SECURITIES AND EXCHANGE COMMISSION
                              Washington D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended:                       Commission file number: 0-27077
December 31, 1999

                             TREMONT ADVISERS, INC.
                 (Name of small business issuer in its charter)

Delaware                                                     06-1210532
(State or other jurisdiction                                 (I.R.S. Employer
of incorporation or organization)                            Identification No.)

555 Theodore Fremd Avenue, Rye, New York                     10580
(Address of Principal Executive Offices)                     (Zip Code)

         Issuer's telephone number, including area code: (914) 925-1140

        Securities registered pursuant to Section 12(b) of the Act: None

        Securities registered pursuant to Section 12(g) of the Act: None

Check  whether  the Issuer  (1) has filed all  reports  required  to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
12 months (or for such shorter  period that the  Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes x No .

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

State issuer's revenues for its most recent fiscal year = $16,524,600

The aggregate  market value of the Class A Common Stock held by nonaffiliates of
the Issuer was  approximately  $6,473,000  based  upon the  average  bid and ask
prices of such stock on March 2, 2000, quoted by the National  Quotation Bureau,
LLC in the over-the  counter market.  The aggregate  market value of the Class B
Common Stock held by nonaffiliates of the Issuer was  approximately  $10,117,000
based upon the last sales price of such stock on March 2, 2000,  as disclosed on
the NASDAQ Small Cap Market (TMAV).

The number of outstanding  shares of the Issuer's Class A Common Stock, $.01 par
value was 1,595,118 as of March 2, 2000 and the number of outstanding  shares of
the Issuer's  Class B Common Stock,  $.01 par value was 4,020,349 as of March 2,
2000.

Shares  outstanding  and per share data have been restated to reflect the impact
of a five-for-four stock split distributed on August 16, 1999.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


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                                TABLE OF CONTENTS

PART I
    Item 1.  Description of Business...........................................1
    Item 2.  Description of Properties........................................11
    Item 3.  Legal Proceedings 12
    Item 4.  Submission of Matters to a Vote of Security Holders..............12

PART II
    Item 5.  Market For the Registrant's Common Equity
             and Related Stockholder Matters..................................13
    Item 6.  Management's Discussion and Analysis.............................15
    Item 7.  Financial Statements.............................................25
    Item 8.  Changes in and Disagreements With Accountants on
             Accounting and Financial Disclosure..............................56

PART III
    Item 9.   Directors and Executive Officers of the Registrant..............57
    Item 10.  Executive Compensation..........................................59
    Item 11.  Security Ownership of Certain Beneficial Owners and Management..64
    Item 12.  Certain Relationships and Related Transactions..................68
    Item 13.  Exhibits, List and Reports on Form 8-K..........................68

EXHIBIT INDEX ................................................................74



<PAGE>

                                     PART I

Item 1. Description of Business

General

     Tremont  Advisers,  Inc. (the "Company" or "Tremont") is a holding  company
incorporated  in the State of  Delaware  having  three core  areas of  business:
proprietary  investment  funds,   consulting  services  and  investment  manager
information.  The Company's clients are investment funds,  investment  managers,
institutional  investors and high-net  worth  individuals  to whom the Company's
subsidiaries  provide advice concerning the organization and management of their
investment  portfolios  or  programs.  The  Company  also  provides  specialized
investment services, sponsors and manages its own proprietary single-manager and
multi-manager  investment  funds,  as well as providing  consulting  services to
investment  management  firms and individual  investment  advisers.  The Company
derives a significant portion of its revenues from proprietary  asset-based fees
and  consulting   services  agreements  with  single-manager  and  multi-manager
investment funds or their sponsors and advisers.

     The  Company's  principal  domestic  subsidiary,   Tremont  Partners,  Inc.
("TPI"),  is registered as an investment  adviser under the Investment  Advisers
Act of 1940, as amended (the "Advisers  Act") and serves as general  partner of,
and provides investment advisory services to, two proprietary investment limited
partnerships,  American  Masters  Broad Market Fund,  L.P. and American  Masters
Broad Market Prime Fund, L.P.

     Tremont  (Bermuda)  Limited  ("TBL"),   the  Company's   principal  foreign
subsidiary,  is based in  Hamilton,  Bermuda and  provides  investment  advisory
services  to  several  multi-manager  offshore  funds.  It also acts as the fund
sponsor, and, in some cases, administrator, for a select group of offshore funds
managed by U.S. based money managers.

     Tremont  Securities,  Inc. ("TSI") is a registered broker dealer.  TSI also
assists the Company's other  subsidiaries in the purchase and sale of investment
funds and other equities and facilitates soft-dollar arrangements.

     Tremont  Futures,  Inc.  ("TFI") is a commodity pool operator and commodity
trading adviser registered with the Commodity Futures Trading Commission and the
National Futures Association. TFI serves as a general partner to the proprietary
investment limited partnership  American Masters Market Neutral Fund, L.P. which
also receives consulting advice from TPI.

     Tremont Investment  Management,  Inc. ("TIMI") is an investment adviser and
portfolio  manager located in Toronto,  Canada.  TIMI, which is 65% owned by the
Company,  is registered with the Ontario Securities  Commission as an investment
counsel and  portfolio  manager,  as well as a limited  market  dealer under the
Securities Act (Ontario).  TIMI serves as sponsor to The Tremont Masters Fund, a
Canadian-domiciled  multi-advisor  proprietary  hedge fund  which also  receives
consulting advice from TPI.

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<PAGE>

     TASS Investment  Research Limited ("TASS"),  located in the United Kingdom,
was  acquired in March 1999 and is one of the leading  information  and research
companies to the alternative investment industry. TASS provides information on a
global and extensive  range of alternative  investment  funds and managers which
include (but are not limited to) hedge  funds,  event-driven  funds,  distressed
securities  funds,  derivative  funds,  managed futures funds,  commodity funds,
arbitrage funds, emerging markets funds and funds of funds, as well as commodity
trading advisors.

Subsidiaries' Services and Operations

     The Company's  primary  business  objectives are to develop and sponsor its
own  proprietary  single-manager  and  multi-manager  investment  funds  and  to
maintain and expand its services for single-manager and multi-manager investment
programs or funds.  The Company conducts its business through the activities and
operations of its  subsidiaries,  TPI, TBL, TSI, TFI, TIMI and TASS.  Since each
subsidiary  markets its services to a distinct  and  separate  group of clients,
although some clients may utilize the services of more than one of the Company's
subsidiaries.  At present, the Company's principal revenues are derived from TPI
and TBL which have been  actively  engaged in seeking new  clients.  The Company
will  continue to develop its own  proprietary  investment  funds,  the American
Masters Series,  as well as develop its own  distribution  for select global and
institutional markets.

     The  significant  operations  during  fiscal 1999 of each of the  Company's
subsidiaries are summarized below.

     1. TPI TPI was formed as a  consulting  firm  assisting  pension and profit
sharing plans in the design and structure of  specialized  investment  programs.
TPI specializes in non-traditional  approaches to management and its client base
includes financial intermediaries,  individuals,  pension, retirement and profit
sharing plans. TPI also provides management services to the limited partnerships
for  which  it acts as  general  partner  and  consulting  services  to  several
multi-manager  investment  funds, as well as to institutional and high net worth
investors.  During the years ended December 31, 1999 and 1998, approximately 55%
and 61%, respectively,  of the Company's consolidated revenues have been derived
from TPI's  operations.  The  principal  services  rendered by TPI are set forth
below.

     A.  Proprietary  Investment  Funds. TPI is currently the general partner of
two domestic limited  partnerships to which it also provides investment advisory
and management  services for asset-based  fees.  Revenues from these proprietary
investment  funds  accounted  for  approximately  30% and  31% of the  Company's
consolidated   revenues  for  the  years  ended  December  31,  1999  and  1998,
respectively. TPI's proprietary investment funds are as follows:

          American  Masters  Broad  Market  Fund,  L.P.  ("AMBMF") is a Delaware
     limited  partnership  formed  to  achieve  capital  growth  through  hedged
     investments.  TPI is the general partner and receives a monthly  management
     fee based upon  AMBMF's  net asset


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<PAGE>

     value  as of  the  end  of  each  month.  At  December  31,  1999,  AMBMF's
     approximate net asset value was $289.2 million.

          American  Masters  Broad  Market  Prime  Fund,  L.P.  ("AMBMPF")  is a
     Delaware  limited  partnership  formed to achieve  capital growth through a
     leveraged  investment  strategy.  TPI is the general partner and receives a
     monthly management fee based upon AMBMPF's net asset value as of the end of
     each month.  TPI is also  reimbursed  for certain  allocable  expenses.  At
     December 31, 1999, AMBMPF's approximate net asset value was $223.7 million.

     B.  Non-Proprietary  Investment  Funds.  TPI's  consulting  services to its
non-proprietary  investment funds or their sponsors  accounted for approximately
19% and 24% of the Company's  consolidated revenues for the years ended December
31, 1999 and 1998,  respectively.  TPI has been  instrumental  in organizing and
structuring its current major  single-manager and multi-manager  investment fund
clients.  TPI  assists the  sponsor in the  organization  of these funds by: (i)
establishing  investment  objectives and guidelines consistent with the client's
purposes and market; (ii) defining suitable asset classes for investment;  (iii)
negotiating  fees and other  arrangements  with  investment  advisers  and other
professionals  rendering  services  to the  funds;  and  (iv)  providing  advice
regarding fund structure and administration.

     Upon organization of a fund, TPI: (i) monitors its investment  performance,
including the  performance  of its  investment  advisers;  (ii)  recommends  the
retention  or  replacement  of  such   investment   advisers;   (iii)  furnishes
specialized  reports  requested by the sponsor or managers of the fund; and (iv)
provides other administrative services as required. In several instances, TPI is
also the investment adviser to a fund and, in that capacity, advises the fund as
to the investment of its portfolio assets.

     TPI also renders advisory services to investment  partnerships,  bank trust
funds and  insurance  companies in the selection of their  investments  in other
investment  partnerships,  funds,  and/or  separate  accounts.  In  addition  to
receiving management fees, TPI may receive consulting fees based on the value of
assets of funds under  management by its investment  fund clients.  From time to
time,  TPI receives a  performance  fee at the end of a fund's first fiscal year
and yearly  thereafter  in addition to the fees  received  based on assets under
management.

     C.  Institutional  and High  Net-Worth  Investors.  TPI renders  consulting
services and investment  advice to corporate pension and  profit-sharing  plans,
state  and  local  retirement  systems,  and high net  worth  individuals.  Such
services  may include:  (i)  designing  and  implementing  investment  programs,
including the  establishment of objectives and guidelines;  (ii) identifying and
selecting  appropriate  investment advisers for such programs;  (iii) monitoring
the  performance  of such  programs;  and/or (iv)  administering  the  reporting
involved in such  programs.  TPI  generally  receives  annual  retainer  fees or
asset-based fees for these services.

     D. Investment Adviser Research Program. TPI maintains a continuing research
program evaluating and reviewing both domestic and foreign  investment  advisers
and advisory  firms.  TPI's  employees meet with and interview over 250 advisory
individuals  and


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<PAGE>

firms  each  year.  Interviews  are  conducted  with each  adviser or the senior
investment  personnel of an advisory  firm in order to evaluate  such factors as
investment  approach,  style,  personnel  turnover,   delegation  of  investment
decision  making  responsibilities,  and the number and type of  accounts  under
management.  As a result of this research, and with the acquisition of TASS, the
Company has  developed a  proprietary  computerized  database of more than 2,500
investment  advisers and investment advisory firms,  including,  but not limited
to, domestic  equity,  international  equity and fixed income  advisers,  mutual
funds,  private limited  partnerships,  and offshore funds. This database allows
the Company to monitor and evaluate  investment  management  performance  and to
simulate the match of a fund's objectives with the investment characteristics of
different  or combined  investment  advisers.  In addition,  TPI  utilizes  this
database to advise clients in the selection of appropriate  investment  advisers
and investment programs.

     2. TBL TBL is as an exempted company organized under the laws of Bermuda to
provide  investment  management  services to offshore  investors.  TBL currently
provides  investment  consulting and advisory services to several  multi-manager
offshore  funds and acts as the fund sponsor and, in some cases,  administrator,
for a select group of offshore funds managed by U.S. based money  managers.  For
the years ended December 31, 1999 and 1998, TBL accounted for  approximately 32%
and 33%, respectively,  of the Company's consolidated revenues. Given the growth
during  recent  years  in the  amount  of  money  invested  in  offshore  funds,
management  believes that TBL will continue to be a significant  contributor  to
the Company's revenues in the future. The services rendered by TBL are set forth
below.

     A.  Proprietary  Investment  Funds.  TBL is the  sponsor or  co-sponsor  of
several offshore  mutual-funds.  TBL provides investment advisory and management
services to these funds and receives asset based fees for its services. Revenues
from these proprietary  products  accounted for approximately 19% and 15% of the
Company's  consolidated  revenues for each of the years ended  December 31, 1999
and 1998, respectively. TBL's significant proprietary products are as follows:

     Kingate  Global Fund,  Ltd.-Class B Shares  ("Kingate") is a British Virgin
Islands  hedge fund  marketed  to high net worth  individuals  who accept a high
degree of risk in their investment. TBL receives compensation at the end of each
month from Kingate's Class B Shares based on a percentage of the net asset value
of the shares  owned by investors  introduced  to Kingate by TBL. As of December
31, 1999, Kingate's approximate net asset value was $1.0 billion of which $173.2
million was attributable to investors introduced by TBL.

     American  Masters  Fund  "Hilspen  Series"  Limited  ("AMF-Hilspen")  is an
open-end  investment  company which was organized in January 1999 as an exempted
company under the laws of the Cayman Islands. AMF-Hilspen seeks to significantly
outperform  traditional  equity  indices by  attempting to identify the best and
worst performing styles among Big Cap Value, Big Cap Growth, Small Cap Value and
Small Cap Growth companies.  As AMF-Hilspen's  investment manager,  TBL receives
monthly  compensation based upon AMF-Hilspen's net assets. At December 31, 1999,
AMF-Hilspen's approximate net asset value was $55.8 million.



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<PAGE>

     American Masters Fund "AG Absolute Return Series" Limited  ("AMF-AG") is an
open-end  investment  company  organized  on  September  1, 1999 as an  exempted
company under the laws of the Cayman Islands.  AMF-AG invests  predominantly  in
convertible securities hedging activities in both the U.S. and non-U.S. markets,
using  a  variety  of  convertible  securities,   including  convertible  bonds,
convertible  preferred stocks and warrants.  As AMF-AG's investment manager, TBL
received monthly  compensation  based upon AMF-AG's net assets.  At December 31,
1999,  AMF-AG's  approximate  net asset value was $12.7 million of which $61,300
relates to TBL.

     Tremont Broad Market,  LDC  ("TBLDC") is an open-ended  investment  company
registered in the Cayman Islands as an exempted  limited duration  company.  The
Fund  seeks   long-term   capital  growth.   TBL,  as  investment   advisor  and
administrator,  receives  compensation  on a monthly  basis.  As of December 31,
1999, TBLDC's approximate net asset value was $67 million.

     B. Insurance Products.

     Tremont International Insurance, Ltd. ("TIIL") is a Cayman Island insurance
company which offers a variety of insurance  products,  including  variable life
insurance  policies and deferred  variable  annuities,  to customers who are not
residents of the Cayman Islands.  TIIL is owned 24.5% by TBL and 75.5% by Mutual
Risk Management, Ltd. ("MRM"), an international risk management company.

     Tremont MRM Services  Limited ("TMRM") was formed under Bermuda law by TBL,
MRM and The  Anglo  Dutch  Insurance  Company  Limited,  a  Cayman  Island  life
insurance company ("Anglo-Dutch"), to provide product development, marketing and
administrative  services to TIIL.  TMRM is owned 38.8% by TBL, 20% by MRM, 40.7%
by Anglo-Dutch and 0.5% by others.

     3. TSI. TSI is a broker-dealer registered under the Securities Exchange Act
of 1934, as amended. It acts as an introducing broker for security  transactions
initiated by nonaffiliated companies and facilitates  soft-dollar  arrangements.
TSI sells private  investment  partnerships,  variable annuity and variable life
products.   TSI  accounted  for  approximately  4%  and  6%,  respectively,   of
consolidated revenues for the years ended December 31, 1999 and 1998.

     4. TFI TFI is a commodity  pool  operator  and  commodity  trading  advisor
registered  with the  Commodity  Futures  Trading  Commission  and the  National
Futures  Association.  It  currently  serves  as  the  general  partner  of  one
proprietary investment partnership.



                                       5

<PAGE>


     A. Proprietary Investment Funds.

     American Masters Market Neutral Fund, L.P.  ("AMMN") was the first domestic
limited partnership in the Company's proprietary "American Masters" series. AMMN
was formed by TFI to achieve  long term  capital  appreciation  irrespective  of
stock market volatility. TFI receives a monthly management fee based upon AMMN's
net asset  value as of the end of each  month.  At  December  31,  1999,  AMMN's
approximate net asset value was $9.2 million.

     5. TIMI TIMI, a 65% owned  subsidiary of the Company,  was formed in Canada
in July,  1998 and is registered  with the Ontario  Securities  Commission as an
investment  counsel and portfolio  manager,  as well as a limited  market dealer
under the Securities Act (Ontario).  It has sponsored one proprietary investment
fund.

     A. Proprietary Investment Funds.

     The Tremont Masters Fund is a proprietary Canadian fund launched by TIMI in
February,  1999 with $500,000.  At December 31, 1999, The Tremont Masters Fund's
approximate net asset value was $556,300, all of which relates to TIMI.

     6. TASS TASS was acquired by the Company  during March 1999. It specializes
in the sale of electronic databases and serves a large institutional client base
whose subscribers include investment banks, foundations,  endowments, government
agencies  and high net worth  individuals,  among  others.  TASS  accounted  for
approximately  9% of the  Company's  consolidated  revenues  for the year  ended
December 31, 1999.

Clients

     The Company's  principal  clients continue to be investment funds formed by
or with the  assistance  of TPI or TBL,  or the  sponsors  and  managers of such
investment  funds.  Investment  funds include limited  partnerships,  bank trust
funds  and  offshore  mutual  funds.  TPI and  TBL  consulting  agreements  with
non-proprietary  investment fund clients accounted for approximately 23% and 29%
of the Company's  consolidated revenues for each of the years ended December 31,
1999 and 1998.

     The significant  non-proprietary  client  relationships of the Company,  by
subsidiary, are described below.

     1. TPI

     The DaimlerChrysler  Minority Equity Trust (the "Trust") is a multi-manager
program using  minority  owned and operated  investment  management  firms.  TPI
advises the Trust on the selection and monitoring of managers, as well as on the
allocation of funds among them. TPI's compensation is based upon a percentage of
the Trust's net asset value


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at the end of each month.  As of December  31,  1999,  the Trust had a net asset
value of approximately $609.8 million.

     Meridian  Horizon  Fund,  L.P.  ("Meridian")  is a  multi-manager  Delaware
limited partnership  employing  diversified  investment  strategies  utilizing a
multi-manager  approach.  TPI is a consultant to and  administrator of Meridian.
TPI's compensation is based upon a percentage of Meridian's assets at the end of
each month.  In addition,  TPI receives a fixed  consulting fee. At December 31,
1999,  Meridian had a net asset value of approximately  $356.8 million, of which
$501,500 relates to TPI.

     Security Equity Life Insurance Company is a New York based company offering
a Group Flexible Premium Variable Life Insurance contract with separate accounts
for different  investments.  TPI acts as the investment  manager of one of these
separate  accounts  using  a  multi-manager  approach.  The  primary  investment
objective of this account is to achieve above-average, long-term capital growth.
At December 31, 1999, the account had a net asset value of  approximately  $64.8
million.  TPI receives  compensation from the account based upon a percentage of
the account's net assets.

     2. TBL

     Credit   Suisse   Financial   Products   Master  Fund  (the  "Fund")  is  a
multi-manager  limited  partnership  advised  by a diverse  group of  investment
managers.  The  Fund is a  principal  guaranteed  fund of  funds,  designed  for
high-net worth  individuals  with low risk  tolerance.  Its portfolio funds have
been selected to counter  balance each other in periods of market  strengths and
weaknesses. TBL serves as a consultant to the Fund's general partner and assists
in the monitoring and selection of investment vehicles. TBL receives a fee based
upon a percentage of the Fund's assets at the end of each month.  As of December
31, 1999, the Fund's approximate net asset value was $469 million.

     Bomaral Fund ("Bomaral") is a Netherland Antilles-based fund formed on June
29,  1999.  Bomaral  seeks to  achieve  long term  capital  appreciation  and to
consistently  generate positive returns  irrespective of stock market volatility
or direction while focusing on preservation of capital. TBL serves as consultant
to Bomaral, assisting in the monitoring and selection of investment managers and
investment  vehicles.  TBL receives a fee based upon a  percentage  of Bomaral's
assets at the end of each month. As of December 31, 1999, Bomaral's  approximate
net asset value was $53.4 million.

     The  percentage  of  revenues  that  any  client  pays to the  Company  can
fluctuate  substantially  over time due to the nature of the capital markets and
the nature of the fee arrangements with the client.

     The Company, through its subsidiaries,  enters into written agreements with
its clients. Under these agreements,  fees are typically based upon a percentage
of assets under management or a percentage based on the performance of the fund.
The fees are payable  periodically,  usually  monthly or  quarterly.  In certain
instances, the subsidiary receives an initial fixed fee from multi-


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manager  investment  funds  for its  services  in  organizing  the  fund.  Other
arrangements are based on annual retainer fees payable  periodically  during the
term of the consulting  agreement or as a single fee for  individual  consulting
projects.  Several contracts require the payment of asset-based fees for so long
as investors placed by the subsidiary remain investors, which period may be well
beyond the termination of a particular contract.

     The   Company's   ability  to  generate  and  sustain   revenues  from  its
multi-manager  investment fund clients is primarily dependent on the size of the
assets under  management in each fund and on the  continuation of its agreements
with the funds.  Each of these agreements is generally  terminable upon 30 to 60
days written  notice,  or on the expiration of a stated term of up to two years,
subject to earlier termination in certain  circumstances.  Other annual retainer
or ongoing  agreements are also generally  terminable on short-term  notice from
clients.

