THE HENNESSY FUNDS, INC.,
HENNESSY MUTUAL FUNDS, INC.,
THE HENNESSY MANAGEMENT CO., L.P.,
THE HENNESSY MANAGEMENT CO. 2. L.P.
and EDWARD J. HENNESSY, INCORPORATED
Code of Ethics
Amended effective as of June 30, 2000
I. DEFINITIONS
A. "Access person" means any director, officer or advisory person of the
Fund or the general partner of the Adviser.
B. "Act" means the Investment Company Act of 1940, as amended.
C. "Adviser" means The Hennessy Management Co., L.P., The Hennessy
Management Co. 2. L.P. and/or Edward J. Hennessy, Incorporated.
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. "Control" has the same meaning as that set forth in Section 2(a)(9) of
the Act.
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H. "Covered Security" means a security as defined in Section 2(a)(36) of
the Act, except that it does not include:
(i) Direct obligations of the Government of the United States;
(ii) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and
(iii) Shares issued by open-end registered investment companies.
I. "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.
J. "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.
K. "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.
L. "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.
M. 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.
N. "Purchase or sale of a Covered Security" includes, among other things,
the writing of an option to purchase or sell a Covered Security.
II. APPROVAL OF CODE OF ETHICS
A. The Board of Directors of the Fund, including a majority of the
Disinterested directors, shall approve this Code of Ethics and any
material changes thereto. Prior to approving this Code of Ethics and
any material changes thereto, the Board of Directors must determine
that this Code of Ethics contains provisions reasonably necessary to
prevent access persons from violating Rule 17j-1(b) of
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the Act and shall receive a certification from the Adviser that it has
adopted such procedures as are reasonably necessary to prevent access
persons of the Adviser from violating this Code of Ethics.
B. No less frequently than annually, the officers of the Fund and the
officers of the Adviser shall furnish a report to the Board of
Directors of the Fund:
1. Describing issues arising under the Code of Ethics since the last
report to the Board of Directors, including, but not limited to,
information about material violations of the Code of Ethics and
sanctions imposed in response to such material violations. Such
report shall also include a list of access persons under the Code
of Ethics.
2. Certifying that the Fund and Adviser have adopted such procedures
as are reasonably necessary to prevent access persons from
violating the Code of Ethics.
C. This Code of Ethics, the certifications required by Sections II.A. and
II.B.(2), and the reports required by Section II.B. shall be
maintained by the Fund's Administrator. The reports required by
Section V shall be maintained by the Fund's President or designee.
III. EXEMPTED TRANSACTIONS
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The prohibitions of Section IV 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
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
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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.
IV. PROHIBITED PURCHASES AND SALES
A. Except in a transaction exempted by Section III 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 III of this Code of
Ethics, Investment Personnel (other than the Fund's President) must
obtain approval from the Fund's President before directly or
indirectly acquiring beneficial ownership in any securities in an
Initial Public Offering or in a Limited Offering. The Fund's President
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 President 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 III 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. InvestmentPersonnel 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.
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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.
V. REPORTING AND COMPLIANCE PROCEDURES
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A. Except as provided in Section V.B. of this Code of Ethics, every
access person shall report to the Fund the information described in
Section V.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. 1. A Disinterested director of the Fund need not make a report
pursuant to Section V.C. and V.E. of this Code of Ethics and need
only report a transaction in a Covered Security pursuant to
Section V.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 Covered 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.
2. An access person need not make a report with respect to
transactions effected for, and Covered Securities held in, any
account over which the person has no direct or indirect influence
or control.
3. An access person need not make a quarterly transaction report
pursuant to Section V.D. of this Code of Ethics if the report
would duplicate information contained in broker trade
confirmations or account statements received by the Fund's
President or designee with respect to the access person in the
time period required by Section V.D., provided that all of the
information required by Section V.D. is contained in the broker
trade confirmations or account statements or in the records of
the Fund. All Investment Personnel shall direct their brokers to
supply to the Fund's President or designee, on a timely basis,
duplicate copies of confirmations of all personal securities
transactions and copies of all account statements for all
securities accounts.
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:
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1. The title, number of shares and principal amount of each Covered
Security in which the access person had any direct or indirect
beneficial ownership when the person becomes an access person;
2. The name of any broker, dealer or bank with whom the access
person maintained an account in which any securities were held
for the direct or indirect benefit of the access person; and
3. The date that the report is submitted by the access person.
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 Covered
Security in which the access person had any direct or indirect
beneficial ownership:
(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 Covered 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
which any securities were held during the quarter for the direct
or indirect benefit of the access person:
(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:
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1. The title, number of shares and principal amount of each Covered
Security in which the access person had any direct or indirect
beneficial ownership;
2. The name of any broker, dealer or bank with whom the access
person maintains an account in which any securities are held for
the direct or indirect benefit of the access person; and
3. The date that the report is submitted by the access person.
F. Any report filed pursuant to Section V.C., Section V.D. or Section
V.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 Fund's President or designee shall review all reports filed
pursuant to Section V.C., Section V.D. or Section V.E. of this Code of
Ethics. The Fund's President or designee shall identify all access
persons who are required to file reports pursuant to this Section V of
this Code of Ethics and must inform such access persons of their
reporting obligation.
H. Each year access persons shall certify to the Fund 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.
VI. SANCTIONS
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Upon discovering a violation of this Code of Ethics, the Board of Directors of
the Fund or the Adviser, as applicable, may impose such sanctions as it deems
appropriate, including inter alia, issuing a letter of censure, or suspension or
termination of employment.
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