What changed in this filing

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Item 1. Business

2020-12-01 compared with 2019-12-03 · 245 added, 221 removed, 543 unchanged (46% of the section changed)

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open-end mutual funds branded as the Hennessy Funds.

We are committed to employing a consistent and disciplined approach to investing based on a

buy-and-hold philosophy that rejects the idea of market timing and to providing superior service to investors.

Our goal is to provide products that investors can have

confidence in, knowing their money is invested as promised and with their best interests in mind.

We are committed to providing superior service to investors and employing a consistent and disciplined approach to investing based on a buy-and-hold philosophy that rejects the idea of market timing.

Our goal is to provide products that investors can have confidence in, knowing their money is invested as

promised and with their best interests in mind.

Our firm was founded on these principles over 30 years ago, and the same principles guide us today.

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Investment advisory services include managing the composition of each funds portfolio (including the purchase, retention, and disposition of portfolio securities in accordance with each funds

investment objectives, policies, and restrictions), conducting investment research, monitoring compliance with each funds investment restrictions and applicable laws and regulations, overseeing the selection and continued employment of sub-advisors and monitoring such sub-advisors investment performance and adherence to investment policies and compliance procedures, overseeing other service providers,

maintaining public relations and marketing programs for each fund, preparing and distributing regulatory reports, and overseeing distribution through third-party financial intermediaries.

Shareholder services include maintaining an 800

number that the current investors in the Hennessy Funds may call to ask questions about the funds or their accounts or to get help with processing exchange and redemption requests or changing account options.

The fees we receive for investment

advisory and shareholder services are calculated as a percentage of the average daily net asset values of the Hennessy Funds.

investment objectives, policies, and restrictions), monitoring each funds compliance with its investment restrictions and federal securities laws, monitoring the liquidity of each fund, reviewing each funds investment performance,

overseeing the selection and continued employment of sub-advisors and monitoring such sub-advisors adherence to the funds investment objectives, policies,

and restrictions, monitoring and overseeing other service providers, maintaining in-house marketing and distribution departments, preparing and distributing regulatory reports, and monitoring and overseeing

distribution through third-party financial intermediaries.

Shareholder services include maintaining a toll-free number that the current investors in the Hennessy Funds may call to ask questions about the funds

or their accounts or to get help with processing exchange and redemption requests or changing account options.

The fees we receive for investment advisory and shareholder services are calculated as a percentage of the average daily net asset values

of the Hennessy Funds.

Accordingly, our total revenue increases or decreases as our average assets under management rises or falls.

The percentage

amount of the investment advisory fees varies from fund to fund, but the percentage amount of the shareholder service fees is consistent across all funds.

We have delegated the day-to-day portfolio management

responsibilities to sub-advisors, subject to our oversight, for some of the Hennessy Funds.

The percentage amount of the investment advisory fees varies from fund to fund, but the percentage amount of the

shareholder service fees is consistent across all funds.

We have delegated the day-to-day portfolio management responsibilities to sub-advisors, subject to our oversight, for some of the Hennessy Funds.

In exchange for these sub-advisory services, we pay each sub-advisor a fee out of our own assets, which is calculated as a percentage of the average daily net asset values of the sub-advised funds.

Accordingly, the sub-advisory fees we pay increase or decrease as our average assets under management in our sub-advised funds increases or decreases, respectively.

Our average assets under management for fiscal year 2019 was $5.2 billion.

As of the end of fiscal year 2019, our total assets under

management was $4.9 billion, an increase of over 1,200% from $375 million as of the end of fiscal year 2002, which was our first fiscal year as a public company.

Accordingly, the sub-advisory fees we pay increase or decrease as our average assets under management in our

sub-advised funds increases or decreases, respectively.

Our average assets under management for

fiscal year 2020 was $4.1 billion, and our total assets under management as of the end of fiscal year 2020 was $3.6 billion.

Although our total AUM has fluctuated up and down throughout our history, it was 851% higher as of the end of

fiscal year 2020 than our total AUM of $375 million as of the end of fiscal year 2002, which was our first fiscal year as a public company.

Our business strategy centers on (i) organic growth through our marketing, sales, and distribution efforts and (ii) growth through

strategic purchases of management-related assets.

HISTORICAL TIMELINE

HISTORICAL CALENDAR YEAR TIMELINE

In February, we were founded as a California corporation under our previous name, Edward J.

Hennessy, Inc., and registered as a broker-dealer with the National Association of Securities Dealers (now known as the Financial Industry

Regulatory Authority).

Hennessy, Inc., and registered as a broker-dealer with the Financial Industry Regulatory Authority.

In March, we launched our first mutual fund, the Hennessy Balanced Fund.

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In June, we successfully completed our first asset purchase by purchasing the assets related to the management of two funds previously managed by Netfolio, Inc.

(Netfolio) named the OShaughnessy Cornerstone Growth

Fund and OShaughnessy Cornerstone Value Fund, which are now called the Hennessy Cornerstone Growth Fund and the Hennessy Cornerstone Value Fund, respectively.

The amount of the purchased assets as of the closing date totaled approximately

$197 million.

(Netfolio) and changed the fund names to the Hennessy

Cornerstone Growth Fund and the Hennessy Cornerstone Value Fund.

The amount of the purchased assets as of the closing date totaled approximately $197 million.

In May, we successfully completed a self-underwritten initial public offering of our stock by raising $5.7 million at an offering price of $1.98 (HNNA.OB) and changed our firm name to Hennessy Advisors, Inc.

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under management at the time of our initial public offering was approximately $358 million.

In September, we purchased the assets related to the management of a fund previously managed by SYM Financial Corporation, named the SYM Select Growth Fund, and reorganized the assets of such fund into the Hennessy Cornerstone Mid

The amount of the purchased assets as of the closing date was approximately $35 million.

In September, we purchased the assets related to the management of a fund previously managed by SYM Financial Corporation and reorganized the assets of such fund into the newly created Hennessy Cornerstone Mid Cap 30 Fund.

amount of the purchased assets as of the closing date was approximately $35 million.

In March, we purchased the assets related to the management of five funds previously managed by Lindner Asset Management, Inc.

