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.
(Exact name of registrant as specified in charter)
50606 Ameriprise Financial Center, Minneapolis, Minnesota 55474
(Address of principal executive offices) (Zip code)
Scott R. Plummer - 5228 Ameriprise Financial Center, Minneapolis, MN 55474
(Name and address of agent for service)
Registrant's telephone number, including area code: (612) 671-1947
Date of fiscal year end: December 31
Date of reporting period: June 30, 2010
Semiannual Report
(COLUMBIA MANAGEMENT LOGO)
RIVERSOURCE
LASALLE INTERNATIONAL REAL ESTATE FUND
--------------------------------------------------------------------------------
SEMIANNUAL REPORT FOR THE PERIOD ENDED
JUNE 30, 2010
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND SEEKS LONG-TERM CAPITAL
APPRECIATION AND, SECONDLY, CURRENT INCOME.
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
TABLE OF CONTENTS --------------------------------------------------------------
Your Fund at a Glance.............. 3
Portfolio of Investments........... 7
Statement of Assets and
Liabilities...................... 14
Statement of Operations............ 15
Statements of Changes in Net
Assets........................... 16
Financial Highlights............... 17
Notes to Financial Statements...... 19
Approval of Investment Management
Services Agreement............... 34
Proxy Results...................... 37
Proxy Voting....................... 39
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2 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
YOUR FUND AT A GLANCE ----------------------------------------------------------
(UNAUDITED)
FUND SUMMARY
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> RiverSource LaSalle International Real Estate Fund (the Fund) Common Stock
decreased 7.82% based on net asset value (excluding sales charge) and 3.37%
based on market price for the six months ended June 30, 2010.
> The Fund underperformed the FTSE NAREIT Equity REITs Index, which rose 5.56%
for the six-month period.
> The Fund underperformed the UBS Global Investors Index, which declined 2.13%
for the same period.
> The Fund outperformed the UBS Global Investors (excluding US) Index, which
fell 9.42% for the same time frame.
ANNUALIZED TOTAL RETURNS (for period ended June 30, 2010)
--------------------------------------------------------------------------------
SINCE
INCEPTION
6 MONTHS* 1 YEAR 3 YEARS 5/29/07
----------------------------------------------------------------------
RiverSource LaSalle
International Real Estate
Fund
Market Price -3.37% +35.85% -26.13% -25.39%(a)
----------------------------------------------------------------------
Net Asset Value:
----------------------------------------------------------------------
Without sales charge -7.82% +21.79% -18.43% -20.22%(b)
----------------------------------------------------------------------
With sales charge -12.13% +16.17% -19.73% -21.58%(b)
----------------------------------------------------------------------
FTSE NAREIT Equity REITs
Index(1) (unmanaged) +5.56% +53.90% -9.00% -10.85%
----------------------------------------------------------------------
UBS Global Investors Index(2)
(unmanaged) -2.13% +37.02% -13.82% -15.05%
----------------------------------------------------------------------
UBS Global Investors
(excluding US) Index(3)
(unmanaged) -9.42% +20.81% -17.90% -18.52%
----------------------------------------------------------------------
* Not annualized.
(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.
The performance information shown represents past performance and is not a
guarantee of future results. The investment return and principal value of your
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 3
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
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 (through
September 26, 2010) or thereafter columbiamanagement.com.
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.
(1) 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.
(2) 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.
(3) The UBS Global Investors (excluding US) 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. This index represents real estate
securities in over 21 countries, excluding the United States.
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4 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
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PRICE PER SHARE
--------------------------------------------------------------------------------
JUNE 30, 2010 MARCH 31, 2010 DEC. 31, 2009
----------------------------------------------------------------------------
Market price $6.98 $7.76 $7.39
----------------------------------------------------------------------------
Net asset value 8.19 9.20 9.09
----------------------------------------------------------------------------
DISTRIBUTIONS PAID PER COMMON SHARE
--------------------------------------------------------------------------------
PAYABLE DATE PER SHARE AMOUNT
-----------------------------------------------------------------
March 29, 2010 $0.085
-----------------------------------------------------------------
June 21, 2010 0.085
-----------------------------------------------------------------
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.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 5
YOUR FUND AT A GLANCE (continued) ----------------------------------------------
COUNTRY BREAKDOWN(1) (at June 30, 2010)
---------------------------------------------------------------------
Australia 20.3%
------------------------------------------------
Canada 4.5%
------------------------------------------------
Finland 0.8%
------------------------------------------------
France 10.9%
------------------------------------------------
Hong Kong 8.1%
------------------------------------------------
Japan 10.8%
------------------------------------------------
Netherlands 4.9%
------------------------------------------------
Norway 0.5%
------------------------------------------------
Singapore 5.6%
------------------------------------------------
Sweden 2.4%
------------------------------------------------
Switzerland 1.5%
------------------------------------------------
United Kingdom 12.6%
------------------------------------------------
United States 17.0%
------------------------------------------------
Other(2) 0.1%
------------------------------------------------
(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.
