(a)
|
|
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 Agreement
|
27
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Cornerstone Growth Fund –
|
||||
Investor Class (HFCGX)
|
-1.92%
|
-1.39%
|
9.23%
|
10.52%
|
Hennessy Cornerstone Growth Fund –
|
||||
Institutional Class (HICGX)
|
-1.78%
|
-1.08%
|
9.59%
|
10.86%
|
Russell 2000® Index
|
-18.38%
|
-16.87%
|
7.24%
|
10.06%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
13.67%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April
30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Alpha Metallurgical Resources, Inc.
|
3.16%
|
Antero Resources Corp.
|
2.96%
|
PBF Energy, Inc.
|
2.94%
|
Arch Resources, Inc.
|
2.67%
|
Alliance Resource Partners LP
|
2.53%
|
Peabody Energy Corp.
|
2.46%
|
The Andersons, Inc.
|
2.34%
|
Cenovus Energy, Inc.
|
2.27%
|
Chesapeake Energy Corp.
|
2.27%
|
Titan International, Inc.
|
2.26%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 92.62%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 1.56%
|
||||||||||||
Scholastic Corp.
|
66,000
|
$
|
2,432,100
|
1.56
|
%
|
|||||||
Consumer Discretionary – 3.33%
|
||||||||||||
Build-A-Bear Workshop, Inc. (a)
|
135,600
|
2,568,264
|
1.65
|
%
|
||||||||
Movado Group, Inc.
|
72,600
|
2,611,422
|
1.68
|
%
|
||||||||
|
5,179,686
|
3.33
|
%
|
|||||||||
Consumer Staples – 9.37%
|
||||||||||||
BJ’s Wholesale Club Holdings, Inc. (a)
|
43,100
|
2,773,485
|
1.78
|
%
|
||||||||
Coca Cola Consolidated, Inc.
|
4,900
|
2,163,350
|
1.39
|
%
|
||||||||
Ingles Markets, Inc.
|
33,600
|
3,128,832
|
2.01
|
%
|
||||||||
Tyson Foods, Inc., Class A
|
30,800
|
2,869,328
|
1.85
|
%
|
||||||||
The Andersons, Inc.
|
72,500
|
3,641,675
|
2.34
|
%
|
||||||||
|
14,576,670
|
9.37
|
%
|
|||||||||
Energy – 33.72%
|
||||||||||||
Antero Resources Corp. (a)
|
130,900
|
4,607,680
|
2.96
|
%
|
||||||||
Arch Resources, Inc.
|
25,000
|
4,159,500
|
2.67
|
%
|
||||||||
Cenovus Energy, Inc. (b)
|
191,100
|
3,531,528
|
2.27
|
%
|
||||||||
Chesapeake Energy Corp.
|
43,100
|
3,535,062
|
2.27
|
%
|
||||||||
EnLink Midstream LLC
|
335,800
|
3,314,346
|
2.13
|
%
|
||||||||
Equinor ASA – ADR (b)
|
97,800
|
3,333,024
|
2.14
|
%
|
||||||||
Imperial Oil Ltd. (b)
|
65,300
|
3,274,142
|
2.11
|
%
|
||||||||
Laredo Petroleum, Inc. (a)
|
41,200
|
2,933,852
|
1.89
|
%
|
||||||||
Marathon Petroleum Corp.
|
36,800
|
3,211,168
|
2.07
|
%
|
||||||||
Nabors Industries Ltd. (a)(b)
|
22,500
|
3,478,950
|
2.24
|
%
|
||||||||
Oceaneering International, Inc. (a)
|
195,300
|
2,212,749
|
1.42
|
%
|
||||||||
PBF Energy, Inc. (a)
|
157,500
|
4,576,950
|
2.94
|
%
|
||||||||
Peabody Energy Corp. (a)
|
169,100
|
3,828,424
|
2.46
|
%
|
||||||||
Ranger Oil Corp. (a)
|
97,300
|
3,099,005
|
1.99
|
%
|
||||||||
Targa Resources Corp.
|
45,700
|
3,354,837
|
2.16
|
%
|
||||||||
|
52,451,217
|
33.72
|
%
|
|||||||||
Financials – 8.06%
|
||||||||||||
American International Group, Inc.
|
46,000
|
2,691,460
|
1.73
|
%
|
||||||||
Encore Capital Group, Inc. (a)
|
39,600
|
2,289,276
|
1.47
|
%
|
||||||||
Mr. Cooper Group, Inc. (a)
|
55,400
|
2,491,338
|
1.60
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials (Continued)
|
||||||||||||
Old Republic International Corp.
|
107,800
|
$
|
2,372,678
|
1.52
|
%
|
|||||||
Prudential Financial, Inc.
|
24,900
|
2,701,899
|
1.74
|
%
|
||||||||
|
12,546,651
|
8.06
|
%
|
|||||||||
Health Care – 7.51%
|
||||||||||||
Anthem, Inc.
|
6,400
|
3,212,352
|
2.06
|
%
|
||||||||
CVS Health Corp.
|
27,800
|
2,672,414
|
1.72
|
%
|
||||||||
McKesson Corp.
|
10,500
|
3,250,905
|
2.09
|
%
|
||||||||
Tenet Healthcare Corp. (a)
|
35,200
|
2,552,352
|
1.64
|
%
|
||||||||
|
11,688,023
|
7.51
|
%
|
|||||||||
Industrials – 18.63%
|
||||||||||||
BlueLinx Holdings, Inc. (a)
|
33,100
|
2,206,777
|
1.42
|
%
|
||||||||
Boise Cascade Co.
|
34,400
|
2,599,952
|
1.67
|
%
|
||||||||
Builders FirstSource, Inc. (a)
|
39,600
|
2,438,172
|
1.57
|
%
|
||||||||
Daseke, Inc. (a)
|
249,600
|
2,096,640
|
1.35
|
%
|
||||||||
Eagle Bulk Shipping, Inc. (b)
|
52,500
|
3,267,600
|
2.10
|
%
|
||||||||
Grindrod Shipping Holdings Ltd. (b)
|
126,100
|
3,240,770
|
2.08
|
%
|
||||||||
Titan International, Inc. (a)
|
253,600
|
3,514,896
|
2.26
|
%
|
||||||||
Triumph Group, Inc. (a)
|
119,000
|
2,682,260
|
1.72
|
%
|
||||||||
Univar Solutions, Inc. (a)
|
100,200
|
2,917,824
|
1.88
|
%
|
||||||||
USA Truck, Inc. (a)
|
107,000
|
1,755,870
|
1.13
|
%
|
||||||||
ZIM Integrated Shipping Services Ltd. (b)
|
40,600
|
2,258,578
|
1.45
|
%
|
||||||||
|
28,979,339
|
18.63
|
%
|
|||||||||
Materials – 10.44%
|
||||||||||||
Alcoa Corp.
|
36,300
|
2,461,140
|
1.58
|
%
|
||||||||
Alpha Metallurgical Resources, Inc. (a)
|
31,800
|
4,920,732
|
3.16
|
%
|
||||||||
Cabot Corp.
|
38,300
|
2,522,055
|
1.62
|
%
|
||||||||
Commercial Metals Co.
|
77,200
|
3,165,200
|
2.04
|
%
|
||||||||
Sasol Ltd – ADR (a)(b)
|
130,500
|
3,165,930
|
2.04
|
%
|
||||||||
|
16,235,057
|
10.44
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $136,898,574)
|
144,088,743
|
92.62
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
PARTNERSHIPS & TRUSTS – 4.54%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Energy – 4.54%
|
||||||||||||
Alliance Resource Partners LP
|
220,000
|
$
|
3,940,200
|
2.53
|
%
|
|||||||
Energy Transfer Equity LP
|
282,300
|
3,127,884
|
2.01
|
%
|
||||||||
|
||||||||||||
Total Partnerships & Trusts
|
||||||||||||
(Cost $5,895,832)
|
7,068,084
|
4.54
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 2.87%
|
||||||||||||
Money Market Funds – 2.87%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (c)
|
4,472,378
|
4,472,378
|
2.87
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $4,472,378)
|
4,472,378
|
2.87
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $147,266,784) – 100.03%
|
155,629,205
|
100.03
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.03)%
|
(45,034
|
)
|
(0.03
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
155,584,171
|
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, 2022.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
2,432,100
|
$
|
—
|
$
|
—
|
$
|
2,432,100
|
||||||||
Consumer Discretionary
|
5,179,686
|
—
|
—
|
5,179,686
|
||||||||||||
Consumer Staples
|
14,576,670
|
—
|
—
|
14,576,670
|
||||||||||||
Energy
|
52,451,217
|
—
|
—
|
52,451,217
|
||||||||||||
Financials
|
12,546,651
|
—
|
—
|
12,546,651
|
||||||||||||
Health Care
|
11,688,023
|
—
|
—
|
11,688,023
|
||||||||||||
Industrials
|
28,979,339
|
—
|
—
|
28,979,339
|
||||||||||||
Materials
|
16,235,057
|
—
|
—
|
16,235,057
|
||||||||||||
Total Common Stocks
|
$
|
144,088,743
|
$
|
—
|
$
|
—
|
$
|
144,088,743
|
||||||||
Partnerships & Trusts
|
||||||||||||||||
Energy
|
$
|
7,068,084
|
$
|
—
|
$
|
—
|
$
|
7,068,084
|
||||||||
Total Partnerships & Trusts
|
$
|
7,068,084
|
$
|
—
|
$
|
—
|
$
|
7,068,084
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
4,472,378
|
$
|
—
|
$
|
—
|
$
|
4,472,378
|
||||||||
Total Short-Term Investments
|
$
|
4,472,378
|
$
|
—
|
$
|
—
|
$
|
4,472,378
|
||||||||
Total Investments
|
$
|
155,629,205
|
$
|
—
|
$
|
—
|
$
|
155,629,205
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $147,266,784)
|
$
|
155,629,205
|
||
Dividends and interest receivable
|
28,141
|
|||
Receivable for fund shares sold
|
71,838
|
|||
Return of capital receivable
|
53,773
|
|||
Prepaid expenses and other assets
|
20,945
|
|||
Total assets
|
155,803,902
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
24,416
|
|||
Payable to advisor
|
97,409
|
|||
Payable to administrator
|
29,644
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
19,381
|
|||
Accrued service fees
|
11,921
|
|||
Accrued trustees fees
|
5,258
|
|||
Accrued expenses and other payables
|
20,474
|
|||
Total liabilities
|
219,731
|
|||
NET ASSETS
|
$
|
155,584,171
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
142,272,563
|
||
Total distributable earnings
|
13,311,608
|
|||
Total net assets
|
$
|
155,584,171
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
140,812,096
|
||
Shares issued and outstanding
|
6,115,206
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
23.03
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
14,772,075
|
||
Shares issued and outstanding
|
614,604
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
24.04
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
1,751,703
|
||
Interest income
|
1,287
|
|||
Total investment income
|
1,752,990
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
600,313
|
|||
Distribution fees – Investor Class (See Note 5)
|
110,256
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
99,028
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
4,560
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
93,799
|
|||
Service fees – Investor Class (See Note 5)
|
73,504
|
|||
Federal and state registration fees
|
15,463
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Trustees’ fees and expenses
|
9,779
|
|||
Reports to shareholders
|
6,785
|
|||
Legal fees
|
1,169
|
|||
Interest expense (See Note 7)
|
678
|
|||
Other expenses
|
13,409
|
|||
Total expenses
|
1,055,121
|
|||
NET INVESTMENT INCOME
|
$
|
697,869
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
5,241,966
|
||
Net change in unrealized appreciation/depreciation on investments
|
(8,948,928
|
)
|
||
Net loss on investments
|
(3,706,962
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(3,009,093
|
)
|
(1)
|
Net of foreign taxes withheld and issuance fees of $177,645.
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income (loss)
|
$
|
697,869
|
$
|
(785,532
|
)
|
|||
Net realized gain on investments
|
5,241,966
|
41,914,519
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(8,948,928
|
)
|
18,604,616
|
|||||
Net increase (decrease) in net
|
||||||||
assets resulting from operations
|
(3,009,093
|
)
|
59,733,603
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(33,524,165
|
)
|
—
|
|||||
Distributable earnings – Institutional Class
|
(3,505,908
|
)
|
—
|
|||||
Total distributions
|
(37,030,073
|
)
|
—
|
|||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
5,666,528
|
7,853,848
|
||||||
Proceeds from shares subscribed – Institutional Class
|
1,153,176
|
1,438,342
|
||||||
Dividends reinvested – Investor Class
|
32,429,645
|
—
|
||||||
Dividends reinvested – Institutional Class
|
3,066,399
|
—
|
||||||
Cost of shares redeemed – Investor Class
|
(12,958,096
|
)
|
(20,954,269
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(1,475,108
|
)
|
(2,945,640
|
)
|
||||
Net increase (decrease) in net assets derived
|
||||||||
from capital share transactions
|
27,882,544
|
(14,607,719
|
)
|
|||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(12,156,622
|
)
|
45,125,884
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
167,740,793
|
122,614,909
|
||||||
End of period
|
$
|
155,584,171
|
$
|
167,740,793
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
227,406
|
276,838
|
||||||
Shares sold – Institutional Class
|
43,548
|
49,401
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
1,319,351
|
—
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
119,641
|
—
|
||||||
Shares redeemed – Investor Class
|
(525,284
|
)
|
(755,784
|
)
|
||||
Shares redeemed – Institutional Class
|
(56,235
|
)
|
(105,327
|
)
|
||||
Net increase (decrease) in shares outstanding
|
1,128,427
|
(534,872
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
29.83
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.10
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.26
|
)
|
||
Total from investment operations
|
(0.16
|
)
|
||
Less distributions:
|
||||
Dividends from net realized gains
|
(6.64
|
)
|
||
Total distributions
|
(6.64
|
)
|
||
Net asset value, end of period
|
$
|
23.03
|
||
TOTAL RETURN
|
-1.92
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
140.81
|
||
Ratio of expenses to average net assets
|
1.33
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
0.83
|
%(3)
|
||
Portfolio turnover rate(4)
|
88
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
19.91
|
$
|
19.15
|
$
|
22.17
|
$
|
24.16
|
$
|
18.98
|
|||||||||
(0.14
|
)(1)
|
(0.08
|
)(1)
|
(0.01
|
)(1)
|
(0.17
|
)
|
(0.09
|
)
|
|||||||||
10.06
|
0.84
|
(1.19
|
)
|
(1.82
|
)
|
5.27
|
||||||||||||
9.92
|
0.76
|
(1.20
|
)
|
(1.99
|
)
|
5.18
|
||||||||||||
—
|
—
|
(1.82
|
)
|
—
|
—
|
|||||||||||||
—
|
—
|
(1.82
|
)
|
—
|
—
|
|||||||||||||
$
|
29.83
|
$
|
19.91
|
$
|
19.15
|
$
|
22.17
|
$
|
24.16
|
|||||||||
49.82
|
%
|
3.97
|
%
|
-5.19
|
%
|
-8.24
|
%
|
27.29
|
%
|
|||||||||
$
|
151.96
|
$
|
110.96
|
$
|
125.10
|
$
|
158.98
|
$
|
197.22
|
|||||||||
1.34
|
%
|
1.36
|
%
|
1.34
|
%
|
1.30
|
%
|
1.30
|
%
|
|||||||||
(0.51
|
)%
|
(0.45
|
)%
|
(0.07
|
)%
|
(0.56
|
)%
|
(0.33
|
)%
|
|||||||||
98
|
%
|
98
|
%
|
95
|
%
|
133
|
%
|
98
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
31.09
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.15
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.27
|
)
|
||
Total from investment operations
|
(0.12
|
)
|
||
Less distributions:
|
||||
Dividends from net realized gains
|
(6.93
|
)
|
||
Total distributions
|
(6.93
|
)
|
||
Net asset value, end of period
|
$
|
24.04
|
||
TOTAL RETURN
|
-1.78
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
14.77
|
||
Ratio of expenses to average net assets
|
1.01
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
1.18
|
%(3)
|
||
Portfolio turnover rate(4)
|
88
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
20.68
|
$
|
19.83
|
$
|
22.88
|
$
|
24.85
|
$
|
19.46
|
|||||||||
(0.05
|
)(1)
|
(0.03
|
)(1)
|
0.05
|
(1)
|
0.11
|
0.01
|
|||||||||||
10.46
|
0.88
|
(1.22
|
)
|
(2.08
|
)
|
5.38
|
||||||||||||
10.41
|
0.85
|
(1.17
|
)
|
(1.97
|
)
|
5.39
|
||||||||||||
—
|
—
|
(1.88
|
)
|
—
|
—
|
|||||||||||||
—
|
—
|
(1.88
|
)
|
—
|
—
|
|||||||||||||
$
|
31.09
|
$
|
20.68
|
$
|
19.83
|
$
|
22.88
|
$
|
24.85
|
|||||||||
50.34
|
%
|
4.29
|
%
|
-4.86
|
%
|
-7.93
|
%
|
27.70
|
%
|
|||||||||
$
|
15.78
|
$
|
11.65
|
$
|
14.62
|
$
|
20.52
|
$
|
31.65
|
|||||||||
1.01
|
%
|
1.05
|
%
|
1.01
|
%
|
0.96
|
%
|
0.97
|
%
|
|||||||||
(0.17
|
)%
|
(0.14
|
)%
|
0.27
|
%
|
(0.23
|
)%
|
(0.00
|
)%
|
|||||||||
98
|
%
|
98
|
%
|
95
|
%
|
133
|
%
|
98
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a corresponding increase or
decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered investment companies
(“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and requires funds whose use of
derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required to
|
HENNESSY FUNDS
|
1-800-966-4354
|
comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential
impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5 establishes
requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions.
Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related
recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with the rules by
September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”) generally are 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 generally are valued at the mean between
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 are 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 for equity securities. 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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
150,726,712
|
|||
Gross tax unrealized appreciation
|
$
|
36,563,930
|
|||
Gross tax unrealized depreciation
|
(19,252,581
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
17,311,349
|
|||
Undistributed ordinary income
|
$
|
—
|
|||
Undistributed long-term capital gains
|
37,030,068
|
||||
Total distributable earnings
|
$
|
37,030,068
|
|||
Other accumulated gain/(loss)
|
$
|
(990,643
|
)
|
||
Total accumulated gain/(loss)
|
$
|
53,350,774
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
—
|
|||||
Long-term capital gains
|
37,030,073
|
—
|
|||||||
Total distributions
|
$
|
37,030,073
|
$
|
—
|
(1) Ordinary income includes short-term capital gains.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 980.80
|
$6.53
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.20
|
$6.66
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 982.20
|
$4.96
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.79
|
$5.06
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.33% for Investor Class shares or 1.01% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded that the Advisor provides
high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics, as appropriate),
conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred to manage the Fund
are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as the Fund’s assets
grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
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
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Focus Fund –
|
||||
Investor Class (HFCSX)
|
-17.05%
|
-8.89%
|
9.56%
|
11.11%
|
Hennessy Focus Fund –
|
||||
Institutional Class (HFCIX)
|
-16.88%
|
-8.55%
|
9.96%
|
11.50%
|
Russell 3000® Index
|
-11.75%
|
-3.11%
|
13.01%
|
13.29%
|
Russell Mid Cap® Growth Index
|
-25.44%
|
-16.73%
|
12.06%
|
12.17%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Markel Corp.
|
11.81%
|
Brookfield Asset Management, Inc., Class A
|
11.38%
|
American Tower Corp., Class A
|
10.97%
|
Encore Capital Group, Inc.
|
10.61%
|
Aon PLC
|
8.63%
|
CarMax, Inc.
|
7.32%
|
O’Reilly Automotive, Inc.
|
6.58%
|
SS&C Technologies Holdings, Inc.
|
5.40%
|
Ashtead Group PLC
|
5.03%
|
Restoration Hardware Holdings, Inc.
|
3.90%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 87.36%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 1.14%
|
||||||||||||
AST SpaceMobile, Inc. (a)
|
1,247,902
|
$
|
9,396,702
|
1.05
|
%
|
|||||||
Shenandoah Telecommunications Co.
|
42,275
|
853,955
|
0.09
|
%
|
||||||||
|
10,250,657
|
1.14
|
%
|
|||||||||
Consumer Discretionary – 20.83%
|
||||||||||||
CarMax, Inc. (a)
|
766,122
|
65,717,945
|
7.32
|
%
|
||||||||
NVR, Inc. (a)
|
6,228
|
27,255,036
|
3.03
|
%
|
||||||||
O’Reilly Automotive, Inc. (a)
|
97,409
|
59,083,429
|
6.58
|
%
|
||||||||
Restoration Hardware Holdings, Inc. (a)
|
104,116
|
34,995,470
|
3.90
|
%
|
||||||||
|
187,051,880
|
20.83
|
%
|
|||||||||
Financials – 42.52%
|
||||||||||||
Aon PLC (b)
|
269,099
|
77,497,821
|
8.63
|
%
|
||||||||
Brookfield Asset Management, Inc., Class A (b)
|
2,050,442
|
102,235,038
|
11.38
|
%
|
||||||||
Brookfield Asset Management Reinsurance Partners Ltd. (b)
|
15,721
|
788,565
|
0.09
|
%
|
||||||||
Encore Capital Group, Inc. (a)(d)
|
1,648,029
|
95,272,557
|
10.61
|
%
|
||||||||
Markel Corp. (a)
|
78,347
|
106,025,428
|
11.81
|
%
|
||||||||
|
381,819,409
|
42.52
|
%
|
|||||||||
Industrials – 11.91%
|
||||||||||||
Allegiant Travel Co. (a)
|
160,303
|
24,877,423
|
2.77
|
%
|
||||||||
American Woodmark Corp. (a)
|
691,441
|
32,394,011
|
3.61
|
%
|
||||||||
Ashtead Group PLC (b)
|
860,196
|
45,202,312
|
5.03
|
%
|
||||||||
Mistras Group, Inc. (a)
|
785,984
|
4,472,249
|
0.50
|
%
|
||||||||
|
106,945,995
|
11.91
|
%
|
|||||||||
Information Technology – 10.96%
|
||||||||||||
Applied Materials, Inc.
|
183,115
|
20,206,740
|
2.25
|
%
|
||||||||
CDW Corp.
|
182,239
|
29,737,760
|
3.31
|
%
|
||||||||
SS&C Technologies Holdings, Inc.
|
749,303
|
48,449,932
|
5.40
|
%
|
||||||||
|
98,394,432
|
10.96
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $332,739,718)
|
784,462,373
|
87.36
|
%
|
|||||||||
|
||||||||||||
REITS – 10.97%
|
||||||||||||
Financials – 10.97%
|
||||||||||||
American Tower Corp., Class A
|
408,606
|
98,482,218
|
10.97
|
%
|
||||||||
|
||||||||||||
Total REITS
|
||||||||||||
(Cost $648,119)
|
98,482,218
|
10.97
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 1.76%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.76%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (c)
|
15,819,015
|
$
|
15,819,015
|
1.76
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $15,819,015)
|
15,819,015
|
1.76
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $349,206,852) – 100.09%
|
898,763,606
|
100.09
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.09)%
|
(828,411
|
)
|
(0.09
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
897,935,195
|
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, 2022.
|
(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. Details of transactions with affiliated companies for the period ended April 30, 2022, are as follows:
|
Value at
|
Sales
|
Realized
|
Corporate
|
||||||||||||||||||
Common Stocks
|
November 1, 2021
|
Purchases
|
Proceeds
|
Gain/Loss
|
Actions
|
||||||||||||||||
Encore Capital Group, Inc.
|
$
|
113,892,311
|
$
|
—
|
$
|
(27,883,967
|
)
|
$
|
9,777,341
|
$
|
—
|
||||||||||
Sub-total for affiliates
|
|||||||||||||||||||||
held as of 4/30/2022(1)
|
113,892,311
|
—
|
(27,883,967
|
)
|
9,777,341
|
—
|
|||||||||||||||
Marlin Business Services Corp
|
22,009,457
|
—
|
(12,347,191
|
)
|
7,721,670
|
(10,183,161
|
)
|
||||||||||||||
Sub-total for securities
|
|||||||||||||||||||||
no longer affiliates
|
|||||||||||||||||||||
as of 4/30/2022(2)
|
22,009,457
|
—
|
(12,347,191
|
)
|
7,721,670
|
$
|
(10,183,161
|
)
|
|||||||||||||
$
|
135,901,768
|
$
|
—
|
$
|
(40,231,158
|
)
|
$
|
17,499,011
|
$
|
(10,183,161
|
)
|
||||||||||
Net Change
|
|||||||||||||||||||||
in Unrealized
|
|||||||||||||||||||||
Appreciation /
|
Value at
|
||||||||||||||||||||
Common Stocks
|
Depreciation
|
Dividends
|
April 30, 2022
|
Shares
|
|||||||||||||||||
Encore Capital Group, Inc.
|
$
|
(513,128
|
)
|
$
|
—
|
$
|
95,272,557
|
1,648,029
|
|||||||||||||
Sub-total for affiliates
|
|||||||||||||||||||||
held as of 4/30/2022(1)
|
(513,128
|
)
|
—
|
95,272,557
|
1,648,029
|
||||||||||||||||
Marlin Business Services Corp
|
(7,200,775
|
)
|
134,438
|
—
|
—
|
||||||||||||||||
Sub-total for securities
|
|||||||||||||||||||||
no longer affiliates
|
|||||||||||||||||||||
as of 4/30/2022(2)
|
(7,200,775
|
)
|
134,438
|
—
|
—
|
||||||||||||||||
$
|
(7,713,903
|
)
|
$
|
134,438
|
$
|
95,272,557
|
1,648,029
|
(1)
|
At April 30, 2022, this security represented 10.61% of the Fund’s net assets.
|
(2)
|
At April 30, 2022, this security was no longer an affiliate of the Fund.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
10,250,657
|
$
|
—
|
$
|
—
|
$
|
10,250,657
|
||||||||
Consumer Discretionary
|
187,051,880
|
—
|
—
|
187,051,880
|
||||||||||||
Financials
|
381,819,409
|
—
|
—
|
381,819,409
|
||||||||||||
Industrials
|
106,945,995
|
—
|
—
|
106,945,995
|
||||||||||||
Information Technology
|
98,394,432
|
—
|
—
|
98,394,432
|
||||||||||||
Total Common Stocks
|
$
|
784,462,373
|
$
|
—
|
$
|
—
|
$
|
784,462,373
|
||||||||
REITS
|
||||||||||||||||
Financials
|
$
|
98,482,218
|
$
|
—
|
$
|
—
|
$
|
98,482,218
|
||||||||
Total REITS
|
$
|
98,482,218
|
$
|
—
|
$
|
—
|
$
|
98,482,218
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
15,819,015
|
$
|
—
|
$
|
—
|
$
|
15,819,015
|
||||||||
Total Short-Term Investments
|
$
|
15,819,015
|
$
|
—
|
$
|
—
|
$
|
15,819,015
|
||||||||
Total Investments
|
$
|
898,763,606
|
$
|
—
|
$
|
—
|
$
|
898,763,606
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in unaffiliated securities, at value (cost $305,714,721)
|
$
|
803,491,049
|
||
Investments in affiliated securities, at value (cost $43,492,131)
|
95,272,557
|
|||
Total investments in securities, at value (cost $349,206,852)
|
898,763,606
|
|||
Dividends and interest receivable
|
153,196
|
|||
Receivable for fund shares sold
|
125,847
|
|||
Receivable for securities sold
|
4,453,507
|
|||
Prepaid expenses and other assets
|
41,350
|
|||
Total assets
|
903,537,506
|
|||
LIABILITIES:
|
||||
Payable for securities purchased
|
3,935,202
|
|||
Payable for fund shares redeemed
|
446,677
|
|||
Payable to advisor
|
724,389
|
|||
Payable to administrator
|
176,683
|
|||
Payable to auditor
|
11,223
|
|||
Accrued distribution fees
|
102,333
|
|||
Accrued service fees
|
46,889
|
|||
Accrued expenses and other payables
|
158,915
|
|||
Total liabilities
|
5,602,311
|
|||
NET ASSETS
|
$
|
897,935,195
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
289,169,314
|
||
Total distributable earnings
|
608,765,881
|
|||
Total net assets
|
$
|
897,935,195
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
523,062,356
|
||
Shares issued and outstanding
|
9,182,537
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
56.96
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
374,872,839
|
||
Shares issued and outstanding
|
6,318,338
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
59.33
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income from unaffiliated securities(1)
|
$
|
2,507,630
|
||
Dividend income from affiliated securities
|
134,438
|
|||
Interest income
|
5,409
|
|||
Total investment income
|
2,647,477
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
4,812,618
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
736,054
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
177,921
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
584,555
|
|||
Distribution fees – Investor Class (See Note 5)
|
468,502
|
|||
Service fees – Investor Class (See Note 5)
|
312,335
|
|||
Federal and state registration fees
|
31,580
|
|||
Reports to shareholders
|
27,927
|
|||
Trustees’ fees and expenses
|
18,906
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Legal fees
|
7,904
|
|||
Other expenses
|
79,014
|
|||
Total expenses
|
7,283,694
|
|||
NET INVESTMENT LOSS
|
$
|
(4,636,217
|
)
|
|
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments:
|
||||
Unaffiliated investments
|
$
|
54,782,504
|
||
Affiliated investments
|
17,499,011
|
|||
Net change in unrealized appreciation/depreciation on investments
|
||||
Unaffiliated investments
|
(249,474,276
|
)
|
||
Affiliated investments
|
(7,713,903
|
)
|
||
Net loss on investments
|
(184,906,664
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(189,542,881
|
)
|
(1)
|
Net of foreign taxes withheld of $84,018.
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment loss
|
$
|
(4,636,217
|
)
|
$
|
(8,433,350
|
)
|
||
Net realized gain on investments
|
72,281,515
|
223,830,997
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(257,188,179
|
)
|
262,240,110
|
|||||
Net increase (decrease) in net
|
||||||||
assets resulting from operations
|
(189,542,881
|
)
|
477,637,757
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(102,832,917
|
)
|
(202,897,649
|
)
|
||||
Distributable earnings – Institutional Class
|
(74,423,824
|
)
|
(111,878,455
|
)
|
||||
Total distributions
|
(177,256,741
|
)
|
(314,776,104
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
9,368,829
|
38,949,266
|
||||||
Proceeds from shares subscribed – Institutional Class
|
40,021,143
|
214,555,313
|
||||||
Dividends reinvested – Investor Class
|
100,142,197
|
198,099,143
|
||||||
Dividends reinvested – Institutional Class
|
68,169,964
|
100,565,261
|
||||||
Cost of shares redeemed – Investor Class
|
(81,813,786
|
)
|
(305,916,863
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(79,068,197
|
)
|
(267,470,520
|
)
|
||||
Net increase (decrease) in net assets
|
||||||||
derived from capital share transactions
|
56,820,150
|
(21,218,400
|
)
|
|||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(309,979,472
|
)
|
141,643,253
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
1,207,914,667
|
1,066,271,414
|
||||||
End of period
|
$
|
897,935,195
|
$
|
1,207,914,667
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
137,702
|
541,194
|
||||||
Shares sold – Institutional Class
|
561,059
|
2,870,484
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
1,451,336
|
3,250,724
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
950,104
|
1,592,734
|
||||||
Shares redeemed – Investor Class
|
(1,221,127
|
)
|
(4,446,090
|
)
|
||||
Shares redeemed – Institutional Class
|
(1,151,693
|
)
|
(3,724,618
|
)
|
||||
Net increase in shares outstanding
|
727,381
|
84,428
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
80.48
|
||
Income from investment operations:
|
||||
Net investment loss
|
(0.34
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(11.30
|
)
|
||
Total from investment operations
|
(11.64
|
)
|
||
Less distributions:
|
||||
Dividends from net realized gains
|
(11.88
|
)
|
||
Total distributions
|
(11.88
|
)
|
||
Net asset value, end of period
|
$
|
56.96
|
||
TOTAL RETURN
|
-17.05
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
523.06
|
||
Ratio of expenses to average net assets
|
1.53
|
%(3)
|
||
Ratio of net investment loss to average net assets
|
(1.04
|
)%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
71.68
|
$
|
85.11
|
$
|
83.20
|
$
|
84.92
|
$
|
70.63
|
|||||||||
(0.63
|
)(1)
|
(0.66
|
)(1)
|
(0.52
|
)(1)
|
(0.86
|
)
|
(0.51
|
)
|
|||||||||
31.46
|
(4.21
|
)
|
16.90
|
(0.85
|
)
|
14.80
|
||||||||||||
30.83
|
(4.87
|
)
|
16.38
|
(1.71
|
)
|
14.29
|
||||||||||||
(22.03
|
)
|
(8.56
|
)
|
(14.47
|
)
|
(0.01
|
)
|
—
|
||||||||||
(22.03
|
)
|
(8.56
|
)
|
(14.47
|
)
|
(0.01
|
)
|
—
|
||||||||||
$
|
80.48
|
$
|
71.68
|
$
|
85.11
|
$
|
83.20
|
$
|
84.92
|
|||||||||
52.87
|
%
|
-6.79
|
%
|
24.16
|
%
|
-2.02
|
%
|
20.23
|
%
|
|||||||||
$
|
709.40
|
$
|
678.72
|
$
|
1,213.20
|
$
|
1,339.45
|
$
|
1,675.00
|
|||||||||
1.49
|
%
|
1.51
|
%
|
1.47
|
%
|
1.47
|
%
|
1.48
|
%
|
|||||||||
(0.88
|
)%
|
(0.88
|
)%
|
(0.67
|
)%
|
(0.72
|
)%
|
(0.51
|
)%
|
|||||||||
4
|
%
|
5
|
%
|
2
|
%
|
13
|
%
|
5
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
83.66
|
||
Income from investment operations:
|
||||
Net investment loss
|
(0.22
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(11.76
|
)
|
||
Total from investment operations
|
(11.98
|
)
|
||
Less distributions:
|
||||
Dividends from net realized gains
|
(12.35
|
)
|
||
Total distributions
|
(12.35
|
)
|
||
Net asset value, end of period
|
$
|
59.33
|
||
TOTAL RETURN
|
-16.88
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
374.87
|
||
Ratio of expenses to average net assets
|
1.13
|
%(3)
|
||
Ratio of net investment loss to average net assets
|
(0.63
|
)%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
74.24
|
$
|
87.83
|
$
|
85.66
|
$
|
87.10
|
$
|
72.17
|
|||||||||
(0.37
|
)(1)
|
(0.39
|
)(1)
|
(0.25
|
)(1)
|
(0.28
|
)
|
(0.11
|
)
|
|||||||||
32.62
|
(4.36
|
)
|
17.41
|
(1.15
|
)
|
15.04
|
||||||||||||
32.25
|
(4.75
|
)
|
17.16
|
(1.43
|
)
|
14.93
|
||||||||||||
(22.83
|
)
|
(8.84
|
)
|
(14.99
|
)
|
(0.01
|
)
|
—
|
||||||||||
(22.83
|
)
|
(8.84
|
)
|
(14.99
|
)
|
(0.01
|
)
|
—
|
||||||||||
$
|
83.66
|
$
|
74.24
|
$
|
87.83
|
$
|
85.66
|
$
|
87.10
|
|||||||||
53.43
|
%
|
-6.45
|
%
|
24.59
|
%
|
-1.65
|
%
|
20.69
|
%
|
|||||||||
$
|
498.51
|
$
|
387.55
|
$
|
586.25
|
$
|
811.96
|
$
|
1,057.32
|
|||||||||
1.12
|
%
|
1.14
|
%
|
1.12
|
%
|
1.09
|
%
|
1.10
|
%
|
|||||||||
(0.50
|
)%
|
(0.51
|
)%
|
(0.32
|
)%
|
(0.34
|
)%
|
(0.13
|
)%
|
|||||||||
4
|
%
|
5
|
%
|
2
|
%
|
13
|
%
|
5
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a corresponding increase or
decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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 exchange rate at the time of valuation. Purchases and sales of investments and
income are translated into U.S. dollars using the spot market exchange rate 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
|
HENNESSY FUNDS
|
1-800-966-4354
|
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 – Distributions received from real estate investment trusts (“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 any required 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 do not constitute qualified dividend income and do not qualify for the dividends-received deduction.
|
k).
|
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.
|
l).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered investment
companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and requires funds whose
use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19,
2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule
18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5 establishes
requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions.
Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related
recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with the rules by
September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 generally are 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”) generally are 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 generally are 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 are 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
|
HENNESSY FUNDS
|
1-800-966-4354
|
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 for equity securities. 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 exceeds 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.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
402,434,173
|
||
Gross tax unrealized appreciation
|
$
|
818,221,412
|
||
Gross tax unrealized depreciation
|
(11,476,479
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
806,744,933
|
||
Undistributed ordinary income
|
$
|
—
|
||
Undistributed long-term capital gains
|
177,256,695
|
|||
Total distributable earnings
|
$
|
177,256,695
|
||
Other accumulated gain/(loss)
|
$
|
(8,436,125
|
)
|
|
Total accumulated gain/(loss)
|
$
|
975,565,503
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
—
|
|||||
Long-term capital gains
|
177,256,741
|
314,776,104
|
|||||||
Total distributions
|
$
|
177,256,741
|
$
|
314,776,104
|
(1) Ordinary income includes short-term capital gains.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 829.50
|
$6.94
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.21
|
$7.65
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 831.20
|
$5.13
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.19
|
$5.66
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.53% for Investor Class shares or 1.13% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
Summaries of the advisory and sub-advisory agreements;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor and the Sub-Advisor and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale;
|
|
(9)
|
A completed questionnaire from the Sub-Advisor;
|
|
(10)
|
A summary of the Sub-Advisor’s responses to the questionnaire, as well as relevant information from the Sub-Advisor’s Form ADVs Parts 1 and 2 and the certifications submitted by the Sub-Advisor each quarter;
|
|
(11)
|
Financial information of the Sub-Advisor; and
|
|
(12)
|
The Sub-Advisor’s Code of Ethics.
|
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 and an assessment of the Advisor’s performance, the Trustees concluded that the Advisor provides
high-quality services to the Fund, and they 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 by providing portfolio management services.
|
||
(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 and federal securities laws.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(e)
|
The Advisor 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 (including their codes of
ethics, as appropriate), conducts on-site visits to the Sub-Advisor and the Fund’s other service providers, as feasible, 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 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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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. Based on this review and an assessment of the Sub-Advisor’s performance, the Trustees concluded that the Sub-Advisor
provides high-quality services to the Fund. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by
|
HENNESSY FUNDS
|
1-800-966-4354
|
the Sub-Advisor and that the nature and extent of the services provided by the Sub-Advisor were appropriate to assure that the Fund’s portfolio aligns properly with its investment objective and principal
investment strategies.
|
(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.
|
||
(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)
|
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 Advisor services previously identified 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
the majority of expenses incurred to manage the Fund are variable asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For
example, third-party platform fees and sub-advisory fees increase as the Fund’s assets grow.
|
||
(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 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
|
Important Notice Regarding Delivery of Shareholder Documents
|
25
|
Electronic Delivery
|
25
|
Board Approval of Investment Advisory Agreement
|
26
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Cornerstone
|
||||
Mid Cap 30 Fund –
|
||||
Investor Class (HFMDX)
|
1.67%
|
1.36%
|
10.17%
|
11.08%
|
Hennessy Cornerstone
|
||||
Mid Cap 30 Fund –
|
||||
Institutional Class (HIMDX)
|
1.85%
|
1.71%
|
10.57%
|
11.45%
|
Russell Midcap® Index
|
-12.54%
|
-6.10%
|
10.66%
|
11.99%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
13.67%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April
30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Peabody Energy Corp.
|
6.40%
|
Antero Resources Corp.
|
5.96%
|
Alcoa Corp.
|
4.95%
|
NOV, Inc.
|
4.28%
|
Commercial Metals Co.
|
4.23%
|
Dillard’s, Inc.
|
3.92%
|
HF Sinclair Corp.
|
3.74%
|
BJ’s Wholesale Club Holdings, Inc.
|
3.67%
|
Plains All American Pipeline LP
|
3.44%
|
Mr. Cooper Group, Inc.
|
3.42%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 96.11%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Consumer Discretionary – 30.23%
|
||||||||||||
Abercrombie & Fitch Co., Class A (a)
|
322,600
|
$
|
11,155,508
|
2.95
|
%
|
|||||||
Academy Sports & Outdoors, Inc.
|
292,600
|
10,931,536
|
2.89
|
%
|
||||||||
Asbury Automotive Group, Inc. (a)
|
64,500
|
11,849,295
|
3.13
|
%
|
||||||||
AutoNation, Inc. (a)
|
104,100
|
12,066,231
|
3.19
|
%
|
||||||||
Dillard’s, Inc.
|
48,800
|
14,825,928
|
3.92
|
%
|
||||||||
Group 1 Automotive, Inc.
|
70,000
|
12,189,800
|
3.22
|
%
|
||||||||
Macy’s, Inc.
|
484,200
|
11,703,114
|
3.10
|
%
|
||||||||
Penske Automotive Group, Inc.
|
118,300
|
12,400,206
|
3.28
|
%
|
||||||||
PVH Corp.
|
115,800
|
8,427,924
|
2.23
|
%
|
||||||||
The Goodyear Tire & Rubber Co. (a)
|
659,700
|
8,787,204
|
2.32
|
%
|
||||||||
|
114,336,746
|
30.23
|
%
|
|||||||||
Consumer Staples – 9.78%
|
||||||||||||
BJ’s Wholesale Club Holdings, Inc. (a)
|
215,600
|
13,873,860
|
3.67
|
%
|
||||||||
Spectrum Brands Holdings, Inc.
|
134,800
|
11,467,436
|
3.03
|
%
|
||||||||
United Natural Foods, Inc. (a)
|
271,700
|
11,664,081
|
3.08
|
%
|
||||||||
|
37,005,377
|
9.78
|
%
|
|||||||||
Energy – 22.87%
|
||||||||||||
Antero Resources Corp. (a)
|
640,400
|
22,542,080
|
5.96
|
%
|
||||||||
Green Plains, Inc. (a)
|
336,000
|
9,431,520
|
2.49
|
%
|
||||||||
HF Sinclair Corp. (a)
|
372,400
|
14,158,648
|
3.74
|
%
|
||||||||
NOV, Inc.
|
891,900
|
16,170,147
|
4.28
|
%
|
||||||||
Peabody Energy Corp. (a)
|
1,068,300
|
24,186,312
|
6.40
|
%
|
||||||||
|
86,488,707
|
22.87
|
%
|
|||||||||
Financials – 8.88%
|
||||||||||||
First American Financial Corp.
|
172,623
|
10,065,647
|
2.66
|
%
|
||||||||
Mr. Cooper Group, Inc. (a)
|
287,400
|
12,924,378
|
3.42
|
%
|
||||||||
Old Republic International Corp.
|
481,900
|
10,606,619
|
2.80
|
%
|
||||||||
|
33,596,644
|
8.88
|
%
|
|||||||||
Industrials – 8.57%
|
||||||||||||
ArcBest Corp.
|
141,400
|
10,203,424
|
2.70
|
%
|
||||||||
Ryder System, Inc.
|
148,000
|
10,345,200
|
2.73
|
%
|
||||||||
WESCO International, Inc. (a)
|
96,300
|
11,869,938
|
3.14
|
%
|
||||||||
|
32,418,562
|
8.57
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Information Technology – 3.21%
|
||||||||||||
Jabil, Inc.
|
210,500
|
$
|
12,152,165
|
3.21
|
%
|
|||||||
Materials – 12.57%
|
||||||||||||
Alcoa Corp.
|
276,300
|
18,733,140
|
4.95
|
%
|
||||||||
Commercial Metals Co.
|
389,800
|
15,981,800
|
4.23
|
%
|
||||||||
Olin Corp.
|
223,600
|
12,834,640
|
3.39
|
%
|
||||||||
|
47,549,580
|
12.57
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $363,884,108)
|
363,547,781
|
96.11
|
%
|
|||||||||
|
||||||||||||
PARTNERSHIPS & TRUSTS – 3.44%
|
||||||||||||
Energy – 3.44%
|
||||||||||||
Plains All American Pipeline LP
|
1,254,600
|
12,997,656
|
3.44
|
%
|
||||||||
|
||||||||||||
Total Partnerships & Trusts
|
||||||||||||
(Cost $12,875,016)
|
12,997,656
|
3.44
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 0.47%
|
||||||||||||
Money Market Funds – 0.47%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (b)
|
1,793,531
|
1,793,531
|
0.47
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $1,793,531)
|
1,793,531
|
0.47
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $378,552,655) – 100.02%
|
378,338,968
|
100.02
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.02)%
|
(69,655
|
)
|
(0.02
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
378,269,313
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2022.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Consumer Discretionary
|
$
|
114,336,746
|
$
|
—
|
$
|
—
|
$
|
114,336,746
|
||||||||
Consumer Staples
|
37,005,377
|
—
|
—
|
37,005,377
|
||||||||||||
Energy
|
86,488,707
|
—
|
—
|
86,488,707
|
||||||||||||
Financials
|
33,596,644
|
—
|
—
|
33,596,644
|
||||||||||||
Industrials
|
32,418,562
|
—
|
—
|
32,418,562
|
||||||||||||
Information Technology
|
12,152,165
|
—
|
—
|
12,152,165
|
||||||||||||
Materials
|
47,549,580
|
—
|
—
|
47,549,580
|
||||||||||||
Total Common Stocks
|
$
|
363,547,781
|
$
|
—
|
$
|
—
|
$
|
363,547,781
|
||||||||
Partnerships & Trusts
|
||||||||||||||||
Energy
|
$
|
12,997,656
|
$
|
—
|
$
|
—
|
$
|
12,997,656
|
||||||||
Total Partnerships & Trusts
|
$
|
12,997,656
|
$
|
—
|
$
|
—
|
$
|
12,997,656
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
1,793,531
|
$
|
—
|
$
|
—
|
$
|
1,793,531
|
||||||||
Total Short-Term Investments
|
$
|
1,793,531
|
$
|
—
|
$
|
—
|
$
|
1,793,531
|
||||||||
Total Investments
|
$
|
378,338,968
|
$
|
—
|
$
|
—
|
$
|
378,338,968
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $378,552,655)
|
$
|
378,338,968
|
||
Dividends and interest receivable
|
10,531
|
|||
Receivable for fund shares sold
|
69,638
|
|||
Return of capital receivable
|
272,875
|
|||
Prepaid expenses and other assets
|
25,696
|
|||
Total assets
|
378,717,708
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
16,885
|
|||
Payable to advisor
|
237,347
|
|||
Payable to sub-transfer agents
|
46,817
|
|||
Payable to administrator
|
69,762
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
38,635
|
|||
Accrued service fees
|
17,757
|
|||
Accrued trustees fees
|
3,911
|
|||
Accrued expenses and other payables
|
6,053
|
|||
Total liabilities
|
448,395
|
|||
NET ASSETS
|
$
|
378,269,313
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
282,213,739
|
||
Total distributable earnings
|
96,055,574
|
|||
Total net assets
|
$
|
378,269,313
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
210,523,590
|
||
Shares issued and outstanding
|
10,647,765
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
19.77
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
167,745,723
|
||
Shares issued and outstanding
|
8,107,618
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
20.69
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Distributions received from master limited partnerships
|
$
|
498,703
|
||
Return of capital on distributions received
|
(498,703
|
)
|
||
Dividend income from common stock
|
5,646,968
|
|||
Interest income
|
1,884
|
|||
Total investment income
|
5,648,852
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
1,406,910
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
211,254
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
75,064
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
212,187
|
|||
Distribution fees – Investor Class (See Note 5)
|
160,078
|
|||
Service fees – Investor Class (See Note 5)
|
106,718
|
|||
Federal and state registration fees
|
18,598
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Reports to shareholders
|
14,470
|
|||
Trustees’ fees and expenses
|
11,805
|
|||
Audit fees
|
11,222
|
|||
Legal fees
|
2,783
|
|||
Other expenses
|
27,444
|
|||
Total expenses
|
2,273,689
|
|||
NET INVESTMENT INCOME
|
$
|
3,375,163
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
132,724,377
|
||
Net change in unrealized appreciation/depreciation on investments
|
(129,618,363
|
)
|
||
Net gain on investments
|
3,106,014
|
|||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
6,481,177
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income (loss)
|
$
|
3,375,163
|
$
|
(2,309,361
|
)
|
|||
Net realized gain on investments
|
132,724,377
|
20,131,190
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(129,618,363
|
)
|
130,334,890
|
|||||
Net increase in net assets resulting from operations
|
6,481,177
|
148,156,719
|
||||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(3,694,691
|
)
|
—
|
|||||
Distributable earnings – Institutional Class
|
(2,816,027
|
)
|
—
|
|||||
Total distributions
|
(6,510,718
|
)
|
—
|
|||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
6,259,632
|
27,799,744
|
||||||
Proceeds from shares subscribed – Institutional Class
|
13,249,245
|
11,595,887
|
||||||
Dividends reinvested – Investor Class
|
3,639,868
|
—
|
||||||
Dividends reinvested – Institutional Class
|
2,742,901
|
—
|
||||||
Cost of shares redeemed – Investor Class
|
(18,842,236
|
)
|
(81,876,744
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(17,517,807
|
)
|
(41,705,014
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(10,468,397
|
)
|
(84,186,127
|
)
|
||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(10,497,938
|
)
|
63,970,592
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
388,767,251
|
324,796,659
|
||||||
End of period
|
$
|
378,269,313
|
$
|
388,767,251
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
319,917
|
1,537,236
|
||||||
Shares sold – Institutional Class
|
634,372
|
580,302
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
184,671
|
—
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
133,150
|
—
|
||||||
Shares redeemed – Investor Class
|
(956,499
|
)
|
(4,659,617
|
)
|
||||
Shares redeemed – Institutional Class
|
(848,889
|
)
|
(2,247,525
|
)
|
||||
Net decrease in shares outstanding
|
(533,278
|
)
|
(4,789,604
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
19.78
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.16
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
0.17
|
|||
Total from investment operations
|
0.33
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(0.34
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.34
|
)
|
||
Net asset value, end of period
|
$
|
19.77
|
||
TOTAL RETURN
|
1.67
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
210.52
|
||
Ratio of expenses to average net assets
|
1.35
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
1.63
|
%(3)
|
||
Portfolio turnover rate(4)
|
103
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
13.27
|
$
|
12.01
|
$
|
16.87
|
$
|
22.46
|
$
|
18.37
|
|||||||||
(0.14
|
)(1)
|
(0.03
|
)(1)
|
(0.02
|
)(1)
|
(0.06
|
)
|
(0.15
|
)
|
|||||||||
6.65
|
1.29
|
(0.34
|
)
|
(1.87
|
)
|
4.36
|
||||||||||||
6.51
|
1.26
|
(0.36
|
)
|
(1.93
|
)
|
4.21
|
||||||||||||
—
|
—
|
—
|
—
|
—
|
||||||||||||||
—
|
—
|
(4.50
|
)
|
(3.66
|
)
|
(0.12
|
)
|
|||||||||||
—
|
—
|
(4.50
|
)
|
(3.66
|
)
|
(0.12
|
)
|
|||||||||||
$
|
19.78
|
$
|
13.27
|
$
|
12.01
|
$
|
16.87
|
$
|
22.46
|
|||||||||
49.06
|
%
|
10.49
|
%
|
-1.22
|
%
|
-10.54
|
%
|
23.02
|
%
|
|||||||||
$
|
219.58
|
$
|
188.71
|
$
|
206.11
|
$
|
338.39
|
$
|
351.16
|
|||||||||
1.36
|
%
|
1.37
|
%
|
1.36
|
%
|
1.31
|
%
|
1.34
|
%
|
|||||||||
(0.74
|
)%
|
(0.27
|
)%
|
(0.15
|
)%
|
(0.47
|
)%
|
(0.33
|
)%
|
|||||||||
0
|
%
|
94
|
%
|
70
|
%
|
181
|
%
|
106
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
20.66
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.20
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
0.18
|
|||
Total from investment operations
|
0.38
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(0.35
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.35
|
)
|
||
Net asset value, end of period
|
$
|
20.69
|
||
TOTAL RETURN
|
1.85
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
167.75
|
||
Ratio of expenses to average net assets
|
1.00
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets
|
1.96
|
%(4)
|
||
Portfolio turnover rate(5)
|
103
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
13.81
|
$
|
12.46
|
$
|
17.38
|
$
|
23.07
|
$
|
18.80
|
|||||||||
(0.07
|
)(1)
|
0.01
|
(1)
|
0.03
|
(1)
|
(0.00
|
)(2)
|
0.02
|
||||||||||
6.92
|
1.34
|
(0.36
|
)
|
(1.92
|
)
|
4.38
|
||||||||||||
6.85
|
1.35
|
(0.33
|
)
|
(1.92
|
)
|
4.40
|
||||||||||||
—
|
—
|
—
|
—
|
—
|
||||||||||||||
—
|
—
|
(4.59
|
)
|
(3.77
|
)
|
(0.13
|
)
|
|||||||||||
—
|
—
|
(4.59
|
)
|
(3.77
|
)
|
(0.13
|
)
|
|||||||||||
$
|
20.66
|
$
|
13.81
|
$
|
12.46
|
$
|
17.38
|
$
|
23.07
|
|||||||||
49.60
|
%
|
10.83
|
%
|
-0.84
|
%
|
-10.22
|
%
|
23.47
|
%
|
|||||||||
$
|
169.19
|
$
|
136.09
|
$
|
168.79
|
$
|
329.30
|
$
|
620.38
|
|||||||||
0.99
|
%
|
1.01
|
%
|
1.00
|
%
|
0.95
|
%
|
0.97
|
%
|
|||||||||
(0.38
|
)%
|
0.09
|
%
|
0.20
|
%
|
(0.12
|
)%
|
0.04
|
%
|
|||||||||
0
|
%
|
94
|
%
|
70
|
%
|
181
|
%
|
106
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a corresponding increase or
decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered investment
companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and requires funds
whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required to
|
HENNESSY FUNDS
|
1-800-966-4354
|
comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the
potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5 establishes
requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight and certain other
conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also
adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with
the rules by September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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, MLPs, and real
estate investment trusts, that are traded on a securities exchange for which a last-quoted sales price is readily available generally are 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”) generally are 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 generally are valued at the mean between the bid and ask prices. To the extent these
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 are 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 for equity securities. 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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
259,999,096
|
|||
Gross tax unrealized appreciation
|
$
|
139,260,695
|
|||
Gross tax unrealized depreciation
|
(9,906,846
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
129,353,849
|
|||
Undistributed ordinary income
|
$
|
—
|
|||
Undistributed long-term capital gains
|
—
|
||||
Total distributable earnings
|
$
|
—
|
|||
Other accumulated gain/(loss)
|
$
|
(33,268,734
|
)
|
||
Total accumulated gain/(loss)
|
$
|
96,085,115
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
6,510,718
|
$
|
—
|
|||||
Long-term capital gains
|
—
|
—
|
|||||||
Total distributions
|
$
|
6,510,718
|
$
|
—
|
(1) Ordinary income includes short-term capital gains.
|
WWW.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, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$1,016.70
|
$6.75
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.10
|
$6.76
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$1,018.50
|
$5.00
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.84
|
$5.01
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.35% for Investor Class shares or 1.00% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 181/365 days (to reflect the half-year period).
|
WWW.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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
WWW.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 and an assessment of the Advisor’s performance, the Trustees concluded that the Advisor provides
high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics, as appropriate),
conducts on-site visits to the Fund’s service providers, as feasible, 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 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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred to manage the
Fund are variable
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as the Fund’s assets
grow.
|
||
(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 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
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
|
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Cornerstone
|
||||
Large Growth Fund –
|
||||
Investor Class (HFLGX)
|
-6.21%
|
-1.33%
|
10.79%
|
11.18%
|
Hennessy Cornerstone
|
||||
Large Growth Fund –
|
||||
Institutional Class (HILGX)
|
-6.03%
|
-1.05%
|
11.11%
|
11.45%
|
Russell 1000® Index
|
-11.29%
|
-2.10%
|
13.44%
|
13.53%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
13.67%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Nucor Corp.
|
2.40%
|
Bath & Body Works, Inc.
|
2.27%
|
Philip Morris International, Inc.
|
2.24%
|
HP, Inc.
|
2.22%
|
Dow, Inc.
|
2.21%
|
Steel Dynamics, Inc.
|
2.21%
|
CF Industries Holdings, Inc.
|
2.20%
|
APA Corp.
|
2.17%
|
Reliance Steel & Aluminum Co.
|
2.17%
|
Target Corp.
|
2.16%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 97.87%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 4.03%
|
||||||||||||
Meta Platforms, Inc. (a)
|
14,700
|
$
|
2,946,909
|
2.02
|
%
|
|||||||
Sirius XM Holdings, Inc.
|
487,700
|
2,926,200
|
2.01
|
%
|
||||||||
|
5,873,109
|
4.03
|
%
|
|||||||||
Consumer Discretionary – 17.36%
|
||||||||||||
Bath & Body Works, Inc. (a)
|
62,500
|
3,305,625
|
2.27
|
%
|
||||||||
Best Buy Co., Inc.
|
30,700
|
2,760,851
|
1.89
|
%
|
||||||||
Darden Restaurants, Inc.
|
23,400
|
3,082,482
|
2.11
|
%
|
||||||||
DR Horton, Inc.
|
36,600
|
2,546,994
|
1.75
|
%
|
||||||||
NVR, Inc. (a)
|
600
|
2,625,726
|
1.80
|
%
|
||||||||
PulteGroup, Inc.
|
64,400
|
2,689,344
|
1.84
|
%
|
||||||||
Tapestry, Inc.
|
81,400
|
2,679,688
|
1.84
|
%
|
||||||||
Target Corp.
|
13,800
|
3,155,370
|
2.16
|
%
|
||||||||
Williams-Sonoma, Inc.
|
19,000
|
2,479,120
|
1.70
|
%
|
||||||||
|
25,325,200
|
17.36
|
%
|
|||||||||
Consumer Staples – 2.24%
|
||||||||||||
Philip Morris International, Inc.
|
32,700
|
3,270,000
|
2.24
|
%
|
||||||||
Energy – 2.17%
|
||||||||||||
APA Corp.
|
77,300
|
3,163,889
|
2.17
|
%
|
||||||||
Financials – 10.16%
|
||||||||||||
Ameriprise Financial, Inc.
|
10,200
|
2,707,998
|
1.86
|
%
|
||||||||
Cincinnati Financial Corp.
|
23,000
|
2,821,180
|
1.93
|
%
|
||||||||
Coinbase Global, Inc. (a)
|
17,200
|
1,938,612
|
1.33
|
%
|
||||||||
Fidelity National Financial, Inc.
|
61,900
|
2,464,858
|
1.69
|
%
|
||||||||
T. Rowe Price Group, Inc.
|
20,700
|
2,546,928
|
1.74
|
%
|
||||||||
The Carlyle Group, Inc.
|
64,600
|
2,344,334
|
1.61
|
%
|
||||||||
|
14,823,910
|
10.16
|
%
|
|||||||||
Health Care – 15.59%
|
||||||||||||
AbbVie, Inc.
|
19,200
|
2,820,096
|
1.93
|
%
|
||||||||
AmerisourceBergen Corp.
|
20,000
|
3,025,800
|
2.07
|
%
|
||||||||
Cardinal Health, Inc.
|
53,300
|
3,094,065
|
2.12
|
%
|
||||||||
Gilead Sciences, Inc.
|
51,500
|
3,056,010
|
2.10
|
%
|
||||||||
HCA Healthcare, Inc.
|
11,400
|
2,445,870
|
1.68
|
%
|
||||||||
Hologic, Inc. (a)
|
41,200
|
2,965,988
|
2.03
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Health Care (Continued)
|
||||||||||||
Moderna, Inc. (a)
|
18,100
|
$
|
2,432,821
|
1.67
|
%
|
|||||||
Regeneron Pharmaceuticals, Inc. (a)
|
4,400
|
2,900,084
|
1.99
|
%
|
||||||||
|
22,740,734
|
15.59
|
%
|
|||||||||
Industrials – 17.58%
|
||||||||||||
3M Co.
|
20,600
|
2,970,932
|
2.04
|
%
|
||||||||
Avis Budget Group, Inc. (a)
|
10,200
|
2,730,234
|
1.87
|
%
|
||||||||
Builders FirstSource, Inc. (a)
|
39,600
|
2,438,172
|
1.67
|
%
|
||||||||
C.H. Robinson Worldwide, Inc.
|
29,300
|
3,110,195
|
2.13
|
%
|
||||||||
Caterpillar, Inc.
|
13,700
|
2,884,398
|
1.98
|
%
|
||||||||
Expeditors International of Washington, Inc.
|
28,800
|
2,853,216
|
1.95
|
%
|
||||||||
Northrop Grumman Corp.
|
7,100
|
3,119,740
|
2.14
|
%
|
||||||||
Snap-on, Inc.
|
14,500
|
3,081,105
|
2.11
|
%
|
||||||||
United Parcel Service, Inc., Class B
|
13,700
|
2,465,726
|
1.69
|
%
|
||||||||
|
25,653,718
|
17.58
|
%
|
|||||||||
Information Technology – 7.99%
|
||||||||||||
HP, Inc.
|
88,400
|
3,238,092
|
2.22
|
%
|
||||||||
Lam Research Corp.
|
5,800
|
2,701,408
|
1.85
|
%
|
||||||||
NortonLifeLock, Inc.
|
117,500
|
2,942,200
|
2.02
|
%
|
||||||||
QUALCOMM, Inc.
|
19,900
|
2,779,831
|
1.90
|
%
|
||||||||
|
11,661,531
|
7.99
|
%
|
|||||||||
Materials – 20.75%
|
||||||||||||
Alcoa Corp.
|
37,800
|
2,562,840
|
1.76
|
%
|
||||||||
Celanese Corp.
|
21,400
|
3,144,516
|
2.16
|
%
|
||||||||
CF Industries Holdings, Inc.
|
33,100
|
3,205,073
|
2.20
|
%
|
||||||||
Cleveland-Cliffs, Inc. (a)
|
111,000
|
2,829,390
|
1.94
|
%
|
||||||||
Dow, Inc.
|
48,500
|
3,225,250
|
2.21
|
%
|
||||||||
Freeport-McMoRan, Inc.
|
62,700
|
2,542,485
|
1.74
|
%
|
||||||||
Nucor Corp.
|
22,600
|
3,498,028
|
2.40
|
%
|
||||||||
Reliance Steel & Aluminum Co.
|
16,000
|
3,172,000
|
2.17
|
%
|
||||||||
Sealed Air Corp.
|
44,600
|
2,863,766
|
1.96
|
%
|
||||||||
Steel Dynamics, Inc.
|
37,600
|
3,224,200
|
2.21
|
%
|
||||||||
|
30,267,548
|
20.75
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $141,038,878)
|
142,779,639
|
97.87
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS –2.19%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 2.19%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (b)
|
3,188,890
|
$
|
3,188,890
|
2.19
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $3,188,890)
|
3,188,890
|
2.19
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $144,227,768) – 100.06%
|
145,968,529
|
100.06
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.06)%
|
(81,158
|
)
|
(0.06
|
)%
|
||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
145,887,371
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2022.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
5,873,109
|
$
|
—
|
$
|
—
|
$
|
5,873,109
|
||||||||
Consumer Discretionary
|
25,325,200
|
—
|
—
|
25,325,200
|
||||||||||||
Consumer Staples
|
3,270,000
|
—
|
—
|
3,270,000
|
||||||||||||
Energy
|
3,163,889
|
—
|
—
|
3,163,889
|
||||||||||||
Financials
|
14,823,910
|
—
|
—
|
14,823,910
|
||||||||||||
Health Care
|
22,740,734
|
—
|
—
|
22,740,734
|
||||||||||||
Industrials
|
25,653,718
|
—
|
—
|
25,653,718
|
||||||||||||
Information Technology
|
11,661,531
|
—
|
—
|
11,661,531
|
||||||||||||
Materials
|
30,267,548
|
—
|
—
|
30,267,548
|
||||||||||||
Total Common Stocks
|
$
|
142,779,639
|
$
|
—
|
$
|
—
|
$
|
142,779,639
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
3,188,890
|
$
|
—
|
$
|
—
|
$
|
3,188,890
|
||||||||
Total Short-Term Investments
|
$
|
3,188,890
|
$
|
—
|
$
|
—
|
$
|
3,188,890
|
||||||||
Total Investments
|
$
|
145,968,529
|
$
|
—
|
$
|
—
|
$
|
145,968,529
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $144,227,768)
|
$
|
145,968,529
|
||
Dividends and interest receivable
|
130,376
|
|||
Receivable for fund shares sold
|
2,990
|
|||
Prepaid expenses and other assets
|
22,164
|
|||
Total assets
|
146,124,059
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
13,708
|
|||
Payable to advisor
|
94,375
|
|||
Payable to administrator
|
29,422
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
58,123
|
|||
Accrued service fees
|
11,239
|
|||
Accrued trustees fees
|
5,225
|
|||
Accrued expenses and other payables
|
13,368
|
|||
Total liabilities
|
236,688
|
|||
NET ASSETS
|
$
|
145,887,371
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
120,284,233
|
||
Total distributable earnings
|
25,603,138
|
|||
Total net assets
|
$
|
145,887,371
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
129,167,544
|
||
Shares issued and outstanding
|
11,002,149
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
11.74
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
16,719,827
|
||
Shares issued and outstanding
|
1,409,051
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
11.87
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
1,555,894
|
||
Interest income
|
745
|
|||
Total investment income
|
1,556,639
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
584,417
|
|||
Distribution fees – Investor Class (See Note 5)
|
104,820
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
91,386
|
|||
Service fees – Investor Class (See Note 5)
|
69,880
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
59,359
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
2,274
|
|||
Federal and state registration fees
|
20,106
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Trustees’ fees and expenses
|
9,686
|
|||
Reports to shareholders
|
4,975
|
|||
Legal fees
|
1,081
|
|||
Other expenses
|
12,494
|
|||
Total expenses before recoupment by advisor
|
986,856
|
|||
Expense recoupment by advisor – Investor Class (See Note 5)
|
3,336
|
|||
Expense recoupment by advisor – Institutional Class (See Note 5)
|
611
|
|||
Net expenses
|
990,803
|
|||
NET INVESTMENT INCOME
|
$
|
565,836
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
23,328,392
|
||
Net change in unrealized appreciation/depreciation on investments
|
(33,456,663
|
)
|
||
Net loss on investments
|
(10,128,271
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(9,562,435
|
)
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
565,836
|
$
|
1,077,347
|
||||
Net realized gain on investments
|
23,328,392
|
23,137,704
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(33,456,663
|
)
|
30,012,110
|
|||||
Net increase (decrease) in net
|
||||||||
assets resulting from operations
|
(9,562,435
|
)
|
54,227,161
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(18,524,443
|
)
|
(5,878,284
|
)
|
||||
Distributable earnings – Institutional Class
|
(2,507,385
|
)
|
(758,549
|
)
|
||||
Total distributions
|
(21,031,828
|
)
|
(6,636,833
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
3,230,696
|
8,018,607
|
||||||
Proceeds from shares subscribed – Institutional Class
|
1,231,390
|
16,491,311
|
||||||
Dividends reinvested – Investor Class
|
17,953,867
|
5,574,991
|
||||||
Dividends reinvested – Institutional Class
|
2,397,570
|
740,220
|
||||||
Cost of shares redeemed – Investor Class
|
(8,151,378
|
)
|
(15,731,261
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(1,688,824
|
)
|
(16,883,651
|
)
|
||||
Net increase (decrease) in net assets
|
||||||||
derived from capital share transactions
|
14,973,321
|
(1,789,783
|
)
|
|||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(15,620,942
|
)
|
45,800,545
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
161,508,313
|
115,707,768
|
||||||
End of period
|
$
|
145,887,371
|
$
|
161,508,313
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
256,710
|
592,099
|
||||||
Shares sold – Institutional Class
|
90,289
|
1,203,797
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
1,400,177
|
501,827
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
184,777
|
65,913
|
||||||
Shares redeemed – Investor Class
|
(628,849
|
)
|
(1,214,696
|
)
|
||||
Shares redeemed – Institutional Class
|
(133,662
|
)
|
(1,221,754
|
)
|
||||
Net increase (decrease) in shares outstanding
|
1,169,442
|
(72,814
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
14.35
|
||
Income from investment operations:
|
||||
Net investment income
|
0.04
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.79
|
)
|
||
Total from investment operations
|
(0.75
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.08
|
)
|
||
Dividends from net realized gains
|
(1.78
|
)
|
||
Total distributions
|
(1.86
|
)
|
||
Net asset value, end of period
|
$
|
11.74
|
||
TOTAL RETURN
|
-6.21
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
129.17
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement/recoupment
|
1.29
|
%(3)
|
||
After expense reimbursement/recoupment
|
1.29
|
%(3)
|
||
Ratio of net investment income to average net assets:
|
||||
Before expense reimbursement/recoupment
|
0.69
|
%(3)
|
||
After expense reimbursement/recoupment
|
0.69
|
%(3)
|
||
Portfolio turnover rate(5)
|
71
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
The Fund had an expense limitation agreement in place through November 30, 2019.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
10.21
|
$
|
10.54
|
$
|
12.24
|
$
|
11.75
|
$
|
10.27
|
|||||||||
0.09
|
(1)
|
0.09
|
(1)
|
0.13
|
(1)
|
0.06
|
0.11
|
|||||||||||
4.64
|
(0.15
|
)
|
0.56
|
0.94
|
1.49
|
|||||||||||||
4.73
|
(0.06
|
)
|
0.69
|
1.00
|
1.60
|
|||||||||||||
(0.10
|
)
|
(0.14
|
)
|
(0.09
|
)
|
(0.08
|
)
|
(0.12
|
)
|
|||||||||
(0.49
|
)
|
(0.13
|
)
|
(2.30
|
)
|
(0.43
|
)
|
—
|
||||||||||
(0.59
|
)
|
(0.27
|
)
|
(2.39
|
)
|
(0.51
|
)
|
(0.12
|
)
|
|||||||||
$
|
14.35
|
$
|
10.21
|
$
|
10.54
|
$
|
12.24
|
$
|
11.75
|
|||||||||
48.00
|
%
|
-0.75
|
%
|
7.84
|
%
|
8.53
|
%
|
15.70
|
%
|
|||||||||
$
|
143.11
|
$
|
103.11
|
$
|
117.62
|
$
|
125.91
|
$
|
91.74
|
|||||||||
1.29
|
%
|
1.31
|
%
|
1.31
|
%
|
1.24
|
%
|
1.25
|
%
|
|||||||||
1.29
|
%
|
1.31
|
%(4)
|
1.29
|
%
|
1.24
|
%
|
1.25
|
%
|
|||||||||
0.69
|
%
|
0.93
|
%
|
1.24
|
%
|
0.81
|
%
|
0.95
|
%
|
|||||||||
0.69
|
%
|
0.93
|
%
|
1.26
|
%
|
0.81
|
%
|
0.95
|
%
|
|||||||||
68
|
%
|
62
|
%
|
57
|
%
|
70
|
%
|
65
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
14.51
|
||
Income from investment operations:
|
||||
Net investment income
|
0.06
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(0.79
|
)
|
||
Total from investment operations
|
(0.73
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.11
|
)
|
||
Dividends from net realized gains
|
(1.80
|
)
|
||
Total distributions
|
(1.91
|
)
|
||
Net asset value, end of period
|
$
|
11.87
|
||
TOTAL RETURN
|
-6.03
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
16.72
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement/recoupment
|
0.98
|
%(3)
|
||
After expense reimbursement/recoupment
|
0.98
|
%(3)
|
||
Ratio of net investment income to average net assets:
|
||||
Before expense reimbursement/recoupment
|
0.99
|
%(3)
|
||
After expense reimbursement/recoupment
|
0.99
|
%(3)
|
||
Portfolio turnover rate(5)
|
71
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
The Fund had an expense limitation agreement in place through November 30, 2019.
|
(5)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
10.33
|
$
|
10.65
|
$
|
12.38
|
$
|
11.87
|
$
|
10.37
|
|||||||||
0.12
|
(1)
|
0.13
|
(1)
|
0.16
|
(1)
|
0.14
|
0.13
|
|||||||||||
4.68
|
(0.15
|
)
|
0.56
|
0.90
|
1.52
|
|||||||||||||
4.80
|
(0.02
|
)
|
0.72
|
1.04
|
1.65
|
|||||||||||||
(0.13
|
)
|
(0.17
|
)
|
(0.12
|
)
|
(0.10
|
)
|
(0.15
|
)
|
|||||||||
(0.49
|
)
|
(0.13
|
)
|
(2.33
|
)
|
(0.43
|
)
|
—
|
||||||||||
(0.62
|
)
|
(0.30
|
)
|
(2.45
|
)
|
(0.53
|
)
|
(0.15
|
)
|
|||||||||
$
|
14.51
|
$
|
10.33
|
$
|
10.65
|
$
|
12.38
|
$
|
11.87
|
|||||||||
48.30
|
%
|
-0.40
|
%
|
8.12
|
%
|
8.82
|
%
|
16.00
|
%
|
|||||||||
$
|
18.39
|
$
|
12.60
|
$
|
18.42
|
$
|
19.25
|
$
|
12.17
|
|||||||||
1.04
|
%
|
1.01
|
%
|
1.00
|
%
|
0.96
|
%
|
1.00
|
%
|
|||||||||
1.04
|
%
|
1.01
|
%(4)
|
0.98
|
%
|
0.96
|
%
|
1.00
|
%
|
|||||||||
0.91
|
%
|
1.23
|
%
|
1.56
|
%
|
1.08
|
%
|
1.20
|
%
|
|||||||||
0.91
|
%
|
1.23
|
%
|
1.58
|
%
|
1.08
|
%
|
1.20
|
%
|
|||||||||
68
|
%
|
62
|
%
|
57
|
%
|
70
|
%
|
65
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a corresponding increase or
decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered investment
companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and requires funds
whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required to comply with Rule 18f-4 by
August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully
implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5 establishes
requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards
|
HENNESSY FUNDS
|
1-800-966-4354
|
to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes
of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including
with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the potential impact of the
new rules on the Fund’s financial statements.
|
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 generally are 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”) generally are 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 generally are 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 are 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 for equity securities. 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 exceeds 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
|
Fiscal Year
|
Fiscal Year
|
|||||||||||
2022
|
2023
|
Total
|
||||||||||
Investor Class
|
$
|
12,258
|
$
|
—
|
$
|
12,258
|
||||||
Institutional Class
|
$
|
2,261
|
$
|
162
|
$
|
2,423
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
126,550,944
|
||
Gross tax unrealized appreciation
|
$
|
37,333,974
|
||
Gross tax unrealized depreciation
|
(2,168,152
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
35,165,822
|
||
Undistributed ordinary income
|
$
|
1,496,191
|
||
Undistributed long-term capital gains
|
19,535,388
|
|||
Total distributable earnings
|
$
|
21,031,579
|
||
Other accumulated gain/(loss)
|
$
|
—
|
||
Total accumulated gain/(loss)
|
$
|
56,197,401
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
1,496,384
|
$
|
1,164,101
|
|||||
Long-term capital gains
|
19,535,444
|
5,472,732
|
|||||||
Total distributions
|
$
|
21,031,828
|
$
|
6,636,833
|
(1) Ordinary income includes short-term capital gains.
|
WWW.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, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 937.90
|
$6.20
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.40
|
$6.46
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 939.70
|
$4.71
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.93
|
$4.91
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.29% for Investor Class shares or 0.98% for Institutional Class shares, as applicable, multiplied by the average account value over the period,
multiplied by 181/365 days (to reflect the half-year period).
|
WWW.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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
WWW.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 and an assessment of the Advisor’s performance, the Trustees concluded that the Advisor provides
high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics, as appropriate),
conducts on-site visits to the Fund’s service providers, as feasible, 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 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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred to manage the
Fund are variable
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as the Fund’s
assets grow.
|
||
(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 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 Agreement
|
27
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Cornerstone Value Fund –
|
||||
Investor Class (HFCVX)
|
7.88%
|
13.99%
|
9.50%
|
10.00%
|
Hennessy Cornerstone Value Fund –
|
||||
Institutional Class (HICVX)
|
8.01%
|
14.24%
|
9.74%
|
10.22%
|
Russell 1000® Value Index
|
-3.94%
|
1.32%
|
9.06%
|
11.17%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
13.67%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
The Kraft Heinz Co.
|
2.30%
|
General Mills, Inc.
|
2.29%
|
Merck & Co., Inc.
|
2.27%
|
Suncor Energy, Inc.
|
2.25%
|
Marathon Petroleum Corp.
|
2.21%
|
Altria Group, Inc.
|
2.16%
|
Philip Morris International, Inc.
|
2.16%
|
The Coca-Cola Co.
|
2.16%
|
Bristol-Myers Squibb Co.
|
2.15%
|
GlaxoSmithKline PLC – ADR
|
2.15%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 98.50%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 7.50%
|
||||||||||||
AT&T, Inc.
|
256,460
|
$
|
4,836,836
|
1.65
|
%
|
|||||||
BCE, Inc. – ADR (b)
|
109,900
|
5,843,383
|
2.00
|
%
|
||||||||
Paramount Global
|
163,200
|
4,752,384
|
1.62
|
%
|
||||||||
Verizon Communications, Inc.
|
116,200
|
5,380,060
|
1.84
|
%
|
||||||||
Warner Bros. Discovery, Inc. (a)
|
62,042
|
1,126,062
|
0.39
|
%
|
||||||||
|
21,938,725
|
7.50
|
%
|
|||||||||
Consumer Staples – 21.25%
|
||||||||||||
Altria Group, Inc.
|
113,700
|
6,318,309
|
2.16
|
%
|
||||||||
British American Tobacco PLC – ADR (b)
|
141,900
|
5,928,582
|
2.03
|
%
|
||||||||
Colgate-Palmolive Co.
|
80,100
|
6,171,705
|
2.11
|
%
|
||||||||
General Mills, Inc.
|
94,600
|
6,691,058
|
2.29
|
%
|
||||||||
PepsiCo, Inc.
|
36,500
|
6,267,415
|
2.14
|
%
|
||||||||
Philip Morris International, Inc.
|
63,100
|
6,310,000
|
2.16
|
%
|
||||||||
The Coca-Cola Co.
|
98,100
|
6,338,241
|
2.16
|
%
|
||||||||
The Kraft Heinz Co.
|
157,900
|
6,731,277
|
2.30
|
%
|
||||||||
Unilever PLC – ADR (b)
|
131,800
|
6,097,068
|
2.08
|
%
|
||||||||
Walgreens Boots Alliance, Inc.
|
125,400
|
5,316,960
|
1.82
|
%
|
||||||||
|
62,170,615
|
21.25
|
%
|
|||||||||
Energy – 20.17%
|
||||||||||||
BP PLC – ADR (b)
|
199,300
|
5,723,896
|
1.96
|
%
|
||||||||
Canadian Natural Resources Ltd. (b)
|
94,900
|
5,871,463
|
2.01
|
%
|
||||||||
Chevron Corp.
|
36,075
|
5,651,870
|
1.93
|
%
|
||||||||
ConocoPhillips
|
57,800
|
5,521,056
|
1.89
|
%
|
||||||||
Devon Energy Corp.
|
96,700
|
5,625,039
|
1.92
|
%
|
||||||||
EOG Resources, Inc.
|
48,500
|
5,662,860
|
1.93
|
%
|
||||||||
Exxon Mobil Corp.
|
72,310
|
6,164,428
|
2.11
|
%
|
||||||||
Marathon Petroleum Corp.
|
74,300
|
6,483,418
|
2.21
|
%
|
||||||||
Suncor Energy, Inc. (b)
|
183,000
|
6,577,020
|
2.25
|
%
|
||||||||
TotalEnergies SE – ADR (b)
|
118,100
|
5,752,651
|
1.96
|
%
|
||||||||
|
59,033,701
|
20.17
|
%
|
|||||||||
Financials – 16.16%
|
||||||||||||
Aflac, Inc.
|
93,700
|
5,367,136
|
1.83
|
%
|
||||||||
Citigroup, Inc.
|
104,300
|
5,028,303
|
1.72
|
%
|
||||||||
JPMorgan Chase & Co.
|
42,500
|
5,072,800
|
1.73
|
%
|
||||||||
Manulife Financial Corp. (b)
|
288,900
|
5,650,884
|
1.93
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials (Continued)
|
||||||||||||
MetLife, Inc.
|
86,400
|
$
|
5,674,752
|
1.94
|
%
|
|||||||
Morgan Stanley
|
64,100
|
5,165,819
|
1.77
|
%
|
||||||||
Royal Bank of Canada (b)
|
52,400
|
5,293,972
|
1.81
|
%
|
||||||||
The Bank of New York Mellon Corp.
|
113,800
|
4,786,428
|
1.64
|
%
|
||||||||
The Toronto-Dominion Bank (b)
|
72,700
|
5,251,848
|
1.79
|
%
|
||||||||
|
47,291,942
|
16.16
|
%
|
|||||||||
Health Care – 14.29%
|
||||||||||||
AbbVie, Inc.
|
37,100
|
5,449,248
|
1.86
|
%
|
||||||||
Amgen, Inc.
|
25,100
|
5,853,069
|
2.00
|
%
|
||||||||
Bristol-Myers Squibb Co.
|
83,600
|
6,292,572
|
2.15
|
%
|
||||||||
Gilead Sciences, Inc.
|
99,600
|
5,910,264
|
2.02
|
%
|
||||||||
GlaxoSmithKline PLC – ADR (b)
|
138,700
|
6,280,336
|
2.15
|
%
|
||||||||
Merck & Co., Inc.
|
75,100
|
6,660,619
|
2.27
|
%
|
||||||||
Pfizer, Inc.
|
109,600
|
5,378,072
|
1.84
|
%
|
||||||||
|
41,824,180
|
14.29
|
%
|
|||||||||
Industrials – 3.64%
|
||||||||||||
3M Co.
|
40,000
|
5,768,800
|
1.97
|
%
|
||||||||
United Parcel Service, Inc., Class B
|
27,200
|
4,895,456
|
1.67
|
%
|
||||||||
|
10,664,256
|
3.64
|
%
|
|||||||||
Information Technology – 13.36%
|
||||||||||||
Cisco Systems, Inc.
|
106,100
|
5,196,778
|
1.78
|
%
|
||||||||
Corning, Inc.
|
157,200
|
5,531,868
|
1.89
|
%
|
||||||||
Hewlett Packard Enterprise Co.
|
348,400
|
5,368,844
|
1.83
|
%
|
||||||||
HP, Inc.
|
158,200
|
5,794,866
|
1.98
|
%
|
||||||||
Intel Corp.
|
125,300
|
5,461,827
|
1.87
|
%
|
||||||||
International Business Machines Corp.
|
46,400
|
6,134,544
|
2.10
|
%
|
||||||||
Texas Instruments, Inc.
|
32,900
|
5,601,225
|
1.91
|
%
|
||||||||
|
39,089,952
|
13.36
|
%
|
|||||||||
Materials – 2.13%
|
||||||||||||
Dow, Inc.
|
93,800
|
6,237,700
|
2.13
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $261,165,666)
|
288,251,071
|
98.50
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 1.36%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.36%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (c)
|
3,975,097
|
$
|
3,975,097
|
1.36
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $3,975,097)
|
3,975,097
|
1.36
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $265,140,763) – 99.86%
|
292,226,168
|
99.86
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.14%
|
405,405
|
0.14
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
292,631,573
|
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, 2022.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
21,938,725
|
$
|
—
|
$
|
—
|
$
|
21,938,725
|
||||||||
Consumer Staples
|
62,170,615
|
—
|
—
|
62,170,615
|
||||||||||||
Energy
|
59,033,701
|
—
|
—
|
59,033,701
|
||||||||||||
Financials
|
47,291,942
|
—
|
—
|
47,291,942
|
||||||||||||
Health Care
|
41,824,180
|
—
|
—
|
41,824,180
|
||||||||||||
Industrials
|
10,664,256
|
—
|
—
|
10,664,256
|
||||||||||||
Information Technology
|
39,089,952
|
—
|
—
|
39,089,952
|
||||||||||||
Materials
|
6,237,700
|
—
|
—
|
6,237,700
|
||||||||||||
Total Common Stocks
|
$
|
288,251,071
|
$
|
—
|
$
|
—
|
$
|
288,251,071
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
3,975,097
|
$
|
—
|
$
|
—
|
$
|
3,975,097
|
||||||||
Total Short-Term Investments
|
$
|
3,975,097
|
$
|
—
|
$
|
—
|
$
|
3,975,097
|
||||||||
Total Investments
|
$
|
292,226,168
|
$
|
—
|
$
|
—
|
$
|
292,226,168
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $265,140,763)
|
$
|
292,226,168
|
||
Dividends and interest receivable
|
693,483
|
|||
Dividend tax reclaim receivable
|
48,220
|
|||
Receivable for fund shares sold
|
57,981
|
|||
Prepaid expenses and other assets
|
22,459
|
|||
Total assets
|
293,048,311
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
20,660
|
|||
Payable to advisor
|
184,653
|
|||
Payable to administrator
|
54,320
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
105,719
|
|||
Accrued service fees
|
22,989
|
|||
Accrued trustees fees
|
4,488
|
|||
Accrued expenses and other payables
|
12,681
|
|||
Total liabilities
|
416,738
|
|||
NET ASSETS
|
$
|
292,631,573
|
||
NET ASSETS CONSIST OF:
|
||||
Capital stock
|
$
|
241,529,381
|
||
Total distributable earnings
|
51,102,192
|
|||
Total net assets
|
$
|
292,631,573
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
270,087,979
|
||
Shares issued and outstanding
|
13,401,127
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
20.15
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
22,543,594
|
||
Shares issued and outstanding
|
1,117,501
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
20.17
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
5,413,088
|
||
Interest income
|
1,511
|
|||
Total investment income
|
5,414,599
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
1,037,676
|
|||
Distribution fees – Investor Class (See Note 5)
|
200,094
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
158,085
|
|||
Service fees – Investor Class (See Note 5)
|
133,396
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
85,552
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
4,098
|
|||
Federal and state registration fees
|
15,463
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Trustees’ fees and expenses
|
10,611
|
|||
Reports to shareholders
|
6,604
|
|||
Legal fees
|
1,707
|
|||
Other expenses
|
18,922
|
|||
Total expenses
|
1,698,586
|
|||
NET INVESTMENT INCOME
|
$
|
3,716,013
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
22,745,803
|
||
Net change in unrealized appreciation/depreciation on investments
|
(6,415,658
|
)
|
||
Net gain on investments
|
16,330,145
|
|||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
20,046,158
|
(1)
|
Net of foreign taxes withheld and issuance fees of $193,532.
