UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K

(Mark One)

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 20022003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________.

Commission file number 1-12043

FAHNESTOCK VINEROPPENHEIMER HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Ontario, Canada 98-0080034

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)

P.O. Box 2015, Suite 1110

20 Eglinton Avenue West

Toronto, Ontario, Canada M4R 1K8

(Address of principal executive offices) (Zip Code)

Registrant’s Telephone number, including area code: (416) 322-1515

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange

Title of each class on which registered

Class A non-voting shares New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

Title of each class

Not Applicable

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][ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]

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 [ ]

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,June 30, 2003 was $284,982,000$355,695,000 based on the closing price of the Class A non-voting shares on the New York Stock Exchange as at March 17,June 30, 2003 of $22.50.$27.96.

The number of shares of the Company’s Class A non-voting shares and Class B voting shares (being the only classes of common stock of the Company), outstanding on March 17, 20039, 2004 was 12,665,85113,322,416 and 99,680 shares, respectively.

TABLE OF CONTENTS

PART I

Item 1. BUSINESS

Oppenheimer Holdings Inc., formerly called Fahnestock Viner Holdings Inc., formerlyprior to that called E.A. Viner Holdings Limited and immediately prior to that called Goldale Investments Limited (the "Company"), maintains its registered office and principal place of business at 20 Eglinton Avenue West, Suite 1110, Toronto, Ontario Canada M4R 1K8 and its telephone number is (416) 322-1515.

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.

The Company is a holding company and carries on no active business. It owns, directly or through intermediate subsidiaries, Oppenheimer & Co. Inc. (formerly called Fahnestock & Co. Inc. (formerlyand prior to that called Edward A. Viner & Co., Inc.), a New York corporation ("Fahnestock"Oppenheimer"); Freedom Investments, Inc., a Delaware corporation ("Freedom"); Oppenheimer Asset Management Inc. (formerly called Hudson Capital Advisors Inc.), a New York corporation ("Hudson Capital"OAM"); Evanston Financial, Inc., a New York corporation ("Evanston"); since September 17, 2001, Josephthal & Co. Inc., a New York corporation ("Josephthal"); and since November 9, 2001, Prime Charter, Ltd., a Delaware corporation ("Prime") and since January 17, 2002, Fahnestock Canada Inc., an Ontario corporation ("FCI"). FahnestockOppenheimer, OAM and Freedom are sometimes collectively referred to as the "Operating Subsidiaries". 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 isOppenheimer and OAM are the principal Operating Subsidiary. FahnestockSubsidiaries. Oppenheimer 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 wasOAM is engaged in the investment advisory business in the United States until July 1999. ItsStates. In addition, Oppenheimer conducts investment advisory business is now part ofunder the name Fahnestock Asset Management, a division of Fahnestock.Oppenheimer. The business formerly conducted by Josephthal and Prime is now conducted by Fahnestock.Oppenheimer. The private client business acquired from CIBC World Markets Inc. in January 2003 is being conducted by Fahnestock under the name Oppenheimer & Co., a division of Fahnestock.Oppenheimer. The asset management business acquired from CIBC World Markets in June 2003 is being conducted by OAM. The Company operates a discount brokerage business through Freedom. Freedom also services independent financial consultants.

In September 2001, through a wholly-owned subsidiary, FahnestockOppenheimer acquired 91.6% of the outstanding common stock of Josephthal Group, IncInc. ("Josephthal Group"). 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’sOppenheimer’s system in November 2001. FahnestockOppenheimer acted as a clearing agent for Josephthal until December 31, 2001 when the accounts of Josephthal became accounts of Fahnestock.Oppenheimer. 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.Oppenheimer.

In November 2001, through a wholly-owned subsidiary, FahnestockOppenheimer acquired 100% of the outstanding common stock of Grand Charter Group Incorporated ("Grand Charter") 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’s accounts became FahnestockOppenheimer accounts. Prime ceased to be a broker-dealer effective January 22, 2002 and since January 1, 2002 its business has been conducted by Fahnestock.Oppenheimer. 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’sOppenheimer’s clearing platform.

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. BUYandHOLD operates as a division of Freedom. The acquisition was accounted for by the purchase method.

In May 2002, Oppenheimer Trust Company received a charter as a limited purpose bank domiciled in New Jersey. Oppenheimer Trust Company offers trust services to the clients of Oppenheimer and OAM.

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 dateon June 4, 2003 acquired the U.S. Asset Management Division of CIBC World Markets for a total consideration of approximately $241$242 million, of which approximately $13$16 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 beprivate client business is being operated as theby Oppenheimer Division of Fahnestock and addsadded approximately 620 account executives in 18 branches located in the major financial centers of the United States.States to its business at the closing date. Client assets of the Private Client Division arewere approximately $30 billion.billion at the closing date. Assets under management in the Asset Management Division arewere approximately $8.5 billion. The asset management business is being operated by OAM. The acquisition is being accounted for by the purchase method. This transaction more than doubles the Company’s retail exposure and asset base.

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 FahnestockOppenheimer in July 1997. During the fourth quarter of 1997, approximately 20% of the "pre-raid" staff of financial consultants were hired away in a raid. These proceeds, which were received in January 2003, were included in the Company’s results for the first quarter of 2003.

In January 2004, the Company received monetary damages plus interest in the amount of approximately $2.7 million, pursuant to an award by a National Association of Securities Dealers Dispute Resolution Panel against another broker dealer in a raiding case involving financial consultants of Josephthal & Co. Inc., a company acquired by Oppenheimer in September 2001. These proceeds, which were received in January 2004, will be included in the Company’s results for the first quarter of 2003.2004.

At December 31, 2002, Fahnestock2003, Oppenheimer employed 1,1021,704 full-time registered representatives and approximately 6521,309 other employees in trading, research, investment banking, investment advisory services, public finance and support positions in the United States for FahnestockOppenheimer, OAM and Freedom, for a total of approximately 1,7543,013 full-time employees. FahnestockOppenheimer and Freedom are broker-dealers registered with the Securities and Exchange Commission (the "SEC") and in all other jurisdictions where their respective businesses require registration. Fahnestock,Oppenheimer, in addition to its United States operations, has threetwo 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 ("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.

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.

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.

FahnestockOppenheimer is a member of the New York Stock Exchange, Inc. ("NYSE"), the National Association of Securities Dealers, Inc. ("NASD"), the American Stock Exchange, Inc. ("AMEX"), the Chicago Stock Exchange Incorporated ("CSE"), the Chicago Board Options Exchange, Inc. ("CBOE"), the Philadelphia Stock Exchange, Inc. ("PHLX"), the New York Futures Exchange, Inc. ("NYFE"), the National Futures Association ("NFA") and the Securities Industry Association ("SIA"). In addition, FahnestockOppenheimer has satisfied the requirements of the Municipal Securities Rulemaking Board ("MSRB") 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.

Fahnestock,Oppenheimer, which acts as a clearing broker and omnibus broker for Freedom and carries an omnibus account for the BUYandHOLD Division of Freedom, which is itself a self-clearing firm, is also a member of the Securities Investor Protection Corporation ("SIPC"), 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 2003, 2002 2001 and 2000.2001. In addition, FahnestockOppenheimer has purchased protection from Aetna Casualty and Surety CompanyLloyds of London of an additional $24,500,000$49,500,000 per customer. In February 2004, the protection purchased from Lloyds of London was increased to $74,500,000 per customer.

The Company’s internet address is www.fahnestock.com.www.opco.com. 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 other SEC filings and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

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.

The Company derives most of its revenues from the operations of its principal subsidiary, Fahnestock.subsidiaries, Oppenheimer and OAM. Although maintained as separate entities, the operations of the Company's brokerage subsidiaries are closely related because FahnestockOppenheimer 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.Oppenheimer.

COMMISSIONS

A significant portion of Fahnestock'sOppenheimer'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 FahnestockOppenheimer has formulated. Often, discounts are granted to customers, generally on large trades or to active customers. FahnestockOppenheimer 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.

Commission business relies heavily on the services of financial consultants with good sales production records.records and good reputations. Competition among securities firms for such personnel is intense. Retail clients' accounts are serviced by retail financial consultantsadvisors (excluding the institutional financial consultants referred to below) in Fahnestock'sOppenheimer's offices. Fahnestock'sOppenheimer's institutional clients, which include mutual funds, banks, insurance companies, and pension and profit-sharing funds, are serviced by institutional brokers.financial advisors. (For a discussion of regulatory matters, see "Regulation".) 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.

Securities Clearance Activities

FahnestockOppenheimer 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, FahnestockOppenheimer derives substantial interest revenue from its securities clearing activities. See "Interest - Securities Borrowed And Loaned." FahnestockOppenheimer provides margin financing for the clients of the securities firms for which it clears, with the securities firms guaranteeing the accounts of their clients. FahnestockOppenheimer also extends margin credit directly to its correspondent firms to the extent that such firms hold securities positions for their own account. Because FahnestockOppenhimer must rely on the guarantees and general credit of its correspondent firms, FahnestockOppenheimer 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 "Risk Management."