     Although  the  Company  expects  that  its  multi-manager  investment  fund
agreements  will  continue  for the  duration  of such  funds,  there  can be no
assurance  that an  arrangement  will not be earlier  terminated  by the client.
During 1999,  TPI agreed to terminate its  relationship  with two clients due to
what management  believes were internal  reasons of their sponsor.  During 1998,
TBL terminated  its  relationship  with two clients whose  businesses had ceased
operations.  These  terminations  have not  resulted  in a  significant  loss of
revenues.  However,  the Company will  continue to endeavor to expand its client
base and further  diversify its  consulting  business in an effort to reduce the
adverse impact of termination with respect to any one or more of its clients.

Selection of Investment Advisers

     As  part  of its  services  rendered,  and in its  capacity  as  investment
consultant  to  various   clients,   the  Company  monitors  and  evaluates  the
performance of investment  managers for clients based on matching the objectives
of the client with the investment characteristics of the investment manager. The
Company  then  recommends  the  selection,  continuation  or  termination  of an
investment  manager;  although  the final  decision  is made by the  client.  In
certain instances,  clients have requested that affiliates of the Company act as
investment  manager.  GAMCO,  an  affiliate  of  Mario  J.  Gabelli,  one of the
Company's  principal  shareholders,  was  selected  to be one of the  investment
managers, along with others, to one of the Company's consulting clients upon the
Company's recommendation after an evaluation of all relevant factors.

     In the future,  the Company may enter into transactions with its directors,
officers,  holders of 5% of its Common Stock or affiliates of Mr.  Gabelli,  but
will do so only if the terms of such  transactions  are no less favorable to the
Company than could be obtained by the Company from unaffiliated third parties.

Recent Business Developments

     TASS Acquisition

     On March 11, 1999,  the Company  acquired all of the  outstanding  ordinary
(common)  shares  of  TASS,  an  English  company  specializing  in the  sale of
electronic databases. Tremont



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issued  238,096  (190,477  pre-split)  shares,  of its  Class B Common  Stock in
exchange for the TASS common shares,  of which 80,212 (64,170  pre-split) shares
were received by Ms. Meaden,  Chief  Executive of TASS. TASS thus became another
of the Company's subsidiaries,  although its preferred stock is not owned by the
Company. TASS serves a large institutional client base whose subscribers include
money center banks, investment banks, private banks, central banks, foundations,
endowments,  insurance  companies,  prime brokers,  family  offices,  academics,
government  agencies  and  high-net  worth  individuals.  At  the  time  of  the
acquisition,   two  employment  agreements  were  entered  into  with  key  TASS
employees,  including  Ms.  Meaden.  They were also granted  options to purchase
shares of the Company's  Class B Common Stock and certain  registration  rights.
See  "Employment  Contracts,  Terminations  of Employment  and Change in Control
Arrangement."

     Ms.  Meaden was granted two types of options (the "Group I Options" and the
"Group II Options") to purchase 184,308  (147,447  pre-split) and 31,058 (24,847
pre-split) shares,  respectively,  of Class B Common Stock.  Laurence Huntington
Taylor II, a principal of TASS, was granted 97,508  (78,007  pre-split)  Group I
Options and 16,442 (13,154 pre-split) Group II Options.  The Group I Options and
Group II  Options  are  exercisable  at $6.40 per share and  $12.00  per  share,
respectively.  Sixty percent of the Group I Options became exercisable effective
March 11, 1999, the balance become exercisable at any time on or after March 11,
2000.  One-third of the Group II Options  vested on March 11, 1999,  the balance
vest  one-third  each on or after  March  11,  2000 and  2001.  Both the Group I
Options and the Group II Options become immediately exercisable upon a change in
control of the Company  and may not be  transferred  without  the prior  written
consent of the  Company.  In the event  that  either  employee  seeks to sell or
transfer any shares of the Company's stock other than to a family affiliate, the
Company has the right of first  refusal to purchase the shares on the same terms
and conditions as the third party offer.

     On March 15, 1999,  options to purchase 15,000 (12,000 pre-split) shares of
Class B Common  Stock at $12.00  per share were  granted  to certain  additional
employees of TASS.  These options vest and become  exercisable  one-third on the
date of the agreement,  one-third on the first  anniversary of the agreement and
one-third on the second anniversary of the agreement.

     Joint Venture Investments

          Hedge World/FITX

     At December 31, 1998, TBL had  approximately  a 40% interest in HedgeWorld,
Limited  ("Hedge  World"),  an offshore  entity that  developed  an  independent
electronic commerce vehicle to provide certain online services to the hedge fund
community.  At December 31, 1998,  TBL also had an investment  of  approximately
$16,800 in FITX  Capital  Limited,  an  offshore  entity  sponsoring  public and
private issues and providing other financial services.

     In a series of  transactions  that took place during 1999, TBL  transferred
its interests in both Hedge World and FITX Capital Limited to FITX Group Limited
("FITX"),  an exempt Bermuda company,  in consideration of approximately  30% of
the FITX outstanding stock. The


                                       9
<PAGE>

Company also invested an additional $212,500 in FITX's Series B Preferred Stock,
as did certain of the Company's  Directors.  FITX was formed on June 23, 1999 to
deliver e-commerce portal solutions to niche markets, primarily within the hedge
fund  industry.  FITX expects that this  technology  will enable the exchange of
information  services and capital between money managers,  service providers and
customers.

     On December 15, 1999, the Company and certain of its  subsidiaries  entered
into a license  agreement with FITX pursuant to which FITX was granted a license
to use the Company's proprietary database,  TASS+, in exchange for 87,260 shares
of FITX Series B Preferred Stock valued at $11.46 per share  ($1,000,000).  FITX
will also pay annual  royalties on net revenues  earned in  connection  with the
TASS+ database.

     CSFB Tremont Hedge Fund Index

     The Company has formed a joint  venture with Credit  Suisse  First  Boston,
called  Credit  Suisse  First  Boston  Tremont  Index  LLC,  to form a series of
benchmarks for the hedge fund industry and to start a line of indexed  products.
The Company owns 25% of the venture and its share of operating profits,  if any,
will range from 33% to 25%. The venture  launched CSFB Tremont Hedge Fund Index,
a  capital-weighted  master  index,  in the  fourth  quarter  of 1999  and it is
anticipated that it will be followed by a series of capital weighted sub-indices
based on various  investment  strategies and styles. It is also anticipated that
the venture will launch index products during 2000.

Competition

     The Company 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 capital,  resources and services.  There has
recently  been  increasing  competition  from  commercial  banks  and  insurance
companies.  The Company believes that the principal  competitive  factors in the
securities  industry are the quality and ability of professional  personnel,  as
well as the  relative  price of  services  and  products  offered.  The  Company
believes  that there are several  important  factors which affect the success of
the  Company  among  investment  consulting  firms.  These  factors  include the
abilities and reputations of the consulting and  professional  personnel,  their
ability to develop new  investment  management  products  and  technologies  for
clients, and their ability to market existing services.

     The Company is committed to  maintaining  the firm's  competitive  position
through the continued involvement of its professional  management in all aspects
of business development.

Regulation

     The  Company is  subject to or  restricted  by  various  federal  and state
governmental laws or regulations relating to the investment  consulting services
rendered to its clients.  To the extent that the Company  renders such services,
it is subject  to  compliance  with the  Advisers  Act and state law,  including
limitations  on the  amount of fees  charged  by it and the  transactions  to be



                                       10
<PAGE>

effected by it. Even though  management  believes  the Company is in  compliance
with applicable  regulations,  changes in the regulations may affect the expense
of operation and require  adjustments  in the Company's  business  procedures to
ensure  compliance.  TPI  is  registered  as  an  investment  adviser  with  the
Securities and Exchange  Commission (the  "Commission")  under the Advisers Act.
However, registration does not imply in any manner that TPI has been approved by
the  Commission  or any state or foreign  regulatory  authority,  nor imply that
TPI's  qualifications  have  been  passed  upon by the  Commission  or any state
regulatory authority.

     The Company may be deemed,  in certain  instances,  to be a "fiduciary" for
its  clients  and  their  funds  under  ERISA  and  U.S.   Department  of  Labor
regulations.  In such event,  the Company could be subject to certain  sanctions
and fines for its noncompliance with a particular law and its regulations.

     The Company obtains a significant  amount of its revenues from sponsors and
managers of single-manager  and multi-manager  investment funds.  These sponsors
and managers are subject to regulation under the Investment  Company Act and the
Advisers  Act  respecting  the  amount of the fees that they may charge to their
funds.  Since the  Company is  generally  paid out of the fees  received by such
sponsors or managers,  any regulatory limits on such fees has a direct impact on
the fees to be received by the Company.  In addition,  the  aforementioned  acts
generally require that the agreements between the sponsors or managers and their
funds be  terminable  by the funds on 30 to 60 days'  notice.  Accordingly,  the
Company's  agreements  with these sponsors and managers are also subject to such
termination provisions.

Employees

     At  December  31,  1999,  the Company had 57  full-time  employees  and two
part-time employees.

Stock Split

     On June 15, 1999,  the Board of Directors  approved a  five-for-four  stock
split (with no change in par value) on both the  Company's  Class A Common Stock
and Class B Common Stock which was  distributed  to  stockholders  on August 16,
1999.  All per share and shares  outstanding  data have been restated to reflect
the impact of the split.

Item 2. Description of Properties

     The  Company  owns no real  property  but  leases  10,910  square  feet for
executive  offices in Rye, New York.  The lease expires August 2002 and requires
monthly payments of approximately $22,700.

     TBL's lease for a 3,250  square foot office in  Hamilton,  Bermuda  expires
February 2003 and requires monthly payments of approximately $7,100.



                                       11
<PAGE>

     In September  1999, TASS entered into an office lease in the United Kingdom
guaranteed by the Company.  This lease expires in June 2005 but is renewable for
two additional five year periods. The monthly rent is approximately $14,000.

Item 3.  Legal Proceedings

     Payroll  Express.  In 1991,  the Company  engaged KPM, Inc.  d/b/a/ Payroll
Express  ("Payroll  Express")  to  perform  certain  data  processing  services,
including  preparing Forms 941 and filing them with the Internal Revenue Service
("IRS") and paying payroll and other taxes on behalf of the Company. The Company
terminated  its  relationship  with Payroll  Express upon being  informed by the
Chapter 11 Trustee for Payroll Express that the Company had suffered a potential
loss as a result of a fraudulent  scheme  undertaken by Payroll  Express and its
principal, David S. Kast. It appears that Payroll Express failed to make certain
payments  to the  IRS on the  Company's  behalf  and  falsely  and  fraudulently
misrepresented  to the Company the dollar  amount of taxes  actually paid to the
IRS. It also appears that a  substantial  portion of these funds  (approximately
$400,000) was wrongfully  appropriated  by Payroll  Express and Kast. This theft
created an  additional  federal tax  liability  for the Company in the amount of
$307,500  for the years  1995 and 1996  which has been  paid.  These sums do not
include  interest or  penalties  since the Company has been  informed by the IRS
that,  based upon its initial review of this matter,  interest and penalties may
not be assessed.  The Company has been reimbursed by its insurance carrier for a
substantial portion of this tax liability.  The Company is also cooperating with
the authorities in their ongoing  criminal  investigation of Payroll Express and
Kast,  and  has  filed  a Proof  of  Claim  in the  Payroll  Express  bankruptcy
proceeding.

     Vasu. The Company has been sued by a former  employee for alleged breach of
contract and defamation. In a decision dated September 21, 1999, the Connecticut
District Court held that the claim for defamation must be arbitrated  under NASD
rules. Plaintiff has not commenced arbitration proceedings.  By Notice of Motion
dated  October 18,  1999,  the Company  moved to dismiss  the  complaint  in its
entirety.  The Company believes that the suit is without merit; however,  should
the plaintiff  prevail,  the Company believes that it is likely that the damages
will not be  material  to the  Company's  consolidated  financial  condition  or
results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

     No matter  was  submitted  to a vote of the  holders  of either the Class A
Common Stock or Class B Common Stock in the fourth quarter of 1999.





                                       12

<PAGE>

                                     PART II

Item 5.  Market  For the  Registrant's  Common  Equity and  Related  Stockholder
         Matters

     The  Company's  Class A Common  Stock  ("TMAVA")  and Class B Common  Stock
("TMAVB") are closely held and thinly traded.  At December 31, 1999, the Class A
Common  Stock and Class B Common  Stock were quoted on the OTC  Bulletin  Board.
Effective February 2, 2000, the Company's Class B Common Stock has traded on the
NASDAQ SmallCap Market under the symbol TMAV.

     The quotations are dealer prices  without  retail  mark-ups,  mark-downs or
commissions and may not represent actual transactions.  The following table sets
forth the range of high and low bid prices of the Class A Common Stock and Class
B Common Stock, respectively,  from January 1, 1998 through February 2, 2000 and
for the Class B Common from  February 2, 2000 through March 2, 2000 the high and
low sales price information as listed on the NASDAQ SmallCap Market.

     The quotations  have been restated to reflect the impact of a five-for-four
stock split paid on August 16, 1999 to shareholders of record on July 30, 1999.


                       Price Range of Class A Common Stock

                                                           Bid Prices*
                                                           -----------
                                                     High               Low
1998
January 1, 1998 - March 31, 1998                    $ 5.00            $ 3.70
April 1, 1998 - June 30, 1998                         6.60              3.30
July 1, 1998 - September 30, 1998                     6.40              3.80
October 1, 1998 - December 31, 1998                   6.20              1.60

1999
January 1, 1999 - March 31, 1999                    $ 8.00            $ 4.80
April 1, 1999 - June 30, 1999                         8.60              6.40
July 1, 1999 - September 30, 1999                    10.50              7.75
October 1, 1999 - December 31, 1999                  11.00              9.00

2000
January 1, 2000 - March 2, 2000                     $10.50            $10.50


----------------------------------
*Bid prices prior to August 16, 1999 have been adjusted to reflect the impact of
the five-for-four stock split distributed on that date.


                                       13
<PAGE>


                       Price Range of Class B Common Stock

                                                           Bid Prices
                                                           ----------
                                                     High               Low
1998
January 1, 1998 - March 31, 1998                    $ 3.80            $ 3.60
April 1, 1998 - June 30, 1998                         7.40              1.70
July 1, 1998 - September 30, 1998                     6.40              3.20
October 1, 1998 - December 31, 1998                   6.50              3.20

1999
January 1, 1999 - March 31, 1999                    $ 8.40            $ 5.00
April 1, 1999 - June 30, 1999                         8.80              6.40
July 1, 1999 - September 30, 1999                    11.00              8.00
October 1, 1999 - December 31, 1999                  11.75              6.00

2000
January 1, 2000 - February 1, 2000                  $10.00            $ 9.50
February 2, 2000 - March 2, 2000 (1)                $11.00            $ 8.00

----------
(1) On February 2, 2000, the Class B Common Stock began trading under the symbol
TMAV on The NASDAQ Small Cap Market.

Holders

     As of March 2, 2000 there were  approximately  288 holders of record of the
Company's  Class A Common Stock and  approximately  302 holders of record of the
Company's Class B Common Stock.

Dividends

     Since its organization,  the Company has not paid any cash dividends on its
Class A Common  Stock or its  Class B Common  Stock nor does it plan to do so in
the foreseeable future.

Stock Split

     On July 15, 1999,  the Board of Directors  approved a  five-for-four  stock
split (with no change in par value) of both the  Company's  Class A Common Stock
and Class B Common  Stock.  The split was payable to  stockholders  of record on
July 30, 1999.  All per share and share  outstanding  data have been restated to
reflect the impact of this stock split.

                                       14

<PAGE>

Item 6. Management's Discussion and Analysis

Financial Condition

     The Company believes its relationships with its present clients are stable.
The agreements with the Company's  single-manager  and multi-manager  investment
funds  generally are terminable  upon 30 to 60 days' notice or on the expiration
of a stated term of up to two years,  subject to earlier  termination in certain
circumstances.  At December 31, 1999, the Company expected that its arrangements
with its larger  single-manager  and multi-manager  investment fund clients will
continue  for the  duration of such funds and the Company has not  received  any
notice that any of such  clients  intends to  terminate  its  arrangement  after
December 31, 1999.  There can be no assurance that any such arrangement will not
be earlier  terminated by the client.  The Company is not currently aware of any
event or events  which would cause its clients to terminate  their  arrangements
with the Company.  Several  contracts entered into by TBL require the payment of
asset-based  fees to TBL so long as the investors placed by TBL remain investors
in those  funds,  which  may be well  beyond  the  termination  of a  particular
contract.

     The Company believes that its product  development  efforts in fiscal 1999,
as well as client relationships formed abroad, have placed the Company in a good
position  for  2000  and  thereafter.   Management  expects  to  concentrate  on
developing  new  proprietary  products and taking full  advantage of its growing
relationships  world-wide  to increase its  revenues and to develop  independent
product  distribution  channels.  Profitability  is dependent  on the  Company's
ability to maintain existing consulting relationships.

Result of Operations

     The  Company's   revenues  are  derived  from  consulting  and  specialized
investment  services  provided to  institutional  and other clients,  as well as
management  fees  from  certain  funds  under  management.  Consulting  fees are
generally a function of the amount of assets under management and the percentage
fees charged to clients. Management fees are based on a percentage of the assets
of the managed fund and are usually paid on a monthly or  quarterly  basis.  The
Company also receives  asset-based fees for investments placed by TBL in certain
offshore mutual funds. The Company provides other consulting  services generally
on a fixed fee basis,  whether as annual  retainer fees or single  project fees.
Since the purchase of TASS in March 1999, the Company also has had revenues from
the sale of electronic database  information.  The Company's principal operating
expenses  consist of its costs of personnel and independent  consultants.  It is
management's intention to continue the Company's focus on launching new products
and to take  advantage  of its growing  world-wide  relationships  to expand its
operations.

Fiscal year ended  December 31, 1999 compared to Fiscal year ended  December 31,
1998.

     Consulting  fees earned for the year ended  December 31, 1999  increased by
$3,981,800,  or 40.6%,  from  $9,798,000 for the year ended December 31, 1998 to
$13,779,800  for the year ended  December 31, 1999. At the  Company's  principal
domestic subsidiary, TPI, consulting


                                       15
<PAGE>

fees  increased  from  $6,469,300  for  the  year  ended  December  31,  1998 to
$8,943,400 for the year ended December 31, 1999. This increase was primarily due
to increases in revenues resulting from increased assets under management in the
Company's  proprietary  products,  the American Masters Broad Market Prime Fund,
L.P.  ($1,094,600  increase),  and the American  Masters Broad Market Fund, L.P.
($638,300  increase).  In  addition,  1999  consulting  fees  increased  due  to
increases   in  fees  from   non-proprietary   investment   funds  such  as  the
DaimlerChrysler  Minority  Equity  Trust  ($293,100  increase)  and the Meridian
Horizon Fund, L.P. ($122,200 increase). During the years ended December 31, 1999
and  1998,  certain  domestic  proprietary  investment  funds  accounted  for  a
significant  percentage of the  Company's  consolidated  revenues;  the American
Masters Broad Market Fund,  L.P.  accounted for  approximately  13.3% and 14.7%,
respectively,  and the American Masters Broad Market Prime Fund, L.P.  accounted
for approximately 16.9% and 15.8%, respectively, of consolidated revenues.

     At the Company's  foreign  subsidiary,  TBL,  consulting  fees increased by
$1,462,100,  or 45.4%,  from  $3,223,100 for the year ended December 31, 1998 to
$4,685,200 for the year ended December 31, 1999. This increase was primarily due
to an increase in revenues as a result of increased assets under management from
the  Company's  proprietary  products,   Kingate  Global  Fund  Class  B  Shares
($1,067,300  increase)  and  Tremont  Broad  Market LDC  ($337,000),  as well as
increases in assets within the investment vehicles of other clients.

     Additionally,  the increase in consulting fees was from the placement agent
fees  received  by TSI,  the  Company's  wholly-owned  broker-dealer  subsidiary
($26,100  increase),  and from TFI ($19,500  increase) which was formed in July,
1998.

     Performance fees for the year ended December 31, 1999 increased by $419,300
or 96.5%,  from  $434,600  for the year ended  December  31, 1998 as compared to
$853,900 for the year ended December 31, 1999. This increase is primarily due to
the favorable changes in the market conditions during 1999, as a result of which
more clients  outperformed  their  pre-established  benchmarks.  The significant
performance  fees  earned by TBL in 1999 were from  Galleon  International  Ltd.
($293,500),  Jemmco International Fund, Ltd. ($54,800),  Levco Alternative Fund,
Ltd.  ($87,100) and Starvest Fund,  Ltd.  ($45,900).  The sole  performance  fee
earned by TPI in 1999 was $102,000 from the Dillon Flaherty Market Neutral Fund,
L.P.  Performance  fees of $209,400  were also earned on assets placed by TSI in
certain non-related domestic limited  partnerships.  The performance fees earned
for the  year  ended  December  31,  1999  are  subject  to  adjustment  pending
completion  of  final  audits  of  the  respective  funds.   Management  expects
performance   fee  revenue  to  increase   during  periods  of  positive  market
conditions,  but management cannot predict with any accuracy whether such income
from  performance  fees will  continue  in the  future  due to  changing  market
conditions and other outside factors.

     Data sales of $1,542,000 were primarily by TASS,  which was acquired by the
Company during March 1999.  Its operations  have been included in the statements
of income from the date of acquisition.

     Commissions  received by TSI decreased by $74,600,  or 17.6%, from $423,500
for the year ended December 31, 1998 to $348,900 for the year ended December 31,
1999, primarily as


                                       16
<PAGE>

a result of the  commission  flow being more  extensive in 1998 than in 1999. In
addition,  commissions decreased in 1999 as a result of a different mix of money
managers executing trades through TSI.

     Operating  profits at TBL were  $2,698,000 and $874,700 for the years ended
December 31, 1999 and 1998,  respectively.  The increase in operating profits of
$1,823,300  was  primarily  due to  increased  revenues  from  assets  raised in
proprietary products such as the Class B Shares of Kingate Global Fund, Ltd. and
Tremont  Broad  Market,  LDC. In  addition,  equity  earnings of joint  ventures
increased as a result of more capital  invested  (i.e.  $600,000 was invested in
Tremont Broad Market LDC in 1999) and favorable market conditions.

     Management  expects that during 2000 the Company  will  continue to develop
its proprietary  investment funds under the brand name American Masters, as well
as develop  relationships with additional  potential  clients.  The Company will
utilize these relationships to create diversified ways to package and distribute
its  proprietary  products.  For instance,  the Company has entered into a joint
venture agreement with Credit Suisse First Boston to form a series of benchmarks
for the hedge fund industry and to start a line of investable  indexed products.
The joint  venture of which the Company owns 25%, is called  Credit Suisse First
Boston Tremont Index LLC. Under the joint venture  agreement the Company's share
of operating profits, if any, will range from 33% to 25%. The CSFB Tremont Hedge
Fund Index,  a  capital-weighted  master index,  was launched  during the fourth
quarter of 1999, and it is  anticipated  that it will be followed by a series of
capital weighted sub-indices based on various investment  strategies and styles.
It is also  anticipated  that the joint  venture  will launch  investable  index
products during 2000.

