UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-22031
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND, INC.
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(Exact name of registrant as specified in charter)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
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(Address of principal executive offices) (Zip code)
Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474
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(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 671-1947
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Date of fiscal year end: 12/31
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Date of reporting period: 12/31
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Annual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
LASALLE INTERNATIONAL REAL ESTATE FUND
(FORMERLY SELIGMAN LASALLE INTERNATIONAL REAL ESTATE FUND)
ANNUAL REPORT FOR
THE PERIOD ENDED
DECEMBER 31, 2009
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND
SEEKS LONG-TERM CAPITAL APPRECIATION AND, SECONDLY,
CURRENT INCOME.
TABLE OF CONTENTS --------------------------------------------------------------
Your Fund at a Glance.............. 2
Manager Commentary................. 5
Portfolio of Investments........... 10
Statement of Assets and
Liabilities...................... 15
Statement of Operations............ 16
Statements of Changes in Net
Assets........................... 17
Financial Highlights............... 18
Notes to Financial Statements...... 20
Report of Independent Registered
Public Accounting Firm........... 36
Federal Income Tax Information..... 38
Board Members and Officers......... 39
Proxy Voting....................... 43
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RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ----------------------------------------------------------
FUND SUMMARY
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> RiverSource LaSalle International Real Estate Fund (the Fund) Common Stock
gained 48.21% based on market price, and 34.15% based on net asset value
(excluding sales charge impact) for the 12-month period ended Dec. 31, 2009.
> The Fund underperformed the UBS Global Investors Index (excluding U.S.) based
on net asset value, which gained 42.60% for the 12-month period ended Dec. 31,
2009.
> The Fund underperformed the UBS Global Investors Index based on net asset
value, which gained 35.70% for the same period.
> The Fund outperformed the FTSE-NAREIT Equity REITs Index, which rose 27.99%
for the 12 months ended Dec. 31, 2009.
ANNUALIZED TOTAL RETURNS (for period ended Dec. 31, 2009)
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SINCE
INCEPTION
1 YEAR 5/30/07
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RiverSource LaSalle International Real
Estate Fund
Market Price +48.21% -28.51%(a)
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Net Asset Value:
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Without sales charge +34.15% -21.32%(b)
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With sales charge +28.09% -22.71%(b)
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UBS Global Investors Index (excluding
U.S.)(c) (unmanaged) +42.60% -18.69%
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UBS Global Investors Index(d) (unmanaged) +35.70% -16.30%
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FTSE-NAREIT Equity REITs Index(e)
(unmanaged) +27.99% -13.09%
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(a) Market price total return at inception is based on the initial offering
price on May 25, 2007, which was $25.00 per share.
(b) Net asset value total return at inception is from the opening of business on
May 30, 2007. The since-inception returns are calculated with and without
the effect of the initial 4.50% maximum sales charge.
(c) The UBS Global Investors Index (excluding U.S.) measures the performance of
real estate securities within the S&P/Citigroup World Property Index that
derive 70% or more of income from rent. This index represents real estate
securities in over 21 countries, excluding the United States.
(d) The UBS Global Investors Index measures the performance of real estate
securities within the S&P/Citigroup World Property Index that derive 70% or
more of income from rent.
(e) The FTSE NAREIT Equity REITs Index measures the performance of all publicly-
traded U.S. real estate trusts that are equity real estate investment trusts
(REITs), as determined by the National Association of Real Estate Investment
Trusts.
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2 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
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The net asset value of the Fund's shares may not always correspond to the market
price of such shares. Common stock of many closed-end funds frequently trade at
a discount from their net asset value. The Fund is subject to stock market risk,
which is the risk that stock prices overall will decline over short or long
periods, adversely affecting the value of an investment in the Fund.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
investment will fluctuate so that your shares, when sold, may be worth more or
less than their original cost. Current performance may be lower or higher than
the performance information shown. You may obtain performance information
current to the most recent month-end by visiting riversource.com/funds.
Returns reflect changes in market price or net asset value, as applicable, and
assume reinvestment of distributions. Returns do not reflect the deduction of
taxes that investors may pay on distributions or the sale of shares.
The indices do not reflect the effects of sales charges, expenses and taxes. It
is not possible to invest directly in an index.
PRICE PER SHARE
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DEC. 31, SEPT. 30, JUNE 30, MARCH 31, DEC. 31,
2009 2009 2009 2009 2008
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Market price $7.39 $7.33 $5.57 $4.17 $5.60
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Net asset value 9.09 9.29 7.29 5.71 7.61
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DISTRIBUTIONS PAID PER SHARE
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PAYMENT DATE PER SHARE AMOUNT
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March 23, 2009 $0.13
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June 9, 2009 0.13
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Sept. 24, 2009 0.06
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Dec. 21, 2009 0.36
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The net asset value of the Fund's shares may not always correspond to the market
price of such shares. Common stock of many closed-end funds frequently trade at
a discount from their net asset value. The Fund is subject to stock market risk,
which is the risk that stock prices overall will decline over short or long
periods, adversely affecting the value of an investment in the Fund.
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RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
STYLE MATRIX
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STYLE
VALUE BLEND GROWTH
LARGE
X MEDIUM SIZE
SMALL
Shading within the style matrix approximates areas in which the Fund is designed
to generally invest.
The style matrix can be a valuable tool for constructing and monitoring your
portfolio. It provides a frame of reference for distinguishing the types of
stocks or bonds owned by a fund, and may serve as a guideline for helping you
build a portfolio.
Investment products, including shares of funds, are not federally or FDIC-
insured, are not deposits or obligations of, or guaranteed by any financial
institution, and involve investment risks including possible loss of principal
and fluctuation in value.
Investments in real estate securities may be subject to specific risks, such as
risks to general and local economic conditions, and risks related to individual
properties. Investing in one economic sector, such as real estate, may result in
greater price fluctuations than owning a portfolio of diversified investments.
The Fund is a "non-diversified" fund and, as such, the Fund may hold fewer
securities than other funds. A decline in the value of these investments would
cause the Fund's overall value to decline to a greater degree than if the Fund
held a more diversified portfolio.
Investments in small- and mid-capitalization companies involve greater risks and
volatility than investments in larger, more established companies. International
investing involves increased risk and volatility due to potential political and
economic instability, currency fluctuations, and differences in financial
reporting and accounting standards and oversight. Risks are particularly
significant in emerging markets.
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4 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
MANAGER COMMENTARY -------------------------------------------------------------
Dear Stockholders,
RiverSource LaSalle International Real Estate Fund (the Fund) is a closed-end
fund. Up to 20% of its portfolio may be invested in a U.S. dividend-capture
strategy; the balance is invested in equity and equity-related securities of
international real estate companies.
The Fund's Common Stock return, based on net asset value (excluding sales charge
impact), was 34.15% for the 12 months ended Dec. 31, 2009. In comparison, the
FTSE NAREIT Equity REITs Index rose 27.99% for the 12 months. The UBS Global
Investors Index of global real estate stocks gained 35.70%, and the UBS Global
Investors Index (excluding U.S.) rose 42.60% for the same period.
SIGNIFICANT PERFORMANCE FACTORS
Both the global economy and global real estate companies appear to have
navigated the most dramatic and dangerous economic and financial year in
decades. After a dismal first quarter, the stabilizing of the world's
COUNTRY BREAKDOWN(1) (at Dec. 31, 2009)
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Australia 19.3%
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Belgium 0.1%
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Bermuda 1.9%
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Canada 3.0%
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Finland 0.9%
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France 9.6%
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Germany 0.8%
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Hong Kong 5.7%
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Japan 11.0%
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Luxembourg 0.9%
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Netherlands 7.2%
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Singapore 3.7%
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Sweden 2.6%
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Switzerland 1.5%
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United Kingdom 13.3%
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United States 18.4%
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Other(2) 0.1%
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(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan). The Fund's
composition is subject to change.
(2) Cash & Cash Equivalents.
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RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 5
MANAGER COMMENTARY (continued) -------------------------------------------------
economies and financial system led to strong mid-year recovery in the stock
prices of global real estate companies, and continued progress in the final
months of the year. We believe this progress reflects investor relief that the
financial crisis may be in the process of resolution, renewed growth in most of
the economies around the world, the increased financial stability of the public
real estate industry, and the coming-into-view of the recovery in the world's
commercial real estate markets.
The best performing real estate stock markets, Singapore and Hong Kong,
benefitted from the early recovery of their economies and financial liquidity
helped by the stimulus applied to the Chinese economy. In Japan, the only market
to lose ground in 2009, both the economy and real estate market lagged. The more
economically stable real estate markets and economies in Continental Europe
significantly outperformed. Real estate companies in the U.K. and U.S. lagged
the global index somewhat; in the case of the U.S., much of this was due to the
weak dollar.
An important factor in the recovery of global real estate stocks was the re-
opening of the capital markets beginning in the second quarter. Public real
estate companies raised more than $45 billion U.S. dollars (USD) in new equity
issues in 2009, as well as more than $20 billion USD in
TOP TEN HOLDINGS(1) (at Dec. 31, 2009)
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Westfield Group (Australia) 9.6%
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Unibail-Rodamco (France) 8.5%
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Stockland (Australia) 5.3%
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Dexus Property Group (Australia) 4.1%
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Link REIT (Hong Kong) 3.6%
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Corio (Netherlands) 3.2%
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British Land (United Kingdom) 2.7%
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Japan Real Estate Investment (Japan) 2.4%
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Hammerson (United Kingdom) 2.3%
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Land Securities Group (United Kingdom) 2.3%
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(1) Percentages indicated are based upon total investments (excluding
Investments of Cash Collateral Received for Securities on Loan and Cash &
Cash Equivalents).
For further detail about these holdings, please refer to the section entitled
"Portfolio of Investments."
Fund holdings are as of the date given, are subject to change at any time, and
are not recommendations to buy or sell any security.
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6 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
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unsecured debt. Bank credit has become more available as well, and both the
initial public offering and commercial mortgage-backed securities (CMBS) markets
revived in the U.S. in the fourth quarter. Companies have been able to improve
financial flexibility through new stock issues, debt repurchases, asset sales,
and more efficient and capital-conserving operating, investment, and development
policies.
The leading components of the Fund's return in 2009 were holdings in Continental
Europe, particularly France and the Netherlands. Hong Kong was another major
contributor, as was the dividend-capture program in U.S. real estate investment
trusts (REITs). Major company contributions to the Fund's return came from
holdings in two Hong Kong companies, LINK REIT and HONGKONG LAND HOLDINGS,
STOCKLAND in Australia, and two French companies, KLEPIERRE and UNIBAIL-RODAMCO.
Holdings in three Japanese companies -- NTT URBAN DEVELOPMENT, JAPAN REAL ESTATE
INVESTMENT, and JAPAN RETAIL FUND INVESTMENT -- were the largest negative
contributors to return.
