H Y P E R I O N
1999
TERM TRUST
Annual Report
November 30, 1998
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HYPERION 1999 TERM TRUST, INC.
Report of the Investment Advisor
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January 20, 1999
Dear Shareholder:
We welcome this opportunity to provide you with information about Hyperion 1999
Term Trust, Inc. (the "Trust") for its fiscal year ended November 30, 1998. The
Trust's shares are traded on the New York Stock Exchange ("NYSE") under the
symbol "HTT".
Description Of The Trust
The Trust is a closed-end investment company with a scheduled termination date
of November 30, 1999. As reported in the semi-annual report dated May 31, 1998,
the Trust's investment advisor, Hyperion Capital Management, Inc. (the
"Advisor"), has determined that the amount of portfolio risk required during the
remaining term of the Trust to attain the $10.00 per share terminal date
objective would be inappropriate for the Trust and its shareholders.
Accordingly, the Trust's portfolio is now invested primarily in U.S. Treasury
and mortgage-backed securities that mature near the Trust's scheduled
termination date, but will not enable the Trust to achieve its objective to
return $10.00 per share by that time.
Market Environment
This past year was a very challenging period for the markets. The problems in
the global economy caused volatility in both the fixed income and equity
markets. Prices on U.S. Treasuries increased, but other sectors of the market
did not fare as well. Prices on mortgage-backed securities ("MBS") increased in
general, but to a lesser amount than anticipated as prepayment risk increased.
Credit related securities like corporate bonds also lagged, due to credit
concerns and fears of an economic recession.
Two seemingly contradictory events needed to take place before any semblance of
order could be restored to the markets. First, there had to be a significant
deleveraging of portfolios; and, second, there had to be a reassertion of
economic leadership on the part of both the U.S. and foreign governments.
Surprisingly, both of these occurred in the fourth quarter. The deleveraging of
portfolios occurred as a result of the implementation of stricter lending
standards for all types of companies and portfolios. This forced these
institutions to sell securities into the market and reduce market risk.
Similarly, the lowering of administered interest rates by both the U.S. Federal
Reserve Bank and its European counterparts clearly demonstrated a commitment to
maintain the positive forward movement of these respective economies. Over the
period, the Federal Funds rate dropped by 75 basis points.
By the end of the year, the fixed income markets appeared to be more sound. The
"flight-to-quality" subsided, interest rates reversed some of their declines
but, more importantly, the performance of corporate bonds and MBS began to
recover. Below is a chart showing the changes in interest rates and yield
spreads for various sectors of the fixed income market.
_______________________________________________________________________________
HYPERION 1999 TERM TRUST, INC.
Report of the Investment Advisor
_______________________________________________________________________________
Graph: The Graph depicts the differences in yield spreads
between the GNMA current coupon, 10 year Treasury,
2 year Treasury, and AAA Corporates for the period
between September 30, 1998 and December 30, 1998.
We believe that the fixed income market will
reverse course in 1999. We expect interest rates
to increase slightly during the year. This is
primarily due to the continued strength of the U.S.
economy. For the last 18 months, the U.S. economy
has been an oasis of prosperity in the global
community. The problems in Asia, Russia, and Latin
America have failed to slow the U.S. economy.
Weakness in manufacturing and other
export-dependent companies has been more than
compensated for in other areas, such as
high-technology, bio-technology, and
Internet-oriented companies.
We target a 5.5% to 6.0% yield level on 30-year
U.S. Treasury Bonds in 1999. This interest rate
environment should be favorable for MBS, as higher
interest rates should reduce prepayment risk. The
market environment should also be supportive of
credit-related securities, as the strength of the
economy should keep credit problems at a minimum.
Portfolio Strategy and Performance
Over the last year, the prices of security holdings
in the portfolio increased. As a result, we have
taken the opportunity to selectively sell
securities and reinvest the proceeds into well
structured MBS, U.S. Treasury, and asset-backed
securities with maturities that are consistent with
the termination date of the Trust. In the process,
we have reduced the portfolio's exposure to
prepayment risk by reinvesting into securities with
lower coupon collateral, or by reinvesting into
securities that, because of their structure or
nature, are less sensitive to prepayment risk.
Over the year, the allocation to Collateralized
Mortgage Obligations ("CMOs") increased at the
expense of a reduction in mortgage pass-through
collateral. Additionally, without any negative
impact on the Trust's dividend, the leverage in the
portfolio had been reduced from over 31% to 16%.
The Trust's total return, based on Net Asset Value
for the year ended November 30, 1998, was 7.58%.
Total return is based upon the change in Net Asset
Value of the Trust's shares and includes
reinvestment of dividends. The current monthly
dividend the Trust pays its shareholder is $0.03542
per share. The current yield of 5.91% on shares of
the Trust is based on the NYSE closing price of
$7.1875 on November 30, 1998. This yield was 141
basis points above the yield of the 2-Year Treasury
Note.
As of the end of December, the Trust, inclusive of
leverage, had a duration (duration measures a bond
portfolio's price sensitivity to interest rate
changes) of 1.9 years; the core (non-levered)
assets had a duration of 1.5 years.
The Trust is continuing its share repurchase
program. This repurchase program allows the Trust
to purchase and retire shares of the Trust in the
open marketplace. Such transactions were made when
the share price of the Trust was significantly
below the Trust's NAV. By purchasing the shares at
a discount to the NAV and retiring them, the Trust
recaptures the spread (between share purchase price
and the NAV) is captured by the Trust and the
Trust's remaining shareholders benefit. From
December 1, 1997 through and including November 30,
1998, the Trust has repurchased and retired 186,000
shares, capturing $0.00087 in additional NAV per
share, or $53,305 in an actual dollar amount for
shareholders.
The chart that follows shows the allocation of the
Trust's holdings by asset category on November 30,
1998.
HYPERION 1999 TERM TRUST, INC.
PORTFOLIO OF INVESTMENTS AS OF NOVEMBER 30, 1998 *
PIE CHART
U.S. Government Agency Pass-Through Certificates 6.9%
U.S. Government Agency Collateralized Mortgage Obligations 56.1%
U.S. Treasury Obligations 14.3%
Asset-Backed Securities 6.4%
Collateralized Mortgage Obligations 14.5%
Municipal Zero Coupon Securities 0.2%
Repurchase Agreement 1.6%
*As a percentage of total investments.
