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<SEC-DOCUMENT>0000791963-02-000001.txt : 20020415
<SEC-HEADER>0000791963-02-000001.hdr.sgml : 20020415
ACCESSION NUMBER:		0000791963-02-000001
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20011231
FILED AS OF DATE:		20020401

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FAHNESTOCK VINER HOLDINGS INC
		CENTRAL INDEX KEY:			0000791963
		STANDARD INDUSTRIAL CLASSIFICATION:	SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211]
		IRS NUMBER:				980080034
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-12043
		FILM NUMBER:		02598456

	BUSINESS ADDRESS:	
		STREET 1:		SUITE 1110, P.O. BOX 2015
		STREET 2:		20 EGLINTON AVE. WEST
		CITY:			TORONTO ONTARIO CANADA
		STATE:			A0
		ZIP:			M4R 1K8
		BUSINESS PHONE:		(416)322-1515

	MAIL ADDRESS:	
		STREET 1:		PO BOX 2015 SUITE 1110
		STREET 2:		20 EGLINTON AVENUE WEST
		CITY:			TORONTO ONTARIO CANADA
		STATE:			A6
		ZIP:			M4R 1K8

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VINER E A HOLDINGS LTD
		DATE OF NAME CHANGE:	19880622

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GOLDALE INVESTMENTS LTD
		DATE OF NAME CHANGE:	19861030
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>f10k01z.htm
<TEXT>
<!DOCTYPE HTML PUBLIC "-//IETF//DTD HTML//EN">
<html>


<body bgcolor="#FFFFFF">

<p align="center"><font size="3" face="Arial"></font>&nbsp;</p>

<p align="center"><font size="2" face="Arial"><b>_________________________________________________________________________________</b></font></p>

<p align="center"><font size="2" face="Arial">UNITED STATES</font></p>

<p align="center"><font size="2" face="Arial">SECURITIES AND
EXCHANGE COMMISSION</font></p>

<p align="center"><font size="2" face="Arial">Washington, D. C.
20549</font></p>

<p align="center"><font size="2" face="Arial"><b>FORM 10-K</b></font></p>

<p><font size="2" face="Arial">(Mark One) </font></p>

<p><font size="2" face="Arial">[x] ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For
the fiscal year ended December 31, 2001<b> </b></font></p>

<p align="center"><font size="2" face="Arial">OR</font></p>

<p><font size="2" face="Arial">[ ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For
the transition period from _________ to _________.</font></p>

<p><font size="2" face="Arial">Commission file number 1-12043</font></p>

<p align="center"><font size="2" face="Arial"><b>FAHNESTOCK VINER
HOLDINGS INC.<br>
</b>(Exact name of registrant as specified in its charter)</font></p>

<p align="center"><font size="2" face="Arial">Ontario, Canada <br>
(State or other jurisdiction of incorporation or organization)</font></p>

<p align="center"><font size="2" face="Arial">98-0080034<br>
(I.R.S. Employer Identification No.)</font></p>

<p align="center"><font size="2" face="Arial">P.O. Box 2015,
Suite 1110<br>
20 Eglinton Avenue West<br>
Toronto, Ontario, Canada M4R 1K8<br>
(Address of principal executive offices) (Zip Code)</font></p>

<p align="center"><font size="2" face="Arial">Registrant&#146;s
Telephone number, including area code: (416) 322-1515</font></p>

<p><font size="2" face="Arial">Securities registered pursuant to
Section 12(b) of the Act:</font></p>

<p><font size="2" face="Arial">Name of each exchange</font></p>

<p><font size="2" face="Arial"><u>Title of each class</u> <u>on
which registered</u> </font></p>

<p><font size="2" face="Arial">Class A non-voting shares New York
Stock Exchange</font></p>

<p><font size="2" face="Arial">Securities registered pursuant to
Section 12(g) of the Act:</font></p>

<p><font size="2" face="Arial"><u>Title of each class</u></font></p>

<p><font size="2" face="Arial">Not Applicable</font></p>

<p><font size="2" face="Arial">Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [x]
No [ ]</font></p>

<p><font size="2" face="Arial">Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]</font></p>

<p><font size="2" face="Arial">The aggregate market value of the
voting stock of the Company held by non-affiliates of the Company
cannot be calculated in a meaningful way because there is only
limited trading in the class of voting stock of the Company. The
aggregate market value of the Class A non-voting shares held by
non-affiliates of the Company at December 31, 2001 was
$349,140,000.</font></p>

<p><font size="2" face="Arial">The number of shares of the
Company's Class A non-voting shares and Class B voting shares
(being the only classes of common stock of the Company),
outstanding on February 28, 2002 was 12,479,267 and 99,680
shares, respectively.</font></p>

<p><font size="2" face="Arial">_______________________________________________________________________</font></p>

<p align="center"><font size="3" face="Arial">TABLE OF CONTENTS </font></p>
<div align="center"><center>

<table border="0" cellpadding="7" cellspacing="0" width="576">
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">Item
        Number</font></td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">Page</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">PART
        1</font></td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">1.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Business</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">1</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">2.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Properties</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">13</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">3.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Legal
        Proceedings</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">13</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">4.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Submission
        of Matters to a Vote of Security Holders</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">13</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">PART
        II</font></td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">5.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Market
        for the Registrant&#146;s Common Equity and Related
        Stockholder Matters</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">15</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">6.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Selected
        Financial Data</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">17</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">7.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Management&#146;s
        Discussion and Analysis of Financial Condition and
        Results of Operations</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">18</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">7a.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Quantitative
        and Qualitative Disclosures About Market Risk</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">24</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">8.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Financial
        Statements and Supplementary Data</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">26</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">9.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Changes
        in and Disagreements with Accountants and Financial
        Disclosure</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">26</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">PART
        III</font></td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">10.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Directors
        and Executive Officers of the Registrant</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">27</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">11.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Executive
        Compensation</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">29</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">12.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Security
        Ownership of Certain Beneficial Owners and Management</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">36</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">13.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Certain
        Relationships and Related Transactions</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">37</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">PART
        IV</font></td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="3" face="Arial">14.</font></td>
        <td valign="top" width="77%"><font size="3" face="Arial">Exhibits,
        Financial Statement Schedules, and Reports on Form 8-K</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">38</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="77%"><font size="3" face="Arial">Signatures</font></td>
        <td valign="top" width="9%"><p align="right"><font
        size="3" face="Arial">39</font></p>
        </td>
    </tr>
</table>
</center></div>

<p align="center"><font face="Arial">PART I</font></p>

<p><font face="Arial"><b>Item 1. BUSINESS</b></font></p>

<p><font face="Arial">Fahnestock Viner Holdings Inc., formerly
called E.A. Viner Holdings Limited and immediately prior to that
called Goldale Investments Limited (the &quot;Company&quot;),
maintains its registered office and principal place of business
at 20 Eglinton Avenue West, Suite 1110, Toronto, Ontario M4R 1K8
and its telephone number is (416) 322-1515.</font></p>

<p><font face="Arial">The Company was originally incorporated
under the laws of British Columbia. Pursuant to its Certificate
and Articles of Continuation effective October 12, 1977, the
Company's legal existence was continued under the Business
Corporation Act (Ontario) as if it had been incorporated as an
Ontario corporation.</font></p>

<p><font face="Arial">The Company is a holding company and
carries on no active business. It owns, directly or through
intermediate subsidiaries, Fahnestock &amp; Co. Inc. (formerly
Edward A. Viner &amp; Co., Inc.), a New York corporation
(&quot;Fahnestock&quot;); Freedom Investments, Inc., a Delaware
corporation (&quot;Freedom&quot;); Hudson Capital Advisors Inc.,
a New York corporation (&quot;Hudson Capital&quot;); Evanston
Financial, Inc., a New York corporation (&quot;Evanston&quot;);
since September 17, 2001, Josephthal &amp; Co. Inc., a New York
corporation (&quot;Josephthal&quot;); since November 9, 2001,
Prime Charter, Ltd., a Delaware corporation (&quot;Prime&quot;)
and since January 17, 2002, Fahnestock Canada Inc., an Ontario
corporation (&quot;FCI&quot;). Fahnestock, Freedom, Josephthal
and Prime are sometimes collectively referred to as the
&quot;Operating Subsidiaries&quot;. Through the Operating
Subsidiaries, the Company is engaged in the securities brokerage
and trading business and offers investment advisory and other
related financial services. Fahnestock is the principal Operating
Subsidiary. Fahnestock is engaged in the securities brokerage
business in the United States, operates in Toronto, Canada as an
International Dealer and, through the agency of local licensed
broker-dealers, operates offices in Buenos Aires, Argentina and
Caracas, Venezuela. Hudson Capital was engaged in the investment
advisory business in the United States until July 1999. Its
business is now part of Fahnestock Asset Management, a division
of Fahnestock. The Company operates a discount brokerage business
based in Omaha, Nebraska through Freedom. Freedom also services
independent financial consultants.</font></p>

<p><font face="Arial">In May 2000, through a wholly-owned
subsidiary, the Company acquired 100% of the outstanding shares
of Propp &amp; Company Inc. (&quot;Propp&quot;), a New York-based
broker-dealer in securities. The total purchase price was
approximately $7,000,000. The acquisition was accounted for by
the purchase method. Propp ceased to be a broker dealer effective
on August 15, 2000 and its business is being conducted by
Fahnestock.</font></p>

<p><font face="Arial">In September 2001, through a wholly-owned
subsidiary, Fahnestock acquired 91.6% of the outstanding common
stock of Josephthal Group, Inc (&quot;Josephthal Group&quot;). In
October 2001 substantially all of the remaining outstanding stock
of Josephthal Group was acquired. The purchase price was $1 plus
the assumption of liabilities of $23,885,000. Josephthal Group
indirectly owns 100% of Josephthal, a private New York-based
broker-dealer founded in 1910 with approximately 265 financial
consultants in 25 offices across the United States at the time of
closing. The acquisition was accounted for by the purchase
method. The accounts of Josephthal were converted to
Fahnestock&#146;s system in November 2001. Fahnestock acted as a
clearing agent for Josephthal until December 31, 2001 when the
accounts of Josephthal became accounts of Fahnestock. Josephthal
will make application to withdraw as a broker dealer. Since
January 1, 2002 its business is being conducted by Fahnestock.</font></p>

<p><font face="Arial">In October 2001, through a wholly-owned
subsidiary, Fahnestock acquired 100% of the outstanding common
stock of Grand Charter Group Incorporated (&quot;Grand
Charter&quot;) for a cash consideration of $2,892,000. Grand
Charter owns 100% of Prime, a twelve-year-old full service
securities firm with approximately 110 financial consultants
operating from offices in New York, New York and Boca Raton,
Florida. The acquisition was accounted for by the purchase
method. Effective January 1, 2002, Prime&#146;s accounts became
Fahnestock accounts. The business generated by the two branches
associated with the Prime acquisition is being cleared pursuant
to an agreement with Bank of New York. Prime ceased to be a
broker-dealer effective January 22, 2002 and since January 1,
2002 its business is being conducted by Fahnestock.</font></p>

<p><font face="Arial">At December 31, 2001, Fahnestock employed
1,135 full-time registered representatives and approximately 680
other employees in trading, research, investment banking,
investment advisory services, public finance and support
positions in the United States for Fahnestock and Freedom, for a
total of approximately 1,815 full-time employees. Fahnestock and
Freedom are broker-dealers registered with the Securities and
Exchange Commission (the &quot;SEC&quot;) and in all other
jurisdictions where their respective businesses require
registration. Fahnestock, in addition to its United States
operations, has three additional offices: it conducts business in
Toronto, Ontario as an International Dealer and in Caracas and
Buenos Aires through local broker-dealers who are licensed under
the laws of Venezuela and Argentina, respectively. FCI, a
wholly-owned subsidiary of the Company, filed an application for
registration as an investment dealer with the Investment Dealers
Association of Canada which was approved on January 17, 2002.</font></p>

<p><font face="Arial">The Operating Subsidiaries are collectively
engaged in a broad range of activities in the securities
brokerage business, including retail securities brokerage,
institutional sales, bond trading and investment banking -
offering both corporate and public finance services,
underwriting, research, market making and investment advisory and
asset management services. No material part of the Company's
revenues, taken as a whole, are derived from a single customer or
group of customers.</font></p>

<p><font face="Arial">Fahnestock is a member of the New York
Stock Exchange, Inc. (&quot;NYSE&quot;), the National Association
of Securities Dealers, Inc. (&quot;NASD&quot;), the American
Stock Exchange, Inc. (&quot;AMEX&quot;), the Chicago Stock
Exchange Incorporated (&quot;CSE&quot;), the Chicago Board
Options Exchange, Inc. (&quot;CBOE&quot;), the Philadelphia Stock
Exchange, Inc. (&quot;PHLX&quot;), the New York Futures Exchange,
Inc. (&quot;NYFE&quot;), the National Futures Association
(&quot;NFA&quot;) and the Securities Industry Association
(&quot;SIA&quot;). In addition, Fahnestock has satisfied the
requirements of the Municipal Securities Rulemaking Board
(&quot;MSRB&quot;) for effecting customer transactions in
municipal securities. Freedom is a member of the NASD. Effective
January 1, 2002 all of the business of Josephthal and Prime is
being conducted by Fahnestock. </font></p>

<p><font face="Arial">Fahnestock, which acts as a clearing broker
for Freedom, is also a member of the Securities Investor
Protection Corporation (&quot;SIPC&quot;), which provides, in the
event of the liquidation of a broker-dealer, protection for
customers' accounts (including the customer accounts of other
securities firms when it acts on their behalf as a clearing
broker) held by the firm of up to $500,000 for each customer,
subject to a limitation of $100,000 for claims for cash balances.
SIPC is funded through assessments on registered broker-dealers,
which may not exceed 1% of a broker-dealer's gross revenues (as
defined); SIPC assessments were a flat fee of $150 in 2001, 2000
and 1999. In addition, Fahnestock has purchased protection from
Aetna Casualty and Surety Company of an additional $24,500,000
per customer. </font></p>

<p><font face="Arial"><i>The following table sets forth the
amount and percentage of the Company's revenues from each
principal source for each of the following years ended December
31.</i></font></p>

<table border="0" cellpadding="7" cellspacing="0" width="643">
    <tr>
        <td valign="top" width="32%">&nbsp;</td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial"><u>2001</u></font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial"><u>%</u></font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        face="Arial"><u>2000</u></font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        face="Arial"><u>%</u></font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial"><u>1999</u></font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial"><u>%</u></font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="7"><font face="Arial">(Dollars
        in thousands, except percentages)</font></td>
    </tr>
    <tr>
        <td valign="top" width="32%">&nbsp;</td>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%"><font face="Arial">Commissions</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$122,272</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">47%</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        face="Arial">$128,915</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        face="Arial">41%</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$118,747</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">43%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="32%"><font face="Arial">Principal
        transactions, net</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">56,374</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">22%</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        face="Arial">84,420</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        face="Arial">27%</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">71,014</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">25%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="32%"><font face="Arial">Interest</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">34,309</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">13%</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        face="Arial">63,696</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        face="Arial">20%</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">43,835</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">16%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="32%"><font face="Arial">Underwriting
        fees</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">10,955</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">4%</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        face="Arial">9,314</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        face="Arial">3%</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">15,550</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">5%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="32%"><font face="Arial">Advisory
        fees</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">24,504</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">9%</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        face="Arial">21,764</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        face="Arial">7%</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">22,440</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">8%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="32%"><font face="Arial">Other</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">12,847</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">5%</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        face="Arial">8,390</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        face="Arial">2%</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">7,525</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">3%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="32%">&nbsp;</td>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%"><font face="Arial">Total
        revenues</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$261,261</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">100%</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        face="Arial">$316,499</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        face="Arial">100%</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$279,111</font></p>
        </td>
        <td valign="top" width="9%"><p align="right"><font
        face="Arial">100%</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial">The Company derives most of its revenues
from the operations of its principal subsidiary, Fahnestock.
Although maintained as separate entities, the operations of the
Company's brokerage subsidiaries are closely related because
Fahnestock acts as clearing broker in transactions initiated by
Freedom. Except as expressly otherwise stated, the discussion
below pertains to the operations of Fahnestock.</font></p>

<p><font face="Arial">COMMISSIONS</font></p>

<p><font face="Arial">A significant portion of Fahnestock's
revenues is derived from commissions from retail and, to a lesser
extent, institutional customers on brokerage transactions in
exchange-listed and over-the-counter corporate equity and debt
securities. Brokerage commissions are charged on both exchange
and over-the-counter transactions in accordance with a schedule,
which Fahnestock has formulated. Often, discounts are granted to
customers, generally on large trades or to active customers.
Fahnestock also provides a range of services in other financial
products to retail and institutional customers, including the
purchase and sale of options on the CBOE, the AMEX and other
stock exchanges as well as futures on indexes listed on various
exchanges.</font></p>

<p><font face="Arial">Commission business relies heavily on the
services of financial consultants with good sales production
records. Competition among securities firms for such personnel is
intense. Retail clients' accounts are serviced by retail
financial consultants (excluding the institutional financial
consultants referred to below) in Fahnestock's offices.
Fahnestock's institutional clients, which include mutual funds,
banks, insurance companies, and pension and profit-sharing funds,
are serviced by institutional brokers. (For a discussion of
regulatory matters, see &quot;Regulation&quot;.) The
institutional department is supported by the equity research
department which provides coverage of a number of commercial and
industrial as well as emerging growth companies and special
situation investments. </font></p>

<p><font face="Arial">Securities Clearance Activities</font></p>

<p><font face="Arial">Fahnestock provides a full range of
securities clearance services to two non-affiliated securities
firms on a fully-disclosed basis. In addition to commissions and
service charges, Fahnestock derives substantial interest revenue
from its securities clearing activities. See &quot;Interest&quot;
and &quot;Securities Borrowed And Loaned.&quot; Fahnestock
provides margin financing for the clients of the securities firms
for which it clears, with the securities firms guaranteeing the
accounts of their clients. Fahnestock also extends margin credit
directly to its correspondent firms to the extent that such firms
hold securities positions for their own account. Because
Fahnestock must rely on the guarantees and general credit of its
correspondent firms, Fahnestock may be exposed to significant
risks of loss if any of its correspondents or its correspondents'
customers are unable to meet their respective financial
commitments. See &quot;Risk Management.&quot;</font></p>

<p><font face="Arial">The correspondent clearing procedure for
fully-disclosed accounts involves a series of steps: the
correspondent broker opens an account for its customer and takes
the customer's order for the purchase and sale of securities. The
order is then executed by the correspondent firm or Fahnestock.
Fahnestock completes the transaction by taking possession of the
customer's cash, if securities are being purchased, or
certificates, if securities are being sold, lending the customer
any amounts required if the purchase is being made on margin, and
making delivery to the broker for the other party to the
transaction. Fahnestock or the correspondent sends the customer a
written confirmation containing the details of each transaction
the day after it is executed and Fahnestock sends each customer a
monthly statement for the entire account. The execution,
clearance, settlement, receipt, delivery and record-keeping
functions involved in the clearing process require the
performance of a series of complex steps, many of which are
accomplished with data processing equipment.</font></p>

<p><font face="Arial">Floor Brokerage</font></p>

<p><font face="Arial">In addition to transactions executed by
Fahnestock for itself or its own customers, Fahnestock acts as
agent for the accounts of other brokers. With its memberships on
the various exchanges, Fahnestock attempts to utilize excess
execution capacity by executing orders for other brokerage firms.
Fahnestock bills such other firms at prevailing rates which are
set on a basis competitive with rates charged by other brokerage
firms performing similar functions.</font></p>

<p><font face="Arial">PRINCIPAL TRANASACTIONS</font></p>

<p><font face="Arial">Market-Making</font></p>

<p><font face="Arial">Fahnestock acts as both principal and agent
in the execution of its customers' orders in the over-the-counter
market. Fahnestock buys, sells and maintains an inventory of a
security in order to &quot;make a market&quot; in that security.
(To &quot;make a market&quot; in a security is to maintain firm
bid and offer prices by standing ready to buy or sell round lots
at publicly quoted prices. In order to make a market it is
necessary to commit capital to buy, sell and maintain an
inventory of a security.) As of December 31, 2001, Fahnestock
made approximately 700 dealer markets in the common stock or
other equity securities of corporate issuers. In executing
customer orders for over-the-counter securities in which it does
not make a market, Fahnestock generally charges a commission and
acts as agent or will act as principal by marking the security up
or down in a riskless transaction, working with another firm
which is a market-maker acting as principal. However, when the
buy or sell order is in a security in which Fahnestock makes a
market, Fahnestock normally acts as principal and purchases from
or sells to its customers at a price which is approximately equal
to the current inter-dealer market price plus or minus a mark-up
or mark-down. The stocks in which Fahnestock makes a market also
include those of issuers which are followed by Fahnestock's
research department.</font></p>

<p><font face="Arial">Trading profits or losses depend on (i) the
skills of those employees engaged in market-making activities,
(ii) the capital allocated to holding positions in securities and
(iii) the general trend of prices in the securities markets.
Trading as principal requires the commitment of capital and
creates an opportunity for profits or an exposure to risk of loss
due to market fluctuations. Fahnestock takes both long and short
positions in those securities in which it makes a market.</font></p>

<p><font face="Arial">The size of its securities positions on any
one day may not be representative of Fahnestock's exposure on any
other day because securities positions vary substantially based
upon economic and market conditions, allocations of capital,
underwriting commitments and trading volume. Also, the aggregate
value of inventories of stocks which Fahnestock may carry is
limited by the Net Capital Rule. See &quot;Net Capital
Requirements&quot; and Item 7, &quot;Management's Discussion and
Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources.&quot;</font></p>

<p><font face="Arial">To a lesser extent, Fahnestock also buys
and sells municipal bonds, Ginnie Maes, Unit Investment Trusts
and U.S. Treasury Securities as well as other fixed income
securities for its own account in the secondary market and
maintains an inventory of municipal bonds and other securities
and resells bonds from its inventory to dealers as well as to
institutional and retail customers.</font></p>

<p><font face="Arial">Other Trading Activities</font></p>

<p><font face="Arial">Fahnestock holds positions in its trading
accounts in over-the-counter securities and in exchange-listed
securities in which it does not make a market and may engage from
time to time in other types of principal transactions in
securities. Fahnestock has several trading departments including:
a convertible bond department, a risk arbitrage department, a
corporate bond dealer department, a municipal bond department, a
government/mortgage backed securities department, a department
that underwrites and trades U.S. government agency issues,
taxable corporate bonds, UITs and a department that trades high
yield securities (commonly referred to as &quot;junk
bonds&quot;). These departments continually purchase and sell
securities and make markets in order to make a profit on the
inter-dealer spread. Although Fahnestock from time to time holds
an inventory of securities, more typically, it seeks to match
customer buy and sell orders. Fahnestock does not carry
&quot;bridge loans&quot; (i.e., short-term loans made in
anticipation of intermediate-term or long-term financing). No
substantial losses relating to Fahnestock's risk arbitrage
activities have been incurred.</font></p>

<p><font face="Arial">Investment Income</font></p>

<p><font face="Arial">Dividends and interest earned on securities
held in inventory are treated as investment income.</font></p>

<p><font face="Arial">Principal transactions with customers as
well as market-making and other trading and investment
activities, accounted for approximately 22%, 27% and 25%,
respectively, of the Company&#146;s total revenues for the fiscal
years ended December 31, 2001, 2000, and 1999, respectively.</font></p>

<p><font face="Arial">Risk Management</font></p>

<p><font face="Arial">Fahnestock's principal transactions and
brokerage activities expose it to credit and market risks. When
Fahnestock advances funds or securities to a counterparty in a
principal transaction or to a customer in a brokered transaction,
it is subject to the risk that the counterparty or customer will
not repay such advances. If the market price of the securities
purchased or loaned has declined or increased, respectively,
Fahnestock may be unable to recover some or all of the value of
the amount advanced. A similar risk is also present where a
customer is unable to respond to a margin call and the market
price of the collateral has dropped. In addition, Fahnestock's
securities positions are subject to fluctuations in market value
and liquidity.</font></p>

<p><font face="Arial">Fahnestock monitors market risks through
daily profit and loss statements and position reports. Each
trading department adheres to internal position limits determined
by senior management and regularly reviews the age and
composition of its proprietary accounts. Positions and profits
and losses for each trading department are reported to senior
management on a daily basis. Fahnestock may from time to time
attempt to reduce market risk through the utilization of various
derivative securities as a hedge to market exposure. </font></p>

<p><font face="Arial">In its market-making activities, Fahnestock
must provide liquidity in the equities for which it makes
markets. As a result of this event, Fahnestock has risk
containment policies in place which limit position size and
monitor transactions on a minute-to-minute basis.</font></p>

<p><font face="Arial">In addition to monitoring the credit
worthiness of its customers, Fahnestock imposes more conservative
margin requirements than those of the NYSE. Generally, Fahnestock
limits customer loans to an amount not greater than 65% of the
value of the securities (or 50% if the securities in the account
are concentrated in a limited number of issues). Particular
attention and more restrictive requirements are placed on more
highly volatile securities traded in the NASDAQ market. In
comparison, the NYSE permits loans of up to 75% of the value of
the securities in a customer's account.</font></p>

<p><font face="Arial">For further discussion of risk management,
see Item 7a, Quantitative and Qualitative Disclosures about
Market Risk.</font></p>

<p><font face="Arial">INTEREST</font></p>

<p><font face="Arial">Fahnestock derives net interest income from
the financing of customer margin loans and its securities lending
activities. See &quot;Customer Financing&quot; and
&quot;Securities Borrowed and Loaned.&quot;</font></p>

<p><font face="Arial">Customer Financing</font></p>

<p><font face="Arial">Customers' securities transactions are
effected on either a cash or margin basis. In margin
transactions, Fahnestock extends credit to the customer,
collateralized by securities and/or cash in the customer's
account, for a portion of the purchase price, and receives income
from interest charged on such extensions of credit. The customer
is charged for such margin financing at interest rates based upon
the brokers call rate (the prevailing interest rate charged by
banks on collateralized loans to broker-dealers), to which is
added an additional amount of up to 2%.</font></p>

<p><font face="Arial">In each of the last five years, financing
activities conducted on behalf of its customers have provided
Fahnestock with a substantial source of revenue. A substantial
portion of these financing activities are undertaken in
connection with Fahnestock's securities clearance business and
its own retail business. See &quot;Commissions.&quot; The amount
of Fahnestock's interest revenue is affected by the volume of
customer borrowing and by prevailing interest rates.</font></p>

<p><font face="Arial">The primary source of funds to finance
customers' margin account borrowings are collateralized and
uncollateralized bank borrowings, funds generated by lending
securities on a cash collateral basis in excess of the amount of
securities borrowed and free credit balances in customers'
accounts. Free credit balances in customers' accounts, to the
extent not required to be segregated pursuant to SEC rules, may
be used in the conduct of Fahnestock's business, including the
extension of margin credit. Subject to applicable regulations,
interest is paid by Fahnestock on most, but not all, of such free
credit balances awaiting reinvestment by customers. To the extent
that the use of free credit balances reduces borrowings, interest
expense is reduced.</font></p>