TOP TEN HOLDINGS(1) (at June 30, 2010)
---------------------------------------------------------------------
Westfield Group (Australia) 8.0%
------------------------------------------------
Unibail-Rodamco SE (France) 7.9%
------------------------------------------------
Hongkong Land Holdings Ltd. (Hong Kong) 3.6%
------------------------------------------------
British Land Co. PLC (United Kingdom) 3.5%
------------------------------------------------
Dexus Property Group (Australia) 3.2%
------------------------------------------------
Mirvac Group (Australia) 2.9%
------------------------------------------------
Nippon Building Fund, Inc. (Japan) 2.9%
------------------------------------------------
The Link REIT (Hong Kong) 2.5%
------------------------------------------------
CapitaLand Ltd. (Singapore) 2.2%
------------------------------------------------
Canadian Real Estate Investment Trust
(Canada) 2.2%
------------------------------------------------
(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.
--------------------------------------------------------------------------------
6 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JUNE 30, 2010 (UNAUDITED)
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
COMMON STOCKS (98.5%)(c)
ISSUER SHARES VALUE(a)
AUSTRALIA (20.0%)
CFS Retail Property Trust 411,231 $649,584
Charter Hall Office REIT 3,404,405(d) 710,442
Commonwealth Property Office Fund 1,376,012 1,068,315
Dexus Property Group 3,846,731 2,466,755
GPT Group 625,818 1,460,235
Mirvac Group 2,034,986 2,220,956
Stockland 251,864 781,178
Westfield Group 600,237 6,095,481
---------------
Total 15,452,946
-------------------------------------------------------------------------------------
CANADA (4.4%)
Canadian Real Estate Investment Trust 64,421 1,681,179
First Capital Realty, Inc. 58,402 746,690
Northern Property Real Estate Investment
Trust 13,079 284,802
RioCan Real Estate Investment Trust 40,412 722,822
---------------
Total 3,435,493
-------------------------------------------------------------------------------------
FINLAND (0.8%)
Citycon OYJ 60,709(d) 178,595
Sponda OYJ 153,422 460,986
---------------
Total 639,581
-------------------------------------------------------------------------------------
FRANCE (10.8%)
Klepierre 41,749 1,153,343
Mercialys SA 19,175 543,903
Societe Immobiliere de Location pour
l'Industrie et le Commerce 6,406 632,337
Unibail-Rodamco SE 36,934 6,018,844
---------------
Total 8,348,427
-------------------------------------------------------------------------------------
HONG KONG (8.0%)
Great Eagle Holdings Ltd. 193,068 490,842
Hongkong Land Holdings Ltd. 554,141(d) 2,739,130
Hysan Development Co., Ltd. 294,368(d) 832,214
Sun Hung Kai Properties Ltd. 17,000 232,513
The Link REIT 765,515 1,899,696
---------------
Total 6,194,395
-------------------------------------------------------------------------------------
JAPAN (10.6%)
Aeon Mall Co., Ltd. 77,800(d) 1,541,873
Japan Real Estate Investment Corp. 205 1,670,509
Mitsubishi Estate Co., Ltd. 59,000 821,704
Mitsui Fudosan Co., Ltd. 82,000 1,141,767
Nippon Building Fund, Inc. 277 2,198,735
NTT Urban Development Corp. 399(d) 317,108
Tokyu REIT, Inc. 99 514,547
---------------
Total 8,206,243
-------------------------------------------------------------------------------------
NETHERLANDS (4.8%)
Corio NV 33,218 1,612,901
Eurocommercial Properties NV 29,254 932,611
Vastned Retail NV 11,344 571,486
Wereldhave NV 8,617 639,371
---------------
Total 3,756,369
-------------------------------------------------------------------------------------
NORWAY (0.5%)
Norwegian Property ASA 292,831(b) 382,576
-------------------------------------------------------------------------------------
See accompanying Notes to Portfolio of Investments.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 7
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
COMMON STOCKS (CONTINUED)
ISSUER SHARES VALUE(a)
SINGAPORE (5.6%)
Ascendas Real Estate Investment Trust 586,276(d) $757,294
CapitaLand Ltd. 663,000(d) 1,690,975
CapitaMalls Asia Ltd. 668,000 998,961
Suntec Real Estate Investment Trust 912,139 853,655
---------------
Total 4,300,885
-------------------------------------------------------------------------------------
SWEDEN (2.4%)
Castellum AB 88,667 803,663
Hufvudstaden AB, Series A 78,600 599,183
Wihlborgs Fastigheter AB 23,574(d,f) 446,700
---------------
Total 1,849,546
