diff --git a/src/apply.xsl b/src/apply.xsl
index 6f76bcf..d7fd6e3 100644
--- a/src/apply.xsl
+++ b/src/apply.xsl
@@ -32,14 +32,14 @@
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
 
   <apply-templates select="$fnref" mode="f:apply" />
 </function>
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
   <param name="arg1" />
 
   <apply-templates select="$fnref" mode="f:apply">
@@ -49,7 +49,7 @@
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
   <param name="arg1" />
   <param name="arg2" />
 
@@ -61,7 +61,7 @@
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
   <param name="arg1" />
   <param name="arg2" />
   <param name="arg3" />
@@ -75,7 +75,7 @@
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
   <param name="arg1" />
   <param name="arg2" />
   <param name="arg3" />
@@ -91,7 +91,7 @@
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
   <param name="arg1" />
   <param name="arg2" />
   <param name="arg3" />
@@ -109,7 +109,7 @@
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
   <param name="arg1" />
   <param name="arg2" />
   <param name="arg3" />
@@ -129,7 +129,7 @@
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
   <param name="arg1" />
   <param name="arg2" />
   <param name="arg3" />
@@ -151,7 +151,7 @@
 
 
 <function name="f:apply">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
   <param name="arg1" />
   <param name="arg2" />
   <param name="arg3" />
@@ -201,7 +201,7 @@
   determined, -1 is returned.
 -->
 <function name="f:arity" as="xs:decimal">
-  <param name="fnref" as="element()" />
+  <param name="fnref" as="element(f:ref)" />
 
   <sequence select="if ( $fnref/@arity ) then
                       $fnref/@arity
diff --git a/src/transform/apply-gen.xsl b/src/transform/apply-gen.xsl
index 732358c..2f7f032 100644
--- a/src/transform/apply-gen.xsl
+++ b/src/transform/apply-gen.xsl
@@ -157,11 +157,15 @@
     <namespace name="{$ns-prefix}"
                select="$ns" />
 
-    <element name="{$local-name}"
-             namespace="{$ns}">
+    <f:ref>
       <attribute name="arity"
                  select="count( $fnref/xsl:param )" />
-    </element>
+
+      <!-- represents the function being referenced -->
+      <element name="{$local-name}"
+               namespace="{$ns}">
+      </element>
+    </f:ref>
   </out:function>
 </function>
 
@@ -184,7 +188,7 @@
             select="$defn/xsl:param" />
 
   <out:template mode="f:apply"
-                match="{$name-resolv}"
+                match="f:ref[ {$name-resolv} ]"
                 priority="5">
     <namespace name="{$ns-prefix}"
                select="$ns" />
diff --git a/test/apply-test.xsl b/test/apply-test.xsl
index e751e30..66cece9 100644
--- a/test/apply-test.xsl
+++ b/test/apply-test.xsl
@@ -28,20 +28,20 @@
   <import href="../src/apply.xsl" />
 
 
-  <template mode="f:apply" match="foo:fn0">
+  <template mode="f:apply" match="f:ref[ foo:fn0 ]">
     <!-- return something to show that we were called properly -->
     <sequence select="0" />
   </template>
 
 
-  <template mode="f:apply" match="foo:fn1">
+  <template mode="f:apply" match="f:ref[ foo:fn1 ]">
     <param name="arg1" />
 
     <sequence select="string($arg1)" />
   </template>
 
 
-  <template mode="f:apply" match="foo:fn2">
+  <template mode="f:apply" match="f:ref[ foo:fn2 ]">
     <param name="arg1" />
     <param name="arg2" />
 
@@ -49,7 +49,7 @@
   </template>
 
 
-  <template mode="f:apply" match="foo:fn3">
+  <template mode="f:apply" match="f:ref[ foo:fn3 ]">
     <param name="arg1" />
     <param name="arg2" />
     <param name="arg3" />
@@ -58,7 +58,7 @@
   </template>
 
 
-  <template mode="f:apply" match="foo:fn4">
+  <template mode="f:apply" match="f:ref[ foo:fn4 ]">
     <param name="arg1" />
     <param name="arg2" />
     <param name="arg3" />
@@ -68,7 +68,7 @@
   </template>
 
 
-  <template mode="f:apply" match="foo:fn5">
+  <template mode="f:apply" match="f:ref[ foo:fn5 ]">
     <param name="arg1" />
     <param name="arg2" />
     <param name="arg3" />
@@ -80,7 +80,7 @@
   </template>
 
 
-  <template mode="f:apply" match="foo:fn6">
+  <template mode="f:apply" match="f:ref[ foo:fn6 ]">
     <param name="arg1" />
     <param name="arg2" />
     <param name="arg3" />
@@ -93,7 +93,7 @@
   </template>
 