     Compensation  expense  increased  for the year ended  December  31, 1999 by
$2,557,000,  or 61.6%,  from  $4,148,100 for the year ended December 31, 1998 to
$6,705,100 for the year ended December 31, 1999. These increases result from the
Company's  acquisition of TASS on March 11, 1999,  salary  increases for certain
employees that became effective January 1, 1999, the increased health care costs
arising from the increased  number of employees  from 31 at December 31, 1998 to
57 at December 31, 1999,  increased  bonus  accruals and a charge of $402,100 in
August 1999 relating to the distribution of 120,750 shares of FITX Group Limited
("FITX")  stock to certain  employees and  directors of the Company.  As part of
compensation expense, $1,840,500 and $1,150,000 for the years ended December 31,
1999 and 1998, respectively, were attributable to employee bonuses.

     General   and   administrative   expenses   consist   primarily   of  rent,
telecommunications,  travel  and  entertainment,  professional  fees  and  other
related  expenses.  General  and  administrative  expenses  for the  year  ended
December 31, 1999  increased by  $1,488,400,  or 55.4%,  as compared to the year
ended December 31, 1998.  This increase was primarily due to the  acquisition of
TASS,  increased  professional  fees associated with the Payroll Express Company
bankruptcy investigation and costs related to the Company's continued expansion,
including the expansion of its office space in September 1998 and the opening of
a Canadian subsidiary and office in July 1998.



                                       17
<PAGE>

     Consulting  expenses  increased by $380,600,  or 28.0%, from $1,361,100 for
the year ended  December 31, 1998 as compared to  $1,741,700  for the year ended
December  31, 1999,  primarily as a result of the increase in revenues  from the
clients that participate in revenue sharing arrangements. For example, TSI has a
clearing arrangement with Bear Stearns,  Inc. whereby 25% of the commissions are
shared with Bear  Stearns,  Inc.  Also,  TPI, TSI and TBL have  revenue  sharing
arrangements  with various clients  whereby earned  management fees or placement
fees are split with third party solicitors.

     The increase in depreciation  is a result of fixed asset  purchases  during
the year ended December 31, 1999. These purchases totaled $522,600 and consisted
of computer  equipment  for the new  employees  hired during the year,  software
purchases, as well as a computer system network for the Company. At December 31,
1999,  the  Company had  commitments  for  additional  capital  expenditures  of
approximately $224,000.

     Amortization of intangibles  increased $748,800 for the year ended December
31, 1999 as compared to the year ended  December 31,  1998,  because of the TASS
acquisition in March 1999.

     Equity earnings from limited  partnerships  increased $320,400,  or 175.7%,
from  $182,400 for the year ended  December 31, 1998 as compared to $502,800 for
the year ended  December 31, 1999,  as a result of increased  performance  and a
greater asset base due to increased investments by the Company. During 1999, the
Company,  through its Canadian  subsidiary,  invested  $500,000 into the Tremont
Masters Fund when it was launched on February 1, 1999. In addition,  the Company
invested  $417,900,  through TPI,  into the American  Masters Broad Market Prime
Fund, L.P. (See Investments in Limited Partnerships.)

     Equity earnings from other investments  increased $494,500,  from a loss of
$222,100 for the year ended December 31, 1998 to income of $272,400 for the year
ended December 31, 1999. This was primarily as a result of increased performance
and a greater  asset base due to increased  investments  by the Company.  During
1999, TBL invested  $600,000 in Tremont Broad Market Fund,  LDC, a Cayman Island
corporation organized for the purpose of achieving capital growth through hedged
investments and $212,500 in FITX. In addition,  Tremont MRM Services Limited had
equity  earnings of  approximately  $422,200 in 1999,  versus none in 1998.  The
above  gains  were  offset by losses of  $240,100  from  FITX's  operations.  In
addition,  the Company owned  twenty-five  percent of a joint venture  operation
which  suffered a  $200,000  loss in 1998.  The  Company  terminated  this joint
venture effective December 31, 1998 and incurred no further losses.

     Other income net  increased  from  $443,900 from $50,600 for the year ended
December  31, 1998 to  $494,5000  for the year ended  December  31,  1999.  This
increase was primarily the result of an investment gain of $402,100  relating to
the  distribution  of  120,750  shares of FITX stock to  certain  employees  and
Directors.  This increase also resulted from more interest earned on more monies
invested during 1999 than in 1998.



                                       18
<PAGE>

     Profitability  is dependent on the Company's  ability to maintain  existing
client  relationships,  several of which  currently  account  for a  significant
portion of the Company's  revenues,  to increase assets under management for its
clients, and to market its services to new accounts.

Fiscal year ended  December 31, 1998 compared to Fiscal year ended  December 31,
1997.

     Consulting  fees earned by the Company for the year ended December 31, 1998
increased by $3,957,700,  or approximately  67.8%,  from $5,840,300 for the year
ended  December 31, 1997 to $9,798,000  for the year ended December 31, 1998. At
the Company's primary domestic  subsidiary,  TPI, consulting fees increased from
$3,437,500 for the year ended December 31, 1997 to $6,469,300 for the year ended
December 31, 1998,  due largely to  increases in revenues  from its  proprietary
products such as The Broad Market Fund, L.P.  ($421,300  increase) and The Broad
Market Prime Fund, L.P. ($1,476,000 increase). In addition, 1998 consulting fees
also increased due to increases in fees from  non-proprietary  investment funds,
such as The Meridian Horizon Fund, L.P. ($471,600 increase), The DaimlerChrysler
Minority  Equity Trust Fund  ($354,800  increase)  and The Security  Equity Life
Insurance program ($263,700  increase).  Consulting fees also increased when TSI
realized  fees  from the  sale of  limited  partnership  interests.  These  fees
amounted to $105,600  and  $173,000,  for the years ended  December 31, 1998 and
1997,  respectively.  During the years ended  December  31,  1998 and 1997,  two
proprietary  investment  funds  accounted  for a  significant  percentage of the
Company's  consolidated  revenues:  The Broad Market Fund,  L.P.  accounted  for
approximately 14.7% and 17%, respectively, and The Broad Market Prime Fund, L.P.
accounted  for  approximately  15.8%  and  3%,  respectively,   of  consolidated
revenues.

     At the Company's foreign  subsidiary,  TBL,  consulting fees increased from
$2,229,800 for the year ended December 31, 1997 to $3,223,100 for the year ended
December 31, 1998. This increase was primarily due to increases in revenues from
proprietary  products,  such as the Class B Shares of the Kingate  Global  Fund,
Ltd. ($681,100 increase) and Tremont Broad Market, LDC ($126,800  increase),  as
well as the commencement of revenues from new  institutional  clients  ($434,200
increase).  The  increase in the  Company's  revenues  resulted  primarily  from
increases in the value of the assets within the respective investment vehicles.

     Performance  fees  for the year  ended  December  31,  1998  were  $434,600
compared  to  $884,300  for the year ended  December  31,  1997.  This  $449,700
decrease was primarily due to the unfavorable  changes in the market  conditions
during  part of 1998,  as a result of which  fewer  clients  outperformed  their
pre-established  bench marks. The significant  performance fees earned by TBL in
1998 were from Cambridge Energy Fund International Ltd.  ($242,900) and Starvest
Fund Ltd. ($38,300).  The sole significant fee earned by TPI in 1998 was $50,000
from The Dillon Flaherty  Market Neutral Fund, L.P. The performance  fees earned
for the  year  ended  December  31,  1998  are  subject  to  adjustment  pending
completion  of  final  audit  of  the  respective  funds.   Management   expects
performance   fee  revenue  to  increase   during  periods  of  positive  market
conditions,  but management cannot predict with any accuracy whether such income
from  performance  fees will  continue  in the  future  due to  changing  market
conditions and other outside factors.


                                       19
<PAGE>


     Commissions increased by $121,400 or approximately 40.2%, from $302,100 for
the year ended  December  31,  1997,  as compared to $423,500 for the year ended
December 31, 1998. This increase resulted from TSI having additional clients and
more trading activity in 1998.

     Operating  profits at TBL were  $874,700  and  $490,200 for the years ended
December 31, 1998 and 1997, respectively. The increase in operating profits from
1997 to 1998  ($384,500)  was  primarily  due to increased  revenues from assets
raised in proprietary products such as the Class B Shares of Kingate Global Fund
Ltd., and American Masters Fund Limited-TWIN Series.  Identifiable assets of TBL
were $2,282,800 and $1,531,700 at December 31, 1998 and 1997, respectively.

     Compensation  expense  increased  for the year ended  December  31, 1998 by
$823,100,  or approximately  24.8%, over the similar period in 1997, as a result
of the Company's  continued  efforts to attract and retain qualified  employees.
Compensation  expense  primarily  increased due to salary  increases for certain
employees that became effective January 1, 1998, increased health care costs due
to the increase in the number of employees  during the year,  and an increase in
bonuses granted by the Company to its employees.  At December 31, 1998 and 1997,
respectively,  the  Company  had 31 and  27  full-time  employees.  As  part  of
compensation  expense,  $1,150,000 and $701,000 for the years ended December 31,
1998 and 1997, respectively, were attributable to employee bonuses.

     General   and   administrative   expenses   consist   primarily   of  rent,
telecommunications,  travel and  entertainment,  outside  professional  fees and
other related expenses.  General and administrative expenses were $2,684,500 and
$1,506,900  for the years ended  December 31, 1998 and 1997,  respectively.  The
increases in general and  administrative  expenses  were  primarily due to costs
related to the Company's continued expansion to service its business growth. The
largest  component of the general and  administration  expense  increase was the
Company's outside  professional fees,  including legal and accounting  expenses.
Such fees increased $440,600, or 143%, from $309,100 for the year ended December
31, 1997 to $749,700 for the year ended December 31, 1998. Part of this increase
is as a result of the  Company  expanding  its  businesses  and  forming two new
subsidiaries,  Tremont Futures,  Inc., a registered  commodity pool operator and
commodity trading adviser, and Tremont Investment  Management,  Inc., a Canadian
registered investment adviser. In addition,  professional fees increased in 1998
due to the defense of the  lawsuit  filed  against the Company in May 1998,  the
Payroll Express Company  bankruptcy  investigation,  amendments to the Company's
Certificate of Incorporation, amendments to TSI's NASD Restriction Agreement, as
well as other items in the normal course of business.

     Consulting  expenses  increased  by  $242,100,  approximately  21.6%,  from
$1,119,000 for the year ended December 31, 1997 to $1,361,100 for the year ended
December  31, 1998 as a result of the  increase in revenues  from  clients  that
participated  in  revenue  sharing   arrangements.   For  example,  TSI  had  an
arrangement  for  securities  clearance  services with a clearing  broker dealer
whereby a certain percentage of the commissions earned is shared.  Also, TPI and
TBL had revenue  sharing  arrangements  with  respect to certain  clients  whose
products  were launched  during late 1997.



                                       20
<PAGE>

     The increase in depreciation  was a result of fixed asset purchases  during
the year ended December 31, 1998. These purchases totaled $229,200 and consisted
of computer  equipment  for the new  employees  hired during the year,  software
purchases,  as well as a computer  system network for TBL. At December 31, 1998,
the Company had commitments for additional capital expenditures of approximately
$80,000.

     Equity in  earnings  of  limited  partnerships  decreased  by  $32,700,  or
approximately  15.2%,  from  $215,100  for the year ended  December  31, 1997 to
$182,400  for the year  ended  December  31,  1998,  as a result of  unfavorable
investment  results from certain  limited  partnerships,  as well as unfavorable
market conditions during part of 1998.

     Loss from  operations  of joint  ventures,  net  increased by $105,000,  or
approximately  89.6%,  from  $117,100  for the year ended  December  31, 1997 to
$222,100 for the year ended December 31, 1998,  primarily as a result of a joint
venture operation owned twenty-five percent by the Company incurring significant
operating  costs  during  the year  and  less  than  anticipated  revenues  from
operations.  The Company  terminated this joint venture  effective  December 31,
1998.

     Other income, net increased by $36,800 or approximately 266%, primarily due
to higher  interest  rates and the higher  amounts of  investable  cash and cash
equivalents  provided by  operations  and invested in 1998 than in 1997. In 1998
and 1997, other income,  net included loss from other  investments of $2,000 and
$10,600, respectively.

Liquidity and Capital Resources

     At  December  31,  1999,  the  Company  had  $2,879,300  in cash  and  cash
equivalents  and  working  capital of  $2,212,400,  as compared to cash and cash
equivalents  of  $1,893,800  and working  capital of  $2,992,600 at December 31,
1998.

     Cash flows  provided by operating  activities  was  $2,859,700 for the year
ended December 31 1999,  compared to cash flows used by operating  activities of
$1,799,600  for the year ended  December 31, 1998. The increase in cash provided
by operations was primarily as a result of profitable  operations,  the increase
in accounts  payable,  accrued  expenses,  income taxes payable and other assets
offset by an increase in accounts receivable and a decrease in deferred revenues
after consideration of the TASS acquisition adjustments.

     Cash flows used in investing  activities  were $2,383,700 and $1,109,600 in
1999 and  1998,  respectively.  1999  and  1998  cash  flows  used in  investing
activities were investments in limited partnerships and joint ventures,  as well
as the  purchase  of  fixed  assets  offset  partially  by the  sale of  limited
partnership interests, joint venture interests and other investments. On July 1,
1999,  the Company  exercised  options to purchase  85,800 shares of a nonpublic
registered  investment  advisor  specializing  in 401(k)  investment  allocation
advice  over the  internet.  The  options  were  granted at $1.00 per share,  as
adjusted for a stock split.  At December 31, 1999,  the investment was valued at
$85,800 by the Company and is included in other investments.



                                       21
<PAGE>

     Cash flows  provided by financing  activities  of $509,500 in 1999 resulted
from the issuance of shares of the  Company's  Class B Common Stock  through the
exercise of certain stock options by employees and directors of the Company,  as
well as the sale of 59,523 (47,619  pre-split) shares of Class B Common Stock at
$6.00 per share (post split) pursuant to a 1997 stock purchase  agreement by and
between the Company and MGL Investments Ltd.

     On July 15, 1999, the Company's Board of Directors approved a five-for-four
stock split (with no change in par value) of both its outstanding Class A Common
Stock and its Class B Common Stock,  which was paid to stockholders of record on
July 30, 1999. All per share and shares  outstanding  data have been restated to
reflect the impact of the split.

     The Company owns 30,000 shares of a nonpublic financial services company as
a result of an employee's  participation  as a board member of such company.  In
consideration  of consulting  services  performed for this entity,  TPI received
$54,000 and  $36,000,  respectively  for the years ended  December  31, 1999 and
1998. At December 31, 1999,  the Company  valued these shares of common stock at
zero.

     Identifiable  assets of TBL were  $5,980,200 and $2,282,800 at December 31,
1999 and  1998,  respectively.  Identifiable  assets  increased  as a result  of
increased  profits and an increase in TBL's  investment in FITX for two reasons.
First, on December 15, 1999, the Company and certain  subsidiaries  (TASS,  TBL,
TPI) entered into a license  agreement  with FITX  pursuant to which the Company
has licensed its proprietary database to FITX in consideration for 87,260 shares
of FITX's Series B Preferred  Stock valued at $11.46 per share.  This amount was
recorded as deferred revenue, net of inter-company eliminations of $259,000, and
is being recognized over a three year period.  Second, FITX conducted a separate
private placement  completed in December 1999. As a result,  TBL's investment in
FITX was stepped-up by $870,700.  Since the Company  considers FITX to be in the
start-up phase of its  operations,  the Company has, in accordance  with SAB No.
51,  reflected  this  $870,700  on  its  statement  of  shareholders  equity  as
additional paid in capital.

     The  Company  is being  sued by a former  employee  for  alleged  breach of
contract and  defamation.  In a decision dated  September 21, 1999, the District
Court held that the claim for  defamation  must be arbitrated  under NASD rules.
Plaintiff has not commenced arbitration  proceedings.  By Notice of Motion dated
October 18, 1999,  the Company  moved to dismiss the  complaint in its entirety.
The  Company  believes  that the suit is  without  merit;  however,  should  the
plaintiff prevail,  the Company believes that it is likely that the damages will
not be material to the Company's  consolidated financial condition or results of
operations.

     The Company  believes  that it has adequate  capital  resources and working
capital to bring to market the  products it  developed in late 1999 and those it
expects  to  develop  in  early  2000 and that the  revenue  stream  from  these
products,  as well as from  existing  products,  will be  sufficient  to support
future growth. The Company has no material short or long term debt obligations.



                                       22
<PAGE>

Facilities

     The Company's  lease for its  corporate  offices in Rye, New York expire in
August 2002 and requires aggregate monthly payments of approximately $22,700.

     TBL's lease for corporate offices in Hamilton, Bermuda was extended through
February 2003 and requires monthly lease payments of approximately $7,100.

     TASS,  located  in  the  United  Kingdom,  entered  into  an  office  lease
guaranteed by Tremont Advisers,  Inc. that expires in June 2005 but is renewable
for two additional five-year periods. The monthly rent is approximately $14,000.

Investments in Limited Partnerships

     The  Company,  through  its  subsidiaries,  was  invested  in five  limited
partnerships at December 31, 1999 and 1998 as follows:

<TABLE>
<CAPTION>
                                  Fair Value of Investments at       Rate of Return
         Fund                    December 1999    December 1998    1999          1998
         ----                    -------------    -------------    ----          ----
<S>                                <C>             <C>             <C>           <C>
American Masters Broad Market
  Fund, L.P.                       $  956,000      $  807,200      17.2%         16.0%
American Masters Broad Market
  Prime Fund, L.P                     554,400          56,700      22.8%         20.6%
Gamtree, L.P. (3)                     192,400         177,600       6.8%         (4.9%)
Meridian Horizon Fund, L.P.           501,500         378,600      30.3%         17.2%
American Masters Market
  Neutral Fund, L.P.                  694,900         614,600       9.0%          1.7%(1)
The Tremont Masters Fund              556,300            --        11.3%(2)      --
                                   ----------      ----------
                                   $3,455,500      $2,034,700      00.0           0.0
                                   ==========      ==========
</TABLE>

(1)  Rate of return for period  September  1, 1998 (date of  formation)  through
     December 31, 1998.
(2)  Rate of return for period  February  1, 1999  (date of  formation)  through
     December 31, 1999.
(3)  Gamtree, L.P. was closed effective December 31, 1999.

Business Combination

     On March 11, 1999,  the Company  acquired all of the  outstanding  ordinary
(common) shares of TASS Investment  Research  Limited,  formerly TASS Management
Limited ("TASS"), a London,  England - based company specializing in the sale of
electronic  database  information.  The Company issued  238,096 shares  (190,477
shares pre-split) of its Class B Common Stock at $6.00 per share in exchange for
the TASS common shares,  of which 80,212 shares (64,170 shares  pre-split)  were
received by Nicola Meaden, the founder and chief executive officer of TASS. TASS
thus became another  subsidiary of the Company,  although its preferred stock is

                                       23
<PAGE>

not owned by the Company.  TASS serves a large  institutional  client base whose
subscribers include money center banks, investment banks, private banks, central
banks,  foundations,  endowments,  insurance  companies,  prime brokers,  family
offices,  academics,  government  agencies and high-net worth  individuals.  The
acquisition  has been  accounted  for using the purchase  method of  accounting.
Accordingly,  the  excess  of cost  over the  fair  market  value of net  assets
acquired  (approximately  $2.2  million) is being  amortized on a straight  line
basis over a ten year period.  The  operations of TASS have been included in the
consolidated  statements of income from the date of closing.  Revenues  included
for the period from  acquisition  through  December 31, 1999 were $1,531,700 and
expenses totaled  $2,291,600,  resulting in a loss before taxes of $759,900.  In
connection with the  acquisition,  employment  agreements were entered into with
two key employees of TASS,  including Ms. Meaden,  who were also granted options
to  purchase   shares  of  the  Company's  Class  B  Common  Stock  and  certain
registration rights.

Inflation

     The impact of inflation on the Company's revenues and results of operations
has not been significant.

Impact of Year 2000

     In prior years, the Company  discussed the nature and progress of its plans
to become Year 2000 ready.  In late 1999, the Company  completed its remediation
and  testing  of  systems.  As a result  of those  planning  and  implementation
efforts, the Company experienced no significant  disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully  responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from Year 2000 issues,  either with its
products,  its internal systems,  or the products and services of third parties.
The Company  expensed  approximately  $112,400  during 1999 in  connection  with
remediating its systems.  During 2000, the Company expects to remediate  certain
non-critical  systems  at an  estimated  cost of  $235,000  that  will be funded
through   operating  cash  flows.   Of  the  total   remaining   project  costs,
approximately  $224,000 is  attributable  to the  purchase of new  software  and
operating equipment, which will be capitalized. The remaining $11,000 relates to
other  remediation  efforts  and will be charged to  expense  as  incurred.  The
Company will continue to monitor its mission critical computer  applications and
those of its suppliers and vendors  throughout  the year 2000 to ensure that any
latent Year 2000 matters that may arise are addressed promptly.

Forward Looking Statements

     Certain statements in this Management's  Discussion and Analysis constitute
"forward  looking  statements"  within  the  meaning of the  Private  Securities
Litigation Reform Act of 1995. Such forward looking statements involve known and
unknown  risks,  uncertainties  and other  factors  which  may cause the  actual
results,  performance, or achievements of the Company to be materially different
from any future results,  performance,  or achievements  expressed or implied by
such forward looking statements.  These forward looking statements were based on
various


                                       24
<PAGE>

factors and were derived  utilizing  numerous  important  assumptions  and other
factors that could cause actual results to differ  materially  from those in the
forward looking statements, including, but not limited to: uncertainty as to the
Company's  future  profitability  and  the  Company's  ability  to  develop  and
implement   operational   and  financial   systems  to  manage  rapidly  growing
operations,  competition in the Company's existing and potential future lines of
business,  and other factors. Other factors and assumptions not identified above
were also involved in the derivation of these forward  looking  statements,  and
the failure of such other assumptions to be realized,  as well as other factors,
may also cause actual results to differ  materially  from those  projected.  The
Company  assumes no  obligation to update these  forward  looking  statements to
reflect  actual  results,  changes in  assumptions  or changes in other  factors
affecting such forward looking statements.

