FAHNESTOCK FUNDS, 485BPOS, 1996-04-26

FAHNESTOCK FUNDS
485BPOS, 1996-04-26

Previous: AMERICAN NATIONAL VARIABLE LIFE SEPARATE ACCOUNT, 497, 1996-04-26

Next: MFS INSTITUTIONAL TRUST, 485APOS, 1996-04-26

As filed with the Securities and Exchange Commission on
April 26, 1996 (to be effective on May 1, 1996)

Securities Act File No. 33-36697
Investment Company Act File No. 811-6166

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 6 x

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]

Amendment No. 8 x

(Check appropriate box or boxes)

THE FAHNESTOCK FUNDS
................................................
(Exact Name of Registrant as Specified in Charter)

110 Wall Street
New York, New York 10005
- --------------------------------------- -----------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (212)668-8000

Albert G. Lowenthal
Fahnestock & Co. Inc.
110 Wall Street
New York, New York 10005
---------------------------------------
(Name and Address of Agent for Service)

Copies to:

Faith Colish, A Professional Corporation
63 Wall Street
New York, New York 10005

Page 1 of ___ Pages
Exhibit Index at Page ___

It is proposed that this filing will become effective
(check appropriate box):

[ ] Immediately upon filing pursuant to paragraph (b), or

X on May 1, 1996 pursuant to paragraph (b), or

[ ] 60 days after filing pursuant to paragraph (a), or

[ ] on (date) pursuant to paragraph (a) of Rule 485

DECLARATION PURSUANT TO RULE 24f-2

Registrant has registered an indefinite number of shares of each series of its
shares of beneficial interest, $.01 par value per share, under the Securities
Act of 1933 pursuant to Section (a)(1) of Rule 24f-2 under the Investment
Company Act of 1940. The Rule 24f-2 Notice for Registrant's fiscal period ending
December 31, 1995 was filed on February 22, 1996.

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
- --------------------------------------------------------------------------------

Proposed Proposed
Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being Being Price Per Offering Registration
Registered Registered Unit* Price** Fee
- ---------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C>
Shares of
Beneficial
Interest,
$.01 par value 566,502.585 $12.51 $7,086,947.34 $100

- --------------------------------------------------------------------------------

</TABLE>

* Estimated solely for the purposes of determining the amount of the
registration fee based on the net asset value per share of such Common Stock on
April 8, 1996.

** Calculated pursuant to Rule 24e-2(a) under the Investment Company Act of
1940. During the fiscal year ended December 31, 1995, 654,266.400 shares were
redeemed. Of this total, $1,413,413.74 (representing the aggregate redemption
price of 110,945.270 of such redeemed shares, was used for reduction
made by the issuer with respect to Rule 24f-2 for such fiscal year and
$543,321.130 is being used for "reduction" in this amendment. None of such
shares were previously so used in filings pursuant to Rule 24e-2(a) with
respect to the current fiscal year ending December 31, 1996.

-i-

FORM N-1A

CROSS REFERENCE SHEET

HUDSON CAPITAL APPRECIATION FUND

<TABLE>
<CAPTION>
PART A
ITEM NO. PROSPECTUS HEADING
- -------- ------------------
<S> <C> <C>
1. Cover Page......................................... Cover Page

2. Synopsis........................................... Expense Information

3. Condensed Financial
Information....................................... Expense Information and
Financial Highlights

4. General Description of
Registrant........................................ Cover Page; Organization of
the Fund; Investment
Objectives and Policies; and
Additional Information

5. Management of the Fund............................. Management of the Fund; and
Investment Objectives and
Policies
6. Capital Stock and Other
Securities........................................ Distributions to Shareholders
and Taxation; and Additional
Information
7. Purchase of Securities
Being Offered.................................. Cover Page; Management of the
Fund; Net Asset Value; How to
Buy Shares; and Dividends,
Distributions and Taxes

8. Redemption or Repurchase........................... How to Redeem Shares

9. Pending Legal Proceedings.......................... Not applicable

10. Cover Page......................................... Cover Page

11. Table of Contents.................................. Contents

12. General Information and
History........................................... Organization of the Fund;
Management of the Fund

</TABLE>

-ii-

<TABLE>
<CAPTION>
PART B. HEADING IN STATEMENT OF
ITEM NO. ADDITIONAL INFORMATION
- -------- -----------------------
<S> <C> <C>

13. Investment Objectives and
Policies.................... ..................... Investment Objectives and
Policies

14. Management of the Fund....... ..................... Management

15. Control Persons and Principal
Holders of Securities....... ..................... See in the Prospectus
"Additional Information"

16. Investment Advisory and
Other Services.............. ..................... Management; Purchases and
Redemptions; See in the
Prospectus "Management of
the Fund"

17. Brokerage Allocation and
Other Practices............. ..................... Investment Objectives and
Policies

18. Capital Stock and Other
Securities.................. ..................... See in the Prospectus
"Management of the Fund"

19. Purchase, Redemption and
Pricing of Securities
Being Offered............... ..................... Purchases and Redemptions

20. Tax Status................... ..................... Taxes

21. Underwriters................. ..................... Purchases and Redemptions;
See in the Prospectus "Purchase
of Shares"

22. Calculations of Yield
Quotations of Money
Market Funds................ ..................... Not applicable

23. Financial Statements......... ..................... Financial Statements

</TABLE>

PART C
- ------

Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.

-iii-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
HUDSON CAPITAL
APPRECIATION FUND 110 Wall Street
(A Series of The Fahnestock Funds) New York, New York 10005
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PROSPECTUS

MAY 1, 1996

Hudson Capital Appreciation Fund (the 'Fund') is the first (and, to date, the
only) series of The Fahnestock Funds, a Massachusetts business trust (the
'Trust'). The Trust is an open-end diversified management investment company
commonly known as a mutual fund. The Fund seeks long term growth through capital
appreciation by investing primarily in equity securities. Current income is a
secondary consideration. Shares of the Fund are sold with an initial maximum
sales charge of 4.50%. (See 'How to Buy Shares'.)

This Prospectus sets forth information about the Fund that an investor ought to
know before investing. It should be read and retained for future reference.

A Statement of Additional Information dated May 1, 1996 has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus. A copy can be obtained free of charge upon request by writing or
telephoning: Fahnestock & Co. Inc., 110 Wall Street, New York, NY 10005,
1-800-221-5588.

- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<S> <C>
Financial Highlights............................................................................................. 3
Expense Information.............................................................................................. 4
Organization of the Fund......................................................................................... 6
Investment Objective, Policies and Risk Considerations........................................................... 6
Management of the Fund........................................................................................... 9
Distributions to Shareholders and Taxation....................................................................... 13
Computation of Net Asset Value................................................................................... 14
How to Buy Shares................................................................................................ 15
How to Redeem Shares............................................................................................. 17
Additional Services and Programs................................................................................. 18
Performance Information.......................................................................................... 18
Other Matters.................................................................................................... 19
</TABLE>

MISSOURI RISK DISCLOSURE. Prospective Missouri investors should note that the
Fund may invest in the securities of companies showing unusual earnings growth
and undergoing structural changes. In addition, the Fund anticipates that in the
future portfolio turnover will normally not exceed 175%. See the table on page 3
for information regarding prior turnover rates. It is the opinion of the
Missouri Securities Commissioner that such activities may result in higher risks
and costs to the Fund. See 'Investment Objective, Policies and Risk
Considerations.'

- --------------------------------------------------------------------------------

-2-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED)

The following table has been audited by the Fund's independent auditors, whose
reports thereon appear in the Fund's annual reports to shareholders which are
incorporated by reference in the Statement of Additional Information. This
information should be read in conjunction with the financial statements and
related notes which also appear in the Fund's annual reports which were audited
by Ernst & Young LLP for the period from March 5, 1991 to December 31, 1991 and
for the year ended December 31, 1992 and Coopers & Lybrand L.L.P. for the years
ended December 31, 1993, 1994 and 1995.

<TABLE>
<CAPTION>
MARCH 5, 1991
(COMMENCEMENT
OF OPERATIONS)
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period....... $ 10.95 $ 13.72 $ 11.93 $ 11.36 $ 10.00
Income from investment operations:
Net investment income/(loss) (net)......... (0.03) (0.06) (0.13) (0.05) 0.01
Net realized and unrealized gains (losses)
on investments........................... 2.09 (1.48) 2.25 1.02 1.74
------------ ------------ ------------ ------------ --------------
Total income/(loss) from investment
operations.......................... 2.05 (1.54) 2.12 0.97 1.75
Less dividends paid to shareholders:
Dividends paid from net realized gains on
investments.............................. (1.62) (1.23) (0.33) (0.40) (0.39)
------------ ------------ ------------ ------------ --------------
Net asset value, end of period............. $ 11.39 $ 10.95 $ 13.72 $ 11.93 $ 11.36
------------ ------------ ------------ ------------ --------------
------------ ------------ ------------ ------------ --------------
Total return.................................... 18.94% (11.22)% 17.77% 8.54% 17.50%
Ratios/Supplemented Data:
Net assets, end of period (000)............ $ 12,097 $ 15,874 $ 19,227 $ 16,993 $ 11,987
Ratio of expenses to average net assets.... 2.50%`D' 2.49%`D' 2.49%`D' 2.50%`D' 2.48%*`D'
Ratio of net investment income (loss) to
average net assets....................... (0.16)%`D' (0.46)%`D' (1.00)%`D' (0.48)%`D' 0.11%*`D'
Portfolio turnover rate.................... 197.71% 194.55% 154.18% 256.84% 250.85%
</TABLE>

- ------------

* Annualized

`D' The ratios of expenses and investment income/(loss) (net) to average net
assets are net of expenses voluntarily reimbursed by the Adviser,
Administrator and Distributor in the amount of .92%, .27%, .25%, 1.10% and
.56%, respectively.

- --------------------------------------------------------------------------------

-3-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

EXPENSE INFORMATION

The following information reflects the costs and expenses an investor may expect
to incur, either directly or indirectly, as a shareholder of the Fund, based
upon the maximum sales charge that may be incurred at the time of purchase and
the Fund's projected annual operating expenses.

SHAREHOLDER TRANSACTION EXPENSE

<TABLE>
<S> <C>
Maximum sales charge imposed on purchases (as a percentage of offering price) 4.50%*
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage of offering
price) 0%
Deferred Sales Charge (as a percentage of original purchase price or redemption
proceeds, as applicable) 0%
Redemption Fees (as a percentage of amount redeemed, if applicable) 0%
</TABLE>

------------------------------------------------------------

* The sales charge set forth in the above table is the maximum charge
imposed on purchases of shares; investors may pay actual charges less than
4.50%, as described under 'How to Buy Shares.'

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)

<TABLE>
<S> <C>
Management Fee 1.00%**
12b-1 Fees .50%***
Other Expenses (After fee waiver/expense reimbursement) 1.00%`D'
----
Total Fund Operating Expenses 2.50%
</TABLE>

------------------------------------------------------------

** The management fee is higher than that paid by most other investment
companies. The Investment Management Agreement, as amended effective
February 23, 1993, provides for a management fee at a reduced rate of 0.75%
per annum with respect to assets of the Fund in excess of $25,000,000. To
date the Fund's net assets have not exceeded $25,000,000.

*** The 12b-1 fee is payable with respect to assets of the Fund which have been
continuously included in its portfolio for four years or less as of the
Fund's most recent fiscal year-end, and is based on the average daily net
asset value of those assets during such period; no 12b-1 fee will be paid
with respect to assets of the Fund which have been continuously included in
its portfolio for more than four years as of the Fund's most recent fiscal
year-end, calculated on a first-in, first-out basis. (See 'How the Fund's
Shares Are Distributed.')

`D' 'Other Expenses' in the above table include fees for shareholder
services, custodial fees, legal and accounting fees, printing costs and
registration fees and give effect to expense reimbursements of .92% for
the Fund's fiscal year ended December 31, 1995.

The purpose of the above table is to assist investors in understanding the
various costs and expenses that an investor in the Fund will bear, directly or
indirectly. The management fees referred to above and

- --------------------------------------------------------------------------------

-4-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

nature of services provided are more fully explained in this prospectus under
the section 'Management of the Fund' and in the Statement of Additional
Information under the caption 'Investment Advisory and Other Services'.

Fahnestock & Co., Inc. the Fund's principal distributor, has concluded that the
combination of sales charges imposed on purchases ('front-end' sales charges)
and the asset-based charges pursuant to Rule 12b-1 are within the guidelines
established by the National Association of Securities Dealers, Inc. ('NASD').
However long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by NASD rules.