<p><font face="Arial">Margin lending by Fahnestock is subject to
the margin rules of the Board of Governors of the Federal Reserve
System, NYSE margin requirements and Fahnestock's internal
policies. By permitting customers to purchase on margin,
Fahnestock takes the risk of a market decline that would reduce
the value of its collateral below the customer's indebtedness
before the collateral could be sold. Under applicable NYSE rules,
in the event of a decline in the market value of the securities
in a margin account, Fahnestock is obligated to require the
customer to deposit additional securities or cash in the account
so that at all times the loan to the customer for the purchase of
marginable securities is no greater than 75% of the market value
of such securities or cash in the account.</font></p>

<p><font face="Arial">Securities Borrowed and Loaned</font></p>

<p><font face="Arial">In connection with both its trading and
brokerage activities, Fahnestock borrows securities to cover
short sales and to complete transactions in which customers have
failed to deliver securities by the required settlement date, and
lends securities to other brokers and dealers for similar
purposes. When borrowing securities, Fahnestock is required to
deposit cash or other collateral, or to post a letter of credit
with the lender, and receives a rebate (based on the amount of
cash deposited) or pays a fee calculated to yield a negotiated
rate of return.</font></p>

<p><font face="Arial">When lending securities, Fahnestock
receives cash or similar collateral and generally pays a rebate
(based on the amount of cash deposited) to the other party to the
transaction. Transactions in which stocks are borrowed or loaned
are generally executed pursuant to written agreements with
counterparties which require that the securities borrowed be
marked to market on a daily basis and that excess collateral be
refunded or that additional collateral be furnished in the event
of changes in the market value of the securities. Margin
adjustments are usually made on a daily basis through the
facilities of various clearing houses.</font></p>

<p>&nbsp;</p>

<p><font face="Arial">INVESTMENT BANKING BUSINESS</font></p>

<p><font face="Arial">Fahnestock manages the underwriting of both
corporate and municipal securities, including the securitization
of corporate and other obligations, and participates as an
underwriter in the syndicates of issues managed by other
securities firms. The corporate finance department is responsible
for originating and developing transactions which include
underwriting, mergers and acquisitions, private placements,
valuations, financial advisory work and other investment banking
matters.</font></p>

<p><font face="Arial">The management of and participation in
public offerings involve significant risks. An underwriter may
incur losses if it is unable to resell at a profit the securities
it has purchased. Under federal and state securities and other
laws, an underwriter is subject to substantial liability for
misstatements or omissions that are judged to be material in
prospectuses and other communications related to underwriting.</font></p>

<p><font face="Arial">Underwriting commitments cause a charge
against net capital. Consequently, the aggregate amount of
underwriting commitments at any one time may be limited by the
amount of net capital available. The Company derived 4%, 3% and
5% of its revenues from underwriting in 2001, 2000 and 1999,
respectively. See &quot;Net Capital Requirements&quot; and Item
7, &quot;Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources.&quot;</font></p>

<p><font face="Arial">INVESTMENT ADVISORY BUSINESS</font></p>

<p><font face="Arial">Fahnestock (through its Fahnestock Asset
Management division) provides investment advisory services for a
fee to its clients. These equity and debt management service fees
are based on the value of the portfolio under management. In
addition to the management fee, transactions executed for such
accounts may be effected at standard rates of commission or at
discounts from Fahnestock's customary commission schedule.</font></p>

<p><font face="Arial">At December 31, 2001 Fahnestock had
approximately $1.1 billion under management. The agreements under
which the portfolios are managed on behalf of institutions and
other investors generally provide for termination by either party
at any time.</font></p>

<p><font face="Arial">ADMINISTRATION AND OPERATIONS</font></p>

<p><font face="Arial">Administration and operations personnel are
responsible for the processing of securities transactions; the
receipt, identification and delivery of funds and securities; the
maintenance of internal financial controls; accounting functions;
custody of customers' securities; the handling of margin accounts
for Fahnestock and its correspondents; and general office
services. Fahnestock employs approximately 196 persons in its
administration and operations departments at its head office and
approximately 54 persons in its administration and operations
departments in Detroit.</font></p>

<p><font face="Arial">There is considerable fluctuation during
any year and from year to year in the volume of transactions
Fahnestock must process. Fahnestock records transactions and
posts its books on a daily basis. Operations personnel monitor
day-to-day operations to assure compliance with applicable laws,
rules and regulations. Failure to keep current and accurate books
and records can render Fahnestock liable for disciplinary action
by governmental and self-regulatory organizations.</font></p>

<p><font face="Arial">Fahnestock executes its own and certain of
its correspondents' securities transactions on all United States
exchanges of which it is a member and in the over-the-counter
market. Fahnestock clears all of its securities transactions
(i.e., it delivers securities that it has sold, receives
securities that it has purchased and transfers related funds)
through its own facilities and through memberships in various
clearing corporations and custodian banks.</font></p>

<p><font face="Arial">Fahnestock believes that its internal
controls and safeguards are adequate, although fraud and
misconduct by customers and employees and the possibility of
theft of securities are risks inherent in the securities
industry. As required by the NYSE and certain other authorities,
Fahnestock carries a broker's blanket insurance bond covering
loss or theft of securities, forgery of checks and drafts,
embezzlement, fraud and misplacement of securities. This bond
provides coverage of up to an aggregate of $15,000,000 with a
self-insurance retention of $250,000.<b> </b></font></p>

<p><font face="Arial">COMPETITION</font></p>

<p><font face="Arial">Fahnestock encounters intense competition
in all aspects of the securities business and competes directly
with other securities firms, a significant number of which have
substantially greater resources and offer a wider range of
financial services. In addition, there has recently been
increasing competition from other sources, such as commercial
banks, insurance companies and certain major corporations that
have entered the securities industry through acquisition, and
from other entities. Additionally, foreign-based securities firms
and commercial banks regularly offer their services in performing
a variety of investment banking functions including: merger and
acquisition advice, leveraged buy-out financing, merchant
banking, and bridge financing, all in direct competition with
U.S. broker-dealers. These developments have led to the creation
of a greater number of integrated financial services firms that
may be able to compete more effectively than Fahnestock for
investment funds by offering a greater range of financial
services.</font></p>

<p><font face="Arial">Fahnestock believes that the principal
factors affecting competition in the securities industry are the
quality and ability of professional personnel and relative prices
of services and products offered. Fahnestock and its competitors
employ advertising and direct solicitation of potential customers
in order to increase business and furnish investment research
publications in an effort to retain existing and attract
potential clients. Many of Fahnestock's competitors engage in
these programs more extensively than does Fahnestock.</font></p>

<p><font face="Arial">There is substantial commission discounting
by broker-dealers competing for institutional and retail
brokerage business. Recently, full service firms have begun
offering on-line trading services to their clients at substantial
discounts to their regular pricing. Fahnestock intends to compete
in this area, but it is likely to reduce profitability per
transaction, unless offset by higher transaction volume. The
continuation of such discounting and an increase in the incidence
thereof could adversely affect Fahnestock. However, an increase
in the use of discount brokerages could be beneficial to Freedom.</font></p>

<p><font face="Arial">REGULATION</font></p>

<p><font face="Arial">The securities industry in the United
States is subject to extensive regulation under both federal and
state laws. The SEC is the federal agency charged with
administration of the federal securities laws. Much of the
regulation of broker-dealers has been delegated to
self-regulatory organizations such as the NASD, national
securities exchanges such as the NYSE and the National Futures
Association. The NYSE has been designated Fahnestock&#146;s
primary regulator with respect to securities activities and the
National Futures Association has been designated
Fahnestock&#146;s primary regulator with respect to commodities
activities. The CBOE has been designated Fahnestock's primary
regulator with respect to options trading activities. The NASD
has been designated Freedom&#146;s primary regulator with respect
to securities activities. These self-regulatory organizations
adopt rules (subject to approval by the SEC or the Commodities
Futures Trading Commission (&quot;CFTC&quot;), as the case may
be) governing the industry and conduct periodic examinations of
Fahnestock's and Freedom's operations. Securities firms are also
subject to regulation by state securities commissions in the
states in which they do business. Fahnestock is registered as a
broker-dealer in 50 states and Puerto Rico. Fahnestock is also
registered as an International Broker-Dealer in Canada. FCI, a
subsidiary of the Company, filed an application for registration
as an investment dealer with the Investment Dealers Association
of Canada, which was approved on January 17, 2002. The Investment
Dealers Association of Canada has been designated FCI&#146;s
primary regulator with respect to securities activities.</font></p>

<p><font face="Arial">The regulations to which broker-dealers are
subject cover all aspects of the securities business, including
sales methods, trade practices among broker-dealers, the use and
safekeeping of customers' funds and securities, capital structure
of securities firms, record keeping and the conduct of directors,
officers and employees. The SEC has adopted rules requiring
underwriters to ensure that municipal securities issuers provide
current financial information and imposing limitations on
political contributions to municipal issuers by brokers, dealers
and other municipal finance professionals. Additional
legislation, changes in rules promulgated by the SEC, the CFTC
and by self-regulatory organizations, or changes in the
interpretation or enforcement of existing laws and rules may
directly affect the method of operation and profitability of
broker-dealers. The SEC, self-regulatory organizations (including
the NYSE) and state securities commissions may conduct
administrative proceedings which can result in censure, fine,
issuance of cease and desist orders or suspension or expulsion of
a broker-dealer, its officers, or employees. The principal
purpose of regulating and disciplining broker-dealers is to
protect customers and the securities markets rather than to
protect creditors and shareholders of broker-dealers.</font></p>

<p><font face="Arial">Fahnestock is also subject to regulation by
the SEC and under certain state laws in connection with its
business as an investment advisor. </font></p>

<p><font face="Arial">Margin lending by Fahnestock is subject to
the margin rules of the Board of Governors of the Federal Reserve
System and the NYSE. Under such rules, Fahnestock is limited in
the amount it may lend in connection with certain purchases of
securities and is also required to impose certain maintenance
requirements on the amount of securities and cash held in margin
accounts. In addition, Fahnestock may (and currently does) impose
more restrictive margin requirements than required by such rules.
See &quot;Customer Financing.&quot;</font></p>

<p><font face="Arial">NET CAPITAL REQUIREMENTS</font></p>

<p><font face="Arial">As registered broker-dealers and member
firms of the NYSE (Fahnestock and Josephthal) or the NASD
(Freedom and Prime), the Operating Subsidiaries are subject to
certain net capital requirements pursuant to Rule 15c3-1 (the
&quot;Net Capital Rule&quot;) promulgated under the Securities
Exchange Act of 1934 (the &quot;Exchange Act&quot;). The Net
Capital Rule, which specifies minimum net capital requirements
for registered brokers and dealers, is designed to measure the
general financial integrity and liquidity of a broker-dealer and
requires that at least a minimum part of its assets be kept in
relatively liquid form.<b> </b></font></p>

<p><font face="Arial">Fahnestock elects to compute net capital
under an alternative method of calculation permitted by the Net
Capital Rule. (Freedom computes net capital under the basic
formula as provided by the Net Capital Rule.) Under this
alternative method, Fahnestock is required to maintain a minimum
&quot;net capital&quot;, as defined in the Net Capital Rule, at
least equal to 2% of the amount of its &quot;aggregate debit
items&quot; computed in accordance with the Formula for
Determination of Reserve Requirements for Brokers and Dealers
(Exhibit A to Rule 15c3-3 under the Exchange Act) or $250,000,
whichever is greater. &quot;Aggregate debit items&quot; are
assets that have as their source transactions with customers,
primarily margin loans. Failure to maintain the required net
capital may subject a firm to suspension or expulsion by the
NYSE, the SEC and other regulatory bodies and ultimately may
require its liquidation. The Net Capital Rule also prohibits
payments of dividends, redemption of stock and the prepayment of
subordinated indebtedness if net capital thereafter would be less
than 5% of aggregate debit items (or 7% of the funds required to
be segregated pursuant to the Commodity Exchange Act and the
regulations thereunder, if greater) and payments in respect of
principal of subordinated indebtedness if net capital thereafter
would be less than 5% of aggregate debit items (or 6% of the
funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder, if greater). The Net
Capital Rule also provides that the total outstanding principal
amounts of a broker-dealer's indebtedness under certain
subordination agreements (the proceeds of which are included in
its net capital) may not exceed 70% of the sum of the outstanding
principal amounts of all subordinated indebtedness included in
net capital, par or stated value of capital stock, paid in
capital in excess of par, retained earnings and other capital
accounts for a period in excess of 90 days.</font></p>

<p><font face="Arial">Net capital is essentially defined in the
Net Capital Rule as net worth (assets minus liabilities), plus
qualifying subordinated borrowings minus certain mandatory
deductions that result from excluding assets that are not readily
convertible into cash and deductions for certain operating
charges. The Net Capital Rule values certain other assets, such
as a firm's positions in securities, conservatively. Among these
deductions are adjustments (called &quot;haircuts&quot;) in the
market value of securities to reflect the possibility of a market
decline prior to disposition. </font></p>

<p><font face="Arial">Compliance with the Net Capital Rule could
limit those operations of the brokerage subsidiaries of the
Company that require the intensive use of capital, such as
underwriting and trading activities and the financing of customer
account balances, and also could restrict the Company's ability
to withdraw capital from its brokerage subsidiaries, which in
turn could limit the Company's ability to pay dividends, repay
debt and redeem or purchase shares of its outstanding capital
stock. Under the Net Capital Rule broker-dealers are required to
maintain certain records and provide the SEC with quarterly
reports with respect to, among other things, significant
movements of capital, including transfers to a holding company
parent or other affiliate. The SEC may in certain circumstances
restrict the Company's brokerage subsidiaries' ability to
withdraw excess net capital and transfer it to the Company or to
other of the Operating Subsidiaries.</font></p>

<p>&nbsp;</p>

<p><font face="Arial"><b>Item 2. PROPERTIES</b></font></p>

<p><font face="Arial">The Company maintains offices at 20
Eglinton Avenue West, Toronto, Ontario, Canada for general
administrative activities. Most day-to-day management functions
are conducted at the executive offices of Fahnestock at 125 Broad
Street, New York, New York. This office also serves as the base
for most of Fahnestock's research, operations and trading,
investment banking and investment advisory services, though other
offices also have employees who work in these areas. Generally,
the offices outside of 125 Broad Street, New York serve as bases
for sales representatives who process trades and provide other
brokerage services in co-operation with Fahnestock's New York
office using the data processing facilities located there.
Freedom conducts its business from its offices located at 11422
Miracle Hills Dr., Omaha, Nebraska. Management believes that its
present facilities are adequate for the purposes for which they
are used and have adequate capacity to provide for presently
contemplated future uses. </font></p>

<p><font face="Arial">The Company and its subsidiaries own no
real property, but currently occupy office space totalling
approximately 527,000 square feet in 87 locations under standard
commercial terms expiring between 2002 and 2013. If any leases
are not renewed, the Company believes it could obtain comparable
space elsewhere on commercially reasonable rental terms.</font></p>

<p><font face="Arial"><b>Item 3. LEGAL PROCEEDINGS </b></font></p>

<p><font face="Arial">The Operating Subsidiaries are involved in
certain litigation arising in the ordinary course of business.
Management believes, based upon discussion with legal counsel,
that the outcome of this litigation will not have a material
effect on the Company&#146;s financial position. The materiality
of legal matters to the Company&#146;s future operating results
depends on the level of future results of operations as well as
the timing and ultimate outcome of such legal matters.</font></p>

<p><font face="Arial"><b>Item 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS</b></font></p>

<p><font face="Arial">The Class B voting shares (the &quot;Class
B Shares&quot;), the Company's only class of voting securities,
are not registered under the Exchange Act and are not required to
be registered. The Class B Shares have fewer than 500
shareholders of record. Consequently, the Company is not required
under Section 14 of the Exchange Act to furnish proxy soliciting
material or an information statement to holders of the Class B
Shares. However, the Company is required under applicable
Canadian securities laws to provide proxy soliciting material,
including a management proxy circular, to the holders of its
Class B Shares.</font></p>

<p><font face="Arial">Pursuant to the Company's Articles of
Incorporation, holders of Class A non-voting shares (the
&quot;Class A Shares&quot;), although not entitled to vote
thereat, are entitled to receive notices of shareholders'
meetings and to receive all informational documents required by
law or otherwise to be provided to holders of Class B Shares. In
addition, holders of Class A Shares are entitled to attend and
speak at all meetings of shareholders, except class</font></p>

<p><font face="Arial">meetings not including the Class A Shares.</font></p>

<p><font face="Arial">In the event of either a &quot;take-over
bid&quot; or an &quot;issuer bid&quot; (as those terms are
defined in the Securities Act, (Ontario)) being made for the
Class B Shares and no corresponding offer being made to purchase
Class A Shares, the holders of Class A Shares would have no right
under the Articles of Incorporation of the Company or under any
applicable statute to require that a similar offer be made to
them to purchase their Class A Shares.</font></p>

<p><font face="Arial">No matters were submitted to the Company's
shareholders during the fourth quarter of the Company's fiscal
year.</font></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p align="center"><font face="Arial"><b>PART II</b></font></p>

<p><font face="Arial"><b>Item 5. MARKET FOR THE REGISTRANT'S
COMMON EQUITY AND RELATED</b></font></p>

<p><font face="Arial"><b>STOCKHOLDER MATTERS</b></font></p>

<p><font face="Arial">The Company's Class A Shares are listed and
traded on The New York Stock Exchange (trading symbol
&quot;FVH&quot;) and on The Toronto Stock Exchange (trading
symbol &quot;FHV.A&quot;). The Class B Shares are not traded on
any stock exchange in Canada or the United States and, as a
consequence, there is only limited trading in the Class B shares.
The Company does not presently contemplate listing the Class B
Shares in the United States on any national or regional stock
exchange or on NASDAQ.</font></p>

<p><font face="Arial">The following tables set forth the <i>high
and low sales prices of the Class A Shares</i> on The Toronto
Stock Exchange and on The New York Stock Exchange. Prices
provided are in Canadian dollars or U.S. dollars as indicated and
are based on data provided by The Toronto Stock Exchange and The
New York Stock Exchange.</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="475">
    <tr>
        <td valign="top" colspan="2" width="34%"><font
        face="Arial">Class A Shares:</font></td>
        <td valign="top" colspan="2" width="30%"><p
        align="center"><font face="Arial">TSE</font></p>
        </td>
        <td valign="top" colspan="2" width="36%"><p
        align="center"><font face="Arial">NYSE</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%">&nbsp;</td>
        <td valign="top" width="15%"><font face="Arial">HIGH</font></td>
        <td valign="top" width="14%"><font face="Arial">LOW</font></td>
        <td valign="top" width="18%"><font face="Arial">HIGH</font></td>
        <td valign="top" width="18%"><font face="Arial">LOW</font></td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%">&nbsp;</td>
        <td valign="top" colspan="2" width="30%"><p
        align="center"><font face="Arial">(Cdn. Dollars)</font></p>
        </td>
        <td valign="top" colspan="2" width="36%"><p
        align="center"><font face="Arial">(U.S. dollars)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="18%">&nbsp;</td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">2001</font></td>
        <td valign="top" width="21%"><font face="Arial">1<sup>st</sup>
        Quarter</font></td>
        <td valign="top" width="15%"><font face="Arial">$43.90</font></td>
        <td valign="top" width="14%"><font face="Arial">$33.25</font></td>
        <td valign="top" width="18%"><font face="Arial">$27.60</font></td>
        <td valign="top" width="18%"><font face="Arial">$22.00</font></td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%"><font face="Arial">2<sup>nd</sup>
        Quarter</font></td>
        <td valign="top" width="15%"><font face="Arial">$45.50</font></td>
        <td valign="top" width="14%"><font face="Arial">$37.50</font></td>
        <td valign="top" width="18%"><font face="Arial">$29.25</font></td>
        <td valign="top" width="18%"><font face="Arial">$24.75</font></td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%"><font face="Arial">3<sup>rd</sup>
        Quarter</font></td>
        <td valign="top" width="15%"><font face="Arial">$44.50</font></td>
        <td valign="top" width="14%"><font face="Arial">$38.00</font></td>
        <td valign="top" width="18%"><font face="Arial">$28.40</font></td>
        <td valign="top" width="18%"><font face="Arial">$24.30</font></td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%"><font face="Arial">4<sup>th</sup>
        Quarter</font></td>
        <td valign="top" width="15%"><font face="Arial">$45.30</font></td>
        <td valign="top" width="14%"><font face="Arial">$36.94</font></td>
        <td valign="top" width="18%"><font face="Arial">$28.35</font></td>
        <td valign="top" width="18%"><font face="Arial">$23.15</font></td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="18%">&nbsp;</td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">2000</font></td>
        <td valign="top" width="21%"><font face="Arial">1<sup>st</sup>
        Quarter</font></td>
        <td valign="top" width="15%"><font face="Arial">$24.75</font></td>
        <td valign="top" width="14%"><font face="Arial">$20.60</font></td>
        <td valign="top" width="18%"><font face="Arial">$17.125</font></td>
        <td valign="top" width="18%"><font face="Arial">$14.5625</font></td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%"><font face="Arial">2<sup>nd</sup>
        Quarter</font></td>
        <td valign="top" width="15%"><font face="Arial">$27.75</font></td>
        <td valign="top" width="14%"><font face="Arial">$24.25</font></td>
        <td valign="top" width="18%"><font face="Arial">$18.875</font></td>
        <td valign="top" width="18%"><font face="Arial">$16.50</font></td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%"><font face="Arial">3<sup>rd</sup>
        Quarter</font></td>
        <td valign="top" width="15%"><font face="Arial">$34.00</font></td>
        <td valign="top" width="14%"><font face="Arial">$27.00</font></td>
        <td valign="top" width="18%"><font face="Arial">$23.00</font></td>
        <td valign="top" width="18%"><font face="Arial">$18.4375</font></td>
    </tr>
    <tr>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="21%"><font face="Arial">4<sup>th</sup>
        Quarter</font></td>
        <td valign="top" width="15%"><font face="Arial">$36.05</font></td>
        <td valign="top" width="14%"><font face="Arial">$29.75</font></td>
        <td valign="top" width="18%"><font face="Arial">$24.10</font></td>
        <td valign="top" width="18%"><font face="Arial">$19.875</font></td>
    </tr>
</table>

<p><font face="Arial">The following table sets forth information
about the <i>shareholders of the Company</i> as at December 31,
2001 as set forth in the records of the Company's transfer agent
and registrar: </font></p>

<p><font face="Arial"><b>Class A Shares:</b></font></p>

<table border="0" cellpadding="7" cellspacing="0" width="636">
    <tr>
        <td valign="top" width="51%"><font face="Arial"><u>Shareholders
        of record having addresses in:</u></font></td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial"><u>Number of shares</u></font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial"><u>Percentage</u></font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial"><u>Number of shareholders</u></font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="51%"><font face="Arial">Canada </font></td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">5,105,377</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">41%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">174</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="51%"><font face="Arial">United
        States</font></td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">7,231,676</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">59%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">172</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="51%"><font face="Arial">Other</font></td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">32</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">-</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">2</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="51%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="51%"><font face="Arial">Total
        issued and outstanding</font></td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">12,337,085</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">100%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">348</font></p>
        </td>
    </tr>
</table>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p><font face="Arial"><b>Class B Shares</b></font></p>

<table border="0" cellpadding="7" cellspacing="0" width="648">
    <tr>
        <td valign="top" width="50%"><font face="Arial"><u>Shareholders
        of record having addresses in:</u></font></td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial"><u>Number of shares</u></font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial"><u>Percentage</u></font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        face="Arial"><u>Number of shareholders</u></font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="50%"><font face="Arial">Canada
        (1)</font></td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">98,037</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">98%</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        face="Arial">122</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="50%"><font face="Arial">United
        States</font></td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">1,635</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">2%</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        face="Arial">66</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="50%"><font face="Arial">Other</font></td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">8</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        face="Arial">2</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="50%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="19%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="50%"><font face="Arial">Total
        issued and outstanding</font></td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">99,680</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">100%</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        face="Arial">190</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial">(1) The Company has been informed that
50,490 Class B shares held by Phase II Financial Limited, an
Ontario corporation, are beneficially owned by A.G. Lowenthal,
Chairman, CEO and a Director of the Company, a U.S. citizen and
resident. See Item 12, &quot;Security Ownership of Certain
Beneficial Owners and Management&quot;.</font></p>

<p><font face="Arial"><i>Dividends</i></font></p>

<p><font face="Arial">The following table sets forth the
frequency and amount of any cash dividends declared on the
Company&#146;s Class A and Class B Shares for the fiscal years
ended December 31, 2001 and 2000.</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="631">
    <tr>
        <td valign="top" width="13%"><font face="Arial"><u>Type</u></font></td>
        <td valign="top" width="24%"><font face="Arial"><u>Declaration
        date</u></font></td>
        <td valign="top" width="24%"><font face="Arial"><u>Record
        date</u></font></td>
        <td valign="top" width="26%"><font face="Arial"><u>Payment
        date</u></font></td>
        <td valign="top" width="13%"><font face="Arial"><u>Amount
        per share</u></font></td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">January
        27, 2000</font></td>
        <td valign="top" width="24%"><font face="Arial">February
        11, 2000</font></td>
        <td valign="top" width="26%"><font face="Arial">February
        25, 2000</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.07</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">April 19,
        2000</font></td>
        <td valign="top" width="24%"><font face="Arial">May 5,
        2000</font></td>
        <td valign="top" width="26%"><font face="Arial">May 19,
        2000</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.08</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">July 19,
        2000</font></td>
        <td valign="top" width="24%"><font face="Arial">August 4,
        2000</font></td>
        <td valign="top" width="26%"><font face="Arial">August
        18, 2000</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.08</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">October
        19, 2000</font></td>
        <td valign="top" width="24%"><font face="Arial">November
        3, 2000</font></td>
        <td valign="top" width="26%"><font face="Arial">November
        17, 2000</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.08</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">January
        25, 2001</font></td>
        <td valign="top" width="24%"><font face="Arial">February
        9, 2001 </font></td>
        <td valign="top" width="26%"><font face="Arial">February
        23, 2001</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">April 19,
        2001</font></td>
        <td valign="top" width="24%"><font face="Arial">May 4,
        2001</font></td>
        <td valign="top" width="26%"><font face="Arial">May 18,
        2001</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">July 19,
        2001</font></td>
        <td valign="top" width="24%"><font face="Arial">August 3,
        2001</font></td>
        <td valign="top" width="26%"><font face="Arial">August
        17, 2001</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">October
        18, 2001</font></td>
        <td valign="top" width="24%"><font face="Arial">November
        2, 2001</font></td>
        <td valign="top" width="26%"><font face="Arial">November
        16, 2001</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="13%"><font face="Arial">Quarterly</font></td>
        <td valign="top" width="24%"><font face="Arial">January
        24, 2002</font></td>
        <td valign="top" width="24%"><font face="Arial">February
        8, 2002</font></td>
        <td valign="top" width="26%"><font face="Arial">February
        22, 2002</font></td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$0.09</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial">Future dividend policy will depend upon the
earnings and financial condition of the Operating Subsidiaries,
the Company's need for funds and other factors. However, it is
the present intention of the Company's management to pay a
quarterly dividend in the amount of U.S. $0.09 per Class A Share
and Class B Share in May, August and November, 2002. Dividends
may be paid to holders of Class A Shares and Class B Shares (pari
passu), as and when declared by the Company's Board of Directors,
from funds legally available therefor.</font></p>

