SEC Company Response from TOTAL RETURN U S TREASURY FUND INC (CIK 0000811160) — Feb 25, 2005
TOTAL RETURN U S TREASURY FUND INC (CIK 0000811160)
Date: Feb. 25, 2005 · CIK: 0000811160 · Accession: 0001275125-05-000097
AI Filing Summary & Sentiment
Letter
[CITIGROUP LOGO] Ms. Laura Hatch Mr. James O'Connor U.S. Securities and Exchange Commission Room 5302, Mail Stop 5-6 450 Fifth Street, N.W. Washington, D.C. 20549
RE: ISI Strategy Fund, Inc., Total Return U.S. Treasury Fund, Inc., Managed Municipal Fund, Inc. and North American Government Fund, Inc.
Dear Ms. Hatch:
Each of ISI Strategy Fund Shares, ISI Total Return U.S. Treasury Fund Shares, ISI Managed Municipal Fund Shares, and ISI North American Government Bond Fund Class A and Class C Shares (each a "Fund") filed a Post-Effective Amendment to its Registration Statement with the Securities and Exchange Commission (the "SEC") on December 30, 2004 as follows:
<TABLE> <S> <C> <C> <C> ----------------------------------------------------------- ----------------------- --------------------------------- FUND POST-EFFECTIVE ACCESSION NUMBER AMENDMENT ----------------------------------------------------------- ----------------------- --------------------------------- ISI Strategy Fund, Inc. 9 0001275125-04-000455 ----------------------------------------------------------- ----------------------- --------------------------------- Total Return U.S. Treasury Fund, Inc. 23 0001275125-04-000458 ----------------------------------------------------------- ----------------------- --------------------------------- Managed Municipal Fund, Inc. 19 0001275125-04-000457 ----------------------------------------------------------- ----------------------- --------------------------------- North American Government Bond Fund, Inc. 17 0001275125-04-000456 ----------------------------------------------------------- ----------------------- --------------------------------- </TABLE>
Following below is a summary of the comments of the SEC staff (the "Staff") to the filings and each Fund's responses to the comments. Defined terms used below have the same meanings as in the applicable Fund's prospectus included in filings referenced above.
The changes to each Fund's prospectus and statement of additional information as described below will be included in a Post-Effective Amendment to be filed on February 28, 2005 pursuant to Rule 485(b) under the Investment Company Act of 1940, as amended.
* * * * *
ISI STRATEGY FUND SHARES - PROSPECTUS
COMMENT: In the section entitled "Investment Summary - Objective and Strategies" state the maturity range of the Treasury Securities in which the Fund may invest. If the Fund may invest in Treasury Securities with a range of maturities, state that fact.
<TABLE> <S> <C> FORUM FINANCIAL GROUP, LLC TWO PORTLAND SQUARE PORTLAND, MAINE 04101 TEL 207 879 1900 FAX 207 822 6688 </TABLE> <PAGE>
RESPONSE: In the section entitled "Investment Summary - Objective and Strategies," we have added disclosure that the Fund may purchase Treasury Securities of varying maturities.
COMMENT: In the section entitled "Investment Summary - Objective and Strategies," describe how the Fund's portfolio is allocated between common stocks and Treasury Securities.
RESPONSE: We have enhanced the section entitled "Investment Summary - Objective and Strategies" by adding the following disclosure:
"Under normal market conditions, The Fund will invest its assets in a ratio of:
o approximately 80% common stocks to 20% Treasury Securities when an aggressive strategy is deemed warranted, o approximately 60% common stocks to 40% Treasury Securities when a neutral strategy is deemed warranted, and o approximately 40% common stocks to 60% Treasury Securities when a conservative strategy is deemed warranted,
When the Advisor expects the environment to be more favorable to financial assets, to have low inflation, declining interest rates and rising corporate profits, the Fund would move towards a heavier weighting in equities along with long maturity Treasuries. Conversely, when the Advisor anticipates a defensive environment for financial assets, where rising interest rates are expected, the Fund will move towards a heavier weighting in fixed income with an emphasis on maturities of five years or less."
This disclosure is similar to the disclosure already contained in the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations."
COMMENT: In the section entitled "Investment Summary - Objective and Strategies," add disclosure explaining the process by which the Sub-Adviser will attempt to match the return of the Wilshire 5000, plus 1-2%.
RESPONSE: We have enhanced the section entitled "Investment Summary - Objective and Strategies" by adding the following disclosure:
"To accomplish this, LA Capital uses a quantitative model to select a sampling of stocks contained in the Wilshire 5000. With this model, LA Capital constructs the Fund's equity portfolio so that its market capitalization and industry sector weightings closely resemble that of the Wilshire 5000, but, where the model suggests, LA Capital varies sector weightings in an effort to provide enhanced returns."