EXAMPLE

The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Fund. These amounts are based upon payment by
an investor of the initial 4.50% sales charge and payment by the Fund of
operating expenses at the levels set forth in the table above, and are also
based upon the following assumptions:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------

<S> <C> <C> <C> <C>
You would pay the following expenses for the period
of years indicated on a $1,000 investment, assuming
5% annual return.`D' $ 69 $ 119 $ 172 $316
------ ------- ------- --------
</TABLE>

------------------------------------------------------------

`D' This example should not be considered to be a representation of past or
future expenses; actual expenses may be greater or lesser than those shown;
moreover, the actual rate of annual return will vary and may be greater or
lesser than the assumed rate of 5%.

- --------------------------------------------------------------------------------

-5-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

ORGANIZATION OF THE FUND

The Fund is the initial (and, to date, only) series of shares of beneficial
interest (hereinafter referred to simply as 'shares') of The Fahnestock Funds
(the 'Trust') which is a diversified open-end management investment company
created as a Massachusetts business trust under the laws of the Commonwealth of
Massachusetts on August 29, 1990 by Fahnestock, the Fund's Administrator and
principal distributor.

INVESTMENT OBJECTIVE, POLICIES AND RISK CONSIDERATIONS

The Fund seeks long term growth through capital appreciation by investing
primarily in equity securities. Current income is a secondary consideration. The
Fund may not always achieve its objective, but it expects to follow the
investment strategy described in the following paragraphs.

The Fund will attempt to achieve its objective by investing primarily in common
stocks and securities convertible into common stock. When, in the judgment of
Hudson Capital Advisors, Inc. (the 'Adviser'), a defensive investment posture is
appropriate because of market conditions or there are temporarily no investment
opportunities in common stocks or securities convertible into common stocks
which are appropriate for the Fund, the Fund may invest in short term debt
securities as a temporary alternative to equity securities. Such investments may
be in United States Government Securities, certificates of deposit of major
banks, commercial paper rated in the top two ratings of a nationally-recognized
rating service or in a money market fund, including a money market fund which
the Adviser may manage in the future. Since the return on a money market fund
may be less than would be available through a direct investment in the
securities comprising its portfolio and will involve payment of a second
management fee in addition to the Fund's own management fee, such purchases will
be made only in accordance with guidelines established by the Board of Trustees
designed to ensure that purchases of shares of a money market fund will be
undertaken only when it is in the best interest of the Fund and complies with
limitations established by the Investment Company Act of 1940, as amended (the
'1940 Act'). In establishing these guidelines, the Trustees will consider
whether the Adviser should be paid a management fee by the Fund with respect to
the assets invested in such money market fund. Investing in such short-term debt
securities as a defensive or temporary investment approach does not constitute a
change in the Fund's investment objective and will be subject to any guidelines
which the Trustees may establish.

In choosing investments for the portfolio, the Adviser uses the following
primary criteria for selection of securities:

1. Earnings growth. The Adviser attempts to identify companies with strong
fundamentals, a history of profitable operations, and the likelihood of
continued earnings growth. Within this group the Adviser seeks to invest in
companies showing earnings growth which the Adviser anticipates will be higher
than investors generally expect. Higher earnings could be generated internally
by, for example, a new product, a new service, or a new management with a
dynamic program for growth. Higher earnings could also result from events
external to the company, such as a lowering of the costs of materials important
to its operations or an exceptional increase in demand for its products. Since
factors such as the foregoing sometimes have greater impact on the share prices
of smaller companies, the Adviser will frequently place greater emphasis on

- --------------------------------------------------------------------------------

-6-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

the ownership of such companies. Historically, companies enjoying growth have
been particularly attractive in a cycle of general market increases, because, in
the view of the Adviser, higher than average earnings often tend to result in
higher than average price-earning ratios during such periods with the likely
result of greater appreciation in prices of the shares of such companies.

In addition to the foregoing considerations, the Adviser will attempt to
identify companies whose stock prices do not adequately reflect underlying
values and growth potential. There can be many reasons why a stock's price is
depressed, such as investor perception about the company's industry or sector
that is not relevant to the particular company, temporary reduction of liquidity
of the company (but not its publicly-traded stock), or short-term earnings
disappointments which the company is taking appropriate steps to address. In
each case the Adviser will focus on the company's 'staying power,' the strength
of its balance sheet, and the long-term fundamentals of its industry. Again,
this selection process often leads to small-capitalization companies. Because
the marketplace generally devotes less research and attention to small companies
the Adviser believes that it is more likely to find underlying values that are
not yet recognized. However, the Fund generally will also hold mid-size and
larger-capitalization companies to balance the somewhat-greater price volatility
that may be experienced by companies with smaller capitalization.

2. Corporate events. In addition to the criteria described above the Adviser
will endeavor to identify companies that are likely to experience changes not
only in material costs, products, markets, management style, or investors'
perception of their value but also in the structure of the company itself, such
as the acquisition of another company, the likelihood that the company itself
will be acquired, the sale or discontinuance of divisions that have failed to
contribute sufficiently (or at all) to earnings, a company's tender offer for
its own stock, a spin-off of part of the company through a distribution of
shares to its shareholders that permits the market to appraise each segment of
the company separately, a sale of assets followed by a distribution of a part or
all of the proceeds to shareholders, or even dissolution of the company followed
by a distribution of assets or proceeds of sale to the shareholders.

Ideally, the Adviser will endeavor to identify companies where all of these
types of change may occur, since such instances may offer more than one
opportunity to realize appreciation.

Foreign Securities

In seeking to achieve its objective, the Fund may, to a minor degree, and in no
event with respect to more than 10% of its assets at the time of purchase,
invest in foreign securities. Foreign securities usually are denominated in
foreign currencies, which means their value will be affected by changes in the
strength of foreign currencies relative to the U.S. dollar, as well as the other
factors that affect security prices. Foreign companies are not subject to
accounting standards or governmental supervision comparable to United States
companies and there often is less publicly available information about their
operations. There generally is less governmental regulation of foreign
securities markets, and security trading practices abroad may offer less
protection to investors such as the Fund. Foreign securities can also be
affected by political or financial instability abroad, and may be less liquid or
more volatile than domestic investments. These investments may be in the form of

- --------------------------------------------------------------------------------

-7-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

American Depository Receipts, which typically are issued by a U.S. bank or trust
company to evidence ownership of underlying securities issued by a foreign
operation. American Depository Receipts are not necessarily denominated in the
same currency as the securities into which they may be converted.

Warrants

A warrant confers upon its holder the right to purchase an amount of securities
at a particular time and price. Because a warrant does not carry with it the
right to dividends or voting rights with respect to the securities which it
entitles a holder to purchase, and because it does not represent any rights in
the assets of the issuer, warrants may be considered more speculative than
certain other types of investments. Also, the value of a warrant does not
necessarily change with the value of the underlying securities and a warrant
ceases to have value if it is not exercised prior to its expiration date. For so
long as the Fund's shares are sold in states so requiring, the Fund will limit
its purchase of warrants to five percent of its net assets, with no more than
two percent of its net assets to be invested in warrants not listed on the New
York Stock Exchange or the American Stock Exchange. The acquisition of warrants
in units or attached to other securities is not subject to these restrictions.

Lending of Securities

The Fund may lend its portfolio securities to broker-dealers and other financial
institutions pursuant to agreements requiring that the loans be continuously
collateralized by cash, letters of credit or U.S. Government securities of a
value equal to at least the fair market value of the securities loaned. These
loans will not be made if as a result the aggregate of all outstanding loans
exceeds 30 percent of the value of the Fund's total assets taken at current
value.

Other Investment Policies, Restrictions and Risk Considerations

A fundamental policy of management is to spread the Fund's investments among a
number of industry groups without concentration in any particular industry; the
Fund will not purchase a security if 25% or more of its total assets would be
invested in a particular industry.

In order to limit investment risks, portfolio securities are sold when they
reach a predetermined price objective, or when a change in relative valuation
occurs, or when a deterioration in company or industry fundamentals is
anticipated or occurs. In addition, the percentage of the Fund's assets invested
in cash or temporary investments is increased when investment alternatives, such
as U.S. Government Securities and money market instruments, offer better overall
returns than equities. When, in the opinion of management, current market or
economic conditions warrant, the Fund temporarily may retain cash or invest in
preferred stock, nonconvertible bonds or other fixed-income securities. During
those periods the Fund may tend to emphasize investment in securities of issuers
which the Adviser believes offer the possibility of a corporate event, since
changes of this nature can result in gains even when the overall equity market
is weak. Purchases and sales of securities will be made whenever necessary in
the management's view to achieve the objective of the Fund. It is anticipated
that portfolio turnover will normally not exceed 175% in the future. See page 3
for prior turnover rates. (A 100% rate of portfolio turnover is normally
considered to be high.) A high rate of portfolio turnover will increase the
Fund's brokerage expenses and may increase

- --------------------------------------------------------------------------------

-8-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

the amount of taxable short-term gains realized by the Fund. The Fund does not
expect to realize significant gains from selling securities held less than three
months.

The Statement of Additional Information contains more information about the
Fund's investment policies and also identifies the restrictions on the Fund's
investment activities, which provide that the Fund shall not, among other
things:

-- Invest more than 5% of its total assets taken at market value in the
securities of any one issuer other than the United States Government, or
purchase more than 10% of the voting securities or of any other class of
securities of any one issuer.

-- Purchase securities of any company with a record of less than three years'
continuous operation if such purchase would cause the Fund's investments in all
such companies taken at cost to exceed 5% of the Fund's total assets taken at
market value.

The investment objective and restrictions referred to above are fundamental and
may not be changed without approval of a majority of the outstanding voting
securities of the Fund. The Statement of Additional Information contains a
complete description of the Fund's restrictions and policies relating to the
investment of its assets and its activities.

MANAGEMENT OF THE FUND

The business of the Fund is managed by its Trustees. The Trustees elect officers
who are responsible for the day-to-day operations of the Fund and who execute
policies formulated by the Trustees.

How the Fund Receives Investment Advice. The Trust has entered into an
Investment Management Agreement with the Adviser with respect to the Fund, under
which the Adviser, subject to the direction of the Trustees, provides the Fund
with a continuous investment program consistent with the Fund's stated
investment objective and policies and is responsible for the management of the
Fund's assets. In addition to providing investment advice to the Fund, the
officers and employees of the Adviser are responsible for the investment and
reinvestment of the Fund's assets, subject to the overall authority of the
Trustees.

Effective October 1, 1995, James Gerson became portfolio manager of the Fund
with primary responsibility for day-to-day management of the portfolio. Mr.
Gerson is a senior vice president of Hudson Capital Advisors, Inc., the Fund's
Investment Manager, as well as of Fahnestock & Co., Inc. From April 1993 until
October 1994, he was a senior vice president and Managing Director of
Fahnestock's Corporate Finance Department. From October 1994 to September 1995,
he was an Equity Research Analyst with Fahnestock. From 1986 until he joined
Fahnestock & Co., Inc., he was associated with other investment banking firms in
the following capacities: February 1992 to April 1993 -- Senior Vice President
and Managing Director, Corporate Finance, of Reich & Co.; and January 1986 to
February 1992 -- Senior Vice President and Managing Director, Corporate Finance,
of Josephthal & Co. and its successor companies. In these positions he
concentrated on analyzing and structuring corporate financing for public
companies, with particular emphasis on 'small-cap' companies (having market
capitalization of less than $100 million).

Mr. Gerson uses his familiarity with the market for small-cap securities in
seeking to achieve the

- --------------------------------------------------------------------------------

-9-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

Fund's investment objective, policies and risk considerations.

Performance information about the Fund from its inception through December 31,
1995 is contained in the Fund's Annual Report filed with the Securities and
Exchange Commission. A copy of the Annual Report may be obtained free of charge
upon written or phone request from Fahnestock & Co., Inc., 110 Wall Street, New
York, NY 10005, telephone 1-800-221-5588. This performance is not necessarily
indicative of results that would have been achieved if Mr. Gerson had been
managing the Fund during the same period.

Pursuant to the Investment Management Agreement, the Fund pays the Adviser an
annual management fee equal to one percent of the Fund's average annual net
assets up to $25 million (which is higher than the management fee paid by most
investment companies) and 0.75% of annual average net assets in excess of $25
million. The management fee is accrued daily and paid quarterly and is based on
the average of the daily net asset values of the Fund during the preceding
quarter.

The Adviser, a corporation organized in 1986 under the laws of New York, located
at 805 Third Avenue, New York, NY 10022, currently has approximately
$900,000,000 in assets under management in its capacity as investment adviser to
primarily institutional clients, including a portion of the assets of a
registered open-end investment company which has no other relationship with the
Adviser or its affiliates. The Adviser is a wholly-owned subsidiary of
Fahnestock Viner Holdings, Inc., a corporation organized and existing under the
laws of the province of Ontario, Canada, whose non-voting shares are publicly
traded in the over-the-counter market and listed on the National Association of
Securities Dealers Automated Quotations System, and approximately 95% of whose
voting securities are held by officers and directors of Fahnestock Viner
Holdings, Inc.

