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Item 1. Business

2022-12-07 compared with 2021-11-24 · 195 added, 351 removed, 362 unchanged (60% of the section changed)

Hennessy Advisors, Inc.

(the “Company,” “we,” “us,” or “our”) is a publicly traded investment management firm whose primary business activity is managing, servicing, and marketing a family of open-end

mutual funds branded as the Hennessy Funds.

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.

(the “Company,” “we,” “us,” or “our”) is a publicly traded investment management firm whose primary business activity is managing, servicing, and marketing a family of open-end mutual funds branded as the Hennessy Funds.

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.

We earn revenues primarily by providing investment advisory services to the Hennessy Funds and secondarily by providing shareholder services to shareholders of the Hennessy Funds.

and monitoring such sub-advisors’

adherence to the fund’s 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 their accounts or the funds or to get help with processing exchange and redemption requests or changing account options.

We earn revenues primarily by providing investment advisory services to the Hennessy Funds and secondarily by providing shareholder services to investors in the Hennessy Funds.

Investment advisory services include managing the composition of each fund’s portfolio (including the purchase, retention, and disposition of portfolio securities in accordance with each fund’s investment objectives, policies, and restrictions), monitoring each fund’s compliance with its investment objectives and restrictions and federal securities laws, monitoring the liquidity of each fund, reviewing each fund’s investment performance, overseeing the selection and continued employment of sub-advisors and monitoring such sub-advisors’ adherence to the fund’s investment objectives, policies, and restrictions, overseeing other service providers, maintaining in-house marketing and distribution departments, preparing and distributing regulatory reports, and overseeing distribution of the funds 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 their accounts or the funds 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.

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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

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.

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 2022 was $3.6 billion, and our total assets under management as of the end of fiscal year 2022 was $2.9 billion.

Although our total AUM has fluctuated up and down throughout our history, it was 984% higher as of the end of fiscal year 2021 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

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 CALENDAR YEAR TIMELINE

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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 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.

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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.

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.

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.

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

became the sub-advisor

to both funds.

became the sub-advisor to both funds.

The amount of the purchased assets as of the closing date totaled approximately $74 million.

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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, 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).

In conjunction with the completion of the 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.

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

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 Transition Fund and the Hennessy BP Midstream Fund.

In connection with the transaction, BP Capital Fund Services, LLC became the sub-adviser

to both funds.

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 Energy Transition Fund and the Hennessy Midstream Fund.

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

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

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In October, we transferred listing of our common stock from The Nasdaq Capital Market to The Nasdaq Global Market.

Also in October, the Company completed a public offering of 4.875% notes due 2026 (the “2026 Notes”) in the aggregate principal amount of $40,250,000, which included the full exercise of the underwriters’ overallotment option.

Also in October, we completed a public offering of 4.875% notes due 2026 (the “2026 Notes”) in the aggregate principal amount of $40.25 million, which included the full exercise of the underwriters’ overallotment option.

In August, we signed a definitive agreement with Stance Capital, LLC (“Stance Capital”) and Red Gate Advisers, LLC, among others, to purchase the assets related to the management of the Stance Equity ESG Large Cap Core ETF.

Upon completion of the transaction, which is subject to the approval of the shareholders of the Stance Equity ESG Large Cap Core ETF, the assets related to the Stance Equity ESG Large Cap Core ETF will be reorganized to become a series of Hennessy Funds Trust named the Hennessy Stance ESG Large Cap ETF.

(See Note 16 in Item 8, “Financial Statements and Supplementary Data.”)

PRODUCT INFORMATION

Investment Strategies of the Hennessy Funds

We manage 16 mutual funds, each of which is categorized as a Domestic Equity, Multi-Asset,

or Sector and Specialty product.

We manage 16 mutual funds, each of which is categorized as a Domestic Equity, Multi-Asset, or Sector and Specialty product.

Shares of the funds generally are available for purchase only by U.S.

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Hennessy Total Return Fund

Hennessy BP Energy Transition Fund

Hennessy Energy Transition Fund

Hennessy Focus Fund

Hennessy Equity and Income Fund

Hennessy BP Midstream Fund

Hennessy Midstream Fund

Hennessy Cornerstone Mid Cap 30 Fund

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Following is a brief description of the investment objectives and principal investment strategies of the Hennessy Funds in the Domestic Equity product category:

Hennessy Cornerstone Growth Fund

(Investor Class symbol HFCGX;

Hennessy Cornerstone Growth Fund (Investor Class symbol HFCGX;

Institutional Class symbol HICGX).

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

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;

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 periods.

Hennessy Focus Fund (Investor Class symbol HFCSX;

Institutional Class symbol HFCIX).

The Hennessy Focus Fund seeks capital appreciation by focusing on 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

This fund’s holdings are conviction-weighted.

Hennessy Cornerstone Mid Cap 30 Fund

(Investor Class symbol HFMDX;

The Hennessy Focus Fund seeks capital appreciation through a concentrated portfolio of approximately 20 companies that the portfolio managers believe are high-quality businesses with large growth opportunities, excellent management, low tail risk, and discount valuations.

This fund’s holdings are conviction-weighted, with the top ten positions comprising approximately 60-80% of the fund’s assets.

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

Institutional Class symbol HIMDX).

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.

