HENNESSY BALANCED FUND
Supplement to the Prospectus
dated September 9, 1996
HYPOTHETICAL PAST PERFORMANCE
By utilizing our investment strategy, we seek to achieve returns
that in the long run will be substantially similar to that of the DJIA but
with less volatility. The chart below illustrates the total return for
each of the last twenty years of the DJIA and for a hypothetical portfolio
consisting 50% of one-year Treasury bills and 50% of the ten highest
yielding common stocks in the DJIA as of the beginning of each year (the
"Model Portfolio"). The Model Portfolio was developed in a manner very
similar to our investment strategy, but does not reflect the effects of
cash flows in and out of the portfolio, the deduction of commissions and
other expenses, and the reinvestment of dividends. The performance of the
Model Portfolio would have been lower if the fees and expenses borne by
the Fund had been deducted.
Comparison of Total Return(1)
DJIA Total Model Portfolio
Year Return Total Return
1977 -12.71% 2.75%
1978 2.69% 3.21%
1979 10.52% 11.03%
1980 21.41% 19.52%
1981 -3.40% 9.39%
1982 25.79% 19.43%
1983 25.68% 23.66%
1984 1.06% 8.82%
1985 32.78% 19.34%
1986 26.91% 19.84%
1987 6.02% 6.01%
1988 15.95% 14.99%
1989 31.71% 17.75%
1990 -0.57% 0.10%
1991 23.93% 23.05%
1992 7.43% 5.99%
1993 16.72% 15.44%
1994 4.95% 3.85%
1995 36.40% 20.45%
1996 28.90% 16.53%
Average: 15.11% 13.05%
_____________________________
(1) Total return represents the sum of the following components: (a) the
percentage change in value of each common stock from the first
trading day on the New York Stock Exchange in a given year to the
last trading day in that year; (b) the total dividends received in
that year on each common stock divided by the market value of the
common stock as of the first trading day in that year (without any
dividend reinvestment); and (c) the yield on one-year U.S. Treasury
bills as of the close of the first trading day in that year. Total
return does not take into consideration any commissions, expenses or
taxes, and does not include reinvestment of dividends.
The returns shown above are not guarantees of future performance
and should not be used as a predictor of returns to be expected in
connection with an investment in the Fund. As indicated above, the Model
Portfolio has both outperformed and underperformed the DJIA in the last
twenty years. There is no assurance that the investment returns of the
Fund will exceed that of the DJIA.
The performance information shown above was compiled by the
Adviser from statistical services, reports, or other sources believed by
the Adviser to be reliable. Such information has not been verified by any
third party and is unaudited.
While the foregoing information is relevant to an investor's
decision to invest in the Fund, investors should be aware that the Fund's
performance will not be identical to that of the Model Portfolio for a
number of reasons including the fact that we (a) will reinvest dividends;
(b) have expenses; (c) purchase and sell investments continuously; and (d)
may not be able to be fully invested or invest in the exact proportions of
the Model Portfolio at all times.
The date of this Supplement is February 3, 1997.
[For EDGAR users -- The information contained in this Supplement was
initially filed in the Fund's registration statement on Form N-1A and
reviewed by the Securities and Exchange Commission.]