CHANGES TO THE FUND'S PORTFOLIO
Our investment process for the international portion of the Fund's portfolio is
driven by our estimates of the intrinsic values of the stocks in our investment
universe, and our evaluation of the relative values offered by property sectors
and individual stocks. In the international portion of the portfolio, a larger
percentage of assets were invested in Australia, Singapore, and Continental
Europe at the end of 2009 than a year earlier, and the proportion in Hong Kong,
Japan, and the U.K. declined somewhat. The percentage of asset allocation to the
U.S. remained the same. At the end of the year, a significantly higher
percentage of assets were invested in companies owning retail properties than at
the end of the prior year, and a smaller percentage of holdings in companies
with office and diversified properties. The strategy of the dividend-capture
portion of the portfolio did not change during the year.
OUR FUTURE STRATEGY
In contrast to other real estate cycles, the current one has been marked more by
a deficit in demand rather than an excess of supply. This is particularly
important in the slower-growing economies of Europe and North America. Just as
businesses have been reducing inventory, space occupiers are making do with as
little square footage as possible. With
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RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 7
MANAGER COMMENTARY (continued) -------------------------------------------------
little new supply, and natural obsolescence continuing, the chances of a strong
surge in demand increases once the cycle turns up.
Property values are already increasing in parts of Asia and in the U.K., and we
expect value recovery will anticipate revived fundamentals to some extent in
Europe and North America. Transactions are still sparse, but there is evidence
that capitalization rates are stable to falling, particularly for the income
generated by stabilized core properties, and that the net operating income
component of these valuations is higher than had been predicted earlier in the
year. Both of these factors increase property valuations. The prices of global
real estate companies relative to their assets are still relatively high, and we
expect the net asset values of the companies in our investment universe will
benefit from lower capitalization rates in 2010. By other measures, such as the
implied capitalization rates of public real estate companies and their dividend
yields versus broad-market yield comparables, we believe the shares of these
companies continue to offer reasonable value in most markets.
While the Fund concentrates its investments in the real estate industry, its
portfolio is well diversified by region and property sector. The companies in
our portfolio, in our view, generally own higher-quality properties, have
moderate leverage, and have excellent management and well thought-out business
plans. We believe these companies are well positioned to take advantage of
conditions in this year's real estate market. If attractive acquisitions are
available because highly-levered owners become unable to retain control of their
properties, the available capital reserves of these companies can be invested to
their advantage. We think the higher-quality portfolio of these companies should
outperform the market.
In conclusion, economic conditions improved materially as 2009 progressed, and
we believe they will continue to strengthen in 2010 and beyond. We believe most
global real estate companies are financially secure today and are prepared to
both maximize the potential of their operating portfolio and capitalize on
value-added opportunities that may present themselves. We believe they offer an
attractive combination of the potential for increased earnings, high current
income and the cushion of real assets, as real estate markets recover.
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8 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
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(LASALLE INVESTMENT MANAGEMENT LOGO)
LASALLE INVESTMENT MANAGEMENT (SECURITIES), L.P.
LASALLE INVESTMENT MANAGEMENT SECURITIES B.V.
Any specific securities mentioned are for illustrative purposes only and are not
a complete list of securities that have increased or decreased in value. The
views expressed in this statement reflect those of the portfolio manager(s) only
through the end of the period of the report as stated on the cover and do not
necessarily represent the views of RiverSource Investments, LLC (RiverSource) or
any subadviser to the Fund or any other person in the RiverSource or subadviser
organizations. Any such views are subject to change at any time based upon
market or other conditions and RiverSource disclaims any responsibility to
update such views. These views may not be relied on as investment advice and,
because investment decisions for a fund in the RiverSource Family of Funds are
based on numerous factors, may not be relied on as an indication of trading
intent on behalf of any fund in the RiverSource Family of Funds.
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RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 9
PORTFOLIO OF INVESTMENTS ------------------------------------------------------
DEC. 31, 2009
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
COMMON STOCKS (97.9%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (19.0%)
Abacus Property Group 718,974 $286,780
Dexus Property Group 4,582,224(d) 3,475,378
Stockland 1,277,620 4,499,983
Westfield Group 728,361 8,149,298
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Total 16,411,439
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BELGIUM (0.1%)
Cofinimmo 767 108,257
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BERMUDA (1.9%)
Hongkong Land Holdings 335,128 1,650,534
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CANADA (3.0%)
Canadian Real Estate Investment Trust 68,700 1,773,833
RioCan Real Estate Investment Trust 41,600 786,177
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Total 2,560,010
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FINLAND (0.9%)
Citycon 35,752 149,459
Sponda 159,683(b,d) 622,389
Technopolis 1,309 5,798
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Total 777,646
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FRANCE (9.5%)
Klepierre 6,940 280,764
Mercialys 19,563 687,628
Unibail-Rodamco 32,977 7,233,780
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Total 8,202,172
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GERMANY (0.8%)
Deutsche Euroshop 20,367 686,964
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HONG KONG (5.7%)
Great Eagle Holdings 317,000 821,978
Hysan Development 347,368 983,074
Link REIT 1,211,115 3,090,408
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Total 4,895,460
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JAPAN (10.9%)
Frontier Real Estate Investment 85 604,821
Japan Logistics Fund 146 1,070,625
Japan Real Estate Investment 274 2,021,502
Japan Retail Fund Investment 361(d) 1,624,815
Mitsui Fudosan 90,000 1,522,968
Nippon Building Fund 179 1,361,522
NTT Urban Development 1,750 1,169,131
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Total 9,375,384
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NETHERLANDS (7.1%)
Corio 39,581 2,692,699
Eurocommercial Properties 28,776 1,189,326
VastNed Retail 8,987 590,068
Wereldhave 17,446 1,663,925
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Total 6,136,018
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SINGAPORE (3.6%)
Ascendas Real Estate Investment Trust 866,137 1,359,805
CapitaLand 340,000 1,008,739
CapitaMall Trust 593,330 757,392
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Total 3,125,936
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SWEDEN (2.5%)
Castellum 104,527 1,059,461
Hufvudstaden Cl A 146,825 1,113,508
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Total 2,172,969
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SWITZERLAND (1.5%)
PSP Swiss Property 22,352(b,d) 1,261,599
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UNITED KINGDOM (13.2%)
Atrium European Real Estate 153,771 1,033,430
Big Yellow Group 70,349(b,d) 400,882
British Land 300,161 2,312,043
Development Securities 43,093 236,619
See accompanying Notes to Portfolio of Investments.
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10 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
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COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
UNITED KINGDOM (CONT.)
Great Portland Estates 241,050 $1,116,111
Hammerson 292,775 1,993,349
Helical Bar 37,276 205,504
Land Securities Group 176,816 1,946,722
Segro 180,961 1,004,050
Shaftesbury 174,029(d) 1,106,893
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Total 11,355,603
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UNITED STATES (18.2%)
AMB Property 27,000 689,850
AvalonBay Communities 17,600(d) 1,445,137
BioMed Realty Trust 92,500 1,459,651
DCT Industrial Trust 113,500 569,770
Essex Property Trust 13,550 1,133,458
Federal Realty Investment Trust 19,800 1,340,856
Healthcare Realty Trust 49,695(d) 1,066,455
Host Hotels & Resorts 63,256(d) 738,200
Kimco Realty 56,200(d) 760,386
Macerich 497 17,849
Mack-Cali Realty 32,000 1,106,240
Public Storage 12,744(d) 1,037,999
Simon Property Group 16,933(d) 1,351,253
SL Green Realty 20,800 1,044,992
Taubman Centers 28,654(d) 1,028,965
Ventas 20,749 907,561
Vornado Realty Trust 1 45
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Total 15,698,667
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TOTAL COMMON STOCKS
(Cost: $84,771,998) $84,418,658
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CLOSED-END FUNDS (0.9%)(c)
ISSUER SHARES VALUE(a)
LUXEMBOURG
ProLogis European Properties 121,996(b) $746,693
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TOTAL CLOSED-END FUNDS
(Cost: $1,454,524) $746,693
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MONEY MARKET FUND (0.1%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.18% 59,984(e) $59,984
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TOTAL MONEY MARKET FUND
(Cost: $59,984) $59,984
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INVESTMENTS OF CASH COLLATERAL RECEIVED
FOR SECURITIES ON LOAN (9.4%)
SHARES VALUE(a)
JPMorgan Prime Money Market Fund 8,102,844 $8,102,844
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TOTAL INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON LOAN
(Cost: $8,102,844) $8,102,844
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TOTAL INVESTMENTS IN SECURITIES
(Cost: $94,389,350)(f) $93,328,179
=====================================================================================
See accompanying Notes to Portfolio of Investments.
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RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 11
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
SUMMARY OF INVESTMENTS IN SECURITIES BY INDUSTRY
The following table represents the portfolio investments of the Fund by industry
classifications as a percentage of net assets at Dec, 31, 2009:
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE(a)
-----------------------------------------------------------------------
Real Estate Investment Trusts (REITs)(1) 82.1% $70,887,503
Real Estate Management & Development 16.6 14,277,848
Other(2) 9.5 8,162,828
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Total $93,328,179
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(1) Includes U.S. REITs as well as entities similar to REITs formed under the
laws of non-U.S. countries.
(2) Cash & Cash Equivalents
The industries identified above are based on the Global Industry Classification
Standard (GICS), which was developed by and is the exclusive property of Morgan
Stanley Capital International Inc. and Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using policies described in Note 2 to the
financial statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars.
(d) At Dec. 31, 2009, security was partially or fully on loan. See Note 7 to
the financial statements.
(e) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at Dec. 31, 2009.
(f) At Dec. 31, 2009, the cost of securities for federal income tax purposes
was $105,426,609 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $6,314,473
Unrealized depreciation (18,412,903)
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Net unrealized depreciation $(12,098,430)
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12 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
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FAIR VALUE MEASUREMENTS
Generally accepted accounting principles (GAAP) require disclosure regarding the
inputs and valuation techniques used to measure fair value and any changes in
valuation inputs or techniques. In addition, investments shall be disclosed by
major category.
The Fund categorizes its fair value measurements according to a three-level
hierarchy that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by prioritizing that the most observable input be used when
available. Observable inputs are those that market participants would use in
pricing an investment based on market data obtained from sources independent of
the reporting entity. Unobservable inputs are those that reflect the Fund's
assumptions about the information market participants would use in pricing an
investment. An investment's level within the fair value hierarchy is based on
the lowest level of any input that is deemed significant to the asset or
liability's fair value measurement. The input levels are not necessarily an
indication of the risk or liquidity associated with investments at that level.
For example, certain U.S. government securities are generally high quality and
liquid, however, they are reflected as Level 2 because the inputs used to
determine fair value may not always be quoted prices in an active market.
Fair value inputs are summarized in the three broad levels listed below:
- Level 1 -- Valuations based on quoted prices for investments in active
markets that the Fund has the ability to access at the measurement date.
Valuation adjustments are not applied to Level 1 investments.
- Level 2 -- Valuations based on other significant observable inputs
(including quoted prices for similar securities, interest rates,
prepayment speeds, credit risks, etc.).
- Level 3 -- Valuations based on significant unobservable inputs (including
the Fund's own assumptions and judgment in determining the fair value of
investments).
