UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

(Mark One)

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

   FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                             OR

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

   FOR THE TRANSITION PERIOD FROM _____ TO _____

                         COMMISSION FILE NUMBER: 0-20724

                             WATSON WYATT & COMPANY
             (Exact name of registrant as specified in its charter)

      DELAWARE                                        53-0181291
   (State or other                                 (I.R.S. Employer
   jurisdiction of                                 Identification No.)
   incorporation or
    organization)

                            6707 DEMOCRACY BOULEVARD
                                   SUITE 800
                               BETHESDA, MD 20817
          (Address of principal executive offices, including zip code)
                                 (301) 581-4600
              (Registrant's telephone number, including area code)


Indicate  by check  mark  whether  the  registrant  (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 the number of shares  outstanding  of each of the issuer's  classes of
common stock, as of May 9, 2000.

Common Stock,  $1.00 par value                                    14,847,097
------------------------------                                 ----------------
         Class                                                 Number of Shares

<PAGE>
<TABLE>
<CAPTION>

                                               WATSON WYATT & COMPANY
                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE AMOUNTS)

                                                          Three Months Ended March 31,       Nine Months Ended March 31,
                                                        -------------------------------     -----------------------------
                                                           2000                 1999           2000               1999
                                                        ----------           ----------     ----------         ----------
                                                                  (Unaudited)                        (Unaudited)
<S>                                                     <C>                  <C>            <C>                <C>

Fees                                                    $  157,502           $  135,573     $  456,236         $  409,916
                                                        ----------           ----------     ----------         ----------

Costs of providing services:
     Salaries and employee benefits                         85,871               70,977        246,624            219,845
     Stock incentive bonus plan                              8,200                6,900         23,200             14,500
     Occupancy and communications                           17,000               16,412         47,423             46,366
     Professional and subcontracted services                 9,082               11,573         34,009             33,625
     Other                                                   9,561                9,303         25,861             20,889
                                                        ----------           ----------     ----------         ----------
                                                           129,714              115,165        377,117            335,225

General and administrative expenses                         16,214               14,194         44,116             42,046
Depreciation and amortization                                5,483                3,996         15,000             11,820
                                                        ----------           ----------     ----------         ----------
                                                           151,411              133,355        436,233            389,091
                                                        ----------           ----------     ----------         ----------

Income from operations                                       6,091                2,218         20,003             20,825

Other:
     Interest income                                           232                  127          1,484                655
     Interest expense                                         (431)                (473)        (1,519)            (2,194)

Income from affiliates                                         481                  583          2,624              1,608
                                                        ----------           ----------     ----------         ----------

Income before income taxes and minority interest             6,373                2,455         22,592             20,894

Provision for income taxes                                   2,806                1,530         10,641             10,447
                                                        ----------           ----------     ----------         ----------

Income before minority interest                              3,567                  925         11,951             10,447


Minority interest in net (income)/loss of
     consolidated subsidiaries                                  (9)                  54            167                (31)
                                                        ----------           ----------     ----------         ----------

Income from continuing operations                            3,558                  979         12,118             10,416

Discontinued operations:

Adjustment to reduce loss on disposal of discontinued
     Outsourcing Business [less applicable income tax
     expense of $6,322 for the nine months ended
     March 31, 1999]                                             -                    -              -              8,678
                                                        ----------           ----------     ----------         ----------

Net income                                              $    3,558           $      979     $   12,118         $   19,094
                                                        ==========           ==========     ==========         ==========



Earnings per share, continuing operations, basic
     and fully diluted                                  $     0.24           $     0.07     $     0.81         $     0.70


Earnings per share, discontinued operations, basic
     and fully diluted                                           -                    -              -               0.58
                                                        ----------           ----------     ----------         ----------

Earnings per share, net income, basic
     and fully diluted                                  $     0.24           $     0.07     $     0.81         $     1.28
                                                        ==========           ==========     ==========         ==========

Weighted average shares of Redeemable Common Stock,         14,851               14,693         15,051             14,931
     basic and fully diluted                            ==========           ==========     ==========         ==========



                                               See accompanying notes
                                                         F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                               WATSON WYATT & COMPANY
                                             CONSOLIDATED BALANCE SHEETS
                                             (THOUSANDS OF U.S. DOLLARS)

                                                                                 March 31,                June 30,
                                                                                   2000                     1999
                                                                               -------------            -------------
                                                                                (Unaudited)

<S>                                                                            <C>                      <C>
                                                        ASSETS

Cash and cash equivalents                                                      $      13,324            $      35,985
Receivables from clients:
     Billed, net of allowances of $5,154 and $3,701                                   77,514                   72,798
     Unbilled                                                                         71,541                   63,068
                                                                               -------------            -------------
                                                                                     149,055                  135,866
Other current assets                                                                   8,993                   10,834
                                                                               -------------            -------------
  Total current assets                                                               171,372                  182,685
Investment in affiliates                                                              17,005                   15,306
Fixed assets, net of accumulated depreciation of $88,976 and $80,368                  37,246                   42,797
Deferred income taxes                                                                 56,206                   56,206
Intangible assets, net                                                                 9,092                    7,455
Other assets                                                                           8,494                    9,511
                                                                               -------------            -------------

                                                                               $     299,415            $     313,960
                                                                               =============            =============

                       LIABILITIES, REDEEMABLE COMMON STOCK AND PERMANENT SHAREHOLDERS' EQUITY


Accounts payable and accrued liabilities                                       $     142,161            $     152,371
Line of credit and book overdrafts                                                    10,221                      248
Income taxes payable                                                                  10,876                   18,374
                                                                               -------------            -------------
     Total current liabilities                                                       163,258                  170,993

Accrued retirement benefits                                                           70,134                   77,140
Deferred rent and accrued lease losses                                                 6,537                    9,270
Other noncurrent liabilities                                                          22,280                   22,608
Minority interest in subsidiaries                                                        523                      669
Redeemable Common Stock - $1 par value:
     25,000,000 shares authorized;
     14,852,297 and 16,112,416 issued
     and outstanding; at redemption value                                             99,213                  107,631

Permanent shareholders' equity:
Adjustment for redemption value less
     than amounts paid in by shareholders                                             10,505                   11,420
Retained deficit                                                                     (70,671)                 (83,209)
Cumulative translation adjustment (accumulated other comprehensive loss)              (2,364)                  (2,562)
Commitments and contingencies
                                                                               -------------            -------------