-------------------------------------------------------------------------------------
SWITZERLAND (1.5%)
PSP Swiss Property AG 19,140(b) 1,145,025
-------------------------------------------------------------------------------------
UNITED KINGDOM (12.4%)
Atrium European Real Estate Ltd. 195,387 840,459
Big Yellow Group PLC 123,196 540,860
British Land Co. PLC 416,266 2,687,766
Derwent London PLC 47,610 884,884
Development Securities PLC 43,093 161,542
Hammerson PLC 288,492 1,470,061
Helical Bar PLC 42,190 173,170
Land Securities Group PLC 84,923 702,520
Metric Property Investments PLC 76,616(b) 122,436
Minerva PLC 152,809(b) 246,537
Segro PLC 215,547 812,378
Shaftesbury PLC 178,981 957,072
---------------
Total 9,599,685
-------------------------------------------------------------------------------------
UNITED STATES (16.7%)
Acadia Realty Trust 39,056(d) 656,922
AMB Property Corp. 23,382(d) 554,387
AvalonBay Communities, Inc. 11,713(d) 1,093,643
BioMed Realty Trust, Inc. 59,790(d) 962,021
Camden Property Trust 22,150 904,828
Douglas Emmett, Inc. 71,558(d) 1,017,555
EastGroup Properties, Inc. 13,775(d) 490,115
Essex Property Trust, Inc. 3,300(d) 321,882
Extra Space Storage, Inc. 28,873(d) 401,335
Host Hotels & Resorts, Inc. 33,741(d) 454,829
Kimco Realty Corp. 78,082 1,049,422
Mack-Cali Realty Corp. 34,212 1,017,123
Public Storage 7,562 664,775
Senior Housing Properties Trust 47,137 947,925
Simon Property Group, Inc. 7,911 638,813
Taubman Centers, Inc. 29,172(d) 1,097,741
Ventas, Inc. 14,937 701,292
---------------
Total 12,974,608
-------------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost: $86,985,112) $76,285,779
-------------------------------------------------------------------------------------
MONEY MARKET FUND (0.1%)
SHARES VALUE(a)
RiverSource Short-Term Cash Fund, 0.276% 62,525(g) $62,525
-------------------------------------------------------------------------------------
TOTAL MONEY MARKET FUND
(Cost: $62,525) $62,525
-------------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON
LOAN (13.8%)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
REPURCHASE AGREEMENTS(E)
Goldman Sachs & Co.
dated 06-30-10, matures 07-01-10,
repurchase price
$8,726,710 0.030% $8,726,703 $8,726,703
See accompanying Notes to Portfolio of Investments.
--------------------------------------------------------------------------------
8 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
INVESTMENTS OF CASH COLLATERAL RECEIVED FOR SECURITIES ON
LOAN (CONTINUED)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
REPURCHASE AGREEMENTS (CONT.)
Mizuho Securities USA, Inc.
dated 06-30-10, matures 07-01-10,
repurchase price
$2,000,003 0.050% $2,000,000 $2,000,000
---------------
Total 10,726,703
-------------------------------------------------------------------------------------
TOTAL INVESTMENTS OF CASH COLLATERAL
RECEIVED FOR SECURITIES ON LOAN
(Cost: $10,726,703) $10,726,703
-------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $97,774,340)(h) $87,075,007
=====================================================================================
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 June 30, 2010:
PERCENTAGE OF
INDUSTRY NET ASSETS VALUE(A)
-----------------------------------------------------------------------
Diversified Financial Services 0.2% $122,436
Real Estate Investment Trusts (REITs)(1) 76.4 59,171,130
Real Estate Management & Development 21.9 16,992,213
Other(2) 13.9 10,789,228
-----------------------------------------------------------------------
Total $87,075,007
-----------------------------------------------------------------------
(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 June 30, 2010, security was partially or fully on loan. See Note 7 to
the financial statements.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 9
PORTFOLIO OF INVESTMENTS (continued) -------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONTINUED)
(e) The table below represents securities received as collateral for repurchase
agreements. This collateral, which is generally high quality short-term
obligations, is deposited with the Fund's custodian and, pursuant to the
terms of the repurchase agreement, must have an aggregate market value
greater than or equal to the repurchase price plus accrued interest at all
times. The market value of securities held as collateral for repurchase
agreements is monitored on a daily basis to ensure the existence of the
proper level of collateral.