*As a percentage of total investments.
Conclusion
We appreciate the opportunity to serve your
investment needs. As always, we welcome your
questions and comments, and encourage you to
contact our Shareholder Services Representatives at
1-800-HYPERION.
Sincerely,
ANDREW M. CARTER CLIFFORD E. LAI
Director and Chairman of the Board President
Hyperion 1999 Term Trust, Inc. Hyperion 1999 Term Trust, Inc.
Chairman and Chief Executive Officer, President and Chief Investment Officer
Hyperion Capital Management, Inc. Hyperion Capital Management, Inc.
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HYPERION 1999 TERM TRUST, INC.
Portfolio of Investments Principal
November 30, 1998 Interest Amount Value
Rate Maturity (000s) (Note 2)
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U.S. GOVERNMENT & AGENCY OBLIGATIONS - 96.0%
U.S. Government Agency Pass-Through Certificates - 8.6%
Federal National Mortgage Association 6.%0 11/01/00-08/01/02 $ 29,108 $ 29,072,067
6.50 08/01/02 799 807,146
-------------------------
29,879,213
-------------------------
Federal Home Loan Mortgage Corporation 6.30 06/25/13 8,994 8,993,513
-------------------------
Total U.S. Government Agency Pass-Through Certificates
(Cost - $ 38,133,180 ) 38,872,726
-------------------------
U.S. Government Agency Collateralized Mortgage Obligations - 69.7%
Federal Home Loan Mortgage Corporation
Series 1684, Class D 5.35 11/15/14 5,813 5,801,271
Series 1490, Class PE 5.75 07/15/06 4,556 4,561,888
Series 1634, Class PE 5.75 06/15/18 8,380 8,381,698
Series 2048, Class QA 5.75 12/15/09 12,953 12,968,022
Series 1539, Class PG 5.80 06/15/05 20,641 20,681,204
Series 1517, Class E 6.00 04/15/18 1,299 1,300,762
Series 1610, Class PE 6.00 04/15/17 32,024 32,135,643
Series 1836, Class C 6.25 06/15/14 5,000 @ 5,029,950
Series 1478, Class F 6.50 05/15/06 8,156 8,275,543
Series 1453, Class S 7.32+ 01/15/00 3,546 3,585,112
-------------------------
102,721,093
-------------------------
Federal National Mortgage Association
Series 1993-210, Class PE 5.75 03/25/18 16,230 16,220,996
Series 1993-202, Class E 5.75 12/25/16 14,250 14,241,735
Series 1994-30, Class E 5.75 11/25/17 28,000 27,984,040
Series 1993-191, Class PE 5.80 09/25/06 15,357 15,367,542
Series 1993-135, Class PZ 5.85 08/25/03 18,879 18,838,432
Series 1994-50, Class PD 5.85 09/25/17 48,000 @ 48,046,080
Series 1993-174, Class D 6.00 07/25/06 38,955 38,934,019
Series 1993-160, Class PE 6.00 05/25/16 8,666 8,688,564
Series 1994-34, Class A 6.00 08/25/07 5,213 5,227,739
Series 1998-6, Class PB 6.00 03/18/13 11,705 11,762,003
Series 1997-32, Class PA 6.50 04/25/09 6,023 6,034,861
Series 1991-18, Class SA 12.70+ 04/18/27 1,761 1,778,156
-------------------------
213,124,167
-------------------------
Total U.S. Government Agency Collateralized Mortgage Obligations
( Cost - $ 311,829,666 ) 315,845,260
-------------------------
U.S. Treasury Obligations - 17.7%
U.S. Treasury Notes 5.88 11/15/99 5,700 @ 5,760,563
6.13 08/15/07 13,500 @ 14,719,225
6.25 05/31/00 8,000 @ 8,182,504
7.75 12/31/99 25,000 @ 25,789,075
7.75 01/31/00 25,000 @ 25,851,575
-------------------------
Total U.S. Treasury Obligations
( Cost - $ 78,696,761 ) 80,302,942
-------------------------
Total U.S. Government & Agency Obligations
( Cost - $ 428,659,607 ) 435,020,928
-------------------------
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ASSET-BACKED SECURITIES - 8.0%
FirstPlus Home Loan Owner
Series 1998-2, Class A2 6.%3 06/10/10 $ 10,000 $ 10,027,100
-------------------------
Green Tree Financial Corp.
Series 1998-2, Class A2 6.06 11/15/29 3,205 3,205,785
-------------------------
MBNA Master Card Trust
Series 1996-M, Class A 5.+3 04/15/09 5,000 4,911,650
-------------------------
The Money Store Home Equity Trust
Series 1998-A, Class A 6.36 07/15/07 2,594 2,598,244
-------------------------
Neiman Marcus Credit Master Trust
Series 1995-1, CTF Class A 7.60 06/15/03 15,000 15,455,379
-------------------------
Total Asset-Backed Securities
( Cost - $ 35,795,353 ) 36,198,158
-------------------------
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COLLATERALIZED MORTGAGE OBLIGATIONS - 18.0%
Commercial Mortgage Acceptance Corporation
Series 1996-C1, Class A 6.72+ 12/25/20 5,424 5,418,231
-------------------------
Contimortgage Home Equity Loan Trust
Series 1998-2, Class A2A 6.15+ 03/15/13 10,000 9,971,880
-------------------------
DLJ Mortgage Acceptance Corporation
Series 1995-CF2, Class A1A 6.65 12/17/27 8,891 9,084,240
Series 1993-MF10, Class A2* 7.20 07/15/03 8,548 8,936,711
-------------------------
18,020,951
-------------------------
First Boston Mortgage Securities Corporation
Series 1993-M1, Class 1A 6.75 09/25/06 24,033 24,976,079
-------------------------
GMAC Commercial Mortgage Securities, Inc.
Series 1997-C2, Class A3 6.57 11/15/07 16,000 16,709,760
-------------------------
Merrill Lynch Mortgage Investors, Inc.
Series 1995-C1, Class A 7.21+ 05/25/15 4,733 4,795,356
-------------------------
Prudential Home Mortgage Securities Co., Inc.