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 Cornerstone Large Growth Fund

(Investor Class symbol HFLGX;

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.

Hennessy Cornerstone Large Growth Fund (Investor Class symbol HFLGX;

Institutional Class symbol HILGX).

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(1) above-average market capitalization;

(2) a price-to-cash-flow

ratio less than the median of the remaining securities;

(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 capital.

Hennessy Cornerstone Value Fund

(Investor Class symbol HFCVX;

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

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 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

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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Of those three funds, two utilize a quantitative investment strategy and one is actively managed.

These funds follow a more conservative investment strategy focused on generating income and providing an alternative to mutual funds containing only equity stocks.

Following is a brief description of the investment objectives and principal investment strategies of the Hennessy Funds in the Multi-Asset

product category:

Hennessy Total Return Fund

(Investor Class symbol HDOGX).

These funds follow a more conservative investment strategy focused on generating income and providing an alternative to funds containing only equity stocks.

Following is a brief description of the investment objectives and principal investment strategies of the Hennessy Funds in the Multi-Asset product category:

Hennessy Total Return Fund (Investor Class symbol HDOGX).

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 (known as the “Dogs of the Dow”) in roughly equal dollar amounts and the remaining 50% of its assets in U.S.

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Treasury securities.

Hennessy Equity and Income Fund

(Investor Class symbol HEIFX;

Hennessy Equity and Income Fund (Investor Class symbol HEIFX;

Institutional Class symbol HEIIX).

The Hennessy Equity and Income Fund seeks income and long-term capital appreciation with reduced volatility of returns by investing up to 70% of its assets in common stock, preferred stock, and convertible securities and its remaining assets in high-quality

corporate, agency, and government bonds.

Hennessy Balanced

(Investor Class symbol HBFBX).

The Hennessy Equity and Income Fund seeks income and long-term capital appreciation with reduced volatility of returns by investing up to 70% of its assets in common stock, preferred stock, and equity-like instruments and its remaining assets in asset-backed and mortgage-backed securities and debt instruments, including high-yield 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 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.

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Following is a brief description of the investment objectives and principal investment strategies of the Hennessy Funds in the Sector and Specialty product category:

Hennessy BP Energy Transition Fund

(Investor Class symbol HNRGX;

Hennessy Energy Transition Fund (Investor Class symbol HNRGX;

Institutional Class symbol HNRIX).

The Hennessy BP Energy Transition 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.

The Hennessy Energy Transition Fund seeks total return by investing in companies operating in the United States across the full spectrum of the energy supply/demand value chain, including traditional upstream, midstream, and downstream energy companies, as well as renewable energy companies and energy end users.

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 fund’s investments and determine the weighting of each investment.

Hennessy BP Midstream Fund

(Investor Class symbol HMSFX;

Hennessy Midstream Fund (Investor Class symbol HMSFX;

Institutional Class symbol HMSIX).

The 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.

Hennessy Gas Utility Fund

(Investor Class symbol GASFX;

The Hennessy 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.

Hennessy Gas Utility Fund (Investor Class symbol GASFX;

Institutional Class symbol HGASX).

The 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 Stock Index.

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.

The AGA Stock Index is a capitalization-weighted index that consists of all 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 company’s balance sheet.

Hennessy Japan Fund

(Investor Class symbol HJPNX;

Hennessy Japan Fund (Investor Class symbol HJPNX;

Institutional Class symbol HJPIX).

The Hennessy Japan Fund seeks long-term capital appreciation by investing in equity securities of Japanese companies.

Using in-depth

analysis and on-site

research, the 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.

Using in-depth analysis and on-site research, the 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 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;

Hennessy Japan Small Cap Fund (Investor Class symbol HJPSX;

Institutional Class symbol HJSIX).

The Hennessy Japan Small Cap Fund seeks long-term capital appreciation by investing in equity securities of smaller Japanese companies, typically considered to be companies with market capitalizations in the bottom 20% of all publicly traded 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-cap

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

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;

Hennessy Large Cap Financial Fund (Investor Class symbol HLFNX;

Institutional Class symbol HILFX).

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;

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 HISFX).

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;

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;

Institutional Class symbol HTCIX).

The 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.

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.

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 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

The following table presents the average annualized returns for each Hennessy Fund and its relevant benchmark indices for the one-year,

three-year, five-year, and ten-year

(or since inception for Hennessy Funds that commenced operations less than ten years ago) periods ended September 30, 2021.

Returns are presented net of all expenses borne by mutual fund shareholders, but not net of fees waived or expenses borne by the Company.

The following table presents the average annualized returns for each Hennessy Fund and its relevant benchmark indices for the one-year, three-year, five-year, and ten-year (or since inception for Hennessy Funds that commenced operations less than ten years ago) periods ended September 30, 2022.

Returns are presented net of all expenses borne by fund investors, but not net of fees waived or expenses borne by the Company.

The past investment performance of the Hennessy Funds is not a guarantee of future performance, and all of the Hennessy Funds have experienced negative performance over various periods in the past and may do so again in the future.