                                                                               $     299,415            $     313,960
                                                                               =============            =============



                                               See accompanying notes
                                                         F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                    WATSON WYATT & COMPANY
                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (THOUSANDS OF U.S. DOLLARS)


                                                                                               Nine Months Ended March 31,
                                                                                              -----------------------------
                                                                                                 2000               1999
                                                                                              ----------         ----------
                                                                                                       (Unaudited)

<S>                                                                                           <C>                <C>

Cash flows from (used for) operating activities:
     Net income                                                                               $   12,118         $    19,094
     Adjustments to reconcile net income to net cash
       provided by operating activities:

         Adjustment to reduce loss on discontinued operations                                          -              (8,678)
         Provision for doubtful receivables from clients                                           7,596               9,670
         Depreciation                                                                             13,595              10,780
         Amortization of intangible assets                                                         1,405               1,040
         Income from affiliates                                                                   (2,624)             (1,608)
         Minority interest in net (loss) income of consolidated subsidiaries                        (167)                 31
         (Increase) decrease in assets (net of discontinued operations):
             Receivables from clients                                                            (20,785)            (30,239)
             Income taxes receivable                                                                   -               2,216
             Other current assets                                                                  1,841                (657)
             Other assets                                                                          1,017                 877
         (Decrease) increase in liabilities (net of discontinued operations):
             Accounts payable and accrued liabilities                                             (8,012)             17,057
             Income taxes payable                                                                 (7,498)              5,492
             Accrued retirement benefits                                                          (7,006)             (1,599)
             Deferred rent and accrued lease losses                                               (2,733)             (2,441)
             Other noncurrent liabilities                                                            567               1,210
           Other, net                                                                               (110)                210
         Discontinued operations, net                                                               (895)             (3,857)
                                                                                              ----------           ---------
         Net cash (used for) from operating activities                                           (11,691)             18,598
                                                                                              ----------           ---------

Cash flows from (used in) investing activities:
     Purchases of fixed assets                                                                   (10,217)             (9,729)
     Acquisitions                                                                                 (2,900)             (6,207)
     Investment in affiliates                                                                        891               3,151
                                                                                              ----------          ----------
       Net cash used in investing activities                                                     (12,226)            (12,785)
                                                                                              ----------          ----------

Cash flows from (used by) financing activities:
     Net borrowings (repayments) and book overdrafts                                               9,973              (8,325)
     Issuances of Redeemable Common Stock                                                            166              15,055
     Repurchases of Redeemable Common Stock                                                       (9,079)            (13,224)
                                                                                              ----------          ----------
      Net cash from (used by) financing activities                                                 1,060              (6,494)
                                                                                              ----------          ----------
Effect of exchange rates on cash                                                                     196                  32
                                                                                              ----------          ----------

Decrease in cash and cash equivalents                                                            (22,661)               (649)

Cash and cash equivalents at beginning of period                                                  35,985              13,405
                                                                                              ----------          ----------

Cash and cash equivalents at end of period                                                    $   13,324          $   12,756
                                                                                              ==========          ==========



                                                   See accompanying notes
                                                             F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                              WATSON WYATT & COMPANY
                       CONSOLIDATED STATEMENTS OF CHANGES IN PERMANENT SHAREHOLDERS' EQUITY
                                            (THOUSANDS OF U.S. DOLLARS)
                                                    (Unaudited)

                                                                                 Adjustment for
                                                                                Redemption Value
                                                                  Cumulative    Less Than Amounts
                                                   Retained      Translation       Paid in by
                                                    Deficit          Loss         Shareholders       Total
                                                 ------------     ----------       ----------      ---------
<S>                                              <C>              <C>              <C>             <C>
Balance at June 30, 1999                         $    (83,209)    $   (2,562)      $   11,420      $ (74,351)

Comprehensive Income:
Net income                                             12,118              -                -         12,118
Foreign currency translation adjustment                     -            198                -            198
                                                                                                   ---------
Total Comprehensive Income                                                                            12,316
Effect of repurchases of 1,307,967 shares of
     common stock                                         420              -             (420)             -
Adjustment of redemption value for change
     in Formula Book Value per share                        -              -             (495)          (495)
                                                 ------------     ----------       ----------      ---------

Balance at March 31, 2000                        $    (70,671)    $   (2,364)      $   10,505      $ (62,530)
                                                 ============     ==========       ==========      =========



                                             See accompanying notes
                                                      F-5
</TABLE>
<PAGE>

                             WATSON WYATT & COMPANY

                  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                 (UNAUDITED)


1.   The accompanying  unaudited  consolidated  financial statements  of Watson
     Wyatt & Company and its subsidiaries, (collectively, "Watson Wyatt" or the
     "Company"),  are presented in accordance with the rules and regulations of
     the Securities and Exchange  Commission  ("SEC") and do not include all of
     the  disclosures   normally  required  by  Generally  Accepted  Accounting
     Principles.  In the opinion of management,  these  statements  reflect all
     adjustments,  consisting only of normal recurring  adjustments,  which are
     necessary for a fair presentation of the consolidated financial statements
     for the interim periods.  The consolidated  financial statements should be
     read in conjunction with the audited consolidated financial statements and
     notes thereto  contained in the  Company's  Annual Report on Form 10-K for
     the fiscal year ended June 30, 1999.

     The results of  operations  for the  nine months ended  March 31, 2000 are
     not  necessarily  indicative  of the results  that can be expected for the
     entire  fiscal year  ending June 30,  2000.  The results  reflect  prorata
     growth in share value,  anticipated tax rates and potential  distributions
     at the discretion of the Company's Board of Directors.  Certain prior year
     amounts   have  been   reclassified   to  conform  to the  current  year's
     presentation.

2.   On January 19, 2000,  the Company  filed  registration  statements on Form
     S-3 and Form S-4 with the Securities and Exchange  Commission to offer its
     common stock to the public through a corporate  reorganization and Initial
     Public  Offering  ("IPO").  As a part  of the  proposed  transaction,  the
     current  operating  company,  Watson  Wyatt & Company,  will merge with an
     indirect  wholly-owned  subsidiary to become a wholly-owned  subsidiary of
     Watson Wyatt & Company Holdings.

