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<PAGE> PAGE 2
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SIGNATURE EDWARD J. VEILLEUX
TITLE VICE PRESIDENT
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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Coopers Coopers & Lybrand L.L.P.
& Lybrand a professional services firm
REPORT OF INDEPENDENT ACCOUNTANTS
-------
To the Board of Directors of
Flag Investors Real Estate Securities Fund
In planning and performing our audit of the financial
statements and financial highlights of the Flag Investors Real Estate Securities
Fund for the year ended December 31, 1996, we considered its internal control
structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and financial highlights and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management of Flag Investors Real Estate Securities Fund
is responsible for establishing and maintaining an internal control structure.
In fulfilling this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an internal control
structure are to provide management with reasonable, but not absolute, assurance
that assets are safeguarded against loss from unauthorized use or disposition
and that transactions are executed in accordance with management's
authorization and recorded properly to permit preparation of financial
statements in conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and not be detected. Also,
projection of any evaluation of the structure 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 the internal control structure would
not necessarily disclose all matters in the internal control structure 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 the specific internal control structure
elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the financial
statements and financial highlights 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
structure, including procedures for safeguarding securities, that we consider to
be material weaknesses, as defined above, as of December 31, 1996.
This report is intended solely for the information and use
of management and the Board of Directors of Flag Investors Real Estate
Securities Fund and for the Securities and Exchange Commission.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
February 4, 1997
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International,
a limited liability association incorporated in Switzerland.