The correspondent clearing procedure for fully-disclosed accounts involvesCommodities

Oppenheimer is a seriesfutures commission merchant and clears commodities transactions on a number of steps: the correspondent broker opens an accountcommodities exchanges for its clients that trade commodities. Such client commodity accounts contain significant leverage and thus have a greater than average likelihood of becoming unsecured or for clients incurring substantial losses, that ultimately could result in a loss to the Company.

PRINCIPAL TRANSACTIONS

In the regular course of its business, Oppenheimer takes securities positions as a market maker to facilitate customer transactions and takesfor investment purposes. In making markets and when trading for its own account, Oppenheimer exposes its own capital to the customer's order forrisk of fluctuations in market value. Trading profits (or losses) depend primarily upon the purchase and sale of securities. The order is then executed by the correspondent firm or Fahnestock. Fahnestock completes the transaction by taking possessionskills of the customer's cash, ifemployees engaged in market making and position taking, the amount of capital allocated to positions in securities are being purchased, or certificates, if securities are being sold, borrowing securities if securities are being sold, lendingand 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 detailsgeneral trend 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 involvedprices in the clearing process requiresecurities markets.

Oppenheimer monitors its risk by maintaining its securities positions at or below certain pre-established levels. These levels reduce certain opportunities to realize profits in the performanceevent that the values of a seriessuch securities increase. However, they also reduce the risk of complex steps, manyloss in the event of which are accomplished with data processing equipment.

Floor Brokerage

In additiondecreases in such values and result in controlled interest costs incurred on funds provided 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, Fahnestockmaintain such positions. Oppenheimer also attempts to utilize excess execution capacity by executing ordersminimize risk with respect to its principal transactions thereby reducing the need to hold securities inventory positions for other brokerage firms. Fahnestock bills such other firms at prevailing rateseven short periods of time.

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. Oppenheimer takes both long and short positions in those securities in which are set onit makes a basis competitive with rates charged by other brokerage firms performing similar functions.market.

PRINCIPAL TRANASACTIONS

Market-Making

FahnestockEquities. Oppenheimer acts as both principal and agent in the execution of its customers' orders in the over-the-counter market. FahnestockOppenheimer buys, sells and maintains an inventory of a security in order to "make a market" in that security. (To "make a market" 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, FahnestockOppenheimer 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 FahnestockOppenheimer makes a market, FahnestockOppenheimer 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 FahnestockOppenheimer makes a market also include those of issuers which are followed by Fahnestock'sOppenheimer's research department.

Trading profits or losses depend on (i) the skills of those employees engaged Oppenheimer makes markets in market-making activities, (ii) the capital allocated to holding positions inapproximately over 650 over-the-counter equity 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.

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 "Net Capital Requirements" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

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 incometrades 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 institutionalfacilitate customer transactions. As a result of the move to decimal trading in the Nasdaq Stock Market, which began for all stocks in April 2001, narrowing bid-ask spreads and retail customers.smaller price increments are being experienced and are resulting in a decrease in trading revenue earned from the Company’s market making operations. Oppenheimer also trades in OTC Bulletin Board and pink sheet securities. These securities are typically more illiquid, have smaller capitalizations and may involve more risk than Nasdaq-traded securities.

High Yield. Oppenheimer also trades non-investment grade public and private debt securities, as well as distressed securities. Risk of loss upon default by the borrower is significantly greater with respect to unrated or less than investment grade corporate debt securities than with other corporate debt securities. These securities are generally unsecured and are often subordinated to other creditors of the issuer. These issuers usually have high levels of indebtedness and are more sensitive to adverse economic conditions, such as recession or increasing interest rates, than are investment grade issuers. There is a limited market for some of these securities and market quotes are available only from a small number of dealers.

Other Trading and Investment Activities

FahnestockOppenheimer 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. FahnestockOppenheimer 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 "junk bonds").UIT’s. These departments continually purchase and sell securities and make markets in order to make a profit on the inter-dealer spread. Although FahnestockOppenheimer from time to time holds an inventory of securities, more typically, it seeks to match customer buy and sell orders. Fahnestock doesIn addition, Oppenheimer or OAM hold proprietary positions in equity or fixed income securities in which it may not act as a dealer.

The size of its securities positions on any one day may not be representative of Oppenheimer'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 Oppenheimer may carry "bridge loans" (i.e.is limited by the Net Capital Rule. See "Net Capital Requirements" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

In the case of OAM, it holds investments as general partner in a range of investment partnerships ("hedge funds"), short-term loans made in anticipationwhich are offered to its qualified clients as well as qualified clients of intermediate-term or long-term financing). No substantial losses relating to Fahnestock's risk arbitrage activities have been incurred.other broker-dealers.

Investment Income

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.

Principal transactions with customers as well as market-making and other trading and investment activities accounted for approximately 21%20%, 22%21% and 27%22%, respectively, of the Company’s total revenues for the fiscal years ended December 31, 2003, 2002 and 2001, and 2000, respectively.

Risk Management

Fahnestock's principal transactionsCredit Risk. Credit risk represents the loss that the Company would incur if a client, counterparty or issuer of securities or other instruments held by the Company fails to perform its contractual obligations. The Company follows industry practice to reduce credit risk related to various investing and brokeragefinancing activities exposeby obtaining and maintaining collateral. The Company adjusts margin requirements if it to credit andbelieves the risk exposure is not appropriate based on market risks. conditions. When FahnestockOppenheimer 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, FahnestockOppenheimer 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'sOppenheimer's securities positions are subject to fluctuations in market value and liquidity.

FahnestockOppenheimer 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. FahnestockOppenheimer may from time to time attempt to reduce market risk through the utilization of various derivative securities as a hedge to market exposure.

In its market-making activities, FahnestockOppenheimer must provide liquidity in the equities for which it makes markets. As a result of this event, FahnestockOppenheimer has risk containment policies in place, which limit position size and monitor transactions on a minute-to-minute basis.

In addition to monitoring the credit-worthiness of its customers, FahnestockOppenheimer imposes more conservative margin requirements than those of the NYSE. Generally, FahnestockOppenheimer 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 equity securities in a customer's account.

Operational Risk. Operational risk generally refers to the risk of loss resulting from the Company’s operations, including, but not limited to, improper or unauthorized execution and processing of transactions, deficiencies in its operating systems, business disruptions and inadequacies or breaches in its internal control processes. The Company operates in diverse markets and it is reliant on the ability of its employees and systems to process high numbers of transactions often within short time frames. In the event of a breakdown or improper operation of systems, human error or improper action by employees, the Company could suffer financial loss, regulatory sanctions or damage to its reputation. In order to mitigate and control operational risk, the Company has developed and continues to enhance policies and procedures that are designed to identify and manage operational risk at appropriate levels.

Legal Risk. Legal 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 business. The Company has various procedures addressing issues such as regulatory capital requirements, sales and trading practices, use of and safekeeping of customer funds, credit granting, collection activities, money-laundering and record keeping.

For further discussion of risk management, see Item 7a,7A, Quantitative and Qualitative Disclosures about Market Risk.

DISASTER RECOVERY

The events of September 11, 2001 heightened the need for comprehensive disaster recovery plans. Disaster recovery plans exist for the Company’s critical systems, and redundancies are built into the systems as deemed appropriate. The Company believes that its disaster recovery program, including off-site back-up technology and operational facilities, is adequate to handle a reasonable business disruption. However, there can be no assurances that a disaster directly affecting the Company’s headquarters or its operations center would not have a material adverse impact on the Company. Insurance and other safeguards might only partially reimburse the Company for its losses. The Company also uses periodic self-assessments, internal audit reviews and independent consultants as a further check on operational risk and exposure.

The Company maintains disaster recovery procedures and a site in Edison New Jersey at which it houses back-up facilities to its main operations in New York City. Subsequent to 9/11/01, the Company has substantially upgraded its investment in such procedures and facilities, but there remains substantial risk and uncertainty with respect to the efficacy of such planning due to the complications of moving its personnel and business to any such facility.

INTEREST

FahnestockOppenheimer derives neta substantial portion of its interest incomerevenues, and incurs a substantial portion of its interest expenses, in connection with its securities borrowed/ securities loaned activity. Oppenheimer also earns interest on its securities portfolio, on its operating and segregated balances, on its margin lending activity and on certain of its investments. Oppenheimer also incurs interest expense on its long-term debt, bank loans and free credit balances in the accounts of customers.

