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HUDSON CAPITAL
APPRECIATION FUND 110 Wall Street
(A Series of The Fahnestock Funds) New York, New York 10005
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Dear Shareholder:
We are pleased to present the Annual Report of Hudson Capital Appreciation
Fund for the period ending December 31, 1996.
PERFORMANCE COMPARISON
The Hudson Capital Appreciation Fund was ranked the #3 performing growth
fund by Lipper Analytical Services for the year ending December 31, 1996.
The Fund net asset value increased 40.7% for the full year of 1996. This
compared to a 23.8% increase for the Standard & Poor's Composite Index of 500
Common Stocks and a 26.0% increase for the NASDAQ index. For the last six months
of 1996, the Fund increased 17.8%, compared to a 12.0% increase for the S&P 500
and 14.0% for the NASDAQ index. At year end, the Fund's net asset value per
share was $12.99 after payment of a capital gain distribution of $3.02 on
December 30.
INVESTMENT STRATEGY
Under the management of James Gerson, which began in the 4th Quarter of
1995, the Fund has continued to seek out well-managed companies whose current
performance is under-recognized by the stock market, and thus can be purchased
at reasonable prices. These companies may be large or small and can be found in
many industries. At year end, the portfolio held approximately 62% of its assets
in small and mid-cap companies, 33% in larger capitalization companies and 5% in
cash and cash equivalents. Stocks purchased on this basis are sold when either
the fundamentals change, or stock price appreciation make them fairly valued.
FACTORS AFFECTING PORTFOLIO PERFORMANCE
The factors affecting our performance appear to be the character of the
securities selected, which are primarily 'value' oriented growth companies. By
'value' we mean companies whose price in relation to their historical earnings
growth rate is conservative and that have strong balance sheets. In addition, we
seek successful companies that are expanding into related business areas where
management competence is likely to once again, be rewarded. Often, this leads us
to successful companies in out-of-favor or cyclical industries. When the market
perception changes, we expect to be rewarded by an increase in the stock's
price.
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STOCK SELECTION
As we look ahead, our stock selection shall continue to focus on the
identification of undervalued companies whose stock prices do not yet reflect
fundamental trends such as growth in sales, earnings and strong industry
momentum. We do not attempt to anticipate market direction and so will remain
relatively fully invested. We appreciate your confidence as we serve your long
term investment needs.
Very truly yours,
/s/ ALBERT G. LOWENTHAL
Albert G. Lowenthal
Chairman of the Board
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THE VALUE OF A $10,000 INVESTMENT IN THE HUDSON CAPITAL APPRECIATION FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Hudson Capital Appreciation Fund (the 'Fund') from March 5, 1991 (start of
performance) to December 31, 1996, compared to the Standard and Poor's 500 Index
(S&P 500).`D'
HUDSON CAPITAL APPRECIATION FUND
6 Year Total Returns
[GRAPH OF HUDSON CAPITAL APPRECIATION FUND VERSUS S&P 500]
AVERAGE ANNUAL TOTAL RETURNS** FOR THE PERIOD
ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
1 Year............................................................. 34.20%
5 Year............................................................. 12.59%
Start of Performance (03/05/91).................................... 13.83%
</TABLE>
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PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY
BE WORTH MORE OR LESS THAN ORIGINAL COST.
* Represents a hypothetical investment of $10,000 in the Fund, after
deducting the maximum sales load of 4.50% ($10,000 investment minus $450 sales
load=$9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions.
** Total returns quoted reflect all applicable sales loads.
`D' Source: The S&P 500 is not adjusted to reflect sales loads, expenses,
or other fees that the SEC requires to be reflected in the Fund's performance.
The S&P 500 has been adjusted to reflect reinvestment of dividends on securities
in the index. This index is unmanaged.