GOLDMAN SACHS & CO. (0.030%)
SECURITY DESCRIPTION VALUE(a)
----------------------------------------------------------
Fannie Mae Pool $1,557,397
Government National Mortgage Association 7,343,840
----------------------------------------------------------
Total market value of collateral securities $8,901,237
----------------------------------------------------------
MIZUHO SECURITIES USA, INC. (0.050%)
SECURITY DESCRIPTION VALUE(a)
----------------------------------------------------------
United States Treasury Inflation Indexed Bonds $25,375
United States Treasury Note/Bond 1,591,501
United States Treasury Strip Coupon 218,456
United States Treasury Strip Principal 204,668
----------------------------------------------------------
Total market value of collateral securities $2,040,000
----------------------------------------------------------
(f) Identifies issues considered to be illiquid as to their marketability (see
Note 2 to the financial statements). The aggregate value of such securities
at June 30, 2010 was $446,700, representing 0.58% of net assets.
Information concerning such security holdings at June 30, 2010 was as
follows:
ACQUISITION
SECURITY DATES COST
-------------------------------------------------------------------------
Wihlborgs Fastigheter AB 01-08-10 thru 02-05-10 $463,346
(g) Affiliated Money Market Fund -- See Note 8 to the financial statements. The
rate shown is the seven-day current annualized yield at June 30, 2010.
(h) At June 30, 2010, the cost of securities for federal income tax purposes
was approximately $97,774,000 and the approximate aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $684,000
Unrealized depreciation (11,383,000)
-----------------------------------------------------------
Net unrealized depreciation $(10,699,000)
-----------------------------------------------------------
--------------------------------------------------------------------------------
10 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 11
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 June 30, 2010:
FAIR VALUE AT JUNE 30, 2010
--------------------------------------------------------------
LEVEL 1 LEVEL 2
QUOTED PRICES OTHER LEVEL 3
IN ACTIVE SIGNIFICANT SIGNIFICANT
MARKETS FOR OBSERVABLE UNOBSERVABLE
DESCRIPTION(A) IDENTICAL ASSETS INPUTS(B) INPUTS TOTAL
--------------------------------------------------------------------------------------------
Equity Securities
Common Stocks
Diversified Financial
Services $-- $122,436 $-- $122,436
Real Estate Investment
Trusts (REITs) 15,663,412 43,507,718 -- 59,171,130
Real Estate Management
& Development 746,690 16,245,523 -- 16,992,213
--------------------------------------------------------------------------------------------
Total Equity Securities 16,410,102 59,875,677 -- 76,285,779
--------------------------------------------------------------------------------------------
Other
Affiliated Money Market
Fund(c) 62,525 -- -- 62,525
Investments of Cash
Collateral Received
for Securities on Loan -- 10,726,703 -- 10,726,703
--------------------------------------------------------------------------------------------
Total Other 62,525 10,726,703 -- 10,789,228
--------------------------------------------------------------------------------------------
Total $16,472,627 $70,602,380 $-- $87,075,007
--------------------------------------------------------------------------------------------
(a) See the Portfolio of Investments for all investment classifications not
indicated in the table.
(b) Includes certain securities trading outside the 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. There were no significant transfers between
Levels 1 and 2 during the period.
(c) Money market fund that is a sweep investment for cash balances in the Fund
at June 30, 2010.
--------------------------------------------------------------------------------
12 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
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 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 800.937.5449.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 13
STATEMENT OF ASSETS AND LIABILITIES --------------------------------------------
JUNE 30, 2010 (UNAUDITED)
ASSETS
Investments in securities, at value
Unaffiliated issuers* (identified cost $86,985,112) $ 76,285,779
Affiliated money market fund (identified cost $62,525) 62,525
Investments of cash collateral received for securities on loan
(identified cost $10,726,703) 10,726,703
--------------------------------------------------------------------------------
Total investments in securities (identified cost $97,774,340) 87,075,007
Foreign currency holdings (identified cost $873,332) 872,523
Dividends and accrued interest receivable 470,023
Receivable for investment securities sold 2,027,729
--------------------------------------------------------------------------------
Total assets 90,445,282
--------------------------------------------------------------------------------
LIABILITIES
Payable for investment securities purchased 2,080,846
Payable upon return of securities loaned 10,726,703
Accrued investment management services fees 65,978
Accrued Stockholder account and registrar fees 369
Accrued administrative services fees 5,769
Accrued Stockholders' meeting fees 25,445
Other accrued expenses 56,406
--------------------------------------------------------------------------------
Total liabilities 12,961,516
--------------------------------------------------------------------------------
Net assets applicable to outstanding Common Stock $ 77,483,766
--------------------------------------------------------------------------------
REPRESENTED BY
Common Stock -- $.01 par value $ 94,637
Additional paid-in capital 204,773,039
Excess of distributions over net investment income (1,801,425)
Accumulated net realized gain (loss) (114,865,940)
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (10,716,545)
--------------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding Common
Stock $ 77,483,766
--------------------------------------------------------------------------------
Shares outstanding applicable to Common Stock 9,463,695
--------------------------------------------------------------------------------
Net asset value per share of outstanding Common Stock $ 8.19
--------------------------------------------------------------------------------
Market price per share of Common Stock $ 6.98
--------------------------------------------------------------------------------
*Value of securities on loan $ 10,174,187
--------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this
statement.