Securities Borrowed/ Securities Loaned. In connection with both its trading and brokerage activities, Oppenheimer borrows securities to cover short sales and to complete transactions in which customers have failed to deliver securities by the required settlement date, and lends securities to other brokers and dealers for similar purposes. Oppenheimer has an active securities borrowed and lending matched book business ("Matched Book"), in which Oppenheimer borrows securities from one party and lends them to another party. When Oppenheimer borrows securities, Oppenheimer provides cash to the lender as collateral, which is reflected in the Company’s financial statements as receivable from brokers and dealers. OPCO earns interest revenues on this cash collateral. Similarly, when Oppenheimer lends securities to another party, that party provides cash to Oppenheimer as collateral, which is reflected in the Company’s financial statements as payable to brokers and dealers. Oppenheimer pays interest expense on the cash collateral received from the financing of customer margin loans and its securities lending activities. See "Customer Financing" and "Securities Borrowed and Loaned."party borrowing the securities.

Customer Financing

Customers' securitiesMargin Lending. Customers’ transactions are effectedexecuted on either a cash or margin basis. In a margin transactions, Fahnestocktransaction, Oppenheimer extends credit to the customer, collateralized by securities and/orand cash in the customer'scustomer’s account, for a portion of the purchase price, and receives income from interest charged on such extensions of credit. The customerMargin lending by Oppenheimer is charged for suchsubject to the margin financing at interest rates based upon the brokers’ call rate (the prevailing interest rate charged by banks on collateralized loans to broker-dealers), to which is added an additional amount of up to 2%.

In eachrules of the last five years, financing activities conducted on behalfBoard of its customers have provided Fahnestock with a substantial sourceGovernors of revenue. A substantial portion of these financing activities are undertaken in connection with Fahnestock's securities clearance businessthe Federal Reserve System, NYSE margin requirements and its own retail business. See "Commissions." The amount of Fahnestock's interest revenue is affected by the volume of customer and securities borrowings and by prevailing interest rates.Oppenheimer’s internal policies.

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'sOppenheimer’s business, including the extension of margin credit. Subject to applicable regulations, interest is paid by FahnestockOppenheimer on most, but not all, of such free credit balances awaiting reinvestment by customers. The customer is charged for such margin financing at interest rates derived from the company’s "base" rate as defined, as well as the brokers’ loan rate, and LIBOR to which is added an additional amount of up to 2%. To the extent that the use of free credit balances reduces borrowings, interest expense is reduced.

Margin lending by FahnestockIn permitting a customer to purchase securities on margin, Oppenheimer 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 ofthat a market decline that wouldcould reduce the value of its collateral below the customer'samount of the customer’s indebtedness beforeand that the collateral couldcustomer might otherwise be sold. Under applicable NYSE rules, inunable to repay the eventindebtedness.

In addition to monitoring the creditworthiness of a decline inits customers, Oppenheimer also considers the market valuetrading liquidity and volatility of the securities it accepts as collateral for its margin loans. Trading liquidity and volatility may be dependent, in a margin account, Fahnestockpart, upon the market in which the security is obligated to requiretraded, the customer to deposit additional securities or cash in the account so that at all times the loan to the customer for the purchasenumber of marginable securities is no greater than 75%outstanding shares of the market value of suchissuer, events affecting the issuer and/or securities markets in general, and whether or cash in the account.

Securities Borrowed and Loaned

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 (basednot there are any legal restrictions on the amount of cash deposited) or pays a fee calculated to yield a negotiated rate of return.

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 valuesale of the securities. Margin adjustmentsOppenheimer considers all of these factors at the time it agrees to extend credit to customers and continues to review its extensions of credit on an ongoing basis.

The majority of Oppenheimer’s margin loans are usually made to United States citizens or to corporations which are domiciled in the United States. Oppenheimer may extend credit to investors or corporations who are citizens of foreign countries or who may reside outside the United States. Oppenheimer believes that should such foreign investors default upon their loans and should the collateral for those loans be insufficient to satisfy the investors’ obligations, it may be more difficult to collect such investors’ outstanding indebtedness than would be the case if investors were citizens or residents of the United States.

Although Oppenheimer attempts to minimize the risk associated with the extension of credit in margin accounts, there is no assurance that the assumptions on which Oppenheimer bases its decisions will be correct or that it is in a daily basis throughposition to predict factors or events which will have an adverse impact on any individual customer or issuer, or the facilities of various clearing houses.

securities markets in general.

INVESTMENT BANKING BUSINESS

Fahnestock manages the underwritingOppenheimer offers corporations (primarily middle-market growth companies) a full range of both corporatefinancial advisory services as well as debt, equity, 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 whichconvertible financing services. Products include underwriting, mergers and acquisitions,acquisition financing, private placements valuations, financial advisory work and other investment banking matters.

The management of and participation in public offerings involve significantof debt and equity securities, debt refinancings, restructuring, merger and acquisition and exclusive sales advice, structured financings and securitizations. Investment banking activity involves both economic and regulatory risks. An underwriter may incur losses if it is unable to resell at a profitsell the securities it has purchased. Under federal and state securitiesis committed to purchase or if it is forced to liquidate its commitments at less than the agreed upon purchase price. In addition, under the Securities Act and other laws and court decisions with respect to underwriters’ liability and limitations on indemnification of underwriters by issuers, an underwriter is subject to substantial potential liability for material misstatements or omissions that are judged to be material in prospectuses and other communications relatedwith respect to underwriting.

Underwritingunderwritten offerings. Further, underwriting commitments causeconstitute a charge against net capital. Consequently, the aggregate amount ofcapital and Oppenheimer’s underwriting commitments at any one time may be limited by the amountrequirement that it must, at all times, be in compliance with the Uniform Net Capital Rule 15c3-1 of net capital available. the SEC.

Oppenheimer intends to continue to pursue opportunities for its corporate customers, which may require it to finance and/or underwrite the issuance of securities. Under circumstances where Oppenheimer is required to act as an underwriter or to take a position in the securities of its customers, Oppenheimer O may assume greater risk than would normally be assumed in its normal trading activity. Oppenheimer also participates as an underwriter in the syndication of issues managed by other securities firms.

The Company derived 8%7%, 4%8% and 3%4% of its revenues from underwriting in 2003, 2002 2001 and 2000,2001, respectively. See "Net Capital Requirements" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

INVESTMENT ADVISORY BUSINESS

FahnestockOppenheimer (through its Fahnestock Asset Management division) providesand OAM provide 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'sOppenheimer 's customary commission schedule.

At December 31, 2002 Fahnestock2003, Oppenheimer and OAM had approximately $869 million$9.59 billion under management. The agreements under which the portfolios are managed on behalf of institutions and other investors generally provide for termination by either party at any time.

OAM is a broad-based advisory platform that includes: Investment Advisory Services (IAS), Strategic Asset Review (STAR), and Portfolio Advisory Services (PAS), collectively the consulting services; Oppenheimer Investment Advisors (OIA), core internally managed client accounts; OMEGA, financial advisor discretionary fee-based advisory accounts; and Alternative Investments Group, non-traditional investment strategies within SEC-registered funds.

Fahnestock Asset Management and the OMEGA Group provide customized discretionary investment management services and products to high net worth individuals and families, endowments and foundations and institutions. They seek to provide portfolio management, client service and other financial services in a disciplined manner that is tailored to meet its clients’ particular needs and objectives.

Importance of Investment Performance.

The Company believes that investment performance is one of the most important factors for the growth of assets under management for a company in the asset management business. Poor investment performance could impair growth of the Company’s asset management business because existing clients might withdraw funds and the Company’s ability to attract funds from existing and new clients might diminish.

Investment advisory and administrative contracts are generally terminable at will or upon relatively short notice. Institutional and individual clients can terminate their relationships with an asset manager, reduce the aggregate amount of assets under management, or shift their funds to other types of accounts with different rate structures for any number of reasons, including investment performance, changes in prevailing interest rates, loss of key investment management personnel and financial market performance. In a declining stock market, the withdrawal of assets from accounts could accelerate.

Other Business

The Company operates a mortgage banking business through Evanston Financial Corporation.

ADMINISTRATION AND OPERATIONS

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 FahnestockOppenheimer and its correspondents; and general office services. FahnestockOppenheimer employs approximately 200380 persons in its administration and operations departments at its head office, and approximately 5560 persons in its administration and operations departments in Detroit.Detroit and over 100 administrative and operations persons located in its branch offices.

There is considerable fluctuation during any year and from year to year in the volume of transactions FahnestockOppenheimer must process. FahnestockOppenheimer 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 FahnestockOppenheimer liable for disciplinary action by governmental and self-regulatory organizations.

FahnestockOppenheimer 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. FahnestockOppenheimer 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.

FahnestockOppenheimer 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, FahnestockOppenheimer 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.

COMPETITION

FahnestockOppenheimer 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 FahnestockOppenheimer for investment funds by offering a greater range of financial services.

FahnestockOppenheimer 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. FahnestockOppenheimer 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'sOppenheimer 's competitors engage in these programs more extensively than does Fahnestock.Oppenheimer.

