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Tremont Advisers Inc · 10KSB · For 12/31/99

Filed On 3/17/00 · SEC File 0-27077 · Accession Number 891554-0-734

  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 3/17/00  Tremont Advisers Inc              10KSB      12/31/99    9:96                                     Document Tech Inc/FA

Annual Report -- Small Business · Form 10-KSB
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10KSB       Annual Report -- Small Business                       79    258K 
 2: EX-10.64    Amendment to Employment Agreement                      2      9K 
 3: EX-10.65    Amendment to Employment Agreement                      2      9K 
 4: EX-10.66    Agreement and Release                                  8     40K 
 5: EX-21.1     Subsidiaries of the Company                            1      7K 
 6: EX-23.1     Consent of Independent Auditors                        1      6K 
 7: EX-23.2     Independent Auditor's Consent                          1      6K 
 8: EX-23.3     Independent Auditor's Consent                          1      6K 
 9: EX-27       Financial Data Schedule                                1      7K

10KSB · Annual Report -- Small Business
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Certain Relationships and Related Transactions Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Description of Business Description of Properties Directors and Executive Officers of the Registrant Executive Compensation Exhibit Index Exhibits, List and Reports on Form 8-K Financial Statements Page Foreign Currency Translation Forward Looking Statements Legal Proceedings Management's Discussion and Analysis Market For the Registrant's Common Equity and Related Stockholder Matters Payroll Express Security Ownership of Certain Beneficial Owners and Management Submission of Matters to a Vote of Security Holders
1	1st Page
3	Item 1. Description of Business
13	Item 2. Description of Properties
14	Item 3. Legal Proceedings
"	Payroll Express
"	Item 4. Submission of Matters to a Vote of Security Holders
15	Item 5. Market For the Registrant's Common Equity and Related Stockholder Matters
17	Item 6. Management's Discussion and Analysis
26	Forward Looking Statements
27	Item 7. Financial Statements Page
39	Foreign Currency Translation
58	Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
59	Item 9. Directors and Executive Officers of the Registrant
61	Item 10. Executive Compensation
66	Item 11. Security Ownership of Certain Beneficial Owners and Management
70	Item 12. Certain Relationships and Related Transactions
"	Item 13. Exhibits, List and Reports on Form 8-K
76	Exhibit Index

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SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-KSB

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

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

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

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

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

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

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

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

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

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

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

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

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

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

DOCUMENTS INCORPORATED BY REFERENCE
None

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TABLE OF CONTENTS

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

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

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

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

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PART I

Item 1. Description of Business

General

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

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

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

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

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

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

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

Subsidiaries' Services and Operations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

B. Insurance Products.

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

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

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

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

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A. Proprietary Investment Funds.

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

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

A. Proprietary Investment Funds.

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

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

Clients

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

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

1. TPI

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

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

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

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

2. TBL

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

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

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

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

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

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

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

Selection of Investment Advisers

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

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

Recent Business Developments

TASS Acquisition

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

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

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

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

Joint Venture Investments

Hedge World/FITX

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

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

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

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

CSFB Tremont Hedge Fund Index

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

Competition

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

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

Regulation

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

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

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

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

Employees

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

Stock Split

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

Item 2. Description of Properties

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

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

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

Item 3. Legal Proceedings

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

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

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

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

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PART II

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

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

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

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

Price Range of Class A Common Stock

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

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

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

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

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Price Range of Class B Common Stock

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

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

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

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

Holders

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

Dividends

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

Stock Split

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

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Item 6. Management's Discussion and Analysis

Financial Condition

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

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

Result of Operations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Liquidity and Capital Resources

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

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

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

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

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

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

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

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

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

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Facilities

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

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

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

Investments in Limited Partnerships

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

[Enlarge/Download Table]

Fair Value of Investments at Rate of Return
Fund December 1999 December 1998 1999 1998
---- ------------- ------------- ---- ----

American Masters Broad Market
Fund, L.P. $ 956,000 $ 807,200 17.2% 16.0%
American Masters Broad Market
Prime Fund, L.P 554,400 56,700 22.8% 20.6%
Gamtree, L.P. (3) 192,400 177,600 6.8% (4.9%)
Meridian Horizon Fund, L.P. 501,500 378,600 30.3% 17.2%
American Masters Market
Neutral Fund, L.P. 694,900 614,600 9.0% 1.7%(1)
The Tremont Masters Fund 556,300 -- 11.3%(2) --
---------- ----------
$3,455,500 $2,034,700 00.0 0.0
========== ==========

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

Business Combination

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

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

Inflation

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

Impact of Year 2000

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

Forward Looking Statements

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

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

Item 7. Financial Statements Page
----

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

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Report of Independent Auditors

Shareholders and Board of Directors
Tremont Advisers, Inc.