Series 1993-61, Class A5 6.50 12/26/07 1,624 1,623,663
-------------------------
Total Collateralized Mortgage Obligations
( Cost - $ 80,071,106 ) 81,515,920
-------------------------
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MUNICIPAL ZERO COUPON SECURITY - 0.2%
Kansas
Kansas City, Kansas, Utility System
Revenue Bonds**
( Cost - $ 924,605 ) 05 3.(a) 03/01/00 985 940,667
-------------------------
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REPURCHASE AGREEMENT - 2.0%
Dated 11/25/98, with Morgan Stanley Dean Witter;
proceeds: $9,008,470; collateralized by $9,224,000
FHLMC 2086 PC, 5.75%, due 1/15/16, value: $9,183,691 (Note 2)
( Cost - $ 9,000,000 ) 0 4.84 12/02/98 $ 9,000 $ 9,000,000
-------------------------
Dated 11/30/98, with State Street Bank and Trust Company;
proceeds: $262,036; collateralized by $240,000
U.S. Treasury Note, 7.88%, due 2/15/21, value: $320,022 (Note 2)
( Cost - $ 262,000 ) 00 5.%0 12/02/98 262 262,000
-------------------------
Total Repurchase Agreements
( Cost - $ 9,262,000 ) 0 9,262,000
-------------------------
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TOTAL INVESTMENTS - 124.2%
( Cost - $ 554,712,671 ) 562,937,673
-------------------------
Liabilities in Excess of Other Assets - (24.2%) (109,703,794)
-------------------------
NET ASSETS - 100.0% $ 453,233,879
=========================
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@ - Portion of or entire principal amount delivered as collateral
for reverse repurchase agreements (Note 5).
+ - Variable Rate Security: Coupon rate is rate in effect at
November 30, 1998.
(a) - Zero Coupon Bond. Interest rate represents yield to maturity.
* - Security exempt from registration under Rule 144A of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to qualified
institutional buyers.
** - Insured by American Municipal Bond Assurance Corporation.
- -----------------
See notes to financial statements.
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HYPERION 1999 TERM TRUST, INC.
Statement of Assets and Liabilities
November 30, 1998
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Assets:
Investments, at value (cost $554,712,671) (Note 2) $ 562,937,673
Cash 12
Interest receivable 4,458,445
Prepaid expenses 237,064
--------------------
Total assets 567,633,194
--------------------
Liabilities:
Reverse repurchase agreements (Note 5) 113,977,625
Interest payable for reverse repurchase agreements (Note 5) 222,879
Dividends payable 129,452
Accrued expenses and other liabilities 69,359
-------------
Total liabilities 114,399,315
-------------
Net Assets (equivalent to $7.39 per share based on
61,358,339 shares issued and outstanding) $ 453,233,879
====================
Composition of Net Assets:
Capital stock, at par value ($.01) (Note 6) $ 613,583
Additional paid-in capital (Note 6) 580,123,157
Undistributed net investment income 13,282,017
Accumulated net realized loss (149,009,880)
Net unrealized appreciation 8,225,002
--------------------
==================
Net assets applicable to capital stock outstanding $ 453,233,879
====================
- ----------
See notes to financial statements.
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Hyperion 1999 Term Trust, Inc.
Statement of Operations
For the Year Ended November 30, 1998
- --------------------------------------------------------------------------------
Investment Income (Note 2):
Interest $ 41,374,763
-------------------
Expenses:
Investment advisory fee (Note 3) 2,260,120
Administration fee (Note 3) 629,929
Insurance 221,585
Custodian 115,553
Reports to shareholders 83,114
Transfer agency 59,614
Registration 52,995
Directors' fees 47,437
Accounting and tax services 44,650
Legal 16,237
Miscellaneous 38,629
-------------------
Total operating expenses 3,569,863
Interest expense (Note 5) 11,648,471
-------------------
Total expenses 15,218,334
-------------------
Net investment income 26,156,429
-------------------
Realized and Unrealized Gains (Losses) on
Investments, Short Sale and Futures
Transactions (Notes 2 and 4):
Net realized gains (losses) on:
Investments 10,926,846
Short sale transactions (203,125)
Futures transactions (139,017)
-----------------
10,584,704
-----------------
Net change in unrealized appreciation on investments (4,445,668)
-----------------
Net realized and unrealized gain on investments,
futures and short sale transactions 6,139,036
-------------------
Net increase in net assets resulting from operations $ 32,295,465
===================
- ----------
See notes to financial statements.
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Hyperion 1999 Term Trust, Inc. For the Year For the Year
Statements of Changes in Net Assets Ended Ended
November 30, November 30,
1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Increase in Net Assets Resulting from Operations:
Net investment income $ 26,156,429 $ 29,200,850
Net realized gain on investment, short sale and
futures transactions 10,584,704 1,236,567
Net change in unrealized appreciation (depreciation) on investments
and short sales (4,445,668) (1,692,419)
-------------------- --------------------
Net increase in net assets resulting from operations 32,295,465 28,744,998
-------------------- --------------------
Dividends to Shareholders (Note 2):
Net investment income (26,092,588) (27,436,642)
-------------------- --------------------
Capital Stock Transactions (Note 6):
Cost of Trust shares repurchased and retired (1,315,955) (8,477,023)
-------------------- --------------------
Total increase/(decrease) in net assets 4,886,922 (7,168,667)
Net Assets:
Beginning of year 448,346,957 455,515,624
-------------------- --------------------
End of year (including undistributed net investment income
of $13,282,017 and $13,218,176, respectively) $ 453,233,879 $ 448,346,957
==================== ====================
</TABLE>
See notes to financial statements.
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HYPERION 1999 TERM TRUST, INC.
