THE HENNESSY FUNDS, INC., THE HENNESSY MUTUAL FUNDS, INC.,
THE HENNESSY FUNDS TRUST and HENNESSY ADVISORS, INC.
CODE OF ETHICS
Amended effective as of JULY 1, 2005
I. INTRODUCTION
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The Hennessy Funds, Inc., The Hennessy Mutual Funds, Inc., The Hennessy
Funds Trust ("The Funds"), and Hennessy Advisors, Inc. ("Adviser") expect
all of their directors, officers and employees to maintain high ethical
standards of conduct and to comply with applicable laws and governmental
regulations.
II. DEFINITIONS
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A. "Access person" means any director, officer or advisory person of the
Fund or of the Adviser.
B. "Act" means the Investment Company Act of 1940, as amended.
C. "Adviser" means Hennessy Advisors, Inc.
D. "Advisory person" means: (i) any employee of the Fund or the Adviser
or of any company in a control relationship to the Fund or Adviser,
who, in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale
of Covered Securities by the Fund, or whose functions relate to the
making of any recommendations with respect to such purchases or sales;
and (ii) any natural person in a control relationship to the Fund or
Adviser who obtains information concerning recommendations made to the
Fund with regard to the purchase or sale of Covered Securities by the
Fund.
E. A Covered Security is "being considered for purchase or sale" when a
recommendation to purchase or sell the Covered Security has been made
and communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
F. "Beneficial ownership" shall be interpreted in the same manner as it
would be under Rule 16a-1(a)(2) under the Securities Exchange Act of
1934 in determining whether a person is the beneficial owner of a
security for purposes as such Act and the rules and regulations
promulgated thereunder.
G. "CCO" means Chief Compliance Officer per rule 38a-1 of the Investment
Company Act and rule 206(4)-7 of the Investment Advisers Act both of
1940.
H. "Conflict of Interest": for the purposes of this Code of Ethics, a
"conflict of interest" will be deemed to be present when an
individual's private interest interferes in anyway, or even appears to
interfere, with the interests of The Funds as a whole.
I. "Control" has the same meaning as that set forth in Section 2(a)(9) of
the Act.
J. "Covered Security" means a security as defined in Section 2(a)(36) of
the Act, except that it does not include:
(a) Direct obligations of the Government of the United States;
(b) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and
(c) Shares issued by open-end registered investment companies.
K. "Disinterested director" means a director of the Fund who is not an
"interested person" of the Fund within the meaning of Section 2(a)(19)
of the Act and the rules and regulations promulgated thereunder.
L. "The Funds" or "Fund" means The Hennessy Funds, Inc. or any series of
The Hennessy Funds, Inc. and/or Hennessy Mutual Funds, Inc. or any
series of Hennessy Mutual Funds, Inc. and/or The Hennessy Funds Trust
or any series of the Hennessy Funds Trust.
M. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
N. "Investment personnel" means: (i) any employee of the Fund or the
Adviser or of any company in a control relationship to the Fund or
Adviser who, in connection with his or her regular functions or
duties, makes or participates in making recommendations regarding the
purchase or sale of securities by the Fund; and (ii) any natural
person who controls the Fund or Adviser and who obtains information
concerning recommendations made to the Fund regarding the purchase or
sale of securities by the Fund.
O. A "Limited Offering" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to Section 4(2)
or Section 4(6) thereof or pursuant to Rule 504, Rule 505 or Rule 506
thereunder.
P. "Purchase or sale of a Covered Security" includes, among other things,
the writing of an option to purchase or sell a Covered Security.
Q. "Reportable Security" means shares of the Funds and Covered
Securities.
III. GENERAL STANDARDS
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The Funds and the Adviser hold their directors, officers, and employees
accountable for adhering to and advocating the following standards to the best
of their knowledge and ability:
A. Always act in an honest and ethical manner, including in connection
with, and the handling and avoidance of, actual or apparent conflicts
of interest between personal and professional relationships;
B. Fully comply with all applicable laws, rules and regulations of
federal, state and local governments (both United States and foreign)
and other applicable regulatory agencies (collectively, the "Laws");
C. Proactively promote full, fair, accurate, timely and understandable
disclosure in reports and documents that The Funds and Adviser file
with, or submit to, the Securities and Exchange Commission (the "SEC")
and in other public communications The Funds or Adviser make; and
D. Proactively promote ethical and honest behavior with The Funds and the
Adviser, including, without limitation, the prompt reporting of
violations of, and being accountable for adherence to, this Code of
Ethics.