3.   Under  the  Company's  current  Bylaws,  which  remain  in effect  pending
     consummation of the corporate  reorganization mentioned above, the Company
     is obligated to repurchase its Redeemable Common Stock,  except in certain
     circumstances.  Accordingly, the redemption value of outstanding shares is
     classified as Redeemable  Common Stock and not as permanent  shareholders'
     equity.  Redeemable  Common  Stock  is  equal  to  the  number  of  shares
     outstanding  multiplied  by the  Formula  Book Value per share,  which was
     $6.68  per  share  at  March  31,  2000  and  June  30,  1999.   Permanent
     shareholders' equity includes an adjustment for the difference between the
     redemption  value of the Redeemable  Common Stock and the amounts actually
     paid or deemed paid by shareholders for the shares.

4.   During  the nine  months ended  March 31, 2000,  the  Company  repurchased
     1,307,967  shares of Redeemable  Common Stock. The computation of earnings
     per share,  basic and fully  diluted,  is based upon the weighted  average
     number of shares of Redeemable Common Stock outstanding during the period.
     The number of shares (in thousands)  used in the computation is 14,851 and
     14,693 for the three months ended March 31, 2000  and  1999, respectively,
     and 15,051  and 14,931 for the nine  months ended March 31, 2000 and 1999,
     respectively.

                                      -6-
<PAGE>

5.   In the third quarter of fiscal  year  1998, the Company  discontinued  its
     Benefits Administration Outsourcing Business,  including its investment in
     its affiliate, Wellspring  Resources,  LLC ("Wellspring"), and recorded an
     after-tax  loss of $69.9 million  related  thereto.  In October 1998,  the
     Company consummated agreements with certain clients,  Wellspring,  and its
     former  venture  partner to transfer  operating  responsibility  for these
     clients to Wellspring,  clarifying the remaining  future  obligations  and
     costs related to the  discontinuation.  The Company  reduced the amount of
     its provision for losses from disposal of the Outsourcing  Business in the
     second  quarter  of fiscal  year  1999 by $8.7  million,  net of tax,  and
     believes it has adequate provisions for any remaining costs.

6.   The Company  has adopted SFAS No. 130  "Reporting  Comprehensive  Income."
     Comprehensive  Income  includes  net income and changes in the  cumulative
     translation  gain or  loss.  For the  three months  ended  March 31, 2000,
     Comprehensive Income totaled $3.8 million,  compared with $0.9 million for
     the three months ended March 31, 1999. For the nine months ended March 31,
     2000 and  1999,  Comprehensive  Income  totaled  $12.3  million  and $19.0
     million, respectively.  The  decrease is  mainly  due  to the $8.7 million
     adjustment to reduce  the loss from  disposal of the Company's Outsourcing
     Business in the second quarter of fiscal year 1999.

7.   In fiscal year 1999, the  Company adopted SFAS No. 131 "Disclosures  about
     Segments  of an  Enterprise  and  Related  Information."  The  Company  is
     primarily organized geographically and has seven reportable segments:

            (1)  U.S. East
            (2)  U.S. Central
            (3)  U.S. West
            (4)  Asia/Pacific
            (5)  Canada
            (6)  Latin America
            (7)  Data Services

The Company evaluates the performance of its  segments and  allocates resources
to them based on  net operating income. Prior and current  year data  has  been
restated  to  be  consistent  with   current  classifications  for  comparative
purposes.

The table below presents  specified  information  about reported segments as of
and for the three months ended March 31, 2000 (in thousands):
<TABLE>
<CAPTION>

                    U.S.      U.S.     U.S.      Asia/               Latin    Data
                    East    Central    West     Pacific   Canada    America Services   Total
                    ----    -------    ----     -------   ------    ------- --------   -----
<S>               <C>       <C>       <C>       <C>       <C>       <C>     <C>      <C>
Fees (net of
  reimbursable
  expenses)       $ 54,108  $ 43,933  $ 19,576  $ 15,279  $ 12,244  $ 1,977 $ 2,867  $ 149,984
Net operating
  income            15,388     8,025     1,842     2,774     1,721      183     995     30,928
Receivables         55,687    46,655    18,734    14,110    11,953    2,310       -    149,449
</TABLE>
                                      -7-
<PAGE>

The table below presents  specified  information  about reported segments as of
and for the three months ended March 31, 1999 (in thousands):
<TABLE>
<CAPTION>

                    U.S.      U.S.     U.S.      Asia/               Latin    Data
                    East    Central    West     Pacific   Canada    America Services   Total
                    ----    -------    ----     -------   ------    ------- --------   -----
<S>               <C>       <C>       <C>       <C>       <C>      <C>      <C>      <C>
Fees (net of
  reimbursable
  expenses)       $ 48,350  $ 39,220  $ 14,449  $ 11,432  $10,721  $ 2,026  $ 2,649  $ 128,847
Net operating
  income/(loss)     11,817     6,272    (5,076)      956      613      317      300     15,199
Receivables         54,530    40,865    21,187    12,013   12,113    1,846        -    142,554
</TABLE>


The table below presents  specified  information  about reported segments as of
and for the nine months ended March 31, 2000 (in thousands):
<TABLE>
<CAPTION>

                    U.S.      U.S.     U.S.      Asia/               Latin    Data
                    East    Central    West     Pacific   Canada    America Services   Total
                    ----    -------    ----     -------   ------    ------- --------   -----
<S>               <C>       <C>       <C>       <C>       <C>      <C>      <C>      <C>
Fees (net of
  reimbursable
  expenses)       $158,766  $127,116  $ 58,768  $ 42,091  $32,019  $ 5,268  $ 9,769  $ 433,797
Net operating
  income/(loss)     43,383    22,230     5,871     5,761      933     (335)   3,937     81,780
Receivables         55,687    46,655    18,734    14,110   11,953    2,310        -    149,449
</TABLE>


The table below presents  specified  information  about reported segments as of
and for the nine months ended March 31, 1999 (in thousands):
<TABLE>
<CAPTION>

                    U.S.      U.S.     U.S.      Asia/               Latin    Data
                    East    Central    West     Pacific   Canada    America Services   Total
                    ----    -------    ----     -------   ------    ------- --------   -----
<S>               <C>       <C>       <C>       <C>       <C>      <C>      <C>      <C>
Fees (net of
  reimbursable
  expenses)       $141,915  $113,333  $ 54,746  $ 35,067  $30,392  $ 4,724  $10,709  $ 390,886
Net operating
  income/(loss)     37,214    18,639      (210)    3,518    1,103     (393)   3,507     63,378
Receivables         54,530    40,865    21,187    12,013   12,113    1,846        -    142,554
</TABLE>


Information about interest income and tax expense is not presented as a segment
expense  because  it is  not  considered  a  responsibility  of  the  segments'
operating management.