Inputs that are used in determining fair value of an investment may include
price information, credit data, volatility statistics, and other factors. These
inputs can be either observable or unobservable. The availability of observable
inputs can vary between investments, and is affected by various factors such as
the type of investment, and the volume and level of activity for that investment
or similar investments in the marketplace. The inputs will be considered by the
Fund Administrator, along with any other relevant factors in the calculation of
an investment's fair value. The Fund uses prices and inputs that are current as
of the measurement date, which may include periods of market dislocations.
During these periods, the availability of prices and inputs may be reduced for
many investments. This condition could cause an investment to be reclassified
between the various levels within the hierarchy.
Non-U.S. equity securities actively traded in foreign markets may be reflected
in Level 2 despite the availability of closing prices, because the Fund
evaluates and determines whether those closing prices reflect fair value at the
close of the New York Stock Exchange (NYSE) or require adjustment, as described
in Note 2 to the financial statements -- Valuation of securities.
Investments falling into the Level 3 category are primarily supported by quoted
prices from brokers and dealers participating in the market for those
investments. However, these may be classified as
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RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 13
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
FAIR VALUE MEASUREMENTS (CONTINUED)
Level 3 investments due to lack of market transparency and corroboration to
support these quoted prices. Additionally, valuation models may be used as the
pricing source for any remaining investments classified as Level 3. These models
rely on one or more significant unobservable inputs and/or significant
assumptions by the Fund Administrator. Inputs used in a valuation model may
include, but are not limited to, financial statement analysis, discount rates
and estimated cash flows, and comparable company data.
The following table is a summary of the inputs used to value the Fund's
investments as of Dec. 31, 2009:
FAIR VALUE AT DEC. 31, 2009
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LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION IDENTICAL ASSETS INPUTS INPUTS TOTAL
----------------------------------------------------------------------------------------------
Equity Securities
Common Stocks(a)
Real Estate
Investment Trusts
(REITs) $17,511,983 $52,628,827 $-- $70,140,810
Real Estate
Management &
Development 746,693 13,531,155 -- 14,277,848
----------------------------------------------------------------------------------------------
Total Equity Securities 18,258,676 66,159,982 -- 84,418,658
----------------------------------------------------------------------------------------------
Other
Closed-End Funds -- 746,693 -- 746,693
Affiliated Money
Market Fund(b) 59,984 -- -- 59,984
Investments of Cash
Collateral Received
for Securities on
Loan 8,102,844 -- -- 8,102,844
----------------------------------------------------------------------------------------------
Total Other 8,162,828 746,693 -- 8,909,521
----------------------------------------------------------------------------------------------
Total $26,421,504 $66,906,675 $-- $93,328,179
----------------------------------------------------------------------------------------------
(a) Includes certain securities trading outside of U.S. whose values were
adjusted as a result of significant market movements following the close of
local trading. Therefore, these investment securities were classified as
Level 2 instead of Level 1.
(b) Money market fund that is a sweep investment for cash balances in the Fund
at Dec. 31, 2009.
HOW TO FIND INFORMATION ABOUT THE FUND'S QUARTERLY PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1(800) SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as filed on Form N-Q,
can be obtained without charge, upon request, by calling 1(800) 937-5449.
--------------------------------------------------------------------------------
14 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
DEC. 31, 2009
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $86,226,522) $ 85,165,351
Affiliated money market fund (identified cost $59,984) 59,984
Investments of cash collateral received for securities on loan
(identified cost $8,102,844) 8,102,844
--------------------------------------------------------------------------------
Total investments in securities (identified cost $94,389,350) 93,328,179
Cash 13,447
Foreign currency holdings (identified cost $267,196) 270,446
Dividends and accrued interest receivable 527,555
Receivable for investment securities sold 3,425,077
--------------------------------------------------------------------------------
Total assets 97,564,704
--------------------------------------------------------------------------------
LIABILITIES
Payable for investment securities purchased 3,013,423
Payable upon return of securities loaned 8,102,844
Accrued investment management services fees 66,862
Accrued Stockholder account and registrar fees 1,305
Accrued administrative services fees 5,846
Accrued Stockholders' meeting fees 31,100
Other accrued expenses 100,304
--------------------------------------------------------------------------------
Total liabilities 11,321,684
--------------------------------------------------------------------------------
Net assets applicable to outstanding Common Stock $ 86,243,020
--------------------------------------------------------------------------------
REPRESENTED BY
Common Stock -- $.01 par value $ 94,858
Additional paid-in capital 204,938,640
Excess of distributions over net investment income (2,442,157)
Accumulated net realized gain (loss) (115,289,193)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (1,059,128)
--------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding Common
Stock $ 86,243,020
--------------------------------------------------------------------------------
Shares outstanding applicable to Common Stock 9,485,828
--------------------------------------------------------------------------------
Net asset value per share of outstanding Common Stock $ 9.09
--------------------------------------------------------------------------------
Market price per share of Common Stock $ 7.39
--------------------------------------------------------------------------------
*Value of securities on loan $ 7,735,740
--------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this
statement.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 15
STATEMENT OF OPERATIONS --------------------------------------------------------
YEAR ENDED DEC. 31, 2009
INVESTMENT INCOME
Income:
Dividends $ 5,124,793
Income distributions from affiliated money market fund 182
Income from securities lending -- net 10,221
Less foreign taxes withheld (324,241)
-------------------------------------------------------------------------------
Total income 4,810,955
-------------------------------------------------------------------------------
Expenses:
Investment management services fees 689,624
Stockholder account and registrar fees 11,157
Administrative services fees 36,537
Compensation of board members 2,234
Custodian fees 74,205
Printing and postage 40,115
Professional fees 55,343
Stockholders' meeting fees 69,082
Other 52,737
-------------------------------------------------------------------------------
Total expenses 1,031,034
-------------------------------------------------------------------------------
Investment income (loss) -- net 3,779,921
-------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions (47,092,567)
Foreign currency transactions 45,536
-------------------------------------------------------------------------------
Net realized gain (loss) on investments (47,047,031)
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 63,947,534
-------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies 16,900,503
-------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ 20,680,424
-------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this
statement.
--------------------------------------------------------------------------------
16 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
YEAR ENDED DEC. 31, 2009 2008
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 3,779,921 $ 5,487,210
Net realized gain (loss) on investments (47,047,031) (50,782,115)
Capital gain distributions from investments -- 1,074,598
Net change in unrealized appreciation (depreciation) on
investments
and on translation of assets and liabilities in foreign
currencies 63,947,534 (37,099,266)
---------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 20,680,424 (81,319,573)
---------------------------------------------------------------------------------------------
Distributions to Stockholders
Net investment income (6,488,521) (2,631,601)
Tax return of capital -- (13,359,685)
---------------------------------------------------------------------------------------------
Total distributions (6,488,521) (15,991,286)
---------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Value of shares issued for distributions -- 189,280 and 642,736
shares 919,875 6,417,603
Cost of shares purchased in open market -- 266,895 and 151,904
shares (1,686,712) (2,232,365)
---------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share transactions (766,837) 4,185,238
---------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 13,425,066 (93,125,621)
Net assets at beginning of year 72,817,954 165,943,575
---------------------------------------------------------------------------------------------
Net assets at end of year $ 86,243,020 $ 72,817,954
---------------------------------------------------------------------------------------------
Excess of distributions over net investment income $ (2,442,157) $ (1,288,595)
---------------------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this
statement.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 17
FINANCIAL HIGHLIGHTS -----------------------------------------------------------
The Fund's financial highlights are presented below. Per share operating
performance data is designed to allow investors to trace the operating
performance, on a per Common share basis from the beginning net asset value to
the ending net asset value, so that investors can understand what effect the
individual items have on their investment, assuming it was held throughout the
period. Generally, the per share amounts are derived by converting the actual
dollar amounts incurred for each item, as disclosed in the financial statements,
to their equivalent per Common share amounts, using average Common shares
outstanding during the period.
Total return measures the Fund's performance assuming that investors purchased
Fund shares at market price or net asset value as of the beginning of the
period, reinvested all their distributions, and then sold their shares at the
closing market price or net asset value on the last day of the period. The
computations do not reflect taxes or any sales commissions investors may incur
in purchasing or selling Fund shares and taxes investors may incur on
distributions or on the sale of Fund shares. Total investment returns are not
annualized for periods of less than one year.
--------------------------------------------------------------------------------
18 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
YEAR ENDED DEC. 31,
--------------------------------
PER SHARE OPERATING PERFORMANCE 2009 2008 2007(a)
Net asset value, beginning of period $7.61 $18.29 $23.88(b)
-----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .39 .60 .35
Net gains (losses) (both realized and
unrealized) 1.77 (9.42) (4.95)
-----------------------------------------------------------------------------------
Total from investment operations 2.16 (8.82) (4.60)
-----------------------------------------------------------------------------------
Offering costs -- -- (.05)
-----------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Distributions from net investment income (.68) (.29) (.35)
Distributions in excess of net investment
income -- -- (.53)
Tax return of capital -- (1.46) --
-----------------------------------------------------------------------------------
Total distributions (.68) (1.75) (.88)
-----------------------------------------------------------------------------------
Issuance of Common Stock in distributions -- (.11) (.06)
-----------------------------------------------------------------------------------
Net asset value, end of period $9.09 $7.61 $18.29
-----------------------------------------------------------------------------------
Market value, end of period $7.39 $5.60 $16.15
-----------------------------------------------------------------------------------
TOTAL RETURN:
Based upon net asset value 34.15% (50.17%) (19.61%)
-----------------------------------------------------------------------------------
Based upon market price 48.21% (58.47%) (32.20%)(e)
-----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(c)
Total expenses 1.41% 1.26% 1.18%(d)
-----------------------------------------------------------------------------------
Net investment income (loss) 5.15% 4.24% 2.82%(d)
-----------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $86 $73 $166
-----------------------------------------------------------------------------------
Portfolio turnover rate 255% 241% 134%
-----------------------------------------------------------------------------------
NOTES TO FINANCIAL HIGHLIGHTS
(a) For the period from May 30, 2007 (commencement of operations) to Dec. 31,
2007.
(b) Net asset value, beginning of period, of $23.875 reflects a deduction of
$1.125 per share sales charge from the initial offering price of $25.00 per
share.
(c) In addition to the fees and expenses which the Fund bears directly, the Fund
indirectly bears a pro rata share of the fees and expenses of the acquired
funds in which it invests. Such indirect expenses are not included in the
above reported expense ratios.
(d) Annualized.
(e) Based upon initial offering price of $25.00 per share.
The accompanying Notes to Financial Statements are an integral part of this
statement.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 19
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. ORGANIZATION
RiverSource LaSalle International Real Estate Fund, Inc. (formerly Seligman
LaSalle International Real Estate Fund, Inc.) (the Fund) is registered under the
Investment Company Act of 1940, as amended (1940 Act) as a non-diversified,
closed-end management investment company. The Fund has 100 million authorized
shares of common stock (Common Stock) The Fund's Common Stock trades on the New
York Stock Exchange (NYSE) under the symbol "SLS".
The Fund's primary investment objective is long-term capital appreciation and
its secondary objective is current income. In seeking its objectives, the Fund
invests at least 80% of its Managed Assets (the net asset value of the Fund's
Common Stock plus the liquidation preference of any issued and outstanding
preferred shares (Preferred Stock) and the principal amount of any borrowings
used for leverage) in equity and equity-related securities issued by
international real estate companies.