<p><font face="Arial">CERTAIN TAX MATTERS</font></p>

<p><font face="Arial">The following paragraphs summarize certain
United States and Canadian federal income tax considerations in
connection with the receipt of dividends paid on the Class A and
Class B Shares of the Company. These tax considerations are
stated in brief and general terms and are based on United States
and Canadian law currently in effect. There are other potentially
significant United States and Canadian federal income tax
considerations and state, provincial or local income tax
considerations with respect to ownership and disposition of the
Class A and Class B Shares which are not discussed herein. The
tax considerations relative to ownership and disposition of the
Class A and Class B Shares may vary from taxpayer to taxpayer
depending on the taxpayer's particular status. Accordingly,
prospective purchasers should consult with their tax advisors
regarding tax considerations which may apply to the particular
situation.</font></p>

<p><font face="Arial">United States Federal Income Tax
Considerations</font></p>

<p><font face="Arial">Dividends on Class A and Class B Shares
paid to citizens or residents of the U.S. or to U.S. corporations
(including any Canadian federal income tax withheld) will be
subject to U.S. federal income taxation as ordinary income to the
extent paid out of the Company&#146;s earnings and profits,
determined under U.S. tax principles. Such dividends will not be
eligible for the deduction for dividends received by corporations
(unless such corporation owns by vote and value at least 10% of
the stock of the Company, in which case a portion of such
dividend may be eligible for such exclusion).</font></p>

<p><font face="Arial">U.S. corporations, U.S. citizens and U.S.
residents will generally be entitled, subject to certain
limitations, to a credit against their U.S. federal income tax
for Canadian federal income taxes withheld from such dividends.
Taxpayers may claim a deduction for such taxes if they do not
elect to claim such tax credit. No deduction for foreign taxes
may be claimed by an individual taxpayer who does not itemize
deductions. Because the application of the foreign tax credit
depends upon the particular circumstances of each shareholder,
shareholders are urged to consult their own tax advisors in this
regard. </font></p>

<p><font face="Arial">Canadian Federal Income Tax Considerations</font></p>

<p><font face="Arial">Dividends paid on Class A and Class B
Shares held by non-residents of Canada will generally be subject
to Canadian withholding tax. This withholding tax is levied at
the basic rate of 25%, although this rate may be reduced by the
terms of any applicable tax treaty. The Canada - U.S. tax treaty
provides that the withholding rate on dividends paid to U.S.
residents on Class A and Class B Shares is generally 15%.</font></p>

<p><font face="Arial">Normal Course Issuer Bid</font></p>

<p><font face="Arial">On July 3, 2001 the Company announced that
commencing July 5, 2001 it intended to purchase up to 614,000
Class A Shares by way of a Normal Course Issuer Bid through the
facilities of The Toronto Stock Exchange and/or The New York
Stock Exchange, representing approximately 5% of the outstanding
Class A Shares. In fiscal 2001, through a Normal Course Issuer
Bid, which expired July 4, 2001, the Company did not purchase any
shares. However, the Company purchased 6,100 Class A Shares at an
average cost of $24.45 per share pursuant to the Normal Course
Issuer Bid that commenced July 4, 2001. Any shares purchased by
the Company pursuant to the Normal Course Issuer Bid will be
cancelled. Unless terminated earlier by the Company, it may
continue to purchase shares up to July 4, 2002. The Company may,
at its option, apply to extend the program for an additional
year.</font></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p><font face="Arial"><b>Item 6. SELECTED FINANCIAL DATA</b></font></p>

<p><font face="Arial">The following table presents selected
financial information derived from the audited consolidated
financial statements of the Company for the five years ended
December 31, 2001. The selected financial information should be
read in conjunction with, and is qualified in its entirety by
reference to, the Consolidated Financial Statements and notes
thereto included elsewhere in this report. In 2001, the Company
purchased Josephthal and Prime. The 2001 amounts include the
assets and liabilities and operating results of Josephthal and
Prime as of and subsequent to the period after September 17, 2001
and November 9, 2001, respectively. In 1997, the Company
purchased First of Michigan Capital Corporation
(&quot;FOM&quot;). The 1997 amounts include the assets and
liabilities and the operating results of FOM as of and subsequent
to the period after July 17, 1997. See also Item 1,
&quot;Business&quot; and Item 7, &quot;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations&quot;.</font></p>

<table border="1" cellpadding="2" cellspacing="1" width="638"
bordercolor="#000000">
    <tr>
        <td valign="top" width="32%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial"><u>2001</u></font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial"><u>2000</u></font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial"><u>1999</u></font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial"><u>1998</u></font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial"><u>1997</u></font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="6" width="98%" height="16"><p
        align="right"><font size="2" face="Arial">(In thousands
        of U.S. dollars except per share and share amounts)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Revenue</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$261,261</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$316,499</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$279,111</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$232,781</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$242,158 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Profit before extraordinary item</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$19,150</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$40,901</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$27,390</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$12,447</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$26,731 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Net profit</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$19,150</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$40,901</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$27,390</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$12,447</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$26,731 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Profit before extraordinary item per share
        (1)</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$1.55</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$3.38</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$2.19</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$0.99</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$2.14 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Net profit per share (1)</font></td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">- basic</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$1.55</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$3.38</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$2.19</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$0.99</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$2.14 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">- diluted</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$1.50</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$3.29</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$2.17</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$0.96</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$2.08 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Total assets</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$710,275</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$697,482</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$766,528</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$666,763</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$835,146 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Total current liabilities</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$468,580</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$475,682</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$579,141</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$500,410</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$674,181 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Subordinated indebtedness,</font></td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">including current portion</font></td>
        <td valign="top" width="13%" height="16"><p
        align="center"><font size="2" face="Arial">-</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p
        align="center"><font size="2" face="Arial">-</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$30</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$30</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$30 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Cash dividends per Class A </font></td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Share and Class B share</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$0.36</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$0.31</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$0.28</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$0.28</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$0.24 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Shareholders' equity</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$241,695</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$221,800</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$187,388</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$166,323</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$160,935 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Book value per share (1)</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$19.43</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$18.34</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$15.30</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">$13.48</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$12.87 </font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="32%" height="16"><font size="2"
        face="Arial">Number of shares of capital stock
        outstanding</font></td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">12,436,765</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="2" face="Arial">12,090,649</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">12,247,249</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="2" face="Arial">12,340,949</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">12,508,440</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
    </tr>
</table>

<p><font size="3" face="Arial">The Class A Shares and Class B
Shares are combined because they are of equal rank for purposes
of dividends and in the event of a distribution of assets upon
liquidation, dissolution or winding up. </font></p>

<blockquote>
    <blockquote>
        <p>&nbsp;</p>
    </blockquote>
</blockquote>

<p><font face="Arial"><b>Item 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</b></font></p>

<p><font face="Arial">The Company&#146;s financial statements
have been prepared in accordance with accounting principles
generally accepted in the United States of America. The following
discussion should be read in conjunction with the consolidated
financial statements and notes thereto which appear elsewhere in
this annual report. </font></p>

<p><font face="Arial">Business Environment</font></p>

<p><font face="Arial">The Company is a holding company whose
principal subsidiary is Fahnestock. Fahnestock provides
securities brokerage, investment banking, trust and asset
management services to its clients from 92 offices across the
U.S.A. and including an office in Toronto, Canada and associated
offices in Caracas, Venezuela and Buenos Aires, Argentina.
Fahnestock is licensed to offer brokerage and other financial
services in all 50 States. Client assets entrusted to the Company
as at December 31, 2001 totalled approximately $19.6 billion. The
Company provides investment advisory services through Fahnestock
Asset Management, operating as a division of Fahnestock. Client
assets under management by the asset management groups totaled
$1.1 billion at December 31, 2001. Fahnestock also engages in
proprietary trading of securities. In addition, the Company
operates a discount brokerage business based in Omaha, Nebraska,
through Freedom.</font></p>

<p><font face="Arial">The securities industry is highly
competitive and sensitive to many factors and is directly
affected by general economic and market conditions, including the
volatility and price level of securities markets; the volume,
size, and timing of securities transactions; the demand for
investment banking services and changes in interest rates. All
such conditions have an impact on commissions, trading and
investment income as well as on liquidity. In addition, a
significant portion of the Company's expenses are relatively
fixed and do not vary with market activity. Consequently,
substantial fluctuations can occur in the Company's revenues and
net income from period to period due to these and other factors.</font></p>

<p><font face="Arial">In addition, the Company has faced
increasing competition from commercial banks and other sources as
these institutions begin to offer more investment banking and
financial services traditionally only provided by securities
firms. The effect of the consolidation of the securities industry
of recent years means that a variety of financial services
companies have merged to offer a broader spectrum of investment
products and such competitors have substantially greater
financial resources than the Company. The Company is also
experiencing increasing regulation in the securities industry,
particularly affecting the over-the-counter markets, making
compliance with regulations more difficult and costly. At
present, the Company is unable to predict the extent of the
changes, or their potential effect on the Company's business.</font></p>

<p><font face="Arial">Outlook</font></p>

<p><font face="Arial">The Company's long-term plan is to continue
to expand existing offices by hiring experienced professionals,
thus maximizing the potential of each office and expanding the
development of existing trading, investment banking, investment
advisory and other activities. Equally important is the search
for viable acquisition candidates. As opportunities are
presented, it is the intention of the Company to pursue growth by
acquisition where a comfortable match can be found in terms of
corporate goals and personnel and at a price that would provide
the Company's shareholders with incremental value. </font></p>

<p><font face="Arial">Results of Operations</font></p>

<p><font face="Arial">Markets in fiscal 2001 were extremely
volatile, and ended the year with a substantial decline.
Beginning in May 2000 declines in over-valued technology and
telecommunications stocks, the ensuing loss of wealth, concerns
over inflation and the slowing economy reduced investors
participation in the equity markets. On September 11, 2001,
attacks by terrorists on the World Trade Center and the Pentagon
irretrievably damaged North America&#146;s sense of
invulnerability at home. The repercussions have had and will have
far reaching consequences beyond the personal losses experienced
by many Americans and their families. An economy, already in
recession, saw consumers reduce expenditures, reduce travel and
brought business investment to a virtual halt. Despite continuing
interest rate reductions and calls to resume normal behavior, the
economy continued to limp along. Securities markets were
negatively affected by issues surrounding the bankruptcy of Enron
Corp. as investors remained uncertain and both economic and
market conditions continue to be extremely volatile. </font></p>

<p><font face="Arial">The impact of difficult business conditions
provided the opportunity for expansion of the Company&#146;s
business. As a result, the Company made two acquisitions in the
latter part of 2001.</font></p>

<p><font face="Arial">On September 17, 2001 the Company purchased
substantially all of the outstanding shares of Josephthal Group,
Inc., the parent of Josephthal &amp; Co. Inc., a full service
securities firm headquartered in New York City with approximately
265 financial consultants in 25 offices across the United States
at the time of closing. </font></p>

<p><font face="Arial">On November 9, 2001, the Company purchased
all of the outstanding common shares of Grand Charter Group,
Incorporated, the parent of Prime Charter, Ltd., a full service
broker-dealer headquartered in New York City with approximately
110 financial consultants in New York City and Boca Raton,
Florida.</font></p>

<p><font face="Arial">The effect of these acquisitions was to
increase the number of financial consultants by 58% to
approximately 1,135 and the number of branch offices by 31% to
92. The Company intends to continue to expand as opportunities
occur.</font></p>

<p><font face="Arial"><i>The following table and discussion
summarizes the changes in the major revenue and expense
categories for the past two years (in thousands of U.S. dollars).</i></font></p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="35%">&nbsp;</td>
        <td valign="top" colspan="4" width="65%"><p
        align="center"><font face="Arial">Period to Period Change</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%">&nbsp;</td>
        <td valign="top" colspan="4" width="65%"><p
        align="center"><font face="Arial">Increase (Decrease)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%">&nbsp;</td>
        <td valign="top" colspan="2" width="32%"><p
        align="center"><font face="Arial">2001 versus 2000</font></p>
        </td>
        <td valign="top" colspan="2" width="33%"><p
        align="center"><font face="Arial">2000 versus 1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%">&nbsp;</td>
        <td valign="top" width="17%"><p align="center"><font
        face="Arial">Amount</font></p>
        </td>
        <td valign="top" width="15%"><p align="center"><font
        face="Arial">Percentage</font></p>
        </td>
        <td valign="top" width="17%"><p align="center"><font
        face="Arial">Amount</font></p>
        </td>
        <td valign="top" width="16%"><p align="center"><font
        face="Arial">Percentage</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Revenues
        -</font></td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Commissions</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">$(6,643)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-5%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">$10,168</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">9%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Principal
        transactions, net</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(28,046)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-33%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">13,406</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">19%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Interest</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(29,387)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-46%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">19,861</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">45%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Underwriting
        fees</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">1,641</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">18%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(6,236)</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">-40%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Advisory
        fees</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">2,740</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">13%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(676)</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">-3%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Other</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">4,457</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">53%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">865</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">11%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Total
        revenues</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(55,238)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-17%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">37,388</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">13%</font></p>
        </td>
    </tr>
</table>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="35%"><font face="Arial">Expenses
        -</font></td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Compensation</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(6,043)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-4%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">11,324</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">8%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Clearing
        and exchanges fees</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(1,193)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-17%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(1,665)</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">-19%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Communications</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">308</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">1%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">1,891</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">9%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Occupancy
        costs</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">3,226</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">26%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(257)</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">-2%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Interest</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(19,051)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-58%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">11,796</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">55%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Other</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">7,615</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">55%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(6,947)</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">-33%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Total
        expenses</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(15,138)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-6%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">16,142</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">7%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Profit
        before taxes</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(40,100)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-56%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">21,246</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">42%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Income
        taxes</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">(18,349)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-60%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">7,735</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">34%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="35%"><font face="Arial">Net
        profit</font></td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">$(21,751)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        face="Arial">-53%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        face="Arial">$13,511</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        face="Arial">49%</font></p>
        </td>
    </tr>
</table>

<p>&nbsp;</p>

<p><font face="Arial">Fiscal 2001 compared to Fiscal 2000</font></p>

<p><font face="Arial">The Company experienced a decline in its
revenues and net profit in 2001 compared to 2000. Revenues in
fiscal 2001 decreased by 17% and net profit decreased by 53%
compared to fiscal 2000. The effect of the acquisition of
Josephthal and Prime Charter added to revenues and decreased net
profit in the third and fourth quarters of 2001. </font></p>

<p><font face="Arial">Total revenues for 2001 were $261,261,000 a
decrease of 17% from $316,499,000 in 2000. Commission income
(income realized in securities transactions for which the Company
acts as agent) decreased 5% to $122,272,000 in 2001 from
$128,915,000 in 2000. This decrease, while partially offset in
the fourth quarter by the additional business generated by
Josephthal and Prime Charter, is attributable to the extremely
volatile trading environment encountered throughout 2001 compared
to 2000 and most particularly post September 11, 2001. Principal
transactions (revenues from transactions in which the Company
acts as principal in the secondary market trading of
over-the-counter equities and municipal, corporate and government
bonds) decreased by 33% to $56,374,000 in 2001 from $84,420,000
in 2000 due to significantly reduced activity, and reduced
spreads (the difference between bid and ask prices) in the NASDAQ
markets, as a result of the decimalization of the NASDAQ markets
effective in the third quarter of 2001. The Company has reduced
the number of securities in which it makes markets. It may
increase or decrease this number as conditions warrant.
Underwriting fees in 2001 were $10,955,000, an increase of 18%
compared to $9,314,000 in 2000 as a result of closing several
significant merger and acquisition transactions in 2001. Advisory
fees in 2001 were $24,504,000, an increase of 13% compared to
$21,764,000 in 2000 as a result of increased fees from increased
balances in money market funds.</font></p>

<p><font face="Arial">Interest income was $34,309,000, a decrease
of 46% from $63,696,000 in 2000. Interest expense was
$14,071,000, a decrease of 58% from $33,122,000 in 2000. This
represents a decrease of 34% in net interest revenue (interest
revenue less interest expense) in 2001 compared to 2000, which
can be attributed to a decrease in average customer margin
balances and lower interest rates in 2001 compared to 2000. The
lower gross interest revenue and interest expense are also the
result of discontinuing a matched book repurchase business, which
the Company operated between the fall of 2000 and the spring of
2001.</font></p>

<p><font face="Arial">Expenses totalled $229,649,000, a decrease
of 6% compared to $244,787,000 in 2000. The decrease is due, in
part, to lower variable expenses which decrease as the volume of
business decreases, such as compensation and related expenses and
clearing and exchange fees, and in part to the decrease in
interest expense. Compensation and related costs were
$148,838,000, a decrease of 4% from $154,881,000 in 2000.
Clearing and exchange fees were $6,012,000, a decrease of 17%
from $7,205,000 in 2000. Communications expenses were
$23,620,000, an increase of 1% over $23,312,000 in 2000
reflecting additional costs in the last quarter of 2001, after
the acquisition of Josephthal and Prime Charter. Occupancy costs
were $15,691,000, an increase of 26% compared to $12,465,000 as a
result of increasing the size of the organization with the
acquisition of Josephthal and Prime Charter in 2001. The number
of branch locations post-acquisitions is 92 compared to 70 prior
to the acquisitions, an increase of approximately 31%. Other
expenses were $21,417,000 in 2001, an increase of 55% over
$13,802,000 in 2000. The differences relate to higher provision
for bad debts in 2001 and higher error account charges compared
to 2000. </font></p>

<p><font face="Arial">Fiscal 2000 compared to Fiscal 1999</font></p>

<p><font face="Arial">In fiscal 2000, the U.S. economy behaved
like a roller-coaster, with record volumes and valuations in the
early part of the year followed by a decline in May as the New
Economy valuations collapsed. The summer months saw a brief rally
followed by a protracted decline throughout the balance of the
year. The Company&#146;s level of business activity mirrored the
marketplace, with a strong performance in the first quarter which
was unsustainable through the balance of the year. Fiscal 2000
was a record year, and on a quarter-by-quarter basis net results
in 2000 were higher in each quarter compared to 1999, except for
the fourth quarter, when 2000 results were lower than in the
previous year.</font></p>

<p><font face="Arial">Total revenues for 2000 were $316,499,000,
an increase of 13% over $279,111,000 in 1999. Commission income
(income realized in securities transactions for which the Company
acts as agent) increased 9% to $128,915,000 in 2000 from
$118,747,000 in 1999. This increase is attributable to the active
trading environment encountered most particularly in the first
quarter of 2000, when strong investor interest propelled
valuations and volumes in the favored technology equities to
historically high levels. Principal transactions (revenues from
transactions in which the Company acts as principal in the
secondary market trading of over-the-counter equities and
municipal, corporate and government bonds) increased by 19% to
$84,420,000 in 2000 from $71,014,000 in 1999. The increase was
due, in part, to a comparison against poor results in the first
quarter of 1999. Underwriting fees in 2000 were $9,314,000, a
decrease of 40% compared to $15,550,000 in 1999. The collapse of
the New Economy in the spring of 2000 and a slowing U.S. economy
adversely affected the new issues market. Advisory fees in 2000
were $21,764,000, a decrease of 3% compared to $22,440,000 in
1999. The management of client assets was consolidated within the
Fahnestock Asset Management division in late 1999. The overall
level of assets under management declined by approximately 10%
from 1999 to 2000.</font></p>

<p><font face="Arial">Interest income was $63,696,000 in 2000, an
increase of 45% over $43,835,000 in 1999. Interest expense was
$33,122,000, an increase of 55% from $21,326,000 in 1999. This
represents an increase of 36% in net interest revenue (interest
revenue less interest expense) in 2000 compared to 1999, which
can be attributed to an increase in average customer debit
balances and higher average stock borrow/stock loan balances in
2000 compared to 1999. The higher gross interest revenue and
interest expense amounts are the result of a matched book
repurchase business in which the Company began trading activity
in the fall of 2000.</font></p>

<p><font face="Arial">Expenses totalled $244,787,000 in 2000, an
increase of 7% compared to $228,645,000 in 1999. The increase is
due, in part, to higher variable expenses, which increase as
volume of business increases, such as compensation and related
expenses and in part to the increase in interest expense related
to the matched book business. Compensation and related costs were
$154,881,000, an increase of 8% over $143,557,000 in 1999.
Clearing and exchange fees were $7,205,000, a decrease of 19%
from $8,870,000 in 1999. Communications expenses were
$23,312,000, an increase of 9% over $21,421,000 in 1999
reflecting additional costs in 2000, after the summer 1999
introduction of a firm-wide proprietary communication platform
providing a wide area network supporting investment quotes and
news distribution, internet access, internal and external e-mail
capability, order entry, and data base management. Occupancy
costs were $12,465,000, a decrease of 2% compared to $12,722,000
as a result of branch consolidation and renegotiation of leases.
Other expenses were $13,802,000, a decrease of 33% from
$20,749,000 in 1999 due to a reduced provision for bad debts and
reduced charges to the error account compared to 1999.</font></p>

<p><font face="Arial">Liquidity and Capital Resources</font></p>

<p><font face="Arial">The increase in the Company&#146;s assets
in 2001 compared to 2000 is primarily the result of increased
cash and short-term deposits as well as by increased client
balances, reflecting the addition of the business of Josephthal
&amp; Co in the fourth quarter. Also impacting the Company&#146;s
assets is the cessation since the spring of 2001 of a matched
book repurchase business. Customer-related receivables and
securities inventory are highly liquid and represent a
substantial percentage of total assets. The principal sources of
financing for the Company's assets are stockholders' equity,
customer free credit balances, proceeds from securities lending,
bank loans and other payables. The Company historically has not
utilized long-term financing. Cash generated from operations,
increased earnings, proceeds from stock purchased by employee
stock plans, and cash proceeds upon the exercise of employee
stock options supplemented bank borrowings during the past three
years. At December 31, 2001, Fahnestock had bank lines of credit
and call loan arrangements with outstanding borrowings thereunder
of $13,134,000. At December 31, 2001 Fahnestock had available
collateralized and uncollateralized letters of credit of
$39,500,000.</font></p>

<p><font face="Arial">Contractual and commercial commitments
consist of operating and capital leases which are disclosed in
note 9 to the consolidated financial statements and there are no
other contingent or undisclosed liabilities.</font></p>

<p><font face="Arial">During 2001, the Company paid cash
dividends to its shareholders totalling $4,443,000 from
internally generated cash.</font></p>

<p><font face="Arial">During 2001, the Company purchased a total
of 6,100 of its Class A non-voting shares at an average cost of
$24.45 per share through the facilities of the Toronto and New
York Stock Exchanges by way of a Normal Course Issuer Bid, using
internally generated cash. The Company has expressed an intention
to purchase up to an additional 607,900 of its shares from time
to time until July 4, 2002 from internally generated funds.</font></p>

<p><font face="Arial">Because of the Company's strong financial
condition, size and earnings history, management believes
adequate sources of credit would be available to finance higher
trading volumes, branch expansion and major capital expenditures,
as needed.</font></p>

<p><font face="Arial">Inflation</font></p>

<p><font face="Arial">Because the assets of the Company's
brokerage subsidiaries are highly liquid, and because securities
inventories are carried at current market values, the impact of
inflation generally is reflected in the financial statements.
However, the rate of inflation affects the Company's costs
relating to employee compensation, rent, communications and
certain other operating costs, and such costs may not be
recoverable in the level of commissions charged. To the extent
inflation results in rising interest rates and has other adverse
effects upon the securities markets, it may adversely affect the
Company's financial position and results of operations.</font></p>

<p>&nbsp;</p>

<p><font face="Arial">Newly Issued Accounting Standards</font></p>

<p><font face="Arial">Please see note 11 of the Company&#146;s
consolidated financial statements for a discussion of newly
issued accounting standards.</font></p>

<p><font face="Arial">Factors Affecting &quot;Forward-Looking
Statements&quot;</font></p>

<p><font face="Arial">From time to time, the Company may publish
&quot;Forward-looking statements&quot; within the meaning of
Section 27A of the Securities Act of 1933, as amended ( the
&quot;Act&quot;), and Section 21E of the Exchange Act or make
oral statements that constitute forward-looking statements. These
forward-looking statements may relate to such matters as
anticipated financial performance, future revenues or earnings,
business prospects, projected ventures, new products, anticipated
market performance, and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of
the safe harbor, the Company cautions readers that a variety of
factors could cause the Company&#146;s actual results to differ
materially from the anticipated results or other expectations
expressed in the Company&#146;s forward-looking statements. These
risks and uncertainties, many of which are beyond the
Company&#146;s control, include, but are not limited to: (i)
transaction volume in the securities markets, (ii) the volatility
of the securities markets, (iii) fluctuations in interest rates,
(iv) changes in regulatory requirements which could affect the
cost of doing business, (v) fluctuations in currency rates, (vi)
general economic conditions, both domestic and international,
(vii) changes in the rate of inflation and the related impact on
the securities markets, (viii) competition from existing
financial institutions and other new participants in the
securities markets, (ix) legal developments affecting the
litigation experience of the securities industry, and (x) changes
in federal and state tax laws which could affect the popularity
of products sold by the Company. The Company does not undertake
any obligation to publicly update or revise any forward-looking
statements.</font></p>

<p>&nbsp;</p>

<p><font face="Arial"><b>Item 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK</b></font></p>

<p><font face="Arial">Risk Management</font></p>

<p><font face="Arial">The Company&#146;s principal business
activities by their nature involve significant market, credit and
other risks. The Company&#146;s effectiveness in managing these
risks is critical to its success and stability. </font></p>

<p><font face="Arial">As part of its normal business operations,
the Company engages in the trading of both fixed income and
equity securities in both a proprietary and market-making
capacity. The Company makes markets in over-the-counter equities
in order to facilitate order flow and accommodate its
institutional and retail customers. The Company also makes
markets in municipal bonds, mortgage-backed securities,
government bonds and high yield bonds.</font></p>

<p><font face="Arial">Market Risk</font></p>

<p><font face="Arial">Market risk generally means the risk of
loss that may result from the potential change in the value of a
financial instrument as a result of fluctuations in interest and
currency exchange rates and in equity and commodity prices.
Market risk is inherent in all types of financial instruments,
including both derivatives and non-derivatives. The
Company&#146;s exposure to market risk arises from its role as a
financial intermediary for its customers&#146; transactions and
from its proprietary trading and arbitrage activities. (See
additional discussion under Risk Management in Item 1).</font></p>