To reduce the potential risk of an adverse effect on the Fund's portfolio,
written policies have been adopted by the Trust, the Fund and the Adviser to
restrict securities trading in personal accounts of the portfolio managers and
other affiliated personnel who normally have access to information on portfolio
transactions. These policies comply in all material respects with the
recommendations of the Investment Company Institute.

How the Fund Receives Administrative Services. The Trust has entered into an
Administration Agreement with Fahnestock pursuant to which Fahnestock provides
certain administrative services to the Fund and its shareholders. Under the
Administration Agreement, Fahnestock provides the Trust and the Fund with office
space, supplies and other facilities required for the business of the Fund.
Fahnestock pays the compensation of all officers and employees of the Trust and
pays the expenses of clerical services related to the administration of the
Trust and the Fund. Fahnestock has entered into a Sub-Administration Agreement
with a financial services firm (the 'Sub-Administrator') has extensive
experience in the mutual fund industry, to perform these services. Pursuant to
the Sub-Administration Agreement, Fahnestock pays the Sub-Administrator a fee,
plus reasonable out-of-pocket expenses. The Fund pays no administrative fee to
Fahnestock or to the Sub-Administrator.

The Fund's Expenses. All expenses of the Fund, including the advisory fee and
the administration fee, are subject to compliance with applicable

- --------------------------------------------------------------------------------

-10-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

state expense limitations. The Fund believes that the most restrictive annual
expense limitation to which it is subject limits ordinary operating expenses of
the Fund to 2.5% of the first $30 million, 2.0% of the next $70 million and 1.5%
of the remaining average net assets of the Fund (excluding payments under the
Distribution Plan not to exceed .50% of net assets per annum, taxes, interest,
distribution and brokerage fees and commissions and extraordinary expenses such
as litigation costs). If the Fund's expenses exceed these limitations, the
Adviser is required to reduce the advisory fee or reimburse the Fund for any
such excess amounts, limited to an amount not greater than the advisory fee.
Although reimbursement under the Investment Management Agreement must be made at
least annually, the Adviser has agreed to pay any reimbursements on the same
schedule as the Fund is required to pay the advisory fee, provided that if, at
the end of the fiscal year, Fund expenses do not exceed the annual expense
limitations applicable to the Fund, the Fund will reimburse the Adviser for
monies paid by the Adviser for fees foregone during the course of the fiscal
year. The expenses of printing prospectuses used in selling Fund shares and
other sales literature, as well as certain other sales-related charges, all of
which are eligible for payment under the Fund's 12b-1 Plan, are borne by
Fahnestock.

All expenses which are not specifically agreed to be paid by the Adviser or
Fahnestock and which are incurred in the operation of the Fund (including fees
of Trustees of the Trust who are not 'interested persons', as such term is
defined in the 1940 Act) and the continuous public offering of the shares of the
Fund are borne by the Fund, including the cost of printing and engraving share
certificates, the expenses relating to the determination of the net asset value
of shares of the Fund, the expenses of the continuing registration and
qualification of shares for sale, the cost of prospectuses distributed to
shareholders, the charges for custodians, transfer agents, registrars and other
agents, and auditing and legal expenses.

Brokerage Transactions. Securities for the Fund's portfolio will at all times be
bought and sold solely on the basis of investment considerations and
appropriateness to the fulfillment of the Fund's objective. The primary
consideration in placing portfolio security transactions is execution at the
most favorable prices, consistent with best execution. All orders for
transactions in securities on behalf of the Fund are placed with broker-dealers
selected by the Adviser. Fahnestock & Co. Inc., which is also the Distributor of
shares of the Fund, may serve as the Fund's broker in effecting portfolio
transactions on national securities exchanges and retain commissions in
accordance with certain regulations of the Securities and Exchange Commission,
including Rule 17e-1 under the 1940 Act. In addition, the Adviser may select
broker-dealers that provide it with research services and may cause the Fund to
pay these broker-dealers commissions that exceed those that other broker-dealers
may have charged, if it views the commissions as reasonable in relation to the
value of the brokerage and/or research services received consistent with best
execution. Consistent with the foregoing primary consideration, the Rules of
Fair Practice of the National Association of Securities Dealers, Inc. and such
other policies as the Trustees may determine, the Adviser may consider sales of
shares of the Fund and of any other of series of The Fahnestock Funds as a
factor in the selection of other broker-dealers to execute the Fund's portfolio
transactions. (For

- --------------------------------------------------------------------------------

-11-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

further discussion of brokerage allocation, see the Statement of Additional
Information.)

How the Fund's Shares are Distributed. The Trust has entered into a Distribution
Agreement with Fahnestock, under which Fahnestock is obligated to use its best
efforts on behalf of the Fund to sell, and accept orders for the purchase of,
shares of the Fund. Fahnestock may, from time to time, enter into selling
agreements with other selected broker-dealers ('Selling Dealers') who have
agreed to sell shares of the Fund. Fahnestock is a member of the National
Association of Securities Dealers, Inc. and of the New York, American and other
principal national securities exchanges.

The Fund is a series of The Fahnestock Funds, which has adopted a plan of
distribution ('Distribution Plan') pursuant to Rule 12b-1 under the 1940 Act,
under which it may reimburse Fahnestock for the expenses it bears in
distributing shares of the Fund and any other series of the shares of the Trust
including, but not limited to, continuing compensation to Fahnestock's account
representatives and others who engage in or support distribution of shares;
compensation to persons who service shareholder accounts by, for instance,
answering routine telephone inquiries and processing shareholder transactions;
costs related to the formulation and implementation of marketing and promotional
activities, including direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising; costs of printing and distributing
prospectuses and reports to prospective shareholders; costs involved in
preparing, printing and distributing sales literature; and costs involved in
obtaining whatever information, analysis and reports with respect to marketing
and promotional activities that Fahnestock deems advisable. The Fund, as well as
each other series which the Trust may create, may reimburse Fahnestock for
distribution expenses at an annual rate not exceeding 0.50 percent of the
average daily net value of the Fund's assets which have been continuously
included in its portfolio for four years or less. No reimbursement for
distribution expenses will be payable during the Fund's fiscal year with respect
to assets of the Fund which have been continuously included in its portfolio for
more than four years, as measured by the net asset value of shares of the Fund
which have been continuously outstanding for four years or more as of the last
day of its preceding fiscal year. In calculating the number of shares which have
been outstanding for four years or more, the Fund will treat all redemptions in
a particular shareholder's account as having been made from those shares which
have been outstanding for the longest period of time, a method of accounting
commonly referred to as 'first-in, first-out.' Expenses incurred in connection
with promotional activities will be identified to the series involved, although
it is anticipated that some promotional activities will be conducted in respect
of all series in common, with the result that expenses incurred in connection
with those activities will not be identifiable to any particular series. In the
latter case, expenses will be allocated among the series on the basis of their
relative net assets.

Continuance of the Fund's Plan is subject to annual approval by a majority of
the Trustees and a majority of the Trustees who are not 'interested persons' of
the Fund and who have no direct or indirect financial interest in the operation
of the Plan or any related agreement ('Rule 12b-1 Trustees'). The Plan requires
that quarterly written reports of amounts spent under the Plan and the purposes
of such expenditures be furnished to and reviewed by the Trustees.

- --------------------------------------------------------------------------------

-12-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

The Fund's Plan may not be amended to increase materially the amount which may
be spent thereunder without approval by a majority of the outstanding securities
of the Fund. All material amendments of the Fund's Plan will require approval by
a majority of the Fund's Trustees and of the Rule 12b-1 Trustees. The Plan may
be terminated at any time by vote of either a majority of the Rule 12b-1
Trustees or a majority of the outstanding shares of the Fund.

Fahnestock, a New York corporation, is a wholly-owned subsidiary of Fahnestock
Viner Holdings, Inc. and has its principal office at 110 Wall Street, New York,
NY 10005. Albert G. Lowenthal, Chairman of the Board of Trustees of the Trust
and President, a Principal and a Director of the Adviser, is Chairman of the
Board of Directors, Chief Executive Officer and Chief Financial Officer of
Fahnestock. Michael Mendelson, who is President and a Trustee of the Trust, is
Managing Director of Fahnestock Asset Management, a division of Fahnestock.
Richard Wohlman, who is Treasurer of the Trust, is Comptroller of Fahnestock.

Transfer and Dividend Agent. Investors Fiduciary Trust Company, located at 127
West 10th Street, Kansas City, Missouri, 64105 serves as the Fund's Transfer
Agent, and as such automatically opens and maintains an account for each new
investor in shares of the Fund. Under this arrangement, share certificates are
not delivered to individual shareholders unless a written request is received by
the Transfer Agent from the shareholder and then only to the extent of the
number of whole shares owned or requested. Fractional interests in shares, to
three decimal places, are reflected in the shareholder's account. Shareholders
will receive statements reflecting transactions in their accounts and account
balances. Shareholders should retain their account statements in order to
calculate the taxes on any gains or losses realized from redemption of the
Fund's shares. Fahnestock or the Transfer Agent can provide account transcripts
for past periods but shareholders may be required to pay a fee to receive such
transcripts.

DISTRIBUTIONS TO SHAREHOLDERS AND TAXATION

Distributions. The Fund expects to distribute substantially all of its net
taxable investment income at least annually and substantially all of its net
realized capital gains, if any, annually. Unless a shareholder indicates on the
applicable document at the time of initial investment or subsequently in writing
to the transfer agent that dividends and distributions are to be paid in cash,
dividends and distributions will automatically be reinvested in additional
shares of the Fund at net asset value without a sales charge.

Dividends declared by the Fund and distributed to shareholders of record in
October, November or December of any year will be treated for Federal income tax
purposes as having been received by shareholders in that year, so long as the
dividends are paid before February 1 of the following year.

Federal Taxes. The Fund has qualified as a 'regulated investment company' under
the Internal Revenue Code (the 'Code') and intends to continue to so qualify in
the future. As such, and by complying with the applicable provisions of the
Code, the Fund will not be subject to Federal income tax on taxable income
(including realized capital gains) which is distributed to shareholders.

Distributions from the Fund representing net investment income and any net
short-term capital gains, as computed for Federal income tax purposes, will be
taxable to shareholders as

- --------------------------------------------------------------------------------

-13-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

ordinary income whether such distributions are distributed as cash payments or
reinvested in additional shares of the Fund.

Distributions from the Fund representing net long-term capital gains, as
computed for Federal income tax purposes, whether such distributions are
distributed as cash payments or reinvested in additional shares, will be taxable
to the shareholders as long-term capital gains regardless of the length of time
a shareholder has held his shares. Long-term capital gains of individuals are
taxed at a maximum rate of 28% rather than the maximum rate applicable to
ordinary income for individuals (currently 39.6%). Net long term capital gains
of corporations are taxed at the rates applicable to ordinary income. In
general, only dividends from the Fund that reflect its dividend income from
United States corporations may, subject to certain limitations, qualify for the
Federal dividends-received deduction for corporate shareholders.

The Fund may be required to withhold for Federal income tax purposes 31%
('backup withholding') of the taxable distributions and the proceeds of
redemptions payable to shareholders who fail to provide the Fund with their
correct taxpayer identification numbers or to make required certifications, or
who have been notified by the Internal Revenue Service that they are subject to
back-up withholding. Corporate shareholders and certain other shareholders
specified in the Code are exempt from back-up withholding.

Shortly after the end of each taxable year, shareholders will receive a written
notice designating the amount of the year's distributions and the Federal income
tax treatment by shareholders of amounts distributed by the Fund, including
amounts includable in income as described in the preceding paragraph.

State and Local Taxes. Depending on the residence of the shareholder for tax
purposes, distributions may also be subject to state and local taxes.
Shareholders should consult their own tax advisers as to the Federal, state and
local tax consequences of ownership of shares of the Fund in their particular
circumstances.

COMPUTATION OF NET ASSET VALUE

The Fund's net asset value per share is computed as of the close of business on
the New York Stock Exchange (generally at 4:00 p.m. New York time) on each day
on which the Exchange is open for unrestricted trading.

The net asset value per share is determined by dividing the total current market
value of the assets of the Fund, less its liabilities, by the total number of
shares outstanding at the time of determination. The Trustees have determined to
value the Fund's securities traded on a national securities exchange at the
price of the last sale on such exchange on the date as of which assets are
valued. If no sale has occurred on the date as of which assets are valued, or if
the security is traded only in the over-the-counter market, it will normally be
valued at its current bid price. Debt securities having a remaining maturity of
60 days or less may be valued at amortized cost, which approximates market
value. These instruments may include government securities, corporate debt
securities and money market instruments, such as bank certificates of deposit
and commercial paper. Portfolio securities for which current quotations are not
readily available are valued at fair value as determined in good faith by the
Trustees.