The Fund currently has outstanding Common Stock. Each outstanding share of
Common Stock entitles the holder thereof to one vote on all matters submitted to
a vote of the Common Stockholders, including the election of directors. Because
the Fund has no other classes or series of stock outstanding, Common Stock
possesses exclusive voting power. All of the Fund's shares of Common Stock have
equal dividend, liquidation, voting and other rights. The Fund's Common
Stockholders have no preference, conversion, redemption, exchange, sinking fund,
or appraisal rights and have no preemptive rights to subscribe for any of the
Fund's securities.
Although the Fund has no current intention to do so, the Fund is authorized and
reserves the flexibility to use leverage through the issuance of Preferred
Shares and/or borrowings, including the issuance of debt securities. The costs
of issuing Preferred Stock and/or a borrowing program would be borne by Common
Stockholders and consequently would result in a reduction of net asset value of
shares of Common Stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ADOPTION OF NEW ACCOUNTING STANDARD
In June 2009, the Financial Accounting Standards Board (FASB) established the
FASB Accounting Standards Codification(TM )(Codification) as the single source
of authoritative accounting principles recognized by the FASB in the preparation
of financial statements in conformity with U.S. generally accepted accounting
principles (GAAP). The Codification supersedes existing non-grandfathered, non-
SEC accounting and reporting standards. The Codification did not change GAAP
but, rather, organized it into a hierarchy where all guidance within the
--------------------------------------------------------------------------------
20 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
Codification carries an equal level of authority. The Codification became
effective for financial statements issued for interim and annual periods ending
after Sept. 15, 2009. The Codification did not have a material effect on the
Fund's financial statements.
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
All securities are valued at the close of business of the NYSE. Securities
traded on national securities exchanges or included in national market systems
are valued at the last quoted sales price. Debt securities are generally traded
in the over-the-counter market and are valued by an independent pricing service
using an evaluated bid. When market quotes are not readily available, the
pricing service, in determining fair values of debt securities, takes into
consideration such factors as current quotations by broker/dealers, coupon,
maturity, quality, type of issue, trading characteristics, and other yield and
risk factors it deems relevant in determining valuations. Foreign securities are
valued based on quotations from the principal market in which such securities
are normally traded. The procedures adopted by the Fund's Board of Directors
(the Board) generally contemplate the use of fair valuation in the event that
price quotations or valuations are not readily available, price quotations or
valuations from other sources are not reflective of market value and thus deemed
unreliable, or a significant event has occurred in relation to a security or
class of securities (such as foreign securities) that is not reflected in price
quotations or valuations from other sources. A fair value price is a good faith
estimate of the value of a security at a given point in time.
Many securities markets and exchanges outside the U.S. close prior to the close
of the NYSE and therefore the closing prices for securities in such markets or
on such exchanges may not fully reflect events that occur after such close but
before the close of the NYSE, including significant movements in the U.S. market
after foreign exchanges have closed. Accordingly, in those situations,
Ameriprise Financial, Inc. (Ameriprise Financial), parent company of RiverSource
Investments, LLC (RiverSource Investments or the Investment Manager), as
administrator to the Fund, will fair value foreign securities pursuant to
procedures adopted by the Board, including utilizing a third party pricing
service to determine these fair values. These procedures take into account
multiple factors, including movements in the U.S. securities markets, to
determine a good
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 21
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
faith estimate that reasonably reflects the current market conditions as of the
close of the NYSE.
Short-term securities maturing in more than 60 days from the valuation date are
valued at the market price or approximate market value based on current interest
rates. Typically, those maturing in 60 days or less that originally had
maturities of more than 60 days at acquisition date are valued at amortized cost
using the market value on the 61st day before maturity. Short-term securities
maturing in 60 days or less at acquisition date are valued at amortized cost.
Amortized cost is an approximation of market value. Investments in money market
funds are valued at net asset value.
FOREIGN CURRENCY TRANSLATIONS
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. Foreign currency amounts related to the
purchase or sale of securities and income and expenses are translated at the
exchange rate on the transaction date. The effect of changes in foreign exchange
rates on realized and unrealized security gains or losses is reflected as a
component of such gains or losses. In the Statement of Operations, net realized
gains or losses from foreign currency transactions, if any, may arise from sales
of foreign currency, closed forward contracts, exchange gains or losses realized
between the trade date and settlement date on securities transactions, and other
translation gains or losses on dividends, interest income and foreign
withholding taxes. At Dec. 31, 2009, foreign currency holdings consisted of
multiple denominations.
GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liabilities arising out of the performance of their
duties to the Fund. In addition, certain of the Fund's contracts with its
service providers contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown since the amount of any future
claims that may be made against the Fund cannot be determined and the Fund has
no historical basis for predicting the likelihood of any such claims.
FEDERAL TAXES
The Fund's policy is to comply with Subchapter M of the Internal Revenue Code
that applies to regulated investment companies and to distribute substantially
all of its taxable income (which includes net short-term capital gains) to
Stockholders. No provision for income or excise taxes is thus required.
Management of the Fund has concluded that there are no significant uncertain tax
positions that would require recognition in the financial statements.
--------------------------------------------------------------------------------
22 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
Generally, the tax authorities can examine all the tax returns filed for the
last three years.
RECENT ACCOUNTING PRONOUNCEMENT
On Jan. 21, 2010, the FASB issued an Accounting Standards Update (the
amendment), Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements, which provides guidance on how
investment assets and liabilities are to be valued and disclosed. Specifically,
the amendment requires reporting entities to disclose the input and valuation
techniques used to measure fair value for both recurring and nonrecurring fair
value measurements for Level 2 or Level 3 positions. The amendment also requires
that transfers between all levels (including Level 1 and Level 2) be disclosed
on a gross basis (i.e., transfers out must be disclosed separately from
transfers in), and the reason(s) for the transfer. Additionally purchases,
sales, issuances and settlements must be disclosed on a gross basis in the Level
3 rollforward. The effective date of the amendment is for interim and annual
periods beginning after Dec. 15, 2009, however, the requirement to provide the
Level 3 activity for purchases, sales, issuances and settlements on a gross
basis will be effective for interim and annual periods beginning after Dec. 15,
2010. At this time the Fund is evaluating the implications of the amendment and
the impact to the financial statements.
DIVIDENDS TO STOCKHOLDERS
Effective Jan. 8, 2009, the Fund adopted an earned distribution policy. Under
this policy, the Fund intends to make quarterly distributions to holders of
Common Stock that are approximately equal to all distributions received by the
Fund from its underlying portfolio investments (regardless of their
characterization for tax purposes), less Fund expenses. Capital Gains, when
available, are distributed along with the last income dividend of the calendar
year.
Prior to Jan. 8, 2009, the Fund had a level rate distribution policy under which
the Fund paid quarterly distributions to holders of Common Stock equal to 1.75%
of the Fund's initial public offering price of $25.00, or approximately 7% on an
annual basis.
Dividends and other distributions to Stockholders are recorded on ex-dividend
dates.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Dividend income is recognized on the ex-dividend date or upon receipt of
ex-dividend notification in the case of certain foreign securities. Interest
income,
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 23
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
including amortization of premium, market discount and original issue discount
using the effective interest method, is accrued daily.
The Fund receives distributions from holdings in real estate investment trusts
(REITs) which report information on the character components of their
distributions annually. REIT distributions are allocated to dividend income,
capital gain and return of capital based on estimates made by the Fund's
management. Return of capital is recorded as a reduction of the cost basis of
securities held. Management's estimates are subsequently adjusted when the
actual character of the distributions are disclosed by the REITs which could
result in a proportionate increase in returns of capital to Stockholders.
3. INVESTMENTS IN DERIVATIVES
The Fund may invest in certain derivative instruments, which are transactions
whose values depend on or are derived from (in whole or in part) the value of
one or more other assets, such as securities, currencies, commodities or
indices. Such derivative instruments may be used to maintain cash reserves while
maintaining exposure to certain other assets, to offset anticipated declines in
values of investments, to facilitate trading, to reduce transaction costs, and
to pursue higher investment returns. The Fund may also use derivative
instruments to mitigate certain investment risks, such as foreign currency
exchange rate risk, interest rate risk, and credit risk. Investments in
derivative instruments may expose the Fund to certain additional risks,
including those detailed below.
FORWARD FOREIGN CURRENCY CONTRACTS
The Fund may enter into forward foreign currency contracts in connection with
settling purchases or sales of securities, to hedge the currency exposure
associated with some or all of the Fund's securities or as part of its
investment strategy. A forward foreign currency contract is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of a forward foreign currency contract fluctuates with changes in
foreign currency exchange rates. Forward foreign currency contracts are marked
to market daily based upon foreign currency exchange rates from an independent
pricing service and the change in value is recorded as unrealized appreciation
or depreciation. The Fund will record a realized gain or loss when the forward
foreign currency contract is closed.
The risks of forward foreign currency contracts include movement in the values
of the foreign currencies relative to the U.S. dollar (or other foreign
currencies) and the possibility that the counterparty will not complete its
contractual obligation, which may be in excess of the amount, if any, reflected
in the Statement of Assets and Liabilities.
--------------------------------------------------------------------------------
24 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
EFFECTS OF DERIVATIVE TRANSACTIONS ON THE FINANCIAL STATEMENTS
The following tables are intended to provide additional information about the
effect of derivatives on the financial statements of the Fund including: the
fair value of derivatives by risk category and the location of those fair values
in the Statement of Assets and Liabilities; the impact of derivative
transactions on the Fund's operations over the period including realized gains
or losses and unrealized gains or losses. The derivative schedules following the
Portfolio of Investments present additional information regarding derivative
instruments outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT DEC. 31, 2009
At Dec. 31, 2009, the fund had no outstanding derivatives.
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS FOR THE YEAR
ENDED DEC. 31, 2009
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
----------------------------------------------------------------------
FORWARD FOREIGN
RISK EXPOSURE CATEGORY CURRENCY CONTRACTS
----------------------------------------------------------------------
Foreign exchange contracts $7,752
----------------------------------------------------------------------
Total $7,752
----------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES
RECOGNIZED IN INCOME
----------------------------------------------------------------------
FORWARD FOREIGN
RISK EXPOSURE CATEGORY CURRENCY CONTRACTS
----------------------------------------------------------------------
Foreign exchange contracts $173
----------------------------------------------------------------------
Total $173
----------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY
At Dec. 31, 2009, the Fund had no outstanding forward foreign currency
contracts. The monthly average gross notional amount for these contracts was
$2,000 for the year ended Dec. 31, 2009.
4. EXPENSES
INVESTMENT MANAGEMENT SERVICES FEES
Under an Investment Management Services Agreement, the Investment Manager is
responsible for the management of the Fund. Day-to-day portfolio management of
the Fund is provided by the Fund's subadvisors. See Subadvisory and delegation
agreements below. Effective June 15, 2009, the annual management fee rate is
equal to 0.915% of the Fund's average daily Managed Assets. Prior to June 15,
2009, the Investment Manager received an annual fee, equal to 0.98% of the
Fund's average daily Managed Assets. The management fee for the year
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 25
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
ended Dec. 31, 2009 was 0.94% of the Fund's average daily Managed Assets. The
reduction in the investment management services fee on June 15, 2009 is related
to the elimination of the administrative portion of the management fee that is
now being charged separately to the Fund through the Administrative Services
Agreement with Ameriprise Financial. See Administrative services fees below for
more information.
