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, 2000

                             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: Class B Common Stock

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 ___.

Check 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.
_______

State issuer's revenues for its most recent fiscal year = $23,177,500

The aggregate  market value of the Class A Common Stock held by nonaffiliates of
the Issuer was  approximately  $7,628,100  based  upon the  average  bid and ask
prices of such stock on February  28,  2001,  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
$16,819,800  based upon the last sales price of such stock on February 28, 2001,
as disclosed on the NASDAQ SmallCap Market (TMAV).

The number of outstanding  shares of the Issuer's Class A Common Stock, $.01 par
value,  was  1,735,418  as of February  28,  2001 and the number of  outstanding
shares of the Issuer's Class B Common Stock, $.01 par value, was 5,126,958 as of
February 28, 2001.

Shares  outstanding  and per share data have been restated to reflect the impact
of a five-for-four stock split distributed on August 8, 2000.

                       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 ...............................................11
   Item 4.   Submission of Matters to a Vote of Security Holders..............11

PART II

   Item 5.   Market For the Registrant's Common Equity
              and Related Stockholder Matters.................................12
   Item 6.   Management's Discussion and Analysis.............................14
   Item 7.   Financial Statements.............................................25
   Item 8.   Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure..............................59

PART III

   Item 9.   Directors and Executive Officers of the Registrant...............60
   Item 10.  Executive Compensation...........................................63
   Item 11.  Security Ownership of Certain Beneficial Owners and Management...67
   Item 12.  Certain Relationships and Related Transactions...................71
   Item 13.  Exhibits, List and Reports on Form 8-K...........................71

EXHIBIT INDEX ................................................................78





<PAGE>


                                     PART I
Item 1.  Description of Business

General

     Tremont  Advisers,  Inc.  (the  "Company" or  "Tremont"),  incorporated  in
Delaware in 1987, has three principal areas of business: developing and managing
proprietary   investment  funds,  providing  investment  advisory  services  and
retrieving and selling information.

     The Company's  proprietary  investment  funds,  generally offered under the
"American  Masters"  name, are domestic and off-shore  single and  multi-manager
investment  funds from which the Company earns  monthly or quarterly  management
fees based upon net assets.  At December 31, 2000,  the  Company's  subsidiaries
were the general  partners or sponsors of thirteen  proprietary  funds,  four of
which  commenced  operations  in the last two  years.  The  Company  anticipates
forming additional funds in 2001.

     The Company's investment advisory services include counseling clients about
the organization and management of their investment  portfolios or programs,  as
well as providing specialized investment services to investment management firms
and individual  investment advisors.  Advisory fees are generally based upon the
amount of assets in the clients' investment vehicles.

     The research  conducted  by the Company on domestic and foreign  investment
advisors is critical to all aspects of its business. The Company has developed a
proprietary  program  which  reviews and  evaluates  this  information.  Certain
aspects of the program are sold to large institutions such as banks, foundations
and government agencies, among others, as well as to high net worth individuals.
Generally, these sales are made for a fixed fee.

     All of the Company  activities are conducted by its  subsidiaries,  each of
which markets its services to a separate and distinct group of clients. However,
some clients may utilize the services of more than one subsidiary. The Company's
subsidiaries are described below.

     o  Tremont  Partners,   Inc.  ("TPI"),  the  Company's  principal  domestic
subsidiary,  is a registered  investment  advisor that serves as general partner
of, and provides  investment  advisory services to, both the Company's  domestic
proprietary  investment  funds and  unaffiliated  clients,  including  financial
intermediaries, individuals, pension, retirement and profit sharing plans.

     TPI's revenues from the Company's proprietary  investment funds constituted
approximately 30% of the Company's  consolidated  revenues for each of the years
ended  December  31,  2000 and 1999  and  revenues  from  advisory  services  to
unaffiliated  clients constituted  approximately 16% and 21% of those respective
amounts.  During the years ended December 31, 2000 and 1999,  approximately  51%
and 55%, respectively,  of the Company's consolidated revenues were derived from
TPI's operations.



<PAGE>


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

     TBL's revenues from the Company's proprietary  investment funds constituted
approximately 21% and 19% of the Company's  consolidated  revenues for the years
ended December 31, 2000 and 1999, respectively.  Its revenues from advisory fees
from unaffiliated clients constituted  approximately 11% and 9% of the Company's
consolidated revenues for the years then ended. For the years ended December 31,
2000 and 1999, TBL accounted for approximately 38% and 32%, respectively, of the
Company's  consolidated  revenues.  Given the growth  during recent years in the
amount of money  invested in offshore  funds,  the Company  believes  that TBL's
activities will continue to significantly contribute to the Company's revenues.

     o Tremont  Investment  Management,  Inc. ("TIMI") is a registered  Canadian
investment  adviser,  portfolio  manager and limited  market  dealer  located in
Toronto,  Canada. TIMI serves as sponsor to the Company's Canadian multi-manager
proprietary  hedge  fund.  TIMI  is  owned  65%  by  the  Company  and  35% by a
non-affiliated individual.

     o Tremont Futures, Inc. ("TFI") is a registered commodity pool operator and
commodity  trading  adviser  that  serves  as a  general  partner  of one of the
Company's proprietary investment funds.

     o  Tremont  Tass  (Europe)  Limited.   ("TASS")  (formerly  known  as  TASS
Investment Research Limited), located in the United Kingdom, was acquired by the
Company  in  March  1999.  It is one of the  alternative  investment  industry's
leading information and research companies.

     o Tremont  Securities,  Inc.  ("TSI") is a registered  broker  dealer that,
among other  activities,  facilitates  the purchase and sale of  investments  on
behalf of clients of the Company's subsidiaries.

Proprietary Investment Funds

     The  Company's  proprietary  investment  funds were  originally  created to
provide  clients with vehicles for investment  with  "hard-to-access"  managers.
Today,  the Company  has more than $1 billion in its  proprietary  domestic  and
offshore investment funds.

     Tremont's  single-manager funds offer access to managers who have undergone
review by the  Company's  research  department  and  investment  committee.  The
Company sponsors only the funds of those managers it believes to be the "best in
class,"  who  generally  have at least a 12 month  track  record and $50 million
under management.


                                       2
<PAGE>


     The Company's significant proprietary investment funds are:

     American  Masters Broad Market Fund, L.P.  ("AMBMF") is a Delaware  limited
partnership formed to achieve capital growth through hedged investments.  TPI is
the sole  general  partner  and  receives  a monthly  management  fee based upon
AMBMF's  net asset  value as of the end of each month.  At  December  31,  2000,
AMBMF's approximate net asset value was $290 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 sole  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  operating  expenses.  At December 31, 2000,
AMBMPF's approximate net asset value was $362 million.

     American  Masters Market Neutral Fund, L.P.  ("AMMN") is a Delaware limited
partnership  formed 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,  2000,  AMMN's
approximate net asset value was $20 million.

     American  Masters  Opportunity  Fund, L.P.  ("AMOF") is a Delaware  limited
partnership formed on March 21, 2000 to achieve long-term capital  appreciation,
generate positive returns  irrespective of stock market volatility or direction,
and preserve  capital.  TPI receives a monthly  management fee based upon AMOF's
net  asset  value as of the end of each  month.  At  December  31,  2000  AMOF's
approximate net asset value was $8 million.

     American  Masters  Multi-Tech  Fund,  L.P.  ("AMMT") is a Delaware  limited
partnership  formed on March 31, 2000 to seek superior  capital  appreciation by
investing primarily in technology industries.  TPI receives a monthly management
fee based upon AMMT's net asset  value as of the end of each month.  At December
31, 2000, AMMT's approximate net asset value was $14 million.

     American Masters Opportunity Insurance Fund, L.P. ("AMOIF"),  is a Delaware
limited  Partnership  formed on December 18, 2000 to achieve  long-term  capital
appreciation,  generate positive returns irrespective of stock market volatility
or direction,  and preserve capital. TPI receives a monthly management fee based
upon  AMOIF's net asset  value as of the end of each month.  AMOIF was funded on
February 1, 2001 with $25 million.

     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, a  co-sponsor  of  Kingate,  receives
compensation  at the end of each month  based on a  percentage  of the net asset
value of the Class B Shares owned by investors  introduced to Kingate by TBL. At
December 31,  2000,  Kingate's  approximate  net asset value was $1.2 billion of
which $211 million was attributable to investors introduced by TBL.


                                       3
<PAGE>


     American  Masters Fund "AG Absolute Return Series" Limited  ("AMF-AG") is a
Cayman Island open-end  investment company engaged in 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
investment  manager,  TBL receives monthly  compensation based upon AMF-AG's net
assets.  At December  31,  2000,  AMF-AG's  approximate  net asset value was $91
million.

     Tremont Broad Market Fund, LDC  ("TBMLDC") is a Cayman  Islands  open-ended
investment  company seeking long-term capital growth. As investment  advisor and
administrator,  TBL  receives  monthly  compensation  based on a  percentage  of
TBMLDC's net asset value. At December 31, 2000,  TBMLDC's  approximate net asset
value was $127 million.

     The Tremont  Masters Fund ("Tremont  Masters") is a Canadian  multi-manager
fund formed to achieve an attractive adjusted return having a low correlation to
traditional  fixed income and equity  markets.  At December  31,  2000,  Tremont
Masters'  approximate  net asset value was $605,000.  TIMI will receive  monthly
compensation  based on a  percentage  of the net  asset  value of  nonaffiliated
assets, when contributed.

Investment Advisory Services

     The  Company  provides  investment  advisory  services  to a broad range of
clients,  using  both  quantitative  and  qualitative  analysis.  The  Company's
investment committee consists of individuals with diverse and extensive industry
backgrounds  in  disciplines  ranging  from  trading and  investment  to product
construction  to  statistical  analysis.  This  expertise  is brought to bear in
helping  clients  choose the mix of  strategies  and  managers to achieve  their
investment objectives.

     Among the  advisory  services  provided by the  Company to the  sponsors of
investment  vehicles is  assistance  in organizing  and  structuring  single and
multi-manager funds. These services include:

     o    establishing  investment objectives and guidelines consistent with the
          client's purposes and market;

     o    defining suitable asset classes for investment;

     o    negotiating fees and other  arrangements with investment  advisers and
          other professionals rendering services to the fund; and

     o    providing advice regarding fund structure and administration.


                                       4
<PAGE>


     Once a fund has been organized, the Company's on-going services include:

     o    monitoring the fund's  performance,  including the  performance of its
          investment advisers;

     o    recommending the retention or replacement of investment advisers;

     o    furnishing specialized reports requested by the sponsor or managers of
          the fund; and

     o    providing other administrative services as required.

     The  Company  also  renders  advisory  services  and  investment  advice to
corporate pension and  profit-sharing  plans, state and local retirement systems
and high net worth individuals. These services may include:

     o    designing  and  implementing   investment   programs,   including  the
          establishment of objectives and guidelines;

     o    identifying  and  selecting  appropriate  investment  advisers for the
          programs;

     o    monitoring the performance of the programs; and/or

     o    administering the reporting involved in such programs.

     Additionally,   the  Company  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.

     Advisory fees from unaffiliated clients accounted for approximately 28% and
31% of the Company's  consolidated revenues in the years ended December 31, 2000
and 1999, respectively.

     The Company enters into written agreements with its advisory clients. Under
these  agreements,  fees,  usually payable  monthly or quarterly,  are typically
based on assets under the client's management or on the performance of the fund.
However,  the Company may, from time to time, receive a fixed fee for organizing
a multi-manager  fund. Other  arrangements  include annual retainer fees payable
during  the terms of the  agreements  or  single  fees for  individual  advisory
projects.  Several contracts require the payment of asset-based fees for so long
as investors  placed by the Company in the fund remain  investors,  which may be
well beyond the termination of a particular contract.


                                       5
<PAGE>


     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.  The  Company's  ability to  generate  and
sustain  revenues  from  clients  that  are  multi-manager  funds  is  primarily
dependent  on  the  size  of  the  funds'  assets  under  management  and on the
continuation of their advisory and/or  management  agreements.  These agreements
generally have a term of up to two years and are terminable  upon 30 to 60 days'
written notice or earlier in certain  circumstances.  Other  agreements are also
generally terminable by the clients upon short notice.

     Although  the Company  expects that an agreement  with an  investment  fund
client  will  continue  for the  duration  of the fund's  term,  there can be no
assurance  that a client or the  Company  will not  terminate  the  relationship
earlier.  During  2000,  the Company  resigned as advisor to three  accounts and
mutually   agreed  with  two  other   clients  to   terminate   their   advisory
relationships.   During  1999,  two  advisory  agreements  were  terminated.  No
significant  loss of revenues in these two years has  resulted  from the loss of
these  clients.  However,  the Company is actively  seeking to expand its client
base and  further  diversify  its  advisory  business in an effort to reduce the
adverse impact of the loss of any one or more of its clients.

     As part of its  investment  advisory  services  for a client,  the  Company
monitors the performance of various investment  managers and then evaluates them
by  matching   the   client's   objectives   with  each   manager's   investment
characteristics.  The Company then  recommends  the selection,  continuation  or
termination  of a manager,  although  the final  decision is made by the client.
From  time to  time,  clients  have  hired an  affiliate  of the  Company  as an
investment manager.  For instance,  upon the Company's  recommendation  after an
evaluation of all relevant  factors,  one of the Company's  clients  selected an
affiliate  of a  principal  shareholder  of the Company to be one of its several
investment  managers.  In the future,  the  Company may enter into or  recommend
transactions  with  its  directors,  officers,  and  stockholders  and/or  their
affiliates,  but will do so only if the  terms of the  transactions  are no less
favorable  to the Company or its client than could be obtained by the Company or
client from an unaffiliated third party.

     The  Company's  six most  significant  unaffiliated  advisory  clients  are
described  below.  They  represented the indicated percentages of the Company's
total consolidated revenues in the three years ended December 31, 2000:

                                                    2000        1999       1998
                                                    ---------------------------
  Meridian Horizon Fund, L.P.                        5.5%       5.1%       6.8%
  The DaimlerChrysler Minority Equity Trust          4.7        6.6        7.5
  Bomaral Fund                                       4.3        0.4         --
  Security Equity Life Insurance Company             2.7        3.0        4.4
  Green's Investment Fund Limited                    1.9         --         --
  Credit Suisse Financial Products Master Fund       1.4        1.1        0.6


                                       6
<PAGE>


     Meridian  Horizon  Fund,  L.P.  ("Meridian")  is  a  multi-manager  limited
partnership employing diversified investment strategies.  TPI is a consultant to
and the administrator of Meridian. TPI's compensation is based upon a percentage
of Meridian's net assets at the end of each month.  In addition,  TPI receives a
fixed  consulting  fee. At December 31, 2000,  Meridian had a net asset value of
approximately $627 million.

     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 at the end of each month.  As of December  31, 2000,
the Trust had a net asset value of approximately $547 million.

     Bomaral Fund  ("Bomaral") is a recently  formed  Netherland  Antilles-based
fund  seeking  to  achieve  long term  capital  appreciation,  positive  returns
irrespective  of stock market  volatility  or  direction,  and  preservation  of
capital.  TBL serves as an advisor 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, 2000, Bomaral's approximate net asset value was $98 million.

     Security  Equity Life Insurance  Company  offers 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. TPI receives
compensation  from the account  based upon a  percentage  of the  account's  net
assets.  As of  December  31,  2000,  the  account  had a net asset value of $77
million.

     Green's Investment Fund Limited ("Green's) is a Cayman Island multi-manager
exempted investment company employing  diversified  investment  strategies.  TBL
advises it on portfolio construction, fund selection, monitoring and supervision
of investments. TBL receives a fee based upon a percentage of the Green's assets
at the end of each month.  As of December 31, 2000, the Green's  approximate net
asset value was $115 million.

     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  counterbalance  each other in periods of market  strengths and
weaknesses.  TBL serves as an advisor 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, 2000, the Fund's approximate net asset value was $628 million.


                                       7
<PAGE>


Information Research and Sales

     Investment  Adviser Research  Program.  The Company  maintains a continuing
research program  evaluating and reviewing both domestic and foreign  investment
advisors and advisory  firms.  The Company's  employees  meet with and interview
over 250 advisors each year.  Interviews  are conducted  with the advisor or the
senior  investment  personnel  of an advisory  firm 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 the Company has developed a proprietary
computerized database of more than 2,500 investment advisers including,  but not
limited to, domestic  equity,  international  equity and fixed income  advisors,
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 advisors. In addition,  the Company utilizes
this  database to advise  clients in the  selection  of  appropriate  investment
advisors and investment programs.

