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<SEC-DOCUMENT>0000791963-03-000006.txt : 20030318
<SEC-HEADER>0000791963-03-000006.hdr.sgml : 20030318
<ACCEPTANCE-DATETIME>20030318163443
ACCESSION NUMBER:		0000791963-03-000006
CONFORMED SUBMISSION TYPE:	10-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20021231
FILED AS OF DATE:		20030318

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:		03607940

	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:	GOLDALE INVESTMENTS LTD
		DATE OF NAME CHANGE:	19861030

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VINER E A HOLDINGS LTD
		DATE OF NAME CHANGE:	19880622
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>f10k02.htm
<TEXT>
<!DOCTYPE HTML PUBLIC "-//IETF//DTD HTML//EN">
<html>

<body bgcolor="#FFFFFF" link="#0000FF">

<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, 2002<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.</b></font></p>

<p align="center"><font size="2" face="Arial">(Exact name of
registrant as specified in its charter)</font></p>

<p><font size="2" face="Arial">Ontario, Canada 98-0080034</font></p>

<p><font size="2" face="Arial">(State or other jurisdiction of
(I.R.S. Employer</font></p>

<p><font size="2" face="Arial">incorporation or organization)
Identification No.)</font></p>

<p><font size="2" face="Arial">P.O. Box 2015, Suite 1110</font></p>

<p><font size="2" face="Arial">20 Eglinton Avenue West</font></p>

<p><font size="2" face="Arial">Toronto, Ontario, Canada M4R 1K8</font></p>

<p><font size="2" face="Arial">(Address of principal executive
offices) (Zip Code)</font></p>

<p><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&#146;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">Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of
the Securities Exchange Act of 1934). Yes [ X ] No [ ]</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 March 17, 2003 was
$284,982,000 based on the closing price of the Class A non-voting
shares on the New York Stock Exchange as at March 17, 2003 of
$22.50.</font></p>

<p><font size="2" face="Arial">The number of shares of the
Company&#146;s Class A non-voting shares and Class B voting
shares (being the only classes of common stock of the Company),
outstanding on March 17, 2003 was 12,665,851 and 99,680
shares, respectively.</font></p>

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

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

<table border="0" cellpadding="7" cellspacing="0" width="576">
    <tr>
        <td width="14%"><font face="Arial">Item Number</font></td>
        <td width="77%">&nbsp;</td>
        <td width="9%"><p align="right"><font face="Arial">Page</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">PART 1</font></td>
        <td width="77%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">1.</font></td>
        <td width="77%"><font face="Arial">Business</font></td>
        <td width="9%"><p align="right"><font face="Arial">2</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">2.</font></td>
        <td width="77%"><font face="Arial">Properties</font></td>
        <td width="9%"><p align="right"><font face="Arial">14</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">3.</font></td>
        <td width="77%"><font face="Arial">Legal Proceedings</font></td>
        <td width="9%"><p align="right"><font face="Arial">14</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">4.</font></td>
        <td width="77%"><font face="Arial">Submission of Matters
        to a Vote of Security Holders</font></td>
        <td width="9%"><p align="right"><font face="Arial">14</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%">&nbsp;</td>
        <td width="77%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">PART II</font></td>
        <td width="77%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">5.</font></td>
        <td width="77%"><font face="Arial">Market for the
        Registrant&#146;s Common Equity and Related Stockholder
        Matters</font></td>
        <td width="9%"><p align="right"><font face="Arial">16</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">6.</font></td>
        <td width="77%"><font face="Arial">Selected Financial
        Data</font></td>
        <td width="9%"><p align="right"><font face="Arial">18</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">7.</font></td>
        <td width="77%"><font face="Arial">Management&#146;s
        Discussion and Analysis of Financial Condition and
        Results of Operations</font></td>
        <td width="9%"><p align="right"><font face="Arial">19</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">7a.</font></td>
        <td width="77%"><font face="Arial">Quantitative and
        Qualitative Disclosures About Market Risk</font></td>
        <td width="9%"><p align="right"><font face="Arial">28</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">8.</font></td>
        <td width="77%"><font face="Arial">Financial Statements
        and Supplementary Data</font></td>
        <td width="9%"><p align="right"><font face="Arial">30</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">9.</font></td>
        <td width="77%"><font face="Arial">Changes in and
        Disagreements with Accountants and Financial Disclosure</font></td>
        <td width="9%"><p align="right"><font face="Arial">30</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%">&nbsp;</td>
        <td width="77%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">PART III</font></td>
        <td width="77%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">10.</font></td>
        <td width="77%"><font face="Arial">Directors and
        Executive Officers of the Registrant</font></td>
        <td width="9%"><p align="right"><font face="Arial">31</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">11.</font></td>
        <td width="77%"><font face="Arial">Executive Compensation</font></td>
        <td width="9%"><p align="right"><font face="Arial">33</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">12.</font></td>
        <td width="77%"><font face="Arial">Security Ownership of
        Certain Beneficial Owners and Management</font></td>
        <td width="9%"><p align="right"><font face="Arial">40</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">13.</font></td>
        <td width="77%"><font face="Arial">Certain Relationships
        and Related Transactions</font></td>
        <td width="9%"><p align="right"><font face="Arial">42</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">14.</font></td>
        <td width="77%"><font face="Arial">Controls and
        Procedures</font></td>
        <td width="9%"><p align="right"><font face="Arial">42</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%">&nbsp;</td>
        <td width="77%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">PART IV</font></td>
        <td width="77%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font face="Arial">15.</font></td>
        <td width="77%"><font face="Arial">Exhibits, Financial
        Statement Schedules, and Reports on Form 8-K</font></td>
        <td width="9%"><p align="right"><font face="Arial">43</font></p>
        </td>
    </tr>
    <tr>
        <td width="14%">&nbsp;</td>
        <td width="77%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%">&nbsp;</td>
        <td width="77%"><font face="Arial">Signatures</font></td>
        <td width="9%"><p align="right"><font face="Arial">44</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 and Freedom 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 business formerly conducted by Josephthal and
Prime is now conducted by Fahnestock. The private client business
acquired from CIBC World Markets Inc. in January 2003 is being
conducted by Fahnestock under the name Oppenheimer &amp; Co., a
division of Fahnestock. The Company operates a discount brokerage
business through Freedom. Freedom also services independent
financial consultants.</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, formerly 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
made application to withdraw as a broker dealer and such
application was approved. Since January 1, 2002 its business has
been conducted by Fahnestock.</font></p>

<p><font face="Arial">In November 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, formerly 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. Prime ceased to be a broker-dealer effective
January 22, 2002 and since January 1, 2002 its business has been
conducted by Fahnestock. The business generated by the two
branches associated with the Prime acquisition was cleared
pursuant to an agreement with Bank of New York until November
2002 when its client accounts were converted to Fahnestock&#146;s
clearing platform.</font></p>

<p><font face="Arial">In March 2002, through Freedom, the Company
purchased the business of BUYandHOLD Securities Corporation and
affiliates for cash consideration of $2,297,000. BUYandHOLD is an
on-line brokerage business headquartered in Edison, NJ. The
combination of the Freedom and BUYandHOLD technology platforms
provides clients with a comprehensive and diversified suite of
online financial services.<b> </b>BUYandHOLD operates as a
division of Freedom. The acquisition was accounted for by the
purchase method. </font></p>

<p><font face="Arial">On January 3, 2003, the Company acquired
the U.S. Private Client Division of CIBC World Markets and has
agreed to acquire at a later date the U.S. Asset Management
Division of CIBC World Markets for a total consideration of
approximately $241 million, of which approximately $13 million
was paid in cash at closing from cash on hand and the balance was
paid from the proceeds of the issuance of debt instruments. The
businesses will be operated as the Oppenheimer Division of
Fahnestock and adds approximately 620 account executives in 18
branches located in the major financial centers of the United
States. Client assets of the Private Client Division are
approximately $30 billion. Assets under management in the Asset
Management Division are approximately $8.5 billion. The
acquisition is being accounted for by the purchase method. This
transaction more than doubles the Company&#146;s retail exposure
and asset base.</font></p>

<p><font face="Arial">In January 2003, the Company received
monetary damages plus interest in the amount of $21,750,000,
pursuant to an award by a National Association of Securities
Dealers Dispute Resolution panel against another broker-dealer in
a raiding case involving the sales force of First of Michigan
Corporation, a company acquired by Fahnestock in July 1997.
During the fourth quarter of 1997, approximately 20% of the
&quot;pre-raid&quot; staff of financial consultants were hired
away in a raid. These proceeds, which were received in January
2003, will be included in the Company&#146;s results for the
first quarter of 2003.</font></p>

<p><font face="Arial">At December 31, 2002, Fahnestock employed
1,102 full-time registered representatives and approximately 652
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 1,754 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, was registered as an
investment dealer with the Investment Dealers Association of
Canada (&quot;IDA) on January 17, 2002. The Company is in the
process of selling FCI and expects to close this transaction on
or about March 31, 2003, subject to the approval of the IDA.</font></p>

<p><font face="Arial">At February 28, 2003, Fahnestock and
Freedom employed 1,760 full-time registered representatives and
approximately 1,123 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 2,883 full-time employees. </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
and omnibus 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 2002, 2001 and 2000. 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">The Company&#146;s internet address is </font><font
color="#0000FF" face="Arial"><u>www.fahnestock.com.</u></font><font
face="Arial"> The Company makes available free of charge through
its website its annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, and all amendments to
those reports as soon as reasonably practicable after such
material is electronically filed with or furnished to the SEC.</font></p>

<p><font face="Arial"></font>&nbsp;</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 width="32%">&nbsp;</td>
        <td width="13%"><p align="right"><font face="Arial"><u>2002</u></font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial"><u>%</u></font></p>
        </td>
        <td width="14%"><p align="right"><font face="Arial"><u>2001</u></font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial"><u>%</u></font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial"><u>2000</u></font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial"><u>%</u></font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7"><font face="Arial">(Dollars in thousands,
        except percentages)</font></td>
    </tr>
    <tr>
        <td width="32%">&nbsp;</td>
        <td width="13%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="10%">&nbsp;</td>
        <td width="13%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%"><font face="Arial">Commissions</font></td>
        <td width="13%"><p align="right"><font face="Arial">$135,747</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">48%</font></p>
        </td>
        <td width="14%"><p align="right"><font face="Arial">$122,272</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">47%</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">$128,915</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">41%</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font face="Arial">Principal
        transactions, net</font></td>
        <td width="13%"><p align="right"><font face="Arial">58,227</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">21%</font></p>
        </td>
        <td width="14%"><p align="right"><font face="Arial">56,374</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">22%</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">84,420</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">27%</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font face="Arial">Interest</font></td>
        <td width="13%"><p align="right"><font face="Arial">27,622</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">10%</font></p>
        </td>
        <td width="14%"><p align="right"><font face="Arial">34,309</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">13%</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">63,696</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">20%</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font face="Arial">Underwriting fees</font></td>
        <td width="13%"><p align="right"><font face="Arial">22,760</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">8%</font></p>
        </td>
        <td width="14%"><p align="right"><font face="Arial">10,955</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">4%</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">9,314</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">3%</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font face="Arial">Advisory fees</font></td>
        <td width="13%"><p align="right"><font face="Arial">26,365</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">9%</font></p>
        </td>
        <td width="14%"><p align="right"><font face="Arial">24,504</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">9%</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">21,764</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">7%</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font face="Arial">Other</font></td>
        <td width="13%"><p align="right"><font face="Arial">12,612</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">4%</font></p>
        </td>
        <td width="14%"><p align="right"><font face="Arial">12,847</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">5%</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">8,390</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">2%</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%">&nbsp;</td>
        <td width="13%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="10%">&nbsp;</td>
        <td width="13%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%"><font face="Arial">Total revenues</font></td>
        <td width="13%"><p align="right"><font face="Arial">$283,333</font></p>
        </td>
        <td width="9%"><p align="right"><font face="Arial">100%</font></p>
        </td>
        <td width="14%"><p align="right"><font face="Arial">$261,261</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">100%</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">$316,499</font></p>
        </td>
        <td 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 and omnibus 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 -
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, borrowing securities
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, 2002, 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, cash and cash equivalents and cash and
securities held in segregated accounts 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 21%, 22% and 27%,
respectively, of the Company&#146;s total revenues for the fiscal
years ended December 31, 2002, 2001 and 2000, respectively.</font></p>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</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&#146; 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 and securities borrowings 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, to complete transactions in which customers have
failed to deliver securities by the required settlement date, and
to lend securities to other brokers and dealers for similar
purposes. When borrowing securities, Fahnestock is required to
deposit cash or other collateral 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><font face="Arial"></font>&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 8%, 4% and
3% of its revenues from underwriting in 2002, 2001 and 2000,
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, 2002 Fahnestock had
approximately $869 million 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</font><font
color="#FF00FF" face="Arial"> </font><font face="Arial">200</font><font
color="#FF00FF" face="Arial"> </font><font face="Arial">persons</font><font
color="#FF00FF" face="Arial"> </font><font face="Arial">in its
administration and operations departments at its head office and
approximately 55 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 $25,000,000 with a
self-insurance retention of $250,000.<b> </b></font></p>

<p><font face="Arial"></font>&nbsp;</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 and in connection with its
research department activities. </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) or the NASD (Freedom), 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><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&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 in Edison,
NJ. 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 at December 31, 2002, occupied office space
totalling approximately 589,000 square feet in 89 locations under
standard commercial terms expiring between 2002 and 2013.
Currently, the Company occupies office space totaling
approximately 977,000 square feet in 105 locations. 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 are owned by 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 2002
fiscal year.</font></p>

<p><font face="Arial">At the annual and special meeting of
shareholders to be held on May 12, 2003, the Company will put a
resolution with respect to the E.A. Viner International Co.
Convertible Debenture before both the Class A non-voting and
Class B shareholders.</font></p>

<p><font face="Arial">Pursuant to an Asset Purchase Agreement
dated as of December 9, 2002 between the Corporation, its
wholly-owned subsidiary Viner Finance Inc., CIBC World Markets
Corp. and CIBC, effective January 3, 2003 the Corporation,
through Viner Finance Inc. acquired the assets and business of
the U.S. Oppenheimer Private Client Division of CIBC World
Markets Corp. To fund a portion of the purchase price, the
Corporation&#146;s wholly-owned subsidiary, E.A. Viner
International Co., issued to CIBC (i) a $69,980,828 principal
amount Variable Rate Exchangeable Debenture Due 2013 (the
&quot;First Exchangeable Debenture&quot;) and (ii) a $90,841,572
principal amount Convertible Debenture Due 2006 (the Interim
Debenture&quot;). Subject to shareholder approval, as described
below, the Interim Debenture is convertible into a $90,841,572
principal amount Variable Rate Exchangeable Debenture Due 2013
(the &quot;Second Exchangeable Debenture&quot;). The First
Exchangeable Debenture is exchangeable for 3,016,415 Class A
Shares at the rate of $23.20 per share (the closing price on the
NYSE for the Class A Shares on December 6, 2002). The Second
Exchangeable Debenture (when issued) will be exchangeable for
3,915,585 Class A Shares, also at the rate of $23.20 per share.
The First and Second Exchangeable Debentures provide for an
adjustment of up to an additional issuance of 3% of the Class A
Shares issuable in the event that the Debentures are exchanged,
the holders of the Debentures exercise their rights to have the
Class A Shares, for which the Debentures are exchanged, sold and
realize a price of less than $23.20 per share. If both Debentures
are fully converted CIBC would own approximately 35% of the then
outstanding Class A Shares.</font></p>

<p><font face="Arial">In accordance with the requirements of the
Toronto Stock Exchange, the Interim Debenture may not be
converted into the Second Exchangeable Debenture without the
approval of the Class A Shareholders and Class B Shareholders
voting together. Provided shareholders approve the conversion,
the Convertible Debenture will be automatically converted.</font></p>

<p><font face="Arial">Accordingly, the Class A Shareholders and
Class B Shareholders are being asked to consider, and if deemed
advisable, pass such resolution.</font></p>

<p><font face="Arial">In order to pass, the resolution must be
approved by a simple majority of the votes cast by the Class A
and Class B Shareholders voting together.</font></p>

<p><font face="Arial"></font>&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 high and
low sales prices of the Class A Shares 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 colspan="2" width="34%"><font face="Arial">Class A
        Shares:</font></td>
        <td colspan="2" width="30%"><p align="center"><font
        face="Arial">TSE</font></p>
        </td>
        <td colspan="2" width="36%"><p align="center"><font
        face="Arial">NYSE</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%">&nbsp;</td>
        <td width="15%"><font face="Arial">HIGH</font></td>
        <td width="14%"><font face="Arial">LOW</font></td>
        <td width="18%"><font face="Arial">HIGH</font></td>
        <td width="18%"><font face="Arial">LOW</font></td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%">&nbsp;</td>
        <td colspan="2" width="30%"><p align="center"><font
        face="Arial">(Cdn. Dollars)</font></p>
        </td>
        <td colspan="2" width="36%"><p align="center"><font
        face="Arial">(U.S. dollars)</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">2002</font></td>
        <td width="21%"><font face="Arial">1<sup>st</sup> Quarter</font></td>
        <td width="15%"><font face="Arial">$46.00</font></td>
        <td width="14%"><font face="Arial">$39.40</font></td>
        <td width="18%"><font face="Arial">$28.88</font></td>
        <td width="18%"><font face="Arial">$24.85</font></td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%"><font face="Arial">2<sup>nd</sup> Quarter</font></td>
        <td width="15%"><font face="Arial">$40.56</font></td>
        <td width="14%"><font face="Arial">$32.65</font></td>
        <td width="18%"><font face="Arial">$25.70</font></td>
        <td width="18%"><font face="Arial">$21.26</font></td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%"><font face="Arial">3<sup>rd</sup> Quarter</font></td>
        <td width="15%"><font face="Arial">$35.00</font></td>
        <td width="14%"><font face="Arial">$31.55</font></td>
        <td width="18%"><font face="Arial">$23.15</font></td>
        <td width="18%"><font face="Arial">$20.00</font></td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%"><font face="Arial">4<sup>th</sup> Quarter</font></td>
        <td width="15%"><font face="Arial">$43.86</font></td>
        <td width="14%"><font face="Arial">$31.45</font></td>
        <td width="18%"><font face="Arial">$28.45</font></td>
        <td width="18%"><font face="Arial">$19.77</font></td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">2001</font></td>
        <td width="21%"><font face="Arial">1<sup>st</sup> Quarter</font></td>
        <td width="15%"><font face="Arial">$43.90</font></td>
        <td width="14%"><font face="Arial">$33.25</font></td>
        <td width="18%"><font face="Arial">$27.60</font></td>
        <td width="18%"><font face="Arial">$22.00</font></td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%"><font face="Arial">2<sup>nd</sup> Quarter</font></td>
        <td width="15%"><font face="Arial">$45.50</font></td>
        <td width="14%"><font face="Arial">$37.50</font></td>
        <td width="18%"><font face="Arial">$29.25</font></td>
        <td width="18%"><font face="Arial">$24.75</font></td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%"><font face="Arial">3<sup>rd</sup> Quarter</font></td>
        <td width="15%"><font face="Arial">$44.50</font></td>
        <td width="14%"><font face="Arial">$38.00</font></td>
        <td width="18%"><font face="Arial">$28.40</font></td>
        <td width="18%"><font face="Arial">$24.30</font></td>
    </tr>
    <tr>
        <td width="13%">&nbsp;</td>
        <td width="21%"><font face="Arial">4<sup>th</sup> Quarter</font></td>
        <td width="15%"><font face="Arial">$45.30</font></td>
        <td width="14%"><font face="Arial">$36.94</font></td>
        <td width="18%"><font face="Arial">$28.35</font></td>
        <td width="18%"><font face="Arial">$23.15</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,
2002 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 width="51%"><font face="Arial"><u>Shareholders of
        record having addresses in:</u></font></td>
        <td width="15%"><p align="right"><font face="Arial"><u>Number
        of shares</u></font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial"><u>Percentage</u></font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial"><u>Number
        of shareholders</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="51%"><font face="Arial">Canada </font></td>
        <td width="15%"><p align="right"><font face="Arial">5,141,484</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">41%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">176</font></p>
        </td>
    </tr>
    <tr>
        <td width="51%"><font face="Arial">United States</font></td>
        <td width="15%"><p align="right"><font face="Arial">7,255,491</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">59%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">176</font></p>
        </td>
    </tr>
    <tr>
        <td width="51%"><font face="Arial">Other</font></td>
        <td width="15%"><p align="right"><font face="Arial">32</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">2</font></p>
        </td>
    </tr>
    <tr>
        <td width="51%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
    </tr>
    <tr>
        <td width="51%"><font face="Arial">Total issued and
        outstanding</font></td>
        <td width="15%"><p align="right"><font face="Arial">12,397,007</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">100%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">354</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</p>