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

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

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

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

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INDEPENDENT AUDITOR'S REPORT

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

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

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

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

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 18, 2000

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INDEPENDENT AUDITOR'S REPORT

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

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

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

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

February 18, 2000

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Tremont Advisers, Inc.

Consolidated Balance Sheets

[Enlarge/Download Table]

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

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

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

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

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

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

Deferred income taxes payable 836,800 559,400

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

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

See accompanying notes.

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Tremont Advisers, Inc.

Consolidated Statements of Income

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

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

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

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

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

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

See accompanying notes.

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Tremont Advisers, Inc.

Consolidated Statements of Shareholders' Equity

[Enlarge/Download Table]

Common Stock Additional Total
Par Value Paid in Retained Shareholders'
Class A Class B Capital Earnings Equity
------------------------------------------------------------------------------

Balance at December 31, 1997 $ 12,800 $ 28,000 $ 4,725,300 $ (1,280,900) $ 3,485,200
Comprehensive income:
Net income -- -- -- 1,447,900 1,447,900
Foreign currency translation adjustment -- -- -- -- (5,300)
------------
Comprehensive income 1,442,600
Issuance of Class B Common Stock -
Director Options (7,500 shares) -- 100 28,000 -- 28,100
Issuance of Class B Common Stock
-Employee Options (130,000 shares) -- 1,300 227,500 -- 228,800
Income tax benefits related to exercise
of options -- -- 126,100 -- 126,100
------------------------------------------------------------------------------

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

See accompanying notes.

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Tremont Advisers, Inc.

Consolidated Statements of Cash Flows

[Enlarge/Download Table]

Year ended December 31
1999 1998
---------------------------

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

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

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

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

See accompanying notes.

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Tremont Advisers, Inc.

Consolidated Statements of Cash Flows (continued)

[Download Table]

Twelve months ended
December 31
1999 1998
---------------------------

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 --

See accompanying notes.

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements
December 31, 1999

1. Basis of Presentation

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

2. Summary of Significant Accounting Policies

Principles of Consolidation

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

Fair Value of Financial Instruments

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

Use of Estimates

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

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

Revenue Recognition

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

Cash and Cash Equivalents

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

Concentrations of Credit Risk

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

Investments

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Fixed Assets

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

Goodwill

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

Transactions in Affiliates Stock

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

Income Taxes

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

Minority Interest

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Stock Compensation

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

Foreign Currency Translation

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

Earnings Per Share

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

Reclassifications

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

3. Business Combination

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

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

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

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

4. Prepaid Expenses and Other Assets

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

4. Prepaid Expenses and Other Assets (continued)

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

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

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

5. Investments in Limited Partnerships

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

[Enlarge/Download Table]

American Masters American Masters American Masters Tremont
Broad Market Broad Market Market Neutral Masters
Fund, L.P. Prime Fund, L.P. Fund, L.P. Fund
------------------------------------------------------------------------------

1999
Total assets $ 298,527,000 $322,761,500 $10,229,900 $ 556,300
Total liabilities 9,301,900 99,073,700 1,069,500 -

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

5. Investments in Limited Partnerships (continued)

[Enlarge/Download Table]

1998

Total assets $ 198,415,000 $ 236,656,000 $ 1,158,000 $ --
Total liabilities 10,725,000 87,511,800 34,000 --

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

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

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

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

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

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

5. Investments in Limited Partnerships (continued)

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

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

6. Other Investments

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

6. Other Investments (continued)

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

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

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

6. Other Investments (continued)

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

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

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

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

7. Accrued Expenses

Accrued expenses consist of the following:

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

8. Shareholders' Equity

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

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

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

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

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

9. Stock Options

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

9. Stock Options (continued)

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

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

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

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

9. Stock Options (continued)

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

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

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

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

9. Stock Options (continued)

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

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

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

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

[Enlarge/Download Table]

1999 1998
-----------------------------------------------------------------
Weighted-Average Weighted-Average
Options Exercise Price Options Exercise Price
-----------------------------------------------------------------

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

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

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

Weighted-average fair value of options
granted during the year $4.68 $4.41

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

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

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

(a) Average contractual life remaining in years.