<p><font face="Arial">Other Risk</font></p>

<p><font face="Arial">In addition, the Company&#146;s activities
expose it to operational risk, legal risk and funding risk.
Operational risk generally means the risk of loss resulting from
improper processing of transactions or deficiencies in the
Company&#146;s operating systems or internal controls. With
respect to its trading activities, the Company has procedures
designed to ensure that all transactions are accurately recorded
and properly reflected on the Company&#146;s books on a timely
basis. With respect to client activities, the Company operates a
system of internal controls designed to ensure that transactions
and other account activity (new account solicitation, transaction
authorization, transaction processing, billing and collection)
are properly approved, processed, recorded and reconciled. Legal
risk generally includes the risk of non-compliance with legal and
regulatory requirements and the risk that a counterparty&#146;s
obligations are unenforceable. The Company is subject to
extensive regulation in the various jurisdictions in which it
conducts its business. Through its legal advisors and its
compliance department, the Company has established routines to
ensure compliance with regulatory capital requirements, sales and
trading practices, new products, use and safekeeping of customer
securities and funds, granting of credit, collection activities
and record keeping. The Company has procedures designed to assess
and monitor counterparty risk. For a discussion of funding risk,
see &#145;Liquidity and Capital Resources&#146;, above.</font></p>

<p><font face="Arial">Credit Risk</font></p>

<p><font face="Arial">Credit risk arises from non-performance by
trading counterparties, customers and issuers of debt securities
held in the Company&#146;s inventory. The Company manages this
risk by imposing and monitoring position limits, regularly
reviewing trading counterparties, monitoring and limiting
securities concentrations, marking positions to market on a daily
basis to evaluate and establish the adequacy of collateral, and
with respect to trading counterparties, conducting business
through clearing corporations which guarantee performance.
Further discussion of credit risk appears in the Notes to the
Consolidated Financial Statements, in Item 8.</font></p>

<p><font face="Arial">Value-at-Risk </font></p>

<p><font face="Arial">Value-at-risk is a statistical measure of
the potential loss in the fair value of a portfolio due to
adverse movements in underlying risk factors. In response to the
Securities and Exchange Commission&#146;s market risk disclosure
requirements, the Company has performed a value-at-risk analysis
of its trading financial instruments and derivatives. The
value-at-risk calculation uses standard statistical techniques to
measure the potential loss in fair value based upon a one-day
holding period and a 95% confidence level. The calculation is
based upon a variance-covariance methodology, which assumes a
normal distribution of changes in portfolio value. The forecasts
of variances and co-variances used to construct the model, for
the market factors relevant to the portfolio, were generated from
historical data. Although value-at-risk models are sophisticated
tools, their use can be limited as historical data is not always
an accurate predictor of future conditions. The Company attempts
to manage its market exposure using other methods, including
trading authorization limits and concentration limits.</font></p>

<p>&nbsp;</p>

<p><font face="Arial"><i>At December 31, 2001 and 2000, the
Company&#146;s value-at-risk for each component of market risk
was as follows (in thousands of U.S. dollars):</i></font></p>

<table border="1" cellpadding="7" cellspacing="1" width="595">
    <tr>
        <td valign="top" width="29%">&nbsp;</td>
        <td valign="top" colspan="3" width="43%"><p
        align="center"><font size="3" face="Arial">Fiscal 2001</font></p>
        </td>
        <td valign="top" colspan="2" width="27%"><p
        align="center"><font size="3" face="Arial">As at December
        31, </font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="29%">&nbsp;</td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial"><u>High</u></font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        size="3" face="Arial"><u>Low</u></font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial"><u>Average</u></font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial"><u>2001</u></font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial"><u>2000</u></font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="29%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="29%"><font size="3" face="Arial">Interest
        rate risk</font></td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$231</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        size="3" face="Arial">$148</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$200</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$203</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$115</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="29%"><font size="3" face="Arial">Equity
        price risk</font></td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">357</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        size="3" face="Arial">193</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">334</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">523</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">562</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="29%"><font size="3" face="Arial">Diversification
        benefit</font></td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">(216)</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        size="3" face="Arial">(67)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">(211)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">(385)</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">(325)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="29%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="13%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="29%"><font size="3" face="Arial">Total</font></td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$372</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        size="3" face="Arial">$274</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$323</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$341</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$352</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial">The potential future loss presented by the
total value-at-risk generally falls within predetermined levels
of loss that should not be material to the Company&#146;s results
of operations, financial condition or cash flows. The changes in
the value-at-risk amounts reported in 2001 from those reported in
2000 reflect changes in the size and composition of the
Company&#146;s trading portfolio at December 31, 2001 compared to
December 31, 2000. Further discussion of risk management appears
in Item 7, Management&#146;s Discussion and Analysis of the
Results of Operations and Item 1, Risk Management.</font></p>

<p><font face="Arial">The value-at-risk estimate has limitations
that should be considered in evaluating the Company&#146;s
potential future losses based on the year-end portfolio
positions. Recent market conditions including increased
volatility, may result in statistical relationships that result
in higher value-at-risk than would be estimated from the same
portfolio under different market conditions. Likewise, the
converse may be true. Critical risk management strategy involves
the active management of portfolio levels to reduce market risk.
The Company&#146;s market risk exposure is continuously monitored
as the portfolio risks and market conditions change.</font></p>

<p>&nbsp;</p>

<p><font face="Arial"><b>Item 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA</b></font></p>

<p><font face="Arial">The information required to be furnished in
response to this Item is submitted hereinafter following the
signature pages hereto.</font></p>

<p><font face="Arial"><b>Item 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE</b></font></p>

<p><font face="Arial">None.</font></p>

<p>&nbsp;</p>

<p align="center"><font face="Arial"><b>PART III</b></font></p>

<p><font face="Arial"><b>Item 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT</b></font></p>

<p><font face="Arial">General</font></p>

<p><font face="Arial">Directors of the Company are elected
annually by the holders of the Class B Shares to serve until the
next annual meeting of shareholders or until their successors are
appointed. Executive officers are appointed annually by the
directors or until their successors are appointed. Certain
information concerning the executive officers and directors of
the Company as at December 31, 2001 is set forth below.</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="33%"><font face="Arial"><u>Name</u></font></td>
        <td valign="top" width="9%"><font face="Arial"><u>Age</u></font></td>
        <td valign="top" width="58%"><p align="center"><font
        face="Arial"><u>Positions held</u></font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
        <td valign="top" width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">John L.
        Bitove</font></td>
        <td valign="top" width="9%"><font face="Arial">74</font></td>
        <td valign="top" width="58%"><font face="Arial">A
        Director of the Company since February 1980; Retired
        executive.</font><p><font face="Arial">- Member of the
        Audit and Compensation and Stock Option Committees</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
        <td valign="top" width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">Richard
        Crystal</font></td>
        <td valign="top" width="9%"><font face="Arial">61</font></td>
        <td valign="top" width="58%"><font face="Arial">A
        Director of the Company since 1992; Partner Brown Raysman
        Millstein Felder &amp; Steiner LLP (law firm) since July
        2002; Partner, Winston &amp; Strawn (law firm) and
        predecessor firms, U.S. counsel to the Company from 1985
        to July 2002.</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
        <td valign="top" width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">Albert G.
        Lowenthal</font></td>
        <td valign="top" width="9%"><font face="Arial">56</font></td>
        <td valign="top" width="58%"><font face="Arial">Chairman
        of the Board, Chief Executive Officer and Director of the
        Company since 1985; Chairman of the Board, Chief
        Executive Officer and Director of Fahnestock since 1985;
        prior to 1985, Mr. Lowenthal was President of Cowen
        Securities Inc., a New York stock brokerage firm and a
        general partner of Cowen &amp; Co., a New York brokerage
        firm.</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
        <td valign="top" width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">Kenneth
        W. McArthur</font></td>
        <td valign="top" width="9%"><font face="Arial">66</font></td>
        <td valign="top" width="58%"><font face="Arial">A
        Director of the Company since 1996; President and C.E.O.
        of Shurway Capital Corporation ( a private corporation),
        since July1993; Senior Vice-President Bank of Montreal
        Investment Counsel between January 1992 and July 1993;
        Senior Vice-President Nesbitt Thomson Inc. between July
        1989 and January 1993.</font><p><font face="Arial">-
        Member of the Audit Committee</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">A. Winn
        Oughtred</font></td>
        <td valign="top" width="9%"><font face="Arial">59</font></td>
        <td valign="top" width="58%"><font face="Arial">A
        Director of the Company since 1979; a Director of
        Fahnestock since 1983; Secretary of the Company since
        June, 1992 and prior to June, 1991; Partner, Borden
        Ladner Gervais LLP. (law firm), Canadian counsel to the
        Company since 1979.</font></td>
    </tr>
</table>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="9%">&nbsp;</td>
        <td valign="top" width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">Elaine K.
        Roberts</font></td>
        <td valign="top" width="9%"><font face="Arial">50</font></td>
        <td valign="top" width="58%"><font face="Arial">President,
        Treasurer and a Director of the Company since 1977;
        Treasurer and a Director of Fahnestock since 1983.</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="9%">&nbsp;</td>
        <td valign="top" width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">Burton
        Winberg</font></td>
        <td valign="top" width="9%"><font face="Arial">77</font></td>
        <td valign="top" width="58%"><font face="Arial">A
        Director of the Company since 1979; President of Rockport
        Holdings Limited (a real estate development company)
        since 1959. </font><p><font face="Arial">- Member of the
        Audit and Compensation and Stock Option Committees.</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial">Compliance with Section 16(a) of the
Securities Exchange Act of 1934.</font></p>

<p><font face="Arial">Section 16(a) of the Exchange Act requires
the Company's directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's
equity securities, to file by specific dates with the SEC initial
reports of ownership and reports of changes in ownership of
equity securities of the Company. Officers, directors and greater
than ten percent stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms that
they file. The Company is required to report in this annual
report on Form 10-K any failure of its directors and executive
officers and greater than ten percent stockholders to file by the
relevant due date any of these reports during the two preceding
fiscal years.</font></p>

<p><font face="Arial">To the Company's knowledge, based solely on
review of copies of such reports furnished to the Company during
the two fiscal years ended December 31, 2001, all Section 16(a)
filing requirements applicable to the Company's officers,
directors and greater than ten percent stockholders were complied
with. </font></p>

<p><font face="Arial">DIRECTORS COMPENSATION</font></p>

<p><font face="Arial">In the year ended December 31, 2001, the
Company paid its directors an annual retainer fee of $10,000 plus
$1,000 for each board or committee meeting attended in person and
$500 for board or committee meeting attended by telephone.
Directors are reimbursed for travel and related expenses incurred
in attending board and committee meetings. Directors who are not
employees of the Company and its subsidiaries, are also entitled
to the automatic grant of stock options under the Company&#146;s
1996 Equity Incentive Plan, as amended, (the &quot;Plan&quot;)
pursuant to a formula set out in the Plan.</font></p>

<p><font face="Arial">DIRECTORS AND OFFICERS INSURANCE</font></p>

<p><font face="Arial">The Company carries liability insurance for
its directors and officers. In December 1998, the Company
purchased directors and officers liability insurance for the
three years ending November 30, 2001 at an annual premium rate of
$55,000. On November 30, 2001, the Company renewed its directors
and officers liability insurance for one year ending November 30,
2002 at an annual premium rate of $112,000. No part of the
insurance premiums were or are to be paid by the officers and
directors. The aggregate insurance coverage under both policies
is limited to $10 million with $1 million deductibles. </font></p>

<p><font face="Arial">Under the by-laws of the Company, the
Company is obligated to indemnify the directors and officers of
the Company and its subsidiaries to the maximum extent permitted
by the Business Corporations Act (Ontario). The Company has
entered into indemnity agreements with each of its directors
providing for such indemnities.</font></p>

<p>&nbsp;</p>

<p><font face="Arial"><b>Item 11. EXECUTIVE COMPENSATION</b></font></p>

<p><font face="Arial">With respect to the year ended December 31,
2001, the Compensation and Stock Option Committee of the Board of
Directors (the &quot;Committee&quot;) was responsible for making
recommendations for approval by the Board of Directors with
respect to the compensation of the Company&#146;s executive
officers. The members of this Committee are John L. Bitove and
Burton Winberg, each of whom are outside directors of the Company
and have no interlocking relationship with the Company or its
subsidiaries.</font></p>

<p><font face="Arial">Summary Compensation Table</font></p>

<p><font face="Arial"><i>The following table sets forth total
annual compensation paid or accrued by the Company to or for the
account of the Company's chief executive officer and each of the
four most highly paid executive officers of the Company and
Fahnestock, the Company&#146;s principal operating subsidiary,
other than the chief executive officer, whose total cash
compensation for the fiscal year ended December 31, 2001 exceeded
$100,000 (the &quot;Named Executives&quot;). </i></font></p>

<table border="1" cellpadding="2" cellspacing="1" width="605"
bordercolor="#000000">
    <tr>
        <td valign="top" width="19%" height="16">&nbsp;</td>
        <td valign="top" width="6%" height="16">&nbsp;</td>
        <td valign="top" colspan="4" width="39%" height="16"><p
        align="center"><font size="1" face="Arial">Annual
        Compensation</font></p>
        </td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">Long-term</font></p>
        <p align="right"><font size="1" face="Arial">Compensation</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Name and Principal Occupation</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">Year</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">Salary</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p
        align="center"><font size="1" face="Arial">Bonus</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p
        align="center"><font size="1" face="Arial">Other Annual
        Compensation</font></p>
        <p align="center"><font size="1" face="Arial">(1)</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">Class A Shares Underlying Options</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">All Other Compensation</font></p>
        <p align="center"><font size="1" face="Arial">(2)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16">&nbsp;</td>
        <td valign="top" width="6%" height="16">&nbsp;</td>
        <td valign="top" width="10%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">A.G. Lowenthal,</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2001</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$480,350</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$497,500</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">$18,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$5,725</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Chairman, CEO,</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2000</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$480,350</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$3,960,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">$17,330</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$7,693</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">and Director of the Company and Fahnestock</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">1999</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$300,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$981,510</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">$11,170</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">150,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$6,270</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16">&nbsp;</td>
        <td valign="top" width="6%" height="16">&nbsp;</td>
        <td valign="top" width="10%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Robert Neuhoff,</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2001</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$260,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$175,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$5,725</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Executive Vice</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2000</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$260,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$225,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$7,693</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">President of Fahnestock</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">1999</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$230,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$185,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">50,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$6,270</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16">&nbsp;</td>
        <td valign="top" width="6%" height="16">&nbsp;</td>
        <td valign="top" width="10%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">George Stroebel, (3)</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2001</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$275,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$225,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">75,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Chief Operating Officer of Fahnestock</font></td>
        <td valign="top" width="6%" height="16">&nbsp;</td>
        <td valign="top" width="10%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16">&nbsp;</td>
        <td valign="top" width="6%" height="16">&nbsp;</td>
        <td valign="top" width="10%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Eric Shames,</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2001</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$290,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$100,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$5,725</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Secretary and Chief </font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2000</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$250,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$200,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$7,693</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Legal Officer of Fahnestock</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">1999</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$210,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$110,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">15,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$6,270</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16">&nbsp;</td>
        <td valign="top" width="6%" height="16">&nbsp;</td>
        <td valign="top" width="10%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="14%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Robert Sablowsky,</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2001</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$225,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$210,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">$170,332</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">0</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$5,725</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">Executive Vice</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">2000</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$225,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$325,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">$323,137</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">20,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$6,690</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="1"
        face="Arial">President of Fahnestock</font></td>
        <td valign="top" width="6%" height="16"><font size="1"
        face="Arial">1999</font></td>
        <td valign="top" width="10%" height="16"><p align="right"><font
        size="1" face="Arial">$200,000</font></p>
        </td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="1" face="Arial">$40,000</font></p>
        </td>
        <td valign="top" width="14%" height="16"><p align="right"><font
        size="1" face="Arial">$235,154</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="16%" height="16"><p align="right"><font
        size="1" face="Arial">20,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="1" face="Arial">$6,270</font></p>
        </td>
    </tr>
</table>

<blockquote>
    <blockquote>
        <p><font face="Arial">(1) For Mr. Lowenthal, includes for
        2001 and 2000, Directors Fees of $10,000 per year plus
        $1000 per meeting attended in person and $500 per meeting
        attended by telephone and for 1999 Directors fees of
        Cdn.$10,000 per year plus Cdn.$600 per meeting attended
        and which were converted to $U.S. at the average rate
        prevailing during the year. For Mr. Sablowsky, includes
        commissions earned on his retail business.</font></p>
        <p><font face="Arial">(2) This represents Company
        contributions to the Fahnestock 401(k) Plan.</font></p>
        <p><font face="Arial">(3) Mr. Stroebel joined Fahnestock
        on January 8, 2001.</font></p>
        <p>&nbsp;</p>
        <p>&nbsp;</p>
    </blockquote>
</blockquote>

<p><font face="Arial">OPTION GRANTS FOR THE YEAR ENDED DECEMBER
31, 2001</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="15%"><font size="3" face="Arial">Name</font></td>
        <td valign="top" width="15%"><font size="3" face="Arial">Number
        of Class A Shares underlying options</font></td>
        <td valign="top" width="15%"><font size="3" face="Arial">Percentage
        of options granted to employees in 2001</font></td>
        <td valign="top" width="15%"><font size="3" face="Arial">Date
        of Grant</font></td>
        <td valign="top" width="12%"><font size="3" face="Arial">Exercise</font><p><font
        size="3" face="Arial">Price of Option</font></p>
        </td>
        <td valign="top" width="15%"><p align="center"><font
        size="3" face="Arial">Grant Date Present Value</font></p>
        </td>
        <td valign="top" width="15%"><font size="3" face="Arial">Expiration
        Date</font></td>
    </tr>
    <tr>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="15%"><font size="3" face="Arial">George
        Stroebel</font></td>
        <td valign="top" width="15%"><font size="3" face="Arial">75,000</font></td>
        <td valign="top" width="15%"><font size="3" face="Arial">11.3%</font></td>
        <td valign="top" width="15%"><font size="3" face="Arial">January
        11, 2001</font></td>
        <td valign="top" width="12%"><p align="center"><font
        size="3" face="Arial">$22.72</font></p>
        </td>
        <td valign="top" width="15%"><p align="center"><font
        size="3" face="Arial">$508,000</font></p>
        </td>
        <td valign="top" width="15%"><font size="3" face="Arial">January
        10, 2006</font></td>
    </tr>
</table>

<p><font face="Arial">The Company determined the present value of
the options granted using an option pricing model with the
following weighted average assumptions: risk-free interest rate
of 4.96%, expected dividend yield of 1.6%, expected life of 5
years and expected volatility of 22.72%. The stock options expire
5 years from the date of grant and vest over a five year period
with 0% in year one, 25% of the shares becoming exercisable on
each of the next three anniversaries of the date of grant and the
balance vesting in the last six months of the option life. </font></p>

<p><font face="Arial">AGGREGATED OPTION EXERCISES AND YEAR-END
VALUE TABLE</font></p>

<p><font face="Arial"><i>The following table sets forth
information with respect to options exercised during the year
ended December 31, 2001 by the Named Executives and as to
unexercised options held by them at December 31, 2001:</i></font></p>

<table border="1" cellpadding="2" cellspacing="1" width="620"
bordercolor="#000000">
    <tr>
        <td valign="top" width="19%" height="16"><font size="2"
        face="Arial">Name</font></td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">Shares acquired on exercise</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">Value Realized</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="20%" height="16"><p align="right"><font
        size="2" face="Arial">Number of shares Underlying
        options/SARs exercisable/unexercisable</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="24%" height="16"><p align="right"><font
        size="2" face="Arial">Year-end value of unexercised
        in-the-money options exercisable/unexercisable</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="20%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="24%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="2"
        face="Arial">A.G. Lowenthal</font></td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="20%" height="16"><p align="right"><font
        size="2" face="Arial">112,500/187,500</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="24%" height="16"><p align="right"><font
        size="2" face="Arial">$1,322,800/$2,404,700</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="2"
        face="Arial">R. Neuhoff</font></td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="20%" height="16"><p align="right"><font
        size="2" face="Arial">12,5000/62,500</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="24%" height="16"><p align="right"><font
        size="2" face="Arial">$180,300/$656,900</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="2"
        face="Arial">G. Stroebel</font></td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="20%" height="16"><p align="right"><font
        size="2" face="Arial">0/75,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="24%" height="16"><p align="right"><font
        size="2" face="Arial">$0/$418,500</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="2"
        face="Arial">E. Shames</font></td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">15,000</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$248,000</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="20%" height="16"><p align="right"><font
        size="2" face="Arial">11,250/18,750</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="24%" height="16"><p align="right"><font
        size="2" face="Arial">$132,300/$240,500</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="19%" height="16"><font size="2"
        face="Arial">R. Sablowsky</font></td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">20,000</font></p>
        </td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="2" face="Arial">$149,900</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="20%" height="16"><p align="right"><font
        size="2" face="Arial">8,910/45,000</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="24%" height="16"><p align="right"><font
        size="2" face="Arial">$109,300/$480,000</font></p>
        </td>
    </tr>
</table>

<p>&nbsp;</p>

<p><font face="Arial">Employment agreement</font></p>

<p><font face="Arial">Fahnestock and George Stroebel, one of the
Named Executives, are parties to an employment agreement dated
November 29, 2000 which provides for an annual salary of
$275,000, an annual bonus equal to 0.5% of the Company&#146;s
pre-tax income (2001 bonus not to be less than $225,000), options
on 150,000 Class A Shares to be granted pursuant to the Plan
(75,000 in January, 2001 and 75,000 in January, 2002), and
standard benefits provided by the Company.</font> <font
face="Arial">The agreement is for an initial term through January
7, 2003. If the agreement is terminated by Fahnestock for other
than just cause or by Mr. Stroebel for breach of certain terms of
the agreement during the initial term of the agreement, Mr.
Stroebel will be entitled to the continuation of his annual
salary until the earlier of six months from termination or
January 7, 2003, plus in 2002, a bonus determined pursuant to the
agreement.</font></p>

<p>&nbsp;</p>

<p><font face="Arial">REPORT OF THE COMPENSATION AND STOCK OPTION
COMMITTEE</font></p>

<p><font face="Arial">The following report of the Committee
discusses generally the Committee's executive compensation
objectives and policies and their relationship to corporate
performance in 2001. In addition, the report specifically
discusses the Committee's bases for compensation in 2001 of the
Company&#146;s Chief Executive Officer, as well as the other
senior executive officers of the Company and Fahnestock. </font></p>

<p><font face="Arial"><b><i>Objectives and Policies</i></b></font></p>

<p><font face="Arial">The Committee's objective is to provide a
competitive compensation program with appropriate incentives for
superior performance, thereby providing a strong and direct link
between corporate performance and compensation. Performance is
defined in several ways, as more fully discussed below, each of
which has relevance to the Company&#146;s success in the
short-term, long-term or both.</font></p>

<p><font face="Arial">The Company&#146;s compensation program for
senior executive officers consists of the following key elements:
a base salary, an annual bonus, grants of stock options and, in
the case of the Chief Executive Officer, the Performance-Based
Compensation Agreements referred to below.</font></p>

<p><font face="Arial">In arriving at its recommendations
concerning the specific components of the Company&#146;s
compensation program, the Committee considers certain public
information about the compensation paid by a group of comparable
public Canadian and U.S. broker-dealers and the relative
performance of the Company as measured by net income levels and
earnings per share, among other factors.</font></p>

<p><font face="Arial">The Committee believes that this approach
best serves the interests of shareholders by enabling the Company
to structure compensation in a way that meets the requirements of
the highly competitive environment in which the Company operates,
while ensuring that senior executive officers are compensated in
a manner that advances both the short and long-term interests of
shareholders.</font></p>

<p><font face="Arial">Compensation for the Company&#146;s senior
executive officers involves a significant component of
remuneration which is contingent on the performance of both the
Company and the senior executive officer: the variable annual
bonus (which permits individual performance to be recognized on
an annual basis, and which is based, in significant part, on an
evaluation of the contribution made by the officer to corporate
performance) and stock options (which directly relate a portion
of compensation to stock price appreciation realized by the
Company&#146;s shareholders).</font></p>

<p><font face="Arial"><i>Base Salary.</i> Salaries paid to senior
executive officers (other than the Chief Executive Officer) are
reviewed and set annually by the Committee considering
recommendations made by the Chief Executive Officer to the
Committee, based upon the Chief Executive Officer's assessment of
the nature of the position, and the skills, experience and
performance of each senior executive officer, as well as salaries
paid by comparable companies in the Company&#146;s industry.</font></p>

<p><font face="Arial"><i>Annual Bonus.</i> Bonuses paid to senior
executive officers (other than the Chief Executive Officer) are
set annually by the Committee considering recommendations made by
the Chief Executive Officer to the Committee, based upon the
Chief Executive Officer's assessment of the performance of the
Company and his assessment of the contribution of each senior
executive to that performance. Senior executive officers,
including the Chief Executive Officer, of Fahnestock have the
right to elect to defer a portion of their annual bonus and
performance-based compensation under Fahnestock's Executive
Deferred Compensation Plan, a non-qualified unfunded plan.</font></p>

<p><font face="Arial"><i>Stock Option Grants.</i> Under the Plan,
as amended, senior executive officers and employees of the
Company and its subsidiaries (other than the Chief Executive
Officer) are granted stock options by the Committee based upon
the recommendations of the Chief Executive Officer and based upon
a variety of considerations, including the date of the last grant
made to the officer or employee, as well as considerations
relating to the contribution and performance of the specific
optionee.</font></p>

<p><font face="Arial"><b><i>Chief Executive Officer Compensation</i></b></font></p>

<p><font face="Arial">Mr. A.G. Lowenthal, the Chairman of the
Board and the Chief Executive Officer of the Company and
Fahnestock, is paid a base salary set by the Committee, plus
performance-based compensation under the Performance-Based
Compensation Agreements referred to below and, at the discretion
of the Committee, is eligible for bonuses and grants of stock
options.</font></p>

<p><font face="Arial">On March 5, 1997, the Company entered into
a Performance-Based Compensation Agreement (the &quot;1997 Comp
Agreement&quot;) effective as of January 1, 1997 and expiring
December 31, 2001 with Albert G. Lowenthal, pursuant to the
recommendation of the Committee, the approval of the Board of
Directors and the approval of the holders of the Class B Shares.
The purpose of the 1997 Comp Agreement was to set the terms under
which Mr. Lowenthal's performance-based compensation was to be
calculated during the term thereof. </font></p>

<p><font face="Arial">The 1997 Comp Agreement was terminated
effective December 31, 2000 because the Compnay had made the
maximum dollar amount of performance awards provided for in the
1997 Comp Agreement. Upon the recommendation of the Committee and
the approval of the Board, a new Performance-Based Compensation
Agreement dated January 1, 2001 (the &quot;2001 Comp
Agreement&quot;) was entered into between the Company and Mr.
Lowenthal. The 2001 Comp Agreement was approved by the holders of
the Class B Shares on May 14, 2001.</font></p>