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

<table border="0" cellpadding="7" cellspacing="0" width="648">
    <tr>
        <td width="50%"><font face="Arial"><u>Shareholders of
        record having addresses in:</u></font></td>
        <td width="16%"><p align="right"><font face="Arial"><u>Number
        of shares</u></font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial"><u>Percentage</u></font></p>
        </td>
        <td width="19%"><p align="right"><font face="Arial"><u>Number
        of shareholders</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="50%"><font face="Arial">Canada (1)</font></td>
        <td width="16%"><p align="right"><font face="Arial">98,037</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">98%</font></p>
        </td>
        <td width="19%"><p align="right"><font face="Arial">122</font></p>
        </td>
    </tr>
    <tr>
        <td width="50%"><font face="Arial">United States</font></td>
        <td width="16%"><p align="right"><font face="Arial">1,635</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">2%</font></p>
        </td>
        <td width="19%"><p align="right"><font face="Arial">66</font></p>
        </td>
    </tr>
    <tr>
        <td width="50%"><font face="Arial">Other</font></td>
        <td width="16%"><p align="right"><font face="Arial">8</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">-</font></p>
        </td>
        <td width="19%"><p align="right"><font face="Arial">2</font></p>
        </td>
    </tr>
    <tr>
        <td width="50%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
    </tr>
    <tr>
        <td width="50%"><font face="Arial">Total issued and
        outstanding</font></td>
        <td width="16%"><p align="right"><font face="Arial">99,680</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">100%</font></p>
        </td>
        <td 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, 2002 and 2001.</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="631">
    <tr>
        <td width="13%"><font face="Arial"><u>Type</u></font></td>
        <td width="24%"><font face="Arial"><u>Declaration date</u></font></td>
        <td width="24%"><font face="Arial"><u>Record date</u></font></td>
        <td width="26%"><font face="Arial"><u>Payment date</u></font></td>
        <td width="13%"><font face="Arial"><u>Amount per share</u></font></td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">January 25, 2001</font></td>
        <td width="24%"><font face="Arial">February 9, 2001 </font></td>
        <td width="26%"><font face="Arial">February 23, 2001</font></td>
        <td width="13%"><p align="right"><font face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">April 19, 2001</font></td>
        <td width="24%"><font face="Arial">May 4, 2001</font></td>
        <td width="26%"><font face="Arial">May 18, 2001</font></td>
        <td width="13%"><p align="right"><font face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">July 19, 2001</font></td>
        <td width="24%"><font face="Arial">August 3, 2001</font></td>
        <td width="26%"><font face="Arial">August 17, 2001</font></td>
        <td width="13%"><p align="right"><font face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">October 18, 2001</font></td>
        <td width="24%"><font face="Arial">November 2, 2001</font></td>
        <td width="26%"><font face="Arial">November 16, 2001</font></td>
        <td width="13%"><p align="right"><font face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">January 24, 2002</font></td>
        <td width="24%"><font face="Arial">February 8, 2002</font></td>
        <td width="26%"><font face="Arial">February 22, 2002</font></td>
        <td width="13%"><p align="right"><font face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">April 19, 2002</font></td>
        <td width="24%"><font face="Arial">May 3, 2002</font></td>
        <td width="26%"><font face="Arial">May 17, 2002</font></td>
        <td width="13%"><p align="right"><font face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">July 18, 2002</font></td>
        <td width="24%"><font face="Arial">August 2, 2002</font></td>
        <td width="26%"><font face="Arial">August 16, 2002</font></td>
        <td width="13%"><p align="right"><font face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">October 18, 2002</font></td>
        <td width="24%"><font face="Arial">November 8, 2002</font></td>
        <td width="26%"><font face="Arial">November 22, 2002</font></td>
        <td width="13%"><p align="right"><font face="Arial">$0.09</font></p>
        </td>
    </tr>
    <tr>
        <td width="13%"><font face="Arial">Quarterly</font></td>
        <td width="24%"><font face="Arial">January 24, 2003</font></td>
        <td width="24%"><font face="Arial">February 14, 2003</font></td>
        <td width="26%"><font face="Arial">February 28, 2003</font></td>
        <td 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. 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 5, 2002 the Company announced that
commencing July 9, 2002 it intended to purchase up to 620,700
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 2002, through a Normal Course Issuer
Bid, which expired July 4, 2002 and through the current Normal
Course Issuer Bid, the Company purchased 151,400 Class A Shares
at an average cost of $21.72 per share, of which 86,100 Class A
non-voting shares were purchased pursuant to the Normal Course
Issuer Bid that expired on July 4, 2002 and 65,300 Class A
non-voting shares were purchased pursuant to the current Normal
Course Issuer Bid which expires July 8, 2003. Any shares
purchased by the Company pursuant to the Normal Course Issuer Bid
will be cancelled. The Company may, at its option, apply to
extend the program for an additional year.</font></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, 2002. 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 2002, the Company
purchased the business of BUYandHOLD Securities Corporation. The
2002 amounts include the assets and liabilities and operating
results of BUYandHOLD as of and subsequent to the period after
March 12, 2002. 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. 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="0" cellpadding="0" cellspacing="0" width="638"
bordercolor="#000000">
    <tr>
        <td width="32%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial"><u>2002</u></font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial"><u>2001</u></font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial"><u>2000</u></font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial"><u>1999</u></font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial"><u>1998</u></font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="6" width="98%" height="16"><p align="right"><font
        face="Arial">(In thousands of U.S. dollars except per
        share and share amounts)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Revenue</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$283,333</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$261,261</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$316,499</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$279,111</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$232,781</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Profit
        before extraordinary item</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$9,321</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$19,150</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$40,901</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$27,390</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$12,447</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Net profit</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$9,321</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$19,150</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$40,901</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$27,390</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$12,447</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Profit
        before extraordinary item per share (1)</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.75</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$1.55</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$3.38</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$2.19</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.99</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Net profit
        per share (1)</font></td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="14%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">- basic</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.75</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$1.55</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$3.38</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$2.19</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.99</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">- diluted</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.73</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$1.50</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$3.29</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$2.17</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.96</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Total
        assets</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$1,031,226</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$710,275</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$697,482</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$766,528</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$666,763</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Total
        current liabilities</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$783,590</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$468,580</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$475,682</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$579,141</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$500,410</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Subordinated
        indebtedness,</font></td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="14%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">including
        current portion</font></td>
        <td width="13%" height="16"><p align="center"><font
        face="Arial">-</font></p>
        </td>
        <td width="12%" height="16"><p align="center"><font
        face="Arial">-</font></p>
        </td>
        <td width="13%" height="16"><p align="center"><font
        face="Arial">-</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$30</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$30</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Cash
        dividends per Class A </font></td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="14%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Share and
        Class B share</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.36</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$0.36</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.31</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$0.28</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$0.28</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Shareholders'
        equity</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$247,636</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$241,695</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$221,800</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$187,388</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$166,323</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Book value
        per share (1)</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$19.82</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">$19.43</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$18.34</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">$15.30</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">$13.48</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16"><font face="Arial">Number of
        shares of capital stock outstanding</font></td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">12,496,687</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        face="Arial">12,436,765</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">12,090,649</font></p>
        </td>
        <td width="14%" height="16"><p align="right"><font
        face="Arial">12,247,249</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">12,340,949</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="14%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="14%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
    </tr>
</table>

<blockquote>
    <blockquote>
        <p><font 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>
        <p><font face="Arial"></font>&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">Critical Accounting Policies<br>
<br>
The Company&#146;s accounting policies are essential to
understanding and interpreting the financial results reported in
the consolidated financial statements. The significant accounting
policies used in the preparation of the Company&#146;s
consolidated financial statements are summarized in note 1 to
those statements. Certain of those policies are considered to be
particularly important to the presentation of the Company&#146;s
financial results because they require management to make
difficult, complex or subjective judgments, often as a result of
matters that are inherently uncertain. The following is a
discussion of these policies.</font></p>

<p><font face="Arial"><br>
Valuation of Securities and Other Assets<br>
<br>
Substantially all&nbsp;financial instruments are reflected in the
consolidated financial statements at fair&nbsp;value or amounts
that approximate fair value, these&nbsp;include cash equivalents;
deposits&nbsp;with&nbsp;clearing organizations; securities owned;
and securities sold but&nbsp;not yet purchased. &nbsp;Where
available, the Company uses prices from independent
sources&nbsp;such as listed market prices, or broker or dealer
price quotations. In addition, even where&nbsp;the&nbsp;value of
a&nbsp;security&nbsp;is&nbsp;derived from an independent market
price or broker or dealer quote, certain assumptions may be
required&nbsp;to&nbsp;determine the&nbsp;fair&nbsp;value.
For&nbsp;instance,&nbsp;the&nbsp;Company generally assumes that
the size of positions in securities that the Company
holds&nbsp;would&nbsp;not be&nbsp;large
enough&nbsp;to&nbsp;affect&nbsp;the&nbsp;quoted price of&nbsp;the
securities if the Company were to sell them, and&nbsp;that any
such sale would happen in an orderly manner. However, these
assumptions may be incorrect and the actual value realized upon
disposition could be different from the current carrying value. </font></p>

<p><font face="Arial"><br>
Intangible Assets and Goodwill<br>
<br>
Goodwill represents the excess cost of a business acquisition
over the fair value of the&nbsp;net&nbsp;assets acquired. SFAS
No.&nbsp;142, &quot;Goodwill and Other Intangible
Assets,&quot;&nbsp;provides that goodwill is no longer amortized
and the value of identifiable intangible assets must be amortized
over their useful lives, unless the asset is determined to have
an indefinite useful life. Intangible&nbsp;assets
consist&nbsp;of&nbsp;goodwill&nbsp;related&nbsp;to&nbsp;the
acquisitions of First of Michigan Corporation, Prime Charter Ltd.
and Josephthal &amp; Co. Inc. This goodwill was allocated to the
private client and capital markets reporting unit pursuant
to&nbsp;SFAS No. 142. The Company has engaged a national
accounting firm to perform an independent valuation of assets
acquired and liabilities assumed with respect to the acquisition
of the U.S. Private Client and Asset Management Divisions of CIBC
World Markets in 2003. These amounts will involve significant
estimates and will be reported in the Company&#146;s Form 10-Q
for the quarterly period ending March 31, 2003.<br>
<br>
The Company reviews its goodwill in order to determine whether
its value is impaired&nbsp;on&nbsp;at
least&nbsp;an&nbsp;annual&nbsp;basis.
Goodwill&nbsp;is&nbsp;impaired when&nbsp;the carrying amount of
the reporting unit exceeds the implied fair value of the
reporting unit. &nbsp;In estimating&nbsp;the fair value&nbsp;of
the reporting&nbsp;unit, the Company uses valuation techniques
based on multiples of revenues, earnings, book value&nbsp;and
discounted cash&nbsp;flows&nbsp;similar
to&nbsp;models&nbsp;employed&nbsp;in analyzing the purchase
price&nbsp;of an acquisition target. If the value of the goodwill
is impaired, the difference&nbsp;between the value of&nbsp;the
goodwill reflected on the financial statements and its current
fair value is recognized as an expense in the period in which the
impairment occurs. </font></p>

<p><font face="Arial"><br>
Reserves<br>
<br>
The&nbsp;Company records reserves&nbsp;related&nbsp;to
legal&nbsp;proceedings&nbsp;in &nbsp;&quot;other payables and
accrued expenses&quot;. The determination of the amounts
of&nbsp;these reserves requires significant judgment on&nbsp;the
part&nbsp;of&nbsp;management. Management&nbsp;considers many
factors including, but&nbsp;not limited to: the amount of the
claim; the amount of the loss&nbsp;in the&nbsp;client's account;
the&nbsp;basis and&nbsp;validity of the claim; the possibility of
wrong&nbsp;doing on&nbsp;the part of an employee of the Company;
previous results in similar&nbsp;cases; and legal precedents and
case law as well as the timing of the resolution of such matters.
Each legal proceeding is reviewed with counsel in each accounting
period and the reserve is adjusted as deemed appropriate by
management. Any change in the reserve amount is recorded
as&nbsp;a charge to results&nbsp;in that period. The assumptions
of management in determining the estimates of reserves may be
incorrect and the actual disposition of a legal proceeding could
be greater or less than the reserve amount.<br>
<br>
The&nbsp;Company&nbsp;also records&nbsp;reserves&nbsp;or
allowances&nbsp;for doubtful&nbsp;accounts related&nbsp;to
receivables from&nbsp;clients and financial&nbsp;consultants.
&nbsp;Client loans are&nbsp;collateralized by securities;
however,&nbsp;if there is a decline in&nbsp;the value&nbsp;of the
collateral and the Company cannot obtain additional collateral or
collect on the loan, a reserve is established. &nbsp;The Company
also makes loans&nbsp;or pays advances&nbsp;to financial
consultants. Reserves&nbsp;are established on these
receivables&nbsp;if the financial consultant is no longer
associated with the Company and the receivable has not been
promptly repaid or&nbsp;if it is determined that it is probable
the amount will not be collected.</font></p>

<p><font face="Arial">The Company also estimates taxes payable
and records income tax reserves. These reserves are based on
historic experience and may not reflect the ultimate liability.
The Company monitors and adjusts these reserves as necessary.</font></p>

<p><font face="Arial"></font>&nbsp;</p>

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

<p><font face="Arial">Fahnestock Viner Holdings Inc. is a holding
company whose principal subsidiary is Fahnestock &amp; Co. Inc.
(&quot;Fahnestock&quot;). Fahnestock provides securities
brokerage, investment banking, trust and asset management
services to its clients from 89 offices across the U.S.A. and 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, 2002
totalled approximately $17.8 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 $869 million at
December 31, 2002. Fahnestock also engages in proprietary trading
of securities. In addition, the Company operates a discount
brokerage business based in Edison, NJ, through Freedom
Investments, Inc.</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 of
which 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 faces competition
from commercial banks and other sources as these institutions
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 changes, or the 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 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
long term 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. In the near
term, the Company will not be seeking additional acquisitions,
but will focus its attention on the integration of recent
acquisitions, including the significant acquisition in 2003 of
the U.S. private client and asset management businesses of CIBC
World Markets.</font></p>

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

<p><font face="Arial">Results for the year reflect continued
difficult conditions in the investment environment. Domestic and
world events, the aftermath of terrorism, revelations of
corporate misconduct and greed, accounting problems, general
failures of our nation&#146;s corporate structures to operate in
the best interests of their many constituencies, and finally, a
deteriorating international situation with impending war on Iraq
and the potential of nuclear confrontation on the Korean
peninsula substantially impacted capital markets and the
Company&#146;s results.</font></p>

<p><font face="Arial">However, the impact of difficult business
conditions provided the opportunity for expansion of the
Company&#146;s business. As a result, the Company followed two
acquisitions in the latter part of 2001 with the acquisition of
the business of BUYandHold Securities in March 2002. </font></p>

<p><font face="Arial">On March 12, 2002, the Company acquired,
through Freedom Investments, Inc., the business of BUYandHOLD
Securities Corporation. BUYandHOLD is an online retail brokerage
firm headquartered in Edison, NJ and provides its approximately
90,000</font><font color="#FF0000" face="Arial"> </font><font
face="Arial">clients with a dollar-based investing platform. The
acquisition added important proprietary technology, as well as
revenues.</font></p>

<p><font face="Arial">On January 3, 2003 the Company acquired the
U.S. private client division and agreed at a later date to
acquire the U.S. asset management business of CIBC World Markets.
This business, currently operating as the Oppenheimer &amp; Co.
division of Fahnestock, will affect the results of future
periods, with the addition of approximately 620 financial
consultants in 18 branch offices and client assets of
approximately $30 billion. This acquisition more than doubles the
Company&#146;s retail exposure and asset base and will be
included in the Company&#146;s 2003 results.</font></p>

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

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td width="35%">&nbsp;</td>
        <td colspan="4" width="65%"><p align="center"><font
        face="Arial">Period to Period Change</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%">&nbsp;</td>
        <td colspan="4" width="65%"><p align="center"><font
        face="Arial">Increase (Decrease)</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%">&nbsp;</td>
        <td colspan="2" width="32%"><p align="center"><font
        face="Arial">2002 versus 2001</font></p>
        </td>
        <td colspan="2" width="33%"><p align="center"><font
        face="Arial">2001 versus 2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%">&nbsp;</td>
        <td width="17%"><p align="center"><font face="Arial">Amount</font></p>
        </td>
        <td width="15%"><p align="center"><font face="Arial">Percentage</font></p>
        </td>
        <td width="17%"><p align="center"><font face="Arial">Amount</font></p>
        </td>
        <td width="16%"><p align="center"><font face="Arial">Percentage</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Revenues -</font></td>
        <td width="17%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Commissions</font></td>
        <td width="17%"><p align="right"><font face="Arial">$13,475</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+11%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">$(6,643)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-5%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Principal
        transactions, net</font></td>
        <td width="17%"><p align="right"><font face="Arial">1,853</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+3%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(28,046)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-33%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Interest</font></td>
        <td width="17%"><p align="right"><font face="Arial">(6,687)</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">-19%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(29,387)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-46%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Underwriting fees</font></td>
        <td width="17%"><p align="right"><font face="Arial">11,805</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+108%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">1,641</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">+18%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Advisory fees</font></td>
        <td width="17%"><p align="right"><font face="Arial">1,861</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+8%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">2,740</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">+13%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Other</font></td>
        <td width="17%"><p align="right"><font face="Arial">(235)</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">-2%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">4,457</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">+53%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Total revenues</font></td>
        <td width="17%"><p align="right"><font face="Arial">22,072</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+8%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(55,238)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-17%</font></p>
        </td>
    </tr>
</table>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td width="35%"><font face="Arial">Expenses -</font></td>
        <td width="17%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Compensation</font></td>
        <td width="17%"><p align="right"><font face="Arial">20,972</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+14%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(6,043)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-4%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Clearing and exchanges
        fees</font></td>
        <td width="17%"><p align="right"><font face="Arial">3,595</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+60%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(1,193)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-17%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Communications</font></td>
        <td width="17%"><p align="right"><font face="Arial">8,446</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+36%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">308</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">1%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Occupancy costs</font></td>
        <td width="17%"><p align="right"><font face="Arial">7,217</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+46%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">3,226</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">26%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Interest</font></td>
        <td width="17%"><p align="right"><font face="Arial">(5,692)</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">-40%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(19,051)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-58%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Other</font></td>
        <td width="17%"><p align="right"><font face="Arial">6,229</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+29%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">7,615</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">55%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Total expenses</font></td>
        <td width="17%"><p align="right"><font face="Arial">40,767</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">+18%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(15,138)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-6%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Profit before taxes</font></td>
        <td width="17%"><p align="right"><font face="Arial">(18,695)</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">-59%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(40,100)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-56%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Income taxes</font></td>
        <td width="17%"><p align="right"><font face="Arial">(7,092)</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">-57%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">(18,349)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-60%</font></p>
        </td>
    </tr>
    <tr>
        <td width="35%"><font face="Arial">Net profit</font></td>
        <td width="17%"><p align="right"><font face="Arial">(11,603)</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">-61%</font></p>
        </td>
        <td width="17%"><p align="right"><font face="Arial">$(21,751)</font></p>
        </td>
        <td width="16%"><p align="right"><font face="Arial">-53%</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial">Fiscal 2002 compared to Fiscal 2001</font></p>

<p><font face="Arial">Results for fiscal 2002 reflected continued
difficult conditions in the investment environment. The combined
impact of rising unemployment levels, adverse import/export flows
and slowing business conditions has overcome the normal impact of
record low interest rates and the prospect of lower tax rates to
produce low market volumes and overall declining prices.</font></p>