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HUDSON CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
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<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -----------
<S> <C> <C>
COMMON STOCKS -- 98.3%
AGRICULTURE -- 10.7%
10,000 AGCO Corporation $ 286,250
17,000 Arcadian Corporation 450,500
19,000 Con Agra, Inc. 945,250
-----------
Total 1,682,000
-----------
BUILDING & CONSTRUCTION -- 4.5%
20,000 Continental Homes Holding Corp. 425,000
22,500(b) Genlyte Group, Inc. 281,250
-----------
Total 706,250
-----------
CHEMICALS -- 4.4%
9,500 Arco Chemical Company 465,500
20,000 NL Industries, Inc. 217,500
-----------
Total 683,000
-----------
COMMUNICATIONS -- 1.5%
15,000(b) IFR Systems, Inc. 236,250
-----------
Total 236,250
-----------
COMPUTER PRODUCTS -- 4.8%
15,000(b) EMC Corporation 496,875
16,000(b) Phoenix Technology Ltd. 258,000
-----------
Total 754,875
-----------
</TABLE>
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The accompanying notes are an integral part of the financial statements.
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HUDSON CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
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<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS -- 9.7%
6,000 Blount International Inc. -- Class A $ 230,250
31,000(b) Childrens Discovery Ctrs. Amer. 217,000
27,000(b) Helen of Troy Ltd. 594,000
20,000(b) Mackie Designs, Inc. 130,000
15,000 Regis Corp. Minnesota 243,750
40,000(b) Sirena Apparel Group 103,750
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Total 1,518,750
-----------
ELECTRONICS -- 11.7%
17,600(b) Aeroflex, Inc 83,600
7,000(b) ASM Lithography Holding 348,688
10,000(b) NU Horizons Electronic 79,375
25,000(b) Speedfam International 712,500
15,000(b) Teradyne, Inc. 365,625
10,000(b) UHratech Stepper, Inc. 237,500
-----------
Total 1,827,288
-----------
ENVIRONMENTAL -- 1.4%
33,000(b) Gundle/SLT Environmental, Inc. 218,625
-----------
Total 218,625
-----------
FINANCIAL -- 5.6%
8,000 State Street Boston Corp. 516,000
8,000 Travelers Group, Inc. 363,000
-----------
Total 879,000
-----------
</TABLE>
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The accompanying notes are an integral part of the financial statements.
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HUDSON CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
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<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
INDUSTRIAL PRODUCTS -- 15.2%
15,000 Baldor Electric $ 369,375
8,000(b) Esterline Technologies Corp. 209,000
13,000 Graco, Inc. 318,500
15,000(b) Jacobs Engineering Group, Inc. 354,375
18,375(b) New Brunswick Scientific 128,625
33,000(b) Supreme Industries, Inc. -- Class A 187,687
15,000 Titan Wheel International, Inc 191,250
15,000 Valmont Industries 618,750
-----------
Total 2,377,562
-----------
OIL, ENERGY & GAS EXPLORATION
SERVICE, PRODUCTION AND DISTRIBUTION -- 9.8%
15,000(b) Abacan Resources Corp. 130,313
8,000(b) Hvide Marine, Inc. 174,000
15,500(b) Louis Dreyfus Natural Gas Corp. 265,437
9,000(b) Petroleum Geo-Service 351,000
28,699(b) Southern Union Company 631,378
-----------
Total 1,552,128
-----------
PHARMACEUTICALS & HEALTH -- 7.1%
14,000 McKesson Corp. 784,000
16,000(b) Rehabcare Group, Inc. 322,000
-----------
Total 1,106,000
-----------
RESTAURANTS -- 2.5%
26,000(b) Garden Fresh Restaurant Corp. 263,250
10,000(b) O'Charleys, Inc. 130,000
-----------
Total 393,250
-----------
</TABLE>
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The accompanying notes are an integral part of the financial statements.
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HUDSON CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996
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<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -----------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL -- 4.1%
15,000(b) Travis Boats & Motors, Inc. $ 189,375
20,000 Wal-Mart Stores, Inc. 457,500
-----------
Total 646,875
-----------
TRANSPORTATION -- 5.3%
15,000 Air Express International Corp. 483,750
20,000(b) Celadon Group, Inc. 220,000
12,000(b) Matlack Systems, Inc. 82,500
10,000(b) P.A.M. Transportation 45,625
-----------
Total 831,875
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TOTAL COMMON STOCKS (Cost $12,221,116) 15,413,728
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<S> <C> <C>
SHORT-TERM GOVERNMENT OBLIGATIONS -- 1.6%
$ 250,000 United States Treasury Bill, 2/27/1997 248,079
-----------
TOTAL SHORT-TERM GOVERNMENT OBLIGATIONS (Cost $248,079) 248,079
-----------
TOTAL INVESTMENTS -- 99.9% (Cost $12,469,195)(a) 15,661,807
Cash and Other Assets in Excess of Liabilities -- 0.1% 8,913
-----------
Net Assets -- 100% $15,670,720
-----------
-----------
</TABLE>
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(a) The cost of investments for federal tax purposes amounts to $12,469,195. The
net unrealized appreciation of investments on a federal tax basis amounts to
$3,192,612 which is comprised of $3,665,603 appreciation and $472,991
depreciation at December 31, 1996.
