SecProbe.io

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

								December 7, 2004

Olivia P. Adler, Esq.
Dechert LLP
1775 I Street, N.W.
Washington, DC 20006-2401

Re:	Capstone Church Bond Fund (the "Fund")
	Registration Statement on Form N-2
	File Numbers 333-120044; 811-21662
	Filed October 28, 2004

Dear Ms. Adler:

      We have reviewed the filing referenced above, and have the
following comments.  Unless otherwise noted below, all defined
terms
have the meanings assigned to them in the prospectus.

General

   	The disclosure indicates that this will be a "best efforts"
offering; yet the cover page does not contain the table of
information required for best efforts offerings by Instruction 5
to
Item 1.1(g) of Form N-2.  Please include the disclosure required
by
Instruction 5.

   	Please inform the staff of the information the Fund proposes
to
omit from the final pre-effective amendment pursuant to Rule 430A
under the Securities Act.

	It appears from the disclosure that the Consultant may be a
control person of the Fund and, accordingly, that transactions
between the Consultant and the Fund may be prohibited under
Sections
17(a) and/or 17(d) of the Investment Company Act of 1940 ("1940
Act").  Please clarify the Consultant`s relation to the Fund in
light
of Section 17.

Prospectus

Fees and Expenses of the Fund

      Please base the percentages of "Annual Fund Operating
Expenses"
on amounts for the current fiscal year, rather than "the Fund`s
anticipated expenses during its first fiscal year."

      Please delete "#9" from the Maximum Sales Load line item and
the text of note 2 to the fee table.

	Please explain supplementally to us why the organization
expenses and offering costs to be paid by the Fund are not
included
among the expenses shown in the fee table.  Alternatively, include
these items in the fee table.

      Please clarify that annual operating expenses are shown as a
percentage of net assets attributable to common shares.

      Please clarify in note 5 to the fee table that Other
Expenses
are based on estimated amounts for the current fiscal year.

      Please disclose whether the Fund will pay the Consultant for
distribution-related expenses.

      In the Example, replace "redemption" with "repurchase."
Also,
move the first sentence of the explanation following the Example
to
precede the Example.

Summary

The Fund

      The disclosure indicates the Fund will purchase bonds issued
by
"other Christian non-profit organizations."  Please confirm that
bonds issued by organizations other than churches will not count
towards the 80% requirement of Rule 35d-1 under the 1940 Act.
Please
advise supplementally whether the Fund will diversify by religious
denomination.

      Please disclose the Fund`s anticipated average portfolio
maturity here.

Investment Objectives Policies and Risks

      Will the Fund borrow for leverage?  If so, please disclose
in
this section and disclose the risks of leverage in all prospectus
disclosure pertaining to risks of investing in the Fund.

      Please disclose the percentage of Fund assets to be invested
in
derivatives, and whether income from those investments will be
fully
taxable.  Also summarize the attendant risks in this section.

	Please summarize in this section the risks associated with
rising real interest rates.

	Please disclose in this section that the Fund may use hedging
techniques, lend portfolio, participate in repurchase agreements
and
sell securities on a "when issued" and "delayed delivery" basis.

	Share Repurchases

	Please disclose how the Fund intends to comply with the
liquidity requirements for interval funds set forth in Rule 23c-
3(b)(9) under the 1940 Act.

	Please replace the term "redemption fee" with "repurchase
fee."

	Use of Proceeds

	Please describe the "other operating purposes contemplated by
the Prospectus" for which the proceeds from this offering will be
used.

Investment Objectives and Policies

	Disclosure in the fee table indicates the Fund may leverage
through borrowing, yet the prospectus contains no information
regarding the Fund`s leverage policy or strategies, or the risks
to
common shareholders of leveraging through borrowing or the
issuance
of preferred shares.  Please clarify whether the Fund will
leverage,
and disclose all attendant risks to common shareholders.  In the
event the Fund intends to use debt for leverage, include the
expenses
associated with interest payments on the borrowed funds in the fee
table.  Also, disclose the maximum percentage of total assets the
Fund will borrow.

      The prospectus contains no disclosure regarding the Fund`s
credit quality strategy or the anticipated average credit quality
of
the Fund`s portfolio.  Please clarify.  If the Fund will invest in
below investment grade, or "junk" bonds, please so indicate, and
disclose all risks attendant with such securities.  Also disclose
the
percentage of Fund assets to be invested in below investment grade
debt.

      Since the average maturity of the Fund`s portfolio will be
approximately twenty years, please disclose the enhanced risk of
volatility present with securities of longer maturities.  Also
discuss the interest rates of church bonds in relation to rates on
other types of bonds.