<p><font face="Arial">Revenues in fiscal 2002 increased compared
to fiscal 2001 by 8% as a result of the acquisitions of
Josephthal and Prime Charter in the latter part of 2001 and
BUYandHOLD in March 2002. Net profit declined by 61% in fiscal
2002 compared to fiscal 2001 as a result of poor market
conditions and substantial expenses associated with these recent
acquisitions, including integration costs of combining
facilities, severance payments associated with combining
personnel and most significantly, costs of litigation for claims
which preceded the Company&#146;s acquisitions of these entities.</font></p>

<p><font face="Arial">Total revenues for 2002 were $283,333,000
an increase of 8% over $261,261,000 in 2001. Commission income
(income realized in securities transactions for which the Company
acts as agent) increased 11% to $135,747,000 in 2002 from
$122,272,000 in 2001. This increase was the result of the
additional business generated by Josephthal, Prime Charter and
BUYandHOLD, which more than offset generally lower commission
levels in the weaker markets of 2002 compared to 2001. Revenues
from 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 3% to $58,227,000 in 2002 from $56,374,000 in
2001 due to stronger activity in the trading of fixed income
securities as a result of lower interest rates and higher bond
prices in 2002 compared to 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
increased by 108% to $22,760,000 in 2002 from $10,955,000 in 2001
related to increased participation in the issuance of closed-end
funds and debt securities. Demand for these products increased in
2002 as investors sought new investment vehicles. Advisory fees
increased by 8% to $26,365,000 in 2002 from $24,504,000 in 2001
primarily as a result of the acquisition of the business of
BUYandHOLD in March 2002. BUYandHOLD provides a fee-based
investing approach to retail investors.</font></p>

<p><font face="Arial">Interest income in 2002 was $27,622,000, a
decrease of 19% from $34,309,000 in 2001. Interest expense was
$8,379,000, a decrease of 40% from $14,071,000 in 2001. This
represents a decrease of 5% in net interest revenue (interest
revenue less interest expense) in 2002 compared to 2001, which
can be attributed to a decrease in average customer margin
balances and lower interest rates in 2002 compared to 2001. </font></p>

<p><font face="Arial">Expenses in 2002 totalled $270,416,000, an
increase of 18% compared to $229,649,000 in 2001. The increase in
expenses can be attributed to the acquisitions of Josephthal and
Prime Charter in the latter part of 2001 and the business of
BUYandHOLD in March 2002. Compensation and related costs in 2002
were $169,810,000, an increase of 14% from $148,838,000 in 2001.
Compensation expense has volume-related components and increases
with increases in commission business conducted in 2002 compared
to 2001, as well as increased retention and severance costs and a
general increase in staff levels in both acquired branch offices
and in head office departments which were required to handle the
business volume of the larger entity. Clearing and exchange fees
in 2002 were $9,607,000, an increase of 60% from $6,012,000 in
2001. These expenses increased in 2002 compared with 2001 with
increased volume and with the increased size of the sales force.
In addition, until November, 2002, the business generated from
the former Prime Charter branches was being cleared by a third
party as was the business of BUYandHOLD until June, 2002. The
cost of third party clearing is higher than the cost of clearing
trades in-house. Communications expenses in 2002 were
$32,066,000, an increase of 36% over $23,620,000 in 2001
reflecting additional costs of a larger branch system, after the
acquisition of Josephthal and Prime Charter. Occupancy costs in
2002 were $22,908,000, an increase of 46% compared to $15,691,000
in 2001 as a result of increasing the size of the organization
with the acquisition of Josephthal and Prime Charter in 2001. The
increase in communications, technology and occupancy expenses
reflects the additional costs associated with connecting and
housing 51% more financial consultants in 15 more branch offices
in 2002 compared to September 16, 2001, before the acquisitions
of Josephthal and Prime Charter. Occupancy costs were also
significantly impacted by costs associated with underutilized
space that will be utilized in 2003 and future years by post
year-end acquisitions. Other expenses were $27,646,000, an
increase of 29% over $21,417,000 in 2001. The increase relates
primarily to increased depreciation and amortization expense
levels because of the larger organization, as well as to
increased bad debt expense and costs of litigation.</font></p>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&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. Revenues
from 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
large merger and acquisition deals 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% over $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
attributable to discontinuing a matched book 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 $7,205,000in 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, an increase of 55% over $13,802,000 in 2001.
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">Liquidity and Capital Resources</font></p>

<p><font face="Arial">The increase in the Company&#146;s assets
in 2002 compared to 2001 is primarily attributable to increased
receivables from brokers and clearing organizations as a result
of increased stock borrow/stock loan balances. 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, 2002, Fahnestock had bank lines
of credit and call loan arrangements with outstanding borrowings
thereunder of $16,200,000. At December 31, 2002 Fahnestock had
available collateralized and uncollateralized letters of credit
of $34,500,000.</font></p>

<p><font face="Arial">The Company paid cash dividends to its
shareholders totalling $4,509,000, during 2002, from internally
generated cash.</font></p>

<p><font face="Arial">During 2002, the Company purchased a total
of 151,400 of its Class A non-voting shares at an average cost of
$21.72 per share through the facilities of the New York Stock
Exchange by way of a Normal Course Issuer Bid, using internally
generated cash. The Company has expressed an intention to
purchase up to an additional 555,400 of its shares from time to
time until July 8, 2003 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. See factors affecting "forward-looking statements".</font></p>

<p><font face="Arial">On January 3, 2003 the Company acquired the
U.S. Private Client and Asset Management businesses of CIBC World
Markets for an aggregate purchase price of approximately $241
million, of which approximately $13 million was paid in cash at
closing from cash on hand and the balance was paid from the
proceeds of the issuance of debt instruments. A description of
these instruments has been provided in note 16 to the
consolidated financial statements. This acquisition more than
doubles the Company&#146;s business. The interest due on the
debentures, the principal of which amounts to approximately $161
million in aggregate, is payable semi-annually and will be
financed from internally-generated funds. The principle payments
on the zero coupon promissory notes will also be financed from
internally-generated funds. The Company believes that the
necessary internally-generated funds will be available to service
this debt from normal operations which now include the acquired
businesses.</font></p>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial">In connection with the above-noted
acquisition of the Private Client business from CIBC World
Markets, the Company has arranged a credit facility in the amount
of $50 million with CIBC. In January 2003 the Company borrowed
$25 million under this facility and expects to borrow the balance
in July 2003. The borrowings are being used to finance broker
notes and are repayable, together with interest at the CIBC U.S.
base rate plus 2%, over five years or earlier if any broker notes
become due earlier. </font></p>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial">Contractual and Contingent Obligations</font></p>

<p><font face="Arial">The Company has contractual obligations to
make future payments in connection with non-cancelable lease
obligations, certain retirement plans and debt assumed upon the
acquisition of Josephthal. Additional disclosure relating the
Company&#146;s commitments appears in note 11 to the consolidated
financial statements.</font></p>

<p><font face="Arial">The following table sets forth these
contractual and contingent commitments as at December 31, 2002.
Commitments entered into in connection with the acquisition from
CIBC World Markets in 2003 have not been included in this table.</font></p>

<p><font face="Arial">Contractual Obligations</font></p>

<p><font face="Arial">(In millions of dollars)</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="613">
    <tr>
        <td width="31%">&nbsp;</td>
        <td width="9%"><p align="right"><font face="Arial">2003</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">2004</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">2005</font></p>
        </td>
        <td width="11%"><p align="right"><font face="Arial">2006</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">Thereafter</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">Total</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font face="Arial">Minimum rentals</font></td>
        <td width="9%"><p align="right"><font face="Arial">$15</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">$12</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">$10</font></p>
        </td>
        <td width="11%"><p align="right"><font face="Arial">$9</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">$38</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">$84</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font face="Arial">Supplemental Executive
        Retirement Plan</font></td>
        <td width="9%"><p align="right"><font face="Arial">1</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">-</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">-</font></p>
        </td>
        <td width="11%"><p align="right"><font face="Arial">-</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">-</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">1</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font face="Arial">Assumed Josephthal
        notes</font></td>
        <td width="9%"><p align="right"><font face="Arial">4</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">4</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">-</font></p>
        </td>
        <td width="11%"><p align="right"><font face="Arial">-</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">1</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">9</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="10%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="13%">&nbsp;</td>
    </tr>
    <tr>
        <td width="31%"><font face="Arial">Total</font></td>
        <td width="9%"><p align="right"><font face="Arial">$20</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">$16</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">$10</font></p>
        </td>
        <td width="11%"><p align="right"><font face="Arial">$9</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">$39</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">$94</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial">Subsequent Event</font></p>

<p><font face="Arial">In January 2003 the Company received
monetary damages plus interest in the amount of approximately $22
million pursuant to an award by a National Association of
Securities Dealers Dispute Resolution Panel against another
broker-dealer along with ten individual branch managers, in a
raiding case involving the sales force of First of Michigan
Corporation, a company acquired by Fahnestock in July 1997. These
proceeds, which have been received, will be included in the
Company&#146;s results for the first quarter of 2003.</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><font face="Arial">Newly Issued Accounting Standards</font></p>

<p><font face="Arial">The Financial Accounting Standards Board
issued SFAS No. 146, &quot;Accounting for Costs Associated with
Exit or Disposal Activities&quot;, FIN No. 45,
&quot;Guarantor&#146;s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others&quot;, and FIN No. 46, &quot;Consolidation of Variable
Interest Entities&quot;. The Company is reviewing this statement
and these interpretations and does not expect their adoption to
have a material impact on its financial results. The Company is
reviewing SFAS No. 148, &quot;Accounting for Stock-Based
Compensation &#150; Transition and Disclosure&quot; and has
adopted the disclosure provisions, but does not intend to adopt
other provisions of this standard in 2003.</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, (x) changes in
federal and state tax laws which could affect the popularity of
products sold by the Company, and (xi) domestic and world events.
The Company does not undertake any obligation to publicly update
or revise any forward-looking statements.</font></p>

<p><font face="Arial"></font>&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">Operational Risk</font></p>

<p><font face="Arial">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. 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"></font>&nbsp;</p>

<p><font face="Arial">Legal and Regulatory Risk</font></p>

<p><font face="Arial">Legal and regulatory risk includes the risk
of non-compliance with applicable legal and regulatory
requirements. The Company is subject to extensive regulation in
the different jurisdictions in which it conducts its activities.
The Company has comprehensive procedures for addressing issues
such as regulatory capital requirements, sales and trading
practices, use of and safekeeping of customer funds and
securities, granting of credit, collection activities, money
laundering, and record keeping.</font></p>

<p><font face="Arial"></font>&nbsp;</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><font face="Arial"><i>At December 31, 2002 and 2001, 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="0" cellpadding="0" cellspacing="0" width="595">
    <tr>
        <td width="29%">&nbsp;</td>
        <td colspan="3" width="43%"><p align="center"><font
        face="Arial">Fiscal 2002</font></p>
        </td>
        <td colspan="2" width="27%"><p align="center"><font
        face="Arial">As at December 31, </font></p>
        </td>
    </tr>
    <tr>
        <td width="29%">&nbsp;</td>
        <td width="15%"><p align="right"><font face="Arial"><u>High</u></font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial"><u>Low</u></font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial"><u>Average</u></font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial"><u>2002</u></font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial"><u>2001</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="29%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="13%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="29%"><font face="Arial">Interest rate risk</font></td>
        <td width="15%"><p align="right"><font face="Arial">$150</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">$175</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">$152</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">$150</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">$203</font></p>
        </td>
    </tr>
    <tr>
        <td width="29%"><font face="Arial">Equity price risk</font></td>
        <td width="15%"><p align="right"><font face="Arial">$336</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">165</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">248</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">336</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">523</font></p>
        </td>
    </tr>
    <tr>
        <td width="29%"><font face="Arial">Diversification
        benefit</font></td>
        <td width="15%"><p align="right"><font face="Arial">(18)</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">(93)</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">(56)</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">(18)</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">(385)</font></p>
        </td>
    </tr>
    <tr>
        <td width="29%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="13%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="29%"><font face="Arial">Total</font></td>
        <td width="15%"><p align="right"><font face="Arial">$468</font></p>
        </td>
        <td width="13%"><p align="right"><font face="Arial">$247</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">$344</font></p>
        </td>
        <td width="15%"><p align="right"><font face="Arial">$468</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">$341</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 2002 from those reported in
2001 reflect changes in the size and composition of the
Company&#146;s trading portfolio at December 31, 2002 compared to
December 31, 2001. At December 31, 2002 the Company was not
holding any hedging positions, thus reducing the diversification
benefit compared to 2001 when it did hold such positions. 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><font face="Arial"></font>&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><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&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, 2002 is set forth below.</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td width="33%"><font face="Arial"><u>Name</u></font></td>
        <td width="9%"><font face="Arial"><u>Age</u></font></td>
        <td width="58%"><p align="center"><font face="Arial"><u>Positions
        held</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">John L. Bitove</font></td>
        <td width="9%"><font face="Arial">75</font></td>
        <td 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 width="33%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">Richard Crystal</font></td>
        <td width="9%"><font face="Arial">62</font></td>
        <td 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, U.S.
        counsel to the Company; Partner, Winston &amp; Strawn
        (law firm) and predecessor firms from 1985 to July 2002.</font></td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">Albert G. Lowenthal</font></td>
        <td width="9%"><font face="Arial">57</font></td>
        <td 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 stock brokerage firm.</font></td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">Kenneth W. McArthur</font></td>
        <td width="9%"><font face="Arial">67</font></td>
        <td 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 of Bank of Montreal
        Investment Counsel between January 1992 and July 1993;
        Senior Vice-President of 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 width="33%"><font face="Arial">A. Winn Oughtred</font></td>
        <td width="9%"><font face="Arial">60</font></td>
        <td 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>

<p><font face="Arial"></font>&nbsp;</p>

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td width="33%"><font face="Arial"><u>Name</u></font></td>
        <td width="9%"><font face="Arial"><u>Age</u></font></td>
        <td width="58%"><p align="center"><font face="Arial"><u>Positions
        held</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">Elaine K. Roberts</font></td>
        <td width="9%"><font face="Arial">51</font></td>
        <td 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 width="33%">&nbsp;</td>
        <td width="9%">&nbsp;</td>
        <td width="58%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">Burton Winberg</font></td>
        <td width="9%"><font face="Arial">78</font></td>
        <td 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, 2002 and representations
made to the Company by such persons, 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, 2002, the
Company paid each of 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. On November 30, 2002, the Company
renewed its directors and officers liability insurance for one
year ending November 30, 2003 at an annual premium rate of
$202,000. 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 in 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><font face="Arial"><b>Item 11. EXECUTIVE COMPENSATION</b></font></p>

<p><font face="Arial">With respect to the year ended December 31,
2002, 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, 2002 exceeded
$100,000 (the &quot;Named Executives&quot;). </i></font></p>

<table border="0" cellpadding="0" cellspacing="0" width="606"
bordercolor="#000000">
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="6%" height="16">&nbsp;</td>
        <td colspan="4" width="39%" height="16"><p align="center"><font
        size="2" face="Arial">Annual Compensation</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">Long-term</font></p>
        <p align="right"><font size="2" face="Arial">Compensation</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Name
        and</font><p><font size="2" face="Arial">Principal</font></p>
        </td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="center"><font
        size="2" face="Arial">Other</font></p>
        <p align="center"><font size="2" face="Arial">Annual</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">Class A Shares</font></p>
        <p align="right"><font size="2" face="Arial">Underlying</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">All Other</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Occupation</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">Year</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">Salary</font></p>
        </td>
        <td width="12%" height="16"><p align="center"><font
        size="2" face="Arial">Bonus</font></p>
        </td>
        <td width="16%" height="16"><p align="center"><font
        size="2" face="Arial">Compensation</font></p>
        <p align="center"><font size="2" face="Arial">(1)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">Options</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">Compensation</font></p>
        <p align="center"><font size="2" face="Arial">(2)</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">A.G.
        Lowenthal,</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2002</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$480,340</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">$22,500</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$2,475</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Chairman,
        CEO,</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2001</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$480,350</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$497,500</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">$18,000</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$5,725</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">and
        Director of</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2000</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$480,350</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$3,960,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">$17,330</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$7,693</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">the
        Company;</font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Chairman
        and CEO,</font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">and
        a director</font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">of
        Fahnestock</font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Robert
        Neuhoff,</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2002</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$260,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$75,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$2,475</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Executive
        Vice</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2001</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$260,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$175,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$5,725</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">President
        and a </font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2000</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$260,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$225,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$7,693</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Director
        of </font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Fahnestock</font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Eric
        J. Shames,</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2002</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$290,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$75,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$2,475</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Secretary
        and </font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2001</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$290,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$100,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$5,725</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">General
        Counsel of</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2000</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$250,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$200,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$7,693</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Fahnestock</font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
</table>

<p><font face="Courier"></font>&nbsp;</p>

<table border="0" cellpadding="0" cellspacing="0" width="606"
bordercolor="#000000">
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="6%" height="16">&nbsp;</td>
        <td colspan="4" width="39%" height="16"><p align="center"><font
        size="2" face="Arial">Annual Compensation</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">Long-term</font></p>
        <p align="right"><font size="2" face="Arial">Compensation</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Name
        and</font><p><font size="2" face="Arial">Principal</font></p>
        </td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="center"><font
        size="2" face="Arial">Other</font></p>
        <p align="center"><font size="2" face="Arial">Annual</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">Class A Shares</font></p>
        <p align="right"><font size="2" face="Arial">Underlying</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">All Other</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Occupation</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">Year</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">Salary</font></p>
        </td>
        <td width="12%" height="16"><p align="center"><font
        size="2" face="Arial">Bonus</font></p>
        </td>
        <td width="16%" height="16"><p align="center"><font
        size="2" face="Arial">Compensation</font></p>
        <p align="center"><font size="2" face="Arial">(1)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">Options</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">Compensation</font></p>
        <p align="center"><font size="2" face="Arial">(2)</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">E.K.
        Roberts,</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2002</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$183,300</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$60,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">22,500</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td colspan="2" width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">President,
        Treasurer</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2001</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$158,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$85,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">18,000</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td colspan="2" width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">And
        Director of the</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2000</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$135,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$125,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">17,330</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td colspan="2" width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Company,
        </font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td colspan="2" width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Treasurer
        and a </font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td colspan="2" width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">director
        of Fahnestock</font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td colspan="2" width="5%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Robert
        Maimone,</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2002</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$170,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$80,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$2,475</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Sr.
        Vice President, </font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2001</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$170,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$80,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$5,725</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Operations
        of</font></td>
        <td width="6%" height="16"><font size="2" face="Arial">2000</font></td>
        <td width="10%" height="16"><p align="right"><font
        size="2" face="Arial">$170,000</font></p>
        </td>
        <td width="12%" height="16"><p align="right"><font
        size="2" face="Arial">$100,000</font></p>
        </td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16"><p align="right"><font
        size="2" face="Arial">0</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16"><p align="right"><font
        size="2" face="Arial">$7,693</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font size="2" face="Arial">Fahnestock</font></td>
        <td width="6%" height="16">&nbsp;</td>
        <td width="10%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="16%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td colspan="2" width="15%" height="16">&nbsp;</td>
    </tr>
</table>

<p><font face="Arial"></font>&nbsp;</p>

<blockquote>
    <blockquote>
        <p><font face="Arial">Includes Directors Fees of $10,000
        per year plus $1000 per meeting attended in person and
        $500 per meeting attended by telephone.</font></p>
        <p><font face="Arial">This amount represents Company
        contributions to the Fahnestock 401(k) Plan.</font></p>
        <p><font face="Arial"></font>&nbsp;</p>
        <p><font face="Arial"></font>&nbsp;</p>
    </blockquote>
</blockquote>

<p><font face="Arial">OPTION GRANTS FOR THE YEAR ENDED DECEMBER
31, 2002</font></p>

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

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</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, 2002 by the Named Executives and as to
unexercised options held by them at December 31, 2002:</i></font></p>