IV. SPECIFIC DUTIES AND RESPONSIBILITIES
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In adhering to and advocating the standards set forth above; each director,
officer and employee shall fulfill the following duties and responsibilities to
the best of their knowledge and ability:
A. They shall handle all conflicts of interest between personal and
professional relationships in an ethical and honest manner, and shall
disclose in advance to the Chief Compliance Officer ("CCO") the
relevant details of any transaction or relationship that reasonably
could be expected to give rise to an actual or apparent conflict of
interest between themselves and The Funds. The CCO shall, as
appropriate, discuss such disclosures with The Funds' and/or the
Adviser's board of directors which board shall thereafter take such
action with respect to the conflict of interest as it shall deem
appropriate. It is the general policy of The Funds and the Adviser
that conflicts of interest should be avoided whenever practicable.
B. They shall use their best efforts to ensure the timely and
understandable disclosure of information that, in all material
respects, is accurate, complete, objective and relevant in all reports
and documents The Funds and/or the Adviser file with, or submits to,
the SEC or in any other public communications that The Funds or the
Adviser make.
C. They shall use their best efforts to ensure their, The Funds', and the
Adviser's compliance in all material respects with all applicable
laws.
D. They shall respect the confidentiality of information acquired in the
course of their work and shall not disclose such information, except
when they believe they are authorized or legally obliged to disclose
the information. They may not use confidential information acquired in
the course of their work for their personal advantage.
E. They shall not take or direct or allow any other person to take or
direct any action to fraudulently influence, coerce, manipulate or
mislead The Funds' or the Adviser's independent auditing firm.
F. They may not engage The Funds' or the Adviser's auditing firms to
perform audit or non-audit services without the prior approval of The
Funds' and/or the Adviser's board of directors, or The Funds' or
Adviser's audit committee or designee's.
G. The independent directors of Hennessy Advisors, Inc. shall not have
access to, and shall not seek from any employee of the Adviser, any of
the portfolio rebalancing information related to any of the mutual
funds managed by Hennessy Advisors, Inc. until such time as the
rebalancing of such funds has been entirely concluded except that
certain limited access to such information may be granted with
permission, in advance, from the Chief Compliance Officer.
V. REPORTING VIOLATIONS
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A. If any person believes that a director, officer or employee has
violated this Code of Ethics; or if The Funds or the Adviser has or is
about to violate a Law; or if a director, officer or employee believe
that he or she is being asked to violate this Code of Ethics or any
Law in the performance of his or her duties for The Funds or the
Adviser: then the matter should be promptly reported to The Funds' and
the Adviser's CCO and/or to the Audit Committee of the Adviser's board
of directors. The CCO and/or the Audit Committee will take
appropriate steps to maintain the confidentiality of the reporting
person's identity, to the extend consistent with The Funds' and the
Adviser's obligations to investigate and remedy the matter and, if
appropriate, to report the matter to government officials. Persons
may report violations of the Code of Ethics on an anonymous basis. No
retribution will be taken against a person for reporting, in good
faith, a violation or suspected violation of this Code of Ethics.
VI. APPROVAL OF THE CODE OF ETHICS
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A. The Board of Directors of The Funds, including a majority of the
Disinterested directors, and the Board of Directors of the Adviser
shall approve this Code of Ethics and any material changes thereto.
Prior to approving this Code of Ethics and any material changes
thereto, they must determine that this Code of Ethics contains
provisions reasonably necessary to prevent access persons from
violating Rule 17j-1(b) of the Act.
B. No less frequently than annually, the CCO of The Funds and the CCO of
the Adviser shall furnish a report to the Boards of Directors of the
Funds and the Adviser:
1. Describing issues arising under the Code of Ethics since the last
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report to the Board of Directors, including, but not limited to,
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information about material violations of the Code of Ethics and
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sanctions imposed in response to such material violations. Such
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report shall also include a list of access persons under the Code
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of Ethics.
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2. Certifying that The Funds and Adviser have adopted such
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procedures as are reasonably necessary to prevent access persons
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from violating the Code of Ethics.
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C. This Code of Ethics, the approvals required by Sections VI.A. and
VI.B.(2), and the reports required by Section VI.B. shall be
maintained by the Fund's Administrator and by The Funds' and Adviser's
CCO. The reports required by Section V shall be maintained by The
Funds' CCO.