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
3,716,013
|
$
|
5,989,743
|
||||
Net realized gain on investments
|
22,745,803
|
5,839,377
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(6,415,658
|
)
|
75,931,568
|
|||||
Net increase in net assets resulting from operations
|
20,046,158
|
87,760,688
|
||||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(12,280,194
|
)
|
(5,556,028
|
)
|
||||
Distributable earnings – Institutional Class
|
(284,427
|
)
|
(127,258
|
)
|
||||
Total distributions
|
(12,564,621
|
)
|
(5,683,286
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
5,460,363
|
1,114,552
|
||||||
Proceeds from shares subscribed – Institutional Class
|
19,824,898
|
578,755
|
||||||
Dividends reinvested – Investor Class
|
11,605,966
|
5,201,166
|
||||||
Dividends reinvested – Institutional Class
|
250,047
|
108,613
|
||||||
Cost of shares redeemed – Investor Class
|
(8,831,654
|
)
|
(21,989,301
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(2,880,770
|
)
|
(1,257,956
|
)
|
||||
Net increase (decrease) in net assets derived
|
||||||||
from capital share transactions
|
25,428,850
|
(16,244,171
|
)
|
|||||
TOTAL INCREASE IN NET ASSETS
|
32,910,387
|
65,833,231
|
||||||
NET ASSETS:
|
||||||||
Beginning of period
|
259,721,186
|
193,887,955
|
||||||
End of period
|
$
|
292,631,573
|
$
|
259,721,186
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
266,780
|
62,162
|
||||||
Shares sold – Institutional Class
|
963,080
|
32,026
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
593,351
|
331,073
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
12,767
|
6,909
|
||||||
Shares redeemed – Investor Class
|
(438,892
|
)
|
(1,262,841
|
)
|
||||
Shares redeemed – Institutional Class
|
(138,363
|
)
|
(71,863
|
)
|
||||
Net increase (decrease) in shares outstanding
|
1,258,723
|
(902,534
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
19.59
|
||
Income from investment operations:
|
||||
Net investment income
|
0.26
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
1.24
|
|||
Total from investment operations
|
1.50
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(0.51
|
)
|
||
Dividends from net realized gains
|
(0.43
|
)
|
||
Total distributions
|
(0.94
|
)
|
||
Net asset value, end of period
|
$
|
20.15
|
||
TOTAL RETURN
|
7.88
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
270.09
|
||
Ratio of expenses to average net assets
|
1.22
|
%(3)
|
||
Ratio of net investment income to average net assets
|
2.65
|
%(3)
|
||
Portfolio turnover rate(4)
|
35
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
13.69
|
$
|
17.43
|
$
|
19.29
|
$
|
21.48
|
$
|
18.36
|
|||||||||
0.44
|
(1)
|
0.41
|
(1)
|
0.47
|
(1)
|
0.41
|
0.45
|
|||||||||||
5.87
|
(3.01
|
)
|
0.30
|
0.35
|
3.10
|
|||||||||||||
6.31
|
(2.60
|
)
|
0.77
|
0.76
|
3.55
|
|||||||||||||
(0.41
|
)
|
(0.47
|
)
|
(0.41
|
)
|
(0.42
|
)
|
(0.43
|
)
|
|||||||||
—
|
(0.67
|
)
|
(2.22
|
)
|
(2.53
|
)
|
—
|
|||||||||||
(0.41
|
)
|
(1.14
|
)
|
(2.63
|
)
|
(2.95
|
)
|
(0.43
|
)
|
|||||||||
$
|
19.59
|
$
|
13.69
|
$
|
17.43
|
$
|
19.29
|
$
|
21.48
|
|||||||||
46.82
|
%
|
-16.22
|
%
|
5.22
|
%
|
3.64
|
%
|
19.63
|
%
|
|||||||||
$
|
254.23
|
$
|
189.60
|
$
|
253.95
|
$
|
266.76
|
$
|
281.07
|
|||||||||
1.23
|
%
|
1.30
|
%
|
1.23
|
%
|
1.21
|
%
|
1.22
|
%
|
|||||||||
2.43
|
%
|
2.71
|
%
|
2.75
|
%
|
2.21
|
%
|
2.36
|
%
|
|||||||||
41
|
%
|
32
|
%
|
27
|
%
|
41
|
%
|
72
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
19.63
|
||
Income from investment operations:
|
||||
Net investment income
|
0.28
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
1.25
|
|||
Total from investment operations
|
1.53
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(0.56
|
)
|
||
Dividends from net realized gains
|
(0.43
|
)
|
||
Total distributions
|
(0.99
|
)
|
||
Net asset value, end of period
|
$
|
20.17
|
||
TOTAL RETURN
|
8.01
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
22.54
|
||
Ratio of expenses to average net assets
|
0.98
|
%(3)
|
||
Ratio of net investment income to average net assets
|
2.72
|
%(3)
|
||
Portfolio turnover rate(4)
|
35
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
13.71
|
$
|
17.45
|
$
|
19.33
|
$
|
21.52
|
$
|
18.40
|
|||||||||
0.48
|
(1)
|
0.44
|
(1)
|
0.50
|
(1)
|
0.45
|
0.43
|
|||||||||||
5.88
|
(3.01
|
)
|
0.29
|
0.35
|
3.18
|
|||||||||||||
6.36
|
(2.57
|
)
|
0.79
|
0.80
|
3.61
|
|||||||||||||
(0.44
|
)
|
(0.49
|
)
|
(0.45
|
)
|
(0.46
|
)
|
(0.49
|
)
|
|||||||||
—
|
(0.68
|
)
|
(2.22
|
)
|
(2.53
|
)
|
—
|
|||||||||||
(0.44
|
)
|
(1.17
|
)
|
(2.67
|
)
|
(2.99
|
)
|
(0.49
|
)
|
|||||||||
$
|
19.63
|
$
|
13.71
|
$
|
17.45
|
$
|
19.33
|
$
|
21.52
|
|||||||||
47.19
|
%
|
-16.06
|
%
|
5.37
|
%
|
3.88
|
%
|
19.95
|
%
|
|||||||||
$
|
5.50
|
$
|
4.29
|
$
|
6.44
|
$
|
7.22
|
$
|
7.40
|
|||||||||
0.99
|
%
|
1.08
|
%
|
1.08
|
%
|
0.98
|
%
|
0.97
|
%
|
|||||||||
2.67
|
%
|
2.94
|
%
|
2.92
|
%
|
2.43
|
%
|
2.60
|
%
|
|||||||||
41
|
%
|
32
|
%
|
27
|
%
|
41
|
%
|
72
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax jurisdictions and concluded that there is no impact on the Fund’s net assets and no
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a corresponding
increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered investment
companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and requires
funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required to comply with Rule
18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential impact of Rule 18f-4 on the Fund.
When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
HENNESSY FUNDS
|
1-800-966-4354
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5 establishes requirements for determining fair value in
good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions. Rule 2a-5 also defines when market
quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and
is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with the rules by September 8, 2022.
Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”) generally are 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 generally are 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 are 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 for equity securities. 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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
226,781,886
|
|||
Gross tax unrealized appreciation
|
$
|
43,586,393
|
|||
Gross tax unrealized depreciation
|
(10,784,596
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
32,801,797
|
|||
Undistributed ordinary income
|
$
|
5,163,173
|
|||
Undistributed long-term capital gains
|
5,655,685
|
||||
Total distributable earnings
|
$
|
10,818,858
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
43,620,655
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
6,908,914
|
$
|
5,683,286
|
|||||
Long-term capital gains
|
5,655,707
|
—
|
|||||||
Total distributions
|
$
|
12,564,621
|
$
|
5,683,286
|
(1) Ordinary income includes short-term capital gains.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$1,078.80
|
$6.29
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.74
|
$6.11
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$1,080.10
|
$5.05
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.93
|
$4.91
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.22% for Investor Class shares or 0.98% for Institutional Class shares, as applicable, multiplied by the average account value over the
period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
|
|
|
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded that the Advisor
provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics, as
appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred to manage
the Fund are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as the Fund’s
assets grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
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
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Total Return
|
||||
Fund (HDOGX)
|
3.17%
|
3.40%
|
5.74%
|
6.94%
|
75/25 Blended DJIA/Treasury Index
|
-5.24%
|
-0.45%
|
9.43%
|
9.39%
|
Dow Jones Industrial Average
|
-7.05%
|
-0.82%
|
11.96%
|
12.20%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
U.S. Treasury Bill, 0.785%, 07/14/2022
|
27.96%
|
U.S. Treasury Bill, 0.290%, 05/12/2022
|
22.40%
|
U.S. Treasury Bill, 0.450%, 06/16/2022
|
22.40%
|
Chevron Corp.
|
9.04%
|
Dow, Inc.
|
7.83%
|
Merck & Co., Inc.
|
7.70%
|
The Coca-Cola Co.
|
7.51%
|
Amgen, Inc.
|
7.36%
|
International Business Machines Corp.
|
7.18%
|
Verizon Communications, Inc.
|
6.10%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 69.80%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 6.10%
|
||||||||||||
Verizon Communications, Inc.
|
70,600
|
$
|
3,268,780
|
6.10
|
%
|
|||||||
Consumer Staples – 13.27%
|
||||||||||||
The Coca-Cola Co.
|
62,200
|
4,018,742
|
7.51
|
%
|
||||||||
Walgreens Boots Alliance, Inc.
|
72,800
|
3,086,720
|
5.76
|
%
|
||||||||
|
7,105,462
|
13.27
|
%
|
|||||||||
Energy – 9.04%
|
||||||||||||
Chevron Corp.
|
30,900
|
4,841,103
|
9.04
|
%
|
||||||||
Financials – 2.34%
|
||||||||||||
JPMorgan Chase & Co.
|
10,500
|
1,253,280
|
2.34
|
%
|
||||||||
Health Care – 15.06%
|
||||||||||||
Amgen, Inc.
|
16,900
|
3,940,911
|
7.36
|
%
|
||||||||
Merck & Co., Inc.
|
46,500
|
4,124,085
|
7.70
|
%
|
||||||||
|
8,064,996
|
15.06
|
%
|
|||||||||
Industrials – 5.60%
|
||||||||||||
3M Co.
|
20,800
|
2,999,776
|
5.60
|
%
|
||||||||
Information Technology – 10.56%
|
||||||||||||
Cisco Systems, Inc.
|
1,900
|
93,062
|
0.18
|
%
|
||||||||
Intel Corp.
|
39,300
|
1,713,087
|
3.20
|
%
|
||||||||
International Business Machines Corp.
|
29,100
|
3,847,311
|
7.18
|
%
|
||||||||
|
5,653,460
|
10.56
|
%
|
|||||||||
Materials – 7.83%
|
||||||||||||
Dow, Inc.
|
63,100
|
4,196,150
|
7.83
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $33,461,395)
|
37,383,007
|
69.80
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 73.95%
|
Number of Shares/
|
% of
|
||||||||||
|
Par Amount
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.19%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (a)
|
635,946
|
$
|
635,946
|
1.19
|
%
|
|||||||
U.S. Treasury Bills – 72.76%
|
||||||||||||
0.290%, 05/12/2022 (b)(c)
|
12,000,000
|
11,998,937
|
22.40
|
%
|
||||||||
0.450%, 06/16/2022 (b)(c)
|
12,000,000
|
11,994,480
|
22.40
|
%
|
||||||||
0.785%, 07/14/2022 (b)(c)
|
15,000,000
|
14,976,457
|
27.96
|
%
|
||||||||
|
38,969,874
|
72.76
|
%
|
|||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $39,607,009)
|
39,605,820
|
73.95
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $73,068,404) – 143.75%
|
76,988,827
|
143.75
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (43.75)%
|
(23,432,104
|
)
|
(43.75
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
53,556,723
|
100.00
|
%
|
(a)
|
The rate listed is the fund’s seven-day yield as of April 30, 2022.
|
(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 $25,979,918.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
3,268,780
|
$
|
—
|
$
|
—
|
$
|
3,268,780
|
||||||||
Consumer Staples
|
7,105,462
|
—
|
—
|
7,105,462
|
||||||||||||
Energy
|
4,841,103
|
—
|
—
|
4,841,103
|
||||||||||||
Financials
|
1,253,280
|
—
|
—
|
1,253,280
|
||||||||||||
Health Care
|
8,064,996
|
—
|
—
|
8,064,996
|
||||||||||||
Industrials
|
2,999,776
|
—
|
—
|
2,999,776
|
||||||||||||
Information Technology
|
5,653,460
|
—
|
—
|
5,653,460
|
||||||||||||
Materials
|
4,196,150
|
—
|
—
|
4,196,150
|
||||||||||||
Total Common Stocks
|
$
|
37,383,007
|
$
|
—
|
$
|
—
|
$
|
37,383,007
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
635,946
|
$
|
—
|
$
|
—
|
$
|
635,946
|
||||||||
U.S. Treasury Bills
|
—
|
38,969,874
|
—
|
38,969,874
|
||||||||||||
Total Short-Term Investments
|
$
|
635,946
|
$
|
38,969,874
|
$
|
—
|
$
|
39,605,820
|
||||||||
Total Investments
|
$
|
38,018,953
|
$
|
38,969,874
|
$
|
—
|
$
|
76,988,827
|
HENNESSY FUNDS
|
1-800-966-4354
|
Principal
|
Maturity
|
|||||||||||||
Face Value
|
Counterparty
|
Rate
|
Trade Date
|
Maturity Date
|
Amount
|
|||||||||
$
|
7,196,000
|
Jefferies LLC
|
0.45%
|
|
02/10/22
|
05/12/22
|
$
|
7,204,096
|
||||||
7,196,000
|
Jefferies LLC
|
0.70%
|
|
03/17/22
|
06/16/22
|
7,208,593
|
||||||||
8,995,000
|
Jefferies LLC
|
0.95%
|
|
04/14/22
|
07/14/22
|
9,016,363
|
||||||||
$
|
23,387,000
|
$
|
23,429,052
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $73,068,404)
|
$
|
76,988,827
|
||
Dividends and interest receivable
|
55,792
|
|||
Receivable for fund shares sold
|
420
|
|||
Prepaid expenses and other assets
|
9,440
|
|||
Total assets
|
77,054,479
|
|||
LIABILITIES:
|
||||
Payable to advisor
|
27,031
|
|||
Payable to administrator
|
11,221
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
28,983
|
|||
Accrued service fees
|
4,505
|
|||
Reverse repurchase agreements
|
23,387,000
|
|||
Accrued interest payable
|
17,061
|
|||
Accrued trustees fees
|
5,948
|
|||
Accrued expenses and other payables
|
4,779
|
|||
Total liabilities
|
23,497,756
|
|||
NET ASSETS
|
$
|
53,556,723
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
46,802,079
|
||
Total distributable earnings
|
6,754,644
|
|||
Total net assets
|
$
|
53,556,723
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
53,556,723
|
||
Shares issued and outstanding
|
3,859,948
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.87
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
712,102
|
||
Interest income
|
26,174
|
|||
Total investment income
|
738,276
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
161,623
|
|||
Distribution fees – Investor Class (See Note 5)
|
40,406
|
|||
Interest expense (See Notes 7 and 9)
|
38,429
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
35,110
|
|||
Service fees – Investor Class (See Note 5)
|
26,937
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
16,162
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Federal and state registration fees
|
10,126
|
|||
Trustees’ fees and expenses
|
8,766
|
|||
Reports to shareholders
|
4,070
|
|||
Legal fees
|
357
|
|||
Other expenses
|
4,598
|
|||
Total expenses
|
372,962
|
|||
NET INVESTMENT INCOME
|
$
|
365,314
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
3,139,523
|
||
Net change in unrealized appreciation/depreciation on investments
|
(1,778,144
|
)
|
||
Net gain on investments
|
1,361,379
|
|||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
1,726,693
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
365,314
|
$
|
843,922
|
||||
Net realized gain (loss) on investments
|
3,139,523
|
(185,169
|
)
|
|||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(1,778,144
|
)
|
9,981,646
|
|||||
Net increase in net assets resulting from operations
|
1,726,693
|
10,640,399
|
||||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(387,098
|
)
|
(3,994,715
|
)
|
||||
Total distributions
|
(387,098
|
)
|
(3,994,715
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
381,648
|
575,745
|
||||||
Dividends reinvested – Investor Class
|
367,698
|
3,786,662
|
||||||
Cost of shares redeemed – Investor Class
|
(2,984,784
|
)
|
(7,221,451
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(2,235,438
|
)
|
(2,859,044
|
)
|
||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(895,843
|
)
|
3,786,640
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
54,452,566
|
50,665,926
|
||||||
End of period
|
$
|
53,556,723
|
$
|
54,452,566
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
27,122
|
43,131
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
26,243
|
294,662
|
||||||
Shares redeemed – Investor Class
|
(215,853
|
)
|
(548,584
|
)
|
||||
Net decrease in shares outstanding
|
(162,488
|
)
|
(210,791
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Cash Flows for the six months ended April 30, 2022 (Unaudited)
|
Cash flows from operating activities:
|
||||
Net increase in net assets from operations
|
$
|
1,726,693
|
||
Adjustments to reconcile net increase in net assets resulting from
|
||||
operations to net cash used in operating activities:
|
||||
Payments to purchase securities
|
(7,131,584
|
)
|
||
Proceeds from sale of securities
|
9,183,542
|
|||
Net sale of short term investments
|
(1,550,046
|
)
|
||
Realized gain on investments in securities
|
(3,139,523
|
)
|
||
Net accretion of discount on securities
|
(25,862
|
)
|
||
Change in unrealized appreciation/depreciation
|
||||
on investments in securities
|
1,778,144
|
|||
(Increases) decreases in operating assets:
|
||||
Increase in dividends and interest receivable
|
(2,446
|
)
|
||
Decrease in prepaid expenses and other assets
|
1,675
|
|||
Increases (decreases) in operating liabilities:
|
||||
Decrease in payable to advisor
|
(813
|
)
|
||
Decrease in payable to administrator
|
(6,949
|
)
|
||
Decrease in payable for distribution fees
|
(3,652
|
)
|
||
Decrease in payable for service fees
|
(135
|
)
|
||
Increase in accrued interest payable
|
12,014
|
|||
Decrease in accrued audit fees
|
(11,328
|
)
|
||
Decrease in accrued trustee fees
|
(655
|
)
|
||
Decrease in other accrued expenses and payables
|
(5,105
|
)
|
||
Net cash used in operating securities
|
823,970
|
|||
Cash flows from financing activities:
|
||||
Increase in reverse repurchase agreements
|
1,799,000
|
|||
Proceeds on shares sold
|
381,264
|
|||
Payment on shares redeemed
|
(2,984,834
|
)
|
||
Distributions paid in cash, net of reinvestments
|
(19,400
|
)
|
||
Net cash provided by financing activities
|
(823,970
|
)
|
||
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
|
$
|
367,698
|
||
Cash paid for interest
|
$
|
26,415
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF CASH FLOWS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
13.54
|
||
Income from investment operations:
|
||||
Net investment income
|
0.09
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
0.34
|
|||
Total from investment operations
|
0.43
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(0.10
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.10
|
)
|
||
Net asset value, end of period
|
$
|
13.87
|
||
TOTAL RETURN
|
3.17
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
53.56
|
||
Ratio of expenses, including interest expense, to average net assets
|
1.38
|
%(3)
|
||
Ratio of net investment income to average net assets
|
1.36
|
%(3)
|
||
Portfolio turnover rate
|
19
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
11.97
|
$
|
13.98
|
$
|
13.57
|
$
|
14.66
|
$
|
13.84
|
|||||||||
0.20
|
(1)
|
0.27
|
(1)
|
0.24
|
(1)
|
0.23
|
0.20
|
|||||||||||
2.33
|
(1.99
|
)
|
0.81
|
0.43
|
1.48
|
|||||||||||||
2.53
|
(1.72
|
)
|
1.05
|
0.66
|
1.68
|
|||||||||||||
(0.20
|
)
|
(0.29
|
)
|
(0.24
|
)
|
(0.23
|
)
|
(0.20
|
)
|
|||||||||
(0.76
|
)
|
—
|
(0.40
|
)
|
(1.52
|
)
|
(0.66
|
)
|
||||||||||
(0.96
|
)
|
(0.29
|
)
|
(0.64
|
)
|
(1.75
|
)
|
(0.86
|
)
|
|||||||||
$
|
13.54
|
$
|
11.97
|
$
|
13.98
|
$
|
13.57
|
$
|
14.66
|
|||||||||
21.72
|
%
|
-12.36
|
%
|
7.93
|
%
|
4.92
|
%
|
12.56
|
%
|
|||||||||
$
|
54.45
|
$
|
50.67
|
$
|
72.94
|
$
|
71.60
|
$
|
77.75
|
|||||||||
1.35
|
%
|
1.73
|
%
|
2.31
|
%
|
1.95
|
%
|
1.57
|
%
|
|||||||||
1.52
|
%
|
2.05
|
%
|
1.74
|
%
|
1.67
|
%
|
1.38
|
%
|
|||||||||
19
|
%
|
39
|
%
|
30
|
%
|
10
|
%
|
36
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a corresponding increase or decrease, as
applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Reverse Repurchase Agreements – Transactions involving reverse repurchase agreements are treated as collateralized financing transactions and are recorded at their contracted resell or repurchase
amounts, which approximates fair value. Upon entering into a reverse repurchase agreement transaction, the Fund establishes a segregated account in which it maintains liquid assets in an amount at least equal to the repurchase
price marked to market daily (including accrued interest), and the Fund subsequently monitors the account to ensure that it maintains such equivalent value. Interest on reverse repurchase agreements is included in interest
payable.
|
As of April 30, 2022, securities with a fair value of $25,979,918, which are included in investments in securities in the
Statement of Assets and Liabilities, were pledged to collateralize reverse repurchase agreements.
|
|
j).
|
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
|
HENNESSY FUNDS
|
1-800-966-4354
|
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, 2022, please refer to the table in Note 9.
|
|
k).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered
investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and
requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required to
comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential impact of Rule
18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5
establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight and
certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule
2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund
investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 generally are 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”) generally are 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 generally are 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 are 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 for equity securities. 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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
70,431,450
|
|||
Gross tax unrealized appreciation
|
$
|
6,894,601
|
|||
Gross tax unrealized depreciation
|
(1,222,553
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
5,672,048
|
|||
Undistributed ordinary income
|
$
|
20,834
|
|||
Undistributed long-term capital gains
|
—
|
||||
Total distributable earnings
|
$
|
20,834
|
|||
Other accumulated gain/(loss)
|
$
|
(277,833
|
)
|
||
Total accumulated gain/(loss)
|
$
|
5,415,049
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
387,098
|
$
|
844,427
|
|||||
Long-term capital gains
|
—
|
3,150,288
|
|||||||
Total distributions
|
$
|
387,098
|
$
|
3,994,715
|
(1) Ordinary income includes short-term capital gains.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Maturity Date
|
Amount
|
Interest Rate
|
||
May 12, 2022
|
$7,196,000
|
0.45%
|
||
June 16, 2022
|
$7,196,000
|
0.70%
|
||
July 14, 2022
|
$8,995,000
|
0.95%
|
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, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$1,031.70
|
$6.95
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.95
|
$6.90
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.38%, multiplied by the average account value over the period, multiplied by 181/365 days (to reflect the half-year period).
|
WWW.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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
WWW.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 and an assessment of the Advisor’s performance, the Trustees concluded that the Advisor
provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics, as
appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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 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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred to manage
the Fund are variable
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as the
Fund’s assets grow.
|
||
(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 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
|
15
|
Statement of Operations
|
16
|
Statements of Changes in Net Assets
|
17
|
Financial Highlights
|
18
|
Notes to the Financial Statements
|
22
|
Expense Example
|
30
|
Proxy Voting Policy and Proxy Voting Records
|
32
|
Availability of Quarterly Portfolio Schedule
|
32
|
Federal Tax Distribution Information
|
32
|
Important Notice Regarding Delivery of Shareholder Documents
|
32
|
Electronic Delivery
|
32
|
Board Approval of Investment Advisory Agreements
|
33
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Equity and Income Fund –
|
||||
Investor Class (HEIFX)
|
-8.20%
|
-5.37%
|
6.31%
|
6.68%
|
Hennessy Equity and Income Fund –
|
||||
Institutional Class (HEIIX)
|
-8.00%
|
-4.98%
|
6.72%
|
7.06%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
13.67%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Berkshire Hathaway, Inc., Class B
|
4.86%
|
Apple, Inc.
|
4.53%
|
Alphabet, Inc., Class C
|
3.82%
|
BlackRock, Inc.
|
2.84%
|
Altria Group, Inc.
|
2.74%
|
The Charles Schwab Corp.
|
2.67%
|
O’Reilly Automotive, Inc.
|
2.65%
|
Visa, Inc., Class A
|
2.59%
|
Martin Marietta Materials, Inc.
|
2.52%
|
Texas Instruments, Inc.
|
2.52%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 64.03%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 7.40%
|
||||||||||||
Alphabet, Inc., Class C (a)
|
1,676
|
$
|
3,853,677
|
3.82
|
%
|
|||||||
Meta Platforms, Inc. (a)
|
10,758
|
2,156,656
|
2.14
|
%
|
||||||||
Verizon Communications, Inc.
|
31,248
|
1,446,782
|
1.44
|
%
|
||||||||
|
7,457,115
|
7.40
|
%
|
|||||||||
Consumer Discretionary – 7.98%
|
||||||||||||
CarMax, Inc. (a)
|
17,360
|
1,489,141
|
1.48
|
%
|
||||||||
Lowe’s Companies, Inc.
|
7,081
|
1,400,126
|
1.39
|
%
|
||||||||
O’Reilly Automotive, Inc. (a)
|
4,406
|
2,672,459
|
2.65
|
%
|
||||||||
The Home Depot, Inc.
|
8,264
|
2,482,506
|
2.46
|
%
|
||||||||
|
8,044,232
|
7.98
|
%
|
|||||||||
Consumer Staples – 7.34%
|
||||||||||||
Altria Group, Inc.
|
49,702
|
2,761,940
|
2.74
|
%
|
||||||||
Church & Dwight Co., Inc.
|
23,052
|
2,248,953
|
2.23
|
%
|
||||||||
Nestlé S.A. – ADR (b)
|
18,526
|
2,383,185
|
2.37
|
%
|
||||||||
|
7,394,078
|
7.34
|
%
|
|||||||||
Energy – 0.16%
|
||||||||||||
Enbridge, Inc. (b)
|
925
|
40,367
|
0.04
|
%
|
||||||||
Kinder Morgan, Inc.
|
2,200
|
39,930
|
0.04
|
%
|
||||||||
Targa Resources Corp.
|
550
|
40,376
|
0.04
|
%
|
||||||||
The Williams Companies, Inc.
|
1,225
|
42,005
|
0.04
|
%
|
||||||||
|
162,678
|
0.16
|
%
|
|||||||||
Financials – 12.37%
|
||||||||||||
Berkshire Hathaway, Inc., Class B (a)
|
15,157
|
4,893,134
|
4.86
|
%
|
||||||||
BlackRock, Inc.
|
4,580
|
2,861,034
|
2.84
|
%
|
||||||||
The Charles Schwab Corp.
|
40,641
|
2,695,718
|
2.67
|
%
|
||||||||
The Progressive Corp.
|
18,769
|
2,015,040
|
2.00
|
%
|
||||||||
|
12,464,926
|
12.37
|
%
|
|||||||||
Health Care – 3.76%
|
||||||||||||
Johnson & Johnson
|
11,442
|
2,064,823
|
2.05
|
%
|
||||||||
Pfizer, Inc.
|
35,151
|
1,724,860
|
1.71
|
%
|
||||||||
|
3,789,683
|
3.76
|
%
|
|||||||||
Industrials – 6.06%
|
||||||||||||
FedEx Corp.
|
9,814
|
1,950,434
|
1.94
|
%
|
||||||||
Norfolk Southern Corp.
|
9,810
|
2,529,803
|
2.51
|
%
|
||||||||
Old Dominion Freight Line, Inc.
|
5,798
|
1,624,136
|
1.61
|
%
|
||||||||
|
6,104,373
|
6.06
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Information Technology – 13.17%
|
||||||||||||
Apple, Inc.
|
28,983
|
$
|
4,569,170
|
4.53
|
%
|
|||||||
Cisco Systems, Inc.
|
32,441
|
1,588,960
|
1.58
|
%
|
||||||||
Fiserv, Inc. (a)
|
20,076
|
1,965,842
|
1.95
|
%
|
||||||||
Texas Instruments, Inc.
|
14,890
|
2,535,023
|
2.52
|
%
|
||||||||
Visa, Inc., Class A
|
12,263
|
2,613,613
|
2.59
|
%
|
||||||||
|
13,272,608
|
13.17
|
%
|
|||||||||
Materials – 5.79%
|
||||||||||||
Air Products and Chemicals, Inc.
|
7,153
|
1,674,303
|
1.66
|
%
|
||||||||
Martin Marietta Materials, Inc.
|
7,187
|
2,545,779
|
2.52
|
%
|
||||||||
NewMarket Corp.
|
4,987
|
1,618,830
|
1.61
|
%
|
||||||||
|
5,838,912
|
5.79
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $40,251,680)
|
64,528,605
|
64.03
|
%
|
|||||||||
|
||||||||||||
PREFERRED STOCKS – 1.64%
|
||||||||||||
Communication Services – 0.05%
|
||||||||||||
AT&T, Inc.
|
||||||||||||
Series A, 5.000%, Perpetual
|
860
|
17,647
|
0.02
|
%
|
||||||||
Series C, 4.750%, Perpetual
|
1,935
|
37,558
|
0.03
|
%
|
||||||||
|
55,205
|
0.05
|
%
|
|||||||||
Consumer Discretionary – 0.03%
|
||||||||||||
Ford Motor Co.
|
||||||||||||
6.000%, 12/01/2059
|
515
|
12,947
|
0.01
|
%
|
||||||||
6.200%, 06/01/2059
|
513
|
13,261
|
0.02
|
%
|
||||||||
|
26,208
|
0.03
|
%
|
|||||||||
Consumer Staples – 0.03%
|
||||||||||||
CHS, Inc., Series 3, 6.750% to 09/30/2024 then
|
||||||||||||
3 Month LIBOR USD + 4.155%, Perpetual (c)
|
355
|
9,400
|
0.01
|
%
|
||||||||
CHS, Inc., Series 4, 7.500%, Perpetual
|
840
|
23,201
|
0.02
|
%
|
||||||||
|
32,601
|
0.03
|
%
|
|||||||||
Financials – 1.53%
|
||||||||||||
AEGON Funding Co. LLC, 5.100%, 12/15/2049
|
1,175
|
24,851
|
0.02
|
%
|
||||||||
American International Group, Inc., Series A, 5.850%, Perpetual
|
1,435
|
35,516
|
0.04
|
%
|
||||||||
Arch Capital Group Ltd.
|
||||||||||||
Series G, 4.550%, Perpetual (b)
|
1,010
|
19,483
|
0.02
|
%
|
||||||||
Series F, 5.450%, Perpetual (b)
|
401
|
9,083
|
0.01
|
%
|
||||||||
Axis Capital Holdings Ltd., Series E, 5.500%, Perpetual (b)
|
905
|
20,227
|
0.02
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
PREFERRED STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials (Continued)
|
||||||||||||
Bank of America Corp.
|
||||||||||||
Series QQ, 4.250%, Perpetual
|
1,575
|
$
|
28,082
|
0.03
|
%
|
|||||||
Series LL, 5.000%, Perpetual
|
1,420
|
30,019
|
0.03
|
%
|
||||||||
Series KK, 5.375%, Perpetual
|
815
|
18,321
|
0.02
|
%
|
||||||||
Bank of Hawaii Corp., Series A, 4.375%, Perpetual
|
1,060
|
21,073
|
0.02
|
%
|
||||||||
Bank OZK, Series A, 4.625%, Perpetual
|
1,395
|
25,110
|
0.02
|
%
|
||||||||
Cadence Bank, Series A, 5.500%, Perpetual
|
565
|
13,696
|
0.01
|
%
|
||||||||
Capital One Financial Corp.
|
||||||||||||
Series J, 4.800%, Perpetual
|
2,060
|
40,850
|
0.04
|
%
|
||||||||
Series I, 5.000%, Perpetual
|
1,900
|
39,482
|
0.04
|
%
|
||||||||
Carlyle Finance LLC, 4.625%, 05/15/2061
|
995
|
18,666
|
0.02
|
%
|
||||||||
Citigroup, Inc., Series K, 6.875% to 11/15/2023 then
|
||||||||||||
3 Month LIBOR USD + 4.130%, Perpetual (c)
|
780
|
20,686
|
0.02
|
%
|
||||||||
Citizens Financial Group, Inc., Series D, 6.350% to 04/06/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.642%, Perpetual (c)
|
980
|
25,353
|
0.03
|
%
|
||||||||
ConnectOne Bancorp, Inc., Series A, 5.250% to 09/01/2026 then
|
||||||||||||
5 Year CMT Rate + 4.420%, Perpetual (c)
|
625
|
14,756
|
0.01
|
%
|
||||||||
Cullen/Frost Bankers, Inc., Series B, 4.450%, Perpetual
|
860
|
17,243
|
0.02
|
%
|
||||||||
Equitable Holdings, Inc., Series A, 5.250%, Perpetual
|
1,270
|
27,635
|
0.03
|
%
|
||||||||
Federal Agricultural Mortgage Corp, Series F, 5.250%, Perpetual
|
585
|
12,232
|
0.01
|
%
|
||||||||
Fifth Third Bancorp, Series K, 4.950%, Perpetual
|
1,580
|
33,417
|
0.03
|
%
|
||||||||
First Citizens BancShares, Inc., Series A, 5.375%, Perpetual
|
1,495
|
35,073
|
0.03
|
%
|
||||||||
First Horizon Corp.
|
||||||||||||
Series D, 6.100% to 05/01/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.859%, Perpetual (c)
|
530
|
13,223
|
0.01
|
%
|
||||||||
Series B, 6.625% to 08/01/2025 then
|
||||||||||||
3 Month LIBOR USD + 4.262%, Perpetual (c)
|
700
|
18,102
|
0.02
|
%
|
||||||||
First Republic Bank, Series N, 4.500%, Perpetual
|
1,625
|
30,534
|
0.03
|
%
|
||||||||
Hartford Financial Services Group, Inc., Series G, 6.000%, Perpetual
|
1,505
|
38,949
|
0.04
|
%
|
||||||||
Huntington Bancshares, Inc., Series H, 4.500%, Perpetual
|
2,275
|
42,633
|
0.04
|
%
|
||||||||
JPMorgan Chase & Co.
|
||||||||||||
Series JJ, 4.550%, Perpetual
|
1,900
|
36,081
|
0.03
|
%
|
||||||||
Series LL, 4.625%, Perpetual
|
1,875
|
36,338
|
0.04
|
%
|
||||||||
KeyCorp
|
||||||||||||
Series G, 5.625%, Perpetual
|
535
|
12,733
|
0.01
|
%
|
||||||||
Series F, 5.650%, Perpetual
|
755
|
17,833
|
0.02
|
%
|
||||||||
Series E, 6.125% to 12/15/2026 then
|
||||||||||||
3 Month LIBOR USD + 3.892%, Perpetual (c)
|
412
|
11,005
|
0.01
|
%
|
||||||||
MetLife, Inc., Series F, 4.750%, Perpetual
|
1,725
|
38,864
|
0.04
|
%
|
||||||||
Morgan Stanley
|
||||||||||||
4.250%, Perpetual
|
2,365
|
42,239
|
0.04
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
PREFERRED STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials (Continued)
|
||||||||||||
Morgan Stanley (Continued)
|
||||||||||||
Series K, 5.850% to 04/15/2027 then
|
||||||||||||
3 Month LIBOR USD + 3.491%, Perpetual (c)
|
735
|
$
|
18,544
|
0.02
|
%
|
|||||||
Series I, 6.375% to 10/15/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.708%, Perpetual (c)
|
790
|
20,564
|
0.02
|
%
|
||||||||
Regions Financial Corp.
|
||||||||||||
Series E, 4.450%, Perpetual
|
1,960
|
36,652
|
0.04
|
%
|
||||||||
Series C, 5.700% to 05/15/2029 then
|
||||||||||||
3 Month LIBOR USD + 3.148%, Perpetual (c)
|
1,035
|
25,099
|
0.02
|
%
|
||||||||
Signature Bank, Series A, 5.000%, Perpetual
|
1,460
|
27,930
|
0.03
|
%
|
||||||||
State Street Corp., Series D, 5.900% to 03/15/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.108%, Perpetual (c)
|
1,975
|
49,770
|
0.05
|
%
|
||||||||
SVB Financial Group, Series A, 5.250%, Perpetual
|
1,185
|
25,679
|
0.03
|
%
|
||||||||
Synchrony Financial, Series A, 5.625%, Perpetual
|
1,815
|
37,534
|
0.04
|
%
|
||||||||
Synovus Financial Corp.
|
||||||||||||
Series E, 5.875% to 07/01/2024 then
|
||||||||||||
5 Year CMT Rate + 4.127%, Perpetual (c)
|
710
|
18,155
|
0.02
|
%
|
||||||||
Series D, 6.300% to 06/21/2023 then
|
||||||||||||
3 Month LIBOR USD + 3.352%, Perpetual (c)
|
740
|
18,352
|
0.02
|
%
|
||||||||
Texas Capital Bancshares, Inc., Series B, 5.750%, Perpetual
|
595
|
13,191
|
0.01
|
%
|
||||||||
The Allstate Corp., Series H, 5.100%, Perpetual
|
1,120
|
25,010
|
0.02
|
%
|
||||||||
The Charles Schwab Corp., Series J, 4.450%, Perpetual
|
1,495
|
30,109
|
0.03
|
%
|
||||||||
The Goldman Sachs Group, Inc.
|
||||||||||||
Series K, 6.375% to 05/10/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.550%, Perpetual (c)
|
895
|
22,912
|
0.02
|
%
|
||||||||
Series J, 5.500% to 05/10/2023 then
|
||||||||||||
3 Month LIBOR USD + 3.640%, Perpetual (c)
|
955
|
24,295
|
0.02
|
%
|
||||||||
Truist Financial Corp.
|
||||||||||||
Series R, 4.750%, Perpetual
|
2,190
|
44,479
|
0.04
|
%
|
||||||||
Series O, 5.250%, Perpetual
|
1,625
|
37,456
|
0.04
|
%
|
||||||||
US Bancorp
|
||||||||||||
Series O, 4.500%, Perpetual
|
1,295
|
25,680
|
0.03
|
%
|
||||||||
Series B, 3.500% to 05/31/2022 then
|
||||||||||||
3 Month LIBOR USD + 0.600%, Perpetual (c)
|
1,970
|
40,483
|
0.04
|
%
|
||||||||
Voya Financial, Inc., Series B, 5.350% to 09/15/2029 then
|
||||||||||||
5 Year CMT Rate + 3.210%, Perpetual (c)
|
1,105
|
27,238
|
0.03
|
%
|
||||||||
Washington Federal, Inc., Series A, 4.875%, Perpetual
|
1,395
|
26,714
|
0.03
|
%
|
||||||||
Wells Fargo & Co.