- --------------------------------------------------------------------------------

-14-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

HOW TO BUY SHARES

General. Investors may buy shares of the Fund through representatives of
Fahnestock or the Selling Dealers. Initial orders are reviewed when they are
received by Fahnestock or the Selling Dealers and, if they are accompanied by
all appropriate information or are made through an existing brokerage account,
the order is accepted by Fahnestock. The minimum initial investment is $1,000
and all purchases must be made in U.S. dollars. Thereafter, additional
investments may be made in amounts of $250 or more as the shareholder elects.
Purchases by check written upon a bank situated outside the United States may be
delayed until United States funds are received and a collection charge may be
imposed by the transfer agent to defray the cost of conversion to U.S. funds.
The offering price will be the net asset value per share (see 'Computation of
Net Asset Value') next determined after acceptance of the purchase order plus a
sales load as follows:

<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE CONCESSION TO
AS A AS A SELLING DEALERS
AMOUNT OF PERCENTAGE OF PERCENTAGE OF AS A
PURCHASE THE THE PERCENTAGE OF THE
(INCLUDING SALES CHARGE) AMOUNT INVESTED OFFERING PRICE OFFERING PRICE*
- -------------------------------------------------- --------------- --------------- -----------------

- ------------

* Fahnestock may, from time to time, at its own expense, provide promotional
incentives to certain Selling Dealers whose representatives have sold or are
expected to sell significant amounts of shares of the Fund. Selling Dealers
to whom 90% or more of the entire sales load is reallowed may be deemed to be
underwriters as that term is defined under the Securities Act of 1933.
Fahnestock retains the entire sales load on any retail sales made by it.

The sales charge may be reduced if an investor combines his purchases with those
of certain individuals or entities (Combination Privilege) or already owns
shares (Accumulation Privilege). (See Statement of Additional Information,
'Methods of Obtaining Reduced Sales Charge' or ask your sales representative.)
In addition, the foregoing schedule of reduced sales charges will also be
available to investors who enter into a written Letter of Intent providing for
the purchase, within a 13-month period, of shares of the Fund. Shares previously
purchased during a 90-day period prior to the date of receipt by the Fund of the
Letter of Intent and still owned by the shareholder may also be included in
determining the applicable reduction.

Shares of the Fund may be sold without sales charge to Trustees or officers of
the Fund, and directors or officers of the Adviser, Fahnestock, Selling Dealers,
or Fahnestock Viner Holdings, Inc. or its affiliates, to the bona fide full-time
employees and their relatives, retired employees or sales representatives of any
of the foregoing who have acted as such for not less than 90 days, or members of
the families of bona fide

- --------------------------------------------------------------------------------

-15-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

full-time employees or sales representatives of Fahnestock, or to any trust,
pension, profit sharing or other benefit plan for such persons. Such sales will
be made upon written assurance by the purchaser that the purchase is made for
investment purposes and that the shares will not be resold except through
redemption by the issuer. Shares of the Fund may also be purchased without a
sales charge by any state, county, or city, or any instrumentality, department,
authority or agency thereof, which is prohibited by applicable investment laws
from paying a sales charge or commission in connection with the purchase of
shares of any registered management investment company (hereinafter 'an eligible
governmental authority'). If an investment by an eligible governmental authority
at net asset value is made through a Selling Dealer or a registered
representative of Fahnestock, Fahnestock may make a payment, out of its own
resources, to such Selling Dealer or registered representative in an amount not
to exceed 0.25% of the amount invested.

Additional information relating to the methods of obtaining reduced sales loads
is contained in the Fund's Statement of Additional Information and may be
obtained from a registered representative of Fahnestock or a Selling Dealer.

Retirement Plans. Investors may use the Fund as a funding medium for various
types of qualified retirement plans, including Individual Retirement Accounts,
Keogh Plans (H.R. 10), Pension and Profit Sharing Plans, Tax Sheltered Annuity
Retirement Plans, and 401(k) Plans. The initial investment minimum for any of
the above plans will be $1,000. Plan participants may make subsequent
investments of $250 or more. Contributions to such plans are subject to
prevailing amount limits set by the Internal Revenue Code and may be deducted
within limits set by the Code.

Investors may purchase shares of the Fund at net asset value, without imposition
of a sales charge, to the extent that the investment represents (a) the proceeds
from the redemption made within the preceding 60 days of shares of another
mutual fund not affiliated with Hudson Capital Advisers, Inc., whose shares were
purchased subject to a sales charge, or (b) the net proceeds of the sale within
the preceding 60 days of shares of any closed-end investment company. When
making a purchase at net asset value pursuant to these provisions, the investor
must forward to Fahnestock either the redemption check representing the proceeds
of the mutual fund shares redeemed, or a copy of the confirmation from the other
mutual fund showing the redemption transaction, or a copy of the confirmation
showing the sale of the shares of the closed-end company.

Automatic Investment. The Fund offers an Automatic Investment Plan whereby the
Fund's transfer agent, Investors Fiduciary Trust Company (IFTC), is permitted
through preauthorized checks of $250 or more to charge the regular bank account
of a shareholder on a regular basis to provide systematic additions to the Fund
account of the shareholder. While there is no charge to shareholders for this
service, a charge of $10 will be deducted from a shareholder's Fund account for
checks returned for insufficient funds. A shareholder's Automatic Investment
Plan may be terminated at any time without charge or penalty by the shareholder,
the Fund, IFTC or Fahnestock. Further information regarding the Automatic
Investment Plan may be obtained through any Fahnestock account representative.

- --------------------------------------------------------------------------------

-16-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

Additional Information. Investors should refer to the Statement of Additional
Information for more complete information about how to purchase shares of the
Fund. Investors can also obtain additional information from a representative of
Fahnestock or a Selling Dealer.

HOW TO REDEEM SHARES

Through Fahnestock or A Selling Dealer. Shares of the Fund may be redeemed
through Fahnestock or your Selling Dealer. Redemptions will be made at the net
asset value next determined after receipt of any such order by Fahnestock or the
Selling Dealer. Certificates, if any, in proper form for redemption or any
required stock powers should be presented or sent to Fahnestock or your Selling
Dealer no later than the close of business of the day on which the redemption
order is placed.

Written Request. Any shareholder of record may require the Fund to redeem his
shares by making written application to the transfer agent. Such application
must be signed by the shareholder as his name appears on the records of the Fund
and must be accompanied by any share certificates issued for shares being
redeemed or a stock power if no such certificates were issued. A stock power is
a written instrument executed by a shareholder in order to facilitate the legal
transfer of shares of the Fund. Share certificates must be duly endorsed for
transfer. Signatures on share certificates and stock powers must be guaranteed,
except that a signature guarantee will not be required for a redemption of less
than $5,000 where the redemption proceeds are sent to a shareholder of record at
the shareholder's address of record. A signature guarantee is a widely accepted
way to protect you and the transfer agent by verifying the signature on your
request. Only the following institutions may provide you with an acceptable
signature guarantee: a commercial bank that is a member of FDIC or a trust
company, or a member firm of a U.S. stock exchange. (A foreign bank must
indicate name of its New York correspondent bank.) Redemptions will be effected
at the net asset value next determined after receipt by the Transfer Agent of
such application and certificates or stock powers, if any, in proper form for
redemption.

General. Payment for shares redeemed will ordinarily be made within seven (7)
days after receipt by a Selling Dealer, Fahnestock or the Transfer Agent of the
redemption application, in good order, and any necessary certificates or stock
powers. However, at various times the Trust may be requested to redeem Fund
shares for which it has not yet received good payment. Accordingly, the Trust
may delay the mailing of a redemption check for up to 10 business days from the
payment date or until such time as it has assured itself that good payment
(e.g., cash in hand) has been collected for the purchase of such shares,
whichever occurs first.

The Trust may suspend the right of redemption of Fund shares and may postpone
payment for redeemed Fund shares when the New York Stock Exchange is closed for
other than weekends or holidays, or if permitted by the rules of the Securities
and Exchange Commission during periods when trading on the Exchange is
restricted or during an emergency which makes it impractical for the Trust to
dispose of the Fund's securities or fairly to determine the value of its net
assets, or during any other period permitted by the Securities and Exchange
Commission for the protection of investors.

Due to the proportionately high cost of maintaining smaller accounts, the Trust
reserves the right

- --------------------------------------------------------------------------------

-17-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

to redeem all shares in a Fund account which has a value of less than $500 as
the result of redemptions (except accounts which constitute the assets of
retirement plans and Individual Retirement Accounts) and to mail the proceeds to
the shareholder. Shareholders will be notified before these redemptions are to
be made and will have 30 days to purchase additional shares to bring their
accounts up to the required minimum.

The redemption price of shares of the Fund may be more or less than the
shareholder's cost, depending upon the market value of the securities owned by
the Fund at the time of the redemption, and gain or loss may be recognized for
Federal income tax purposes.

ADDITIONAL SERVICES AND PROGRAMS

Systematic Withdrawal Plan. This service enables a shareholder with an account
value of $10,000 or more automatically to receive or make periodic payments from
the Fund at no cost. A shareholder may elect to receive or make as many payments
as he wants. Payments may be made monthly, quarterly, semi-annually or annually
in varying amounts, but not less than $100 each. Payments may be made to the
shareholder, another individual, a bank or any other designated entity. This
service is particularly useful in paying regular bills and disbursing funds from
retirements plans in compliance with IRS regulations.

The maintenance of a Systematic Withdrawal Plan concurrently with purchases of
additional shares of the Fund would be disadvantageous to a shareholder because
of the sales load payable on such purchases. A Systematic Withdrawal Plan may be
established by completing an application form available from Fahnestock or your
Selling Dealer and requires that all dividends and distributions be taken in
additional shares of the Fund. See the Statement of Additional Information,
'Additional Services and Programs.'

Reinvestment Privilege. A shareholder who has redeemed shares of the Fund may,
within two years after the date of redemption, reinvest any part of the
redemption proceeds in the Fund without payment of a sales load. A shareholder
should notify Fahnestock or the Selling Dealer in writing of an intention to
exercise the reinvestment privilege. If the shareholder reinvests in the Fund
within thirty (30) days, any loss realized on the redemption will not be
recognized for Federal income tax purposes as to the number of shares acquired
under the reinvestment privilege except through an adjustment in the tax basis
of the so-acquired shares.

Additional Information. Shareholders should refer to the Statement of Additional
Information for more complete information on the additional services and
programs available to shareholders of the Fund. Additional information is also
available from a registered representative of Fahnestock or a Selling Dealer.

PERFORMANCE INFORMATION

From time to time the Fund may publish its 'total return'. Total return figures
are based on historical earnings and are not intended to indicate future
performance. The 'total return' of the Fund refers to the average annual
compounded rates of return over periods of 1, 5, and 10 years (which periods
will be stated in the publication) that would compare the initial amount
invested, including a sales load, at the beginning of a stated period to the
ending redeemable value of the investment. The calculation assumes the
reinvestment of all dividends and distributions, and reflects all recurring fees
that are charged to all shareholder accounts and nonrecurring charges, if any,
at the end of each period.

- --------------------------------------------------------------------------------

-18-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

The total return calculation includes the maximum sales load of 4.50% unless
otherwise stated. Investment at a lower sales load would increase this
performance measure correspondingly. See the information under the caption 'How
to Buy Shares' for information on reduced sales loads. The principal value of an
investment will fluctuate so that the value of the investment, when redeemed,
may be more or less than the original investment.

OTHER MATTERS

Description of the Fund's Shares. The Fund is the initial (and, to date, the
only) series of shares of beneficial interest of The Fahnestock Funds, a
Massachusetts business trust which was created on August 29, 1990 under the laws
of the Commonwealth of Massachusetts and has an unlimited number of authorized
shares of beneficial interest. All shares of the Fund are one class and have
equal rights as to voting, redemption, dividends and liquidation. All shares
issued and outstanding are fully paid and nonassessable by the Fund and the
Trust and are redeemable at net asset value at the option of shareholders.
Shares have no preemptive or conversion rights and are freely transferable.
Certificates for shares will not be issued unless requested in writing by an
investor.

When matters are submitted for shareholder vote, shareholders of each series of
The Fahnestock Funds, including the Fund, will have one vote for each full share
held and proportional, fractional votes for each fractional share held.
Shareholders of all series of The Fahnestock Funds will vote collectively on
certain matters affecting all series, such as the election of Trustees and the
selection of accountants; shareholders of one series are not entitled to vote on
a matter that does not affect that series but that does require a separate vote
of another series, such as a particular series' investment management agreement.
Neither the Trust nor the Fund intends to hold annual meetings. As a result,
shareholders may not consider each year the election of Trustees or the
appointment of accountants. However, pursuant to the By-Laws of the Trust, the
holders of at least 10 percent of the shares outstanding and entitled to vote
may require a special meeting of shareholders to be held for any purpose,
including removal of a Trustee from office. Shareholders of the Trust may remove
a Trustee by the affirmative vote of a majority of the outstanding voting
shares. In addition, the Board of Trustees will call a special meeting of
shareholders for the purpose of electing Trustees if, at any time, less than a
majority of the Trustees holding office at that time were elected by
shareholders. The Trustees may call special shareholder meetings of one or more
(including all) of its series of shares for such purposes as electing or
removing Trustees, changing fundamental policies or adopting new management
agreements.