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. FahnestockOppenheimer 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.Oppenheimer. However, an increase in the use of discount brokerages could be beneficial to Freedom.

REGULATION

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 ("SRO") such as the NASD and national securities exchanges such as the NYSE and the National Futures Association. The NYSE has been designated Fahnestock’sOppenheimer’s primary regulator with respect to securities activities and the National Futures Association has been designated Fahnestock’sOppenheimer’s primary regulator with respect to commodities activities. The CBOE has been designated Fahnestock'sOppenheimer’s primary regulator with respect to options trading activities. The NASD has been designated Freedom’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 ("CFTC"), as the case may be) governing the industry and conduct periodic examinations of Fahnestock'sOppenheimer '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 isOppenheimer and Freedom are each registered as a broker-dealer in the 50 states and Puerto Rico. FahnestockOppenheimer 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’s primary regulator with respect to securities activities.

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.

FahnestockOppenheimer 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.

Margin lending by FahnestockOppenheimer is subject to the margin rules of the Board of Governors of the Federal Reserve System and the NYSE. Under such rules, FahnestockOppenheimer 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, FahnestockOppenheimer may (and currently does) impose more restrictive margin requirements than required by such rules. See "Customer Financing.Lending."

NET CAPITAL REQUIREMENTS

As registered broker-dealers and member firms of the NYSE (Fahnestock)(Oppenheimer) or the NASD (Freedom), the Operating Subsidiaries are subject to certain net capital requirements pursuant to Rule 15c3-1 (the "Net Capital Rule") promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 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.

FahnestockOppenheimer 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, FahnestockOppenheimer is required to maintain a minimum "net capital", as defined in the Net Capital Rule, at least equal to 2% of the amount of its "aggregate debit items" 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. "Aggregate debit items" 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.

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 "haircuts") in the market value of securities to reflect the possibility of a market decline prior to disposition.

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 and/or the SROs 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.Subsidiaries or to expand the Company’s business.

Item 2. PROPERTIES

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 FahnestockOppenheimer at 125 Broad Street, New York, New York. This office also serves as the base for most of Fahnestock'sOppenheimer 's research, operations and trading and investment banking and investment advisory services,activities, though other offices also have employees who work in these areas. Investment advisory services are offered from the Company’s office at 200 Park Avenue, New York, New York, although other offices also have employees who work in this area. 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'sOppenheimer 's New York office using the data processing facilities located there. Freedom conducts its business from its offices located in Edison, NJ.N.J., where the Company also maintains its disaster recovery site. 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.

The Company and its subsidiaries own no real property, but at December 31, 2002,2003, occupied office space totalling approximately 589,000984,000 square feet in 8998 locations under standard commercial terms expiring between 20022004 and 2013. Currently, the Company occupies office space totaling approximately 977,000 square feet in 105 locations.2014. If any leases are not renewed, the Company believes it could obtain comparable space elsewhere on commercially reasonable rental terms.

Item 3. LEGAL PROCEEDINGS

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’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.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Class B voting shares (the "Class B Shares"), 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 proxyinformation circular, to the holders of its Class B Shares.

Pursuant to the Company's Articles of Incorporation, holders of Class A non-voting shares (the "Class A Shares"), 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

meetings not including the Class A Shares.

In the event of either a "take-over bid" or an "issuer bid" (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.

No matters were submitted to the Company's shareholders during the fourth quarter of the Company's 20022003 fiscal year.

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.

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’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 "First Exchangeable Debenture") and (ii) a $90,841,572 principal amount Convertible Debenture Due 2006 (the Interim Debenture"). 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 "Second Exchangeable Debenture"). 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.

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.

Accordingly, the Class A Shareholders and Class B Shareholders are being asked to consider, and if deemed advisable, pass such resolution.

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.

PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED

STOCKHOLDER MATTERS

The Company's Class A Shares are listed and traded on The New York Stock Exchange (trading symbol "FVH"(the "NYSE") and on The Toronto Stock Exchange (the "TSX") (trading symbol "FHV.A""OPY"). 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.

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.

The following table sets forth information about the shareholders of the Company as at December 31, 20022003 as set forth in the records of the Company's transfer agent and registrar:

Class A Shares:

Class B Shares

(1) The Company has been informed that 50,49050,975 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, "Security Ownership of Certain Beneficial Owners and Management".

Dividends

The following table sets forth the frequency and amount of any cash dividends declared on the Company’s Class A and Class B Shares for the fiscal years ended December 31, 20022003 and 2001.2002.

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.

CERTAIN TAX MATTERS

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.

United States Federal Income Tax Considerations

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 incomequalified dividends to the extent paid out of the Company’s earnings and profits, determined under U.S. tax principles.principles, subject to tax at 15%. 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).

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.

Canadian Federal Income Tax Considerations

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%.

Normal Course Issuer Bid

On July 5, 20028, 2003, the Company announced that during the year commencing July 9, 200210, 2003 it intended to purchase up to 620,700636,000 Class A Shares by way of a Normal Course Issuer Bid through the facilities of The Toronto Stock Exchange and/or The New York Stock Exchange, representing approximately 5% of the outstanding Class A Shares. In fiscal 2002,2003, through a Normal Course Issuer Bid, which expired July 4, 2002 and through the current Normal Course Issuer Bid,8, 2003, the Company purchased 151,40025,700 Class A Shares at an average cost of $21.72$22.76 per share, of which 86,100share. The Company did not purchase any 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 toShares in 2003 under the current Normal Course Issuer Bid, which expires July 8, 2003.9, 2004. 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.

Item 6. SELECTED FINANCIAL DATA

The following table presents selected financial information derived from the audited consolidated financial statements of the Company for the five years ended December 31, 2002.2003. 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 2003, the Company purchased the U.S. private client and asset management divisions of CIBC World Markets. The 2003 amounts include the assets and liabilities and operating results of the private client division for the entire year and the assets and liabilities and operating results of the asset management division as of and subsequent to June 4, 2003. 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, "Business" and Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations".

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.

 

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The Company’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.

Critical Accounting Policies

The Company’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’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’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.

Valuation of Securities and Other Assets

Substantially all financial instruments are reflected in the consolidated financial statements at fair value or amounts that approximate fair value, thesevalue. These include cash equivalents; deposits with clearing organizations; securities owned; and securities sold but not yet purchased.  Where available, the Company uses prices from independent sources such as listed market prices, or broker or dealer price quotations. In addition, even where the value of a security is derived from an independent market price or broker or dealer quote, certain assumptions may be required to determine the fair value. For instance, the Company generally assumes that the size of positions in securities that the Company holds would not be large enough to affect the quoted price of the securities if the Company were to sell them, and 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.

Intangible Assets and Goodwill

Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. SFAS No. 142, "Goodwill and Other Intangible Assets," 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 assets consist of goodwill relatedGoodwill relates to the acquisitions of Oppenheimer, First of Michigan Capital Corporation, PrimeGrand Charter Ltd. andGroup Incorporated, Josephthal & Co. Inc. This goodwill wasand the Oppenheimer division and has been allocated to the private client and capital markets reporting unit pursuant to SFAS No. 142. The Company has engaged a national accounting firm to performobtained 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 MarketsOppenheimer division in 2003. These amounts will involveThis valuation involved significant estimates, which were based on historical data, revenue projections and will be reported inindustry experience. The Company has identified intangible assets relating to customer relationships, which it is amortizing over their useful lives, and trademarks and trade names, which are being evaluated for impairment on at least an annual basis. The excess cost of the Company’s Form 10-Q for the quarterly period ending March 31, 2003.Oppenheimer division is being allocated to goodwill.

The Company reviews its goodwill on at least an annual basis in order to determine whether its value is impaired on at least an annual basis.impaired. Goodwill is impaired when the carrying amount of the reporting unit exceeds the implied fair value of the reporting unit.  In estimating the fair value of the reporting unit, the Company uses valuation techniques based on multiples of revenues, earnings, book value and discounted cash flows similar to models employed in analyzing the purchase price of an acquisition target. If the value of the goodwill is impaired, the difference between the value of 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.

Reserves

The Company records reserves related to legal proceedings in  "other payables and accrued expenses". The determination of the amounts of these reserves requires significant judgment on the part of management. Management considers many factors including, but not limited to: the amount of the claim; the amount of the loss in the client's account; the basis and validity of the claim; the possibility of wrong doing on the part of an employee of the Company; previous results in similar 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 a charge to results 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.

The Company also records reserves or allowances for doubtful accounts related to receivables from clients and financial consultants.  Client loans are collateralized by securities; however, if there is a decline in the value of the collateral and the Company cannot obtain additional collateral or collect on the loan, a reserve is established.  The Company also makes loans or pays advances to financial consultants. Reserves are established on these receivables if the financial consultant is no longer associated with the Company and the receivable has not been promptly repaid or if it is determined that it is probable the amount will not be collected.