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purchased assets as of the closing date totaled approximately $301 million.

In July, we purchased the assets related to the management of a fund previously managed by Landis Associates LLC, named The Henlopen Fund, and changed the fund name to the Hennessy Cornerstone Growth, Series II Fund.

The amount of

the purchased assets as of the closing date was approximately $299 million.

In July, we purchased the assets related to the management of a fund previously managed by Landis Associates LLC and changed the fund name to the Hennessy Cornerstone Growth, Series II Fund.

The amount of the purchased assets as of

the closing date was approximately $299 million.

In November, we launched the Hennessy Micro Cap Growth Fund, LLC, a non-registered private pooled investment fund.

In March, we purchased the assets related to the management of two funds previously managed by RBC Global Asset Management (U.S.) Inc., named

the Tamarack Large Growth Fund and the Tamarack Value Fund, and reorganized the assets of such funds into the Hennessy Cornerstone Large Growth Fund and the Hennessy Large Value Fund, respectively.

In conjunction with the completion of the

transaction, RBC Global Asset Management (U.S.) Inc.

In March, we purchased the assets related to the management of two funds previously managed by RBC Global Asset Management (U.S.) Inc.

reorganized the assets of such funds into the newly created Hennessy Cornerstone Large Growth Fund and the Hennessy Large Value Fund.

In conjunction with the completion of the transaction, RBC Global Asset Management (U.S.) Inc.

became the sub-advisor to the Hennessy Large Value Fund.

The amount of the purchased assets as of the closing date totaled approximately

$158 million.

In September, we purchased the assets related to the management

of two funds previously managed by SPARX Investment & Research, USA, Inc.

and sub-advised by SPARX Asset Management Co., Ltd., named the SPARX Japan Fund and the SPARX Japan Smaller Companies Fund,

which are now called the Hennessy Japan Fund and the Hennessy Japan Small Cap Fund, respectively.

In conjunction with the completion of the transaction, SPARX Asset Management Co., Ltd.

became the sub-advisor

to the Hennessy Japan Fund and the Hennessy Japan Small Cap Fund.

The amount of the purchased assets as of the closing date totaled approximately $158 million.

In September, we purchased the assets related to the management of two funds previously

managed by SPARX Investment & Research, USA, Inc.

and sub-advised by SPARX Asset Management Co., Ltd.

and changed the fund names to the Hennessy Japan Fund and the Hennessy Japan Small Cap Fund.

conjunction with the completion of the transaction, SPARX Asset Management Co., Ltd.

became the sub-advisor to both funds.

The amount of the purchased assets as of the closing date totaled approximately

In October, we reorganized the assets of the Hennessy Cornerstone Growth, Series II Fund into the Hennessy Cornerstone Growth Fund.

In October, we purchased the assets related to the management of 10 funds previously managed by FBR Fund Advisers (the FBR

We reorganized the assets of three of the FBR Funds into our existing Hennessy Funds and changed the fund names of the other seven FBR Funds to become part of our product offerings.

We reorganized the assets of three of the FBR Funds into existing Hennessy Funds and reorganized the assets of the seven other FBR Funds into newly created series of the Hennessy Funds.

In conjunction with the completion of the

transaction, Broad Run Investment Management, LLC became the sub-advisor to the Hennessy Focus Fund, Financial Counselors, Inc.

became the sub-advisor to the Hennessy

Equity and Income Fund (fixed income allocation) and the Hennessy Core Bond Fund, and The London Company of Virginia, LLC became the sub-advisor to the Hennessy Equity and Income Fund (equity allocation).

amount of the purchased assets as of the closing date was approximately $2.2 billion.

In December, we closed the Hennessy Micro Cap Growth Fund, LLC.

transaction, Broad Run Investment Management, LLC became the sub-advisor to the Hennessy Focus Fund, FCI Advisors became the sub-advisor to the Hennessy Equity and

Income Fund (fixed income allocation) and the Hennessy Core Bond Fund, and The London Company of Virginia, LLC became the sub-advisor to the Hennessy Equity and Income Fund (equity allocation).

The amount of

the purchased assets as of the closing date was approximately $2.2 billion.

December, we closed the Hennessy Micro Cap Growth Fund, LLC.

In April, our common stock began trading on The NASDAQ Capital Market.

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Fund and the Hennessy Large Cap Financial Fund.

In September, we purchased the assets related to the management of two funds previously managed by Westport Advisers, LLC, named the Westport Fund and the Westport Select Cap Fund, and reorganized the assets of such funds into the

Hennessy Cornerstone Mid Cap 30 Fund.

The amount of the purchased assets as of the closing date totaled approximately $435 million.

In September, we purchased the assets related to the management of two funds previously managed by Westport Advisers, LLC and reorganized the assets of such funds into the Hennessy Cornerstone Mid Cap 30 Fund.

The amount of the

purchased assets as of the closing date totaled approximately $435 million.

In February, we liquidated the Hennessy Core Bond Fund and reorganized the Hennessy Large Value Fund into the Hennessy Cornerstone Value

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In December, we purchased the assets related to the management of two funds previously

managed by Rainier Investment Management, LLC (Rainier), named the Rainier Large Cap Equity Fund and the Rainier Mid Cap Equity Fund.

We reorganized the assets of the Rainier Large Cap Equity Fund into the Hennessy Cornerstone Large

Growth Fund, and we reorganized the assets of the Rainier Mid Cap Equity Fund into the Hennessy Cornerstone Mid Cap 30 Fund.

managed by Rainier Investment Management, LLC (Rainier) and reorganized the assets of such funds into the Hennessy Cornerstone Large Growth Fund and the Hennessy Cornerstone Mid Cap 30 Fund.

The amount of the purchased assets as of the

closing date totaled approximately $122 million.

In January, we purchased the assets related to the management of a third fund previously managed by Rainier and reorganized the assets of

such fund into the Hennessy Cornerstone Mid Cap 30 Fund.

The amount of the purchased assets as of the closing date totaled approximately $253 million.

In January, we purchased the assets related to the management of a third fund previously managed by Rainier, named the Rainier Small/Mid Cap

Equity Fund (together with the Rainier Mid Cap Equity Fund and the Rainier Large Cap Equity Fund, the Rainier Funds), and reorganized the assets of such fund into the Hennessy Cornerstone Mid Cap 30 Fund.