Statement of Cash Flows
For the Year Ended November 30, 1998
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Increase (Decrease) in Cash:
Cash flows provided by operating activities:
Interest received (excluding net amortization of $832,038) $ 41,641,622
Interest expense paid (11,927,005)
Operating expenses paid (4,038,693)
Purchase and sale of short-term portfolio investments,
including options, net (7,451,758)
Purchases and short covers of long-term portfolio investments (468,774,736)
Proceeds from short sales, principal paydowns, and dispositions of
long-term portfolio investments 575,150,868
Net cash used for futures transactions (139,017)
-----------------
Net cash used for futures transactions 124,461,281
-----------------
Cash flows used for financing activities:
Net cash used for reverse repurchase agreements (97,182,750)
Cash dividends paid (25,963,136)
Cash used to repurchase and retire Trust shares (1,315,955)
-----------------
Net cash used for financing activities (124,461,841)
-----------------
Net decrease in cash (560)
Cash at beginning of year 572
-----------------
Cash at end of year $ 12
=================
Reconciliation of Net Increase in Net Assets Resulting from
Operations to Net Cash Provided by Operating Activities:
Net increase in net assets resulting from operations $ 32,295,465
-----------------
Decrease in investments 62,051,557
Decrease in net unrealized appreciation on investments 4,445,668
Decrease in interest receivable 508,837
Decrease in other assets 25,693,111
Decrease in other liabilities (533,357)
-----------------
Total adjustments 92,165,816
-----------------
Net cash used for operating activities $ 124,461,281
=================
See notes to financial statements.
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Hyperion 1999 Term Trust, Inc. For the Year For the Year For the Year For the Year For the Year
Financial Highlights Ended Ended Ended Ended Ended
November 30, November 30, November 30, November 30, November 30,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value,
beginning of the period $ 7.28$ 7.25$ 7.61$ 7.72$ 7.02
---------------- ---------------- ---------------- ----------------- ----------------
Net investment income 0.43 0.47 0.52 0.51 0.68
Net realized and unrealized gain (loss)
on investment, futures and
short sale transactions 0.11 (0.01) (0.40) (0.10) 0.58
---------------- ---------------- ---------------- ----------------- ----------------
Net increase in net asset value resulting
from operations 0.54 0.46 0.12 0.41 1.26
---------------- ---------------- ---------------- ----------------- ----------------
Net effect of shares repurchased - 0.01 - - -
Dividends from net investment income (0.43) (0.44) (0.48) (0.52) (0.56)
---------------- ---------------- ---------------- ----------------- ----------------
Net asset value, end of period $ 7.39 $ 7.28 $ 7.25 $ 7.61 $ 7.72
================ ================ ================ ================= ================
Market price, end of period $ 7.19 $ 6.87 $ 6.50 $ 6.50 $ 6.875
================ ================ ================ ================= ================
Total Investment Return + 10.92% 12.90% 7.53% 1.91% 10.29%
Ratios to Average Net Assets/
Supplementary Data:
Net assets, end of period (000s) $453,234 $448,347 $455,516 $480,080 $487,264
Operating expenses 0.79% 0.81% 0.83% 0.96% 0.83%
Interest expense 2.58% 2.27% 2.27% 2.50% 1.69%
Total expenses 3.37% 2.98% 3.10% 3.46% 2.52%
Net investment income 5.79% 6.57% 7.05% 6.55% 9.07%
Portfolio turnover rate 63% 50% 135% 473% 745%
</TABLE>
+ Total investment return is computed based upon the New York Stock Exchange
market price of the Trust's shares and excludes the effects of brokerage
commissions.
- ----------
See notes to financial statements.
- ------------------------------------------------------------------------
HYPERION 1999 TERM TRUST, INC.
Notes to Financial Statements
November 30, 1998
- -------------------------------------------------------------------------
1. The Trust
Hyperion 1999 Term Trust, Inc. (the "Trust"), which was incorporated under the
laws of the State of Maryland on November 22, 1991, is registered under the
Investment Company Act of 1940 (the "1940 Act") as a diversified, closed-end
management investment company. The Trust expects to distribute substantially all
of its net assets on or shortly before November 30, 1999 and thereafter to
terminate.
The Trust's investment objectives are to provide a high level of current income
consistent with investing only in securities of the highest credit quality and
to return at least $10.00 per share (the initial public offering price per
share) to investors on or shortly before November 30, 1999. Hyperion Capital
Management, Inc. (the "Advisor"), presently intends to manage the portfolio for
the remaining term of the Trust in a manner that attempts to achieve the Trust's
objectives, but there is no assurance that these investment objectives can be
achieved; indeed, under current market conditions it will be extremely difficult
for the Trust to achieve its objective to return $10.00 per share by its
scheduled termination date, November 30, 1999.
2. Significant Accounting Policies
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 the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Valuation of Investments: Where market quotations are readily available,
securities held by the Trust are valued based upon the current bid price for
long positions and the current ask price for short positions. The Trust values
mortgage-backed securities ("MBS") and other debt securities for which market
quotations are not readily available at their fair value as determined in good
faith, utilizing procedures approved by the Board of Directors of the Trust, on
the basis of information provided by dealers in such securities. Some of the
general factors which may be considered in determining fair value include the
fundamental analytic data relating to the investment and an evaluation of the
forces which influence the market in which these securities are purchased and
sold. Determination of fair value involves subjective judgment, as the actual
market value of a particular security can be established only by negotiations
between the parties in a sales transaction. Debt securities having a remaining
maturity of sixty days or less when purchased and debt securities originally
purchased with maturities in excess of sixty days but which currently have
maturities of sixty days or less are valued at amortized cost.
The ability of issuers of debt securities held by the Trust to meet their
obligations may be affected by economic developments in a specific industry or
region. The values of MBS can be significantly affected by changes in interest
rates or in the financial conditional of an issuer or market.
Options Written or Purchased: The Trust may write or purchase options as a
method of hedging potential declines in similar underlying securities. When the
Trust writes or purchases an option, an amount equal to the premium received or
paid by the Trust is recorded as a liability or an asset and is subsequently
adjusted to the current market value of the option written or purchased.
Premiums received or paid from writing or purchasing options which expire
unexercised are treated by the Trust on the expiration date as realized gains or
losses. The difference between the premium and the amount paid or received on
effecting a closing purchase or sale transaction, including brokerage
commissions, is also treated as a realized gain or loss. If an option is
exercised, the premium paid or received is added to the proceeds from the sale
or cost of the purchase in determining whether the Trust has realized a gain or
a loss on the investment transaction.
The Trust, as writer of an option, may have no control over whether the
underlying securities may be sold (call) or purchased (put) and as a result
bears the market risk of an unfavorable change in the price of the security
underlying the written option.