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.

Asset management operations

Asset management fees are generally recognized over the period the related service is provided based on the account value at the valuation date per the respective asset management agreements. In certain circumstances, the firm is entitled to receive incentive fees when the return on assets under management exceeds certain benchmark returns or other performance targets. Incentive fees are generally based on investment performance over a 12-month period and are not subject to adjustment once the measurement period ends. Accordingly, incentive fees are recognized in the consolidated statements of earnings when the measurement period ends. Asset management fees and incentive fees are included in "Advisory fees" in the consolidated statements of earnings. Assets under management are not included as assets of the Company.

Business Environment

Fahnestock Viner Holdings Inc.The Company is a holding company whose principal subsidiary is Fahnestock & Co. Inc. ("Fahnestock"). Fahnestocksubsidiaries are Oppenheimer and OAM. Oppenheimer provides securities brokerage, investment banking, trust and asset management services to its clients from 8998 offices across the U.S.A. and an office in Toronto, Canada and associated offices in Caracas, Venezuela and Buenos Aires, Argentina. FahnestockOppenheimer is licensed to offer brokerage and other financial services in all 50 States. Client assets entrusted to the Company as at December 31, 20022003 totalled approximately $17.8$46 billion. The Company provides investment advisory services through OAM and Fahnestock Asset Management, operating as a division of Fahnestock. ClientOppenheimer. The Company provides trust services and products through Oppenheimer Trust Company. At December 31, 2003, client assets under management by the asset management groups totaled $869 million at December 31, 2002. Fahnestock$9.59 billion. Oppenheimer also engages in proprietary trading of securities. In addition, the Company operates a discount brokerage business based in Edison, NJ, through Freedom Investments, Inc.Freedom. At December 31, 2003, the Company employed approximately 3,013 people, of whom 1,704 were financial consultants.

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.

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.

Outlook

The Company's long-term plan is to continue to expand existing offices by hiring experienced professionals as well as through the purchase of operating branch offices from other broker dealers, 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 significant 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.

Results of Operations

Results forThe results of the year ended December 31, 2003, compared to the same period of 2002, 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’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’s results.

However, the impact of difficult business conditions provided the opportunity for expansionchanged face of the Company’s business. As a result,Company after the acquisition by the Company followed two acquisitions in the latter part of 2001 with the acquisition of the business of BUYandHold Securities in March 2002.

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 90,000clients with a dollar-based investing platform. The acquisition added important proprietary technology, as well as revenues.

Onon January 3, 2003 the Company acquiredof the U.S. private client divisionbusiness of CIBC World Markets and agreed at a later date to acquirethe subsequent acquisition on June 4, 2003 of the U.S. asset management business of CIBC World Markets. This business, currently operating asMarkets (together, the Oppenheimer & Co. division of Fahnestock, will affectdivisions). This acquisition more than doubled the results of future periods, with the addition ofCompany’s private client presence, adding approximately 620 financial consultants in 18 branch offices, at the date of closing. The aggregate purchase price was approximately U.S. $242 million. The Company began self-clearing substantially all of the private client business at the end of May 2003. Until that time, CIBC provided operational and administrative services to the Company on a transition basis. That arrangement precluded the attainment of certain operating efficiencies and cost savings that became available to the Company post- conversion of the client accounts to the Company’s clearing platform.

The Company closed on its purchase of OAM on June 4, 2003. OAM currently manages client assets totaling over U.S. $8.65 billion. The business includes internally managed funds, alternative investments (including hedge funds) and third party managed high net worth accounts.

The Company’s results were significantly impacted by the recent integration of approximately $30 billion. Thisits acquisition more than doublesof the Company’s retail exposureOppenheimer private client division and asset basethe closing of the purchase of OAM. In 2003, expenses were impacted by payments to CIBC through May 2003 for various transition services, which the Company utilized during the period. The costs of integration and will be includedretention also significantly impacted the 2003 results. On May 27, 2003, Oppenheimer assumed clearing and execution of the business of the Oppenheimer divisions. There were client service issues and internal operational difficulties encountered as a result of the largest conversion of client accounts in the Company’s 2003 results.history, which were largely rectified by the end of the second quarter. The Company continues to monitor its systems requirements and remains committed to make improvements in service and technology.

The assumption of the clearing functions substantially changed the Company’s balance sheet through increased client receivables and payables, related broker-dealer stock loans and borrows and bank loans, as well as some increase in inventories carried by the Company to accommodate the increased size of the business. The Company continues to believe that this recent acquisition will transform the Company and the Company remains confident that operating margins will improve over coming quarters as overlapping services are eliminated, and integration is completed.

The U.S. economy has continued to pick up momentum as reflected in growth in fourth quarter GNP. New job creation continues to lag and remains an issue for consumer confidence. Low interest rates, a record trade deficit and a record federal budget deficit have been reflected in a weak U.S. dollar, which is trading at record lows compared to other major currencies. These factors are likely to continue to lead to favorable U.S. corporate earnings comparisons and continuing strength in the stock market. Savings rates and favorable demographics in the United States also provide for strong investment flows and favorable conditions for the securities industry.

The following table and discussion summarizes the changes in the major revenue and expense categories for the past two years (in thousands of dollars).

Fiscal 2003 compared to Fiscal 2002

Results for 2003 reflected both the changed face of the Company following its acquisition activity in 2003 and improving economic growth in the U.S., which led to a resurgence of investor participation in the markets. Following its acquisition on January 3, 2003 of the U.S. Private Client business of CIBC World Markets, the Company significantly increased its private client business in terms of financial consultants and client assets. The number of financial consultants increased to 1,704 at December 31, 2003 compared to 1,102 at December 31, 2002. Client assets entrusted to the Company were approximately $46 billion at December 31, 2003 compared to approximately $17.8 billion at December 31, 2002. The acquisition on June 4, 2003 of the U.S. Asset Management business of CIBC World Markets added new business lines and increased managed assets from approximately $869 million at December 31, 2002 to approximately $9.59 billion at December 31, 2003.

Total revenues for 2003 were $689,993,000 an increase of 144% over $283,333,000 in 2002. Commission income (income realized in securities transactions for which Oppenheimer acts as agent) increased 139% to $325,071,000 from $135,747,000 in 2002. This increase was primarily the result of the additional business generated by the acquired Oppenheimer branches, as well as improved market conditions. Revenues from principal transactions (revenues from transactions in which Oppenheimer acts as principal in the secondary market trading of over-the-counter equities and municipal, corporate and government bonds) increased by 135% to $136,672,000 from $58,227,000 in 2002 due to the business generated by the acquired divisions and stronger activity in the trading of fixed income securities as a result of lower interest rates and higher bond prices in 2003 compared to 2002. Investment banking revenues increased by 122% to $50,623,000 from $22,760,000 in 2002, related to increased participation in the issuance of closed-end funds and debt securities, particularly as a result of the impact of the acquired Oppenheimer divisions. Advisory fees increased by 206% to $80,550,000 from $26,365,000 in 2002 primarily as a result of the acquisition of the U.S. Asset Management business of CIBC World Markets in June 2003. In January 2003, the Company was awarded $21,750,000 in an arbitration award in connection with a raiding case involving the sales force of First of Michigan Corporation, a company acquired by the Company in 1997.

Interest income in 2003 was $42,600,000, an increase of 54% from $27,622,000 in 2002. Interest expense was $14,322,000, an increase of 71% from $8,379,000 in 2002. This represents an increase of 47% in net interest revenue (interest revenue less interest expense) in 2003 compared to 2002, which can be attributed to an increase in average customer margin balances due to the conversion of the customer accounts of the acquired Oppenheimer branches in May 2003 and lower interest rates in 2003 compared to 2002.

Expenses in 2003 totalled $639,390,000, an increase of 136% compared to $270,416,000 in 2002. The increase in expenses can be attributed to the acquisitions of the Oppenheimer divisions in 2003 as well as continuing unfavorable legal settlement costs associated with Josephthal & Co. Inc. client accounts, which were acquired in 2001. Compensation and related expenses in 2003 were $435,160,000, an increase of 156% from $169,810,000 in 2002. Compensation expense has volume-related components and increases with increases in commission business conducted in 2003 compared to 2002, 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 2003 were $20,734,000, an increase of 116% from $9,607,000 in 2002. These expenses increased in 2003 compared with 2002 with increased volume and with the increased size of the sales force. In addition, until May, 2003, the business generated from the acquired Oppenheimer branches was being cleared by a third party. The cost of third party clearing is higher than the cost of clearing trades in-house. Communications expenses in 2003 were $54,526,000, an increase of 70% over $32,066,000 in 2002 reflecting additional costs of a larger branch system, after the acquisition of the Oppenheimer divisions. Occupancy costs in 2003 were $53,604,000, an increase of 93% compared to $27,772,000 in 2002 as a result of the increased size of the organization with the acquisition of the Oppenheimer divisions. The increase in communications, technology and occupancy expenses reflects the additional costs associated with connecting and housing approximately 55% more financial consultants in 16 more branch offices in 2003 compared to December 31, 2002, before the acquisitions of the Oppenheimer divisions. During 2003, the Company was able to utilize previously underutilized space and was able to reassign employees to maximize the usage of space. Other expenses were $61,144,000, an increase of 168% over $22,782,000 in 2002. The increase relates primarily to increased levels of general and administrative expense due to the larger organization size, as well as increased bad debt expense and costs of litigation. The Company may face additional unfavorable judgments in future periods. The Company has used its best estimate to provide adequate reserves to cover litigation losses.