The amount of the purchased

assets as of the closing date totaled approximately $253 million.

we purchased the assets related to the management of the BP Capital TwinLine Energy Fund and the BP Capital TwinLine MLP Fund (collectively, the BP Funds).

The amount of the purchased assets as of the closing date totaled approximately

$200 million.

In May, August, and September, we repurchased an aggregate of 495,947 shares of our common stock pursuant to our stock buyback program.

In October, we purchased the assets related to the management of the two funds previously managed by BP Capital Fund Services, LLC and reorganized the assets

of such funds into the newly created Hennessy BP Energy Fund and the Hennessy BP Midstream Fund.

In connection with the transaction, BP Capital Fund Services, LLC became the sub-adviser to both funds.

amount of the purchased assets as of the closing date totaled approximately $200 million.

During the year, we repurchased an aggregate of 560,734 shares of our common stock pursuant to our stock buyback program.

In the first three months of the year, we repurchased an aggregate of 206,109 shares of our common stock pursuant to our stock buyback program.

PRODUCT INFORMATION

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The Hennessy Cornerstone Growth Fund seeks long-term growth of capital by investing in growth-oriented common stocks using a quantitative formula.

From the universe of stocks of companies in the S&P Capital IQ Database with market

capitalizations exceeding $175 million, this fund invests in the 50 common stocks with the highest one-year price appreciation that also have price-to-sales ratios below 1.5, higher annual earnings than in the previous year, and positive stock price appreciation over the prior three-month and six-month

From the investable common stocks of public companies in the S&P Capital IQ Database with

market capitalizations exceeding $175 million, this fund invests in the 50 common stocks with the highest one-year price appreciation that also have price-to-sales ratios below 1.5, higher annual earnings than in the previous year, and positive stock price appreciation over the prior three-month and six-month

Hennessy Focus Fund (Investor Class symbol HFCSX;

Institutional Class symbol HFCIX).

Hennessy Focus Fund seeks capital appreciation by maintaining a highly concentrated portfolio of approximately 20-30 companies that are most attractive to its portfolio managers based on their independent,

fundamental research that primarily seeks to identify high-quality businesses that they believe are valued at a discount and that have large growth opportunity, excellent management, and low tail

risk. The portfolio is conviction-weighted, with 60-80% of its assets typically concentrated in what the portfolio managers believe to be the funds top 10 investments.

Hennessy Focus Fund seeks capital appreciation by maintaining a highly concentrated portfolio of approximately 20 companies whose valuations in the market are modest, that earn higher than average economic returns, that are well managed, and that

have ample opportunity to reinvest excess profits at above-average rates.

This funds holdings are conviction-weighted, with 60-80% of its assets typically

concentrated in what the portfolio managers believe to be the funds top 10 investments.

Hennessy Cornerstone Mid Cap 30 Fund (Investor Class symbol HFMDX;

Institutional Class symbol

The Hennessy Cornerstone Mid Cap 30 Fund seeks long-term growth of capital by investing in growth-oriented mid-cap companies using a quantitative formula.

the universe of stocks of companies in the S&P Capital IQ Database with market capitalizations between $1 billion and $10 billion, this fund invests in the 30 common stocks with the highest

one-year price appreciation that also have price-to-sales ratios below 1.5, higher annual earnings than in the previous year, and

The Hennessy Cornerstone Mid Cap 30 Fund seeks long-term growth of capital by investing in mid-cap growth-oriented common stocks using a quantitative formula.

From the investable common stocks of public companies in the S&P Capital IQ Database with market capitalizations between $1 billion and $10 billion, this fund invests in the 30 common stocks with the highest one-year price appreciation that also have price-to-sales ratios below 1.5, higher annual earnings than in the previous year, and

positive stock price appreciation over the prior three-month and six-month periods.

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The Hennessy Cornerstone Large Growth Fund seeks long-term growth of capital by investing in growth-oriented common stocks of larger companies using a quantitative formula.

From the universe of stocks of companies in the S&P Capital IQ

Database, this fund invests in the 50 stocks with the highest one-year return on total capital that also have market capitalizations exceeding the database average, a price-to-cash flow ratio less than the database median, and positive total capital.

From the investable common stocks of public companies in the S&P

Capital IQ Database, this fund invests in the 50 stocks that meet the following criteria, in the specified order:

(1) above-average market capitalization;

(2) a price-to-cash-flow ratio less than the median of the remaining securities;

(3) positive total capital;

and (4) the highest one-year return on total

Hennessy Cornerstone Value Fund (Investor Class symbol HFCVX;

Institutional Class symbol HICVX).

The Hennessy Cornerstone Value Fund seeks total return, consisting of capital appreciation and current income, by investing in larger, dividend-paying companies using a quantitative formula.

From the universe of stocks of companies in the S&P

Capital IQ Database, this fund invests in the 50 stocks with the highest dividend yield that also have market capitalizations exceeding the database average, shares outstanding exceeding the database average,

12-month sales that are 50% greater than the database average, and cash flows exceeding the database average.

The Hennessy Cornerstone Value Fund seeks total return, consisting of capital appreciation and current income, by investing in larger, dividend-paying common stocks using a quantitative formula.

From the investable common stocks of public companies

in the S&P Capital IQ Database, this fund invests in the 50 stocks with the highest dividend yield that also have above-average market capitalizations, above-average

number of shares outstanding, 12-month sales that are 50% greater than the average, and above-average cash flows.

Multi-Asset Funds

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The Hennessy Total Return Fund seeks total

return, consisting of capital appreciation and current income, by investing approximately 50% of its assets in the 10 highest dividend-yielding common stocks of the Dow Jones Industrial Average (commonly referred to as the Dogs of the

Dow) and the remaining 50% of its assets in U.S.

equal dollar amounts and the remaining 50% of its assets in U.S.

Treasury securities with a maturity of less than one year.

This fund then utilizes a borrowing strategy that allows the funds performance to approximate what it would be if the fund had an

asset allocation of roughly 75% Dogs of the Dow stocks and 25% U.S.