<table border="0" cellpadding="0" cellspacing="0" width="620"
bordercolor="#000000">
    <tr>
        <td colspan="5" width="52%" height="16">&nbsp;</td>
        <td width="20%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">Year-end</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">Number of shares</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">value of</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">Underlying</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">unexercised</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">unexercised</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">in-the-money</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        face="Arial">Shares</font></p>
        </td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">options/SARs</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">options</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        face="Arial">Acquired </font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">Value</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">exercisable/</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">exercisable/</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font face="Arial">Name</font></td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        face="Arial">on exercise</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">Realized</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">unexercisable</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">unexercisable</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="19%" height="16"><font face="Arial">A.G.
        Lowenthal</font></td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">225,000/75,000</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">$1,959,000/$853,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font face="Arial">R. Neuhoff</font></td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">25,000/50,000</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">$284,000/$324,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font face="Arial">E. J.
        Shames</font></td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">22,500/7,500</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">$196,000/$85,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font face="Arial">E.K.
        Roberts</font></td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">37,500/37,500</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">$427,000/$427,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="19%" height="16"><font face="Arial">R. Maimone</font></td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="15%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="13%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="20%" height="16"><p align="right"><font
        face="Arial">0/12,500</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="26%" height="16"><p align="right"><font
        face="Arial">0</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</p>

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

<p><font face="Arial"></font>&nbsp;</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 2002. In addition, the report specifically
discusses the Committee's bases for compensation in 2002 of the
Corporation's Chief Executive Officer, as well as the other
senior executive officers of the Corporation 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 Corporation's success in the
short-term, long-term or both.</font></p>

<p><font face="Arial">The Corporation'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 Agreement referred to below.</font></p>

<p><font face="Arial">In arriving at its recommendations
concerning the specific components of the Corporation'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 Corporation 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
Corporation to structure compensation in a way that meets the
requirements of the highly competitive environment in which the
Corporation 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 Corporation's senior
executive officers involves a significant component of
remuneration which is contingent on the performance of both the
Corporation 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
Corporation'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 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 Corporation's industry. The Committee then makes
recommendations to the Board with respect to base salaries.</font></p>

<p><font face="Arial"><i>Annual Bonus. </i>Bonuses paid to senior
executive officers (other than the Chief Executive Officer) are
reviewed 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 Corporation 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. The
Committee then makes recommendations to the Board with respect to
bonuses.</font></p>

<p><font face="Arial"><i>Stock Option Grants. </i>Under the Plan,
as amended, senior executive officers and employees of the
Corporation 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 Corporation and
Fahnestock, is paid a base salary set by the Committee, plus
performance-based compensation under the Performance-Based
Compensation Agreement 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 January 1, 2001, the Corporation entered
into a Performance-Based Compensation Agreement (the &quot;2001
Comp Agreement&quot;) with Albert G. Lowenthal, which expires on
December 31, 2005. The 2001 Comp Agreement was approved by the
Class B Shareholders in 2001. The purpose of the 2001 Comp
Agreement is to set the terms under which Mr. Lowenthal's
performance-based compensation is to be calculated during the
term thereof.</font></p>

<p><font face="Arial">In March of 2002, the Committee established
performance goals under the 2001 Comp Agreement entitling Mr.
Lowenthal to a Performance Award under the 2001 Comp Agreement
for the year 2002 of an aggregate of the 2002 amounts determined
by the application of the following formulae,</font></p>

<table border="0" cellpadding="7" cellspacing="0" width="600">
    <tr>
        <td width="88%"><blockquote>
            <blockquote>
                <p><font size="2" face="Arial">an amount equal to
                the amount by which the closing price of one
                Class A Share at December 31, 2002, exceeded the
                closing price of one Class A Share as at January
                1, 2002 multiplied by 200,000 shares; plus</font></p>
            </blockquote>
        </blockquote>
        </td>
        <td width="12%"><font size="2" face="Arial">nil</font></td>
    </tr>
    <tr>
        <td width="88%"><blockquote>
            <blockquote>
                <p><font size="2" face="Arial">an amount equal
                to:</font></p>
            </blockquote>
        </blockquote>
        </td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="88%"><blockquote>
            <blockquote>
                <blockquote>
                    <blockquote>
                        <p><font size="2" face="Arial">3% of the
                        amount by which the Corporation's
                        consolidated profit before income taxes
                        for the year ended December 31, 2002
                        exceeds 15% of and is less than 25% of
                        the Corporation's consolidated
                        shareholders' equity as at December 31,
                        2001; plus</font></p>
                    </blockquote>
                </blockquote>
            </blockquote>
        </blockquote>
        </td>
        <td width="12%"><font size="2" face="Arial">nil</font></td>
    </tr>
    <tr>
        <td width="88%"><blockquote>
            <blockquote>
                <blockquote>
                    <blockquote>
                        <p><font size="2" face="Arial">4% of the
                        amount by which the Corporation's
                        consolidated profit before income taxes
                        for the year ended December 31, 2002
                        exceeds 25% of the Corporation's
                        consolidated shareholders' equity as at
                        December 31, 2001; plus</font></p>
                    </blockquote>
                </blockquote>
            </blockquote>
        </blockquote>
        </td>
        <td width="12%"><font size="2" face="Arial">nil</font></td>
    </tr>
    <tr>
        <td width="88%"><blockquote>
            <blockquote>
                <p><font size="2" face="Arial">an amount equal
                to:</font></p>
                <blockquote>
                    <blockquote>
                        <p><font size="2" face="Arial">3.0%
                        percent of the amount by which the
                        Corporation&#146;s consolidated net
                        profit for the year ended December 31,
                        2002 is greater than U.S.$0 and less than
                        U.S.$11,500,000; plus</font></p>
                    </blockquote>
                </blockquote>
            </blockquote>
        </blockquote>
        </td>
        <td width="12%"><font size="2" face="Arial">$226,410</font></td>
    </tr>
    <tr>
        <td width="88%"><blockquote>
            <blockquote>
                <p><font size="2" face="Arial">4.0% of the amount
                by which the Corporation&#146;s consolidated net
                profit for the year ended December 31, 2002 is
                greater than U.S.$11,500,000 and less than
                U.S.$23,000,000; plus</font></p>
            </blockquote>
        </blockquote>
        </td>
        <td width="12%"><font size="2" face="Arial">nil</font></td>
    </tr>
    <tr>
        <td width="88%"><blockquote>
            <blockquote>
                <blockquote>
                    <blockquote>
                        <p><font size="2" face="Arial">4.5% of
                        the amount by which the
                        Corporation&#146;s consolidated net
                        profit for the year ended December 31,
                        2002 is greater than U.S.$23,000,000.</font></p>
                    </blockquote>
                </blockquote>
            </blockquote>
        </blockquote>
        </td>
        <td width="12%"><font size="2" face="Arial"><u>nil </u></font></td>
    </tr>
    <tr>
        <td width="88%"><font size="2" face="Arial">Total</font></td>
        <td width="12%"><font size="2" face="Arial"><u>$226,410</u></font></td>
    </tr>
</table>

<p><font face="Arial">Because of the Corporation's performance in
2002, Mr. Lowenthal requested and the Committee agreed that Mr.
Lowenthal not receive a Performance Award under the 2001 Comp
Agreement or any discretionary bonus for 2002.</font></p>

<p><font face="Arial">In March of 2002, the Committee set Mr.
Lowenthal&#146;s base salary for 2002 at $480,340, the same base
salary as 2001.</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 Corporation 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 &quot;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 such compensation 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) in 2001 the 2001 Comp Agreement was adopted and
approved by the Class B Shareholders.</font></p>

<p><font face="Arial">To the extent consistent with the
Corporation's general compensation objectives, the Committee
considers the potential effect of Section 162(m) on compensation
paid to the executive officers of the Corporation 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
Corporation's efforts to qualify, that the compensation paid by
the Corporation 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><font color="#FF0000" face="Arial"></font>&nbsp;</p>

<p><font color="#FF0000" face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</p>

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

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"><b></b></font>&nbsp;</p>

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

<blockquote>
    <p><font face="Arial"><i>The following table sets forth
    information as of February 28, 2003 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 width="16%"><font face="Arial"><u>Title of Class</u></font></td>
        <td width="22%"><font face="Arial"><u>Identity of Person
        or Group</u></font></td>
        <td width="34%"><font face="Arial"><u>Mailing Address</u></font></td>
        <td width="11%"><font face="Arial"><u>Amount Owned</u></font></td>
        <td width="6%">&nbsp;</td>
        <td width="12%"><font face="Arial"><u>Percent of Class</u></font></td>
    </tr>
    <tr>
        <td width="16%"><font face="Arial">Class B</font></td>
        <td width="22%"><font face="Arial">A.G. Lowenthal</font></td>
        <td width="34%"><font face="Arial">c/o Fahnestock &amp;
        Co. Inc.</font><p><font face="Arial">125 Broad St</font></p>
        <p><font face="Arial">New York, NY 10004</font></p>
        </td>
        <td width="11%"><p align="right"><font face="Arial">50,490</font></p>
        </td>
        <td width="6%"><p align="right"><font face="Arial">(1)</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">50.6%</font></p>
        </td>
    </tr>
    <tr>
        <td width="16%">&nbsp;</td>
        <td width="22%">&nbsp;</td>
        <td width="34%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="6%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="16%">&nbsp;</td>
        <td width="22%"><font face="Arial">O. Roberts</font></td>
        <td width="34%"><font face="Arial">c/o Suite 1110, Box
        2015</font><p><font face="Arial">20 Eglinton Ave. W.</font></p>
        <p><font face="Arial">Toronto, Canada M4R 1K8</font></p>
        </td>
        <td width="11%"><p align="right"><font face="Arial">44,309</font></p>
        </td>
        <td width="6%"><p align="right"><font face="Arial">(2)</font></p>
        </td>
        <td width="12%"><p align="right"><font face="Arial">44.4%</font></p>
        </td>
    </tr>
</table>

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

<p><font 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 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 face="Arial"><i>The following table sets forth
    information as of February 28, 2003 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 width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial"><u>Identity of Person
        or Group</u></font></td>
        <td width="20%"><font face="Arial"><u>Amount Owned</u></font></td>
        <td width="10%">&nbsp;</td>
        <td width="18%"><font face="Arial"><u>Percent of Class</u></font></td>
    </tr>
    <tr>
        <td width="22%"><font face="Arial">Class A Shares</font></td>
        <td width="30%"><font face="Arial">A.G. Lowenthal</font></td>
        <td width="20%"><p align="right"><font face="Arial">2,687,713</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">(1)</font></p>
        </td>
        <td width="18%"><p align="right"><font face="Arial">21%</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">J.L. Bitove</font></td>
        <td width="20%"><p align="right"><font face="Arial">50,580</font></p>
        </td>
        <td width="10%">&nbsp;</td>
        <td width="18%"><p align="right"><font face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">R. Crystal</font></td>
        <td width="20%"><p align="right"><font face="Arial">1,500</font></p>
        </td>
        <td width="10%">&nbsp;</td>
        <td width="18%"><p align="right"><font face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">R. Maimone</font></td>
        <td width="20%"><p align="right"><font face="Arial">46,367</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">(7)</font></p>
        </td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">K.W. McArthur</font></td>
        <td width="20%"><p align="right"><font face="Arial">46,250</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">(4)</font></p>
        </td>
        <td width="18%"><p align="right"><font face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">R. Neuhoff</font></td>
        <td width="20%"><p align="right"><font face="Arial">49,890</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">(5)</font></p>
        </td>
        <td width="18%"><p align="right"><font face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">A.W. Oughtred</font></td>
        <td width="20%"><p align="right"><font face="Arial">3,500</font></p>
        </td>
        <td width="10%">&nbsp;</td>
        <td width="18%"><p align="right"><font face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">E.K. Roberts</font></td>
        <td width="20%"><p align="right"><font face="Arial">154,494</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">(3)</font></p>
        </td>
        <td width="18%"><p align="right"><font face="Arial">1%</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">E. Shames</font></td>
        <td width="20%"><p align="right"><font face="Arial">32,000</font></p>
        </td>
        <td width="10%"><p align="right"><font face="Arial">(8)</font></p>
        </td>
        <td width="18%"><p align="right"><font face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">B. Winberg</font></td>
        <td width="20%"><p align="right"><font face="Arial">4,400</font></p>
        </td>
        <td width="10%">&nbsp;</td>
        <td width="18%"><p align="right"><font face="Arial">*</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="30%"><font face="Arial">Executive Officers and
        Directors as a group (10 members)</font></td>
        <td width="20%"><p align="right"><font face="Arial">3,076,694</font></p>
        </td>
        <td width="10%">&nbsp;</td>
        <td width="18%"><p align="right"><font face="Arial">24%</font></p>
        </td>
    </tr>
</table>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</p>

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

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

<p><font 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 11,347
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. 225,000 Class A Shares are beneficially owned in
respect of Class A Shares currently issuable upon exercise of
options issued under the Plan.</font></p>

<blockquote>
    <p><font 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 face="Arial">116,994 Class A Shares are held
    directly and 37,500 Class A Shares are beneficially owned in
    respect of Class A Shares currently issuable upon exercise of
    options issued under the Plan. </font></p>
    <p><font face="Arial">35,000 Class A Shares are held directly
    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.</font></p>
    <p><font face="Arial">20,000 Class A Shares are held
    directly, 4,890 Class A Shares are held through the
    Company&#146;s 401(k) plan and 25,000 Class A Shares are
    beneficially owned in respect of Class A Shares currently
    issuable upon exercise of options issued under the Plan. </font></p>
    <p><font face="Arial">4,166 Class A Shares are held through
    the Company&#146;s 401(k) plan and 5,000 Class A Shares are
    beneficially owned in respect of Class A Shares currently
    issuable upon exercise of options issued under the Plan. </font></p>
    <p><font face="Arial">38,125 Class A Shares are held
    directly, and 8,242 Class A Shares are held through the
    Company&#146;s 401(k) plan </font></p>
    <p><font face="Arial">30,000 Class A Shares are held
    directly, 2,000 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.</font></p>
    <p><font face="Arial"></font>&nbsp;</p>
</blockquote>

<p><font 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></b></font>&nbsp;</p>

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

<p><font face="Arial">During the year 2002 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 width="33%"><font face="Arial">Name and Principal
        Position</font></td>
        <td width="22%"><p align="center"><font face="Arial">Largest
        Amount Outstanding During 2002</font></p>
        </td>
        <td width="23%"><p align="center"><font face="Arial">Amount
        Outstanding as at December 31, 2002</font></p>
        </td>
        <td width="22%"><font face="Arial">Security for
        Indebtedness</font></td>
    </tr>
    <tr>
        <td 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 width="22%"><p align="center"><font face="Arial">$27,800</font></p>
        </td>
        <td width="23%"><p align="center"><font face="Arial">nil</font></p>
        </td>
        <td width="22%"><font face="Arial">Margined securities</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">R. Maimone, Senior
        V.P., Operations of Fahnestock</font></td>
        <td width="22%"><p align="center"><font face="Arial">$602,700</font></p>
        </td>
        <td width="23%"><p align="center"><font face="Arial">$602,700</font></p>
        </td>
        <td width="22%"><font face="Arial">Margined securities</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">Eric Shames,</font><p><font
        face="Arial">Secretary and Chief Legal Officer of
        Fahnestock</font></p>
        </td>
        <td width="22%"><p align="center"><font face="Arial">$122,300</font></p>
        </td>
        <td width="23%"><p align="center"><font face="Arial">$122,300</font></p>
        </td>
        <td width="22%"><font face="Arial">Margined securities</font></td>
    </tr>
</table>

<p><font face="Arial">Item 14. CONTROLS AND PROCEDURES</font></p>

<p><font face="Arial">&nbsp;&nbsp;&nbsp;&nbsp; Within 90 days
prior to the filing of this report, an evaluation was carried out
under the supervision and with the participation of the
Company&#146;s management, including its Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design
and operation of the Company&#146;s disclosure controls and
procedures (as defined in Rule&nbsp;13a-14(c) under the Exchange
Act). Based upon that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the design and operation
of the Company&#146;s disclosure controls and procedures were
effective. No significant changes were made in the Company&#146;s
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.
</font></p>

<p><font face="Arial"></font>&nbsp;</p>

<p><font face="Arial"></font>&nbsp;</p>

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

<p><font face="Arial"><b>Item 15. 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="619">
    <tr>
        <td width="7%"><font face="Arial">(a)</font></td>
        <td width="7%"><font face="Arial">(i)</font></td>
        <td width="86%"><font face="Arial">Financial Statements</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%"><font face="Arial">The response to this
        portion of Item 15 is submitted as a separate section of
        this report. See pages F-1 to F-20</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%">&nbsp;</td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%"><font face="Arial">(ii)</font></td>
        <td width="86%"><font face="Arial">Financial Statement
        Schedules</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%"><font face="Arial">Not Applicable.</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%">&nbsp;</td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%"><font face="Arial">(iii)</font></td>
        <td width="86%"><font face="Arial">Listing of Exhibits</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%"><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 width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%">&nbsp;</td>
    </tr>
    <tr>
        <td width="7%"><font face="Arial">(b)</font></td>
        <td width="7%">&nbsp;</td>
        <td width="86%"><font face="Arial">Reports on Form 8-K</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%"><font face="Arial">The Company filed a
        report on Form 8-K on January 17, 2003 under Item 2 with
        respect to the acquisition on January 3, 2003 of the U.S.
        Private Client and Asset Management Divisions of CIBC
        World Markets.</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%">&nbsp;</td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%"><font face="Arial">The Company filed a
        report on Form 8-K on January 22, 2003 under Item 5 with
        respect to the receipt of an award by a National
        Securities Association of Securities Dealers Dispute
        Resolution Panel.</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%">&nbsp;</td>
    </tr>
    <tr>
        <td width="7%"><font face="Arial">(c)</font></td>
        <td width="7%">&nbsp;</td>
        <td width="86%"><font face="Arial">Exhibits</font></td>
    </tr>
    <tr>
        <td width="7%">&nbsp;</td>
        <td width="7%">&nbsp;</td>
        <td width="86%"><font face="Arial">See the Exhibit Index
        included hereinafter.</font></td>
    </tr>
</table>

<p><font face="Arial"></font>&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 17 day of March, 2003.</font></p>

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

<p><font face="Arial">BY: </font></p>

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

<p><font face="Arial"></font>&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 width="33%"><font face="Arial"><u>Signature</u></font></td>
        <td width="33%"><font face="Arial"><u>Title</u></font></td>
        <td width="33%"><font face="Arial"><u>Date</u></font></td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%"><font face="Arial">Director</font></td>
        <td width="33%"><font face="Arial">March 17, 2003</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">J.L. Bitove</font></td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%"><font face="Arial">Director</font></td>
        <td width="33%"><font face="Arial">March 17, 2003</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">R. Crystal</font></td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%"><font face="Arial">Chairman, Chief
        Executive </font></td>
        <td width="33%"><font face="Arial">March 17, 2003</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">A.G. Lowenthal</font></td>
        <td width="33%"><font face="Arial">Officer, Director</font></td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%"><font face="Arial">Director</font></td>
        <td width="33%"><font face="Arial">March 17, 2003</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">K.W. McArthur</font></td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%"><font face="Arial">Secretary, Director</font></td>
        <td width="33%"><font face="Arial">March 17, 2003</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">A.W. Oughtred</font></td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%"><font face="Arial">President &amp;
        Treasurer, </font></td>
        <td width="33%"><font face="Arial">March 17, 2003</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">E.K. Roberts</font></td>
        <td width="33%"><font face="Arial">(Principal Financial
        and Accounting Officer), Director</font></td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
    <tr>
        <td width="33%">&nbsp;</td>
        <td width="33%"><font face="Arial">Director</font></td>
        <td width="33%"><font face="Arial">March 17, 2003</font></td>
    </tr>
    <tr>
        <td width="33%"><font face="Arial">B. Winberg</font></td>
        <td width="33%">&nbsp;</td>
        <td width="33%">&nbsp;</td>
    </tr>
</table>

<p><font face="Arial"></font>&nbsp;</p>

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

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

<p><font face="Arial">I, Albert G. Lowenthal, certify that: </font></p>

<blockquote>
    <blockquote>
        <p><font face="Arial">I have reviewed this annual report
        on Form&nbsp;10-K of Fahnestock Viner Holdings Inc.; </font></p>
        <p><font face="Arial">Based on my knowledge, this annual
        report does not contain any untrue statement of a
        material fact or omit to state a material fact necessary
        to make the statements made, in light of the
        circumstances under which such statements were made, not
        misleading with respect to the period covered by this
        annual report; </font></p>
        <p><font face="Arial">Based on my knowledge, the
        financial statements, and other financial information
        included in this annual report, fairly present in all
        material respects the financial condition, results of
        operations and cash flows of the registrant as of, and
        for, the periods presented in this annual report; </font></p>
        <p><font face="Arial">The registrant&#146;s other
        certifying officers and I are responsible for
        establishing and maintaining disclosure controls and
        procedures (as defined in Exchange Act Rules&nbsp;13a-14
        and 15d-14) for the registrant and we have: </font></p>
    </blockquote>
</blockquote>