|
||||||||||||
Series Z, 4.750%, Perpetual
|
1,930
|
37,539
|
0.04
|
%
|
||||||||
Series R, 6.625% to 03/15/2024 then
|
||||||||||||
3 Month LIBOR USD + 3.690%, Perpetual (c)
|
1,505
|
39,506
|
0.04
|
%
|
||||||||
|
1,542,279
|
1.53
|
%
|
|||||||||
|
||||||||||||
Total Preferred Stocks
|
||||||||||||
(Cost $1,875,673)
|
1,656,293
|
1.64
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
REITS – 2.36%
|
Number of Shares/
|
% of
|
||||||||||
|
Par Amount
|
Value
|
Net Assets
|
|||||||||
Financials – 0.18%
|
||||||||||||
Annaly Capital Management, Inc., Series I, 6.750% to 06/30/2024
|
||||||||||||
then 3 Month LIBOR USD + 4.989%, Perpetual (c)
|
1,115
|
$
|
27,585
|
0.03
|
%
|
|||||||
Apollo Commercial Real Estate Finance, Inc.
|
3,130
|
37,685
|
0.04
|
%
|
||||||||
Chimera Investment Corp.
|
2,930
|
29,359
|
0.03
|
%
|
||||||||
Chimera Investment Corp.
|
||||||||||||
Series C, 7.750% to 09/30/2025 then
|
||||||||||||
3 Month LIBOR USD + 4.743%, Perpetual (c)
|
1,265
|
29,791
|
0.03
|
%
|
||||||||
Series B, 8.000% to 03/30/2024 then
|
||||||||||||
3 Month LIBOR USD + 5.791%, Perpetual (c)
|
575
|
14,053
|
0.01
|
%
|
||||||||
Starwood Property Trust, Inc.
|
1,805
|
41,298
|
0.04
|
%
|
||||||||
|
179,771
|
0.18
|
%
|
|||||||||
Real Estate – 2.18%
|
||||||||||||
Kimco Realty Corp., Series M, 5.250%, Perpetual
|
955
|
23,149
|
0.02
|
%
|
||||||||
Public Storage, Series P, 4.000%, Perpetual
|
1,185
|
22,408
|
0.02
|
%
|
||||||||
STORE Capital Corp.
|
75,771
|
2,154,170
|
2.14
|
%
|
||||||||
|
2,199,727
|
2.18
|
%
|
|||||||||
|
||||||||||||
Total REITS
|
||||||||||||
(Cost $2,101,972)
|
2,379,498
|
2.36
|
%
|
|||||||||
|
||||||||||||
CORPORATE BONDS – 16.56%
|
||||||||||||
Communication Services – 1.14%
|
||||||||||||
AT&T, Inc., 4.250%, 03/01/2027
|
980,000
|
1,001,548
|
1.00
|
%
|
||||||||
T-Mobile USA, Inc., 3.875%, 04/15/2030
|
150,000
|
142,488
|
0.14
|
%
|
||||||||
|
1,144,036
|
1.14
|
%
|
|||||||||
Consumer Discretionary – 1.66%
|
||||||||||||
Alibaba Group Holding Ltd., 3.600%, 11/28/2024 (b)
|
1,000,000
|
998,283
|
0.99
|
%
|
||||||||
Lowe’s Companies, Inc., 2.625%, 04/01/2031
|
325,000
|
285,524
|
0.28
|
%
|
||||||||
Starbucks Corp., 3.500%, 03/01/2028
|
400,000
|
390,312
|
0.39
|
%
|
||||||||
|
1,674,119
|
1.66
|
%
|
|||||||||
Energy – 1.40%
|
||||||||||||
Canadian Natural Resources Ltd., 3.900%, 02/01/2025 (b)
|
1,000,000
|
1,002,773
|
0.99
|
%
|
||||||||
The Williams Companies, Inc., 2.600%, 03/15/2031
|
475,000
|
411,900
|
0.41
|
%
|
||||||||
|
1,414,673
|
1.40
|
%
|
|||||||||
Financials – 7.96%
|
||||||||||||
Aflac, Inc., 3.600%, 04/01/2030
|
300,000
|
292,883
|
0.29
|
%
|
||||||||
Bank of America Corp., 2.299% to 07/21/2031 then
|
||||||||||||
SOFR + 1.220%, 07/21/2032 (c)
|
575,000
|
476,168
|
0.47
|
%
|
||||||||
Dell International LLC / EMC Corp., 5.450%, 06/15/2023
|
322,000
|
329,170
|
0.33
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
CORPORATE BONDS
|
% of
|
|||||||||||
|
Par Amount
|
Value
|
Net Assets
|
|||||||||
Financials (Continued)
|
||||||||||||
Fifth Third Bancorp, 3.650%, 01/25/2024
|
225,000
|
$
|
225,838
|
0.23
|
%
|
|||||||
General Motors Financial Co., Inc., 3.700%, 05/09/2023
|
1,075,000
|
1,081,474
|
1.07
|
%
|
||||||||
Huntington Bancshares, Inc.
|
||||||||||||
2.550%, 02/04/2030
|
525,000
|
470,459
|
0.47
|
%
|
||||||||
4.000%, 05/15/2025
|
365,000
|
368,362
|
0.36
|
%
|
||||||||
Intercontinental Exchange, Inc., 0.700%, 06/15/2023
|
165,000
|
161,355
|
0.16
|
%
|
||||||||
JPMorgan Chase & Co., 2.069% to 06/01/2028 then
|
||||||||||||
SOFR + 1.015%, 06/01/2029 (c)
|
325,000
|
285,272
|
0.28
|
%
|
||||||||
Marsh & McLennan Cos., Inc., 4.375%, 03/15/2029
|
275,000
|
278,362
|
0.28
|
%
|
||||||||
Morgan Stanley
|
||||||||||||
1.593% to 05/04/2026 then SOFR + 0.879%, 05/04/2027 (c)
|
295,000
|
265,771
|
0.27
|
%
|
||||||||
2.239% to 07/21/2031 then SOFR + 1.178%, 07/21/2032 (c)
|
330,000
|
273,030
|
0.27
|
%
|
||||||||
Prudential Financial Inc., 3.878%, 03/27/2028
|
260,000
|
261,038
|
0.26
|
%
|
||||||||
Regions Financial Corp., 1.800%, 08/12/2028
|
325,000
|
283,087
|
0.28
|
%
|
||||||||
Synchrony Financial, 3.950%, 12/01/2027
|
650,000
|
623,403
|
0.62
|
%
|
||||||||
Synovus Financial Corp., 3.125%, 11/01/2022
|
1,300,000
|
1,302,248
|
1.29
|
%
|
||||||||
The Goldman Sachs Group, Inc., 4.223% to 05/01/2028 then
|
||||||||||||
3 Month LIBOR USD + 1.301%, 05/01/2029 (c)
|
300,000
|
293,922
|
0.29
|
%
|
||||||||
Willis North America, Inc., 3.600%, 05/15/2024
|
750,000
|
747,961
|
0.74
|
%
|
||||||||
|
8,019,803
|
7.96
|
%
|
|||||||||
Health Care – 1.74%
|
||||||||||||
Edwards Lifesciences Corp., 4.300%, 06/15/2028
|
700,000
|
707,594
|
0.70
|
%
|
||||||||
Evernorth Health, Inc., 3.500%, 06/15/2024
|
700,000
|
701,742
|
0.70
|
%
|
||||||||
Regeneron Pharmaceuticals, Inc., 1.750%, 09/15/2030
|
425,000
|
346,523
|
0.34
|
%
|
||||||||
|
1,755,859
|
1.74
|
%
|
|||||||||
Industrials – 0.55%
|
||||||||||||
General Electric Co., 3.625%, 05/01/2030
|
380,000
|
352,176
|
0.35
|
%
|
||||||||
The Boeing Co., 2.196%, 02/04/2026
|
225,000
|
205,495
|
0.20
|
%
|
||||||||
|
557,671
|
0.55
|
%
|
|||||||||
Information Technology – 2.11%
|
||||||||||||
Autodesk, Inc., 2.850%, 01/15/2030
|
675,000
|
613,705
|
0.61
|
%
|
||||||||
Broadcom, Inc., 4.110%, 09/15/2028
|
425,000
|
412,559
|
0.41
|
%
|
||||||||
International Business Machines Corp.
|
||||||||||||
2.200%, 02/09/2027
|
125,000
|
117,239
|
0.11
|
%
|
||||||||
2.720%, 02/09/2032
|
325,000
|
288,689
|
0.29
|
%
|
||||||||
PayPal Holdings, Inc., 2.850%, 10/01/2029
|
750,000
|
689,683
|
0.69
|
%
|
||||||||
|
2,121,875
|
2.11
|
%
|
|||||||||
|
||||||||||||
Total Corporate Bonds
|
||||||||||||
(Cost $17,626,841)
|
16,688,036
|
16.56
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
MORTGAGE-BACKED SECURITIES – 2.64%
|
% of
|
|||||||||||
|
Par Amount
|
Value
|
Net Assets
|
|||||||||
Federal Agency Mortgage-Backed Obligations - 2.64%
|
||||||||||||
Fannie Mae Pool
|
||||||||||||
3.000%, 10/01/2043
|
967,273
|
$
|
932,944
|
0.93
|
%
|
|||||||
3.500%, 01/01/2042
|
168,926
|
167,235
|
0.17
|
%
|
||||||||
6.000%, 10/01/2037
|
77,916
|
83,472
|
0.08
|
%
|
||||||||
Fannie Mae REMICS
|
||||||||||||
Series 2013-52, 1.250%, 06/25/2043
|
47,183
|
42,407
|
0.04
|
%
|
||||||||
Series 2012-16, 2.000%, 11/25/2041
|
44,603
|
41,473
|
0.04
|
%
|
||||||||
Series 2010-134, 2.250%, 03/25/2039
|
9,934
|
9,930
|
0.01
|
%
|
||||||||
Freddie Mac Gold Pool
|
||||||||||||
3.000%, 05/01/2042
|
491,028
|
474,529
|
0.47
|
%
|
||||||||
3.000%, 09/01/2042
|
666,595
|
644,168
|
0.64
|
%
|
||||||||
5.500%, 04/01/2037
|
37,222
|
39,824
|
0.04
|
%
|
||||||||
Freddie Mac REMICS
|
||||||||||||
Series 4146, 1.500%, 10/15/2042
|
15,804
|
15,526
|
0.02
|
%
|
||||||||
Series 4309, 2.000%, 10/15/2043
|
41,098
|
39,359
|
0.04
|
%
|
||||||||
Series 3870, 2.750%, 01/15/2041
|
15,744
|
15,501
|
0.01
|
%
|
||||||||
Series 4322, 3.000%, 05/15/2043
|
65,861
|
64,700
|
0.06
|
%
|
||||||||
Government National Mortgage Association,
|
||||||||||||
Series 2013-24, 1.750%, 02/16/2043
|
97,551
|
90,781
|
0.09
|
%
|
||||||||
|
||||||||||||
Total Mortgage-Backed Securities
|
||||||||||||
(Cost $2,754,269)
|
2,661,849
|
2.64
|
%
|
|||||||||
|
||||||||||||
U.S. TREASURY OBLIGATIONS – 9.69%
|
||||||||||||
U.S. Treasury Notes – 9.69%
|
||||||||||||
0.250%, 08/31/2025
|
1,250,000
|
1,145,068
|
1.14
|
%
|
||||||||
0.500%, 11/30/2023
|
750,000
|
726,094
|
0.72
|
%
|
||||||||
0.625%, 03/31/2027
|
450,000
|
403,049
|
0.40
|
%
|
||||||||
0.750%, 04/30/2026
|
1,500,000
|
1,377,275
|
1.37
|
%
|
||||||||
1.000%, 07/31/2028
|
1,000,000
|
888,945
|
0.88
|
%
|
||||||||
1.250%, 12/31/2026
|
625,000
|
579,468
|
0.58
|
%
|
||||||||
1.250%, 04/30/2028
|
425,000
|
385,439
|
0.38
|
%
|
||||||||
1.500%, 02/15/2025
|
200,000
|
192,656
|
0.19
|
%
|
||||||||
1.500%, 11/30/2028
|
75,000
|
68,520
|
0.07
|
%
|
||||||||
1.875%, 07/31/2026
|
1,550,000
|
1,485,820
|
1.47
|
%
|
||||||||
1.875%, 02/15/2032
|
575,000
|
525,855
|
0.52
|
%
|
||||||||
2.250%, 03/31/2024
|
350,000
|
347,197
|
0.34
|
%
|
||||||||
2.375%, 03/31/2029
|
125,000
|
120,645
|
0.12
|
%
|
||||||||
2.500%, 03/31/2027
|
200,000
|
196,203
|
0.19
|
%
|
||||||||
2.625%, 04/15/2025
|
300,000
|
298,031
|
0.30
|
%
|
||||||||
2.750%, 02/15/2024
|
575,000
|
576,168
|
0.57
|
%
|
||||||||
3.000%, 10/31/2025
|
450,000
|
451,512
|
0.45
|
%
|
||||||||
|
||||||||||||
Total U.S. Treasury Obligations
|
||||||||||||
(Cost $10,346,094)
|
9,767,945
|
9.69
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
INVESTMENT COMPANIES (EXCLUDING
|
Number
|
% of
|
||||||||||
MONEY MARKET FUNDS) – 0.52%
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials – 0.52%
|
||||||||||||
Apollo Investment Corp.
|
3,225
|
$
|
40,925
|
0.04
|
%
|
|||||||
Ares Capital Corp.
|
1,995
|
40,439
|
0.04
|
%
|
||||||||
Bain Capital Specialty Finance, Inc.
|
2,655
|
40,834
|
0.04
|
%
|
||||||||
BlackRock TCP Capital Corp.
|
3,015
|
41,305
|
0.04
|
%
|
||||||||
FS KKR Capital Corp.
|
1,865
|
39,072
|
0.04
|
%
|
||||||||
Golub Capital BDC, Inc.
|
2,775
|
41,403
|
0.04
|
%
|
||||||||
Hercules Capital, Inc.
|
2,325
|
39,060
|
0.04
|
%
|
||||||||
Monroe Capital Corp.
|
4,000
|
40,520
|
0.04
|
%
|
||||||||
New Mountain Finance Corp.
|
3,130
|
41,629
|
0.04
|
%
|
||||||||
Oaktree Specialty Lending Corp.
|
5,730
|
41,027
|
0.04
|
%
|
||||||||
Sixth Street Specialty Lending, Inc.
|
1,825
|
40,771
|
0.04
|
%
|
||||||||
Carlyle Secured Lending, Inc.
|
2,935
|
41,119
|
0.04
|
%
|
||||||||
TriplePoint Venture Growth BDC Corp.
|
2,500
|
39,375
|
0.04
|
%
|
||||||||
|
||||||||||||
Total Investment Companies
|
||||||||||||
(Excluding Money Market Funds)
|
||||||||||||
(Cost $550,539)
|
527,479
|
0.52
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 2.14%
|
||||||||||||
Money Market Funds – 2.14%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (d)
|
2,158,475
|
2,158,475
|
2.14
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $2,158,475)
|
2,158,475
|
2.14
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $77,665,543) – 99.58%
|
100,368,180
|
99.58
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.42%
|
420,748
|
0.42
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
100,788,928
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
U.S.-traded security of a foreign corporation.
|
(c)
|
Variable rate security; rate disclosed is the rate as of April 30, 2022.
|
(d)
|
The rate listed is the fund’s seven-day yield as of April 30, 2022.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
7,457,115
|
$
|
—
|
$
|
—
|
$
|
7,457,115
|
||||||||
Consumer Discretionary
|
8,044,232
|
—
|
—
|
8,044,232
|
||||||||||||
Consumer Staples
|
7,394,078
|
—
|
—
|
7,394,078
|
||||||||||||
Energy
|
162,678
|
—
|
—
|
162,678
|
||||||||||||
Financials
|
12,464,926
|
—
|
—
|
12,464,926
|
||||||||||||
Health Care
|
3,789,683
|
—
|
—
|
3,789,683
|
||||||||||||
Industrials
|
6,104,373
|
—
|
—
|
6,104,373
|
||||||||||||
Information Technology
|
13,272,608
|
—
|
—
|
13,272,608
|
||||||||||||
Materials
|
5,838,912
|
—
|
—
|
5,838,912
|
||||||||||||
Total Common Stocks
|
$
|
64,528,605
|
$
|
—
|
$
|
—
|
$
|
64,528,605
|
||||||||
Preferred Stocks
|
||||||||||||||||
Communication Services
|
$
|
55,205
|
$
|
—
|
$
|
—
|
$
|
55,205
|
||||||||
Consumer Discretionary
|
26,208
|
—
|
—
|
26,208
|
||||||||||||
Consumer Staples
|
32,601
|
—
|
—
|
32,601
|
||||||||||||
Financials
|
1,542,279
|
—
|
—
|
1,542,279
|
||||||||||||
Total Preferred Stocks
|
$
|
1,656,293
|
$
|
—
|
$
|
—
|
$
|
1,656,293
|
||||||||
REITS
|
||||||||||||||||
Financials
|
$
|
179,771
|
$
|
—
|
$
|
—
|
$
|
179,771
|
||||||||
Real Estate
|
2,199,727
|
—
|
—
|
2,199,727
|
||||||||||||
Total REITS
|
$
|
2,379,498
|
$
|
—
|
$
|
—
|
$
|
2,379,498
|
||||||||
Corporate Bonds
|
||||||||||||||||
Communication Services
|
$
|
—
|
$
|
1,144,036
|
$
|
—
|
$
|
1,144,036
|
||||||||
Consumer Discretionary
|
—
|
1,674,119
|
—
|
1,674,119
|
||||||||||||
Energy
|
—
|
1,414,673
|
—
|
1,414,673
|
||||||||||||
Financials
|
—
|
8,019,803
|
—
|
8,019,803
|
||||||||||||
Health Care
|
—
|
1,755,859
|
—
|
1,755,859
|
||||||||||||
Industrials
|
—
|
557,671
|
—
|
557,671
|
||||||||||||
Information Technology
|
—
|
2,121,875
|
—
|
2,121,875
|
||||||||||||
Total Corporate Bonds
|
$
|
—
|
$
|
16,688,036
|
$
|
—
|
$
|
16,688,036
|
||||||||
Mortgage-Backed Securities
|
||||||||||||||||
Federal Agency Mortgage-Backed Obligations
|
$
|
—
|
$
|
2,661,849
|
$
|
—
|
$
|
2,661,849
|
||||||||
Total Mortgage-Backed Securities
|
$
|
—
|
$
|
2,661,849
|
$
|
—
|
$
|
2,661,849
|
||||||||
U.S. Treasury Obligations
|
||||||||||||||||
U.S. Treasury Notes
|
$
|
—
|
$
|
9,767,945
|
$
|
—
|
$
|
9,767,945
|
||||||||
Total U.S. Treasury Obligations
|
$
|
—
|
$
|
9,767,945
|
$
|
—
|
$
|
9,767,945
|
||||||||
Investment Companies (Excluding
|
||||||||||||||||
Money Market Funds)
|
||||||||||||||||
Financials
|
$
|
527,479
|
$
|
—
|
$
|
—
|
$
|
527,479
|
||||||||
Total Investment Companies
|
||||||||||||||||
(Excluding Money Market Funds)
|
$
|
527,479
|
$
|
—
|
$
|
—
|
$
|
527,479
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
2,158,475
|
$
|
—
|
$
|
—
|
$
|
2,158,475
|
||||||||
Total Short-Term Investments
|
$
|
2,158,475
|
$
|
—
|
$
|
—
|
$
|
2,158,475
|
||||||||
Total Investments
|
$
|
71,250,350
|
$
|
29,117,830
|
$
|
—
|
$
|
100,368,180
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $77,665,543)
|
$
|
100,368,180
|
||
Dividends and interest receivable
|
342,517
|
|||
Receivable for fund shares sold
|
71,990
|
|||
Receivable for securities sold
|
618,300
|
|||
Return of capital receivable
|
498
|
|||
Prepaid expenses and other assets
|
21,489
|
|||
Total assets
|
101,422,974
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
494,939
|
|||
Payable to advisor
|
70,042
|
|||
Payable to administrator
|
20,051
|
|||
Payable to auditor
|
11,216
|
|||
Accrued distribution fees
|
7,984
|
|||
Accrued service fees
|
3,933
|
|||
Accrued trustees fees
|
5,579
|
|||
Accrued expenses and other payables
|
20,302
|
|||
Total liabilities
|
634,046
|
|||
NET ASSETS
|
$
|
100,788,928
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
75,593,004
|
||
Total distributable earnings
|
25,195,924
|
|||
Total net assets
|
$
|
100,788,928
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
45,690,570
|
||
Shares issued and outstanding
|
3,082,400
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
14.82
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
55,098,358
|
||
Shares issued and outstanding
|
3,956,237
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.93
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
735,599
|
||
Interest income
|
372,606
|
|||
Total investment income
|
1,108,205
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
454,839
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
55,004
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
23,484
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
67,749
|
|||
Distribution fees – Investor Class (See Note 5)
|
38,270
|
|||
Service fees – Investor Class (See Note 5)
|
25,513
|
|||
Federal and state registration fees
|
15,923
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Trustees’ fees and expenses
|
9,407
|
|||
Reports to shareholders
|
6,413
|
|||
Legal fees
|
3,492
|
|||
Other expenses
|
7,783
|
|||
Total expenses
|
734,255
|
|||
NET INVESTMENT INCOME
|
$
|
373,950
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments:
|
$
|
2,726,439
|
||
Net change in unrealized appreciation/depreciation on investments:
|
(12,140,396
|
)
|
||
Net loss on investments
|
(9,413,957
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(9,040,007
|
)
|
(1)
|
Net of foreign taxes withheld of $8,953.
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
373,950
|
$
|
890,714
|
||||
Net realized gain on investments
|
2,726,439
|
8,268,323
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(12,140,396
|
)
|
13,894,367
|
|||||
Net increase (decrease) in net
|
||||||||
assets resulting from operations
|
(9,040,007
|
)
|
23,053,404
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(3,514,334
|
)
|
(3,200,223
|
)
|
||||
Distributable earnings – Institutional Class
|
(4,442,947
|
)
|
(4,139,573
|
)
|
||||
Total distributions
|
(7,957,281
|
)
|
(7,339,796
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
1,627,526
|
1,376,547
|
||||||
Proceeds from shares subscribed – Institutional Class
|
1,763,872
|
3,724,722
|
||||||
Dividends reinvested – Investor Class
|
3,420,686
|
3,106,285
|
||||||
Dividends reinvested – Institutional Class
|
3,396,892
|
3,180,592
|
||||||
Cost of shares redeemed – Investor Class
|
(5,685,457
|
)
|
(8,925,766
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(6,769,307
|
)
|
(11,189,372
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(2,245,788
|
)
|
(8,726,992
|
)
|
||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(19,243,076
|
)
|
6,986,616
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
120,032,004
|
113,045,388
|
||||||
End of period
|
$
|
100,788,928
|
$
|
120,032,004
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
98,169
|
83,494
|
||||||
Shares sold – Institutional Class
|
114,951
|
245,309
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
207,242
|
200,751
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
219,021
|
217,790
|
||||||
Shares redeemed – Investor Class
|
(349,409
|
)
|
(549,400
|
)
|
||||
Shares redeemed – Institutional Class
|
(451,347
|
)
|
(732,371
|
)
|
||||
Net decrease in shares outstanding
|
(161,373
|
)
|
(534,427
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
17.26
|
||
Income from investment operations:
|
||||
Net investment income
|
0.04
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(1.34
|
)
|
||
Total from investment operations
|
(1.30
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.03
|
)
|
||
Dividends from net realized gains
|
(1.11
|
)
|
||
Total distributions
|
(1.14
|
)
|
||
Net asset value, end of period
|
$
|
14.82
|
||
TOTAL RETURN
|
-8.20
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
45.69
|
||
Ratio of expenses to average net assets
|
1.51
|
%(3)
|
||
Ratio of net investment income to average net assets
|
0.44
|
%(3)
|
||
Portfolio turnover rate(4)
|
11
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
15.12
|
$
|
15.72
|
$
|
15.82
|
$
|
16.24
|
$
|
15.61
|
|||||||||
0.09
|
(1)
|
0.16
|
(1)
|
0.18
|
(1)
|
0.16
|
0.14
|
|||||||||||
3.01
|
0.40
|
1.02
|
0.40
|
1.95
|
||||||||||||||
3.10
|
0.56
|
1.20
|
0.56
|
2.09
|
||||||||||||||
(0.10
|
)
|
(0.16
|
)
|
(0.17
|
)
|
(0.14
|
)
|
(0.12
|
)
|
|||||||||
(0.86
|
)
|
(1.00
|
)
|
(1.13
|
)
|
(0.84
|
)
|
(1.34
|
)
|
|||||||||
(0.96
|
)
|
(1.16
|
)
|
(1.30
|
)
|
(0.98
|
)
|
(1.46
|
)
|
|||||||||
$
|
17.26
|
$
|
15.12
|
$
|
15.72
|
$
|
15.82
|
$
|
16.24
|
|||||||||
21.24
|
%
|
3.74
|
%
|
8.39
|
%
|
3.44
|
%
|
14.16
|
%
|
|||||||||
$
|
53.97
|
$
|
51.29
|
$
|
93.51
|
$
|
121.32
|
$
|
155.33
|
|||||||||
1.49
|
%
|
1.49
|
%
|
1.46
|
%
|
1.42
|
%
|
1.43
|
%
|
|||||||||
0.54
|
%
|
1.08
|
%
|
1.16
|
%
|
0.89
|
%
|
0.78
|
%
|
|||||||||
26
|
%
|
22
|
%
|
16
|
%
|
18
|
%
|
15
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
16.22
|
||
Income from investment operations:
|
||||
Net investment income
|
0.06
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(1.25
|
)
|
||
Total from investment operations
|
(1.19
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.06
|
)
|
||
Dividends from net realized gains
|
(1.04
|
)
|
||
Total distributions
|
(1.10
|
)
|
||
Net asset value, end of period
|
$
|
13.93
|
||
TOTAL RETURN
|
-8.00
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
55.10
|
||
Ratio of expenses to average net assets
|
1.12
|
%(3)
|
||
Ratio of net investment income to average net assets
|
0.83
|
%(3)
|
||
Portfolio turnover rate(4)
|
11
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
14.22
|
$
|
14.80
|
$
|
14.93
|
$
|
15.34
|
$
|
14.76
|
|||||||||
0.14
|
(1)
|
0.20
|
(1)
|
0.22
|
(1)
|
0.19
|
0.16
|
|||||||||||
2.83
|
0.38
|
0.96
|
0.39
|
1.87
|
||||||||||||||
2.97
|
0.58
|
1.18
|
0.58
|
2.03
|
||||||||||||||
(0.16
|
)
|
(0.22
|
)
|
(0.24
|
)
|
(0.20
|
)
|
(0.18
|
)
|
|||||||||
(0.81
|
)
|
(0.94
|
)
|
(1.07
|
)
|
(0.79
|
)
|
(1.27
|
)
|
|||||||||
(0.97
|
)
|
(1.16
|
)
|
(1.31
|
)
|
(0.99
|
)
|
(1.45
|
)
|
|||||||||
$
|
16.22
|
$
|
14.22
|
$
|
14.80
|
$
|
14.93
|
$
|
15.34
|
|||||||||
21.68
|
%
|
4.16
|
%
|
8.76
|
%
|
3.86
|
%
|
14.60
|
%
|
|||||||||
$
|
66.06
|
$
|
61.75
|
$
|
80.40
|
$
|
97.86
|
$
|
110.74
|
|||||||||
1.12
|
%
|
1.12
|
%
|
1.09
|
%
|
1.02
|
%
|
1.05
|
%
|
|||||||||
0.91
|
%
|
1.44
|
%
|
1.53
|
%
|
1.28
|
%
|
1.16
|
%
|
|||||||||
26
|
%
|
22
|
%
|
16
|
%
|
18
|
%
|
15
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a
corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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 – Distributions received from real estate investment trusts (“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 any required 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 do not constitute qualified dividend income and do not qualify for the
dividends-received deduction.
|
j).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered
investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act,
and requires funds whose use of derivatives is greater than a limited
|
HENNESSY FUNDS
|
1-800-966-4354
|
specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19, 2022.
The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully
implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5
establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight and
certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule
2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund
investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”) generally are valued at the Nasdaq Official Closing Price, which may differ from the last sales price reported.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Securities traded on a securities exchange for which a last-quoted sales price is not readily available generally are 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 are 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 for equity securities.
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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
85,235,039
|
||
Gross tax unrealized appreciation
|
$
|
36,289,007
|
||
Gross tax unrealized depreciation
|
(1,722,007
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
34,567,000
|
||
Undistributed ordinary income
|
$
|
35,920
|
||
Undistributed long-term capital gains
|
7,590,292
|
|||
Total distributable earnings
|
$
|
7,626,212
|
||
Other accumulated gain/(loss)
|
$
|
—
|
||
Total accumulated gain/(loss)
|
$
|
42,193,212
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
366,988
|
$
|
990,650
|
|||||
Long-term capital gains
|
7,590,293
|
6,349,146
|
|||||||
Total distributions
|
$
|
7,957,281
|
$
|
7,339,796
|
(1) Ordinary income includes short-term capital gains.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 918.00
|
$7.18
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.31
|
$7.55
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 920.00
|
$5.33
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.24
|
$5.61
|
1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.51% for Investor Class shares or 1.12% for Institutional Class shares, as applicable, multiplied by the average account value over the
period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
Summaries of the advisory and sub-advisory agreements;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor and the Sub-Advisors and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale;
|
|
(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)
|
Financial information for the holding company of each Sub-Advisor; and
|
|
(12)
|
Each Sub-Advisor’s Code of Ethics.
|
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 and an assessment of the Advisor’s performance, the Trustees concluded that the Advisor
provides high-quality services to the Fund, and they 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 by providing portfolio management services.
|
||
(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 and federal securities laws.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
(e)
|
The Advisor 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 (including
their codes of ethics, as appropriate), conducts on-site visits to the Sub-Advisors and the Fund’s other service providers, as feasible, 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 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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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. Based on this review and an assessment of each Sub-Advisor’s performance, the Trustees concluded that each
Sub-Advisor provides high-quality services to the Fund. The Trustees also concluded that they were satisfied with
|
HENNESSY FUNDS
|
1-800-966-4354
|
the nature, extent, and quality of the advisory services provided to the Fund by each Sub-Advisor and that the nature and extent of the services provided by each Sub-Advisor were appropriate to
assure that the Fund’s portfolio aligns properly with its investment objective and principal investment strategies.
|
(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; and
|
|||
(iii)
|
manages proxy voting for the Fund.
|
(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)
|
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 Advisor services previously identified 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 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 the 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
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
within a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred to
manage the Fund are variable asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees and sub-advisory
fees increase as the Fund’s assets grow.
|
|
(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 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
|
21
|
Proxy Voting Policy and Proxy Voting Records
|
22
|
Availability of Quarterly Portfolio Schedule
|
22
|
Federal Tax Distribution Information
|
22
|
Important Notice Regarding Delivery of Shareholder Documents
|
22
|
Electronic Delivery
|
22
|
Board Approval of Investment Advisory Agreement
|
23
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Balanced Fund (HBFBX)
|
1.42%
|
0.95%
|
4.15%
|
4.57%
|
50/50 Blended DJIA/Treasury Index
|
-4.03%
|
-0.80%
|
6.80%
|
6.59%
|
Dow Jones Industrial Average
|
-7.05%
|
-0.82%
|
11.96%
|
12.20%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
U.S. Treasury Bill, 0.630%, 01/26/2023
|
17.12%
|
U.S. Treasury Bill, 0.450%, 06/16/2022
|
9.01%
|
Chevron Corp.
|
7.00%
|
U.S. Treasury Bill, 0.240%, 12/01/2022
|
6.87%
|
Merck & Co., Inc.
|
5.38%
|
Dow, Inc.
|
5.00%
|
The Coca-Cola Co.
|
4.97%
|
U.S. Treasury Bill, 0.440%, 05/19/2022
|
4.85%
|
U.S. Treasury Bill, 1.420%, 11/03/2022
|
4.82%
|
International Business Machines Corp.
|
4.72%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 48.74%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 4.03%
|
||||||||||||
Verizon Communications, Inc.
|
12,550
|
$
|
581,065
|
4.03
|
%
|
|||||||
|
||||||||||||
Consumer Staples – 8.75%
|
||||||||||||
The Coca-Cola Co.
|
11,100
|
717,171
|
4.97
|
%
|
||||||||
Walgreens Boots Alliance, Inc.
|
12,850
|
544,840
|
3.78
|
%
|
||||||||
|
1,262,011
|
8.75
|
%
|
|||||||||
Energy – 7.00%
|
||||||||||||
Chevron Corp.
|
6,450
|
1,010,521
|
7.00
|
%
|
||||||||
|
||||||||||||
Financials – 2.07%
|
||||||||||||
JPMorgan Chase & Co.
|
2,500
|
298,400
|
2.07
|
%
|
||||||||
|
||||||||||||
Health Care – 9.98%
|
||||||||||||
Amgen, Inc.
|
2,850
|
664,591
|
4.60
|
%
|
||||||||
Merck & Co., Inc.
|
8,750
|
776,038
|
5.38
|
%
|
||||||||
|
1,440,629
|
9.98
|
%
|
|||||||||
Industrials – 3.70%
|
||||||||||||
3M Co.
|
3,700
|
533,614
|
3.70
|
%
|
||||||||
Information Technology – 8.21%
|
||||||||||||
Cisco Systems, Inc.
|
10,300
|
504,494
|
3.49
|
%
|
||||||||
International Business Machines Corp.
|
5,150
|
680,882
|
4.72
|
%
|
||||||||
|
1,185,376
|
8.21
|
%
|
|||||||||
Materials – 5.00%
|
||||||||||||
Dow, Inc.
|
10,850
|
721,525
|
5.00
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $6,136,350)
|
7,033,141
|
48.74
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 51.34%
|
Number of Shares/
|
% of
|
||||||||||
|
Par Amount
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 3.18%
|
||||||||||||
First American Government Obligations
|
||||||||||||
Fund, Institutional Class, 0.22% (a)
|
459,561
|
$
|
459,561
|
3.18
|
%
|
|||||||
U.S. Treasury Bills – 48.16%
|
||||||||||||
0.440%, 05/19/2022 (b)
|
700,000
|
699,988
|
4.85
|
%
|
||||||||
0.450%, 06/16/2022 (b)
|
1,300,000
|
1,299,892
|
9.01
|
%
|
||||||||
0.785%, 07/14/2022 (b)
|
300,000
|
299,529
|
2.08
|
%
|
||||||||
1.420%, 11/03/2022 (b)
|
700,000
|
695,007
|
4.82
|
%
|
||||||||
0.240%, 12/01/2022 (b)
|
1,000,000
|
991,761
|
6.87
|
%
|
||||||||
0.630%, 01/26/2023 (b)
|
2,500,000
|
2,469,756
|
17.12
|
%
|
||||||||
1.590%, 03/23/2023 (b)
|
500,000
|
491,973
|
3.41
|
%
|
||||||||
|
6,947,906
|
48.16
|
%
|
|||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $7,436,818)
|
7,407,467
|
51.34
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $13,573,168) – 100.08%
|
14,440,608
|
100.08
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.08)%
|
(11,219
|
)
|
(0.08
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
14,429,389
|
100.00
|
%
|
(a)
|
The rate listed is the fund’s seven-day yield as of April 30, 2022.
|
(b)
|
The rate listed is the discount rate at issue.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
581,065
|
$
|
—
|
$
|
—
|
$
|
581,065
|
||||||||
Consumer Staples
|
1,262,011
|
—
|
—
|
1,262,011
|
||||||||||||
Energy
|
1,010,521
|
—
|
—
|
1,010,521
|
||||||||||||
Financials
|
298,400
|
—
|
—
|
298,400
|
||||||||||||
Health Care
|
1,440,629
|
—
|
—
|
1,440,629
|
||||||||||||
Industrials
|
533,614
|
—
|
—
|
533,614
|
||||||||||||
Information Technology
|
1,185,376
|
—
|
—
|
1,185,376
|
||||||||||||
Materials
|
721,525
|
—
|
—
|
721,525
|
||||||||||||
Total Common Stocks
|
$
|
7,033,141
|
$
|
—
|
$
|
—
|
$
|
7,033,141
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
459,561
|
$
|
—
|
$
|
—
|
$
|
459,561
|
||||||||
U.S. Treasury Bills
|
—
|
6,947,906
|
—
|
6,947,906
|
||||||||||||
Total Short-Term Investments
|
$
|
459,561
|
$
|
6,947,906
|
$
|
—
|
$
|
7,407,467
|
||||||||
Total Investments
|
$
|
7,492,702
|
$
|
6,947,906
|
$
|
—
|
$
|
14,440,608
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $13,573,168)
|
$
|
14,440,608
|
||
Dividends and interest receivable
|
10,618
|
|||
Receivable for fund shares sold
|
200
|
|||
Prepaid expenses and other assets
|
13,875
|
|||
Total assets
|
14,465,301
|
|||
LIABILITIES:
|
||||
Payable to advisor
|
7,262
|
|||
Payable to administrator
|
4,273
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
1,966
|
|||
Accrued service fees
|
1,210
|
|||
Accrued trustees fees
|
6,218
|
|||
Accrued expenses and other payables
|
3,755
|
|||
Total liabilities
|
35,912
|
|||
NET ASSETS
|
$
|
14,429,389
|
||
NET ASSETS CONSIST OF:
|
||||
Capital stock
|
$
|
13,557,813
|
||
Total distributable earnings
|
871,576
|
|||
Total net assets
|
$
|
14,429,389
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
14,429,389
|
||
Shares issued and outstanding
|
1,191,149
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
12.11
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
132,883
|
||
Interest income
|
8,235
|
|||
Total investment income
|
141,118
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
41,433
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
13,467
|
|||
Audit fees
|
11,222
|
|||
Distribution fees – Investor Class (See Note 5)
|
10,358
|
|||
Federal and state registration fees
|
9,867
|
|||
Trustees’ fees and expenses
|
8,394
|
|||
Service fees – Investor Class (See Note 5)
|
6,905
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
3,414
|
|||
Reports to shareholders
|
2,896
|
|||
Legal fees
|
88
|
|||
Interest expense (See Note 7)
|
40
|
|||
Other expenses
|
2,265
|
|||
Total expenses
|
125,505
|
|||
NET INVESTMENT INCOME
|
$
|
15,613
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
14,815
|
||
Net change in unrealized appreciation/depreciation on investments
|
146,245
|
|||
Net gain on investments
|
161,060
|
|||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
176,673
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
15,613
|
$
|
22,631
|
||||
Net realized gain on investments
|
14,815
|
528,693
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
146,245
|
1,167,646
|
||||||
Net increase in net assets resulting from operations
|
176,673
|
1,718,970
|
||||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(485,416
|
)
|
(35,846
|
)
|
||||
Total distributions
|
(485,416
|
)
|
(35,846
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
1,323,647
|
1,324,997
|
||||||
Dividends reinvested – Investor Class
|
481,808
|
35,297
|
||||||
Cost of shares redeemed – Investor Class
|
(598,519
|
)
|
(1,500,429
|
)
|
||||
Net increase (decrease) in net assets derived
|
||||||||
from capital share transactions
|
1,206,936
|
(140,135
|
)
|
|||||
TOTAL INCREASE IN NET ASSETS
|
898,193
|
1,542,989
|
||||||
NET ASSETS:
|
||||||||
Beginning of period
|
13,531,196
|
11,988,207
|
||||||
End of period
|
$
|
14,429,389
|
$
|
13,531,196
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
107,959
|
107,079
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
40,546
|
2,986
|
||||||
Shares redeemed – Investor Class
|
(49,361
|
)
|
(124,203
|
)
|
||||
Net increase (decrease) in shares outstanding
|
99,144
|
(14,138
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
12.39
|
||
Income from investment operations:
|
||||
Net investment income
|
0.02
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
0.15
|
|||
Total from investment operations
|
0.17
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(0.02
|
)
|
||
Dividends from net realized gains
|
(0.43
|
)
|
||
Total distributions
|
(0.45
|
)
|
||
Net asset value, end of period
|
$
|
12.11
|
||
TOTAL RETURN
|
1.42
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
14.43
|
||
Ratio of expenses to average net assets
|
1.82
|
%(3)
|
||
Ratio of net investment income to average net assets
|
0.23
|
%(3)
|
||
Portfolio turnover rate
|
7
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
10.84
|
$
|
12.38
|
$
|
12.34
|
$
|
12.88
|
$
|
12.68
|
|||||||||
0.02
|
(1)
|
0.12
|
(1)
|
0.13
|
(1)
|
0.09
|
0.06
|
|||||||||||
1.56
|
(1.04
|
)
|
0.59
|
0.33
|
1.09
|
|||||||||||||
1.58
|
(0.92
|
)
|
0.72
|
0.42
|
1.15
|
|||||||||||||
(0.03
|
)
|
(0.12
|
)
|
(0.13
|
)
|
(0.08
|
)
|
(0.05
|
)
|
|||||||||
—
|
(0.50
|
)
|
(0.55
|
)
|
(0.88
|
)
|
(0.90
|
)
|
||||||||||
(0.03
|
)
|
(0.62
|
)
|
(0.68
|
)
|
(0.96
|
)
|
(0.95
|
)
|
|||||||||
$
|
12.39
|
$
|
10.84
|
$
|
12.38
|
$
|
12.34
|
$
|
12.88
|
|||||||||
14.62
|
%
|
-7.84
|
%
|
6.05
|
%
|
3.46
|
%
|
9.56
|
%
|
|||||||||
$
|
13.53
|
$
|
11.99
|
$
|
12.30
|
$
|
11.62
|
$
|
12.24
|
|||||||||
1.85
|
%
|
1.89
|
%
|
1.88
|
%
|
1.84
|
%
|
1.82
|
%
|
|||||||||
0.17
|
%
|
1.05
|
%
|
1.04
|
%
|
0.70
|
%
|
0.45
|
%
|
|||||||||
31
|
%
|
42
|
%
|
52
|
%
|
21
|
%
|
31
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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. Market discounts, original issue discounts, and market premiums on debt securities
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
are accreted or amortized to interest income over the life of a security with a corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity
method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered
investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act,
and requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required
to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential impact
of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5
establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight and
certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with
Rule 2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in
|
HENNESSY FUNDS
|
1-800-966-4354
|
determining fair value and the accounting and auditing of fund investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the potential impact of the new
rules on the Fund’s financial statements.
|
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 generally are 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”) generally are 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 generally are 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 are 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 for equity securities.