Fiscal 2002 compared to Fiscal 2001

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.

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’s acquisitions of these entities.

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.

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.

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 costsexpenses 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,$27,772,000, an increase of 46%44% compared to $15,691,000$19,233,000 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,$22,782,000, an increase of 29%27% over $21,417,000$17,875,000 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.

Fiscal 2001 compared to Fiscal 2000

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.

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.

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.

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.

Liquidity and Capital Resources

Total assets at December 31, 2003 increased by approximately 66% from December 31, 2002 due primarily to the acquisition of the Oppenheimer divisions and the conversion of the Oppenheimer private client division client accounts to the Oppenheimer clearing platform on May 27, 2003. Liquid assets at December 31, 2003 accounted for 88% of total assets, compared to 98% at December 31, 2002. The increaseacquisitions of the Oppenheimer divisions resulted in the Company’saddition of fixed assets, intangibles and goodwill, all considered long-term in 2002nature. Current assets at December 31, 2003 increased by 50% compared to 2001 is primarily attributable to increasedthe previous year-end because of increases in all aspects of the Company’s business with the self-clearing of the Oppenheimer divisions business. The new business impacted broker and customer receivables, from brokers and clearing organizations as a result of increased stock borrow/stock loan balances. Customer related receivablesbalances, deposits with clearing organizations, restricted cash and securities inventory are highly liquidnotes receivable. The Company satisfies its need for funds from its own cash resources, internally generated funds, collateralized and represent a substantial percentageuncollateralized borrowings, consisting primarily 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.uncommitted lines of credit. 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 exerciseamount of employee stock options supplementedOppenheimer 's bank borrowings duringfluctuates in response to changes in the past three years.level of the Company's securities inventories and customer margin debt, changes in stock loan balances and changes in notes receivable from employees. Oppenheimer has arrangements with banks for borrowings on an unsecured and on a fully collateralized basis. At December 31, 2002, Fahnestock had bank lines2003, $101,619,000 of credit and call loan arrangements withsuch borrowings were outstanding, an increase of over 527% compared to outstanding borrowings thereunder of $16,200,000.at December 31, 2002. At December 31, 2002 Fahnestock2003, the Company had available collateralized and uncollateralized letters of credit of $34,500,000.$143,934,000.

In connection with the acquisition of the Oppenheimer divisions, the Company issued debentures in the amount of approximately $161 million and a zero coupon promissory note in the amount of approximately $66 million. The notes to the financial statements contain a description of these instruments. The interest due on the debentures is payable semi-annually and is being financed from internally-generated funds. The principal payments on the zero coupon promissory note is also being financed from internally-generated funds. The Company believes that the necessary internally-generated funds will be available to service these obligations from funds generated by normal operations, including funds generated by the acquired business.

In connection with the acquisition of the Oppenheimer divisions, 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 borrowed the balance in July 2003. The borrowings were 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. The interest and principal repayments are being made out of internally-generated funds and the Company believes that the cash flow from funds generated by normal operations, including funds generated by the acquired business, will be adequate to enable the Company to meet its obligations. In accordance with the credit arrangement, the Company has provided certain covenants to CIBC with respect to the maintenance of minimum debt/equity ratios and net capital of Oppenheimer. In the Company’s view, the most restrictive of the covenants requires that Oppenheimer maintain minimum excess net capital of $100 million. As at December 31, 2003, the Company was in compliance with the covenants. The Company does not foresee any difficulties in complying with the covenants.

Management believes that funds from operations, combined with the Company's capital base and available credit facilities, are sufficient for the Company's liquidity needs in the foreseeable future.

The Company paid cash dividends to its shareholders totalling $4,509,000,$4,616,000, during 2002,2003, from internally generatedinternally-generated cash.

During 2002,2003, the Company purchased a total of 151,40025,700 of its Class A non-voting shares at an average cost of $21.72$22.76 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 555,400636,000 of its shares from time to time until July 8, 20039, 2004 from internally generated funds.

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".

On January 3,The book value of the Company’s Class A and Class B Shares was $21.75 at December 31, 2003, the Company acquired the U.S. Private Client and Asset Management businesses of CIBC World Markets for an aggregate purchase priceincrease of approximately $241 million,10% compared to $19.82 at December 31, 2002, based on total outstanding shares of which approximately $13 million was paid in cash at closing from cash on hand12,919,200 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’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.

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.

12,496,687, respectively.

Contractual and Contingent Obligations

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’s commitments appears in note 1112 to the consolidated financial statements.

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.2003.

Contractual Obligations

(In millions of dollars)

Subsequent Event

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’s results for the first quarter of 2003.

Inflation

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.

Newly Issued Accounting Standards

The Financial Accounting Standards Board issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", FIN No. 45, "Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others", and FIN No. 46, "Consolidation of Variable Interest Entities",SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities", and SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". The Company is reviewing this statementhas adopted these statements and these interpretations and does not expect their adoption to havehas not had a material impact on its financial results.

The Company is reviewinghas reviewed SFAS No. 148, "Accounting for Stock-Based Compensation – Transition and Disclosure" and has adopted the disclosure provisions, but does not intend to adopt other provisions of this standard in 2003.at this time.

Factors Affecting "Forward-Looking Statements"

From time to time, the Company may publish "Forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended ( the "Act"), 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’s actual results to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements. These risks and uncertainties, many of which are beyond the Company’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.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Risk Management

The Company’s principal business activities by their nature involve significant market, credit and other risks. The Company’s effectiveness in managing these risks is critical to its success and stability.

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.

Market Risk

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’s exposure to market risk arises from its role as a financial intermediary for its customers’ transactions and from its proprietary trading and arbitrage activities. (See additional discussion under Risk Management in Item 1).

Operational Risk

Operational risk generally means the risk of loss resulting from improper processing of transactions or deficiencies in the Company’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’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 ‘Liquidity and Capital Resources’, above.

Credit Risk

Credit risk arises from non-performance by trading counterparties, customers and issuers of debt securities held in the Company’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.

Legal and Regulatory Risk

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.

Value-at-Risk

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’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.

At December 31, 20022003 and 2001,2002, the Company’s value-at-risk for each component of market risk was as follows (in thousands of U.S. dollars):

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’s results of operations, financial condition or cash flows. The changes in the value-at-risk amounts reported in 20022003 from those reported in 20012002 reflect changes in the size and composition of the Company’s trading portfolio at December 31, 20022003 compared to December 31, 2001. At2002, which include a larger position in equities. The Company’s portfolio as at December 31, 20022003 includes approximately $15,781,000 in corporate equities, which are co-related to deferred compensation liabilities and which do not bear any value-at-risk to the Company was not holding any hedging positions, thus reducing the diversification benefit compared to 2001 when it did hold such positions.Company. Further discussion of risk management appears in Item 7, Management’s Discussion and Analysis of the Results of Operations and Item 1, Risk Management.

The value-at-risk estimate has limitations that should be considered in evaluating the Company’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’s market risk exposure is continuously monitored as the portfolio risks and market conditions change.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required to be furnished in response to this Item is submitted hereinafter following the signature pages hereto.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

PART III

Item 9A. CONTROLS AND PROCEDURES

As of the end of the reporting period, an evaluation was carried out under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) 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’s disclosure controls and procedures were effective. No significant changes were made in the Company’s internal over financial reporting during the quarter ended December 31, 2003 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

General

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, 2002March 8, 2004 is set forth below.

Compliance with Section 16(a) of the Securities Exchange Act of 1934.Beneficial Ownership Reporting Compliance

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.year (or, to the extent not previously disclosed, any prior fiscal year).

To the Company's knowledge, based solely on review of copies of such reports furnished to the Company during the two fiscal yearsyear ended December 31, 20022003 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.

DIRECTORS COMPENSATION

In the year ended December 31, 2002,From January 1, 2003 to June 30, 2003, 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 each board or committee meeting attended by telephone. Commencing July 1, 2003, directors’ fees were increased as follows:

In 2003 the Directors were paid fees for both board and committee attendance of $195,500 in aggregate. 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’s 1996 Equity Incentive Plan, as amended (the "Plan"), pursuant to a formula set out in the Plan.