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Investor Class Share - HFCGX

Russell 2000 ®

Russell 2000 ® Index (1)

S&P 500 ® Index (2)

Hennessy Focus Fund*

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Investor Class Share - HFCSX

Russell 3000 ®

Russell Midcap ®

Growth Index (4)

Russell 3000 ® Index (3)

Russell Midcap ® Growth Index (4)

Hennessy Cornerstone Mid Cap 30 Fund

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Investor Class Share - HFMDX

Russell Midcap ®

Russell Midcap ® Index (5)

S&P 500 ® Index (2)

Hennessy Cornerstone Large Growth Fund

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Investor Class Share - HFLGX

Russell 1000 ®

Russell 1000 ® Index (6)

S&P 500 ® Index (2)

Hennessy Cornerstone Value Fund

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Investor Class Share - HFCVX

Russell 1000 ®

Value Index (7)

Russell 1000 ® Value Index (7)

S&P 500 ® Index (2)

Hennessy Total Return Fund

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Investor Class Share - HEIFX

70/30 Blended Balanced Index (10)

60/40 Blended Balanced Index (11)

S&P 500 ® Index (2)

Hennessy Balanced Fund

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Dow Jones Industrial Average (9)

Hennessy BP Energy Transition Fund*

Hennessy Energy Transition Fund*

Institutional Class Share - HNRIX

Investor Class Share - HNRGX

Energy Index (13)

Hennessy BP Midstream Fund*

S&P 500 ® Energy Index (11)

S&P 500 ® Index (2)

Hennessy Midstream Fund*

Institutional Class Share - HMSIX**

Investor Class Share - HMSFX

Alerian Midstream Index (14)

Alerian US Midstream Energy Index (12)

S&P 500 ® Index (2)

Hennessy Gas Utility Fund*

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AGA Stock Index (13)

S&P 500 ® Index (2)

Hennessy Japan Fund

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Investor Class Share - HJPNX

Russell/Nomura Total Market TM

Russell/Nomura Total Market TM Index (14)

Tokyo Stock Price Index (TOPIX) (15)

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Investor Class Share - HJPSX

Russell/Nomura Small Cap TM

Russell/Nomura Small Cap TM Index (16)

Tokyo Stock Price Index (TOPIX) (15)

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Investor Class Share - HLFNX

Russell 1000 ®

Index Financials (19)

Russell 1000 ®

Russell 1000 ® Index Financials (17)

Russell 1000 ® Index (6)

Hennessy Small Cap Financial Fund*

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Investor Class Share - HSFNX

Russell 2000 ®

Index Financials (20)

Russell 2000 ®

Russell 2000 ® Index Financials (18)

Russell 2000 ® Index (1)

Hennessy Technology Fund*

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NASDAQ Composite Index (19)

S&P 500 ® Index (2)

Performance information from prior to the date that we acquired the assets related to the management of the fund is included because the previous investment manager managed the fund using a similar investment strategy.

Performance shown for periods prior to the inception of Institutional Class shares represents the performance of Investor Class shares of the fund and includes expenses that are not applicable to, and are higher than, those of Institutional Class shares.

The Russell 2000 ®

Index comprises the smallest 2,000 companies in the Russell 3000 ®

Index based on market capitalization, representing approximately 8% of the Russell 3000 ®

Index in terms of total market capitalization.

The S&P 500 ®

Index is a capitalization-weighted

index that is designed to represent the broad domestic economy through changes in the aggregate market value of 500 stocks across all major industries.

The Russell 3000 ®

Index comprises the 3,000 largest U.S.

The Russell 2000 ® Index comprises the smallest 2,000 companies in the Russell 3000 ® Index based on market capitalization and current index membership, representing approximately 7% of the total market capitalization of the Russell 3000 ® Index.

The S&P 500 ® Index is a capitalization-weighted index that is designed to represent the broad domestic economy through changes in the aggregate market value of 500 stocks across all major industries.

The Russell 3000 ® Index comprises the 3,000 largest U.S.

companies based on market capitalization, representing approximately 96% of the investable U.S.

equities market.

The Russell Midcap ®

Growth Index comprises approximately 65% of the total market value of the Russell Midcap ®

Index and includes companies with higher price-to-book

ratios and higher forecasted growth values.

The Russell Midcap ®

Index comprises approximately 800 of the smallest securities of the Russell 1000 ®

Index based on a combination of market capitalization and current index membership.

The Russell 1000 ®

Index comprises the 1,000 largest companies in the Russell 3000 ®

Index based on market capitalization.

The Russell 1000 ®

Value Index comprises those Russell 1000 ®

companies with lower price-to-book

ratios and lower forecasted growth value.

The Russell Midcap ® Growth Index comprises those companies in the Russell Midcap ® Index with relatively higher price-to-book ratio, higher forecasted growth values, and higher sales per share historical growth.

The Russell Midcap ® Index comprises approximately 800 of the smallest securities in the Russell 1000 ® Index, representing approximately 27% of the total market capitalization of the Russell 1000 ® Index.

The Russell 1000 ® Index comprises the 1,000 largest companies in the Russell 3000 ® Index based on market capitalization and current index membership, representing approximately 93% of the total market capitalization of the Russell 3000 ® Index.

The Russell 1000 ® Value Index comprises those companies in the Russell 1000 ® Index with relatively lower price-to-book ratios, lower forecasted growth value, and lower sales per share historical growth.

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 U.S.

Treasury Bill Index, which comprises U.S.

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

Treasury securities maturing in three months.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the NYSE or The Nasdaq Stock Market LLC.