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

10. Other Income, Net

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

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

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

11. Income Taxes

The provision for income taxes is summarized as follows:

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

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

11. Income Taxes (continued)

[Download Table]

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

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:

[Enlarge/Download Table]

1999 1998
-----------------------------------------------
Amount Percent Amount Percent
-----------------------------------------------

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

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

11. Income Taxes (continued)

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

12. Earnings Per Share

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

[Enlarge/Download Table]

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

Numerator:
Net income - numerator for basic and dilutive earnings per
share (income available to common shareholders) $2,531,200 $1,447,900

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

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

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

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

Diluted earnings per share $ .43 $ .27
========================

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

13. Contingencies

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

14. Commitments

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

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

14. Commitments (continued)

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

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

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

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

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

15. Employee Benefit Plan

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

15. Employee Benefit Plan (continued)

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

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

16. Segment and Geographic Data

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

16. Segment and Geographic Data (continued)

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

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

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

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

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

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

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

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

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

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

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Tremont Advisers, Inc.

Notes to Consolidated Financial Statements (continued)

16. Segment and Geographic Data (continued)

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

17. Impact of Year 2000 (Unaudited)

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

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

Not applicable

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PART III

Item 9. Directors and Executive Officers of the Registrant.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Item 10. Executive Compensation.

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

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

Summary Compensation Table

[Enlarge/Download Table]

Annual Compensation
----------------------------------------------------------------------------------------------------------------

Long Term Compensation

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

Other Restricted Securities
Annual Stock Underlying LTIP All other
Salary Bonus Compensation Award(s) Options/ Payout Compen-
Name and Principal Year ($)(a) ($)(b) ($) (c) ($) SARs (#) ($) sation($)
Position
-----------------------------------------------------------------------------------------------------------------

Sandra L. Manzke,
Chief Executive Officer 1999 380,000 372,000 58,275 -- 11,000 -- --
----------------------------------------------------------------------------------------
1998 373,000 310,000 -- -- -- -- --
----------------------------------------------------------------------------------------
1997 362,000 135,000 -- -- 43,750 -- --
-----------------------------------------------------------------------------------------------------------------
Robert I. Schulman,
Chief Operating Officer 1999 342,000 334,800 58,275 -- 10,000 -- --
----------------------------------------------------------------------------------------
1998 335,700 279,000 -- -- -- -- 295,000
----------------------------------------------------------------------------------------
1997 326,250 121,500 -- -- 31,250 -- --
-----------------------------------------------------------------------------------------------------------------
Bruce D. Ruehl,
Chief Investment 1999 155,000 125,000 33,300 -- 5,000 -- 9,050
Strategist
----------------------------------------------------------------------------------------
1998 150,000 150,000 -- -- 5,000 -- --
---------------------------------------------------------------------------------------
1997 140,000 100,000 -- -- 12,500 -- --
-----------------------------------------------------------------------------------------------------------------
Stephen T. Clayton,
Chief Financial Officer 1999 140,000 110,000 49,950 -- 7,000 -- 53,125
----------------------------------------------------------------------------------------
1998 130,000 65,000 -- -- 3,125 -- 12,650
----------------------------------------------------------------------------------------
1997 120,000 50,000 -- -- 12,500 -- --
-----------------------------------------------------------------------------------------------------------------
Suzanne S. Hammond,
Secretary and Treasurer 1999 120,000 35,000 19,980 -- 2,500 -- --
----------------------------------------------------------------------------------------
1998 107,000 20,000 -- -- 2,500 -- --
----------------------------------------------------------------------------------------
1997 100,417 14,000 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------

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

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

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

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

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

[Enlarge/Download Table]

Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
December 31, December 31,
1999 (#) 1999 ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized ($) Unexercisable Unexercisable
--------------------------------------------------------------------------------------------

Sandra L. Manzke -- $ -- 46,500/8,250 $154,750/$ --

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

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

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

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

Directors' Compensation

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

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

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

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

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

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

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

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

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

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

Class B Options

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

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

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

1998 Stock Option Plan

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

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

Indemnification for Certain Liabilities

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

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

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

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

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

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[Download Table]

Name and Address of Number of
Beneficial Owner Shares Owned % of
---------------- ------------ ----

Class A Class B Class A Class B
------- ------- ------- -------

Sandra L. Manzke (1) 229,500 482,470 14% 12%
555 Theodore Fremd Avenue
Rye, New York

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

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

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

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

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

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

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

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

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

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

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

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

* Less than one percent.