Item 7. Financial Statements                                                Page
                                                                            ----

Reports of Independent Auditors .............................................26
Consolidated Balance Sheets as of December 31, 1999 and 1998 ................29
Consolidated Statements of Income for the years ended
   December 31, 1999 and 1998 ...............................................30
Consolidated Statements of Shareholders' Equity for the years ended
   December 31, 1999 and 1998 ...............................................31
Consolidated Statements of Cash Flows for the years ended
   December 31, 1999 and 1998                                                32
Notes to Consolidated Financial Statements...................................34





                                       25

<PAGE>

                         Report of Independent Auditors


Shareholders and Board of Directors
Tremont Advisers, Inc.

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Tremont
Advisers,  Inc. as of December 31, 1999 and 1998,  and the related  consolidated
statements of income,  shareholders'  equity,  and cash flows for the years then
ended.  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.  The financial  statements of American  Masters
Broad  Market Fund,  L.P.  (formerly  known as The Broad  Market Fund,  L.P.) (a
limited  partnership  in which  the  Company  had a .32% and  .43%  interest  at
December  31, 1999 and 1998,  respectively)  and American  Masters  Broad Market
Prime Fund,  L.P.  (formerly  known as The Broad  Market  Prime  Fund,  L.P.) (a
limited  partnership  in which  the  Company  had a .25% and  .03%  interest  at
December 31, 1999 and 1998, respectively) (collectively, the "Funds"), have been
audited by other  auditors  whose reports have been  furnished to us; insofar as
our opinion on the consolidated  financial  statements  relates to data included
for the  aforementioned  Funds,  it is based  solely  on their  reports.  In the
consolidated  financial  statements,  the Company's aggregate  investment in the
aforementioned  Funds is stated at $1,510,400  and $863,900 at December 31, 1999
and 1998, respectively,  and the Company's aggregate equity in the net income of
the aforementioned Funds is stated at $228,600 and $125,300, for the years ended
December 31, 1999 and 1998, respectively.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits,  and the reports of other  auditors,
provide a reasonable basis for our opinion.

In our  opinion,  based on our audits and the  reports  of other  auditors,  the
consolidated  financial  statements  referred to above  present  fairly,  in all
material respects, the consolidated financial position of Tremont Advisers, Inc.
at December 31, 1999 and 1998, and the consolidated  results of their operations
and their cash flows for the years then ended,  in  conformity  with  accounting
principles generally accepted in the United States.

White Plains, New York
March 2, 2000                                                Ernst & Young, LLP



                                       26

<PAGE>

INDEPENDENT AUDITOR'S REPORT




To the Partners of
American Masters Broad Market Fund, L.P.


We have audited the statement of financial  condition of American  Masters Broad
Market Fund, L.P. (formerly The Broad Market Fund, L.P.) (a limited partnership)
as of December  31,  1999,  and the  related  statements  of income,  changes in
Partners'  capital,  and cash flows for each of the two years in the period then
ended (not presented herein).  These financial statements are the responsibility
of the General  Partner.  Our  responsibility  is to express an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of American Masters Broad Market
Fund, L.P.  (formerly The Broad Market Fund,  L.P.) as of December 31, 1999, the
results  of its  operations  and its cash flows for each of the two years in the
period then ended in conformity with generally accepted accounting principles.




GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 18, 2000



                                       27

<PAGE>

INDEPENDENT AUDITOR'S REPORT



To the Partners of
American Masters Broad Market Prime Fund, L.P.

We have audited the statement of financial  condition of American  Masters Broad
Market Prime Fund, L.P.  (formerly The Broad Market Prime Fund, L.P.) (a limited
partnership)  as of December 31,  1999,  and the related  statements  of income,
changes in  Partners'  capital,  and cash flows for each of the two years in the
period then ended (not presented  herein).  These  financial  statements are the
responsibility  of the  General  Partner.  Our  responsibility  is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of American Masters Broad Market
Prime Fund, L.P. (formerly The Broad Market Prime Fund, L.P.) as of December 31,
1999, the results of its operations and its cash flows for each of the two years
in the period  then  ended in  conformity  with  generally  accepted  accounting
principles.




GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 18, 2000






                                       28

<PAGE>

                             Tremont Advisers, Inc.

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                       December 31
                                                                                 1999               1998
                                                                             -------------------------------
<S>                                                                          <C>                <C>
Assets
Current assets:
   Cash and cash equivalents                                                 $  2,879,300       $  1,893,800
   Accounts receivable, less allowance for bad debts of $35,000                 3,682,700          2,111,600
   Dividend receivable                                                             31,000               --
   Income taxes receivable                                                           --               82,800
   Prepaid expenses and other current assets                                      263,800            327,900
                                                                             -------------------------------
Total current assets                                                            6,856,800          4,416,100

Investments in limited partnerships (cost -- $2,346,600 and $1,428,600)         3,455,500          2,034,700
Other investments (cost -- $1,159,200 and $469,900)                             3,019,700            200,300

Fixed assets:
   Furniture and equipment                                                      1,272,900            893,200
   Leasehold improvements                                                         110,800             82,700
   Less accumulated depreciation                                                 (609,200)          (526,200)
                                                                             -------------------------------
Fixed assets, net                                                                 774,500            449,700

Goodwill, net of amortization of $181,600                                       1,999,800               --
Other assets                                                                       30,300            192,900
                                                                             -------------------------------
Total assets                                                                 $ 16,136,600       $  7,293,700
                                                                             ===============================

Liabilities and Shareholders' Equity
Current liabilities:
   Accounts payable                                                          $    563,800       $    283,300
   Accrued expenses                                                             2,492,800          1,111,200
   Deferred revenue                                                             1,363,500               --
   Income taxes payable                                                           191,700               --
   Deferred income taxes payable                                                   32,600             29,000
                                                                             -------------------------------
Total current liabilities                                                       4,644,400          1,423,500

Deferred income taxes payable                                                     836,800            559,400

Redeemable preferred stock:
   Series A Preferred Stock, $1 par value, 650,000 shares
     authorized; issued and outstanding - none                                       --                 --

Shareholders' equity:
   Preferred Stock, $1 par value, 350,000 shares authorized; issued
     and outstanding - none                                                          --                 --
   Class A Common Stock, $0.01 par value, 5,000,000 shares
     authorized; 1,595,118 and 1,605,870 shares issued and
     outstanding                                                                   16,000             12,800
   Class B Common Stock, $0.01 par value, 10,000,000 shares
     authorized; 4,020,349 and 3,502,630 shares issued and
     outstanding                                                                   40,200             29,400
   Additional paid in capital                                                   7,901,800          5,106,900
   Retained earnings                                                            2,698,200            167,000
   Cumulative foreign currency translation adjustment                                (800)            (5,300)
                                                                             -------------------------------
Total shareholders' equity                                                     10,655,400          5,310,800
                                                                             -------------------------------
Total liabilities and shareholders' equity                                   $ 16,136,600       $  7,293,700
                                                                             ===============================
</TABLE>

See accompanying notes.


                                       29

<PAGE>

                             Tremont Advisers, Inc.

                        Consolidated Statements of Income

                                                       Year ended December 31
                                                        1999            1998
                                                    ---------------------------
Revenues
Consulting fees                                     $13,779,800     $ 9,798,000
Performance fees                                        853,900         434,600
Database sales                                        1,542,000            --
Commissions                                             348,900         423,500
                                                    ---------------------------
Total revenues                                       16,524,600      10,656,100

Expenses
Compensation                                          6,705,100       4,148,100
General and administrative                            4,172,900       2,684,500
Consulting                                            1,741,700       1,361,100
Depreciation                                            278,900         180,700
Amortization of intangibles                             748,800            --
                                                    ---------------------------
Total expenses                                       13,647,400       8,374,400

Equity in earnings of limited partnerships              502,800         182,400
Earnings (loss) from other investments, net             272,400        (224,100)
Other income, net                                       494,500          52,600
Minority interest                                          --            17,500
                                                    ---------------------------

Income before income taxes                            4,146,900       2,310,100
Provision for income taxes                            1,615,700         862,200
                                                    ---------------------------
Net income                                          $ 2,531,200     $ 1,447,900
                                                    ===========================


Net income per common share - basic                 $       .46     $       .28
                                                    ---------------------------

Net income per common share - assuming dilution     $       .43     $       .27
                                                    ===========================


See accompanying notes.


                                       30

<PAGE>

                             Tremont Advisers, Inc.

                 Consolidated Statements of Shareholders' Equity


<TABLE>
<CAPTION>
                                                             Common Stock             Additional                           Total
                                                               Par Value                Paid in         Retained       Shareholders'
                                                        Class A         Class B         Capital         Earnings          Equity
                                                     ------------------------------------------------------------------------------
<S>                                                  <C>             <C>             <C>              <C>              <C>
Balance at December 31, 1997                         $     12,800    $     28,000    $  4,725,300     $ (1,280,900)    $  3,485,200
   Comprehensive income:
     Net income                                              --              --              --          1,447,900        1,447,900
     Foreign currency translation adjustment                 --              --              --               --             (5,300)
                                                                                                                       ------------
   Comprehensive income                                                                                                   1,442,600
   Issuance of Class B Common Stock -
     Director Options (7,500 shares)                         --               100          28,000             --             28,100
   Issuance of Class B Common Stock
     -Employee Options (130,000 shares)                      --             1,300         227,500             --            228,800
   Income tax benefits related to exercise
     of options                                              --              --           126,100             --            126,100
                                                     ------------------------------------------------------------------------------

Balance at December 31, 1998                               12,800          29,400       5,106,900          167,000        5,310,800
   Comprehensive income:
     Net income                                              --              --              --          2,531,200        2,531,200
     Foreign currency translation adjustment                 --              --              --               --              4,500
                                                                                                                       ------------
   Comprehensive income                                                                                                   2,535,700
   Issuance of Class B Common Stock -
        MGL (47,619 shares)                                  --               500         356,700             --            357,200
   Issuance of Class B Common Stock -
        TASS Acquisition (190,477 shares)                    --             1,900       1,426,700             --          1,428,600
   Issuance of Class B Common Stock -
     Director Options (21,250 shares)                        --               200          74,800             --             75,000
   Issuance of Class B Common Stock -
     Employee Options (11,250 shares)                        --               100          28,600             --             28,700
   Income tax benefits related to exercise
     of options                                              --              --            49,200             --             49,200
   Conversion of Class A Common Stock to
     Class B Common Stock (8,802 shares)                     --              --              --               --               --
   5 for 4 Stock Split (319,202 Class A
     Shares) (801,349 Class B Shares)                       3,200           8,100         (11,300)            --               --
   Cash-in-lieu of fractional shares                         --              --              (600)            --               (600)
   Gain on sale of stock of affiliate                        --              --           870,800             --            870,800
                                                     ------------------------------------------------------------------------------
Balance at December 31, 1999                         $     16,000    $     40,200    $  7,901,800     $  2,698,200     $ 10,655,400
                                                     ==============================================================================
</TABLE>


See accompanying notes.


                                       31

<PAGE>

                             Tremont Advisers, Inc.

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                   Year ended December 31
                                                                    1999            1998
                                                                ---------------------------
<S>                                                             <C>             <C>
Operating activities
Net income                                                      $ 2,531,200     $ 1,447,900
Adjustments to reconcile net income to net cash provided  by
   operating activities:
     Depreciation                                                   278,900         180,700
     Amortization of intangibles                                    748,800            --
     Equity in earnings of limited partnerships                    (502,800)       (182,400)
     (Earnings) loss from other investments, net                   (272,400)        224,100
     Deferred income taxes                                          281,000         256,300
     Foreign currency translation adjustment                          4,500          (5,300)
     Allowance for bad debts                                           --            10,000
     Changes in operating assets and liabilities:
       Accounts receivable                                       (1,386,600)       (110,200)
       Receivable from officer                                         --           200,000
       Accounts payable                                             241,300         232,800
       Accrued expenses                                             733,300          (1,600)
       Deferred revenue                                            (171,100)           --
       Income taxes, net                                            274,500         (84,000)
       Other assets                                                    (300)           --
       Prepaid expenses and other current assets                     99,400        (368,700)
                                                                ---------------------------
Net cash provided by operating activities                         2,859,700       1,799,600

Investing activities
Purchase of fixed assets                                           (522,600)       (229,200)
Withdrawals from limited partnerships                                  --            79,200
Investments in limited partnerships                                (918,000)       (710,000)
Cash acquired, net of acquisition costs                              23,100            --
Proceeds from sale of other investments                              47,100          40,000
Investments in other investments                                 (1,013,300)       (289,600)
                                                                ---------------------------
Net cash used by investing activities                            (2,383,700)     (1,109,600)

Financing activities
Net proceeds from issuance of Class B Common Stock                  357,200            --
Exercise of Class B Common Stock Options                            103,700         256,900
Tax benefits from exercise of stock options                          49,200         126,100
Cash-in-lieu of fractional shares                                      (600)           --
                                                                ---------------------------
Net cash provided by financing activities                           509,500         383,000

Net increase in cash and cash equivalents                           985,500       1,073,000
Cash and cash equivalents at beginning of year                    1,893,800         820,800
                                                                ---------------------------
Cash and cash equivalents at end of year                        $ 2,879,300     $ 1,893,800
                                                                ===========================
</TABLE>


See accompanying notes.



                                       32

<PAGE>

                             Tremont Advisers, Inc.

                Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>
                                                                    Twelve months ended
                                                                        December 31
                                                                    1999            1998
                                                                ---------------------------
<S>                                                             <C>             <C>
Schedule of noncash investing and financing activities:
Investing activities
Liabilities assumed in the TASS acquisition:
   Deferred revenue                                             $   793,600     $      --
   Accounts payable                                                  39,200            --
   Accrued expenses                                                 648,300            --

Assets acquired in the TASS acquisition:
   Fixed assets                                                     232,500            --
   Accumulated depreciation                                        (151,400)           --
   Accounts receivable                                              184,500            --
   Prepaid and other                                                 47,000            --
   Customer contracts                                               555,500            --
   Goodwill                                                       2,181,400            --

Issuance of license agreement to FITX Group Limited                 741,000            --
Dividend receivable                                                  31,000            --

Financing activities
Noncash transaction related to the issuance of Class B
   Common Stock in the TASS acquisition                           1,428,600            --
Gain on sale of stock of affiliate                                  870,800            --
</TABLE>




See accompanying notes.




                                       33

<PAGE>

                             Tremont Advisers, Inc.

                   Notes to Consolidated Financial Statements
                                December 31, 1999


1.  Basis of Presentation

The consolidated  financial statements include the accounts of Tremont Advisers,
Inc. ("the Company") and its wholly-owned  subsidiaries,  Tremont Partners, Inc.
("TPI"),  Tremont (Bermuda) Limited ("TBL"),  Tremont Securities,  Inc. ("TSI"),
Tremont  Futures,  Inc. ("TFI") and TASS Investment  Research Limited  ("TASS"),
formerly known as TASS Management Limited. The consolidated financial statements
also include the accounts of Tremont Investment Management, Inc. ("TIMI"), a 65%
owned subsidiary.  TPI is an investment  advisor registered under the Investment
Advisers Act of 1940,  as amended.  TBL is  incorporated  under  Bermuda law and
provides  advisory  services  to clients  located  offshore.  TSI, a  registered
broker-dealer,  assists  customers in the purchase  and sale of  investments  in
other entities.  TFI is registered with the Commodity Futures Trading Commission
and the National Futures  Association as a commodity pool operator and commodity
trading  advisor.  TASS is a London based  company  specializing  in the sale of
electronic  database  information,  registered  with the  Securities and Futures
Authority  Limited of the United  Kingdom.  TIMI is registered  with the Ontario
(Canada)  Securities  Commission as an investment counsel and portfolio manager,
and as a limited market dealer under the Securities Act (Ontario).

2.  Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its majority owned subsidiaries. All intercompany transactions and accounts have
been eliminated in consolidation.

Fair Value of Financial Instruments

The  estimated  fair value of amounts  reported  in the  consolidated  financial
statements  have been  determined  by using  available  market  information  and
appropriate valuation  methodologies.  The carrying value for all current assets
and current  liabilities  approximates  fair value  because of their  short-term
nature. The fair value of long-term  investments also approximate their carrying
value.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent assets and liabilities at the date of



                                       34
<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


2.  Summary of Significant Accounting Policies (continued)

the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from such estimates

Revenue Recognition

Consulting  fees are  recorded as earned and are  derived  from  consulting  and
specialized  investment services provided to institutional and other clients, as
well as fees  earned  from  certain  funds  under  management.  These  fees  are
generally a percentage of the amount of assets under  management as well as fees
for  investments  placed by TBL in certain  offshore  funds and for  investments
placed by TSI in certain  domestic  limited  partnerships.  The Company provides
other  consulting  services  generally  on a fixed fee  basis,  either as annual
retainer fees or single  project fees.  The revenues from such other  consulting
arrangements  are recognized  ratably over the contract terms.  Performance fees
are recorded  based on the  achievement  of investment  performance in excess of
established  benchmarks and are recognized  only when they are no longer subject
to market conditions.  Revenues from sales of database  information are deferred
at the time of the  sale  and are  recognized  ratably  over  the  terms of each
underlying  contract.  Commissions  earned by TSI are  recorded  on a trade date
basis.

Cash and Cash Equivalents

The Company  considers  all highly liquid  investments  with a maturity of three
months or less at the time of purchase to be cash  equivalents.  At December 31,
1999,  cash and  cash  equivalents  is  comprised  primarily  of  deposits  with
financial  institutions.  Such  deposits are  generally in excess of the amounts
covered by FDIC insurance.

Concentrations of Credit Risk

The  Company's  accounts   receivable  are  not  concentrated  in  any  specific
geographic  region,  but  are  concentrated  in  the  investment  industry.  The
Company's  exposure to credit risk  associated  with  nonpayment by customers is
affected by conditions within the investment industry.

Investments

The equity method of accounting is used for investments in limited partnerships,
investments  in  joint  ventures  and  other  investments  where  the  Company's
ownership interest exceeds 20%.

Other  investments  are accounted for using the cost method of accounting  where
the Company's ownership interest is less than 20%.



                                       35
<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


2.  Summary of Significant Accounting Policies (continued)

Fixed Assets

Fixed  assets  are  stated  at  cost.   Depreciation   is  provided   using  the
straight-line  method over the estimated useful lives of the related assets (3-5
years).  During 1999,  $347,300 of fully  depreciated  fixed assets were written
off.

Goodwill

Goodwill  represents  the excess of purchase  price and  related  costs over the
value assigned to the net tangible assets of the business acquired.  Goodwill is
amortized on a  straight-line  basis over 10 years.  The Company's  policy is to
account for  goodwill at the lower of  amortized  cost or  estimated  realizable
value.  The  Company  assesses  the  carrying  value of  goodwill  if facts  and
circumstances  suggest that there may be  impairment.  If this review  indicates
that the goodwill will not be recoverable as determined by a non-discounted cash
flow analysis of the operating  assets over the remaining  amortization  period,
the  carrying  value of the goodwill  would be reduced to  estimated  realizable
value.

Transactions in Affiliates Stock

At the time an  affiliate  sells its stock to  unrelated  parties  at a price in
excess  of its book  value,  the  Company's  net  investment  in that  affiliate
increases.  If at that  time the  affiliate  is a  newly-formed  start-up,  or a
development stage company, the company's  proportionate share of the affiliates'
equity resulting from the additional equity raised is accounted for as an equity
transaction under Staff Accounting Bulletin ("SAB")No. 51. Such transactions are
reflected as equity transactions in the accompanying  statement of shareholders'
equity.

Income Taxes

The  provision  for income  taxes  includes  federal and state  taxes  currently
payable  after  reduction  for  undistributed   foreign   subsidiaries'   income
considered  permanently  reinvested,  and  includes  taxes  deferred  because of
temporary  differences  between the financial  statement and tax basis of assets
and liabilities.  A valuation  allowance is recorded based on available evidence
when it is more likely  than not that some  portion or all of the  deferred  tax
assets will not be realized.

Minority Interest

The Company presently owns 65% of TIMI. For financial  reporting  purposes,  the
assets,  liabilities  and earnings of TIMI have been  included in the  Company's
consolidated  financial statements.  The joint venture partner's 35% interest in
TIMI has been recorded as minority interest.



                                       36
<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


2.  Summary of Significant Accounting Policies (continued)

Stock Compensation

In 1997, the Company adopted Statement of Financial Accounting Standards No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation". As permitted under this
standard,  the Company has elected to follow Accounting Principles Board Opinion
No. 25 ("APB 25"),  "Accounting for Stock Issued to Employees" in accounting for
its stock options and other stock-based  employee awards.  The Company derives a
tax  deduction  measured by the excess of the market value over the option price
at the date  nonqualified  options  are  exercised.  The  related tax benefit is
credited to  additional  paid in capital.  Pro forma  information  regarding net
income and earnings per share,  as calculated  under the provisions of SFAS 123,
are disclosed in Note 9.

Foreign Currency Translation

The Company  accounts for  translation  of foreign  currency in accordance  with
Statement  of  Financial   Accounting   Standards   No.  52  "Foreign   Currency
Translation." The assets and liabilities of the Company's  foreign  subsidiaries
are translated at the current  exchange rate as of the balance sheet date, while
capital  accounts are translated at historical  rates. The revenues and expenses
are  translated  using an average  exchange rate during the period.  Adjustments
resulting  from these  translations  are  reflected  as a separate  component of
shareholders'   equity   titled   "Cumulative   foreign   currency   translation
adjustment."

Earnings Per Share

Basic  earnings per share is computed  based on the weighted  average  number of
common shares  outstanding.  Diluted earnings per share reflects the increase in
the  weighted  average  common  shares  outstanding  that would  result from the
assumed  exercise of outstanding  stock options,  calculated  using the treasury
stock  method.  All per share and share  outstanding  data have been restated to
reflect the impact of a five-for-four stock split.

Reclassifications

Certain prior year balances have been  reclassified  to conform with the current
year's presentation.



                                       37
<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

3.  Business Combination

On March 11, 1999, the Company acquired all of the outstanding  common shares of
TASS. The Company issued 238,096 shares (190,477 shares  pre-split) of its Class
B Common  Stock at $6.00 per share in exchange  for the TASS common  shares,  of
which 80,212  shares  (64,170  shares  pre-split)  were  received by Ms.  Nicola
Meaden,  the founder and chief  executive  officer of TASS. The  transaction was
accounted for using the purchase  method of accounting and the  operations  have
been included in the consolidated statements of income from the date of closing.
In connection with the acquisition, employment agreements were entered into with
two key employees of TASS,  including Ms. Meaden,  who were also granted options
to  purchase   shares  of  the  Company's  Class  B  Common  Stock  and  certain
registration rights (See Note 9).