<table border="0" cellspacing="0" width="613">
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">a)&nbsp;designed such
        disclosure controls and procedures to ensure that
        material information relating to the registrant,
        including its consolidated subsidiaries, is made known to
        us by others within those entities, particularly during
        the period in which this annual report is being prepared;
        </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">b)&nbsp;evaluated the
        effectiveness of the registrant&#146;s disclosure
        controls and procedures as of a date within 90&nbsp;days
        prior to the filing date of this annual report (the
        &quot;Evaluation Date&quot;); and </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">c)&nbsp;presented in
        this annual report our conclusions about the
        effectiveness of the disclosure controls and procedures
        based on our evaluation as of the Evaluation Date; </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
</table>

<blockquote>
    <blockquote>
        <p><font face="Arial">5. The registrant&#146;s other
        certifying officers and I have disclosed, based on our
        most recent evaluation, to the registrant&#146;s auditors
        and the audit committee of registrant&#146;s board of
        directors (or persons performing the equivalent
        function): </font></p>
    </blockquote>
</blockquote>

<table border="0" cellspacing="0" width="613">
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">a)&nbsp;all
        significant deficiencies in the design or operation of
        internal controls which could adversely affect the
        registrant&#146;s ability to record, process, summarize
        and report financial data and have identified for the
        registrant&#146;s auditors any material weaknesses in
        internal controls; and </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">b)&nbsp;any fraud,
        whether or not material, that involves management or
        other employees who have a significant role in the
        registrant&#146;s internal controls; and </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
</table>

<blockquote>
    <blockquote>
        <p><font face="Arial">6. The registrant&#146;s other
        certifying officers and I have indicated in this annual
        report whether or not there were significant changes in
        internal controls or in other factors that could
        significantly affect internal controls subsequent to the
        date of our most recent evaluation, including any
        corrective actions with regard to significant
        deficiencies and material weaknesses. </font></p>
        <p><font face="Arial"></font>&nbsp;</p>
    </blockquote>
</blockquote>

<table border="0" cellspacing="0" width="264">
    <tr>
        <td width="9%">&nbsp;</td>
        <td width="68%"><font face="Arial">&quot;A.G.
        Lowenthal&quot;</font></td>
        <td width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td width="9%">&nbsp;</td>
        <td colspan="2" width="91%"><font face="Arial">Name:
        Albert G. Lowenthal </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
    <tr>
        <td width="9%">&nbsp;</td>
        <td colspan="2" width="91%"><font face="Arial">Title:
        Chief Executive Officer </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
</table>

<p><font face="Arial">March 17, 2003</font></p>

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

<p><font face="Arial">I, Elaine K. Roberts, certify that: </font></p>

<blockquote>
    <blockquote>
        <p><font face="Arial">I have reviewed this annual report
        on Form&nbsp;10-K of Fahnestock Viner Holdings Inc.; </font></p>
        <p><font face="Arial">Based on my knowledge, this annual
        report does not contain any untrue statement of a
        material fact or omit to state a material fact necessary
        to make the statements made, in light of the
        circumstances under which such statements were made, not
        misleading with respect to the period covered by this
        annual report; </font></p>
        <p><font face="Arial">Based on my knowledge, the
        financial statements, and other financial information
        included in this annual report, fairly present in all
        material respects the financial condition, results of
        operations and cash flows of the registrant as of, and
        for, the periods presented in this annual report; </font></p>
        <p><font face="Arial">The registrant&#146;s other
        certifying officers and I are responsible for
        establishing and maintaining disclosure controls and
        procedures (as defined in Exchange Act Rules&nbsp;13a-14
        and 15d-14) for the registrant and we have: </font></p>
    </blockquote>
</blockquote>

<table border="0" cellspacing="0" width="613">
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">a)&nbsp;designed such
        disclosure controls and procedures to ensure that
        material information relating to the registrant,
        including its consolidated subsidiaries, is made known to
        us by others within those entities, particularly during
        the period in which this annual report is being prepared;
        </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">b)&nbsp;evaluated the
        effectiveness of the registrant&#146;s disclosure
        controls and procedures as of a date within 90&nbsp;days
        prior to the filing date of this annual report (the
        &quot;Evaluation Date&quot;); and </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">c)&nbsp;presented in
        this annual report our conclusions about the
        effectiveness of the disclosure controls and procedures
        based on our evaluation as of the Evaluation Date; </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
</table>

<blockquote>
    <blockquote>
        <p><font face="Arial">5. The registrant&#146;s other
        certifying officers and I have disclosed, based on our
        most recent evaluation, to the registrant&#146;s auditors
        and the audit committee of registrant&#146;s board of
        directors (or persons performing the equivalent
        function): </font></p>
    </blockquote>
</blockquote>

<table border="0" cellspacing="0" width="613">
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">a)&nbsp;all
        significant deficiencies in the design or operation of
        internal controls which could adversely affect the
        registrant&#146;s ability to record, process, summarize
        and report financial data and have identified for the
        registrant&#146;s auditors any material weaknesses in
        internal controls; and </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
    <tr>
        <td width="8%">&nbsp;</td>
        <td width="92%"><font face="Arial">b)&nbsp;any fraud,
        whether or not material, that involves management or
        other employees who have a significant role in the
        registrant&#146;s internal controls; and </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
</table>

<blockquote>
    <blockquote>
        <p><font face="Arial">6. The registrant&#146;s other
        certifying officers and I have indicated in this annual
        report whether or not there were significant changes in
        internal controls or in other factors that could
        significantly affect internal controls subsequent to the
        date of our most recent evaluation, including any
        corrective actions with regard to significant
        deficiencies and material weaknesses. </font></p>
        <p><font face="Arial"></font>&nbsp;</p>
    </blockquote>
</blockquote>

<table border="0" cellspacing="0" width="264">
    <tr>
        <td width="9%">&nbsp;</td>
        <td width="68%"><font face="Arial">&quot;E.K.
        Roberts&quot;</font></td>
        <td width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td width="9%">&nbsp;</td>
        <td colspan="2" width="91%"><font face="Arial">Name:
        Elaine K. Roberts </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
    <tr>
        <td width="9%">&nbsp;</td>
        <td colspan="2" width="91%"><font face="Arial">Title:
        Chief Financial Officer </font></td>
        <td width="0%">&nbsp;</td>
    </tr>
</table>

<p><font face="Arial">March 17, 2003</font></p>

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

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

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

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

<table border="0" cellpadding="7" cellspacing="0" width="638">
    <tr>
        <td width="89%"><font size="3" face="Arial">Management&#146;s
        Responsibility for Consolidated Financial Statements</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">F2</font></p>
        </td>
    </tr>
    <tr>
        <td width="89%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td width="89%"><font size="3" face="Arial">Report of
        Independent Accountants</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">F3</font></p>
        </td>
    </tr>
    <tr>
        <td width="89%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td width="89%"><font size="3" face="Arial">Consolidated
        Balance Sheets as of December 31, 2002 and 2001</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">F4</font></p>
        </td>
    </tr>
    <tr>
        <td width="89%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td width="89%"><font size="3" face="Arial">Consolidated
        Statements of Operations for the three years ended</font><p><font
        size="3" face="Arial">December 31, 2002, 2001 and 2000</font></p>
        </td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">F5</font></p>
        </td>
    </tr>
    <tr>
        <td width="89%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td width="89%"><font size="3" face="Arial">Consolidated
        Statements of Changes in Shareholders&#146; Equity for
        the three years ended December 31, 2002, 2001 and 2000</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">F6</font></p>
        </td>
    </tr>
    <tr>
        <td width="89%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td width="89%"><font size="3" face="Arial">Consolidated
        Statements of Cash Flows for the three years ended</font><p><font
        size="3" face="Arial">December 31, 2002, 2001 and 2000</font></p>
        </td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">F7</font></p>
        </td>
    </tr>
    <tr>
        <td width="89%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
    </tr>
    <tr>
        <td width="89%"><font size="3" face="Arial">Notes to
        Consolidated Financial Statements </font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">F8</font></p>
        </td>
    </tr>
</table>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F1</font></p>

<p><font size="3" face="Arial"></font>&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 its cash flows, estimates which are necessary are
based on careful judgments 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 auditors, conduct 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 auditors 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 /s/E.K. Roberts</font></p>

<p><font size="3" face="Arial">A.G. Lowenthal, E.K. Roberts,</font></p>

<p><font size="3" face="Arial">Chairman of the Board President
and Treasurer</font></p>

<p><font size="3" face="Arial">and Chief Executive Officer</font></p>

<p><font size="3" face="Arial">February 25, 2003 </font></p>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F2</font></p>

<p align="center"><font size="3" face="Arial">AUDITORS&#146;
REPORT</font></p>

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

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

<p><font size="3" face="Arial">In our opinion, the accompanying
consolidated balance sheets and the related consolidated
statements of operations, changes in 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, 2002 and 2001, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 2002 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 audits 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">As discussed in note 2, the
Company has adopted the goodwill provisions of Statements of
Financial Accounting Standard No. 142, &quot;Goodwill and Other
Intangibles&quot;.</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 25, 2003.</font></p>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F3</font></p>

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

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

<table border="0" cellpadding="0" cellspacing="0" width="638"
bordercolor="#000000">
    <tr>
        <td colspan="7" height="16"><p align="center"><font
        size="3" face="Arial">FAHNESTOCK VINER HOLDINGS INC.</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7" height="16"><p align="center"><font
        size="3" face="Arial">CONSOLIDATED BALANCE SHEETS</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7" height="16"><p align="center"><font
        size="3" face="Arial">AS AT DECEMBER 31, </font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="75%" height="17">&nbsp;</td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="center"><font
        size="3" face="Arial">2002 </font></p>
        </td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="11%" height="17"><p align="center"><font
        size="3" face="Arial">2001</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%" height="17">&nbsp;</td>
        <td colspan="6" width="42%" height="17"><p align="center"><font
        size="3" face="Arial">(Expressed in thousands of U.S.
        dollars)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">ASSETS</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Current assets</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Cash and cash equivalents</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$16,115</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">$24,217</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Restricted deposits (note 3)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">7,440</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">2,393</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Deposits with clearing organizations</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">3,606</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">7,686</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Receivable from brokers and clearing
        organizations </font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">492,094</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">100,694</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Receivable from customers</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">392,929</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">463,986</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Securities owned, including amounts pledged,
        at market value (note 4)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">50,173</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">50,575</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Other</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">45,430</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">37,531</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16">&nbsp;</td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">1,007,787</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">687,082</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Other assets</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Stock exchange seats (approximate market
        value</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">$6,716; $8,155 in 2001)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">2,994</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">3,018</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Property, plant and equipment (note 5)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">8,488</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">9,992</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Goodwill</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">11,957</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">10,183</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16">&nbsp;</td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">23,439</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">23,193</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="17">&nbsp;</td>
        <td colspan="2" width="1%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$1,031,226</font></p>
        </td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$710,275</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">LIABILITIES AND SHAREHOLDERS' EQUITY</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="17"><font size="3"
        face="Arial">Current liabilities</font></td>
        <td colspan="2" width="1%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="11%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="17"><font size="3"
        face="Arial">Drafts payable</font></td>
        <td colspan="2" width="1%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$21,653</font></p>
        </td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$20,622</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Bank call loans (note 6)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">16,200</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">13,134</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Payable to brokers and clearing
        organizations </font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">520,743</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">179,212</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Payable to customers</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">162,343</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">188,387</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Securities sold, but not yet purchased, at
        market value (note 4)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">9,606</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">8,921</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Accounts payable and other liabilities</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">50,988</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">56,812</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Income taxes payable</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">2,057</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">1,492</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16">&nbsp;</td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">783,590</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">468,580</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Commitments and contingencies (note 11)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Shareholders' equity</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Share capital (note 7)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">12,397,007 Class A non-voting shares issued </font><p><font
        size="3" face="Arial">(2001-12,337,085 shares issued)</font></p>
        </td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">34,338</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">34,124</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">99,680 Class B voting shares issued</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">133</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">133</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16">&nbsp;</td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">34,471</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">34,257</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Contributed capital (note 8)</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">5,028</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">4,113</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16"><font size="3"
        face="Arial">Retained earnings</font></td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">208,137</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">203,325</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="16">&nbsp;</td>
        <td colspan="2" width="1%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">247,636</font></p>
        </td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="11%" height="16"><p align="right"><font
        size="3" face="Arial">241,695</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="75%" height="17">&nbsp;</td>
        <td colspan="2" width="1%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$1,031,226</font></p>
        </td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$710,275</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7" height="17"><p align="center"><font
        size="3" face="Arial">Approved on behalf of the Board:</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7" 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>
</table>

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F4</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="662"
bordercolor="#000000">
    <tr>
        <td colspan="7" height="16"><p align="center"><font
        size="3" face="Arial">FAHNESTOCK VINER HOLDINGS INC.</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7" height="16"><p align="center"><font
        size="3" face="Arial">CONSOLIDATED STATEMENTS OF
        OPERATIONS</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7" height="17"><p align="center"><font
        size="3" face="Arial">FOR THE YEAR ENDED DECEMBER 31, </font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="center"><font
        size="3" face="Arial">2002</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="center"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="center"><font
        size="3" face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="17">&nbsp;</td>
        <td colspan="6" width="47%" height="17"><p align="center"><font
        size="3" face="Arial">(Expressed in thousands of U.S.
        dollars, except per share amounts)</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">REVENUE:</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Commissions</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$135,747</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$122,272</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$128,915</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Principal
        transactions, net</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">58,227</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">56,374</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">84,420</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Interest</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">27,622</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">34,309</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">63,696</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Underwriting
        fees</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">22,760</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">10,955</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">9,314</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Advisory
        fees</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">26,365</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">24,504</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">21,764</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Other</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">12,612</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">12,847</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">8,390</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">283,333</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">261,261</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">316,499</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">EXPENSES:</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Compensation
        and related expenses</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">169,810</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">148,838</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">154,881</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Clearing
        and exchange fees</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">9,607</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">6,012</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">7,205</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Communications</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">32,066</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">23,620</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">23,312</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Occupancy
        costs</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">22,908</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">15,691</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">12,465</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Interest</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">8,379</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">14,071</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">33,122</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Other</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">27,646</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">21,417</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">13,802</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">270,416</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">229,649</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">244,787</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Profit
        before income taxes </font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">12,917</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">31,612</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">71,712</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Income
        tax provision (note 9)</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">5,370</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">12,462</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">30,811</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="17"><font size="3" face="Arial">Profit
        before cumulative effect of a change in accounting
        principle</font></td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">7,547</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">19,150</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">40,901</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="17"><font size="3" face="Arial">Cumulative
        effect of a change in accounting principle (note 2)</font></td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">1,774</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="17"><font size="3" face="Arial">NET
        PROFIT FOR YEAR</font></td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$9,321</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$19,150</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$40,901</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="17"><font size="3" face="Arial">Earnings
        per share (notes 2 and 10)</font></td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="17"><font size="3" face="Arial">Basic
        earnings per share </font></td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$0.75</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$1.55</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$3.38</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">-
        Before the effect of a change in accounting </font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Principle</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$0.61</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$1.55</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$3.38</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">-
        Cumulative effect of a change in accounting principle</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$0.14</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%" height="16"><font size="3" face="Arial">Diluted
        earnings per share</font></td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$0.73</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$1.50</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$3.29</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td 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 width="53%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="7" height="16">&nbsp;</td>
    </tr>
</table>

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

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

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

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

<p align="center"><font size="3" face="Arial">F5</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="662"
bordercolor="#000000">
    <tr>
        <td colspan="7" height="16"><p align="center"><font
        size="3" face="Arial">FAHNESTOCK VINER HOLDINGS INC.</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7" height="16"><p align="center"><font
        size="3" face="Arial">CONSOLIDATED STATEMENTS OF CHANGES
        IN SHAREHOLDERS&#146; EQUITY</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="7" height="17"><p align="center"><font
        size="3" face="Arial">FOR THE YEAR ENDED DECEMBER 31, </font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="17">&nbsp;</td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="center"><font
        size="3" face="Arial">2002</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="center"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="center"><font
        size="3" face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="17">&nbsp;</td>
        <td colspan="6" width="44%" height="17"><p align="center"><font
        size="3" face="Arial">(Expressed in thousands of U.S.
        dollars)</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">SHARE
        CAPITAL</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">Balance
        at beginning of year</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$34,257</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$29,683</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$32,651</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">Issue
        of Class A non-voting shares</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">3,503</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">4,723</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">948</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">Repurchase
        of Class A non-voting shares for cancellation</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(3,289)</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(149)</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">(3,916)</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="17">&nbsp;</td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="17"><font size="3" face="Arial">Balance
        at end of year</font></td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$34,471</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$34,257</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$29,683</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">CONTRIBUTED
        CAPITAL</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">Balance
        at beginning of year</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$4,113</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$3,499</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$3,262</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">Tax
        benefit from employee stock options exercised</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">915</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">614</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">237</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="17">&nbsp;</td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="17"><font size="3" face="Arial">Balance
        at end of year</font></td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$5,028</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$4,113</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$3,499</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="16">&nbsp;</td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">RETAINED
        EARNINGS</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">Balance
        at beginning of year</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$203,325</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">$188,618</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">$151,475</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">Net
        profit for year</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">9,321</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">19,150</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">40,901</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="16"><font size="3" face="Arial">Dividends
        paid</font></td>
        <td width="1%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(4,509)</font></p>
        </td>
        <td width="3%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(4,443)</font></p>
        </td>
        <td width="4%" height="16">&nbsp;</td>
        <td width="13%" height="16"><p align="right"><font
        size="3" face="Arial">(3,758)</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="17">&nbsp;</td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="17"><font size="3" face="Arial">Balance
        at end of year</font></td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$208,137</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$203,325</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$188,618</font></p>
        </td>
    </tr>
    <tr>
        <td width="56%" height="17">&nbsp;</td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td width="56%" height="17"><font size="3" face="Arial">Total
        Shareholders&#146; Equity</font></td>
        <td width="1%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$247,636</font></p>
        </td>
        <td width="3%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$241,695</font></p>
        </td>
        <td width="4%" height="17">&nbsp;</td>
        <td width="13%" height="17"><p align="right"><font
        size="3" face="Arial">$221,800</font></p>
        </td>
    </tr>
</table>

