Hennessy Small Cap Financial Fund
Investor
HSFNX
Institutional
HISFX
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  • Overview

    Category
    Sector & Specialty - Financial

    Hennessy Small Cap Financial Fund

    Actively managed, the Fund maintains a concentrated portfolio of small-cap Financial Services sector stocks.

    Investor

    HSFNX

    Institutional

    HISFX

    Documents

    Morningstar style box

    Morningstar style box
    Investment Overview Video
    Investment Overview Video

    Financial Funds Investment Strategy

    Portfolio Managers Dave Ellison and Ryan Kelley describe their investment strategy, which seeks high-quality and well managed Financial Services companies.

     

    Why Invest

    • An opportunity to invest in a select group of geographically diverse regional and community banks
    • Managed by Dave Ellison, the most tenured fund manager in the Financial Services sector
    • Concentrated, actively managed portfolio of 25-50 stocks

    Investment Approach

    From a universe of banks and Financial Services companies with market capitalizations under $3 billion, the Hennessy Small Cap Financial Fund seeks stocks that offer value and/or a catalyst for positive change. The Managers seeks businesses with the following characteristics:

    - High-quality management team with a long-term view and experience through market cycles

    - Uncomplicated business model with a low-cost operating structure

    - Conservative lending culture with high-quality deposits

     - Well-capitalized, well-structured balance sheets

    - Sustainable earnings and book value growth opportunities

    - Attractive valuation relative to peers 

    Portfolio Managers

    • David Ellison

      David Ellison

      Portfolio Manager
      • 26
        Years on Fund
      • 40
        Years of Experience
    • Ryan C. Kelley

      Ryan C. Kelley, CFA

      Chief Investment Officer and Portfolio Manager
      • 18
        Years on Fund
      • 27
        Years of Experience

    “We look for smaller banks that we believe can grow profits regardless of the interest rate environment.”

    - Dave Ellison

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  • Insights & News

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  • Performance

    Daily Pricing & Performance

    as of 3/22/23
    • Investor Class (HSFNX)

      • NAV

        $21.22

      • $ Change

        -$0.96

      • % Change

        -4.33%

      • YTD

        -17.59%

    • Institutional Class (HISFX)

      • NAV

        $12.26

      • $ Change

        -$0.56

      • % Change

        -4.37%

      • YTD

        -17.55%

    Average Annualized Total Return

    as of 2/28/23
    Name 1 Mo YTD 1 yr 3 yr 5 yr 10 yr Since Inception (1/3/97)
    Investor Class (HSFNX) 0.49% 4.39% -8.60% 16.41% 6.41% 9.49% 10.15%
    Institutional Class (HISFX) 0.52% 4.44% -8.28% 16.83% 6.78% 9.88% 10.34%
    Russell 2000® Index Financials 0.19% 5.81% -7.74% 9.02% 5.53% 8.82% 8.26%
    Russell 2000® Index -1.69% 7.89% -6.02% 10.08% 6.01% 9.06% 7.95%

    Please swipe to view table

    as of 12/31/22
    Name QTR YTD 1 yr 3 yr 5 yr 10 yr Since Inception (1/3/97)
    Investor Class (HSFNX) 4.38% -11.16% -11.16% 9.16% 5.58% 9.92% 10.03%
    Institutional Class (HISFX) 4.48% -10.84% -10.84% 9.57% 5.98% 10.32% 10.23%
    Russell 2000® Index Financials 5.72% -15.47% -15.47% 2.50% 3.59% 9.06% 8.08%
    Russell 2000® Index 6.23% -20.44% -20.44% 3.10% 4.13% 9.01% 7.69%

    Please swipe to view table

    Hypothetical Growth of $10,000

    as of 2/28/2023

    Value of $10,000 invested between 2/28/2022 and 2/28/2023
    Small Cap Financial Fund (HSFNX) $9,140
    Small Cap Financial Fund (HISFX) $9,172
    Russell 2000® Index Financials $9,226
    Russell 2000® Index $9,399