The 70/30 Blended Balanced Index consists of 70% common stocks represented by the S&P 500 ®

Index and 30% bonds represented by the Bloomberg Intermediate U.S.

Government/Credit Index, which measures the performance of U.S.

dollar-denominated

Treasury securities and government-related and investment-grade

corporate securities that have $250 million or more of outstanding face value, are fixed rate and non-convertible,

and have remaining maturities of greater than or equal to one year and less than 10 years.

The 60/40 Blended Balanced Index consists of 60% common stocks represented by the S&P 500 ®

Index and 40% bonds represented by the Bloomberg Intermediate U.S.

Government/Credit Index, which measures the performance of U.S.

dollar-denominated

Treasury securities and government-related and investment-grade

corporate securities that have $250 million or more of outstanding face value, are fixed rate and non-convertible,

and have remaining maturities of greater than or equal to one year and less than 10 years.

The 50/50 Blended DJIA/Treasury Index consists of 50% common stocks represented by the Dow Jones Industrial Average and 50% short-duration Treasury securities represented by the ICE BofAML 1-Year

The 50/50 Blended DJIA/Treasury Index consists of 50% common stocks represented by the Dow Jones Industrial Average and 50% short-duration Treasury securities represented by the ICE BofAML 1-Year U.S.

Treasury Note Index, which comprises U.S.

Treasury securities maturing in approximately one year.

The S&P 500 ®

Energy Index comprises those companies included in the S&P 500 ®

that are classified in the Energy sector.

The S&P 500 ® Energy Index comprises those companies included in the S&P 500 ® that are classified in the Energy sector.

The Alerian US Midstream Energy Index comprises companies that earn a majority of their cash flow from midstream activities involving energy commodities.

The AGA Stock Index is a capitalization-weighted

index consisting of members of the American Gas Association whose securities are traded on a U.S.

The AGA Stock Index is a capitalization-weighted index consisting of members of the American Gas Association whose securities are traded on a U.S.

stock exchange.

The Russell/Nomura Total Market ™

Index contains the top 98% of all stocks listed on Japan’s stock exchanges and registered on Japan’s over-the-counter

market based on market capitalization.

The Russell/Nomura Total Market ™ Index represents approximately 98% of the investable Japan equity market.

The Tokyo Stock Price Index (TOPIX) is a capitalization-weighted index of all of the companies listed on the First Section of the Tokyo Stock Exchange.

The Russell/Nomura Small Cap ™

Index contains the bottom 15% of the Russell/Nomura Total Market ™

Index based on market capitalization.

The Russell 1000 ®

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

The Russell/Nomura Small Cap ™ Index comprises the bottom 15% of the Russell/Nomura Total Market ™ Index based on market capitalization.

The Russell 1000 ® Index Financials is a subset of the Russell 1000 ® Index that measures the performance of securities classified in the Financials sector of the large-cap U.S.

equity market.

The Russell 2000 ®

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

The Russell 2000 ® Index Financials is a subset of the Russell 2000 ® Index that measures the performance of securities classified in the Financials sector of the small-cap U.S.

equity market.

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Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes.

is a trademark of Frank Russell Company.

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.

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

Standard & Poor’s Financial Services LLC is the source and owner of the S&P ®

and S&P 500 ®

Standard & Poor’s Financial Services LLC is the source and owner of the S&P ® and S&P 500 ® trademarks.

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

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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 Midstream Index is a servicemark of GKD Index Partners.

The Alerian US Midstream Energy Index is a servicemark of GKD Index Partners.

LLC d/b/a Alerian (“Alerian”), and its use is granted under a license from Alerian.

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Development of New Investment Strategies and Expanding Our Product Offerings

We develop new investment strategies and expand our product offerings by identifying client needs and reviewing asset allocation tables to determine where we can augment our family of mutual funds.

We develop new investment strategies and expand our product offerings by identifying investor needs and reviewing asset allocation tables to determine where we can augment our family of funds.

Once we identify an attractive market segment, we select one of the following methods to initiate the new strategy:

We screen the appropriate universe of stocks with a set of parameters that we believe identifies stocks that will produce higher long-term returns with lower associated risk than their relative indices, and we then introduce the new investment strategy into the marketplace by opening and directly marketing a new mutual fund;

We purchase the assets related to the management of an existing mutual fund that we then manage ourselves;

We purchase the assets related to the management of an existing mutual fund and then engage the existing portfolio managers or strategic firm to act as a sub-advisor

to manage the fund;

We purchase the assets related to the management of an existing mutual fund and then employ the existing portfolio management team to manage the fund.

ASSETS UNDER MANAGEMENT, SOURCES OF REVENUES, AND 12B-1

We earn revenues primarily by providing investment advisory services to the Hennessy Funds and secondarily by providing shareholder services to shareholders of the Hennessy Funds.

We purchase the assets related to the management of an existing fund that we then manage ourselves;

We purchase the assets related to the management of an existing fund and then engage the existing portfolio managers or strategic firm to act as a sub-advisor to manage the fund;

We purchase the assets related to the management of an existing fund and then employ the existing portfolio management team to manage the fund.

ASSETS UNDER MANAGEMENT, SOURCES OF REVENUES, AND 12B-1 PLANS

We earn revenues primarily by providing investment advisory services to the Hennessy Funds and secondarily by providing shareholder services to investors in the Hennessy Funds.