                                      -8-
<PAGE>

A  reconciliation  of the information  reported by segment to the  consolidated
amounts follows for the three month and nine month periods ended March 31:
<TABLE>
<CAPTION>

                                                      Three Months Ended March 31,          Nine Months Ended March 31,
                                                    -------------------------------        -----------------------------
                                                       2000                 1999              2000               1999
                                                    ----------           ----------        ----------         ----------
<S>                                                 <C>                  <C>               <C>                <C>
Fees:
-----
Total segment fees                                  $  149,984           $  128,847        $  433,797         $  390,886
Reimbursable expenses not included in total
  segment fees                                           6,996                7,802            22,377             22,086
Other, net                                                 522               (1,076)               62             (3,056)
                                                    ----------           ----------        ----------         ----------
Consolidated fees                                   $  157,502           $  135,573        $  456,236         $  409,916
                                                    ==========           ==========        ==========         ==========

Net Operating Income:
---------------------
Total segment net operating income                  $   30,928           $   15,199        $   81,780         $   63,378
Income from affiliates                                     481                  583             2,624              1,608
Differences in allocation methods for
  depreciation, G&A and pension costs                     (200)               3,312             2,312              1,916
Gain on sale of business units                               -                    -                 -              3,822
Discretionary bonuses and stock incentive
  bonus plan                                           (21,450)             (16,572)          (63,200)           (48,120)
Other, net                                              (3,386)                 (67)             (924)            (1,710)
                                                    ----------           ----------        ----------         ----------
Consolidated pretax income from
  continuing operations                             $    6,373           $    2,455        $   22,592         $   20,894
                                                    ==========           ==========        ==========         ==========

Receivables:
------------
Total segment receivables -
billed and unbilled                                 $  149,449           $  142,554        $  149,449         $  142,554
Net valuation differences and
receivables of discontinued operations                    (394)              (1,995)             (394)            (1,995)
                                                    ----------           ----------        ----------         ----------
Total billed and unbilled receivables                  149,055              140,559           149,055            140,559
Assets not reported by segment                         150,360              138,133           150,360            138,133
                                                    ----------           ----------        ----------         ----------
Consolidated assets                                 $  299,415           $  278,692        $  299,415         $  278,692
                                                    ==========           ==========        ==========         ==========
</TABLE>

8.   In December  1999, the  SEC  issued  Staff  Accounting  Bulletin  No.  101
     "Revenue  Recognition in Financial  Statements" (SAB 101) which summarizes
     certain  of the  staff's  views  on  revenue  recognition.  The  Company's
     revenue  recognition  policies  have been and continue to be in accordance
     with SAB 101.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

CORPORATE INFORMATION

Watson Wyatt & Company,  including its  subsidiaries,  is a global  provider of
human capital consulting services. The Company operates on a geographical basis
from 59 offices in 18 countries  throughout  North  America,  Asia-Pacific  and
Latin America. The Company provides services in three principal practice areas:
employee benefits, human resources technologies and human capital consulting.

                                      -9-
<PAGE>

Watson  Wyatt & Company was  incorporated  in Delaware  on February  17,  1958.
Including  predecessors,  the  Company has been in  business  since  1946.  The
Company  conducted  business as The Wyatt Company until  changing its corporate
name to Watson  Wyatt & Company in  connection  with the  establishment  of the
Watson Wyatt Worldwide alliance.  In 1995, the Company entered into an alliance
agreement  with  R.  Watson  & Sons  (now  Watson  Wyatt  Partners),  a  United
Kingdom-based  actuarial,  benefits and human resources consulting  partnership
that was founded in 1878.  Since 1995,  the Company has  marketed  its services
globally  under  the  Watson  Wyatt   Worldwide   brand,   sharing   resources,
technologies, processes and business referrals.

Although  the  Company  operates  globally as an  alliance,  its  revenues  and
operating  expenses  reflect solely the results of operations of Watson Wyatt &
Company.  The Company's  share of the results of operations of its  affiliates,
recorded  using the equity  method of  accounting,  is reflected in the "Income
from  affiliates"  line.  Watson Wyatt  & Company's  principal  affiliates  are
Watson Wyatt  Partners,  in which the Company holds a 10% interest in a defined
distribution  pool,  and Watson  Wyatt  Holdings  (Europe)  Limited,  a holding
company through which the Company conducts its continental European operations.
The Company owns 25% of Watson Wyatt Holdings (Europe) Limited and Watson Wyatt
Partners owns the remaining 75%.

Watson  Wyatt's  principal  executive  offices  are  located at 6707  Democracy
Boulevard, Suite 800, Bethesda, Maryland, 20817. The Company's telephone number
is (301) 581-4600. The Company's web site is at http://www.watsonwyatt.com.


FINANCIAL STATEMENT OVERVIEW

Watson Wyatt's fiscal year ends June 30. The financial  statements contained in
this quarterly report reflect  Consolidated Balance Sheets as of the end of the
third  quarter of fiscal year 2000 (March 31, 2000) and as of the end of fiscal
year 1999 (June 30, 1999),  Consolidated Statements of Operations for the three
and nine month periods ended March 31, 2000 and 1999,  Consolidated  Statements
of Cash  Flows for the nine month  periods  ended  March 31,  2000 and 1999 and
Consolidated  Statements of Changes in Permanent  Shareholders'  Equity for the
nine month period ended March 31, 2000.

The Company derives  substantially  all of its revenue from fees for consulting
services, which generally are billed at standard hourly rates or on a fixed-fee
basis;  management  believes  the  approximate  percentages  are 60%  and  40%,
respectively.  Clients are  typically  invoiced on a monthly basis with revenue
recognized as services are  performed.  For the most recent three fiscal years,
fees  from U.S.  consulting  operations  have  comprised  approximately  80% of
consolidated  revenues.  No  single  client  accounted  for more than 3% of the
Company's consolidated revenues for any of the most recent three fiscal years.

The Company's most  significant  expense is  compensation  to employees,  which
typically comprises over 60% of total costs of providing services.  In addition
to payroll and related  benefits  and taxes,  compensation  to  employees  also
includes  incentive bonus expense,  which is linked to the Company's  operating
performance.  Other significant costs of providing services include office rent
and related costs, communications and professional and subcontracted services.

                                      -10-
<PAGE>

RESULTS OF OPERATIONS--NINE MONTHS ENDED MARCH 31, 2000 COMPARED TO NINE MONTHS
ENDED MARCH 31, 1999.

