[Federal Register Volume 60, Number 32 (Thursday, February 16, 1995)]
[Notices]
[Pages 9073-9074]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-3885]



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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-20896; 811-6433]


Smith Breeden Institutional Intermediate Duration U.S. Government 
Fund; Notice of Application

February 10, 1995.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for deregistration under the Investment 
Company Act of 1940 (the ``Act'').

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APPLICANT: Smith Breeden Institutional Intermediate Duration U.S. 
Government Fund.

RELEVANT ACT SECTION: Order requested under section 8(f).

SUMMARY OF APPLICATION: Applicant seeks an order declaring it has 
ceased to be an investment company.

FILING DATES: The application was filed on November 21, 1994 and 
amended on February 6, 1995.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be issued unless the SEC orders a hearing. Interested persons may 
request a hearing by writing to the SEC's Secretary and serving 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on March 7, 1995, 
and should be accompanied by proof of service on the applicant, in the 
form of an affidavit or, for lawyers, a certificate of service. Hearing 
requests should state the nature of the writer's interest, the reason 
for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street NW., Washington, D.C. 
20549. Applicant, 200 Europa Drive, Suite 200, Chapel Hill, North 
Carolina 27514.

FOR FURTHER INFORMATION CONTACT:
Marianne H. Khawly, Staff Attorney, at (202) 942-0562, or C. David 
Messman, Branch Chief, at (202) 942-0564 (Division of Investment 
Management, Office of Investment Company Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee from 
the SEC's Public Reference Branch.

Applicant's Representations

    1. Applicant is a registered open-end, diversified, management 
investment company under the Act and is organized as a business trust 
under the laws of the Commonwealth of Massachusetts. On October 8, 
1991, applicant filed a Notification of Registration on Form N-8A 
pursuant to section 8(a) of the Act and a registration statement on 
Form N-1A under section 8(b) of the Act. With respect to the securities 
issued by applicant pursuant to the Securities Act of 1933, a 
registration statement on Form N-1A was filed on November 29, 1991. The 
registration statement became effective on February 24, 1992, and 
applicant's initial public offering commenced on March 12, 1992.
    2. At a joint meeting held on June 2, 1994, applicant's Board of 
Trustee (the ``Trustees'') unanimously determined that applicant's 
continuation was no longer in the best interest of applicant or its 
shareholders. The Trustees determined that applicant's 
[[Page 9074]] shareholders would be better served by a liquidation of 
applicant's assets. The Trustees reached this conclusion based upon the 
recommendation of Smith Breeden Associates, Inc. (the ``Adviser'') that 
applicant's master-feeder structure was no longer the most economically 
viable alternative over the long term. The master-feeder structure was 
chosen initially to allow for flexibility in distribution. The 
Intermediate Series initially had a load and was to be marketed by 
brokers to a retail market. This plan was not successful and assets 
only grew to $8 million after two years. The Adviser was supporting an 
expense cap in both the master and feeder funds creating redundancies 
in expenses at small asset levels. After two years, the Adviser 
concluded that it could no longer support the expense caps. The 
Trustees voted to approve a plan of liquidation whereby the assets of 
applicant would be distributed in case or in-kind to applicant's 
shareholders in complete liquidation of the applicant.
    3. According to applicant's Declaration of Trust, no shareholder 
vote was required. Prior to the time of liquidation, applicant was 
required to notify shareholders of the plan of liquidation in the form 
of a letter signed by a majority of the Trustees. The letter was sent 
by overnight courier on July 28, 1994.
    4. On August 1, 1994, immediately preceding the liquidation, 
applicant had a total of 895,357.904 shares of beneficial interest 
outstanding. At such time, applicant's aggregate and per share net 
asset value was $8,813,488.2 and $9.843, respectively.
    5. All portfolio securities and any other assets of applicant were 
distributed to applicant's shareholders in connection with the 
liquidation. On August 1, 1994, applicant transferred its assets to its 
shareholders at fair market value in cancellation of their shares. 
Prior to the liquidating distribution, Smith Breeden Intermediate 
Duration U.S. Government Series (``Intermediate Series'') held a 
majority of applicant's shares (870,004.56). The Intermediate Series 
received all of applicant's investments and remaining cash. The 
Intermediate Series assumed all of applicant's liabilities which 
consisted of: $7,483,827 for accounts payable for securities purchased; 
$3,697 for accrued expenses; and $2,652 for investment advisory fees. 
The value of assets and cash received by the Intermediate Series was 
$8,563,932.70.
    6. On August 1, 1994, applicant transferred cash to its minority 
share-holders in the amount of $249,555.50. This payment was equal to 
the net asset value of such shareholders' shares on such date. Prior to 
the plan of liquidation, minority shareholders held 25,353.344 shares.
    7. On July 29, 1994, the balance of unamortized organizational 
expenses was $24,256. Initially, these expenses were paid by the 
Adviser and applicant established an Account Payable for Organization 
Costs (The ``Account'') to the Adviser.
    On July 29, 1994, the balance in the Account equalled the balance 
of unamortized organizational expenses. In liquidation, the Adviser 
forgave the Account and relinquished its right to be reimbursed for the 
organization costs it paid.
    8. All expenses incurred in connection with applicant's liquidation 
were borne by the Intermediate Series. Such expenses, totalling $2,000, 
included legal and drafting fees.
    9. As of the date of the application, applicant has no assets, 
debts, or shareholders. Applicant is not a party to any litigation or 
administrative proceeding. Applicant is neither engaged in nor proposes 
to engage in any business activities other than those necessary for the 
winding-up of its affairs.
    10. Applicant will terminate its existence as a business trust 
under Massachusetts law.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-3885 Filed 2-15-95; 8:45 am]
BILLING CODE 8010-01-M