<p><font face="Arial">In March of 2001, The Committee established
performance goals under the 2001 Comp Agreement entitling Mr.
Lowenthal to a Performance Award for the year 2001 of an
aggregate of the amounts determined by the application for the
following formulae,</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="87%"><blockquote>
            <blockquote>
                <p><font face="Arial">an amount equal to the
                amount by which the closing price of Class A
                Shares on the New York Stock Exchange on December
                31, 2001, exceeded the closing price on February
                28, 2001 multiplied by 200,000; plus</font></p>
            </blockquote>
        </blockquote>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$928,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="87%"><blockquote>
            <blockquote>
                <p><font face="Arial">an amount equal to:</font></p>
                <p><font face="Arial">3% of the amount by which
                the Company&#146;s consolidated profit before
                income taxes for the year ended December 31, 2001
                exceeds 15% and is less than 25% of the
                Company&#146;s consolidated shareholders' equity
                at December 31, 2000; plus</font></p>
                <p><font face="Arial">4% of the amount by which
                the Company&#146;s consolidated profit before
                income taxes for the year ended December 31, 2001
                exceeds 25% of the Company&#146;s consolidated
                shareholders' equity at December 31, 2000; plus</font></p>
            </blockquote>
        </blockquote>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">nil</font></p>
        <p align="right"><font face="Arial">nil</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="87%"><blockquote>
            <blockquote>
                <p><font face="Arial">3% percent of the amount by
                which the Company&#146;s consolidated net profit
                at December 31, 2001 exceeds U.S.$26,913,000, the
                average of the Company&#146;s consolidated net
                profit for 1998,1999 and 2000).</font></p>
            </blockquote>
        </blockquote>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial"><u>nil</u></font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="87%"><p align="right"><font
        face="Arial">Total earned under the 2001 Comp Agreement</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$928,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="87%"><p align="right"><font
        face="Arial">Total paid to Mr. Lowenthal with respect to
        fiscal 2001*</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        face="Arial">$497,500</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial">* Because of the Company&#146;s performance
in 2001, Mr. Lowenthal requested and the Committee agreed to
limit Mr. Lowenthal&#146;s performance bonus for 2001 to
$497,500.</font></p>

<p><font face="Arial"><b><i>U.S. Internal Revenue Code Section
162(m) </i></b></font></p>

<p><font face="Arial">The Company is a Canadian taxpayer.
However, because Fahnestock is a U.S. taxpayer, most compensation
issues are affected by the U.S. Internal Revenue Code of 1986, as
amended (the U.S. Tax Code&quot;).</font></p>

<p><font face="Arial">Section 162(m) of the U.S. Tax Code
generally disallows a tax deduction to public corporations for
annual compensation of over $1,000,000 paid to any of the
company's chief executive officer and four other most highly paid
executive officers (determined as of the end of each fiscal year)
unless it constitutes qualified performance-based compensation or
otherwise qualifies for an exception.</font></p>

<p><font face="Arial">In order to qualify for exemptions under
Section 162(m), on March 25, 1997, the 1997 Comp Agreement was
adopted and approved by the Class B Shareholders and in 2001 the
2001 Comp Agreement was adopted and approved by the Class B
Shareholders.</font></p>

<p><font face="Arial">In 1997, the Committee proposed and the
Directors adopted an amendment to the Plan which was confirmed by
the Class B Shareholders limiting the number of Class A Shares
issuable under options granted under the Plan in any 60 month
period to 500,000 with respect to certain individual participants
in the Plan. In 1999, the Committee proposed and the Directors
adopted a further amendment to the Plan which was confirmed by
the Class B Shareholders extending this limitation to all
participants in the Plan.</font></p>

<p><font face="Arial">To the extent consistent with the
Company&#146;s general compensation objectives, the Committee
considers the potential effect of Section 162(m) on compensation
paid to the executive officers of the Company and its
subsidiaries. However, the Committee reserves the right to award
and recommend the awarding of nondeductible compensation in any
circumstances it deems appropriate. Further, because of
ambiguities and uncertainties as to the application and
interpretation of Section 162(m) and the regulations issued
thereunder, no assurance can be given, notwithstanding the
Company&#146;s efforts to qualify, that the compensation paid by
the Company to its executive officers will in fact satisfy the
requirements for the exemption from the Section 162(m) deduction
limit.</font></p>

<p><font face="Arial"><b><i>Members of the Compensation and Stock
Option Committee</i></b></font></p>

<p><font face="Arial">Burton Winberg &#151; Chairman</font></p>

<p><font face="Arial">John L. Bitove</font></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p><font face="Arial">SHARE PERFORMANCE GRAPH</font></p>

<p><font face="Arial">The following graph shows changes over the
past five years period of U.S.$100 invested in (1) the
Company&#146;s Class A Shares, (2) the Standard &amp; Poors 500
Composite Stock Price Index and (3) the Toronto Stock Exchange
300 Composite Index.</font></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p><font face="Arial"><b>Item 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT</b></font></p>

<blockquote>
    <p><font size="3" face="Arial"><i>The following table sets
    forth information as of December 31, 2001 as to the only
    persons known to the Company who own beneficially more than
    5% of the Class B Shares (the only class of voting stock of
    the Company). There are no outstanding rights to acquire
    beneficial ownership of any Class B Shares.</i></font></p>
</blockquote>

<table border="0" cellpadding="7" cellspacing="0" width="619">
    <tr>
        <td valign="top" width="16%"><font size="2" face="Arial"><u>Title
        of Class</u></font></td>
        <td valign="top" width="22%"><font size="2" face="Arial"><u>Identity
        of Person or Group</u></font></td>
        <td valign="top" width="34%"><font size="2" face="Arial"><u>Mailing
        Address</u></font></td>
        <td valign="top" width="11%"><font size="2" face="Arial"><u>Amount
        Owned</u></font></td>
        <td valign="top" width="6%">&nbsp;</td>
        <td valign="top" width="12%"><font size="2" face="Arial"><u>Percent
        of Class</u></font></td>
    </tr>
    <tr>
        <td valign="top" width="16%"><font size="2" face="Arial">Class
        B</font></td>
        <td valign="top" width="22%"><font size="2" face="Arial">A.G.
        Lowenthal</font></td>
        <td valign="top" width="34%"><font size="2" face="Arial">c/o
        Fahnestock &amp; Co. Inc.</font><p><font size="2"
        face="Arial">125 Broad St</font></p>
        <p><font size="2" face="Arial">New York, NY 10004</font></p>
        </td>
        <td valign="top" width="11%"><p align="right"><font
        size="2" face="Arial">50,490</font></p>
        </td>
        <td valign="top" width="6%"><p align="right"><font
        size="2" face="Arial">(1)</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="2" face="Arial">50.6%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="16%">&nbsp;</td>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="34%">&nbsp;</td>
        <td valign="top" width="11%">&nbsp;</td>
        <td valign="top" width="6%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="16%">&nbsp;</td>
        <td valign="top" width="22%"><font size="2" face="Arial">O.
        Roberts</font></td>
        <td valign="top" width="34%"><font size="2" face="Arial">c/o
        Suite 1110, Box 2015</font><p><font size="2" face="Arial">20
        Eglinton Ave. W.</font></p>
        <p><font size="2" face="Arial">Toronto, Canada M4R 1K8</font></p>
        </td>
        <td valign="top" width="11%"><p align="right"><font
        size="2" face="Arial">44,309</font></p>
        </td>
        <td valign="top" width="6%"><p align="right"><font
        size="2" face="Arial">(2)</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="2" face="Arial">44.4%</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial">________________________________________</font></p>

<p><font size="2" face="Arial">1. All shares are held of record
by Phase II Financial Limited, an Ontario corporation
(&quot;Phase II&quot;) wholly-owned by Mr. Lowenthal who is
Chairman of the Company.</font></p>

<p><font size="2" face="Arial">2. Mrs. Roberts, who is the mother
of Elaine Roberts, President of the Company, owns 100 shares
directly and 44,209 shares indirectly through Elka Estates
Limited, an Ontario corporation (&quot;Elka&quot;) which is
wholly-owned by Mrs. Roberts.</font></p>

<blockquote>
    <p><font size="3" face="Arial"><i>The following table sets
    forth information as of December 31, 2001 as to the ownership
    of Class A Shares and Class B Shares, the only classes of
    equity securities of the Company, by persons who are
    directors of the Company, the Named Executives, and as to
    directors and executive officers of the Company as a group,
    without naming them.</i></font></p>
</blockquote>

<table border="0" cellpadding="7" cellspacing="0" width="619">
    <tr>
        <td valign="top" width="22%"><font size="2" face="Arial"><u>Title
        of Class</u></font></td>
        <td valign="top" width="30%"><font size="2" face="Arial"><u>Identity
        of Person or Group</u></font></td>
        <td valign="top" width="20%"><font size="2" face="Arial"><u>Amount
        Owned</u></font></td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><font size="2" face="Arial"><u>Percent
        of Class</u></font></td>
    </tr>
    <tr>
        <td valign="top" width="22%"><font size="2" face="Arial">Class
        A Shares</font></td>
        <td valign="top" width="30%"><font size="2" face="Arial">A.G.
        Lowenthal</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">2,575,497</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(1)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">21%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">J.L.
        Bitove</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">50,580</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(3)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">R.
        Crystal</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">1,500</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">K.W.
        McArthur</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">40,000</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(4)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">R.
        Neuhoff</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">37,390</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(7)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">A.W.
        Oughtred</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">8,500</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(4)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">E.K.
        Roberts</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">139,744</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(5)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">1%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">R.
        Sablowsky</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">7,600</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(8)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">E.
        Shames</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">15,000</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(9)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">G.
        Stroebel</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">5,000</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">B.
        Winberg</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">12,100</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(6)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">Executive
        Officers and Directors as a group (10 members)</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">2,892,911</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">23%</font></p>
        </td>
    </tr>
</table>

<table border="0" cellpadding="7" cellspacing="0" width="619">
    <tr>
        <td valign="top" width="22%"><font size="2" face="Arial">Class
        B Shares</font></td>
        <td valign="top" width="30%"><font size="2" face="Arial">A.G.
        Lowenthal</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">50,490</font></p>
        </td>
        <td valign="top" width="10%"><p align="right"><font
        size="2" face="Arial">(2)</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">51%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">J.L.
        Bitove</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">20</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">R.
        Crystal</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">K.W.
        McArthur</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">R.
        Neuhoff</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">A.W.
        Oughtred</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">E.K.
        Roberts</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">108</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">E.
        Shames</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">G.
        Stroebel</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">B.
        Winberg</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="22%">&nbsp;</td>
        <td valign="top" width="30%"><font size="2" face="Arial">Executive
        Officers and Directors as a group (10 members)</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="2" face="Arial">50,618</font></p>
        </td>
        <td valign="top" width="10%">&nbsp;</td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">51%</font></p>
        </td>
    </tr>
</table>

<p><font size="2" face="Arial">* less than 1%</font></p>

<p><font size="2" face="Arial">(1) Mr. Lowenthal is the sole
general partner of Phase II Financial L. P., a New York limited
partnership, (&quot;Phase II L.P.&quot;) which is the record
holder of 2,445,900 Class A Shares. Mr. Lowenthal holds 10,731
Class A Shares through the Company's 401(k) plan, 5,000 through
the Albert G. Lowenthal Foundation and 1,366 Class A Shares
directly. 112,500 Class A Shares are beneficially owned in
respect of Class A Shares currently issuable upon exercise of
options granted under the Plan.</font></p>

<blockquote>
    <p><font size="2" face="Arial">Phase II, an Ontario
    corporation wholly-owned by Mr. Lowenthal, is the holder of
    record of all such shares.</font></p>
    <p><font size="2" face="Arial">25,000 Class A Shares are
    beneficially owned in respect of Class A Shares currently
    issuable upon exercise of options issued under the Plan. The
    balance of the shares held, are held directly.</font></p>
    <p><font size="2" face="Arial">5,000 Class A Shares are
    beneficially owned in respect of Class A Shares currently
    issuable upon exercise of options issued under the Plan. The
    balance of the shares held, are held directly.</font></p>
    <p><font size="2" face="Arial">18,750 Class A Shares are
    beneficially owned in respect of Class A Shares currently
    issuable upon exercise of options issued under the Plan. The
    balance of the shares held, are held directly.</font></p>
    <p><font size="2" face="Arial">10,000 Class A Shares are
    beneficially owned in respect of Class A Shares currently
    issuable upon exercise of options issued under the Plan. The
    balance of the shares held, are held directly.</font></p>
    <p><font size="2" face="Arial">4,890 Class A Shares are held
    through the Company&#146;s 401(k) plan and 12,500 Class A
    Shares are beneficially owned in respect of Class A Shares
    currently issuable upon exercise of options issued under the
    Plan. The balance of the shares held, are held directly.</font></p>
    <p><font size="2" face="Arial">397 Class A Shares are held
    through the Company&#146;s 401(k) plan and 10,000 Class A
    Shares are beneficially owned in respect of Class A Shares
    currently issuable upon exercise of options issued under the
    Plan. The balance of the shares held, are held directly.</font></p>
    <p><font size="2" face="Arial">1,893 Class A Shares are held
    through the Company&#146;s 401(k) plan and 11,250 Class A
    Shares are beneficially owned in respect of Class A Shares
    currently issuable upon exercise of options issued under the
    Plan. The balance of the shares held, are held directly.</font></p>
</blockquote>

<p><font size="3" face="Arial">(c) There are no arrangements,
known to the Company, the operation of which may at a subsequent
date result in a change of control of the Company.</font></p>

<p><font face="Arial"><b>Item 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS</b></font></p>

<p><font face="Arial">During the year 2001 certain of the
directors, executive officers and senior officers of the Company
and Fahnestock maintained margin accounts with Fahnestock in
connection with the purchase of securities (including securities
of the Company) which margin accounts are substantially on the
same terms including interest rates and collateral, as those
prevailing from time to time for comparable transactions with
non-affiliated persons and do not involve more than the normal
risk of collectability. The details of their indebtedness to
Fahnestock on their margin accounts is as follows:</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="33%"><font face="Arial">Name and
        Principal Position</font></td>
        <td valign="top" width="22%"><p align="center"><font
        face="Arial">Largest Amount Outstanding During 2001</font></p>
        </td>
        <td valign="top" width="23%"><p align="center"><font
        face="Arial">Amount Outstanding as at December 31, 2001</font></p>
        </td>
        <td valign="top" width="22%"><font face="Arial">Security
        for Indebtedness</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">Albert G.
        Lowenthal,</font><p><font face="Arial">Chairman and CEO
        of the Company and Fahnestock</font></p>
        </td>
        <td valign="top" width="22%"><p align="right"><font
        face="Arial">$185,000</font></p>
        </td>
        <td valign="top" width="23%"><p align="right"><font
        face="Arial">Nil</font></p>
        </td>
        <td valign="top" width="22%"><font face="Arial">Margined
        securities</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">Eric
        Shames,</font><p><font face="Arial">Secretary and Chief
        Legal Officer of Fahnestock</font></p>
        </td>
        <td valign="top" width="22%"><p align="right"><font
        face="Arial">$153,200</font></p>
        </td>
        <td valign="top" width="23%"><p align="right"><font
        face="Arial">$148,000</font></p>
        </td>
        <td valign="top" width="22%"><font face="Arial">Margined
        securities</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">A. Winn
        Oughtred, Secretary and a Director of the Company and
        Fahnestock</font></td>
        <td valign="top" width="22%"><p align="right"><font
        face="Arial">$164,000</font></p>
        </td>
        <td valign="top" width="23%"><p align="right"><font
        face="Arial">Nil</font></p>
        </td>
        <td valign="top" width="22%"><font face="Arial">Margined
        securities</font></td>
    </tr>
</table>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p align="center"><font face="Arial"><b>PART IV</b></font></p>

<p><font face="Arial"><b>Item 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON</b></font></p>

<p><font face="Arial"><b>FORM 8-K</b></font></p>

<table border="0" cellpadding="7" cellspacing="0" width="571">
    <tr>
        <td valign="top" width="7%"><font face="Arial">(a)</font></td>
        <td valign="top" width="7%"><font face="Arial">(i)</font></td>
        <td valign="top" width="85%"><font face="Arial">Financial
        Statements</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%"><font face="Arial">The
        response to this portion of Item 14 is submitted as a
        separate section of this report. See pages F-1 to F-20</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%"><font face="Arial">(ii)</font></td>
        <td valign="top" width="85%"><font face="Arial">Financial
        Statement Schedules</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%"><font face="Arial">Not
        Applicable</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%"><font face="Arial">(iii)</font></td>
        <td valign="top" width="85%"><font face="Arial">Listing
        of Exhibits</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%"><font face="Arial">The
        exhibits which are filed with this Form 10-K or are
        incorporated herein by reference are set forth in the
        Exhibit Index which immediately precedes the exhibits to
        this report.</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="7%"><font face="Arial">(b)</font></td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%"><font face="Arial">Reports
        on Form 8-K</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%"><font face="Arial">None</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="7%"><font face="Arial">(c)</font></td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%"><font face="Arial">Exhibits</font></td>
    </tr>
    <tr>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="7%">&nbsp;</td>
        <td valign="top" width="85%"><font face="Arial">See the
        Exhibit Index included hereinafter.</font></td>
    </tr>
</table>

<p>&nbsp;</p>

<p align="center"><font face="Arial"><b>SIGNATURES</b></font></p>

<p><font face="Arial">Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York,
State of New York, on the 28th day of March, 2002.</font></p>

<p><font face="Arial">FAHNESTOCK VINER HOLDINGS INC.</font></p>

<p><font face="Arial">BY: /s/E.K. Roberts</font></p>

<p><font face="Arial">E.K. Roberts, President</font></p>

<p>&nbsp;</p>

<p><font face="Arial">Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed by
the following persons in the capacities and on the dates
indicated.</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="33%"><font face="Arial"><u>Signature</u></font></td>
        <td valign="top" width="33%"><font face="Arial"><u>Title</u></font></td>
        <td valign="top" width="33%"><font face="Arial"><u>Date</u></font></td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">/s/ J.L.
        Bitove</font></td>
        <td valign="top" width="33%"><font face="Arial">Director</font></td>
        <td valign="top" width="33%"><font face="Arial">February
        28, 2002</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">J.L.
        Bitove</font></td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">/s/ R.
        Crystal</font></td>
        <td valign="top" width="33%"><font face="Arial">Director</font></td>
        <td valign="top" width="33%"><font face="Arial">February
        28, 2002</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">R.
        Crystal</font></td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">/s/ A.G.
        Lowenthal</font></td>
        <td valign="top" width="33%"><font face="Arial">Chairman,
        Chief Executive </font></td>
        <td valign="top" width="33%"><font face="Arial">February
        28, 2002</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">A.G.
        Lowenthal</font></td>
        <td valign="top" width="33%"><font face="Arial">Officer,
        Director</font></td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">/s/ K. W.
        McArthur</font></td>
        <td valign="top" width="33%"><font face="Arial">Director</font></td>
        <td valign="top" width="33%"><font face="Arial">February
        28, 2002</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">K.W.
        McArthur</font></td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">/s/ A.W.
        Oughtred</font></td>
        <td valign="top" width="33%"><font face="Arial">Secretary,
        Director</font></td>
        <td valign="top" width="33%"><font face="Arial">February
        28, 2002</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">A.W.
        Oughtred</font></td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">/s/ E.K.
        Roberts</font></td>
        <td valign="top" width="33%"><font face="Arial">President
        &amp; Treasurer, </font></td>
        <td valign="top" width="33%"><font face="Arial">February
        28, 2002</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">E.K.
        Roberts</font></td>
        <td valign="top" width="33%"><font face="Arial">(Principal
        Financial and Accounting Officer), Director</font></td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">/s/ B.
        Winberg</font></td>
        <td valign="top" width="33%"><font face="Arial">Director</font></td>
        <td valign="top" width="33%"><font face="Arial">February
        28, 2002</font></td>
    </tr>
    <tr>
        <td valign="top" width="33%"><font face="Arial">B.
        Winberg</font></td>
        <td valign="top" width="33%">&nbsp;</td>
        <td valign="top" width="33%">&nbsp;</td>
    </tr>
</table>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS</font></p>

<p align="center"><font size="3" face="Arial">FAHNESTOCK VINER
HOLDINGS INC.</font></p>

<p>&nbsp;</p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
<tr>
        <td valign="top" width="89%"><font size="3" face="Arial">Management&#146;s
        Responsibility for Consolidated Financial Statements</font></td>
        <td valign="top" width="11%"><p align="right"><font
        size="3" face="Arial">F-1</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="89%">&nbsp;</td>
        <td valign="top" width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="89%"><font size="3" face="Arial">Report
        of Independent Accountants</font></td>
        <td valign="top" width="11%"><p align="right"><font
        size="3" face="Arial">F-2</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="89%">&nbsp;</td>
        <td valign="top" width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="89%"><font size="3" face="Arial">Consolidated
        Balance Sheets as of December 31, 2001 and 2000</font></td>
        <td valign="top" width="11%"><p align="right"><font
        size="3" face="Arial">F-3</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="89%">&nbsp;</td>
        <td valign="top" width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="89%"><font size="3" face="Arial">Consolidated
        Statements of Operations for the three years ended<br>
        December 31, 2001, 2000 and 1999</font></td>
        <td valign="top" width="11%"><p align="right"><font
        size="3" face="Arial">F-4</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="89%">&nbsp;</td>
        <td valign="top" width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="89%"><font size="3" face="Arial">Consolidated
        Statements of Shareholders&#146; Equity for the three
        years ended December 31, 2001, 2000 and 1999</font></td>
        <td valign="top" width="11%"><p align="right"><font
        size="3" face="Arial">F-5</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="89%">&nbsp;</td>
        <td valign="top" width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="89%"><font size="3" face="Arial">Consolidated
        Statements of Cash Flows for the three years ended<br>
        December 31, 2001, 2000 and 1999</font></td>
        <td valign="top" width="11%"><p align="right"><font
        size="3" face="Arial">F-6</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="89%">&nbsp;</td>
        <td valign="top" width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="89%"><font size="3" face="Arial">Notes
        to Consolidated Financial Statements</font></td>
        <td valign="top" width="11%"><p align="right"><font
        size="3" face="Arial">F-7</font></p>
        </td>
    </tr>
</table>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p><font size="3" face="Arial">MANAGEMENT'S RESPONSIBILITY FOR
CONSOLIDATED FINANCIAL STATEMENTS</font></p>

<p><font size="3" face="Arial">The accompanying consolidated
financial statements of Fahnestock Viner Holdings Inc. were
prepared by management in accordance with accounting principles
generally accepted in the United States of America, which conform
in all material respects with accounting principles generally
accepted in Canada. The significant accounting policies of the
Company are described in Note 1 to the consolidated financial
statements.</font></p>

<p><font size="3" face="Arial">Management is responsible for the
integrity and objectivity of the information contained in the
consolidated financial statements. In order to present fairly the
financial position of the Company and the results of its
operations and the changes in its financial position, estimates
which are necessary are based on careful judgements and have been
properly reflected in the consolidated financial statements.
Management has established systems of internal control which are
designed to provide reasonable assurance that assets are
safeguarded from loss or unauthorized use and to produce reliable
accounting records for the preparation of financial information.</font></p>

<p><font size="3" face="Arial">PricewaterhouseCoopers LLP, the
Company's independent accountants, conducts an audit of the
consolidated financial statements in accordance with auditing
standards generally accepted in the United States of America.
Their audit includes a review and evaluation of the Company's
systems of internal control, and such tests and procedures as
they consider necessary in order to form an opinion as to whether
the consolidated financial statements are presented fairly in
accordance with accounting principles generally accepted in the
United States of America.</font></p>

<p><font size="3" face="Arial">The Board of Directors is
responsible for ensuring that management fulfills its
responsibilities for financial reporting and internal control.
The Board of Directors is assisted in this responsibility by its
Audit Committee, whose members are not officers of the Company.
The Audit Committee meets with management as well as with the
independent accountants to review the internal controls,
consolidated financial statements, and the auditors&#146; report.
The Audit Committee reports its findings to the Board of
Directors for its consideration in approving the consolidated
financial statements for issuance to the shareholders.</font></p>

<p><font size="3" face="Arial">Management recognizes its
responsibility for conducting the Company's affairs in compliance
with established financial standards, and applicable laws and
regulations, and for maintaining proper standards of conduct for
its activities. </font></p>

<p><font size="3" face="Arial">/s/A.G. Lowenthal <br>
A.G. Lowenthal, <br>
Chairman of the Board <br>
and Chief Executive Officer</font></p>

<p><font size="3" face="Arial">E.K. Roberts,<br>
/s/E.K. Roberts<br>
President and Treasurer</font></p>

<p><font size="3" face="Arial">February 21, 2002 </font></p>

<p align="center"><font size="3" face="Arial">F-1</font></p>

<p align="center">&nbsp;</p>

<p align="center"><font size="3" face="Arial">REPORT OF
INDEPENDENT ACCOUNTANTS</font></p>

<p><font size="3" face="Arial">TO THE SHAREHOLDERS OF FAHNESTOCK
VINER HOLDINGS INC.</font></p>

<p><font size="3" face="Arial">In our opinion, the accompanying
consolidated balance sheets and the related consolidated
statements of operations, shareholders&#146; equity and cash
flows present fairly, in all material respects, the financial
position of Fahnestock Viner Holdings Inc. and its subsidiaries
at December 31, 2001 and 2000, and the results of its operations
and its cash flows for each of the three years in the period
ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America. These
financial statements are the responsibility of the Company&#146;s
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits
of these statements in accordance with auditing standards
generally accepted in the United States of America, which require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.</font></p>

<p><font size="3" face="Arial">/s/PricewaterhouseCoopers LLP</font></p>

<p><font size="3" face="Arial">New York, New York</font></p>

<p><font size="3" face="Arial">February 21, 2002.</font></p>

<p align="center"><font size="3" face="Arial">F-2</font></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<table border="0" cellpadding="0" cellspacing="0" width="638"
bordercolor="#000000">
<tr>
        <td valign="top" colspan="6" height="16"><p
        align="center"><font size="3" face="Arial">FAHNESTOCK
        VINER HOLDINGS INC.<br>
        CONSOLIDATED BALANCE SHEETS<br>
        AS AT DECEMBER 31, </font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="17">&nbsp;</td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17"><p
        align="center"><font size="3" face="Arial">2001 </font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17"><p
        align="center"><font size="3" face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="6" width="100%" height="17"><p
        align="right"><font size="3" face="Arial">(Expressed in
        thousands of U.S. dollars)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">ASSETS</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Current assets</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Cash and cash equivalents</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">$24,217</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">$14,669</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Restricted deposits (note 2)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">2,393</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">2,712</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Securities purchased under
        agreement to resell</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">23,500</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Deposits with clearing
        organizations</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">7,686</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">5,917</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Receivable from brokers and
        clearing organizations </font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">100,694</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">130,657</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Receivable from customers</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">463,986</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">428,582</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Securities owned, including amounts
        pledged, at market value <br>
        (note 3)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">50,575</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">51,543</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Other</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">38,430</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">23,050</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">687,981</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">680,630</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Other assets</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Stock exchange seats (approximate
        market value</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">$8,155; $8,258 in 2000)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">3,018</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">3,018</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Fixed assets, net of accumulated
        depreciation of $18,503; $14,961 in 2000</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">9,992</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">9,687</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Goodwill, at amortized cost</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">9,284</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">4,147</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">22,294</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">16,852</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="17">&nbsp;</td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$710,275</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$697,482</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">LIABILITIES AND SHAREHOLDERS'
        EQUITY</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="17"><font
        size="3" face="Arial">Current liabilities</font></td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17">&nbsp;</td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="17"><font
        size="3" face="Arial">Drafts payable</font></td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$20,622</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$26,464</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Bank call loans (note 4)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">13,134</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">25,899</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Securities sold under agreement to
        repurchase</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">23,500</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Payable to brokers and clearing
        organizations </font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">179,212</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">222,150</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Payable to customers</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">188,387</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">124,534</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Securities sold, but not yet
        purchased, at market value (note 3)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">8,921</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">8,153</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Accounts payable and other
        liabilities</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">56,812</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">40,003</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Income taxes payable</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">1,492</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">4,979</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">468,580</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">475,682</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Commitments and contingencies (note
        9)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Shareholders' equity</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Share capital (note 5)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">12,337,085 Class A non-voting
        shares (2000-11,990,969 shares)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">34,124</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">29,550</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">99,680 Class B voting shares</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">133</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">133</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">34,257</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">29,683</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Contributed capital (note 6)</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">4,113</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">3,499</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16"><font
        size="3" face="Arial">Retained earnings</font></td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">203,325</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">188,618</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">241,695</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">221,800</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="75%" height="17">&nbsp;</td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$710,275</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$697,482</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="6" height="17"><p
        align="center"><font size="3" face="Arial">The
        accompanying notes are an integral part of these
        consolidated financial statements.</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="6" height="16"><p
        align="center"><font size="3" face="Arial">F-3</font></p>
        </td>
    </tr>
</table>