 
-  <template mode="f:apply" match="foo:fn7">
+  <template mode="f:apply" match="f:ref[ foo:fn7 ]">
     <param name="arg1" />
     <param name="arg2" />
     <param name="arg3" />
@@ -107,7 +107,7 @@
   </template>
 
 
-  <template mode="f:apply" match="foo:fn8">
+  <template mode="f:apply" match="f:ref[ foo:fn8 ]">
     <param name="arg1" />
     <param name="arg2" />
     <param name="arg3" />
diff --git a/test/apply.xspec b/test/apply.xspec
index 865ba1b..8608775 100644
--- a/test/apply.xspec
+++ b/test/apply.xspec
@@ -33,7 +33,9 @@
 
       <call function="f:apply">
         <param name="fnref">
-          <foo:fn1 />
+          <f:ref>
+            <foo:fn1 />
+          </f:ref>
         </param>
         <param name="arg1" select="$arg" />
       </call>
@@ -48,7 +50,9 @@
     <scenario label="applying">
       <scenario label="nullary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn0 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn0 /></f:ref>
+          </param>
         </call>
 
         <expect label="passes each argument"
@@ -58,7 +62,9 @@
 
       <scenario label="unary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn1 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn1 /></f:ref>
+          </param>
           <param name="arg1" select="1" />
         </call>
 
@@ -69,7 +75,9 @@
 
       <scenario label="binary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn2 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn2 /></f:ref>
+          </param>
           <param name="arg1" select="1" />
           <param name="arg2" select="2" />
         </call>
@@ -81,7 +89,9 @@
 
       <scenario label="ternary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn3 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn3 /></f:ref>
+          </param>
           <param name="arg1" select="1" />
           <param name="arg2" select="2" />
           <param name="arg3" select="3" />
@@ -94,7 +104,9 @@
 
       <scenario label="4-ary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn4 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn4 /></f:ref>
+          </param>
           <param name="arg1" select="1" />
           <param name="arg2" select="2" />
           <param name="arg3" select="3" />
@@ -108,7 +120,9 @@
 
       <scenario label="5-ary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn5 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn5 /></f:ref>
+          </param>
           <param name="arg1" select="1" />
           <param name="arg2" select="2" />
           <param name="arg3" select="3" />
@@ -123,7 +137,9 @@
 
       <scenario label="6-ary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn6 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn6 /></f:ref>
+          </param>
           <param name="arg1" select="1" />
           <param name="arg2" select="2" />
           <param name="arg3" select="3" />
@@ -139,7 +155,9 @@
 
       <scenario label="7-ary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn7 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn7 /></f:ref>
+          </param>
           <param name="arg1" select="1" />
           <param name="arg2" select="2" />
           <param name="arg3" select="3" />
@@ -156,7 +174,9 @@
 
       <scenario label="8-ary function">
         <call function="f:apply">
-          <param name="fnref"><foo:fn8 /></param>
+          <param name="fnref">
+            <f:ref><foo:fn8 /></f:ref>
+          </param>
           <param name="arg1" select="1" />
           <param name="arg2" select="2" />
           <param name="arg3" select="3" />
@@ -182,7 +202,9 @@
       <!-- test our format directly; do not rely on the
            apply-gen code -->
       <variable name="fnref">
-        <foo:bar arity="{$test-arity}" />
+        <f:ref arity="{$test-arity}">
+          <foo:bar />
+        </f:ref>
       </variable>
 
       <call function="f:arity">
@@ -197,7 +219,7 @@
 
     <scenario label="given a function reference with no defined arity">
       <variable name="fnref">
-        <foo:bar />
+        <f:ref><foo:bar /></f:ref>
       </variable>
 
       <call function="f:arity">
diff --git a/test/transform/apply-gen.xspec b/test/transform/apply-gen.xspec
index 3d84649..df9dae9 100644
--- a/test/transform/apply-gen.xspec
+++ b/test/transform/apply-gen.xspec
@@ -49,13 +49,15 @@
 
     <!-- the generated node is simply the same name and namespace as
          the function -->
-    <expect label="generated function produces function node"
-            test="exists( xsl:stylesheet/xsl:function/foo:bar )" />
+    <expect label="generated function produces function reference
+                   node"
+            test="exists( xsl:stylesheet/xsl:function/f:ref/foo:bar )" />
 
 
     <!-- more detailed tests below -->
     <expect label="generates application template"
-            test="xsl:stylesheet/xsl:template/@match = 'foo:bar'" />
+            test="xsl:stylesheet/xsl:template/@match
+                    = 'f:ref[ foo:bar ]'" />
 
     <expect label="generated template has mode f:apply"
             test="xsl:stylesheet/xsl:template/@mode = 'f:apply'" />