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

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

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

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

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

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

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

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

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

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

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

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

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

Item 12. Certain Relationships and Related Transactions.

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

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

(a) Documents filed as part of this report:

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

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

Exhibit No.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

21.1 Subsidiaries of the Company

23.1 Consent of Ernst & Young LLP, independent auditor

23.2 Consent of Goldstein Golub Kessler LLP, independent auditors.

23.3 Consent of Goldstein Golub Kessler LLP, independent auditors.

27.0 Financial Data Schedule

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(b) Reports on Form 8-K.

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

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

TREMONT ADVISERS, INC.
(Registrant)

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

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

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

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

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

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

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

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

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

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

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

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

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

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EXHIBIT INDEX

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

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

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

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

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

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

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

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

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

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

10.41 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).

10.44 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).

10.47 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).

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

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

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

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

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

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

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

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

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

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

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

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10KSB Filing	Date	First	Last	Other Filings

	12/23/93	70	76
	1/10/94	60
	1/19/94	60
	2/23/94	76
	3/29/94	70	76
	4/1/94	71	76
	4/22/94	61	76
	5/12/94	71	76
	5/31/94	59
	9/15/95	61
	9/25/95	71	77
	11/13/95	71	77
	12/31/95	41
	12/31/96	41		10KSB
	4/1/97	77
	4/18/97	71
	5/15/97	71	77
	6/5/97	71	77
	6/12/97	72	77
	7/1/97	72	78
	9/30/97	64		10QSB
	12/31/97	21	33	10-K, 10-Q
	1/1/98	15	54
	3/18/98	77
	3/19/98	71	78	10-K
	3/31/98	15	16
	4/1/98	15	16
	7/1/98	15	43
	7/13/98	59
	7/14/98	59
	7/17/98	54	78
	8/1/98	54	64
	8/6/98	71	76
	8/7/98	46		10QSB
	9/1/98	25	42
	9/17/98	46	65
	10/1/98	15	16
	11/6/98	72	78	10QSB/A
	12/31/98	4	70	10KSB
	1/1/99	15	19
	1/27/99	42
	2/1/99	20	25
	3/8/99	73	78
	3/11/99	10	78
	3/15/99	11	47
	3/19/99	71	78	10KSB
	3/31/99	15	16	10QSB
	4/1/99	15	16
	6/15/99	13
	6/23/99	12	44
	6/29/99	9
	6/30/99	44	62	10QSB
	7/1/99	15	44
	7/15/99	16	46
	7/30/99	15	46
	7/31/99	54	64
	8/1/99	54	64
	8/16/99	1	66
	9/1/99	7
	9/21/99	14	53
	9/30/99	55		10QSB
	10/1/99	15	16
	10/18/99	14	53
	12/9/99	53	79
	12/15/99	12	44
	12/23/99	74		8-K
For The Period Ended	12/31/99	1	70	5
	1/1/00	15	16
	1/12/00	44
	1/22/00	53	79
	2/1/00	16		8-K
	2/2/00	15	16
	2/18/00	29	30
	3/2/00	1	66
	3/11/00	11	47
Filed On / Filed As Of	3/17/00	75
	7/31/00	54	64	4
	12/31/00	53	63	10KSB, 4, 5
	3/11/01	11	64
	3/12/01	64		10KSB
	8/31/02	54
	3/1/03	54

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Tremont Advisers Inc · 10KSB · For 12/31/99

Filed On 3/17/00 · SEC File 0-27077 · Accession Number 891554-0-734

Annual Report -- Small Business · Form 10-KSBFiling Table of Contents

10KSB · Annual Report -- Small BusinessDocument Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Annual Report -- Small Business · Form 10-KSB
Filing Table of Contents

10KSB · Annual Report -- Small Business
Document Table of Contents