SUBADVISORY AND DELEGATION AGREEMENTS
Under a subadvisory agreement between the Investment Manager and LaSalle
Investment Management (Securities), L.P. (referred to as LaSalle U.S.) and a
delegation agreement between LaSalle U.S. and LaSalle Investment Management
Securities B.V. (collectively LaSalle), LaSalle is responsible for furnishing
investment advice, research and assistance with respect to the Fund's
investments. The Investment Manager contracts with and compensates LaSalle U.S.
for the provision of day-to-day portfolio management of the Fund's assets. Under
the subadvisory agreement, the Investment Manager pays LaSalle U.S. a fee equal
to 0.49% of the Fund's average daily Managed Assets.
ADMINISTRATIVE SERVICES FEES
Under an Administrative Services Agreement, effective June 15, 2009, the Fund
pays Ameriprise Financial an annual fee for administration and accounting
services equal to a percentage of the Fund's average daily Managed Assets that
declines from 0.08% to 0.05% as the Fund's Managed Assets increase. For the
period from June 15, 2009 through Dec. 31, 2009, the fee was 0.05% of the Fund's
average daily Managed Assets. Prior to June 15, 2009, Ameriprise Financial
administered certain aspects of the Fund's business and other affairs for no
additional fee. The fees payable under the Administrative Services Agreement
beginning on June 15, 2009 are offset by corresponding decreases in the
investment management fees charged to the Fund and the elimination of separate
fees that were previously payable to State Street Bank and Trust Company, in its
capacity as the Fund's prior administrative agent.
OTHER FEES
Other expenses are for, among other things, certain expenses of the Fund or the
Board including: Fund boardroom and office expense, employee compensation,
employee health and retirement benefits, and certain other expenses. Payment of
these Fund and Board expenses is facilitated by a company providing limited
administrative services to the Fund and the Board. For the year ended Dec. 31,
2009, other expenses paid to this company were $492.
COMPENSATION OF BOARD MEMBERS
Under a Deferred Compensation Plan (the Plan), the board members who are not
"interested persons" of the Fund under the 1940 Act may defer receipt of their
--------------------------------------------------------------------------------
26 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other funds in the RiverSource Family
of Funds. The Fund's liability for these amounts is adjusted for market value
changes and remains in the Fund until distributed in accordance with the Plan.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $183,793,069 and $186,556,312, respectively, for the
year ended Dec. 31, 2009. Realized gains and losses are determined on an
identified cost basis.
6. DIVIDEND INVESTMENT PLAN AND STOCK REPURCHASE PROGRAM
The Fund, in connection with its Dividend Investment Plan (the Plan), issues
shares of its own Common Stock, as needed, to satisfy Plan requirements. A total
of 189,280 shares were issued to Plan participants during the year ended Dec.
31, 2009 for proceeds of $919,875, a weighted average discount of 27.4% from the
net asset value of those shares. Pursuant to the Plan, unless a Common
Stockholder elects otherwise, all cash dividends, capital gains distributions,
and other distributions are automatically reinvested in additional Common Stock.
If you hold your shares in street name or other nominee (i.e., through a
broker), you should contact them to determine their policy, as the broker firm's
policy with respect to Fund distributions may be to default to a cash payment.
Common Stockholders who elect not to participate in the Plan (including those
whose intermediaries do not permit participation in the Plan by their customers)
will receive all dividends and distributions payable in cash directly to the
Common Stockholder of record (or, if the shares of Common Stock are held in
street or other nominee name, then to such nominee). Common Stockholders may
elect not to participate in the Plan and to receive all distributions of
dividends and capital gains or other distributions in cash by sending written
instructions to American Stock Transfer & Trust Company, LLC (AST), 59 Maiden
Lane Plaza Level, New York, New York 10038. Participation in the Plan may be
terminated or resumed at any time without penalty by written notice if received
by AST, prior to the record date for the next distribution. Otherwise, such
termination or resumption will be effective with respect to any subsequently
declared distribution.
Under the Plan, Common Stockholders receive shares of Common Stock in lieu of
cash distributions unless they have elected otherwise as described above. Common
Stock will be issued in lieu of cash by the Fund from previously authorized but
unissued Common Stock. If the market price of a share on the ex-dividend date of
such a distribution is at or above the Fund's net asset value per
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 27
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
share on such date, the number of shares to be issued by the Fund to each Common
Stockholder receiving shares in lieu of cash distributions will be determined by
dividing the amount of the cash distribution to which such Common Stockholder
would be entitled by the greater of the net asset value per share on such date
or 95% of the market price of a share on such date. If the market price of a
share on such an ex-dividend date is below the net asset value per share, the
number of shares to be issued to such Common Stockholders will be determined by
dividing such amount by the per share market price. The issuance of Common Stock
at less than net asset value per share will dilute the net asset value of all
Common Stock outstanding at that time. Market price on any day means the closing
price for the Common Stock at the close of regular trading on the NYSE on such
day or, if such day is not a day on which the Common Stock trades, the closing
price for the Common Stock at the close of regular trading on the immediately
preceding day on which trading occurs.
The Fund, under its stock repurchase program, currently intends to make open
market purchases of its Common Stock from time to time when the Fund is trading
at a discount to its net asset value, in an amount approximately sufficient to
offset the growth in the number of shares of Common Stock issued as a result of
the reinvestment of the portion of its distributions to Common Stockholders that
are attributable to distributions received by the Fund from its underlying
portfolio investments less Fund expenses. For the year ended Dec. 31, 2009,
266,895 shares were purchased in the open market at an aggregate cost of
$1,686,712, which represented a weighted average discount of 21.8% from the net
asset value of those acquired shares. Shares of Common Stock repurchased to
satisfy Plan requirements or in the open market are retired and no longer
outstanding.
The Fund reserves the right to amend or terminate the Plan as applied to any
distribution paid subsequent to written notice of the change sent to
participants in the Plan at least 90 days before the record date for such
distribution. There are no service or brokerage charges to participants in the
Plan; however, the Fund reserves the right to amend the Plan to include a
service charge payable to the Fund by the participants. The Fund also reserves
the right to amend the Plan to provide for payment of brokerage fees by Plan
participants in the event the Plan is changed to provide for open market
purchases of Common Stock on behalf of Plan participants. All correspondence
concerning the Plan should be directed to AST.
--------------------------------------------------------------------------------
28 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
7. LENDING OF PORTFOLIO SECURITIES
Effective May 15, 2009, the Fund has entered into a Master Securities Lending
Agreement (the Agreement) with JPMorgan Chase Bank, National Association
(JPMorgan). The Agreement authorizes JPMorgan as lending agent to lend
securities to authorized borrowers in order to generate additional income on
behalf of the Fund. Pursuant to the Agreement, the securities loaned are secured
by cash or U.S. government securities equal to at least 100% of the market value
of the loaned securities. Any additional collateral required to maintain those
levels due to market fluctuations of the loaned securities is delivered the
following business day. Cash collateral received is invested by the lending
agent on behalf of the Fund into authorized investments pursuant to the
Agreement. The investments made with the cash collateral are listed in the
Portfolio of Investments. The values of such investments and any uninvested cash
collateral balance are disclosed in the Statement of Assets and Liabilities
along with the related obligation to return the collateral upon the return of
the securities loaned. At Dec. 31, 2009, securities valued at $7,735,740 were on
loan, secured by cash collateral of $8,102,844 invested in short-term securities
or in cash equivalents.
Risks of delay in recovery of securities or even loss of rights in the
securities may occur should the borrower of the securities fail financially.
Risks may also arise to the extent that the value of the securities loaned
increases above the value of the collateral received. JPMorgan will indemnify
the Fund from losses resulting from a borrower's failure to return a loaned
security when due. Such indemnification does not extend to losses associated
with declines in the value of cash collateral investments. Loans are subject to
termination by the Funds or the borrower at any time, and are, therefore, not
considered to be illiquid investments.
Pursuant to the Agreement, the Fund receives income for lending its securities
either in the form of fees or by earning interest on invested cash collateral,
net of negotiated rebates paid to borrowers and fees paid to the lending agent
for services provided and any other securities lending expenses. Net income of
$10,221 earned from securities lending for the year ended Dec. 31, 2009 is
included in the Statement of Operations. The Fund also continues to earn
interest and dividends on the securities loaned.
8. AFFILIATED MONEY MARKET FUND
The Fund may invest its daily cash balance in RiverSource Short-Term Cash Fund,
a money market fund established for the exclusive use of the funds in the
RiverSource Family of Funds and other institutional clients of RiverSource
Investments. The cost of the Fund's purchases and proceeds from sales of shares
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
of RiverSource Short-Term Cash Fund aggregated $7,396,739 and $7,336,755,
respectively, for the year ended Dec. 31, 2009. The income distributions
received with respect to the Fund's investment in RiverSource Short-Term Cash
Fund can be found in the Statement of Operations and the Fund's invested balance
in RiverSource Short-Term Cash Fund at Dec. 31, 2009, can be found in the
Portfolio of Investments.
9. FEDERAL TAX INFORMATION
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of foreign currency
transactions, passive foreign investment company (PFIC) holdings, re-
characterization of real estate investment trust (REIT) distributions, post-
October losses, foreign tax credits and losses deferred due to wash sales. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend distributions, the
fiscal year in which amounts are distributed may differ from the year that the
income or realized gains (losses) were recorded by the Fund.
In the Statement of Assets and Liabilities, as a result of permanent book-to-tax
differences, excess of distributions over net investment income has been
decreased by $1,555,038 and accumulated net realized loss has been increased by
$1,558,098 resulting in a net reclassification adjustment to increase paid-in
capital by $3,060.
The tax character of distributions paid for the years indicated is as follows:
YEAR ENDED DEC. 31, 2009 2008
------------------------------------------------------------------
Ordinary income $6,488,521 $ 2,631,601
Tax return of capital -- 13,359,685
------------------------------------------------------------------
At Dec. 31, 2009, the components of distributable earnings on a tax basis are as
follows:
Undistributed ordinary income................... $ 667,354
Undistributed accumulated long-term gain........ $ --
Accumulated realized loss....................... $(107,359,605)
Unrealized appreciation (depreciation).......... $ (12,098,227)
--------------------------------------------------------------------------------
30 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
For federal income tax purposes, the Fund had a capital loss carry-over of
$105,171,372 at Dec. 31, 2009, that if not offset by capital gains will expire
as follows:
2015 2016 2017
$6,138,672 $40,987,419 $58,045,281
Because the measurement periods for a regulated investment company's income are
different for excise tax purposes versus income tax purposes, special rules are
in place to protect the amount of earnings and profits needed to support excise
tax distributions. As a result, the Fund is permitted to treat net capital
losses realized between Nov. 1, 2009 and its fiscal year end (post-October loss)
as occurring on the first day of the following tax year. At Dec. 31, 2009, the
Fund had a post-October loss of $2,188,233 that is treated for income tax
purposes as occurring on Jan. 1, 2010.