     TASS, acquired by the Company in March 1999, specializes in researching and
selling information, serving a large institutional client base whose subscribers
include investment banks, foundations,  endowments, government agencies and high
net worth individuals,  among others. TASS provides  information on an extensive
global 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.  The integration of TASS into the Company greatly  enhanced  Tremont's
global  research  capabilities.  The TASS  database  contains over 300 fields of
information  and collects data on over 2,500 hedge funds based around the world.
TASS  accounted  for  approximately  8% and 9%,  respectively,  of the Company's
consolidated revenues for the years ended December 31, 2000 and 1999.

     FITX  Group   Limited   ("FITX")   was  formed  in  June  1999  to  provide
business-to-business e-commerce web site products and services to niche markets,
primarily  within the hedge fund industry.  Its  subsidiary,  HedgeWorld,  Inc.,
offers  news,  performance  data,  trading  and  services  on its  web  site  to
investors,  financial  advisors,  fund  managers  and the hedge fund  industry's
service providers.  HedgeWorld is the exclusive provider of HedgeTrust Exchange,
a secure  online  platform  for  trading  non-U.S.  domiciled  hedge  funds on a
regulated exchange.  In December 1999, the Company granted FITX a license to use
the TASS database in exchange for 87,260 shares of FITX Series B Preferred Stock
valued at $11.46 per share  ($1,000,000)  and an annual  royalty on net revenues
earned by FITX in connection  with the TASS database.  At December 31, 2000, the
Company owned approximately 24.2% of FITX's outstanding common stock.


                                       8
<PAGE>


Other Businesses

     Insurance Products

     In addition to American  Masters  Opportunity  Insurance  Fund,  L.P.,  its
proprietary  investment fund which is solely for insurance  company  investments
(described  in more  detail  above  under the  heading  "Proprietary  Investment
Funds"),  the  Company  is also  involved  in the  following  insurance  related
activities:

     Tremont International Insurance, Ltd. ("TIIL") is a Cayman Island insurance
company  offering 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 51% by Mutual
Risk  Management,  Ltd., an  international  risk management  company ("MRM") and
24.5% by others.

     Tremont MRM  Services  Limited  ("TMRM")  was formed  under  Bermuda law to
provide product development, marketing and administrative services to TIIL. TMRM
is owned 38.9% by the Company, 20% by MRM and 41.1% by others.

     HedgeLife  Holdings,  Limited  ("HedgeLife") is a Bermuda corporation to be
formed  by the  Company  in  conjunction  with  other  owners  of TIIL and TMRM.
HedgeLife is conducting an initial offering of $300,000,000 of its common shares
to accredited  investors.  It is intended that, upon  subscription  for at least
$100,000,000  of the common shares,  HedgeLife will acquire from the Company and
the other owners of TIIL and TMRM all of the capital  stock of those  companies,
thereby making them wholly-owned subsidiaries of HedgeLife. It is also currently
intended that TMRM will cease active  operations and TIIL will assume all of the
operating activities formerly performed on its behalf by TMRM.

     The offering will  commence in March 2001 and the Company  expects that the
first closing and  completion of the described  transactions  will occur in June
2001,  although  this  may  not  happen  until  a later  date,  if at all.  Upon
completion of the described  transactions,  the Company will own at least 38% of
the Series A shares and at least .5% of each other class.

     Hedge Fund Indices

     Credit Suisse First Boston Tremont Index LLC is a joint venture between the
Company and Credit  Suisse First Boston Index Co., Inc. that has formed a series
of  benchmarks  for the hedge fund  industry  and has  started a line of indexed
products. 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 2001. The Company owns 25% of the venture; however,
the  Company is entitled  to receive  33% of the  venture's  first $2 million of
operating profits, when and if the venture becomes profitable.


                                       9
<PAGE>


     Brokerage Services

     TSI is a registered broker dealer that,  directly or indirectly,  purchases
and sells  investments  on behalf of the Company's  clients.  It also acts as an
introducing   broker  for  security   transactions   initiated  by  unaffiliated
companies,  facilitates  soft-dollar  arrangements and sells private  investment
partnerships,  variable  annuity and variable life  products.  TSI accounted for
approximately 1% and 2%, respectively, of the Company's consolidated revenues in
the years ended December 31, 2000 and 1999.

Competition

     The Company encounters intense competition in all aspects of the securities
business and competes directly with other securities firms, commercial banks and
insurance  companies,  a significant number of which have substantially  greater
capital,  resources  and  services.  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. Similarly, the Company believes that the important factors which affect
the success of investment consulting firms include the abilities and reputations
of the consultants professional personnel, the ability to develop new investment
management  products  and  technologies  for  clients  and the 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  advisory services
rendered to its clients.  To the extent that the Company  renders such services,
it is subject to compliance with the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and state law, including limitations on the amount of fees
charged by it and the transactions to be 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.

     The Company is also subject to the Securities Act of 1933, as amended,  and
the Exchange Act of 1934, as amended, and the rules and regulations  promulgated
thereunder.

     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,  nor  imply  that  TPI's
qualifications  have been passed upon, by the Commission or any state or foreign
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.


                                       10
<PAGE>


     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 these 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,  2000,  the  Company had 65  full-time  employees  and no
part-time employees.

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

     TASS  leases a 2,800  square  foot  office in  London,  England.  The lease
expires in June 2005 but is renewable for two additional five year periods.  The
monthly rent is approximately $14,000 and is guaranteed by the Company.

Item 3.  Legal Proceedings

     None.

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

     On October 20,  2000,  a majority  of the holders of each of the  Company's
Class A Common Stock and Class B Common Stock granted  their written  consent in
accordance with Delaware law to a proposed amendment to the Company's 1998 Stock
Plan (the "Plan"). The amendment, which had been approved by the Company's Board
of Directors on September  13, 2000,  increased  the number of shares of Class B
Common Stock underlying  options  available for grants under the Plan by 300,000
shares,  up to an aggregate of 612,500  shares.  9,133,578  votes,  representing
76.2% of the aggregate eligible votes, were cast in favor of the resolution.


                                       11
<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
("TMAV") are closely held and thinly traded.

     The  quotations  below for the Class A Common  Stock and the Class B Common
Stock are, up until February 2, 2000,  dealer prices  without  retail  mark-ups,
mark-downs or commissions and may not represent actual  transactions.  They have
been  restated  to reflect  the impact of a  five-for-four  stock  split paid on
August 8, 2000 to shareholders of record on July 31, 2000.

     The following  table sets forth the range of high and low bid prices of the
Class A Common Stock and the range of high and low bid prices or trade prices of
the Class B Common  Stock,  as  applicable,  in each case from  January  1, 1999
through  February 28,  2001.  For the period  commencing  on January 1, 1999 and
ending on  February  1, 2000,  both the Class A Common  Stock and Class B Common
Stock were quoted on the OTC Bulletin Board. Since February 2, 2000, the Class B
Common Stock has traded on the NASDAQ SmallCap  Market(R) under the symbol TMAV.
The Class A Common Stock continues to be quoted on the OTC Bulletin Board.

                       Price Range of Class A Common Stock

                                                            Bid Prices
                                                    ------------------------
                                                       High             Low
                                                    -------           ------
1999
January 1, 1999 - March 31, 1999                    $ 6.40            $ 3.84
April 1, 1999 - June 30, 1999                         6.88              5.12
July 1, 1999 - September 30, 1999                     8.40              6.20
October 1, 1999 - December 31, 1999                   8.80              7.20

2000
January 1, 2000 - March 31, 2000                    $ 8.40            $ 8.00
April 1, 2000 - June 30, 2000                         8.60              6.40
July 1, 2000 - September 30, 2000                    14.00              7.00
October 1, 2000 - December 31, 2000                  12.00              9.50

2001
January 1, 2001 - February 28, 2001                 $11.00            $ 9.00


                                       12
<PAGE>


                      Price Range of Class B Common Stock

                                                            Bid Prices
                                                    ------------------------
                                                       High             Low
                                                    -------           ------
1999
----
January 1, 1999 - March 31, 1999                    $ 6.72            $ 4.00
April 1, 1999 - June 30, 1999                         7.04              5.12
July 1, 1999 - September 30, 1999                     8.80              6.40
October 1, 1999 - December 31, 1999                   9.40              4.80

2000
----
January 1, 2000 - February 1, 2000                    8.00              7.60

                                                           Trade Prices
                                                    ------------------------
                                                      High              Low
                                                    ------           -------
2000
----
February 2, 2000 - March 31, 2000                   $ 8.80            $ 6.40
April 1, 2000 - June 30, 2000                         9.00              7.20
July 1, 2000 - September 30, 2000                    12.00              7.50
October 1, 2000 - December 31, 2000                  15.00             10.00

2001
----
January 1, 2001 - February 28, 2001                 $19.00            $10.125

Holders

     As of February 28, 2001, there were  approximately 275 holders of record of
the Company's  Class A Common Stock and  approximately  370 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 Splits

     On July 15,  1999 and on June 6,  2000,  the  Board of  Directors  approved
five-for-four  stock splits (with no change in par value) of both the  Company's
Class A Common Stock and Class B Common Stock.  The first split was  distributed
on August 16,  1999 to  stockholders  of record on July 30,  1999 and the second
split was  distributed on August 8, 2000 to  stockholders  of record on July 31,
2000.

     All per share and shares outstanding data have been restated to reflect the
impact of these stock splits.


                                       13
<PAGE>


Tender Offer for Class A Common Stock

     On June 6, 2000, the Board of Directors approved an offer to buy back up to
200,000 shares  (250,000 shares post split) of the Company's  approximately  1.6
million (2.0  million  shares post split)  outstanding  shares of Class A Common
Stock for $11.50 per share  ($9.20 post  split).  The offer was made on June 19,
2000 and  remained  open for 30 days.  The  offer was not  conditioned  upon any
minimum number of shares being tendered.

     A total of 1,013,760 (1,267,200 shares post split) shares were tendered and
not withdrawn  prior to the offer  expiration  date. The Company first purchased
all shares  properly  tendered by holders of an aggregate of 100 or fewer shares
if the  tender  was for all of the  shares  owned by them and  then,  after  the
purchase of all of those shares, all the remaining tendered shares on a pro rata
basis.

Increase in Authorized Shares

     On December 6, 2000, the Board of Directors adopted, subject to shareholder
approval, an increase in the total number of authorized shares of Class B Common
Stock from ten million shares to twenty million shares.

Item 6.  Management's Discussion and Analysis

Overview

     The Company is a holding  company with three  principal  areas of business:
developing and managing  proprietary  investment  funds,  advisory  services and
information  research and sales.  The Company's  clients are  investment  funds,
investment managers,  institutional investors, family offices and high-net-worth
individuals.

     The proprietary  investment  funds offered by the Company,  generally under
the American Masters brand, consist of single and multi-manager investment funds
from which the Company  earns  monthly or quarterly  management  fees based upon
their net assets.

     Advisory  services  include  advising  clients about the  organization  and
management  of their  investment  portfolios  or programs,  as well as providing
specialized  investment  services to investment  management firms and individual
investment advisers. Advisory fees are generally based upon the amount of assets
in the clients' investment vehicles.

     Since its  purchase of TASS in March 1999,  the Company has also  generated
revenues from the sale of information from its electronic database.


                                       14
<PAGE>


     The  following  table  presents  the  percentage  of  consolidated  revenue
attributable to each area of business for each of the three years ended December
31, 2000:

<TABLE>
<CAPTION>
                                        2000                          1999                          1998
                              -------------------------------------------------------------------------------------
                                            % of Total                    % of Total                     % of Total
Revenue Source                  Revenues       Revenues       Revenues       Revenues      Revenues       Revenues
-------------------------------------------------------------------------------------------------------------------
<S>                           <C>               <C>         <C>              <C>          <C>               <C>
Proprietary funds             $11,874,400       51.2        $8,139,500       49.3         $4,855,600        45.6
Advisory fees                   7,661,000       33.1         5,676,800       34.4          4,860,200        45.6
Information sales               1,839,500        7.9         1,542,000        9.3                --           --
Performance fees                1,535,400        6.6           817,400        4.9            516,800         4.8
Commissions                       267,200        1.2           348,900        2.1            423,500         4.0
                              -----------------------------------------------------------------------------------
Total revenues                $23,177,500      100.0       $16,524,600      100.0        $10,656,100       100.0
                              ===================================================================================
</TABLE>

Results of Operations

     Proprietary Investment Funds Fees

     Fees from the Company's proprietary  investment funds increased 45.9%
from  $8,139,500 in the year ended December 31, 1999 to $11,874,400 for the year
ended December 31, 2000 and 67.6% from $4,855,600 in the year ended December 31,
1998 to  $8,139,500  for the year ended  December 31, 1999, in both cases due to
the  growth of the  funds'  net assets  caused by  additional  investor  capital
contributions and positive investment performance.

     The following  tables present the revenues from the proprietary  investment
funds  responsible  for an aggregate of 95.5% of the increase  from 1999 to 2000
and for an aggregate of 95.7% of the increase from 1998 to 1999:

<TABLE>
<CAPTION>
                                                               Year ended
                                                               December 31
                                                       ------------------------
                                                          2000          1999        Change ($)     Change (%)
                                                       ------------------------------------------------------
<S>                                                    <C>           <C>            <C>             <C>
American Masters Broad Market Prime Fund, L.P.         $4,135,100    $2,786,300     $1,348,800        48.4
Kingate Global Fund Class B Shares                      3,090,800     2,429,400        661,400        27.2
American Masters Broad Market Fund, L.P                 2,815,100     2,204,500        610,600        27.7
Tremont Broad Market Fund, LDC                          1,467,500       523,000        944,500       180.6
</TABLE>



<TABLE>
<CAPTION>
                                                               Year ended
                                                              December 31
                                                       -----------------------
                                                          1999          1998        Change ($)     Change (%)
                                                       ------------------------------------------------------
<S>                                                    <C>           <C>            <C>              <C>
American Masters Broad Market Prime Fund, L.P.         $2,786,300    $1,687,100     $1,099,200        65.2
Kingate Global Fund Class B Shares                      2,429,400     1,362,100      1,067,300        78.4
American Masters Broad Market Fund, L.P                 2,204,500     1,564,500        640,000        40.9
Tremont Broad Market Fund, LDC                            523,000       186,000        337,000       181.2
</TABLE>



                                       15
<PAGE>



     During the years ended December 31, 2000 and December 31, 1999, significant
proprietary  investment  funds of which  the  Company  was the sole  sponsor  or
general partner had net investor activity as follows:

                                                       2000             1999
                                                  ------------------------------
American Masters Broad Market Prime Fund, L.P.    $  96,459,600     $ 34,793,800
American Masters Broad Market Fund, L.P.            (38,906,600)      62,931,200
Tremont Broad Market Fund, LDC                       46,507,700       40,584,700

     Advisory Fees

     Advisory fees are earned from  unaffiliated  clients and are based upon the
underlying net asset value of their investment  vehicles.  Advisory fees consist
of asset-based fees, fixed-fee arrangements,  traditional (i.e. non-alternative)
investment advisory fees and administration fees.

     The following  table presents  advisory fee revenues  attributable  to each
type of fee in the three years ended December 31, 2000:

<TABLE>
<CAPTION>
                               2000                          1999                         1998
                      ----------------------------------------------------------------------------------
                                      % of                          % of                          % of
                                    Advisory                      Advisory                      Advisory
   Type of Fee         Fees           Fees           Fees           Fees             Fees         Fees
--------------------------------------------------------------------------------------------------------
<S>                   <C>              <C>          <C>              <C>          <C>              <C>
Asset-based           $4,058,900       53.0         $2,743,400       48.3         $2,554,800       52.6
Fixed                  1,234,600       16.1          1,112,100       19.6          1,016,200       20.9
Traditional            1,204,700       15.7          1,221,300       21.5            928,200       19.1
Administration         1,162,800       15.2            600,000       10.6            361,000        7.4
                      ---------------------------------------------------------------------------------
Total fees            $7,661,000      100.0         $5,676,800      100.0         $4,860,200      100.0
                      =================================================================================
</TABLE>

     Overall,  advisory fees increased  35.0% from  $5,676,800 in the year ended
December 31, 1999 to $7,661,000 in the year ended December 31, 2000 and 16.8% in
1999 from  $4,860,200 in the year ended December 31, 1998.  These increases were
due to the growth of the net asset value of clients'  investment  funds  arising
from  additional  capital  contributions  by investors  and positive  investment
performance.