    Value of $10,000 invested between 2/29/2020 and 2/28/2023
    Small Cap Financial Fund (HSFNX) $15,777
    Small Cap Financial Fund (HISFX) $15,944
    Russell 2000® Index Financials $12,958
    Russell 2000® Index $13,338

    Value of $10,000 invested between 2/28/2018 and 2/28/2023
    Small Cap Financial Fund (HSFNX) $13,640
    Small Cap Financial Fund (HISFX) $13,885
    Russell 2000® Index Financials $13,088
    Russell 2000® Index $13,389

    Value of $10,000 invested between 2/28/2013 and 2/28/2023
    Small Cap Financial Fund (HSFNX) $24,749
    Small Cap Financial Fund (HISFX) $25,661
    Russell 2000® Index Financials $23,280
    Russell 2000® Index $23,798

    Value of $10,000 invested between 1/3/1997 and 2/28/2023
    Small Cap Financial Fund (HSFNX) $125,202
    Small Cap Financial Fund (HISFX) $131,229
    Russell 2000® Index Financials $79,704
    Russell 2000® Index $74,007

    This data illustrates the performance of a hypothetical $10,000 investment made in the Fund for the period noted, and it assumes reinvestment of dividends and capital gains. This chart does not imply future performance.

    Calendar Year Total Returns

      2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
    Investor Class (HSFNX)    		 36.59 -3.40 11.74 33.41 -0.20 -15.86 19.88 2.58 42.75 -11.16
    Institutional Class (HISFX)    		 36.96 -3.08 12.20 33.92 0.13 -15.46 20.21 2.91 43.37 -10.84
    Russell 2000® Index Financials    		 31.37 8.85 0.60 31.14 5.78 -10.83 24.21 -1.95 29.95 -15.47
    Russell 2000® Index    		 38.82 4.89 -4.41 21.31 14.65 -11.01 25.52 19.96 14.82 -20.44
    Year
    Investor Class (HSFNX)
    Institutional Class (HISFX)
    Russell 2000® Index Financials
    Russell 2000® Index
    2012 21.42% 21.71% 21.30% 16.35%
    2011 -15.63% -15.52% -2.96% -4.18%
    2010 17.50% 17.75% 20.37% 26.85%
    2009 20.13% 19.91% -0.03% 27.17%
    2008 -8.73% -8.11% -24.97% -33.79%
    2007 -22.18% -22.18% -16.57% -1.57%
    2006 11.80% 11.80% 19.71% 18.37%
    2005 -1.55% -1.55% 2.31% 4.55%
    2004 16.04% 16.04% 21.52% 18.33%
    2003 41.05% 41.05% 39.43% 47.25%
    2002 18.68% 18.68% 2.09% -20.48%
    2001 23.85% 23.85% 15.74% 2.49%
    2000 32.42% 32.42% 21.16% -3.02%
    1999 -5.43% -5.43% -6.03% 21.26%
    1998 -13.52% -13.52% -7.16% -2.55%

    Please swipe to view table

    Returns-Based Statistics
    Relative to Russell 2000® Index Financials

    as of 12/31/22
    Investor Class (HSFNX)
    Type 3 yr 5 yr 10 yr
    Alpha 7.04 2.34 0.51
    Beta 1.13 1.11 1.09
    Upside Capture 118.64 111.67 110.09
    Downside Capture 100.59 105.93 109.95
    Institutional Class (HISFX)
    Type 3 yr 5 yr 10 yr
    Alpha 7.42 2.72 0.87
    Beta 1.13 1.11 1.09
    Upside Capture 119.25 112.39 110.82
    Downside Capture 100.12 105.43 109.24

    Alpha measures the fund’s excess return relative to the return of the benchmark. Beta measures the volatility of the fund compared to that of the benchmark. The beta of the benchmark is 1.00. Capture ratios measure the fund’s overall performance in up markets (positive return periods) and down markets (negative return periods).