It is unlikely the Board will authorize a distribution of any net realized
capital gains until the available capital loss carry-over has been offset or
expires. There is no assurance that the Fund will be able to utilize all of its
capital loss carry-over before it expires.
10. RISKS RELATING TO CERTAIN INVESTMENTS
ACTIVE MANAGEMENT RISK
The Fund is actively managed and its performance therefore will reflect in part
the ability of the portfolio managers to select securities and to make
investment decisions that are suited to achieving the Fund's investment
objective. Due to its active management, the Fund could underperform other funds
with similar investment objectives.
NON-DIVERSIFICATION RISK
The Fund is non-diversified. A non-diversified fund may invest more of its
assets in fewer companies than if it were a diversified fund. The Fund may be
more exposed to the risks of loss and volatility than a fund that invests more
broadly.
FOREIGN CURRENCY RISK
Foreign currency risk results from constantly changing exchange rates between
local currency and the U.S. dollar. Whenever the Fund holds securities valued in
a foreign currency or holds the currency, changes in the exchange rate add or
subtract from the value of the investment.
REAL ESTATE INDUSTRY RISK
Because of the Fund's policy of concentrating its investments in securities of
companies operating in the real estate industry, the Fund is more susceptible to
risks associated with the ownership of real estate and with the real estate
industry
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
in general. These risks can include fluctuations in the value of the underlying
properties, defaults by borrowers or tenants, market saturation, decreases in
market rates for rents, and other economic, political, or regulatory occurrences
affecting the real estate industry, including REITs. REITs depend upon
specialized management skills, may have limited financial resources, may have
less trading volume, and may be subject to more abrupt or erratic price
movements than the overall securities markets. REITs are also subject to the
risk of failing to qualify for tax-free pass-through of income. Some REITs
(especially mortgage REITs) are affected by risks similar to those associated
with investments in debt securities including changes in interest rates and the
quality of credit extended.
REITs often do not provide complete tax information until after the calendar
year-end. Consequently, because of the delay, it may be necessary for the Fund
to request permission to extend the deadline for issuance of Forms 1099-DIV
beyond January 31.
RISKS OF FOREIGN INVESTING
Investments in foreign securities involve certain risks not associated with
investments in U.S. companies. Securities markets in certain foreign countries
are not as developed, efficient or liquid as securities markets in the United
States. Therefore, the prices of foreign securities are often volatile and
trading costs are higher. Foreign securities in the Fund's portfolio subject the
Fund to the risks associated with investing in the particular country, including
the political, regulatory, economic, social and other conditions of the country,
as well as fluctuations in its currency and the risks associated with less
developed custody and settlement practices.
Emerging markets risk includes the dramatic pace of change in these countries as
well as the other considerations listed above. Because of the less developed
markets and economics and less mature governments and governmental institutions,
the risks of investing in foreign securities can be intensified in the case of
investments in emerging markets.
SMALL AND MID-SIZED COMPANY RISK
Investments in small and medium size companies often involve greater risks than
investments in larger, more established companies, including less predictable
earnings, lack of experienced management, financial resources, product
diversification and competitive strengths. Securities of small and medium size
companies may trade only over-the-counter or on regional securities exchanges
and the frequency and volume of their trading is substantially less than is
typical of larger companies.
--------------------------------------------------------------------------------
32 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
11. SUBSEQUENT EVENTS
Management has evaluated Fund related events and transactions that occurred
during the period from the date of the Statement of Assets and Liabilities
through Feb. 22, 2010, the date of issuance of the Fund's financial statements.
There were no events or transactions that occurred during the period that
materially impacted the amounts or disclosures in the Fund's financial
statements.
12. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc. was filed in the
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company (now known as
RiverSource) mutual funds and they purport to bring the action derivatively on
behalf of those funds under the Investment Company Act of 1940. The plaintiffs
allege that fees allegedly paid to the defendants by the funds for investment
advisory and administrative services are excessive. The plaintiffs seek remedies
including restitution and rescission of investment advisory and distribution
agreements. The plaintiffs voluntarily agreed to transfer this case to the
United States District Court for the District of Minnesota (the District Court).
In response to defendants' motion to dismiss the complaint, the District Court
dismissed one of plaintiffs' four claims and granted plaintiffs limited
discovery. Defendants moved for summary judgment in April 2007. Summary judgment
was granted in the defendants' favor on July 9, 2007. The plaintiffs filed a
notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit)
on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary
judgment and remanded to the District Court for further proceedings. On August
6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court,
asking the U.S. Supreme Court to stay the District Court proceedings while the
U.S. Supreme Court considers and rules in a case captioned Jones v. Harris
Associates, which involves issues of law similar to those presented in the
Gallus case.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 33
NOTES TO FINANCIAL STATEMENTS (continued) --------------------------------------
Investment Company Act of 1940, and various Minnesota laws. AEFC agreed to pay
disgorgement of $10 million and civil money penalties of $7 million. AEFC also
agreed to retain an independent distribution consultant to assist in developing
a plan for distribution of all disgorgement and civil penalties ordered by the
SEC in accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource Funds' Boards of
Directors/Trustees.
On November 7, 2008, RiverSource Investments, LLC, a subsidiary of Ameriprise
Financial, Inc., acquired J. & W. Seligman & Co. Incorporated (Seligman). In
late 2003, Seligman conducted an extensive internal review concerning mutual
fund trading practices. Seligman's review, which covered the period 2001-2003,
noted one arrangement that permitted frequent trading in certain open-end
registered investment companies managed by Seligman (the Seligman Funds); this
arrangement was in the process of being closed down by Seligman before September
2003. Seligman identified three other arrangements that permitted frequent
trading, all of which had been terminated by September 2002. In January 2004,
Seligman, on a voluntary basis, publicly disclosed these four arrangements to
its clients and to shareholders of the Seligman Funds. Seligman also provided
information concerning mutual fund trading practices to the SEC and the Office
of the Attorney General of the State of New York (NYAG).
In September 2006, the NYAG commenced a civil action in New York State Supreme
Court against Seligman, Seligman Advisors, Inc. (now known as RiverSource Fund
Distributors, Inc.), Seligman Data Corp. and Brian T. Zino (collectively, the
Seligman Parties), alleging, in substance, that the Seligman Parties permitted
various persons to engage in frequent trading and, as a result, the prospectus
disclosure used by the registered investment companies then managed by Seligman
was and had been misleading. The NYAG included other related claims and also
claimed that the fees charged by Seligman to the Seligman Funds were excessive.
On March 13, 2009, without admitting or denying any violations of law or
wrongdoing, the Seligman Parties entered into a stipulation of settlement with
the NYAG and settled the claims made by the NYAG. Under the terms of the
settlement, Seligman paid $11.3 million to four Seligman Funds. This settlement
resolved all outstanding matters between the Seligman Parties and the NYAG. In
addition to the foregoing matter, the New York staff of the SEC indicated in
September 2005 that it was considering recommending to the Commissioners of the
SEC the instituting of a formal action against Seligman and Seligman Advisors,
Inc. relating to frequent trading
--------------------------------------------------------------------------------
34 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
in the Seligman Funds. Seligman responded to the staff in October 2005 that it
believed that any action would be both inappropriate and unnecessary, especially
in light of the fact that Seligman had previously resolved the underlying issue
with the Independent Directors of the Seligman Funds and made recompense to the
affected Seligman Funds. There have been no further developments with the SEC on
this matter.
Ameriprise Financial and certain of its affiliates have historically been
involved in a number of legal, arbitration and regulatory proceedings, including
routine litigation, class actions, and governmental actions, concerning matters
arising in connection with the conduct of their business activities. Ameriprise
Financial believes that the Funds are not currently the subject of, and that
neither Ameriprise Financial nor any of its affiliates are the subject of, any
pending legal, arbitration or regulatory proceedings that are likely to have a
material adverse effect on the Funds or the ability of Ameriprise Financial or
its affiliates to perform under their contracts with the Funds. Ameriprise
Financial is required to make 10-Q, 10-K and, as necessary, 8-K filings with the
Securities and Exchange Commission on legal and regulatory matters that relate
to Ameriprise Financial and its affiliates. Copies of these filings may be
obtained by accessing the SEC website at www.sec.gov.
There can be no assurance that these matters, or the adverse publicity
associated with them, will not result in increased fund redemptions, reduced
sale of fund shares or other adverse consequences to the Funds. Further,
although we believe proceedings are not likely to have a material adverse effect
on the Funds or the ability of Ameriprise Financial or its affiliates to perform
under their contracts with the Funds, these proceedings are subject to
uncertainties and, as such, we are unable to estimate the possible loss or range
of loss that may result. An adverse outcome in one or more of these proceedings
could result in adverse judgments, settlements, fines, penalties or other relief
that could have a material adverse effect on the consolidated financial
condition or results of operations of Ameriprise Financial.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource LaSalle International Real Estate
Fund (the Fund) (formerly Seligman LaSalle International Real Estate Fund) as of
December 31, 2009, and the related statements of operations, changes in net
assets, and the financial highlights for the year then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit. The statement of changes
in net assets and financial highlights of the Fund for the periods presented
through December 31, 2008, were audited by other auditors whose report dated
February 27, 2009, expressed an unqualified opinion on those financial
statements and financial highlights.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2009, by correspondence with the custodian
and brokers, or by other appropriate auditing procedures where replies from
brokers were not received. We believe that our audit provides a reasonable basis
for our opinion.
--------------------------------------------------------------------------------
36 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
In our opinion, the 2009 financial statements and financial highlights audited
by us as referred to above present fairly, in all material respects, the
financial position of RiverSource LaSalle International Real Estate Fund at
December 31, 2009, the results of its operations, the changes in its net assets
and the financial highlights for the year then ended, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
February 22, 2010
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 37
FEDERAL INCOME TAX INFORMATION -------------------------------------------------
(UNAUDITED)
The Fund is required by the Internal Revenue Code of 1986 to tell its
Stockholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below are reported to you on Form 1099-DIV, Dividends
and Distributions. Stockholders should consult a tax advisor on how to report
distributions for state and local tax purposes.
Fiscal year ended Dec. 31, 2009
INCOME DISTRIBUTIONS - the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 19.75%
Dividends Received Deduction for corporations................ 1.21%
U.S. Government Obligations.................................. 0.00%
Foreign Tax Credit........................................... $279,271
Foreign Source Income........................................ $2,550,822
The Fund designates as distributions of long-term gains, to the extent necessary
to fully distribute such capital gains, earnings and profits distributed to
Stockholders on the sale of shares.
--------------------------------------------------------------------------------
38 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Stockholders elect a Board that oversees the Fund's operations. The Board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the Board. The following is a list of the Fund's Board members.
The RiverSource Family of Funds that each Board member oversees consists of 132
funds, which includes 100 RiverSource funds and 32 Seligman funds. Fund Board
members serve until their terms expire and successors are elected and qualify,
until he or she reaches the mandatory retirement age established by the Board,
or until the fifteenth anniversary of the first Fund Board meeting they attend
as members of the Board.