     The following  table presents the  percentages  of asset-based  fees earned
from the Company's  significant  unaffiliated clients in each of the three years
ended December 31, 2000:

                                                    2000        1999        1998
                                                    ----------------------------
Security Equity Life Insurance Company              8.2%        8.8%        9.5%
Meridian Horizon Fund, L.P.                         6.1         7.3         9.9
Bomaral Fund                                        5.9         1.2          --
Green's Investment Fund Limited                     5.6          --          --
Credit Suisse Financial Products Master Fund        4.3         3.3         1.4


                                       16
<PAGE>


     Asset-based fees increased significantly during the year ended December 31,
2000 because the Company obtained two new unaffiliated clients, Bomaral Fund and
Green's Investment Fund Limited,  in October 1999 and April 2000,  respectively,
and as a result of the continued growth of other clients'  investment  vehicles.
Management  expects that as the asset  values of these  clients  grow,  the fees
payable  by  them  will  constitute  an  increasingly  large  percentage  of the
Company's  asset-based  fees.  The Company has also  entered  into  sub-advisory
arrangements  relative to the Bomaral Fund which are  discussed  below under the
heading "Advisory Expenses."

     Fixed fees  increased  during the year ended  December  31, 2000 due to the
Company's acquisition of TASS in March 1999. During 2000, TASS performed certain
non-recurring consulting services which it did not perform in 1999. The increase
in fixed fees from 1998 to 1999 was due to an annual fee of $150,000  from a new
client;  however,  the  Company  resigned  from this  account  during the fourth
quarter  of  2000.  Notwithstanding  the  growth  in the  dollar  amount  of the
Company's  fixed fees, they continue to decline as a percentage of the Company's
total advisory fees as the Company focuses its efforts on obtaining clients that
pay asset-based fees.

     Traditional  advisory  fees are primarily  earned from the  DaimlerChrysler
Minority Equity Trust. Its fees represented approximately 14.1%, 19.3% and 16.5%
of the  Company's  total  advisory  fees in 2000,  1999 and 1998,  respectively.
Management does not expect any significant  growth in traditional  advisory fees
inasmuch as the Company is focusing its efforts on  developing  new  alternative
investment clients paying asset-based fees.

     Administration  fees  continue  to grow  almost  entirely  as a  result  of
increases in the net assets of the Meridian  Horizon Fund, L.P. During the three
years ended December 31, 2000,  1999 and 1998,  administration  fees earned from
this fund represented, respectively, 10.2%, 6.9% and 4.2% of the Company's total
advisory  fees.  Management  anticipates  that  this  client  will  continue  to
represent  a  significant  portion of the  Company's  advisory  fees during 2001
inasmuch  as its net  assets  under  management  increased  during  January  and
February 2001 by approximately $110 million.

     Information Sales

     Revenues from information sales increased 19.3% from $1,542,000 in the year
ended  December  31,  1999 to  $1,839,500  in the year ended  December  31, 2000
because of the acquisition of TASS in March 1999. Thus, there were twelve months
of sales  during 2000 but only ten months of sales during  1999.  Revenues  from
information sales in 2000 included  approximately $250,000 of revenue recognized
(approximately  $62,500  per  quarter)  from the grant of a  license  to FITX in
December 1999.


                                       17
<PAGE>


     Performance Fees

     Performance  fees are earned  primarily from  unaffiliated  clients and are
based upon the growth of their  underlying  net asset  value over  predetermined
benchmarks.  The  Company  typically  receives  these fees  pursuant to advisory
service  agreements under which the Company also receives  asset-based  advisory
fees.

     Performance  fees increased  87.8% from $817,400 in the year ended December
31, 1999 to  $1,535,400  in the year ended  December  31, 2000 and 58.2% in 1999
from  $516,800  in  the  year  ended   December  31,  1998  due  to  new  client
relationships  and the asset  growth of existing  clients  attributable  to both
additional   investor  capital   contributions   and  net  positive   investment
performance.

     The following table presents the percentage of the performance  fees earned
from certain clients during each of the three years ended December 31, 2000:

                                                   2000        1999        1998
                                                   ----------------------------
Bomaral Fund                                       36.2%        -- %        -- %
American Masters Fund
   "AG Absolute Return Series" Limited             24.1         --         15.9
Dillon Flaherty Market Neutral Fund, L.P.           7.7        12.5         9.7
Jemmco International Fund, Ltd.                     7.5         8.4         --
Cerberus Partners, L.P.....                         5.8        25.6        11.5
Galleon International Fund, Ltd.                    0.4        35.9         0.1
Cambridge Energy Fund International Ltd.             --         --         47.0

     Management expects  performance fees to increase during periods of positive
market  conditions  but, due to changing  market  conditions  and other  outside
factors,  cannot  predict with any accuracy  whether these fees will continue in
the future.

     Compensation Expenses

     Compensation  expenses  increased  30.1% from  $6,705,100 in the year ended
December 31, 1999 to $8,722,900 in the year ended December 31, 2000 and 61.6% in
1999 from  $4,148,100  in the year ended  December 31, 1998 due to the Company's
continuing  efforts to attract and retain qualified  employees and the increased
benefit costs and bonus accruals  associated  with an increase in employees from
31 at December  31, 1998 to 57 at  December  31, 1999 and to 65 at December  31,
2000.  Compensation  equaled  37.6%,  40.6%  and  38.9% of the  Company's  total
consolidated  revenues  for  2000,  1999  and  1998,   respectively.   The  1999
compensation expense included $402,100  attributable to the distribution of FITX
stock to certain of the  Company's  employees and  directors.  If this amount is
excluded for purposes of computing  1999  compensation  as a percentage of total
consolidated revenues, the resulting percentage, 38.1%, is reasonably consistent
with the applicable percentages in 2000 and 1998.


                                       18
<PAGE>


     General and Administrative Expenses

     General  and  administrative   expenses,   consisting  primarily  of  rent,
telecommunications,  travel  and  entertainment,  professional  fees  and  other
related expenses, increased 9.0% from $4,172,900 for the year ended December 31,
1999 to $4,547,600  for the year ended  December 31, 2000 and 55.4% in 1999 from
$2,684,500  for the year ended  December 31, 1998,  as a result of the Company's
continued growth,  including its acquisition of TASS in March 1999.  General and
administrative  costs  equaled  19.6%,  25.3% and 25.2% of the  Company's  total
consolidated revenues in 2000, 1999 and 1998, respectively.

     Advisory Expenses

     Advisory  expenses  are  fees  paid to other  advisers  or  consultants  as
introducer or agent fees, as advisory fees (including  performance  fees) and as
commission rebates earned from soft-dollar related transactions.

     The following table presents the advisory  expenses incurred by the Company
as a  percentage  of revenue  earned  from each  corresponding  area of business
during the three years ended December 31, 2000.

    Area of Business                     2000        1999        1998
    -----------------------------------------------------------------
    Proprietary funds                     10.0%       9.9%       11.2%
    Advisory fees(*)                      16.5       10.7        11.6
    Information sales                      5.6        6.4        ---
    Commissions                           41.8       41.4        46.6

    (*) Includes performance fees.

     Overall,  advisory  expenses  increased  67.6% from  $1,741,700 in the year
ended  December 31, 1999 to $2,918,900  in the year ended  December 31, 2000 and
28.0% in 1999 from  $1,361,100  for the year ended  December 31, 1998 because of
increased  revenues from agreements  under which the Company shares a portion of
its earned revenues with other advisers or consultants. In addition, the Company
entered into certain new advisory agreements under which the portion of revenues
shared is higher than under other agreements. In particular,  the Company shared
approximately  67% of the revenues  (including  performance fees) it earned from
Bomaral Fund in 2000. This client became a client in late 1999 and, accordingly,
was responsible for an insignificant portion of the Company's 1999 advisory fees
as compared to 2000.  Management  expects that as revenues  continue to increase
from the Bomaral  Fund,  the related  advisory  expenses  will also  continue to
increase and represent a  signinifciant  portion of the  Company's  consolidated
advisory expenses.


                                       19
<PAGE>


     Depreciation and Amortization

     As  a  result  of  fixed  asset   purchases  made  after   September  1999,
depreciation  increased  44.8% from $278,900 in the year ended December 31, 1999
to $403,700 in the year ended  December 31, 2000 and 54.3% in 1999 from $180,700
for the year ended December 31, 1998. These assets included  computer  equipment
for new employees,  software updates for the Company's  information database and
hardware upgrades for its worldwide computer network system.

     Intangibles,  consisting of customer  contracts recorded as a result of the
acquisition of TASS in March 1999,  were  amortized over a twelve-month  period.
Amortization  decreased 68.9% from $748,800 for the year ended December 31, 1999
to $232,600 for the year ended  December 31, 2000 due to the  completion  of the
amortization  schedule. The balance of amortization recorded during 2000 relates
to the goodwill  associated with the purchase of TASS. There was no amortization
of intangibles during 1998.

     Equity Earnings of Investments

     Equity  earnings of investments  increased  37.3% from $535,300 in the year
ended  December  31, 1999 to $734,700  in the year ended  December  31, 2000 and
193.5% in 1999 from $182,400 in the year ended December 31, 1998,  primarily due
to overall  positive  investment  performance  and to the  Company's  additional
capital  investments in its  proprietary  investment  funds.  For instance,  the
Company  invested  $2,000,000 in the American  Masters  Opportunity  Fund, L.P.,
which was launched  June 1, 2000,  and an  additional  $1,350,000 in the Tremont
Broad Market Fund LDC.

     A  substantial  portion of the equity  earnings  increases  were due to the
following proprietary investment funds:

<TABLE>
<CAPTION>
                                                               Year ended
                                                               December 31
                                                          2000          1999        Change ($)     Change (%)
                                                       ------------------------------------------------------
<S>                                                    <C>            <C>            <C>               <C>
American Masters Opportunity Fund, L.P.                $ 100,400      $     --       $ 100,400            (1)
Tremont Broad Market Fund, LDC                           193,400        40,900         152,500         372.9
American Masters Market Neutral Fund, L.P.               110,600        80,300          30,300          37.7

(1)  Commenced operations on June 1, 2000.

<CAPTION>
                                                               Year ended
                                                               December 31
                                                          2000          1999        Change ($)     Change (%)
                                                       ------------------------------------------------------
<S>                                                    <C>            <C>            <C>             <C>
American Masters Broad Market Prime Fund, L.P.         $  79,800      $  6,700       $  73,100       1,091.0
Meridian Horizon Fund, L.P.                              122,500        79,200          43,300          54.7
Tremont Broad Market Fund, LDC                            40,900            --          40,900            (2)
American Masters Market Neutral Fund, L.P.                80,300         9,600          70,700         736.5

(2)  Initial investment made in 1999.
</TABLE>


                                       20
<PAGE>


Earnings (losses) from Operations of Joint Ventures

     Joint venture  operations  resulted in losses of $828,700 in the year ended
December 31, 2000, as compared to income of $239,900 for the year ended December
31, 1999 and losses of $224,100 for the year ended December 31, 1998. The losses
during 2000 were primarily due to planned losses incurred by FITX. The Company's
proportionate  share  (approximately  24.8%) of FITX's  losses for 2000 and 1999
were  approximately  $1,002,500  and $182,300,  respectively.  The Company began
equity  accounting  for its  investment in FITX in October 1999. The increase in
equity earnings from 1998 to 1999 was primarily  attributable to the increase in
Tremont MRM Services  Limited's equity earnings of $422,200 in 1999 from none in
1998.

Liquidity and Capital Resources

     At  December  31,  2000,  the  Company  had  $3,481,600  in cash  and  cash
equivalents  and  working  capital of  $4,565,400,  as compared to cash and cash
equivalents  of  $2,879,300  and working  capital of  $2,712,400 at December 31,
1999.

     Cash flow  provided by operating  activities  was  $4,229,200  for the year
ended  December 31 2000,  compared to $2,908,900 for the year ended December 31,
1999. This increase resulted from profitable  operations,  increases in deferred
taxes,  accrued  expenses,  tax  benefits  arising from the exercise of employee
stock  options and loss from other  investments,  net,  offset by an increase in
accounts receivable and an increase in equity earnings of investments.

     Cash flow used by investing activities was $2,292,000 and $2,383,700 in the
years  ended  December  31,  2000  and  1999,  respectively,  and  consisted  of
investments,  investments  in a joint  venture and the purchase of fixed assets,
offset  partially  by  proceeds  from  the  sale  of  certain   investments  and
distributions from a joint venture.

     Cash flow  used by  financing  activities  was  $1,334,900  in 2000 and was
primarily  for the  purchase  of  200,000  shares  (250,000  post-split)  of the
Company's  Class A Common Stock (the "tender offer shares") and the repayment of
borrowings under the revolving  promissory note described  below.  These uses of
cash were offset by proceeds from the borrowing under the revolving note and the
proceeds  from the  exercises  of options to  purchase  Class B Common  Stock by
employees and a director of the Company.

     On July  25,  2000,  the  Company  executed  a  two-year  Revolving  Credit
Promissory Note (the "Revolver") due on July 31, 2002 in an amount not to exceed
$2.5 million from which it borrowed $1,975,000 to fund a portion of the purchase
price of the tender offer  shares.  The balance of the Revolver is available for
working capital needs arising from time to time.  Borrowings  under the Revolver
will bear interest, at the Company's option, at the lending bank's prime rate or
the London  Interbank  Offered Rate plus a margin of 2%. The Revolver is secured
by a pledge of the  management  fees  payable  to the  Company by certain of its
proprietary investment funds and the pledge of the Company's limited partnership
interest,  currently valued at $1,882,400,  in the American Masters  Opportunity
Fund, L.P. The Company is in compliance  with all covenants in the Revolver.  As
of December 31, 2000, the Company repaid $900,000 of the Revolver,  reducing the
outstanding balance to $1,075,000, and recognized interest expense of $70,800.


                                       21
<PAGE>


     On August 8, 2000,  the Company  distributed  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 to  stockholders  of record on July 31,  2000.  All per
share and shares  outstanding  data have been  restated to reflect the impact of
the split.

     On July 1, 1999, the Company exercised options to purchase 85,800 shares of
a privately-held registered investment advisor specializing in 401(k) investment
allocation over the internet.  The options were exercised at $1.00 per share, as
adjusted for a stock split.  At December 31, 2000,  the investment was valued at
$85,800 (cost) by the Company and is included in investments.

     The Company  owns  30,000  shares of common  stock of a financial  services
company  acquired  as a result of an  employee's  participation  on its board of
directors. At December 31, 2000, the Company valued these shares at zero. In the
years  ended  December  31,  2000 and 1999,  the  Company  received  $60,000 and
$54,000, respectively, for consulting services rendered to this entity.

     The Company  believes  that it has adequate  capital  resources and working
capital to bring the  products it developed in late 2000 and those it expects to
develop in early 2001 to market 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,  other than as
noted above.

Commitments

     On December 6, 2000,  the Company  amended  Sandra L.  Manzke's  employment
agreement.  Under the terms of the amended agreement,  which expires on December
31, 2001, Ms. Manzke serves as the Co-Chief Executive Officer of the Company and
Chairman of the Board of  Directors  and will  receive a salary of $420,000  per
year  and  the  incentive  compensation,  if any,  determined  by the  Board  of
Directors at the end of the year.

     On  December  6,  2000,  the  Company  also  amended  Robert I.  Schulman's
employment  agreement.  Under the terms of the  amended  agreement,  which  also
expires on December  31, 2001,  Mr.  Schulman  serves as the Co-Chief  Executive
Officer and  President of the Company and will receive a salary of $378,000.  In
addition,   he  will  receive  a  predetermined   percentage  of  any  incentive
compensation paid to Ms. Manzke.

     On August 11, 2000, the Company  entered into an employment  agreement with
Barry H.  Colvin  pursuant to which Mr.  Colvin  serves as the  Company's  Chief
Operating  Officer.  The agreement expires on January 1, 2002 and provides for a
salary of  $275,000  and a bonus of at least  $200,000  if he is employed by the
Company  on the date  that the  Company  usually  pays  out  annual  performance
bonuses.  The Company may terminate the agreement  without cause at any time. In
that event, Mr. Colvin will receive  severance  payments equal to the balance of
the compensation due to him through December 31, 2001, less all amounts required
to be withheld or deducted.  Benefits and any other employee  entitlements  will
cease as of the date of termination.  If Mr. Colvin  voluntarily  terminates his
employment  by the  Company  prior to


                                       22
<PAGE>

January 1,  2002,  he is  required,  within  fifteen  days after his last day of
employment,  to pay the Company $50,000 as liquidated  damages to recompense the
Company  for the time,  opportunity  loss,  cost of  securing  his  replacement,
absence of continuity and the adverse  impact on customers and employees  caused
by his departure.