<table border="0" cellpadding="0" cellspacing="0" width="668">
    <tr>
        <td 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><font size="3" face="Arial"></font>&nbsp;</p>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F6</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="648">
    <tr>
        <td colspan="16"><p align="center"><font size="3"
        face="Arial">FAHNESTOCK VINER HOLDINGS INC.</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="16"><p align="center"><font size="3"
        face="Arial">CONSOLIDATED STATEMENTS OF CASH FLOWS</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="16"><p align="center"><font size="3"
        face="Arial">FOR THE YEAR ENDED DECEMBER 31, </font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16">&nbsp;</td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">2002</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">2001</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td 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 colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Cash flows from operating activities:</font></td>
        <td colspan="5" width="12%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="17"><font size="3"
        face="Arial">Net profit for year</font></td>
        <td colspan="5" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$9,321</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$19,150</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$40,901</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="17"><font size="3"
        face="Arial">Adjustments to reconcile net profit to net
        cash provided</font></td>
        <td colspan="5" width="12%" height="17">&nbsp;</td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17">&nbsp;</td>
        <td width="2%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">by (used in) operating activities:</font></td>
        <td colspan="5" width="12%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Non-cash items included in net profit:</font></td>
        <td colspan="5" width="12%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Depreciation and amortization</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">4,864</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">3,974</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">3,472</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Loss on disposal of fixed assets</font></td>
        <td colspan="5" width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">443</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Write off of negative goodwill (note 2)</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(1,774)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="2" width="59%" height="16"><font size="3"
        face="Arial">Decrease (increase) in operating assets, net
        of the effect of acquisitions:</font></td>
        <td colspan="4" width="12%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="3" width="14%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Restricted deposits</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(5,047)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">319</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(320)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Securities purchased under agreement to
        resell</font></td>
        <td colspan="5" width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">23,500</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">51,060</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Deposits with clearing organizations</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">4,080</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(1,769)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">38</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Receivable from brokers and clearing
        organizations</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(391,400)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">37,463</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">6,110</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Receivable from customers</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">71,057</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(35,404)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">7,738</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Securities owned</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">699</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">1,524</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">11,701</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Other assets</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(7,899)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(6,116)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(3,244)</font></p>
        </td>
    </tr>
    <tr>
        <td 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 colspan="4" width="12%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="3" width="14%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Drafts payable</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">1,031</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(5,842)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">1,699</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Securities sold under agreement to
        repurchase</font></td>
        <td colspan="5" width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(23,500)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(45,531)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Payable to brokers and clearing
        organizations</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">341,531</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(42,938)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">12,999</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Payable to customers</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(26,044)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">63,853</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(673)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Securities sold, but not yet purchased</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">685</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">498</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(10,508)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Accounts payable and other liabilities</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(5,824)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(9,941)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(5,504)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Tax benefit from employee stock options
        exercised</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">915</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">614</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">237</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Income taxes payable</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">565</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(3,487)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(16,606)</font></p>
        </td>
    </tr>
    <tr>
        <td width="55%" height="17"><font size="3" face="Arial">Cash
        (used in) provided by operating activities</font></td>
        <td colspan="3" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">(3,240)</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">22,341</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="19%" height="17"><p align="right"><font
        size="3" face="Arial">53,569</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="17"><font size="3"
        face="Arial">Cash flows from investing activities:</font></td>
        <td colspan="5" width="12%" height="17">&nbsp;</td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17">&nbsp;</td>
        <td width="2%" height="17">&nbsp;</td>
        <td width="12%" height="17">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Purchase of Josephthal Group, Inc., net of
        cash acquired</font></td>
        <td colspan="5" width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">3,139</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Purchase of Grand Charter Group, net of cash
        acquired</font></td>
        <td colspan="5" width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(1,789)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Purchase of Propp &amp; Company, net of cash
        acquired</font></td>
        <td colspan="5" width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(768)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="17"><font size="3"
        face="Arial">Purchase of the business of BUYandHOLD</font></td>
        <td colspan="5" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">(2,297)</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Proceeds from sale of exchange seat</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">24</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="center"><font
        size="3" face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Purchase of property, plant and equipment</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(1,360)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(1,009)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(1,821)</font></p>
        </td>
    </tr>
    <tr>
        <td width="55%" height="16"><font size="3" face="Arial">Cash
        (used in) provided by investing activities</font></td>
        <td colspan="3" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(3,633)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">341</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="19%" height="16"><p align="right"><font
        size="3" face="Arial">(2,589)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Cash flows from financing activities:</font></td>
        <td colspan="5" width="12%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Cash dividends paid on Class A non-voting
        and</font></td>
        <td colspan="5" width="12%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Class B shares</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(4,509)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">(4,443)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(3,758)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Issuance of Class A non-voting shares</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">3,503</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">4,723</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">948</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Repurchase of Class A non-voting shares for </font></td>
        <td colspan="5" width="12%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16">&nbsp;</td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="17"><font size="3"
        face="Arial">Cancellation</font></td>
        <td colspan="5" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">(3,289)</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">(149)</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">(3,916)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="17"><font size="3"
        face="Arial">Increase (decrease) in bank call loans</font></td>
        <td colspan="5" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">3,066</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">(13,265)</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">(40,423)</font></p>
        </td>
    </tr>
    <tr>
        <td width="55%" height="17"><font size="3" face="Arial">Cash
        (used in) financing activities</font></td>
        <td colspan="3" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">(1,229)</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">(13,134)</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="19%" height="17"><p align="right"><font
        size="3" face="Arial">(47,149)</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Net (decrease) increase in cash and cash
        equivalents</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">(8,102)</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">9,548</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">3,831</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="16"><font size="3"
        face="Arial">Cash and cash equivalents, beginning of year</font></td>
        <td colspan="5" width="12%" height="16"><p align="right"><font
        size="3" face="Arial">24,217</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td colspan="5" width="11%" height="16"><p align="right"><font
        size="3" face="Arial">14,669</font></p>
        </td>
        <td width="2%" height="16">&nbsp;</td>
        <td width="12%" height="16"><p align="right"><font
        size="3" face="Arial">10,838</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="3" width="61%" height="17"><font size="3"
        face="Arial">Cash and cash equivalents, end of year</font></td>
        <td colspan="5" width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$16,115</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td colspan="5" width="11%" height="17"><p align="right"><font
        size="3" face="Arial">$24,217</font></p>
        </td>
        <td width="2%" height="17">&nbsp;</td>
        <td width="12%" height="17"><p align="right"><font
        size="3" face="Arial">$14,669</font></p>
        </td>
    </tr>
    <tr>
        <td colspan="16" height="17"><p align="center"><font
        size="3" face="Arial">The accompanying notes are an
        integral part of these financial statements</font></p>
        </td>
    </tr>
</table>

<p align="center"><font size="3" face="Arial">F7</font></p>

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

<p align="center"><font size="3" face="Arial">Notes to
Consolidated Financial Statements</font></p>

<p align="center"><font size="3" face="Arial">(Expressed in U.S.
dollars)</font></p>

<p align="center"><font size="3" face="Arial">December 31, 2002</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"><b>1. Summary of significant
accounting policies</b></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
purpose of inclusion in the Company&#146;s 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 Company&#146;s 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 of America, these consolidated
financial statements are presented in U.S. dollars.</font></p>

<p><font size="3" face="Arial">Certain prior period amounts have
been reclassified to conform to the current presentation.</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 United States of America, 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>

<p><font size="3" face="Arial">Significant intercompany balances
and transactions have been eliminated in the preparation of the
consolidated financial statements.</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 is 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 align="center"><font size="3" face="Arial">F8</font></p>

<p align="center"><font size="3" face="Arial"></font>&nbsp;</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 &#150; </i></font></p>

<p><font size="3" face="Arial">Goodwill arose upon the
acquisitions of Fahnestock, Fahnestock International Inc., First
of Michigan Capital Corporation, Josephthal Group, Inc., and
Grand Charter Group Incorporated. Goodwill is subject to an
annual test for impairment to determine if the fair value of
goodwill of a reporting unit is less than its carrying amount.
Goodwill has been tested for impairment as at December 31, 2002
and no such impairment was recorded.</font></p>

<p><font size="3" face="Arial"><i>(f) Property, plant and
equipment</i></font></p>

<p><font size="3" face="Arial">Property, plant and equipment and
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 historical 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
Standards 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><font size="3" face="Arial">Securities borrowed transactions
require the Company to deposit cash 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 $480,938,000 (2001 - $54,579,000).
Included in payable to brokers and clearing organizations are
deposits received for securities loaned of $514,213,000 (2001 -
$153,966,000).</font></p>

<p><font size="3" face="Arial"><i>(j) Resale and 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 align="center"><font size="3" face="Arial">F9</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"><i>(m)</i> <i>Stock-based
compensation plans</i></font></p>

<p><font size="3" face="Arial">The Company has a stock-based
compensation plan, which is described in note 6. No compensation
expense is recognized for this plan when stock options are issued
to employees. Any consideration paid by employees on the exercise
of stock options or purchase of stock is credited to share
capital.</font></p>

<p><font size="3" face="Arial"><b>2. Change in Accounting Policy</b></font></p>

<p><font size="3" face="Arial"><i>Goodwill and other intangible
assets</i></font></p>

<p><font size="3" face="Arial">In June 2001 the Financial
Accounting Standards Board issued Statement of Accounting
Standards No.142, &quot;Goodwill and Other Intangibles&quot;.
Under this standard, goodwill is no longer to be amortized but is
subject to a revised annual impairment test to identify any
potential goodwill impairment. A goodwill impairment loss will be
recognized if the fair value of the goodwill of a reporting unit
is less than its carrying amount. The standard also requires that
intangible assets with indefinite useful lives no longer be
amortized, but be subject to an annual impairment test comparing
fair values to carrying amounts.</font></p>

<p><font size="3" face="Arial">The Company adopted this standard
effective January 1, 2002 without restatement of prior periods.
In connection with the adoption of the new standard, the
Company&#146;s recorded amount of goodwill of $11,957,000 is no
longer subject to amortization but is being periodically measured
for impairment. Such impairment test was performed as at January
1, 2002 and no impairment was recorded.</font></p>

<p><font size="3" face="Arial">In addition, the standard requires
a write-off of unamortized &quot;negative goodwill&quot; in the
amount of $1,774,000, which arose as a result of the acquisitions
of Hopper Soliday Corporation and subsidiaries, Reich &amp; Co.,
Inc. and Propp &amp; Company Inc.. Negative goodwill represents
the excess fair value of net assets acquired above the cost of
acquisition. The write-off is recognized in the statement of
operations as a gain from the cumulative effect of a change in
accounting principle. </font></p>

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

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

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

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

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

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

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

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F10</font></p>

<p><font size="3" face="Arial">The following table reflects the
effect of the amortization of goodwill on the results of
operations as though FAS 142 had been adopted on January 1, 2001
and 2000, respectively.</font></p>
<div align="center"><center>

<table border="0" cellpadding="0" width="523">
    <tr>
        <td width="59%">&nbsp;</td>
        <td colspan="3" width="41%"><p align="center"><font
        size="3" face="Arial">December 31,</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%">&nbsp;</td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">2001</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Profit before
        cumulative effect of a change in accounting principle as
        reported</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$7,547</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$19,150</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$40,901</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Amortization
        of goodwill as reported</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">432</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">464</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Profit before
        cumulative effect of a change in accounting principle as
        adjusted </font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">7,547</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">19,582</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">41,365</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Cumulative
        effect of a change in accounting principle as reported</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">1,774</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Net profit as
        adjusted</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$9,321</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$19,582</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$41,365</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Basic
        earnings per share as reported</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.75</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.55</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.38</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">- Before
        cumulative effect of a change in accounting principle</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.63</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.55</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.38</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">-Cumulative
        effect of a change in accounting principle</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.14</font></p>
        </td>
        <td width="14%"><p align="center"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="14%"><p align="center"><font size="3"
        face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Diluted
        earnings per share as reported</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.73</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.50</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.29</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Basic
        earnings per share as adjusted</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.75</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.59</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.42</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Diluted
        earnings per share as adjusted</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.73</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.53</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.33</font></p>
        </td>
    </tr>
</table>
</center></div>

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

<p><font size="3" face="Arial"><i>Recently issued accounting
standards</i></font></p>

<p><font size="3" face="Arial">The Financial Accounting Standards
Board issued SFAS No. 146, &quot;Accounting for Costs Associated
with Exit or Disposal Activities&quot;, FIN No. 45,
&quot;Guarantor&#146;s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of
Others&quot;, and FIN No. 46, &quot;Consolidation of Variable
Interest Entities&quot;. The Company is reviewing this statement
and these interpretations and does not expect their adoption to
have a material impact on its financial results. SFAS No. 148,
&quot;Accounting for Stock-Based Compensation &#150; Transition
and Disclosure&quot; is being reviewed but the Company does not
intend to adopt this standard in fiscal 2003.</font></p>

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

<p><font size="3" face="Arial">Deposits of $7,440,000 (2001 -
$2,393,000) were held at year-end in a special reserve bank
accounts 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><font size="3" face="Arial"></font>&nbsp;</p>

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

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

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

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

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

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

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F11</font></p>

<p><font size="3" face="Arial"><b>4. Securities owned and
Securities sold, but not yet purchased (at fair market value)</b></font></p>

<table border="0" cellpadding="0" cellspacing="0" width="534">
    <tr>
        <td width="57%">&nbsp;</td>
        <td width="20%"><p align="center"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="center"><font size="3"
        face="Arial">2001</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">Securities
        owned consist of:</font></td>
        <td width="20%">&nbsp;</td>
        <td width="5%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">Corporate
        equities</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$11,467,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$19,268,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">Corporate and
        sovereign debt</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">16,522,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">12,931,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">U.S.
        government and agency and state and municipal government
        obligations</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">22,103,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">15,833,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">Money market
        funds </font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">2,540,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">Options and
        other</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">81,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">3,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$50,173,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$50,575,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%">&nbsp;</td>
        <td width="20%">&nbsp;</td>
        <td width="5%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">Securities
        sold, but not yet purchased consist of:</font></td>
        <td width="20%">&nbsp;</td>
        <td width="5%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">Corporate
        equities</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$5,049,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$4,057,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">Corporate
        debt </font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">3,935,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">4,683,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%"><font size="3" face="Arial">U.S.
        government and agency and state and municipal government
        obligations and other</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">622,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">181,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="57%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$9,606,000</font></p>
        </td>
        <td width="5%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$8,921,000</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 fair market values. At December 31, 2002, the
Company has pledged securities owned of approximately $1,078,000
($176,000 in 2001) as collateral to counterparties for securities
loan transactions, which can be sold or repledged. </font></p>

<p><font size="3" face="Arial"><b>5. Property, plant and
equipment</b></font></p>

<table border="0" cellpadding="0" cellspacing="0" width="613">
    <tr>
        <td width="21%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
        <td width="21%">&nbsp;</td>
        <td width="19%"><p align="center"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="19%"><p align="center"><font size="3"
        face="Arial">2001</font></p>
        </td>
    </tr>
    <tr>
        <td width="21%">&nbsp;</td>
        <td colspan="4" width="79%"><p align="center"><font
        size="3" face="Arial">(Expressed in thousands of U.S.
        dollars)</font></p>
        </td>
    </tr>
    <tr>
        <td width="21%">&nbsp;</td>
        <td width="19%"><p align="center"><font size="3"
        face="Arial">Cost</font></p>
        </td>
        <td width="21%"><p align="center"><font size="3"
        face="Arial">Accumulated depreciation</font></p>
        </td>
        <td width="19%"><p align="center"><font size="3"
        face="Arial">Net book value</font></p>
        </td>
        <td width="19%"><p align="center"><font size="3"
        face="Arial">Net book value</font></p>
        </td>
    </tr>
    <tr>
        <td width="21%"><font size="3" face="Arial">Furniture,
        fixtures and equipment</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$26,321</font></p>
        </td>
        <td width="21%"><p align="right"><font size="3"
        face="Arial">$18,926</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$7,395</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$8,458</font></p>
        </td>
    </tr>
    <tr>
        <td width="21%"><font size="3" face="Arial">Leasehold
        improvements</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">5,534</font></p>
        </td>
        <td width="21%"><p align="right"><font size="3"
        face="Arial">4,441</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">1,093</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">1,534</font></p>
        </td>
    </tr>
    <tr>
        <td width="21%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$31,855</font></p>
        </td>
        <td width="21%"><p align="right"><font size="3"
        face="Arial">$23,367</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$8,488</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$9,992</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">Accumulated depreciation as at
December 31, 2001 was $18,503,000.</font></p>

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

<p><font size="3" face="Arial"><b>6. 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% at December 31, 2002. These loans
and certain unused lines, collateralized by firm and customer
securities with market values of approximately $21,937,000 and
$10,811,000, respectively, at December 31, 2002 are primarily
with two U.S. money center banks. Details of the bank call loans
are as follows:</font></p>

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F12</font></p>
<div align="center"><center>

<table border="0" cellpadding="0" cellspacing="0" width="570">
    <tr>
        <td width="44%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">2001</font></p>
        </td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Year-end
        balance</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$16,200,000</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$13,134,000</font></p>
        </td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$25,899,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Weighted
        interest rate (at end of year)</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">1.38%</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">2.07%</font></p>
        </td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">7.09%</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Maximum
        balance (at any month end)</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$49,281,000</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$37,666,000</font></p>
        </td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$170,406,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Average
        amount outstanding (during the year) (1)</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$19,760,000</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$12,836,000</font></p>
        </td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$77,579,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Weighted
        average interest rate (during the year) (2)</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">2.10%</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">4.80%</font></p>
        </td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">7.86%</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, 2002,
2001, and 2000 was $6,473,000, $9,709,000 and $33,061,000,
respectively.</font></p>

<p><font size="3" face="Arial"><b>7. 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="547">
    <tr>
        <td width="37%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">2001</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="37%"><font size="3" face="Arial">12,397,007
        (12,337,085 in 2001 and 11,990,969 in 2000) Class A
        non-voting shares</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$34,338,000</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$34,124,000</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$29,550,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="37%"><font size="3" face="Arial">99,680 Class
        B voting shares</font></td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">133,000</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">133,000</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">133,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="37%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
        <td width="3%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
        <td width="3%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
    </tr>
    <tr>
        <td width="37%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$34,471,000</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$34,257,000</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$29,683,000</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">Under the Company&#146;s 1996
Equity Incentive Plan as amended February 28, 2002
(&quot;EIP&quot;), the compensation and stock option committee of
the board of directors of the Company may grant options to
purchase Class A Shares to officers and key 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 are available
under the EIP is 3,815,000.</font></p>

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

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

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

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

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

<p align="center"><font size="3" face="Arial">F13</font></p>

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

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

<table border="0" cellpadding="0" cellspacing="0" width="607">
    <tr>
        <td width="44%">&nbsp;</td>
        <td colspan="2" width="29%"><p align="center"><font
        size="3" face="Arial">2002</font></p>
        </td>
        <td colspan="2" width="28%"><p align="center"><font
        size="3" face="Arial">2001</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%">&nbsp;</td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">Number of shares</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">Weighted average exercise price</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">Number of shares</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">Weighted average exercise price</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Options
        outstanding, beginning of year</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">1,907,503</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">$17.36</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">1,640,024</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$15.46</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Options
        granted </font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">383,128</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">$27.14</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">663,160</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$24.05</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Options
        exercised</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">(211,322)</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">$16.57</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">(352,216)</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$13.41</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Options
        forfeited</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">(100,350)</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">$26.35</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">(43,465)</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$18.21</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Options
        outstanding, end of year</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">1,978,959</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">$20.16</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">1,907,503</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$17.36</font></p>
        </td>
    </tr>
    <tr>
        <td width="44%"><font size="3" face="Arial">Options
        vested, end of year</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">462,185</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">$16.13</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">304,896</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$12.93</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">The following table summarizes
stock options outstanding and exercisable as at December 31,
2002.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="590">
    <tr>
        <td width="22%"><p align="center"><font size="3"
        face="Arial">Range of exercise prices </font></p>
        </td>
        <td width="15%"><p align="center"><font size="3"
        face="Arial">Number outstanding</font></p>
        </td>
        <td width="15%"><p align="center"><font size="3"
        face="Arial">Weighted average remaining contractual life</font></p>
        </td>
        <td width="19%"><p align="center"><font size="3"
        face="Arial">Weighted average exercise price</font></p>
        <p align="center"><font size="3" face="Arial">of
        outstanding</font></p>
        <p align="center"><font size="3" face="Arial">options</font></p>
        </td>
        <td width="16%"><p align="center"><font size="3"
        face="Arial">Number exercisable</font></p>
        <p align="center"><font size="3" face="Arial">(vested)</font></p>
        </td>
        <td width="13%"><p align="center"><font size="3"
        face="Arial">Weighted average exercise price of</font></p>
        <p align="center"><font size="3" face="Arial">vested</font></p>
        <p align="center"><font size="3" face="Arial">options</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="15%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="13%">&nbsp;</td>
    </tr>
    <tr>
        <td width="22%"><font size="3" face="Arial">$13.875-$19.875</font></td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">1,000,311</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">1.27 Years</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$15.66</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">455,185</font></p>
        </td>
        <td width="13%"><p align="right"><font size="3"
        face="Arial">$16.04</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%"><font size="3" face="Arial">$19.875-$28.75</font></td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">978,648</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">3.63 Years</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$24.86</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">7,000</font></p>
        </td>
        <td width="13%"><p align="right"><font size="3"
        face="Arial">$21.50</font></p>
        </td>
    </tr>
    <tr>
        <td width="22%" height="8">&nbsp;</td>
        <td width="15%" height="8">&nbsp;</td>
        <td width="15%" height="8">&nbsp;</td>
        <td width="19%" height="8">&nbsp;</td>
        <td width="16%" height="8">&nbsp;</td>
        <td width="13%" height="8">&nbsp;</td>
    </tr>
    <tr>
        <td width="22%"><font size="3" face="Arial">$13.875-$28.75</font></td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">1,978,959</font></p>
        </td>
        <td width="15%"><p align="right"><font size="3"
        face="Arial">2.41 Years</font></p>
        </td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$20.16</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">462,185</font></p>
        </td>
        <td width="13%"><p align="right"><font size="3"
        face="Arial">$16.13</font></p>
        </td>
    </tr>
</table>