INDEPENDENT BOARD MEMBERS
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2008 Attorney
Minneapolis, MN 55402
Age 55
------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Family of Funds, 1999-2006; former None
901 S. Marquette Ave. 2008 Governor of Minnesota
Minneapolis, MN 55402
Age 75
------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2008 Leadership (consulting company)
Minneapolis, MN 55402
Age 55
------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2008 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley University
Age 59
------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 2008
Minneapolis, MN 55402
Age 75
------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2008 Insurance
Minneapolis, MN 55402
Age 74
------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Chair of the Board President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. since 2008, College Inc. (manufactures
Minneapolis, MN 55402 Board member since irrigation systems)
Age 71 2008
------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 39
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
INDEPENDENT BOARD MEMBERS (CONTINUED)
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
------------------------------------------------------------------------------------------------------------------------------
John F. Maher Board member since Retired President and Chief Executive Officer and None
901 S. Marquette Ave. 2007 former Director, Great Western Financial Corporation
Minneapolis, MN 55402 (financial services), 1986-1997
Age 66
------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2008 real estate and asset management company)
Minneapolis, MN 55402
Age 57
------------------------------------------------------------------------------------------------------------------------------
Leroy C. Richie Board member since Counsel, Lewis & Munday, P.C. since 1987; Vice Digital Ally, Inc.
901 S. Marquette Ave. 2007 President and General Counsel, Automotive Legal (digital imaging);
Minneapolis, MN 55402 Affairs, Chrysler Corporation, 1990-1997 Infinity, Inc. (oil
Age 68 and gas exploration
and production); OGE
Energy Corp. (energy
and energy services)
------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2008 since 2003 (biotechnology); former President, Aquila Pharmaceuticals,
Minneapolis, MN 55402 Biopharmaceuticals Inc.
Age 65 (biotechnology);
Healthways, Inc.
(health management
programs)
------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
40 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
--------------------------------------------------------------------------------
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2008, Officer, Ameriprise Financial, Inc. since 2005;
Financial Center Vice President since President, Chairman of the Board and Chief Investment
Minneapolis, MN 55474 2008 Officer, RiverSource Investments, LLC since 2001;
Age 49 Director, President and Chief Executive Officer,
Ameriprise Certificate Company since 2006; Chairman of
the Board and Chief Executive Officer, RiverSource
Distributors, Inc. since 2006 and of RiverSource Fund
Distributors, Inc. since 2008; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc., 2001-2005
------------------------------------------------------------------------------------------------------------------------------
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments or Ameriprise Financial.
The Board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. The officers serve at the
pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the
Fund's other officers are:
FUND OFFICERS
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2008 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center and Director and Vice President -- Asset Management,
Minneapolis, MN 55474 Products and Marketing, RiverSource Distributors, Inc.
Age 44 since 2006 and of RiverSource Fund Distributors, Inc.
since 2008; Managing Director and Global Head of
Product, Morgan Stanley Investment Management, 2004-
2006; President, Touchstone Investments, 2002-2004
--------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2008 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 45 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 41
BOARD MEMBERS AND OFFICERS (continued) -----------------------------------------
FUND OFFICERS (CONTINUED)
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
--------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Chief Administrative Officer, RiverSource Investments,
5228 Ameriprise Financial 2008 LLC since 2009; Vice President -- Asset Management and
Center Minneapolis, MN Trust Company Services, RiverSource Investments, LLC,
55474 2006-2009; Vice President -- Operations and Compliance,
Age 44 RiverSource Investments, LLC, 2004-2006; Director of
Product Development -- Mutual Funds, Ameriprise
Financial, Inc., 2001-2004
--------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2008 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006 and of
Minneapolis, MN 55474 RiverSource Fund Distributors, Inc. since 2008
Age 54
--------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2008 RiverSource Distributors, Inc. and Chief Legal Officer
Minneapolis, MN 55474 and Assistant Secretary, RiverSource Investments, LLC
Age 50 since 2006; Chief Counsel, RiverSource Fund
Distributors, Inc. since 2008; Vice President, General
Counsel and Secretary, Ameriprise Certificate Company
since 2005; Vice President -- Asset Management
Compliance, Ameriprise Financial, Inc., 2004-2005;
Senior Vice President and Chief Compliance Officer,
USBancorp Asset Management, 2002-2004
--------------------------------------------------------------------------------------------------------
Eleanor T.M. Hoagland Chief Compliance Chief Compliance Officer, RiverSource Investments, LLC,
100 Park Avenue Officer since 2008 Ameriprise Certificate Company and RiverSource Service
New York, NY 10010 Corporation since 2009; Chief Compliance Officer for
Age 58 each of the Seligman funds since 2004; Money Laundering
Prevention Officer and Identity Theft Prevention
Officer for each of the Seligman funds, 2008-2009;
Managing Director, J. & W. Seligman & Co. Incorporated
and Vice-President for each of the Seligman funds,
2004-2008
--------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Vice President -- Compliance, Ameriprise Financial,
2934 Ameriprise Financial Prevention Officer Inc. since 2008; Anti-Money Laundering Officer,
Center since 2008 and Ameriprise Financial, Inc. since 2005; Compliance
Minneapolis, MN 55474 Identity Theft Director, Ameriprise Financial, Inc., 2004-2008
Age 46 Prevention Officer
since 2008
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
42 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT
PROXY VOTING -------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with the procedures that can be found by
visiting riversource.com/funds. Information regarding how the Fund voted proxies
relating to portfolio securities is filed with the SEC by August 31 for the most
recent 12-month period ending June 30 of that year, and is available without
charge by visiting riversource.com/funds; or searching the website of the SEC at
www.sec.gov.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2009 ANNUAL REPORT 43
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND
200 Ameriprise Financial Center
Minneapolis, MN 55474
RIVERSOURCE.COM/FUNDS
You should consider the investment objectives, risks,
charges, and expenses of the Fund carefully before
investing. You can obtain the Fund's most recent periodic
reports and other regulatory filings by contacting your
financial advisor or American Stock Transfer & Trust Company
at 800-937-5449. These reports and other filings can also be
found on the Securities and Exchange Commission's EDGAR
Database. You should read these reports and other filings
carefully before investing.
(RIVERSOURCE INVESTMENTS LOGO) (C)2010 RiverSource Investments, LLC. SL-9909 A (3/10)
Item 2. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial
officer. A copy of the code of ethics is filed as an exhibit to this
form N-CSR.
(b) During the period covered by this report, there were not any
amendments to the provisions of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any
implicit or explicit waivers to the provisions of the code of ethics
adopted in 2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Pamela G. Carlton, Jeffrey Laikind, John F. Maher and Anne P.
Jones, each qualify as audit committee financial experts.
Item 4. Principal Accountant Fees and Services
(a) Audit Fees. The fees for the year ended Dec. 31, to Ernst & Young LLP for
professional services rendered for the audit of the annual financial
statements for RiverSource LaSalle International Real Estate Fund, Inc.
were as follows:
2009 -- $34,625
(b) Audit-Related Fees. The fees for the year ended Dec. 31, to Ernst & Young
LLP for additional audit-related services rendered related to the
semiannual financial statement review and other consultations and services
required to complete the audit for RiverSource LaSalle International Real
Estate Fund, Inc. were as follows:
2009 -- $2,109
(c) Tax Fees. The fees for the year ended Dec. 31, to Ernst & Young LLP for
tax compliance related services rendered for RiverSource LaSalle
International Real Estate Fund, Inc. were as follows:
2009 -- $3,498
(d) All Other Fees. The fees for the year ended Dec. 31, to Ernst & Young LLP
for additional professional services rendered for RiverSource LaSalle
International Real Estate Fund, Inc. were as follows:
2009 -- $0
(e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley
pre-approval requirements, all services to be performed by Ernst & Young
LLP for the registrant and to the registrant's investment adviser and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant must
be pre-approved by the audit committee.
(e) (2) 100% of the services performed for items (b) through (d) above during
2009 were pre-approved by the audit committee.
(f) Not applicable.
(g) Non-Audit Fees. The fees for the year ended Dec. 31, to Ernst & Young LLP
by the registrant for non-audit fees and by the registrant's investment
adviser, and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant
were as follows:
2009 -- $804,293
(h) 100% of the services performed in item (g) above during 2009 were
pre-approved by the Ameriprise Financial Audit Committee and/or the
RiverSource Mutual Funds Audit Committee.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. Investments.
(a) The complete schedule of investments is included in Item 1 of this Form
N-CSR.
(b) Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
GENERAL GUIDELINES, POLICIES AND PROCEDURES
The funds uphold a long tradition of supporting sound and principled corporate
governance. The Board, which consists of a majority of independent Board
members, determines policies and votes proxies. The funds' investment manager,
RiverSource Investments, and the funds' administrator, Ameriprise Financial,
provide support to the Board in connection with the proxy voting process.
GENERAL GUIDELINES
CORPORATE GOVERNANCE MATTERS -- The Board supports proxy proposals that it
believes are tied to the interests of shareholders and votes against proxy
proposals that appear to entrench management. For example:
- The Board generally votes in favor of proposals for an independent
chairman or, if the chairman is not independent, in favor of a lead
independent director.
- The Board supports annual election of all directors and proposals to
eliminate classes of directors.
- In a routine election of directors, the Board will generally vote
with management's recommendations because the Board believes that
management and nominating committees of independent directors are in
the best position to know what qualifications are required of
directors to form an effective board. However, the Board will
generally vote against a nominee who has been assigned to the audit,
compensation, or nominating committee if the nominee is not
independent of management based on established criteria. The Board
will also withhold support for any director who fails to attend 75%
of meetings or has other activities that appear to interfere with
his or her ability to commit sufficient attention to the company
and, in general, will vote against nominees who are determined to
have been involved in options backdating.
- The Board generally supports proposals requiring director nominees
to receive a majority of affirmative votes cast in order to be
elected to the board, and opposes cumulative voting based on the
view that each director elected should represent the interests of
all shareholders.
- Votes in a contested election of directors are evaluated on a
case-by-case basis. In general, the Board believes that incumbent
management and nominating committees, with access to more and better
information, are in the best position to make strategic business
decisions. However, the Board will consider an opposing slate if it
makes a compelling business case for leading the company in a new
direction.
SHAREHOLDER RIGHTS PLANS -- The Board generally supports shareholder rights
plans based on a belief that such plans force uninvited bidders to negotiate
with a company's board. The Board believes these negotiations allow time for the
company to maximize value for shareholders by forcing a higher premium from a
bidder, attracting a better bid from a competing bidder or allowing the company
to pursue its own strategy for enhancing shareholder value. The Board supports
proposals to submit shareholder rights plans to shareholders and supports
limiting the vote required for approval of such plans to a majority of the votes
cast.
AUDITORS -- The Board values the independence of auditors based on established
criteria. The Board supports a reasonable review of matters that may raise
concerns regarding an auditor's service that may cause the Board to vote against
a management recommendation, including, for example, auditor involvement in
significant financial restatements, options backdating, material weaknesses in
control, attempts to limit auditor liability or situations where independence
has been compromised.