--------------------------------------------------------------------------------
14 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
STATEMENT OF OPERATIONS --------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
INVESTMENT INCOME
Income:
Dividends $ 2,873,017
Interest 943
Income distributions from affiliated money market fund 135
Income from securities lending -- net 23,188
Foreign taxes withheld (141,849)
------------------------------------------------------------------------------
Total income 2,755,434
------------------------------------------------------------------------------
Expenses:
Investment management services fees 381,202
Stockholder account and registrar fees 5,430
Administrative services fees 33,329
Compensation of board members 1,357
Custodian fees 18,100
Printing and postage 9,000
Professional fees 23,692
Stockholders' meeting fees 23,500
Other 14,380
------------------------------------------------------------------------------
Total expenses 509,990
------------------------------------------------------------------------------
Investment income (loss) -- net 2,245,444
------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on:
Security transactions 425,104
Foreign currency transactions (1,851)
------------------------------------------------------------------------------
Net realized gain (loss) on investments 423,253
Net change in unrealized appreciation (depreciation) on
investments and on translation of assets and liabilities in
foreign currencies (9,657,417)
------------------------------------------------------------------------------
Net gain (loss) on investments and foreign currencies (9,234,164)
------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $(6,988,720)
------------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this
statement.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 15
STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2010 DEC. 31, 2010
(UNAUDITED)
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 2,245,444 $ 3,779,921
Net realized gain (loss) on investments 423,253 (47,047,031)
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities
in foreign currencies (9,657,417) 63,947,534
---------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (6,988,720) 20,680,424
---------------------------------------------------------------------------
Distributions to Stockholders
Net investment income (1,604,712) (6,488,521)
---------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Value of shares issued for
distributions (41,726 and 189,280
shares) 308,883 919,875
Cost of shares purchased in open market
(63,859 and 266,895 shares) (474,705) (1,686,712)
---------------------------------------------------------------------------
Increase (decrease) in net assets from
capital share transactions (165,822) (766,837)
---------------------------------------------------------------------------
Total increase (decrease) in net assets (8,759,254) 13,425,066
Net assets at beginning of period 86,243,020 72,817,954
---------------------------------------------------------------------------
Net assets at end of period $77,483,766 $ 86,243,020
---------------------------------------------------------------------------
Excess of distributions over net
investment income $(1,801,425) $ (2,442,157)
---------------------------------------------------------------------------
The accompanying Notes to Financial Statements are an integral part of this
statement
--------------------------------------------------------------------------------
16 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
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 returns are not annualized
for periods of less than one year.
SIX MONTHS ENDED YEAR ENDED DEC. 31,
JUNE 30, 2010 --------------------------------
PER SHARE OPERATING PERFORMANCE (UNAUDITED) 2009 2008 2007(a)
Net asset value, beginning of period $9.09 $7.61 $18.29 $23.88(b)
---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .24 .39 .60 .35
Net gains (losses) (both realized and
unrealized) (.97) 1.77 (9.42) (4.95)
---------------------------------------------------------------------------------------------------------
Total from investment operations (.73) 2.16 (8.82) (4.60)
---------------------------------------------------------------------------------------------------------
Offering costs -- -- -- (.05)
---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Distributions from net investment income (.17) (.68) (.29) (.35)
Distributions in excess of net investment
income -- -- -- (.53)
Tax return of capital -- -- (1.46) --
---------------------------------------------------------------------------------------------------------
Total distributions (.17) (.68) (1.75) (.88)
---------------------------------------------------------------------------------------------------------
Issuance of Common Stock in distributions -- -- (.11) (.06)
---------------------------------------------------------------------------------------------------------
Net asset value, end of period $8.19 $9.09 $7.61 $18.29
---------------------------------------------------------------------------------------------------------
Market price, end of period $6.98 $7.39 $5.60 $16.15
---------------------------------------------------------------------------------------------------------
TOTAL RETURN:
Based upon net asset value (7.82%) 34.15% (50.17%) (19.61%)
---------------------------------------------------------------------------------------------------------
Based upon market price (3.37%) 48.21% (58.47%) (32.20%)(c)
---------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS(d)
Total expenses 1.22%(e) 1.41% 1.26% 1.18%(e)
---------------------------------------------------------------------------------------------------------
Net investment income (loss) 5.39%(e) 5.15% 4.24% 2.82%(e)
---------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (in millions) $77 $86 $73 $166
---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 118% 255% 241% 134%
---------------------------------------------------------------------------------------------------------
See accompanying Notes to Financial Highlights.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 17
FINANCIAL HIGHLIGHTS (continued) -----------------------------------------------
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) Based upon initial offering price of $25.00 per share.