The Trust purchases or writes options to hedge against adverse market
movements or fluctuations in value caused by changes in interest rates. The
Trust bears the risk in purchasing an option, to the extent of the
premium paid, that it will expire without being exercised. If this occurs, the
option expires worthless and the premium paid for the option is recognized as a
realized loss. The risk associated with writing call options is that the
Trust may forego the opportunity for a profit if the market value of the
underlying position increases and the option is exercised. The Trust will only
write call options on positions held in its portfolio. The risk in writing a
put option is that the Trust may incur a loss if the market value of the
underlying position decreases and the option is exercised. In addition,
the Trust bears the risk of not being able to enter into a closing
transaction for written options as a result of an illiquid market for the
underlying security.
Short Sales: The Trust may make short sales of securities as a method of hedging
potential declines in similar securities owned. When the Trust makes a short
sale, it must borrow the security sold short and deliver it to the broker-dealer
through which it made the short sale as collateral for its obligation to deliver
the security upon conclusion of the sale. The Trust may have to pay a fee to
borrow the particular securities and may be obligated to pay over any payments
received on such borrowed securities. A gain, limited to the price at which the
Trust sold the security short, or a loss, unlimited as to dollar amount, will be
realized upon the termination of a short sale if the market price is less or
greater than the proceeds originally received.
Financial Futures Contracts: A futures contract is an agreement between two
parties to buy and sell a financial instrument for a set price on a future date.
Initial margin deposits are made upon entering into futures contracts and can be
either cash or securities. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Trust records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transaction and the Trust's basis in the contract.
The Trust invests in financial futures contracts to hedge against fluctuations
in the value of portfolio securities caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly, the Trust may not
achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts, interest rates and
the underlying hedged assets. The Trust is at risk that it may not be able to
close out a transaction because of an illiquid secondary market.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses from securities
transactions are calculated on the identified cost basis. Interest income is
recorded on the accrual basis. Discounts and premiums on certain securities are
accreted and amortized using the effective yield to maturity method.
Taxes: It is the Trust's intention to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income or excise tax provision is required.
Dividends and Distributions: The Trust declares and pays dividends monthly from
net investment income. Distributions of net realized capital gains in excess of
capital loss carryforwards are distributed at least annually. Dividends and
distributions are recorded on the ex-dividend date. Dividends from net
investment income and distributions from realized gains from investment
transactions have been determined in accordance with Federal income tax
regulations and may differ from net investment income and realized gains
recorded by the Trust for financial reporting purposes. These differences, which
could be temporary or permanent in nature, may result in reclassification of
distributions; however, net investment income, net realized gains and net assets
are not affected.
Cash Flow Information: The Trust invests in securities and distributes
dividends and distributions which are paid in cash or are reinvested at the
discretion of shareholders. These activities are reported in the Statement
of Changes in Net Assets. Additional information on cash receipts and cash
payments is presented in the Statement of Cash Flows. Cash, as used in the
Statement of Cash Flows, is the amount reported as "Cash" in the Statement
of Assets and Liabilities, and does not include short-term investments.
Accounting practices that do not affect reporting activities on a cash basis
include carrying investments at value and accreting discounts and amortizing
premiums on debt obligations.
Repurchase Agreements: The Trust, through its custodian, receives delivery of
the underlying collateral, the market value of which at the time of purchase is
required to be in an amount at least equal to the resale price, including
accrued interest. The Advisor is responsible for determining that the value of
these underlying securities is sufficient at all times. If the seller defaults
and the value of the collateral declines or if bankruptcy proceedings commence
with respect to the seller of the security, realization of the collateral by the
Trust may be delayed or limited.
3. Investment Advisory Agreement and Affiliated
Transactions
The Trust has entered into an Investment Advisory Agreement with the Advisor.
The Advisor is responsible for the management of the Trust's portfolio and
provides the necessary personnel, facilities, equipment and certain other
services necessary to the operations of the Trust. For such services, the Trust
pays a monthly fee at an annual rate of 0.50% of the Trust's average weekly net
assets. During the year ended November 30, 1998, the Advisor received $2,260,120
in investment advisory fees.
The Trust has entered into an Administration Agreement with Hyperion Capital
Management, Inc. (the "Administrator"). The Administrator has entered into a
sub-administration agreement with Investors Capital Services, Inc. (the
"Sub-Administrator"). The Administrator and Sub-Adminstrator perform
administrative services necessary for the operation of the Trust, including
maintaining certain books and records of the Trust and preparing reports and
other documents required by Federal, state, and other applicable laws and
regulations, and providing the Trust with administrative office facilities. For
these services, the Trust pays to the administrator a monthly fee at an annual
rate of 0.17% of the first $100 million of the Trust's average weekly net
assets, 0.145% of the next $150 million and 0.12% of any amounts above $250
million. During the year ended November 30, 1998, the Administrator received
$629,929 in Administration fees. The Administrator is responsible for any fees
due the Sub-Administrator.
Certain officers and/or directors of the Trust are officers and/or directors of
the Advisor, Administrator and Sub-Administrator.
4. Purchases and Sales of Investments
Purchases and sales of investments, excluding short-term securities, U.S.
Government securities and reverse repurchase agreements, for the year ended
November 30, 1998, were $128,008,478 and $95,910,320, respectively. Purchases
and sales of U.S. Government securities, for the year ended November 30, 1998,
were $288,867,820 and $308,065,486, respectively. For purposes of this footnote,
U.S. Government securities include securities issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation and the Government National Mortgage
Association.
The federal income tax basis of the Trust's investments at November 30, 1998 was
$554,712,671 which was the same for financial reporting and, accordingly, net
unrealized appreciation for federal income tax purposes was $8,225,002 (gross
unrealized appreciation -- $8,422,651; gross unrealized depreciation --
$197649). At tax year end May 31, 1998, the Trust had a capital loss
carryforward of $153,417,945 of which $14,753,030 expires in 2001, $80,484,434
expires in 2002, $2,139,679 expires in 2003, $44,548,231expires in 2004, and
$11,492,571 expires in 2005, available to offset any future capital gains.
However, if the Trust terminates as expected in 1999, the capital loss
carryforward must be utilized by 1999 in order for shareholders to realize a
benefit. The Trust utilized $10,581,552 of capital loss carryforward during the
tax year ended 5/31/98.
5. Borrowings
The Trust may enter into reverse repurchase agreements with the same parties
with whom it may enter into repurchase agreements. Under a reverse repurchase
agreement, the Trust sells securities and agrees to repurchase them at a
mutually agreed upon date and price. Under the 1940 Act, reverse repurchase
agreements will be regarded as a form of borrowing by the Trust unless, at the
time it enters into a reverse repurchase agreement, it establishes and maintains
a segregated account with its custodian containing securities from its portfolio
having a value not less than the repurchase price (including accrued interest).