REVENUES.  Fees for the nine months  ended March 31, 2000 were $456.2  million,
compared  to $409.9  million  for the nine  months  ended  March 31,  1999,  an
increase of $46.3  million,  or 11%. This revenue  growth is primarily due to a
$16.0  million,  or 11%,  rise in fees  generated by the  Company's  U.S.  East
region,  a $13.7  million,  or 12% rise in fees generated by the Company's U.S.
Central  region,  a $3.1  million,  or 5%  increase in the Company's  U.S. West
region, and a $0.8 million, or 2% increase in other North American regions. The
fee  increase in the North  American  regions can be  attributed  to  increased
chargeable  hours,  accounting  for  approximately  $7.5  million,  and  to the
realization of net billing rate increases,  accounting for approximately  $26.1
million.  In addition  to these  amounts,  the  Company's  Asia-Pacific  region
generated  $7.5  million,  or 21% higher fees than in the  previous  nine month
period, and the Company's Latin American region generated $0.5 million,  or 11%
higher fees than in the previous  nine month  period.  Within North America the
following individual lines of business, not all inclusive, showed the following
trends: Benefits Group, a $19.9 million, or 9% increase; HR Technologies Group,
a $6.5 million,  or 11% increase;  and Human  Capital Group, a $5.5 million, or
16% increase.

Fees for the three months ended March 31, 2000 were $157.5 million, compared to
$135.6  million for the three months ended March 31, 1999, an increase of $21.9
million, or 16%. This revenue growth is primarily due to a $4.8 million, or 31%
increase in fees generated by the Company's  U.S. West region,  a $4.8 million,
or 9% increase in fees  generated by the  Company's  U.S.  East region,  a $4.7
million,  or 11%  increase in fees  generated  by the  Company's  U.S.  Central
region,  and a $1.8 million,  or 13% increase in other North American  regions.
The fee increase in the North  American  regions can be attributed to increased
chargeable  hours,  accounting  for  approximately  $0.6  million,  and  to the
realization of net billing rate increases,  accounting for approximately  $15.5
million.  In addition  to these  amounts,  the  Company's  Asia-Pacific  region
generated  $3.7  million,  or 31% higher fees than in the previous  three month
period.  Within North America the following  individual lines of business,  not
all inclusive,  showed the following trends: Benefits Group, a $4.9 million, or
6% increase; HR Technologies Group, a $4.8 million, or 31% increase; and  Human
Capital Group, a $3.3 million, or 31% increase.

SALARIES AND EMPLOYEE BENEFITS.  Salaries and employee benefit expenses for the
nine  months  ended  March 31,  2000 were  $246.6  million,  compared to $219.8
million for the nine months ended March 31, 1999, an increase of $26.8 million,
or 12%. The increase is mainly due to an $18.8 million increase in compensation
expenses,  which is partly the result of annual salary increases of 6% and a 4%
increase in headcount.  The remainder of the  difference can be attributed to a
$6.0 million higher fiscal year end bonus accrual,  a $1.8 million  increase in
medical  claims,  and a $1.0  million  higher  pension  expense.  Salaries  and
employee  benefit expenses for the third quarter of fiscal year 2000 were $85.9
million,  compared to $71.0  million for the third quarter of fiscal year 1999,
an  increase of $14.9  million,  or 21%.  The  increase is mainly due to a $7.5
million increase in compensation expenses, which is partly the result of annual
salary  increases of 6% and a 4% increase in  headcount.  The  remainder of the
difference can be attributed to the $4.1 million third quarter fiscal year 1999
adjustment  to  pension  expense  due to higher  investment  gains,  and a $3.4
million increase in the fiscal year end bonus accrual.

                                      -11-
<PAGE>

STOCK  INCENTIVE  BONUS PLAN.  The  accrued  bonus  under the  Company's  stock
incentive  bonus  plan for the nine  months  ended  March  31,  2000 was  $23.2
million, compared to $14.5 million for the nine months ended March 31, 1999, an
increase of $8.7 million,  or 60%. The stock  incentive  bonus plan expense for
the three  months  ended  March 31,  2000 was $8.2  million,  compared  to $6.9
million for the three months ended March 31, 1999, an increase of $1.3 million,
or 19%. These increases are due to higher  operating  results for the three and
nine  months  ended March 31, 2000  compared to the  operating  results for the
three and nine months ended March 31, 1999. Under the equity based compensation
structure the Company plans to implement as a publicly traded  enterprise,  the
results of operations for the three and nine month periods ended March 31, 2000
and 1999  would not have  included  the  accrual  for  bonuses  under the stock
incentive bonus plan.

OCCUPANCY AND COMMUNICATIONS. Occupancy and communication expenses for the nine
months ended March 31, 2000 were $47.4  million,  compared to $46.4 million for
the nine months ended March 31, 1999, an increase of $1.0  million,  or 2%. The
increase is primarily due to a $0.5 million increase in telephone expense and a
$0.4 million increase in business taxes.  Occupancy and communication  expenses
for the three months ended March 31, 2000 were $17.0 million, compared to $16.4
million for the three months ended March 31, 1999, an increase of $0.6 million,
or 4%. The  increase is primarily  due to a $0.3  million  increase in business
taxes and a $0.3 million increase in equipment rentals.

PROFESSIONAL  AND  SUBCONTRACTED   SERVICES.   Professional  and  subcontracted
services for the nine months ended March 31, 2000 were $34.0 million,  compared
to $33.6  million for the nine months ended March 31, 1999, an increase of $0.4
million,  or 1%. The  difference is mainly due to a $1.2 million  actuarial and
strategic consulting expense from a sub-contractor, $0.9 million in non-compete
payments,  and a $1.0 million increase in international  professional services,
offset by lower  reimbursable  expenses  generated on behalf of clients of $1.7
million and a $1.0 million  insurance  claim.  Professional  and  subcontracted
services for the three months ended March 31, 2000 were $9.1 million,  compared
to $11.6  million for the three months ended March 31, 1999, a decrease of $2.5
million,  or 22%. The  decrease is  attributable  to a $1.0  million  insurance
claim,  lower  reimbursable  expenses  generated  on behalf of  clients of $0.8
million  and lower  general  expenses of $0.6  million  in the  Company's North
American offices.