    Sharpe Ratio

    as of 12/31/22
    Type 3 yr 5 yr 10 yr
    Investor Class (HSFNX) 0.41 0.29 0.51
    Institutional Class (HISFX) 0.42 0.30 0.52
    Russell 2000® Index Financials 0.20 0.21 0.52
    Financial Category Average 0.25 0.24 0.53

    Sharpe Ratio is a measure of risk-adjusted return, reflecting the average return earned in excess of the risk-free rate per unit of volatility.

    Standard Deviation

    as of 12/31/22
    Type 3 yr 5 yr 10 yr
    Investor Class (HSFNX) 31.59 27.02 21.95
    Institutional Class (HISFX) 31.63 27.05 21.96
    Russell 2000® Index Financials 26.52 22.98 18.77
    Financial Category Average 26.62 23.01 18.40

    Standard deviation is a statistical measure of the historical volatility of a mutual fund or portfolio.

    Fund Expenses

    • Investor Class (HSFNX)

      • Gross expense ratio

        1.59%

    • Institutional Class (HISFX)

      • Gross expense ratio

        1.22%

    Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted.

    Each Morningstar category average represents a universe of funds with similar objectives. The Morningstar Style Box reveals the fund's investment style as of 12/31/22. The vertical axis shows the market capitalization of the stocks owned and the horizontal axis shows investment style (value, blend, or growth). ©Morningstar, Inc. All Rights Reserved. Past performance is no guarantee of future results.

    The performance shown for Institutional Class shares / HISFX prior to 5/30/08 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 performance shown for periods prior to 10/26/12 is that of the predecessor FBR Fund.

    The Russell 2000® Index Financials is an unmanaged index commonly used to measure the performance of U.S. small-capitalization financial sector stocks. The Russell 2000® Index is an unmanaged index commonly used to measure the performance of U.S. small-capitalization stocks. One cannot invest directly in an index.

    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 Russell. 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 Russell’s express written consent. Russell does not promote, sponsor, or endorse the content of this communication.

    Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security.

  • Portfolio

    Portfolio Characteristics

    as of 12/31/22
    Inception Date (HSFNX) 1/3/97
    Inception Date (HISFX) 5/30/08
    Total Fund Assets $105 Million
    Active Share vs. Russell 2000® Index Financials 88%
    Portfolio Turnover 29%
    Median Market Cap $1.7 Billion
    Median Price/Earnings 10.7x
    Median Price/Book 1.1x

    Price/Earnings measures a stock’s price per share compared to earnings. Price/Book measures a stock’s price per share to book value. Portfolio Turnover and Price/Earnings shown reflect the trailing 12-month period.

    Sector Weighting

    as of 12/31/22
    Fund
    Financials 95.0%
    Cash & Other 5.0%
    Sub-Industry Weighting % of Net Assets
    Regional Banks 76.1%
    Thrifts & Mortgage Finance 18.9%

    Portfolio Holdings

    Top 10 Holdings

    as of 12/31/22
    % of Net Assets
    Top 10 Holdings Ticker Current Vs. 3Q22 Vs. 4Q21 10-Year Holdings History (%) Time Held
    Associated Banc-Corp. ASB 4.98% +1.24% +1.92%
    		3 Years
    OceanFirst Financial Corp. OCFC 4.79% +1.58% +4.79%
    		< 1 Year
    Old National Bancorp ONB 4.74% -0.32% +4.74%
    		1 Year
    First Citizens BancShares, Inc. FCNCA 4.72% -0.70% +4.72%
    		1 Year
    Hancock Whitney Corp. HWC 4.64% -0.48% -0.01%
    		2 Years
    Texas Capital Bancshares, Inc. TCBI 4.62% -0.77% +0.07%
    		4 Years
    Independent Bank Corp. INDB 4.45% -0.34% -0.27%
    		14 Years
    Lakeland Bancorp, Inc. LBAI 4.05% -0.42% -0.91%
    		4 Years
    Western New England Bancorp, Inc. WNEB 3.99% +0.85% +2.67%
    		1 Year
    Hingham Institution for Savings HIFS 3.97% -0.47% -1.71%
    		24 Years
    Total as % of Net Assets 44.95%