The Trust has established and maintained such an account for each of its reverse
repurchase agreements. Reverse repurchase agreements involve the risk that the
market value of the securities retained in lieu of sale by the Trust may decline
below the price of the securities the Trust has sold but is obligated to
repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce the
Trust's obligation to repurchase the securities, and the Trust's use of the
proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision.
At November 30, 1998, the Trust had the following reverse repurchase agreements
outstanding:
Maturity in
Zero to 30
days
Maturity Amount, Including Interest Payable $114,411,236
Market Value of Assets Sold Under
Agreements............................... $115,356,662
Weighted Average Interest Rate............ 5.00%
--------------------------------------------------
- -------------------------------------------------------------------------------
The average daily balance of reverse repurchase agreements outstanding during
the year ended November 30, 1998 was $207,626,458 at a weighted average interest
rate of 5.61%. The maximum amount of reverse repurchase agreements outstanding
at any time during the year was $213,960,473, as of July 22, 1998, which was
31.16% of total assets.
6. Capital Stock
There are 75 million shares of $.01 par value common stock authorized. Of the
61,358,339 shares outstanding at November 30, 1998, the Advisor owned 25,639
shares.
The Trust is continuing its stock repurchase program, whereby an amount of up to
15% of the original outstanding common stock, or approximately 9.5 million
shares, are authorized for repurchase. The purchase price may not exceed the
then-current net asset value.
As of November 30, 1998, 1,902,300 shares have been repurchased pursuant to this
program at a cost of $12,812,926 and an average discount of 6.6% from its net
asset value. For the year ended November 30, 1998, 186,000 shares have been
repurchased at a cost of $1,315,955 and an average discount of 4.30% from its
net asset value. For the year ended November 30, 1997, 1,265,500 shares had been
repurchased at a cost of $8,477,023, at an average discount of 6.23%. All shares
repurchased have been retired.
7. Financial Instruments
The Trust regularly trades in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing exposure
to various market risks. These financial instruments include written options and
futures contracts and may involve, to a varying degree, elements of risk in
excess of the amounts recognized for financial statement purposes.
7. Financial Instruments (continued)
The notional or contractual amounts of these instruments represent the
investment the Trust has in particular classes of financial instruments and does
not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered. During the period,
the fund had segregated sufficient cash and/or securities to cover any
commitments under these contracts.
There was no written option activity for the year ended November 30, 1998.
There were no open futures contracts at November 30, 1998.
8. Subsequent Events
The Trust's Board of Directors declared the following regular monthly dividends:
Dividend Record Payable
Per Share Date Date
$0.03542 12/21/98 12/31/98
$0.03542 12/31/98 01/28/99
--------------
- -----------------------------------------------------------------------
HYPERION 1999 TERM TRUST, INC.
Report of the Independent Accountants
________________________________________________________________________
To the Board of Directors and Shareholders of
Hyperion 1999 Term Trust, Inc.:
In our opinion, the accompanying statement of
assets and liabilities, including the portfolio of
investments, and the related statements of
operations, of cash flows and of changes in net
assets and the financial highlights present fairly,
in all material respects, the financial position of
Hyperion 1999 Term Trust, Inc. (the "Trust") at
November 30, 1998 and the results of its
operations, its cash flows, the changes in its net
assets and the financial highlights for the year
then ended, in conformity with generally accepted
accounting principles. These financial statements
and financial highlights (hereafter referred to as
"financial statements") are the responsibility of
the Trust's management; our responsibility is to
express an opinion on these financial statements
based on our audit. We conducted our audit of
these financial statements in accordance with
generally accepted auditing standards which 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, assessing the accounting
principles used and significant estimates made by
management, and evaluating the overall financial
statement presentation. We believe that our audit,
which included confirmation of investments at
November 30, 1998 by correspondence with the
custodian and brokers, provides a reasonable basis
for the opinion expressed above.
The statement of changes in net assets of the Trust
for the year ended November 30, 1997 and the
financial highlights for the four years in the
period then ended were audited by other independent
accountants whose report dated January 9, 1998
expressed an unqualified opinion on those
statements.
As discussed in Note 1 to the financial statements,
the Trust expects to distribute substantially all
of its net assets on or shortly before November 30,
1999, and thereafter to terminate. The
distribution and termination may require
shareholder approval.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
January 20, 1999
- -----------------------------------------------------
TAX INFORMATION (unaudited)
- -----------------------------------------------------
The Trust is required by Subchapter M of the
Internal Revenue Code of 1986, as amended, to
advise you within 60 days of the Trust's fiscal
year end (November 30, 1998) as to the federal tax
status of distributions received by shareholders
during such fiscal year. Accordingly, we are
advising you that all distributions paid during the
fiscal year were derived from net investment income
and are taxable as ordinary income. In addition,
12.66% of the Trust's distributions during the
fiscal year ended November 30, 1998 were earned
from U.S. Treasury obligations. None of the
Trust's distributions qualifies for the dividends
received deduction available to corporate
shareholders.
Because the Trust's fiscal year is not the calendar
year, another notification will be sent with
respect to calendar 1998. The second notification,
which will reflect the amount to be used by
calendar year taxpayers on their federal, state and
local income tax returns, will be made in
conjunction with Form 1099 -DIV and will be mailed
in January, 1999. Shareholders are advised to
consult their own tax advisors with respect to the
tax consequences of their investment in the Trust.
- ------------------------------------------------------------------------------
PROXY RESULTS (unaudited)
- -------------------------------------------------------------------------------
During the fiscal period ended November 30, 1998, Hyperion 1999 Term Trust, Inc.
shareholders voted on the following proposals at a shareholders meeting on April
21, 1998. The description of each proposal and number of shares voted are as
follows:
<TABLE>
<S> <C> <C> <C>
Shares Voted Shares Voted
For Without Authority
1. To elect the members to the Trust's Board of Directors: Harry E. Petersen Jr. 45,673,281 979,825
Leo M. Walsh Jr. 45,689,950 963,156
</TABLE>
- -------------------------------------------------------------------------------
YEAR 2000 CHALLENGE (unaudited)
- ------------------------------------------------------------------------------
The Trust could be adversely affected if computers used by the Trust's service
providers do not properly process information dated January 1, 2000 and after.