This disclosure is similar to the disclosure already contained in the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations."
<PAGE>
COMMENT: In the section entitled "Investment Summary - Objective and Strategies," add small- and mid-capitalization risk disclosure, if applicable.
RESPONSE: We have enhanced the section entitled "Investment Summary - Objective and Strategies" by adding the following risk disclosure:
"SPECIFIC RISKS OF SMALL-AND MEDIUM-SIZED COMPANIES Because investing in small- and medium-sized companies can have more risk than investing in larger, more established companies, an investment in the Fund may have the following additional risks:
o analysts and other investors typically follow these companies less actively and information about these companies is not always readily available; o securities of many small-and medium-sized companies are traded in the over-the-counter markets or on a regional securities exchange potentially making them thinly traded, less liquid and their prices more volatile than the prices of the securities of larger companies; o changes in the value of small- and medium-sized company stocks may not mirror the fluctuation of the general market; and o more limited product lines, markets and financial resources make these companies more susceptible to economic or market setbacks;
For these and other reasons, the prices of the securities of small and medium capitalization companies can fluctuate more significantly than the securities of larger companies. The smaller the company, the greater effect these risks may have on that company's operations and performance."
This disclosure has also been added to the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations."
COMMENT: In the section entitled "Investment Summary - Objective and Strategies," add interest rate risk disclosure as well as risk disclosure regarding how changes in interest rates effect the value of debt securities with short - and long - term maturities.
RESPONSE: We have enhanced the section entitled "Investment Summary - Objective and Strategies" by adding the following risk disclosure:
"INTEREST RATE RISK. The value of the Shares can be expected to increase during periods of falling interest rates and decrease during periods of rising interest rates.
MATURITY RISK. Longer-term debt securities are generally more volatile (i.e. experience greater price fluctuations). Therefore, price fluctuations will generally be greater at times when the Fund holds a larger amount of longer-term Treasury Securities."
Similar disclosure is also included in the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations."
<PAGE>
COMMENT: In the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations, add disclosure regarding the conditions under which the Advisor will employ an aggressive strategy, a neutral strategy and a conservative strategy and describe how such determination is made.
RESPONSE: We have enhanced the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations" by adding the following disclosure:
"When the Advisor expects the environment ahead to be more favorable to financial assets, to have low inflation, declining interest rates and rising corporate profits, the Fund will move towards the more aggressive strategy. Conversely, when the Advisor anticipates a defensive environment for financial assets, where rising interest rates are expected, the Fund will move towards the more conservative strategy. A neutral strategy would be employed in scenarios with more mixed news, in between the aggressive and defensive environments."
Similar disclosure was also added to the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations."
COMMENT: In the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations," add disclosure regarding the conditions under which the Fund will have a relatively short average maturity or a relatively long average maturity.
RESPONSE: We have enhanced the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations" by adding the following disclosure:
"If the market environment is defensive and rising interest rates and weak corporate earnings are expected, the Fund may invest in securities with shorter-term maturities. Conversely, in an aggressive market environment of low inflation, declining interest rates and rising corporate profits, the Fund may invest in securities with longer-term maturities."
COMMENT: In the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations," it is stated that the Advisor manages the Treasury Securities in the Fund's portfolio with a view toward, first, a high level of total return with relative stability of principal and, second, high current income. Explain how Treasury Securities provide high total return and income.
RESPONSE: The Fund believes that the prospectus already provides adequate disclosure regarding how high total return and current income can be achieved through investments in Treasury Securities. Market volatility can offer the potential for high income and high return. In the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations," the prospectus states that the Advisor will seeks to achieve high total return and current income through Treasury Securities by considering, in addition to yield, opportunities for capital gain and appreciation that could result from interest rate changes. For example, if the
<PAGE>
Fund's portfolio has a long average maturity, it will look to generate capital gains plus income on portfolio securities when interest rates fall.
COMMENT: In the section entitled "The Fund's Net Asset Value," list the types of securities in which the Fund invests that are more likely to require fair valuation, if applicable.
RESPONSE: We have enhanced the section entitled "The Fund's Net Asset Value" by adding the following disclosure:
"The Fund's investment in securities of small- and medium-sized capitalization companies are more likely to require a fair value determination because they are more thinly traded and less liquid than the securities of larger capitalization companies."