This fund then utilizes a borrowing strategy that allows the funds performance to approximate what it would be if the

fund had an asset allocation of roughly 75% Dogs of the Dow stocks and 25% U.S.

Treasury securities.

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Institutional Class symbol HEIIX).

The Hennessy Equity and Income Fund seeks long-term capital growth and current income with reduced volatility of returns by investing, under normal circumstances, approximately 60% of its assets in common stock, preferred stock, and convertible

securities and approximately 40% of its assets in high-quality corporate, agency, and government bonds.

The Hennessy Equity and Income Fund seeks income and long-term capital growth with reduced volatility of returns by investing approximately 60% of its assets in common stock, preferred stock, and convertible securities and approximately 40% of its

assets in high-quality corporate, agency, and government bonds.

Hennessy Balanced Fund (Investor Class symbol HBFBX).

The Hennessy Balanced Fund seeks a

combination of capital appreciation and current income by investing approximately 50% of its assets in the Dogs of the Dow stocks and approximately 50% of its assets in U.S.

combination of capital appreciation and current income by investing approximately 50% of its assets in roughly equal dollar amounts in the Dogs of the Dow stocks but limits exposure to market risk and volatility by investing approximately 50% of its

assets in U.S.

Treasury securities with a maturity of less than one year.

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Institutional Class symbol HNRIX).

Hennessy BP Energy Fund seeks total return by investing primarily in companies operating in a capacity related to the supply, transportation, production, transmission, or demand of energy, also known as the energy value chain.

The portfolio managers

use a proprietary research and investment process that involves fundamental and quantitative analysis of various macroeconomic and commodity price and other factors to select this funds investments and determine the weighting of each

Hennessy BP Energy Fund seeks total return by investing in companies operating in the United States in a capacity related to the supply, transportation, production, transmission, or demand of energy, also known as the energy value chain.

portfolio managers use a proprietary research and investment process that involves fundamental and quantitative analysis of various macroeconomic and commodity price and other factors to select this funds investments and determine the

weighting of each investment.

Hennessy BP Midstream Fund (Investor Class symbol HMSFX;

Institutional Class symbol HMSIX).

Hennessy BP Midstream Fund seeks capital appreciation through distribution growth and current income by investing primarily in companies, including master limited partnerships, that own and operate assets used in the transporting, storing,

gathering, processing, distributing, or marketing of natural gas, natural gas liquids, crude oil, refined products, coal, or electricity or that provide energy-related equipment and services.

Hennessy BP Midstream Fund seeks capital appreciation through distribution growth and current income by investing in midstream energy infrastructure companies, including master limited partnerships, that own and operate assets used in the

transporting, storing, gathering, processing, distributing, or marketing of natural gas, natural gas liquids, crude oil, refined products, coal, or electricity or that provide energy-related equipment and services.

The portfolio managers combine a top-down deductive reasoning approach with a detailed bottom-up analysis of individual companies.

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Institutional Class symbol HGASX).

Hennessy Gas Utility Fund seeks income and capital appreciation by investing in distribution-focused natural gas companies.

This fund invests in companies that are members of the American Gas Association

(AGA), which comprise the AGA Stock Index.

The AGA Stock Index is capitalization-weighted and adjusted for the percentage of natural gas assets on each companys balance sheet..

Hennessy Gas Utility Fund seeks income and capital appreciation by investing in companies that are members of the American Gas Association (AGA) in approximately the same percentage as the percentage weighting of such company in the AGA

The AGA Stock Index is a capitalization-weighted index that consists of publicly traded member companies of the AGA whose securities are traded on a U.S.

stock exchange.

The index is adjusted

monthly for the percentage of natural gas assets on each companys balance sheet.

Hennessy Japan Fund (Investor Class symbol HJPNX;

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portfolio managers focus on stocks with a potential value gap by screening for companies that they believe have strong businesses and management and are trading at attractive prices.

The portfolio is limited to its portfolio

managers best ideas and maintains a concentrated number of holdings.

The portfolio managers limit the portfolio to what

they consider to be their best ideas and maintain a concentrated number of holdings.

Hennessy Japan Small Cap Fund (Investor Class symbol HJPSX;

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Japanese companies.

Using in-depth analysis and on-site research, the portfolio managers focus on stocks with a potential value gap by screening for

small-capitalization companies that the portfolio managers believe have strong businesses and management and are trading at attractive prices.

The portfolio is limited to its portfolio managers best ideas and is unconstrained by its

Using in-depth analysis and on-site research, the portfolio managers focus on stocks with a potential value gap by screening for small-cap companies that the portfolio managers believe have strong businesses and management and are trading at attractive prices.

The portfolio managers limit the portfolio to what they consider to be their best

ideas and is unconstrained by its benchmarks.

Hennessy Large Cap Financial Fund (Investor Class symbol HLFNX;

Institutional Class symbol

The Hennessy Large Cap Financial Fund seeks capital appreciation by investing in securities of companies with market capitalizations of $3 billion or more principally engaged in the business of providing financial services.

The Hennessy Large Cap Financial Fund seeks capital appreciation by investing in securities of large-cap companies principally engaged in the business of providing financial services, including

information technology companies that are primarily engaged in providing products or services to financial services companies.

Hennessy Small Cap Financial Fund (Investor Class symbol HSFNX;

Institutional Class symbol

The Hennessy Small Cap Financial Fund seeks capital appreciation by investing in securities of companies with market capitalizations of less than $3 billion principally engaged in the business of providing financial services.

The Hennessy Small Cap Financial Fund seeks capital appreciation by investing in securities of small-cap companies principally engaged in the business of providing financial services.

Hennessy Technology Fund (Investor Class symbol HTECX;

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Hennessy Technology Fund seeks long-term capital appreciation by investing in securities of companies principally engaged in the research, design, development, manufacturing, or distributing of products or services in the technology industry.

the universe of stocks of companies in the S&P Capital IQ Database with market capitalizations exceeding $175 million, this fund invests in approximately 60 common stocks that the portfolio managers believe demonstrate sector-leading cash

flows and profits, a history of delivering returns in excess of cost of capital, attractive relative valuations, ability to generate cash, attractive balance sheet risk profiles, and prospects for sustainable profitability.

the investable common stocks of public companies in the S&P Capital IQ Database with market capitalizations exceeding $175 million, this fund invests in approximately 60 stocks (weighted equally by dollar amount) that the portfolio managers

believe demonstrate sector-leading cash flows and profits, a history of delivering returns in excess of cost of capital, attractive relative valuations, ability to generate cash, attractive balance sheet risk

profiles, and prospects for sustainable profitability.