The Trust's service providers are taking steps to address Year 2000 risks with
respect to computer systems on which the Trust depends. At this time, however,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Trust.
- ------------------------------------------------------------------------------
CHANGE IN ACCOUNTANTS (unaudited)
- -------------------------------------------------------------------------------
In 1998, the Trust determined to change accountants from Deloitte & Touche LLP
("D&T") to PricewaterhouseCoopers LLP ("PwC"). D&T's report on the financial
statements for the Trust's fiscal year ended November 30, 1997 contained no
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles. The decision to change
accountants was determined by the Board of Directors of the Trust. There were no
disagreements with D&T on any matter of accounting principles or practices,
financial statement disclosures, auditing scope or procedure, which, if not
resolved to the satisfaction of D&T, would have caused D&T to make reference to
the matter in their reports.
In 1998, the Trust engaged PwC as its independent accountants to audit the
Trust's financial statements. Prior to engaging PwC, the Trust (or someone on
its behalf) did not consult PwC regarding either (i) the application of
accounting principles to a specified transaction, either contemplated or
proposed or the type of audit opinion that might be rendered on the Trust's
financial statements; or (ii) any matter that was either the subject of a
disagreement with its former accountant or a reportable event.
- -----------------------------------------------------
DIVIDEND REINVESTMENT PLAN
- -----------------------------------------------------
A Dividend Reinvestment Plan (the "Plan") is available to shareholders of the
Trust pursuant to which they may elect to have all dividends and distributions
of capital gains automatically reinvested by State Street Bank and Trust Company
(the "Plan Agent") in Trust shares. Shareholders who do not participate in the
Plan will receive all distributions in cash paid by check mailed directly to the
shareholder of record (or if the shares are held in street or other nominee
name, then to the nominee) by the Trust's Custodian, as Dividend Disbursing
Agent.
The Plan Agent serves as agent for the shareholders in administering the Plan.
After the Trust declares a dividend or determines to make a capital gain
distribution, payable in cash, the participants in the Plan will receive the
equivalent amount in Trust shares valued at the market price determined as of
the time of purchase (generally, the payment date of the dividend or
distribution). The Plan Agent will, as agent for the participants, use the
amount otherwise payable as a dividend to participants to buy shares in the open
market, on the New York Stock Exchange or elsewhere, for the participants'
accounts. If, before the Plan Agent has completed its purchases, the market
price increases, the average per share purchase price paid by the Plan Agent may
exceed the market price of the shares at the time the dividend or other
distribution was declared. Share purchases under the Plan may have the effect of
increasing demand for the Trust's shares in the secondary market.
There is no charge to participants for reinvesting dividends or capital gain
distributions, except for certain brokerage commissions, as described below. The
Plan Agent's fees for handling the reinvestment of dividends and distributions
are paid by the Trust. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open market
purchases in connection with the reinvestment of dividends and distributions.
The automatic reinvestment of dividends and distributions will not relieve
participants of any federal income tax that may be payable on such dividends or
distributions.
Participants in the Plan may withdraw from the Plan upon written notice to the
Plan Agent. When a participant withdraws from the Plan or upon termination of
the Plan by the Trust, certificates for whole shares credited to his or her
account under the Plan will be issued and a cash payment will be made for any
fraction of a share credited to such account.
A brochure describing the Plan is available from the Plan Agent, State Street
Bank and Trust
Company, by calling 1-800-426-5523.
If you wish to participate in the Plan and your shares are held in your name,
you may simply complete and mail the enrollment form in the brochure. If your
shares are held in the name of your brokerage firm, bank or other nominee, you
should ask them whether or how you can participate in the Plan. Shareholders
whose shares are held in the name of a brokerage firm, bank or other nominee and
are participating in the Plan may not be able to continue participating in the
Plan if they transfer their shares to a different brokerage firm, bank or other
nominee, since such shareholders may participate only if permitted by the
brokerage firm, bank or other nominee to which their shares are transferred.
- -----------------------------------------------------------------------------
Hyperion 1999 Term Trust, Inc.
Selected Quarterly Financial Data
(unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net realized and
unrealized gains (losses) Net increase
on investment, written (decrease) in net
Net investment option, futures and short assets resulting from Dividends and
income sale transactions operations distributions Share price
------------------ -------------------------- --------------------- -------------------- ------
Total Per Per Per Per
Quarter ended income Amount share Amount share Amount share* Amount share High Low
- -----------------------------------------------------------------------------------------------------------------------------------
June 26, 1992**
to August 31, $ 8,539,531 $ 7,129,135 0.11 (19,306,330)$ (0.30) $(12,177,195$ (0.19) 4,219,485 $ 0.07 10 3/8 $ 10
