SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
DRAFT
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave., NW
Washington, DC 20004

LAURA E. FLORES*
202.739.5684
lflores@morganlewis.com
* Admitted in Florida only

April XX, 2005

VIA EDGAR CORRESPONDENCE

Mr. Christian T. Sandoe
U.S. Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC  20549

Re:      Rydex ETF Trust (the "Trust") - Post Effective Amendment No. 3
         --------------------------------------------------------------
         (File Nos. 333-101625 and 811-21261)
         ------------------------------------

Dear Mr. Sandoe:

This letter responds to your comments to the Trust's Post-Effective Amendment
No. 3, filed on February 11, 2005 for the purpose of introducing the Rydex
Russell Top 50 ETF (the "Fund") into the Trust and incorporating disclosures
regarding (i) the Trust's policies and procedures with respect to frequent
purchases and redemptions of fund shares, (ii) the circumstances under which the
Trust may use fair value pricing and the effects of using fair value pricing,
and (iii) the Trust's policies and procedures with respect to the disclosure of
portfolio holdings information. The following summarizes your comments, and our
response to those comments. Unless otherwise noted, capitalized terms have the
same meaning as contained in the Fund's Prospectus and/or Statement of
Additional Information (SAI).

1.       COMMENT. Please consider revising the statement that "Shares may trade
         at, above or below their NAV," included in the second bullet point
         under "Trading Risk," by deleting the reference to shares trading at
         and above the NAV.

         RESPONSE. We have revised the language accordingly.

2.       COMMENT. Please disclose the duration of the Advisor's contractual
         agreement to pay all operating expenses of the Fund in footnote (F)
         following the "Fees and Expenses" table on page 3 of the Prospectus.
<PAGE>

Mr. Christian T. Sandoe
April XX, 2005
Page 2

         RESPONSE. We do not believe additional disclosure in footnote (F) is
         necessary as the Advisor's obligation to bear all Fund expenses is a
         term in the advisory contract between the Advisor and the Trust and is
         currently disclosed on page 13 of the Prospectus. Because this unitary
         fee is a core term of the advisory agreement, it will continue in
         perpetuity for as long as the contract is renewed by the Trust's Board
         in accordance with Section 15(c).

3.       COMMENT. Please delete the use of "Additional" in the "Additional
         Investment Strategies" and "Additional Risks" headings located on page
         6 of the Prospectus as they are also considered to be principal
         investment strategies and risks.

         RESPONSE. We have revised the headings accordingly.

4.       COMMENT. Please include disclosure concerning the 60-day shareholder
         notice requirement specified in Rule 35d-1 under "Additional Investment
         Strategies" on page 6 of the Prospectus.

         RESPONSE. We have included the following sentence under "Principal
         Investment Strategy":

         "This is a non-fundamental policy that can be changed by the Fund upon
         60 days' prior notice to shareholders."

5.       COMMENT. Please clarify the Board of Trustees' reasons for not adopting
         frequent trading policies and procedures.

         RESPONSE. We have revised the "Market Timing" section as follows:

         "Because the shares of the Fund are listed for trading on the Exchange,
         which allows retail investors to purchase and sell individual shares
         among themselves at market prices throughout the trading day similar to
         other publicly traded securities, the Fund's Board of Trustees has not
         adopted policies and procedures designed to prevent market timing or to
         monitor for frequent purchases and redemptions of Fund shares. In
         addition, the Fund sells and redeems its shares at NAV only in
         block-size Creation Units pursuant to the terms of a Participant
         Agreement between the authorized participant and the Distributor,
         principally in exchange for a basket of securities that mirrors the
         composition of the Fund's portfolio and a specified amount of cash. The
         Fund also imposes a transaction fee on such Creation Unit transactions
         that is designed to offset the Fund's transfer and other transaction
         costs associated with the issuance and redemption of the Creation Unit
         shares."

6.       COMMENT. Please disclose the calculation of NAV with respect to the
         NYSE schedule in accordance with Section 22 (e) and Rule 22c-1 in the
         "Calculating NAV" section on page 9 of the Prospectus.
<PAGE>

Mr. Christian T. Sandoe
April XX, 2005
Page 3

         RESPONSE. The Fund's Advisor has confirmed that this Fund will not be
         impacted by the early closings of markets other than the NYSE;
         therefore, we have revised the "Calculating NAV" section by deleting
         the second sentence as follows:

         The Fund calculates NAV once each business day as of the regularly
         scheduled close of normal trading on the New York Stock Exchange
         ("NYSE") (normally, 4:00 p.m., Eastern Time).