     On  August  1,  2000,  the  Company  amended  Robert  Parnell's  employment
agreement pursuant to which he serves as the President,  Chief Operating Officer
and Chief Investment  Officer of TIMI. The amended agreement expires on July 31,
2001 and provides for an annual salary of $200,000.

     On March 11, 1999, the Company entered into a two-year employment agreement
with Nicola Meaden  pursuant to which she serves as Chief  Executive  Officer of
TASS for a minimum  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, 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  her  accrued  salary,  her  guaranteed  bonus,  and the value of any
accrued  but  unused  vacation  time  through  the date of  termination.  If her
employment  is terminated  for any other  reason,  she will be entitled to these
amounts through the end of the term of her employment  agreement;  however,  the
Company may offset  against these  payments an amount equal to any  compensation
she receives from a competing business prior to the end of the term.

     Laurence  Huntington  Taylor, II was employed by the Company as Senior Vice
President of Global  Marketing and Sales  pursuant to an  employment  agreement,
dated  March 11,  1999,  having a two year term.  As of January  22,  2000,  the
Company and Mr.  Taylor  entered into an Agreement  and Release (the  "Release")
terminating Mr. Taylor's employment.  The Release provides,  among other things,
that Mr. Taylor is to receive severance payments through the end of the intended
term of his  employment,  March 10,  2001,  subject to certain  conditions.  Mr.
Taylor was obligated to notify the Company if and when he became  employed by or
engaged to render services to a "competing business," as defined in the Release,
and to certify to the Company the amount of  compensation  he was receiving from
the competing business. Mr. Taylor's severance payments were to be reduced by an
amount equal to the  compensation he received from the competing  business.  The
Company  made  severance  payments to Mr.  Taylor  until  October,  2000 when it
learned  that Mr.  Taylor  had been  hired by an  entity  it deems a  "competing
business." Mr. Taylor had not provided the Company with the required notice.  In
late October  2000,  Mr. Taylor sued the Company in New York State Supreme Court
to collect approximately $118,000 he claims is due under the Release. In January
2001,  the Company  served an Answer and made  discovery  requests.  The case is
being  transferred  from  Westchester  County,  where it was filed,  to New York
County,  where the Release  specifies  it should be  litigated.  On February 28,
2001,  Mr.  Taylor  served a motion  for  summary  judgment  on the issue of the
Company's alleged liability.  The Company will serve papers in opposition to Mr.
Taylor's motion.  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.


                                       23
<PAGE>


Facilities

     The Company  leases  office space in Rye, New York,  Hamilton,  Bermuda and
London,  England.  They  expire  between  August  2002 and June 2005 and require
aggregate monthly payments of approximately $43,800.

Inflation

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

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 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.





                                       24
<PAGE>


Item 7.  Financial Statements                                               Page
                                                                            ----

Reports of Independent Auditors ............................................. 26

Consolidated Balance Sheets as of December 31, 2000 and 1999 ................ 29

Consolidated Statements of Income for the years ended
   December 31, 2000 and 1999 ............................................... 30

Consolidated Statements of Shareholders' Equity for the years ended
   December 31, 2000 and 1999 ............................................... 31

Consolidated Statements of Cash Flows for the years ended
   December 31, 2000 and 1999 ............................................... 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, 2000 and 1999,  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. (a limited  partnership in which the Company had a .32%
interest at December  31, 1999) and  American  Masters  Broad Market Prime Fund,
L.P. (a limited partnership in which the Company had a .25% interest at December
31, 1999) (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  at December 31, 1999 and the Company's  aggregate  equity in the net
income of the  aforementioned  Funds is stated at  $228,600  for the year  ended
December 31, 1999.

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, 2000 and 1999, 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.

Stamford, Connecticut
February 26, 2001                                             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. (a limited  partnership)  as of December  31,  1999,  and the
related statements of income,  changes in Partners' capital,  and cash flows for
the year 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 audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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  audit  provides  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. as of December 31, 1999,  and the results of its  operations and its
cash  flows for the year then ended in  conformity  with  accounting  principles
generally accepted in the United States of America.



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. (a limited partnership) as of December 31, 1999, and the
related statements of income,  changes in Partners' capital,  and cash flows for
the year 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 audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  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  audit  provides  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. as of December 31, 1999 and the results of its  operations and
its cash flows for the year then ended in conformity with accounting  principles
generally accepted in the United States of America.



GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 18, 2000






                                       28
<PAGE>


                             Tremont Advisers, Inc.

                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                                            December 31
                                                                                      2000               1999
                                                                                 -------------------------------
<S>                                                                              <C>                 <C>
Assets
Current assets:
   Cash and cash equivalents                                                      $ 3,481,600        $ 2,879,300
   Accounts receivable, less allowance for bad debts of $35,000                     5,163,800          3,682,700
   Dividend receivable                                                                     --             31,000
   Income taxes receivable                                                            130,300                 --
   Prepaid expenses and other current assets                                          178,800            263,800
                                                                                 -------------------------------
Total current assets                                                                8,954,500          6,856,800

Investments (cost - $4,992,200 and $3,092,400)                                      6,677,000          4,243,500
Investments in joint ventures (cost - $526,000 and $413,400)                        1,368,200          2,231,700

Fixed assets:
   Furniture and equipment                                                          1,839,900          1,272,900
   Leasehold improvements                                                             158,300            110,800
   Less accumulated depreciation                                                     (999,400)          (609,200)
                                                                                 -------------------------------
Fixed assets, net                                                                     998,800            774,500

Goodwill, net                                                                       1,781,800          1,999,800
Other assets                                                                           98,000             30,300
                                                                                 -------------------------------
Total assets                                                                     $ 19,878,300        $16,136,600
                                                                                 ===============================

Liabilities and Shareholders' Equity
Current liabilities:
   Accrued expenses                                                              $  3,013,300        $ 2,492,800
   Deferred revenue                                                                 1,000,300            863,500
   Accounts payable                                                                   375,500            563,800
   Income taxes payable                                                                    --            191,700
   Deferred income taxes payable                                                           --             32,600
                                                                                 -------------------------------
Total current liabilities                                                           4,389,100          4,144,400

Deferred income taxes payable                                                       1,550,500            836,800
Revolving note payable                                                              1,075,000                 --
Deferred revenue                                                                      239,300            500,000

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; 1,985,418 and 1,993,855 shares issued and
     outstanding, including 250,000 shares held in treasury at
     December 31, 2000                                                                 19,900             16,000
   Class B Common Stock, $0.01 par value, 10,000,000 shares
     authorized; 5,154,208 and 5,025,381 shares issued and
     outstanding, including 27,250 shares held in treasury at
     December 31, 2000                                                                 51,500             40,200
   Additional paid in capital                                                       8,405,800          7,901,800
   Retained earnings                                                                6,685,500          2,698,200
   Cumulative foreign currency translation adjustment                                   7,000               (800)
   Common Stock held in treasury, at cost                                          (2,545,300)                --
                                                                                 -------------------------------
Total shareholders' equity                                                         12,624,400         10,655,400
                                                                                 -------------------------------
Total liabilities and shareholders' equity                                       $ 19,878,300        $16,136,600
                                                                                 ===============================
See accompanying notes.
</TABLE>


                                       29
<PAGE>


                             Tremont Advisers, Inc.

                        Consolidated Statements of Income

<TABLE>
<CAPTION>
                                                                              Year ended December 31
                                                                           2000                   1999
                                                                       -----------------------------------
Revenues
<S>                                                                    <C>                      <C>
Proprietary investment funds                                           $11,874,400              $8,139,500
Advisory fees                                                            7,661,000               5,676,800
Information sales                                                        1,839,500               1,542,000
Performance fees                                                         1,535,400                 817,400
Commissions                                                                267,200                 348,900
                                                                       -----------------------------------
Total revenues                                                          23,177,500              16,524,600

Expenses
Compensation                                                             8,722,900               6,705,100
General and administrative                                               4,547,600               4,172,900
Advisory expenses                                                        2,918,900               1,741,700
Depreciation                                                               403,700                 278,900
Amortization of intangibles                                                232,600                 748,800
                                                                       -----------------------------------
Total expenses                                                          16,825,700              13,647,400

Equity earnings of investments                                             734,700                 535,300
Earnings (loss) from operations of joint ventures                         (828,700)                239,900
Other income, net                                                          159,900                 494,500
                                                                       -----------------------------------

Income before income taxes                                               6,417,700               4,146,900
Provision for income taxes                                               2,430,400               1,615,700
                                                                       -----------------------------------
Net income                                                             $ 3,987,300             $ 2,531,200
                                                                       ===================================

Net income per common share - basic                                    $       .58             $       .37
                                                                       -----------------------------------
Net income per common share - diluted                                  $       .54             $       .34
                                                                       ===================================
</TABLE>

See accompanying notes.


                                       30
<PAGE>


                             Tremont Advisers, Inc.

                 Consolidated Statements of Shareholders' Equity

<TABLE>
<CAPTION>
                                                         Common Stock       Additional                                   Total
                                                          Par Value          Paid in       Retained     Treasury     Shareholders'
                                                     Class A    Class B     Capital        Earnings       Stock         Equity
                                                     ------------------------------------------------------------------------------
<S>                                                   <C>          <C>        <C>           <C>          <C>            <C>
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 (59,523 shares)                                   --        500      356,700            --            --        357,200
   Issuance of Class B Common Stock -
        TASS Acquisition (238,096 shares)                     --      1,900    1,426,700            --            --      1,428,600
   Issuance of Class B Common Stock - Director
     Options (26,562 shares)                                  --        200       74,800            --            --         75,000
   Issuance of Class B Common Stock - Employee
     Options (14,062 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 (11,002 shares)                             --         --           --            --            --             --
   5 for 4 Stock Split (399,002 Class A Shares)
     (1,001,686 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
   Comprehensive income:
     Net income                                               --         --           --     3,987,300            --      3,987,300
     Foreign currency translation adjustment                  --         --           --            --            --          7,800
                                                                                                                        -----------
   Comprehensive income                                                                                                   3,995,100
   Issuance of Class B Common Stock - Employee
     Options (120,390 shares)                                 --      1,200      135,200            --            --        136,400
   Income tax benefits related to exercise of options         --         --      383,800            --            --        383,800
   Conversion of Class A Common Stock to Class B
     Common Stock (8,438 shares)                              --         --           --            --            --             --
   5 for 4 Stock Split (398,025 Class A Shares)
      (1,005,822 Class B Shares)                           3,900     10,100      (14,000)           --            --             --
   Cash-in-lieu of fractional shares                          --         --       (1,000)           --            --         (1,000)
   Purchase of Class A Common Stock for treasury
     (250,000 shares)                                         --         --           --            --    (2,300,000)    (2,300,000)
   Purchase of Class B Common Stock for treasury
     (27,250 shares)                                          --         --           --            --      (245,300)      (245,300)
                                                     ------------------------------------------------------------------------------
Balance at December 31, 2000                           $  19,900   $ 51,500   $8,405,800    $6,685,500   $(2,545,300)   $12,624,400
                                                     ==============================================================================
</TABLE>

See accompanying notes.


                                       31
<PAGE>


                             Tremont Advisers, Inc.

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                 Year ended December 31
                                                                               2000                 1999
                                                                            -------------------------------
<S>                                                                         <C>                 <C>
Operating activities
Net income                                                                  $ 3,987,300         $ 2,531,200
Adjustments to reconcile net income to net cash provided  by
   operating activities:
     Depreciation                                                               403,700             278,900
     Amortization of intangibles                                                232,600             748,800
     Equity earnings of investments                                            (734,700)           (535,300)
     Loss (earnings) from operations of joint ventures                          828,700            (239,900)
     Deferred income taxes                                                      681,100             281,000
     Foreign currency translation adjustment                                      7,800               4,500
     Tax benefits from exercise of stock options                                383,800              49,200
     Changes in operating assets and liabilities:
       Accounts receivable                                                   (1,481,100)         (1,386,600)
       Dividend receivable                                                       31,000                  --
       Prepaid expenses and other current assets                                 70,400              99,400
       Other assets                                                             (67,700)               (300)
       Accounts payable                                                        (188,300)            241,300
       Accrued expenses                                                         520,500             733,300
       Deferred revenue                                                        (123,900)           (171,100)
       Income taxes, net                                                       (322,000)            274,500
                                                                            -------------------------------
Net cash provided by operating activities                                     4,229,200           2,908,900

Investing activities
Purchase of fixed assets                                                       (627,900)           (522,600)
Proceeds from sale of investments                                             1,692,400                  --
Cash paid for investments                                                    (3,391,300)           (918,000)
Distributions from joint venture                                                152,200              47,100
Investments in joint venture                                                   (117,400)         (1,013,300)
Cash acquired, net of acquisition costs                                              --              23,100
                                                                            -------------------------------
Net cash used by investing activities                                        (2,292,000)         (2,383,700)

Financing activities
Purchase of treasury stock                                                   (2,545,300)                 --
Borrowing from revolving note payable                                         1,975,000                  --
Repayment of borrowing from revolving note payable                             (900,000)                 --
Exercise of Class B Common Stock Options                                        136,400             103,700
Cash-in-lieu of fractional shares                                                (1,000)               (600)
Net proceeds from issuance of Class B Common Stock                                   --             357,200
                                                                            -------------------------------
Net cash (used) provided by financing activities                             (1,334,900)            460,300

Net increase in cash and cash equivalents                                       602,300             985,500
Cash and cash equivalents at beginning of year                                2,879,300           1,893,800
                                                                            -------------------------------
Cash and cash equivalents at end of year                                    $ 3,481,600         $ 2,879,300
                                                                            ===============================
</TABLE>

See accompanying notes.


                                       32
<PAGE>


                             Tremont Advisers, Inc.

                Consolidated Statements of Cash Flows (continued)


<TABLE>
<CAPTION>
                                                                                         Years ended
                                                                                         December 31
                                                                                   2000               1999
                                                                            -----------------------------------
<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, 2000

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 Tremont Tass (Europe) Ltd.,
formerly  known as TASS  Investment  Research  Limited and prior thereto as TASS
Management Limited ("TASS").  The consolidated financial statements also include
the  accounts  of Tremont  Investment  Management,  Inc.  ("TIMI"),  a 65% owned
subsidiary.

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  accounting
principles  generally accepted in the United States 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
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from such estimates.



                                       34
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

2.  Summary of Significant Accounting Policies (continued)

Revenue Recognition

     The  Company's  proprietary  investment  funds are domestic  and  off-shore
single and  multi-manager  investment funds from which the Company earns monthly
or quarterly  management fees based upon their  respective net assets.  Revenues
are recorded as earned.

     Advisory fees derived from  advisory and  specialized  investment  services
provided to institutional and other clients, as well as fees earned from certain
funds  under  management,  are  recorded as earned.  These fees are  generally a
percentage of the amount of assets under  management.  The Company also receives
fees for  investments  placed in  certain  offshore  funds by TBL and in certain
domestic  limited  partnerships  by  TSI.  Additionally,  the  Company  provides
advisory services on a fixed fee basis, either as annual retainer fees or single
project  fees.  The revenues from these  advisory  arrangements  are  recognized
ratably  over  the  terms'  of the  contracts.  Performance  fees  based  on the
achievement of investment  performance  in excess of established  benchmarks are
recognized when the fees are no longer subject to market conditions. Performance
fees are  estimates  subject to  adjustment  pending  completion of the year end
audit of the underlying investment funds.

     Revenues from the sales of information are deferred at the time of the sale
and  are  recognized  ratably  over  the  term  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, 2000,  cash and cash  equivalents  was comprised  primarily of deposits with
financial  institutions.  These  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.  Thus, the
Company's  exposure to credit risks  associated  with nonpayment by customers is
affected by conditions within the investment industry.


                                       35
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

2.  Summary of Significant Accounting Policies (continued)

Investments

     The  equity  method  of  accounting  is used  for  investments  in  limited
partnerships and for investments in joint ventures and other  investments  where
the  Company's  ownership  interest  exceeds 20%.  Other  investments  where the
Company's  ownership  interest is less than 20% are accounted for using the cost
method of accounting.

 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 2000 and 1999,  $13,500,  and $347,300,  respectively,  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  and is
amortized  on a  straight-line  basis over 10 years.  The Company  accounts  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  the  carrying  amount  may not be  recoverable.  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 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 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.





                                       36
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

2.  Summary of Significant Accounting Policies (continued)

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 remaining 35% interest in TIMI has been
recorded as minority interest.