November 30, 1992 16,580,937 12,842,733 0.21 (22,483,352) (0.36) (9,640,619) (0.15) 12,658,452 0.20 10 3/4 8 7/8
February 28, 1993 14,278,323 10,642,860 0.17 (31,400,517) (0.50) (20,757,657) (0.33) 12,658,452 0.20 10 9
May 31, 1993 13,647,042 10,562,767 0.17 (5,780,313) (0.09) 4,782,454 0.08 12,658,452 0.209 3/4 8 3/4
August 31, 1993 11,325,312 8,412,983 0.13 (27,675,828) (0.44) (19,262,845) (0.31) 11,861,350 0.19 8 7/8 7 1/2
November 30, 1993 18,307,264 15,895,853 0.25 (44,953,480) (0.70) (29,057,627) (0.45) 9,356,249 0.15 8 1/4 6 3/8
February 28, 1994 14,880,602 12,231,574 0.19 12,367,705 0.20) 24,599,279 0.39 8,299,440 0.13 7 6 1/4
May 31, 1994 15,469,465 12,626,698 0.20 17,800,528 0.28 30,427,226 0.48 8,296,179 0.13 7 3/8 6 3/4
August 31, 1994 7,142,378 9,904,737 0.16 (36,250,648) (0.57) (26,345,911) (0.41) 9,082,485 0.15 7 1/4 6 1/2
November 30, 1994 17,379,627 8,190,924 0.13 42,523,788 0.67 50,714,712 0.80 9,472,210 0.15 7 6 3/8
February 28, 1995 12,898,232 9,029,349 0.14 6,995,260 0.11 16,024,609 0.25 8,940,494 0.14 7 6 1/2
May 31, 1995 12,240,737 7,744,298 0.12 14,747,914 0.24 22,492,212 0.36 8,677,288 0.14 7 3/8 6 5/8
August 31, 1995 12,848,385 8,727,012 0.14 (12,253,807) (0.19) (3,526,795) (0.05) 7,888,401 0.12 7 1/2 6 3/4
November 30, 1995 11,433,972 6,825,146 0.11 (15,999,089) (0.26) (9,173,943) (0.15) 7,493,924 0.12 7 1/8 6 1/2
February 29, 1996 12,730,201 8,716,948 0.14 (13,968,641) (0.22) (5,251,693) (0.08) 7,493,976 0.12 6 7/8 6 3/8
May 31, 1996 12,153,474 8,523,188 0.13 (26,191,953) (0.41) (17,668,765) (0.28) 7,493,890 0.12 6 5/8 6
August 31, 1996 10,994,972 7,631,546 0.12 9,748 0.00 7,641,294 0.12 7,493,949 0.12 6 1/2 6 1/8
November 30, 1996 10,505,729 7,350,161 0.13 15,350,953 0.23 22,701,114 0.36 7,489,268 0.12 6 5/8 6 1/4
February 28, 1997 10,831,594 7,618,503 0.12 (8,866,675) (0.14) (1,248,172) (0.02) 7,430,297 0.12 6 5/8 6 3/8
May 31, 1997 10,465,870 7,325,626 0.12 (3,545,553) (0.06) 3,780,073 0.06 6,863,056 0.11 6 1/2 6 3/8
August 31, 1997 10,378,734 7,001,939 0.11 7,787,460 0.12 14,789,399 0.23 6,574,399 0.11 6 13/16 6 1/2
November 30, 1997 10,770,774 7,254,782 0.12 4,168,916 0.07 11,423,698 0.19 6,568,890 0.10 6 7/8 6 11/16
February 28, 1998 11,078,600 7,043,407 0.11 (4,206,980) (0.06) 2,836,427 0.05 6,533,033 0.11 7 1/16 6 7/8
May 31, 1998 10,476,196 6,591,293 0.11 8,158,313 0.13 14,749,606 0.24 6,519,854 0.11 7 1/8 6 15/16
August 31, 1998 10,166,353 6,315,532 0.11 5,032,065 0.08 11,347,597 0.19 6,519,851 0.11 7 3/16 7
November 30, 1998 9,653,614 6,206,197 0.10 (2,844,362) (0.04) 3,361,835 0.06 6,519,850 0.10 7 1/4 7 1/8
* Excludes net effect of shares repurchased.
** Commencement of investment operations.
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
INVESTMENT ADVISOR AND ADMINISTRATOR CUSTODIAN
HYPERION CAPITAL MANAGEMENT, INC. STATE STREET BANK AND TRUST COMPANY
One Liberty Plaza 225 Franklin Street
165 Broadway, 36th Floor Boston, Massachusetts 02116
New York, New York 10006-1404
For General Information about the Trust: INDEPENDENT ACCOUNTANTS
(800) HYPERION
PRICEWATERHOUSECOOPERS LLP
TRANSFER AGENT 1177 Avenue of the Americas
New York, New York 10036
BOSTON EQUISERVE, L.P.
Investor Relations Department LEGAL COUNSEL
P.O. Box 8200
Boston, Massachusetts 02266-8200 SULLIVAN & WORCESTER LLP
For Shareholder Services: 1025 Connecticut Avenue, N.W.
(800) 426-5523 Washington, D.C. 20036
</TABLE>
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that periodically the Trust may purchase its shares in the
open market at prevailing market prices.
_______________________________________________________________________________
Officers & Directors
_______________________________________________________________________________
Andrew M. Carter
Chairman
Lewis S. Ranieri
Director
Robert F. Birch*
Director
Rodman L. Drake*
Director
Garth Marston
Director Emeritus
Leo M. Walsh, Jr.*
Director
Harry E. Petersen, Jr.*
Director
Kenneth C. Weiss
Director
Patricia A. Sloan
Director & Secretary
Clifford E. Lai
President
Patricia A. Botta
Vice President
Thomas F. Doodian
Treasurer
* Audit Committee Members
This Report is for shareholder information. This is not a
prospectus intended for use in the purchase or sale of
Trust shares.
Hyperion 1999 Term Trust, Inc.
One Liberty Plaza
165 Broadway, 36th Floor
New York, NY 10006-1404
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000881413
<NAME> HYPERION 1999 TERM TRUST, INC.
<SERIES>
<NUMBER> 0
<NAME> HYPERION 1999 TERM TRUST, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 554713
<INVESTMENTS-AT-VALUE> 562938
<RECEIVABLES> 4458
<ASSETS-OTHER> 237
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 567633
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 114399
<TOTAL-LIABILITIES> 114399
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 580737
<SHARES-COMMON-STOCK> 61358
<SHARES-COMMON-PRIOR> 61544
<ACCUMULATED-NII-CURRENT> 13282
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (149010)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8225
<NET-ASSETS> 453234
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 41375
<OTHER-INCOME> 0
<EXPENSES-NET> 15219
<NET-INVESTMENT-INCOME> 26156
<REALIZED-GAINS-CURRENT> 10585
<APPREC-INCREASE-CURRENT> (4446)
<NET-CHANGE-FROM-OPS> 32295
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 26093
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 186
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4887
<ACCUMULATED-NII-PRIOR> 13218
<ACCUMULATED-GAINS-PRIOR> (159594)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2260
<INTEREST-EXPENSE> 11648
<GROSS-EXPENSE> 15219
<AVERAGE-NET-ASSETS> 452024
<PER-SHARE-NAV-BEGIN> 7.28
<PER-SHARE-NII> 0.43
<PER-SHARE-GAIN-APPREC> 0.11
<PER-SHARE-DIVIDEND> (0.43)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.39
<EXPENSE-RATIO> 0.79
<AVG-DEBT-OUTSTANDING> 207626
<AVG-DEBT-PER-SHARE> 3.38
</TABLE>