(b) Non-income producing security.
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The accompanying notes are an integral part of the financial statements.
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HUDSON CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
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<TABLE>
<S> <C>
ASSETS:
Total investments in securities, at value (Cost $12,469,195) (Note 1)........................... $15,661,807
Dividends receivable............................................................................ 14,004
Receivable for Fund shares sold................................................................. 892,300
-----------
Total assets............................................................................... 16,568,111
-----------
LIABILITIES:
Due to custodian bank........................................................................... 643,236
Payable for capital gain distribution........................................................... 35,702
Payable for Fund shares redeemed................................................................ 4,606
Payable for investments purchased............................................................... 53,515
Other payables and accrued expenses............................................................. 160,332
-----------
Total liabilities.......................................................................... 897,391
-----------
Net assets...................................................................................... $15,670,720
-----------
-----------
Shares of beneficial interest outstanding (unlimited number of $.001 par value shares
authorized).................................................................................... 1,205,913
-----------
-----------
Net asset value and redemption price per share ($15,670,720/1,205,913).......................... $ 12.99
-----------
-----------
Maximum offering price per share (NAV/(1-maximum sales charge))................................. $ 13.60
-----------
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NET ASSETS CONSIST OF:
Paid in capital................................................................................. $12,461,761
Net unrealized appreciation of investments...................................................... 3,192,612
Accumulated net realized gain on investments.................................................... 16,347
-----------
Net assets................................................................................. $15,670,720
-----------
-----------
</TABLE>
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The accompanying notes are an integral part of the financial statements.
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HUDSON CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
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<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest......................................................................................... $ 58,441
Dividends........................................................................................ 123,664
----------
Total income................................................................................ 182,105
----------
Expenses: (Notes 2 and 3)
Investment management fee........................................................................ 133,239
Distribution expenses............................................................................ 66,620
Legal, compliance and filing fees................................................................ 93,249
Custodian fee.................................................................................... 9,564
Shareholder servicing and related shareholder expenses........................................... 87,014
Audit and accounting............................................................................. 36,273
Amortization of organization expenses............................................................ 4,085
Trustees' fees and expenses...................................................................... 18,991
Other............................................................................................ 17,226
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Total expenses.............................................................................. 466,261
----------
Fees waived...................................................................................... (133,239)
Net expenses..................................................................................... 333,022
----------
Net investment loss.............................................................................. (150,917)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments...................................................................... 2,958,488
Net change in unrealized appreciation of investments.................................................. 1,794,231
----------
Net gain on investments.......................................................................... 4,752,719
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Net increase in net assets from operations............................................................ $4,601,802
----------
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</TABLE>
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The accompanying notes are an integral part of the financial statements.
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HUDSON CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
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<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Investment loss net.................................................... $ (150,917) $ (22,887)
Net realized gain on investments....................................... 2,958,488 1,459,180
Unrealized appreciation (depreciation) of investments.................. 1,794,231 1,073,821
----------------- --------------------
Net increase in net assets resulting from operations.............. 4,601,802 2,510,114
Distributions to shareholders from net realized gains.................. (2,791,224) (1,442,286)
Share transactions -- net (Note 4)..................................... 1,762,917 (4,844,459)
----------------- --------------------
Net increase (decrease) in net assets............................. 3,573,495 (3,776,631)
Net Assets:
Beginning of year................................................. 12,097,225 15,873,856
----------------- --------------------
End of year....................................................... $15,670,720 $ 12,097,225
----------------- --------------------
----------------- --------------------
</TABLE>
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The accompanying notes are an integral part of the financial statements.
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HUDSON CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS
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1. SUMMARY OF ACCOUNTING POLICIES.