The fees we receive for these services are calculated as a percentage of the average daily net asset values of the Hennessy Funds.

In addition, the sub-advisory

fees that we pay are also calculated as a percentage of the average daily net asset values of the sub-advised

Hennessy Funds.

The amount of our assets under management fluctuates as a result of organic inflows (purchases of shares of the Hennessy Funds by new or existing shareholders), acquisition inflows, outflows (redemptions of shares of the Hennessy Funds by shareholders), and market appreciation or depreciation.

The following table summarizes our assets under management:

In addition, the sub-advisory fees that we pay are also calculated as a percentage of the average daily net asset values of the sub-advised Hennessy Funds.

The amount of our assets under management fluctuates as a result of organic inflows (purchases of shares of the Hennessy Funds by new or existing investors), acquisition inflows, outflows (redemptions of shares of the Hennessy Funds by investors), and market appreciation or depreciation.

The following table summarizes our assets under management for the past three fiscal years:

Fiscal Years Ended September 30,

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Organic inflows

Market appreciation (depreciation)

Market (depreciation) appreciation

Ending assets under management

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

The following table summarizes our sources of revenues, net of sub-advisory fees, for the past three fiscal years:

Fiscal Years Ended September 30,

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Shareholder service fees

Revenue, net of sub-advisory

Sub-advisory fees

Revenue, net of sub-advisory fees

Investment Advisory Agreements and Fees

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

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 Fund’s investment advisory agreement, Prospectus, and Statement of Additional Information.

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:

acting as portfolio manager for the fund or overseeing the sub-advisor

acting as portfolio manager for the fund, which includes managing 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), seeking best execution for the fund’s portfolio, managing the use of soft dollars for the fund, and managing proxy voting for the fund;

acting as portfolio manager for the fund or overseeing the sub-advisor acting as portfolio manager for the fund, which includes managing 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), seeking best execution for the fund’s portfolio, managing the use of soft dollars for the fund, and managing proxy voting for the fund;

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

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monitoring the fund’s compliance with its investment objectives and restrictions and federal securities laws;

maintaining a compliance program (including a code of ethics), conducting ongoing reviews of the compliance programs of the fund’s service providers (including any sub-advisor),

including their codes of ethics, as appropriate, conducting onsite visits to the fund’s 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, directors and officers and errors and omissions 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 fund’s sub-advisor,

reviewing the fund’s investment performance, and monitoring the sub-advisor’s

adherence to the fund’s investment objectives, policies, and restrictions;

maintaining a compliance program (including a code of ethics), conducting ongoing reviews of the compliance programs of the fund’s service providers (including any sub-advisor), including their codes of ethics, as appropriate, conducting on-site visits to the fund’s 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, directors and officers and errors and omissions 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 fund’s sub-advisor, reviewing the fund’s investment performance, and monitoring the sub-advisor’s adherence to the fund’s investment objectives, policies, and restrictions;

overseeing service providers that provide accounting, administration, distribution, transfer agency, custodial, sales, marketing, public relations, audit, information technology, and legal services to the fund;

maintaining in-house

marketing and distribution departments on behalf of the fund;

maintaining in-house marketing and distribution departments on behalf of the fund;

preparing or directing the preparation of all regulatory filings for the fund, including writing and annually updating the fund’s prospectus and related documents;

for each annual report of the fund, preparing or reviewing a written summary of the fund’s performance during the most recent 12-month

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

paying the incentive compensation of the fund’s compliance officers and employing other staff such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight personnel, as well as management executives;

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

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

paying the incentive compensation of the fund’s compliance officer and employing other staff such as legal, marketing, national accounts, distribution, sales, administrative, and trading oversight personnel, as well as management executives;

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

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The investment advisory agreements also provide that we are responsible for performing any ordinary clerical and bookkeeping services needed by the Hennessy Funds that are not provided by the funds’ custodian, administrator, or transfer agent.

The Funds’ Board of Trustees comprises three trustees who are not interested persons of the Hennessy Funds (the “disinterested trustees”) and Neil J.

The Funds’ Board of Trustees comprises four trustees who are not interested persons of the Hennessy Funds (the “disinterested trustees”) and Neil J.

Hennessy, who is our Chief Executive Officer and Chairman of our Board of Directors.

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Hennessy Balanced Fund

Hennessy BP Energy Transition Fund

Hennessy BP Midstream Fund

Hennessy Energy Transition Fund

Hennessy Midstream Fund

Hennessy Gas Utility Fund

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Hennessy Technology Fund

We waived a portion of our fees with respect to the Hennessy Cornerstone Large Growth Fund and the Hennessy BP Energy Transition Fund through the expiration of each fund’s expense limitation agreement on November 30, 2019, and October 25, 2020, respectively.

We continue to waive a portion of its fees with respect to 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 the Hennessy Energy Transition Fund through the expiration of the fund’s expense limitation agreement on October 25, 2020.

We continue to waive a portion of our fees with respect to the Hennessy Midstream Fund and the Hennessy Technology Fund to comply with contractual expense ratio limitations.

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

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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.

Total fee waivers during fiscal years 2021 and 2020 were $0.1 million and $0.3 million, respectively.

Total fee waivers during each of fiscal year 2022 and 2021 were $0.1 million.

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

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.

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

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.