COMMENT: In the section entitled "How to Buy Shares - Limitations on Frequent Purchases," state whether the Fund is susceptible to market timing and why, if applicable.
RESPONSE: It is my understanding that the Fund's portfolio composition reduces the possibility for market timing opportunities.
COMMENT: In the section entitled "How to Redeem Shares - Other Redemption Information," rephrase the final sentence to state " Redemption proceeds may not be available until your check has cleared or up to ten days, whichever is earlier."
RESPONSE: In the section entitled "How to Redeem Shares - Other Redemption Information," we have revised the final sentence as requested.
ISI TOTAL RETURN U.S. TREASURY FUND SHARES - PROSPECTUS
COMMENT: In the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations," it is stated that the Advisor manages the Treasury Securities in the Fund's portfolio with a view toward, first, a high level of total return with relative stability of principal and, second, high current income. Explain how Treasury Securities provide high total return and income.
RESPONSE: The Fund believes that the prospectus already provides adequate disclosure regarding how high total return and current income can be achieved through investments in Treasury Securities. Market volatility can offer the potential for high income and high return. In the section entitled "Investment Program - Investment Objective, Policies and Risk Considerations," the prospectus states that the Advisor will seeks to achieve high total return and current income through Treasury Securities by considering, in addition to yield, opportunities for capital gain and appreciation that could result from interest rate changes. For example, if the Fund's portfolio has a long average maturity, it will look to generate capital gains plus income on portfolio securities when interest rates fall.
<PAGE>
COMMENT: In the section entitled "The Fund's Net Asset Value," list the types of securities in which the Fund invests that are more likely to require fair valuation, if applicable.
RESPONSE: The Fund only invests in U.S. Treasury Securities and in repurchase agreements fully collateralized by U.S. Treasury Securities. These securities are not likely to be subject to fair valuation.
COMMENT: In the section entitled "How to Buy Shares - Limitations on Frequent Purch
Show Raw Text
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
[CITIGROUP LOGO]
Ms. Laura Hatch
Mr. James O'Connor
U.S. Securities and Exchange Commission Room 5302, Mail Stop 5-6 450 Fifth
Street, N.W.
Washington, D.C. 20549
RE: ISI Strategy Fund, Inc., Total Return U.S. Treasury Fund, Inc.,
Managed Municipal Fund, Inc. and North American Government Fund, Inc.
Dear Ms. Hatch:
Each of ISI Strategy Fund Shares, ISI Total Return U.S. Treasury Fund Shares,
ISI Managed Municipal Fund Shares, and ISI North American Government Bond Fund
Class A and Class C Shares (each a "Fund") filed a Post-Effective Amendment to
its Registration Statement with the Securities and Exchange Commission (the
"SEC") on December 30, 2004 as follows:
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------------- ----------------------- ---------------------------------
FUND POST-EFFECTIVE ACCESSION NUMBER
AMENDMENT
----------------------------------------------------------- ----------------------- ---------------------------------
ISI Strategy Fund, Inc. 9 0001275125-04-000455
----------------------------------------------------------- ----------------------- ---------------------------------
Total Return U.S. Treasury Fund, Inc. 23 0001275125-04-000458
----------------------------------------------------------- ----------------------- ---------------------------------
Managed Municipal Fund, Inc. 19 0001275125-04-000457
----------------------------------------------------------- ----------------------- ---------------------------------
North American Government Bond Fund, Inc. 17 0001275125-04-000456
----------------------------------------------------------- ----------------------- ---------------------------------
</TABLE>
Following below is a summary of the comments of the SEC staff (the "Staff") to
the filings and each Fund's responses to the comments. Defined terms used below
have the same meanings as in the applicable Fund's prospectus included in
filings referenced above.
The changes to each Fund's prospectus and statement of additional information as
described below will be included in a Post-Effective Amendment to be filed on
February 28, 2005 pursuant to Rule 485(b) under the Investment Company Act of
1940, as amended.
* * * * *
ISI STRATEGY FUND SHARES - PROSPECTUS
COMMENT: In the section entitled "Investment Summary - Objective and Strategies"
state the maturity range of the Treasury Securities in which the Fund may
invest. If the Fund may invest in Treasury Securities with a range of
maturities, state that fact.
<TABLE>
<S> <C>
FORUM FINANCIAL GROUP, LLC TWO PORTLAND SQUARE PORTLAND, MAINE 04101 TEL 207 879 1900 FAX 207 822 6688
</TABLE>
<PAGE>
RESPONSE: In the section entitled "Investment Summary - Objective and
Strategies," we have added disclosure that the Fund may purchase Treasury
Securities of varying maturities.