Historical Investment Performance of the Hennessy Funds

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Energy Index (12)

S&P North American Natural Resources Index (13)

S&P 500 ®

Hennessy BP Midstream Fund*

Institutional Class Share - HMSFX**

Investor Class Share - HMSIX

Institutional Class ShareHMSIX**

Investor Class ShareHMSFX

Alerian MLP Index (13)

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Russell 1000 ®

Financial Services Index (19)

Index Financials (18)

Russell 1000 ®

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Russell 2000 ®

Financial Services Index (20)

Index Financials (19)

Russell 2000 ®

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The 75/25 Blended DJIA/Treasury Index consists of 75% common stocks represented by the Dow Jones Industrial

Average and 25% short-duration Treasury securities represented by the ICE BofAML 3-Month U.S.

Treasury Bill Index, which comprises U.S.

Average and 25% short-duration Treasury securities represented by the ICE BofAML U.S.

3-Month Treasury Bill Index, which comprises U.S.

Treasury securities maturing in three months.

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that are classified in the Energy sector.

The S&P North American Natural Resources Index represents

U.S.-traded securities classified in the Energy and Materials sectors, excluding the chemicals industry and steel sub-industry.

The Alerian MLP Index comprises companies that earn a majority of their cash flow from midstream activities

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The Russell 1000 ®

Financial Services Index is a subset

of the Russell 1000 ®

Index that measures the performance of the securities classified in the financial services sector of the large-capitalization U.S.

Index Financials is a subset of the

Russell 1000 ®

Index that measures the performance of the securities classified in the financials sector of the large-cap U.S.

equity market.

The Russell 2000 ®

Financial Services Index is a subset

of the Russell 2000 ®

Index that measures the performance of the securities classified in the financial services sector of the small-capitalization U.S.

Index Financials is a subset of the

Russell 2000 ®

Index that measures the performance of the securities classified in the financials sector of the small-cap U.S.

equity market.

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Performance data for an index does not reflect any deductions for fees, expenses, or

Frank Russell Company (Russell) is the source and owner of the trademarks, service marks, and

copyrights related to the Russell Indexes.

Frank Russell Company (Russell) is the source and owner of the trademarks, service marks, and copyrights

related to the Russell Indexes.

Russell ®

is a trademark of Frank Russell Company.

Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell

Indexes or Russell ratings or underlying data, and no party may rely on any Russell Indexes or Russell ratings or underlying data contained in this communication.

No further distribution of Russell data is permitted without Russells express

written consent.

Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes or

Russell ratings or underlying data, and no party may rely on any Russell Indexes or Russell ratings or underlying data contained in this communication.

No further distribution of Russell data is permitted without Russells express written

Russell does not promote, sponsor, or endorse the content of this communication.

The Dow Jones Industrial Average is the property of the

Dow Jones & Company, Inc.

Standard & Poors Financial Services LLC is the

source and owner of the S&P ®

and S&P 500 ®

The Dow Jones Industrial Average is the property of the Dow Jones & Company, Inc.

Dow Jones & Company, Inc.

is not affiliated with the Hennessy Funds or its investment advisor.

is not affiliated with the

Hennessy Funds or its investment advisor.

Dow Jones & Company, Inc.

has not participated in any way in the creation of the Hennessy Funds or in

the selection of stocks included in the Hennessy Funds and has not approved any information included in this communication.

Poors Financial Services LLC is the source and owner of the S&P ®

and S&P 500 ®

has not participated in any way in the creation of the Hennessy Funds or in the selection of stocks included in the Hennessy Funds and has not approved any information

included in this communication.

The Alerian MLP Index is a servicemark of GKD Index Partners.

LLC d/b/a Alerian (Alerian), and

its use is granted under a license from Alerian.

Alerian makes no express or implied warranties, representations, or promises regarding the originality, merchantability, suitability, or fitness for a particular purpose or use with respect to the

Alerian indices.

No party may rely on, and Alerian does not accept any liability for any errors, omissions, interruptions, or defects in, the Alerian indices or underlying data.

Development of New Investment Strategies and Expanding Our Product Offerings

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Organic inflows

Market appreciation

Market appreciation (depreciation)

Ending assets under management

As stated above, the fees we receive for providing investment advisory and shareholder services increase or

decrease as our average assets under management rises or falls.

As stated above, the amount of fees we receive for providing investment advisory and shareholder services

increases or decreases as our average assets under management rises or falls.

The following table summarizes our sources of revenues, net of sub-advisory fees:

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Investment Advisory Agreements and Fees

We provide investment advisory services to the entire family of Hennessy Funds pursuant to investment advisory agreements with Hennessy Funds

Our provision of investment advisory services to the Hennessy Funds is subject to the oversight of the Board of Trustees of Hennessy Funds Trust (the Funds Board of Trustees) and must be in accordance with the applicable

Hennessy Funds investment advisory agreement, Prospectus, and Statement of Additional Information.

We provide investment advisory services to the Hennessy Funds pursuant to investment advisory agreements with Hennessy Funds Trust.

provision of investment advisory services to the Hennessy Funds is subject to the oversight of the Board of Trustees of Hennessy Funds Trust (the Funds Board of Trustees) and must be in accordance with the applicable Hennessy

Funds investment advisory agreement, Prospectus, and Statement of Additional Information.