7.       COMMENT. With respect to the discussion of the Fund's use of fair
         valuation in the second sentence of the second full paragraph under
         "Calculating NAV" on page 9 of the Prospectus, please consider
         replacing "may" with "will."

         RESPONSE. We have revised the language accordingly.

8.       COMMENT. Please incorporate disclosure concerning the applicability of
         Section 18(f)(1) into the language included in the last paragraph
         following "Non-Fundamental Policies" on page 11 of the SAI.

         RESPONSE. We have revised the paragraph referenced as follows (new
         language appears in bold for purposes of correspondence only):

         "With respect to both the fundamental and  non-fundamental  policies of
         the Fund,  the  foregoing  percentages:  (i) are based on total  assets
         (except for the  limitation on illiquid  securities,  which is based on
         net assets); (ii) will apply at the time of the purchase of a security;
         and  (iii)  shall  not be  considered  violated  unless  an  excess  or
         deficiency  occurs  or  exists  immediately  after and as a result of a
         purchase of such  security,  except for the  fundamental  limitation on
         borrowing   described   in   paragraph  1  above,   under  the  heading
         "Fundamental  Policies  of the Fund."  With  respect to  borrowings  in
         accordance  with the limitations set forth in paragraph 1, in the event
         that such asset  coverage  shall at any time fall below 300 per centum,
         the Fund must reduce the amount of its borrowings to an extent that the
         asset  coverage  of such  borrowings  shall be at least 300 per  centum
         within three days thereafter."

9.       COMMENT. Please revise the "Portfolio Holdings" section on page 86 of
         the SAI to reflect the requirements of 11(f)(ii) with respect to
         restrictions placed on the use of information disclosed and 11(f)(vi)
         with respect to the Fund's procedures regarding portfolio holdings
         disclosure.

         RESPONSE. With respect to item 11(f)(ii), no conditions or restrictions
         are placed on the use of Fund information disclosed to the Distributor
         or other agent for dissemination through the facilities of the NSCC
         and/or other fee-based subscription services or to entities that
         publish and/or analyze such information in connection with the process
         of purchasing or redeeming Creation Units or trading shares of the Fund
         in the secondary market.
<PAGE>

Mr. Christian T. Sandoe
April XX, 2005
Page 4

         The success of the Fund depends, in part, on its ability to maintain a
         high degree of transparency; therefore, the disclosure of portfolio
         holdings information does not present the same potential for abuse for
         the Fund as it does for other open-end investment companies. For
         example, the consideration necessary to purchase a Creation Unit of the
         Fund consists of a cash component as well as an in-kind deposit of a
         designated portfolio of securities ("Deposit Securities"). The Deposit
         Securities substantially replicate the stocks included in the Fund's
         Underlying Index. The list of the names and required number of shares
         of each Deposit Security is disclosed by the Custodian through NSCC
         each Business Day. Moreover, the Fund's investment objective is to
         replicate as closely as possible the performance of the Russell Top
         50TM Index, the composition of which is publicized.

         However, recipients permitted to receive Fund information based on an
         exception determined by the Chief Compliance Officer would be subject
         to a duty of confidentiality, including a duty not to trade on the
         nonpublic information and would be required to execute an agreement to
         that effect. No such exceptions currently exist.

         With respect to item 11(f)(vi), we have revised the "Portfolio
         Holdings" section on page 11 of the SAI as follows:

         "The Board has approved  portfolio  holdings  disclosure  policies that
         govern the timing and  circumstances  of disclosure to shareholders and
         third parties of information  regarding the portfolio  investments held
         by the Fund.  These policies and procedures,  as described  below,  are
         designed to ensure that disclosure of portfolio holdings is in the best
         interests  of Fund  shareholders,  and  address  conflicts  of interest
         between  the  interests  of Fund  shareholders  and those of the Fund's
         Advisor,  principal underwriter,  or any affiliated person of the Fund,
         the Advisor, or the principal underwriter.