      Will the Funds` investments in church mortgage loans count
towards the 80% requirement of Rule 35d-1 under the 1940 Act?  If
so,
please advise us supplementally of the legal basis for the Fund`s
position.  Also, please clarify whether investments in church
mortgage loans are riskier than church bonds and, if so, disclose
the
nature of the enhanced risks.

      The disclosure here indicates the Fund may invest up to 20%
of
total assets in church mortgage loans and other assets, yet Rule
35d-
1 disclosure in the Summary refers to net assets.  Please correct
this inconsistency.

      Will the Fund invest in adjustable rate securities?  If so,
please so disclose, and also disclose all attendant risks.

      Please expand the discussion of the church mortgage bond
market
to include a more detailed description of the size of the market,
availability of new issues and the nature of the secondary market.
Disclose who originates the bonds (e.g., will the Fund be engaged
in
underwriting the Consultant`s securities?), how the bonds are
collateralized, the bonds` degree of liquidity and default rates.
Also disclose the number of pricing sources and principal
underwriters in the market other than the Consultant, as well as
the
market share of the Consultant.

      It appears from the disclosure that the Consultant is
actually
an investment adviser or sub-adviser.  If so, why is the name
"Consultant" used in the disclosure?  If the Consultant is not an
adviser, why are there asset-level breakpoints in the Consultant`s
fee structure?  Did the Fund`s board approve the Consultant`s
contract?  If so, why is the approval process not discussed in the
Statement of Additional Information?  Clarify that the Consultant
will have a conflict of interest in providing ratings analyses for
these bonds, and explain what, if anything, will be done to
resolve
the conflict.  Does the Adviser participate at all in portfolio
selection?

      Since no income accrues to the Fund on "when issued" and
"delayed delivery" transactions prior to the date the Fund takes
delivery of the securities, why does the Fund enter into such
transactions?

Special Risk Considerations

	Please discuss the risks of default in greater detail.  What
will the Fund do in the event of default?  Are there restrictions
on
the Fund`s ability to liquidate collateral?

Taxation

	Please clarify whether the Fund has qualified as a regulated
investment company under Subchapter M of the Internal Revenue
Code.

Repurchase of Shares

	In the first paragraph of this section, please delete
language
indicating shareholders will redeem shares and replace it with
language indicating the Fund will repurchase shares.

Plan of Distribution

	Please disclose the underwriting fees the Distributor will
receive in connection with this offering.  Will the Consultant or
an
affiliate of the adviser be paid a distribution fee?  If so,
please
disclose.

Statement of Additional Information

Investment Restrictions

      Please explain in the narrative the meaning of the phrase
"amounts not exceeding the asset coverage tests established by
Section 18(f) of the 1940 Act or as otherwise permitted by law" as
it
pertains to the Fund`s fundamental policy on issuing senior
securities.

      Please disclose whether the Fund will meet the requirements
of
Section 851 of the Internal Revenue Code.

Annual Approval of Investment Advisory Agreement
      This disclosure does not contain a reasonably detailed
discussion of the material factors that formed the basis for the
board of directors approving the investment advisory contract.
Please include this information in the disclosure.  See
Instruction
to Item 18.13 of Form N-2.
Portfolio Transactions
	With whom will the Adviser negotiate transactions for the
purchase or sale of securities on behalf of the Fund?
Net Asset Value
	How dependent on the Consultant will the Board be when
valuing
Church Mortgage Bonds?
Closing
      We note that portions of the filing are incomplete. We may
have
additional comments on such portions when you complete them in a
pre-
effective amendment, on disclosures made in response to this
letter,
on information supplied supplementally, or on exhibits added in
any
pre-effective amendments.  Please note that comments we give in
one
section apply to other sections in the filing that contain the
same
or similar disclosure.
      Please advise us if you have submitted or expect to submit
an
exemptive application or no-action request in connection with your
registration statement.
      Response to this letter should be in the form of a pre-
effective amendment filed pursuant to Rule 472 under the
Securities
Act. Where no change will be made in the filing in response to a
comment, please indicate this fact in a supplemental letter and
briefly state the basis for your position.
      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the Fund and its management are in
possession of all facts relating to the Fund`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
	Notwithstanding our comments, in the event the Fund requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that
* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;
* the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the Fund from its full responsibility for the adequacy and
accuracy of the disclosure in the filing; and
* the Fund may not assert this action as defense in any proceeding
initiated by the Commission or any person under the federal
securities laws of the United States.
      In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Investment Management in connection with our review of
your filing or in response to our comments on your filing.

*    *    *    *    *    *

   	We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities.  We will act on the request and, pursuant to
delegated authority, grant acceleration of the effective date.

      Should you have any questions regarding this letter, please
contact me at (202) 942-0686.

						Sincerely,

						Vincent J. Di Stefano
						Attorney

??

??

??

??

Ms. Olivia P. Adler
Page  1

</TEXT>
</DOCUMENT>