Stock Compensation

     As permitted  under  Statement of Financial  Accounting  Standards  No. 123
("SFAS 123"), "Accounting for Stock-Based Compensation," 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.  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 the 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."



                                       37
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

2.  Summary of Significant Accounting Policies (continued)

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 distributed on August 8, 2000.

Reclassifications

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

3.  Business Combination

     On March 11,  1999,  the Company  acquired  all of the  outstanding  common
shares of TASS in exchange for 297,620 shares (238,096 shares  pre-split) of its
Class B Common Stock at $4.80 per share. The transaction was accounted for using
the purchase  method of accounting and TASS operations have been included in the
consolidated statements of income from the date of closing.

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

                                                        Year ended
                                                    December 31, 1999
                                                        (Unaudited)
                                                    -----------------
        Total revenues                                 $ 16,868,400
        Net income                                        2,349,200
        Per share data:
           Basic earnings                              $       0.34
           Diluted earnings                            $       0.32




                                       38
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

4.  Investments

     Proprietary Investment Funds

     The  Company  has  made  investments  in its  below  described  proprietary
investment funds.

     o  American   Masters  Broad  Market  Fund,  L.P.  is  a  Delaware  limited
partnership  organized to achieve  capital growth  through  hedged  investments.
During 2000, the Company withdrew $500,000 from this fund,  resulting in $76,400
of realized gain.

     o American  Masters  Broad  Market Prime Fund,  L.P. is a Delaware  limited
partnership  organized to achieve capital growth through a leveraged  investment
strategy.  The  Company is required to fund up to 1% of its losses if, and when,
such losses occur.  During 2000, the Company  withdrew  $500,000 from this fund,
resulting in $32,100 of realized gain.

     o American  Masters Market Neutral Fund,  L.P. is a Delaware  multi-manager
limited  partnership   organized  to  achieve  long-term  capital   appreciation
irrespective  of stock  market  volatility.  During 2000,  the Company  withdrew
$500,000 from this fund.

     o American  Masters  Opportunity  Fund,  L.P.  is a Delaware  multi-manager
limited  partnership  formed  on March 21,  2000 to  achieve  long-term  capital
appreciation,  generate positive returns irrespective of stock market volatility
or direction and preserve capital.

     o American  Masters  Multi-Tech  Fund,  L.P.  is a  Delaware  multi-manager
limited   partnership  formed  on  March  31,  2000  to  seek  superior  capital
appreciation by investing primarily in technology industries.

     o Tremont Broad Market Fund, LDC is a Cayman Islands open-ended  investment
company seeking long-term capital growth through hedged investments.  TBL is its
investment  advisor,  administrator,  registrar and transfer agent. During 2000,
TBL invested an additional $1,350,000 in this fund.

     o American  Masters Fund "AG Absolute  Return  Series"  Limited is a Cayman
Island open-end  investment  company engaging in 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.

     o The Tremont  Masters Fund is a Canadian  multi-manager  investment  trust
organized  to  achieve  an  adjusted  return  that  has  a  low  correlation  to
traditional fixed income and equity markets.


                                       39
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

4.  Investments (continued)

     The following table sets forth summary financial information  pertaining to
the Company's domestic proprietary investment funds.

<TABLE>
<CAPTION>
                                                American Masters      American Masters    American Masters
                                               Broad Market Fund,    Broad Market Prime    Market Neutral
                                                      L.P.               Fund, L.P.          Fund, L.P.
                                               -----------------------------------------------------------
<S>                                            <C>                  <C>                   <C>
2000
Total assets                                   $  296,100,700       $   512,582,900       $   22,405,900
Total liabilities                                   6,136,300           151,039,700            2,116,100

Net investment income (loss)                   $    9,981,000       $     2,987,600       $     (167,100)
Realized and unrealized gain                       29,664,900            38,408,200            1,801,800
                                               ---------------------------------------------------------
Net income                                     $   39,645,900       $    41,395,800       $    1,634,700
                                               =========================================================

General Partner                                           TPI                   TPI                  TFI
GP investment in partnership-at market value   $      566,900       $       126,000        $     305,500
GP investment in partnership-at cost                       --                    --              105,000
Proportionate share of earnings (*)                   110,900                71,600              110,600
Proportionate share of fund's net assets                 0.20%                 0.03%                1.51%

1999
Total assets                                   $  298,527,000       $   322,761,500        $  10,229,900
Total liabilities                                   9,301,900            99,073,700            1,069,500

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

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

*Proportionate share of earnings is included in equity earnings of investments
in the consolidated statements of income.



                                       40
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

4.  Investments (continued)

                                           American Masters     American Masters
                                           Opportunity Fund,       Multi-Tech
                                                 L.P.              Fund, L.P.
                                           -----------------    ----------------
2000
Total assets                               $   9,636,800        $   15,974,900
Total liabilities                              2,062,600             1,654,600

Net investment income                      $      22,500        $       13,200
Realized and unrealized gain                     451,700              (717,900)
                                           -----------------------------------
Net income (loss)                          $     474,200        $     (704,700)
                                           ===================================
General Partner                                      TPI                   TPI
GP investment in partnership-at market
  value                                    $   2,100,400        $       25,400
GP investment in partnership-at cost           2,000,000                25,000
Proportionate share of earnings (*)              100,400                   400
Proportionate share of fund's net assets           27.73%                 0.18%

*Proportionate share of earnings is included in equity earnings of investments
in the consolidated statements of income.

     The  following  table  sets forth  summary  financial  information  for the
offshore  proprietary  investment  funds for which the  Company  is a sponsor or
co-sponsor:

<TABLE>
<CAPTION>
                                                                     American Masters
                                                                           Fund
                                                  Tremont Broad        "AG Absolute
                                                 Market Fund, LDC        Series"          The Tremont
                                                                         Limited          Masters Fund
                                                 ----------------    ----------------     ------------
<S>                                               <C>                  <C>                 <C>
2000
Total assets                                      $ 126,857,000        $ 93,170,100        $   604,800
Total liabilities                                       191,500           1,934,800                  -

Net investment income (loss)                      $   1,432,900        $  3,274,700        $       400
Realized and unrealized gain                         11,761,600           3,530,500             48,100
                                                  ----------------------------------------------------
Net income                                        $  13,194,500        $  6,805,200        $    48,500
                                                  ====================================================

Sponsor                                                 TBL                   TBL                TIMI
Investment at market value                        $   2,184,300        $     75,900        $   604,800
Investment at cost                                    1,950,000              60,000            500,100
Proportionate share of earnings(*)                      193,400              14,600             48,500
Proportionate share of fund's net assets                   1.72%               0.08%            100.00%
</TABLE>

*Proportionate share of earnings is included in equity earnings of investments
in the consolidated statements of income.


                                       41
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

4.  Investments (continued)

<TABLE>
<CAPTION>
                                                                      American Masters
                                                                            Fund
                                                   Tremont Broad        "AG Absolute
                                                  Market Fund, LDC        Series"           The Tremont
                                                                          Limited           Masters Fund
                                                 -------------------------------------------------------
<S>                                              <C>                 <C>                    <C>
1999
Total assets                                     $     87,438,500    $    12,887,900        $   556,300
Total liabilities                                      20,475,200            137,900                 --

Net investment income (loss)                     $        244,900    $      (137,870)       $       600
Realized and unrealized gain                            5,449,600            630,500             55,600
                                                 ------------------------------------------------------
Net income                                       $      5,694,500    $       492,630        $    56,200
                                                 ======================================================

Sponsor                                          TBL                 TBL                    TIMI
Investment at market value                       $        640,900     $      61,300         $   556,300
Investment at cost                                        600,000            60,000             500,100
Proportionate share of earnings(*)                         40,900             1,300              56,200
Proportionate share of fund's net assets                     0.96%             0.48%              100.00%
</TABLE>

*Proportionate share of earnings is included in equity earnings of investments
in the consolidated statements of income.

     The Company also has the following proprietary funds.

     o GamTree,  L.P. ("GamTree") is a Delaware limited partnership organized to
achieve  long-term  capital  growth through  diversified  asset  management.  At
December  31,  1999,  TPI  had an  investment  of  $192,400  (cost  -  $100,000)
representing  15.5%  of  GamTree's  net  assets.  TPI's  proportionate  share of
GamTree's income for the year ended December 31, 1999,  $14,800, is reflected in
equity earnings of investments in the consolidated  statements of income. During
2000, TPI resigned as co-general  partner and  recognized a gain of $92,400.  At
December 31, 2000, TPI had no investment in GamTree.

     o  American  Masters  Opportunity  Insurance  Fund,  L.P.  ("AMOIF"),  is a
Delaware limited  Partnership  formed on December 18, 2000 to achieve  long-term
capital  appreciation,  generate  positive returns  irrespective of stock market
volatility or direction, and preserve capital. TPI receives a monthly management
fee based upon  AMIF's net asset  value as of the end of each  month.  AMOIF was
funded on February 1, 2001 with $25 million.



                                       42
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

4.  Investments (continued)

     Investments in Nonaffiliated Investment Funds

     The Company has an interest in Meridian Horizon Fund, L.P. ("Meridian"),  a
Delaware  multi-manager  limited  partnership  organized to achieve a high total
return while preserving capital. At December 31, 2000 and 1999, Meridian had net
assets  of $627  million  and  $357  million,  respectively.  In  addition,  net
investment  losses  for the years  ended  December  31,  2000 and 1999 were $8.1
million and $4.4 million,  respectively,  and net realized and unrealized  gains
were $91.1 million and $81.8 million,  respectively,  resulting in net income of
$83 million and $77.4 million,  respectively. At December 31, 2000 and 1999, TPI
had an  investment  of $585,700  and  $501,500,  respectively  (cost - $250,000)
representing  0.09% and 0.14% of Meridian's  net assets at December 31, 2000 and
1999,  respectively.  TPI's proportionate share of Meridian's income in 2000 and
1999 ($84,200 and  $122,900,  respectively)  is reflected in equity  earnings of
investments in the consolidated statements of income.

     Other Investments

     On July 1, 1999, the Company  exercised  options to purchase 85,800 shares,
for $1.00 per share, of a registered  investment advisor  specializing in 401(k)
investment  allocation advice over the internet.  At December 31, 2000 and 1999,
the investment was valued at cost ($85,800).

     At December 31,  2000,  the Company  owned a beneficial  interest in 30,000
shares of a financial  services  company which were acquired by the Company as a
result of an  employee's  participation  as a board  member of the  company.  At
December 31, 2000 and 1999, respectively, the shares of common stock were valued
at zero.  As a result of  consulting  services  performed  for this entity,  the
Company received $60,000 and $54,000, respectively, for the years ended December
31, 2000 and 1999.

     During  2000,  the Company  purchased  1,300  shares of common stock of The
NADAQ Stock  Market,  Inc.  which,  at December  31,  2000,  were valued at cost
($16,300).



                                       43
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

5.  Investments in Joint Ventures

     Insurance Products

     Tremont International Insurance, Ltd. ("TIIL"), 24.5% owned by the Company,
is a Cayman Island insurance  company offering a variety of insurance  products,
including variable life insurance policies and deferred variable  annuities,  to
customers who are not residents of the Cayman Islands.  At December 31, 2000 and
1999, the Company's investment in TIIL was $61,200 (cost - $62,300).

     Tremont MRM  Services  Limited  ("TMRM")  was formed  under  Bermuda law to
provide product development, marketing and administrative services to TIIL. TMRM
is owned 38.9% by the Company,  20.0% by Mutual Risk Management,  Inc. and 41.1%
by others.  At December 31, 2000 and 1999, the Company's  investment in TMRM was
$435,500  (cost - $19,000) and $394,900 (cost - $4,800),  respectively.  For the
years ended  December 31, 2000 and 1999,  the Company's  proportionate  share of
TMRM's  operating  income was  $173,800  and  $422,200,  respectively,  which is
reflected  in  earnings   (loss)  from  operations  of  joint  ventures  in  the
consolidated  statements  of  income.  During  2000,  TMRM  declared  and paid a
dividend of $152,200 to the  Company.  During  December  1999,  TMRM  declared a
dividend of $31,000 which was paid to the Company in January 2000.

     Information Services

     FITX Group Limited ("FITX"),  an exempt Bermuda company, was formed in June
1999 to provide  business-to-business  e-commerce web site products and services
to niche  markets,  primarily  within the hedge fund  industry.  At December 31,
2000,  TBL's  approximate  24.2%  interest  in  FITX  equaled  $871,500  (cost -
$444,700) and its share of losses for the years ended December 31, 2000 and 1999
was $1,002,500 and $182,300,  respectively, as reflected in earnings (loss) from
operations of joint ventures in the consolidated statements of income.

     On December 15, 1999, the Company and certain of its  subsidiaries  entered
into a license  agreement  with FITX pursuant to which the Company  granted FITX
the right to use its proprietary  database in exchange for 87,260 shares of FITX
Series B Preferred  Stock  having a per share value of $11.46  ($1,000,000)  and
on-going  royalty  fees.  This  amount was  recorded as an  investment  in joint
ventures  and  deferred  revenue,   net  of  an  inter-company   elimination  of
approximately  $259,000,  and is being recognized over a three year period.  The
royalty fees were not significant in 2000 or in 1999.



                                       44
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

5.  Investments in Joint Ventures (continued)

     As of December 15, 1999, the Company  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.

6.  Accrued Expenses

     Accrued expenses consist of the following:

                                                  December 31
                                           2000                1999
                                        -------------------------------
      Advisory fees                     $ 1,214,700          $1,027,200
      Compensation                          818,000             507,000
      Other                                 431,500             188,900
      Professional fees                     359,500             262,500
      Employee benefit plan                 130,000             138,800
      Notes payable                          59,600             368,400
                                        -------------------------------
                                        $ 3,013,300          $2,492,800
                                        ===============================

7.  Revolving Note Payable

     On July  25,  2000,  the  Company  executed  a  two-year  Revolving  Credit
Promissory Note (the "Revolver") due on July 31, 2002 in an amount not to exceed
$2.5 million from which it borrowed $1,975,000 to fund a portion of the purchase
price of the  tendered  Class A Common  Stock  (discussed  below in Note 8). The
balance of the Revolver is available for working capital needs arising from time
to time.  Borrowings  under the Revolver  will bear  interest,  at the Company's
option,  at the lending bank's prime rate or the London  Interbank  Offered Rate
plus a margin of 2%. The Revolver is secured by a pledge of the management  fees
payable to the Company by certain of its  proprietary  investment  funds and the
pledge  of the  Company's  limited  partnership  interest,  currently  valued at
$1,882,400,  in the American  Masters  Opportunity  Fund, L.P. The Company is in
compliance  with all  covenants in the  Revolver.  As of December 31, 2000,  the
Company repaid  $900,000 of the Revolver,  reducing the  outstanding  balance to
$1,075,000, and paid interest of $70,800.



                                       45
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

8.  Shareholders' Equity

         Common Stock

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

     o 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;

     o upon liquidation,  dissolution or winding up of the Company,  the holders
of the Class A Common  Stock are  entitled  to  receive  an amount  equal to the
aggregate  liquidation  preference of $0.25 per share before any distribution in
respect of the Class B Common Stock. The holders of the Class B Common Stock are
then  entitled  to $0.25 per share.  The  Company's  remaining  assets are to be
distributed in equal amounts per share; and

     o each  share of  Class A Common  Stock  is  convertible,  at the  holder's
option, into a share of Class B Common Stock.

     On December 6, 2000, the Board of Directors adopted, subject to shareholder
approval, an increase in the total number of authorized shares of Class B Common
Stock from 10 million shares to 20 million shares.

     Tender Offer and Stock Split

     On June 6, 2000, the Board of Directors approved an offer to buy back up to
200,000 shares  (250,000 shares post split) of the Company's  approximately  1.6
million (2.0  million  shares post split)  outstanding  shares of Class A Common
Stock for $11.50  ($9.20 post  split) per share.  The offer was made on June 19,
2000 and  remained  open for 30 days.  The  offer was not  conditioned  upon any
minimum number of shares being tendered.

     A total of 1,013,760  shares  (1,267,  200 shares post split) were tendered
and not  withdrawn  prior  to the  offer  expiration  date.  The  Company  first
purchased all shares  properly  tendered by any holder of an aggregate of 100 or
fewer  shares if the tender  was for all of the  shares  owned by the holder and
then, after purchase of all the foregoing shares,  all remaining tendered shares
on a pro rata basis.



                                       46
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

8.  Shareholders' Equity (continued)

     On July 15,  1999 and on June 6,  2000,  the  Board of  Directors  approved
five-for-four  stock splits (with no change in par value) of both the  Company's
Class A Common Stock and Class B Common Stock.  The first split was  distributed
on August 16, 1999 to  stockholders of record as of July 30, 1999 and the second
split was distributed on August 8, 2000 to stockholders of record as of July 31,
2000.

