<PAGE> PAGE 1
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<PAGE> PAGE 5
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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SIGNATURE NEIL HENNESSY
TITLE PRESIDENT
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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</TABLE>
Independent Auditors' Report on Internal Accounting Control
The Shareholders and Board of Trustees
of The Hennessy Funds, Inc.:
In planning and performing our audits of the financial statements of The
Hennessy Funds, Inc. (the "Funds"), comprising respectively the Hennessy
Balanced Fund and Hennessy Leveraged Dogs Fund for the period ended June 30,
1999, we considered their internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on internal control.
The management of the Funds is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes that
are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in internal control, error or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and operation may
deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weakness under standards established
by the American Institute of Certified Public Accountants. A material weakness
is a condition in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level the risk that
misstatements caused by error or fraud in amounts that would be material in
relation to the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving internal control and
its operation, including controls for safeguarding securities, that we consider
to be material weaknesses as defined above as of June 30, 1999.
This report is intended solely for the information and use of management, the
Board of Trustees and the Securities and Exchange Commission and is not intended
to be and should not be used by anyone other than these specified parties.
KPMG LLP
Chicago, Illinois
July 20, 1999
