SecProbe.io

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Morgan, Lewis & Bockius LLP
1111 Pennsylvania Ave., N.W.
Washington, DC 20004

August 19, 2005

VIA EDGAR CORRESPONDENCE

Christian T. Sandoe, Esq.
U.S. Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549

Re:      RYDEX CAPITAL PARTNERS SPHINX FUND (THE "FUND") - POST-EFFECTIVE
         AMENDMENT NO. 2 (FILE NOS. 333-102487, 811-21278)

Dear Mr. Sandoe:

This letter responds to your comments to the Fund's Post-Effective Amendment No.
2, filed on June 28, 2005 for the purpose of  incorporating  the Fund's  updated
financial  information  for the fiscal  year ended March 31,  2005,  and to make
other  non-material  changes.  The following  summarizes your comments,  and our
responses 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).

PROSPECTUS - COVER PAGE:

1.       COMMENT. The third sentence of the first paragraph states that the
         Index is an "investable benchmark." Please explain in this section what
         this term means.

         RESPONSE. We have included the following language at the end of the
         first full paragraph under "Investment Objective" on the Fund's Cover
         Page:

         "The Index is considered an investable benchmark because a fund seeking
         to track the Index may invest in funds managed by the 41 constituent
         managers that comprise the Index. Many other published indices are not
         considered investable because they represent the theoretical returns of
         a group of securities that cannot effectively be purchased by a fund
         attempting to track a particular index."

2.       COMMENT. The fourth paragraph states that investing in the Fund's
         shares involves certain risks and identifies the location in the
         prospectus where the risk factors are described. Please present this
         paragraph in boldface common type at least as large as 10-point modern
         type and at least two points leaded. SEE Item 1.1(j) of Form N-2.

         RESPONSE. We have revised the fourth paragraph accordingly.

3.       COMMENT. While the cover page may include other information not
         required by Item 1 of Form N-2, so long as it does not, by its nature,
         quantity, or manner of presentation impede the understanding of the
         information required, this section includes more than four pages of
         disclosure about the Fund's investments, investment adviser, trading
         market and repurchase procedures. As the quantity of information
         presented in this section impedes the understanding of the information
         required, please move the disclosure of the Fund's investments,
         investment adviser, trading market and repurchase procedures to the
         body of the prospectus. SEE Item 1.2 of Form N-2.

         RESPONSE. We have revised the cover page accordingly.

4.       COMMENT. The seventh sentence states that a repurchase fee will apply
         if the date as of which the shares are valued for purposes of
         repurchase is less than one year following the date of the investor's
         purchase of the shares. Please explain to us that this repurchase fee
         is intended to be used for (E.G., to offset the costs incurred by the
         Fund in repurchasing Fund shares or to reduce annual fund operating
         expenses).

         RESPONSE. The repurchase fee is intended to offset Fund expenses.

5.       COMMENT. The first sentence states that the term "Eligible Investor"
         includes individuals that have accounts managed by an investment
         adviser registered under the Investment Advisors Act of 1940 and the
         adviser is subscribing for shares in a fiduciary capacity on behalf of
         the account. Please explain to us how this will work in practice and
         what it means for the potential nature of the Fund's investors.

         RESPONSE. This provision may potentially permit investors who do not
         otherwise meet the other stated investor qualifications to invest in
         the Fund. The language of the provision, however, ensures that the
         investor has had the assistance of a registered investment adviser
         prior to making the decision to invest in the Fund. Furthermore, the
         SEC has indicated that a registered investment adviser acting in a
         fiduciary capacity has "a duty to ensure that its investment advice is
         suitable to the client's objectives, needs, and circumstances."1 The
         investor suitability language is also identical to language that the
         SEC permitted in the DB Hedge Strategies Fund and numerous subsequent
         funds. It is our understanding that this suitability standard was the
         result of extensive negotiation between the DB Hedge Strategies Fund
         and the SEC staff. Finally, the securities issued by the Fund, which is
         registered under the 1940 Act, are registered under the Securities Act
         of 1933 and are, therefore, not subject to the accredited investor
         standard found in Regulation D.

------------------------
1 Thomas P. Lemke and Gerald T. Lins, REGULATION OF INVESTMENT ADVISERS 168
(2005); See IN RE JOHN G. KINNARD AND CO., SEC No-Action Letter, Fed. Sec. L.
Rep. (CCH) P. 79,662 (Nov. 30, 1973).