Agreements and Fees

We have delegatedd the day-to-day

portfolio management responsibilities to sub-advisors,

subject to our oversight, for some of the Hennessy Funds.

In each case, the sub-advisor

entity or the individuals working at the sub-advisor

entity is the same entity or are the same individuals who advised the fund prior to our purchase of the assets related to the management of such fund.

The provision of sub-advisory

services must be in accordance with the applicable Hennessy Fund’s sub-advisory

agreement, Prospectus, and Statement of Additional Information.

The services that each sub-advisor

provides to the applicable Hennessy Fund pursuant to the terms of the sub-advisory

agreement include, among other things, the following:

Sub-Advisory Agreements and Fees

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

In each case, the sub-advisor entity or the individuals working at the sub-advisor entity is the same entity or are the same individuals who advised the fund prior to our purchase of the assets related to the management of such fund.

The provision of sub-advisory services must be in accordance with

the applicable Hennessy Fund’s sub-advisory agreement, Prospectus, and Statement of Additional Information.

The services that each sub-advisor provides to the applicable Hennessy Fund pursuant to the terms of the sub-advisory agreement include, among other things, the following:

ensuring that its compliance programs include policies and procedures relevant to the fund and the sub-advisor’s

duties as a portfolio manager to the fund;

for each annual report of the fund, preparing a written summary of the fund’s performance during the most recent 12-month

providing a quarterly certification to Funds’ Board of Trustees 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.

In exchange for sub-advisory

services, we pay sub-advisory

fees to the sub-advisors

out of our own assets.

fees are calculated as a percentage of the applicable fund’s 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 fund’s sub-advisor

as of the end of fiscal year 2021:

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

for each annual report of the fund, preparing a written summary of the fund’s performance during the most recent 12-month period;

providing a quarterly certification to Funds’ Board of Trustees 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.

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 fund’s 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 fund’s sub-advisor as of the end of fiscal year 2022:

Hennessy Fund

(All Class Shares)

Sub-Advisory Fee

(As a % of Fund Assets)

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(equity allocation)

Hennessy BP Energy Transition Fund

BP Capital Fund Advisors, LLC

Hennessy BP Midstream Fund

BP Capital Fund Advisors, LLC

Hennessy Japan Fund

SPARX Asset Management Co., Ltd.

$0-$500 million:

Above $500 million-$1 billion:

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SPARX Asset Management Co., Ltd.

$0-$500 million:

Above $500 million-$1 billion:

Above $1 billion:

The sub-advisory

agreements must be renewed annually in the same manner as the investment advisory agreements and are subject to the same termination provisions.

The sub-advisory agreements must be renewed annually in the same manner as the investment advisory agreements and are subject to the same termination provisions.

Shareholder Servicing Agreements and Fees

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 a toll-free

Pursuant to a shareholder servicing agreement with Hennessy Funds Trust, we provide shareholder services to investors in the Hennessy Funds including, among other things, maintaining a toll-free number that the current investors in the Hennessy Funds may call to ask questions about their accounts or the funds 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 fund’s Investor Class shares.

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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

These plans are named after Rule 12b-1

of the Investment Company Act of 1940, which permits a mutual fund to adopt a plan that allows the fund to collect fees to use to make payments to third parties in connection with the distribution of fund shares.

Amounts paid under a plan may be spent on any activities or expenses primarily intended to result in sale of shares of the fund, including, but not limited to (i) advertising, (ii) compensation paid to financial institutions, broker-dealers, and others for sales and marketing, (iii) shareholder accounting servicing, (iv) printing and mailing prospectuses to possible new shareholders, and (v) printing and mailing sales literature.

A mutual fund may also employ a distributor to distribute and market fund shares and then use 12b-1

fees to pay the distributor for expenses relating to telephone use, overhead, employing employees who engage in or support the distribution of the fund shares, printing prospectuses and other reports for possible new shareholders, advertising, and preparing and distributing sales literature.

fee for each Hennessy Fund is 0.15% of the average daily net assets of such fund’s Investor Class shares.

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

These plans are named after Rule 12b-1 of the Investment Company Act of 1940, which permits a fund to adopt a plan that allows the fund to collect fees to use to make payments to third parties in connection with the distribution of fund shares.

Amounts paid under a plan may be spent on any activities or expenses primarily intended to result in sale of shares of the fund, including, but not limited to (i) advertising, (ii) compensation paid to financial intermediaries, broker-dealers, and others for sales and marketing, (iii) shareholder accounting servicing, (iv) printing and mailing prospectuses to possible new investors, and (v) printing and mailing sales literature.

A fund may also employ a distributor to distribute and market fund shares and then use 12b-1 fees to pay the distributor for expenses relating to telephone use, overhead, employing employees who engage in or support the distribution of the fund shares, printing prospectuses and other reports for possible new investors, advertising, and preparing and distributing sales literature.

The 12b-1 fee for each Hennessy Fund is 0.15% of the average daily net assets of such fund’s Investor Class shares.

CUSTODIAL, DISTRIBUTION, AND BROKERAGE ARRANGEMENTS

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

When selecting brokers, we and our sub-advisors

are required to seek best execution.

When selecting brokers, we and our sub-advisors are required to seek best execution.