The following  unaudited proforma  information  presents a summary of results of
operations  for the  years  ended  December  31,  1999 and  1998,  respectively,
assuming consummation of the purchase of TASS as of January 1, 1998.

                                                      Years ended December 31
                                                       1999             1998
                                                    ----------------------------
                                                            (Unaudited)

Total revenues                                      $16,868,400      $12,275,800
Net income                                            2,349,200        1,267,900
Per share data:
   Basic earnings                                           .42              .23
   Diluted earnings                                         .39              .22

4.  Prepaid Expenses and Other Assets

                                                             December 31
                                                        1999             1998
                                                    ----------------------------
Current:
    Prepaid expenses                                $   243,700      $    70,400
    Insurance receivable                                   --            257,500
    Other                                                20,100             --
                                                    ----------------------------
                                                    $   263,800      $   327,900
                                                    ============================

Non-Current:
    Security deposits                               $    30,300      $    30,000
    Deferred acquisition costs                             --            162,900
                                                    ----------------------------
                                                    $    30,300      $   192,900
                                                    ============================


                                       38
<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

4.  Prepaid Expenses and Other Assets (continued)

Payroll  Express,  the Company's  payroll  preparation  and withholding tax data
processing   service  from  1991  through   September  1998,  filed  Chapter  11
bankruptcy.  Payroll  Express  engaged in a fraudulent  scheme by diverting  the
Company's  federal payroll tax withholdings  amounting to $307,500 for the years
ended December 31, 1995 and 1996.

The  Company  is  cooperating  with  the  authorities  in the  ongoing  criminal
investigation of Payroll Express and its principal and filed a proof of claim in
the Payroll Express bankruptcy.  The Company's losses were significantly covered
by its fidelity  bond. A proof of loss,  which seeks  recovery of the  Company's
losses and  reimbursement  for  related  professional  fees,  was filed with its
insurance  provider.  Included in other  assets at December 31, 1998 is $257,500
which  represented  a receivable  from the insurance  provider  pursuant to this
claim.  This amount reduced the related loss of $307,500 recorded by the Company
in general and administrative  expenses.  This amount ($257,500) was received in
1999.

On March 11, 1999, the Company acquired TASS. Accordingly,  acquisition costs of
$162,900  incurred  through  December 31, 1998,  primarily  legal and accounting
professional  fees, were recorded as deferred  acquisition costs at December 31,
1998. During 1999, $78,900 of additional acquisition costs were capitalized.

5.  Investments in Limited Partnerships

The  following  table  sets  forth   financial   information  of  the  Company's
investments in certain proprietary limited partnerships:

<TABLE>
<CAPTION>
                                              American Masters      American Masters     American Masters            Tremont
                                                Broad Market         Broad Market         Market Neutral             Masters
                                                 Fund, L.P.         Prime Fund, L.P.        Fund, L.P.                Fund
                                              ------------------------------------------------------------------------------
<S>                                             <C>                   <C>                   <C>                    <C>
1999
Total assets                                    $ 298,527,000         $322,761,500          $10,229,900            $ 556,300
Total liabilities                                   9,301,900           99,073,700            1,069,500                    -

Net investment income (loss)                    $   5,554,400      $       321,300        $     (88,500)           $     600
Realized and unrealized gain                       33,050,000           39,428,600              599,300               55,600
                                                ----------------------------------------------------------------------------
Net income                                      $  38,604,400        $  39,749,900        $     510,800            $  56,200
                                                ============================================================================

General Partner                                           TPI                  TPI                  TFI                 TIMI
GP investment in partnership-at market
   value                                        $     956,000       $      554,400         $    694,900            $ 556,300
GP investment in partnership-at cost                  423,600              467,900              605,000              500,100
Proportionate share of earnings (1)                   148,800               79,800               80,300               56,200
Proportionate share of fund's net assets                 0.32%                0.25%                7.60%              100.00%
</TABLE>


                                       39

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


5.  Investments in Limited Partnerships (continued)

<TABLE>
<CAPTION>
1998
<S>                                              <C>                  <C>                  <C>                     <C>
Total assets                                    $ 198,415,000       $  236,656,000         $  1,158,000            $   --
Total liabilities                                  10,725,000           87,511,800               34,000                --

Net investment income (loss)                    $   3,794,000       $     (437,800)        $    (18,000)           $   --
Realized and unrealized gain                       22,101,000           21,305,600               36,000                --
                                                ----------------------------------------------------------------------------
Net income                                      $  25,895,000       $   20,867,800         $     18,000            $   --
                                                ============================================================================

General Partner                                           TPI                  TPI                  TFI                 TIMI
GP investment in partnership-at market value    $     807,200       $       56,700         $    614,600            $    --
GP investment in partnership-at cost                  423,600               50,000              605,000                 --
Proportionate share of earnings (1)                   118,600                6,700               (9,600)                --
Proportionate share of fund's net assets                 0.43%                0.03%               54.70%                --
</TABLE>

(1)  Proportionate  share of  earnings  is  included  in equity in  earnings  of
     limited partnership in the consolidated statements of income.

American  Masters  Broad Market Fund,  L.P.--American  Masters Broad Market Fund
L.P.  formerly  known as The Broad  Market  Fund,  L.P.,  is a Delaware  limited
partnership organized for the purpose of achieving capital growth through hedged
investments.

American  Masters Broad Market Prime Fund,  L.P.--American  Masters Broad Market
Prime Fund,  L.P.  formerly  known as The Broad  Market Prime Fund,  L.P.,  is a
Delaware  limited  partnership  organized  for the purpose of achieving  capital
growth through a leveraged investment strategy.  The Company has a commitment to
fund up to 1% of the  limited  partnership's  losses if, and when,  such  losses
occur.

American  Masters  Market  Neutral Fund,  L.P.--American  Masters Market Neutral
Fund,  L.P.  is a Delaware  limited  partnership  organized  for the  purpose of
achieving   long-term   capital   appreciation   irrespective  of  stock  market
volatility.  This  limited  partnership  was  formed  on  September  1, 1998 and
utilizes a multi-manager approach to investing.

Tremont  Masters  Fund--Tremont  Masters  Fund is a  Canadian  investment  trust
established  under the laws of the Province of Ontario on January 27, 1999.  The
fund seeks to achieve an attractive  adjusted  return that has a low correlation
to  traditional  fixed income and equity  markets by  utilizing a  multi-manager
approach to investing.


                                       40

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


5.  Investments in Limited Partnerships (continued)

Meridian Horizon Fund,  L.P.--Meridian  Horizon Fund, L.P. is a Delaware limited
partnership  that was organized for the purpose of achieving a high total return
and preservation of capital utilizing a multi-manager approach to investing.  At
December  31, 1999 and 1998,  total  assets of the fund were $372.2  million and
$244.0 million,  respectively.  In addition, net investment losses for the years
ended   December  31,  1999  and  1998  were  $4.4  million  and  $3.3  million,
respectively,  and realized and  unrealized  gains were $81.8  million and $34.5
million,  respectively,  resulting  in net  income  of $77.4  million  and $31.1
million,  respectively.  At December 31, 1999 and 1998, TPI had an investment of
$501,500   (cost-$250,000)   and   $378,600    (cost-$250,000),    respectively,
representing  .14% and .16%,  respectively,  of Meridian's  net assets.  For the
years ended December 31, 1999 and 1998, TPI's  proportionate share of Meridian's
income ($122,900 and $79,100,  respectively), is reflected in equity in earnings
of limited partnerships in the consolidated statements of income. Effective July
1, 1998, the limited partnership  agreement was amended and restated whereby TPI
resigned as a co-general partner.

GamTree,  L.P.--GamTree,  L.P., a Delaware limited partnership organized for the
purpose  of  achieving   long-term  capital  growth  through  diversified  asset
management.  At December  31, 1999 and 1998,  TPI, a  co-general  partner had an
investment   of   $192,400   (cost-$100,000)   and   $177,600   (cost-$100,000),
respectively,  representing  15.5% and 12.6%,  respectively,  of  GamTree's  net
assets.  For the years ended  December  31, 1999 and 1998,  TPI's  proportionate
share of  GamTree's  income  (loss) of $14,800 and  $(9,100),  respectively,  is
reflected  in equity in earnings  of limited  partnerships  in the  consolidated
statements of income. The limited  partnership was closed effective December 31,
1999.

6.  Other Investments

At December 31, 1999 and 1998,  TBL's investment  representing  24.5% of Tremont
International  Insurance Ltd. ("TIIL"), a Cayman Islands corporation,  formed in
July 1996, was $61,200 (cost - $62,300).  TIIL offers certain deferred  variable
annuities,  variable life insurance and other  insurance  contracts to customers
not resident in the Cayman Islands.

In July 1997, TBL formed with Mutual Risk Management  ("MRM") and another party,
Tremont MRM Services Limited ("TMRM"),  an international risk management company
incorporated under the laws of Bermuda, in which TBL has a 38.75% interest. TMRM
provides product development,  marketing and administrative services to TIIL. At
December 31, 1999 and 1998, TBL's investment in TMRM was $394,900  (cost-$4,800)
and  $3,700  (cost-$4,800),  respectively.  In  addition,  for the  years  ended
December 31, 1999 and 1998,  TBL's  proportionate  share of operating income was
$422,200 and none, respectively, which is reflected in earnings (loss) from


                                       41

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


6.  Other Investments (continued)

operations of joint ventures in the  consolidated  statements of income.  During
December  1999,  TMRM  declared a dividend  of $31,000  which was paid to TBL on
January 12, 2000. No dividends were declared or paid prior to December 1999.

At December 31, 1998,  TBL had  approximately  a 40% interest  (cost-$6,000)  in
HedgeWorld Limited, an offshore non-public venture that developed an independent
e-commerce  vehicle,  to  provide  certain  online  services  to the hedge  fund
community.  At December 31, 1998,  TBL's  investment was written down to zero to
account for its  proportionate  share of operating losses. At June 30, 1999, TBL
had advances to this entity that aggregated  approximately $117,000. At December
31, 1998,  TBL also had an investment of  approximately  $16,800 in FITX Capital
Limited (formerly Tremont Capital Limited). During the third quarter of 1999, in
a series of  transactions,  TBL transferred its interests in these entities,  to
FITX Group Limited  ("FITX"),  an exempt Bermuda  company in  consideration  for
approximately 30% of its outstanding stock. FITX was formed on June 23, 1999, to
deliver  e-commerce  portal  solutions  to niche  markets  thereby  enabling the
exchange of  information  services and capital  needed  between money  managers,
service providers and customers primarily within the hedge fund industry. During
1999,  TBL invested an  additional  $212,500 cash in FITX. On December 15, 1999,
the Company and certain of its  subsidiaries  entered  into a License  Agreement
with FITX. Under the terms of the License  Agreement,  Tremont granted to FITX a
license to use its proprietary database, TASS+, in exchange for 87,260 shares of
FITX's Series B Preferred  Stock,  at a price of $11.46 per share  ($1,000,000).
Such amount was recorded as an other  investment  and deferred  revenue,  net of
inter-company  elimination of $259,000 and is being recognized over a three year
period.  In addition,  FITX agreed to pay TBL on-going annual  royalties for net
revenues  earned in  connection  with the on-line  usage of the TASS+  database.
These royalty fees were not significant in 1999.  Based on the carrying value of
TBL's  investment in FITX as of December 15, 1999, TBL recognized an increase of
$870,800 in its carrying value of FITX stock due to additional  equity raised by
FITX in a separate  private  placement.  This  transaction  has been recorded in
accordance with SAB No. 51.

Tremont  Broad Market Fund,  LDC ("TBMF") is a Cayman  Island  limited  duration
corporation organized for the purpose of achieving capital growth through hedged
investments.  At  December  31,  1999,  TBL's  investment  in TBMF was  $640,900
(cost-$600,000).  TBL had no investment in this entity at December 31, 1998. TBL
serves as the investment adviser, administrator and registrar and transfer agent
of TBMF.

On July 1, 1999, the Company  exercised  options to purchase  85,800 shares of a
nonpublic  registered  investment  advisor  specializing  in  401(k)  investment
allocation advice over the inter-



                                       42

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

6.  Other Investments (continued)

net. The options were granted at $1.00 per share, as adjusted for a stock split.
At December 31, 1999 and 1998, the investment and options were valued at $85,800
and zero, respectively.

At December 31, 1999, the Company owns a beneficial interest in 30,000 shares of
a nonpublic financial services company formed in 1996. Such shares were received
by the Company as a result of an employee's  participation  as a board member of
such company.  As a result of consulting  services  performed for this nonpublic
entity, TPI has received $54,000 and $33,000,  respectively, for the years ended
December  31, 1999 and 1998.  At December 31, 1999 and 1998,  respectively,  the
shares of common stock have been valued at zero.

In October  1994,  TBL entered  into an agreement  to form  N-Compass  Financial
Service Limited,  a joint venture,  to provide  investment  advisory services to
offshore clients.  During December 1999, TBL sold its proportionate  share (40%)
to FITX for  $16,000.  At December  31,  1998,  TBL's  investment  in this joint
venture was $10,400  (cost-$277,200)  and its  proportionate  share of operating
losses was $12,700.

At December  31, 1999 and 1998,  the Company has other  investments  aggregating
$61,300 (cost-$60,000) and $68,400  (cost-$52,600),  respectively.  During 1998,
the Company had net losses of $222,100 from joint  ventures,  which are included
in other investments in the consolidated  statements of income. Included in this
amount is realized  losses of $237,400,  of which $203,400  relates to a certain
twenty-five percent owned joint venture that was discontinued effective December
31, 1998.

7.  Accrued Expenses

Accrued expenses consist of the following:

                                                      December 31
                                                1999               1998
                                             -----------------------------

Consulting fees                              $1,027,200        $   369,200
Compensation                                    507,000            300,000
Notes payable                                   368,400             39,800
Professional fees                               262,500            210,100
Employee benefit plan                           138,800            110,000
Printing and graphics                            25,000             37,500
Other                                           163,900             44,600
                                             -----------------------------
                                             $2,492,800         $1,111,200
                                             =============================


                                       43

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


8.  Shareholders' Equity

The  Company's  Class A Common  Stock and Class B Common  Stock are  entitled to
equal rights and privileges, except that:

a.   with respect to voting  rights,  each Class A Common Stock  shareholder  is
     entitled  to four votes for each  share  held of record,  while the Class B
     Common Stock  shareholders  are entitled to one vote for each share held of
     record; and,

b.   upon  liquidation,  dissolution  or winding up of the  Company,  before any
     distribution  in respect of the Class B Common Stock,  the  shareholders of
     the Class A Common  Stock are  entitled  to receive an amount  equal to the
     aggregate  liquidation  preference of $0.32 per share.  The shareholders of
     the Class B Common  Stock are then  entitled  to $0.32 per  share,  and the
     remaining  assets of the Company are then  distributed in equal amounts per
     share.

On  August 7,  1998,  the  Company  amended  its  Certificate  of  Incorporation
increasing  the  authorized  number of shares of Class B Common Stock,  $.01 par
value  per  share,  from  five  million   (5,000,000)   shares  to  ten  million
(10,000,000) shares. The amendment also provided that all or any shares of Class
A Common Stock,  $.01 par value per share, be convertible,  at the option of the
holder thereof, into an equivalent number of shares of Class B Common Stock.

On July 15, 1999, the Board of Directors  approved a  five-for-four  stock split
(with no change in par  value) of both the  Company's  Class A Common  Stock and
Class B Common Stock.  The split was payable to  stockholders  of record on July
30, 1999.

9.  Stock Options

On September 17, 1998,  the  Company's  Board of Directors  adopted,  subject to
shareholder  approval,  the Tremont  Advisers,  Inc. 1998 Stock Option Plan (the
"1998 Plan"). The 1998 Plan provides for the issuance of up to 250,000 shares of
Class B Common Stock in connection  with stock options and other awards  granted
under such plan. The 1998 Plan  authorizes the grant of incentive  stock options
and  non-qualified  stock  options  and stock  rights.  The  exercise  price for
incentive  stock  options  shall not be less than the fair  market  value of the
underlying  shares on the date of grant.  The exercise  price for  non-statutory
stock  options  and  stock  rights  shall  not be less  than the  minimum  legal
consideration required therefore under the laws of any jurisdiction in which the
Company,  or its  successors  in interest,  may be  organized.  The 1998 Plan is
administered  by a committee of the Board of  Directors.  The  committee has the
authority to determine the employees to whom awards will be made,  the amount of
awards,  and the other terms and  conditions  of the awards.  As of December 31,
1999, 11,000 and 88,100 options have been granted at $11.00 per share and $10.00
per share, respectively, under the 1998 plan. As of



                                       44
<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


9.  Stock Options (continued)

December  31,  1998,  29,250  options  at $6.40 per share  have been  granted to
employees under the 1998 Plan.  These options have a five year term and vest and
become exercisable on the following  schedule:  25 percent on the date of grant,
25 percent on the first  anniversary  of the date of grant and 50 percent on the
second anniversary of the date of grant.

As a result of the Company  acquiring  TASS, Ms. Meaden was granted two types of
options (the "Group I Options"  and the "Group II Options") to purchase  184,308
and  31,058  shares,  respectively,  of Class B Common  Stock.  Additionally,  a
Principal  of TASS,  was  granted  97,508  Group I Options  and 16,442  Group II
Options.  The Group I Options and Group II Options are  exercisable at $6.40 per
share and $12.00 per share,  respectively.  Sixty percent of the Group I Options
became exercisable  effective March 11, 1999, the balance becomes exercisable on
or after March 11, 2000.  One-third of the Group II Options  vested on March 11,
1999,  the balance vest  one-third each on or after March 11, 2000 and March 11,
2001.  Both the Group I  Options  and the Group II  Options  become  immediately
exercisable  upon a change in control of the Company.  The stock options may not
be transferred at any time without the prior written consent of the Company.  In
the event  that  either  employee  seeks to sell or  transfer  any shares of the
Company's stock other than to a family  affiliate,  the Company has the right of
first  refusal to purchase  the shares on the same terms and  conditions  as the
third party offer.

On March 15, 1999,  options to purchase 15,000 shares of Class B Common Stock at
$12.00 per share  were  granted to  certain  employees  of TASS,  other than Ms.
Meaden  and  the  above  mentioned  principal.   The  options  vest  and  become
exercisable on the following  schedule:  one-third on the date of the agreement,
one-third on the first  anniversary of the agreement and one-third on the second
anniversary of the agreement.

During 1998,  directors  exercised options and purchased 9,375 shares of Class B
Common Stock at $3.00 per share.  During 1999,  certain  directors  and officers
exercised  options  to  purchase  an  aggregate  of  25,000  and  12,500  shares
(post-split), respectively, of the Company's Class B Common Stock.

In 1994,  the Board of Directors  granted to the president  and chief  operating
officer an option to purchase  343,750  shares of Class B Common  Stock at $1.40
per share,  the then  current  fair market  value of the stock.  The options are
fully  vested and expire on the  anniversary  of the grant date in 2001.  During
August  1998,  156,250  of these  options  were  exercised.  In the event of the
termination of the executive's employment, TPI will have the option, exercisable
no later than seven days after the date of  termination,  to purchase all of the
executive's stock and vested options.



                                       45
<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


9.  Stock Options (continued)

The  purchase  price of each share of stock shall be equal to the best bid price
on the date of such termination, and the purchase price for each option shall be
the greater of (i) $1.40 or (ii) the amount of the best bid price for a share of
stock on the date of such termination less $1.40.

The Company has elected to follow  Accounting  Principles  Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related  Interpretations
in accounting for its employee stock options  because,  as discussed  below, the
alternative  fair value  accounting  provided for under FASB  Statement No. 123,
"Accounting  for  Stock-Based  Compensation,"  requires use of option  valuation
models that were not developed for use in valuing employee stock options.  Under
APB 25,  because the exercise  price of the  Company's  employee  stock  options
equals  the  market  price of the  underlying  stock on the  date of  grant,  no
compensation expense is recognized.

Pro forma information regarding net income and earnings per share is required by
Statement  123, and has been  determined as if the Company had accounted for its
employee stock options under the fair value method of that  Statement.  The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following  weighted-average  assumptions for 1998;
risk-free interest rate of 6.0%;  dividend yield of 0%; volatility factor of the
expected   market  price  of  the  Company's   common  stock  of  .70%,   and  a
weighted-average expected life of the options of approximately 5 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock  options  have   characteristics   significantly
different from those of traded  options,  and because  changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of its employee stock options.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma information for 1999 and 1998 follows:


                                       46

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

9.  Stock Options (continued)

                                                       1999             1998
                                                    ----------------------------

Pro forma net income                                $1,822,200        $1,337,100

Pro forma earnings per share
  Basic                                             $     0.33        $     0.32
  Diluted                                           $     0.31        $     0.30

A summary of the Company's stock option activity and related information for the
years ended December 31 follows:

<TABLE>
<CAPTION>
                                                           1999                           1998
                                               -----------------------------------------------------------------
                                                            Weighted-Average                   Weighted-Average
                                               Options       Exercise Price      Options        Exercise Price
                                               -----------------------------------------------------------------

<S>                                            <C>               <C>             <C>               <C>
     Outstanding - beginning of year           378,207           $2.45           520,832           $1.91
     Granted                                   443,415            8.02            29,250            6.40
     Exercised                                 (37,500)           2.77          (171,875)           1.50
     Lapsed                                     (1,250)           6.40              --
                                               -------                           -------

     Outstanding - end of year                 782,872           $5.58           378,207           $2.45
                                               =======                           =======

     Exercisable at end of year                540,127           $4.27           278,137           $1.98

     Weighted-average fair value of options
       granted during the year                                   $4.68                             $4.41
</TABLE>

The following table summarizes stock options outstanding at December 31, 1999:

        Exercise Price                           Average             Average
            Range              Options           Life (a)        Exercise Price
     --------------------------------------------------------------------------

         $  1.40                 187,500           1.3               $ 1.40
         $  3.00                 123,957           2.5                 3.00
         $  6.40                 309,815           5.0                 6.40
          $10.00                  88,100           4.9                10.00
          $11.00                  11,000           4.9                11.00
          $12.00                  62,500           5.1                12.00
     --------------------------------------------------------------------------
     $1.40 - $12.00              782,872           3.7               $ 5.58
     ==========================================================================

(a)  Average contractual life remaining in years.