PROSPECTUS SUMMARY - THE FUND:

6.       COMMENT. The second sentence of the second paragraph states that the
         Fund is similar to a "fund of funds." As the Fund will pursue its
         investment objective by investing its assets primarily in private
         investment funds and other investment vehicles that are managed by
         hedge fund managers, the Fund IS a fund of funds (or a fund of hedge
         funds). Please modify this sentence to reflect that the Fund IS a fund
         of funds (or a fund of hedge funds) rather than a fund that is SIMILAR
         TO a fund of funds (on a fund of hedge funds).

         RESPONSE. We have not made the requested change. Nonetheless, to better
         clarify why the requested change is not appropriate we have revised the
         sentence as follows (new language appears in bold for the purposes of
         this correspondence only):

         "In this respect, the Fund PRESENTLY INTENDS TO OPERATE PRIMARILY as a
         "fund of funds" (or a "fund of hedge funds") in which, through one
         investment, eligible investors can participate in the investment
         programs of hedge fund managers that have been selected by Standard &
         Poor's ("S&P") as representative of a broad cross section of hedge fund
         strategies, without being subject to the high minimum investment
         requirements that many managers typically impose. THE FUND IS ABLE TO
         ACCOMPLISH THIS LARGELY BY INVESTING IN PORTFOLIO FUNDS. THE FUND,
         HOWEVER, MAY ALSO RETAIN HEDGE FUND MANAGERS AS SUB-ADVISERS AND INVEST
         DIRECTLY IN SECURITIES, AND MAY ALSO USE DERIVATIVES IN CONNECTION WITH
         ITS INVESTMENT PROGRAM."

7.       COMMENT. The first sentence of the fourth paragraph states that Rydex
         has entered into a licensing agreement with PlusFunds to obtain the
         right to offer shares of a registered investment company that pursues
         an investment program that seeks to track the Index and to obtain
         information and assistance from PlusFunds to facilitate the operations
         of the Fund. Disclosure on page 19 of the statement of additional
         information describes this "licensing agreement" in the Other
         Agreements section rather than the Investment Advisory Agreement
         Section. Please describe in greater detail in this section both Rydex's
         and PlusFunds' roles in managing the Fund's investments. In addition,
         please explain to us whether PlusFunds will be considered an investment
         adviser for purposes of Section 2(a)(20) of the Investment Company Act
         and whether the PlusFunds "licensing agreement" will be approved by the
         board and shareholders pursuant to Section 15 of the Investment Company
         Act.

         RESPONSE. In response to the first request, we have included the
         following disclosure under "Advisory Arrangements" on page 3 of the
         Fund's Prospectus (new language appears in bold for the purposes of
         this correspondence only):

         "S&P has granted a license to PlusFunds Group Inc. ("PlusFunds") to
         utilize the Index in connection with the creation and operation of
         various investment vehicles that seek to correlate to the Index, such
         as the Fund, as well as the use of certain trademarks, including the
         trademark "SPhinX." Rydex, in turn, has entered into a licensing
         agreement with PlusFunds to obtain the right to offer shares of a
         registered investment company that pursues an investment program that
         seeks to track the Index. UNDER THE LICENSING AGREEMENT, PLUSFUNDS
         PROVIDES CERTAIN SERVICES TO RYDEX, INCLUDING REPORTING DAILY PRICING
         INFORMATION AND PROVIDING INFORMATION REGARDING THE HOLDINGS OF CERTAIN
         PORTFOLIO FUNDS AND THE WEIGHTINGS OF THE INDEX COMPONENTS ON A REGULAR
         BASIS. Fees payable to PlusFunds under the licensing agreement are paid
         by Rydex and not by the Fund. See `Management of the Fund - General.'"

         With regard to the second request for information, PlusFunds does not
         "regularly furnish advice to the [Fund] with respect to the
         desirability of investing in, purchasing or selling securities or other
         property" and is not "empowered to determine what securities or other
         property shall be purchased or sold by the [Fund]," nor does PlusFunds
         substantially perform any of the duties previously described.2 Thus,
         PlusFunds is not an investment adviser of the Fund for purposes of
         Section 2(a)(20) of the 1940 Act and the Licensing Agreement between
         Rydex and PlusFunds is not subject to Board approval pursuant to
         Section 15 of the 1940 Act.