         Each business day, Fund portfolio holdings information will be provided
         to the  Distributor  or  other  agent  for  dissemination  through  the
         facilities of the NSCC and/or other fee-based  subscription services to
         NSCC members and/or  subscribers to those other fee-based  subscription
         services,  including  Authorized  Participants,  and to  entities  that
         publish and/or analyze such  information in connection with the process
         of purchasing or redeeming Creation Units or trading shares of the Fund
         in the secondary market. This information typically reflects the Fund's
         anticipated  holdings on the following  business  day.  Daily access to
         information  concerning the Fund's portfolio holdings also is permitted
         to (i) certain  personnel of those service  providers that are involved
         in portfolio management and providing administrative, operational, risk
         management,  or  other  support  to  portfolio  management,   including
         affiliated broker-dealers,  and (ii) other personnel of the Advisor and
         other service providers,  such as the Funds'  administrator,  custodian
         and fund  accountant,  who deal directly with, or assist in,  functions
         related to  investment  management,  administration,  custody  and fund
         accounting,  as may be  necessary  to conduct  business in the ordinary
         course in a manner  consistent with agreements with the Fund and/or the
         terms of the  Fund's  current  registration  statement.
<PAGE>

Mr. Christian T. Sandoe
April XX, 2005
Page 5

         As of April 1, 2005, Fund portfolio  holdings  information is disclosed
         to the following  entities as part of ongoing  arrangements  that serve
         legitimate  business  purposes:  State  Street Bank and Trust  Company,
         Securities Industry Automation Corporation ("SIAC"), Standard & Poor's,
         Bloomberg,  Goldman Sachs Execution and Clearing, and Thomson Financial
         News.

         The Fund's Chief Compliance Officer,  or his or her designee,  may also
         grant  exceptions to permit  additional  disclosure  of Fund  portfolio
         holdings  information  at differing  times and with different lag times
         (the  period  from  the  date  of  the  information  to  the  date  the
         information  is  made  available)  in  instances  where  the  Fund  has
         legitimate  business purposes for doing so, it is in the best interests
         of  shareholders,   and  the  recipients  are  subject  to  a  duty  of
         confidentiality,  including  a duty  not  to  trade  on  the  nonpublic
         information  and are  required to execute an  agreement to that effect.
         The  Board  will  be  informed  of any  such  disclosures  at its  next
         regularly  scheduled  meeting or as soon as is  reasonably  practicable
         thereafter. In no event shall the Fund, the Advisor, or any other party
         receive  any direct or indirect  compensation  in  connection  with the
         disclosure of information about the Fund's portfolio holdings.

         In addition to the permitted disclosures described above, the Fund must
         disclose its complete  holdings  quarterly within 60 days of the end of
         each fiscal quarter in the Annual Report and Semi-Annual Report to Fund
         shareholders  and in the quarterly  holdings  report on Form N-Q. These
         reports are  available,  free of charge,  on the EDGAR  database on the
         SEC's web site at www.sec.gov."

10.      COMMENT. Please clearly identify which Trustees are interested under
         "Management of the Trust" on page 15 of the SAI.

         RESPONSE. We have included headings in the "Management of the Trust -
         Members of the Board" section on page 15 of the SAI indicating which
         Trustees are interested and which are independent.

11.      COMMENT. Please disclose the duration of the Trustees' terms of
         service.

         RESPONSE. We have included the following sentence under "Management of
         the Trust - Members of the Board" section on page 15 of the SAI

         "The members of the Board serve as trustees for the life of the Trust
         or until retirement, removal, or their office is terminated pursuant to
         the Trust's Declaration of Trust."

12.      COMMENT. Please provide more specific disclosure with regard to the
         information the Board of Trustees considered and their findings prior
         to their approval of the investment advisory agreement.

         RESPONSE. We have revised the fourth paragraph of the "Board
         Considerations in Approving the Advisory Agreement" section located on
         page 17 of the SAI as follows:
<PAGE>

Mr. Christian T. Sandoe
April XX, 2005
Page 6

         "Based  on  the  Board's   deliberations  and  its  evaluation  of  the
         information   described  above,   the  Board,   including  all  of  the
         independent trustees, agreed that the Advisor had provided high quality
         services  to the Rydex  family of Funds in respect  to such  matters as
         managing the Funds'  portfolios in a manner  consistent with the Funds'
         respective investment objectives,  as well as providing transfer agency
         services, fund accounting services and other services to Fund investors
         in a manner that meets the needs of investors.  In addition,  the Board
         found  that the fees  charged by the  Advisor  for the  services  to be
         pro