<p>&nbsp;</p>

<table border="0" cellpadding="0" cellspacing="0" width="662"
bordercolor="#000000">
<tr>
        <td valign="top" colspan="7" height="16"><p
        align="center"><font size="3" face="Arial">FAHNESTOCK
        VINER HOLDINGS INC.<br>
        CONSOLIDATED STATEMENTS OF OPERATIONS<br>
        FOR THE YEAR ENDED DECEMBER 31, </font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p
        align="center"><font size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p
        align="center"><font size="3" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17"><p
        align="center"><font size="3" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td align="right" valign="top" colspan="7" width="100%"
        height="17"><p align="right"><font size="3" face="Arial">(Expressed
        in thousands of U.S. dollars, except per share amounts)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">REVENUE:</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Commissions</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$122,272</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$128,915</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$118,747</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Principal transactions, net</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">56,374</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">84,420</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">71,014</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Interest</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">34,309</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">63,696</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">43,835</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Underwriting fees</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">10,955</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">9,314</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">15,550</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Advisory fees</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">24,504</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">21,764</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">22,440</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Other</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">12,847</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">8,390</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">7,525</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">261,261</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">316,499</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">279,111</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">EXPENSES:</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Compensation and related expenses</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">148,838</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">154,881</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">143,557</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Clearing and exchange fees</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">6,012</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">7,205</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">8,870</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Communications</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">23,620</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">23,312</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">21,421</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Occupancy costs</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">15,691</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">12,465</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">12,722</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Interest</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">14,071</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">33,122</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">21,326</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Other</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">21,417</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">13,802</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">20,749</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">229,649</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">244,787</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">228,645</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Profit before income taxes</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">31,612</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">71,712</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">50,466</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Income tax provision (note 7)</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">12,462</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">30,811</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">23,076</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17"><font size="3"
        face="Arial">NET PROFIT FOR YEAR</font></td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$19,150</font></p>
        </td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$40,901</font></p>
        </td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$27,390</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17"><font size="3"
        face="Arial">Earnings per share (note 8)</font></td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">- basic</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$1.55</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$3.38</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$2.19</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">- diluted</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$1.50</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$3.29</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$2.17</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="7" height="16"><p
        align="center"><font size="3" face="Arial">The
        accompanying notes are an integral part of these
        consolidated financial statements.</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="7" height="16"><p
        align="center"><font size="3" face="Arial">F-4</font></p>
        </td>
    </tr>
</table>

<p>&nbsp;</p>

<table border="0" cellpadding="0" cellspacing="0" width="662"
bordercolor="#000000">
<tr>
        <td valign="top" colspan="7" height="16"><p
        align="center"><font size="3" face="Arial">FAHNESTOCK
        VINER HOLDINGS INC.<br>
        CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS&#146;
        EQUITY<br>
        FOR THE YEAR ENDED DECEMBER 31, </font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p
        align="center"><font size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p
        align="center"><font size="3" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17"><p
        align="center"><font size="3" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="7" width="100%" height="17"><p
        align="right"><font size="3" face="Arial">(Expressed in
        thousands of U.S. dollars)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">SHARE CAPITAL</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Balance at beginning of year</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$29,683</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$32,651</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$36,525</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Issue of Class A non-voting shares</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">4,723</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">948</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">4,164</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Repurchase of Class A non-voting shares for
        cancellation</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(149)</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(3,916)</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">(8,038)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17"><font size="3"
        face="Arial">Balance at end of year</font></td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$34,257</font></p>
        </td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$29,683</font></p>
        </td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$32,651</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">CONTRIBUTED CAPITAL</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Balance at beginning of year</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$3,499</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$3,262</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$2,196</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Tax benefit from employee stock options
        exercised</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">614</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">237</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">1,066</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17"><font size="3"
        face="Arial">Balance at end of year</font></td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$4,113</font></p>
        </td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$3,499</font></p>
        </td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$3,262</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">RETAINED EARNINGS</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Balance at beginning of year</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$188,618</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$151,475</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$127,602</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Net profit for year</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">19,150</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">40,901</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">27,390</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="16"><font size="3"
        face="Arial">Dividends paid</font></td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(4,443)</font></p>
        </td>
        <td valign="top" width="3%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(3,758)</font></p>
        </td>
        <td valign="top" width="4%" height="16">&nbsp;</td>
        <td valign="top" width="13%" height="16"><p align="right"><font
        size="3" face="Arial">(3,517)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="53%" height="17"><font size="3"
        face="Arial">Balance at end of year</font></td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$203,325</font></p>
        </td>
        <td valign="top" width="3%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$188,618</font></p>
        </td>
        <td valign="top" width="4%" height="17">&nbsp;</td>
        <td valign="top" width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$151,475</font></p>
        </td>
    </tr>
</table>

<table border="0" cellpadding="2" cellspacing="0" width="668">
<tr>
        <td valign="top" height="16"><p align="center"><font
        size="3" face="Arial">The accompanying notes are an
        integral part of these consolidated financial statements.</font></p>
        </td>
    </tr>
</table>

<p align="center"><font size="3" face="Arial">F-5</font></p>

<p>&nbsp;</p>

<table border="0" cellpadding="0" cellspacing="0" width="648">
<tr>
        <td valign="top" colspan="16"><p align="center"><font
        size="3" face="Arial">FAHNESTOCK VINER HOLDINGS INC.<br>
        CONSOLIDATED STATEMENTS OF CASH FLOWS<br>
        FOR THE YEAR ENDED DECEMBER 31, </font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="16" height="16"><p
        align="right"><font size="3" face="Arial">(Expressed in
        thousands of U.S. dollars)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Cash flows from operating
        activities:</font></td>
        <td valign="top" colspan="5" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="17"><font
        size="3" face="Arial">Net profit for year</font></td>
        <td valign="top" colspan="5" width="12%" height="17"><p
        align="right"><font size="3" face="Arial">$19,150</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="17"><p
        align="right"><font size="3" face="Arial">$40,901</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$27,390</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="17"><font
        size="3" face="Arial">Adjustments to reconcile net profit
        to net cash provided by (used in) operating activities:</font></td>
        <td valign="top" colspan="5" width="12%" height="17">&nbsp;</td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="17">&nbsp;</td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Non-cash items included in net
        profit:</font></td>
        <td valign="top" colspan="5" width="12%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16">&nbsp;</td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Depreciation and amortization</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">3,974</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">3,472</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">3,527</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Loss on disposal of fixed assets</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">443</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Gain on sale of exchange seat</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(492)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="16" width="100%" height="16"><font
        size="3" face="Arial">Decrease (increase) in operating
        assets, net of the effect of acquisitions:</font></td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Restricted deposits</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">319</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(320)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(80)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Securities purchased under
        agreement to resell</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">23,500</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">51,060</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(62,386)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Deposits with clearing
        organizations</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(1,769)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">38</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">1,117</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Receivable from brokers and
        clearing organizations</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">37,463</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">6,110</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">30,251</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Receivable from customers</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(35,404)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">7,738</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(101,656)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Securities owned</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">1,524</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">11,701</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">25,335</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Other assets</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(6,116)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(3,244)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">7,924</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="2" width="59%" height="16"><font
        size="3" face="Arial">Increase (decrease) in operating
        liabilities, net of the effect of acquisitions:</font></td>
        <td valign="top" colspan="14" width="41%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Drafts payable</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(5,842)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">1,699</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">2,031</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Securities sold under agreement to
        repurchase</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(23,500)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(45,531)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">68,367</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Payable to brokers and clearing
        organizations</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(42,938)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">12,999</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(25,878)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Payable to customers</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">63,853</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(673)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">9,329</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Securities sold, but not yet
        purchased</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">498</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(10,508)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(22,443)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Accounts payable and other
        liabilities</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(9,941)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(5,504)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">5,181</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Tax benefit from employee stock
        options exercised</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">614</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">237</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">1,066</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Income taxes payable</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(3,487)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(16,606)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">18,007</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3"><p align="right"><font size="3"
        face="Arial">Cash provided by (used in) operating
        activities</font></p>
        </td>
        <td colspan="5"><p align="right"><font size="3"
        face="Arial">22,341</font></p>
        </td>
        <td>&nbsp; </td>
        <td colspan="6"><p align="right"><font size="3"
        face="Arial">53,569</font></p>
        </td>
        <td><p align="right"><font size="3" face="Arial">(13,410)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="17"><font
        size="3" face="Arial">Cash flows from investing
        activities:</font></td>
        <td valign="top" colspan="13" width="39%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Purchase of Josephthal Group, Inc.,
        net of cash acquired</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">3,139</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Purchase of Grand Charter Group,
        Incorporated, net of cash acquired</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(1,789)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Purchase of Propp &amp; Company
        Inc., net of cash acquired</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(768)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="17"><font
        size="3" face="Arial">Proceeds from sale of exchange seat</font></td>
        <td valign="top" colspan="5" width="12%" height="17"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="17"><p
        align="center"><font size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">655</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Purchase of fixed assets</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(1,009)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(1,821)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(4,622)</font></p>
        </td>
    </tr>
    <tr>
        <td align="right" colspan="3"><p align="right"><font
        size="3" face="Arial">Cash provided by (used in)
        investing activities</font></p>
        </td>
        <td align="right" colspan="5"><p align="right"><font
        size="3" face="Arial">341</font></p>
        </td>
        <td align="right">&nbsp; </td>
        <td align="right" colspan="5"><p align="right"><font
        size="3" face="Arial">(2,589)</font></p>
        </td>
        <td align="right">&nbsp; </td>
        <td align="right"><p align="right"><font size="3"
        face="Arial">(3,967)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Cash flows from financing
        activities:</font></td>
        <td valign="top" colspan="13" width="39%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Cash dividends paid on Class A
        non-voting and Class B shares</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">(4,443)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">(3,758)</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(3,517)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Issuance of Class A non-voting
        shares</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">4,723</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">948</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">4,164</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="17"><font
        size="3" face="Arial">Repurchase of Class A non-voting
        shares for cancellation</font></td>
        <td valign="top" colspan="5" width="12%" height="17"><p
        align="right"><font size="3" face="Arial">(149)</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="17"><p
        align="right"><font size="3" face="Arial">(3,916)</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">(8,038)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="17"><font
        size="3" face="Arial">(Decrease) increase in bank call
        loans</font></td>
        <td valign="top" colspan="5" width="12%" height="17"><p
        align="right"><font size="3" face="Arial">(13,265)</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="17"><p
        align="right"><font size="3" face="Arial">(40,423)</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">24,105</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3"><p align="right"><font size="3"
        face="Arial">Cash (used in) provided by financing
        activities</font></p>
        </td>
        <td colspan="5"><p align="right"><font size="3"
        face="Arial">(13,134)</font></p>
        </td>
        <td>&nbsp; </td>
        <td colspan="5"><p align="right"><font size="3"
        face="Arial">(47,149)</font></p>
        </td>
        <td>&nbsp; </td>
        <td><p align="right"><font size="3" face="Arial">16,714</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Net increase (decrease) in cash and
        short-term deposits</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">9,548</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">3,831</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(663)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="16"><font
        size="3" face="Arial">Cash and cash equivalents,
        beginning of year</font></td>
        <td valign="top" colspan="5" width="12%" height="16"><p
        align="right"><font size="3" face="Arial">14,669</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="16"><p
        align="right"><font size="3" face="Arial">10,838</font></p>
        </td>
        <td valign="top" width="2%" height="16">&nbsp;</td>
        <td valign="top" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">11,501</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="3" width="61%" height="17"><font
        size="3" face="Arial">Cash and cash equivalents, end of
        year</font></td>
        <td valign="top" colspan="5" width="12%" height="17"><p
        align="right"><font size="3" face="Arial">$24,217</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" colspan="5" width="11%" height="17"><p
        align="right"><font size="3" face="Arial">$14,669</font></p>
        </td>
        <td valign="top" width="2%" height="17">&nbsp;</td>
        <td valign="top" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$10,838</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" colspan="16" height="17"><p
        align="center"><font size="3" face="Arial">The
        accompanying notes are an integral part of these
        financial statements <br>
        F-6</font></p>
        </td>
    </tr>
</table>

<p align="center"><font size="3" face="Arial">FAHNESTOCK VINER
HOLDINGS INC.<br>
Notes to Consolidated Financial Statements<br>
(Expressed in U.S. dollars)<br>
December 31, 2001</font></p>

<p><font size="3" face="Arial">GENERAL</font></p>

<p><font size="3" face="Arial">Fahnestock Viner Holdings Inc.
(the &quot;Company&quot;) is incorporated under the laws of
Ontario. The Company's principal subsidiary, Fahnestock &amp; Co.
Inc. (&quot;Fahnestock&quot;) is a member of the New York Stock
Exchange, the American Stock Exchange and several other regional
exchanges in the United States.</font></p>

<p><font size="3" face="Arial">1. Summary of significant
accounting policies</font></p>

<p><font size="3" face="Arial">These consolidated financial
statements have been prepared in conformity with accounting
principles generally accepted in the United States of America for
the purpose of inclusion in the annual report on Form 10-K. In
all material respects, they conform with accounting principles
generally accepted in Canada, which have been used to prepare the
consolidated financial statements for purposes of inclusion in
the annual report to shareholders. </font></p>

<p><font size="3" face="Arial">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 and
disclosures of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of revenues and
expenses during the reporting periods. The most significant
estimates are related to income taxes and contingencies. Actual
results could be materially different from these estimates.</font></p>

<p><font size="3" face="Arial">Since operations are predominantly
based in the United States, these consolidated financial
statements are presented in U.S. dollars.</font></p>

<p><font size="3" face="Arial">The following is a summary of
significant accounting policies followed in the preparation of
these consolidated financial statements:</font></p>

<p><font size="3" face="Arial"><i>(a) Basis of consolidation</i></font></p>

<p><font size="3" face="Arial">The consolidated financial
statements include the accounts of the Company and all
subsidiaries. The major subsidiaries, wholly-owned and operated
in the U.S., are as follows:</font></p>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">Fahnestock &amp; Co. Inc.
        -broker/dealer in securities</font></p>
        <p><font size="3" face="Arial">Freedom Investments, Inc.
        -discount broker in securities</font></p>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">Josephthal &amp; Co. Inc.
        -broker/dealer in securities</font></p>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">Prime Charter Ltd.
        -broker/dealer in securities </font></p>
    </blockquote>
</blockquote>

<p><font size="3" face="Arial">All significant intercompany
balances and transactions have been eliminated in the preparation
of the consolidated financial statements.</font></p>

<p align="center"><font size="3" face="Arial">F-7</font></p>

<p><font size="3" face="Arial"><i>(b) Brokerage operations</i></font></p>

<p><font size="3" face="Arial">Transactions in proprietary
securities and related revenues and expenses are recorded on a
trade date basis. Customers&#146; securities and commodities
transactions are reported on a settlement date basis, which is
generally three business days after trade date. Related
commission income and expense are recorded on a trade date basis.
Securities owned and securities sold but not yet purchased are
reported at market value generally based upon quoted prices.
Realized and unrealized changes in market value are recognized in
net trading revenues in the year in which the change occurs.
Other financial instruments are carried at fair value or amounts
that approximate fair value.</font></p>

<p><font size="3" face="Arial"><i>(c) Cash and cash equivalents</i></font></p>

<p><font size="3" face="Arial">The Company defines cash
equivalents as highly liquid investments with original maturities
of less than 90 days that are not held for sale in the ordinary
course of business.</font></p>

<p><font size="3" face="Arial"><i>(d) Drafts payable</i></font></p>

<p><font size="3" face="Arial">Drafts payable represent amounts
drawn by the Company against a bank.</font></p>

<p><font size="3" face="Arial"><i>(e) Goodwill</i></font></p>

<p><font size="3" face="Arial">Goodwill arose as a result of the
acquisitions of Fahnestock, Fahnestock International Inc., First
of Michigan Capital Corporation, Josephthal Group, Inc. and Grand
Charter Group, Incorporated. Until December 31, 2001 goodwill is
being amortized to operations on a straight-line basis over
twenty years. Negative goodwill arising as a result of the
acquisition of Hopper Soliday Corporation and subsidiaries, Reich
&amp; Co., Inc. and Propp &amp; Company Inc. is being amortized
to operations on a straight-line basis over twenty years until
December 31, 2001.</font></p>

<p><font size="3" face="Arial"><i>(f) Fixed assets</i></font></p>

<p><font size="3" face="Arial">Fixed assets and stock exchange
seats are stated at cost. Depreciation of furniture and fixtures
is provided on the straight-line basis generally over three to
seven years. Leasehold improvements are amortized on a
straight-line basis over the shorter of the life of the asset or
the life of the lease. </font></p>

<p><font size="3" face="Arial"><i>(g) Foreign currency
translations</i></font></p>

<p><font size="3" face="Arial">Canadian currency balances have
been translated into U.S. dollars as follows: monetary assets and
liabilities at exchange rates prevailing at year end; revenue and
expenses at average rates for the year; and non-monetary assets
and share capital at historic rates.</font></p>

<p><font size="3" face="Arial"><i>(h) Income taxes</i></font></p>

<p><font size="3" face="Arial">The Company accounts for income
taxes in accordance with Statement of Financial Accounting
Standard No. 109, &quot;Accounting for Income Taxes&quot;.
Deferred income tax assets and liabilities arise from
&quot;temporary differences&quot; between the tax basis of an
asset or liability and its reported amount in the consolidated
financial statements. Deferred tax balances are determined by
applying the enacted tax rates.</font></p>

<p><font size="3" face="Arial"><i>(i)Securities lending
activities</i></font></p>

<p><font size="3" face="Arial">Securities borrowed and securities
loaned are carried at the amounts of cash collateral advanced or
received.</font></p>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">F-8</font></p>

<p>&nbsp;</p>

<p><font size="3" face="Arial">Securities borrowed transactions
require the Company to deposit cash, letters of credit, or other
collateral with the lender. The Company receives cash or
collateral in an amount generally in excess of the market value
of securities loaned.</font></p>

<p><font size="3" face="Arial">The Company monitors the market
value of securities borrowed and loaned on a daily basis and may
require counterparties to deposit additional collateral or return
collateral pledged when appropriate.</font></p>

<p><font size="3" face="Arial">Included in receivable from
brokers and clearing organizations are deposits paid for
securities borrowed of $54,579,000 (2000 - $115,864,000).
Included in payable to brokers and clearing organizations are
deposits received for securities loaned of $153,966,000 (2000
- -$214,696,000).</font></p>

<p><font size="3" face="Arial"><i>(j) Repurchase agreements</i></font></p>

<p><font size="3" face="Arial">Transactions involving purchases
of securities under agreements to resell (&quot;reverse
repurchase agreements&quot;) or sales of securities under
agreements to repurchase (&quot;repurchase agreements&quot;) are
treated as collateralized financing transactions and recorded at
their contractual resale or repurchase amounts plus accrued
interest.</font></p>

<p><font size="3" face="Arial">The Company obtains possession of
collateral with a market value equal to or in excess of the
principal amount loaned under reverse repurchase agreements.
Collateral is valued daily, and adjusted when appropriate.</font></p>

<blockquote>
    <p><font size="3" face="Arial"><i>Revenues</i></font></p>
</blockquote>

<p><font size="3" face="Arial">Investment banking fees are
recorded on offering date, sales concessions on settlement date
and underwriting fees at the time the transaction is
substantially completed and income is reasonably determinable.
Management and investment advisory fees are recorded as earned.</font></p>

<p><font size="3" face="Arial"><i>(l) Interest paid</i></font></p>

<p><font size="3" face="Arial">Included in interest paid is
interest on short-term bank loans, subordinated debt, payments in
lieu of interest on securities loaned and interest paid with
respect to repurchase agreements.</font></p>

<p><font size="3" face="Arial"><b>2. Restricted deposits</b></font></p>

<p><font size="3" face="Arial">Deposits of $2,393,000 (2000 -
$2,712,000) were held at year-end in a special reserve bank
account for the exclusive benefit of customers in accordance with
regulatory requirements. To the extent permitted, these deposits
are invested in interest bearing accounts collateralized by
qualified securities.</font></p>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">F-9</font></p>

<p>&nbsp;</p>

<p><font size="3" face="Arial"><b>3. Securities owned and
Securities sold, but not yet purchased (at market value)</b></font></p>

<table border="0" cellpadding="0" cellspacing="0" width="540">
<tr>
        <td valign="top" width="61%">&nbsp;</td>
        <td valign="top" width="19%"><p align="center"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="20%"><p align="center"><font
        size="3" face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">Securities
        owned consist of:</font></td>
        <td valign="top" width="19%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">Corporate
        equities</font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$19,268,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$20,256,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">Corporate
        debt</font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">12,931,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">14,444,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">U.S.
        government and agency and state and municipal government
        obligations</font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">15,833,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">12,383,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">Options</font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">3,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">28,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">Money
        market funds </font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">2,540,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">4,432,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%">&nbsp;</td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$50,575,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$51,543,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%">&nbsp;</td>
        <td valign="top" width="19%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">Securities
        sold, but not yet purchased consist of:</font></td>
        <td valign="top" width="19%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">Corporate
        equities</font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$4,057,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$3,912,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">Corporate
        debt </font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">4,683,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">3,988,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%"><font size="3" face="Arial">U.S.
        government and agency and state and municipal government
        obligations and other</font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">181,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">253,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="61%">&nbsp;</td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$8,921,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$8,153,000</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">Securities owned and Securities
sold, but not yet purchased, consists of trading and investment
securities at market values. At December 31, 2001, the Company
has pledged securities owned of approximately $176,000 ($532,000
in 2000) as collateral to counterparties for stock loan
transactions which can be sold or repledged. </font></p>

<p align="center">&nbsp;</p>

<p><font size="3" face="Arial"><b>4. Bank call loans</b></font></p>

<p><font size="3" face="Arial">Bank call loans, primarily payable
on demand, bear interest at various rates but not exceeding the
broker call rate, which was 3.5% at December 31, 2001. These
loans, collateralized by firm and customer securities with market
values of approximately $33,189,000 and $100,814,000,
respectively, at December 31, 2001 are primarily with two U.S.
money center banks. Details of the bank call loans are as
follows:</font></p>
<div align="center"><center>

<table border="0" cellpadding="7" cellspacing="0" width="570">
<tr>
        <td valign="top" width="48%">&nbsp;</td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="2" face="Arial">Year-end
        balance</font></td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">$13,134,000</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">$25,899,000</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">$66,322,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="2" face="Arial">Weighted
        interest rate (at end of year)</font></td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">2.07%</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">7.09%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">4.82%</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="2" face="Arial">Maximum
        balance (at any month end)</font></td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">$37,666,000</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">$170,406,000</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">$66,322,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="2" face="Arial">Average
        amount outstanding (during the year) (1)</font></td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">$12,836,000</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">$77,579,000</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">$39,505,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="2" face="Arial">Weighted
        average interest rate (during the year) (2)</font></td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">4.80%</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial">7.86%</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="2" face="Arial">6.41%</font></p>
        </td>
    </tr>
</table>
</center></div>

<p><font size="3" face="Arial">(1) The average amount outstanding
during the year was computed by adding amounts outstanding at the
end of each month and dividing by twelve.</font></p>

<p><font size="3" face="Arial"><br>
(2) The weighted average interest rate during the year was
computed by dividing the actual interest expense by the average
bank call loans outstanding at the end of each month.</font></p>

<p><font size="3" face="Arial">Aggregate interest paid by the
Company on a cash basis during the years ended December 31, 2001,
2000, and 1999 was $9,709,000, $33,061,000 and $19,378,000,
respectively.</font></p>

<p align="center"><font size="3" face="Arial">F-10</font></p>

<p><font size="3" face="Arial"><b>5. Share capital</b></font></p>

<p><font size="3" face="Arial">The Company's authorized share
capital, all of which is without par value, consists of (a) an
unlimited number of first preference shares issuable in series;
(b) an unlimited number of Class A non-voting shares; and (c)
99,680 Class B voting shares.</font></p>

<p><font size="3" face="Arial">The Class A non-voting and the
Class B voting shares are equal in all respects except that the
Class A non-voting shares are non-voting.</font></p>