D. This Code of Ethics may not be waived or amended except by the
approval of both the board of directors of The Funds and the Audit
Committee of the board of directors of the Adviser.
VII. INTERPRETATION AND ENFORCEMENT
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A. This is a combined Code of Ethics for both The Funds and the Adviser.
The Audit Committee of the Adviser's board of directors is responsible
for overseeing the interpretation and enforcement of this Code of
Ethics in all matters related to Hennessy Advisor's Inc. The board of
directors of The Funds is responsible for overseeing the
interpretation and enforcement of this Code of Ethics in all matters
related to The Hennessy Mutual Funds, Inc., The Hennessy Funds, Inc.,
and The Hennessy Funds Trust. In all matters related to The Funds,
the Funds' board of directors shall over-ride the Audit Committee of
and the board of directors of Hennessy Advisors, Inc. When either
party considers any matter related to this Code of Ethics, it shall
act in executive session.
B. Each director, officer and employee will be held accountable for his
or her adherence to this Code of Ethics by their respective boards of
directors. Directors, officers and employees failing to adhere to
this Code of Ethics will be subject to appropriate disciplinary
action, ranging from warnings to possible termination or removal.
VIII. EXEMPTED TRANSACTIONS
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The prohibitions of Section IX of this Code of Ethics shall not apply to:
(a) Purchases or sales effected in any account over which the access
person has no direct or indirect influence or control.
(b) Purchases or sales of Covered Securities which are not eligible
for purchase or sale by any Fund; provided, however, that the
prohibitions of Section IV.B of this Code of Ethics shall apply
to such purchases and sales.
(c) Purchases or sales which are non-volitional on the part of either
the access person or the Fund.
(d) Purchases which are part of an automatic dividend reinvestment
plan.
(e) Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to
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the extent such rights were acquired from such issuer, and sales
of such rights so acquired.
(f) Purchases or sales of common stock of issuers in the Dow Jones
Industrial Average provided that the number of shares purchased
or sold of any one such issuer on any day does not exceed 5,000
shares and purchases or sales of common stock of issuers of
publicly traded stocks not in the Dow Jones Industrial Average
provided that the number of shares purchased or sold of any one
such issuer on any day does not exceed 500 shares.
(g) Purchases or sales which receive the prior approval of the Board
of Directors of the Fund because they are only remotely
potentially harmful to the Fund because they would be very
unlikely to affect a highly institutional market, or because they
clearly are not related economically to the securities to be
purchased, sold or held by the Fund.
IX. PROHIBITED PURCHASES AND SALES
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A. Except in a transaction exempted by Section VII of this Code, no
access person shall purchase or sell, directly or indirectly, any
Covered Security in which he has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and which to his
actual knowledge at the time of such purchase or sale is being
considered for purchase or sale by the Fund or is being purchased or
sold by the Fund.
B. Except in a transaction exempted by Section VII of this Code of
Ethics, Investment Personnel (other than the Fund's CCO) must obtain
approval from the Fund's CCO before directly or indirectly acquiring
beneficial ownership in any securities in an Initial Public Offering
or in a Limited Offering. The Fund's CCO must obtain approval from a
majority of the Disinterested directors before directly or indirectly
acquiring beneficial ownership in any securities in an Initial Public
Offering or in a Limited Offering. Prior approval shall not be given
if the Fund's CCO or the Disinterested directors, as applicable,
believe(s) that the investment opportunity should be reserved for the
Fund or is being offered to the individual by reason of his or her
position with the Fund.
C. Except in a transaction exempted by Section VII of this Code of
Ethics, no access person shall purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership on a
day during which the Fund has a pending "buy" or "sell" order in the
same security until that order is executed or withdrawn.
Notwithstanding the foregoing, Disinterested directors are not subject
to this prohibition unless he or she knows or should have known at the
time of such purchase or sale that the Fund has such a pending "buy"
or "sell" order in the same security.
D. Investment Personnel shall not receive any gift or other thing of more
than de minimis value from any person or entity that does business
with or on behalf of the Fund. The annual receipt of gifts from the
same source valued at $100 or less shall be considered de minimis.
Additionally, the receipt of an occasional dinner, a ticket to a
sporting event or the theater, or comparable entertainment also shall
be considered to be of de minimis value.
E. Except for service which began prior to March 2, 1996, Investment
Personnel shall not serve on the board of directors of publicly traded
companies absent prior authorization of the Board of Directors of the
Fund. The Board of Directors of the Fund may so authorize such board
service only if it determines that such board service is consistent
with the interests of the Fund and its shareholders.