OTHER.  Other costs of  providing  services for the nine months ended March 31,
2000 were $25.9  million,  compared to $20.9  million for the nine months ended
March 31, 1999, an increase of $5.0 million,  or 24%. The increase is primarily
due to a $3.7 million gain from the sale of the Company's defined  contribution
daily  record-keeping  software  recognized  in the nine months ended March 31,
1999,  offset by a $0.7 million  charge related to the exit from this business,
incurred  during the third  quarter of fiscal year 1999.  Without the effect of
the Company's exit from its defined contribution record-keeping business, other
costs of providing  services  would have  increased  $2.0  million,  or 8%. The
difference  without  giving  effect  to this item can be  attributed  to a $0.9
million   increase  in  travel,   a  $0.6  million   increase  in  professional
development,  and a $0.5 million increase in dues and  entertainment  expenses.
Other costs of  providing  services  for the three  months ended March 31, 2000
were $9.6  million,  compared to $9.3  million for the three months ended March
31, 1999, an increase of $0.3 million,  or 3%. The increase is primarily due to
a $0.4  million  increase in travel,  a $0.3 million  increase in  professional
development,  and a $0.3 million increase in dues and  entertainment  expenses,
partially  offset by the charge related to the exit from the Company's  defined
contribution daily record-keeping business mentioned above.

                                     -12-
<PAGE>

GENERAL AND  ADMINISTRATIVE.  General and administrative  expenses for the nine
months ended March 31, 2000 were $44.1  million,  compared to $42.0 million for
the nine months ended March 31, 1999, an increase of $2.1  million,  or 5%. G&A
expenses for the three months ended March 31, 2000 were $16.2 million, compared
to $14.2 million for the three months ended March 31, 1999, an increase of $2.0
million, or 14%. The majority of the increase in both periods can be attributed
to  an  increase  of  $1.5  million  in  legal   expenses.

DEPRECIATION AND  AMORTIZATION.  Depreciation and amortization  expense for the
nine months ended March 31, 2000 was $15.0  million,  compared to $11.8 million
for the nine months ended March 31, 1999, an increase of $3.2 million,  or 27%.
Depreciation and amortization expense for the three months ended March 31, 2000
was $5.5 million, compared to $4.0 million for the three months ended March 31,
1999, an increase of $1.5 million,  or 37%. The increase in both periods is due
to increased  purchases of capital assets towards the end of the year for which
the Company records a full year's depreciation.

INTEREST  INCOME.  Interest income for the nine months ended March 31, 2000 was
$1.5  million,  compared to $0.7  million  for the nine months  ended March 31,
1999, an increase of $0.8 million,  or 114%.  The increase can be attributed to
the receipt of interest of $0.5 million  related to a federal tax refund and to
additional  interest  income of $0.3 million earned during the year on a higher
average investment balance for the first quarter of fiscal year 2000.  Interest
income for the three months ended March 31, 2000 was $0.2 million,  compared to
$0.1 million for the three  months  ended March 31,  1999,  an increase of $0.1
million.

INTEREST EXPENSE. Interest expense for the nine months ended March 31, 2000 was
$1.5  million,  compared to $2.2  million  for the nine months  ended March 31,
1999, a decrease of $0.7 million, or 32%. Interest expense for the three months
ended March 31, 2000 was $0.4  million,  compared to $0.5 million for the three
months ended March 31, 1999,  a decrease of $0.1  million,  or 20%. On average,
the Company  borrowed less money  against its  revolving  line of credit in the
first nine  months of fiscal  year 2000 than in the first nine months of fiscal
year 1999.

INCOME FROM AFFILIATES.  Income from affiliates for the nine months ended March
31, 2000 was $2.6  million,  compared to $1.6 million for the nine months ended
March 31, 1999,  an increase of $1.0  million,  or 63%.  The increase  reflects
improvement  in  business  operations  by  the  Company's  affiliates  in  both
Continental Europe and the United Kingdom. Income from affiliates for the three
months ended March 31, 2000 was $0.5 million,  compared to $0.6 million for the
three months ended March 31, 1999, a decrease of $0.1 million.

PROVISION  FOR INCOME  TAXES.  Income taxes for the nine months ended March 31,
2000 were $10.6  million,  compared to $10.4  million for the nine months ended
March 31, 1999.  The  Company's  effective tax rate was 47% for the nine months
ended March 31, 2000, compared to 50% for the nine months ended March 31, 1999.
The change is due to the use of federal and state tax  credits.  The  Company's
tax rate is affected by differing  foreign tax rates in various  jurisdictions.
The  Company  does not  record a tax  benefit  on foreign  net  operating  loss
carryovers and foreign deferred expenses unless it is more likely than not that
a benefit will be realized.

DISCONTINUED  OPERATIONS.  During the nine  months  ended March 31,  1998,  the
Company further resolved its future obligations  related to the discontinuation
of the Company's Benefits  Administration  Outsourcing Business and reduced the
expected loss on disposal by $8.7 million,  net of tax. Management believes the
Company  has  adequate  provisions  for  any  remaining  costs  related  to the
discontinuation.
                                      -13-
<PAGE>

NET  INCOME.  Net income for the nine  months  ended  March 31,  2000 was $12.1
million,  compared to $19.1 million for the nine months ended March 31, 1999, a
decrease of $7.0 million,  or 37%. The decrease is principally  due to the $8.7
million after-tax adjustment to reduce the loss on disposal of the discontinued
Benefits Administration  Outsourcing Business recorded in fiscal year 1999. Net
income for the three months ended March 31, 2000 was $3.6 million,  compared to
$1.0 million for the three  months  ended March 31,  1999,  an increase of $2.6
million,  or  260%.  The  increase  is due to  higher  income  from  continuing
operations  of $3.9  million,  net of  income  taxes.  Income  from  continuing
operations  for the three and nine  months  ended  March 31, 2000 and 1999 also
reflect the stock incentive bonus plan accruals discussed above.


LIQUIDITY AND CAPITAL RESOURCES

The  Company's  cash and cash  equivalents  at March  31,  2000  totaled  $13.3
million,  compared to $36.0 million at June 30, 1999. The decrease in cash from
June 30,  1999 to March  31,  2000 is mainly  attributable  to the year to date
corporate  tax payments in North America of $17.4  million,  purchases of $10.2
million in capital assets during the first nine months of fiscal year 2000, net
of borrowings against the Company's line of credit of $6.0 million at March 31,
2000.  The  Company had no  borrowings  under its line of credit as of June 30,
1999.