(d) 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
reported expense ratios.
(e) Annualized.
The accompanying Notes to Financial Statements are an integral part of this
statement.
--------------------------------------------------------------------------------
18 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS -------------------------------------------------
(UNAUDITED AS OF JUNE 30, 2010)
1. ORGANIZATION
RiverSource 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
outstanding Common Stock plus the liquidation preference of any issued and
outstanding preferred shares (Preferred Stock) of the Fund 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
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.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 19
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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 from the primary exchange. 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 Columbia
Management Investment Advisers, LLC (formerly known as RiverSource Investments,
LLC) (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 faith estimate that reasonably reflects
the current market conditions as of the close of the NYSE. The fair value of a
security is likely to be different from the quoted or published price, if
available.
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
--------------------------------------------------------------------------------
20 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
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 June 30, 2010, foreign currency holdings consisted of
multiple denominations.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements. Generally, securities received as
collateral subject to repurchase agreements are deposited with the Fund's
custodian and, pursuant to the terms of the repurchase agreement, must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. The market value of securities held as collateral
for repurchase agreements is monitored on a daily basis to ensure the existence
of the proper level of collateral.
ILLIQUID SECURITIES
At June 30, 2010, investments in securities included issues that are illiquid
which the Fund currently limits to 15% of net assets, at market value, at the
time of purchase. The aggregate value of such securities at June 30, 2010 was
$446,700 representing 0.58% of net assets. Certain illiquid securities may be
valued, in good faith, by management at fair value according to procedures
approved by the Board. According to Board guidelines, certain unregistered
securities are determined to be liquid and are not included within the 15%
limitation specified above. Assets are liquid if they can be sold or disposed of
in the ordinary course of business within seven days at approximately the value
at which the asset is valued by the Fund.
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
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 21
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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. Generally,
the tax authorities can examine all tax returns filed for the last three years.
FOREIGN CAPITAL GAINS TAXES
Realized gains in certain countries may be subject to foreign taxes at the fund
level, at rates ranging from approximately 10% to 15%. The Fund pays such
foreign taxes on net realized gains at the appropriate rate for each
jurisdiction.
DIVIDENDS TO STOCKHOLDERS
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.
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, 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
--------------------------------------------------------------------------------
22 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
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.
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
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 23
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
Investments present additional information regarding derivative instruments
outstanding at the end of the period, if any.
FAIR VALUES OF DERIVATIVE INSTRUMENTS AT JUNE 30, 2010
At June 30, 2010, the Fund had no outstanding derivatives.
EFFECT OF DERIVATIVE INSTRUMENTS IN THE STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2010
AMOUNT OF REALIZED GAIN (LOSS) ON DERIVATIVES RECOGNIZED IN INCOME
FORWARD FOREIGN
RISK EXPOSURE CATEGORY CURRENCY CONTRACTS
------------------------------------------------------------------
Foreign exchange contracts $(130)
------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON DERIVATIVES
RECOGNIZED IN INCOME
FORWARD FOREIGN
RISK EXPOSURE CATEGORY CURRENCY CONTRACTS
------------------------------------------------------------------
Foreign exchange contracts $--
------------------------------------------------------------------
VOLUME OF DERIVATIVE ACTIVITY
FORWARD FOREIGN CURRENCY CONTRACTS
At June 30, 2010, the Fund had no outstanding forward foreign currency
contracts. The average gross notional amount of forward foreign currency
contracts opened, and subsequently closed, was $400,000 for the six months ended
June 30, 2010.
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 subadvisers. See Subadvisory and delegation
agreements below. The annual management fee rate is equal to 0.915% of the
Fund's average daily Managed Assets.
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
--------------------------------------------------------------------------------
24 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
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, 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. The fee for the six months ended June 30,
2010 was 0.08% of the Fund's average daily Managed Assets.
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 six months ended June
30, 2010, other expenses paid to this company were $38.
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
compensation. Deferred amounts are treated as though equivalent dollar amounts
had been invested in shares of the Fund or other RiverSource, Seligman and
Threadneedle funds. The Fund's liability for these amounts is adjusted for
market value changes and remains in the funds 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 $97,289,860 and $96,956,374, respectively, for the six
months ended June 30, 2010. 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 41,726 shares were issued to Plan participants during the six months ended
June 30, 2010 for proceeds of $308,883, a weighted average discount of 15.9%
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
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 25
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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 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
--------------------------------------------------------------------------------
26 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
that are attributable to distributions received by the Fund from its underlying
portfolio investments less Fund expenses. For the six months ended June 30,
2010, 63,859 shares were purchased in the open market at an aggregate cost of
$474,705, which represented a weighted average discount of 17.0% 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.