                                       47

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


10.  Other Income, Net

                                                         1999             1998
                                                       -------------------------

Interest income                                        $ 78,400         $ 52,600
Other investment gains (losses)                         416,100             --
                                                       -------------------------
                                                       $494,500         $ 52,600
                                                       =========================

Included in other investment  gains is $402,100  relating to the distribution of
120,750  shares of FITX Group Limited stock to certain  employees and directors.
Such value represents the estimated fair value of the shares  distributed.  This
amount was also included in compensation expense for the year ended December 31,
1999.

11.  Income Taxes

The provision for income taxes is summarized as follows:

                                                   1999                 1998
                                               ---------------------------------
Current:
   Federal                                     $ 1,076,600           $   450,000
   State                                           258,100               155,900
                                               ---------------------------------
                                                 1,334,700               605,900
Deferred:
   Federal                                         284,100               249,500
   State                                            (3,100)                6,800
                                               ---------------------------------
Total tax expense                              $ 1,615,700           $   862,200
                                               =================================

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's  deferred tax  liabilities  and deferred tax assets as of December
31, 1999 and 1998 are as follows:

                                                             1999          1998
                                                           ---------------------
Deferred tax liabilities:
   Tax over book depreciation                              $ 16,600     $ 25,600
   Unrealized appreciation in limited partnerships           36,700       33,100
   Undistributed earnings of foreign subsidiary             829,000      536,100
                                                           ---------------------
Total deferred tax liabilities                              882,300      594,800
                                                            ====================


                                       48

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


11.  Income Taxes (continued)

<TABLE>
<S>                                                             <C>            <C>
Deferred tax assets:
   Net operating loss carryforward of foreign subsidiaries      248,800        36,000
   Bad debt reserves                                              4,100         4,100
   Organization costs                                               800         2,300
   Deferred revenue from foreign affiliate                        8,000          --
   Valuation allowance                                         (248,800)      (36,000)
                                                              -----------------------
Total deferred tax assets                                        12,900         6,400
                                                              -----------------------
Net deferred tax liability                                    $ 869,400     $ 588,400
                                                              =======================
</TABLE>

The income tax provision gives effect to permanent differences between financial
and taxable income,  resulting in a higher effective tax rate than the statutory
income tax rate. The  reconciliation of income tax attributable to income before
income  taxes  computed at the U.S.  federal  statutory  tax rates to income tax
expense is:

<TABLE>
<CAPTION>
                                                             1999                     1998
                                                    -----------------------------------------------
                                                       Amount     Percent       Amount      Percent
                                                    -----------------------------------------------
<S>                                                 <C>             <C>      <C>             <C>
Statutory federal income tax rate                   $ 1,410,000     34.0     $   785,400     34.0
State taxes, net of federal benefit                     157,800      3.8         107,400      4.6
Permanently reinvested foreign income                  (262,000)    (6.3)        (68,000)    (2.9)
Change in valuation allowance relating to losses
   in foreign subsidiaries                              212,800      5.1          36,000      1.6
Other                                                    97,100      2.4           1,400     --
                                                    ---------------------------------------------
                                                    $ 1,615,700     39.0     $   862,200     37.3
                                                    =============================================
</TABLE>

In 1999 and 1998,  the Company made federal  income tax payments of $829,600 and
$415,000,  respectively.  In 1999  and  1998,  the  Company  paid  $234,200  and
$154,700, respectively, in state income, minimum and capital taxes.

Deferred  income  taxes  were not  provided  on  certain  undistributed  foreign
earnings  (cumulatively  $1,170,000  at December  31,  1999) of TBL because such
undistributed  earnings are expected to be reinvested  indefinitely overseas. If
these amounts were not considered  permanently  reinvested,  additional deferred
taxes of approximately $397,800 would have been provided.


                                       49

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


11.  Income Taxes (continued)

At  December  31,  1999  and  1998,  the  Company  had  no  net  operating  loss
carryforwards  for U.S.  federal tax purposes.  At December 31, 1999,  TIMI, the
Canadian subsidiary,  and TASS, the U.K.  subsidiary,  have cumulative generated
net  operating  losses of  approximately  $266,000  and  646,600,  respectively,
against which a full valuation allowance has been recorded.

12.  Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                                                    1999          1998
                                                                 ------------------------
<S>                                                              <C>           <C>
Numerator:
   Net income - numerator for basic and dilutive earnings per
     share (income available to common shareholders)             $2,531,200    $1,447,900

Denominator:
   Denominator for basic earnings per share - weighted
     average shares                                               5,543,823     5,174,580

Effect of dilutive securities:
   Employee stock options                                           339,652       269,919
                                                                 ------------------------

Denominator for diluted earnings per share - adjusted
   weighted average shares and assumed conversions                5,883,475     5,444,499
                                                                 ========================

Basic earnings per share                                         $      .46    $      .28
                                                                 ========================

Diluted earnings per share                                       $      .43    $      .27
                                                                 ========================
</TABLE>

Options to purchase 11,000 shares and 62,500 shares of Class B Common Stock, for
$11.00 and  $12.00,  respectively,  were  outstanding  during  1999 but were not
included in the computation of diluted  earnings per share because such options'
exercise prices were greater than the average market price of the Class B Common
Stock shares and, therefore, the effect would be antidilutive.

For additional disclosures regarding the employee stock options, see Note 9.


                                       50

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


13.  Contingencies

The Company has been sued by a former  employee  for alleged  breach of contract
and defamation. In a decision dated September 21, 1999, the Connecticut District
Court held that the claim for  defamation  must be arbitrated  under NASD rules.
Plaintiff has not commenced arbitration  proceedings.  By Notice of Motion dated
October 18, 1999,  the Company  moved to dismiss the  complaint in its entirety.
The  Company  believes  that the suit is  without  merit;  however,  should  the
plaintiff prevail,  the Company believes that it is likely that the damages will
not be material to the Company's  consolidated financial condition or results of
operations.

14.  Commitments

On December 9, 1999,  the Company  entered  into a amendment  to the  employment
contract  with the Chairman of the Board of  Directors  that expires on December
31, 2000. Under the terms of this amended agreement, the Chairman is entitled to
receive a minimum  annual base salary of  $391,400.  In  addition,  the Chairman
could  receive  incentive  compensation,  to  be  determined  by  the  Board  of
Directors, at the end of each fiscal year.

On December 9, 1999,  the Company  entered into an  amendment to the  employment
contract  with the  President  and Chief  Operating  Officer of the Company that
expires on December 31, 2000.  Under the terms of such  amended  agreement,  the
executive is entitled to receive a minimum  annual base salary of  $352,300.  In
addition,  the executive will receive incentive  compensation equal to an amount
pursuant to a predetermined percentage of the incentive compensation paid to the
Company's Chairman of the Board of Directors.

On March 11, 1999, the Company entered into two, two-year employment agreements.
The first provides that Nicola Meaden will serve as Chief  Executive  Officer of
TASS. The second provides that Laurence  Huntington Taylor, II will serve as the
Company's Senior Vice President of Global  Marketing and Sales.  Both agreements
provide for minimum base  salaries of $150,000  per year, a guaranteed  bonus of
$50,000  per year and such  other  bonus as may be  determined  by the  Board of
Directors.  Mr.  Taylor's  agreement was  terminated by mutual  agreement  dated
January 22, 2000.  Ms.  Meaden's  employment  may be terminated by consent,  for
cause,  or as a result of death or  disability,  and the  Company  is  expressly
permitted to terminate without cause. If her employment is terminated for cause,
she will be entitled to receive accrued salary,  guaranteed bonus, and the value
of accrued but unused  vacation  time  through the date of  termination.  If her
employment  is  terminated  for any reason  other  than for  cause,  she will be
entitled  to the same  amounts  through  the end of the  term of the  employment
agreement;  however,  the Company  may offset  against  payments  due to her any
compensation  received by her through any affiliation with a competing  business
prior to the end of the term.



                                       51
<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


14.  Commitments (continued)

On July 17, 1998, TIMI entered into an employment  agreement with the President,
Chief Operating  Officer and Chief  Investment  Officer that expires on July 31,
2000. Under the terms of the Agreement,  the executive is entitled to receive an
annual  salary of $125,000 for the period  commencing  August 1, 1998 and ending
July 31,  1999 and  $150,000  for the  period  commencing  on August 1, 1999 and
ending on July 31, 2000.

The lease for the Company's Rye New York  corporate  offices  expires August 31,
2002 and requires monthly payments of approximately $22,700.

In September 1999, TASS entered into an office lease agreement guaranteed by the
Company.  It  expires  in June  2005  however  TASS may  renew the lease for two
additional five-year periods. The monthly rent is approximately $14,000.

TBL's lease for corporate  offices  expires March 1, 2003.  Such lease  requires
monthly payments of approximately $7,100.

Rent  expense for the years ended  December  31, 1999 and 1998 was  $445,700 and
$343,500, respectively. Future minimum obligations under noncancelable operating
leases at December  31, 1999 is:  2000-$692,700,  2001-$688,200,  2002-$523,600,
2003-$319,900, 2004-$272,500 and thereafter $113,700.

15.  Employee Benefit Plan

The Company has a defined  contribution plan, the Tremont Advisers,  Inc. 401(k)
Savings Plan (the "Plan"),  which is designed to provide retirement benefits for
the  Company's  employees.  All  employees  who are  eighteen  or older and have
completed one month of service with the Company are eligible to  participate  in
the Plan.  An employee  may elect to defer up to 15% of his or her  compensation
per year to be contributed  to the Plan.  These  contributions  may be allocated
among  eight  investment  mutual  funds and the Class A Common  Stock or Class B
Common Stock of the Company.

     On September 17, 1998, the Board of Directors adopted the Tremont Advisers,
Inc.  Savings Plan (the  "Savings  Plan"),  effective as of January 1, 1998,  to
allow for Company matching  contributions  and to change the allocation  formula
for  the  Company's  discretionary  nonelective  contributions.   The  Company's
matching  contribution  for the years  ending  December 31, 1999 and 1998 was 25
cents for each $1 a participant  contributed as an employee salary deferral,  up
to a deferral of 6.25% of eligible  compensation  ($160,000 maximum for 1999 and
1998).  Company  discretionary  nonelective  contributions  are  made  annually,
subsequent to year-end.


                                       52

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


15.  Employee Benefit Plan (continued)

On September 30, 1999, the Board of Directors amended the retirement  program to
merge the Plan  into the  Savings  Plan.  All  assets  and  participant  account
balances in the Plan were  transferred  and  assigned to the Savings  Plan.  The
Savings Plan was also amended to allow  participants  to self-direct  all monies
held under the Savings Plan on their behalf.

The  Company's  expenses  related to the Savings Plan were $140,200 and $110,000
for the years ended December 31, 1999 and 1998, respectively.

16.  Segment and Geographic Data

The  Company  is  a  holding  company  having  three  core  areas  of  business:
proprietary  investment  funds,   consulting  services  and  investment  manager
information.  The Company's clients are investment funds,  investment  managers,
institutional  investors and high-net  worth  individuals  to whom the Company's
subsidiaries  provide advice concerning the organization and management of their
investment  portfolio  or  programs.   The  Company  also  provides  specialized
investment services, sponsors and manages its own proprietary single-manager and
multi-manager  investment  funds,  as well as providing  consulting  services to
investment  management  firms and individual  investment  advisers.  The Company
derives a significant portion of its revenues from proprietary  asset-based fees
and  consulting   services  agreements  with  single-manager  and  multi-manager
investment funds or their sponsors and advisers.

The following  table provides a summary of the types of fees earned with respect
to each of the Company's core areas of business:




                                       53

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


16.  Segment and Geographic Data (continued)

                                                        1999            1998
                                                     ---------------------------
Revenues

 Proprietary investment funds
    Asset-based fees                                 $ 8,148,200     $ 4,928,200

 Consulting services
   Asset-based fees                                    4,050,300       3,688,000
   Performance-based fees                                853,900         434,600
   Annual retainer and special project fees            1,199,600         996,800
   Administration fees                                   381,700         185,000
   Commissions                                           348,900         423,500
                                                     ---------------------------
                                                       6,834,400       5,727,900

 Database sales                                        1,542,000            --
                                                     ---------------------------

 Total consolidated revenues                         $16,524,600     $10,656,100
                                                     ===========================

                                                             Revenues (a)
                                                    ----------------------------
                                                        1999             1998
                                                     ---------------------------

United States                                        $ 9,755,000     $ 7,107,900
Bermuda                                                5,237,900       3,548,200
United Kingdom                                         1,531,700            --
Canada                                                      --              --
                                                     ---------------------------
Consolidated total                                   $16,524,600     $10,656,100
                                                     ===========================

(a)  Revenues  are  attributed  to  countries  based  on  the  location  of  the
     subsidiary performing the services.

Long-lived  assets are  substantially  all located in the United  States and the
United Kingdom.

During the periods presented in the consolidated  statements of income,  certain
proprietary  investment  funds  accounted  for a  significant  percentage of the
Company's  consolidated  revenues.  For the years ended  December 31, 1999,  and
1998, American Masters Broad Market



                                       54

<PAGE>

                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)


16.  Segment and Geographic Data (continued)

Fund, L.P. accounted for approximately 13% and 15%, respectively of consolidated
revenues.  In addition,  for the years ended December 31, 1999 and 1998 American
Masters Broad Market Prime Fund, L.P.  accounted for  approximately 17% and 16%,
respectively,  of consolidated  revenues.  For the years ended December 31, 1999
and 1998,  revenues  from other  related  entities  (see Note 5)  accounted  for
approximately 6% and 7% of consolidated revenues, respectively.

17.  Impact of Year 2000 (Unaudited)

In prior years,  the Company  discussed  the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company  completed its remediation and
testing of systems.  As a result of those planning and  implementation  efforts,
the  Company   experienced  no  significant   disruptions  in  mission  critical
information technology and non-information technology systems and believes those
systems successfully  responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from Year 2000 issues,  either with its
products,  its internal systems,  or the products and services of third parties.
The Company  expensed  approximately  $112,400  during 1999 in  connection  with
remediating its systems.  During 2000, the Company expects to remediate  certain
non-critical  systems  at an  estimated  cost of  $235,000  that  will be funded
through   operating  cash  flows.   Of  the  total   remaining   project  costs,
approximately  $224,000 is  attributable  to the  purchase of new  software  and
operating equipment, which will be capitalized. The remaining $11,000 relates to
other  remediation  efforts  and will be charged to  expense  as  incurred.  The
Company will continue to monitor its mission critical computer  applications and
those of its suppliers and vendors  throughout  the year 2000 to ensure that any
latent Year 2000 matters that may arise are addressed promptly.




                                       55

<PAGE>

Item  8.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
Financial Disclosure

                                 Not applicable





                                       56

<PAGE>



                                    PART III

Item 9.  Directors and Executive Officers of the Registrant.

The present Directors and Executive Officers of the Company are set forth below:


 Name                     Age    Position
 ----                     ---    --------

 Sandra L. Manzke         51      Chairman of the Board of Directors
                                    and Chief Executive Officer
 Robert I. Schulman       54     Director, President and Chief Operating Officer
 Bruce D. Ruehl           39     Director, Chief Investment Strategist
 Nicola Meaden            40     Director, Chief Executive Officer of TASS
 John L. Keeley, Jr.      59     Director
 Alan A. Rhein            57     Director
 Richard O'Brien          42     Director
 Jimmy L. Thomas          58     Director
 Suzanne S. Hammond       53     Secretary and Treasurer
 Stephen T. Clayton       39     Chief Financial Officer

     All  directors of the Company hold office until the next annual  meeting of
stockholders  of the  Company and until their  successors  are duly  elected and
qualified,  or until their  earlier  death,  resignation  or removal.  Executive
officers  are elected by the Board of  Directors on an annual basis and serve at
the  discretion  of the Board of  Directors.  Sandra  L.  Manzke  and  Robert I.
Schulman are the only officers subject to the terms of an employment  agreement.
There  are no  family  relationships  among any of the  directors  or  executive
officers of the Company.

     Sandra L. Manzke is the Company's Chairman of the Board and Chief Executive
Officer. Ms. Manzke was one of the principal founders of Tremont Partners,  Inc.
("TPI") in 1984 and has been its Chairman  and  President  since its  inception.
When the Company  acquired TPI in 1987, Ms. Manzke also became a director of the
Company and, prior to becoming its Chief Executive  Officer in May 1994, was its
President.  Ms.  Manzke has served as a director of the  Company  since 1987 and
also serves as Director of Tremont (Bermuda) Limited ("TBL").

     Robert I.  Schulman  became the  Company's  President  and Chief  Operating
Officer as of May 31, 1994.  He has been a Director of the Company since October
1993. Mr. Schulman became  President,  Chief Executive Officer and a Director of
TSI as of June 1994 and Chairman and  President of Tremont  Futures,  Inc. as of
July 14, 1998. Mr. Schulman also became Chairman and Chief Executive  Officer of
Tremont Investment Management,  Inc. on July 13, 1998. Prior to May 31, 1994, he
was Executive  Vice  President,  Director of Products & Services at Smith Barney
Shearson. Mr. Schulman is a member of the Company's Audit Committee.

     John L. Keeley,  Jr. became a Director of the Company in January 1994.  Mr.
Keeley is President,  Treasurer and a Director of Keeley Investment Corporation,
a registered  broker-dealer.


                                       57
<PAGE>


He has held these positions  since 1977. He is also  President,  Treasurer and a
Director  of  Keeley  Asset  Management  Corporation,  a  registered  investment
advisor,  Keeley Small Cap Value Fund,  Inc., an open-end  mutual fund,  various
investment partnerships and the John L. Keeley, Jr. Foundation.  Mr. Keeley also
became a Director of the Marquette National Corporation in 1994. Mr. Keeley is a
member of the Company's Audit Committee.

     Alan A. Rhein,  became a Director of the Company in June 1997. Mr. Rhein is
a founding principal of Lockwood Financial Group Ltd., an investment  management
consulting  firm,  and is  President  and Chief  Executive  Officer of  Lockwood
Financial Services,  the broker-dealer division of Lockwood Financial Group Ltd.
In 1993, Mr. Rhein was recruited by Prudential  Securities to serve as Executive
Vice  President in charge of their entire Retail Branch  system.  Mr. Rhein is a
member of the Company's Audit Committee.

     Richard O'Brien,  41, became a Director of the Company in June 1998. He has
been the Vice President, Secretary and General Counsel of Mutual Risk Management
Ltd.,  since March  1995.  From 1990 until  1995,  Mr.  O'Brien was a partner in
Dunnington, Bartholow & Miller, a law firm located in New York City. Mr. O'Brien
is a member of the Company's Audit Committee.

     Jimmy L. Thomas  became a Director of the  Company in  November  1994.  Mr.
Thomas  retired in 1998 and prior to  retirement  was Senior  Vice  President  -
Financial  Services and Treasurer of Gannett Co., Inc.  since  December 1991. He
also serves on the Regional Advisory Board of Marine Midland Bank. Mr. Thomas is
a member of the Company's Audit Committee.

     Nicola Meaden became a Director of the Company in June 1999.  Ms. Meaden is
the founder and Chief  Executive  Officer of TASS  Investment  Research  Limited
("TASS").  Prior to  establishing  TASS, Ms. Meaden worked for the  London-based
commodity and futures brokerage company Gourlay Wolff, where she was responsible
for developing and managing its managed futures department,  including launching
and managing multi-manager offshore funds.

     Bruce D. Ruehl  became a Director  of the Company in June 1999.  Mr.  Ruehl
joined the  Company in 1993 and is  currently  the  Company's  Chief  Investment
Strategist.  Prior to  becoming  Chief  Investment  Strategist,  Mr.  Ruehl  was
responsible  for all manager  research  activities of Tremont.  Prior to joining
Tremont,  Mr. Ruehl was a vice  president and principal of Reliance  Properties,
Inc.,  where he advised private real estate  partnerships  investing in bank and
RTC-owned properties.

     Suzanne S.  Hammond has been the  Secretary  and  Treasurer  of the Company
since August 1991. Ms. Hammond also currently serves as a Senior Vice President,
Treasurer and Secretary of TPI, and as a Director of TBL.

     Stephen T. Clayton joined the Company on January 10, 1994 and was appointed
Chief  Financial  Officer on January  19,  1994.  Mr.  Clayton  also  became the
Financial and Operations Principal and a Director of TSI in June 1994, and Chief
Financial Officer and Director of TFI and TIMI in July 1998.


                                       58
<PAGE>


Item 10. Executive Compensation.

     The following  table sets forth the annual and long-term  compensation  for
the Company's Chief Executive  Officer and other executive  officers whose total
cash compensation exceeded $100,000 for services rendered to the Company and its
subsidiaries for the fiscal year ended December 31, 1999 (the "Named Officers").

     All share data has been  restated to reflect the impact of a  five-for-four
stock split distributed on August 16, 1999.