     All share and per share data have been  restated  to reflect  the impact of
these stock splits.

Redeemable Preferred Stock

     At December 31, 2000 and 1999 the Company had Redeemable  Preferred Stock -
Series A Preferred  Stock,  $1 par value,  650,000 shares  authorized,  of which
there are none issued or outstanding.

9.  Stock Options

     1998 Stock Plan

     As of October 20, 2000, the Company's shareholders approved an amendment to
the Tremont Advisers, Inc. 1998 Stock Plan (the "Plan") authorizing the issuance
of up to 612,500 shares of Class B Common Stock in connection with stock options
and  other  awards  granted  under the Plan.  The Plan  authorizes  the grant of
incentive stock options and  non-qualified  stock options and stock rights.  The
exercise  price  for  incentive  stock  options  shall be not 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 be not 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 Plan is  administered  by the Board of  Directors  which 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.

     On December 6, 2000,  options to purchase  12,500 shares and 306,000 shares
were  granted  under  the  Plan  at  exercise   prices  of  $11.55  and  $10.50,
respectively. On December 9, 1999, options to purchase 13,750 shares and 110,125
shares  were  granted  under the Plan at  exercise  prices  of $8.80 and  $8.00,
respectively.




                                       47
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

9.  Stock Options (continued)

     Other Options

     Upon the Company's  acquisition  of TASS,  two types of options to purchase
shares  of  Class B Common  Stock  (the  "Group I  Options"  and the  "Group  II
Options") were granted to Tass's Chief  Executive  Officer  (230,385 Group I and
38,822  Group II Options)  and to another  executive  of TASS  (121,885  Group I
Options and 20,552 Group II  Options).  The Group I Options and Group II Options
are exercisable at $5.12 per share and $9.60 per share, respectively. All of the
Group I Options are  currently  exercisable.  One-third  of the Group II Options
vested on March 11,  1999,  one-third  vested on March 11,  2000 and the balance
vest on March  11,  2001 but  become  immediately  exercisable  upon a change in
control of the  Company.  The options may not be  transferred  without the prior
written consent of the Company.  In the event that either option holder seeks to
sell or  transfer  any  shares of the  Company's  stock  other  than to a family
member, 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  18,750  shares of Class B Common
Stock at $9.60 per share were granted to certain other employees of TASS. 12,500
of these  options have vested and are  exercisable;  the balance vest and become
exercisable on the second anniversary of their grant.

     In 1994, the Board of Directors granted the Company's  President options to
purchase  429,687  shares of Class B Common  Stock at $1.12 per share,  the then
current fair market value of the stock.  The options are  currently  exercisable
and expire on the  anniversary of the grant date in 2001.  During December 2000,
120,000 of these  options were  exercised  and 195,312 were  exercised in August
1998. In the event of the  termination  of his  employment,  the Company has the
option,  exercisable no later than seven days after the date of termination,  to
purchase all of his stock and options. The purchase price of each share of stock
shall equal the best bid price for a share on the date of  termination,  and the
purchase  price for each  option  shall be the  greater of (i) $1.12 or (ii) the
amount  of the  best  bid  price  for a  share  of  stock  on the  date  of such
termination less $1.12.






                                       48
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

9.  Stock Options (continued)

     Stock Option Exercises

     During 1999,  certain directors and officers  exercised options to purchase
an  aggregate of 31,250 and 15,625  shares  (post-split),  respectively,  of the
Company's Class B Common Stock.

     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 SFAS
123,  "Accounting  for Stock-Based  Compensation,"  ("SFAS 123") 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 SFAS 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 2000;  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 pro forma
information for 2000 and 1999 follows.

                                           2000             1999
                                        ----------       ----------
  Pro forma net income                  $3,062,700       $1,822,200

  Pro forma earnings per share
    Basic                                    $0.44       $     0.26
    Diluted                                  $0.41       $     0.25




                                       49
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

9.  Stock Options (continued)

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

<TABLE>
<CAPTION>
                                                            2000                              1999
                                               -------------------------------   --------------------------------
                                                             Weighted-Average                    Weighted-Average
                                                Options       Exercise Price        Options       Exercise Price
                                               -------------------------------   --------------------------------
<S>                                             <C>                <C>              <C>               <C>
Outstanding - beginning of year                   978,589          $ 4.46           472,758           $1.96
Granted                                           318,500           10.54           554,268            6.42
Exercised                                        (120,390)           1.12           (46,875)           2.22
Lapsed                                             (1,766)           7.35            (1,562)           5.12
                                               ----------                        ----------
Outstanding - end of year                       1,174,933          $ 6.45           978,589           $4.46
                                               ==========                        ==========

Exercisable at end of year                        848,963           $5.08           675,158           $3.42

Weighted-average fair value of options
granted during the year                                             $2.91                             $3.74
</TABLE>

     The following table  summarizes  stock options  outstanding at December 31,
2000:

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

          $1.12             114,375            $ 1.12               0.3
           2.40             154,946              2.40               1.5
           5.12             386,879              5.12               4.0
           8.00             108,358              8.00               3.9
           8.80              13,750              8.80               3.9
           9.60              78,125              9.60               4.1
          10.50             306,000             10.50               4.9
          11.55              12,500             11.55               4.9
    --------------        ---------         -------------
    $1.12 - 11.55         1,174,933         $1.12 - 11.55
    ==============        =========         =============

     (a) Average contractual life remaining in years.



                                       50
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

10.  Other Income, Net

                                                      Years ended
                                                      December 31
                                              2000                   1999
                                            -------------------------------

Interest income                             $130,500              $  78,400
Interest expense                             (70,800)                    --
Other investment gains                            --                416,100
Foreign currency gain                          7,200                     --
Other                                         93,000                     --
                                            -------------------------------
                                            $159,900               $494,500
                                            ===============================

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

11.  Income Taxes

     The  provision  for income taxes for the years ended  December 31, 2000 and
1999 is summarized as follows:

                                                2000              1999
                                            -----------------------------
      Current:
         Federal                            $ 1,472,300        $1,076,600
         State                                  277,000           258,100
                                            -----------------------------
                                              1,749,300         1,334,700
      Deferred:
         Federal                                697,100           284,100
         State                                  (16,000)           (3,100)
                                            -----------------------------
      Total tax expense                     $ 2,430,400        $1,615,700
                                            ==============================

     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.



                                       51
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

11.  Income Taxes (continued)

     Significant  components  of the  Company's  deferred  tax  liabilities  and
deferred tax assets as of December 31, 2000 and 1999 are as follows:

<TABLE>
<CAPTION>
                                                                          2000              1999
                                                                    -------------------------------
<S>                                                                  <C>                 <C>
Deferred tax liabilities:
   Tax over book depreciation                                        $      3,300        $   16,600
   Unrealized appreciation in limited partnerships                         53,100            36,700
   Undistributed earnings of foreign subsidiary                         1,591,900           829,000
                                                                    -------------------------------
Total deferred tax liabilities                                          1,648,300           882,300

Deferred tax assets:
   Net operating loss carryforward of foreign subsidiaries                361,900           248,800
   Bad debt reserves                                                        4,100             4,100
   Organization costs                                                          --               800
   Undistributed earnings of foreign subsidiary                            16,500                --
   Deferred revenue from foreign affiliate                                 32,100             8,000
   Stock options                                                           45,100                --
   Valuation allowance                                                   (361,900)         (248,800)
                                                                    -------------------------------
Total deferred tax assets                                                  97,800            12,900
                                                                    -------------------------------
Net deferred tax liability                                           $  1,550,500        $  869,400
                                                                    ===============================
</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>
                                                           2000                           1999
                                               ---------------------------------------------------------
                                                   Amount         Percent        Amount         Percent
                                               ---------------------------------------------------------
<S>                                              <C>                <C>          <C>             <C>
Statutory federal income tax rate                $ 2,182,000        34.0         $1,410,000      34.0
State taxes, net of federal benefit                  172,200         2.7            157,800       3.8
Permanently reinvested foreign income                (51,000)       (0.8)          (262,000)     (6.3)
Change in valuation allowance relating
   to losses in foreign subsidiaries                 113,100         1.8            212,800       5.1
Other                                                 14,100         0.2             97,100       2.4
                                               ------------------------------------------------------
                                                 $ 2,430,400        37.9         $1,615,700      39.0
                                               ======================================================
</TABLE>



                                       52
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

11.  Income Taxes (continued)

     In 2000  and  1999,  the  Company  made  federal  income  tax  payments  of
$1,491,800  and  $829,600,   respectively,   and  paid  $238,000  and  $234,200,
respectively, in state income, minimum and capital taxes.

     Deferred  income taxes were not provided on certain of TBL's  undistributed
foreign earnings (cumulatively $1,320,000 at December 31, 2000) because they are
expected to be  reinvested  overseas  indefinitely.  If these  amounts  were not
considered  permanently  reinvested,  additional deferred taxes of approximately
$448,800 would have been provided.

     At December  31,  2000 and 1999,  the  Company  had no net  operating  loss
carryforwards  for U.S.  federal tax purposes.  At December 31, 2000,  TIMI, the
Canadian subsidiary,  and TASS, the U.K.  subsidiary,  have generated cumulative
net  operating  losses of  approximately  $425,000 and  $551,000,  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>
                                                                               2000               1999
                                                                           -------------------------------
<S>                                                                         <C>                 <C>
Numerator:
   Net income - numerator for basic and diluted earnings per share
     (income available to common shareholders)                              $ 3,987,300         $2,531,200

Denominator:
   Denominator for basic earnings per share - weighted average shares         6,915,819          6,929,778

Effect of dilutive securities:
   Employee stock options                                                       497,797            424,565
                                                                           -------------------------------
Denominator for diluted earnings per share - adjusted weighted average
   shares and assumed conversions                                             7,413,616          7,354,343
                                                                           ===============================
Basic earnings per share                                                    $      0.58         $      .37
                                                                           ===============================
Diluted earnings per share                                                  $      0.54         $      .34
                                                                           ===============================
</TABLE>

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



                                       53
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

13.  Commitments

     Employment Agreements

     On December 6, 2000, the Company  amended the  employment  agreement of the
Company's  Co-Chief  Executive  Officer and Chairman of the Board of  Directors.
Under the terms of the amended  agreement,  which  expires on December 31, 2001,
she will receive a salary of $420,000 per year and the  incentive  compensation,
if any, determined by the Board of Directors at the end of the year.

     On December 6, 2000, the Company also amended the  employment  agreement of
the Company's  President and Co-Chief Executive Officer.  Under the terms of the
amended  agreement,  which also expires on December 31, 2001,  he will receive a
salary of $378,000. In addition,  he will receive a predetermined  percentage of
any incentive compensation paid to his Co-Chief Executive Officer.

     On August 11, 2000, the Company  entered into an employment  agreement with
the Company's Chief Operating Officer.  The agreement expires on January 1, 2002
and provides for a salary of $275,000 and a bonus of at least  $200,000 if he is
employed  by the Company on the date that the  Company  usually  pays out annual
performance  bonuses.  The Company may terminate the agreement  without cause at
any time. In that event, he will receive severance payments equal to the balance
of the  compensation  due to him through  the end of the term,  less all amounts
required  to  be  withheld  or  deducted.   Benefits  and  any  other   employee
entitlements  will  cease  as of the  date  of  termination.  If he  voluntarily
terminates  his  employment  by the Company  prior to the end of the term, he is
required,  within  fifteen  days  after his last day of  employment,  to pay the
Company  $50,000 as liquidated  damages to recompense  the Company for the time,
opportunity  loss, cost of securing his  replacement,  absence of continuity and
the adverse impact on customers and employees caused by his departure.

     On August 1, 2000,  the Company  amended the  employment  agreement  of the
President,  Chief Operating  Officer and Chief  Investment  Officer of TIMI. The
amended  agreement expires on July 31, 2001 and provides for an annual salary of
$200,000.



                                       54
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

13.  Commitments (continued)

     On March 11, 1999, the Company entered into a two-year employment agreement
with the Chief  Executive  Officer of TASS for a minimum  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.  Her  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 her accrued  salary,  her guaranteed
bonus, and the value of any accrued but unused vacation time through the date of
termination.  If her employment is terminated for any other reason,  she will be
entitled  to  these  amounts  through  the  end of the  term  of her  employment
agreement;  however,  the Company may offset  against  these  payments an amount
equal to any  compensation  she receives from a competing  business prior to the
end of the term.

     The  Company's  Senior Vice  President  of Global  Marketing  and Sales was
employed pursuant to an employment agreement, dated March 11, 1999, having a two
year term. As of January 22, 2000, the Company and the executive entered into an
Agreement and Release (the "Release")  terminating  his employment.  The Release
provides,  among other things,  that he is to receive severance payments through
the end of the  intended  term of his  employment,  March 10,  2001,  subject to
certain conditions. He was obligated to notify the Company if and when he became
employed by or engaged to render services to a "competing  business," as defined
in the Release,  and to certify to the Company the amount of compensation he was
receiving from the competing  business.  His severance  payments were then to be
reduced by an amount equal to the  compensation  he received  from the competing
business.  The Company made the required severance payments until October,  2000
when it  learned  that the  executive  had been  hired by an  entity  it deems a
"competing  business." He had not provided the Company with the required notice.
In late October  2000,  he sued the Company in New York State  Supreme  Court to
collect  approximately  $118,000 he claims is due under the Release.  In January
2001,  the Company  served an Answer and made  discovery  requests.  The case is
being  transferred  from  Westchester  County,  where it was filed,  to New York
County, where the Release specifies it should be litigated. 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.





                                    55
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

13.  Commitments (continued)

     Leases

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

     The lease for the Company's  London,  England  corporate offices expires in
June 2005 but is renewable for two  additional  five-year  periods.  The monthly
rent is approximately $14,000.

     The Company's  lease for  corporate  offices in Hamilton,  Bermuda  expires
March 1, 2003 and requires monthly payments of approximately $7,100.

     Rent  expense for the years ended  December  31, 2000 and 1999 was $629,200
and $445,700,  respectively.  Future  minimum  obligations  under  noncancelable
operating  leases  at  December  31,  2000  are:  2001-$782,200,  2002-$586,600,
2003-$319,900, 2004-$272,500 and 2005-$113,700.

14.  Employee Benefit Plan

     The Company has a defined  contribution  plan, the Tremont  Advisers,  Inc.
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  various  investment  mutual funds and the Class A Common Stock or Class B
Common Stock of the Company.  All assets held by the Plan are  self-directed  by
the participants, including employer contributions.

     The  Plan   allows  for   Company   matching   contributions   and  Company
discretionary  contributions.  The Company's matching contribution for the years
ending  December  31,  2000  and 1999  was 25  cents  for each $1 a  participant
contributed  as an  employee  salary  deferral,  up to a  deferral  of  6.25% of
eligible compensation  ($170,000 maximum and $160,000 maximum for 2000 and 1999,
respectively).   The  Company's   matching   contributions   and   discretionary
contributions are made annually, subsequent to year-end.

     The  Company's  discretionary  contributions  to the Plan were $130,000 and
$140,200 for the years ended December 31, 2000 and 1999, respectively.



                                       56
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

15.  Segment and Geographic Data

     The Company is a holding  company having three principal areas of business:
developing  and managing  proprietary  investment  funds,  providing  investment
advisory services and researching and selling information.

     The Company's  proprietary  investment  funds,  generally offered under the
"American  Masters"  name, are domestic and off-shore  single and  multi-manager
investment  funds from which the Company earns  monthly or quarterly  management
fees based upon net assets.

     Investment   advisory  activities  include  counseling  clients  about  the
organization  and  management  of their  investment  portfolios  or programs and
providing  specialized  investment  services to investment  management firms and
individual  investment  advisers.  Advisory  fees are  generally  based upon the
amount of assets in the clients' investment vehicles.

     The research  conducted  by the Company on domestic and foreign  investment
advisors is critical to all aspects of its business. The Company has developed a
proprietary  program  which  reviews and  evaluates  this  information.  Certain
aspects of the program are sold to large institutions such as banks, foundations
and government agencies, among others, as well as to high net worth individuals.
Generally, these sales are made for a fixed fee.