7. LENDING OF PORTFOLIO SECURITIES
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 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 June 30, 2010,
securities valued at $10,174,187 were on loan, secured by cash collateral of
$10,726,703 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
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 27
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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 Fund 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
$23,188 earned from securities lending for the six months ended June 30, 2010 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 RiverSource, Seligman
and Threadneedle funds and other institutional clients of the Investment
Manager. The cost of the Fund's purchases and proceeds from sales of shares of
RiverSource Short-Term Cash Fund aggregated $3,878,118 and $3,875,577,
respectively, for the six months ended June 30, 2010. 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 June 30, 2010, 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 were recorded by the Fund.
--------------------------------------------------------------------------------
28 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL 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. Because each
investment has a greater effect on the Fund's performance, 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.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 29
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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 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
--------------------------------------------------------------------------------
30 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
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.
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 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, other than as
noted below.
The Fund's Board of Directors approved, in principle, the acquisition of the
Fund by an open-end fund, Columbia Real Estate Equity Fund (the "Open-End
Fund"), a series of Columbia Funds Series Trust I (the "Acquisition"). Each of
the Fund and the Open-End Fund are managed by Columbia Management Investment
Advisers, LLC. The Acquisition was also approved by the Open-End Fund's board of
trustees. As consideration for their shares, holders of the Fund's common stock
would receive shares of the Open-End Fund with a value equal to the net asset
value of their shares of the Fund's common stock on the closing date of the
Acquisition. Redemptions and exchanges of shares of the Open-End Fund issued
pursuant to the Acquisition would be subject to a redemption fee of 2% for a
period of one year following the closing date of the Acquisition. The
Acquisition would be subject to the approval of the stockholders of the Fund at
a special meeting of stockholders of the Fund, details of which will be made
available in a subsequent announcement and included in the prospectus/proxy
statement that will be mailed to stockholders of the Fund.
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
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 31
NOTES TO FINANCIAL STATEMENTS (continued) -------------------------------------
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 (the
Supreme Court), asking the Supreme Court to stay the District Court proceedings
while the 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. On March 30, 2010, the Supreme Court issued its ruling in Jones v.
Harris Associates, and on April 5, 2010, the Supreme Court vacated the Eighth
Circuit's decision in the Gallus case and remanded the case to the Eighth
Circuit for further consideration in light of the Supreme Court's decision in
Jones v. Harris Associates. On June 4, 2010, the Eighth Circuit remanded the
Gallus case to the District Court for further consideration in light of the
Supreme Court's decision in Jones v. Harris Associates.
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 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, Seligman and Threadneedle
funds' Boards of Directors/Trustees.
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
--------------------------------------------------------------------------------
32 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
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 -- 2010 SEMIANNUAL REPORT 33
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
Columbia Management Investment Advisers, LLC ("Columbia Management" or the
"investment manager"), formerly known as RiverSource Investments, LLC, a wholly-
owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise Financial"), serves
as the investment manager to the Fund. Under an investment management services
agreement (the "IMS Agreement"), Columbia Management provides investment advice
and other services to the Fund and the funds distributed by Columbia Management
Investment Distributors, Inc. (collectively, the "Funds"). In addition, under
the subadvisory agreement (the "Subadvisory Agreement") between Columbia
Management and LaSalle Investment Management (Securities), L.P. ("LaSalle U.S.")
and under the Delegation Agreement between LaSalle U.S. and LaSalle Investment
Management Securities B.V. ("LaSalle B.V.," and together with LaSalle U.S., the
"Subadvisers"), the Subadvisers perform portfolio management and related
services for the Fund.
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
each of the IMS Agreement, the Subadvisory Agreement and the Delegation
Agreement (collectively, the "Advisory Agreements"). Columbia Management
prepared detailed reports for the Board and its Contracts Committee in March and
April 2010, including reports based on data provided by independent
organizations and a comprehensive response to each item of information requested
by independent legal counsel to the Independent Directors ("Independent Legal
Counsel") in a letter to the investment manager, to assist the Board in making
these determinations. All of the materials presented in March and April 2010
were first supplied in draft form to designated representatives of the
Independent Directors, i.e., Independent Legal Counsel, the Chair of the Board
and the Chair of the Contracts Committee, and the final materials were revised
to reflect comments provided by these Board representatives. In addition,
throughout the year, the Board (or its committees) reviews information prepared
by Columbia Management addressing the services Columbia Management and the
Subadvisers provide and Fund performance. The Board accords particular weight to
the work, deliberations and conclusions of the Contracts Committee, the
Investment Review Committee and the Compliance Committee in determining whether
to continue the Advisory Agreements. At the April 6-8, 2010 in-person Board
meeting, Independent Legal Counsel reviewed with the Independent Directors,
including in an executive session without management, various factors relevant
to the Board's consideration of each of the Advisory Agreements and the Board's
legal responsibilities related to such consideration. Following an analysis and
discussion of the factors identified below, the Board,
--------------------------------------------------------------------------------
34 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
including all of the Independent Directors, approved renewal of the Advisory
Agreements.