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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
12,851,955
|
||
Gross tax unrealized appreciation
|
$
|
873,298
|
||
Gross tax unrealized depreciation
|
(157,698
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
715,600
|
||
Undistributed ordinary income
|
$
|
10,636
|
||
Undistributed long-term capital gains
|
454,083
|
|||
Total distributable earnings
|
$
|
464,719
|
||
Other accumulated gain/(loss)
|
$
|
—
|
||
Total accumulated gain/(loss)
|
$
|
1,180,319
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
31,330
|
$
|
35,846
|
|||||
Long-term capital gains
|
454,086
|
—
|
|||||||
Total distributions
|
$
|
485,416
|
$
|
35,846
|
(1) Ordinary income includes short-term capital gains.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS /EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$1,014.20
|
$9.09
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,015.77
|
$9.10
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.82%, multiplied by the average account value over the period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded that the Advisor
provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics, as
appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred to
manage the Fund are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as the
Fund’s assets grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
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 Agreement
|
27
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Since Inception
|
|
Months(1)
|
Year
|
Years
|
(12/31/13)
|
|
Hennessy Energy Transition Fund –
|
||||
Investor Class (HNRGX)
|
28.78%
|
58.26%
|
4.06%
|
2.33%
|
Hennessy Energy Transition Fund –
|
||||
Institutional Class (HNRIX)
|
28.95%
|
58.84%
|
4.34%
|
2.58%
|
S&P 500® Energy Index
|
33.92%
|
60.82%
|
7.03%
|
2.00%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
12.27%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% TOTAL ASSETS
|
EOG Resources, Inc.
|
4.71%
|
Solaris Oilfield Infrastructure, Inc.
|
4.51%
|
EQT Corp.
|
4.44%
|
Halliburton Co.
|
4.41%
|
Pioneer Natural Resources Co.
|
4.40%
|
Cheniere Energy, Inc.
|
4.40%
|
Exxon Mobil Corp.
|
4.40%
|
Antero Resources Corp.
|
4.34%
|
Chevron Corp.
|
4.29%
|
Phillips 66
|
4.16%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 93.59%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Downstream – 6.98%
|
||||||||||||
Marathon Petroleum Corp.
|
6,900
|
$
|
602,094
|
2.78
|
%
|
|||||||
Phillips 66
|
10,500
|
910,980
|
4.20
|
%
|
||||||||
|
1,513,074
|
6.98
|
%
|
|||||||||
Exploration & Production – 40.88%
|
||||||||||||
Antero Resources Corp. (a)
|
27,000
|
950,400
|
4.38
|
%
|
||||||||
Comstock Resources, Inc. (a)
|
19,640
|
334,469
|
1.54
|
%
|
||||||||
ConocoPhillips
|
9,145
|
873,530
|
4.03
|
%
|
||||||||
Coterra Energy, Inc.
|
26,510
|
763,223
|
3.52
|
%
|
||||||||
Diamondback Energy, Inc.
|
6,120
|
772,528
|
3.56
|
%
|
||||||||
EOG Resources, Inc.
|
8,830
|
1,030,991
|
4.75
|
%
|
||||||||
EQT Corp.
|
24,500
|
973,875
|
4.49
|
%
|
||||||||
Magnolia Oil & Gas Corp.
|
21,600
|
501,984
|
2.32
|
%
|
||||||||
PDC Energy, Inc.
|
12,090
|
843,157
|
3.89
|
%
|
||||||||
Pioneer Natural Resources Co.
|
4,150
|
964,751
|
4.45
|
%
|
||||||||
Suncor Energy, Inc. (b)
|
23,860
|
857,528
|
3.95
|
%
|
||||||||
|
8,866,436
|
40.88
|
%
|
|||||||||
Integrated – 8.77%
|
||||||||||||
Chevron Corp.
|
6,000
|
940,020
|
4.33
|
%
|
||||||||
Exxon Mobil Corp.
|
11,300
|
963,325
|
4.44
|
%
|
||||||||
|
1,903,345
|
8.77
|
%
|
|||||||||
Midstream – 4.44%
|
||||||||||||
Cheniere Energy, Inc.
|
7,100
|
964,251
|
4.44
|
%
|
||||||||
Oil Services – 25.21%
|
||||||||||||
Halliburton Co.
|
27,150
|
967,083
|
4.46
|
%
|
||||||||
Helmerich & Payne, Inc.
|
12,000
|
552,360
|
2.55
|
%
|
||||||||
Newpark Resources, Inc. (a)
|
125,950
|
439,565
|
2.03
|
%
|
||||||||
Schlumberger Ltd. (b)
|
23,210
|
905,422
|
4.17
|
%
|
||||||||
Select Energy Services, Inc. (a)
|
52,660
|
408,642
|
1.88
|
%
|
||||||||
Solaris Oilfield Infrastructure, Inc.
|
87,920
|
989,100
|
4.56
|
%
|
||||||||
TechnipFMC PLC (a)(b)
|
65,240
|
451,461
|
2.08
|
%
|
||||||||
Tenaris SA – ADR (b)
|
25,000
|
754,500
|
3.48
|
%
|
||||||||
|
5,468,133
|
25.21
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Utility – 7.31%
|
||||||||||||
Freeport-McMoRan, Inc.
|
19,220
|
$
|
779,371
|
3.59
|
%
|
|||||||
NextEra Energy, Inc.
|
4,770
|
338,765
|
1.56
|
%
|
||||||||
OGE Energy Corp.
|
12,100
|
468,028
|
2.16
|
%
|
||||||||
|
1,586,164
|
7.31
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $13,517,516)
|
20,301,403
|
93.59
|
%
|
|||||||||
|
||||||||||||
PARTNERSHIPS & TRUSTS – 6.01%
|
||||||||||||
Midstream – 6.01%
|
||||||||||||
MPLX LP
|
15,104
|
488,765
|
2.25
|
%
|
||||||||
Plains All American Pipeline LP
|
78,710
|
815,436
|
3.76
|
%
|
||||||||
|
||||||||||||
Total Partnerships & Trusts
|
||||||||||||
(Cost $1,458,831)
|
1,304,201
|
6.01
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 0.00%
|
||||||||||||
Money Market Funds – 0.00%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (c)
|
47
|
47
|
0.00
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $47)
|
47
|
0.00
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $14,976,394) – 99.60%
|
21,605,651
|
99.60
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.40%
|
85,760
|
0.40
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
21,691,411
|
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, 2022.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Downstream
|
$
|
1,513,074
|
$
|
—
|
$
|
—
|
$
|
1,513,074
|
||||||||
Exploration & Production
|
8,866,436
|
—
|
—
|
8,866,436
|
||||||||||||
Integrated
|
1,903,345
|
—
|
—
|
1,903,345
|
||||||||||||
Midstream
|
964,251
|
—
|
—
|
964,251
|
||||||||||||
Oil Services
|
5,468,133
|
—
|
—
|
5,468,133
|
||||||||||||
Utility
|
1,586,164
|
—
|
—
|
1,586,164
|
||||||||||||
Total Common Stocks
|
$
|
20,301,403
|
$
|
—
|
$
|
—
|
$
|
20,301,403
|
||||||||
Partnerships & Trusts
|
||||||||||||||||
Midstream
|
$
|
1,304,201
|
$
|
—
|
$
|
—
|
$
|
1,304,201
|
||||||||
Total Partnerships & Trusts
|
$
|
1,304,201
|
$
|
—
|
$
|
—
|
$
|
1,304,201
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
47
|
$
|
—
|
$
|
—
|
$
|
47
|
||||||||
Total Short-Term Investments
|
$
|
47
|
$
|
—
|
$
|
—
|
$
|
47
|
||||||||
Total Investments
|
$
|
21,605,651
|
$
|
—
|
$
|
—
|
$
|
21,605,651
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $14,976,394)
|
$
|
21,605,651
|
||
Dividends and interest receivable
|
2,943
|
|||
Receivable for fund shares sold
|
18,307
|
|||
Receivable for securities sold
|
247,191
|
|||
Return of capital receivable
|
17,119
|
|||
Prepaid expenses and other assets
|
20,842
|
|||
Total assets
|
21,912,053
|
|||
LIABILITIES:
|
||||
Loans payable
|
168,000
|
|||
Payable for fund shares redeemed
|
8,069
|
|||
Payable to advisor
|
23,530
|
|||
Payable to auditor
|
11,504
|
|||
Accrued distribution fees
|
1,909
|
|||
Accrued service fees
|
739
|
|||
Accrued trustees fees
|
6,165
|
|||
Accrued expenses and other payables
|
726
|
|||
Total liabilities
|
220,642
|
|||
NET ASSETS
|
$
|
21,691,411
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
56,934,742
|
||
Accumulated deficit
|
(35,243,331
|
)
|
||
Total net assets
|
$
|
21,691,411
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
9,102,899
|
||
Shares issued and outstanding
|
436,824
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
20.84
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
12,588,512
|
||
Shares issued and outstanding
|
594,264
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
21.18
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Distributions received from master limited partnerships
|
$
|
67,157
|
||
Return of capital on distributions received
|
(67,157
|
)
|
||
Dividend income from common stock(1)
|
255,017
|
|||
Interest income
|
108
|
|||
Total investment income
|
255,125
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
119,604
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
16,877
|
|||
Federal and state registration fees
|
16,290
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,496
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
5,490
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
3,947
|
|||
Trustees’ fees and expenses
|
8,394
|
|||
Distribution fees – Investor Class (See Note 5)
|
5,587
|
|||
Reports to shareholders
|
4,251
|
|||
Service fees – Investor Class (See Note 5)
|
3,724
|
|||
Interest expense (See Note 7)
|
261
|
|||
Other expenses
|
2,593
|
|||
Total expenses before waiver
|
213,670
|
|||
Service provider expense waiver (See Note 5)
|
(16,877
|
)
|
||
Net expenses
|
196,793
|
|||
NET INVESTMENT INCOME
|
$
|
58,332
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
815,269
|
||
Net change in unrealized appreciation/depreciation on investments
|
4,169,030
|
|||
Net gain on investments
|
4,984,299
|
|||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
5,042,631
|
(1)
|
Net of foreign taxes withheld of $2,515.
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
58,332
|
$
|
45,083
|
||||
Net realized gain on investments
|
815,269
|
1,234,155
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
4,169,030
|
5,107,361
|
||||||
Net increase in net assets resulting from operations
|
5,042,631
|
6,386,599
|
||||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(751,147
|
)
|
—
|
|||||
Distributable earnings – Institutional Class
|
(1,188,176
|
)
|
—
|
|||||
Total distributions
|
(1,939,323
|
)
|
—
|
|||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
3,732,351
|
7,710,426
|
||||||
Proceeds from shares subscribed – Institutional Class
|
3,075,803
|
5,598,042
|
||||||
Dividends reinvested – Investor Class
|
698,292
|
—
|
||||||
Dividends reinvested – Institutional Class
|
1,181,355
|
—
|
||||||
Cost of shares redeemed – Investor Class
|
(3,162,354
|
)
|
(6,158,757
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(3,188,118
|
)
|
(3,599,017
|
)
|
||||
Net increase in net assets derived
|
||||||||
from capital share transactions
|
2,337,329
|
3,550,694
|
||||||
TOTAL INCREASE IN NET ASSETS
|
5,440,637
|
9,937,293
|
||||||
NET ASSETS:
|
||||||||
Beginning of period
|
16,250,774
|
6,313,481
|
||||||
End of period
|
$
|
21,691,411
|
$
|
16,250,774
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
190,543
|
521,054
|
||||||
Shares sold – Institutional Class
|
171,535
|
329,240
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
44,449
|
—
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
74,066
|
—
|
||||||
Shares redeemed – Investor Class
|
(169,704
|
)
|
(435,171
|
)
|
||||
Shares redeemed – Institutional Class
|
(159,430
|
)
|
(252,362
|
)
|
||||
Net increase in shares outstanding
|
151,459
|
162,761
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
18.31
|
||
Income from investment operations:
|
||||
Net investment income (loss)(2)
|
0.04
|
|||
Net realized and unrealized gains (losses) on investments
|
4.56
|
|||
Total from investment operations
|
4.60
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(2.07
|
)
|
||
Total distributions
|
(2.07
|
)
|
||
Net asset value, end of period
|
$
|
20.84
|
||
TOTAL RETURN
|
28.78
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
9.10
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
2.44
|
%(4)
|
||
After expense reimbursement
|
2.26
|
%(4)(6)
|
||
Ratio of net investment income (loss) to average net assets:
|
||||
Before expense reimbursement
|
0.25
|
%(4)
|
||
After expense reimbursement
|
0.43
|
%(4)
|
||
Portfolio turnover rate(7)
|
16
|
%(3)
|
(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)
|
Calculated using the average shares outstanding method.
|
(3)
|
Not annualized.
|
(4)
|
Annualized.
|
(5)
|
The Fund had an expense limitation agreement in place through October 25, 2020.
|
(6)
|
Certain service provider expenses were voluntarily waived during the period.
|
(7)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
Period Ended
October 31,
|
Year Ended
November 30,
|
||||||||||||||||||||
2021
|
2020
|
2019
|
2018(1)
|
2017
|
2016
|
|||||||||||||||||
$
|
8.74
|
$
|
14.08
|
$
|
18.32
|
$
|
19.47
|
$
|
20.54
|
$
|
16.41
|
|||||||||||
0.06
|
0.04
|
(0.07
|
)
|
(0.20
|
)
|
(0.23
|
)
|
(0.15
|
)
|
|||||||||||||
9.51
|
(5.38
|
)
|
(4.17
|
)
|
(0.95
|
)
|
(0.84
|
)
|
4.28
|
|||||||||||||
9.57
|
(5.34
|
)
|
(4.24
|
)
|
(1.15
|
)
|
(1.07
|
)
|
4.13
|
|||||||||||||
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||
$
|
18.31
|
$
|
8.74
|
$
|
14.08
|
$
|
18.32
|
$
|
19.47
|
$
|
20.54
|
|||||||||||
109.50
|
%
|
-37.93
|
%
|
-23.14
|
%
|
-5.91
|
%(3)
|
-5.21
|
%
|
25.17
|
%
|
|||||||||||
$
|
6.80
|
$
|
2.50
|
$
|
6.83
|
$
|
18.16
|
$
|
22.66
|
$
|
19.64
|
|||||||||||
2.96
|
%
|
2.59
|
%
|
1.97
|
%
|
1.82
|
%(4)
|
1.87
|
%
|
1.89
|
%
|
|||||||||||
2.74
|
%(6)
|
2.03
|
%(5)(6)
|
1.97
|
%
|
1.82
|
%(4)
|
1.87
|
%
|
1.89
|
%
|
|||||||||||
0.16
|
%
|
(0.18
|
)%
|
(0.46
|
)%
|
(1.05
|
)%(4)
|
(1.21
|
)%
|
(0.92
|
)%
|
|||||||||||
0.38
|
%
|
0.38
|
%
|
(0.46
|
)%
|
(1.05
|
)%(4)
|
(1.21
|
)%
|
(0.92
|
)%
|
|||||||||||
74
|
%
|
73
|
%
|
87
|
%
|
72
|
%(3)
|
84
|
%
|
83
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
18.60
|
||
Income from investment operations:
|
||||
Net investment income (loss)(2)
|
0.07
|
|||
Net realized and unrealized gains (losses) on investments
|
4.62
|
|||
Total from investment operations
|
4.69
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(2.11
|
)
|
||
Total distributions
|
(2.11
|
)
|
||
Net asset value, end of period
|
$
|
21.18
|
||
TOTAL RETURN
|
28.95
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
12.59
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
2.11
|
%(4)
|
||
After expense reimbursement
|
1.93
|
%(4)(6)
|
||
Ratio of net investment income (loss) to average net assets:
|
||||
Before expense reimbursement
|
0.55
|
%(4)
|
||
After expense reimbursement
|
0.73
|
%(4)
|
||
Portfolio turnover rate(7)
|
16
|
%(3)
|
(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)
|
Calculated using the average shares outstanding method.
|
(3)
|
Not annualized.
|
(4)
|
Annualized.
|
(5)
|
The Fund had an expense limitation agreement in place through October 25, 2020.
|
(6)
|
Certain service provider expenses were voluntarily waived during the period.
|
(7)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
Period Ended
October 31,
|
Year Ended
November 30,
|
||||||||||||||||||||
2021
|
2020
|
2019
|
2018(1)
|
2017
|
2016
|
|||||||||||||||||
$
|
8.85
|
$
|
14.26
|
$
|
18.50
|
$
|
19.61
|
$
|
20.64
|
$
|
16.46
|
|||||||||||
0.07
|
0.12
|
(0.02
|
)
|
(0.15
|
)
|
(0.19
|
)
|
(0.11
|
)
|
|||||||||||||
9.68
|
(5.50
|
)
|
(4.22
|
)
|
(0.96
|
)
|
(0.84
|
)
|
4.32
|
|||||||||||||
9.75
|
(5.38
|
)
|
(4.24
|
)
|
(1.11
|
)
|
(1.03
|
)
|
4.21
|
|||||||||||||
—
|
(0.03
|
)
|
—
|
—
|
—
|
(0.03
|
)
|
|||||||||||||||
—
|
(0.03
|
)
|
—
|
—
|
—
|
(0.03
|
)
|
|||||||||||||||
$
|
18.60
|
$
|
8.85
|
$
|
14.26
|
$
|
18.50
|
$
|
19.61
|
$
|
20.64
|
|||||||||||
110.17
|
%
|
-37.80
|
%
|
-22.92
|
%
|
-5.66
|
%(3)
|
-4.99
|
%
|
25.61
|
%
|
|||||||||||
$
|
9.45
|
$
|
3.82
|
$
|
44.37
|
$
|
78.81
|
$
|
122.45
|
$
|
126.92
|
|||||||||||
2.61
|
%
|
2.01
|
%
|
1.66
|
%
|
1.57
|
%(4)
|
1.62
|
%
|
1.60
|
%
|
|||||||||||
2.39
|
%(6)
|
1.77
|
%(5)(6)
|
1.66
|
%
|
1.57
|
%(4)
|
1.62
|
%
|
1.60
|
%
|
|||||||||||
0.22
|
%
|
0.79
|
%
|
(0.12
|
)%
|
(0.79
|
)%(4)
|
(0.98
|
)%
|
(0.65
|
)%
|
|||||||||||
0.44
|
%
|
1.03
|
%
|
(0.12
|
)%
|
(0.79
|
)%(4)
|
(0.98
|
)%
|
(0.65
|
)%
|
|||||||||||
74
|
%
|
73
|
%
|
87
|
%
|
72
|
%(3)
|
84
|
%
|
83
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a
corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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.
|
j).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered
investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of
|
HENNESSY FUNDS
|
1-800-966-4354
|
the 1940 Act, and requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a
derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management
is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs
related to the Fund’s use of derivatives.
|
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5
establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight
and certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection
with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing
of fund investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”)
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
generally are 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 generally are 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 are 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 for equity securities.
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 exceeds
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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
14,993,677
|
||
Gross tax unrealized appreciation
|
$
|
3,082,255
|
||
Gross tax unrealized depreciation
|
(1,734,192
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
1,348,063
|
||
Undistributed ordinary income
|
$
|
1,939,323
|
||
Undistributed long-term capital gains
|
—
|
|||
Total distributable earnings
|
$
|
1,939,323
|
||
Other accumulated gain/(loss)
|
$
|
(41,634,025
|
)
|
|
Total accumulated gain/(loss)
|
$
|
(38,346,639
|
)
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
1,939,323
|
$
|
—
|
|||||
Long-term capital gains
|
—
|
—
|
|||||||
Total distributions
|
$
|
1,939,323
|
$
|
—
|
(1) Ordinary income includes short-term capital gains.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$1,287.80
|
$12.82
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,013.59
|
$11.28
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$1,289.50
|
$10.96
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,015.22
|
$ 9.64
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 2.26% for Investor Class shares or 1.93% for Institutional Class shares, as applicable, multiplied by the average account value over
the period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded that the
Advisor provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics, as
appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred to
manage the Fund are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as the
Fund’s assets grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
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 Agreement
|
29
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Since Inception
|
|
Months(1)
|
Year
|
Years
|
(12/31/13)
|
|
Hennessy Midstream Fund –
|
||||
Investor Class (HMSFX)
|
14.52%
|
31.65%
|
-1.45%
|
-0.98%
|
Hennessy Midstream Fund –
|
||||
Institutional Class (HMSIX)
|
14.69%
|
31.99%
|
-1.22%
|
-0.73%
|
Alerian US Midstream Energy Index
|
16.51%
|
37.51%
|
5.06%
|
2.72%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
12.27%
|
Expense ratios: | Gross 2.11%, Net 1.76%(2) (Investor Class); |
|
Gross 1.74%, 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, 2023.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% TOTAL ASSETS
|
Energy Transfer LP
|
14.05%
|
Enterprise Products Partners LP
|
10.85%
|
MPLX LP
|
10.23%
|
Targa Resources Corp.
|
8.86%
|
The Williams Companies, Inc.
|
8.04%
|
Plains All American Pipeline LP
|
7.72%
|
ONEOK, Inc.
|
7.18%
|
Kinder Morgan, Inc.
|
6.54%
|
DCP Midstream LP
|
5.07%
|
Western Midstream Partners LP
|
4.46%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 39.48%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Crude Oil & Refined Products – 1.99%
|
||||||||||||
Enbridge, Inc. (a)
|
21,500
|
$
|
938,260
|
1.99
|
%
|
|||||||
Gathering & Processing – 13.58%
|
||||||||||||
Antero Midstream Corp.
|
89,000
|
914,030
|
1.94
|
%
|
||||||||
EnLink Midstream LLC
|
132,000
|
1,302,840
|
2.76
|
%
|
||||||||
Targa Resources Corp.
|
57,000
|
4,184,370
|
8.88
|
%
|
||||||||
|
6,401,240
|
13.58
|
%
|
|||||||||
Natural Gas/NGL Transportation – 23.91%
|
||||||||||||
DT Midstream, Inc.
|
18,500
|
994,375
|
2.11
|
%
|
||||||||
Kinder Morgan, Inc.
|
170,090
|
3,087,133
|
6.55
|
%
|
||||||||
ONEOK, Inc.
|
53,526
|
3,389,802
|
7.20
|
%
|
||||||||
The Williams Companies, Inc.
|
110,652
|
3,794,257
|
8.05
|
%
|
||||||||
|
11,265,567
|
23.91
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $10,727,032)
|
18,605,067
|
39.48
|
%
|
|||||||||
|
||||||||||||
PARTNERSHIPS & TRUSTS – 56.43%
|
||||||||||||
Crude Oil & Refined Products – 21.95%
|
||||||||||||
Genesis Energy LP
|
65,000
|
713,700
|
1.51
|
%
|
||||||||
Magellan Midstream Partners LP
|
23,900
|
1,157,955
|
2.46
|
%
|
||||||||
MPLX LP
|
149,249
|
4,829,698
|
10.25
|
%
|
||||||||
Plains All American Pipeline LP
|
351,526
|
3,641,809
|
7.73
|
%
|
||||||||
|
10,343,162
|
21.95
|
%
|
|||||||||
Gathering & Processing – 4.46%
|
||||||||||||
Western Midstream Partners LP
|
87,000
|
2,104,530
|
4.46
|
%
|
||||||||
Natural Gas/NGL Transportation – 30.02%
|
||||||||||||
DCP Midstream LP
|
70,000
|
2,394,000
|
5.08
|
%
|
||||||||
Energy Transfer LP
|
598,700
|
6,633,596
|
14.08
|
%
|
||||||||
Enterprise Products Partners LP
|
197,600
|
5,119,816
|
10.86
|
%
|
||||||||
|
14,147,412
|
30.02
|
%
|
|||||||||
|
||||||||||||
Total Partnerships & Trusts
|
||||||||||||
(Cost $18,223,291)
|
26,595,104
|
56.43
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 3.24%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 3.24%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (b)
|
1,526,087
|
$
|
1,526,087
|
3.24
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $1,526,087)
|
1,526,087
|
3.24
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $30,476,410) – 99.15%
|
46,726,258
|
99.15
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.85%
|
401,845
|
0.85
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
47,128,103
|
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, 2022.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Crude Oil & Refined Products
|
$
|
938,260
|
$
|
—
|
$
|
—
|
$
|
938,260
|
||||||||
Gathering & Processing
|
6,401,240
|
—
|
—
|
6,401,240
|
||||||||||||
Natural Gas/NGL Transportation
|
11,265,567
|
—
|
—
|
11,265,567
|
||||||||||||
Total Common Stocks
|
$
|
18,605,067
|
$
|
—
|
$
|
—
|
$
|
18,605,067
|
||||||||
Partnerships & Trusts
|
||||||||||||||||
Crude Oil & Refined Products
|
$
|
10,343,162
|
$
|
—
|
$
|
—
|
$
|
10,343,162
|
||||||||
Gathering & Processing
|
2,104,530
|
—
|
—
|
2,104,530
|
||||||||||||
Natural Gas/NGL Transportation
|
14,147,412
|
—
|
—
|
14,147,412
|
||||||||||||
Total Partnerships & Trusts
|
$
|
26,595,104
|
$
|
—
|
$
|
—
|
$
|
26,595,104
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
1,526,087
|
$
|
—
|
$
|
—
|
$
|
1,526,087
|
||||||||
Total Short-Term Investments
|
$
|
1,526,087
|
$
|
—
|
$
|
—
|
$
|
1,526,087
|
||||||||
Total Investments
|
$
|
46,726,258
|
$
|
—
|
$
|
—
|
$
|
46,726,258
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $30,476,410)
|
$
|
46,726,258
|
||
Dividends and interest receivable
|
48,412
|
|||
Receivable for fund shares sold
|
28,000
|
|||
Return of capital receivable
|
377,635
|
|||
Deferred income tax
|
—
|
|||
Prepaid expenses and other assets
|
22,885
|
|||
Total assets
|
47,203,190
|
|||
LIABILITIES:
|
||||
Payable to advisor
|
43,797
|
|||
Payable to auditor
|
20,372
|
|||
Accrued distribution fees
|
1,542
|
|||
Accrued service fees
|
795
|
|||
Accrued trustees fees
|
6,320
|
|||
Accrued expenses and other payables
|
2,261
|
|||
Total liabilities
|
75,087
|
|||
NET ASSETS
|
$
|
47,128,103
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
56,502,426
|
||
Accumulated deficit
|
(9,374,323
|
)
|
||
Total net assets
|
$
|
47,128,103
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
9,455,568
|
||
Shares issued and outstanding
|
1,013,464
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
9.33
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
37,672,535
|
||
Shares issued and outstanding
|
3,915,955
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
9.62
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Distributions received from master limited partnerships
|
$
|
988,833
|
||
Return of capital on distributions received
|
(988,833
|
)
|
||
Dividend income(1)
|
254,462
|
|||
Interest income
|
470
|
|||
Total investment income
|
254,932
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
224,775
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
28,940
|
|||
Audit fees
|
20,365
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
6,617
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
10,313
|
|||
Federal and state registration fees
|
15,654
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Trustees’ fees and expenses
|
8,487
|
|||
Distribution fees – Investor Class (See Note 5)
|
5,809
|
|||
Reports to shareholders
|
5,714
|
|||
Service fees – Investor Class (See Note 5)
|
3,872
|
|||
Income tax expense
|
900
|
|||
Legal fees
|
548
|
|||
Other expenses
|
5,797
|
|||
Total expenses before waivers and reimbursements
|
352,947
|
|||
Service provider expense waiver (See Note 5)
|
(28,940
|
)
|
||
Expense reimbursement by advisor – Investor Class (See Note 5)
|
(4,805
|
)
|
||
Expense reimbursement by advisor – Institutional Class (See Note 5)
|
(2,111
|
)
|
||
Net expenses
|
317,091
|
|||
NET INVESTMENT LOSS
|
$
|
(62,159
|
)
|
|
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
104,009
|
||
Net change in unrealized appreciation/depreciation on investments
|
5,765,419
|
|||
Income tax expense
|
—
|
|||
Net gain on investments
|
5,869,428
|
|||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
5,807,269
|
(1)
|
Net of foreign taxes withheld of $4,913.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment loss
|
$
|
(62,159
|
)
|
$
|
(230,996
|
)
|
||
Net realized gain on investments
|
104,009
|
357,263
|
||||||
Net change in unrealized
|
||||||||
appreciation/deprecation on investments
|
5,765,419
|
17,111,950
|
||||||
Net increase in net assets resulting from operations
|
5,807,269
|
17,238,217
|
||||||
DISTRIBUTIONS TO SHAREHOLDERS FROM:
|
||||||||
Return of capital – Investor Class
|
(442,182
|
)
|
(756,323
|
)
|
||||
Return of capital – Institutional Class
|
(1,841,310
|
)
|
(3,420,217
|
)
|
||||
Total distributions
|
(2,283,492
|
)
|
(4,176,540
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
2,454,841
|
2,502,132
|
||||||
Proceeds from shares subscribed – Institutional Class
|
5,069,747
|
3,761,293
|
||||||
Dividends reinvested – Investor Class
|
372,557
|
677,429
|
||||||
Dividends reinvested – Institutional Class
|
1,721,319
|
3,185,818
|
||||||
Cost of shares redeemed – Investor Class
|
(724,800
|
)
|
(2,532,516
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(2,456,451
|
)
|
(5,635,003
|
)
|
||||
Net increase in net assets derived
|
||||||||
from capital share transactions
|
6,437,213
|
1,959,153
|
||||||
TOTAL INCREASE IN NET ASSETS
|
9,960,990
|
15,020,830
|
||||||
NET ASSETS:
|
||||||||
Beginning of period
|
37,167,113
|
22,146,283
|
||||||
End of period
|
$
|
47,128,103
|
$
|
37,167,113
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
274,006
|
321,069
|
||||||
Shares sold – Institutional Class
|
570,412
|
490,595
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
44,513
|
89,396
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
200,654
|
410,703
|
||||||
Shares redeemed – Investor Class
|
(80,972
|
)
|
(320,846
|
)
|
||||
Shares redeemed – Institutional Class
|
(274,716
|
)
|
(711,400
|
)
|
||||
Net increase in shares outstanding
|
733,897
|
279,517
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
8.66
|
||
Income from investment operations:
|
||||
Net investment loss(2)(3)
|
(0.02
|
)
|
||
Net realized and unrealized gains (losses) on investments
|
1.21
|
|||
Total from investment operations
|
1.19
|
|||
Less distributions:
|
||||
Dividends from return of capital
|
(0.52
|
)
|
||
Total distributions
|
(0.52
|
)
|
||
Net asset value, end of period
|
$
|
9.33
|
||
TOTAL RETURN
|
14.52
|
%(4)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
9.46
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
2.02
|
%(5)
|
||
After expense reimbursement
|
1.75
|
%(5)(6)
|
||
Ratio of net investment loss to average net assets:
|
||||
Before expense reimbursement(3)
|
(0.74
|
)%(5)
|
||
After expense reimbursement(3)
|
(0.47
|
)%(5)
|
||
Portfolio turnover rate(7)
|
6
|
%(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)
|
Calculated using the average shares outstanding method.
|
(3)
|
Includes current and deferred tax benefit/expense from net investment income/loss only.
|
(4)
|
Not annualized.
|
(5)
|
Annualized.
|
(6)
|
Certain service provider expenses were voluntarily waived during the period.
|
(7)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
Period Ended
|
Year Ended
November 30,
|
||||||||||||||||||||
October 31,
|
||||||||||||||||||||||
2021
|
2020
|
2019
|
2018(1)
|
2017
|
2016
|
|||||||||||||||||
$
|
5.55
|
$
|
10.90
|
$
|
12.66
|
$
|
14.51
|
$
|
16.54
|
$
|
15.45
|
|||||||||||
(0.07
|
)
|
(0.10
|
)
|
(0.10
|
)
|
(0.16
|
)
|
(0.22
|
)
|
(0.17
|
)
|
|||||||||||
4.21
|
(4.22
|
)
|
(0.63
|
)
|
(0.66
|
)
|
(0.78
|
)
|
2.29
|
|||||||||||||
4.14
|
(4.32
|
)
|
(0.73
|
)
|
(0.82
|
)
|
(1.00
|
)
|
2.12
|
|||||||||||||
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
|||||||||||
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
|||||||||||
$
|
8.66
|
$
|
5.55
|
$
|
10.90
|
$
|
12.66
|
$
|
14.51
|
$
|
16.54
|
|||||||||||
78.41
|
%
|
-42.13
|
%
|
-6.28
|
%
|
-6.15
|
%(4)
|
-6.49
|
%
|
14.78
|
%
|
|||||||||||
$
|
6.72
|
$
|
3.81
|
$
|
9.20
|
$
|
20.07
|
$
|
16.86
|
$
|
13.43
|
|||||||||||
2.11
|
%
|
2.12
|
%
|
1.89
|
%
|
1.86
|
%(5)
|
1.91
|
%
|
2.21
|
%
|
|||||||||||
1.76
|
%(6)
|
1.76
|
%(6)
|
1.76
|
%
|
1.78
|
%(5)
|
1.77
|
%
|
1.74
|
%
|
|||||||||||
(1.26
|
)%
|
(1.63
|
)%
|
(0.92
|
)%
|
(1.34
|
)%(5)
|
(1.50
|
)%
|
(1.60
|
)%
|
|||||||||||
(0.91
|
)%
|
(1.27
|
)%
|
(0.79
|
)%
|
(1.26
|
)%(5)
|
(1.36
|
)%
|
(1.13
|
)%
|
|||||||||||
40
|
%
|
53
|
%
|
41
|
%
|
64
|
%(4)
|
63
|
%
|
139
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
8.90
|
||
Income from investment operations:
|
||||
Net investment loss(2)(3)
|
(0.01
|
)
|
||
Net realized and unrealized gains (losses) on investments
|
1.25
|
|||
Total from investment operations
|
1.24
|
|||
Less distributions:
|
||||
Dividends from return of capital
|
(0.52
|
)
|
||
Total distributions
|
(0.52
|
)
|
||
Net asset value, end of period
|
$
|
9.62
|
||
TOTAL RETURN
|
14.69
|
%(4)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
37.67
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
1.66
|
%(5)
|
||
After expense reimbursement
|
1.50
|
%(5)(6)
|
||
Ratio of net investment loss to average net assets:
|
||||
Before expense reimbursement(3)
|
(0.42
|
)%(5)
|
||
After expense reimbursement(3)
|
(0.26
|
)%(5)
|
||
Portfolio turnover rate(7)
|
6
|
%(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)
|
Calculated using the average shares outstanding method.
|
(3)
|
Includes current and deferred tax benefit/expense from net investment income/loss only.
|
(4)
|
Not annualized.
|
(5)
|
Annualized.
|
(6)
|
Certain service provider expenses were voluntarily waived during the period.
|
(7)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
Period Ended
|
Year Ended
November 30,
|
||||||||||||||||||||
October 31,
|
||||||||||||||||||||||
2021
|
2020
|
2019
|
2018(1)
|
2017
|
2016
|
|||||||||||||||||
$
|
5.68
|
$
|
11.09
|
$
|
12.83
|
$
|
14.66
|
$
|
16.66
|
$
|
15.53
|
|||||||||||
(0.05
|
)
|
(0.10
|
)
|
(0.09
|
)
|
(0.14
|
)
|
(0.18
|
)
|
(0.12
|
)
|
|||||||||||
4.30
|
(4.28
|
)
|
(0.62
|
)
|
(0.66
|
)
|
(0.79
|
)
|
2.28
|
|||||||||||||
4.25
|
(4.38
|
)
|
(0.71
|
)
|
(0.80
|
)
|
(0.97
|
)
|
2.16
|
|||||||||||||
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
|||||||||||
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
(1.03
|
)
|
|||||||||||
$
|
8.90
|
$
|
5.68
|
$
|
11.09
|
$
|
12.83
|
$
|
14.66
|
$
|
16.66
|
|||||||||||
78.57
|
%
|
-41.93
|
%
|
-6.10
|
%
|
-5.94
|
%(4)
|
-6.25
|
%
|
14.97
|
%
|
|||||||||||
$
|
30.45
|
$
|
18.33
|
$
|
31.78
|
$
|
61.92
|
$
|
82.59
|
$
|
33.22
|
|||||||||||
1.74
|
%
|
1.79
|
%
|
1.56
|
%
|
1.58
|
%(5)
|
1.66
|
%
|
1.95
|
%
|
|||||||||||
1.51
|
%(6)
|
1.51
|
%(6)
|
1.51
|
%
|
1.52
|
%(5)
|
1.52
|
%
|
1.48
|
%
|
|||||||||||
(0.89
|
)%
|
(1.55
|
)%
|
(0.76
|
)%
|
(1.15
|
)%(5)
|
(1.28
|
)%
|
(1.28
|
)%
|
|||||||||||
(0.66
|
)%
|
(1.27
|
)%
|
(0.71
|
)%
|
(1.09
|
)%(5)
|
(1.14
|
)%
|
(0.81
|
)%
|
|||||||||||
40
|
%
|
53
|
%
|
41
|
%
|
64
|
%(4)
|
63
|
%
|
139
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, 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.
|
The Fund includes any tax expense or benefit in the Statement of Operations based on the component of income or
gains/losses to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and
the carrying amount of assets and liabilities for income tax purposes. The Fund recognizes a valuation allowance if, based on the weight of available evidence, it is more likely than not that the Fund will not realize
some portion or all of the deferred income tax assets. As of April 30, 2022, 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
open for examination. The Fund has reviewed all open tax years in major tax 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 various state income tax returns.
|
|
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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with a
corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 beginning of the months of March, June, September, and December. 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, 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 to meet Fund shareholder redemption requests as necessary.
|
In general, a distribution constitutes 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 constitutes a tax-free return of capital to the extent of a shareholder’s cost
basis in Fund shares and thereafter generally is taxable to the shareholder as a capital gain. A return-of-capital distribution also reduces the shareholder’s cost basis in Fund shares (but not below zero). A lower cost
basis means that a shareholder recognizes more gain or less loss when the shareholder eventually sells Fund shares, which increases the shareholder’s tax liability.
|
HENNESSY FUNDS
|
1-800-966-4354
|
The Fund attempts to maintain a stable distribution rate and therefore may distribute more or less than the actual 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 increase the Fund’s net asset value (“NAV”).
Correspondingly, such amounts, once distributed, decrease the Fund’s NAV. 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 – Preparing financial statements in accordance 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, as well as the reported change in net assets during the reporting period. Actual results could differ from those estimates.
|
h).
|
Share Valuation – The 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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.
|
j).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by registered
investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18 of the 1940
Act, and requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are
required to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the
potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use
of derivatives.
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5
establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board oversight
and certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance,
including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the
potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”) generally are 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 generally are 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).
|
HENNESSY FUNDS
|
1-800-966-4354
|
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 are 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 for equity securities.