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

                                                2000             1999
                                           -----------------------------
   Revenues

    Proprietary investment funds            $11,874,400       $8,139,500

    Advisory services
      Asset-based fees                        4,058,900        2,743,400
      Fixed fees                              1,234,600        1,112,100
      Administration fees                     1,162,800          600,000
      Traditional fees                        1,204,700        1,221,300
      Performance Fees                        1,535,400          817,400
      Commissions                               267,200          348,900
                                           -----------------------------
                                              9,463,600        6,843,100

    Information sales                         1,839,500        1,542,000
                                           -----------------------------

    Total consolidated revenues             $23,177,500      $16,524,600
                                           =============================



                                       57
<PAGE>


                             Tremont Advisers, Inc.

             Notes to Consolidated Financial Statements (continued)

15.  Segment and Geographic Data (continued)

     The  following  table  provides  a summary  of fees  earned  by  geographic
location.

                                                   Revenues (a)
                                       -------------------------------
                                           2000               1999
                                       -------------      ------------

     United States                      $12,490,400        $ 9,755,000
     Bermuda                              8,765,400          5,237,900
     United Kingdom                       1,921,700          1,531,700
                                       ------------       ------------
     Consolidated total                 $23,177,500        $16,524,600
                                       ============       ============

     (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.

     Certain proprietary investment funds accounted for significant  percentages
of the Company's consolidated revenues, as follows:

                                                          2000         1999
                                                         -------------------

   American Masters Broad Market Prime Fund, L.P.         17.8%       16.9%
   Kingate Global Fund Class B Shares                     13.3%       14.7%
   American Masters Broad Market Fund, L.P.               12.2%       13.3%




                                       58
<PAGE>


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


                                 Not applicable













                                       59
<PAGE>


                                    PART III

Item 9.  Directors and Executive Officers of the Registrant.

Directors

     All  directors of the Company hold office until the next annual  meeting of
the  Company's  shareholders  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.  There are no family  relationships
among any of the directors or executive officers of the Company.

     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  receive  $5,000 for each Board of  Directors  meeting
attended and $2,500 for each telephonic meeting in which they participate.

     In  addition  to the  cash  compensation  described  above,  the  Company's
non-employee  directors were granted  options to purchase an aggregate of 18,750
shares of the Company's Class B Common Stock on December 9, 1999. These options,
granted  under the  Company's  1998 Stock Plan,  are  exercisable  for $8.00 per
share.  Half of these options are currently  exercisable  and the balance become
exercisable  on December 9, 2001. All of the options expire on December 9, 2004.
No options were granted to  non-employee  directors in 2000.  The  foregoing has
been  adjusted  to give  effect to the impact of the  five-for-four  stock split
distributed on August 8, 2000.

     The Audit Committee is the only committee of the Board of Directors.  It is
comprised of Mr.  Schulman and three of the  non-employee  directors.  The Audit
Committee is responsible  for overseeing  and  monitoring  management's  and the
Company's  independent  auditors'   participation  in  the  financial  reporting
process.  The Audit Committee must recommend the Company's financial  statements
for a particular period to the Board of Directors before the Company may include
them in any report filed with the Securities and Exchange Commission.  The Audit
Committee  also  performs  such  other  duties as are set  forth in its  written
charter  which is in  compliance  with all of the  requirements  of the National
Association of Securities Dealers,  Inc. Directors do not receive any additional
compensation for serving on the Audit Committee.

     Shortly,  the Board of Directors will be conferring about the establishment
of a  Disclosure  Policy  Committee  to oversee the  Company's  compliance  with
Regulation Fair Disclosure, adopted by the Securities and Exchange Commission in
August 2000.



                                       60
<PAGE>


         Directors and Executive Officers

     The directors and executive officers of the Company are:

       Name                 Age                    Position
-------------------         ---                    ---------
Sandra L. Manzke            52         Chairman of the Board of Directors and
                                         Co-Chief Executive Officer

Robert I. Schulman          55         Director, President and
                                         Co-Chief Executive Officer

Barry H. Colvin             33         Chief Operating Officer

Bruce D. Ruehl              40         Director, Chief Investment Strategist

Nicola Meaden               41         Director, Chief Executive Officer of TASS

John L. Keeley, Jr.         60         Director

Alan A. Rhein               58         Director

Richard O'Brien             43         Director

Jimmy L. Thomas             59         Director

Suzanne S. Hammond          54         Secretary and Treasurer

Stephen T. Clayton          40         Chief Financial Officer

     Sandra L. Manzke is the Company's Chairman of the Board and has served as a
director of the Company since 1987. Prior to becoming Chief Executive Officer in
May 1994,  Ms. Manzke served as the Company's  President.  Ms. Manzke is now the
Co-Chief Executive Officer of the Company and also serves as a director of TBL.

     Robert I.  Schulman is the  Company's  President and has been since joining
the Company in May 1994.  Until  August  2000,  he also served as the  Company's
Chief  Operating  Officer.  At that  time he was  appointed  Co-Chief  Executive
Officer of the Company  with Ms.  Manzke.  He has been a director of the Company
since October 1993. Mr.  Schulman also serves as the President,  Chief Executive
Officer and a director of TSI, as Chairman and  President of TFI and as Chairman
of the Board of Directors and Chief Executive Officer of TIMI. Mr. Schulman is a
member of the Company's Audit Committee.



                                       61
<PAGE>


     Barry H. Colvin  joined the Company in October  1999 as Director of Manager
Research. In August 2000, he became the Company's Chief Operating Officer. Prior
to joining the  Company,  Mr.  Colvin  spent three years as Vice  President  and
Director of Research for Asset Consulting  Group,  Inc. of St. Louis,  Missouri,
overseeing  research for clients whose assets  totaled over $24 billion.  Before
that,  he was a fixed  income  trader and,  later,  a private deal analyst for a
major insurance company headquartered in the Midwest.

     John L. Keeley,  Jr. has been a director of the Company since January 1994.
Mr.  Keeley  is  President,  Treasurer  and  a  director  of  Keeley  Investment
Corporation,  a registered  broker-dealer  and the  President,  Treasurer  and a
director  of  Keeley  Asset  Management  Corporation,  a  registered  investment
advisor,  and of Keeley Small Cap Value Fund,  Inc., an open-end mutual fund. He
is a principal of various investment partnerships and of the John L. Keeley, Jr.
Foundation and is also a director of the Marquette  National  Corporation  since
1994. Mr. Keeley is a member of the Company's Audit Committee.

     Alan A. Rhein has been a director of the Company since 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,  its broker-dealer  division. Mr. Rhein is Chairman
of the Company's Audit Committee.

     Richard  O'Brien has been a director of the Company since June 1998. He has
been the Vice President, Secretary and General Counsel of Mutual Risk Management
Ltd. since March 1995.

     Jimmy L.  Thomas has been a director of the Company  since  November  1994.
Prior to retiring in 1998, he was Senior Vice  President-Financial  Services and
Treasurer of Gannett Co., Inc. Mr.  Thomas also serves on the Regional  Advisory
Board of HSBC Bank USA and is a member of the Company's Audit Committee.

     Nicola  Meaden  has been a director  of the  Company  since June 1999.  Ms.
Meaden is the founder and Chief Executive Officer of TASS. Prior to establishing
TASS in 1990, Ms. Meaden worked for Gourlay Wolff, a London-based  commodity and
futures brokerage company, where she was responsible for developing and managing
its  managed  futures  department  and  organizing  and  managing  multi-manager
offshore funds.

     Bruce D.  Ruehl has been a director  of the  Company  since June 1999.  Mr.
Ruehl  joined  the  Company  in  1993  and is  the  Company's  Chief  Investment
Strategist. He previously was the manager of the Company's research activities.

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

     Stephen T. Clayton has been the  Company's  Chief  Financial  Officer since
January  1994 and is a  director  of TSI and is Chief  Financial  Officer  and a
director of both TFI and TIMI.


                                       62
<PAGE>


Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Exchange Act of 1934 requires the Company's  directors
and executive  officers to file reports of their holdings of and transactions in
the Company's  stock with the  Securities and Exchange  Commission  (the "SEC").
Based  on the  Company's  records  and the  directors  and  executive  officers'
representations  to the Company,  the Company  believes  that during fiscal 2000
these  requirements were met, except Robert I. Schulman filed a late report as a
result of a problem  related to the SEC's  electronic  filing  procedures.  That
filing reported a total of six sale transactions that occurred in November 2000.

Item 10. Executive Compensation.

     The following  table sets forth the annual and long-term  compensation  for
the Company's  Chief  Executive  Officer and the four other  executive  officers
whose total cash  compensation  exceeded  $100,000 for services  rendered to the
Company and its  subsidiaries  in the fiscal year ended  December  31, 2000 (the
"Named Officers").

     All share data has been restated to reflect the impact of the five-for-four
stock split distributed on August 8, 2000.

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                 Long Term Compensation
                                                                           ------------------------------------------------
                                                Annual Compensation                 Awards           Payouts
---------------------------------------------------------------------------------------------------------------------------
                                                                   Other    Restricted  Securities
                                                                  Annual      Stock     Underlying     LTIP      All Other
                                                                  Compen-    Award(s)    Options/     Payout      Compen-
Name and Principal Position        Year  Salary ($) Bonus ($)(1)  tion ($)     ($)        SARs (#)      ($)      sation ($)
---------------------------------------------------------------------------------------------------------------------------
<S>                                <C>    <C>            <C>         <C>        <C>       <C>           <C>   <C>
                                   2000   391,400        450,000     --         --        12,500        --         --
                                  -----------------------------------------------------------------------------------------
Sandra L. Manzke                   1999   380,000        372,000     --         --        13,750        --     58,275 (2)
                                  -----------------------------------------------------------------------------------------
Co-Chief Executive Officer         1998   373,000        310,000     --         --           --         --         --
---------------------------------------------------------------------------------------------------------------------------
Robert I. Schulman                 2000   352,300        405,000     --         --        12,500              945,600 (3)
                                  -----------------------------------------------------------------------------------------
President and                      1999   342,000        334,800     --         --        12,500        --     58,275 (2)
                                  -----------------------------------------------------------------------------------------
Co-Chief Executive Officer         1998   335,700        279,000     --         --           --         --    295,000 (3)
---------------------------------------------------------------------------------------------------------------------------
                                   2000   228,100        200,000     --         --        100,000       --     45,800 (2)
                                  -----------------------------------------------------------------------------------------
Barry H. Colvin,                   1999    38,400        100,000     --         --        31,250        --         --
                                  -----------------------------------------------------------------------------------------
Chief Operating Officer            1998      --            --        --         --           --         --         --
---------------------------------------------------------------------------------------------------------------------------
                                   2000   220,800        200,000     --         --        50,000        --         --
                                  -----------------------------------------------------------------------------------------
Bruce D. Ruehl,                    1999   155,000        125,000     --         --         6,250        --     33,300 (2)
                                  -----------------------------------------------------------------------------------------
Chief Investment Strategist        1998   150,000        150,000     --         --         6,250        --         --
---------------------------------------------------------------------------------------------------------------------------
Nicola Meaden                      2000   183,300        200,000     --         --        48,000        --         --
                                  -----------------------------------------------------------------------------------------
Chief Executive Officer -          1999   125,000         90,000     --         --         6,250        --     33,300 (2)
                                  -----------------------------------------------------------------------------------------
Tremont (TASS) Europe, Ltd.        1998      --            --        --         --           --         --         --
---------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       63
<PAGE>


(1)  A portion of the bonuses for Ms.  Manzke,  Mr.  Schulman,  Mr.  Ruehl,  Mr.
     Colvin and Ms.  Meaden which  accrued in 1999 were  actually  paid in 2000.
     These  amounts  were  $150,000,  $135,000,  $30,000,  $20,000 and  $32,200,
     respectively. A portion of the bonuses for Ms. Manzke, Mr. Schulman and Mr.
     Ruehl which accrued in 1998 were actually paid in 1999.  These amounts were
     $105,000, $94,500, and $30,000, respectively.

(2)  Value of FITX common stock distributed as a bonus to the employee.

(3)  Represents  compensation  charges  as a result of the  exercise  of certain
     stock options.

Option Grants in Last Fiscal Year

     Presented below is information respecting grants of options to purchase the
Company's  Class B Common Stock  granted to each Named  Officer  during the year
ended December 31, 2000.

<TABLE>
<CAPTION>

                                                    Percent of Total
                                                    Options Granted
                                                           to
                                      Number of       Employees in
                                      Securities         Fiscal     Exercise of Base
               Name               Underlying Options      Year        Price ($/Sh)       Expiration Date
--------------------------------------------------------------------------------------------------------------
<S>                                     <C>               <C>            <C>             <C>
Sandra L. Manzke                         12,500            4%            $11.55          December 6, 2005
Robert I. Schulman                       12,500            4%             10.50          December 6, 2005
Barry H. Colvin                         100,000           31%             10.50          December 6, 2005
Bruce D. Ruehl                           50,000           16%             10.50          December 6, 2005
Nicola Meaden                            48,000           15%             10.50          December 6, 2005
</TABLE>





                                       64
<PAGE>


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

     Presented below is information  respecting  unexercised options to purchase
the Company's Class B Common Stock held by each Named Officer as of December 31,
2000.

<TABLE>
<CAPTION>
                                                          Number of Securities      Value of Unexercised
                                                         Underlying Unexercised    In-the-Money Options at
                                                        Options at December 31,       December 31, 2000
                                                                 2000 (#)                    ($)
                         Shares Acquired      Value            Exercisable/              Exercisable/
       Name              on Exercise (#)    Realized ($)      Unexercisable             Unexercisable
-----------------------------------------------------------------------------------------------------------
<S>                          <C>            <C>            <C>          <C>        <C>             <C>
Sandra L. Manzke                --          $   --          64,687      16,250       $546,700       $25,800
Robert I. Schulman           120,000         945,600       162,812      15,625     $1,621,300       $38,600
Barry H. Colvin                 --              --          40,625      90,625        $98,900      $172,600
Bruce D. Ruehl                  --              --          29,687      40,625       $148,500       $67,700
Nicola Meaden                   --              --         271,389      52,064     $1,670,500       $96,200
</TABLE>

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

     Both the Company's  Chairman of the Board and Co-Chief  Executive  Officer,
Sandra L. Manzke,  and the Company's  President and Co-Chief  Executive Officer,
Robert I.  Schulman,  entered  into  amendments  dated as of December 6, 2000 to
their employment agreements with the Company. Their amended agreements expire on
December  31, 2001 and will be  automatically  renewed  from year to year unless
terminated in a timely manner.

     Ms.  Manzke is entitled to a minimum  annual salary of $420,000 and a bonus
determined  by the Board of  Directors.  Mr.  Schulman  is entitled to a minimum
annual  salary of $378,000  and a bonus  determined  by the Board of  Directors;
however, in no event may Mr. Schulman's salary or bonus in any year be less than
90% of Ms. Manzke's salary and bonus for that year.

     Ms.  Manzke's  employment may be terminated  due to illness,  disability or
other  incapacity  if she is unable to  perform  her  duties  for a period of 90
consecutive days. If her employment is so terminated,  she will receive her base
salary and accrued bonus until December 31, 2001. In the event of her death, her
right to compensation ceases immediately.




                                       65
<PAGE>


     In the event of the termination of Ms. Manzke's  employment for any reason,
including  death, the Company has the option,  exercisable  within 90 days after
the termination, to acquire all of her stock in the Company for a price equal to
its market value on the date of 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 equal to its then market value.

     If Mr.  Schulman is disabled or his employment is terminated by the Company
without cause or by him with cause,  he will receive his base salary and accrued
bonus until  December 31, 2001.  If 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 ceases immediately.

     Upon executing his employment  agreement in 1994, Mr.  Schulman was granted
options to purchase  439,647 shares of the Company's  Class B Common Stock at an
exercise price of $1.12 per share,  the then current fair market value.  114,375
options, all of which are fully vested and will expire on the anniversary of the
grant  date  in  2001,  remain  unexercised.  If Mr.  Schulman's  employment  is
terminated  for  any  reason,  including  the  expiration  of  the  term  of his
employment  agreement,  these unexercised  options will remain exercisable until
their  expiration  date.  However,  the Company may, within seven days after the
termination,  purchase (x) all of Mr.  Schulman's stock in the Company for a per
share price equal to the best bid price on the date of  termination  and (y) all
of his  unexercised  options at a per share  price  equal to the  greater of (i)
$1.12 or (ii) the  amount  of the best bid  price  for a share of Class B Common
Stock on the date of  termination  less $1.12.  Mr.  Schulman has agreed that he
will not sell or dispose  of any of the Class B Common  Stock  underlying  these
options,  or any of these  options that have not been  exercised,  without first
offering  them  to the  Company  for the  price  applicable  in the  case of the
termination of his employment.