Hudson Capital Appreciation Fund (the 'Fund') is a series of The Fahnestock
Funds, a Massachusetts business trust (the 'Trust'). The Trust is an open-end
diversified management investment company registered under the Investment
Company Act of 1940. The Fund seeks long term growth through capital
appreciation by investing primarily in equity securities. Current income is a
secondary consideration. Its financial statements are prepared in accordance
with generally accepted accounting principles for investment companies as
follows:
A) VALUATION OF SECURITIES
Securities traded on a national securities exchange are valued 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 such date, 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 are valued at amortized
cost, which approximates market value. Portfolio securities for
which current quotations are not readily available are valued at
fair value as determined in good faith by the Board of Trustees.
B) FEDERAL INCOME TAXES
It is the Trust's policy to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders.
Therefore, no provision for federal income tax is required.
C) ORGANIZATION COSTS
Organization expenses are being amortized on a straight-line basis
over a period of five years.
D) GENERAL
Securities transactions are recorded on a trade date basis. Interest
income, including amortization of premium and discount, is accrued
as earned and dividend income is recorded on the ex-dividend date.
Realized gains and losses from securities transactions are recorded
on the identified cost basis.
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HUDSON CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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E) DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the
ex-dividend date.
Income distributions and capital gain distributions are determined
in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are
primarily due to differing treatments for net operating losses.
The net effect of these differences for the year ended December 31,
1996 decreased undistributed net investment loss by $150,917 and
decreased undistributed realized gains by $150,917.
F) OTHER
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES.
Under the Investment Management Agreement, the Fund pays an investment
management fee to Hudson Capital Advisors, Inc. (the 'Advisor') equal to 1.00%
of the Fund's average daily net assets up to $25 million and 0.75% of annual
average net assets in excess of $25 million.
Under the Fund's Administration Agreement with Fahnestock & Co. Inc. (the
'Administrator'), the Administrator has agreed to provide administrative
services to the Fund at no charge.
The Advisor has agreed that, if in any fiscal year the sum of the Fund's
expenses (excluding payments under the Distribution Plan) exceeds 2 1/2% of the
first $30 million of its average daily net assets, 2% of the next $70 million of
its average daily net assets and 1 1/2% of its average daily net assets in
excess of $100 million, the Advisor will reduce the advisory fee or reimburse
the Fund for any such excess amounts. During the year ended December 31, 1996,
The Fund incurred investment management fees of $133,239. However, the Advisor
has waived $133,239 of expenses in order to comply with the agreement as stated
above.
In acting as Distributor during the year, Fahnestock & Co. Inc. earned $35,000
of commissions on sales of the Fund's shares.
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HUDSON CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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Fees are paid to Trustees who are unaffiliated with the Advisor on the basis of
$3,000 per annum plus $750 per meeting attended.
At December 31, 1996, affiliated Trustees owned 17,211 shares (1.4%) of the
Fund.
3. DISTRIBUTION PLAN.
Pursuant to Rule 12b-1 under the Investment Company Act of 1940, the Trust has
adopted a Distribution Plan (the 'Plan') under which it may reimburse Fahnestock
& Co. Inc. (the 'Distributor') for expenses relating to the distribution of Fund
shares at an annual rate not to exceed .50 of 1% of the Fund's average daily net
assets. Distribution expenses incurred in a year in excess of .50 of 1% of the
Fund's average daily net assets may be carried forward and sought to be
reimbursed in future years. Interest at the prevailing broker loan rate may be
charged to the Fund on any expenses carried forward and those expenses and
interest will be reflected as current expenses on the Fund's statement of
operations for the year in which they become accounting liabilities.
4. TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST.
At December 31, 1996, the Fund had authorized an unlimited number of shares of
beneficial interest ($.001 par value). Transactions were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold........................................... 223,039 $ 2,946,523 141,457 $ 1,649,479
Issued on reinvestment of dividends and
distributions................................ 213,111 2,755,522 125,192 1,413,414
Redeemed....................................... (292,500) (3,939,128) (654,267) (7,907,352)
-------- ----------- -------- -----------
Net increase (decrease)................... 143,650 $ 1,762,917 (387,618) $(4,844,459)
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
5. INVESTMENT TRANSACTIONS.
Purchases and sales of investment securities, other than short-term investments,
totaled $9,911,659 and $9,876,070, respectively. Fahnestock & Co. Inc. earned
commissions of $3,180 for executing securities transactions of the Fund during
the year ended December 31, 1996.