STOCK OPTION PLANS AND OTHER MANAGEMENT COMPENSATION ISSUES -- The Board expects
company management to give thoughtful consideration to providing competitive
long-term employee incentives directly tied to the interest of shareholders. The
Board votes against proxy proposals that it believes dilute shareholder value
excessively. The Board believes that equity compensation awards can be a useful
tool, when not abused, for retaining employees and giving them incentives to
engage in conduct that will improve the performance of the company. In this
regard, the Board generally favors minimum holding periods of stock obtained by
senior management pursuant to an option plan and will vote against compensation
plans for executives that it deems excessive.
SOCIAL AND CORPORATE POLICY ISSUES -- The Board believes proxy proposals should
address the business interests of the corporation. Shareholder proposals
sometime seek to have the company disclose or amend certain business practices
based purely on social or environmental issues rather than compelling business
arguments. In general, the Board recognizes our fund shareholders are likely to
have differing views of social and environmental issues and believes that these
matters are primarily the responsibility of a company's management and its board
of directors.
POLICIES AND PROCEDURES
The policy of the Board is to vote all proxies of the companies in which a fund
holds investments. Because of the volume and complexity of the proxy voting
process, including inherent inefficiencies in the process that are outside the
control of the Board or the Proxy Team (below), not all proxies may be voted.
The Board has implemented policies and procedures that have been reasonably
designed to vote proxies and to ensure that there are no conflicts between
interests of a fund's shareholders and those of the funds' principal
underwriters, RiverSource Investments, or other affiliated persons. In
exercising its proxy voting responsibilities, the Board may rely upon the
research or recommendations of one or more third party service providers.
The administration of the proxy voting process is handled by the RiverSource
Proxy Administration Team ("Proxy Team"). In exercising its responsibilities,
the Proxy Team may rely upon one or more third party service providers. The
Proxy Team assists the Board in identifying situations where its guidelines do
not clearly require a vote in a particular manner and assists in researching
matters and making voting recommendations. RiverSource Investments may recommend
that a proxy be voted in a manner contrary to the Board's guidelines. In making
recommendations to the Board about voting on a proposal, the investment manager
relies on its own investment personnel (or the investment personnel of a fund's
subadviser(s)) and information obtained from an independent research firm. The
investment manager makes the recommendation in writing. The process requires
that Board members who are independent from the investment manager consider the
recommendation and decide how to vote the proxy proposal or establish a protocol
for voting the proposal.
On an annual basis, or more frequently as determined necessary, the Board
reviews recommendations to revise the existing guidelines or add new guidelines.
Recommendations are based on, among other things, industry trends and the
frequency that similar proposals appear on company ballots.
The Board considers management's recommendations as set out in the company's
proxy statement. In each instance in which a fund votes against management's
recommendation (except when withholding votes from a nominated director), the
Board sends a letter to senior management of the company explaining the basis
for its vote. This permits both the company's management and the Board to have
an opportunity to gain better insight into issues presented by the proxy
proposal(s).
VOTING IN COUNTRIES OUTSIDE THE UNITED STATES (NON-U.S. COUNTRIES) -- Voting
proxies for companies not domiciled in the United States may involve greater
effort and cost due to the variety of regulatory schemes and corporate
practices. For example, certain non-U.S. countries require securities to be
blocked prior to a vote, which means that the securities to be voted may not be
traded within a specified number of days before the shareholder meeting. The
Board typically will not vote securities in non-U.S. countries that require
securities to be blocked as the need for liquidity of the securities in the
funds will typically outweigh the benefit of voting. There may be additional
costs associated with voting in non-U.S. countries such that the Board may
determine that the cost of voting outweighs the potential benefit.
SECURITIES ON LOAN -- The Board will generally refrain from recalling securities
on loan based upon its determination that the costs and lost revenue to the
funds, combined with the administrative effects of recalling the securities,
generally outweigh the benefit of voting the proxy. While neither the Board nor
the funds' administrator assesses the economic impact and benefits of voting
loaned securities on a case-by-case basis, situations may arise where the Board
requests that loaned securities be recalled in order to vote a proxy. In this
regard, if a proxy relates to matters that may impact the nature of a company,
such as a proposed merger or acquisition, and the funds' ownership position is
more significant, the Board has established a guideline to direct the funds'
administrator to use its best efforts to recall such securities based upon its
determination that, in these situations, the benefits of voting such proxies
generally outweigh the costs or lost revenue to the funds, or any potential
adverse administrative effects to the funds, of not recalling such securities.
INVESTMENT IN AFFILIATED FUNDS -- Certain funds may invest in shares of other
Seligman funds (referred to in this context as "underlying funds") and may own
substantial portions of these underlying funds. The proxy policy of the funds is
to ensure that direct public shareholders of underlying funds control the
outcome of any shareholder vote. To help manage this potential conflict of
interest, recognizing that the direct public shareholders of these underlying
funds may represent only a minority interest, the policy of the funds is to vote
proxies of the underlying funds in the same proportion as the vote of the direct
public shareholders. If there are no direct public shareholders of an underlying
fund, the policy is to cast votes in accordance with instructions from the
independent members of the Board.
A note with respect to underlying funds: The underlying funds and the
funds-of-funds share the same officers, Board members, and investment manager,
RiverSource Investments. The funds-of-funds do not invest in an underlying fund
for the purpose of exercising management or control; however, from time to time,
investments by the funds-of-funds in a fund may represent a significant portion
of a fund. Because the funds-of-funds may own a substantial portion of the
shares of a fund, procedures have been put into place to assure that public
shareholders will determine the outcome of all actions taken at underlying fund
shareholder meetings.
Information regarding how the Fund voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30, is available
(i) without charge upon request by calling toll free (800) 221-2450 in the US or
collect (212) 682-7600 outside the US and (ii) on the SEC's website at
www.sec.gov. Information for each new 12-month period ending June 30 will be
available no later than August 31 of that year.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Information pertaining to the portfolio managers of the registrant, as of Dec.
31, 2009, is set forth below.
PORTFOLIO OTHER ACCOUNTS ASSETS UNDER PERFORMANCE SECURITIES
MANAGER MANAGED(A) MANAGEMENT BASED ACCOUNTS OWNERSHIP
-------------------- ---------------- ---------------- ------------------ ----------------
Stan J. Kraska 2 RICs $41.0 million 4 other accounts $10,001-
14 PIVs $4.15 billion ($539.0 M) $50,000
29 other $2.83 billion
accounts
George J. Noon 2 RICs $41.0 million 4 other accounts None
14 PIVs $4.15 billion ($539.0 M)
28 other $2.83 billion
accounts
Keith R. Pauley 2 RICs $41.0 million 4 other accounts $10,001-
14 PIVs $4.15 billion ($539.0 M) $50,000
28 other $2.83 billion
accounts
Ernst Jan de 1 RIC $15 million 2 other accounts None
Leeuw 16 PIVs $4.20 billion ($426.0 M)
17 other $1.31 billion
accounts
(a) RIC refers to a Registered Investment Company; PIV refers to a Pooled
Investment Vehicle.
Compensation:
Compensation for Investment Team Members consists of a base salary and incentive
compensation that is based primarily upon performance of the particular
Investment Team and that of the subadviser with which an Investment Team Member
is employed, and meeting financial objectives for the Investment Team. The
annual performance of
clients' portfolios and/or the performance of stock recommendations against a
sector index (generally the NAREIT-Equity REITs Index or the Wilshire REIT Index
in respect of the Investment Team Members of LaSalle Securities US, or the EPRA
Euro Zone Index and EPRA Europe Index in respect of the Investment Team Member
of LaSalle Securities B.V.) is one factor included in professional employee
evaluations, but compensation is not directly linked to these performance
criteria.
In addition, equity ownership in Jones Lang LaSalle, the subadvisers'
publicly-traded parent, is available to and expected of senior professionals.
The major components of Jones Lang LaSalle's comprehensive equity ownership
program are: (1) Stock Ownership Program - credits employees with a portion of
their incentive compensation in the form of restricted stock; (2) Employee Stock
Purchase Plan -- program through which employees may elect to purchase shares of
Jones Land LaSalle through a payroll deduction plan (available to employees of
LaSalle Securities US) and; (3) Stock Award Incentive Plan rewards key employees
of the firm with stock awards, in the form of restricted stock units, based on
the strength of their individual contributions.
Conflicts of Interest:
Since the Investment Team manages other accounts in addition to the Funds,
conflicts of interest may arise in connection with the Investment Team's
management of a Fund's investments on the one hand and the investments of such
other accounts on the other hand. Conflicts may arise related to: (1)
aggregation and allocation of securities transactions (including initial public
offerings), (2) the timing of purchases and sales of the same security for
different accounts and (3) different advice for different accounts, primarily
driven by the account's investment objectives. LaSalle Securities US and LaSalle
Securities B.V. believe that conflicts are largely mitigated by their respective
Code of Ethics, which prohibits ownership by the Investment Team Members (except
through a mutual fund) of securities of the type the Funds invest in, and
various policies and procedures it has adopted, including the master trading
schedule it maintains to proportionately allocate purchases and sales to each
account by tracking the target weight for each holding and establishing the
required shares to reach those targets.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Total Number of
Total Shares Purchased as Maximum Number of
Number of Average Part of Publicly Shares that May Yet Be
Shares Price Paid Announced Plans or Purchased Under the
Period Purchased Per Share Programs(1) Plans or Programs(1)
---------------------- --------------- --------------- -------------------- -----------------------
7-01-09 to 7-31-09 3,800 $6.30 3,800 N/A
8-01-09 to 8-31-09 64,141 6.90 64,141 N/A
9-01-09 to 9-30-09 -- -- -- N/A
10-01-09 to 10-31-09 38,429 7.36 38,429 N/A
11-01-09 to 11-30-09 58,425 7.27 58,425 N/A
12-01-09 to 12-31-09 -- -- -- N/A
(1) As stated in the registrant's initial registration statement dated May 24,
2007, the registrant may purchase its shares of Common Stock in the open
market, when such shares are trading at a discount to net asset value, in
an amount approximately sufficient to offset the growth in the number of
shares of its Common Stock attributable to the reinvestment of the portion
of its distributions to stockholders that are attributable to distributions
received by the Fund from its underlying portfolio investments.
Item 10. Submission of matters to a vote of security holders. Not applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing date
of this Form N-CSR, the registrant's Principal Financial Officer and
Principal Executive Officer have concluded that those disclosure
controls and procedures provide reasonable assurance that the material
information required to be disclosed by the registrant on this report
is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules
and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a)(1) Code of ethics as applies to the Registrant's principal
executive officer and principal financial officer, as required to be
disclosed under Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(a)(2) Separate certification for the Registrant's principal executive
officer and principal financial officer, as required by Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are attached as EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer
and principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) RiverSource LaSalle International Real Estate Fund, Inc.
By /s/ Patrick T. Bannigan
-------------------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date March 5, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
-------------------------------
Patrick T. Bannigan
President and Principal Executive Officer
Date March 5, 2010
By /s/ Jeffrey P. Fox
-------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial Officer
Date March 5, 2010