Although there is no single statutory definition, Securities and Exchange Commission (“SEC”) releases and other legal guidelines make clear that this duty requires us to seek “the most advantageous terms reasonably available under the circumstances for a customer’s account.” The lowest possible commission, while important, is not the sole determinative factor.

We and our sub-advisors

also consider factors such as order size and market depth, availability of competing markets and liquidity, trading characteristics of the security, financial responsibility of the broker-dealer,

and the broker’s ability to address current market conditions.

We and our sub-advisors also consider factors such as order size and market depth, availability of competing markets and liquidity, trading characteristics of the security, financial responsibility of the broker-dealer, and the broker’s ability to address current market conditions.

Currently, we participate in soft dollar arrangements with one of our brokers.

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Our ability to use the 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.

Under the 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.

Under the 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 Netfolio’s 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.

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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

The implementation of this business strategy is described below.

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Utilizing our branding and marketing campaign to attract assets

We believe we can attract investors to the Hennessy Funds by effectively marketing our consistent and disciplined approach to investing based on a buy-and-hold

philosophy that rejects the idea of market timing.

We believe we can attract investors to the Hennessy Funds by effectively marketing our consistent and disciplined approach to investing based on a buy-and-hold philosophy that rejects the idea of market timing.

We offer quantitative funds, actively managed funds, and income-generating funds.

We believe our quantitative funds attract investors who want to understand exactly how their investments are managed and who favor statistical analysis and empirical evidence as the basis for investment decisions.

We also believe that our actively managed funds attract investors who appreciate a fundamental, hands-on

investment management approach and talented portfolio managers.

Finally, we believe our more conservative, income-generating

funds attract investors seeking alternatives to mutual funds invested entirely in equities.

We run a comprehensive and far-reaching

public relations program designed to disseminate our message to a wide variety of potential investors through frequent television appearances, radio spots, feature articles, and print media mentions.

We also believe that our actively managed funds attract investors who appreciate a fundamental, hands-on investment management approach and talented portfolio managers.

Finally, we believe our more conservative, income-generating funds attract investors seeking alternatives to funds invested entirely in equities.

We run a comprehensive and far-reaching public relations program designed to disseminate our message to a wide variety of potential investors through frequent television appearances, radio spots, feature articles, and print media mentions.

We have partnered with an industry-leading public relations firm, SunStar Strategic, to proactively promote the Hennessy Funds to national financial media.

This public relations program has consistently resulted in the Hennessy Funds being mentioned an average of once every two to three days in national print and broadcast media such as CNBC, Fox News, Bloomberg radio and TV, The Wall Street Journal, Kiplinger, and Barron’s, among others.

To facilitate our presence in the media, we utilize LiveStudio, an in-house

studio providing a direct link to media broadcasts, at our office in Novato, California.

To facilitate our presence in the media, we utilize LiveStudio, an in-house studio providing a direct link to media broadcasts, at our office in Novato, California.

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

Hennessy, who is our Chief Executive Officer and Chairman of our Board of Directors as well as President, Chief Market Strategist, and a Portfolio Manager of the Hennessy Funds, (ii) Ryan Kelley, Chief Investment Officer and a Portfolio Manager of the Hennessy Funds, and (iii) Portfolio Managers David Ellison and Josh Wein, as well as the Portfolio Managers at our sub-advisors.

Hennessy, who is our Chief Executive Officer and Chairman of our Board of Directors as well as President, Chief Market Strategist, and a Portfolio Manager of the Hennessy Funds, (ii) Ryan Kelley, Chief Investment Officer and a Portfolio Manager of the Hennessy Funds, and (iii) Portfolio Managers Ben Cook, David Ellison, 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.

Our core 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.

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.

Through much of our fiscal year 2021 and the second half of our fiscal year 2020, we participated in these activities via videoconference or teleconference, as necessary.

Expanding our distribution network to additional distribution platforms

Investors may purchase shares of the Hennessy Funds through financial intermediaries, including mutual fund supermarkets, national wirehouses and broker-dealers,

independent and regional broker-dealers, and registered investment advisors, or directly from the Hennessy Funds.

Mutual fund supermarkets, such as Schwab, Fidelity, TD Ameritrade, and Pershing, generally offer funds of many different investment companies to investors in exchange for a services fee paid by the applicable fund or that fund’s investment advisor.

The ability to purchase various mutual funds in a single location is very attractive to investors, and the majority of our $3.6 billion of assets under management as of the end of fiscal year 2021 was held at mutual fund supermarkets.

Additionally, we continually seek opportunities to form new relationships with financial intermediaries to make our no-load

mutual funds even more accessible to investors.

Investors may purchase shares of the Hennessy Funds through third-party financial intermediaries, including fund supermarkets, national wirehouses and broker-dealers, independent and regional broker-dealers, and registered investment advisors, or directly from the Hennessy Funds.

Fund supermarkets, such as Schwab, Fidelity, TD Ameritrade, and Pershing, generally offer funds of many different investment companies to investors in exchange for a services fee paid by the applicable fund or that fund’s investment advisor.

The ability to purchase various funds in a single location is very attractive to investors, and the majority of our assets under management as of the end of fiscal year 2022 was held at fund supermarkets.

Additionally, we continually seek opportunities to form new relationships with financial intermediaries to make our no-load funds even more accessible to investors.

We oversee distribution of the Hennessy Funds through all financial intermediaries.

