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<PAGE> PAGE 5
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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SIGNATURE MARIANTHE S. MEWKILL
TITLE TREASURER
The Board of Trustees
Smith Breeden Short Duration U.S. Government Series of the Smith Breeden
Series Fund:
In planning and performing our audit of the financial statements of Smith
Breeden Short Duration U.S. Government Series of the Smith Breeden Series
Fund for the year ended March 31, 1997 (on which we have issued our report
dated May 12, 1997), we considered its internal control structure, including
procedures for safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial
statements and to comply with the requirements of Form N-SAR, and not to
provide assurance on the internal control structure.
The management of the Smith Breeden Short Duration U.S. Government Series of
the Smith Breeden Series Fund is responsible for establishing and maintaining
an internal control structure. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition and that transactions are executed
in accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design
or operation of the specific internal control structure elements does not
reduce to a relatively low level the risk that errors or irregularities, in
amounts that would be material in relation to the financial statements being
audited, may occur and not be detected within a timely period by employees
in the normal course of performing their assigned functions. However, we
noted no matters involving the internal control structure, including
procedures for safeguarding securities, that we consider to be material
weaknesses as defined above as of March 31, 1997.
This report is intended solely for the information and use of management,
the Board of Trustees and the Securities and Exchange Commission.
May 12, 1997
The Board of Trustees
Smith Breeden Intermediate Duration U.S. Government Series of the
Smith Breeden Series Fund:
In planning and performing our audit of the financial statements of Smith
Breeden Intermediate Duration U.S. Government Series of the Smith Breeden
Series Fund for the year ended March 31, 1997 (on which we have issued our
report dated May 12, 1997), we considered its internal control structure,
including procedures for safeguarding securities, in order to determine our
auditing procedures for the purpose of expressing our opinion on the
financial statements and to comply with the requirements of Form N-SAR, and
not to provide assurance on the internal control structure.
The management of the Smith Breeden Intermediate Duration U.S. Government
Series of the Smith Breeden Series Fund is responsible for establishing and
maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of control structure policies and procedures.
Two of the objectives of an internal control structure are to provide
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design
or operation of the specific internal control structure elements does not
reduce to a relatively low level the risk that errors or irregularities,
in amounts that would be material in relation to the financial statements
being audited, may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.
However, we noted no matters involving the internal control structure,
including procedures for safeguarding securities, that we consider to be
material weaknesses as defined above as of March 31, 1997.
This report is intended solely for the information and use of management,
the Board of Trustees and the Securities and Exchange Commission.
May 12, 1997
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<NAME> SMITH BREEDEN INT. DURATION US GOVT SERIES
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