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
exceeds 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.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
|||
2022
|
2023
|
2024
|
2025
|
Total
|
||
Investor Class
|
$10,704
|
$22,658
|
$12,376
|
$4,805
|
$ 50,543
|
|
Institutional Class
|
$15,321
|
$60,422
|
$26,693
|
$2,654
|
$105,090
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
25,744,103
|
||
Gross tax unrealized appreciation
|
$
|
20,982,155
|
||
Gross tax unrealized depreciation
|
—
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
20,982,155
|
Deferred tax assets (liabilities):
|
||||
Net operating losses
|
$
|
905,000
|
||
Capital loss
|
5,027,828
|
|||
Unrealized (gain) loss on investments
|
(3,490,998
|
)
|
||
Total deferred tax assets, net
|
2,441,830
|
|||
Valuation allowance
|
(2,441,830
|
)
|
||
Net
|
$
|
—
|
HENNESSY FUNDS
|
1-800-966-4354
|
Amount
|
Expiration
|
||||
$
|
6,082,301
|
10/31/2023
|
|||
8,971,423
|
10/31/2024
|
||||
7,178,863
|
10/31/2025
|
Amount
|
Expiration
|
||||
$
|
360,753
|
11/30/2037
|
|||
3,737,777
|
Indefinite
|
Tax expense (benefit) at statutory rates
|
$
|
1,219,526
|
|||
State income tax expense, net of federal benefit
|
85,501
|
||||
Tax expense (benefit) on permanent items(1)
|
(13,179
|
)
|
|||
Tax expense (benefit) on expired carryforwards
|
—
|
||||
Tax expense (benefit) due to change in effective state rates
|
—
|
||||
Total current tax expense (benefit)
|
—
|
||||
Change in valuation allowance
|
(1,291,848
|
)
|
|||
Total tax expense
|
$
|
—
|
(1) Permanent items consist of dividends-received deductions.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
—
|
|||||
Long-term capital gains
|
—
|
—
|
|||||||
Return of capital
|
2,283,492
|
4,176,540
|
|||||||
Total distributions
|
$
|
2,283,492
|
$
|
4,176,540
|
(1) Ordinary income includes short-term capital gains.
|
Return of Capital
|
||
Investor Class
|
$0.2575
|
|
Institutional Class
|
$0.2575
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$1,145.20
|
$9.31
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,016.12
|
$8.75
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$1,146.90
|
$7.98
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.36
|
$7.50
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.75% for Investor Class shares or 1.50% for Institutional Class shares, as applicable, multiplied by the average account value over
the period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded that the
Advisor provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics, as
appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred
to manage the Fund are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as
the Fund’s assets grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
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 Agreement
|
27
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Gas Utility Fund –
|
||||
Investor Class (GASFX)
|
16.61%
|
17.57%
|
7.21%
|
9.12%
|
Hennessy Gas Utility Fund –
|
||||
Institutional Class (HGASX)(2)
|
16.78%
|
17.89%
|
7.56%
|
9.30%
|
AGA Stock Index
|
17.25%
|
18.57%
|
8.48%
|
10.25%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
13.67%
|
(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.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
EQT Corp.
|
5.21%
|
The Southern Co.
|
4.97%
|
Sempra Energy
|
4.91%
|
Cheniere Energy, Inc.
|
4.90%
|
Kinder Morgan, Inc.
|
4.83%
|
Enbridge, Inc.
|
4.82%
|
Atmos Energy Corp.
|
4.78%
|
Dominion Resources, Inc.
|
4.78%
|
Berkshire Hathaway, Inc., Class A
|
4.72%
|
ONEOK, Inc.
|
4.34%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 98.36%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Energy – 24.81%
|
||||||||||||
Cheniere Energy, Inc.
|
214,617
|
$
|
29,147,135
|
4.90
|
%
|
|||||||
Enbridge, Inc. (b)
|
656,765
|
28,661,225
|
4.82
|
%
|
||||||||
EQT Corp.
|
780,600
|
31,028,850
|
5.21
|
%
|
||||||||
Kinder Morgan, Inc.
|
1,585,101
|
28,769,583
|
4.83
|
%
|
||||||||
ONEOK, Inc.
|
407,300
|
25,794,309
|
4.34
|
%
|
||||||||
Tellurian, Inc. (a)
|
846,690
|
4,216,516
|
0.71
|
%
|
||||||||
|
147,617,618
|
24.81
|
%
|
|||||||||
Financials – 4.72%
|
||||||||||||
Berkshire Hathaway, Inc., Class A (a)
|
58
|
28,091,720
|
4.72
|
%
|
||||||||
Industrials – 0.69%
|
||||||||||||
MDU Resources Group, Inc.
|
159,407
|
4,106,324
|
0.69
|
%
|
||||||||
Utilities – 68.14%
|
||||||||||||
Algonquin Power & Utilities Corp. (b)
|
156,864
|
2,266,685
|
0.38
|
%
|
||||||||
ALLETE, Inc.
|
425
|
25,220
|
0.00
|
%
|
||||||||
Alliant Energy Corp.
|
41,800
|
2,458,258
|
0.41
|
%
|
||||||||
Ameren Corp.
|
52,040
|
4,834,516
|
0.81
|
%
|
||||||||
Atmos Energy Corp.
|
250,986
|
28,461,812
|
4.78
|
%
|
||||||||
Avangrid, Inc.
|
110,100
|
4,882,935
|
0.82
|
%
|
||||||||
Avista Corp.
|
30,972
|
1,256,534
|
0.21
|
%
|
||||||||
Black Hills Corp.
|
71,847
|
5,262,074
|
0.88
|
%
|
||||||||
Centerpoint Energy, Inc.
|
590,728
|
18,082,184
|
3.04
|
%
|
||||||||
Chesapeake Utilities Corp.
|
25,758
|
3,224,129
|
0.54
|
%
|
||||||||
CMS Energy Corp.
|
193,398
|
13,284,509
|
2.23
|
%
|
||||||||
Consolidated Edison, Inc.
|
163,436
|
15,157,055
|
2.55
|
%
|
||||||||
Corning Natural Gas Holding Corp.
|
4,699
|
113,716
|
0.02
|
%
|
||||||||
Dominion Resources, Inc.
|
348,477
|
28,449,662
|
4.78
|
%
|
||||||||
DTE Energy Co.
|
65,204
|
8,544,332
|
1.44
|
%
|
||||||||
Duke Energy Corp.
|
137,587
|
15,156,584
|
2.55
|
%
|
||||||||
Entergy Corp.
|
4,260
|
506,301
|
0.09
|
%
|
||||||||
Essential Utilities, Inc.
|
205,400
|
9,193,704
|
1.55
|
%
|
||||||||
Eversource Energy
|
68,875
|
6,019,675
|
1.01
|
%
|
||||||||
Exelon Corp.
|
187,531
|
8,772,700
|
1.47
|
%
|
||||||||
Fortis, Inc. (b)
|
159,776
|
7,773,102
|
1.31
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Utilities (Continued)
|
||||||||||||
MGE Energy, Inc.
|
13,129
|
$
|
1,022,355
|
0.17
|
%
|
|||||||
National Fuel Gas Co.
|
112,224
|
7,870,269
|
1.32
|
%
|
||||||||
National Grid PLC – ADR (b)
|
294,544
|
21,843,383
|
3.67
|
%
|
||||||||
New Jersey Resources Corp.
|
152,834
|
6,596,315
|
1.11
|
%
|
||||||||
NiSource, Inc.
|
519,081
|
15,115,639
|
2.54
|
%
|
||||||||
Northwest Natural Holding Co.
|
67,203
|
3,214,320
|
0.54
|
%
|
||||||||
NorthWestern Corp.
|
30,898
|
1,751,608
|
0.29
|
%
|
||||||||
ONE Gas, Inc.
|
112,575
|
9,497,953
|
1.60
|
%
|
||||||||
PG&E Corp. (a)
|
1,332,649
|
16,858,010
|
2.83
|
%
|
||||||||
PPL Corp.
|
69,919
|
1,979,407
|
0.33
|
%
|
||||||||
Public Service Enterprise Group, Inc.
|
197,190
|
13,736,255
|
2.31
|
%
|
||||||||
RGC Resources, Inc.
|
20,254
|
421,283
|
0.07
|
%
|
||||||||
Sempra Energy
|
180,940
|
29,196,478
|
4.91
|
%
|
||||||||
South Jersey Industries, Inc.
|
218,071
|
7,455,847
|
1.25
|
%
|
||||||||
Southwest Gas Holdings, Inc.
|
115,117
|
10,142,959
|
1.70
|
%
|
||||||||
Spire, Inc.
|
78,091
|
5,681,120
|
0.96
|
%
|
||||||||
The Southern Co.
|
402,700
|
29,554,153
|
4.97
|
%
|
||||||||
UGI Corp.
|
117,652
|
4,035,464
|
0.68
|
%
|
||||||||
Unitil Corp.
|
19,998
|
1,019,898
|
0.17
|
%
|
||||||||
WEC Energy Group, Inc.
|
247,240
|
24,736,362
|
4.16
|
%
|
||||||||
Xcel Energy, Inc.
|
137,499
|
10,073,177
|
1.69
|
%
|
||||||||
|
405,527,942
|
68.14
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $284,700,570)
|
585,343,604
|
98.36
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 1.51%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.51%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (c)
|
8,958,358
|
$
|
8,958,358
|
1.51
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $8,958,358)
|
8,958,358
|
1.51
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $293,658,928) – 99.87%
|
594,301,962
|
99.87
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.13%
|
757,853
|
0.13
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
595,059,815
|
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, 2022.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Energy
|
$
|
147,617,618
|
$
|
—
|
$
|
—
|
$
|
147,617,618
|
||||||||
Financials
|
28,091,720
|
—
|
—
|
28,091,720
|
||||||||||||
Industrials
|
4,106,324
|
—
|
—
|
4,106,324
|
||||||||||||
Utilities
|
405,527,942
|
—
|
—
|
405,527,942
|
||||||||||||
Total Common Stocks
|
$
|
585,343,604
|
$
|
—
|
$
|
—
|
$
|
585,343,604
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
8,958,358
|
$
|
—
|
$
|
—
|
$
|
8,958,358
|
||||||||
Total Short-Term Investments
|
$
|
8,958,358
|
$
|
—
|
$
|
—
|
$
|
8,958,358
|
||||||||
Total Investments
|
$
|
594,301,962
|
$
|
—
|
$
|
—
|
$
|
594,301,962
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $293,658,928)
|
$
|
594,301,962
|
||
Dividends and interest receivable
|
568,916
|
|||
Receivable for fund shares sold
|
487,754
|
|||
Return of capital receivable
|
429,387
|
|||
Prepaid expenses and other assets
|
34,954
|
|||
Total assets
|
595,822,973
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
215,547
|
|||
Payable to advisor
|
203,062
|
|||
Payable to administrator
|
105,635
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
94,784
|
|||
Accrued service fees
|
43,189
|
|||
Accrued trustees fees
|
3,052
|
|||
Accrued expenses and other payables
|
86,661
|
|||
Total liabilities
|
763,158
|
|||
NET ASSETS
|
$
|
595,059,815
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
302,125,417
|
||
Total distributable earnings
|
292,934,398
|
|||
Total net assets
|
$
|
595,059,815
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
504,732,758
|
||
Shares issued and outstanding
|
18,216,532
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
27.71
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
90,327,057
|
||
Shares issued and outstanding
|
3,268,637
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
27.63
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
7,864,995
|
||
Interest income
|
2,226
|
|||
Total investment income
|
7,867,221
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
1,079,601
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
372,368
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
31,443
|
|||
Distribution fees – Investor Class (See Note 5)
|
353,211
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
298,539
|
|||
Service fees – Investor Class (See Note 5)
|
235,474
|
|||
Federal and state registration fees
|
20,247
|
|||
Reports to shareholders
|
19,171
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Trustees’ fees and expenses
|
13,185
|
|||
Audit fees
|
11,222
|
|||
Legal fees
|
3,678
|
|||
Interest expense (See Note 7)
|
2,214
|
|||
Other expenses
|
135,766
|
|||
Total expenses
|
2,591,275
|
|||
NET INVESTMENT INCOME
|
$
|
5,275,946
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
27,026,120
|
||
Net change in unrealized appreciation/depreciation on investments
|
50,367,953
|
|||
Net gain on investments
|
77,394,073
|
|||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
82,670,019
|
(1)
|
Net of foreign taxes withheld and issuance fees of $156,813.
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
5,275,946
|
$
|
11,225,332
|
||||
Net realized gain on investments
|
27,026,120
|
69,474,485
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
50,367,953
|
17,334,029
|
||||||
Net increase in net assets resulting from operations
|
82,670,019
|
98,033,846
|
||||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(41,660,325
|
)
|
(48,578,658
|
)
|
||||
Distributable earnings – Institutional Class
|
(5,897,554
|
)
|
(6,556,181
|
)
|
||||
Total distributions
|
(47,557,879
|
)
|
(55,134,839
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
17,025,816
|
10,282,767
|
||||||
Proceeds from shares subscribed – Institutional Class
|
31,976,016
|
16,158,873
|
||||||
Dividends reinvested – Investor Class
|
39,351,915
|
46,063,257
|
||||||
Dividends reinvested – Institutional Class
|
5,560,226
|
5,933,451
|
||||||
Cost of shares redeemed – Investor Class
|
(39,524,706
|
)
|
(121,059,136
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(14,816,714
|
)
|
(29,927,336
|
)
|
||||
Net increase (decrease) in net assets derived
|
||||||||
from capital share transactions
|
39,572,553
|
(72,548,124
|
)
|
|||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
74,684,693
|
(29,649,117
|
)
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
520,375,122
|
550,024,239
|
||||||
End of period
|
$
|
595,059,815
|
$
|
520,375,122
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
613,798
|
412,697
|
||||||
Shares sold – Institutional Class
|
1,186,943
|
624,642
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
1,592,198
|
1,920,697
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
224,694
|
247,846
|
||||||
Shares redeemed – Investor Class
|
(1,520,299
|
)
|
(4,884,070
|
)
|
||||
Shares redeemed – Institutional Class
|
(567,377
|
)
|
(1,215,733
|
)
|
||||
Net increase (decrease) in shares outstanding
|
1,529,957
|
(2,893,921
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
26.09
|
||
Income from investment operations:
|
||||
Net investment income
|
0.25
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
3.76
|
|||
Total from investment operations
|
4.01
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(0.24
|
)
|
||
Dividends from net realized gains
|
(2.15
|
)
|
||
Total distributions
|
(2.39
|
)
|
||
Net asset value, end of period
|
$
|
27.71
|
||
TOTAL RETURN
|
16.61
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
504.73
|
||
Ratio of expenses to average net assets
|
1.00
|
%(3)
|
||
Ratio of net investment income to average net assets
|
1.93
|
%(3)
|
||
Portfolio turnover rate(4)
|
16
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
24.08
|
$
|
29.64
|
$
|
28.68
|
$
|
30.35
|
$
|
28.57
|
|||||||||
0.52
|
(1)
|
0.58
|
(1)
|
0.56
|
(1)
|
0.65
|
0.70
|
|||||||||||
4.00
|
(4.14
|
)
|
3.50
|
(1.52
|
)
|
2.20
|
||||||||||||
4.52
|
(3.56
|
)
|
4.06
|
(0.87
|
)
|
2.90
|
||||||||||||
(0.57
|
)
|
(0.56
|
)
|
(0.62
|
)
|
(0.64
|
)
|
(0.72
|
)
|
|||||||||
(1.94
|
)
|
(1.44
|
)
|
(2.48
|
)
|
(0.16
|
)
|
(0.40
|
)
|
|||||||||
(2.51
|
)
|
(2.00
|
)
|
(3.10
|
)
|
(0.80
|
)
|
(1.12
|
)
|
|||||||||
$
|
26.09
|
$
|
24.08
|
$
|
29.64
|
$
|
28.68
|
$
|
30.35
|
|||||||||
19.91
|
%
|
-12.49
|
%
|
15.28
|
%
|
-2.86
|
%
|
10.39
|
%
|
|||||||||
$
|
457.31
|
$
|
483.56
|
$
|
764.10
|
$
|
825.18
|
$
|
1,306.70
|
|||||||||
1.00
|
%
|
1.02
|
%
|
1.00
|
%
|
1.01
|
%
|
1.01
|
%
|
|||||||||
2.06
|
%
|
2.24
|
%
|
1.98
|
%
|
2.18
|
%
|
2.34
|
%
|
|||||||||
15
|
%
|
16
|
%
|
12
|
%
|
14
|
%
|
18
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
26.01
|
||
Income from investment operations:
|
||||
Net investment income
|
0.28
|
(2)
|
||
Net realized and unrealized gains (losses) on investments
|
3.77
|
|||
Total from investment operations
|
4.05
|
|||
Less distributions:
|
||||
Dividends from net investment income
|
(0.28
|
)
|
||
Dividends from net realized gains
|
(2.15
|
)
|
||
Total distributions
|
(2.43
|
)
|
||
Net asset value, end of period
|
$
|
27.63
|
||
TOTAL RETURN
|
16.78
|
%(4)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
90.33
|
||
Ratio of expenses to average net assets
|
0.68
|
%(5)
|
||
Ratio of net investment income to average net assets
|
2.13
|
%(5)
|
||
Portfolio turnover rate(6)
|
16
|
%(4)
|
(1)
|
Institutional Class shares commenced operations on March 1, 2017.
|
(2)
|
Calculated using the average shares outstanding method.
|
(3)
|
Actual return from inception date of March 1, 2017, to the year end of October 31, 2017.
|
(4)
|
Not annualized.
|
(5)
|
Annualized.
|
(6)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Period Ended
|
||||||||||||||||||
Year Ended October 31,
|
October 31,
|
|||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017(1)
|
||||||||||||||
$
|
24.01
|
$
|
29.56
|
$
|
28.65
|
$
|
30.32
|
$
|
29.68
|
|||||||||
0.59
|
(2)
|
0.66
|
(2)
|
0.64
|
(2)
|
0.71
|
0.62
|
|||||||||||
3.99
|
(4.13
|
)
|
3.50
|
(1.47
|
)
|
0.72
|
||||||||||||
4.58
|
(3.47
|
)
|
4.14
|
(0.76
|
)
|
1.34
|
||||||||||||
(0.65
|
)
|
(0.64
|
)
|
(0.73
|
)
|
(0.75
|
)
|
(0.70
|
)
|
|||||||||
(1.93
|
)
|
(1.44
|
)
|
(2.50
|
)
|
(0.16
|
)
|
—
|
||||||||||
(2.58
|
)
|
(2.08
|
)
|
(3.23
|
)
|
(0.91
|
)
|
(0.70
|
)
|
|||||||||
$
|
26.01
|
$
|
24.01
|
$
|
29.56
|
$
|
28.65
|
$
|
30.32
|
|||||||||
20.29
|
%
|
-12.22
|
%
|
15.63
|
%
|
-2.51
|
%
|
4.56
|
%(3)(4)
|
|||||||||
$
|
63.06
|
$
|
66.46
|
$
|
107.18
|
$
|
107.75
|
$
|
84.62
|
|||||||||
0.69
|
%
|
0.70
|
%
|
0.69
|
%
|
0.65
|
%
|
0.64
|
%(5)
|
|||||||||
2.35
|
%
|
2.57
|
%
|
2.25
|
%
|
2.47
|
%
|
1.23
|
%(5)
|
|||||||||
15
|
%
|
16
|
%
|
12
|
%
|
14
|
%
|
18
|
%(4)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a security with
a corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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.
|
j).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by
registered investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with Section 18
of
|
HENNESSY FUNDS
|
1-800-966-4354
|
the 1940 Act, and requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint
a derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear.
Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and
increase costs related to the Fund’s use of derivatives.
|
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule 2a-5
establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board
oversight and certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In
connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the
accounting and auditing of fund investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”)
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
generally are 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 generally are 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 are 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 for equity securities.
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
exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
304,865,782
|
||
Gross tax unrealized appreciation
|
$
|
256,658,348
|
||
Gross tax unrealized depreciation
|
(41,200,626
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
215,457,722
|
||
Undistributed ordinary income
|
$
|
—
|
||
Undistributed long-term capital gains
|
42,364,536
|
|||
Total distributable earnings
|
$
|
42,364,536
|
||
Other accumulated gain/(loss)
|
$
|
—
|
||
Total accumulated gain/(loss)
|
$
|
257,822,258
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
5,193,201
|
$
|
12,094,090
|
|||||
Long-term capital gains
|
42,364,678
|
43,040,749
|
|||||||
Total distributions
|
$
|
47,557,879
|
$
|
55,134,839
|
(1) Ordinary income includes short-term capital gains.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$1,166.10
|
$5.37
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.84
|
$5.01
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$1,167.80
|
$3.65
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,021.42
|
$3.41
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.00% for Investor Class shares or 0.68% for Institutional Class shares, as applicable, multiplied by the average account value
over the period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded that the
Advisor provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of ethics,
as appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses incurred
to manage the Fund are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees increase as
the Fund’s assets grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
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
|
27
|
Board Approval of Investment Advisory Agreements
|
28
|
HENNESSY FUNDS
|
1-800-966-4354
|
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.
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Japan Fund –
|
||||
Investor Class (HJPNX)
|
-30.55%
|
-26.29%
|
3.19%
|
8.27%
|
Hennessy Japan Fund –
|
||||
Institutional Class (HJPIX)
|
-30.39%
|
-25.97%
|
3.61%
|
8.63%
|
Russell/Nomura Total MarketTM Index
|
-16.61%
|
-15.06%
|
3.58%
|
6.22%
|
Tokyo Stock Price Index (TOPIX)
|
-16.29%
|
-14.60%
|
3.42%
|
6.07%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Sony Group Corp.
|
9.01%
|
Mitsubishi Corp.
|
8.37%
|
Recruit Holdings Co., Ltd.
|
6.81%
|
Hitachi Ltd.
|
6.71%
|
Keyence Corp.
|
6.10%
|
Terumo Corp.
|
4.73%
|
Daikin Industries, Ltd.
|
4.66%
|
Nidec Corp.
|
4.60%
|
MISUMI Group, Inc.
|
4.11%
|
Shimano, Inc.
|
3.85%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 93.76%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 4.45%
|
||||||||||||
SoftBank Group Corp.
|
243,400
|
$
|
10,011,101
|
2.15
|
%
|
|||||||
Z Holdings Corp.
|
2,725,300
|
10,699,088
|
2.30
|
%
|
||||||||
|
20,710,189
|
4.45
|
%
|
|||||||||
Consumer Discretionary – 22.05%
|
||||||||||||
Asics Corp.
|
306,000
|
4,827,688
|
1.04
|
%
|
||||||||
Fast Retailing Co., Ltd.
|
30,500
|
14,042,389
|
3.02
|
%
|
||||||||
Mercari, Inc. (a)
|
880,900
|
14,435,652
|
3.10
|
%
|
||||||||
Nitori Holdings Co., Ltd.
|
91,800
|
9,444,325
|
2.03
|
%
|
||||||||
Shimano, Inc.
|
101,300
|
17,948,785
|
3.85
|
%
|
||||||||
Sony Group Corp.
|
486,000
|
41,942,327
|
9.01
|
%
|
||||||||
|
102,641,166
|
22.05
|
%
|
|||||||||
Consumer Staples – 9.99%
|
||||||||||||
Ariake Japan Co., Ltd.
|
119,900
|
4,810,549
|
1.03
|
%
|
||||||||
Kao Corp.
|
243,200
|
9,747,085
|
2.09
|
%
|
||||||||
Rohto Pharmaceutical Co., Ltd.
|
640,800
|
17,112,288
|
3.68
|
%
|
||||||||
Unicharm Corp.
|
426,000
|
14,821,393
|
3.19
|
%
|
||||||||
|
46,491,315
|
9.99
|
%
|
|||||||||
Financials – 0.99%
|
||||||||||||
Anicom Holdings, Inc.
|
981,200
|
4,628,431
|
0.99
|
%
|
||||||||
Health Care – 7.37%
|
||||||||||||
Asahi Intecc Co., Ltd.
|
100,600
|
1,943,988
|
0.42
|
%
|
||||||||
Olympus Corp.
|
513,200
|
9,032,898
|
1.94
|
%
|
||||||||
PeptiDream, Inc. (a)
|
79,700
|
1,285,471
|
0.28
|
%
|
||||||||
Terumo Corp.
|
739,700
|
22,017,280
|
4.73
|
%
|
||||||||
|
34,279,637
|
7.37
|
%
|
|||||||||
Industrials – 38.99%
|
||||||||||||
Daikin Industries, Ltd.
|
141,900
|
21,684,832
|
4.66
|
%
|
||||||||
Hitachi Ltd.
|
659,100
|
31,258,785
|
6.71
|
%
|
||||||||
Kubota Corp.
|
1,023,100
|
17,381,109
|
3.73
|
%
|
||||||||
MISUMI Group, Inc.
|
762,700
|
19,124,187
|
4.11
|
%
|
||||||||
Mitsubishi Corp.
|
1,160,900
|
38,977,824
|
8.37
|
%
|
||||||||
Nidec Corp.
|
330,900
|
21,392,391
|
4.60
|
%
|
||||||||
Recruit Holdings Co., Ltd.
|
873,200
|
31,681,105
|
6.81
|
%
|
||||||||
|
181,500,233
|
38.99
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Information Technology – 9.92%
|
||||||||||||
Keyence Corp.
|
70,600
|
$
|
28,381,500
|
6.10
|
%
|
|||||||
Murata Manufacturing Co., Ltd.
|
298,400
|
17,786,877
|
3.82
|
%
|
||||||||
|
46,168,377
|
9.92
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $369,345,202)
|
436,419,348
|
93.76
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 5.72%
|
||||||||||||
Money Market Funds – 5.72%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (b)
|
23,263,000
|
23,263,000
|
5.00
|
%
|
||||||||
First American Treasury Obligations Fund,
|
||||||||||||
Institutional Class, 0.29% (b)
|
3,375,819
|
3,375,819
|
0.72
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $26,638,819)
|
26,638,819
|
5.72
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $395,984,021) – 99.48%
|
463,058,167
|
99.48
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.52%
|
2,421,760
|
0.52
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
465,479,927
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2022.
|
HENNESSY FUNDS
|
1-800-966-4354
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
—
|
$
|
20,710,189
|
$
|
—
|
$
|
20,710,189
|
||||||||
Consumer Discretionary
|
—
|
102,641,166
|
—
|
102,641,166
|
||||||||||||
Consumer Staples
|
—
|
46,491,315
|
—
|
46,491,315
|
||||||||||||
Financials
|
—
|
4,628,431
|
—
|
4,628,431
|
||||||||||||
Health Care
|
—
|
34,279,637
|
—
|
34,279,637
|
||||||||||||
Industrials
|
—
|
181,500,233
|
—
|
181,500,233
|
||||||||||||
Information Technology
|
—
|
46,168,377
|
—
|
46,168,377
|
||||||||||||
Total Common Stocks
|
$
|
—
|
$
|
436,419,348
|
$
|
—
|
$
|
436,419,348
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
26,638,819
|
$
|
—
|
$
|
—
|
$
|
26,638,819
|
||||||||
Total Short-Term Investments
|
$
|
26,638,819
|
$
|
—
|
$
|
—
|
$
|
26,638,819
|
||||||||
Total Investments
|
$
|
26,638,819
|
$
|
436,419,348
|
$
|
—
|
$
|
463,058,167
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS/STATEMENT OF ASSETS AND LIABILITIES
|
Statement of Assets and Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $395,984,021)
|
$
|
463,058,167
|
||
Dividends and interest receivable
|
2,230,673
|
|||
Receivable for fund shares sold
|
1,571,228
|
|||
Receivable for securities sold
|
1,306,501
|
|||
Prepaid expenses and other assets
|
27,954
|
|||
Total assets
|
468,194,523
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
2,223,454
|
|||
Payable to advisor
|
338,787
|
|||
Payable to administrator
|
100,870
|
|||
Payable to auditor
|
10,710
|
|||
Accrued distribution fees
|
10,758
|
|||
Accrued service fees
|
5,395
|
|||
Accrued trustees fees
|
1,876
|
|||
Accrued expenses and other payables
|
22,746
|
|||
Total liabilities
|
2,714,596
|
|||
NET ASSETS
|
$
|
465,479,927
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
414,881,161
|
||
Total distributable earnings
|
50,598,766
|
|||
Total net assets
|
$
|
465,479,927
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
60,622,970
|
||
Shares issued and outstanding
|
1,842,996
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
32.89
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
404,856,957
|
||
Shares issued and outstanding
|
11,921,561
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
33.96
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
3,084,696
|
||
Interest income
|
5,758
|
|||
Total investment income
|
3,090,454
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
2,809,492
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
386,262
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
88,920
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
212,526
|
|||
Distribution fees – Investor Class (See Note 5)
|
56,444
|
|||
Service fees – Investor Class (See Note 5)
|
37,629
|
|||
Federal and state registration fees
|
35,191
|
|||
Reports to shareholders
|
18,804
|
|||
Trustees’ fees and expenses
|
16,224
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Interest expense (See Note 7)
|
12,555
|
|||
Audit fees
|
10,709
|
|||
Legal fees
|
6,104
|
|||
Other expenses
|
46,519
|
|||
Total expenses
|
3,752,535
|
|||
NET INVESTMENT LOSS
|
$
|
(662,081
|
)
|
|
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
4,923,376
|
||
Net change in unrealized appreciation/depreciation on investments
|
(242,294,611
|
)
|
||
Net loss on investments
|
(237,371,235
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(238,033,316
|
)
|
(1)
|
Net of foreign taxes withheld of $342,728.
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF OPERATIONS/STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment loss
|
$
|
(662,081
|
)
|
$
|
(1,149,197
|
)
|
||
Net realized gain on investments
|
4,923,376
|
19,086,546
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(242,294,611
|
)
|
68,905,761
|
|||||
Net increase (decrease) in net
|
||||||||
assets resulting from operations
|
(238,033,316
|
)
|
86,843,110
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(747,296
|
)
|
—
|
|||||
Distributable earnings – Institutional Class
|
(11,015,400
|
)
|
(48,044
|
)
|
||||
Total distributions
|
(11,762,696
|
)
|
(48,044
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
13,339,003
|
61,092,843
|
||||||
Proceeds from shares subscribed – Institutional Class
|
117,831,572
|
227,381,324
|
||||||
Dividends reinvested – Investor Class
|
703,285
|
—
|
||||||
Dividends reinvested – Institutional Class
|
10,598,718
|
47,024
|
||||||
Cost of shares redeemed – Investor Class
|
(12,390,794
|
)
|
(129,927,285
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(228,390,357
|
)
|
(182,214,241
|
)
|
||||
Net decrease in net assets derived
|
||||||||
from capital share transactions
|
(98,308,573
|
)
|
(23,620,335
|
)
|
||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(348,104,585
|
)
|
63,174,731
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
813,584,512
|
750,409,781
|
||||||
End of period
|
$
|
465,479,927
|
$
|
813,584,512
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
333,180
|
1,302,489
|
||||||
Shares sold – Institutional Class
|
2,744,578
|
4,688,665
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
15,157
|
—
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
221,545
|
944
|
||||||
Shares redeemed – Investor Class
|
(307,742
|
)
|
(2,825,915
|
)
|
||||
Shares redeemed – Institutional Class
|
(5,728,249
|
)
|
(3,765,795
|
)
|
||||
Net decrease in shares outstanding
|
(2,721,531
|
)
|
(599,612
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
47.78
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
(0.11
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(14.37
|
)
|
||
Total from investment operations
|
(14.48
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.41
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.41
|
)
|
||
Net asset value, end of period
|
$
|
32.89
|
||
TOTAL RETURN
|
-30.55
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
60.62
|
||
Ratio of expenses to average net assets
|
1.44
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets
|
(0.52
|
)%(4)
|
||
Portfolio turnover rate(5)
|
2
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
42.79
|
$
|
37.17
|
$
|
33.63
|
$
|
32.75
|
$
|
27.81
|
|||||||||
(0.23
|
)(1)
|
(0.14
|
)(1)
|
0.05
|
(1)
|
(0.00
|
)(2)
|
(0.03
|
)
|
|||||||||
5.22
|
5.81
|
3.50
|
0.89
|
4.97
|
||||||||||||||
4.99
|
5.67
|
3.55
|
0.89
|
4.94
|
||||||||||||||
—
|
(0.02
|
)
|
(0.01
|
)
|
(0.01
|
)
|
—
|
|||||||||||
—
|
(0.03
|
)
|
—
|
—
|
—
|
|||||||||||||
—
|
(0.05
|
)
|
(0.01
|
)
|
(0.01
|
)
|
—
|
|||||||||||
$
|
47.78
|
$
|
42.79
|
$
|
37.17
|
$
|
33.63
|
$
|
32.75
|
|||||||||
11.66
|
%
|
15.27
|
%
|
10.60
|
%
|
2.70
|
%
|
17.76
|
%
|
|||||||||
$
|
86.11
|
$
|
142.30
|
$
|
87.22
|
$
|
103.33
|
$
|
84.44
|
|||||||||
1.43
|
%
|
1.43
|
%
|
1.43
|
%
|
1.43
|
%
|
1.46
|
%
|
|||||||||
(0.49
|
)%
|
(0.37
|
)%
|
0.14
|
%
|
(0.02
|
)%
|
(0.15
|
)%
|
|||||||||
16
|
%
|
23
|
%
|
9
|
%
|
1
|
%
|
0
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
49.54
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
(0.03
|
)(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(14.81
|
)
|
||
Total from investment operations
|
(14.84
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.74
|
)
|
||
Dividends from net realized gains
|
—
|
|||
Total distributions
|
(0.74
|
)
|
||
Net asset value, end of period
|
$
|
33.96
|
||
TOTAL RETURN
|
-30.39
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
404.86
|
||
Ratio of expenses to average net assets
|
1.02
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets
|
(0.15
|
)%(4)
|
||
Portfolio turnover rate(5)
|
2
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
44.19
|
$
|
38.37
|
$
|
34.67
|
$
|
33.64
|
$
|
28.45
|
|||||||||
(0.03
|
)(1)
|
0.02
|
(1)
|
0.21
|
(1)
|
0.15
|
0.03
|
|||||||||||
5.38
|
5.99
|
3.60
|
0.91
|
5.16
|
||||||||||||||
5.35
|
6.01
|
3.81
|
1.06
|
5.19
|
||||||||||||||
(0.00
|
)(2)
|
(0.16
|
)
|
(0.11
|
)
|
(0.03
|
)
|
—
|
||||||||||
—
|
(0.03
|
)
|
—
|
—
|
—
|
|||||||||||||
(0.00
|
)(2)
|
(0.19
|
)
|
(0.11
|
)
|
(0.03
|
)
|
—
|
||||||||||
$
|
49.54
|
$
|
44.19
|
$
|
38.37
|
$
|
34.67
|
$
|
33.64
|
|||||||||
12.11
|
%
|
15.72
|
%
|
11.02
|
%
|
3.14
|
%
|
18.24
|
%
|
|||||||||
$
|
727.47
|
$
|
608.11
|
$
|
611.41
|
$
|
399.76
|
$
|
177.42
|
|||||||||
1.04
|
%
|
1.04
|
%
|
1.03
|
%
|
1.01
|
%
|
1.05
|
%
|
|||||||||
(0.07
|
)%
|
0.04
|
%
|
0.59
|
%
|
0.49
|
%
|
0.30
|
%
|
|||||||||
16
|
%
|
23
|
%
|
9
|
%
|
1
|
%
|
0
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise taxes. 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-basis 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 tax 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
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a
security with a corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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 exchange rate at the time of valuation. Purchases and sales
of investments and income are translated into U.S. dollars using the spot market exchange rate 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by
registered investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and requires funds whose use of derivatives is greater than a limited specified amount to
establish and maintain a comprehensive derivatives risk management program and appoint a derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4
will have on the availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require
changes in how the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule
2a-5 establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board
oversight and certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security.
In connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the
accounting and auditing of fund investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are valued at the last sales price as
reported by the primary exchange on which the securities are
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
listed. Securities listed on The Nasdaq Stock Market (“Nasdaq”) generally are 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 generally are 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 are 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 for equity securities.
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
exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
514,098,328
|
||
Gross tax unrealized appreciation
|
$
|
319,634,787
|
||
Gross tax unrealized depreciation
|
(23,480,253
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
296,154,534
|
||
Undistributed ordinary income
|
$
|
11,762,697
|
||
Undistributed long-term capital gains
|
—
|
|||
Total distributable earnings
|
$
|
11,762,697
|
||
Other accumulated gain/(loss)
|
$
|
(7,522,453
|
)
|
|
Total accumulated gain/(loss)
|
$
|
300,394,778
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
11,762,696
|
$
|
48,044
|
|||||
Long-term capital gains
|
—
|
—
|
|||||||
Total distributions
|
$
|
11,762,696
|
$
|
48,044
|
(1) Ordinary income includes short-term capital gains.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 694.50
|
$6.05
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.65
|
$7.20
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 696.10
|
$4.29
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.74
|
$5.11
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.44% for Investor Class shares or 1.02% for Institutional Class shares, as applicable, multiplied by the average account value
over the period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
Country
|
Gross Foreign Income
|
Foreign Tax Paid
|
||
Japan
|
$9,097,931
|
$909,789
|
WWW.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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
Summaries of the advisory and sub-advisory agreements;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor and the Sub-Advisor and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale;
|
|
(9)
|
A completed questionnaire from the Sub-Advisor;
|
|
(10)
|
A summary of the Sub-Advisor’s responses to the questionnaire, as well as relevant information from the Sub-Advisor’s Form ADVs Parts 1 and 2 and the certifications submitted by the
Sub-Advisor each quarter;
|
|
(11)
|
Financial information of the Sub-Advisor and its parent company; and
|
|
(12)
|
The Sub-Advisor’s Code of Ethics.
|
WWW.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 and an assessment of the Advisor’s performance, the Trustees concluded that the
Advisor provides high-quality services to the Fund, and they 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 by providing portfolio management services.
|
||
(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 and federal securities laws.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(e)
|
The Advisor 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
(including their codes of ethics, as appropriate), conducts on-site visits to the Sub-Advisor and the Fund’s other service providers, as feasible, 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 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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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. Based on this review and an assessment of the Sub-Advisor’s performance, the Trustees concluded
that the Sub-Advisor provides high-quality services to the Fund. The Trustees also concluded that they were satisfied with
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
the nature, extent, and quality of the advisory services provided to the Fund by the Sub-Advisor and that the nature and extent of the services provided by the Sub-Advisor were appropriate
to assure that the Fund’s portfolio aligns properly with its investment objective and principal investment strategies.
|
(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.
|
||
(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)
|
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 Advisor services previously identified 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 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 the 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 a reasonable 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.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(6)
|
The Trustees also considered whether the Advisor was realizing economies of scale that should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses
incurred to manage the Fund are variable asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform
fees and sub-advisory fees increase as the Fund’s assets grow.
|
|
(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 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.
|
WWW.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
|
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
|
29
|
Board Approval of Investment Advisory Agreements
|
29
|
HENNESSY FUNDS
|
1-800-966-4354
|
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.
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Japan Small Cap Fund –
|
||||
Investor Class (HJPSX)
|
-22.97%
|
-21.14%
|
3.60%
|
9.45%
|
Hennessy Japan Small Cap Fund –
|
||||
Institutional Class (HJSIX)(2)
|
-22.83%
|
-20.84%
|
4.01%
|
9.72%
|
Russell/Nomura Small CapTM Index
|
-19.49%
|
-19.13%
|
0.64%
|
5.76%
|
Tokyo Stock Price Index (TOPIX)
|
-16.29%
|
-14.60%
|
3.42%
|
6.07%
|
(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.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
TRE Holdings Corp.
|
2.12%
|
Creek & River Co., Ltd.
|
2.11%
|
BIPROGY, Inc.
|
2.08%
|
Ship Healthcare Holdings, Inc.
|
2.07%
|
MIRAIT Holdings Corp.
|
2.06%
|
Nihon Kohden Corp.
|
2.06%
|
SBS Holdings, Inc.
|
2.05%
|
Elecom Co., Ltd.
|
1.99%
|
Kito Corp.
|
1.99%
|
Transcosmos, Inc.
|
1.99%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 96.02%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 3.31%
|
||||||||||||
Macromill, Inc.
|
122,600
|
$
|
1,127,573
|
1.52
|
%
|
|||||||
Septeni Holdings Co., Ltd.
|
261,200
|
1,322,203
|
1.79
|
%
|
||||||||
|
2,449,776
|
3.31
|
%
|
|||||||||
Consumer Discretionary – 11.24%
|
||||||||||||
Benesse Holdings, Inc.
|
75,000
|
1,312,267
|
1.77
|
%
|
||||||||
Matsuoka Corp.
|
57,900
|
488,154
|
0.66
|
%
|
||||||||
Musashi Seimitsu Industry Co., Ltd.
|
112,700
|
1,145,320
|
1.55
|
%
|
||||||||
NGK Spark Plug Co., Ltd.
|
88,100
|
1,351,914
|
1.83
|
%
|
||||||||
Nojima Corp.
|
60,500
|
1,216,803
|
1.64
|
%
|
||||||||
Sac’s Bar Holdings, Inc.
|
234,100
|
909,108
|
1.23
|
%
|
||||||||
Saizeriya Co., Ltd.
|
40,400
|
740,927
|
1.00
|
%
|
||||||||
Seiren Co., Ltd.
|
72,700
|
1,152,251
|
1.56
|
%
|
||||||||
|
8,316,744
|
11.24
|
%
|
|||||||||
Consumer Staples – 2.56%
|
||||||||||||
Nishimoto Co., Ltd.
|
65,600
|
1,408,943
|
1.90
|
%
|
||||||||
Yoshimura Food Holdings KK (a)
|
118,900
|
489,908
|
0.66
|
%
|
||||||||
|
1,898,851
|
2.56
|
%
|
|||||||||
Energy – 1.61%
|
||||||||||||
Iwatani Corp.
|
29,900
|
1,189,626
|
1.61
|
%
|
||||||||
Financials – 5.96%
|
||||||||||||
AEON Financial Service Co., Ltd.
|
110,500
|
1,015,871
|
1.37
|
%
|
||||||||
Aruhi Corp.
|
130,900
|
1,007,466
|
1.36
|
%
|
||||||||
Lifenet Insurance Co. (a)
|
228,200
|
923,792
|
1.25
|
%
|
||||||||
Musashino Bank Ltd.
|
107,000
|
1,463,574
|
1.98
|
%
|
||||||||
|
4,410,703
|
5.96
|
%
|
|||||||||
Health Care – 4.13%
|
||||||||||||
Nihon Kohden Corp.
|
63,400
|
1,521,988
|
2.06
|
%
|
||||||||
Ship Healthcare Holdings, Inc.
|
91,800
|
1,533,421
|
2.07
|
%
|
||||||||
|
3,055,409
|
4.13
|
%
|
|||||||||
Industrials – 33.97%
|
||||||||||||
Benefit One, Inc.
|
47,700
|
723,248
|
0.98
|
%
|
||||||||
Creek & River Co., Ltd.
|
96,800
|
1,562,598
|
2.11
|
%
|
||||||||
Daihen Corp.
|
28,100
|
803,868
|
1.08
|
%
|
||||||||
Fugi Corp.
|
58,800
|
981,051
|
1.32
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Industrials (Continued)
|
||||||||||||
Glory Ltd.
|
52,400
|
$
|
842,852
|
1.14
|
%
|
|||||||
Hanwa Co., Ltd.
|
54,100
|
1,322,398
|
1.79
|
%
|
||||||||
Hito Communications Holdings, Inc.
|
116,000
|
1,383,144
|
1.87
|
%
|
||||||||
Kawada Technologies, Inc.
|
17,500
|
480,010
|
0.65
|
%
|
||||||||
Kito Corp.
|
113,400
|
1,472,891
|
1.99
|
%
|
||||||||
MIRAIT Holdings Corp.
|
108,600
|
1,521,881
|
2.06
|
%
|
||||||||
Mitsubishi Logisnext Co., Ltd.
|
112,400
|
659,516
|
0.89
|
%
|
||||||||
Nichiha Corp.
|
60,700
|
1,097,434
|
1.48
|
%
|
||||||||
Nihon Flush Co., Ltd.
|
13,700
|
101,282
|
0.14
|
%
|
||||||||
Nippon Koei Co., Ltd.
|
64,900
|
1,448,654
|
1.96
|
%
|
||||||||
Sato Holdings Corp.
|
96,600
|
1,328,263
|
1.79
|
%
|
||||||||
SBS Holdings, Inc.
|
65,400
|
1,517,583
|
2.05
|
%
|
||||||||
Senko Group Holdings Co., Ltd.
|
55,100
|
372,635
|
0.50
|
%
|
||||||||
Tadano Ltd.
|
130,000
|
923,492
|
1.25
|
%
|
||||||||
Tanseisha Co., Ltd.
|
204,900
|
1,248,978
|
1.69
|
%
|
||||||||
Tocalo Co., Ltd.
|
111,700
|
1,115,297
|
1.51
|
%
|
||||||||
TRE Holdings Corp.
|
98,300
|
1,572,690
|
2.12
|
%
|
||||||||
Tsubakimoto Chain Co.
|
63,900
|
1,459,129
|
1.97
|
%
|
||||||||
Ushio, Inc.
|
93,000
|
1,205,799
|
1.63
|
%
|
||||||||
|
25,144,693
|
33.97
|
%
|
|||||||||
Information Technology – 19.30%
|
||||||||||||
Anritsu Corp.
|
50,000
|
628,726
|
0.85
|
%
|
||||||||
Bell System24 Holdings, Inc.
|
70,300
|
812,989
|
1.10
|
%
|
||||||||
BIPROGY, Inc.
|
60,900
|
1,538,638
|
2.08
|
%
|
||||||||
Digital Garage, Inc.
|
33,100
|
1,095,433
|
1.48
|
%
|
||||||||
Elecom Co., Ltd.
|
122,900
|
1,473,731
|
1.99
|
%
|
||||||||
Macnica Fuji Electronics Holdings, Inc.
|
36,200
|
750,530
|
1.01
|
%
|
||||||||
Mimaki Engineering Co., Ltd.
|
271,500
|
1,424,121
|
1.93
|
%
|
||||||||
Nippon Signal Company, Ltd.
|
155,000
|
1,076,019
|
1.45
|
%
|
||||||||
Pole To Win Holdings, Inc.
|
28,400
|
216,730
|
0.29
|
%
|
||||||||
SIIX Corp.
|
137,900
|
1,053,391
|
1.42
|
%
|
||||||||
Towa Corp.
|
82,800
|
1,284,869
|
1.74
|
%
|
||||||||
Transcosmos, Inc.
|
62,400
|
1,471,163
|
1.99
|
%
|
||||||||
Yamaichi Electronics Co., Ltd.
|
115,100
|
1,458,204
|
1.97
|
%
|
||||||||
|
14,284,544
|
19.30
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Materials – 9.50%
|
||||||||||||
Asia Pile Holdings Corp.
|
423,300
|
$
|
1,390,665
|
1.88
|
%
|
|||||||
Kyoei Steel Ltd.
|
141,200
|
1,448,707
|
1.96
|
%
|
||||||||
Rengo Co., Ltd.
|
226,100
|
1,338,638
|
1.81
|
%
|
||||||||
Sanyo Chemical Industries Ltd.
|
36,600
|
1,399,607
|
1.89
|
%
|
||||||||
Tokyo Ohka Kogyo Co., Ltd.
|
26,700
|
1,450,779
|
1.96
|
%
|
||||||||
|
7,028,396
|
9.50
|
%
|
|||||||||
Real Estate – 3.42%
|
||||||||||||
Star Mica Holdings Co., Ltd.
|
120,400
|
1,424,615
|
1.92
|
%
|
||||||||
Tosei Corp.
|
131,900
|
1,109,858
|
1.50
|
%
|
||||||||
|
2,534,473
|
3.42
|
%
|
|||||||||
Utilities – 1.02%
|
||||||||||||
EF-ON, Inc.
|
179,900
|
756,150
|
1.02
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $80,236,110)
|
71,069,365
|
96.02
|
%
|
|||||||||
|
||||||||||||
SHORT-TERM INVESTMENTS – 1.89%
|
||||||||||||
Money Market Funds – 1.89%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (b)
|
1,402,127
|
1,402,127
|
1.89
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $1,402,127)
|
1,402,127
|
1.89
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $81,638,237) – 97.91%
|
72,471,492
|
97.91
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 2.09%
|
1,545,277
|
2.09
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
74,016,769
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2022.