    Please swipe to view table

    Total Holdings: 30

    as of 12/31/22
    Print All Holdings
    % of Net Assets
    Equity Holdings Ticker Current Vs. 3Q22 Vs. 4Q21 10-Year Holdings History (%) Time Held
    Associated Banc-Corp. ASB 4.98% +1.24% +1.92%
    		3 Years
    OceanFirst Financial Corp. OCFC 4.79% +1.58% +4.79%
    		< 1 Year
    Old National Bancorp ONB 4.74% -0.32% +4.74%
    		1 Year
    First Citizens BancShares, Inc. FCNCA 4.72% -0.70% +4.72%
    		1 Year
    Hancock Whitney Corp. HWC 4.64% -0.48% -0.01%
    		2 Years
    Texas Capital Bancshares, Inc. TCBI 4.62% -0.77% +0.07%
    		4 Years
    Independent Bank Corp. INDB 4.45% -0.34% -0.27%
    		14 Years
    Lakeland Bancorp, Inc. LBAI 4.05% -0.42% -0.91%
    		4 Years
    Western New England Bancorp, Inc. WNEB 3.99% +0.85% +2.67%
    		1 Year
    Hingham Institution for Savings HIFS 3.97% -0.47% -1.71%
    		24 Years
    Northeast Community Bancorp, Inc. NECB 3.65% +0.65% +2.67%
    		1 Year
    PacWest Bancorp PACW 3.52% +1.27% +0.53%
    		2 Years
    First Bancorp FBP 3.35% -1.49% -1.34%
    		7 Years
    Cambridge Bancorp CATC 3.26% +1.11% +3.26%
    		< 1 Year
    ConnectOne Bancorp, Inc. CNOB 3.25% -0.27% -1.49%
    		6 Years
    Wintrust Financial Corp. WTFC 3.24% +1.04% -0.08%
    		3 Years
    BankUnited, Inc. BKU 3.09% +3.09% +3.09%
    		< 1 Year
    HomeTrust Bancshares, Inc. HTBI 2.90% 0.00% -1.88%
    		3 Years
    Customers Bancorp, Inc. CUBI 2.85% +1.42% +2.85%
    		< 1 Year
    WSFS Financial Corp. WSFS 2.82% -1.85% -1.82%
    		2 Years
    Eastern Bankshares, Inc. EBC 2.73% -0.31% +0.13%
    		1 Year
    Banner Corp. BANR 2.73% -1.73% -2.43%
    		2 Years
    Flushing Financial Corp. FFIC 2.45% -0.71% -2.29%
    		1 Year
    New York Community Bancorp, Inc. NYCB 2.43% -0.19% -0.99%
    		2 Years
    Kearny Financial Corp. KRNY 2.04% -0.68% -1.42%
    		7 Years
    Cadence Bank CADE 1.73% -0.28% -0.71%
    		1 Year
    Midland States Bancorp, Inc. MSBI 1.40% +1.40% +1.40%
    		< 1 Year
    Shore Bancshares, Inc. SHBI 1.17% -0.01% -0.14%
    		2 Years
    Orange County Bancorp, Inc. OBT 0.89% +0.39% +0.89%
    		< 1 Year
    Silvergate Capital Corp. SI 0.58% +0.47% -2.03%
    		1 Year
    Total as % of Net Assets 95.0%
    Cash & Other Holdings % of Net Assets
    Cash & Other 5.0%
    Total as % of Net Assets 5.0%

    Please swipe to view table

    Country Allocation

    as of 12/31/22

    • United States

      91.7%

    • International

      3.4%

    • Cash & Other

      5.0%
    United States 91.7%
    Puerto Rico 3.4%
    Cash & Other 5.0%

  • Distributions

    The Hennessy Small Cap Financial Fund pays capital gains (if any) once annually, usually in December. Ordinary income distributions (if any) are paid annually, usually in December.