DIRECTORS AND OFFICERS INSURANCE

The Company carries liability insurance for its directors and officers. On November 30, 2002,2003, the Company renewed its directors and officers liability insurance for one year ending November 30, 20032004 at an annual premium rate of $202,000.$325,750. 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 $1retention of $2.5 million in deductibles.for the policy years ended November 30, 2003 and 2004.

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.

RESOURCES FOR THE BOARD COMMITTEES

The Board and each of its committees have, under the Company’s Corporate Governance Guidelines, the authority to retain independent legal, financial or other advisors at the expense of the Company.

BOARD COMPOSITION

Pursuant to a Stakeholders Agreement dated December 9, 2002 between the Company, CIBC and others, CIBC has the right to have two of its designees nominated for election to the Company’s board. CIBC exercised this right in 2003 and its designees, Mr. A. Molestina and Mr. R. Venn, were elected as directors of the Company at the May 12, 2003 annual and special meeting of shareholders and will serve as directors of the Company until the termination of the May 17, 2004 annual and special meeting of shareholders. CIBC has informed the Company that it does not wish to exercise this right for the May 17, 2004 annual and special meeting of shareholders.

BOARD COMMITTEES

The Board has an Audit Committee, a Compensation and Stock Option Committee and a Nominating/Corporate Governance Committee. The following is a brief summary of the responsibilities of these Committees,

Audit Committee

(Messrs. Bitove, McArthur and Winberg (Chair))

The Board has adopted a written charter for the Audit Committee, a copy of which is attached to this Management Information Circular as Schedule C. The Audit Committee:

reviews annual, quarterly and all legally required public disclosure documents containing financial information that are submitted to the Board;

reviews the nature, scope and timing of the annual audit carried out by the external auditors and reports to the Board;

evaluates the external auditors' performance for the preceding fiscal year; reviews their fees and makes recommendations to the Board;

reviews internal financial control policies, procedures and risk management and reports to the Board;

meets with the external auditors quarterly to review quarterly and annual financial statements and reports and to consider material matters which, in the opinion of the external auditors, should be brought to the attention of the Board and the shareholders;

reviews internal audit activities, meets regularly with internal audit personnel and reports to the Board;

reviews accounting principles and practices;

reviews management reports with respect to litigation, capital expenditures, tax matters and corporate administration charges and reports to the Board;

reviews related party transactions;

reviews and approves changes or waivers to the Company's Code of Conduct and Business Ethics for Directors, Officers and Employees; and

annually reviews this Charter and recommends and make changes thereto as required.

All members of the Audit Committee are independent.

During 2003, the Audit Committee met 5 times.

Compensation and Stock Option Committee

(Messrs. Bitove and Winberg (Chair))

The Board has adopted a Compensation and Stock Option Committee Charter. The Compensation and Stock Option Committee:

makes recommendations to the Board with respect to compensation policy for the Company and its subsidiaries;

makes recommendations to the Board with respect to salary, bonus and benefits paid and provided to senior management of the Company;

in accordance with the provisions of the Company's 1996 Equity Incentive Plan, authorizes grants of stock options and recommends modifications to the Plan;

grants certain compensation awards to senior management of the Company based on criteria linked to the performance of the individual and/or the Company;

administers the Performance-Based Compensation Agreement between the Company and Mr. A.G. Lowenthal;

certifies compliance with the criteria performance-based awards or grants and

administers and makes awards under the Company's Stock Appreciation Rights Plan.

During 2003 the Committee met 4 times.

(see also "Report of the Compensation and Stock Option Committee")

Nominating/Corporate Governance Committee

(Messrs. Bitove, McArthur (Chair), Venn and Winberg)

The Board has adopted a Nominating/Corporate Governance Committee Charter.

The Nominating/Corporate Governance Committee:

makes recommendations to the Board with respect to corporate governance;

when necessary, oversees the recruitment of new Directors for the Company;

recommends nominees for election or appointment to the Board;

maintains an orientation program for new directors and oversees the continuing education needs of Directors;

evaluates Director performance;

reviews and makes recommendations with respect to the Company's Corporate Governance Guidelines;

reviews and approves governance reports for publication in the Company's Management Information Circular and Annual Report on Form 10-K.

Although the Committee was formed in 2003, it did not have any formal meetings in 2003. The members of the Committee, as members of the Board, participated during the year in discussions and decisions on corporate governance, the effectiveness of the Board and related matters. The Committee did meet on February 25, 2004 and has established a schedule for regular meetings for the balance of 2004.

CODE OF ETHICS

The Company has adopted a Code of Conduct and Business Ethics for Directors, Officers and Employees, which can be found on its website at www.opco.com. A paper copy of the Code of Conduct and Business Ethics for Directors, Officers and Employees can be requested by writing to the Company at its head office or by making an email request to investorelations@opy.ca.

Item 11. EXECUTIVE COMPENSATION

With respect to the year ended December 31, 2002,2003, the Compensation and Stock Option Committee of the Board of Directors (the "Committee") was responsible for making recommendations for approval by the Board of Directors with respect to the compensation of the Company’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.

Summary Compensation Table

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,Oppenheimer, the Company’s principal operating subsidiary, other than the chief executive officer, whose total cash compensation for the fiscal year ended December 31, 20022003 exceeded $100,000 (the "Named Executives").

(1) Includes Directors Fees of $10,000 per year plus $1000 per meeting attendedDirectors’ Fees. See the table in person and $500 per meeting attended by telephone.Item 10, above, for the applicable rates.

(2) This amount represents Company contributions to the FahnestockOppenheimer 401(k) Plan.

(3) Mr. Okin joined Oppenheimer on January 3, 2003. In addition to the above compensation, on March 17, 2003 Mr. Okin was awarded 22,222 Class A Shares, which will be issued on January 3, 2006 and priced at $22.50, provided that Mr. Okin remains continuously employed by the Company. The issuance of these conditionally-issued Class A Shares was confirmed by shareholders on May 12, 2003.

(4) Mr. Robinson joined the OAM on June 4, 2003.

 

OPTION GRANTS FOR THE YEAR ENDED DECEMBER 31, 20022003

NoneThe following table sets forth details of options granted to the Named Executives during the year ended December 31, 2003.

AGGREGATED OPTION EXERCISES AND YEAR-END VALUE TABLE

The following table sets forth information with respect to options exercised during the year ended December 31, 20022003 by the Named Executives and as to unexercised options held by them at December 31, 2002:2003:

REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE

The following report of the Committee discusses generally the Committee's executive compensation objectives and policies and their relationship to corporate performance in 2002.2003. In addition, the report specifically discusses the Committee's bases for compensation in 20022003 of the Corporation'sCompany's Chief Executive Officer, as well as the other senior executive officers of the CorporationCompany and Fahnestock.Oppenheimer.

Objectives and Policies

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'sCompany's success in the short-term, long-term or both.

The Corporation'sCompany'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.

In arriving at its recommendations concerning the specific components of the Corporation'sCompany'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 CorporationCompany as measured by net income levels and earnings per share, among other factors.

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

Compensation for the Corporation'sCompany's senior executive officers involves a significant component of remuneration which is contingent on the performance of both the CorporationCompany 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'sCompany’s shareholders).

Base Salary. 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'sCompany’s industry. The Committee then makes recommendations to the Board with respect to base salaries.

Annual Bonus. 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 CorporationCompany and his assessment of the contribution of each senior executive to that performance. The Committee then makes recommendations to the Board with respect to bonuses.

Senior executive officers, including the Chief Executive Officer, of FahnestockOppenheimer have the right to elect to defer a portion of their annual bonus and performance-based compensation under Fahnestock'sOppenheimer's Executive Deferred Compensation Plan, a non-qualified unfunded plan. The Committee then makes recommendations to the Board with respect to bonuses.

Stock Option Grants. Under the Plan, as amended, senior executive officers and employees of the CorporationCompany 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.

Chief Executive Officer Compensation

Mr. A.G. Lowenthal, the Chairman of the Board and the Chief Executive Officer of the CorporationCompany and Fahnestock,Oppenheimer, 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.

On January 1, 2001, the CorporationCompany entered into a Performance-Based Compensation Agreement (the "2001 Comp Agreement") with Albert G.Mr. 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.