                                         Summary Compensation Table
<TABLE>
<CAPTION>
      Annual Compensation
----------------------------------------------------------------------------------------------------------------

                                                                        Long Term Compensation

                                                                     -------------------------------------------
                                       Annual Compensation                 Awards           Payouts
----------------------------------------------------------------------------------------------------------------



                                                          Other      Restricted  Securities
                                                          Annual       Stock     Underlying    LTIP     All other
                                  Salary       Bonus    Compensation  Award(s)    Options/    Payout    Compen-
   Name and Principal     Year    ($)(a)       ($)(b)    ($) (c)      ($)         SARs (#)     ($)      sation($)
        Position
-----------------------------------------------------------------------------------------------------------------
<S>                      <C>      <C>         <C>          <C>           <C>       <C>           <C>      <C>
Sandra L. Manzke,
Chief Executive Officer  1999     380,000     372,000      58,275        --        11,000        --          --
                         ----------------------------------------------------------------------------------------
                         1998     373,000     310,000        --          --          --          --          --
                         ----------------------------------------------------------------------------------------
                         1997     362,000     135,000        --          --        43,750        --          --
-----------------------------------------------------------------------------------------------------------------
Robert I. Schulman,
Chief Operating Officer  1999     342,000     334,800      58,275        --        10,000        --          --
                         ----------------------------------------------------------------------------------------
                         1998     335,700     279,000        --          --          --          --       295,000
                         ----------------------------------------------------------------------------------------
                         1997     326,250     121,500        --          --        31,250        --          --
-----------------------------------------------------------------------------------------------------------------
Bruce D. Ruehl,
Chief Investment         1999     155,000     125,000      33,300        --         5,000        --         9,050
Strategist
                         ----------------------------------------------------------------------------------------
                         1998     150,000     150,000        --          --         5,000        --          --
                         ---------------------------------------------------------------------------------------
                         1997     140,000     100,000        --          --        12,500        --          --
-----------------------------------------------------------------------------------------------------------------
Stephen T. Clayton,
Chief Financial Officer  1999     140,000     110,000      49,950        --         7,000        --        53,125
                         ----------------------------------------------------------------------------------------
                         1998     130,000      65,000        --          --         3,125        --        12,650
                         ----------------------------------------------------------------------------------------
                         1997     120,000      50,000        --          --        12,500        --          --
-----------------------------------------------------------------------------------------------------------------
Suzanne S. Hammond,
Secretary and Treasurer  1999     120,000      35,000      19,980        --         2,500        --          --
                         ----------------------------------------------------------------------------------------
                         1998     107,000      20,000        --          --         2,500        --          --
                         ----------------------------------------------------------------------------------------
                         1997     100,417      14,000        --          --          --          --          --
-----------------------------------------------------------------------------------------------------------------
</TABLE>

(a) On December 9, 1999, the Company  entered into an amendment to Ms.  Manzke's
employment  agreement dated  September 15, 1995.  Under the terms of the amended
agreement  which expires on December 31, 2000, Ms. Manzke is entitled to receive
a minimum  annual base salary of $391,400.  In addition,  Ms. Manzke may receive
incentive  compensation to be determined by the Board of Directors.  On December
9, 1999,  the Company  entered into an amendment  to Mr.  Schulman's  employment
agreement dated April 22, 1994.  Under the terms of the amended  agreement which
expires on December 31, 2000, Mr. Schulman is entitled to receive minimum annual
base compensation of $352,300. In addition,  Mr. Schulman must receive incentive
compensation not less than 90% of the incentive  compensation paid to Ms. Manzke
in any year.


                                       59
<PAGE>


(b) A portion of the  bonuses for Ms.  Manzke,  Mr.  Schulman,  Mr.  Ruehl,  Mr.
Clayton and Ms. Hammond, which accrued in 1998 were actually paid in 1999. These
amounts were $105,000,  $94,500,  $30,000, $15,000 and $7,500,  respectively.  A
portion of the bonuses for Ms. Manzke,  Mr. Ruehl,  Mr. Clayton and Ms. Hammond,
which accrued in 1997 were actually paid in 1998.  These amounts were  $150,000,
$20,000, $12,000 and $6,000, respectively. In addition, a portion of the bonuses
for Ms.  Manzke and Mr.  Schulman  which  accrued in 1996 were  actually paid in
1997. These amounts were $75,000 and $67,500, respectively.

(c)  Represents  compensation  charged  to  each  employee  as  a  result  of  a
distribution to them of FITX Common Stock.

--------------------------------


   Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
                                     Values

Presented  below is  information  with respect to  unexercised  stock options to
purchase the  Company's  Class B Common  Stock held by each Named  Officer as of
December 31, 1999.

<TABLE>
<CAPTION>
                                                            Number of
                                                            Securities       Value of
                                                            Underlying       Unexercised
                                                            Unexercised      In-the-Money
                                                            Options at       Options at
                                                            December 31,     December 31,
                                                            1999 (#)         1999 ($)
                       Shares Acquired                      Exercisable/     Exercisable/
Name                   on Exercise (#)   Value Realized ($) Unexercisable    Unexercisable
--------------------------------------------------------------------------------------------
<S>                              <C>           <C>          <C>              <C>
Sandra L. Manzke                  --            $  --        46,500/8,250      $154,750/$ --

Robert I. Schulman                --               --       221,250/7,500    $1,831,250/$ --

Bruce D. Ruehl                   5,000            9,050      10,000/6,250     $52,750/$9,000

Stephen T. Clayton               6,250           53,125      15,812/6,813     $93,100/$5,600

Suzanne S. Hammond                --               --         1,875/3,125      $4,500/$4,500
</TABLE>



Directors' Compensation

     Directors of the Company who are  salaried  employees of the Company do not
receive any  additional  compensation  for  serving as a director.  Non-employee
directors of the Company  received  $2,500 for each Board of  Directors  meeting
attended and $1,250 for each telephonic Board Meeting attended prior to June 30,
1999.  Subsequent to June 30, 1999, each  non-employee  director received $5,000
for each Board of  Directors  meeting  attended  and $2,500 for each  telephonic
Board Meeting attended.

Employment   Contracts,   Termination   of  Employment  and  Change  in  Control
Arrangements.

     The Company and Sandra L. Manzke,  the Company's  Chairman of the Board and
Chief Executive Officer,  entered into an amended employment  agreement pursuant
to which Ms.


                                       60
<PAGE>


Manzke is entitled to a minimum base salary of $391,400  per annum.  She is also
entitled  to a bonus as  determined  by the  Board of  Directors.  Ms.  Manzke's
employment may be terminated due to illness, disability or other incapacity such
that she is unable to perform her duties for a period of ninety (90) consecutive
days. If her  employment is so  terminated,  she will be entitled to receive her
base  salary and accrued  bonus until  December  31,  2000.  In the event of her
death, her right to compensation will cease.

     In the event of the termination of Ms. Manzke's  employment for any reason,
including  death,  the Company  shall have the option,  provided it is exercised
within  ninety (90) days,  to reacquire  all of Ms.  Manzke's  shares of capital
stock in the Company for a price per share equal to the market value on the date
of such termination.  Ms. Manzke has agreed that she will not sell or dispose of
her stock in the Company without first offering to sell the stock to the Company
at a price per share equal to its then market value.

     Robert I.  Schulman,  the  President  and Chief  Operating  Officer  of the
Company,  entered into an amendment,  as of December 9, 1999, to his  employment
agreement.  The  amended  agreement  expires on  December  31,  2000 and will be
automatically  renewed from year to year unless either party  terminates it in a
timely  manner.  Mr.  Schulman is entitled to a minimum  base salary of $352,300
plus a bonus as the Board of Directors may determine; provided, however, that in
no event  will Mr.  Schulman's  base  salary in any year be less than 90% of the
base  salary  payable  to Ms.  Manzke  for such  year  and in no event  will Mr.
Schulman's bonus be less than 90% of the incentive  compensation  payable to Ms.
Manzke in such year. If Mr. Schulman is disabled or his employment is terminated
by the Company  without cause or by him with cause,  then he will be entitled to
receive his base salary and accrued bonus until  December 31, 1999. In the event
his  employment is terminated by the Company with cause or by him without cause,
or in the event of his death, his right to compensation will cease upon the date
of termination or death.

     Upon executing his employment  agreement in 1994, Mr.  Schulman was granted
options to purchase  343,750 shares of the Company's  Class B Common Stock at an
exercise  price of $1.40 per share,  the then  current  fair market value of the
Class B Common  Stock.  The  options  are fully  vested  and will  expire on the
anniversary  of the  grant  date in  2001.  During  August  1998,  Mr.  Schulman
exercised  options to purchase and  purchased  156,250  shares of Class B Common
Stock.  In the event Mr.  Schulman's  employment is  terminated  for any reason,
including the expiration of the employment agreement,  any unvested options will
lapse;  vested but unexercised  options will remain  outstanding and exercisable
under the original terms and conditions, subject to an option in favor of TPI to
purchase all of Mr.  Schulman's stock no later than seven days after the date of
termination  for a per  share  price  equal to the best bid price on the date of
termination  and the purchase  price for each option shall be the greater of (i)
$1.40 or (ii) the  amount of the best bid  price for a share of Common  Stock on
the date of  termination  less $1.40.  Mr.  Schulman has agreed that he will not
dispose of the Class B Common  Stock he acquires  pursuant to the options or the
unexercised  options  without first offering them to TPI for the per share price
applicable in the case of the termination of his employment.


                                       61
<PAGE>


     On July 17, 1998,  TIMI entered into an  employment  agreement  with Robert
Parnell,  the President,  Chief Operating  Officer and Chief Investment  Officer
that expires on July 31, 2000. Under the terms of the agreement,  Mr. Parnell is
entitled  to  receive an annual  salary of  $125,000  for the period  commencing
August 1, 1998 and ending July 31, 1999 and $150,000  for the period  commencing
on August 1, 1999 and ending on July 31, 2000.

     In  connection  with the TASS  acquisition,  the  Company  entered  into an
employment  agreement  with Ms.  Meaden  pursuant  to which she serves as TASS's
Chief  Executive  Officer  for a minimum  base salary of  $150,000  per year,  a
guaranteed  bonus of $50,000 per year and such other bonus as may be  determined
by the Board of Directors. Ms. Meaden's employment may be terminated by consent,
for cause,  as a result of death or  disability,  and the  Company is  expressly
permitted to terminate  without cause. If Ms. Meaden's  employment is terminated
for cause, she will be entitled to receive accrued salary, guaranteed bonus, and
the value of accrued but unused  vacation time through the date of  termination.
If her employment is terminated  for any other reason other than for cause,  she
will  be  entitled  to the  same  amounts  through  the  end of the  term of the
employment  agreement;  however,  the Company may offset against payments due to
her any  compensation  received by her through any affiliation  with a competing
business prior to the end of the term.

     Simultaneously,  the Company had entered into an employment  agreement with
Laurence  Huntington  Taylor,  II pursuant  to which he served as the  Company's
Senior Vice  President of Global  Marketing and Sales.  Mr.  Taylor's  agreement
contained the same provisions as Ms.  Meaden's.  The agreement was terminated by
mutual  agreement  as of  January  22,  2000  and the  parties  entered  into an
Agreement and Release  pursuant to which Mr. Taylor will receive,  through March
11,  2001,  the end of the term of his  employment  agreement,  his  salary  (an
aggregate of $175,000) and his guaranteed bonus (an aggregate of $50,000). These
payments are subject to offset by an amount equal to any  compensation  received
by Mr. Taylor as a result of any affiliation with a competing  business prior to
March 11, 2001.  Mr. Taylor is also permitted to exercise the Stock Options that
he would have been entitled to exercise if his employment were to have continued
until March 12, 2001.

Class B Options

     During May and June 1997,  options to  purchase  25,000  shares and 156,250
shares,  respectively,  were  granted to the  directors  and  certain  executive
employees at $3.00 per share.  At September 30, 1997,  16,666 options lapsed due
to an employee's  termination of employment.  The remaining  options have vested
and become  exercisable.  In the event a director or employee ceases to serve as
such,  the Company  will have the option,  exercisable  no later than seven days
after  the date of  termination  of the  relationship,  to  purchase  all of the
director's or employee's  vested  options.  The purchase price for each share of
Class B Common  Stock  shall be equal to the best bid  price on the date of such
termination,  and the purchase price for each option shall be the greater of (i)
$3.00,  or (ii) the  amount  of the best bid price for a share of Class B Common
Stock on the date of such termination less $3.00.  During 1999 certain directors
and  officers  exercised  options to purchase an  aggregate of 25,000 and 12,500
shares, respectively, of the Company's Class B Common.


                                       62
<PAGE>


     As of December  31,  1999,  options to  purchase  187,500  shares,  123,957
shares, 183,082 shares, 22,025 shares, 2,750 shares and 20,813 shares of Class B
Common Stock for $1.40, $3.00, $6.40, $10.00,  $11.00 and $12.00 , respectively,
were exercisable by the Company's directors and executives.

     The  foregoing  has been  adjusted  to give  effect  to the  impact  of the
five-for-four split distributed on August 16, 1999.

1998 Stock Option Plan

     On September 17, 1998, the Company's Board of Directors adopted, subject to
shareholder  approval,  the Tremont  Advisers,  Inc. 1998 Stock Option Plan (the
"1998 Plan"). The 1998 Plan provides for the issuance of up to 250,000 shares of
Class B Common Stock in connection  with stock options and other awards  granted
under such plan. The 1998 Plan  authorizes the grant of incentive stock options,
non-qualified  stock options and stock rights.  The exercise price for incentive
stock  options  shall not be less than the fair market  value of the  underlying
shares on the date of grant. The exercise price for non-statutory  stock options
and stock rights shall not be less than the minimum legal consideration required
therefore  under  the laws of any  jurisdiction  in which  the  Company,  or its
successors in interest,  may be organized.  The 1998 Plan is  administered  by a
committee  of the  Board  of  Directors.  The  committee  has the  authority  to
determine the employees to whom awards will be made,  the amount of awards,  and
the other terms and  conditions of the awards.  As of December 31, 1999,  11,000
and 88,100  options  have been granted at $11.00 per share and $10.00 per share,
respectively,  under the 1998 plan. As of December 31, 1998, 29,250 options have
been granted at $6.40 per share under the 1998 Plan.  These  options have a five
year term and will vest and become exercisable on the following schedule: 25% on
the date of grant, 25% of the first anniversary of the date of the grant and 50%
on the second anniversary of the date of the grant.

     The  foregoing  has been  adjusted  to give  effect  to the  impact  of the
five-for-four split distributed on August 16, 1999.

Indemnification for Certain Liabilities

     The By-Laws of the Company  provide  that the  Company  may  indemnify  its
directors  and  officers  to the  fullest  extent  permitted  by the laws of the
Delaware  General  Corporation  Law against  all  expenses,  liability  and loss
(including  attorneys'  fees,  judgment,  fines and amounts paid in  settlement)
incurred by them in any  action,  suit or  proceeding  arising out of certain of
their actions or omissions in their capacities as directors or officers. Article
Seven of the Company's Restated Certificate of Incorporation provides that, with
certain exceptions,  no director of the Company may be liable to the Company for
monetary  damages as a result of a breach of his fiduciary duties as a director.
The Company has acquired  directors' and officers'  liability  insurance for its
directors and officers.


                                       63
<PAGE>


     The  Delaware  Supreme  Court  has  held the  directors'  duty of care to a
corporation and its shareholders  requires the exercise of an informed  business
judgment.   Having  become  informed  of  all  material  information  reasonably
available to them,  directors  must act with  requisite care in the discharge of
their duties. The Delaware General Corporation Law permits a corporation through
its  certificate  of  incorporation  to exonerate  its  directors  from personal
liability to the  corporation  or its  shareholders  for monetary  damages for a
breach of their fiduciary duty of care as a director,  with certain  exceptions.
The  exceptions  include a breach of the  director's  duty of  loyalty,  acts or
omissions not in good faith or which involve  intentional  misconduct or knowing
violation of law, improper  declaration of dividends and transactions from which
the director derived an improper personal benefit. As noted above, the Company's
Restated Certificate of Incorporation  exonerates its directors,  acting in such
capacity,  from  monetary  liability to the extent  permitted by this  statutory
provision.   This  limitation  of  liability  provision  does  not  eliminate  a
shareholder's  right  to  seek  non-monetary,  equitable  remedies  such  as  an
injunction  or  rescission  in order to  redress an action  taken by  directors.
However,  as a practical matter,  equitable remedies may not be available in all
situations,  and  there  may be  instances  in  which  no  effective  remedy  is
available.

Item 11.  Security Ownership of Certain Beneficial Owners and Management.

     The  following  table  contains  information  relating  to  the  beneficial
ownership  of Common  Stock by  members of the Board of  Directors,  and by such
members  and by the  Company's  officers  as a group,  as well as certain  other
beneficial owners as of March 2, 2000. Information as to the number of shares of
Common  Stock  owned and the  nature of  ownership  has been  provided  by these
individuals  and is not within  the  direct  knowledge  of the  Company.  Unless
otherwise  indicated,  the named individuals  possess sole voting and investment
power with respect to the shares  listed.  The  following  information  has been
furnished  to the  Company  or is  based on  Schedules  13D,  or any  amendments
thereto, received by the Company as filed with the Commission.

     The  information  set forth in the table has been  adjusted  to reflect the
impact of the five-for-four stock split distributed on August 16, 1999.









                                       64
<PAGE>


<TABLE>
<CAPTION>
Name and Address of                              Number of
Beneficial Owner                                Shares Owned                   % of
----------------                                ------------                   ----

                                             Class A     Class B        Class A     Class B
                                             -------     -------        -------     -------
<S>                                          <C>         <C>              <C>          <C>
Sandra L. Manzke (1)                         229,500     482,470          14%          12%
555 Theodore Fremd Avenue
Rye, New York


Robert I. Schulman (2)                         2,455     464,689           *           11%
555 Theodore Fremd Avenue
Rye, New York


John L. Keeley, Jr. (3)                      101,987     444,532           6           11%
401 South LaSalle Street
Chicago, Illinois


Alan Rhein (4)                                  --        41,875        --              1%
405 Park Avenue
New York, New York


Jimmy L. Thomas (5)                             --        63,750        --              2%
1100 Wilson Boulevard
Arlington, VA 22234


Suzanne S. Hammond (6)                          --        31,790        --              1%
555 Theodore Fremd Avenue
Rye, New York


Stephen T. Clayton (7)                           948      46,559           *            1%
555 Theodore Fremd Avenue
Rye, New York


Bruce D. Ruehl (8)                               251     136,713           *            3%
555 Theodore Fremd Avenue
Rye, New York


Mario J. Gabelli (9)                         671,507     245,868          42            6%
Gabelli Asset Management Inc.
555 Theodore Fremd Avenue
Rye, New York


Brighton Communications Corporation (10)        --       142,611        --              3%
401 Theodore Fremd Ave
Rye, New York


MGL Investments Ltd. (11)                       --     1,081,230        --             27%
One Logan Square
Suite 1400
Philadelphia, PA


Nicola Meaden (12)                              --       202,398        --              5%
Charter House
13-15 Carteret Street
London, England


Directors and Officers as a group:           335,141   1,914,776          21%          47%

*    Less than one percent.
</TABLE>


                                       65
<PAGE>


(1) Includes 12,500 shares of Class A Common Stock held by the Tremont Advisers,
Inc.,  401(k) Savings Plan for the benefit of Ms. Manzke.  The 482,470 shares of
Class B Common Stock include  54,281 shares held by the Tremont  Advisers,  Inc.
401(k)  Savings Plan for the benefit of Ms. Manzke and 46,500  shares  represent
certain stock options granted to Ms. Manzke by the Company that have vested.

(2) The 2,455 shares of Class A Common  Stock are held by the Tremont  Advisers,
Inc. 401(k) Savings Plan for the benefit of Mr. Schulman.  Of the 464,689 shares
of Class B Common Stock,  221,250 shares represent certain stock options granted
to Mr.  Schulman by the Company  that have vested and 10,568  shares are held by
the Tremont Advisers, inc. 401(k) Savings Plan for the benefit of Mr. Schulman.

(3) The 101,987  shares of Class A Common  Stock are  beneficially  owned by Mr.
Keeley.  Of the 444,532 shares of Class B Common Stock reported,  206,250 shares
reported are beneficially  owned by Mr. Keeley and include 25,000 shares held in
the name of his wife,  11,250 shares held by the John L. Keeley Jr.  Foundation,
43,750 shares held by the KIC Profit Sharing Plan & Trust for the benefit of Mr.
Keeley  for which Mr.  Keeley is  Trustee,  and  43,750  shares  held by the KIC
Pension Plan & Trust for the benefit of Ms.  Keeley and for which Mr.  Keeley is
Trustee and 7,500 shares  represent  certain stock options granted to Mr. Keeley
by the Company  that have vested.  Of the  remaining  106,782  shares of Class B
Common Stock, 82,140 shares are owned by Kamco Limited Partnership No. 1 ("KLP")
and 24,642 shares held by JGJ Partnership of which Mr. Keeley is a partner.  Mr.
Keeley is the sole general partner of KLP, an investment  partnership  organized
under the laws of Illinois.  Mr. Keeley is deemed to have a beneficial ownership
of securities owned beneficially by each of the foregoing entities.

(4) Of the  41,875  shares  of Class B Common  Stock  beneficially  owned by Mr.
Rhein,  16,875 shares represent  certain stock options granted to Mr. Rhein that
have vested.

(5) Of the  63,750  shares  of Class B Common  Stock  beneficially  owned by Mr.
Thomas,  1,250 shares represent certain stock options granted to Mr. Thomas that
have vested.

(6) Of the  31,790  shares  of Class B Common  Stock  beneficially  owned by Ms.
Hammond, 1,875 shares are held by the Tremont Advisers, Inc. 401(k) Savings Plan
for the benefit of Ms. Hammond and 1,875 shares represent  certain stock options
granted to Ms. Hammond that have vested.

(7) The 948  shares of Class A Common  Stock are held by the  Tremont  Advisers,
Inc. 401(k) Savings Plan for the benefit of Mr. Clayton. Of the 46,559 shares of
Class B Common Stock,  15,812 shares represent  certain stock options granted to
Mr.  Clayton  by the  Company  that have  vested,  4,582  shares are held by the
Tremont Advisers, Inc. 401(k) Savings Plan for the benefit of Mr. Clayton, 4,500
shares  are held in the name of his wife,  for which  Mr.  Clayton  specifically
disclaims  beneficial ownership and 250 shares are held in the name of his minor
children, for which Mr. Clayton is deemed to have beneficial ownership.


                                       66
<PAGE>


(8) The 251  shares of Class A Common  Stock are held by the  Tremont  Advisers,
Inc.  401(k) Savings Plan for the benefit of Mr. Ruehl. Of the 136,713 shares of
Class B Common Stock, 1,712 shares are held by the Tremont Advisers, Inc. 401(k)
Savings Plan for the benefit of Mr. Ruehl and 10,000  shares  represent  certain
stock options granted to Mr. Ruehl by the Company that have vested.

(9) Includes  406,731 shares of Class A Common Stock and 2,833 shares of Class B
Common Stock owned by family trusts or  partnerships  over which Mr. Gabelli has
sole voting power and investment power. Does not include shares listed elsewhere
in this table which are held by Brighton  Communications  Corporation,  of which
Mr. Gabelli  specifically  disclaims  beneficial  ownership.  Mr. Gabelli is the
principal shareholder,  as well as the Chairman of the Board and Chief Executive
Officer, of Gabelli Asset Management Inc. ("GAMI"),  the ultimate parent company
for a  variety  of  operating  companies  engaged  in  various  aspects  of  the
securities business,  including Gabelli Funds, LLC, a wholly-owned subsidiary of
GAMI and a registered  investment adviser;  GAMCO Investors,  Inc. ("GAMCO"),  a
wholly-owned  subsidiary of GAMI and a registered  investment  adviser;  Gabelli
Securities,  Inc.  ("GSI"),  a majority-owned  subsidiary of GAMI; and Gabelli &
Company,  Inc.  ("Gabelli & Company"),  a  wholly-owned  subsidiary of GSI and a
registered  broker-dealer.  Mr.  Gabelli is also Chairman of the Board and Chief
Executive Officer of Gabelli Group Capital Partners,  Inc. ("GGCP"),  which owns
approximately  80% of the  common  stock of GAMI.  GGCP,  GAMI,  GAMCO,  GSI and
Gabelli & Company are herein referred to as "affiliates" of Mr. Gabelli.  Acting
in these  capacities,  Mr.  Gabelli  has the  authority  for  making  voting and
investment  decisions on behalf of the affiliates and, therefore,  may be deemed
to be the beneficial owner of shares of the Company owned by or held in accounts
of such  affiliates.  Of the  remaining  264,776  shares of Class A Common Stock
owned by Mr.  Gabelli and  affiliates of Gabelli,  52,500 shares are held by GSI
and 281 shares are held by GGCP.