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
—
|
$
|
2,449,776
|
$
|
—
|
$
|
2,449,776
|
||||||||
Consumer Discretionary
|
—
|
8,316,744
|
—
|
8,316,744
|
||||||||||||
Consumer Staples
|
—
|
1,898,851
|
—
|
1,898,851
|
||||||||||||
Energy
|
—
|
1,189,626
|
—
|
1,189,626
|
||||||||||||
Financials
|
—
|
4,410,703
|
—
|
4,410,703
|
||||||||||||
Health Care
|
—
|
3,055,409
|
—
|
3,055,409
|
||||||||||||
Industrials
|
—
|
25,144,693
|
—
|
25,144,693
|
||||||||||||
Information Technology
|
—
|
14,284,544
|
—
|
14,284,544
|
||||||||||||
Materials
|
—
|
7,028,396
|
—
|
7,028,396
|
||||||||||||
Real Estate
|
—
|
2,534,473
|
—
|
2,534,473
|
||||||||||||
Utilities
|
—
|
756,150
|
—
|
756,150
|
||||||||||||
Total Common Stocks
|
$
|
—
|
$
|
71,069,365
|
$
|
—
|
$
|
71,069,365
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
1,402,127
|
$
|
—
|
$
|
—
|
$
|
1,402,127
|
||||||||
Total Short-Term Investments
|
$
|
1,402,127
|
$
|
—
|
$
|
—
|
$
|
1,402,127
|
||||||||
Total Investments
|
$
|
1,402,127
|
$
|
71,069,365
|
$
|
—
|
$
|
72,471,492
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and Liabilities
as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $81,638,237)
|
$
|
72,471,492
|
||
Dividends and interest receivable
|
1,003,022
|
|||
Receivable for fund shares sold
|
171,686
|
|||
Receivable for securities sold
|
490,641
|
|||
Prepaid expenses and other assets
|
20,029
|
|||
Total assets
|
74,156,870
|
|||
LIABILITIES:
|
||||
Payable for securities purchased
|
1,219
|
|||
Payable for fund shares redeemed
|
27,563
|
|||
Payable to advisor
|
53,869
|
|||
Payable to administrator
|
16,609
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
6,026
|
|||
Accrued service fees
|
3,017
|
|||
Accrued trustees fees
|
5,591
|
|||
Accrued expenses and other payables
|
14,979
|
|||
Total liabilities
|
140,101
|
|||
NET ASSETS
|
$
|
74,016,769
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
81,562,959
|
||
Accumulated deficit
|
(7,546,190
|
)
|
||
Total net assets
|
$
|
74,016,769
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
35,348,233
|
||
Shares issued and outstanding
|
2,543,697
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.90
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
38,668,536
|
||
Shares issued and outstanding
|
2,817,999
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
13.72
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
1,260,940
|
||
Interest income
|
1,142
|
|||
Total investment income
|
1,262,082
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
394,710
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
48,489
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
26,373
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
59,583
|
|||
Distribution fees – Investor Class (See Note 5)
|
30,889
|
|||
Service fees – Investor Class (See Note 5)
|
20,593
|
|||
Federal and state registration fees
|
17,112
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Trustees’ fees and expenses
|
9,226
|
|||
Reports to shareholders
|
7,152
|
|||
Interest expense (See Note 7)
|
1,702
|
|||
Legal fees
|
719
|
|||
Other expenses
|
7,684
|
|||
Total expenses
|
650,610
|
|||
NET INVESTMENT INCOME
|
$
|
611,472
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
1,158,512
|
||
Net change in unrealized appreciation/depreciation on investments
|
(26,930,310
|
)
|
||
Net loss on investments
|
(25,771,798
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(25,160,326
|
)
|
(1)
|
Net of foreign taxes withheld of $140,102.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
611,472
|
$
|
392,688
|
||||
Net realized gain on investments
|
1,158,512
|
1,288,362
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(26,930,310
|
)
|
10,917,876
|
|||||
Net increase (decrease) in net
|
||||||||
assets resulting from operations
|
(25,160,326
|
)
|
12,598,926
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(186,236
|
)
|
(121,856
|
)
|
||||
Distributable earnings – Institutional Class
|
(589,255
|
)
|
(260,753
|
)
|
||||
Total distributions
|
(775,491
|
)
|
(382,609
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
4,287,995
|
10,823,523
|
||||||
Proceeds from shares subscribed – Institutional Class
|
14,174,002
|
45,926,109
|
||||||
Dividends reinvested – Investor Class
|
180,037
|
116,988
|
||||||
Dividends reinvested – Institutional Class
|
571,970
|
246,865
|
||||||
Cost of shares redeemed – Investor Class
|
(4,482,096
|
)
|
(18,166,242
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(27,506,462
|
)
|
(19,434,438
|
)
|
||||
Net increase (decrease) in net assets
|
||||||||
derived from capital share transactions
|
(12,774,554
|
)
|
19,512,805
|
|||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(38,710,371
|
)
|
31,729,122
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
112,727,140
|
80,998,018
|
||||||
End of period
|
$
|
74,016,769
|
$
|
112,727,140
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
268,767
|
607,997
|
||||||
Shares sold – Institutional Class
|
878,090
|
2,575,700
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
10,154
|
6,496
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
33,206
|
13,885
|
||||||
Shares redeemed – Investor Class
|
(282,420
|
)
|
(1,018,588
|
)
|
||||
Shares redeemed – Institutional Class
|
(1,804,192
|
)
|
(1,098,633
|
)
|
||||
Net increase (decrease) in shares outstanding
|
(896,395
|
)
|
1,086,857
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
18.12
|
||
Income from investment operations:
|
||||
Net investment income
|
0.08
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(4.23
|
)
|
||
Total from investment operations
|
(4.15
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.00
|
)(2)
|
||
Dividends from net realized gains
|
(0.07
|
)
|
||
Total distributions
|
(0.07
|
)
|
||
Net asset value, end of period
|
$
|
13.90
|
||
TOTAL RETURN
|
-22.97
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
35.35
|
||
Ratio of expenses to average net assets
|
1.55
|
%(4)
|
||
Ratio of net investment income to average net assets
|
1.07
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
15.73
|
$
|
15.43
|
$
|
14.99
|
$
|
14.92
|
$
|
11.29
|
|||||||||
0.03
|
(1)
|
0.01
|
(1)
|
0.03
|
(1)
|
0.05
|
0.08
|
|||||||||||
2.40
|
0.50
|
0.88
|
0.35
|
3.77
|
||||||||||||||
2.43
|
0.51
|
0.91
|
0.40
|
3.85
|
||||||||||||||
(0.04
|
)
|
(0.21
|
)
|
—
|
(0.05
|
)
|
(0.12
|
)
|
||||||||||
—
|
—
|
(0.47
|
)
|
(0.28
|
)
|
(0.10
|
)
|
|||||||||||
(0.04
|
)
|
(0.21
|
)
|
(0.47
|
)
|
(0.33
|
)
|
(0.22
|
)
|
|||||||||
$
|
18.12
|
$
|
15.73
|
$
|
15.43
|
$
|
14.99
|
$
|
14.92
|
|||||||||
15.46
|
%
|
3.27
|
%
|
6.30
|
%
|
2.64
|
%
|
34.82
|
%
|
|||||||||
$
|
46.15
|
$
|
46.41
|
$
|
66.30
|
$
|
100.93
|
$
|
69.86
|
|||||||||
1.53
|
%
|
1.55
|
%
|
1.52
|
%
|
1.46
|
%
|
1.60
|
%
|
|||||||||
0.16
|
%
|
0.09
|
%
|
0.23
|
%
|
0.21
|
%
|
0.26
|
%
|
|||||||||
24
|
%
|
17
|
%
|
21
|
%
|
35
|
%
|
41
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
17.94
|
||
Income from investment operations:
|
||||
Net investment income
|
0.11
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(4.17
|
)
|
||
Total from investment operations
|
(4.06
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.09
|
)
|
||
Dividends from net realized gains
|
(0.07
|
)
|
||
Total distributions
|
(0.16
|
)
|
||
Net asset value, end of period
|
$
|
13.72
|
||
TOTAL RETURN
|
-22.83
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
38.67
|
||
Ratio of expenses to average net assets
|
1.15
|
%(3)
|
||
Ratio of net investment income to average net assets
|
1.36
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
15.58
|
$
|
15.28
|
$
|
14.83
|
$
|
14.72
|
$
|
11.33
|
|||||||||
0.11
|
(1)
|
0.07
|
(1)
|
0.09
|
(1)
|
0.11
|
0.05
|
|||||||||||
2.37
|
0.50
|
0.86
|
0.36
|
3.78
|
||||||||||||||
2.48
|
0.57
|
0.95
|
0.47
|
3.83
|
||||||||||||||
(0.12
|
)
|
(0.27
|
)
|
(0.04
|
)
|
(0.08
|
)
|
(0.10
|
)
|
|||||||||
—
|
—
|
(0.46
|
)
|
(0.28
|
)
|
(0.34
|
)
|
|||||||||||
(0.12
|
)
|
(0.27
|
)
|
(0.50
|
)
|
(0.36
|
)
|
(0.44
|
)
|
|||||||||
$
|
17.94
|
$
|
15.58
|
$
|
15.28
|
$
|
14.83
|
$
|
14.72
|
|||||||||
15.90
|
%
|
3.69
|
%
|
6.73
|
%
|
3.12
|
%
|
35.17
|
%
|
|||||||||
$
|
66.58
|
$
|
34.58
|
$
|
63.78
|
$
|
98.42
|
$
|
28.71
|
|||||||||
1.13
|
%
|
1.13
|
%
|
1.12
|
%
|
1.04
|
%
|
1.19
|
%
|
|||||||||
0.63
|
%
|
0.45
|
%
|
0.61
|
%
|
0.77
|
%
|
0.80
|
%
|
|||||||||
24
|
%
|
17
|
%
|
21
|
%
|
35
|
%
|
41
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise
taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life of a
security with a corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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 exchange rate at the time of valuation. Purchases and
sales of investments and income are translated into U.S. dollars using the spot market exchange rate 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by
registered investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with
Section 18 of the 1940 Act, and requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk
|
HENNESSY FUNDS
|
1-800-966-4354
|
management program and appoint a derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the
availability, liquidity, and performance of derivatives is unclear. Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how
the Fund uses derivatives, adversely affect the Fund’s performance, and increase costs related to the Fund’s use of derivatives.
|
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”). Rule
2a-5 establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards to designate certain parties to perform fair value determinations, subject to board
oversight and certain other conditions. Rule 2a-5 also defines when market quotations are “readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a
security. In connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value
and the accounting and auditing of fund investments. Funds must comply with the rules by September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial
statements.
|
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 generally are 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”) generally are 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 generally are valued at the mean between the bid and
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 are 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 for equity
securities. 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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
98,174,058
|
||
Gross tax unrealized appreciation
|
$
|
23,765,642
|
||
Gross tax unrealized depreciation
|
(6,151,489
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
17,614,153
|
||
Undistributed ordinary income
|
$
|
327,681
|
||
Undistributed long-term capital gains
|
447,793
|
|||
Total distributable earnings
|
$
|
775,474
|
||
Other accumulated gain/(loss)
|
$
|
—
|
||
Total accumulated gain/(loss)
|
$
|
18,389,627
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
327,681
|
$
|
382,609
|
|||||
Long-term capital gains
|
447,810
|
—
|
|||||||
Total distributions
|
$
|
775,491
|
$
|
382,609
|
(1) Ordinary income includes short-term capital gains.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 770.30
|
$6.80
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.11
|
$7.75
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 771.70
|
$5.05
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.09
|
$5.76
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.55% for Investor Class shares or 1.15% for Institutional Class shares, as applicable, multiplied by the average account
value over the period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
Country
|
Gross Foreign Income
|
Foreign Tax Paid
|
||
Japan
|
$1,896,845
|
$189,684
|
WWW.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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
Summaries of the advisory and sub-advisory agreements;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
HENNESSY FUNDS
|
1-800-966-4354
|
(6)
|
A description of the range of services provided by the Advisor and the Sub-Advisor and the distinction between the Advisor-provided services and the Sub-Advisor-provided services;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund;
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale;
|
|
(9)
|
A completed questionnaire from the Sub-Advisor;
|
|
(10)
|
A summary of the Sub-Advisor’s responses to the questionnaire, as well as relevant information from the Sub-Advisor’s Form ADVs Parts 1 and 2 and the certifications submitted by the
Sub-Advisor each quarter;
|
|
(11)
|
Financial information of the Sub-Advisor and its parent company; and
|
|
(12)
|
The Sub-Advisor’s Code of Ethics.
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded that
the Advisor provides high-quality services to the Fund, and they noted that their overall confidence in the Advisor was high. The
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
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 by providing portfolio management services.
|
||
(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 and federal securities laws.
|
||
(e)
|
The Advisor 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
(including their codes of ethics, as appropriate), conducts on-site visits to the Sub-Advisor and the Fund’s other service providers, as feasible, 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 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 prepares or directs the preparation of all 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.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(m)
|
The Advisor provides a quarterly compliance certification to the Board.
|
||
(n)
|
The Advisor prepares or reviews all Board materials, presents to and leads discussions with the Board, 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. Based on this review and an assessment of the Sub-Advisor’s performance, the Trustees concluded
that the Sub-Advisor provides high-quality services to the Fund. The Trustees also concluded that they were satisfied with the nature, extent, and quality of the advisory services provided to the Fund by the
Sub-Advisor and that the nature and extent of the services provided by the Sub-Advisor were appropriate to assure that the Fund’s portfolio aligns properly with its investment objective and principal investment
strategies.
|
(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.
|
||
(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)
|
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 Advisor services previously identified 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 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 the 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,
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
|
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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses
incurred to manage the Fund are variable asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party
platform fees and sub-advisory fees increase as the Fund’s assets grow.
|
|
(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 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
|
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 Agreement
|
27
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Large Cap Financial Fund –
|
||||
Investor Class (HLFNX)
|
-24.53%
|
-18.71%
|
8.41%
|
10.07%
|
Hennessy Large Cap Financial Fund –
|
||||
Institutional Class (HILFX)(2)
|
-24.39%
|
-18.41%
|
8.78%
|
10.35%
|
Russell 1000® Index Financials
|
-13.99%
|
-3.31%
|
13.03%
|
14.04%
|
Russell 1000® Index
|
-11.29%
|
-2.10%
|
13.44%
|
13.53%
|
(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.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Berkshire Hathaway Inc., Class B
|
6.11%
|
Bank of America Corp.
|
5.30%
|
Wells Fargo & Co.
|
5.20%
|
JPMorgan Chase & Co.
|
4.97%
|
Capital One Financial Corp.
|
4.95%
|
Citizens Financial Group, Inc.
|
4.92%
|
KeyCorp
|
4.75%
|
State Street Corp.
|
4.69%
|
Morgan Stanley
|
4.50%
|
Huntington Bancshares, Inc.
|
4.30%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 91.73%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials – 78.80%
|
||||||||||||
Ally Financial, Inc.
|
33,000
|
$
|
1,318,680
|
2.49
|
%
|
|||||||
Bank of America Corp.
|
78,500
|
2,800,880
|
5.30
|
%
|
||||||||
Berkshire Hathaway, Inc., Class B (a)
|
10,000
|
3,228,300
|
6.11
|
%
|
||||||||
BlackRock, Inc.
|
1,300
|
812,084
|
1.54
|
%
|
||||||||
Blackstone, Inc.
|
3,500
|
355,495
|
0.67
|
%
|
||||||||
Capital One Financial Corp.
|
21,000
|
2,617,020
|
4.95
|
%
|
||||||||
Citigroup, Inc.
|
44,000
|
2,121,240
|
4.01
|
%
|
||||||||
Citizens Financial Group, Inc.
|
66,000
|
2,600,400
|
4.92
|
%
|
||||||||
Fifth Third Bancorp
|
50,000
|
1,876,500
|
3.55
|
%
|
||||||||
Huntington Bancshares, Inc.
|
173,000
|
2,274,950
|
4.30
|
%
|
||||||||
JPMorgan Chase & Co.
|
22,000
|
2,625,920
|
4.97
|
%
|
||||||||
KeyCorp
|
130,000
|
2,510,300
|
4.75
|
%
|
||||||||
Moody’s Corp.
|
5,800
|
1,835,584
|
3.47
|
%
|
||||||||
Morgan Stanley
|
29,500
|
2,377,405
|
4.50
|
%
|
||||||||
Signature Bank
|
7,000
|
1,695,750
|
3.21
|
%
|
||||||||
State Street Corp.
|
37,000
|
2,477,890
|
4.69
|
%
|
||||||||
The Goldman Sachs Group, Inc.
|
7,000
|
2,138,430
|
4.04
|
%
|
||||||||
Tradeweb Markets, Inc.
|
8,000
|
569,520
|
1.08
|
%
|
||||||||
Truist Financial Corp.
|
26,000
|
1,257,100
|
2.38
|
%
|
||||||||
Wells Fargo & Co.
|
63,000
|
2,748,690
|
5.20
|
%
|
||||||||
Zions Bancorp NA
|
25,000
|
1,412,750
|
2.67
|
%
|
||||||||
|
41,654,888
|
78.80
|
%
|
|||||||||
Information Technology – 12.93%
|
||||||||||||
Apple, Inc.
|
14,000
|
2,207,100
|
4.17
|
%
|
||||||||
Block, Inc. (a)
|
900
|
89,586
|
0.17
|
%
|
||||||||
Mastercard, Inc., Class A
|
5,000
|
1,816,900
|
3.44
|
%
|
||||||||
PayPal Holdings, Inc. (a)
|
7,000
|
615,510
|
1.16
|
%
|
||||||||
SoFi Technologies, Inc. (a)
|
24,000
|
146,880
|
0.28
|
%
|
||||||||
Visa, Inc., Class A
|
9,200
|
1,960,796
|
3.71
|
%
|
||||||||
|
6,836,772
|
12.93
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $41,725,206)
|
48,491,660
|
91.73
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 9.43%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 9.43%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (b)
|
2,728,000
|
$
|
2,728,000
|
5.16
|
%
|
|||||||
First American Treasury Obligations Fund,
|
||||||||||||
Institutional Class, 0.29% (b)
|
2,258,894
|
2,258,894
|
4.27
|
%
|
||||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $4,986,894)
|
4,986,894
|
9.43
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $46,712,100) – 101.16%
|
53,478,554
|
101.16
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (1.16)%
|
(614,271
|
)
|
(1.16
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
52,864,283
|
100.00
|
%
|
(a)
|
Non-income-producing security.
|
(b)
|
The rate listed is the fund’s seven-day yield as of April 30, 2022.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Financials
|
$
|
41,654,888
|
$
|
—
|
$
|
—
|
$
|
41,654,888
|
||||||||
Information Technology
|
6,836,772
|
—
|
—
|
6,836,772
|
||||||||||||
Total Common Stocks
|
$
|
48,491,660
|
$
|
—
|
$
|
—
|
$
|
48,491,660
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
4,986,894
|
$
|
—
|
$
|
—
|
$
|
4,986,894
|
||||||||
Total Short-Term Investments
|
$
|
4,986,894
|
$
|
—
|
$
|
—
|
$
|
4,986,894
|
||||||||
Total Investments
|
$
|
53,478,554
|
$
|
—
|
$
|
—
|
$
|
53,478,554
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and
Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $46,712,100)
|
$
|
53,478,554
|
||
Dividends and interest receivable
|
86,480
|
|||
Receivable for fund shares sold
|
63,348
|
|||
Return of capital receivable
|
1,663
|
|||
Prepaid expenses and other assets
|
21,838
|
|||
Total assets
|
53,651,883
|
|||
LIABILITIES:
|
||||
Payable for securities purchased
|
588,020
|
|||
Payable for fund shares redeemed
|
111,405
|
|||
Payable to advisor
|
42,130
|
|||
Payable to administrator
|
11,795
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
3,920
|
|||
Accrued service fees
|
2,280
|
|||
Accrued trustees fees
|
5,876
|
|||
Accrued expenses and other payables
|
10,946
|
|||
Total liabilities
|
787,600
|
|||
NET ASSETS
|
$
|
52,864,283
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
43,213,393
|
||
Total distributable earnings
|
9,650,890
|
|||
Total net assets
|
$
|
52,864,283
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
25,824,886
|
||
Shares issued and outstanding
|
1,018,123
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
25.37
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
27,039,397
|
||
Shares issued and outstanding
|
1,054,738
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
25.64
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income
|
$
|
609,730
|
||
Interest income
|
878
|
|||
Total investment income
|
610,608
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
299,700
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
42,190
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
31,960
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
9,523
|
|||
Distribution fees – Investor Class (See Note 5)
|
23,915
|
|||
Federal and state registration fees
|
17,728
|
|||
Service fees – Investor Class (See Note 5)
|
15,943
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Trustees’ fees and expenses
|
8,947
|
|||
Reports to shareholders
|
5,161
|
|||
Interest expense (See Note 7)
|
716
|
|||
Legal fees
|
450
|
|||
Other expenses
|
6,252
|
|||
Total expenses
|
488,863
|
|||
NET INVESTMENT INCOME
|
$
|
121,745
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
4,016,220
|
||
Net change in unrealized appreciation/deprecation on investments
|
(22,161,550
|
)
|
||
Net loss on investments
|
(18,145,330
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(18,023,585
|
)
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income (loss)
|
$
|
121,745
|
$
|
(190,967
|
)
|
|||
Net realized gain on investments
|
4,016,220
|
4,934,331
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(22,161,550
|
)
|
21,198,437
|
|||||
Net increase (decrease) in net
|
||||||||
assets resulting from operations
|
(18,023,585
|
)
|
25,941,801
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(1,687,916
|
)
|
—
|
|||||
Distributable earnings – Institutional Class
|
(1,797,726
|
)
|
—
|
|||||
Total distributions
|
(3,485,642
|
)
|
—
|
|||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
1,797,839
|
10,760,638
|
||||||
Proceeds from shares subscribed – Institutional Class
|
10,093,477
|
24,725,649
|
||||||
Dividends reinvested – Investor Class
|
1,636,788
|
—
|
||||||
Dividends reinvested – Institutional Class
|
1,782,399
|
—
|
||||||
Cost of shares redeemed – Investor Class
|
(3,731,016
|
)
|
(10,552,763
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(8,689,907
|
)
|
(23,051,103
|
)
|
||||
Net increase in net assets derived
|
||||||||
from capital share transactions
|
2,889,580
|
1,882,421
|
||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(18,619,647
|
)
|
27,824,222
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
71,483,930
|
43,659,708
|
||||||
End of period
|
$
|
52,864,283
|
$
|
71,483,930
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
56,620
|
356,674
|
||||||
Shares sold – Institutional Class
|
309,167
|
786,529
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
50,270
|
—
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
54,242
|
—
|
||||||
Shares redeemed – Investor Class
|
(119,939
|
)
|
(333,681
|
)
|
||||
Shares redeemed – Institutional Class
|
(292,694
|
)
|
(744,960
|
)
|
||||
Net increase in shares outstanding
|
57,666
|
64,562
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
35.32
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.02
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(8.32
|
)
|
||
Total from investment operations
|
(8.30
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
(1.65
|
)
|
||
Total distributions
|
(1.65
|
)
|
||
Net asset value, end of period
|
$
|
25.37
|
||
TOTAL RETURN
|
-24.53
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
25.82
|
||
Ratio of expenses to average net assets
|
1.67
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
0.15
|
%(3)
|
||
Portfolio turnover rate(4)
|
40
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
22.33
|
$
|
22.63
|
$
|
21.43
|
$
|
22.02
|
$
|
16.23
|
|||||||||
(0.15
|
)(1)
|
(0.05
|
)(1)
|
(0.05
|
)(1)
|
(0.07
|
)
|
(0.08
|
)
|
|||||||||
13.14
|
(0.25
|
)
|
1.84
|
0.48
|
5.97
|
|||||||||||||
12.99
|
(0.30
|
)
|
1.79
|
0.41
|
5.89
|
|||||||||||||
—
|
—
|
—
|
—
|
(0.10
|
)
|
|||||||||||||
—
|
—
|
(0.59
|
)
|
(1.00
|
)
|
—
|
||||||||||||
—
|
—
|
(0.59
|
)
|
(1.00
|
)
|
(0.10
|
)
|
|||||||||||
$
|
35.32
|
$
|
22.33
|
$
|
22.63
|
$
|
21.43
|
$
|
22.02
|
|||||||||
58.17
|
%
|
-1.33
|
%
|
8.75
|
%
|
1.82
|
%
|
36.41
|
%
|
|||||||||
$
|
36.42
|
$
|
22.51
|
$
|
23.63
|
$
|
40.99
|
$
|
26.33
|
|||||||||
1.68
|
%
|
1.75
|
%
|
1.82
|
%
|
1.69
|
%
|
1.81
|
%
|
|||||||||
(0.47
|
)%
|
(0.21
|
)%
|
(0.23
|
)%
|
(0.44
|
)%
|
(0.41
|
)%
|
|||||||||
62
|
%
|
88
|
%
|
83
|
%
|
64
|
%
|
76
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
35.63
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.09
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(8.41
|
)
|
||
Total from investment operations
|
(8.32
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
(1.67
|
)
|
||
Total distributions
|
(1.67
|
)
|
||
Net asset value, end of period
|
$
|
25.64
|
||
TOTAL RETURN
|
-24.39
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
27.04
|
||
Ratio of expenses to average net assets
|
1.28
|
%(3)
|
||
Ratio of net investment income (loss) to average net assets
|
0.57
|
%(3)
|
||
Portfolio turnover rate(4)
|
40
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
22.44
|
$
|
22.68
|
$
|
21.39
|
$
|
21.91
|
$
|
16.26
|
|||||||||
(0.03
|
)(1)
|
0.02
|
(1)
|
0.01
|
(1)
|
0.03
|
0.18
|
|||||||||||
13.22
|
(0.26
|
)
|
1.87
|
0.45
|
5.78
|
|||||||||||||
13.19
|
(0.24
|
)
|
1.88
|
0.48
|
5.96
|
|||||||||||||
—
|
—
|
—
|
—
|
(0.31
|
)
|
|||||||||||||
—
|
—
|
(0.59
|
)
|
(1.00
|
)
|
—
|
||||||||||||
—
|
—
|
(0.59
|
)
|
(1.00
|
)
|
(0.31
|
)
|
|||||||||||
$
|
35.63
|
$
|
22.44
|
$
|
22.68
|
$
|
21.39
|
$
|
21.91
|
|||||||||
58.78
|
%
|
-1.06
|
%
|
9.16
|
%
|
2.16
|
%
|
36.92
|
%
|
|||||||||
$
|
35.06
|
$
|
21.15
|
$
|
21.97
|
$
|
8.85
|
$
|
5.83
|
|||||||||
1.32
|
%
|
1.45
|
%
|
1.43
|
%
|
1.34
|
%
|
1.50
|
%
|
|||||||||
(0.11
|
)%
|
0.08
|
%
|
0.05
|
%
|
(0.07
|
)%
|
(0.17
|
)%
|
|||||||||
62
|
%
|
88
|
%
|
83
|
%
|
64
|
%
|
76
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements
April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or excise
taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the life
of a security with a corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security. 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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by
registered investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with
Section 18 of the 1940 Act, and requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a
derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is unclear.
Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s performance,
and increase costs related to the Fund’s use of derivatives.
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”).
Rule 2a-5 establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards
|
HENNESSY FUNDS
|
1-800-966-4354
|
to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions. Rule 2a-5 also defines when market quotations are “readily
available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is
rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with the rules by September 8,
2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”) generally are 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 generally are 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 are 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 for equity
securities. 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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
43,654,396
|
||
Gross tax unrealized appreciation
|
$
|
29,210,202
|
||
Gross tax unrealized depreciation
|
(1,247,644
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
27,962,558
|
||
Undistributed ordinary income
|
$
|
—
|
||
Undistributed long-term capital gains
|
3,485,637
|
|||
Total distributable earnings
|
$
|
3,485,637
|
||
Other accumulated gain/(loss)
|
$
|
(288,078
|
)
|
|
Total accumulated gain/(loss)
|
$
|
31,160,117
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
—
|
$
|
—
|
|||||
Long-term capital gains
|
3,485,642
|
—
|
|||||||
Total distributions
|
$
|
3,485,642
|
$
|
—
|
(1) Ordinary income includes short-term capital gains.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 754.70
|
$7.27
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,016.51
|
$8.35
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 756.10
|
$5.57
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.45
|
$6.41
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.67% for Investor Class shares or 1.28% for Institutional Class shares, as applicable, multiplied by the average account
value over the period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded that
the Advisor provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of
ethics, as appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses
incurred to manage the Fund are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees
increase as the Fund’s assets grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
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
|
26
|
Board Approval of Investment Advisory Agreement
|
27
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Small Cap Financial Fund –
|
||||
Investor Class (HSFNX)
|
-12.23%
|
-8.84%
|
6.31%
|
10.71%
|
Hennessy Small Cap Financial Fund –
|
||||
Institutional Class (HISFX)
|
-12.09%
|
-8.54%
|
6.69%
|
11.10%
|
Russell 2000® Index Financials
|
-15.16%
|
-9.93%
|
4.92%
|
9.99%
|
Russell 2000® Index
|
-18.38%
|
-16.87%
|
7.24%
|
10.06%
|
(1)
|
Periods of less than one year are not annualized.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
First BanCorp.
|
6.05%
|
Independent Bank Corp.
|
5.81%
|
Hingham Institution for Savings
|
5.72%
|
Hancock Whitney Corp.
|
5.65%
|
Old National Bancorp
|
5.37%
|
First Citizens BancShares, Inc.
|
4.93%
|
Texas Capital Bancshares, Inc.
|
4.90%
|
Lakeland Bancorp, Inc.
|
4.89%
|
Banner Corp.
|
4.88%
|
WSFS Financial Corp.
|
4.73%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 98.27%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Financials – 98.03%
|
||||||||||||
Associated Banc-Corp.
|
160,000
|
$
|
3,192,000
|
2.90
|
%
|
|||||||
Banner Corp.
|
100,000
|
5,370,000
|
4.88
|
%
|
||||||||
Berkshire Hills Bancorp, Inc.
|
10,000
|
247,400
|
0.22
|
%
|
||||||||
Cadence Bank
|
90,000
|
2,253,600
|
2.05
|
%
|
||||||||
Coastal Financial Corp. (a)
|
18,000
|
738,720
|
0.67
|
%
|
||||||||
ConnectOne Bancorp, Inc.
|
185,000
|
5,154,100
|
4.68
|
%
|
||||||||
Eastern Bankshares, Inc.
|
170,000
|
3,257,200
|
2.96
|
%
|
||||||||
First BanCorp. (b)
|
490,000
|
6,668,900
|
6.05
|
%
|
||||||||
First Citizens BancShares, Inc.
|
8,500
|
5,434,730
|
4.93
|
%
|
||||||||
Flushing Financial Corp.
|
220,000
|
4,730,000
|
4.29
|
%
|
||||||||
Hancock Whitney Corp.
|
133,000
|
6,220,410
|
5.65
|
%
|
||||||||
HarborOne Bancorp, Inc.
|
40,000
|
535,600
|
0.49
|
%
|
||||||||
Hingham Institution for Savings
|
19,500
|
6,299,865
|
5.72
|
%
|
||||||||
HomeTrust Bancshares, Inc.
|
185,000
|
5,000,550
|
4.54
|
%
|
||||||||
Independent Bank Corp.
|
83,000
|
6,404,280
|
5.81
|
%
|
||||||||
Kearny Financial Corp. of Maryland
|
308,000
|
3,652,880
|
3.32
|
%
|
||||||||
Lakeland Bancorp, Inc.
|
358,000
|
5,380,740
|
4.89
|
%
|
||||||||
Luther Burbank Corp.
|
20,000
|
265,400
|
0.24
|
%
|
||||||||
New York Community Bancorp, Inc.
|
410,000
|
3,788,400
|
3.44
|
%
|
||||||||
Northeast Community Bancorp, Inc.
|
228,331
|
2,561,874
|
2.33
|
%
|
||||||||
Old National Bancorp
|
390,000
|
5,912,400
|
5.37
|
%
|
||||||||
PacWest Bancorp
|
97,000
|
3,190,330
|
2.90
|
%
|
||||||||
Shore Bancshares, Inc.
|
82,000
|
1,650,660
|
1.50
|
%
|
||||||||
Silvergate Capital Corp. (a)
|
19,500
|
2,280,720
|
2.07
|
%
|
||||||||
Synovus Financial Corp.
|
25,000
|
1,038,500
|
0.94
|
%
|
||||||||
Texas Capital Bancshares, Inc. (a)
|
105,000
|
5,392,800
|
4.90
|
%
|
||||||||
Western New England Bancorp, Inc.
|
337,000
|
2,894,830
|
2.63
|
%
|
||||||||
Wintrust Financial Corp.
|
37,000
|
3,230,840
|
2.93
|
%
|
||||||||
WSFS Financial Corp.
|
130,000
|
5,209,100
|
4.73
|
%
|
||||||||
|
107,956,829
|
98.03
|
%
|
|||||||||
Information Technology – 0.24%
|
||||||||||||
Bread Financial Holdings, Inc.
|
5,000
|
274,000
|
0.24
|
%
|
||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $87,627,986)
|
108,230,829
|
98.27
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
SHORT-TERM INVESTMENTS – 1.86%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.86%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (c)
|
2,043,774
|
$
|
2,043,774
|
1.86
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $2,043,774)
|
2,043,774
|
1.86
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $89,671,760) – 100.13%
|
110,274,603
|
100.13
|
%
|
|||||||||
Liabilities in Excess of Other Assets – (0.13)%
|
(148,361
|
)
|
(0.13
|
)%
|
||||||||
|
||||||||||||
TOTAL NET ASSETS – 100.00%
|
$
|
110,126,242
|
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, 2022.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Financials
|
$
|
107,956,829
|
$
|
—
|
$
|
—
|
$
|
107,956,829
|
||||||||
Information Technology
|
274,000
|
—
|
—
|
274,000
|
||||||||||||
Total Common Stocks
|
$
|
108,230,829
|
$
|
—
|
$
|
—
|
$
|
108,230,829
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
2,043,774
|
$
|
—
|
$
|
—
|
$
|
2,043,774
|
||||||||
Total Short-Term Investments
|
$
|
2,043,774
|
$
|
—
|
$
|
—
|
$
|
2,043,774
|
||||||||
Total Investments
|
$
|
110,274,603
|
$
|
—
|
$
|
—
|
$
|
110,274,603
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and
Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $89,671,760)
|
$
|
110,274,603
|
||
Dividends and interest receivable
|
25,073
|
|||
Receivable for fund shares sold
|
4,466
|
|||
Prepaid expenses and other assets
|
30,645
|
|||
Total assets
|
110,334,787
|
|||
LIABILITIES:
|
||||
Payable for fund shares redeemed
|
43,102
|
|||
Payable to advisor
|
91,412
|
|||
Payable to administrator
|
25,781
|
|||
Payable to auditor
|
11,228
|
|||
Accrued distribution fees
|
15,873
|
|||
Accrued service fees
|
8,082
|
|||
Accrued trustees fees
|
5,079
|
|||
Accrued expenses and other payables
|
7,988
|
|||
Total liabilities
|
208,545
|
|||
NET ASSETS
|
$
|
110,126,242
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
79,797,895
|
||
Total distributable earnings
|
30,328,347
|
|||
Total net assets
|
$
|
110,126,242
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
86,076,734
|
||
Shares issued and outstanding
|
3,141,868
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
27.40
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
24,049,508
|
||
Shares issued and outstanding
|
1,503,730
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
15.99
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
1,627,528
|
||
Interest income
|
978
|
|||
Total investment income
|
1,628,506
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
697,529
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
107,310
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
8,782
|
|||
Distribution fees – Investor Class (See Note 5)
|
95,275
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
90,052
|
|||
Service fees – Investor Class (See Note 5)
|
63,516
|
|||
Federal and state registration fees
|
22,509
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Trustees’ fees and expenses
|
9,598
|
|||
Interest expense (See Note 7)
|
7,476
|
|||
Reports to shareholders
|
6,971
|
|||
Legal fees
|
900
|
|||
Other expenses
|
11,805
|
|||
Total expenses
|
1,148,101
|
|||
NET INVESTMENT INCOME
|
$
|
480,405
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized gain on investments
|
$
|
12,219,980
|
||
Net change in unrealized appreciation/depreciation on investments
|
(29,977,548
|
)
|
||
Net loss on investments
|
(17,757,568
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(17,277,163
|
)
|
(1)
|
Net of foreign taxes withheld of $10,250.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income
|
$
|
480,405
|
$
|
1,237,630
|
||||
Net realized gain on investments
|
12,219,980
|
7,181,600
|
||||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(29,977,548
|
)
|
46,273,638
|
|||||
Net increase (decrease) in net
|
||||||||
assets resulting from operations
|
(17,277,163
|
)
|
54,692,868
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(1,276,583
|
)
|
(640,077
|
)
|
||||
Distributable earnings – Institutional Class
|
(587,596
|
)
|
(266,480
|
)
|
||||
Total distributions
|
(1,864,179
|
)
|
(906,557
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
13,698,920
|
89,150,331
|
||||||
Proceeds from shares subscribed – Institutional Class
|
10,472,749
|
23,725,263
|
||||||
Dividends reinvested – Investor Class
|
1,243,912
|
621,958
|
||||||
Dividends reinvested – Institutional Class
|
549,827
|
237,659
|
||||||
Cost of shares redeemed – Investor Class
|
(53,557,247
|
)
|
(49,466,414
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(15,247,960
|
)
|
(11,517,594
|
)
|
||||
Net increase (decrease) in net assets
|
||||||||
derived from capital share transactions
|
(42,839,799
|
)
|
52,751,203
|
|||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(61,981,141
|
)
|
106,537,514
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
172,107,383
|
65,569,869
|
||||||
End of period
|
$
|
110,126,242
|
$
|
172,107,383
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
422,231
|
3,020,767
|
||||||
Shares sold – Institutional Class
|
566,377
|
1,373,793
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
39,265
|
28,361
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
29,680
|
18,452
|
||||||
Shares redeemed – Investor Class
|
(1,762,262
|
)
|
(1,754,093
|
)
|
||||
Shares redeemed – Institutional Class
|
(819,660
|
)
|
(688,529
|
)
|
||||
Net increase (decrease) in shares outstanding
|
(1,524,369
|
)
|
1,998,751
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
31.52
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.09
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(3.90
|
)
|
||
Total from investment operations
|
(3.81
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.22
|
)
|
||
Dividends from net realized gains
|
(0.09
|
)
|
||
Total distributions
|
(0.31
|
)
|
||
Net asset value, end of period
|
$
|
27.40
|
||
TOTAL RETURN
|
-12.23
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
86.08
|
||
Ratio of expenses to average net assets
|
1.55
|
%(4)
|
||
Ratio of net investment income (loss) to average net assets
|
0.56
|
%(4)
|
||
Portfolio turnover rate(5)
|
12
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
17.46
|
$
|
21.60
|
$
|
21.96
|
$
|
26.02
|
$
|
23.48
|
|||||||||
0.25
|
(1)
|
0.16
|
(1)
|
0.10
|
(1)
|
0.03
|
(0.04
|
)
|
||||||||||
14.01
|
(3.55
|
)
|
0.93
|
(2.12
|
)
|
5.83
|
||||||||||||
14.26
|
(3.39
|
)
|
1.03
|
(2.09
|
)
|
5.79
|
||||||||||||
(0.20
|
)
|
(0.09
|
)
|
(0.07
|
)
|
0.00
|
(2)
|
(0.06
|
)
|
|||||||||
—
|
(0.66
|
)
|
(1.32
|
)
|
(1.97
|
)
|
(3.19
|
)
|
||||||||||
(0.20
|
)
|
(0.75
|
)
|
(1.39
|
)
|
(1.97
|
)
|
(3.25
|
)
|
|||||||||
$
|
31.52
|
$
|
17.46
|
$
|
21.60
|
$
|
21.96
|
$
|
26.02
|
|||||||||
82.20
|
%
|
-16.37
|
%
|
5.27
|
%
|
-8.79
|
%
|
25.03
|
%
|
|||||||||
$
|
140.03
|
$
|
54.96
|
$
|
89.36
|
$
|
122.00
|
$
|
174.01
|
|||||||||
1.58
|
%
|
1.65
|
%
|
1.58
|
%
|
1.54
|
%
|
1.52
|
%
|
|||||||||
0.90
|
%
|
0.96
|
%
|
0.47
|
%
|
0.11
|
%
|
(0.06
|
)%
|
|||||||||
28
|
%
|
75
|
%
|
46
|
%
|
28
|
%
|
46
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
18.57
|
||
Income from investment operations:
|
||||
Net investment income
|
0.08
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(2.28
|
)
|
||
Total from investment operations
|
(2.20
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
(0.33
|
)
|
||
Dividends from net realized gains
|
(0.05
|
)
|
||
Total distributions
|
(0.38
|
)
|
||
Net asset value, end of period
|
$
|
15.99
|
||
TOTAL RETURN
|
-12.09
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
24.05
|
||
Ratio of expenses to average net assets
|
1.19
|
%(3)
|
||
Ratio of net investment income to average net assets
|
0.91
|
%(3)
|
||
Portfolio turnover rate(4)
|
12
|
%(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.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
10.37
|
$
|
12.92
|
$
|
13.28
|
$
|
15.69
|
$
|
14.23
|
|||||||||
0.21
|
(1)
|
0.13
|
(1)
|
0.10
|
(1)
|
0.07
|
0.02
|
|||||||||||
8.26
|
(2.10
|
)
|
0.54
|
(1.27
|
)
|
3.56
|
||||||||||||
8.47
|
(1.97
|
)
|
0.64
|
(1.20
|
)
|
3.58
|
||||||||||||
(0.27
|
)
|
(0.19
|
)
|
(0.18
|
)
|
(0.02
|
)
|
(0.17
|
)
|
|||||||||
—
|
(0.39
|
)
|
(0.82
|
)
|
(1.19
|
)
|
(1.95
|
)
|
||||||||||
(0.27
|
)
|
(0.58
|
)
|
(1.00
|
)
|
(1.21
|
)
|
(2.12
|
)
|
|||||||||
$
|
18.57
|
$
|
10.37
|
$
|
12.92
|
$
|
13.28
|
$
|
15.69
|
|||||||||
82.88
|
%
|
-16.05
|
%
|
5.57
|
%
|
-8.42
|
%
|
25.56
|
%
|
|||||||||
$
|
32.08
|
$
|
10.61
|
$
|
20.74
|
$
|
35.66
|
$
|
37.92
|
|||||||||
1.20
|
%
|
1.29
|
%
|
1.23
|
%
|
1.15
|
%
|
1.15
|
%
|
|||||||||
1.31
|
%
|
1.27
|
%
|
0.84
|
%
|
0.51
|
%
|
0.30
|
%
|
|||||||||
28
|
%
|
75
|
%
|
46
|
%
|
28
|
%
|
46
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial
Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or
excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the
life of a security with a corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security.