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HUDSON CAPITAL APPRECIATION FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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6. FINANCIAL HIGHLIGHTS.
(for a share outstanding throughout each period)
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992 1991`DD'
------------ ------------ ------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period... $ 11.39 $ 10.95 $ 13.72 $ 11.93 $ 11.36 $ 10.00
Income from investment
operations:
Net investment
income/(loss)......... (0.10) (0.03) (0.06) (0.13) (0.05) 0.01
Net realized and
unrealized gains
(losses) on
investments........... 4.72 2.09 (1.48) 2.25 1.02 1.74
------------ ------------ ------------ ------------ ------------ --------
Total income from
investment
operations........ 4.62 2.06 (1.54) 2.12 0.97 1.75
------------ ------------ ------------ ------------ ------------ --------
Less dividends paid to
shareholders:
Dividends paid from net
realized gains on
investments........... (3.02) (1.62) (1.23) (0.33) (0.40) (0.39)
------------ ------------ ------------ ------------ ------------ --------
Net asset value, end of
period................ $ 12.99 $ 11.39 $ 10.95 $ 13.72 $ 11.93 $ 11.36
------------ ------------ ------------ ------------ ------------ --------
------------ ------------ ------------ ------------ ------------ --------
Total return................ 40.68% 18.94% (11.22)% 17.77% 8.54% 17.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000
omitted).............. $ 15,671 $ 12,097 $ 15,874 $ 19,227 $ 16,993 $11,987
Ratio of expenses to
average net assets.... 2.50%`D' 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.... (1.13)%`D' (0.16)%`D' (0.46)%`D' (1.00)%`D' (0.48)%`D' 0.11%*`D'
Average commission rate
paid.................. $ 0.0597`D'`D' -- -- -- -- --
Portfolio turnover
rate.................. 85.37% 197.71% 194.55% 154.18% 256.84% 250.85%
</TABLE>
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* Annualized
`D' The ratios of expenses and investment income/(loss) (net) to average net
assets are net of expenses voluntarily reimbursed by the Advisor,
Administrator and Distributor in the amount of 1.00%, .92%, .27%, .25%,
1.10% and .56%, respectively.
`DD' Reflects operations for the period from March 5, 1991 (commencement of
operations) to December 31, 1991.
`D'`D' For the fiscal year beginning on or after September 1, 1995, the
Portfolio is required to disclose its average commission rate per share
for purchases or sales of equity securities.
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HUDSON CAPITAL APPRECIATION FUND
REPORT OF INDEPENDENT ACCOUNTANTS
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To the Stockholders and Board of Trustees of
Hudson Capital Appreciation Fund:
We have audited the accompanying statement of assets and liabilities of
Hudson Capital Appreciation Fund (the 'Fund') (The one series comprising the
Fahnestock Funds), including the statement of investments, as of December 31,
1996, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and financial highlights for each of the four years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the year ended December 31, 1992, and for
the period March 5, 1991 (commencement of operations) to December 31, 1991, were
audited by other auditors, whose report, dated February 10, 1993, expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Hudson Capital Appreciation Fund as of December 31, 1996, the results of its
operations, the changes in its net assets and the financial highlights for the
periods referred to above, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Kansas City, Missouri
February 17, 1997
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HUDSON CAPITAL
APPRECIATION FUND
(A Series of The Fahnestock Funds)
110 Wall Street
New York, New York 10005
Telephone (800) 221-5588
INVESTMENT ADVISOR
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
- -------------------------------------
This report is submitted for the
general information of the
shareholders of the Fund. It is not
authorized for distribution to
prospective investors in the Fund
unless preceded or accompanied by an
effective prospectus, which includes
information regarding the Fund's
objectives and policies, experience
of its management, marketability of
shares, and other information.
HUDSON CAPITAL
APPRECIATION
FUND
ANNUAL REPORT
DECEMBER 31, 1996
[LOGO]
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HUD 703013
STATEMENT OF DIFFERENCES
The dagger symbol shall be expressed as .......... 'D'
The double dagger symbol shall be expressed as ... 'DD'