CASH FROM (USED FOR) OPERATING  ACTIVITIES.  Cash used for operating activities
for the nine months  ended March 31, 2000 was $11.7  million,  compared to cash
from operating  activities of $18.6 million for the nine months ended March 31,
1999.  The increase in cash outflows is due to $12.6 million in higher  current
year bonus payouts, net of higher bonus accruals, higher corporate tax payments
compared to accruals of $13.0 million, an $11.4 million year over year decrease
in  accounts  payable,  and  increased  benefits  payments  to retirees of $6.1
million,  offset by a lower  increase in  receivables of $9.5 million and lower
payouts in connection with  discontinued  operations of $3.0 million.  Further,
the allowance for doubtful  accounts  increased $1.4 million from June 30, 1999
to March 31,  2000.  This  increase  is  typical  of the  Company's  historical
patterns, where the receivables and allowance are substantially reduced at year
end from an increased emphasis on collections. Both the receivable balances and
the related  allowance  usually  decrease in the last three months of the year.
The number of months of accounts  receivable  outstanding  was 1.6 at March 31,
2000 and 1.4 at March 31, 1999.

CASH USED IN INVESTING  ACTIVITIES.  Cash used in investing  activities for the
nine months ended March 31, 2000 was $12.2  million,  compared to $12.8 million
for the nine months ended March 31, 1999. The decrease in cash usage was due to
$3.3 million in lower contingent  consideration  payments  associated with 1999
acquisitions,  partially  offset by $2.3  million in lower  distributions  from
affiliates to the Company and $0.5 million in higher  current year purchases of
fixed assets.

CASH FROM (USED BY) FINANCING ACTIVITIES.  Cash flows from financing activities
were $1.1 million for the nine months  ended March 31,  2000,  compared to cash
used by  financing  activities  of $6.5 million for the nine months ended March
31, 1999. This change reflects the timing of borrowings and repayments of $14.2
million against the Company's revolving line of credit, a $4.0 million increase
in book  overdrafts,  and a $14.9  million  decrease in issuances of Redeemable
Common Stock, all of which reflect the fact that the Company completed a formal
stock sale in the nine  months  ended  March 31, 1999 but did not have a formal
stock sale in the nine month  period  ended  March 31,  2000.  This change also
reflects a $4.1 million  decrease in repurchases of Redeemable  Common Stock by
the Company for the nine months ended March 31, 2000.

                                      -14-
<PAGE>

The Company has a $120.0  million  revolving  credit  facility  that matures on
June 30,  2003.  Of the $95.0  million of the credit line that is allocated for
operating needs, $86.8 million was available as of March 31, 2000,  compared to
$92.8 million on June 30, 1999. Further, the Company had borrowings outstanding
of $6.0 million as of March 31, 2000. The remaining $2.2 million is unavailable
as a result of support  required for letters of credit  issued under the credit
line.

The Company relies primarily on funds from operations and short-term borrowings
for  liquidity.  Management  believes  that the  Company  has  access  to ample
financial   resources  to  finance  anticipated  growth,  meet  commitments  to
affiliates,  as well as support ongoing operations.  Anticipated commitments of
funds are  estimated  at $11.5  million for the  remainder of fiscal year 2000,
mainly  for  computer  hardware   purchases  and  for  office  relocations  and
renovations.  Management expects operating cash flows to provide for these cash
needs.  In future  fiscal  years,  management  would expect that the  Company's
capital  needs would be similar in nature to what the  Company has  incurred in
the past.  Capital  expenditures  will be required in  conjunction  with office
lease  renewals  and  relocations   required  to  support  management's  growth
strategy.  Additionally,  the Company's consultants will need to have access to
hardware and software that will support servicing the Company's client base. In
a  rapidly  changing  technological  environment,  management  anticipates  the
Company will need to make  investments  in its knowledge  sharing and financial
systems  infrastructure.  Management  would  expect  cash  from  operations  in
conjunction with the anticipated net proceeds from the proposed public offering
and the Company's  existing credit facility to adquately provide for these cash
needs.

The Company's foreign  operations do not materially impact liquidity or capital
resources.  At March 31, 2000, $12.4 million of the total cash balance of $13.3
million was held outside of North America, which the Company has the ability to
readily   access,   if  necessary.   There  are  no  significant   repatriation
restrictions other than local or U.S. taxes associated with  repatriation.  The
foreign operations in total are substantially self-sufficient for their working
capital needs.

The Company  continues  to  guarantee  certain  leases for office  premises and
equipment for Wellspring.  Minimum  remaining  payments  guaranteed under these
leases at March 31, 2000 total $51.9  million,  which  expire at various  dates
through  2007.  These leases are also jointly and  severally  guaranteed by the
Company's former partner in Wellspring,  State Street.  The estimated loss from
the potential exercise of these guarantees has been included in the fiscal year
1998 loss on disposal of the Benefits Administration Outsourcing Business.


MARKET RISK

The  Company is exposed to market  risks in the  ordinary  course of  business.
These risks include  interest  rate risk and foreign  currency  exchange  risk.
Management  has examined the  Company's  exposure to these risks and  concluded
that none of our  exposures in these areas are  material to fair  values,  cash
flows or earnings.
                                      -15-
<PAGE>


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

The following  discussion of Year 2000,  Note 5 on page 7, the last sentence of
"Provision   for  Income  Taxes"  and  the  last   sentence  of   "Discontinued
Operations",  both on page 13, the sixth  paragraph of  "Liquidity  and Capital
Resources" on page 15, and the last sentence of the first  paragraph of "Item 1
- Legal Proceedings" on page 17 contain forward-looking statements that involve
substantial  risks and  uncertainties.  These  statements  can be identified by
forward-looking words such as "may," "will," "expect," "anticipate," "believe,"
"estimate,"  "plan,"  "intend,"  "continue" or similar words.  Statements  that
contain these words should be read carefully because they discuss the Company's
future  expectations,  contain  projections of the Company's  future results of
operations or financial condition or state other "forward-looking" information.


YEAR 2000 ISSUE

The  Company  has  substantially  completed  a program to address the Year 2000
issue as it affects its business  and  management  believes  that the Year 2000
issue  is not  likely  to  have a  material  adverse  effect  on the  Company's
business,  results of operations, or financial condition.  Nevertheless,  since
the  effects of the Year 2000 issue are not  predictable,  management  does not
expect that the Year 2000  compliance  program will  eliminate  all risk to the
Company associated with the Year 2000 issue.