The services that we provide to each Hennessy Fund pursuant to these investment advisory agreements include, among other things, the following:

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performing a daily reconciliation of portfolio positions and cash for the fund;

monitoring the liquidity of the fund;

monitoring the funds compliance with its investment objectives and restrictions and federal securities

monitoring compliance with federal securities laws, maintaining a compliance program (including a code of

ethics), conducting ongoing reviews of the compliance programs of the funds service providers (including its sub-advisor, as applicable), conducting on-site visits

to the funds service providers (including its sub-advisor, as applicable), monitoring incidents of abusive trading practices, reviewing fund expense accruals, payments, and fixed expense ratios,

evaluating insurance providers for fidelity bond, D&O/E&O, and cyber insurance coverage, conducting employee compliance training, reviewing reports provided by service providers, and maintaining books and records;

ethics), conducting ongoing reviews of the compliance programs of the funds service providers (including any sub-advisor), conducting on-site visits to the

funds service providers (including any sub-advisor) as feasible, monitoring incidents of abusive trading practices, reviewing fund expense accruals, payments, and fixed expense ratios, evaluating

insurance providers for fidelity bond, D&O/E&O insurance, and cybersecurity insurance coverage, managing regulatory examination compliance and responses, conducting employee compliance training, reviewing reports provided by service

providers, and maintaining books and records;

if applicable, overseeing the selection and continued employment of the funds sub-advisor, reviewing the funds investment performance, and monitoring the sub-advisors adherence to the funds investment objectives, policies, and

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updating the funds prospectus and related documents;

preparing or reviewing a written summary of the funds performance for the most recent 12-month period for each annual report of the fund;

preparing or reviewing a written summary of the funds performance during the most recent 12-month period for each annual report of the fund;

monitoring and overseeing the accessibility of the fund on third-party platforms;

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providing a quarterly compliance certification to the Funds Board of Trustees;

preparing or reviewing all materials for meetings of the Funds Board of Trustees, presenting to or leading

discussions with the Funds Board of Trustees, preparing or reviewing all meeting minutes, and arranging for training and education of the Funds Board of Trustees.

preparing or reviewing materials for the Funds Board of Trustees, presenting to or leading discussions with

the Funds Board of Trustees, preparing or reviewing all meeting minutes, and arranging for training and education of the Funds Board of Trustees.

The investment advisory agreements also provide that we are responsible for performing any ordinary clerical and bookkeeping services needed

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The disinterested trustees also have sole responsibility for selecting and nominating other disinterested trustees.

In exchange for the services described above, we receive an investment advisory fee from

each Hennessy Fund that is calculated as a percentage of such funds average daily net asset value.

As of the end of fiscal year 2019, the percentages of each funds assets used to calculate the annual investment advisory fees payable

to us are as follows:

In exchange for the services described above, we receive an investment advisory fee from each Hennessy Fund that is calculated as a percentage

of such funds average daily net asset value.

As of the end of fiscal year 2020, the percentages of each funds assets used to calculate the annual investment advisory fees payable to us are as follows:

Hennessy Fund

(All Class Shares)

Investment Advisory Fee

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Hennessy Technology Fund

We waive a portion of our fees with respect to the Hennessy Cornerstone Large Growth Fund, the Hennessy BP

Midstream Fund, and the Hennessy Technology Fund to comply with contractual expense ratio limitations.

We waived a portion of our fees with respect to (i) the Hennessy Cornerstone Large Growth Fund through

the expiration of the expense limitation agreement on November 30, 2019, (ii) the Hennessy BP Energy Fund during the second half of fiscal year 2020, and (iii) the Hennessy BP Midstream Fund and the Hennessy Technology Fund throughout

fiscal year 2020, in each case to comply with contractual expense ratio limitations.

The fee waivers are calculated daily by the Hennessy Funds accountants at U.S.

Bank Global Fund Services, reviewed by management, and then

charged to expense monthly as offsets to our revenues.

The waived fees are deducted from investment advisory fee income and reduce the aggregate amount of advisory fees we receive from such fund in the subsequent month.

To date, we have only waived

fees based on contractual obligations, but we have the ability to waive fees at our discretion.

Any decision to waive fees would only apply on a going-forward basis.

Our investment advisory agreements must be renewed annually (except in limited circumstances) by (i) the Funds Board of Trustees or

the vote of a majority of the outstanding shares of the applicable Hennessy Fund and (ii) the vote of a majority of the disinterested trustees.

If the investment advisory agreements are not renewed annually as described above, they terminate

automatically.

There are two additional circumstances in which the investment advisory agreements would terminate.

First, an investment advisory agreement automatically terminates if we assign it to another advisor (assignment includes

indirect assignment, which is the transfer of our common stock in sufficient quantities deemed to constitute a controlling block).

Second, either the applicable Hennessy Fund or we may terminate an investment advisory agreement by

providing notice to the other party 60 days prior to the expiration of such agreement.

Bank Global Fund Services, reviewed by management, and then charged to expense

monthly as offsets to our revenues.

Each waived fee is then deducted from investment advisory fee income and reduces the aggregate amount of advisory fees we receive from such fund in the subsequent month.

To date, we have only waived fees based on

contractual obligations, but we have the ability to waive fees at our discretion.

Any decision to waive fees would apply only on a going-forward basis.

Our investment advisory agreements must be renewed annually (except in limited

circumstances) by (a) the Funds Board of Trustees or the vote of a majority of the outstanding shares of the applicable Hennessy Fund and (b) the vote of a majority of the disinterested trustees.

If an investment advisory agreement

is not renewed, it terminates automatically.

There are two additional circumstances in which an investment advisory agreement would terminate.

First, an investment advisory agreement automatically terminates if we assign it to another advisor

(assignment includes indirect assignment, which is the transfer of our common stock in sufficient quantities deemed to constitute a controlling block).

Second, an investment advisory agreement may be terminated prior to its expiration

upon 60 days written notice by either the applicable Hennessy Fund or us.

Sub-Advisory Agreements

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ensuring that its compliance programs include policies and procedures relevant to the fund and the sub-advisors duties as a portfolio manager to the fund;

for each annual report of the fund, preparing a written summary of the funds performance for the most

for each annual report of the fund, preparing a written summary of the funds performance during the most

recent 12-month period;

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supervisory matters, the sub-advisors compliance program (including its code of ethics), compliance with the funds policies, and general firm updates.

In exchange for sub-advisory services, we pay sub-advisory

fees to the sub-advisors out of our own assets.