<p><font size="3" face="Arial">The Company's issued and
outstanding share capital is as follows (no first preference
shares have been issued):</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="638">
<tr>
        <td valign="top" width="43%">&nbsp;</td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="43%"><font size="3" face="Arial">12,337,085
        (11,990,969 in 2000 and 12,147,569 in 1999) Class A
        non-voting shares</font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$34,124,000</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$29,550,000</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$32,518,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="43%"><font size="3" face="Arial">99,680
        Class B voting shares</font></td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">133,000</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">133,000</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">133,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="43%">&nbsp;</td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$34,257,000</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$29,683,000</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$32,651,000</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">Under the Company&#146;s 1996
Equity Incentive Plan as amended February 29, 2000
(&quot;EIP&quot;), the compensation and stock option committee of
the board of directors of the Company may grant options to
purchase Class A non-voting shares to officers and employees of
the Company and its subsidiaries. Grants of options are made to
the Company&#146;s independent directors on a formula basis.
Options are generally granted for a five year term and generally
vest at the rate of 25% of the amount granted for each year held.
The aggregate number of Class A non-voting shares that underlie
options which have been granted and are available under the EIP
is 3,230,000.</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="607">
<tr>
        <td valign="top" width="44%">&nbsp;</td>
        <td valign="top" colspan="2" width="29%"><p
        align="center"><font size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" colspan="2" width="28%"><p
        align="center"><font size="3" face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="44%">&nbsp;</td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">Number of shares</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">Weighted average exercise price</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">Number of shares</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">Weighted average exercise price</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="44%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="44%"><font size="3" face="Arial">Options
        outstanding, beginning of year</font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">1,640,024</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$15.46</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">1,557,669</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">$15.18</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="44%"><font size="3" face="Arial">Options
        granted </font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">663,160</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$24.05</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">229,950</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">$16.28</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="44%"><font size="3" face="Arial">Options
        exercised</font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">(352,216)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$13.41</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">(88,000)</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">$10.86</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="44%"><font size="3" face="Arial">Options
        forfeited</font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">(43,465)</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$18.21</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">(59,595)</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">$15.68</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="44%"><font size="3" face="Arial">Options
        outstanding, end of year</font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">1,907,503</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$17.36</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">1,640,024</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">$15.46</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="44%"><font size="3" face="Arial">Options
        vested, end of year</font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">304,896</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">$12.93</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">318,045</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="3" face="Arial">$13.95</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">The following table summarizes
stock options outstanding and exercisable as at December 31,
2001.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="590">
<tr>
        <td valign="top" width="21%"><p align="center"><font
        size="3" face="Arial">Range of exercise prices </font></p>
        </td>
        <td valign="top" width="16%"><p align="center"><font
        size="3" face="Arial">Number outstanding</font></p>
        </td>
        <td valign="top" width="15%"><p align="center"><font
        size="3" face="Arial">Weighted average remaining
        contractual life</font></p>
        </td>
        <td valign="top" width="19%"><p align="center"><font
        size="3" face="Arial">Weighted average exercise price of
        outstanding options</font></p>
        </td>
        <td valign="top" width="16%"><p align="center"><font
        size="3" face="Arial">Number exercisable (vested)</font></p>
        </td>
        <td valign="top" width="13%"><p align="center"><font
        size="3" face="Arial">Weighted average exercise price of
        vested options</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="21%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
        <td valign="top" width="15%">&nbsp;</td>
        <td valign="top" width="19%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
        <td valign="top" width="13%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="21%"><font size="3" face="Arial">$14.50-$18.00</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">1,201,193</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">2.0 years</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$15.67</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">294,896</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        size="3" face="Arial">$15.87</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="21%"><font size="3" face="Arial">$19.875-$28.30</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">706,310</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">3.8 years</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$23.89</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">10,000</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        size="3" face="Arial">$21.19</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="21%"><font size="3" face="Arial">$14.50-$28.30</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">1,907,503</font></p>
        </td>
        <td valign="top" width="15%"><p align="right"><font
        size="3" face="Arial">2.8 years</font></p>
        </td>
        <td valign="top" width="19%"><p align="right"><font
        size="3" face="Arial">$18.72</font></p>
        </td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">304,896</font></p>
        </td>
        <td valign="top" width="13%"><p align="right"><font
        size="3" face="Arial">$16.04</font></p>
        </td>
    </tr>
</table>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">F-11</font></p>

<p><font size="3" face="Arial">The Company has not issued any
Class A non-voting shares from Treasury to the Company's 401(k)
plan during the last three fiscal years ended December 31, 2001.</font></p>

<p><font size="3" face="Arial">In 2001, the Company paid cash
dividends to holders of Class A non-voting and Class B shares as
follows ($0.31 in 2000):</font></p>

<p><font size="3" face="Arial"><u>Dividend per share Record Date
Payment Date____</u></font></p>

<p><font size="3" face="Arial">$0.09 February 9, 2001 February
23, 2001</font></p>

<p><font size="3" face="Arial">$0.09 May 4, 2001 May 18, 2001</font></p>

<p><font size="3" face="Arial">$0.09 August 3, 2001 August 17,
2001</font></p>

<p><font size="3" face="Arial">$0.09 November 2, 2001 November
16, 2001</font></p>

<p><font size="3" face="Arial">The Company may purchase up to
614,000 Class A non-voting shares by way of a Normal Course
Issuer Bid through the facilities of The Toronto Stock Exchange
and/or the New York Stock Exchange. During the year ended
December 31, 2001, the Company purchased 6,100 Class A non-voting
shares for a total consideration of $149,000 under a Normal
Course Issuer Bid which expired on July 4, 2001 (244,600 shares
for $3,916,000 in 2000 and 562,700 shares for $8,038,000 in
1999). Unless terminated earlier by the Company, it may continue
to purchase shares up to July 4, 2002.</font></p>

<p><font size="3" face="Arial"><b>6. Contributed capital</b></font></p>

<p><font size="3" face="Arial">Contributed capital represents the
tax benefit on the difference between market price and exercise
price on employee stock options exercised.</font></p>

<p><font size="3" face="Arial"><b>7. Income taxes</b></font></p>

<p><font size="3" face="Arial">The income tax provision shown in
the consolidated statement of operations is reconciled to amounts
of tax that would have been payable (recoverable) from the
application of combined federal, state, provincial and local tax
rates to pre-tax profit as follows:</font></p>

<p>&nbsp;</p>

<table border="0" cellpadding="0" cellspacing="0" width="638">
<tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Profit
        before income tax</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$31,612,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$71,712,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$50,466,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">U.S.
        federal tax at 35% </font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$11,092,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$25,110,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$17,663,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Canadian
        tax at 44%</font></td>
        <td valign="top" width="20%"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="20%"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td valign="top" width="20%"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Combined
        state and local tax, net of federal benefit</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">1,977,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">5,846,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">4,444,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Income
        taxes before under-noted</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">13,069,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">30,956,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">22,107,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Tax
        effect of non-taxable interest and dividends</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">(143,000)</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">(258,000)</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">(177,000)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Tax
        effect of differences between accounting and taxable
        income</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">(464,000)</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">113,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">1,146,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Income
        taxes</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$12,462,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$30,811,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$23,076,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Profit
        before income tax provision</font></td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Canadian
        operations </font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$(78,000)</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$(32,000)</font></p>
        </td>
        <td valign="top" width="20%"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">U.S.
        operations</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$31,690,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$71,744,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$50,466,000</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">The U.S. income tax provision in
2001 is $12,462,000 ($30,811,000 in 2000 and $23,076,000 in
1999). The Canadian income tax provision in 2001 is nil (nil in
2000 and 1999).</font></p>

<p align="center"><font size="3" face="Arial">F-12</font></p>

<p align="center">&nbsp;</p>

<p><font size="3" face="Arial">Income taxes included in the
consolidated statements of income represent the following:</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="638">
<tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" colspan="3" width="61%"><p
        align="center"><font size="3" face="Arial">Year ended
        December 31,</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
        <td valign="top" width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">U.S.
        Federal tax</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$9,420,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$21,817,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$16,239,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">State
        and local tax</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">3,042,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">8,994,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">6,837,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Total</font></td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$12,462,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$30,811,000</font></p>
        </td>
        <td valign="top" width="20%"><p align="right"><font
        size="3" face="Arial">$23,076,000</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">Aggregate deferred tax assets,
which relate primarily to fixed assets and non-deductible
expenses, are included in other assets and amounted to
approximately $4,142,000 ($4,287,000 in 2000).</font></p>

<p><font size="3" face="Arial">On a cash basis, the Company paid
income taxes for the years ended December 31, 2001, 2000 and 1999
in the amounts of $14,918,000, $46,163,000 and $4,700,000,
respectively.</font></p>

<p><font size="3" face="Arial"><b>8. Earnings per share</b></font></p>

<table border="0" cellpadding="0" cellspacing="0" width="589">
<tr>
        <td valign="top" width="48%">&nbsp;</td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="3" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="3" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="3" face="Arial">Basic
        weighted average number of shares outstanding</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">12,348,051</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="3" face="Arial">12,108,798</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="3" face="Arial">12,479,550</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="3" face="Arial">Stock
        options</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">421,783</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="3" face="Arial">308,053</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="3" face="Arial">114,902</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="3" face="Arial">Diluted
        common shares</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">12,769,834</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="3" face="Arial">12,416,851</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="3" face="Arial">12,594,452</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="3" face="Arial">Net
        profit</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">$19,150,000</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="3" face="Arial">$40,901,000</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="3" face="Arial">$27,390,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%">&nbsp;</td>
        <td valign="top" width="16%">&nbsp;</td>
        <td valign="top" width="17%">&nbsp;</td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="3" face="Arial">Basic
        profit per share</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">$1.55</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="3" face="Arial">$3.38</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="3" face="Arial">$2.19</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="48%"><font size="3" face="Arial">Diluted
        profit per share</font></td>
        <td valign="top" width="16%"><p align="right"><font
        size="3" face="Arial">$1.50</font></p>
        </td>
        <td valign="top" width="17%"><p align="right"><font
        size="3" face="Arial">$3.29</font></p>
        </td>
        <td valign="top" width="18%"><p align="right"><font
        size="3" face="Arial">$2.17</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">The dilutive impact of stock
options has been determined by application of the treasury stock
method.</font></p>

<p><font size="3"><b>Stock-based compensation</b></font></p>

<p><font size="3" face="Arial">FASB Statement No.123
&quot;Accounting for Stock-Based Compensation&quot; (&quot;SFAS
123&quot;) was issued in 1995, and changed the method for
accounting for stock compensation plans similar to those of the
Company. Adoption of SFAS 123&#146;s fair value recognition
method is optional. The Company has chosen to continue to apply
Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees, and related interpretations in accounting
for its stock compensation plans.</font></p>

<p><font size="3" face="Arial">In accordance with SFAS 123, the
following presents proforma income and earnings per share impact,
using a fair-value-based calculation, of the Company&#146;s
stock-based compensation. Amounts are expressed in thousands of
U.S. dollars except per share amounts.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="625">
<tr>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" colspan="2" width="29%"><p
        align="center"><font size="2" face="Arial">December 31,
        2001</font></p>
        </td>
        <td valign="top" colspan="2" width="29%"><p
        align="center"><font size="2" face="Arial">December
        31,2000</font></p>
        </td>
        <td valign="top" colspan="2" width="29%"><p
        align="center"><font size="2" face="Arial">December 31,
        1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="14%"><p align="center"><font
        size="2" face="Arial">As Reported</font></p>
        </td>
        <td valign="top" width="14%"><p align="center"><font
        size="2" face="Arial">Proforma</font></p>
        </td>
        <td valign="top" width="14%"><p align="center"><font
        size="2" face="Arial">As Reported</font></p>
        </td>
        <td valign="top" width="14%"><p align="center"><font
        size="2" face="Arial">Proforma</font></p>
        </td>
        <td valign="top" width="14%"><p align="center"><font
        size="2" face="Arial">As Reported</font></p>
        </td>
        <td valign="top" width="14%"><p align="center"><font
        size="2" face="Arial">Proforma</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
        <td valign="top" width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">Net
        profit</font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$19,150</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$17,267</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$40,901</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$39,518</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$27,390</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$26,215</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">Basic
        profit per share</font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$1.55</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$1.40</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$3.38</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$3.26</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$2.19</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$2.10</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">Diluted
        profit per share</font></td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$1.50</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$1.35</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$3.29</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$3.18</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$2.17</font></p>
        </td>
        <td valign="top" width="14%"><p align="right"><font
        size="2" face="Arial">$2.08</font></p>
        </td>
    </tr>
</table>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">F-13</font></p>

<p><font size="3" face="Arial">For purposes of the proforma
presentation, the Company determined fair value using an option
pricing model with the following weighted average assumptions for
grants in 2001, 2000 and 1999, respectively: risk-free interest
rates ranging from 3.76% to 5.07%, 5.11% to 6.80% and 4.78% to
6.34%; expected dividend yield of 1.4%,1.5% and 1.8%, expected
life of 5 years and expected volatility ranging from 27% to 29%,
21% to 29% and 24% to 48%. The weighted average fair value of
options granted during 2001, 2000 and 1999, respectively was
$3,741,000, $952,000 and $3,889,000. The fair value is being
amortized over five years on an after-tax basis, where applicable
for purposes of proforma presentation. Stock options generally
expire five years after the date of grant or three months after
the date of retirement, if earlier. Stock options generally vest
over a five year period with 0% in year one, 25% of the shares
becoming exercisable on each of the next three anniversaries of
the grant date and the balance vesting in the last six months of
the option life. The vesting period is at the discretion of the
Compensation and Stock Option Committee and is determined at the
time of grant.</font></p>

<p><font size="3" face="Arial">The effects of applying SFAS 123
in this proforma presentation are not indicative of future
amounts because it does not take into consideration future grants
or any difference between actual and assumed forfeitures.</font></p>

<p align="center">&nbsp;</p>

<p><font size="3" face="Arial"><b>9. Commitments and
contingencies</b></font></p>

<blockquote>
    <p><font size="3" face="Arial">The Company and its
    subsidiaries have operating leases for office space and
    capital leases for equipment expiring at various dates
    through 2013. Future minimum rental commitments under such
    office and equipment leases are as follows:</font></p>
</blockquote>
<div align="center"><center>

<table border="0" cellpadding="0" cellspacing="0" width="354">
<tr>
        <td valign="top" width="70%"><font size="3" face="Arial">2002</font></td>
        <td valign="top" width="30%"><p align="right"><font
        size="3" face="Arial">$14,508,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="70%"><font size="3" face="Arial">2003</font></td>
        <td valign="top" width="30%"><p align="right"><font
        size="3" face="Arial">12,583,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="70%"><font size="3" face="Arial">2004</font></td>
        <td valign="top" width="30%"><p align="right"><font
        size="3" face="Arial">10,243,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="70%"><font size="3" face="Arial">2005</font></td>
        <td valign="top" width="30%"><p align="right"><font
        size="3" face="Arial">8,259,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="70%"><font size="3" face="Arial">2006
        and thereafter</font></td>
        <td valign="top" width="30%"><p align="right"><font
        size="3" face="Arial">42,150,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="70%"><font size="3" face="Arial">Total</font></td>
        <td valign="top" width="30%"><p align="right"><font
        size="3" face="Arial">$87,743,000</font></p>
        </td>
    </tr>
</table>
</center></div>

<p><font size="3" face="Arial">Certain of the leases contain
provisions for rent escalation based on increases in costs
incurred by the lessor. At December 31, 2001, the present value
of future minimum rentals under capitalized lease agreements was
$987,000.</font></p>

<p><font size="3" face="Arial">(b) The Company's rent expense for
the years ended December 31, 2001, 2000 and 1999 was $10,909,000,
$8,233,000 and $8,182,000, respectively.</font></p>

<p><font size="3" face="Arial">(c) The Company, through its
subsidiaries, maintains a defined contribution plan covering
substantially all full-time U.S. employees. The Fahnestock plan
provides that the Company may make discretionary contributions.
For certain employees who were formerly employed by First of
Michigan Corporation (&quot;FOM&quot;), contributions are made in
accordance with the terms of the plan document.</font></p>

<p><font size="3" face="Arial">The Company made contributions to
the plans of $1,525,000, $2,503,000 and $2,692,000 in 2001, 2000
and 1999, respectively.</font></p>

<p><font size="3" face="Arial">FOM sponsors an unfunded
Supplemental Executive Retirement Program (&quot;SERP&quot;),
which is a non-qualified plan that provides certain former
officers additional retirement benefits. Benefits payable under
the SERP were approximately $1,716,000 at December 31, 2001.</font></p>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">F-14</font></p>

<p>&nbsp;</p>

<p><font size="3" face="Arial">(d) On November 30, 2000 the
Company established an Executive Deferred Compensation Plan
(&quot;EDCP&quot;) in order to offer to certain qualified
high-performing financial consultants, a bonus based upon a
formula reflecting years of service, gross commissions and a
valuation of their clients&#146; assets. The bonus amounts
calculated with respect to fiscal 2001 total approximately
$1,270,000 ($900,000 in 2000) and will normally vest five years
from the end of the related fiscal year. The liability is being
recognized on a straight-line basis over the vesting period. The
amount expensed in 2001 was $182,000.</font></p>

<p><font size="3" face="Arial">(e) At December 31, 2001, the
Company has collateralized and uncollateralized letters of credit
for $39,500,000. Collateral for these letters of credit include
marketable securities of approximately $25,835,000, pledged to
two financial institutions. </font></p>

<p><font size="3" face="Arial">(f) The Company is involved in
certain litigation arising in the ordinary course of business.
Management believes, based upon discussions with legal counsel,
that the outcome of this litigation will not have a material
effect on the Company's financial position. The materiality of
legal matters to the Company's future operating results depends
on the level of future results of operations as well as the
timing and ultimate outcome of such legal matters.</font></p>

<p><font size="3" face="Arial">(g) The Company's principal
subsidiary, Fahnestock, is subject to the uniform net capital
requirements of the Securities and Exchange Commission
(&quot;SEC&quot;) under Rule 15c3-1 (the &quot;Rule&quot;).
Fahnestock computes its net capital requirements under the
alternative method provided for in the Rule which requires that
Fahnestock maintain net capital equal to two percent of aggregate
customer related debit items, as defined in SEC Rule 15c3-3. At
December 31, 2001, Fahnestock had net capital of $167,843,000
which was $157,658,000 in excess of the $10,185,000 required to
be maintained at that date. </font></p>

<p><font size="3" face="Arial">(h) In accordance with the
Securities and Exchange Commission&#146;s No Action Letter dated
November 3, 1998, the Company has computed a reserve requirement
for the proprietary accounts of introducing firms as of December
31, 2001. The Company had no deposit requirements as of December
31, 2001.</font></p>

<p><font size="3" face="Arial"><b>10. Financial instruments with
off-balance sheet risk and concentration of credit risk</b></font></p>

<p><font size="3" face="Arial">In the normal course of business,
the Company's securities activities involve execution, settlement
and financing of various securities transactions for customers.
These activities may expose the Company to risk in the event
customers, other brokers and dealers, banks, depositories or
clearing organizations are unable to fulfill their contractual
obligations.</font></p>

<p><font size="3" face="Arial">The Company is exposed to
off-balance sheet risk of loss on unsettled transactions in the
event customers and other counterparties are unable to fulfill
their contractual obligations. It is the Company's policy to
periodically review, as necessary, the credit standing of each
counterparty with which it conducts business.</font></p>

<p><font size="3" face="Arial">Securities sold, but not yet
purchased represent obligations of the Company to deliver the
specified security at the contracted price and thereby create a
liability to repurchase the security in the market at prevailing
prices. Accordingly, these transactions result in
off-balance-sheet risk, as the Company's ultimate obligation to
satisfy the sale of securities sold, but not yet purchased may
exceed the amount recognized on the balance sheet. Securities
positions are monitored on a daily basis.</font></p>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">F-15</font></p>

<p>&nbsp;</p>

<p><font size="3" face="Arial">The Company's customer financing
and securities lending activities require the Company to pledge
customer securities as collateral for various financing sources
such as bank loans and securities lending. At December 31, 2001,
the Company had approximately $643,000,000 of customer securities
under customer margin loans that are available to be pledged of
which the Company has repledged approximately $104,916,000 under
securities loan agreements. In addition, the Company has received
collateral of approximately $51,712,000 under securities borrow
agreements of which the Company has repledged approximately
$35,551,000 as collateral under securities loans agreements.
Included in receivable from brokers and clearing organizations
are receivables from three major U.S. broker-dealers totalling
$32,997,000.</font></p>

<p><font size="3" face="Arial">The Company monitors the market
value of collateral held and the market value of securities
receivable from others. It is the Company's policy to request and
obtain additional collateral when exposure to loss exists. In the
event the counterparty is unable to meet its contractual
obligation to return the securities, the Company may be exposed
to off-balance sheet risk of acquiring securities at prevailing
market prices.</font></p>

<p><font size="3" face="Arial">As part of its trading strategy,
the Company uses derivative financial instruments. Net revenues
from principal transactions, including derivatives, for the year
ended December 31, 2001 included net revenues from trading
equities of $35,485,000 ($71,830,000 in 2000 and $57,078,000 in
1999) and net revenues from trading fixed income securities of
$20,889,000 ($12,590,000 in 2000 and $13,936,000 in 1999). Net
gains from derivatives for the year ended December 31, 2001 were
approximately $2,302,000.</font></p>

<p><font size="3" face="Arial">Futures contracts, comprised
mainly of stock index futures, represent commitments to purchase
or sell securities at a future date and at a specified price.
Credit risk and market risk exist with respect to these
instruments. Credit risk associated with the contracts is limited
to amounts recorded in the balance sheet. Notional or contractual
amounts are used to express the volume of these transactions, and
do not represent the amounts potentially subject to market risk.
At December 31, 2001, the Company had open contracts to sell
stock index futures contracts with notional values of
approximately $5,746,000 ($10,012,000 in 2000). The fair value of
these derivative financial instruments included in brokers and
clearing organizations at December 31, 2001 was approximately
$366,000 ($461,000 in 2000), and the monthly average fair values
of the instruments during the year were assets of $70,000 and
liabilities of $203,000 (assets of $333,000 and liabilities of
$466,000 in 2000). </font></p>

<p><font size="3" face="Arial">Cash is deposited to satisfy
initial margin requirements for open futures contracts and is
included in receivable from brokers and clearing organizations
with any gain or loss from the unsettled futures transactions.</font></p>

<p><font size="3" face="Arial">At December 31, 2001 the Company
had outstanding commitments to buy and sell of $2,393,000 and
$1,368,000, respectively, of mortgage-backed securities on a when
issued basis. These commitments have off-balance sheet risks
similar to those described above.</font></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">F-16</font></p>

<p>&nbsp;</p>

<p><font size="3" face="Arial"><b>11. Impact of Recently Issued
Accounting Standards</b></font></p>

<p><font size="3" face="Arial">In June 2001, the Financial
Accounting Standards Board issued Statements of Financial
Accounting Standards (SFAS) No. 141, &quot; Business
Combinations&quot;, and No. 142, &quot;Goodwill and Other
Intangible Assets&quot;. SFAS 141 mandates the purchase method of
accounting be used for all business combinations initiated after
June 30, 2001 and establishes specific criteria for the
recognition of intangible assets separately from goodwill. SFAS
142 addresses the accounting for goodwill and other intangible
assets subsequent to their acquisition. Under the new rules,
goodwill and other intangible assets deemed to have indefinite
lives will no longer be amortized but, instead, will be tested at
least annually for impairment. All other intangible assets will
continue to be amortized over their estimated useful lives. The
Company has adopted SFAS 141 fully and intends to adopt SFAS 142
commencing January 1, 2002. In connection with the adoption of
SFAS 142, the Company&#146;s recorded amount of goodwill of
$9,284,000 will no longer be subject to amortization but will
instead be periodically measured for impairment. The expected
impact on the fiscal 2002 results of operations is the
discontinuation of recording approximately $774,000 of
amortization expense associated with goodwill, resulting in an
after tax effect of $449,000 on net income ($0.04 per share).</font></p>

<p><font size="3" face="Arial">New accounting standards issued
but not effective would not have a material impact on the
Company&#146;s financial statements. </font></p>

<p><font size="3" face="Arial"><b>12. Acquisitions</b></font></p>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">(a) On September 17, 2001
        a subsidiary of the Company acquired approximately 91.6%
        of the outstanding common stock of Josephthal Group, Inc.
        (&quot;Josephthal&quot;). On October 15, 2001, the
        Company acquired substantially all of the remaining
        outstanding common shares. The Company paid $1 for the
        stock and assumed liabilities of $23,885,000. The results
        of Josephthal&#146;s operations since September 17, 2001
        have been included in the Company&#146;s consolidated
        financial statements. Josephthal indirectly owns 100% of
        Josephthal &amp; Co., Inc., a private New York based,
        full service broker-dealer founded in 1910 with
        approximately 265 financial consultants in 25 offices
        across the United States at the time of closing. The
        acquisition furthers the Company&#146;s growth and
        expansion and significantly extends its private client
        network as well as providing additional managerial
        expertise. The acquisition was accounted for by the
        purchase method as follows:</font></p>
    </blockquote>
</blockquote>
<div align="center"><center>

<table border="0" cellpadding="0" cellspacing="0" width="468">
<tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Cash</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$3,139,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Securities
        owned, at market</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">277,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Receivable
        from brokers and dealers</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">6,425,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Furniture,
        equipment and leasehold improvements, net</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">2,864,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Deposits
        and other assets</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">6,238,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">18,943,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Deduct:</font></td>
        <td valign="top" width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Securities
        sold but not yet purchased, at market</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">(220,000)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Accounts
        payable and accrued liabilities</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">(23,665,000)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Excess
        of cost over fair value of assets acquired allocated to
        goodwill</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$4,942,000</font></p>
        </td>
    </tr>
</table>
</center></div>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p align="center"><font size="3" face="Arial">F-17</font></p>

<p>&nbsp;</p>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">(b) On November 9, 2001 a
        subsidiary of the Company acquired 100% of the
        outstanding common shares of Grand Charter Group,
        Incorporated (&quot;Grand Charter&quot;) for cash
        consideration of $2,892,000. The results of Grand
        Charter&#146;s operations since that date have been
        included in the Company&#146;s consolidated financial
        statements. Grand Charter owns 100% of Prime Charter
        Ltd., a twelve-year-old full service securities firm with
        approximately 100 financial consultants operating from
        offices in New York City and Boca Raton, Florida. The
        acquisition furthers the Company&#146;s growth and
        expansion in its private client business and provides
        additional managerial expertise. The acquisition was
        accounted for by the purchase method as follows:</font></p>
    </blockquote>
</blockquote>
<div align="center"><center>

<table border="0" cellpadding="0" cellspacing="0" width="468">
<tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Cash
        and cash equivalents</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$1,103,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Securities
        owned, at market</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">279,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Receivable
        from clearing organizations</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">1,075,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Furniture,
        equipment and leasehold improvements, net</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">417,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Deposits
        and other assets</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">3,028,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%">&nbsp;</td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">5,902,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Deduct:</font></td>
        <td valign="top" width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Short-term
        bank loans</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">(500,000)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Securities
        sold but not yet purchased, at market</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">(50,000)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Accounts
        payable and accrued liabilities</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">(3,086,000)</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Fair
        value of assets acquired</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">2,266,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Purchase
        price paid</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">2,892,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="77%"><font size="3" face="Arial">Excess
        of cost over fair value of assets acquired allocated to
        goodwill</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$626,000</font></p>
        </td>
    </tr>
</table>
</center></div>

<p>&nbsp;</p>

<p><font size="3" face="Arial">The acquisitions of Josephthal and
Grand Charter bring a total of approximately 375 financial
consultants and 27 additional offices, and represent a
significant increase to the Company&#146;s private client
business. Economic conditions led to financial difficulty at both
Josephthal and Grand Charter.</font></p>

<p><font size="3" face="Arial">Presented below are unaudited
proforma consolidated results of operation. Amounts presented for
2001 and 2000 give effect to the acquisitions of Josephthal
Group, Inc. and Grand Charter Group, Incorporated as if the
transactions were consummated at the beginning of each of the
periods presented. The proforma information is for comparative
purposes only and is not necessarily indicative either of the
actual results that would have occurred if the acquisition had
been consummated at the beginning of the period presented, or of
future operations of the combined companies. The Company
anticipates certain cost savings as a result of the consolidation
of the operations of the acquired businesses with the
Company&#146;s business.</font></p>
<div align="center"><center>