COMMENT: In the section entitled "Investment Summary - Objective and
Strategies," describe how the Fund's portfolio is allocated between common
stocks and Treasury Securities.
RESPONSE: We have enhanced the section entitled "Investment Summary - Objective
and Strategies" by adding the following disclosure:
"Under normal market conditions, The Fund will invest its assets in a
ratio of:
o approximately 80% common stocks to 20% Treasury Securities when
an aggressive strategy is deemed warranted,
o approximately 60% common stocks to 40% Treasury Securities when a
neutral strategy is deemed warranted, and
o approximately 40% common stocks to 60% Treasury Securities when a
conservative strategy is deemed warranted,
When the Advisor expects the environment to be more favorable to
financial assets, to have low inflation, declining interest rates and
rising corporate profits, the Fund would move towards a heavier
weighting in equities along with long maturity Treasuries. Conversely,
when the Advisor anticipates a defensive environment for financial
assets, where rising interest rates are expected, the Fund will move
towards a heavier weighting in fixed income with an emphasis on
maturities of five years or less."
This disclosure is similar to the disclosure already contained in the section
entitled "Investment Program - Investment Objective, Policies and Risk
Considerations."
COMMENT: In the section entitled "Investment Summary - Objective and
Strategies," add disclosure explaining the process by which the Sub-Adviser will
attempt to match the return of the Wilshire 5000, plus 1-2%.
RESPONSE: We have enhanced the section entitled "Investment Summary - Objective
and Strategies" by adding the following disclosure:
"To accomplish this, LA Capital uses a quantitative model to select a
sampling of stocks contained in the Wilshire 5000. With this model, LA
Capital constructs the Fund's equity portfolio so that its market
capitalization and industry sector weightings closely resemble that of
the Wilshire 5000, but, where the model suggests, LA Capital varies
sector weightings in an effort to provide enhanced returns."
This disclosure is similar to the disclosure already contained in the section
entitled "Investment Program - Investment Objective, Policies and Risk
Considerations."
2
<PAGE>
COMMENT: In the section entitled "Investment Summary - Objective and
Strategies," add small- and mid-capitalization risk disclosure, if applicable.
RESPONSE: We have enhanced the section entitled "Investment Summary - Objective
and Strategies" by adding the following risk disclosure:
"SPECIFIC RISKS OF SMALL-AND MEDIUM-SIZED COMPANIES Because investing
in small- and medium-sized companies can have more risk than investing
in larger, more established companies, an investment in the Fund may
have the following additional risks:
o analysts and other investors typically follow these companies
less actively and information about these companies is not always
readily available;
o securities of many small-and medium-sized companies are traded in
the over-the-counter markets or on a regional securities exchange
potentially making them thinly traded, less liquid and their
prices more volatile than the prices of the securities of larger
companies;
o changes in the value of small- and medium-sized company stocks
may not mirror the fluctuation of the general market; and o more
limited product lines, markets and financial resources make these
companies more susceptible to economic or market setbacks;
For these and other reasons, the prices of the securities of small and
medium capitalization companies can fluctuate more significantly than
the securities of larger companies. The smaller the company, the
greater effect these risks may have on that company's operations and
performance."
This disclosure has also been added to the section entitled "Investment Program
- Investment Objective, Policies and Risk Considerations."
COMMENT: In the section entitled "Investment Summary - Objective and
Strategies," add interest rate risk disclosure as well as risk disclosure
regarding how changes in interest rates effect the value of debt securities with
short - and long - term maturities.
RESPONSE: We have enhanced the section entitled "Investment Summary - Objective
and Strategies" by adding the following risk disclosure:
"INTEREST RATE RISK. The value of the Shares can be expected to
increase during periods of falling interest rates and decrease during
periods of rising interest rates.
MATURITY RISK. Longer-term debt securities are generally more volatile
(i.e. experience greater price fluctuations). Therefore, price
fluctuations will generally be greater at times when the Fund holds a
larger amount of longer-term Treasury Securities."
Similar disclosure is also included in the section entitled "Investment Program
- Investment Objective, Policies and Risk Considerations."
3
<PAGE>
COMMENT: In the section entitled "Investment Program - Investment Objective,
Policies and Risk Considerations, add disclosure regarding the conditions under
which the Advisor will employ an aggressive strategy, a neutral strategy and a
conservative strategy and describe how such determination is made.