    Date Paid Income Short-Term Gain Long-Term Gain Total Per Share Reinvest Price
    12/28/2022 $0.18802 -- -- $0.18802 $25.47
    12/08/2022 -- -- $2.16533 $2.16533 $26.67
    12/29/2021 $0.21577 -- -- $0.21577 $31.74
    12/07/2021 -- -- $0.09117 $0.09117 $31.54
    12/29/2020 $0.20265 -- -- $0.20265 $21.93
    12/27/2019 $0.09444 -- -- $0.09444 $21.96
    12/06/2019 -- -- $0.65961 $0.65961 $21.51
    12/27/2018 $0.07119 -- -- $0.07119 $18.71
    12/07/2018 -- $0.00162 $1.31958 $1.32120 $20.10
    12/27/2017 $0.00291 -- -- $0.00291 $24.27
    12/07/2017 -- $0.16690 $1.80632 $1.97322 $24.48
    12/28/2016 $0.06500 -- -- $0.06500 $26.34
    12/07/2016 -- -- $3.19063 $3.19063 $25.42
    12/29/2015 $0.02529 -- -- $0.02529 $22.55
    12/09/2015 -- $0.15543 $1.44849 $1.60392 $22.38
    12/08/2014 -- -- $3.34234 $3.34234 $20.83
    12/31/2013 $0.05812 -- -- $0.05812 $25.48
    12/10/2013 -- $0.16499 $1.43869 $1.60368 $24.71
    12/31/2012 $0.12360 -- -- $0.12360 $19.91
    12/30/2011 $0.28967 -- -- $0.28967 $16.50
    12/31/2010 $0.05717 -- -- $0.05717 $19.90
    12/15/2010 -- $0.12946 -- $0.12946 $19.16
    12/31/2009 $0.06710 -- -- $0.06710 $17.10
    12/31/2008 $0.18543 -- -- $0.18543 $14.29
    12/31/2007 $0.28204 -- -- $0.28204 $15.86
    12/14/2007 -- -- $6.23575 $6.23575 $15.78
    12/29/2006 $0.14674 -- -- $0.14674 $28.94
    12/15/2006 -- $0.07876 $4.27513 $4.35389 $28.90
    07/31/2006 -- -- $0.01524 $0.01524 $31.47
    12/30/2005 $0.14416 -- -- $0.14416 $29.95
    12/16/2005 -- -- $3.68831 $3.68831 $30.47
    10/31/2005 -- -- $0.01175 $0.01175 $32.96
    12/31/2004 $0.18461 -- -- $0.18461 $34.28
    12/17/2004 -- $0.11033 $4.24179 $4.35212 $34.19
    12/30/2003 $0.07202 -- -- $0.07202 $33.83
    12/17/2003 -- $0.05453 $0.60031 $0.65484 $33.01
    10/31/2003 -- -- $0.00153 $0.00153 $32.56
    12/30/2002 $0.13093 -- -- $0.13093 $24.30
    12/18/2002 -- -- $0.63781 $0.63781 $24.33
    12/28/2001 $0.46875 -- -- $0.46875 $21.00
    12/20/2001 -- -- $0.34210 $0.34210 $21.13
    12/20/2000 $0.10219 -- -- $0.10219 $16.79
    12/21/1999 $0.01670 -- -- $0.01670 $13.14
    12/14/1998 $0.07080 $1.33330 $0.60060 $2.00470 $14.19
    12/12/1997 $0.03220 $0.15050 -- $0.18270 $17.88

    Please swipe to view table

    Past performance is not a guarantee of future results.