<table border="0" cellpadding="7" cellspacing="0" width="468">
   <tr>
        <td valign="top" width="54%"><font size="3" face="Arial">Year
        ended December 31,</font></td>
        <td valign="top" width="23%"><p align="center"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="23%"><p align="center"><font
        size="3" face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="54%">&nbsp;</td>
        <td valign="top" width="23%">&nbsp;</td>
        <td valign="top" width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="54%"><font size="3" face="Arial">Revenue</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$344,198,000</font></p>
        </td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$522,738,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="54%"><font size="3" face="Arial">Profit
        before tax</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$21,171,000</font></p>
        </td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$73,947,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="54%"><font size="3" face="Arial">Net
        profit</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$14,816,000</font></p>
        </td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$42,078,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="54%"><font size="3" face="Arial">Basic
        earnings per share </font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$1.20</font></p>
        </td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$3.47</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="54%"><font size="3" face="Arial">Diluted
        earnings per share</font></td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$1.16</font></p>
        </td>
        <td valign="top" width="23%"><p align="right"><font
        size="3" face="Arial">$3.39</font></p>
        </td>
    </tr>
</table>
</center></div>

<p align="center"><font size="3" face="Arial">F-18</font></p>

<p>&nbsp;</p>

<p><font size="3" face="Arial"><b>13. Related Party Transactions</b></font></p>

<p><font size="3" face="Arial">The Company has notes and accounts
receivable for employees, net, of approximately $12,490,000 at
December 31, 2001. These amounts will be forgiven over a three
year period from the initial date of the loan and are contingent
on their continued employment with the Company. The unamortized
potion of the notes become due on demand in the event the
employee departs during the three-year period.</font></p>

<p><font size="3" face="Arial"><b>14. Segment Information</b></font></p>

<p><font size="3" face="Arial">The Company has determined its
reportable segments based on the Company&#146;s method of
internal reporting, which disaggregates its retail business by
branch and its proprietary and investment banking businesses by
product. The Company&#146;s segments are: Private Client which
includes all business generated by the Company&#146;s 92
branches, including commission and fee income earned on client
transactions; Capital Markets which includes market-making
activities in over-the-counter equities, institutional trading in
both fixed income and equities, structured assets transactions,
bond trading, trading in mortgage-backed securities, corporate
underwriting activities, public finance activities, and syndicate
participation; Interest which is derived from client margin
accounts, stock loan activities and financing activities; and
Asset Management which includes fees from money market funds and
the investment management services of Fahnestock&#146;s asset
management divisions employing various programs to professionally
manage client assets either in individual accounts or in funds.
The Company evaluates the performance of its segments and
allocates resources to them based upon profitability.</font></p>

<p><font size="3" face="Arial">The table below presents
information about the reported revenue and operating income
(profit before income taxes) of the Company for the years ended
December 31, 2001, 2000 and 1999. The Company&#146;s business is
predominantly in the U.S. Asset information by reportable segment
is not reported, since the Company does not produce such
information for internal use.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="590">
   <tr>
        <td valign="top" width="28%">&nbsp;</td>
        <td valign="top" colspan="3" width="72%"><p
        align="center"><font size="3" face="Arial">Year ended
        December 31,</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%">&nbsp;</td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">2000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">1999</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Revenue:</font></td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Private
        Client</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$140,028,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$154,698,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$148,584,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Capital
        Markets</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">73,752,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">82,700,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">74,027,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Asset
        Management</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">15,266,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">13,347,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">12,177,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Interest</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">31,560,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">60,817,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">39,753,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Other</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">655,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">4,937,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">4,570,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Total</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$261,261,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$316,499,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$279,111,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Operating
        Income:</font></td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Private
        Client *</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$(5,912,000)</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$5,065,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$5,220,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Capital
        Markets</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">12,835,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">26,537,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">16,307,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Asset
        Management</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">10,512,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">8,168,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">7,760,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Interest</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">15,836,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">25,657,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">18,382,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Other</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">(1,659,000)</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">6,285,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">2,797,000</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="28%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
        <td valign="top" width="24%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="28%"><font size="3" face="Arial">Total</font></td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$31,612,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$71,712,000</font></p>
        </td>
        <td valign="top" width="24%"><p align="right"><font
        size="3" face="Arial">$50,466,000</font></p>
        </td>
    </tr>
</table>

<blockquote>
    <p>* Losses in fiscal 2001 in the Private Client segment are
    the result of operating losses and acquisition costs relating
    to Josephthal and Prime Charter, as well as business
    disruption after September 11, 2001.</p>
</blockquote>

<p align="center"><font size="3" face="Arial">F-19</font></p>

<p align="center">&nbsp;</p>

<p><font size="3" face="Arial"><b>15. Subsequent events</b></font></p>

<p><font size="3" face="Arial">(a) On January 24, 2002, a cash
dividend of U.S.$0.09 per share (totalling $1,129,000) was
declared payable on February 22, 2002 to holders of Class A
non-voting and Class B shares of record on February 8, 2002.</font></p>

<p><font size="3" face="Arial">(b) On January 28, 2002, the
Company announced that its wholly-owned subsidiary Freedom
Investments, Inc. agreed to acquire the business operated by
BUYandH0LD Securities Corporation and affiliates for cash
consideration of $2,000,000 plus the market value of securities
owned by BUYandHOLD at the date of closing. The closed on March
12, 2002.</font></p>

<p><font size="3" face="Arial">BUYandHOLD is a privately held
retail online brokerage firm headquartered in Edison, New Jersey
which launched the first dollar-based equity investing platform
in 1999 and currently has a client base of over 125,000 accounts.</font></p>

<p><font size="3" face="Arial"><b>16. Quarterly Information
(unaudited)</b></font></p>

<p><font size="3" face="Arial">(Expressed in thousands of
dollars, except per share amounts)</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" colspan="5" width="61%"><p
        align="center"><font size="3" face="Arial">Fiscal
        Quarters</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial"><b>Year
        ended December 31, 2001</b></font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">Fourth</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">Third</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">Second</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">First</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">Total</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Revenue</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$77,142</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$53,748</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$56,876</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$73,495</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$261,261</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Profit
        before income taxes</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$3,484</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$5,657</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$6,851</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$15,620</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$31,612</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Net
        profit</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$2,780</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$3,334</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$3,919</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$9,117</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$19,150</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Earnings
        per share:</font></td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Basic</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.22</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.27</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.32</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.74</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$1.55</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Diluted</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.22</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.26</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.30</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.71</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$1.50</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Dividends
        per share</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.09</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.09</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.09</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.09</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.36</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Market
        price of Class A Shares:</font></td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">High</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$28.35</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$28.40</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$29.25</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$27.60</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$29.25</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Low</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$23.15</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$24.30</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$24.75</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$22.00</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$22.00</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial"><b>Year
        ended December 31, 2000</b></font></td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Revenue</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$74,218</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$69,465</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$69,424</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$103,392</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$316,499</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Profit
        before income taxes</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$11,118</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$11,864</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$14,405</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$34,325</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$71,712</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Net
        profit</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$7,654</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$6,375</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$8,292</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$18,580</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$40,901</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Earnings
        per share:</font></td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Basic</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.63</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.53</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.68</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$1.52</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$3.38</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Diluted</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.61</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.51</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.67</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$1.50</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$3.29</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Dividends
        per share</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.08</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.08</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.08</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.07</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$0.31</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Market
        price of Class A Shares:</font></td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">High</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$24.10</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$23.00</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$18.875</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$17.125</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$24.10</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%"><font size="3" face="Arial">Low</font></td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$19.875</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$18.4375</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$16.50</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$14.5625</font></p>
        </td>
        <td valign="top" width="12%"><p align="right"><font
        size="3" face="Arial">$14.5625</font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="39%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
        <td valign="top" width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" colspan="6"><font size="1" face="Arial">The
        price quotations above were supplied by the New York
        Stock Exchange.</font></td>
    </tr>
</table>

<p align="center">F-20</p>

<p align="center"><font size="3" face="Arial">EXHIBIT INDEX</font></p>

<p><font size="3" face="Arial">Unless designated by an asterisk
indicating that such document has been filed herewith, the
Exhibits listed below have been heretofore filed by the Company
pursuant to Section 13 or 15(d) of the Exchange Act and are
hereby incorporated herein by reference to the pertinent prior
filing.</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="607">
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial"><u>Number</u></font></td>
        <td valign="top" width="68%"><font size="2" face="Arial"><u>Description</u></font></td>
        <td valign="top" width="18%"><p align="right"><font
        size="2" face="Arial"><u>Page</u></font></p>
        </td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">3
        (a)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Articles
        of Incorporation, as amended, of Fahnestock Viner
        Holdings Inc. (previously filed as exhibits to Form 20-F
        for the fiscal year ended December 31, 1986 and 1988).</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">3(b)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">By-Laws,
        as amended, of Fahnestock Viner Holdings Inc. (previously
        filed as an exhibit to Form 20-F for the fiscal year
        ended December 31, 1987).</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">10(f)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Fahnestock
        Viner Holdings Inc. 1996 Equity Incentive Plan, Amended
        and Restated as at May 17, 1999 (previously filed as an
        exhibit to Form S-8 dated May 15, 2000)</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">10(h)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Lease
        document for the premises at 125 Broad Street, New York,
        NY dated May 27, 1997 between NY Broad Holdings, Inc. and
        Fahnestock &amp; Co. Inc. (previously filed as an exhibit
        filed to Form 10-K for the year ended December 31, 1997)</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">10(i)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Lease
        document for the premises at 300 River Place, Detroit, MI
        dated February 28, 1997 between The Stroh Companies, Inc.
        and First of Michigan Corporation (previously filed as an
        exhibit filed to Form 10-K for the year ended December
        31, 1997)</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">10(k)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Performance-Based
        Compensation Agreement between Fahnestock Viner Holdings
        Inc. and Albert G. Lowenthal dated March 25, 1997
        (previously filed as an exhibit filed to Form 10-K for
        the year ended December 31, 1997)</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">10(l)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Securities
        Purchase Agreement dated June 11, 1997, between 1888
        Limited Partnership and DST Systems Inc. and Purchaser
        (previously filed as an exhibit to Schedule 14D-1 and
        Schedule 13D for First of Michigan Capital Corporation
        dated June 18, 1997)</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">10(m)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Fahnestock
        Viner Holdings Inc. 1996 Equity Incentive Plan Amendment
        No. 1 dated February 29, 2000 (previously filed as an
        exhibit to Form 10-K for the year ended December 31,
        1999) </font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">10(n)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Fahnestock
        Viner Holdings Inc. 1996 Equity Incentive Plan Amendment
        No. 2 dated May 19, 2001 (filed herewith*)</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">10(o)</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Performance-Based
        Compensation Agreement between Fahnestock Viner Holdings
        Inc. and Albert G. Lowenthal dated January 1, 2001 (filed
        herewith*)</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td valign="top" width="14%"><font size="2" face="Arial">21</font></td>
        <td valign="top" width="68%"><font size="2" face="Arial">Subsidiaries
        of the registrant (filed herewith) *</font></td>
        <td valign="top" width="18%">&nbsp;</td>
    </tr>
</table>

<p align="center"><font size="3" face="Arial">E-1</font></p>
</body>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>2
<FILENAME>ex21.htm
<DESCRIPTION>SUBSIDIARIES OF THE REGISTRANT
<TEXT>
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<body bgcolor="#FFFFFF">

<p><font size="3" face="Arial">EXHIBIT 21</font></p>

<p><font size="3" face="Arial">SUBSIDIARIES OF THE REGISTRANT<br>
AS AT DECEMBER 31, 2001 (100% owned)</font></p>

<p><font size="3" face="Arial">FAHNESTOCK VINER HOLDINGS INC.
(Ontario)</font></p>

<blockquote>
    <p><font size="3" face="Arial">FAHNESTOCK CANADA INC.
    (Ontario)</font></p>
</blockquote>

<blockquote>
    <p><font size="3" face="Arial">E.A. VINER HOLDINGS CO.
    (Delaware)</font></p>
</blockquote>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">NEWSON INC. (Pennsylvania)</font></p>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">HUDSON CAPITAL ADVISORS
        INC. (New York)</font></p>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">EVANSTON FINANCIAL INC.
        (New York)</font></p>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">FAHNESTOCK TRUST COMPANY
        (New Jersey)</font></p>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial">VINER FINANCE INC.
        (Delaware)</font></p>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <blockquote>
            <p><font size="3" face="Arial">FAHNESTOCK &amp; CO.
            INC (New York)</font></p>
        </blockquote>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <blockquote>
            <blockquote>
                <p><font size="3" face="Arial">FIRST OF MICHIGAN
                CAPITAL CORPORATION (Delaware)</font></p>
            </blockquote>
        </blockquote>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <blockquote>
            <blockquote>
                <blockquote>
                    <p><font size="3" face="Arial">-FIRST OF
                    MICHIGAN VENTURE CAPITAL ASSOCIATES, INC.
                    (Michigan)</font></p>
                </blockquote>
            </blockquote>
        </blockquote>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <blockquote>
            <blockquote>
                <blockquote>
                    <p><font size="3" face="Arial">-OLD MICHIGAN
                    CORPORATION (Delaware)</font></p>
                    <p><font size="3" face="Arial">-CRANBROOK
                    CAPITAL MANAGEMENT, INC. (Michigan)</font></p>
                </blockquote>
                <p><font size="3" face="Arial">PACE SECURITIES
                INC. (New York)</font></p>
                <p><font size="3" face="Arial">FREEDOM
                INVESTMENTS, INC. (Delaware)</font></p>
                <p><font size="3" face="Arial">REICH &amp;
                CO.INC. (Alabama)</font></p>
                <p><font size="3" face="Arial">FAHNESTOCK
                ACQUISITION CORP. (Delaware)</font></p>
                <blockquote>
                    <p><font size="3" face="Arial">GRAND CHARTER
                    GROUP, INCORPORATED (Delaware)</font></p>
                    <blockquote>
                        <p><font size="3" face="Arial">PRIME
                        CHARTER LTD (Delaware)</font></p>
                        <p><font size="3" face="Arial">PRIME
                        CHARTER ASSET MANAGEMENT INC. (Delaware)</font></p>
                    </blockquote>
                </blockquote>
                <p><font size="3" face="Arial">JCO ACQUISITION
                CORP. (Delaware) </font></p>
                <blockquote>
                    <p><font size="3" face="Arial">JOSEPHTHAL
                    GROUP, INC. (Delaware)</font></p>
                    <blockquote>
                        <p><font size="3" face="Arial">JOSEPHTHAL
                        FUTURES, INC. (Delaware)</font></p>
                        <p><font size="3" face="Arial">JOSEPHTHAL
                        ASSET &amp; FACILITIES (Delaware)</font></p>
                        <p><font size="3" face="Arial">JOSEPHTHAL
                        1 CAPITAL CORP (Delaware)</font></p>
                        <p><font size="3" face="Arial">JOSEPHTHAL
                        INVESTMENT CORP (Delaware)</font></p>
                        <p><font size="3" face="Arial">JOSEPHTHAL
                        CAPITAL GROUP, INC. (Delaware)</font></p>
                        <blockquote>
                            <p><font size="3" face="Arial">JOSEPHTHAL
                            &amp; CO. INC. (New York)</font></p>
                            <blockquote>
                                <p><font size="3" face="Arial">JOSEPHTHAL
                                AGENCY OF NEW YORK (New York)</font></p>
                                <p><font size="3" face="Arial">JOSEPHTHAL
                                LYON &amp; ROSS INSURANCE AGENCY
                                OF MASSACHUSETTS,
                                INC.(Massachusetts)</font></p>
                            </blockquote>
                        </blockquote>
                    </blockquote>
                </blockquote>
            </blockquote>
        </blockquote>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <blockquote>
            <blockquote>
                <blockquote>
                    <blockquote>
                        <blockquote>
                            <blockquote>
                                <p><font size="3" face="Arial">JOSEPHTHAL
                                &amp; CO INSURANCE AGENCY OF
                                TEXAS (Texas)</font></p>
                            </blockquote>
                        </blockquote>
                    </blockquote>
                </blockquote>
            </blockquote>
        </blockquote>
    </blockquote>
</blockquote>
</body>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10n.htm
<DESCRIPTION>EXHIBIT 10(O)
<TEXT>
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<body bgcolor="#FFFFFF">

<p>EXHIBIT 10(n)</p>

<p align="center">&nbsp;</p>

<p align="center">AMENDMENT NO.2<br>
(MAY 14, 2001)</p>

<p align="center">TO</p>

<p align="center">FAHNESTOCK VINER HOLDINGS INC.<br>
1996 EQUITY INCENTIVE PLAN<br>
AMENDED AND RESTATED<br>
AS AT MAY 17, 1999</p>

<p align="center">&nbsp;</p>

<p>Effective May 14, 2001, the Fahnestock Viner Holdings Inc.
1996 Equity Incentive Plan (Amended and Restated as at May 17,
1999) be further amended by increasing the number of Class A
Shares which may be issued pursuant to Awards granted under the
Plan and awards or options granted under other Plans of the
Company from 3,230,000 Class A Shares to 3,405,000 Class A
Shares.</p>

<p align="center">__________________________</p>

<p>&nbsp;</p>

<p>The foregoing amendment was approved by the Board of Directors
of the Corporation on February 28, 2001 and confirmed by holders
of Class B voting shares of the Corporation at the Annual and
Special Meeting of Shareholders of the Corporation held on May
14, 2001.</p>

<p>&nbsp;</p>

<blockquote>
    <blockquote>
        <blockquote>
            <blockquote>
                <blockquote>
                    <p>[signed: A.W. Oughtred]<br>
                    A.Winn Oughtred, Secretary<br>
                    Fahnestock<font size="2"> Viner Holdings Inc.</font></p>
                </blockquote>
            </blockquote>
        </blockquote>
    </blockquote>
</blockquote>
</body>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10o.htm
<DESCRIPTION>EXHIBIT 10(N)
<TEXT>
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<p>EXHIBIT 10(o)</p>

<p align="center"><b><u>PERFORMANCE-BASED COMPENSATION AGREEMENT</u></b></p>

<p>THIS AGREEMENT, dated as of the 1<sup>st</sup> day of January,
2001, between FAHNESTOCK VINER HOLDINGS INC. (&quot;<u>Holdings</u>&quot;)
and ALBERT G. LOWENTHAL (&quot;<u>Lowenthal</u>&quot;).</p>

<p align="center"><b><u>W</u></b><b> </b><b><u>I</u></b><b> </b><b><u>T</u></b><b>
</b><b><u>N</u></b><b> </b><b><u>E</u></b><b> </b><b><u>S</u></b><b>
</b><b><u>S</u></b><b> </b><b><u>E</u></b><b> </b><b><u>T</u></b><b>
</b><b><u>H</u></b><b> :</b></p>

<p>WHEREAS, Lowenthal is employed by Fahnestock &amp; Co. Inc., a
wholly-owned subsidiary of Holdings (the &quot;<u>Company</u>&quot;),
and Holdings as their respective Chief Executive Officer and
serves as Chairman of their respective Boards of Directors; and</p>

<p>WHEREAS, the Compensation and Stock Option Committee (the
&quot;<u>Committee</u>&quot;) of the Board of Directors of
Holdings (the &quot;<u>Board</u>&quot;) has determined that it is
in the best interests of the Company and Holdings to provide a
portion of the compensation for Lowenthal&#146;s services during
the Term hereof in a manner that aligns the compensation of
Lowenthal with the performance of the Company and Holdings, the
long-term interests of the shareholders of Holdings and the
compensation paid to other chief executive officers of comparable
financial service companies;</p>

<p>NOW, THEREFORE, in consideration of the premises set forth in
this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Holdings and Lowenthal agree as follows:</p>

<p>1.<b> Definitions</b>.</p>

<p>(a) <u>Class A Stock</u> means the Class A non-voting shares
of Holdings.</p>

<p>(b) <u>Market Value</u> of a share of Class A Stock as of a
determination date means its closing price on the New York Stock
Exchange on such date or, if such date is not a trading day, on
the trading day next preceding such determination date.</p>

<p>(c) <u>Performance Award</u> means the written performance
goal established with respect to a Performance Year pursuant to
Section 2.</p>

<p>(c) <u>Performance Award Amount</u> means the amount of
performance-based compensation determined pursuant to the terms
of a Performance Award.</p>

<p>(d) <u>Performance Year</u> means a calendar year during the
Term.</p>

<p>(e) <u>Term</u> means the period commencing on January 1, 2001
and ending on December 31, 2005.</p>

<p>2. <b>Performance Awards.</b> </p>

<p>On or before the 90<sup>th</sup> day of each Performance Year,
the Committee shall establish a written performance goal (the
&quot;<u>Performance Award</u>&quot;) with respect to such
Performance Year. Such Performance Award shall be in the form of
a written formula pursuant to which the Performance Award Amount
shall be determined based upon the degree of attainment in such
Performance Year of targets expressed in terms of one or more of
the following factors: Holdings&#146; return on equity,
Holdings&#146; consolidated net profit, and the increase in the
Market Value of a share of Class A Stock from the date the
Committee establishes the performance goal (or, if later, January
1 of the Performance Year) to December 31 of the Performance
Year. Except to the extent otherwise provided in this Agreement,
the Company shall pay Lowenthal in cash the Performance Award
Amount within five (5) days after the Committee&#146;s
certification for each goal in accordance with Section 3
following the end of each Performance Year.</p>

<p>3.<b> Administration.</b></p>

<p>The procedures with respect to Performance Awards made under
this Agreement shall be administered by the Committee. The
Committee shall at all times consist of two or more members and
shall be constituted in such a manner as to satisfy the
requirements of applicable law, the provisions of Rule 16b-3
under the Securities Exchange Act of 1934 or any successor rule,
and the provisions of Section 162(m)(4)(C)(i) of the Internal
Revenue Code of 1986, as amended (the &quot;<u>Code</u>&quot;).
The Committee shall have full power and authority to grant awards
hereunder and to administer and interpret this Agreement and to
adopt such rules, regulations and guidelines as it deems
necessary or advisable to give effect to the purpose and intent
of this Agreement. Prior to payment of any Performance Award
payable hereunder with respect to any Performance Year the
Committee shall certify as to the degree to which the performance
goals underlying the Performance Award have been attained for
such Performance Year. Certification by the Committee shall be
made within ten (10) days after Holdings&#146; issuance of its
annual audited financial statements with respect to each
Performance Year.</p>

<p>4.<b> Performance Award Amount Limitation.</b></p>

<p>In no event may the Performance Award Amount with respect to
any Performance Year during the Term exceed $5,000,000.</p>

<p>5.<b> Termination of Employment</b>.</p>

<p>(a) If prior to the end of a Performance Year Lowenthal&#146;s
employment with the Company or Holdings terminates for any reason
(including death or permanent disability) other than the
termination of his employment for Cause (as defined in subsection
(b)), in lieu of any payments otherwise payable under this
Agreement with respect to such Performance Year Lowenthal or his
estate, within five (5) days after the Committee&#146;s
certification in accordance with Section 3 following the end of
the Performance Year in which termination occurs, shall be paid
the sum of the following: (i) the amount that would be owed to
Lowenthal with respect to the Performance Award (other than the
portion thereof described in clause (ii) ) for such Performance
Year multiplied by a fraction, the numerator of which is the
number of actual days of the year to the date of such termination
and the denominator of which is 365, and (ii) with respect to the
portion (if any) of the Performance Award attributable to
appreciation in the Market Value of Class A Stock, the amount
that would be owed to Lowenthal with respect to the stock
appreciation amount using the Market Value of the Class A Stock
on such termination date rather than December 31 of the
Performance Year; <u>provided</u>, <u>however</u>, that any such
payment of a Performance Award Amount shall be subject to the
limit set forth in Section 4 and the prior certification of the
Committee as set forth in Section 3.</p>

<p>(b) If prior to the end of a Performance Year,
Lowenthal&#146;s employment is terminated for Cause, his right to
receive any payment under this Agreement with respect to such
Performance Year shall be forfeited. For purposes of this
Agreement, &quot;<u>Cause</u>&quot; means (i) conviction of a
felony involving theft or moral turpitude, or (ii) a
determination by the Board that Lowenthal has engaged in conduct
that constitutes willful gross neglect or willful gross
misconduct with respect to his duties which results in material
economic harm to Holdings or the Company; provided, however, that
for purposes of determining whether conduct constitutes willful
gross misconduct, no act on Lowenthal&#146;s part shall be
considered &quot;willful&quot; unless it is done by him in bad
faith and without reasonable belief that his action was in the
best interests of Holdings and the Company.</p>

<p>6. <b>Deferral Election</b>. </p>

<p>Notwithstanding anything to the contrary herein, to the extent
that Lowenthal makes an election in accordance with the terms of
the Fahnestock &amp; Co. Inc. Executive Deferred Compensation
Plan (the &quot;<u>Plan</u>&quot;) to defer payment of all or a
portion of a Performance Award Amount, such deferred portion
(together with interest and earnings thereon as determined
pursuant to the terms of the Plan) to be paid at the time and in
the manner provided under the Plan.</p>

<p>7.<b> Effectiveness of Agreement.</b></p>

<p>This Agreement shall be effective as of the date of its
adoption by the Committee, subject to approval thereof at a
meeting of shareholders by the holders of a majority of the Class
B voting shares of Holdings (the &quot;<u>Class B Shares</u>&quot;)
present and entitled to vote at the meeting. This Agreement
replaces the Performance-Based Compensation Agreement between
Holdings and Lowenthal dated as of March 25, 1997, which shall be
of no further force and effect after December 31, 2000 except as
it applies to performance years ending on or before such date.</p>

<p>8.<b> Interpretation</b>.</p>

<p>No provision of this Agreement may be altered or waived except
in a writing executed by the parties hereto. This Agreement
constitutes the entire agreement between the parties hereto and
no party shall be bound by any warranties, representations or
guarantees, except as specifically set forth in this Agreement.
This Agreement shall be interpreted under the law of the State of
New York without giving effect to the conflict of law provisions
thereof.</p>

<p>9.<b> Arbitration</b>.</p>

<p>Any controversy or claim arising out of or relating to this
Agreement or the breach of this Agreement which cannot be
resolved by Lowenthal and Holdings shall, at the instance of
either Lowenthal or Holdings, be submitted to arbitration in
accordance with New York law and the procedures of the New York
Stock Exchange. The determination of the arbitrator shall be
conclusive and binding on Holdings and Lowenthal and judgment may
be entered on the arbitrator&#146;s award in any court having
jurisdiction.</p>

<p>10.<b> Assignability</b>.</p>

<p>The respective rights and obligations of Lowenthal and
Holdings under this Agreement shall inure to the benefit of and
be binding upon the heirs and legal representatives of Lowenthal
and the successors and assigns of Holdings.</p>

<p>IN WITNESS WHEREOF, Holdings and Lowenthal have executed this
Agreement as of the day and year first above written.</p>

<p>FAHNESTOCK VINER HOLDINGS INC.<br>
By: [signed: E.K. Roberts]<br>
Name: Elaine K. Roberts<br>
Title: President</p>

<p>&nbsp;</p>

<p>[signed: A.G. Lowenthal]<br>
Albert G. Lowenthal, individually</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>
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