RESPONSE: We have enhanced the section entitled "Investment Program - Investment
Objective, Policies and Risk Considerations" by adding the following disclosure:
"When the Advisor expects the environment ahead to be more favorable
to financial assets, to have low inflation, declining interest rates
and rising corporate profits, the Fund will move towards the more
aggressive strategy. Conversely, when the Advisor anticipates a
defensive environment for financial assets, where rising interest
rates are expected, the Fund will move towards the more conservative
strategy. A neutral strategy would be employed in scenarios with more
mixed news, in between the aggressive and defensive environments."
Similar disclosure was also added to the section entitled "Investment Program -
Investment Objective, Policies and Risk Considerations."
COMMENT: In the section entitled "Investment Program - Investment Objective,
Policies and Risk Considerations," add disclosure regarding the conditions under
which the Fund will have a relatively short average maturity or a relatively
long average maturity.
RESPONSE: We have enhanced the section entitled "Investment Program - Investment
Objective, Policies and Risk Considerations" by adding the following disclosure:
"If the market environment is defensive and rising interest rates and
weak corporate earnings are expected, the Fund may invest in
securities with shorter-term maturities. Conversely, in an aggressive
market environment of low inflation, declining interest rates and
rising corporate profits, the Fund may invest in securities with
longer-term maturities."
COMMENT: In the section entitled "Investment Program - Investment Objective,
Policies and Risk Considerations," it is stated that the Advisor manages the
Treasury Securities in the Fund's portfolio with a view toward, first, a high
level of total return with relative stability of principal and, second, high
current income. Explain how Treasury Securities provide high total return and
income.
RESPONSE: The Fund believes that the prospectus already provides adequate
disclosure regarding how high total return and current income can be achieved
through investments in Treasury Securities. Market volatility can offer the
potential for high income and high return. In the section entitled "Investment
Program - Investment Objective, Policies and Risk Considerations," the
prospectus states that the Advisor will seeks to achieve high total return and
current income through Treasury Securities by considering, in addition to yield,
opportunities for capital gain and appreciation that could result from interest
rate changes. For example, if the
4
<PAGE>
Fund's portfolio has a long average maturity, it will look to generate capital
gains plus income on portfolio securities when interest rates fall.
COMMENT: In the section entitled "The Fund's Net Asset Value," list the types of
securities in which the Fund invests that are more likely to require fair
valuation, if applicable.
RESPONSE: We have enhanced the section entitled "The Fund's Net Asset Value" by
adding the following disclosure:
"The Fund's investment in securities of small- and medium-sized
capitalization companies are more likely to require a fair value
determination because they are more thinly traded and less liquid than
the securities of larger capitalization companies."
COMMENT: In the section entitled "How to Buy Shares - Limitations on Frequent
Purchases," state whether the Fund is susceptible to market timing and why, if
applicable.
RESPONSE: It is my understanding that the Fund's portfolio composition reduces
the possibility for market timing opportunities.
COMMENT: In the section entitled "How to Redeem Shares - Other Redemption
Information," rephrase the final sentence to state " Redemption proceeds may not
be available until your check has cleared or up to ten days, whichever is
earlier."
RESPONSE: In the section entitled "How to Redeem Shares - Other Redemption
Information," we have revised the final sentence as requested.
ISI TOTAL RETURN U.S. TREASURY FUND SHARES - PROSPECTUS
COMMENT: In the section entitled "Investment Program - Investment Objective,
Policies and Risk Considerations," it is stated that the Advisor manages the
Treasury Securities in the Fund's portfolio with a view toward, first, a high
level of total return with relative stability of principal and, second, high
current income. Explain how Treasury Securities provide high total return and
income.
RESPONSE: The Fund believes that the prospectus already provides adequate
disclosure regarding how high total return and current income can be achieved
through investments in Treasury Securities. Market volatility can offer the
potential for high income and high return. In the section entitled "Investment
Program - Investment Objective, Policies and Risk Considerations," the
prospectus states that the Advisor will seeks to achieve high total return and
current income through Treasury Securities by considering, in addition to yield,
opportunities for capital gain and appreciation that could result from interest
rate changes. For example, if the Fund's portfolio has a long average maturity,
it will look to generate capital gains plus income on portfolio securities when
interest rates fall.
5
<PAGE>
COMMENT: In the section entitled "The Fund's Net Asset Value," list the types of
securities in which the Fund invests that are more likely to require fair
valuation, if applicable.
RESPONSE: The Fund only invests in U.S. Treasury Securities and in repurchase
agreements fully collateralized by U.S. Treasury Securities. These securities
are not likely to be subject to fair valuation.
COMMENT: In the section entitled "How to Buy Shares - Limitations on Frequent
Purch