8.       COMMENT. Please explain in greater detail in this section the structure
         of the Fund's investments, who actually issues the securities held by
         the Fund, why the Fund needs a "right" to invest in the Portfolio Funds
         and what additional information PlusFunds has about the Portfolio Funds
         that is not otherwise available to the general public.

         RESPONSE. The majority of the securities held by the Fund are issued by
         the Portfolio Funds, which are managed by the Index's constituent hedge
         fund managers. Please see our response to Comment no. 6 for the
         additional disclosure incorporated into the Prospectus to this effect.
         We have not included this disclosure under the "Advisory Arrangements"
         section of the Prospectus as we do not believe it is appropriate given
         the subject matter of the section. Please see our prior response for
         additional information concerning the relationship between PlusFunds
         and the Fund.

------------------------
2 Section 2(a)(20) of the Investment Company Act of 1940.

9.       COMMENT. Disclosure in the Valuation of Assets section on page 36 of
         the statement of additional information states that PlusFunds is the
         manager of the Portfolio Funds. As it appears that PlusFunds will be an
         affiliate of both the Portfolio Funds and the Fund, please explain to
         us how PlusFunds' role in providing information and assistance to
         facilitate the operations of the Fund and its role as manager of the
         Portfolio Funds is consistent with Section 17 of the Investment Company
         Act.

         RESPONSE. PlusFunds is not an affiliated person of the Fund as that
         term is defined in Section 2(a)(3) of the 1940 Act. PlusFunds provides
         only administrative services to the Fund and does not serve in an
         investment advisory capacity with respect to the Fund.

PROSPECTUS SUMMARY - TAXATION:

10.      COMMENT. The first sentence states that the Fund intends to elect to be
         treated and to qualify each year as a regulated investment company for
         federal income tax purposes. Please explain to us how the Fund will
         satisfy the Subchapter M diversification requirements. Please also
         disclose in this section whether the Portfolio Funds will provide
         sufficient transparency of their portfolio holdings to allow the Fund
         to make this determination.

         RESPONSE. The Fund will test the diversification of its assets in each
         of two alternative ways: (i) each Portfolio Fund and Portfolio Account
         treated as a partnership for Federal income tax purposes will be
         treated as a single issuer and any other Portfolio Account's assets
         will be treated as if held directly by the Fund; and (ii) the Fund's
         proportionate share of the assets of each Portfolio Fund and Portfolio
         Account treated as a partnership for Federal income tax purposes will
         be treated as if held directly by the Fund.

         We have also added the following disclosure in response to the second
         part of the comment (new language appears in bold for the purposes of
         this correspondence only):

         "The Fund intends to elect to be treated and to qualify as a regulated
         investment company under Subchapter M of the Internal Revenue Code of
         1986, as amended, (THE SUB-ADMINISTRATOR WILL RECEIVE A COMPLETE
         LISTING OF THE PORTFOLIO FUNDS' PORTFOLIO HOLDINGS ON A QUARTERLY BASIS
         TO MAKE THAT DETERMINATION) and intends each year to distribute
         substantially all of its investment company taxable income and net
         capital gains to its shareholders. In addition, the Sub-Administrator
         receives a complete listing of the Portfolio Funds portfolio holdings
         on a quarterly basis to determine whether the Fund satisfies the
         Subchapter M diversification requirements. Therefore, it is not
         expected that the Fund will be subject to any Federal income tax. The
         investment strategies of Portfolio Funds and Portfolio Accounts may be
         employed without regard to the tax consequences of investment
         transactions on the Fund and shareholders. See "Taxes" and also "Tax
         Aspects" in the SAI."

PROSPECTUS SUMMARY - RISKS AND SPECIAL CONSIDERATIONS:

11.      COMMENT. Disclosure in the Foreign Investments section states that
         foreign securities in which Portfolio Funds and Portfolio Accounts may
         invest include securities of issuers in emerging markets. Please
         disclose the risks of investing in foreign securities, and, in
         particular, emerging markets investments, in the "Prospectus Summary -
         Risks and Special Considerations" section.

         RESPONSE. We have added the following language under "Risks and Special
         Considerations" in the Prospectus Summary:

         "Certain portfolio managers may invest in securities of foreign
         companies which can be more volatile than investments in U.S.
         companies. Diplomatic, political, or economic developments could
         adversely affect investment in foreign countries. In addition, foreign
         companies generally are not subject to accounting, auditing, and
         financial reporting standards comparable to those applicable to U.S.
         Companies. Portfolio managers may also invest in emerging markets which
         are substantially more volatile, and subst