     In August 2000, the Company's  Chief  Operating  Officer,  Barry H. Colvin,
entered into an employment agreement with the Company that expires on January 1,
2002. Mr. Colvin is entitled to a minimum salary of $275,000 and an annual bonus
of at least  $200,000  if he is  employed  by the  Company  on the date that the
Company usually pays annual performance  bonuses.  The Company may terminate Mr.
Colvin's  employment  without cause at any time. In that event,  he will receive
severance equal to the balance of the  compensation  due to him through December
31, 2001, but benefits and any other employee  entitlements will cease as of the
date of termination.  If Mr. Colvin  terminates his employment before January 1,
2002,  then,  within fifteen days after his last day of employment,  he must pay
the  Company  $50,000  for the time,  opportunity  loss,  cost of  securing  his
replacement,  absence of  continuity  and the adverse  impact on  customers  and
employees caused by his departure.

     The Company's  employment  agreement with TASS's Chief  Executive  Officer,
Nicola Meaden,  expires March 11, 2001. Ms. Meaden receives a minimum salary and
a minimum bonus of, respectively,  $150,000 and $50,000 per year. Her employment
may be  terminated by consent,  as a result of death or  disability  and with or
without cause.  If Ms.  Meaden's  employment is terminated  for cause,  she will
receive  her  accrued  salary,  bonus  and  vacation  pay  through  the  date of
termination.  If her employment is terminated for a reason other than cause, she
will receive these amounts  through the end of the term of her agreement less an
amount equal to any compensation  she receives from a competing  business during
the period.


                                       66
<PAGE>


     TIMI's  President,  Chief Operating  Officer and Chief Investment  Officer,
Robert  Parnell,  entered  into an  amendment,  dated  August  1,  2000,  to his
employment agreement with the Company. Under the terms of the amended agreement,
which  expires July 31,  2001,  Mr.  Parnell  will  receive an annual  salary of
$200,000 per year. The agreement will be automatically renewed from year to year
unless terminated in accordance with its terms.

     Laurence  Huntington  Taylor, II was employed by the Company for a two year
term as Senior  Vice  President  of Global  Marketing  and Sales  pursuant to an
employment  agreement  dated March 11, 1999. As of January 22, 2000, the Company
and Mr. Taylor entered into an Agreement and Release (the "Release") terminating
Mr. Taylor's  employment.  The Release  provides,  among other things,  that Mr.
Taylor is to receive severance  payments through the end of the intended term of
his employment,  March 10, 2001, subject to certain  conditions.  Mr. Taylor was
obligated to notify the Company if and when he became  employed by or engaged to
render  services to a "competing  business,"  as defined in the Release,  and to
certify to the  Company the amount of  compensation  he was  receiving  from the
competing business.  To the extent Mr. Taylor's  compensation from the competing
business equals his severance payments,  the Company's  severance  obligation is
eliminated.  The Company made  severance  payments to Mr. Taylor until  October,
2000 when it  learned  that Mr.  Taylor  had been  hired by an entity it deems a
"competing  business"  and had not provided  the Company  with the  notification
required under the Release. In late October 2000, Mr. Taylor sued the Company in
New York  State  Supreme  Court to  collect an amount he claims is due under the
Release.  In January  2001,  the  Company  served an Answer  and made  discovery
requests.  The case is being transferred from Westchester  County,  where it was
filed, to New York County,  where the Release  specifies it should be litigated.
On February 28, 2001,  Mr.  Taylor  served a motion for summary  judgment on the
issue of the  Company's  alleged  liability.  The Company  will serve  papers in
opposition to Mr. Taylor's motion. 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 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 the Company's
officers as a group, as well as certain other  beneficial  owners as of February
28, 2001.  Information  as to the number of shares of Common Stock owned and the
nature  of  ownership  has been  provided  by these  individuals  or is based on
Schedules 13D, or amendments thereto,  received by the Company as filed with the
Securities and Exchange  Commission,  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  information  set forth in the table has been  adjusted  to reflect the
impact of the five-for-four stock split distributed on August 8, 2000.


                                       67
<PAGE>


<TABLE>
<CAPTION>
                                               Number of Shares
                                                      Owned                        % of
                                              -----------------------      --------------------
Name and Address of Beneficial Owner          Class A        Class B       Class A      Class B
------------------------------------          -------        --------      -------      -------
<S>              <C>                          <C>             <C>           <C>           <C>
Sandra L. Manzke (1)                          256,089         599,648       15%           12%
555 Theodore Fremd Avenue
Rye, New York

Robert I. Schulman (2)                         12,180         521,658        *            10%
555 Theodore Fremd Avenue
Rye, New York

Barry H. Colvin (3)                                --          43,325        *             1%
555 Theodore Fremd Avenue
Rye, New York

John L. Keeley, Jr. (4)                       107,379         560,349        6%           11%
401 South LaSalle Street
Chicago, Illinois

Alan Rhein (5)                                     --          53,905        *             1%
405 Park Avenue
New York, New York

Jimmy L. Thomas (6)                                --          81,250        *             2%
205 Fox Meadow Drive
Orchard Park, New York 14127

Suzanne S. Hammond (7)                         20,025          43,638        1%            1%
555 Theodore Fremd Avenue
Rye, New York

Stephen T. Clayton (8)                          6,842          68,336        *             1%
555 Theodore Fremd Avenue
Rye, New York

Bruce D. Ruehl (9)                              5,992         187,076        *             4%
555 Theodore Fremd Avenue
Rye, New York

Mario J. Gabelli (10)                         694,143         306,040       39%            6%
Gabelli Asset Management Inc.
555 Theodore Fremd Avenue
Rye, New York
</TABLE>


                                       68
<PAGE>


<TABLE>
<CAPTION>
                                               Number of Shares
                                                      Owned                        % of
                                              -----------------------      --------------------
Name and Address of Beneficial Owner          Class A        Class B       Class A      Class B
------------------------------------          -------        --------      -------      -------
<S>                                                <C>      <C>              <C>          <C>

Brighton Communications Corporation (11)           --         170,063        *             3%
401 Theodore Fremd Ave.
Rye, New York

Nicola Meaden (12)                                 --         384,592        *             7%
Charter House
13-15 Carteret Street
London, England

Legion Insurance Company(13)                       --       1,351,536        *            26%
One Logan Square
Philadelphia, PA

Directors and Officers as a group:            408,507       2,543,777       24%           49%
</TABLE>

* Less than one percent.
-------------

(1)  Includes 60,377 shares of Class A Common Stock and 67,851 shares of Class B
     Common Stock owned by the Tremont Advisers, Inc. Savings Plan (the "Savings
     Plan") over which Ms. Manzke has investment discretion and 64,687 shares of
     Class B Common Stock subject to currently  exercisable stock options and/or
     stock  options   exercisable   within  60  days  after  February  28,  2001
     (collectively, the "Currently Exercisable Options").

(2)  Includes 12,180 shares of Class A Common Stock and 13,208 shares of Class B
     Common  Stock  owned by the  Savings  Plan  over  which  Mr.  Schulman  has
     investment discretion and 162,812 shares of Class B Common Stock subject to
     Currently Exercisable Options.

(3)  Includes  40,625  shares  of  Class B Common  Stock  subject  to  Currently
     Exercisable Options

(4)  Includes  31,250 shares of Class B Common Stock owned by Mr. Keeley's wife,
     14,062  shares  of Class B Common  Stock  owned by the John L.  Keeley  Jr.
     Foundation,  54,687  shares of Class B Common Stock owned by the KIC Profit
     Sharing  Plan & Trust,  54,687  shares of Class B Common Stock owned by the
     KIC Pension Plan & Trust,  102,675  shares of Class B Common Stock owned by
     Kamco Limited  Partnership  No. 1 and 30,802 shares of Class B Common Stock
     owned by JGJ Partnership. Mr. Keeley is deemed to have beneficial ownership
     of the  foregoing.  Also  includes  14,062  shares of Class B Common  Stock
     subject to Currently Exercisable Options.

(5)  Includes  22,656  shares  of  Class B Common  Stock  subject  to  Currently
     Exercisable Options.


                                       69
<PAGE>


(6)  Includes  3,125  shares  of  Class B  Common  Stock  subject  to  Currently
     Exercisable Options.

(7)  Includes  14,166  shares  Class A Common  Stock owned by the Savings  Plan,
     2,557  shares of Class B Common  Stock owned by the Savings Plan over which
     Ms. Hammond has investment discretion and 6,188 shares of Class B of Common
     Stock subject to Currently Exercisable Options.

(8)  Includes  6,842  shares of Class A Common Stock and 6,027 shares of Class B
     Common  Stock  owned  by the  Savings  Plan  over  which  Mr.  Clayton  has
     investment  discretion and 32,656 shares of Class B Common Stock subject to
     Currently Exercisable Options. Also includes 5,624 shares of Class B Common
     Stock owned by his wife,  as to which Mr.  Clayton  specifically  disclaims
     beneficial ownership,  and 312 shares owned by his minor children which Mr.
     Clayton is deemed to own beneficially.

(9)  Includes  5,992  shares of Class A Common Stock and 2,140 shares of Class B
     Common Stock owned by the Savings Plan over which Mr. Ruehl has  investment
     discretion  and 29,687  shares of Class B Common Stock subject to Currently
     Exercisable Options.

(10) Includes 407,465 shares of Class A Common Stock and 3,540 shares of Class B
     Common Stock owned by a family  partnership over which Mr. Gabelli has sole
     voting power and investment power. Includes 22,800 shares of Class A Common
     Stock owned by a family  foundation  over which Mr.  Gabelli has voting and
     investment  power,  of which Mr. Gabelli  disclaims  beneficial  ownership.
     Includes  47,067  shares  of  Class A  Common  Stock  subject  to a  voting
     agreement  appointing Mr. Gabelli proxy with the power to vote such shares,
     which voting agreement expires in June 2001. Does not include shares listed
     elsewhere  in  this  table  which  are  held  by  Brighton   Communications
     Corporation  ("Brighton"),  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 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.  Acting in these  capacities,  Mr.  Gabelli has the  authority for
     making  voting  and  investment  decisions  on  behalf of GGCP and GSI and,
     therefore,  may be  deemed  to be the  beneficial  owner of  shares  of the
     Company  owned by or held in  accounts  of GGCP and GSI.  Of the  remaining
     shares of Class A Common  Stock  owned by Mr.  Gabelli  and  affiliates  of
     Gabelli, 52,390 shares are held by GSI and 282 shares are held by GGCP.


                                       70
<PAGE>


(11) 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 Corporation  ("Lynch").  Mr. Gabelli may be deemed to
     be a beneficial  owner of the shares of the Company  owned by  Brighton,  a
     subsidiary  of  Lynch,  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 Brighton.

(12) Includes  284,327  shares  of Class B Common  Stock  subject  to  Currently
     Exercisable Options.

(13) Mutual  Risk  Management,   Ltd.'s  ("MRM")  wholly-owned  subsidiary,  MGL
     Investment, Ltd., purchased these shares during 1997 and 1999. These shares
     were transferred, effective December 31, 1999, to Legion Insurance Company,
     another of MRM's wholly-owned subsidiaries.

Item 12.  Certain Relationships and Related Transactions.

     None.

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, 2000 and 1999............... 29
Consolidated Statements of Income for the years ended
   December 31, 2000 and 1999.............................................. 30
Consolidated Statements of Shareholders' Equity for the years ended
   December 31, 2000 and 1999.............................................. 31
Consolidated Statements of Cash Flows for the years ended
   December 31, 2000 and 1999.............................................. 32
Notes to Consolidated Financial Statements................................. 34




                                       71
<PAGE>


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

     3.4 Amendment, dated August 6, 1998, to the Certificate of Incorporation of
the Company  (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).

     10.30 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,  dated April 18, 1997,  between Gateside - Rye Company and the
Company  (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).


                                       72
<PAGE>


     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 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 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 the
Company, 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).


                                       73
<PAGE>

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

     10.66  Agreement  and Release,  dated as of January 22,  2000,  between the
Company and Laurence  Huntington Taylor II (incorporated  herein by reference to
the Company's Form 10-KSB filed with the Commission on March 17, 2000).

     10.67 Revolving Credit  Promissory Note, dated July 25, 2000, in the amount
of  $2,500,000  by the  Company in favor of Fleet  National  Bank  (incorporated
herein by reference to the  Company's  Form 10-QSB filed with the  Commission on
August 11, 2000).

     10.68 Employment Agreement,  dated August 14, 2000, between the Company and
Barry Colvin  (incorporated  herein by reference to the Company's Form 8-K filed
with the Commission on August 15, 2000).

     10.69  Amendment,  dated August 1, 2000,  to Employment  Agreement  between
Tremont Investment Management, Inc. and Robert Parnell


                                       74
<PAGE>


     10.70 Amendment,  dated December 6, 2000, to Employment  Agreement  between
the Company and Sandra L. Manzke

     10.71 Amendment,  dated December 6, 2000, to Employment  Agreement  between
the Company and Robert I. Schulman

     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

(b)   Reports on Form 8-K.

      None.




                                       75
<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 7, 2001

     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 7, 2001
-------------------------
Sandra L. Manzke                Co-Chief Executive Officer

/s/  Robert I. Schulman         President; Co-Chief Executive     March 7, 2001
-------------------------
Robert I. Schulman              Officer and Director

/s/  Barry H. Colvin            Chief Operating Officer           March 7, 2001
-------------------------
Barry H. Colvin

/s/  John L. Keeley, Jr.        Director                          March 7, 2001
-------------------------
John L. Keeley, Jr.

/s/  Nicola Meaden              Director                          March 7, 2001
-------------------------
Nicola Meaden

/s/  Bruce Ruehl                Director                          March 7, 2001
-------------------------
Bruce Ruehl



                                       76
<PAGE>


/s/  Richard O'Brien            Director                          March 7, 2001
-------------------------
Richard O'Brien

/s/  Alan A. Rhein              Director                          March 7, 2001
-------------------------
Alan A. Rhein

/s/  Jimmy L. Thomas            Director                          March 7, 2001
-------------------------
Jimmy L. Thomas

/s/  Suzanne S. Hammond         Secretary & Treasurer             March 7, 2001
-------------------------
Suzanne S. Hammond

/s/  Stephen T. Clayton         Chief Financial Officer           March 7, 2001
-------------------------
Stephen T. Clayton


                                       77
<PAGE>


                                  EXHIBIT INDEX

                        Exhibit No. and Description                     Page 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,   dated  December  23,  1993,  to  the  Certificate  of
       Incorporation of the Company  (incorporated herein by reference to
       the  Company's  Form 10-K filed with the  Commission  on March 29,
       1994).

3.4    Amendment,   dated  August  6,  1998,   to  the   Certificate   of
       Incorporation of the Company  (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).

10.30  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).



                                   78
<PAGE>


10.39  Lease,  dated April 18, 1997,  between  Gateside - Rye Company and
       the Company  (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 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).



                                   79
<PAGE>


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 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
       the Company,  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,  Inc.  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 the  Company,  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 the Company 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
       the Company 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,   the  Company   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  the  Company  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 the Company and Nicola Meaden  (incorporated herein by
       reference to the Company's  Form 10-KSB filed with the  Commission
       on March 19, 1999).


                                   80
<PAGE>


10.66  Agreement and Release,  dated as of January 22, 2000,  between the
       Company and Laurence Huntington Taylor II (incorporated  herein by
       reference to the Company's  Form 10-KSB filed with the  Commission
       on March 17, 2000).

10.67  Revolving  Credit  Promissory  Note,  dated July 25, 2000,  in the
       amount of  $2,500,000  by the  Company in favor of Fleet  National
       Bank  (incorporated  herein by  reference  to the  Company's  Form
       10-QSB filed with the Commission on August 11, 2000).

10.68  Employment  Agreement,  dated August 14, 2000, between the Company
       and  Barry  Colvin   (incorporated  herein  by  reference  to  the
       Company's Form 8-K filed with the Commission on August 15, 2000).

10.69  Amendment,  dated August 1, 2000, to Employment  Agreement between
       Tremont Investment Management, Inc. and Robert Parnell ............... 82

10.70  Amendment, dated December 6, 2000, to Employment Agreement between
       the Company and Sandra L. Manzke ..................................... 84

10.71  Amendment, dated December 6, 2000, to Employment Agreement between
       the Company and Robert I. Schulman ................................... 86

21.1   Subsidiaries of the Company .......................................... 88

23.1   Consent of Ernst & Young LLP, independent auditor .................... 89

23.2   Consent of Goldstein Golub Kessler LLP, independent auditors ......... 90

23.3   Consent of Goldstein Golub Kessler LLP, independent auditors ......... 91




                                   81