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<PAGE> PAGE 2
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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SIGNATURE MARY ANN CLARK
TITLE A.S. OF FUND ADMNIN.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> SECURITY CAPITAL REAL ESTATE MUTUAL FUND, INC.
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</TABLE>
Arthur Andersen
To the Board of Directors of Security Capital
Real Estate Mutual Funds Incorporated:
In planning and performing our audits of the financial statements of
Security Capital U.S. Real Estate Shares and Security Capital European
Real Estate Shares (collectively the "Funds"), each a separate
portfolio of Security Capital Real Estate Mutual Funds Incorporated,
for the year ended December 31, 1999, we considered its internal
control, including control activities for safeguarding securities, in
order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with
the requirements of Form N-SAR, not to provide assurance on internal
control.
The management of the Funds is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the
expected benefits and related costs of controls. Generally, controls
that are relevant to an audit pertain to the entity's objective of
preparing financial statements for external purposes that are fairly
presented in conformity with generally accepted accounting principles.
Those controls include the safeguarding of assets against unauthorized
acquisition, use, or disposition.
Because of inherent limitations in internal control, errors or fraud
may occur and not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of internal control would not necessarily disclose
all matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not
reduce to a relatively low level the risk that misstatements caused by
error or fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected within
a timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving the internal
control and its operation, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above
as of December 31, 1999.
This report is intended solely for the information and use of
management, the Board of Directors of Security Capital Real Estate
Mutual Funds Incorporated and the Securities and Exchange Commission.
ARTHUR ANDERSEN LLP
Chicago, Illinois
February 2, 2000