    Download historical distributions and NAVs
    Date Paid Income Short-Term Gain Long-Term Gain Total Per Share Reinvest Price
    12/28/2022 $0.30739 -- -- $0.30739 $14.71
    12/08/2022 -- -- $1.26700 $1.26700 $15.60
    12/29/2021 $0.33407 -- -- $0.33407 $18.51
    12/07/2021 -- -- $0.05374 $0.05374 $18.59
    12/29/2020 $0.27354 -- -- $0.27354 $12.88
    12/27/2019 $0.19225 -- -- $0.19225 $13.00
    12/06/2019 -- -- $0.39469 $0.39469 $12.87
    12/27/2018 $0.18031 -- -- $0.18031 $11.16
    12/07/2018 -- $0.00101 $0.82307 $0.82408 $12.14
    12/27/2017 $0.02033 -- -- $0.02033 $14.63
    12/07/2017 -- $0.10053 $1.08807 $1.18860 $14.77
    12/28/2016 $0.16682 -- -- $0.16682 $15.83
    12/07/2016 -- -- $1.95258 $1.95258 $15.39
    12/29/2015 $0.03989 -- -- $0.03989 $13.62
    12/09/2015 -- $0.09311 $0.86773 $0.96084 $13.54
    12/08/2014 -- -- $2.01129 $2.01129 $12.55
    12/31/2013 $0.13517 -- -- $0.13517 $15.30
    12/10/2013 -- $0.16499 $1.43869 $1.60368 $14.94
    12/31/2012 $0.17751 -- -- $0.17751 $12.48
    12/30/2011 $0.35426 -- -- $0.35426 $10.40
    12/31/2010 $0.12307 -- -- $0.12307 $12.73
    12/15/2010 -- $0.12946 -- $0.12946 $12.34
    12/31/2009 $0.13321 -- -- $0.13321 $11.03
    12/31/2008 $0.20868 -- -- $0.20868 $9.31

    Please swipe to view table

    Past performance is not a guarantee of future results.

    Download historical distributions and NAVs

  • Fund Documents

    Download PDF View Online
    Small Cap Financial Fund Documents
    Fact Sheet
    Portfolio Perspective View
    Summary Prospectus
    Full Prospectus
    Statement of Additional Information
    Small Cap Financial Fund Shareholder Reports and Quarterly Holdings
    Q1 Holdings
    Semi-Annual Report
    Q3 Holdings
    Annual Report

    Paper copies of the annual and semi-annual reports will no longer be sent by mail unless shareholders specifically request paper copies. You may elect to receive paper copies free of charge by calling U.S. Bank Global Fund Services at 1-800-261-6950 or, if you own shares through a financial intermediary, by contacting your financial intermediary.

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Hennessy Funds
7250 Redwood Boulevard, Suite 200
 Novato, CA 94945
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The Funds' investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company. Please read it carefully before investing. A hard copy of the prospectus can be requested by calling 1-800-966-4354.

Performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted and can be found here. Neither forward earnings nor earnings growth is a measure of a fund’s future performance.

Mutual fund investing involves risk. Principal loss is possible. Small and medium-sized companies may have more limited liquidity and greater price volatility than larger companies. Investments in foreign securities may involve political, economic, and currency risks, greater volatility, and differences in accounting methods. The Focus, Total Return, Balanced, Large Cap Financial, Small Cap Financial, and Midstream Funds are considered non-diversified funds. A non-diversified fund, which may concentrate its assets in fewer individual holdings than a diversified fund, is more exposed to individual stock volatility than a diversified fund. A fund that concentrates its investments within one country, one sector, or a small group of industries, such as Japan, Technology, Financials, or Energy, may be subject to a higher degree of market risk. Investments in debt securities typically decrease in value when interest rates rise. The risk is greater for longer-term debt securities. Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Mortgage- and asset-backed securities are subject to prepayment risk, which is the risk that the borrower will prepay some or all of the principal owed to the issuer. Funds that invest in pooled investment vehicles (including ETFs) may experience higher fees. The formula-based strategy employed by some Funds may cause those Funds to buy or sell securities at times when it may not be advantageous.