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Increasing our current base of financial advisors and investment professionals

Investment professionals generally have access to a wide variety of investment products they may recommend to their investors.

A recommendation by an investment professional to an investor to buy one of the Hennessy Funds may greatly influence that investor.

Thus, we believe that expanding our current base of investment professionals who utilize no-load

funds for their investors will help us increase our assets under management, which will in turn increase our revenues.

Investment professionals generally have access to a wide variety of investment products they may recommend to their clients.

A recommendation by an investment professional to a client to buy one of the Hennessy Funds may greatly influence that investor.

Thus, we believe that expanding our current base of investment professionals who utilize no-load funds for their clients will help us increase our assets under management, which will in turn increase our revenues.

Securing participation on the platforms of national full-service firms

We continually strive to develop relationships with national full-service firms that permit their investment professionals to offer no-load

funds to their investors as a way to increase the amount of assets that we manage, which will in turn increase our revenues.

Pursuing strategic purchases of management agreements for additional mutual funds

A primary component of our growth strategy is to selectively pursue strategic purchases of the assets related to the management of additional mutual funds.

We believe the regulatory burden imposed upon the mutual fund industry, along with increased competition, has compressed the margins of smaller to mid-sized

mutual fund managers, making those managers more receptive to an asset purchase.

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 “BP Funds”), which were reorganized into the Hennessy BP Energy Transition Fund and the Hennessy BP Midstream Fund, respectively, two new series of Hennessy Funds Trust.

Delivering strong, high-quality

financial results.

We continually strive to develop relationships with national full-service firms that permit their investment professionals to offer no-load funds to their clients as a way to increase the amount of assets that we manage, which will in turn increase our revenues.

Pursuing strategic purchases of management agreements for additional funds

A primary component of our growth strategy is to selectively pursue strategic purchases of the assets related to the management of additional funds.

We believe the regulatory burden imposed upon the fund industry, along with increased competition, has compressed the margins of smaller to mid-sized fund managers, making those managers more receptive to an asset purchase.

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 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.

Delivering strong, high-quality financial results.

We seek to maintain a strong financial position and to manage our investment advisory business to meet the highest regulatory, ethical, and business standards and to maintain continuity of service to all of the investors in the Hennessy Funds.

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Most of the larger firms offer a broader range of financial services to the same retail and institutional investors we seek to serve.

These factors may place us at a competitive disadvantage, and we can give no assurance that our strategies and efforts to maintain and enhance our current investor relationships, as well as to create new ones, will be successful.

These factors may place us at a competitive disadvantage, and we can give no assurance that our strategies and efforts to maintain and enhance our current investor

relationships, as well as to create new ones, will be successful.

To grow our business, we must be able to compete effectively for assets under management.

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the expense ratios of the Hennessy Funds;

the array of our product offerings;

the breadth of our product offerings;

industry rankings of the Hennessy Funds;

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REGULATORY ENVIRONMENT

We are subject to an increasing number of extensive and complex federal and state laws and regulations intended to protect shareholders of mutual funds and investors of registered investment advisors.

We are subject to an increasing number of extensive and complex federal and state laws and regulations intended to protect investors in funds and investors of registered investment advisors.

We believe we are in compliance in all material respects with all applicable laws and regulations.

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Such requirements relate to, among other things, fiduciary duties to investors, transactions with investors, compliance program effectiveness, solicitation arrangements, conflicts of interest, advertising, 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.

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.

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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.

Our mutual funds are registered with the SEC under the Investment Company Act of 1940, which imposes additional obligations on both the Hennessy Funds and us, as the advisor to the Hennessy Funds, including detailed operational requirements.

While we exercise broad discretion over the day-to-day

management of the business, affairs, and investment portfolios of the Hennessy Funds, our operations are subject to oversight and management by the Funds’ Board of Trustees.

agreements with the sub-advisors

to the Hennessy Funds, approving other service providers, determining the method of valuing assets, and monitoring transactions involving affiliates.

The Hennessy Funds are registered with the SEC under the Investment Company Act of 1940, which imposes additional obligations on both the Hennessy Funds and us, as the advisor to the Hennessy Funds, including detailed operational requirements.

While we exercise broad discretion over the day-to-day management of the business, affairs, and investment portfolios of the Hennessy Funds, our operations are subject to oversight and management by the Funds’ Board of Trustees.

The responsibilities of the Funds’ Board of Trustees include, among other things, annually approving the continuation of our investment advisory agreements and shareholder servicing agreement with the Hennessy Funds and our sub-advisory agreements with the sub-advisors to the Hennessy Funds, approving other service providers, determining the method of valuing assets, and monitoring transactions involving affiliates.

The Investment Company Act of 1940 also imposes on us a fiduciary duty with respect to receiving investment advisory fees.

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Our 19 employees had an average tenure of 12 years as of the end of fiscal year 2022.

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.

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.

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

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.

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

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

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.

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AVAILABLE INFORMATION

We make available free of charge through a link on our website, www.hennessyadvisors.com, our Annual Report on Form 10-K,

Quarterly Reports on Form 10-Q,

Current Reports on Form 8-K,

and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

We make available free of charge through a link on our website, www.hennessyadvisors.com, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

We are not including the information contained on our website as part of, or incorporating it by reference into, this Annual Report on Form 10-K.

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