Under Massachusetts law, shareholders of a Massachusetts business trust could,
under certain circumstances, be held personally liable for acts or obligations
of the Trust. The Trust's Declaration of Trust contains an express disclaimer of
shareholder liability for acts, obligations or affairs of the Trust. The
Declaration of Trust also provides for indemnification out of the Fund's assets
for all losses and expenses of any shareholder of the Fund held personally
liable by reason of being or having been a shareholder. Liability of a
shareholder of the Fund is limited to circumstances in which the Fund itself
would be unable to meet its obligations.

Transfer Agent. Investors Fiduciary Trust Company, 127 West 10th Street, Kansas
City, Missouri 64105, acts as transfer agent for the Fund; in this capacity, it
maintains the record of each transaction of a shareholder with respect to shares
of the Fund. A Shareholder may obtain information about his account by
consulting his

- --------------------------------------------------------------------------------

-19-

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------

sales representative or calling the transfer agent at 1-800-367-0068.

Custody of Portfolio. Portfolio securities of the Fund are held pursuant to a
custodian agreement by Investors Fiduciary Trust Company, as custodian; eligible
securities may be held in the book entry system for U.S. government securities
maintained by the Federal Reserve System or deposited with the Depository Trust
Company.

Registration Statement. This Prospectus omits certain information contained in
the Statement of Additional Information and Part C of the Registration Statement
which the Fund has filed with the Securities and Exchange Commission. The Fund's
Statement of Additional Information is incorporated by reference into this
Prospectus. A copy of the Fund's Statement of Additional Information can be
obtained upon request free of charge by writing or telephoning Fahnestock. You
may obtain a copy of Part C of the Registration Statement from the Securities
and Exchange Commission upon payment of the prescribed fee.

- --------------------------------------------------------------------------------

-20-

<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HUDSON CAPITAL
APPRECIATION FUND
(A Series of The Fahnestock Funds)
110 Wall Street
New York, New York 10005
Telephone (800) 221-5588

INVESTMENT ADVISER
Hudson Capital Advisors, Inc.
805 Third Avenue
New York, New York 10022

PRINCIPAL DISTRIBUTOR
Fahnestock & Co. Inc.
110 Wall Street
New York, New York 10005

CUSTODIAN AND TRANSFER AGENT
Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105

INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10019

LEGAL COUNSEL
Faith Colish, A Professional Corporation
63 Wall Street
New York, New York 10005

[LOGO]

PROSPECTUS
May 1, 1996

A mutual fund seeking to achieve long-term growth of capital through investment
in equity securities.

[LOGO]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1996

-----------------------------------

HUDSON CAPITAL APPRECIATION FUND

A SERIES OF

THE FAHNESTOCK FUNDS

110 Wall Street, New York, New York 10005

-----------------------------------

This Statement of Additional Information provides information about
Hudson Capital Appreciation Fund (the "Fund") in addition to the information
that is contained in the Fund's Prospectus dated May 1, 1996. This Statement of
Additional Information is not a prospectus. It should be read in conjunction
with the Fund's Prospectus, a copy of which can be obtained upon request free of
charge by writing or telephoning the Fund's Distributor at the address and
telephone number below.

INVESTMENT ADVISER: DISTRIBUTOR:

Hudson Capital Advisors, Inc. Fahnestock & Co., Inc.
805 Third Avenue 110 Wall Street
New York, New York 10022 New York, New York 10005

Telephone: 1-212-644-3200 Telephone: 1-800-221-5588

TABLE OF CONTENTS

STATEMENT CROSS-REFERENCED
OF ADDITIONAL TO CAPTIONS IN
INFORMATION PROSPECTUS

Page Page
---- ----

Organization of the Fund......... 3 6

Investment Objective
and Policies.................... 3 6

Investment Restrictions........... 4 8

Management of the Fund............ 6 9

Investment Advisory and
Other Services.................. 8 9

Distribution Agreement............ 10 12

Methods of Obtaining
Reduced Sales Charge............ 11 16

Special Redemptions............... 13 17

Additional Services and
Programs........................ 13 18

Taxes............................. 14 13

Calculation of
Performance..................... 17 18

Portfolio Transactions and
Brokerage ...................... 17 11

Custody of Portfolio.............. 19 20

Independent Auditors.............. 19 3

Financial Statements.............. 19 3

ORGANIZATION OF THE FUND

Hudson Capital Appreciation Fund (the "Fund") is the first (and, to
date, the only) series of the shares of beneficial interest of The Fahnestock
Funds, a diversified open-end management investment company organized as a
Massachusetts business trust under the laws of the Commonwealth of
Massachusetts. The Trust was created under the laws of Massachusetts on August
29, 1990.

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to achieve long-term growth
through capital appreciation by investing primarily in equity securities.
Current income is a secondary consideration.

The types of securities the Fund invests in are more fully described
in the Prospectus. This section contains supplemental information concerning the
types of securities and other instruments in which the Fund may invest, the
investment policies and portfolio strategies that the Fund may utilize and
certain risks associated with those investments, policies and strategies.

ADDITIONAL INFORMATION ON INVESTMENT PRACTICES

U.S. GOVERNMENT SECURITIES. Examples of the types of U.S. Government
securities that the Fund may hold include, in addition to those described in the
Prospectus, U.S. Treasury Bills, the obligations of the Federal Housing
Administration, Farmers Home Administration, Small Business Administration,
General Services Administration, Central Bank for Cooperatives, Federal Farm
Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation,
Federal Intermediate Credit Banks, Federal Land Banks and the Maritime
Administration.

LENDING OF SECURITIES. The Fund has the authority to lend securities
to brokers, dealers and other financial organizations. The Fund will not lend
securities to the Adviser, Fahnestock or their affiliates. By lending its
securities, the Fund can increase its income by continuing to receive interest
on the loaned securities as well as by either investing the cash collateral in
short term securities or obtaining yield in the form of interest paid by the
borrower when U.S. Government securities are used as collateral. The Fund will
adhere to the following conditions whenever its securities are loaned: (a) the
Fund must receive at least 100 percent cash collateral or equivalent securities
from the borrower; (b) the borrower must increase this collateral whenever the
market value of the securities including accrued interest rises above the level
of the collateral; (c) the Fund must be able to terminate the loan at any time;
(d) the Fund must receive reasonable interest on the

loan, as well as any dividends, interest or other distributions on the loaned
securities and any increase in market value; (e) the Fund may pay only
reasonable custodian fees in connection with the loan; and (f) voting rights on
the loaned securities may pass to the borrower; provided, however, that if a
material event adversely affecting the investment occurs, the Board of Trustees
must terminate the loan and regain the right to vote the securities.

Purchases and sales of securities will be made whenever necessary in
the management's view to achieve the objectives of the Fund. The Adviser expects
that the Fund, in pursuing its objectives, will experience portfolio turnover of
not in excess of 175% and intends to keep turnover to a minimum consistent with
such objectives. The Adviser believes that unsettled market and economic
conditions during certain periods may require greater portfolio turnover in
pursuing the Fund's objectives than would otherwise be the case.

The investment objectives of the Fund as stated above and the
following investment restrictions will not be changed without approval of a
majority of outstanding voting securities of the Fund, which, as used in the
Prospectus and under the Investment Company Act of 1940, as amended, means
approval of the lesser of (1) the holders of 67% or more of the shares of the
Fund represented at a meeting if the holders of more than 50% of outstanding
shares are present in person or by proxy or (2) the holders of more than 50% of
the outstanding shares.

INVESTMENT RESTRICTIONS

The Fund has adopted the following restrictions and policies relating
to the investment of its assets and its activities, which are fundamental
policies and may not be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities. The Fund may not:

(1) Purchase securities on margin, or purchase real estate or
interests therein, commodities or commodity contracts (including futures
contracts) or make loans except through the purchase of bonds and other
marketable obligations of corporate enterprises.

(2) Invest more than 5% of its total assets, taken at market value, in
the securities of any one issuer other than the United States Government, or
purchase more than 10% of the voting securities or of any other class of
securities of any one issuer.

(3) Engage in the underwriting of securities of other issuers, except
to the extent that the Fund may be deemed to be an underwriter in selling, as
part of an offering registered

under the Securities Act of 1933, as amended, securities which it has acquired.

(4) Effect a short sale of any security.

(5) Purchase securities of any company with a record of less than
three years' continuous operation if such purchase would cause the Fund's
investments in all such companies, taken at cost, to exceed 5% of the Fund's
total assets taken at market value.

(6) Borrow money, except that the Fund may borrow from banks as a
temporary measure for emergency purposes where such borrowings would not exceed
either (i) 33 1/3% of total assets of the Fund taken at market or other fair
value less liabilities other than borrowings, or (ii) 10% of its total assets
taken at cost; or pledge, mortgage, or hypothecate its assets taken at market
value to an extent greater than 15% of the Fund's total assets taken at cost.
(The Fund does not expect to borrow more than 5% of its total net assets at any
one time and will not purchase securities during any period when borrowings
exceed 5% of its total assets.)

(7) Invest for the purpose of exercising control over or management of
any company.

(8) Invest more than 10% of the Fund's total assets in the securities
of other investment companies. (The Investment Company Act of 1940, as amended,
provides additional limitations on investment in securities of investment
companies.)

(9) Invest in oil, gas or other mineral exploration or development
programs, except that the Fund may invest in the securities of companies that
invest in or sponsor those programs.

(10) Purchase or retain securities of any issuer if those officers and
trustees of the Fund or the officers and directors of its investment adviser
owning individually more than one-half of one percent of the securities of such
issuer, together own more than 5% of such issuer, or purchase from or sell to
any of its officers and trustees or investment adviser, its principal
distributor of the officers and directors of its investment adviser or principal
distributor, portfolio securities of the Fund.

(11) Purchase restricted securities which are subject to legal or
contractual delays in or restriction on resale if as a result more than 5% in
market value of the assets of the Fund would be invested in such securities.
(The Fund does not intend to acquire securities which are illiquid at the time
of purchase.)

The percentage limitations contained in the restrictions listed above
apply at the time of purchases of securities. If a percentage restriction is
adhered to at the time of an investment, a later increase or decrease in
percentage resulting from a change in values or assets will not constitute a
violation of such restriction. The Fund may make commitments more restrictive
than the restrictions listed above so as to permit the sale of shares of the
Fund in certain states. Should the Fund determine that such commitment is no
longer in the best interests of the Fund and its shareholders, the Fund will
revoke the commitment by terminating the sale of shares of the Fund in the state
involved.

MANAGEMENT OF THE FUND

The business of the Fund is managed by its Trustees. They elect
officers who are responsible for the day-to-day operations of the Fund and who
execute policies formulated by the Trustees. Several of the officers of the Fund
and Trustees of the Trust are also officers and directors of the Fund's
investment adviser, Hudson Capital Advisors, Inc. ("the Adviser"), or officers
and directors of the Fund's principal distributor, Fahnestock & Co., Inc.
("Fahnestock").

The names of the Trustees and officers of the Fund and their principal
occupations for the past five years follows. An asterisk (*) indicates Trustees
who are "interested persons" of the Fund (as defined by the 1940 Act). Unless
otherwise indicated, the address of each Trustee and officer is 110 Wall Street,
New York, New York 10005.

NAME AND ADDRESS PRINCIPAL OCCUPATION
- ---------------- --------------------
<S> <C>
Albert G. Lowenthal* Trustee, Chairman of the Board and Chief Executive
Officer of the Fund. Mr. Lowenthal is Chairman of
the Board, Chief Executive Officer and Chief
Financial Officer of Fahnestock and its parent,
Fahnestock Viner Holdings Inc. He is also the
General Partner of Phase II Financial LTD., a
limited partnership, Chairman of Freedom
Investments, Inc., a broker-dealer, and is
President, Director and a Principal of the
Adviser.

Michael Mendelson* Trustee and President of the Fund. Mr. Mendelson
is Managing Director of Fahnestock Asset
Management, a division of Fahnestock. He was
formerly President and Director of Fahnestock and
Senior Vice President, E.F. Hutton & Co. (New
York, NY), a former securities firm.

</TABLE>

<TABLE>
<S> <C>
Keith Gunzenhauser Trustee. Mr. Gunzenhauser is retired. He was
2649 360th Street formerly Executive Vice President-Finance and
Van Meter, IA 50261 Chief Investment Officer, Central Life Assurance
Company (Des Moines, IA).