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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by
registered investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with
Section 18 of the 1940 Act, and requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a
derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is
unclear. Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s
performance, and increase costs related to the Fund’s use of derivatives.
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”).
Rule 2a-5 establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards
|
HENNESSY FUNDS
|
1-800-966-4354
|
to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions. Rule 2a-5 also defines when market quotations are “readily
available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related recordkeeping requirements and is
rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with the rules by September
8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”) generally are 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 generally are 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 are 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 for equity
securities. 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 exceeds 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
||||
Cost of investments for tax purposes
|
$
|
126,270,823
|
||
Gross tax unrealized appreciation
|
$
|
51,915,639
|
||
Gross tax unrealized depreciation
|
(3,505,271
|
)
|
||
Net tax unrealized appreciation/(depreciation)
|
$
|
48,410,368
|
||
Undistributed ordinary income
|
$
|
573,969
|
||
Undistributed long-term capital gains
|
485,352
|
|||
Total distributable earnings
|
$
|
1,059,321
|
||
Other accumulated gain/(loss)
|
$
|
—
|
||
Total accumulated gain/(loss)
|
$
|
49,469,689
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
1,378,796
|
$
|
906,557
|
|||||
Long-term capital gains
|
485,383
|
—
|
|||||||
Total distributions
|
$
|
1,864,179
|
$
|
906,557
|
(1) Ordinary income includes short-term capital gains.
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 877.70
|
$7.22
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,017.11
|
$7.75
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 879.10
|
$5.54
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.89
|
$5.96
|
(1)
|
Expenses are equal to the Fund’s annualized expense ratio of 1.55% for Investor Class shares or 1.19% for Institutional Class shares, as applicable, multiplied by the average account
value over the period, multiplied by 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded
that the Advisor provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes of
ethics, as appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of expenses
incurred to manage the Fund are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees
increase as the Fund’s assets grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
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
|
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 Agreement
|
29
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
LETTER TO SHAREHOLDERS
|
Ryan C. Kelley, CFA
|
|
Chief Investment Officer,
|
|
Senior Vice President, and Portfolio Manager
|
HENNESSY FUNDS
|
1-800-966-4354
|
Six
|
One
|
Five
|
Ten
|
|
Months(1)
|
Year
|
Years
|
Years
|
|
Hennessy Technology Fund –
|
||||
Investor Class (HTECX)
|
-20.53%
|
-18.77%
|
12.86%
|
9.93%
|
Hennessy Technology Fund –
|
||||
Institutional Class (HTCIX)
|
-20.43%
|
-18.55%
|
13.14%
|
10.22%
|
Nasdaq Composite Index
|
-20.15%
|
-11.08%
|
16.40%
|
16.30%
|
S&P 500® Index
|
-9.65%
|
0.21%
|
13.66%
|
13.67%
|
Expense ratios:
|
Gross 2.79%, Net 1.23%(2) (Investor Class);
|
Gross 2.44%, Net 0.98%(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, 2023.
|
WWW.HENNESSYFUNDS.COM
|
PERFORMANCE OVERVIEW/SCHEDULE OF INVESTMENTS
|
Schedule of Investments as of April 30, 2022 (Unaudited)
|
TOP TEN HOLDINGS (EXCLUDING MONEY MARKET FUNDS)
|
% NET ASSETS
|
Box, Inc.
|
1.93%
|
Vontier Corp.
|
1.92%
|
Sanmina Corp.
|
1.85%
|
Sciplay Corp.
|
1.83%
|
Arrow Electronics, Inc.
|
1.81%
|
Mastercard, Inc., Class A
|
1.81%
|
A10 Networks, Inc.
|
1.79%
|
Gartner, Inc.
|
1.78%
|
KnowBe4, Inc.
|
1.78%
|
Vishay Intertechnology, Inc.
|
1.78%
|
HENNESSY FUNDS
|
1-800-966-4354
|
COMMON STOCKS – 98.52%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Communication Services – 1.83%
|
||||||||||||
Sciplay Corp. (a)
|
8,170
|
$
|
109,151
|
1.83
|
%
|
|||||||
|
||||||||||||
Consumer Discretionary – 5.80%
|
||||||||||||
1-800-Flowers.com, Inc. (a)
|
8,379
|
85,466
|
1.43
|
%
|
||||||||
Etsy, Inc. (a)
|
835
|
77,814
|
1.30
|
%
|
||||||||
Lands’ End, Inc. (a)
|
6,581
|
92,265
|
1.54
|
%
|
||||||||
Shutterstock, Inc.
|
1,204
|
91,167
|
1.53
|
%
|
||||||||
|
346,712
|
5.80
|
%
|
|||||||||
Information Technology – 90.89%
|
||||||||||||
3D Systems Corp. (a)
|
6,442
|
73,052
|
1.22
|
%
|
||||||||
A10 Networks, Inc.
|
7,480
|
106,814
|
1.79
|
%
|
||||||||
Adobe, Inc. (a)
|
234
|
92,652
|
1.55
|
%
|
||||||||
Advanced Micro Devices, Inc. (a)
|
1,009
|
86,290
|
1.44
|
%
|
||||||||
Apple, Inc.
|
618
|
97,428
|
1.63
|
%
|
||||||||
Applied Materials, Inc.
|
861
|
95,011
|
1.59
|
%
|
||||||||
Arrow Electronics, Inc. (a)
|
919
|
108,313
|
1.81
|
%
|
||||||||
ASE Technology Holding Co. Ltd. – ADR (b)
|
15,257
|
98,255
|
1.65
|
%
|
||||||||
ASML Holding NV – ADR (b)
|
162
|
91,331
|
1.53
|
%
|
||||||||
Atlassian Corp. PLC (a)(b)
|
347
|
78,016
|
1.31
|
%
|
||||||||
Automatic Data Processing, Inc.
|
467
|
101,890
|
1.71
|
%
|
||||||||
Box, Inc. (a)
|
3,759
|
115,101
|
1.93
|
%
|
||||||||
Cadence Design Systems, Inc. (a)
|
656
|
98,958
|
1.66
|
%
|
||||||||
CDW Corp.
|
607
|
99,050
|
1.66
|
%
|
||||||||
Cohu, Inc. (a)
|
3,797
|
100,848
|
1.69
|
%
|
||||||||
CommVault Systems, Inc. (a)
|
1,647
|
100,467
|
1.68
|
%
|
||||||||
Dell Technologies, Inc.
|
2,239
|
105,255
|
1.76
|
%
|
||||||||
DocuSign, Inc. (a)
|
978
|
79,218
|
1.33
|
%
|
||||||||
DXC Technology Co. (a)
|
3,467
|
99,503
|
1.67
|
%
|
||||||||
Extreme Networks, Inc. (a)
|
8,763
|
84,125
|
1.41
|
%
|
||||||||
Flex Ltd. (a)(b)
|
5,943
|
98,000
|
1.64
|
%
|
||||||||
Fortinet, Inc. (a)
|
319
|
92,194
|
1.54
|
%
|
||||||||
Gartner, Inc. (a)
|
366
|
106,341
|
1.78
|
%
|
||||||||
Hewlett Packard Enterprise Co.
|
6,855
|
105,636
|
1.77
|
%
|
||||||||
Intel Corp.
|
2,229
|
97,162
|
1.63
|
%
|
||||||||
Jabil, Inc.
|
1,771
|
102,240
|
1.71
|
%
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
COMMON STOCKS
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Information Technology (Continued)
|
||||||||||||
Kimball Electronics, Inc. (a)
|
5,465
|
$
|
97,496
|
1.63
|
%
|
|||||||
KLA Corp.
|
301
|
96,097
|
1.61
|
%
|
||||||||
KnowBe4, Inc. (a)
|
4,457
|
106,077
|
1.78
|
%
|
||||||||
Kulicke & Soffa Industries, Inc. (b)
|
1,969
|
91,381
|
1.53
|
%
|
||||||||
Lam Research Corp.
|
206
|
95,947
|
1.61
|
%
|
||||||||
LG Display Co. Ltd. – ADR (a)(b)
|
13,412
|
86,239
|
1.44
|
%
|
||||||||
Mastercard, Inc., Class A
|
298
|
108,287
|
1.81
|
%
|
||||||||
Microsoft Corp.
|
351
|
97,410
|
1.63
|
%
|
||||||||
NetApp, Inc.
|
1,369
|
100,279
|
1.68
|
%
|
||||||||
Palo Alto Networks, Inc. (a)
|
177
|
99,347
|
1.66
|
%
|
||||||||
Paychex, Inc.
|
796
|
100,877
|
1.69
|
%
|
||||||||
Paycom Software, Inc. (a)
|
303
|
85,285
|
1.43
|
%
|
||||||||
QIWI PLC – ADR (b)(d)
|
15,383
|
87,222
|
1.46
|
%
|
||||||||
QUALCOMM, Inc.
|
724
|
101,136
|
1.69
|
%
|
||||||||
Sanmina Corp. (a)
|
2,701
|
110,444
|
1.85
|
%
|
||||||||
Seagate Technology Holdings PLC (b)
|
1,214
|
99,597
|
1.67
|
%
|
||||||||
ServiceNow, Inc. (a)
|
188
|
89,883
|
1.51
|
%
|
||||||||
SMART Global Holdings, Inc. (a)(b)
|
4,435
|
100,497
|
1.68
|
%
|
||||||||
Taiwan Semiconductor Manufacturing Co. Ltd. – ADR (b)
|
1,043
|
96,926
|
1.62
|
%
|
||||||||
Telefonaktiebolaget LM Ericsson – ADR (b)
|
11,569
|
92,089
|
1.54
|
%
|
||||||||
Teradata Corp. (a)
|
2,200
|
90,970
|
1.52
|
%
|
||||||||
Teradyne, Inc.
|
920
|
97,023
|
1.62
|
%
|
||||||||
Texas Instruments, Inc.
|
604
|
102,831
|
1.72
|
%
|
||||||||
The Western Union Co.
|
5,800
|
97,208
|
1.63
|
%
|
||||||||
United Microelectronics Corp. – ADR (b)
|
12,091
|
96,244
|
1.61
|
%
|
||||||||
UserTesting, Inc. (a)
|
9,724
|
75,945
|
1.27
|
%
|
||||||||
Vertex, Inc. (a)
|
6,817
|
97,006
|
1.62
|
%
|
||||||||
Vishay Intertechnology, Inc.
|
5,695
|
106,098
|
1.78
|
%
|
||||||||
Vontier Corp.
|
4,470
|
114,521
|
1.92
|
%
|
||||||||
Zeta Global Holdings Corp. (a)
|
8,774
|
95,022
|
1.59
|
%
|
||||||||
|
5,428,534
|
90.89
|
%
|
|||||||||
|
||||||||||||
Total Common Stocks
|
||||||||||||
(Cost $6,148,011)
|
5,884,397
|
98.52
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
SHORT-TERM INVESTMENTS – 1.47%
|
Number
|
% of
|
||||||||||
|
of Shares
|
Value
|
Net Assets
|
|||||||||
Money Market Funds – 1.47%
|
||||||||||||
First American Government Obligations Fund,
|
||||||||||||
Institutional Class, 0.22% (c)
|
87,564
|
$
|
87,564
|
1.47
|
%
|
|||||||
|
||||||||||||
Total Short-Term Investments
|
||||||||||||
(Cost $87,564)
|
87,564
|
1.47
|
%
|
|||||||||
|
||||||||||||
Total Investments
|
||||||||||||
(Cost $6,235,575) – 99.99%
|
5,971,961
|
99.99
|
%
|
|||||||||
Other Assets in Excess of Liabilities – 0.01%
|
511
|
0.01
|
%
|
|||||||||
|
||||||||||||
TOTAL NET ASSETS –
100.00%
|
$
|
5,972,472
|
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, 2022.
|
(d)
|
Value determined using significant unobservable inputs. As of April 30, 2022, this security amounted to $87,222 or 1.46% of net assets.
|
Common Stocks
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||
Communication Services
|
$
|
109,151
|
$
|
—
|
$
|
—
|
$
|
109,151
|
||||||||
Consumer Discretionary
|
346,712
|
—
|
—
|
346,712
|
||||||||||||
Information Technology
|
5,341,312
|
—
|
87,222
|
5,428,534
|
||||||||||||
Total Common Stocks
|
$
|
5,797,175
|
$
|
—
|
$
|
87,222
|
$
|
5,884,397
|
||||||||
Short-Term Investments
|
||||||||||||||||
Money Market Funds
|
$
|
87,564
|
$
|
—
|
$
|
—
|
$
|
87,564
|
||||||||
Total Short-Term Investments
|
$
|
87,564
|
$
|
—
|
$
|
—
|
$
|
87,564
|
||||||||
Total Investments
|
$
|
5,884,739
|
$
|
—
|
$
|
87,222
|
$
|
5,971,961
|
WWW.HENNESSYFUNDS.COM
|
SCHEDULE OF INVESTMENTS
|
Fair Value as of
|
Transfers into
|
Fair Value as of
|
|||||||||||
November 1, 2021
|
Level 3(1)
|
April 30, 2022
|
|||||||||||
Investments in Securities
|
|||||||||||||
Common Stocks
|
$
|
—
|
$
|
87,222
|
$
|
87,222
|
|||||||
Total
|
$
|
—
|
$
|
87,222
|
$
|
87,222
|
(1)
|
Transfers into Level 3 can be attributed to changes in the availability of pricing sources or in the observability of significant inputs used to measure the fair value of those
instruments.
|
Impact to
|
|||||||||||
Fair Value
|
Valuation
|
Unobservable
|
Unobservable
|
Valuation from an
|
|||||||
Type of Security
|
at 4/30/2022
|
Techniques
|
Input
|
Input Values
|
Increase in Input
|
||||||
Common Stocks
|
$87,222
|
Last Traded
|
Market
|
$5.67
|
Significant changes
|
||||||
Price
|
Assessments
|
in market conditions
|
|||||||||
could result in direct
|
|||||||||||
and proportional
|
|||||||||||
changes in the fair
|
|||||||||||
value of the security
|
HENNESSY FUNDS
|
1-800-966-4354
|
Statement of Assets and
Liabilities as of April 30, 2022 (Unaudited)
|
ASSETS:
|
||||
Investments in securities, at value (cost $6,235,575)
|
$
|
5,971,961
|
||
Dividends and interest receivable
|
639
|
|||
Prepaid expenses and other assets
|
17,383
|
|||
Due from advisor
|
4,858
|
|||
Total assets
|
5,994,841
|
|||
LIABILITIES:
|
||||
Payable to auditor
|
11,226
|
|||
Accrued distribution fees
|
747
|
|||
Accrued service fees
|
398
|
|||
Accrued trustees fees
|
6,311
|
|||
Accrued printing & mailing fees
|
3,042
|
|||
Accrued expenses and other payables
|
645
|
|||
Total liabilities
|
22,369
|
|||
NET ASSETS
|
$
|
5,972,472
|
||
NET ASSETS CONSISTS OF:
|
||||
Capital stock
|
$
|
6,531,817
|
||
Accumulated deficit
|
(559,345
|
)
|
||
Total net assets
|
$
|
5,972,472
|
||
NET ASSETS:
|
||||
Investor Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
4,538,709
|
||
Shares issued and outstanding
|
283,704
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
16.00
|
||
Institutional Class
|
||||
Shares authorized (no par value)
|
Unlimited
|
|||
Net assets applicable to outstanding shares
|
$
|
1,433,763
|
||
Shares issued and outstanding
|
87,074
|
|||
Net asset value, offering price, and redemption price per share
|
$
|
16.47
|
WWW.HENNESSYFUNDS.COM
|
STATEMENT OF ASSETS AND LIABILITIES/STATEMENT OF OPERATIONS
|
Statement of Operations for the six months ended April 30, 2022 (Unaudited)
|
INVESTMENT INCOME:
|
||||
Dividend income(1)
|
$
|
42,493
|
||
Interest income
|
53
|
|||
Total investment income
|
42,546
|
|||
EXPENSES:
|
||||
Investment advisory fees (See Note 5)
|
26,470
|
|||
Federal and state registration fees
|
15,385
|
|||
Compliance expense (See Note 5)
|
15,156
|
|||
Audit fees
|
11,222
|
|||
Administration, accounting, custody, and transfer agent fees (See Note 5)
|
10,210
|
|||
Trustees’ fees and expenses
|
8,394
|
|||
Distribution fees – Investor Class (See Note 5)
|
3,998
|
|||
Sub-transfer agent expenses – Investor Class (See Note 5)
|
3,162
|
|||
Sub-transfer agent expenses – Institutional Class (See Note 5)
|
306
|
|||
Reports to shareholders
|
3,258
|
|||
Service fees – Investor Class (See Note 5)
|
2,665
|
|||
Other expenses
|
2,446
|
|||
Total expenses before waivers and reimbursements
|
102,672
|
|||
Service provider expense waiver (See Note 5)
|
(10,210
|
)
|
||
Expense reimbursement from advisor – Investor Class
|
(38,397
|
)
|
||
Expense reimbursement from advisor – Institutional Class
|
(12,347
|
)
|
||
Net expenses
|
41,718
|
|||
NET INVESTMENT INCOME
|
$
|
828
|
||
REALIZED AND UNREALIZED GAINS (LOSSES):
|
||||
Net realized loss on investments
|
$
|
(264,921
|
)
|
|
Net change in unrealized appreciation/depreciation on investments
|
(1,314,801
|
)
|
||
Net loss on investments
|
(1,579,722
|
)
|
||
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
(1,578,894
|
)
|
(1)
|
Net of foreign taxes withheld and issuance fees of $1,716
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
STATEMENTS OF CHANGES IN NET ASSETS
|
Statements of Changes in Net Assets
|
Six Months Ended
|
||||||||
April 30, 2022
|
Year Ended
|
|||||||
(Unaudited)
|
October 31, 2021
|
|||||||
OPERATIONS:
|
||||||||
Net investment income (loss)
|
$
|
828
|
$
|
(1,224
|
)
|
|||
Net realized gain (loss) on investments
|
(264,921
|
)
|
2,211,486
|
|||||
Net change in unrealized
|
||||||||
appreciation/depreciation on investments
|
(1,314,801
|
)
|
358,442
|
|||||
Net increase (decrease) in net assets
|
||||||||
resulting from operations
|
(1,578,894
|
)
|
2,568,704
|
|||||
DISTRIBUTIONS TO SHAREHOLDERS:
|
||||||||
Distributable earnings – Investor Class
|
(1,498,176
|
)
|
(493,580
|
)
|
||||
Distributable earnings – Institutional Class
|
(513,645
|
)
|
(175,930
|
)
|
||||
Total distributions
|
(2,011,821
|
)
|
(669,510
|
)
|
||||
CAPITAL SHARE TRANSACTIONS:
|
||||||||
Proceeds from shares subscribed – Investor Class
|
132,457
|
917,272
|
||||||
Proceeds from shares subscribed – Institutional Class
|
30,683
|
57,969
|
||||||
Dividends reinvested – Investor Class
|
1,465,100
|
482,162
|
||||||
Dividends reinvested – Institutional Class
|
513,645
|
175,930
|
||||||
Cost of shares redeemed – Investor Class
|
(444,363
|
)
|
(1,006,346
|
)
|
||||
Cost of shares redeemed – Institutional Class
|
(261,393
|
)
|
(125,590
|
)
|
||||
Net increase in net assets derived
|
||||||||
from capital share transactions
|
1,436,129
|
501,397
|
||||||
TOTAL INCREASE (DECREASE) IN NET ASSETS
|
(2,154,586
|
)
|
2,400,591
|
|||||
NET ASSETS:
|
||||||||
Beginning of period
|
8,127,058
|
5,726,467
|
||||||
End of period
|
$
|
5,972,472
|
$
|
8,127,058
|
||||
CHANGES IN SHARES OUTSTANDING:
|
||||||||
Shares sold – Investor Class
|
7,308
|
35,433
|
||||||
Shares sold – Institutional Class
|
1,554
|
2,256
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Investor Class
|
73,365
|
21,237
|
||||||
Shares issued to holders as reinvestment
|
||||||||
of dividends – Institutional Class
|
25,019
|
7,528
|
||||||
Shares redeemed – Investor Class
|
(22,443
|
)
|
(38,822
|
)
|
||||
Shares redeemed – Institutional Class
|
(14,145
|
)
|
(4,863
|
)
|
||||
Net increase in shares outstanding
|
70,658
|
22,769
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
26.89
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.00
|
(1)(2)
|
||
Net realized and unrealized gains (losses) on investments
|
(4.18
|
)
|
||
Total from investment operations
|
(4.18
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
(6.71
|
)
|
||
Total distributions
|
(6.71
|
)
|
||
Net asset value, end of period
|
$
|
16.00
|
||
TOTAL RETURN
|
-20.53
|
%(3)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
4.54
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
2.96
|
%(4)
|
||
After expense reimbursement
|
1.23
|
%(4)(5)
|
||
Ratio of net investment income (loss) to average net assets:
|
||||
Before expense reimbursement
|
(1.77
|
)%(4)
|
||
After expense reimbursement
|
(0.04
|
)%(4)
|
||
Portfolio turnover rate(7)
|
99
|
%(3)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Amount is between $(0.005) and $0.005.
|
(3)
|
Not annualized.
|
(4)
|
Annualized.
|
(5)
|
Certain service provider expenses were voluntarily waived during the period.
|
(6)
|
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.
|
(7)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INVESTOR CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
20.50
|
$
|
18.90
|
$
|
18.04
|
$
|
18.46
|
$
|
15.82
|
|||||||||
(0.02
|
)(1)
|
0.02
|
(1)
|
(0.03
|
)(1)
|
(0.05
|
)
|
(0.23
|
)
|
|||||||||
8.82
|
2.10
|
3.15
|
1.26
|
2.87
|
||||||||||||||
8.80
|
2.12
|
3.12
|
1.21
|
2.64
|
||||||||||||||
(0.04
|
)
|
—
|
—
|
—
|
—
|
|||||||||||||
(2.37
|
)
|
(0.52
|
)
|
(2.26
|
)
|
(1.63
|
)
|
—
|
||||||||||
(2.41
|
)
|
(0.52
|
)
|
(2.26
|
)
|
(1.63
|
)
|
—
|
||||||||||
$
|
26.89
|
$
|
20.50
|
$
|
18.90
|
$
|
18.04
|
$
|
18.46
|
|||||||||
45.11
|
%
|
11.42
|
%
|
20.47
|
%
|
7.25
|
%
|
16.69
|
%
|
|||||||||
$
|
6.06
|
$
|
4.26
|
$
|
3.89
|
$
|
3.31
|
$
|
3.20
|
|||||||||
2.79
|
%
|
3.45
|
%
|
3.84
|
%
|
3.70
|
%
|
4.16
|
%
|
|||||||||
1.23
|
%(5)
|
1.23
|
%(5)
|
1.23
|
%
|
1.23
|
%
|
2.15
|
%(6)
|
|||||||||
(1.64
|
)%
|
(2.12
|
)%
|
(2.80
|
)%
|
(2.83
|
)%
|
(3.16
|
)%
|
|||||||||
(0.08
|
)%
|
0.10
|
%
|
(0.19
|
)%
|
(0.36
|
)%
|
(1.15
|
)%(6)
|
|||||||||
200
|
%
|
192
|
%
|
185
|
%
|
225
|
%
|
267
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Financial Highlights
|
Six Months Ended
|
||||
April 30, 2022
|
||||
(Unaudited)
|
||||
PER SHARE DATA:
|
||||
Net asset value, beginning of period
|
$
|
27.65
|
||
Income from investment operations:
|
||||
Net investment income (loss)
|
0.02
|
(1)
|
||
Net realized and unrealized gains (losses) on investments
|
(4.31
|
)
|
||
Total from investment operations
|
(4.29
|
)
|
||
Less distributions:
|
||||
Dividends from net investment income
|
—
|
|||
Dividends from net realized gains
|
(6.89
|
)
|
||
Total distributions
|
(6.89
|
)
|
||
Net asset value, end of period
|
$
|
16.47
|
||
TOTAL RETURN
|
-20.43
|
%(2)
|
||
SUPPLEMENTAL DATA AND RATIOS:
|
||||
Net assets, end of period (millions)
|
$
|
1.43
|
||
Ratio of expenses to average net assets:
|
||||
Before expense reimbursement
|
2.62
|
%(3)
|
||
After expense reimbursement
|
0.98
|
%(3)(4)
|
||
Ratio of net investment income (loss) to average net assets:
|
||||
Before expense reimbursement
|
(1.43
|
)%(3)
|
||
After expense reimbursement
|
0.21
|
%(3)
|
||
Portfolio turnover rate(6)
|
99
|
%(2)
|
(1)
|
Calculated using the average shares outstanding method.
|
(2)
|
Not annualized.
|
(3)
|
Annualized.
|
(4)
|
Certain service provider expenses were voluntarily waived during the period.
|
(5)
|
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.
|
(6)
|
Calculated on the basis of the Fund as a whole.
|
WWW.HENNESSYFUNDS.COM
|
FINANCIAL HIGHLIGHTS — INSTITUTIONAL CLASS
|
Year Ended October 31,
|
||||||||||||||||||
2021
|
2020
|
2019
|
2018
|
2017
|
||||||||||||||
$
|
21.08
|
$
|
19.40
|
$
|
18.47
|
$
|
18.85
|
$
|
16.11
|
|||||||||
0.05
|
(1)
|
0.07
|
(1)
|
0.01
|
(1)
|
0.01
|
(0.12
|
)
|
||||||||||
9.06
|
2.15
|
3.23
|
1.28
|
2.86
|
||||||||||||||
9.11
|
2.22
|
3.24
|
1.29
|
2.74
|
||||||||||||||
(0.11
|
)
|
(0.01
|
)
|
—
|
—
|
—
|
||||||||||||
(2.43
|
)
|
(0.53
|
)
|
(2.31
|
)
|
(1.67
|
)
|
—
|
||||||||||
(2.54
|
)
|
(0.54
|
)
|
(2.31
|
)
|
(1.67
|
)
|
—
|
||||||||||
$
|
27.65
|
$
|
21.08
|
$
|
19.40
|
$
|
18.47
|
$
|
18.85
|
|||||||||
45.49
|
%
|
11.67
|
%
|
20.77
|
%
|
7.54
|
%
|
17.01
|
%
|
|||||||||
$
|
2.06
|
$
|
1.47
|
$
|
1.34
|
$
|
1.09
|
$
|
1.22
|
|||||||||
2.44
|
%
|
3.08
|
%
|
3.47
|
%
|
3.27
|
%
|
3.74
|
%
|
|||||||||
0.98
|
%(4)
|
0.98
|
%(4)
|
0.98
|
%
|
0.98
|
%
|
1.77
|
%(5)
|
|||||||||
(1.29
|
)%
|
(1.74
|
)%
|
(2.43
|
)%
|
(2.41
|
)%
|
(2.74
|
)%
|
|||||||||
0.17
|
%
|
0.36
|
%
|
0.06
|
%
|
(0.12
|
)%
|
(0.77
|
)%(5)
|
|||||||||
200
|
%
|
192
|
%
|
185
|
%
|
225
|
%
|
267
|
%
|
HENNESSY FUNDS
|
1-800-966-4354
|
Notes to the Financial Statements April 30, 2022 (Unaudited)
|
a).
|
Securities Valuation – All investments in securities are valued in accordance with the Fund’s valuation policies and procedures, as described in Note 3.
|
b).
|
Federal Income Taxes – 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. As a result, the Fund has made no provision for federal income taxes or
excise taxes. 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-basis 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 tax 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.
|
WWW.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. Market discounts, original issue discounts, and market premiums on debt securities are accreted or amortized to interest income over the
life of a security with a corresponding increase or decrease, as applicable, in the cost basis of such security using the yield-to-maturity method or, where applicable, the first call date of the security.
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 – Preparing financial statements in accordance 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, as well as 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 Fund shares outstanding, rounded to the nearest $0.01. Fund shares are not 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).
|
Recent Accounting Pronouncements and Regulatory Updates – In October 2020, the Securities and Exchange Commission (“SEC”) adopted new regulations governing the use of derivatives by
registered investment companies (“Rule 18f-4”). Rule 18f-4 imposes limits on the amount of derivatives a fund can enter into, eliminates the asset segregation framework currently used by funds to comply with
Section 18 of the 1940 Act, and requires funds whose use of derivatives is greater than a limited specified amount to establish and maintain a comprehensive derivatives risk management program and appoint a
derivatives risk manager. Funds are required to comply with Rule 18f-4 by August 19, 2022. The impact, if any, that Rule 18f-4 will have on the availability, liquidity, and performance of derivatives is
unclear. Management is currently evaluating the potential impact of Rule 18f-4 on the Fund. When fully implemented, Rule 18f-4 may require changes in how the Fund uses derivatives, adversely affect the Fund’s
performance, and increase costs related to the Fund’s use of derivatives.
|
In December 2020, the SEC adopted a new rule providing a framework for fund valuation practices (“Rule 2a-5”).
Rule 2a-5 establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Rule 2a-5 permits fund boards
|
HENNESSY FUNDS
|
1-800-966-4354
|
to designate certain parties to perform fair value determinations, subject to board oversight and certain other conditions. Rule 2a-5 also defines when market quotations are
“readily available” for purposes of the 1940 Act and the threshold for determining whether a fund must fair value a security. In connection with Rule 2a-5, the SEC also adopted related recordkeeping
requirements and is rescinding previously issued guidance, including with respect to the role of a board in determining fair value and the accounting and auditing of fund investments. Funds must comply with
the rules by September 8, 2022. Management is currently assessing the potential impact of the new rules on the Fund’s financial statements.
|
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 generally are 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”) generally are 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 generally are 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
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
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 are 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 for equity
securities. 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 exceeds 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
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
Fiscal Year
|
|||
2022
|
2023
|
2024
|
2025
|
Total
|
||
Investor Class
|
$51,219
|
$86,892
|
$75,956
|
$38,397
|
$252,464
|
|
Institutional Class
|
$16,327
|
$27,643
|
$23,799
|
$12,347
|
$ 80,116
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
HENNESSY FUNDS
|
1-800-966-4354
|
Investments
|
|||||
Cost of investments for tax purposes
|
$
|
7,125,370
|
|||
Gross tax unrealized appreciation
|
$
|
1,538,881
|
|||
Gross tax unrealized depreciation
|
(514,095
|
)
|
|||
Net tax unrealized appreciation/(depreciation)
|
$
|
1,024,786
|
|||
Undistributed ordinary income
|
$
|
1,178,003
|
|||
Undistributed long-term capital gains
|
828,581
|
||||
Total distributable earnings
|
$
|
2,006,584
|
|||
Other accumulated gain/(loss)
|
$
|
—
|
|||
Total accumulated gain/(loss)
|
$
|
3,031,370
|
WWW.HENNESSYFUNDS.COM
|
NOTES TO THE FINANCIAL STATEMENTS
|
Six Months Ended
|
Year Ended
|
||||||||
April 30, 2022
|
October 31, 2021
|
||||||||
Ordinary income(1)
|
$
|
1,183,100
|
$
|
239,745
|
|||||
Long-term capital gains
|
828,721
|
429,765
|
|||||||
Total distributions
|
$
|
2,011,821
|
$
|
669,510
|
(1) Ordinary income includes short-term capital gains.
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
EXPENSE EXAMPLE
|
Beginning
|
Ending
|
||
Account Value
|
Account Value
|
Expenses Paid
|
|
November 1, 2021
|
April 30, 2022
|
During Period(1)
|
|
Investor Class
|
|||
Actual
|
$1,000.00
|
$ 794.70
|
$5.47
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,018.70
|
$6.16
|
Institutional Class
|
|||
Actual
|
$1,000.00
|
$ 795.70
|
$4.36
|
Hypothetical (5% return before expenses)
|
$1,000.00
|
$1,019.93
|
$4.91
|
(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 181/365 days (to reflect the half-year period).
|
HENNESSY FUNDS
|
1-800-966-4354
|
WWW.HENNESSYFUNDS.COM
|
PROXY VOTING — BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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)
|
The Advisor’s financial statements from its most recent Form 10-K and Form 10-Q;
|
|
(4)
|
A summary of the advisory agreement;
|
|
(5)
|
A recent Fund fact sheet, which included, among other things, Fund performance over various periods;
|
|
(6)
|
A description of the range of services provided by the Advisor;
|
|
(7)
|
A peer expense comparison of the net expense ratio and investment advisory fee of the Fund; and
|
|
(8)
|
A memorandum from the Advisor regarding economies of scale.
|
HENNESSY FUNDS
|
1-800-966-4354
|
(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 and an assessment of the Advisor’s performance, the Trustees concluded
that the Advisor provides high-quality services to the Fund, and they 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 and federal securities laws.
|
||
(e)
|
The Advisor maintains a compliance program (including a code of ethics), conducts ongoing reviews of the compliance programs of the Fund’s service providers (including their codes
of ethics, as appropriate), conducts on-site visits to the Fund’s service providers, as feasible, 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(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 prepares or directs the preparation of all 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, presents to and leads discussions with the Board, 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 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 the 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 a reasonable 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 should be shared with the Fund’s shareholders. The Trustees noted that the majority of
expenses incurred to manage the Fund are variable
|
HENNESSY FUNDS
|
1-800-966-4354
|
asset-based fees, so the Advisor does not realize material economies of scale relating to these expenses as the assets of the Fund increase. For example, third-party platform fees
increase as the Fund’s assets grow.
|
||
(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 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.
|
WWW.HENNESSYFUNDS.COM
|
BOARD APPROVAL OF INVESTMENT ADVISORY AGREEMENT
|
(b)
|
|
✔
|
Request a paper copy of a specific shareholder report, free of charge. Unless you contact U.S. Bank Global Fund Services, you will NOT receive a paper copy.
|
✔
|
Elect to receive paper copies of ALL future shareholder reports, free of charge.
|
✔
|
Elect to receive shareholder reports and other communications (including quarterly statements, annual tax statements, and prospectuses) electronically delivered to your email.
|
|
|
|
|
(a)
|
The Schedules of Investments are included as part of the reports to shareholders filed under Item 1 of this Form.
|
(b)
|
Not applicable.
|
(a)
|
The registrant’s principal executive officer and principal financial officer 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 date of this report, as required by Rule 30a‑3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Exchange Act. 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 and Principal Executive Officer |
Date: July 8, 2022
|
By: /s/Teresa M. Nilsen
Teresa M. Nilsen, Treasurer and Principal Financial Officer
|
Date: July 8, 2022
|
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 8, 2022
|
/s/Neil J. Hennessy
Neil J. Hennessy
President and Principal Executive Officer
|
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 8, 2022
|
/s/Teresa M. Nilsen
Teresa M. Nilsen
Treasurer and Principal Financial Officer
|
/s/Neil J. Hennessy
Neil J. Hennessy
President and Principal Executive Officer
Hennessy Funds Trust
|
/s/Teresa M. Nilsen
Teresa M. Nilsen
Treasurer and Principal Financial Officer
Hennessy Funds Trust
|
Date: July 8, 2022
|
Date: July 8, 2022
|
0!S &, 80!L &4 *0 $ 0
M !!P (X 0 0
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M.?6^>^7G6[8_JC:.8;,;5ZYR6X,;2X3I_=LFX [\/BIU=O#X6_P IVIZ!WWCL;CM_]7_'
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M#^OO99[4H6H^BZ!R79$ZCZ^8Q$W$2PX:MC\:$_EN6)!MJ/LM^\.J,U3;@P,[
MYC'",/MV=H%CJ3Y#7IC8H-)]*CQFI'DO?@$CZ>__UC;]X=H;=IZG'TW2&[_A
MIVYL[LS(=O3==;EV_P##G#=N[$S>P]DP8BLV_E]R9WJCMG'0;3@W5)D*BFI/
MO*5*3)?9^>*RF32"WS!V9LCK'Y%UVTNN=A[&VV*'KGIK-Y':^RMN;LI,92;G
MW-U+AL]ONOVMMRG?-;?P%#E')+52M)%2$K
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MO9^ KI8,<>T
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M2.20:TAC4N-N+X8?%K#?&W%YK/Y[,1[@[X["Q6,QO8CK72TF,V[BL9,*Z/8'
M7<-1!2T^5H<;E7,E=E=)WCO>;&?
FS&Z:OIW*9^EPN#IJMX,?B::LCQ5%%Q# KWD84ML_!O=&W,A#74'\QO^9B
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MA:+?.Z\9N.$KJU!C%3[8Q,GE0_1M8^MO:LJ<_D*G5JJ)4!MZM2(QL18 !>/I
M["W<76NQ-V9.#-;@P1R.8IVC>#)S9?<#5,3PJ4A>"%LJ]/$44V&F)0?S?VBM
M\]*ING9V6VEMKLGM?IN?*BG6'?W66?P$>_L"L4\<\S;
>P/:6G@JFYKF.VNY"2"Q22204\_UY[:^L8Q>=M61C^A8[L!ZC]EG_ %F[
MTK54IONQGN U,6U.^B2WVPZ/HO9_I&>]6?K>P%V$X\%MS#]]3O^_*D+#=57
MD$RYXV6G_A*X:\_]=8:K_P#KJ3&=RZ^+EN#"_%>0T:V4N@[?Z[/HN9_P]?\
MX$K]&>RQS:WL++'$-:6RYI)X_EL_\$7,L>^MPL8XL>S5KP8(72]&Q;;J1FVM
M]"T_S0 ]I_X;TC_-^I]#TOW/YOTO\&5P-NPUH:T-'80I*O:W.AOI/KW3[MS2
M!M@_RG.^DJ_^6]I;^A!),.UT!'M#1_(?O^E_P?\ +277X.@DJ!_;0>(] M$$
M_2$R?Q"S,>G)8&O?Z;JSN:]I