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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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SIGNATURE MARIANTHE S. MEWKILL
TITLE TREASURER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> SMITH BREEDEN SHORT DURATION US GOVT FUND
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> SMITH BREEDEN INTERMEDIATE DURATION US GOVT
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</TABLE>
To the Board of Trustees of Smith Breeden Short Duration U.S. Government
Fund of the Smith Breeden Series Fund:
In planning and performing our audit of the financial statements of the Smith
Breeden Short Duration U.S. Government Fund (the "Fund") for the year ended
March 31, 1999 (on which we have issued our report dated May 14, 1999), we
considered its internal control, including control activities 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 Fund's internal
control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes that
are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in any internal control, errors or fraud may
occur and not be detected. Also, projection of any evaluation of internal
control 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 Fund's internal control would not necessarily
disclose all matters in internal control 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 one or more of the internal control components does not reduce
to a relatively low level the risk that errors or fraud 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 Fund's internal control and its operation, including controls
for safeguarding securities, that we consider to be material weaknesses as
defined above as of March 31, 1999.
This report is intended solely for the information and use of management,
the Board of Trustees of Smith Breeden, and the Securities and Exchange
Commission.
DELOITTE & TOUCHE LLP
May 14, 1999
To the Board of Trustees of Smith Breeden Intermediate Duration U.S.
Government Fund of the Smith Breeden Series Fund:
In planning and performing our audit of the financial statements of the Smith
Breeden Intermediate Duration U.S. Government Fund (the "Fund") for the year
ended March 31, 1999 (on which we have issued our report dated May 14, 1999),
we considered its internal control, including control activities 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 Fund's internal control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in any internal control, errors or fraud may
occur and not be detected. Also, projection of any evaluation of internal
control 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 Fund's internal control would not necessarily
disclose all matters in internal control 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 one or more of the internal control components does not reduce
to a relatively low level the risk that errors or fraud 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 Fund's internal control and its operation, including controls
for safeguarding securities, that we consider to be material weaknesses as
defined above as of March 31, 1999.
This report is intended solely for the information and use of management,
the Board of Trustees of Smith Breeden, and the Securities and Exchange
Commission.
DELOITTE & TOUCHE LLP
May 14, 1999