Richard E. Landau Trustee. Mr. Landau is a private investor. He was
4490 Riverwatch Drive #201 formerly Managing Director and Vice Chairman of
Benita Springs, FL 33923 Angeles Corporation (Los Angeles, CA), a holding
company whose subsidiaries manage securities, real
estate, oil and natural gas investment programs
and mutual fund assets, and Chairman of the Board
of Quinoco Resources, Inc. and Quinoco Oil and
Gas, Inc. (New York, NY).

James D. McQuaid Trustee. Mr. McQuaid is a consultant and was
Metromail Corporation formerly the Chief Executive Officer of Metromail
360 E. 22nd Street Corporation (Chicago, IL), a direct mail company.
Lombard, IL 60148-4924

James D. Gerson Senior Vice President and Portfolio Manager of
19 W. 95th Street the Fund. Mr. Gerson is also Senior Vice President
New York, NY 10025 of Fahnestock and of the Adviser, since October 1,
1995. Previously he was Equity Research Analyst with
Fahnestock (October 1994-September 1995) and Senior
Vice President and Managing Director of Fahnestock's
Corporate Finance Department (April 1993-October 1994).
Prior to joining Fahnestock he was with Reich & Co.
(February 1992-April 1993) and Josephthal & Co.
(January 1986-February 1992).

Richard Wohlman Treasurer. Mr. Wohlman is Comptroller and Chief
Financial Officer of Fahnestock and was previously
Assistant Comptroller of that firm.

</TABLE>

Russell L. Pollack Secretary. Mr. Pollack has been Benefits Director
and Manager-Corporate Tax of Fahnestock since
1989.

</TABLE>

No trustee or officer of the Trust beneficially owned, either
individually or as a group, more than 1% of the outstanding shares of Hudson
Capital Appreciation Fund, and neither the Trust nor management of the Trust is
aware of any shareholder who beneficially owned 5% or more of Hudson Capital
Appreciation Fund as of the close of business on April 8, 1996.

Officers and Trustees of the Trust who are also officers or employees
of Fahnestock or the Adviser receive no remuneration from the Trust. Each other
Trustee receives an annual fee of $3,000 in addition to a fee of $750 for each
Board meeting attended, and is reimbursed for travel and out-of-pocket expenses.
For the fiscal year ended December 31, 1995, Trustees who were not officers or
employees of Fahnestock or the Adviser were entitled to fees and expenses, as a
group, totalling $19,981.00. The Trust has no bonus, profit sharing, pension or
retirement plans.

INVESTMENT ADVISORY AND OTHER SERVICES

As described in the Fund's Prospectus under the caption "How the Fund
Receives Investment Advice," the Fund has entered into an investment management
agreement with the Adviser (the "Management Agreement"), under which the Adviser
provides the Fund with a continuous investment program, consistent with the
Fund's stated investment objective and policies. The Adviser is responsible for
the management of the Fund's portfolio assets.

No person other than the Adviser and its directors and employees
regularly furnishes advice to the Fund with respect to the desirability of the
Fund's investing in, purchasing or selling securities. The Adviser may from time
to time receive statistical information, and information regarding general
economic factors and trends, from Fahnestock.

Under the terms of the Management Agreement between the Trust and the
Adviser and the Administration Agreement between the Trust and Fahnestock, the
Adviser and Fahnestock provide the Fund with office space, supplies and other
facilities required for the business of the Fund. The Adviser and Fahnestock pay
the compensation of all officers and employees of the Trust and the Fund and pay
the expenses of clerical services relating to the administration of the Trust
and the Fund.

As discussed in the Prospectus and as provided in the Management
Agreement, the Fund pays the Adviser an investment management fee, which is
accrued daily and is paid quarterly,

that is approximately equal, on an annual basis, to 1.00% of the average of the
daily net assets of the Fund up to $25 million and 0.75% of annual average net
assets in excess of $25 million. Until December 1, 1992 the Fund also paid
Fahnestock an administration fee which was accrued daily and paid monthly, that
was approximately equal, on an annual basis, to 0.1% of the average daily net
assets of the Fund, but not less than $2,500 per month.

For the fiscal year ended December 31, 1993, the Fund incurred
investment management fees of $175,440. The Adviser waived $43,506 of the
investment management fee.

For the fiscal year ended December 31, 1994, the Fund incurred
investment management fees of $175,266. The Adviser waived $47,465 of the
investment management fee.

For the fiscal year ended December 31, 1995, the Fund incurred
investment management fees of $143,793. The Adviser waived $132,225 of the
investment management fee.

From time to time the Adviser, in its sole discretion and as it deems
appropriate, may assume certain expenses of the Fund while retaining the ability
to be reimbursed by the Fund for such amounts prior to the end of the fiscal
year. This will have the effect of lowering the Fund's overall expense ratio and
of increasing yield to investors, or the converse, at the time such amounts are
assumed or reimbursed as the case may be. The Adviser will not be reimbursed for
such amounts if such action would violate the provisions of the Fund's
applicable expense limitation. The Adviser reserves the right to request the
Trustees to authorize in subsequent years recovery of prior expense
reimbursements or waived fees.

Pursuant to the Management Agreement, the Adviser is not liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which the Agreement relates, except a loss
resulting from willful misfeasance, bad faith, gross negligence on the part of
the Adviser in the performance of its duties or from reckless disregard by the
Adviser of its obligations and duties under the Management Agreement.

The Management Agreement provides that it will terminate automatically
if assigned, and that it may be terminated without penalty by either party upon
not more than 60 days' nor less than 30 days' written notice. The Management
Agreement will continue in effect for a period of more than two years from the
date of

execution only so long as such continuance is specifically approved at least
annually in conformity with the Investment Company Act.

Under the Management Agreement, the Fund may use the name "Hudson" or
any name derived from or similar to it only for so long as the Agreement or any
extension, renewal or amendment thereof remains in effect. If the Management
Agreement is no longer in effect with respect to the Fund, the Fund (to the
extent that it lawfully can) will cease to use such a name or any other name
indicating that it is advised by or otherwise connected with the Adviser. In
addition, Fahnestock may grant the nonexclusive right to use the name Fahnestock
or any similar name to any other corporation or entity, including but not
limited to any investment company of which Fahnestock or any subsidiary or
affiliate thereof or any successor to the business of any subsidiary or
affiliate thereof shall be the distributor or the investment adviser.

DISTRIBUTION AGREEMENT

The Board of Trustees has adopted a Plan of Distribution (the "Plan")
pursuant to Rule 12b-1 under the Act and has approved a distribution agreement
(the "Distribution Agreement") under which Fahnestock serves as distributor of
shares of the Fund. Under the Distribution Agreement, Fahnestock is obligated to
use its best efforts to sell shares on behalf of the Fund. Fahnestock accepts
orders for the purchase of shares of the Fund which are continually offered at
net asset value next determined plus applicable sales charge. Fahnestock is
authorized to receive compensation in the form of a sales charge in connection
with the sale of shares of the Fund. The commission charges are listed in the
Fund's Prospectus. Fahnestock may enter into selling agreements with other
selected broker-dealers who agree to sell shares of the Fund.

Distribution expenses incurred by Fahnestock during a year may exceed
the amount available for reimbursement under the Distribution Plan. Distribution
expenses incurred in a year in excess of 0.50 percent of the average daily net
value of assets of the Fund which have been included in its portfolio for four
years or less, as of the Fund's most recent year end, may be carried forward and
sought to be reimbursed in future years. Interest at the prevailing broker loan
rate may be charged to the Fund on any expenses carried forward. These expenses
and interest will be reflected as current expenses on the Fund's statement of
operations for the year in which these amounts become accounting liabilities,
which is expected to be the year in which they are actually paid. Although the
Board of Trustees may change this policy, payments under the Distribution Plan
currently are applied first to distribution expenses incurred in the current
year and then, up to the maximum amount permitted

under the Distribution Plan, to previously incurred but unreimbursed expenses
carried forward and interest thereon. Fahnestock has acknowledged that payments
under the Distribution Plan are subject to the approval of the Board of Trustees
and that the Fund is not contractually obligated to make payments in any amount
at any time, including those in reimbursement of Fahnestock, for expenses and
interest thereon incurred in a prior year.

Under its terms, the Plan remains in effect so long as its continuance
is approved at least annually by a vote of the Board of Trustees, including a
majority of the Trustees who have no direct or indirect financial interest in
the operation of the Plan or the Distribution Agreement (the "Qualified
Trustees"). The Plan may not be amended to increase materially the amount to be
spent for the services provided by Fahnestock without shareholder approval, and
all material amendments of the Plan must also be approved by the Qualified
Trustees in the manner described above. The Plan may be terminated at any time,
without penalty, by vote of a majority of the Qualified Trustees or by a vote of
a majority of the outstanding Fund shares. The Plan requires that Fahnestock
provide the Board of Trustees quarterly written reports of amounts spent under
the Plan and the purposes for which such expenditures were made.

In considering the adoption of the Plan, the Board of Trustees
considered a variety of factors and was advised by counsel to the Fund (who is
not counsel to Fahnestock or Hudson). The Board considered the factors suggested
in the public releases issued by the SEC in connection with the proposal and
adoption of Rule 12b-1, and concluded, in the exercise of this business judgment
and in light of their fiduciary duties under state law and the Act, that there
is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders.

METHODS OF OBTAINING REDUCED SALES CHARGE

The sales charge applicable to purchases of shares of the Fund are
described in the Fund's Prospectus. Methods of qualifying for reduced sales
charges referred to generally in the Prospectus of the Fund are described in
detail below.

COMBINATION PRIVILEGE. In calculating the sales charge applicable to
purchases made at one time, the purchases will be combined if made by (a) an
individual, his spouse and their children under the age of 21, purchasing
securities for his or their own account, (b) a trustee or other fiduciary
purchasing for a single trust estate or single fiduciary account and (c) certain
groups of four or more individuals making use of salary deductions or similar
group methods of payment whose funds are combined for the purchase of mutual
fund shares. Further information about combined purchases, including certain

restrictions on combined group purchases, is available from a representative of
Fahnestock or Selling Dealer.

WITHOUT SALES CHARGE. Shares of the Fund may be sold without sales
charge to officers of the Fund and Trustees of the Trust, and directors or
officers of the Adviser, Fahnestock, Fahnestock Viner Holdings, Inc. or Selling
Dealers or affiliates of any of them, or to the bona fide, full-time employees
and their relatives, retired employees, or sales representatives of any of the
foregoing who have acted as such for not less than 90 days, or to any trust,
pension, profit-sharing or other benefit plan for such persons. Such sales will
be made only upon the written assurance of the purchaser that the purchase is
made for investment purposes and that the shares will not be resold except
through redemption by the issuer. Such sales are made without a sales load to
promote good will with employees and others with whom the Trust has business
relationships and because the sales effort, if any, involved in making such
sales is negligible. Such sales may be registered solely in the name of the
eligible party or in the names of the eligible party and his immediate family
members.

Shares of the Fund may also be purchased without a sales charge by any
state, county, or city, or any instrumentality, department, authority or agency
thereof, which is prohibited by applicable investment laws from paying a sales
charge or commission in connection with the purchase of shares of any registered
management investment company (hereinafter "an eligible governmental
authority"). If an investment by an eligible governmental authority at net asset
value is made through a Selling Dealer or a registered representative of
Fahnestock, Fahnestock may make a payment, out of its own resources, to such
Selling Dealer or representative in an amount not to exceed 0.25% of the amount
invested.

Investors may purchase shares of the Fund at net asset value, without
imposition of a sales charge, to the extent that the investment represents (a)
the proceeds from the redemption made within the preceding 60 days of shares of
another mutual fund not affiliated with Hudson Capital Advisors, Inc., whose
shares were purchased subject to a sales charge, or (b) the net proceeds of the
sale within the preceding 60 days of shares of any closed-end investment
company. When making a purchase at net asset value pursuant to these provisions,
the investor must forward to Fahnestock either the redemption check representing
the proceeds of the mutual fund shares redeemed, or a copy of the confirmation
from the other mutual fund showing the redemption transaction, or a copy of the
confirmation showing the sale of the shares of the closed-end company.

ACCUMULATION PRIVILEGE. Investors (including investors combining
purchases) who are already shareholders may also obtain

the benefit of a reduced sales charge by taking into account not only the money
then being invested but also the net asset value of all the shares of the Fund
already held by such person. If the net asset value of all the shares already
held plus the gross investment amount of the current purchase exceeds a point in
the schedule of sales charges at which the charge is reduced to a lower
percentage, the entire current purchase is eligible for the reduced charge. For
example, an investment of $5,000 in shares of the Fund, if made at a time when
the net asset value of funds already held is $100,000, would result in a sales
load of 3.50% of the offering price.