<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, 2002.</font></p>

<p><font size="3" face="Arial">In 2002, the Company paid cash
dividends to holders of Class A non-voting and Class B shares as
follows ($0.36 in 2001 and $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 8, 2002 February
22, 2002</font></p>

<p><font size="3" face="Arial">$0.09 May 3, 2002 May 17, 2002</font></p>

<p><font size="3" face="Arial">$0.09 August 2, 2002 August 16,
2002</font></p>

<p><font size="3" face="Arial">$0.09 November 8, 2002 November
22, 2002</font></p>

<p><font size="3" face="Arial">The Company may purchase up to
620,700 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, 2002, the Company purchased 151,400 Class A
non-voting shares for a total consideration of $3,289,000, of
which 86,100 Class A non-voting shares were purchased pursuant to
a Normal Course Issuer Bid which expired on July 4, 2002 and
65,300 Class A non-voting shares were purchased pursuant to a
Normal Course Issuer Bid which expires July 8, 2003, unless
terminated earlier (6,100 shares for $149,000 in 2001 and 244,600
shares for $3,916,000 in 2000).</font></p>

<p><font size="3" face="Arial"><b>8. 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 align="center"><font size="3" face="Arial">F14</font></p>

<p><font size="3" face="Arial"><b>9. 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><font color="#FF0000" size="3" face="Arial"></font>&nbsp;</p>

<table border="0" cellpadding="0" cellspacing="0" width="619">
    <tr>
        <td width="53%">&nbsp;</td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">2001</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Profit before
        income tax</font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$12,917,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$<u>31,612,000</u></font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$<u>71,712,000</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="53%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">U.S. federal
        tax at 35% </font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$4,524,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$11,092,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$25,110,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Canadian tax
        at 44%</font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">74,000</font></p>
        </td>
        <td width="16%"><p align="center"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="16%"><p align="center"><font size="3"
        face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Combined
        state and local tax, net of federal benefit</font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">653,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">1,977,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">5,846,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Income taxes
        before under-noted</font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">5,251,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">13,069,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">30,956,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Tax effect of
        non-taxable interest and dividends</font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">(148,000)</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">(143,000)</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">(258,000)</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Tax effect of
        differences between accounting and taxable income</font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">267,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">(464,000<u>)</u></font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">113,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Income taxes</font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$<u>5,370,000</u></font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$<u>12,462,000</u></font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$<u>30,811,000</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="53%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Profit before
        income tax provision:</font></td>
        <td width="16%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
        <td width="16%">&nbsp;</td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">Canadian
        operations </font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$(10,000)</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$(78,000)</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$(32,000)</font></p>
        </td>
    </tr>
    <tr>
        <td width="53%"><font size="3" face="Arial">U.S.
        operations</font></td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$12,927,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$31,690,000</font></p>
        </td>
        <td width="16%"><p align="right"><font size="3"
        face="Arial">$71,744,000</font></p>
        </td>
    </tr>
</table>

<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="547">
    <tr>
        <td width="32%">&nbsp;</td>
        <td colspan="5" width="68%"><p align="center"><font
        size="3" face="Arial">December 31,</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">2001</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font size="3" face="Arial">Current:</font></td>
        <td width="20%">&nbsp;</td>
        <td width="4%">&nbsp;</td>
        <td width="20%">&nbsp;</td>
        <td width="4%">&nbsp;</td>
        <td width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%"><font size="3" face="Arial">Canadian tax</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$74,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="center"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="center"><font size="3"
        face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font size="3" face="Arial">U.S. Federal
        tax</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">5,176,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$9,878,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$22,767,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font size="3" face="Arial">State and
        local tax</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">1,226,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">3,157,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">9,231,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">6,476,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">13,035,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">31,998,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%" height="14"><font size="3" face="Arial">Deferred:</font></td>
        <td width="20%" height="14">&nbsp;</td>
        <td width="4%" height="14">&nbsp;</td>
        <td width="20%" height="14">&nbsp;</td>
        <td width="4%" height="14">&nbsp;</td>
        <td width="20%" height="14">&nbsp;</td>
    </tr>
    <tr>
        <td width="32%"><font size="3" face="Arial">U.S. Federal
        tax</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(885,000)</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(458,000)</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(950,000)</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%"><font size="3" face="Arial">State and
        local tax</font></td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(221,000)</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(115,000)</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(237,000)</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(1,106,000)</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(573,000)</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">(1,187,000)</font></p>
        </td>
    </tr>
    <tr>
        <td width="32%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$5,370,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$12,462,000</font></p>
        </td>
        <td width="4%">&nbsp;</td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$30,811,000</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">Aggregate deferred income tax
assets, which relate primarily to fixed assets and currently
non-deductible expenses, are included in other assets and
amounted to approximately $5,966,000 ($4,142,000 in 2001).</font></p>

<p><font size="3" face="Arial">On a cash basis, the Company paid
income taxes for the years ended December 31, 2002, 2001 and 2000
in the amounts of $8,411,000, $14,918,000 and $46,163,000,
respectively.</font></p>

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

<p><font size="3" face="Arial"><b>10. Earnings per share</b></font></p>

<p><font size="3" face="Arial">Basic earnings per share was
computed by dividing net profit by the weighted average number of
Class A non-voting and Class B shares outstanding. Diluted
earnings per share includes the weighted average Class A
non-voting and Class B shares outstanding and the effects of
Class A non-voting share options using the treasury stock method.</font></p>

<p align="center"><font size="3" face="Arial">F15</font></p>

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

<p><font size="3" face="Arial">Earnings per share has been
calculated as follows:</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="535">
    <tr>
        <td width="39%">&nbsp;</td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">2001</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="39%"><font size="3" face="Arial">Basic
        weighted average number of shares outstanding</font></td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">12,429,264</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">12,348,051</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">12,108,798</font></p>
        </td>
    </tr>
    <tr>
        <td width="39%"><font size="3" face="Arial">Stock options</font></td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">280,278</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">421,783</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">308,053</font></p>
        </td>
    </tr>
    <tr>
        <td width="39%"><font size="3" face="Arial">Diluted
        common shares</font></td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">12,709,542</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">12,769,834</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">12,416,851</font></p>
        </td>
    </tr>
    <tr>
        <td width="39%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="3%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
        <td width="3%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="39%"><font size="3" face="Arial">Net profit</font></td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">$9,321,000</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$19,150,000</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$40,901,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="39%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="3%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
        <td width="3%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="39%"><font size="3" face="Arial">Basic profit
        per share</font></td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">$0.75</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$1.55</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$3.38</font></p>
        </td>
    </tr>
    <tr>
        <td width="39%"><font size="3" face="Arial">- Before
        cumulative effect of a change in accounting principle</font></td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">$0.61</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$1.55</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$3.38</font></p>
        </td>
    </tr>
    <tr>
        <td width="39%"><font size="3" face="Arial">- Cumulative
        effect of a change in accounting principle</font></td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">$0.14</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="center"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="center"><font size="3"
        face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td width="39%">&nbsp;</td>
        <td width="17%">&nbsp;</td>
        <td width="3%">&nbsp;</td>
        <td width="19%">&nbsp;</td>
        <td width="3%">&nbsp;</td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="39%"><font size="3" face="Arial">Diluted
        profit per share</font></td>
        <td width="17%"><p align="right"><font size="3"
        face="Arial">$0.73</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="19%"><p align="right"><font size="3"
        face="Arial">$1.50</font></p>
        </td>
        <td width="3%">&nbsp;</td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial">$3.29</font></p>
        </td>
    </tr>
</table>

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

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

<p><font size="3" face="Arial">Financial Accounting Standards
Board Statement No. 123, &quot;Accounting for Stock-Based
Compensation&quot; (SFAS 123) was issued in 1995 and changed the
method of 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,
&quot;Accounting for Stock Issued to Employees&quot;, and related
interpretations in accounting for its stock compensation plans.
The Company is reviewing SFAS No. 148, &quot;Accounting for
Stock-Based Compensation &#150; Transition and Disclosure&quot;,
which was issued in 2002, and has adopted the disclosure
provisions but does not intend to adopt other provisions of this
standard in 2003.</font></p>

<p><font size="3" face="Arial">In accordance with SFAS 123, the
following presents the pro forma income and earnings per share
impact, using a fair value 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="601">
    <tr>
        <td width="58%">&nbsp;</td>
        <td colspan="3" width="42%"><p align="center"><font
        size="3" face="Arial">Year ended December 31,</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%">&nbsp;</td>
        <td width="14%"><p align="center"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="14%"><p align="center"><font size="3"
        face="Arial">2001</font></p>
        </td>
        <td width="14%"><p align="center"><font size="3"
        face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%"><font size="3" face="Arial">Net profit as
        reported</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$9,321</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$19,150</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$40,901</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%"><font size="3" face="Arial">Stock-based
        employee compensation expense included in reported net
        income</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%"><font size="3" face="Arial">Additional
        compensation expense</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">1,906</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">1,843</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">1,383</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%"><font size="3" face="Arial">Pro forma net
        profit</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$7,415</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$17,307</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$39,518</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td width="58%"><font size="3" face="Arial">Basic profit
        per share as reported</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.75</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.55</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.38</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%"><font size="3" face="Arial">Diluted
        profit per share as reported</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.73</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.50</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.29</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
        <td width="14%">&nbsp;</td>
    </tr>
    <tr>
        <td width="58%"><font size="3" face="Arial">Pro forma
        basic profit per share</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.60</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.40</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.26</font></p>
        </td>
    </tr>
    <tr>
        <td width="58%"><font size="3" face="Arial">Pro forma
        diluted profit per share</font></td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$0.59</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$1.36</font></p>
        </td>
        <td width="14%"><p align="right"><font size="3"
        face="Arial">$3.18</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">For purposes of the pro forma
presentation, the Company determined fair value using the
Black-Scholes option pricing model with the following weighted
average assumptions for grants in fiscal 2002, 2001 and 2000,
respectively: expected dividend yields of 1.4%, 1.4% and 1.5%;
risk-free </font></p>

<p align="center"><font size="3" face="Arial">F16</font></p>

<p><font size="3" face="Arial">interest rates ranging from 3.75%
to 4.55%, 3.76% to 5.07%, and 5.11% to 6.80%; expected volatility
ranging from 27% to 28%, 27% to 29%, and 21% to 29%; and expected
life of 5 years. The weighted average fair value of options
granted during 2002, 2001 and 2000, respectively was $1,946,000,
$3,741,000 and $952,000. The fair value is being amortized over
five years on an after-tax basis, where applicable for purposes
of pro forma 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 calculation of fair value in
this pro forma presentation are not indicative of future amounts
because it does not take into consideration future grants, any
difference between actual and assumed forfeitures.</font></p>

<p><font size="3" face="Arial"><b>11. 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 as at December 31, 2002 are as
    follows:</font></p>
</blockquote>
<div align="center"><center>

<table border="0" cellpadding="0" cellspacing="0" width="354">
    <tr>
        <td width="70%"><font size="3" face="Arial">2003</font></td>
        <td width="30%"><p align="right"><font size="3"
        face="Arial">$15,000,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="70%"><font size="3" face="Arial">2004</font></td>
        <td width="30%"><p align="right"><font size="3"
        face="Arial">12,024,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="70%"><font size="3" face="Arial">2005</font></td>
        <td width="30%"><p align="right"><font size="3"
        face="Arial">9,774,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="70%"><font size="3" face="Arial">2006</font></td>
        <td width="30%"><p align="right"><font size="3"
        face="Arial">9,060,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="70%"><font size="3" face="Arial">2007 and
        thereafter</font></td>
        <td width="30%"><p align="right"><font size="3"
        face="Arial"><u>38,149,000</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="70%"><font size="3" face="Arial">Total</font></td>
        <td width="30%"><p align="right"><font size="3"
        face="Arial">$84,007,000</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.</font></p>

<p><font size="3" face="Arial">(b) The Company's rent expense for
the years ended December 31, 2002, 2001 and 2000 was $14,108,000,
$10,909,000 and $8,233,000, 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 Fahnestock 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">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 $1,337,000 at December 31, 2002.</font></p>

<p><font size="3" face="Arial">The Company made contributions to
the plans of $1,398,000, $1,525,000 and $2,503,000 in 2002, 2001
and 2000, respectively.</font></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 2002 total approximately
$966,000 ($1,270,000 in 2001, $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 2002 was $373,000.</font></p>

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

<p align="center"><font size="3" face="Arial">F17</font></p>

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

<p><font size="3" face="Arial">(e) At December 31, 2002, the
Company has collateralized and uncollateralized letters of credit
for $34,500,000. Collateral for these letters of credit include
marketable securities of approximately $17,521,000, pledged to
one financial institution. </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 major
subsidiaries, Fahnestock and Freedom, are 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, 2002, Fahnestock had net
capital of $156,105,000, which was $147,310,000 in excess of the
$8,795,000 required to be maintained at that date. Freedom
computes its net capital requirement under the basic method
provided for in the Rule which requires that Freedom maintain net
capital equal to the greater of $250,000 or 6 2/3% of aggregate
indebtedness, as defined. At December 31, 2002, Freedom had net
capital of $2,877,000, which was $2,627,000 in excess of the
$250,000 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, 2002. The Company had no deposit requirements as of December
31, 2002.</font></p>

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

<blockquote>
    <blockquote>
        <p><font size="3" face="Arial"><b>12. Financial
        instruments with off-balance sheet risk and concentration
        of credit risk</b></font></p>
    </blockquote>
</blockquote>

<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><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, 2002,
the Company had approximately $581 million</font><font
color="#FF0000" size="3" face="Arial"> </font><font size="3"
face="Arial">of customer securities under customer margin loans
that are available to be pledged of which the Company has
repledged approximately $64,854,000 under securities loan
agreements. In addition, the Company has received collateral of
approximately $462,806,000 under securities</font></p>

<p align="center"><font size="3" face="Arial">F18</font></p>

<p align="center"><font size="3" face="Arial">borrow agreements
of which the Company has repledged approximately $446,956,000 as
collateral under securities loans agreements. Included in
receivable from brokers and clearing organizations are
receivables from three major U.S. broker-dealers totaling
$260,977,000.</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 from time to
time. Included in net revenues from principal transactions for
the year ended December 31, 2002 were net gains from derivatives
of approximately $710,000.</font></p>

<p><font size="3" face="Arial">At December 31, 2002 the Company
had outstanding commitments to buy and sell of $4,667,000 and
$1,160,000, 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><font size="3" face="Arial"><b>13. Acquisitions</b></font></p>

<p><font size="3" face="Arial">On March 12, 2002, through its
wholly-owned subsidiary, Freedom Investments, Inc., the Company
acquired the business operated by BUYandHOLD Securities
Corporation and affiliates for cash consideration of $2,297,000.
BUYandHOLD is an online brokerage business headquartered in
Edison, NJ, which provides its customers with a dollar-based
investing platform. BUYandHOLD operates as a division of Freedom
Investments, Inc. and its results since the date of acquisition
have been included in these consolidated financial statements.
The acquisition furthers the Company&#146;s growth and expansion
and adds to its client base, as well as providing additional
managerial expertise. The acquisition was accounted for by the
purchase method. The following table summarizes the estimated
fair value of assets acquired.</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="388">
    <tr>
        <td width="76%"><font size="3" face="Arial">Securities
        owned, at market value</font></td>
        <td width="24%"><p align="right"><font size="3"
        face="Arial">$297,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="76%"><font size="3" face="Arial">Furniture,
        fixtures and equipment</font></td>
        <td width="24%"><p align="right"><font size="3"
        face="Arial">2,000,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="76%"><font size="3" face="Arial">Purchase
        price paid</font></td>
        <td width="24%"><p align="right"><font size="3"
        face="Arial">$2,297,000</font></p>
        </td>
    </tr>
</table>

<p><font size="3" face="Arial">Presented below are unaudited pro
forma consolidated results of operations. Amounts presented for
2002 and 2001 give effect to the acquisition of the business of
BUYandHOLD Securities Corporation and affiliates as if the
transaction was consummated as at January 1, 2001. The pro forma
information is for comparative purposes only and is not
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 has realized significant cost savings as a
result of the consolidation of the operations of BUYandHOLD with
the Company&#146;s business, which is not reflected in this pro
forma presentation. The BUYandHOLD division has generated a
positive contribution to consolidated net profit since the
conversion of its client accounts to the Fahnestock platform in
September 2002.</font></p>

<table border="0" cellpadding="0" width="444">
    <tr>
        <td width="59%"><font size="3" face="Arial">(Unaudited)</font></td>
        <td colspan="2" width="41%"><p align="center"><font
        size="3" face="Arial">Year ended</font></p>
        <p align="center"><font size="3" face="Arial">December
        31,</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Expressed in
        thousands of dollars</font></td>
        <td width="21%"><p align="center"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="20%"><p align="center"><font size="3"
        face="Arial">2001</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%">&nbsp;</td>
        <td width="21%">&nbsp;</td>
        <td width="20%">&nbsp;</td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Revenue</font></td>
        <td width="21%"><p align="right"><font size="3"
        face="Arial">$285,511</font></p>
        </td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$270,479</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Profit before
        tax from operations</font></td>
        <td width="21%"><p align="right"><font size="3"
        face="Arial">$11,851</font></p>
        </td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$23,607</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Net profit</font></td>
        <td width="21%"><p align="right"><font size="3"
        face="Arial">$7,903</font></p>
        </td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$13,692</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Basic
        earnings per share </font></td>
        <td width="21%"><p align="right"><font size="3"
        face="Arial">$0.64</font></p>
        </td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$1.11</font></p>
        </td>
    </tr>
    <tr>
        <td width="59%"><font size="3" face="Arial">Diluted
        earnings per share</font></td>
        <td width="21%"><p align="right"><font size="3"
        face="Arial">$0.62</font></p>
        </td>
        <td width="20%"><p align="right"><font size="3"
        face="Arial">$1.07</font></p>
        </td>
    </tr>
</table>

<p align="center"><font size="3" face="Arial"><b>F19</b></font></p>

<p><font size="3" face="Arial"><b>14. Related Party Transactions</b></font></p>

<p><font size="3" face="Arial">The Company has notes and accounts
receivable for employees, net, of approximately $17,012,000 at
December 31, 2002. These amounts will be forgiven over a
three-year service period from the initial date of the loan and
are contingent on their continued employment with the Company.
The unamortized portion of the notes become due on demand in the
event the employee departs during the service period.</font></p>

<p><font size="3" face="Arial">At December 31, 2002, Fahnestock
has an outstanding guarantee of debt of approximately $6,200,000
that arose as a result of the acquisition of Josephthal Group,
Inc.</font></p>

<p><font size="3" face="Arial"><b>15. 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 89
branches, including commission and fee income earned on client
transactions, net interest earnings on client margin loans and
cash balances, stock loan activities and financing activities;
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; 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">In connection with the analysis
done in conjunction with the adoption of SFAS No. 142, the
Company has made changes to its reportable segments. Prior year
results have been restated based on the composition of the new
segments.</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, 2002, 2001 and 2000. 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="523">
    <tr>
        <td width="31%">&nbsp;</td>
        <td colspan="3" width="69%"><p align="center"><font
        size="3" face="Arial">Year ended December 31,</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%">&nbsp;</td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">2002</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">2001</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">2000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Revenue:</font></td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Private
        Client</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$189,796,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$171,588,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$215,515,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Capital
        Markets</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">73,005,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">73,752,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">82,700,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Asset
        Management</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">17,497,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">15,266,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">13,347,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Other</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">3,035,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">655,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">4,937,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Total</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$283,333,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$261,261,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$316,499,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Operating
        Income:</font></td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Private
        Client</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$(12,488,000)</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$9,924,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$30,722,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Capital
        Markets</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">14,418,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">12,835,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">26,537,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Asset
        Management</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">13,219,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">10,512,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">8,168,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Other</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">(2,232,000)</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">(1,659,000)</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">6,285,000</font></p>
        </td>
    </tr>
    <tr>
        <td width="31%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
        <td width="23%">&nbsp;</td>
    </tr>
    <tr>
        <td width="31%"><font size="3" face="Arial">Total</font></td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$12,917,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$31,612,000</font></p>
        </td>
        <td width="23%"><p align="right"><font size="3"
        face="Arial">$71,712,000</font></p>
        </td>
    </tr>
</table>