Sub-advisory fees are calculated as a percentage of the applicable funds average daily net asset value.

following table lists each of our sub-advised funds, the sub-advisor for such fund, and the percentage used to calculate the annual

sub-advisory fees payable by us to such funds sub-advisor as of the end of fiscal year 2019:

In exchange for sub-advisory services, we pay sub-advisory fees to the sub-advisors out of our own assets.

Sub-advisory fees are calculated as a percentage of the applicable

funds average daily net asset value.

The following table lists each of our sub-advised funds, the sub-advisor for such fund, and the percentage used to calculate

the annual sub-advisory fees payable by us to such funds sub-advisor as of the end of fiscal year 2020:

Hennessy Fund

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Hennessy Equity and Income Fund

(fixed income

(fixed income allocation)

The London Company of Virginia, LLC

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Pursuant to a shareholder servicing agreement with Hennessy Funds Trust, we provide shareholder services to shareholders of the Hennessy Funds

including, among other things, maintaining an 800 number that the current investors in the Hennessy Funds may call to ask questions about the funds or their accounts, or to get help with processing exchange and redemption requests or

changing account options.

including, among other things, maintaining a toll-free number that the current investors in the Hennessy Funds may call to ask questions about the funds or their accounts or to get help with processing

exchange and redemption requests or changing account options.

In exchange for these services, we receive a shareholder service fee from each Hennessy Fund of 0.10% of the average daily net assets of such funds Investor Class shares.

The shareholder servicing agreement must be renewed annually by the Funds Board of Trustees, including the vote of a majority of the

disinterested trustees.

If the shareholder servicing agreement is not renewed, it terminates automatically.

In addition, the shareholder servicing agreement may be terminated prior to its expiration upon 60 days written notice by Hennessy

Funds Trust or us.

All of the Hennessy Funds have adopted a 12b-1 plan.

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distribution of the fund shares, printing prospectuses and other reports for possible new shareholders, advertising, and preparing and distributing sales literature.

The 12b-1 fee for each Hennessy Fund is 0.15% of such funds average daily net assets.

The 12b-1 fee for each Hennessy Fund is 0.15% of the

average daily net assets of such funds Investor Class shares.

CUSTODIAL, DISTRIBUTION, AND BROKERAGE ARRANGEMENTS

A third-party and one of its affiliates acts as custodian and distributor for all of our assets under management.

We use independent third parties for custody and distribution of our assets under management.

All trades for the Hennessy Funds are executed by independent brokerage firms following our direction or the direction of our sub-advisors.

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names and formulaic investment strategies of the Hennessy Cornerstone Growth Fund and the Hennessy Cornerstone Value Fund are governed by the terms and conditions of a license agreement, dated as of April 10, 2000, with Netfolio.

license agreement, Netfolio granted us a perpetual, paid-up, royalty-free, exclusive license to use certain trademarks, such as Strategy Indexing, Cornerstone Growth, and

Cornerstone Value, as well as the formula investment strategies used by the Hennessy Cornerstone Growth Fund and the Hennessy Cornerstone Value Fund.

All of our advertising, marketing, promotional, and other materials incorporating or

referring to the trademarks are subject to the prior written approval of Netfolio, except that we do not need Netfolios prior written approval to use the trademarks in a manner that is not substantially unchanged from any prior use by Netfolio

in its own business or from any prior use by us previously approved by Netfolio.

We have the right to assign the license to another person or entity if the assignee agrees in writing to be bound by the terms of the license agreement.

ongoing licensing fees associated with this license agreement, and Netfolio does not have any contractual rights to terminate the license agreement.

license agreement, Netfolio granted us a perpetual, paid-up, royalty-free, exclusive license to use certain trademarks, such as Strategy Indexing,

Cornerstone Growth, and Cornerstone Value, as well as the formula investment strategies used by the Hennessy Cornerstone Growth Fund and the Hennessy Cornerstone Value Fund.

All of our advertising, marketing, promotional, and

other materials incorporating or referring to the trademarks are subject to the prior written approval of Netfolio, except that we do not need Netfolios prior written approval to use the trademarks in a manner that is not substantially

unchanged from any prior use by Netfolio in its own business or from any prior use by us previously approved by Netfolio.

We have the right to assign the license to another person or entity if the assignee agrees in writing to be bound by the terms

of the license agreement.

There are no ongoing licensing fees associated with this license agreement, and Netfolio does not have any contractual rights to terminate the license agreement.

BUSINESS STRATEGY

From the time we launched our first mutual fund in 1996, we have consistently pursued a growth strategy centered on organic growth through our

marketing, sales, and distribution efforts and growth through strategic purchases of management-related assets.

From the time we

launched our first mutual fund in 1996, we have consistently pursued a growth strategy centered on organic growth through our marketing, sales, and distribution efforts and growth through strategic purchases of

management-related assets.

The implementation of this business strategy is described below.

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broadcasts, at our office in Novato, California.

Along with our primary spokesperson, Neil J.

Hennessy, who is our Chief Executive Officer and Chairman of our Board of Directors and President, Chief Investment Officer, and a Portfolio

Manager of the Hennessy Funds, we also utilize David Ellison, Ryan Kelley and Josh Wein, all Portfolio Managers of the Hennessy Funds, as well as our sub-advisors, to further expand our public relations

program and provide comprehensive media coverage of our products.

We maintain and regularly update a robust website.

We also utilize more

focused marketing efforts, such as sending informational and promotional communications, fund performance updates, news articles pertaining to the Hennessy Funds, and portfolio manager commentaries to investors and prospective investors.

participate in exhibitions at select investment advisor trade shows throughout the year.

Additionally, we attend strategic industry-related conferences and participate as moderators or guest speakers on industry-related panels whenever the

opportunity arises.

We have several spokespeople who help us expand our public relations program and provide comprehensive media coverage of our products, including Neil J.

Hennessy, who is our Chief Executive

Officer and Chairman of our Board of Directors and President, Chief Investment Officer, and a Portfolio Manager of the Hennessy Funds, Portfolio Managers David Ellison, Ryan Kelley, and Josh Wein, as well as the Portfolio Managers at our sub-advisors.