ETFs are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF’s shares may trade at a premium or discount to its net asset value, an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact a Fund’s ability to sell its shares. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns.

ESG investing risk is the risk stemming from the Environmental, Social, and Governance factors that the Fund applies in selecting securities. The Fund intends to invest in companies with measurable high ESG ratings relative to their sector peers, and screen out particular companies that do not meet its ESG criteria. This may affect the Fund’s exposure to certain companies or industries and cause the Fund to forego certain investment opportunities. The Fund’s returns may be lower than other funds that do not seek to invest in companies based on ESG ratings. The Fund seeks to pursue its investment objective by using proprietary models that incorporate quantitative analysis. There is no guarantee that the Portfolio Managers’ use of these models will result in effective investment decisions for the Fund. From time to time, the Fund may concentrate its investments in one or more industry sectors. The Fund is currently substantially invested in the Consumer Discretionary and Health Care sectors and its performance is therefore tied closely to, and affected by, developments in these industries.

Master Limited Partnerships (MLPs) and MLP investments have unique characteristics. A Fund does not receive the same tax benefits as a direct investment in an MLP.

The prices of MLP units may fluctuate abruptly and trading volume may be low, making it difficult for a Fund to sell its units at a favorable price. MLP general partners have the power to take actions that adversely affect the interests of unit holders. Most MLPs do not pay U.S. federal income tax at the partnership level, but an adverse change in tax laws could result in MLPs being treated as corporations for federal income tax purposes, which could reduce or eliminate distributions paid by MLPs to the Fund. If the Energy Transition Fund’s MLP investments exceed 25% of its assets, it may not qualify for treatment as a regulated investment company (“RIC”) under the Internal Revenue Code (“Code”), and the Fund would be taxed as an ordinary corporation, which could substantially reduce its net assets and its distributions to shareholders. The Midstream Fund is treated as a regular corporation, or “C” corporation, for U.S. federal income tax purposes, and therefore, is subject to U.S. federal income tax on its taxable income at the graduated rates applicable to corporations (currently a maximum rate of 21%) as well as state and local income taxes. The Midstream Fund will not benefit from current favorable federal income tax rates on long-term capital gains, and Fund income and losses will not be passed on to shareholders. The Midstream Fund accrues deferred income taxes for future tax liabilities associated with the portion of MLP distributions considered to be a tax-deferred return of capital and for any net operating gains as well as capital appreciation of its investments. This deferred tax liability is reflected in the daily NAV, and as a result, the Fund’s after-tax performance could differ significantly from the underlying assets even if the pre-tax performance is closely tracked.

Glossary of Terms contains definitions and additional information.

To view the top 10 holdings of a Fund, please click the Fund name: Cornerstone Growth, Focus, Cornerstone Mid Cap 30, Cornerstone Large Growth, Cornerstone Value, Total Return, Equity and Income, Balanced, Energy Transition, Midstream, Gas Utility, Japan, Japan Small Cap, Large Cap Financial, Small Cap Financial, Technology. Fund holdings are subject to change and not recommendations to buy or sell any security.

Opinions expressed are subject to change at any time, are not guaranteed, and should not be considered investment advice.

News and Media Page:

To view the Morningstar ratings for the Japan Fund, please click here. (Media - TD Ameritrade)

To view the Morningstar ratings for the Focus Fund, please click here. (Media - CNBC-B. Macualey).

1 USD = 105.36 Yen as of 07/27/2020 (Media - Ticker - M. Takeda)

Tom White is a TD Ameritrade Network contributor and is not affiliated with the Hennessy Funds. Content is not investment advice, or a recommendation of any security, strategy, or account type. Options involve risks and are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses.(Media - TD Ameritrade-Rothberg)

To view the Morningstar ratings, please click here.

The Hennessy Funds are offered only to United States residents, and information on this web site is intended only for such persons. Nothing on this web site should be considered a solicitation to buy or an offer to sell shares of any Hennessy Fund in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction.

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