<p align="center"><font size="3" face="Arial">F20</font></p>

<p><font size="3" face="Arial">* Losses in the Private Client
segment are the result of unfavorable market conditions as well
as operating losses and acquisition costs relating to Josephthal,
Prime Charter and BUYandHOLD and include litigation, settlement
costs, retention and severance costs and the costs of
under-utilized facilities.</font></p>

<p><font size="3" face="Arial"><b>16. Subsequent events</b></font></p>

<p><font size="3" face="Arial">(a) Dividend</font></p>

<p><font size="3" face="Arial">On January 24, 2003, a cash
dividend of U.S.$0.09 per share (totalling $1,149,000) was
declared payable on February 28, 2003 to Class A non-voting and
Class B shareholders of record on February 14, 2003.</font></p>

<p><font size="3" face="Arial">(b) Acquisition </font></p>

<p><font size="3" face="Arial">On January 3, 2003, the Company
acquired the U.S. Private Client Division of CIBC World Markets
(&quot;World Markets&quot;) from the Canadian Imperial Bank of
Commerce (&quot;CIBC&quot;) and agreed to complete, at a later
date, the acquisition of the U.S. Asset Management Division of
World Markets. The Private Client Division employs approximately
620 brokers in 18 branch offices located across the United
States. Client assets at December 31, 2002 were approximately $30</font><font
color="#FF00FF" size="3" face="Arial"> </font><font size="3"
face="Arial">billion. The acquisition more than doubles the
Company&#146;s private client presence and provides managerial
expertise to the organization. The acquisition will be accounted
for by the purchase method. The Company has engaged an
independent valuator to identify and value tangible and
intangible acquired.</font></p>

<p><font size="3" face="Arial">The aggregate purchase price of
approximately $241 million was paid as follows:</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="590">
    <tr>
        <td width="17%"><font size="3" face="Arial">$13 million</font></td>
        <td width="83%"><font size="3" face="Arial">paid by
        Fahnestock in cash at closing from cash on hand</font></td>
    </tr>
    <tr>
        <td width="17%"><font size="3" face="Arial">$2 million</font></td>
        <td width="83%"><font size="3" face="Arial">will be paid
        by Fahnestock in cash upon completion of the acquisition
        of the Asset Management Division from cash on hand</font></td>
    </tr>
    <tr>
        <td width="17%"><font size="3" face="Arial">$65 million</font></td>
        <td width="83%"><font size="3" face="Arial">was paid with
        the proceeds of the issuance by Viner Finance Inc, a
        wholly-owned subsidiary of the Company, to World Markets
        of a zero coupon promissory note (i)</font></td>
    </tr>
    <tr>
        <td width="17%"><font size="3" face="Arial">$161 million</font></td>
        <td width="83%"><font size="3" face="Arial">was paid with
        the proceeds of debentures issued by E.A. Viner
        International Co., a wholly-owned subsidiary of the
        Company, to CIBC (ii)</font></td>
    </tr>
</table>

<blockquote>
    <blockquote>
        <blockquote>
            <p><font size="3" face="Arial">The zero coupon
            promissory note matures in five years and is
            repayable as underlying employee loans receivable of
            approximately $65 million which were assigned to
            Viner Finance Inc. by World Markets become due. Such
            payments are to be made notwithstanding whether any
            of the employees&#146; loans default.</font></p>
            <p><font size="3" face="Arial">Two debentures were
            issued. The first exchangeable debenture, in the
            principal amount of approximately $70 million, is
            exchangeable for approximately 3.1 million Class A
            Shares of the Company at the rate of $23.20 per
            share. The first exchangeable debenture matures in
            ten years, and bears interest at an annual rate of
            interest of 3% in the first year, 4% in years two
            through four, and 5% in years five through maturity.
            The convertible debenture, in the principal amount of
            approximately $91 million, is convertible into a
            second exchangeable debenture on the same terms as
            the first exchangeable debenture, subject to approval
            of the Company&#146;s Class A and Class B
            shareholders at the May 12, 2003 annual meeting. If
            shareholder approval is not obtained, the convertible
            debenture will mature in three years and will bear
            interest at 9.75% per annum from the date of January
            6, 2003.</font></p>
            <p><font size="3" face="Arial"></font>&nbsp;</p>
        </blockquote>
    </blockquote>
</blockquote>

<p align="center"><font size="3" face="Arial">F21</font></p>

<blockquote>
    <blockquote>
        <blockquote>
            <p><font size="3" face="Arial">In addition, the
            Company has entered into a credit arrangement with
            CIBC wherein it has borrowed $25 million and may
            borrow a further $25 million, as required, to finance
            retention loans to the new employees.</font></p>
            <p><font size="3" face="Arial"></font>&nbsp;</p>
        </blockquote>
    </blockquote>
</blockquote>

<p><font size="3" face="Arial">(c ) Arbitration Award</font></p>

<p><font size="3" face="Arial">In January 2003 the Company
received monetary damages plus interest in the amount of
$21,750,000 pursuant to an award by a National Association of
Securities Dealers Dispute Resolution Panel against another
broker-dealer in a raiding case involving the sales force of
First of Michigan Corporation, a company acquired by Fahnestock
in July 1997. These proceeds, which have been received, will be
included in the Company&#146;s results for the first quarter of
2003.</font></p>

<p><font size="3" face="Arial"><b>17. 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="0" cellspacing="0" width="638">
    <tr>
        <td width="40%">&nbsp;</td>
        <td colspan="5" width="60%"><p align="center"><font
        size="3" face="Arial"><b>Fiscal Quarters</b></font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial"><b>Year ended
        December 31, 2002</b></font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial"><b>Fourth</b></font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial"><b>Third</b></font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial"><b>Second</b></font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial"><b>First</b></font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial"><b>Total</b></font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Revenue</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$76,150</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$68,522</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$68,144</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$70,517</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$283,333</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Operating
        profit before income taxes</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$5,614</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$2,785</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$1,912</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$2,606</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$12,917</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Cumulative
        effect of a change in accounting principles</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$1,774</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$1,774</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Net profit</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$3,297</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$1,735</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$883</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$3,406</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$9,321</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Earnings per
        share:</font></td>
        <td width="11%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Basic</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$0.27</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.14</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.07</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.27</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.75</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">- Operations</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$0.27</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.14</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.07</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.13</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.61</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">- Cumulative
        effect of a change in </font></td>
        <td width="11%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">accounting
        principles</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">-</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.14</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.14</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Diluted</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$0.26</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.14</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.07</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.26</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.73</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Dividends per
        share</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$0.09</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.09</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.09</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.09</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.36</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Market price
        of Class A Shares:</font></td>
        <td width="11%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">High</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$28.45</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$23.15</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$25.70</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$28.88</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$28.88</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Low</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$19.77</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$20.00</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$21.26</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$24.85</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$19.77</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial"><b>Year ended
        December 31, 2001</b></font></td>
        <td width="11%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Revenue</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$77,142</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$53,748</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$56,876</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$73,495</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$261,261</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Profit before
        income taxes</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$3,484</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$5,657</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$6,851</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$15,620</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$31,612</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Net profit</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$2,780</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$3,334</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$3,919</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$9,117</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$19,150</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Earnings per
        share:</font></td>
        <td width="11%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Basic</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$0.22</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.27</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.32</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.74</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$1.55</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Diluted</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$0.22</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.26</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.30</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.71</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$1.50</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Dividends per
        share</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$0.09</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.09</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.09</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.09</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$0.36</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Market price
        of Class A Shares:</font></td>
        <td width="11%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">High</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$28.35</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$28.40</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$29.25</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$27.60</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$29.25</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%"><font size="3" face="Arial">Low</font></td>
        <td width="11%"><p align="right"><font size="3"
        face="Arial">$23.15</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$24.30</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$24.75</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$22.00</font></p>
        </td>
        <td width="12%"><p align="right"><font size="3"
        face="Arial">$22.00</font></p>
        </td>
    </tr>
    <tr>
        <td width="40%">&nbsp;</td>
        <td width="11%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
        <td width="12%">&nbsp;</td>
    </tr>
    <tr>
        <td colspan="6"><font size="3" face="Arial">The price
        quotations above were supplied by the New York Stock
        Exchange.</font></td>
    </tr>
</table>

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

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

<p align="center"><font size="3" face="Arial">F22</font></p>

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

<p><font 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="0" cellspacing="0" width="607">
    <tr>
        <td width="14%"><font size="3" face="Arial"><u>Number</u></font></td>
        <td width="68%"><font size="3" face="Arial"><u>Description</u></font></td>
        <td width="18%"><p align="right"><font size="3"
        face="Arial"><u>Page</u></font></p>
        </td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">2.1</font></td>
        <td width="68%"><font size="3" face="Arial">Asset
        Purchase Agreement dated as of December 9, 2002 and
        Amendment No. 1 to the Asset Purchase Agreement dated as
        of January 2, 2003, by and among Fahnestock Viner
        Holdings Inc., Viner Finance Inc., Canadian Imperial Bank
        of Commerce and CIBC World Markets Corp. (previously
        filed as an exhibit to Form 8-K dated January 17, 2003). </font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">2.2</font></td>
        <td width="68%"><font size="3" face="Arial">Asset
        Management Acquisition Agreement dated as of January 2,
        2003, by and among Fahnestock Viner Holdings Inc.,
        Fahnestock &amp; Co. Inc., Canadian Imperial Bank of
        Commerce and CIBC World Markets Corp. (previously filed
        as an exhibit to Form 8-K dated January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">3 (a)</font></td>
        <td width="68%"><font size="3" 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 width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">3(b)</font></td>
        <td width="68%"><font size="3" 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 width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">4.1</font></td>
        <td width="68%"><font size="3" face="Arial">Stakeholders
        Agreement dated December 9, 2002, by and among Fahnestock
        Viner Holdings Inc., Canadian Imperial Bank of Commerce,
        Albert G. Lowenthal, Phase II Financial L.P., Phase II
        Financial Limited, The Albert G. Lowenthal Foundation,
        Olga Roberts and Elka Estates Limited (previously filed
        as an exhibit to Form 8-K dated January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">4.2</font></td>
        <td width="68%"><font size="3" face="Arial">Registration
        Rights Agreement dated January 2, 2003, by and between
        Fahnestock Viner Holdings Inc. and Canadian Imperial Bank
        of Commerce (previously filed as an exhibit to Form 8-K
        dated January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">4.3</font></td>
        <td width="68%"><font size="3" face="Arial">Exchangeable
        Debenture dated January 6, 2003, by and between E. A.
        Viner International Co. and Canadian Imperial Bank of
        Commerce (previously filed as an exhibit to Form 8-K
        dated January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">4.4</font></td>
        <td width="68%"><font size="3" face="Arial">Interim
        Exchangeable Debenture dated January 6, 2003, by and
        between E. A. Viner International Co. and Canadian
        Imperial Bank of Commerce (previously filed as an exhibit
        to Form 8-K dated January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(f)</font></td>
        <td width="68%"><font size="3" 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 width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(h)</font></td>
        <td width="68%"><font size="3" 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 width="18%">&nbsp;</td>
    </tr>
</table>

<p><font face="Courier"></font>&nbsp;</p>

<p><font face="Courier"></font>&nbsp;</p>

<p align="center"><font face="Arial">E-1</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="607">
    <tr>
        <td width="14%"><font size="3" face="Arial">10(i)</font></td>
        <td width="68%"><font size="3" 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 width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(k)</font></td>
        <td width="68%"><font size="3" 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 width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(l)</font></td>
        <td width="68%"><font size="3" 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 width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(m)</font></td>
        <td width="68%"><font size="3" 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 width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(n)</font></td>
        <td width="68%"><font size="3" face="Arial">Fahnestock
        Viner Holdings Inc. 1996 Equity Incentive Plan Amendment
        No. 2 dated May 19, 2001 (previously filed as an exhibit
        to Form 10-K for the year ended December 31, 2001)</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(o)</font></td>
        <td width="68%"><font size="3" face="Arial">Performance-Based
        Compensation Agreement between Fahnestock Viner Holdings
        Inc. and Albert G. Lowenthal dated January 1, 2001
        (previously filed as an exhibit to Form 10-K for the year
        ended December 31, 2001)</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(p)</font></td>
        <td width="68%"><font size="3" face="Arial">Credit
        Agreement dated January 2, 2003, by and between
        Fahnestock Viner Holdings Inc. and Canadian Imperial Bank
        of Commerce (previously filed as an exhibit to Form 8-K
        dated January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(q)</font></td>
        <td width="68%"><font size="3" face="Arial">Amended and
        Restated Promissory Note dated January 15, 2003, made by
        Viner Finance Inc. for the benefit of CIBC World Markets
        Corp (previously filed as an exhibit to Form 8-K dated
        January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(r)</font></td>
        <td width="68%"><font size="3" face="Arial">Non-Competition
        Agreement dated January 2, 2003, by and among Canadian
        Imperial Bank of Commerce and CIBC World Markets Corp.,
        Fahnestock &amp; Co. Inc. and Viner Finance Inc.
        (previously filed as an exhibit to Form 8-K dated January
        17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(s)</font></td>
        <td width="68%"><font size="3" face="Arial">Non-Solicitation
        Agreement dated January 2, 2003 by and among Fahnestock
        Viner Holdings Inc., Fahnestock &amp; Co. Inc., Canadian
        Imperial Bank of Commerce and CIBC World Markets Corp.
        (previously filed as an exhibit to Form 8-K dated January
        17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">10(t)</font></td>
        <td width="68%"><font size="3" face="Arial">Clearing
        Agreement dated January 2, 2003 between Fahnestock &amp;
        Co. Inc. and CIBC World Markets Corp. (previously filed
        as an exhibit to Form 8-K dated January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
</table>

<p><font face="Courier"></font>&nbsp;</p>

<p><font face="Courier"></font>&nbsp;</p>

<p><font face="Courier"></font>&nbsp;</p>

<p align="center"><font face="Arial">E-2</font></p>

<table border="0" cellpadding="0" cellspacing="0" width="607">
    <tr>
        <td width="14%"><font size="3" face="Arial">10(u)</font></td>
        <td width="68%"><font size="3" face="Arial">Shareholders
        Agreement dated December 9, 2002, by and among Fahnestock
        Viner Holdings Inc., Albert G. Lowenthal, Phase II
        Financial L.P., Phase II Financial Limited, The Albert G.
        Lowenthal Foundation, Olga Roberts and Elka Estates
        Limited (previously filed as an exhibit to Form 8-K dated
        January 17, 2003).</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">21</font></td>
        <td width="68%"><font size="3" face="Arial">Subsidiaries
        of the registrant (filed herewith) *</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">99.1</font></td>
        <td width="68%"><font size="3" face="Arial">Certification
        pursuant to 18 U.S.C. Section 1350 signed by A.G.
        Lowenthal (filed herewith) *</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
    <tr>
        <td width="14%"><font size="3" face="Arial">99.2</font></td>
        <td width="68%"><font size="3" face="Arial">Certification
        pursuant to 18 U.S.C. Section 1350 signed by E.K. Roberts
        (filed herewith) *</font></td>
        <td width="18%">&nbsp;</td>
    </tr>
</table>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

<p align="center"><font face="Arial">E-3</font></p>

<p><font face="Arial"></font>&nbsp;</p>


<pre><font face="Arial">
EXHIBIT 99.1


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350

         The undersigned, Albert G. Lowenthal, Chairman and Chief Executive Officer of Fahnestock Viner Holdings Inc. (the &quot;Company&quot;), hereby certifies that to his knowledge the Annual Report on Form 10-K for the period ended December 31, 2002 of the Company filed with the Securities and Exchange Commission on the date hereof  (the &quot;Report&quot;) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period specified.

         Signed at the New York, New York, this 17<sup>th</sup> day of March, 2003.


                                                       &quot;A.G. Lowenthal&quot;
                                                       Albert G. Lowenthal
			       Chairman and Chief Executive Officer



EXHIBIT 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350


         The undersigned, Elaine K. Roberts, President and Chief Financial Officer of Fahnestock Viner Holdings Inc. (the &quot;Company&quot;), hereby certifies that to her knowledge the Annual Report on Form 10-K for the period ended December 31, 2002 of the Company filed with the Securities and Exchange Commission on the date hereof  (the &quot;Report&quot;) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period specified.

         Signed at the City of Toronto, Ontario, Canada, this 17<sup>th</sup> day of March, 2003.



                                                       &quot;E.K. Roberts&quot;
                                                       Elaine K. Roberts
			       President and Chief Financial Officer

</font></pre>

<p><font face="Arial"></font>&nbsp;</p>

<p><font size="3" face="Arial"></font>&nbsp;</p>
</body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>2
<FILENAME>ex2102.htm
<DESCRIPTION>SUBSIDIARIES OF REGISTRANT
<TEXT>
<!DOCTYPE HTML PUBLIC "-//IETF//DTD HTML//EN">
<html>


<body bgcolor="#FFFFFF">

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

<p><font face="Arial">SUBSIDIARIES OF THE REGISTRANT</font></p>

<p><font face="Arial">AS AT DECEMBER 31, 2002</font></p>

<p><font face="Arial">(100% owned)</font></p>

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

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

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

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

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

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

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

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

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

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

<blockquote>
    <blockquote>
        <blockquote>
            <blockquote>
                <blockquote>
                    <blockquote>
                        <blockquote>
                            <p><font face="Arial">-OLD MICHIGAN
                            CORPORATION (Delaware)</font></p>
                            <p><font face="Arial">-CRANBROOK
                            CAPITAL MANAGEMENT, INC. (Michigan)</font></p>
                            <p><font face="Arial">-FIRST OF
                            MICHIGAN VENTURE CAPITAL ASSOCIATES,
                            INC. (Michigan)</font></p>
                        </blockquote>
                    </blockquote>
                    <p><font face="Arial">PACE SECURITIES INC.
                    (New York)</font></p>
                    <p><font face="Arial">FREEDOM INVESTMENTS,
                    INC. (Delaware)</font></p>
                    <p><font face="Arial">REICH &amp; CO.INC.
                    (Alabama)</font></p>
                    <p><font face="Arial">GRAND CHARTER GROUP,
                    INCORPORATED (Delaware)</font></p>
                    <blockquote>
                        <blockquote>
                            <p><font face="Arial">PRIME CHARTER
                            LTD. (Delaware)</font></p>
                        </blockquote>
                    </blockquote>
                    <p><font face="Arial">JOSEPHTHAL GROUP, INC.
                    (Delaware)</font></p>
                </blockquote>
            </blockquote>
        </blockquote>
    </blockquote>
</blockquote>

<blockquote>
    <blockquote>
        <blockquote>
            <blockquote>
                <blockquote>
                    <blockquote>
                        <blockquote>
                            <p><font face="Arial">JOSEPHTHAL
                            &amp; CO. INC. (New York)</font></p>
                        </blockquote>
                    </blockquote>
                </blockquote>
            </blockquote>
        </blockquote>
    </blockquote>
</blockquote>
</body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>ex99102.htm
<DESCRIPTION>CERTIFICATION OF CEO
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<pre><font face="Arial">EXHIBIT 99.1


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350

         The undersigned, Albert G. Lowenthal, Chairman and Chief Executive Officer of Fahnestock Viner Holdings Inc.
(the &quot;Company&quot;), hereby certifies that to his knowledge the Annual Report on Form 10-K for the period ended
December 31, 2002 of the Company filed with the Securities and Exchange Commission on the date hereof
(the &quot;Report&quot;) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934
and the information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company for the period specified.

         Signed at the New York, New York, this 17<sup>th</sup> day of March, 2003.


                                                       &quot;A.G. Lowenthal&quot;
                                                       Albert G. Lowenthal
			       Chairman and Chief Executive Officer
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<TYPE>EX-99
<SEQUENCE>4
<FILENAME>ex99202.htm
<DESCRIPTION>CERTIFICATION OF CFO
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<pre><font face="Arial">EXHIBIT 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350


         The undersigned, Elaine K. Roberts, President and Chief Financial Officer of Fahnestock Viner Holdings Inc.
(the &quot;Company&quot;), hereby certifies that to her knowledge the Annual Report on Form 10-K for the period ended
December 31, 2002 of the Company filed with the Securities and Exchange Commission on the date hereof
(the &quot;Report&quot;) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934
and the information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company for the period specified.

         Signed at the City of Toronto, Ontario, Canada, this 17<sup>th</sup> day of March, 2003.



                                                       &quot;E.K. Roberts&quot;
                                                       Elaine K. Roberts
			       President and Chief Financial Officer</font></pre>
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