Management  believes  that the most  significant  risk  facing  the  Company in
connection with the Year 2000 issue relates to software provided by the Company
for use by, or on behalf of,  its  clients.  This  software  has been  provided
principally by the HR  Technologies  Group,  including  benefit  administration
software and call center  services  and the  retirement  practice,  principally
spreadsheet-based   benefit  calculators.   The  risks  presented  include  the
possibility of errors or contractual liability caused by non-compliant software
that is not  identified  or  corrected  and the costs of replacing or repairing
client systems.  Testing and remediation  have been completed on  approximately
80% of such systems.  Virtually all of the systems not yet repaired are used to
support  open   enrollment  in  benefits  plans  and  any  required  Year  2000
remediation will be performed as a part of modifications to such systems before
they are next used.

The cost to address  Year 2000  compliance  issues  exceeded  $4.0  million for
fiscal year 1999.  The  principal  expenditures  were for repair and testing of
internal and client software,  costs associated with managing and administering
the Company's Year 2000  compliance  program and costs of outside  consultants.
Management  expects  that the costs  for the  Company's  Year  2000  compliance
program will be lower in fiscal year 2000.  Funds for costs associated with the
Company's Year 2000 compliance  efforts will come from operating cash flows for
all areas of its operations and will be expensed as incurred.

                                      -16-
<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

From time to time, the Company is a party to various lawsuits,  arbitrations or
mediations  that  arise in the  ordinary  course of  business.  These  disputes
typically  involve  claims  relating to employment  matters or the rendering of
professional  services.  The four  matters  summarized  below  involve the most
significant  pending  or  potential  claims  against  the  Company.  Management
believes,  based on currently  available  information,  that the results of all
such proceedings,  in the aggregate, will not have a material adverse effect on
the  Company's  financial  condition,  but  claims  which are  possible  in its
business  could be material to the financial  results for a particular  period,
depending, in part, upon the operating results for that period.

REGINA,  SASKATCHEWAN  POLICE.  The  Administrative  Board of the Regina Police
Superannuation  and Benefit Plan filed an action  against the Company and three
individual employees in 1994 alleging errors in valuation methods,  assumptions
and  calculations  for the Plan during the course of work provided for the plan
since the 1970s.  Discovery is concluded and the exchange of expert  reports is
anticipated  during 2000.  The  Administrative  Board seeks  approximately  $26
million in damages, plus interest.

CITY OF MILWAUKEE,  WISCONSIN. The City of Milwaukee Employees Retirement Board
notified the Company of a potential claim  involving an erroneously  calculated
cost of living  adjustment that was based on a formula provided by the staff of
the Employees Retirement Board. In response to the notice of claim, the Company
filed a  declaratory  judgment  action  against the City of  Milwaukee  and the
Employees  Retirement  Board in the U.S.  District Court in Chicago.  By mutual
consent,  the  parties  agreed to dismiss  the claim  with leave to  reinstate,
pending settlement discussions among other parties.

CONNECTICUT  CARPENTERS  PENSION FUND. The Connecticut  Carpenters Pension Fund
has filed an action against the Company claiming errors in valuations from 1991
through 1998 that allegedly resulted in understated liabilities. The plaintiffs
are seeking damages of approximately $65 million,  including  punitive damages.
The case is in discovery.

CLAIM AGAINST WATSON WYATT PARTNERS.  A law firm representing a client based in
Europe has notified  Watson Wyatt  Partners,  the Company's  European  alliance
partner, of a claim involving alleged errors in the design of a global employee
stock  option  plan  which may  include  work  performed  by  present or former
subsidiaries of Watson Wyatt & Company.  The parties are informally  exchanging
information pursuant to English legal procedures.

The  Company  carries  substantial  professional  liability  insurance  with  a
self-insured retention of $1 million per occurrence which provides coverage for
professional  liability claims. The Company also carries  employment  practices
liability insurance.

                                      -17-
<PAGE>


ITEM 2.  CHANGES IN SECURITIES

On March 28, 2000, 7,500 shares of the Company's  Redeemable  Common Stock were
issued to an outside  director in a transaction not involving a public offering
in  reliance on Section  4(2) of the  Securities  Act of 1933.  The shares were
issued to the outside  director in connection  with his return to the Company's
board  of  directors  in  November  1999.  The  aggregate  offering  price  was
$50,100.00.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.  OTHER INFORMATION

On January 27, 2000 the Company filed a Current  Report on Form 8-K  announcing
the  filing  of  Registration  Statements  on Form S-3 and Form S-4 to effect a
corporate  reorganization in order to create a holding company structure, and a
subsequent public offering by the holding company.

There is no  assurance  that the  proposed  reorganization  or  initial  public
offering will be consummated.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a.       Exhibits

         3.1      Restated  Certificate  of  Incorporation of  Watson  Wyatt  &
                  Company2
         3.2      Restated Bylaws (as amended through November 19, 1998)3
         4        Form of Certificate Representing Common Stock1
         10       Credit  Agreement Among  NationsBank, N.A.  and Others  dated
                  June 30, 19984

b.       Reports on Form 8-K

         Report on Form 8-K, filed January 27, 2000.



--------
1     Incorporated by reference from Registrant's Initial  Statement on Form 10
      (File No. 0-20724), filed on October 13, 1992
2     Incorporated by  reference from  Registrant's Annual  Report on Form 10-K
      for  the  fiscal  year  ended June 30, 1996 (File No. 0-20724), filed  on
      September 16, 1996
3     Incorporated by reference from  Registrant's  Statement on Form S-8 (File
      No. 33-369545), filed on December 23, 1998
4     Incorporated by  reference  from Registrant's  Annual Report on Form 10-K
      for  the fiscal  year ended  June 30, 1998  (File No. 0-20724),  filed on
      September 24, 1998

                                      -18-
<PAGE>

SIGNATURES


Pursuant to the  requirements  of the  Securities and Exchange Act of 1934, the
registrant  has duly  caused  this  report to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

Watson Wyatt & Company
(Registrant)




/S/ John J. Haley                                                 May 9, 2000
-----------------                                                 -----------
Name:             John J. Haley                                   Date
Title:            President and Chief
                  Executive Officer

/S/ Carl D. Mautz                                                 May 9, 2000
-----------------                                                 -----------
Name:             Carl D. Mautz                                   Date
Title:            Vice President and Chief
                  Financial Officer

/S/ Peter L. Childs                                               May 9, 2000
-------------------                                               -----------
Name:             Peter L. Childs                                 Date
Title:            Controller

                                      -19-