SPECIAL REDEMPTIONS

Although it would not normally do so, the Fund has the right to pay
the redemption price of shares of the Fund in whole or in part in portfolio
securities as prescribed by the Trustees. If a shareholder sells portfolio
securities received in this fashion he would incur a brokerage charge. Any such
securities would be valued for the purposes of making such payment at the same
value as used in determining net asset value. The Fund has, however, elected to
be governed by Rule 18f-1 under the Investment Company Act of 1940, as amended.
Under that rule, the Fund must redeem its shares for cash except to the extent
that the redemption payments to any shareholder during any 90-day period would
exceed the lesser of $250,000 or 1% of the Fund's net assets at the beginning of
such period.

ADDITIONAL SERVICES AND PROGRAMS

SYSTEMATIC WITHDRAWAL PLAN. As described briefly in the Fund's
Prospectus, the Fund permits the establishment of a Systematic Withdrawal Plan.
Payments under this Plan represent proceeds arising from the redemption of Fund
shares. Since the redemption price of the shares of the Fund may be more or less
than the shareholder's cost, depending upon the market value of the securities
owned by the Fund at the time of redemption, the distribution of cash pursuant
to this Plan may result in realization of gain or loss for purposes of Federal,
state and local income taxes. The maintenance of a Systematic Withdrawal Plan
concurrently with the purchases of additional shares of the Fund could be
disadvantageous to a shareholder because of the sales charge payable on such
purchases and because redemptions are taxable events. Therefore, a shareholder
will not be permitted to purchase shares of the Fund (except for investments of
$5,000 or more) at the same time as a Systematic Withdrawal Plan is in effect.
The Fund reserves the right to modify or discontinue the Systematic Withdrawal
Plan of any shareholder on 30 days' prior written notice to such shareholder, or
to discontinue the availability of such Plan in the future. The shareholder may
terminate the Plan at any time by giving proper notice to Fahnestock or the
Transfer Agent.

REINVESTMENT PRIVILEGE. A shareholder who has redeemed shares of the
Fund may, within two years after the date of redemption, reinvest any part of
the redemption proceeds in the Fund without payment of a sales load. The Fund
may modify or terminate the reinvestment privilege at any time.

A redemption or exchange of Fund shares is a taxable transaction for
Federal income tax purposes. Any gain or loss realized is recognized for such
purposes even if the reinvestment privilege is exercised. If the shareholder
reinvests in the Fund within thirty (30) days, any loss realized on the
redemption will not be recognized for Federal income tax purposes as to the
number of shares acquired under the reinvestment privilege except through an
adjustment in the tax basis of the so-acquired shares.

Any loss realized by a shareholder on the redemption or other
disposition of Fund shares which have been held by such shareholder for six
months or less will be treated for tax purposes as a long-term capital loss to
the extent of any capital gains distributions received by the shareholder with
respect to such shares.

AUTOMATIC INVESTMENT. The Fund offers an Automatic Investment Plan
whereby the Fund's transfer agent, Investors Fiduciary Trust Company (IFTC), is
permitted through preauthorized checks of $250 or more to charge the regular
bank account of a shareholder on a regular basis to provide systematic additions
to the Fund account of the shareholder. While there is no charge to shareholders
for this service, a charge of $10 will be deducted from a shareholder's Fund
account for checks returned for insufficient funds. A shareholder's Automatic
Investment Plan may be terminated at any time without charge or penalty by the
shareholder, the Fund, IFTC, or Fahnestock. Further information regarding the
Automatic Investment Plan may be obtained through any Fahnestock account
representative.

TAXES

Set forth below is a summary of certain general Federal income tax
considerations which may affect the Fund and its shareholders. As the summary is
not intended as a substitute for individual tax planning, investors are urged to
consult their own tax advisers with specific reference to their particular
Federal, state or local tax situations.

TAX STATUS OF THE FUND. The Fund has qualified as a "regulated
investment company" under Subchapter M of the Internal Revenue Code (the
"Code"). The Fund will be treated as a separate taxpayer for Federal income tax
purposes. Accordingly, the amounts of investment income and capital gains that
are subject to tax will be determined separately for the Fund and the Fund must
separately meet the diversification, income and

distribution requirements for qualification as a "regulated investment company"
within the meaning of the Internal Revenue Code of 1986.

A qualified Fund will not be liable for Federal income tax on any
investment income or capital gains that it distributes to its shareholders, if
at least 90% of its investment income for the taxable year is so distributed.
(Amounts reinvested automatically in additional shares of a Fund will be treated
as distributed to its shareholders.) In addition, in order to avoid a four
percent excise tax, the Fund must distribute, or be treated as having
distributed, before each January 1, at least 98 percent of its ordinary income
earned during the prior calendar year and 98 percent of the net capital gains
earned during the twelve months ending on the preceding October 31.

The requirements for qualification as a regulated investment company
include two significant rules as to investment results. First, the Fund must
earn at least 90 percent of its gross income from dividends, interest, payments
with respect to securities loans, gains from the disposition of equity or debt
securities and income or gains from options on securities (the "90 percent
test"). Second, the Fund must earn less than 30 percent of its gross income from
gains on securities held less than 3 months (the "30 percent test"). The Fund
does not expect the 90% test to significantly affect its investment policy. The
30 percent test will restrict the extent to which the Fund may: (i) sell
securities held for less than three months; (ii) write options that expire in
less than three months; (iii) close options that were written or purchased
within the preceding three months; and (iv) hold certain options during the
fourth quarter of its taxable year.

TAXATION OF SHAREHOLDERS. Long term capital gains are taxed at a
maximum rate of 28% rather than the maximum rate applicable to ordinary income
for individuals (currently 39.6%). Capital losses are deductible only against
capital gains, plus for individuals, up to $3,000 of ordinary income. If a
shareholder who receives a distribution taxable as long-term capital gain with
respect to shares of a Fund redeems or exchanges the shares before holding them
(unhedged) for more than six months, loss on the redemption or exchange, up to
the amount of the distribution, will be treated as a long-term capital loss.

Dividends of investment income from the Fund may qualify for the
Federal dividends-received deduction for corporate shareholders only to the
extent of the aggregate amount of dividends received by the Fund from U.S.
corporations. The Fund must hold stock for more than 45 days (90 days in the
case of certain preferred stock), without hedging its investment in the stock in
certain ways, for dividends paid on the stock to be eligible dividends.

If the Fund is the holder of record of any stock on the record date
for any dividends payable with respect to such stock, such dividends are
included in the Fund's gross income as of the later of (a) the date such stock
became ex-dividend with respect to such dividends (i.e., the date on which a
buyer of the stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date the Fund acquired such stock. Accordingly, in order
to satisfy its income distribution requirements, the Fund may be required to pay
dividends based on anticipated earnings, and a shareholder may receive dividends
in an earlier year than would otherwise be the case. If a shareholder (a) incurs
a sales charge in acquiring Fund shares, (b) disposes of those shares within
ninety days and (c) acquires shares in a mutual fund for which the otherwise
applicable sales charge is reduced by reason of reinvestment right (i.e., an
exchange privilege), the original sales charge increases the shareholder's tax
basis in the original shares only to the extent that the otherwise applicable
sales charge for the second acquisition is not reduced. The portion of the
original sales charge that does not increase the shareholder's tax basis in the
original shares would be treated as incurred with respect to the second
acquisition and, as a general rule, would increase the shareholder's tax basis
in the newly acquired shares. Furthermore, the same rule also applies to a
disposition of the newly acquired shares made within ninety days of the second
acquisition. This provision prevents a shareholder from immediately deducting
the sales charge by shifting his investment in a family of mutual funds.

BACKUP WITHHOLDING. In general, if a shareholder who is taxed as an
individual cannot certify that he has given his correct taxpayer identification
number to the Fund and that he is not subject to backup withholding, he will be
subject to a 31 percent Federal backup withholding tax on Fund dividends and
distributions and the proceeds of redemptions or exchanges of Fund shares. (An
individual's taxpayer identification number is his social security number.) The
backup withholding tax is not an additional tax and may be credited against a
shareholder's regular Federal income tax liability.

TAXATION OF FUND INVESTMENTS.

CAPITAL GAINS. When the Fund sells a security, the resulting gain or
loss will generally be capital gain or loss and will be long-term capital gain
or loss if the Fund has held the security for more than one year. If the Fund
acquires a debt security at a discount, however, the portion of any gain upon
its sale or redemption that reflects the accrued market discount will be taxed
as ordinary income, rather than capital gain.

FOREIGN TAXES. Because the Fund will invest no more than 10% of its
assets in foreign securities, shareholders will not receive credits against
their Federal income tax due for foreign taxes paid by the Fund, if any.

CALCULATION OF PERFORMANCE

The Fund's total return is computed by finding the average annual
compounded rate of return over the 1, 5 and 10 year periods that would equate
the initial amount invested to the ending redeemable value according to the
following formula:

ERV = P(1xT)'pp'n

where:

P = a hypothetical initial investment of $1,000.
T = average annual total return.
n = number of years.

ERV = ending redeemable value of a hypothetical $1,000 investment
made at the beginning of the 1, 5 and 10 year periods (as
fractional portion thereof), assuming reinvestment of all
dividends and distributions.

This calculation assumes the current maximum sales charge of 4.50% is
included in the initial investment and also assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.

The performance of the Fund is not fixed or guaranteed. Performance
quotations should not be considered to be representations of performance of the
Fund for any period in the future. The performance of the Fund is a function of
many factors including its earnings, expenses and number of outstanding shares.
Fluctuating market conditions; purchases, sales and maturities of portfolio
securities; sales and redemptions of shares of beneficial interest; and changes
in operating expenses are all examples of items that can increase or decrease
the Fund's performance.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Decisions concerning the purchase and sale of portfolio securities and
the allocation of brokerage commissions are made by the Adviser, within the
policy established by its investment committee and subject to review by the
officers of the Fund. In effecting securities transactions, the Adviser
generally seeks to obtain the best price and execution of orders. Commission
rates, being a component of price, are considered together with other relevant
factors. The Adviser will use Fahnestock, of which the Adviser's direct parent,
Fahnestock Viner Holdings, Inc., is the direct sole shareholder, as its
principal broker where, in the judgment of the Adviser, Fahnestock will be able
to obtain a price and execution at least as favorable as other qualified
brokers. All transactions through Fahnestock are made in accordance with
guidelines established by the Board of Trustees. The Fund may not purchase from
Fahnestock securities of

underwritten offerings in which Fahnestock participates as an underwriter. The
Fund may, however, purchase securities from other members of underwriting
syndicates of which Fahnestock is a member, but only in accordance with the
policy set forth below and procedures adopted and reviewed periodically by the
Trustees.

Orders for purchases and sales of securities are placed in a manner
which, in the opinion of the officers of the Fund, will offer the best price and
market for the execution of each such transaction. Purchases from underwriters
of portfolio securities may include a commission or commission paid by the
issuer and transactions with dealers serving as market makers reflect a
"spread". Investments in debt securities are generally traded on a net basis
through dealers acting for their own accounts as principals and not as brokers;
no brokerage commissions are payable on such transactions.

The Fund's primary policy is to execute all purchases and sales of
portfolio instruments at the most favorable prices consistent with best
execution, considering all of the costs of the transaction including brokerage
commissions. This policy governs the selection of brokers and dealers and the
market in which a transaction is executed. Within the framework of this policy,
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. and such other policies as the Trustees may determine, the Adviser may
consider sales of shares of the Fund as a factor in the selection of
broker-dealers to execute the Fund's portfolio transactions.

The Adviser will be governed in the selection of brokers and dealers,
and the negotiation of brokerage commission rates and dealer spreads, by the
reliability and quality of the services, including primarily the availability
and value of research information and to a lesser extent statistical assistance
furnished to the Adviser of the Fund, and their value and expected contribution
to the performance of the Fund. It may not be possible to place a dollar value
on information and services to be received from brokers and dealers, since they
are only supplementary to the research efforts of the Adviser. The research
information and statistical assistance furnished by brokers and dealers may
benefit the Adviser or other advisory clients of the Adviser and, conversely,
brokerage commissions and spreads paid by other advisory clients of the Adviser
may result in research information and statistical assistance beneficial to the
Fund. The Fund will make no binding commitment to allocate amounts of portfolio
transactions. While the Adviser will be primarily responsible for the allocation
of the Fund's brokerage business, the policies and practices of the Adviser in
this regard must be consistent with the foregoing and will at all times be
subject to review by the Trustees.

As permitted by Section 28(e) of the Securities Exchange Act of 1934,
the Fund may pay a broker-dealer which provides broker-

age and research services to the Fund an amount of disclosed commission in
excess of the commission which another broker-dealer would have charged for
effecting that transaction. This practice is subject to a good faith
determination by the Trustees that such commission is reasonable in light of the
brokerage and research services provided and to such policies as the Trustees
may adopt from time to time.