We maintain and regularly update a robust website and social media presence.

marketing efforts include targeted outreach to both current and prospective investors in the Hennessy Funds, including financial advisors and retail investors.

Our content marketing includes overall market and

sector-specific thought leadership, promotional investment ideas, fund updates, and commentary from our portfolio managers, as well as feature news articles and broadcast appearances.

We attend select

investment advisor trade shows and strategic industry-related conferences, and we seek opportunities to moderate or speak on industry-related panels.

In the last half of our fiscal year, we participated in

these activities via videoconference or teleconference.

Expanding our distribution network to additional distribution platforms

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managers more receptive to an asset purchase.

We believe that we are well prepared to benefit from these attractive asset purchase trends and from the increasing supply of potential targets.

In addition, we believe there are a number of attractive

asset purchase opportunities from mutual fund managers who are reaching retirement age or who are leaving the mutual fund management arena.

We have generally been able to offer lower overall expense ratios to the shareholders of purchased funds.

some instances, we have also been able to improve performance.

Through our asset purchase strategy, we have completed 10 purchases of the

assets related to the management of mutual funds over a 19-year period, integrating $4.3 billion in net assets of 30 different mutual funds into the Hennessy Funds family.

We completed our most recent

asset purchase on October 26, 2018, when we purchased the assets related to the management of the BP Capital TwinLine Energy Fund and the BP Capital TwinLine MLP Fund (together, the BP Funds).

This asset purchase added nearly

$200 million to our assets under management.

Upon completion of the transaction, the assets related to the management of the BP Funds were reorganized into two new series of Hennessy Funds Trust called the Hennessy BP Energy Fund and the

Hennessy BP Midstream Fund, respectively.

In connection with the transaction, BP Capital Fund Advisors, LLC, the investment advisor to the BP Funds, became the sub-advisor to the Hennessy BP Energy Fund and

the Hennessy BP Midstream Fund.

The long-term trend toward lower fees has made it more challenging to identify accretive asset purchases, but we believe that we are well positioned to move

quickly once we identify any attractive purchase targets from the increasingly large supply of potential targets.

Through our asset

purchase strategy, we have completed 10 purchases of the assets related to the management of mutual funds over a 20-year period, integrating $4.3 billion in net assets of 30 different mutual funds into

the Hennessy Funds family.

We completed our most recent asset purchase on October 26, 2018, when we purchased the assets related to the management of the BP Capital TwinLine Energy Fund and the BP Capital TwinLine MLP Fund (together, the

This asset purchase added nearly $200 million to our assets under management.

Upon completion of the transaction, the assets related to the management of the BP Funds were reorganized into two new series of Hennessy Funds

Trust called the Hennessy BP Energy Fund and the Hennessy BP Midstream Fund, respectively.

In connection with the transaction, BP Capital Fund Advisors, LLC, the investment advisor to the BP Funds, became the

sub-advisor to the Hennessy BP Energy Fund and the Hennessy BP Midstream Fund.

Delivering strong, high-quality financial results.

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recordkeeping and reporting, disclosure, and anti-fraud matters.

We manage accounts for the Hennessy Funds on a discretionary basis, meaning that we have the

authority to buy and sell securities for each portfolio, select broker-dealers to execute trades, and negotiate brokerage commission rates.

In connection with certain of these transactions, we receive soft

dollar credits from broker-dealers that have the effect of reducing certain of our expenses.

All of our soft dollar arrangements are intended to be within the safe harbor provided by Section 28(e) of the Securities Exchange Act of 1934, as

amended (the Exchange Act).

We manage accounts for the Hennessy Funds on a discretionary basis,

meaning that we have the authority to buy and sell securities for each portfolio, select broker-dealers to execute trades, and negotiate brokerage commission rates.

In connection with certain of these

transactions, we receive soft dollar credits from broker-dealers that have the effect of reducing certain of our expenses.

All of our soft dollar arrangements are intended to be within the safe harbor provided by Section 28(e) of the Securities

Exchange Act of 1934, as amended (the Exchange Act).

If our ability to use soft dollars were reduced or eliminated as a result of the implementation of statutory amendments or new regulations, our operating expenses would increase.

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As of the end of fiscal

year 2019, we employed 21 employees, 19 of whom were full-time employees.

year 2020, we had 21 employees, 19 of whom were full-time employees.

Our 21 employees had an average tenure of 11 years as of the end of fiscal year 2020.

We have historically experienced very low employee turnover, which we attribute to

our focus on competitive compensation, a friendly and flexible office environment, and fostering close-knit working relationships among our team members.

In response to the ongoing COVID-19 pandemic, we have

maintained open lines of communication with employees, including by holding remote office-wide meetings, trainings, and events.

Further, over 50% of our employees are women, and with an executive team that is

50% women and 25% minority, we believe we have created an environment in which all team members can be successful and supported.

Our executive officers are (i) Neil J.

Chief Executive Officer and Chairman of our Board of Directors, (ii) Teresa M.

Hennessy, Chief Executive Officer and Chairman

of our Board of Directors, (ii) Teresa M.

Nilsen, President, Chief Operating Officer, Secretary, and a member of our Board of Directors, (iii) Kathryn R.

Fahy, Chief Financial Officer and Senior Vice

President, and (iv) Daniel B.

Fahy, Chief Financial Officer and Senior Vice President, and (iv) Daniel B.

Steadman, Executive Vice President and a member of our Board of Directors.

In addition to our executive officers responsibilities at Hennessy Advisors, Inc., (a) Mr.

Hennessy is President, Chief

Investment Officer, and a Portfolio Manager of the Hennessy Funds and is a member of the Funds Board of Trustees, (b) Ms.

Hennessy is President, Chief Investment Officer, and a Portfolio

Manager of the Hennessy Funds and is a member of the Funds Board of Trustees, (b) Ms.

Nilsen is an Executive Vice President and Treasurer of the Hennessy Funds, (c) Ms.

President, Assistant Treasurer, and Assistant Secretary of the Hennessy Funds, and (d) Mr.

Fahy is Vice President, Assistant Treasurer, and

Assistant Secretary of the Hennessy Funds, and (d) Mr.

Steadman is an Executive Vice President and Secretary of the Hennessy Funds.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business