We are a publicly traded investment management firm whose primary business
activity is managing, servicing and marketing 16 open-end mutual funds branded
as the Hennessy Funds. We are committed to employing a consistent and repeatable
investment process for the Hennessy Funds, combining time-tested stock selection
strategies with a highly disciplined, team-managed approach, 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, with their
best interest in mind. Our firm was founded on these principles over 26 years
ago and the same principles guide us today.
We earn revenues primarily by providing investment advisory services to the
Hennessy Funds. We also provide shareholder services to the Hennessy Funds,
but we have only earned shareholder service fees from all of (instead of some
of) the Hennessy Funds since March 1, 2015. Investment advisory services include
managing the composition of each fund’s portfolio (including the purchase,
retention, and disposition of portfolio securities in accordance with the fund’s
investment objectives, policies, and restrictions), conducting investment research,
monitoring compliance with each fund’s 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 of the funds, preparing
and distributing regulatory reports, and overseeing distribution through third
party financial intermediaries. Shareholder services include maintaining an
“800” number that the current investors of 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 revenues increase or decrease as our average assets under management
rise or fall. The percentage amount of the investment advisory fees vary from
fund to fund, but the percentage amount of the shareholder service fees is consistent
across all funds.
For six of the Hennessy Funds acquired through asset purchases, we have delegated
the day-to-day portfolio management responsibilities to sub-advisors. 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-advisor fees we pay increase
or decrease as our average assets under management in our sub-advised funds
increases or decreases, respectively.
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. 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-advisor 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,
acquisition inflows, redemptions, and market appreciation or depreciation.
We provide investment advisory services to the entire family of the 16 Hennessy
Funds pursuant to management contracts with Hennessy Funds Trust. Under these
management contracts, we are responsible for the provision of investment advisory
services to the Hennessy Funds, subject to the oversight of the Board of Trustees
of Hennessy Funds Trust (the “Funds’ Board of Trustees”) and
according to each fund’s particular fundamental investment objectives
and policies. The services that we provide to each Hennessy Fund pursuant to
these management contracts 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;
performing daily reconciliations of portfolio positions and cash for
the fund;
monitoring the compliance of the fund with its investment objectives
and restrictions and federal securities laws;
performing activities such as maintaining a compliance program, conducting
ongoing reviews of the compliance programs of service providers to the fund
(including sub-advisors, as applicable), conducting on-site visits to the service
providers to the fund (including sub-advisors, as applicable), monitoring incidents
of abusive trading practices, reviewing fund expense accruals, payments, and
fixed expense ratios, evaluating insurance providers for fidelity bond coverage
and D&O/E&O insurance coverage, conducting employee compliance training,
reviewing reports provided by service providers, maintaining books and records,
and preparing an annual compliance report to the Funds’ Board of Trustees;
overseeing the selection and continued employment of sub-advisors and
monitoring such sub-advisors’ investment performance and adherence to
investment policies;
overseeing service providers that support the fund in providing fund
accounting, fund administration, fund distribution, transfer agency, custodial,
sales and marketing, audit, information technology, and legal services;
maintaining comprehensive and nationwide in-house marketing and distribution
departments on behalf of the fund;
overseeing an ongoing and wide-ranging public relations campaign on
behalf of the fund;
being actively involved with preparing regulatory filings for the fund;
preparing or reviewing a written summary of the fund’s performance
for the most recent six-month or twelve-month period, as applicable, for each
semi-annual and annual report of the fund;
overseeing distribution of the fund through third party financial intermediaries;
paying the incentive compensation of the fund’s compliance officers
and employing other staff such as management executives, legal personnel, marketing
personnel, national accounts and distribution personnel, sales personnel, administrative
personnel, and trading oversight personnel;
providing a quarterly certification to Hennessy Funds Trust; and
preparing or reviewing materials for the Funds’ Board of Trustees,
presenting or leading discussions to or with the Funds’ Board of Trustees,
preparing or reviewing meeting minutes, and arranging for training and education
of the Funds’ Board of Trustees.