In March of 2002,2003, 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 20022003 of an aggregate of the 2002 amounts$3,360,323 determined by the application of a formula based on the following formulae,

Because of the Corporation's performance in 2002, Mr. Lowenthal requestedamount by which the Company's consolidated profit before income taxes for the year ended December 31, 2003 exceeded 15% of and is less than 25% of the Committee agreed that Mr. Lowenthal not receive a Performance Award underCompany's consolidated shareholders' equity as at December 31, 2002; 3.0% percent of the 2001 Comp Agreement or any discretionary bonusamount by which the Company’s consolidated net profit for 2002.

the year ended December 31, 2003 was greater than $0 and less than $11,500,000; 4.0% of the amount by which the Company’s consolidated net profit for the year ended December 31, 2003 was greater than $11,500,000 and less than $23,000,000; and 4.5% of the amount by which the Company’s consolidated net profit for the year ended December 31, 2003 was greater than U.S.$23,000,000 and less than $34,000,000. In March of 2002,2003, the Committee set Mr. Lowenthal’s base salary for 20022003 at $480,340, the same base salary as 2001.$500,000.

U.S. Internal Revenue Code Section 162(m)

The CorporationCompany is a Canadian taxpayer. However, because FahnestockOppenheimer is a U.S. taxpayer, most compensation issues are affected by the U.S. Internal Revenue Code of 1986, as amended (the "U.S. Tax Code").

Section 162(m) of the U.S. Tax Code generally disallows a tax deduction to public corporationsCompanys 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.

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.

To the extent consistent with the Corporation'sCompany's general compensation objectives, the Committee considers the potential effect of Section 162(m) on compensation paid to the executive officers of the CorporationCompany 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'sCompany's efforts to qualify, that the compensation paid by the CorporationCompany to its executive officers will in fact satisfy the requirements for the exemption from the Section 162(m) deduction limit.

Members of the Compensation and Stock Option Committee

Burton Winberg — Chairman

John L. Bitove

SHARE PERFORMANCE GRAPH

The following graph shows changes over the past five year period of U.S.$100 invested in (1) the Companys’ Class A Shares, (2) the Standard & Poors 500 Index, and (3) the Standard & Poors / Toronto Stock Exchange Composite Index.

[PERFORMANCE GRAPH]

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As at December 31, 2003, the authorized capital of the Company includes an unlimited number of Class A Shares of which 12,819,520 Class A Shares were issued and outstanding and 99,680 Class B Shares, all of which were issued and outstanding.

The following table sets forth certain information asregarding the beneficial ownership of, February 28, 2003 as toor the only persons known toexercise of control or discretion over, each class of shares of the Company whoas at March 9, 2004, with respect to (i) each person known by the Company to beneficially own beneficiallyor exercise control or discretion over more than 5% of any class of the Company’s shares, (ii) each of the Company’s directors, (iii) each of the Company’s executive officers named in the Summary Compensation Table and (iv) the directors and officers as a group.

For purposes of the table, beneficial ownership is determined pursuant to Rule 13d-3 of the U.S. Securities Exchange Act of 1934, as amended, pursuant to which a person or group of persons is deemed to have "beneficial ownership" of a class of outstanding shares which such person or group has the right to acquire within 60 days after March 9, 2004. The percentage of shares deemed outstanding is based on 13,322,416 Class A Shares and 99,680 Class B Shares (the only classoutstanding as of voting stockMarch 9, 2004. In addition, for purposes of computing the Company). percentage of Class A Shares owned by each person, the percentage includes all Class A Shares issuable upon exercise of outstanding options held by such persons within 60 days after March 9, 2004.

There are no outstanding rights to acquire beneficial ownership of any Class B Shares.

1. All shares are held of record by Phase II Financial Limited, an Ontario corporation ("Phase II") wholly-owned by Mr. Lowenthal who is Chairman of the Company.

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 ("Elka") which is wholly-owned by Mrs. Roberts.

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.

* less than 1%

(1) With respect to the Class A Shares, Mr. Lowenthal is the sole general partner of Phase II Financial L. P., a New York limited partnership ("Phase II L.P."), which is the record holder of 2,445,9002,738,430 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. 225,000With respect to the Class AB Shares, are beneficially owned in respect of Class A Shares currently issuable upon exercise of options issued under the Plan.

Phase II, an Ontario corporationCompany wholly-owned by Mr. Lowenthal, is the holder of record of all such shares.

116,994(2) With respect to the Class B Shares, Mrs. Roberts, who is the mother of Elaine Roberts, President of the Company, owns 100 Class B Shares directly and 44,209 Class B Shares indirectly through Elka Estates Limited, an Ontario Company ("Elka"), which is wholly-owned by Mrs. Roberts. With respect to the Class A Shares, Mrs. Roberts owns 41,900 Class A Shares directly and 283,055 Class A Shares through Elka Estates Limited.

(3) 182,294 Class A Shares are held directly.

(4) 50,000 Class A Shares are held directly and 37,5006,250 Class A Shares are beneficially owned in respect of Class A Shares currently issuable upon exercise of options issued under the Plan.

35,000(6) 45,000 Class A Shares are held directly, 2,450 Class A Shares are held through the Company’s 401(k) Plan.

(7) 2,700 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.

20,000(8) Includes 6,250 Class A Shares which are held directly, 4,890beneficially owned in respect of Class A Shares issuable upon exercise of options issued under the Plan.

(9) 103 Class A Shares are held through the Company’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.

4,166 Class A Shares are held through the Company’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.

38,125 Class A Shares are held directly, and 8,242 Class A Shares are held through the Company’s 401(k) plan

30,000 Class A Shares are held directly, 2,000 Class A Shares are held through the Company’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.

(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.

(d) Class A Shares authorized for issuance under the Company’s 1996 Equity Incentive Plan (the "Plan"), as amended as at December 31, 2003 are as follows: All Class A Shares authorized under the Plan have been approved by shareholders of the Company.

A description of the Plan appears in Note 8 of the Company’s financial statements for the year ended December 31, 2003. The Company does not have any warrants or rights outstanding as at December 31, 2003.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year 20022003 certain of the directors, executive officers and senior officers of the Company and FahnestockOppenheimer maintained margin accounts with FahnestockOppenheimer 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 FahnestockOppenheimer on their margin accounts is as follows:

Item 14. Principal Accounting Fees and Services

The Company’s principal accountant is PricewaterhouseCoopers LLP. Audit fees include fees for the audit of the Company’s annual consolidated financial statements and the review of its quarterly financial statements. Audit fees also include fees for the audits of the Company’s broker dealer subsidiaries in compliance with statutory and regulatory filings. Other audit-related fees include fees for the audit of the Company’s 401(k) plan. In 2002, the Company engaged Ernst & Young to provide tax related services.

The Audit Committee has the sole authority and responsibility to nominate independent auditors for election by shareholders, and to recommend to shareholders that independent auditors be removed. The Audit Committee approves all audit engagement fees and terms as well as approves all non-audit engagements and engagement fees provided by independent auditors. The process begins prior to the commencement of the audit. The fees described above were 100% pre-approved.

PART IV

Item 14. CONTROLS AND PROCEDURES

     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’s management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 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’s disclosure controls and procedures were effective. No significant changes were made in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON

FORM 8-K

SIGNATURES

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 179th day of March, 2003.2004.

FAHNESTOCK VINEROPPENHEIMER HOLDINGS INC.

BY: "E.K. Roberts"

E.K. Roberts, President

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.

CERTIFICATION

I, Albert G. Lowenthal, certify that:

I have reviewed this annual report on Form 10-K of Fahnestock Viner Holdings Inc.;OPPENHEIMER HOLDINGS INC.

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;CONSOLIDATED FINANCIAL STATEMENTS

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;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

6. The registrant’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.

March 17,FOR THE YEAR ENDED DECEMBER 31, 2003

CERTIFICATION

I, Elaine K. Roberts, certify that:

I have reviewed this annual report on FormFOR INCLUSION IN THE COMPANY’S FORM 10-K of Fahnestock Viner Holdings Inc.;

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;

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;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

6. The registrant’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.

March 17, 2003

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FAHNESTOCK VINEROPPENHEIMER HOLDINGS INC.

F1

MANAGEMENT'S RESPONSIBILITY FOR CONSOLIDATED FINANCIAL STATEMENTS

The accompanying consolidated financial statements of Fahnestock VinerOppenheimer 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.

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.

PricewaterhouseCoopers LLP, the Company's independent auditors,accountants, 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.

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’ 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.

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.

/s/A.G. Lowenthal /s/E.K. Roberts

A.G. Lowenthal, E.K. Roberts,

Chairman of the Board President and Treasurer

and Chief Executive Officer

February 25, 20032004

F2

AUDITORS’ REPORT OF INDEPENDENT AUDITORS

TO THE SHAREHOLDERS OF FAHNESTOCK VINEROPPENHEIMER HOLDINGS INC.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, changes in shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Fahnestock VinerOppenheimer Holdings Inc. (the "Company") and its subsidiaries at December 31, 20022003 and 2001,2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 20022003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’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.

As discussed in note 2, in 2002 the Company has adopted the goodwill provisions of StatementsStatement of Financial Accounting StandardStandards No. 142, "Goodwill and Other Intangibles".

/s/

"PricewaterhouseCoopers LLPLLP"

New York, New York

February 25, 2003.2004

F3