CUSTODY OF PORTFOLIO

Portfolio securities of the Fund are held pursuant to a custodian
agreement between the Trust and Investors Fiduciary Trust Company, 127 West 10th
Street, Kansas City, Missouri 64105 (the "Custodian"). Under the custodian
agreement, the Custodian performs custody and portfolio and accounting services
for the Trust and the Fund.

INDEPENDENT AUDITORS AND COUNSEL

Coopers & Lybrand L.L.P., the independent auditor of the Trust, audits
and renders an opinion on the Fund's annual financial statements.

Faith Colish, A Professional Corporation, serves as counsel for the
Fund.

FINANCIAL STATEMENTS

The Fahnestock Funds hereby incorporates by reference the Annual
Report to Shareholders of Hudson Capital Appreciation Fund for the fiscal year
ended December 31, 1995. The Fund will provide a copy of the Annual Report to
each person who requests a copy of this Statement of Additional Information. The
Fund will also furnish a copy of the Annual Report without charge to any
shareholder upon request directed to the Fund at the address or telephone number
given on the cover page of this Statement of Additional Information.

PART C
OTHER INFORMATION

Item 24: Financial Statements and Exhibits
(a) Financial Statements included in Registration Statement:

(i) Financial Highlights included in Part A.

(ii) Incorporated by reference under "Financial Statements" in Part
B are the Annual Report to Shareholders for the fiscal year
ended December 31, 1995 pertaining to Hudson Capital
Appreciation Fund, which includes the Statement of Investments
and Statement of Assets and Liabilities as of December 31,
1995; Statement of Operations for the Year ended December 31,
1995; Statement of Changes in Net Assets for the years ended
December 31, 1994 and 1995; Financial Highlights for the years
ended December 31, 1993, 1994 and 1995; Notes to Financial
Statements; and the Reports of Coopers & Lybrand L.L.P.,
Independent Auditors, dated February 19, 1994, February 13,
1995 and February 6, 1996.

(b) Exhibits:

<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
- ----------- -----------------------
<S> <C>
1 Declaration of Trust of Registrant*

2 By-Laws*

2.1 Revised By-Laws to reflect amendment to
Article V, Section 1**

3 Not applicable

4 Specimen copy of certificate for shares
issued by Registrant**

5.1 Investment Management Agreement effective
February 23, 1993****

6 Distribution Agreement***

7 Not applicable

8 Custody Agreement***

9(a) Transfer Agency Agreement***

9(b) Administration Agreement***

</TABLE>

C-1

<TABLE>
<S> <C>
9(c) Sub-Administration Agreement***

10 Opinion and Consent of Gaston & Snow**

11 Opinion and Consent of Coopers & Lybrand L.L.P.

12 Not applicable

13 Not applicable

14 Not applicable

15 Plan of Distribution***

</TABLE>

________________________

* Incorporated by reference to Registrant's Registration Statement on Form
N-1A filed on September 4, 1990.

** Incorporated by reference to Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A filed on January 22, 1991.

*** Incorporated by reference to Post-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A filed on April 29, 1992.

**** Incorporated by reference to Post-Effective Amendment No. 3 to
Registrant's Registration Statement on Form N-1A filed on
February 26, 1993.

C-2

Item 25. Persons Controlled by or Under Common Control
with Registrant

Not applicable

Item 26. Number of Holders of Securities

As of April 8, 1996 there were 986 record holders of Registrant's
shares of beneficial interest, par value $.01 per share.

Item 27. Indemnification

Incorporated by reference to Item 27 of Part C of Pre-Effective
Amendment No. 2 to Registrant's Registration Statement filed on January 22,
1991.

Item 28. Business and Other Connections of Investment Manager

Hudson Capital Advisors, Inc. ("Hudson"), a wholly-owned subsidiary of
Fahnestock Viner Holdings, Inc., serves as Investment Manager to Registrant.
Hudson acts as investment manager primarily for institutional clients and is one
of the managers of the Managers Fund, a registered management open-end
investment company. Listed below are the names of all of the directors
and officers of Hudson as of April 11, 1996, their positions with the
Registrant, if any, and, under the heading "Other Business Activities and
Principal Business Addresses", any business, profession, vocation or employment
of a substantial nature (other than the business of Hudson) in which they have
been engaged for their own account or in the capacity of director, officer,
employee, partner or trustee during the past two fiscal years of Hudson.

Name and Position Position with
with Hudson Registrant Other Businesses, etc.
- ----------------- -------------- ----------------------
<S> <C> <C>
Albert G. Lowenthal Trustee, Chairman Chairman of Board of
President and of Board of Directors, Chief Execu-
Director Trustees, and tive Officer and Chief
Chief Executive Financial Officer of
Officer Fahnestock & Co., Inc.,
its holding company
parent, Fahnestock Viner
Holdings, Inc. and its
affiliated companies.

A. W. Oughtred None Solicitor, Borden &
Director Elliot; Director of
Fahnestock & Co.,
Inc. and its
affiliated companies.

</TABLE>

C-3

<TABLE>

E. K. Roberts None President,
Director, Fahnestock Viner
Treasurer and Holdings, Inc.;
Secretary Treasurer and
Director, Fahnestock
& Co., Inc. and
Director of its
affiliated companies.

K. A. Roberts None Vice Chairman and
Director Director, Fahnestock
Viner Holdings,
Inc., Director,
Fahnestock & Co.,
Inc. and its
affiliated companies.

Howard W. Shawn None None
Director,
Senior Vice
President,
Principal

James D. Gerson Senior Vice President Director, Ag Services
Senior Vice and Portfolio Manager of America, Inc., American
President Power Conversion Corporation,
Computer Outsourcing Services,
Inc., Conceptronic Inc.,
Energy Research Corp., and
Hilite Industries, Inc.

</TABLE>

Item 29. Principal Underwriter

(a) Not applicable

(b) The following information is provided with respect to each
director and officer of Fahnestock as of April 11, 1996.

Name and Principal Positions and Offices Positions and Offices
Business Address* with Fahnestock with Registrant
- ------------------ --------------------- ---------------------
<S> <C> <C>
Albert G. Lowenthal Chairman of the Board Trustee, Chairman of
of Directors, the Board of
Chief Executive Trustees, and Chief
Officer, and Chief Executive Officer
Financial Officer

Michael Mendelson Managing Director of Trustee
Fahnestock Asset
Management, a division
of Fahnestock & Co., Inc.

Richard Wohlman Comptroller Treasurer and Chief
Financial Officer

Russell L. Pollack Benefits Director and Secretary
Manager, Corporate Tax

Robert M. Neuhoff Executive Vice N/A
President

</TABLE>

- --------
*Except as otherwise indicated, principal business address is 110 Wall Street,
New York, NY 10005.

C-4

<TABLE>

<S> <C> <C>
Kenneth A. Roberts Director N/A
Fahnestock Viner
Holdings, Inc.
P.O. Box 16
Suite 1204
Guardian of Canada Tower
181 University Ave.
Toronto, Ontario M5H 3M7

James D. Gerson Senior Vice Senior Vice President and
President Portfolio Manager

Elaine Kells Treasurer and N/A
Roberts Director
Fahnestock Viner
Holdings, Inc.
P.O. Box 16/Suite 1204
Guardian of Canada Tower
181 University Ave.
Toronto, Ontario M5H 3M7

Angus Winn Director N/A
Oughtred
Borden & Elliot
40 King Street West
Toronto, Canada M5H 3Y4

</TABLE>

Item 30. Location of Accounts and Records

(1) Hudson Capital Advisors, Inc.
805 Third Avenue
New York, New York 10022

(2) The Fahnestock Funds
110 Wall Street
New York, New York 10005

(3) Investors Fiduciary Trust Company
127 West 10th Street
Kansas City, Missouri 64105

Item 31. Management Services

Not applicable

Item 32. Undertakings

32(c) A brief discussion of relevant market conditions and the
investment strategies and techniques pursued by the Fund's investment
adviser, that materially affected the performance of the Fund during
its fiscal year ended December 31, 1995, and a line graph comparing
the initial account value and subsequent account values at the end of
each fiscal year from inception (1991) to the present to the Standard
& Poor's Composite Index of

C-5

500 Stocks (including income) are contained in the Fund's Annual
Report to shareholders for the year ended December 31, 1995. The Fund
undertakes to furnish to each person to whom a prospectus is delivered
a copy of said annual report upon request and without charge.

C-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and State of New York, on
the 25th day of April, 1996.

THE FAHNESTOCK FUNDS

By: /s/Albert G. Lowenthal
-----------------------------------
Albert G. Lowenthal, Chairman

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933, and has duly caused this Amendment
to the Registration Statement to be signed on its behalf by the undersigned, in
the City of New York, and State of New York, on the 25th day of April, 1996.

<TABLE>
<CAPTION>
Signature Title Date
--------- ------- ----
<S> <C> <C>

/s/ Albert G. Lowenthal Trustee, Chairman April 25, 1996
- ----------------------- of Board of Trustees
Albert G. Lowenthal, (Chief Executive Officer)
as officer and Trustee
and not individually

/s/Richard Wohlman Treasurer (Chief April 25, 1996
- ----------------------- Financial and
Richard Wohlman, as Accounting Officer)
officer and not
individually

/s/Michael Mendelson Trustee and President April 25, 1996
- --------------------
Michael Mendelson,
as officer and Trustee
and not individually,
by Albert G. Lowenthal,
Attorney-in-Fact

/s/ Keith Gunzenhauser Trustee April 25, 1996
- --------------------
by Albert G. Lowenthal
- --------------------
Keith Gunzenhauser,
as Trustee only and
not individually, by
Albert G. Lowenthal,
Attorney-in-Fact

</TABLE>

C-7

/s/ Richard E. Landau Trustee April 25, 1996
- --------------------
by Albert G. Lowenthal
- --------------------
Richard E. Landau,
as Trustee only and
not individually, by
Albert G. Lowenthal,
Attorney-in-Fact

/s/ James D. McQuaid Trustee April 25, 1996
- --------------------
by Albert G. Lowenthal
- --------------------
James D. McQuaid,
as Trustee only and
not individually, by
Albert G. Lowenthal,
Attorney-in-Fact

</TABLE>

C-8

INDEX TO EXHIBITS

Page Number
in Sequential
Exhibit No. Description of Exhibit Numbering System
- ----------- ---------------------- ----------------
<S> <C> <C>
1 Declaration of Trust of Registrant............. *

2 By-Laws of Registrant.......................... *

2.1 Revised By-Laws of Registrant.................. **

3 Not applicable

4 Specimen certificate for shares
issued by Registrant........................... **

5.1 Investment Management Agreement dated
February 23, 1993.............................. ****

6 Distribution Agreement......................... ***

7 Not applicable

8 Custody Agreement.............................. ***

9(a) Transfer Agency Agreement...................... ***

9(b) Administration Agreement....................... ***

9(c) Sub-Administration Agreement................... ***

10 Opinion and consent of Gaston & Snow........... **

11 Opinion and Consent of Coopers & Lybrand L.L.P.

12 Not applicable

13 Not applicable

14 Not applicable

15 Plan of Distribution........................... ***

</TABLE>

- -----------------------------
* Incorporated by reference to Registrant's Registration
Statement on Form N-1A filed on September 4, 1990.

** Incorporated by reference to Pre-Effective Amendment No. 1
to Registrant's Registration Statement on Form N-1A filed
on January 22, 1991.

*** Incorporated by reference to Post-Effective Amendment No. 2
to Registrant's Registration Statement on Form N-1A filed
on April 29, 1992.

**** Incorporated by reference to Post-Effective Amendment No. 3
to Registrant's Registration Statement on Form N-1A filed
on February 26, 1993.

STATEMENT OF DIFFERENCES

Mathematical powers normally expressed as superscripts shall be preceded by
'pp'
The dagger footnote symbol shall be expressed as `D'

EXHIBIT 11

[COOPERS & LYBRAND LETTERHEAD]

CONSENT OF INDEPENDENT ACCOUNTANTS

-----------------------

We consent to the incorporation by reference in Post-Effective Amendment No. 6
to the Registration Statement of the Fahnestock Funds on Form N-1A (File No.
33-36697) of our report dated February 6, 1996 on our audit of the financial
statements and financial highlights of Hudson Capital Appreciation Fund, (the
one series comprising the Fahnestock Funds), which report is included in the
Annual Report to Shareholders for the year ended December 31, 1995 which is also
incorporated by reference in this Post Effective Amendment to the Registration
Statement.

We also consent to the references of our Firm in the Prospectus under the
caption "Financial Highlights" and in the Statement of Additional Information
under the caption "Independent Auditors and Counsel".

COOPERS & LYBRAND L.L.P.

New York, New York
April 22, 1996