X. REPORTING AND COMPLIANCE PROCEDURES
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A. Except as provided in Section X.B. of this Code of Ethics, every
access person shall report to the Fund the information described in
Section X.C., Section V.D. and Section V.E. of this Code of Ethics.
All reports shall be filed with the Fund's President or designee.
B. Disinterested directors of the Fund and the Adviser need not make a
report pursuant to Section X.C. and X.E. of this Code of Ethics and
need only report a transaction in a Reportable Security pursuant to
Section X.D. of this Code of Ethics if such Disinterested director, at
the time of such transaction, knew or, in the ordinary course of
fulfilling his official duties as a director of the Fund, should have
known that, during the 15-day period immediately preceding the date of
the transaction by the director, such Reportable Security was
purchased or sold by the Fund or was being considered by the Fund or
the Adviser for purchase or sale by the Fund.
1. An access person need not make a report with respect to
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transactions effected for, and Reportable Securities held in, any
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account over which the person has no direct or indirect influence
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or control.
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2. An access person need not make a quarterly transaction report
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pursuant to Section X.D. of this Code of Ethics if the report
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would duplicate information contained in broker trade
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confirmations or account statements received by the Fund's
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President or designee with respect to the access person in the
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time period required by Section X.D., provided that all of the
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information required by Section X.D. is contained in the broker
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trade confirmations or account statements or in the records of
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the Fund. All Investment Personnel shall direct their brokers to
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supply to the Fund's President or designee, on a timely basis,
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duplicate copies of confirmations of all personal securities
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transactions and copies of all account statements for all
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securities accounts.
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C. Every access person shall, no later than ten (10) days after the
person becomes an access person, file an initial holdings report
containing the following information:
1. The title, number of shares and principal amount of each
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Reportable Security in which the access person had any direct or
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indirect beneficial ownership when the person becomes an access
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person;
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2. The name of any broker, dealer or bank with whom the access
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person maintained an account in which any securities were held
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for the direct or indirect benefit of the access person; and
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3. The date that the report is submitted by the access person.
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D. Every access person shall, no later than ten (10) days after the end
of a calendar quarter, file a quarterly transaction report containing
the following information:
1. With respect to any transaction during the quarter in a
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Reportable Security in which the access person had any direct or
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indirect beneficial ownership:
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(a) The date of the transaction, the title and the number of shares,
and the principal amount of each security involved;
(b) The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
(c) The price of the Reportable Security at which the transaction was
effected;
(d) The name of the broker, dealer or bank with or through whom the
transaction was effected; and
(e) The date that the report is submitted by the access person.
2. With respect to any account established by the access person in
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which any securities were held during the quarter for the direct
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or indirect benefit of the access person:
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(a) The name of the broker, dealer or bank with whom the access
person established the account;
(b) The date the account was established; and
(c) The date that the report is submitted by the access person.
E. Every access person shall, no later than January 30 each year, file an
annual holdings report containing the following information as of the
preceding December 31:
1. The title, number of shares and principal amount of each
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Reportable Security in which the access person had any direct or
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indirect beneficial ownership;
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2. The name of any broker, dealer or bank with whom the access
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person maintains an account in which any securities are held for
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the direct or indirect benefit of the access person; and
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3. The date that the report is submitted by the access person.
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F. Any report filed pursuant to Section X.C., Section X.D. or Section
X.E. of this Code of Ethics may contain a statement that the report
shall not be construed as an admission by the person making such
report that he has any direct or indirect beneficial ownership in the
security to which the report relates.
G. The Funds' and the Adviser's CCO or designee shall review all reports
filed pursuant to Section X.C., Section X.D. or Section X.E. of this
Code of Ethics. The Funds' CCO and the Adviser's CCO or designee
shall identify all access persons who are required to file reports
pursuant to this Section X of this Code of Ethics and must inform such
access persons of their reporting obligation.
H. Each year the CCO shall provide all directors, officers, employees and
access persons with a copy of this Code of Ethics. Each year each of
them shall certify to The Funds and to the Adviser that (i) they have
read and understand this Code of Ethics and recognize that they are
subject thereto, and (ii) they have complied with the requirements of
this Code of Ethics and that they have disclosed or reported all
personal securities transactions required to be disclosed or reported
pursuant to the requirements of this Code of Ethics.
I. Compliance with this Code of Ethics does not relieve access persons of
their obligations under any other code of ethics.