(10) Mr.  Gabelli  is  Chairman  of the  Board and Chief  Executive  Officer  of
Brighton, and he and his affiliates and their clients are principal shareholders
of Lynch.  Mr.  Gabelli may be deemed to be a beneficial  owner of the shares of
the Company owned by Brighton by virtue of his and certain  affiliated  parties'
significant  beneficial  ownership  of the common stock of Lynch.  Mr.  Gabelli,
however, specifically disclaims beneficial ownership of all of the shares of the
Company's Common Stock held by Lynch.

(11) In July  1997,  Mutual  Risk  Management  ("MRM"),  an  international  risk
management  company,  indirectly  acquired an equity interest in the Company. In
July 1997, MGL  Investments  Ltd.  ("MGL"),  a  wholly-owned  subsidiary of MRM,
purchased 768,750 shares of outstanding Class B Common Stock at a price of $3.00
per share pursuant to a tender offer.  In addition,  the Company  simultaneously
sold MGL 252,956  shares of Class B Common  Stock at a price of $3.00 per share.
As a result of these transactions, MRM then indirectly owned, through MGL, Class
B Common Stock equal to 20% of the aggregate of the Company's  outstanding Class
A Common  Stock and Class B Common  Stock.  Pursuant to the 1997 Stock  Purchase
Agreement MGL has the right to acquire an amount of stock to keep their pro rata
ownership  at  the  same  purchase   price  and  terms  offered  to  prospective
purchasers. In connection with the shares issued


                                       67
<PAGE>


in the TASS acquisition,  MGL exercised its right and purchased 59,524 shares of
Class B Common Stock at $6.00 per share.

(12) Of the 202,398  shares of Class B Common  Stock  beneficially  owned by Ms.
Meaden,  122,186 shares  represent  certain stock options  granted to Ms. Meaden
that have vested.

Item 12. Certain Relationships and Related Transactions.

     In August 1999, certain of the Company's officers and directors, as well as
other employees, received bonus compensation in the form of a distribution of an
aggregate  of  120,750  shares  of FITX  common  stock  having a total  value of
$402,100. No such bonus had a value in excess of $58,300. TBL owns approximately
24.5% of all of FITX's outstanding  stock,  including both common and preferred.
Ms. Manzke and Messrs.  Schulman,  Thomas,  Rhein and Keeley personally invested
$25,500, $51,000, $90,000, $51,000 and $50,000 respectively,  in FITX's Series B
Preferred Stock.

Item 13. Exhibits, List and Reports on Form 8-K.

(a)  Documents filed as part of this report:

     1. The  following  consolidated  financial  statements  of the  Company are
included in Item 7:

     Reports of Independent Auditors..........................................26
     Consolidated Balance Sheets as of December 31, 1999 and 1998.............29
     Consolidated Statements of Income for the years ended
        December 31, 1999 and 1998............................................30
     Consolidated Statements of Shareholders' Equity for the years ended
        December 31, 1999 and 1998............................................31
     Consolidated Statements of Cash Flows for the years ended
        December 31, 1999 and 1998............................................32
     Notes to Consolidated Financial Statements...............................34

     Exhibit No.

     3.1 Restated  Certificate  of  Incorporation  of the Company  (incorporated
herein by  reference  to the  Company's  Form S-1 filed with the  Commission  on
December 16, 1991).

     3.2  By-Laws  of the  Company  (incorporated  herein  by  reference  to the
Company's Form S-1 filed with the Commission on December 16, 1991).

     3.3  Amendment to the  Certificate  of  Incorporation  of the Company dated
December 23, 1993  (incorporated  herein by reference to the Company's Form 10-K
filed with the Commission on March 29, 1994).


                                       68
<PAGE>


     3.4  Amendment to the  Certificate  of  Incorporation  of the Company dated
August 6, 1998 (incorporated  herein by reference to Company's Form 10-KSB filed
with the Commission March 19, 1999).

     4.1  Specimen   representing   the  Rights   Certificate   of  the  Company
(incorporated  herein by  reference  to the  Company's  Form S-1 filed  with the
Commission on December 16, 1991).

     4.2 Specimen representing the Class A Common Stock, $0.01 par value, of the
Company  (incorporated  herein by reference to the Company's Form S-1 filed with
the Commission on December 16, 1991).

     10.9 Consulting  Services  Agreement dated as of May 1, 1991 between Harold
Cohen and  Tremont  Partners,  Inc.  (incorporated  herein by  reference  to the
Company's Form S-1 filed with the Commission on December 16, 1991).

     10.29 Consulting  Services Agreement between Omega Overseas Partners,  Ltd.
and  Tremont  (Bermuda)  Limited  dated  April 1, 1994  (incorporated  herein by
reference  to the  Company's  Form 10-K filed with the  Commission  on March 29,
1994).

     10.30  Employment  Agreement  dated April 22, 1994  between the Company and
Robert I. Schulman  (incorporated herein by reference to the Company's Form 10-Q
filed with the Commission on May 12, 1994).

     10.31 Stock Option  Agreement  dated April 22, 1994 between the Company and
Robert I. Schulman  (incorporated herein by reference to the Company's Form 10-Q
filed with the Commission on May 12, 1994).

     10.34 Employment Agreement dated September 25, 1995 between the Company and
Sandra L. Manzke  (incorporated  herein by reference to the Company's  Form 10-Q
filed with the Commission on November 13, 1995).

     10.39 Lease between  Gateside - Rye Company and the Company dated April 18,
1997.  (incorporated herein by reference to the Company's Form 10-KSB filed with
the Commission on March 19, 1998).

     10.40 Stock  Option  Agreement  dated May 15, 1997  between the Company and
Stephen T.  Clayton.  (incorporated  herein by reference to the  Company's  Form
10-KSB filed with the Commission on March 19, 1998).

     10.41 Stock  Option  Agreement  dated May 15, 1997  between the Company and
Bruce D. Ruehl.  (incorporated  herein by reference to the Company's Form 10-KSB
filed with the Commission on March 19, 1998).

     10.42 Master Agreement dated as of June 5, 1997 among the Company,  Tremont
Bermuda Limited,  Tremont  International  Insurance Ltd., Mutual Risk Management
(Holdings)


                                       69
<PAGE>


Ltd., MGL Investments Ltd.,  Hemisphere  Management  Limited and The Anglo-Dutch
Insurance  Company Limited.  (incorporated  herein by reference to the Company's
Form 10-KSB filed with the Commission on March 19, 1998).

     10.43 Stock Purchase Agreement dated as of June 5, 1997 between the Company
and MGL Investments Ltd. (incorporated herein by reference to the Company's Form
10-KSB filed with the Commission on March 19, 1998).

     10.44 Stock  Option  Agreement  dated June 12, 1997 between the Company and
Sandra L. Manzke. (incorporated herein by reference to the Company's Form 10-KSB
filed with the Commission on March 19, 1998).

     10.45 Stock  Option  Agreement  dated June 12, 1997 between the Company and
Robert I.  Schulman.  (incorporated  herein by reference to the  Company's  Form
10-KSB filed with the Commission on March 19, 1998).

     10.46 Stock  Option  Agreement  dated June 12, 1997 between the Company and
John L. Keeley,  Jr.  (incorporated  herein by reference to the  Company's  Form
10-KSB filed with the Commission on March 19, 1998).

     10.47 Stock  Option  Agreement  dated June 12, 1997 between the Company and
Alan A. Rhein.  (incorporated  herein by reference to the Company's  Form 10-KSB
filed with the Commission on March 19, 1998).

     10.49 Stock Purchase Agreement dated as of July 1, 1997 between Tremont MRM
Services Limited and Mutual Risk Management (Holdings) Ltd. (incorporated herein
by reference to the Company's Form 10-KSB filed with the Commission on March 19,
1998).

     10.50  Shareholders'  Agreement  dated as of July 1, 1997 among Tremont MRM
ServicesLimited,  Tremont (Bermuda) Limited,  The Anglo-Dutch  Insurance Company
Limited and Mutual  Risk  Management  (Holdings)  Ltd.  (incorporated  herein by
reference to the  Company's  Form 10-KSB filed with the  Commission on March 19,
1998).

     10.53 Tremont Advisers, Inc. 1998 Stock Option Plan (incorporated herein by
reference to the Company's Form 10-QSB/A1  filed with the Commission on November
6, 1998)

     10.54  Shareholder's  Agreement  dated as of July 17,  1998,  by and  among
Tremont  Advisers,  Inc., Robert J. Parnell and Tremont  Investment  Management,
Inc.  (incorporated  herein by reference to the Company's Form  10-QSB/A1  filed
with the Commission on November 6, 1998).

     10.55  Employment  Agreement,  dated as of July 17,  1998  between  Tremont
Investment  Management and Robert Parnell  (incorporated  herein by reference to
the Company's Form 10-KSB filed with the Commission on March 19, 1999).


                                       70
<PAGE>


     10.58  Agreement and Plan of  Reorganization,  dated as of March 8, 1999 by
and among Tremont  Advisers,  Inc., Tass  Management  Limited and Nicola Meaden,
Laurence  Huntington  Taylor,  II, Colin Myers,  Norma Smith and Valerie  Benard
(incorporated  herein by reference to the  Company's  Form 10-KSB filed with the
Commission on March 19, 1999).

     10.59  Registration  Rights  Agreement,  dated as of March 11,  1999 by and
among Tremont Advisers,  Inc. and Nicola Meaden, Laurence Huntington Taylor, II,
Valerie Benard, Colin Myers and Norma Smith (incorporated herein by reference to
the Company's Form 10-KSB filed with the Commission on March 19, 1999).

     10.60  Employment  Agreement,  dated as of March 11,  1999,  by and between
Tremont Advisers, Inc. and Laurence Huntington Taylor II (incorporated herein by
reference to the  Company's  Form 10-KSB filed with the  Commission on March 19,
1999).

     10.61 Employment  Agreement,  dated as of March 11, 1999, by and among Tass
Management  Limited,  Tremont  Advisers,  Inc. and Nicola  Meaden  (incorporated
herein by reference to the  Company's  Form 10-KSB filed with the  Commission on
March 19, 1999).

     10.62 Stock Option and Benefits  Agreement,  dated as of March 8, 1999,  by
and  between  Tremont  Advisers,   Inc.  and  Laurence   Huntington  Taylor,  II
(incorporated  herein by reference to the  Company's  Form 10-KSB filed with the
Commission on March 19, 1999).

     10.63 Stock Option and Benefits  Agreement,  dated as of March 8, 1999,  by
and between Tremont  Advisers,  Inc. and Nicola Meaden  (incorporated  herein by
reference to the  Company's  Form 10-KSB filed with the  Commission on March 19,
1999).

     10.64  Amendment  to  Employment  Agreement  dated as of  December  9, 1999
between the Company and Sandra L. Manzke.

     10.65  Amendment  to  Employment  Agreement  dated as of  December  9, 1999
between the Company and Robert I. Schulman

     10.66  Agreement  and  Release  dated as of January  22,  2000  between the
Company and Laurence Huntington Taylor II.

     21.1 Subsidiaries of the Company

     23.1 Consent of Ernst & Young LLP, independent auditor

     23.2 Consent of Goldstein Golub Kessler LLP, independent auditors.

     23.3 Consent of Goldstein Golub Kessler LLP, independent auditors.

     27.0 Financial Data Schedule


                                       71
<PAGE>


(b)  Reports on Form 8-K.

     The Company filed a report on Form 8-K dated December 23, 1999 describing a
Letter of Intent  entered into to form a Canadian  joint  venture with Robert J.
Panell and TAL Global Asset Management Inc.
























                                       72
<PAGE>


                                   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.

                                          TREMONT ADVISERS, INC.
                                          (Registrant)

                                          By /s/ Stephen T. Clayton
                                             -----------------------------------
                                          Stephen T. Clayton
                                          Chief Financial Officer
                                          (Duly authorized Officer and Principal
                                          Financial and Accounting Officer)
Dated: March 17, 2000

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated:

Signature                     Title                                    Date
---------                     -----                                    ----


/s/ Sandra L. Manzke          Chairman of the Board and           March 17, 2000
--------------------          Chief Executive Officer
Sandra L. Manzke


/s/ Robert I. Schulman        President; Chief Operating          March 17, 2000
----------------------        Officer and Director
Robert I. Schulman


/s/ John L. Keeley, Jr.       Director                            March 17, 2000
-----------------------
John L. Keeley, Jr.


/s/ Nicola Meaden             Director                            March 17, 2000
-----------------
Nicola Meaden

/s/ Bruce Ruehl               Director                            March 17, 2000
---------------
Bruce Ruehl

/s/ Richard O'Brien           Director                            March 17, 2000
-------------------
Richard O'Brien


 /s/ Alan A. Rhein            Director                            March 17, 2000
------------------
Alan A. Rhein


/s/ Jimmy L. Thomas           Director                            March 17, 2000
-------------------
Jimmy L. Thomas


/s/ Suzanne S. Hammond        Secretary & Treasurer               March 17, 2000
----------------------
Suzanne S. Hammond


/s/ Stephen T. Clayton        Chief Financial Officer             March 17, 2000
----------------------
Stephen T. Clayton


                                       73
<PAGE>


                                  EXHIBIT INDEX

     3.1 Restated  Certificate  of  Incorporation  of the Company  (incorporated
herein by  reference  to the  Company's  Form S-1 filed with the  Commission  on
December 16, 1991).

     3.2  By-Laws  of the  Company  (incorporated  herein  by  reference  to the
Company's Form S-1 filed with the Commission on December 16, 1991).

     3.3  Amendment to the  Certificate  of  Incorporation  of the Company dated
December 23, 1993  (incorporated  herein by reference to the Company's Form 10-K
filed with the Commission on March 29, 1994).

     3.4  Amendment to the  Certificate  of  Incorporation  of the Company dated
August 6, 1998  (incorporated  herein by reference to the Company's  Form 10-KSB
filed with the Commission on March 19, 1999).

     4.1  Specimen   representing   the  Rights   Certificate   of  the  Company
(incorporated  herein by  reference  to the  Company's  Form S-1 filed  with the
Commission on December 16, 1991).

     4.2 Specimen representing the Class A Common Stock, $0.01 par value, of the
Company  (incorporated  herein by reference to the Company's Form S-1 filed with
the Commission on December 16, 1991).

     10.9 Consulting  Services  Agreement dated as of May 1, 1991 between Harold
Cohen and  Tremont  Partners,  Inc.  (incorporated  herein by  reference  to the
Company's Form S-1 filed with the Commission on December 16, 1991).

     10.27 Lease between First  Properties of Bermuda Ltd and Tremont  (Bermuda)
Limited,  dated  February  23, 1994  (incorporated  herein by  reference  to the
Company's Form 10-K filed with the Commission on March 29, 1994).

     10.29 Consulting  Services Agreement between Omega Overseas Partners,  Ltd.
and  Tremont  (Bermuda)  Limited  dated  April 1, 1994  (incorporated  herein by
reference  to the  Company's  Form 10-K filed with the  Commission  on March 29,
1994).

     10.30  Employment  Agreement  dated April 22, 1994  between the Company and
Robert I. Schulman  (incorporated herein by reference to the Company's Form 10-Q
filed with the Commission on May 12, 1994).

     10.31 Stock Option  Agreement  dated April 22, 1994 between the Company and
Robert I. Schulman  (incorporated herein by reference to the Company's Form 10-Q
filed with the Commission on May 12, 1994).


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     10.34 Employment Agreement dated September 25, 1995 between the Company and
Sandra L. Manzke  (incorporated  herein by reference to the Company's  Form 10-Q
filed with the Commission on November 13, 1995).

     10.39 Lease  between  Gateside-Rye  Company and the Company  dated April 1,
1997.  (incorporated herein by reference to the Company's Form 10-KSB filed with
the Commission on March 19, 1998).

     10.40 Stock  Option  Agreement  dated May 15, 1997  between the Company and
Stephen T.  Clayton.  (incorporated  herein by reference to the  Company's  Form
10-KSB filed with the Commission on March 19, 1998).

     10.41 Stock  Option  Agreement  dated May 15, 1997  between the Company and
Bruce D. Ruehl.  (incorporated  herein by reference to the Company's Form 10-KSB
filed with the Commission on March 19, 1998).

     10.42 Master Agreement dated as of June 5, 1997 among the Company,  Tremont
Bermuda Limited,  Tremont  International  Insurance Ltd., Mutual Risk Management
(Holdings) Ltd., MGL Investments  Ltd.,  Hemisphere  Management  Limited and The
Anglo-Dutch Insurance Company Limited.  (incorporated herein by reference to the
Company's Form 10-KSB filed with the Commission on March 19, 1998).

     10.43 Stock Purchase Agreement dated as of June 5, 1997 between the Company
and MGL Investments Ltd. (incorporated herein by reference to the Company's Form
10-KSB filed with the Commission on March 19, 1998).

     10.44 Stock  Option  Agreement  dated June 12, 1997 between the Company and
Sandra L. Manzke. (incorporated herein by reference to the Company's Form 10-KSB
filed with the Commission on March 19, 1998).

     10.45 Stock  Option  Agreement  dated June 12, 1997 between the Company and
Robert I.  Schulman.  (incorporated  herein by reference to the  Company's  Form
10-KSB filed with the Commission on March 18, 1998).

     10.46 Stock  Option  Agreement  dated June 12, 1997 between the Company and
John L. Keeley,  Jr.  (incorporated  herein by reference to the  Company's  Form
10-KSB filed with the Commission on March 18, 1998).

     10.47 Stock  Option  Agreement  dated June 12, 1997 between the Company and
Alan A. Rhein.  (incorporated  herein by reference to the Company's  Form 10-KSB
filed with the Commission on March 19, 1998).

     10.49 Stock Purchase Agreement dated as of July 1, 1997 between Tremont MRM
Services Limited and Mutual Risk Management (Holdings) Ltd. (incorporated herein
by reference to the Company's Form 10-KSB filed with the Commission on March 19,
1998).


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     10.50  Shareholders'  Agreement  dated as of July 1, 1997 among Tremont MRM
Services Limited,  Tremont (Bermuda) Limited, The Anglo-Dutch  Insurance Company
Limited and Mutual  Risk  Management  (Holdings)  Ltd.  (incorporated  herein by
reference to the  Company's  Form 10-KSB filed with the  Commission on March 19,
1998).

     10.53 Tremont Advisers, Inc. 1998 Stock Option Plan (incorporated herein by
reference to the Company's Form 10-QSB/A1  filed with the Commission on November
6, 1998).  (incorporated  herein by reference to the Company's Form 10-KSB filed
with the Commission on March 19, 1998).

     10.54  Shareholder's  Agreement  dated as of July 17,  1998,  by and  among
Tremont  Advisers,  Inc., Robert J. Parnell and Tremont  Investment  Management,
Inc.  (incorporated  herein by reference to the Company's Form  10-QSB/A1  filed
with the Commission on November 6, 1998).

     10.55  Employment  Agreement  dated as of July  17,  1998  between  Tremont
Investment  Management and Robert Parnell  (incorporated  herein by reference to
the Company's Form 10-KSB filed with the Commission on March 19, 1999).

     10.58  Agreement and Plan of  Reorganization,  dated as of March 8, 1999 by
and among Tremont  Advisers,  Inc., Tass  Management  Limited and Nicola Meaden,
Laurence  Huntington  Taylor,  II, Colin Myers,  Norma Smith and Valerie  Benard
(incorporated  herein by reference to the  Company's  Form 10-KSB filed with the
Commission on March 19, 1999).

     10.59  Registration  Rights  Agreement,  dated as of March 11,  1999 by and
among Tremont Advisers,  Inc. and Nicola Meaden, Laurence Huntington Taylor, II,
Valerie Benard, Colin Myers and Norma Smith (incorporated herein by reference to
the Company's Form 10-KSB filed with the Commission on March 19, 1999).

     10.60  Employment  Agreement,  dated as of March 11,  1999,  by and between
Tremont Advisers, Inc. and Laurence Huntington Taylor II (incorporated herein by
reference to the  Company's  Form 10-KSB filed with the  Commission on March 19,
1999).

     10.61 Employment  Agreement,  dated as of March 11, 1999, by and among Tass
Management  Limited,  Tremont  Advisers,  Inc. and Nicola  Meaden  (incorporated
herein by reference to the  Company's  Form 10-KSB filed with the  Commission on
March 19, 1999).

     10.62 Stock Option and Benefits  Agreement,  dated as of March 8, 1999,  by
and  between  Tremont  Advisers,   Inc.  and  Laurence   Huntington  Taylor,  II
(incorporated  herein by reference to the  Company's  Form 10-KSB filed with the
Commission on March 19, 1999).

     10.63 Stock Option and Benefits  Agreement,  dated as of March 8, 1999,  by
and between Tremont  Advisers,  Inc. and Nicola Meaden  (incorporated  herein by
reference to the  Company's  Form 10-KSB filed with the  Commission on March 19,
1999).


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<PAGE>


     10.64  Amendment  to  Employment  Agreement  dated as of  December  9, 1999
between the Company and Sandra L. Manzke......................................78

     10.65  Amendment  to  Employment  Agreement  dated as of  December  9, 1999
between the Company and Robert I. Schulman ...................................80

     10.66  Agreement  and  Release  dated as of January  22,  2000  between the
Company and Laurence Huntington Taylor II.....................................82

     21.1     Subsidiaries of the Company.....................................90

     23.1     Consent of Ernst & Young LLP, independent auditors..............91

     23.2     Consent of Goldstein Golub Kessler LLP, independent auditors....92

     23.3     Consent of Goldstein Golub Kessler LLP, independent auditors....93

     27.0     Financial Data Schedule.........................................94


















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