Nature, Extent and Quality of Services Provided by Columbia Management and the
Subadvisers: The Board analyzed various reports and presentations it had
received detailing the services performed by Columbia Management and the
Subadvisers, as well as their expertise, resources and capabilities. The Board
specifically considered many developments during the past year concerning the
services provided by Columbia Management, including, in particular, the
continued investment in, and resources dedicated to, the Fund's operations, most
notably, management's announcement of the massive investment made in the
acquisition of the long-term asset management business of Columbia Management
Group, LLC (the "Columbia Transaction") and the completed integration of J. & W.
Seligman & Co. Incorporated, acquisitions which should continue to enhance
investment capabilities and provide access to a greater depth of experienced
portfolio managers in key categories. The Board noted, in particular, that upon
the close of the Columbia Transaction, the investment manager will have grown to
10 investment offices (compared to 6 in 2009). In addition, the Board reviewed
information concerning the investment manager's new Chief Investment Officer
upon the close of the Columbia Transaction, including the application of his
particular investment philosophy, which is intended to enhance the risk and
portfolio management oversight of the Funds.
Moreover, in connection with the Board's evaluation of the overall package of
services provided by Columbia Management, the Board considered the quality of
the administrative services provided by a Columbia Management affiliate to the
Fund. The Board also reviewed the financial condition of Columbia Management,
its affiliate and the Subadvisers, and each entity's ability to carry out its
responsibilities. Further, the Board considered Columbia Management's ability to
retain key personnel in certain targeted areas and its expectations in this
regard. The Board also discussed the acceptability of the terms of the Advisory
Agreements (including the relatively broad scope of services required to be
performed by Columbia Management). The Board concluded that the services being
performed under the Advisory Agreements were of a reasonably high quality.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that Columbia Management, its
affiliate and the Subadvisers, were in a position to continue to provide a high
quality and level of services to the Fund.
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 35
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the Advisory Agreements, the Board carefully
reviewed the investment performance of the Fund based on net asset value, market
price and the trading price of its common stock compared to net asset value. In
this regard, the Board considered detailed reports containing data prepared by
an independent organization showing, for various periods, the performance of the
Fund, the performance of a benchmark index, the percentage ranking of the Fund
among its comparison group and the net assets of the Fund. The Board observed
that the Fund's investment performance reflected the interrelationship of market
conditions with the particular investment strategies employed by the portfolio
management team. Additionally, the Board reviewed the performance of the
Subadvisers and Columbia Management's processes for monitoring the Subadvisers.
The Board considered, in particular, management's rationale for recommending the
continued retention of the Subadvisers.
Comparative Fees, Costs of Services Provided and the Profits Realized By
Columbia Management and its Affiliate from their Relationships with the Fund:
The Board reviewed comparative fees and the costs of services to be provided
under each of the Advisory Agreements. The Board members considered detailed
comparative information set forth in an annual report on fees and expenses,
including, among other things, data (prepared by an independent organization)
showing a comparison of the Fund's expenses with median expenses paid by funds
in its peer group, as well as data showing the Fund's contribution to Columbia
Management's profitability.
The Board accorded particular weight to the notion that the level of fees should
reflect a rational pricing model applied consistently across the various product
lines in the complex of Funds, while assuring that the overall fees for each
Fund (with few defined exceptions) are generally in line with the "pricing
philosophy" (i.e., that the total expense ratio of each Fund, with few
exceptions, is at or below the median expense ratio of funds in the same
comparison group). The Board also reviewed information they received with
respect to the Fund indicating that although its fee structure falls outside of
the pricing philosophy, its expense ratio approximates the median ratio for a
peer group of open-end funds in a comparable asset class. The Board further
observed that the subadvisory fees paid under the Subadvisory Agreement are
borne by the investment manager and not the Fund. Based on its review, the Board
concluded that the fees paid under each of the Advisory Agreements were fair and
reasonable in light of the extent and quality of services that the Fund
receives.
--------------------------------------------------------------------------------
36 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
--------------------------------------------------------------------------------
The Board also considered the expected profitability of Columbia Management and
its affiliate in connection with Columbia Management providing investment
management services to the Fund. In this regard, the Board referred to a
detailed profitability report, discussing the profitability to Columbia
Management and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability over the past two years. In
this regard, the Board observed slightly reduced profitability in 2009 as
compared with 2008. The Board also considered the services acquired by the
investment manager through the use of commission dollars paid by the Fund on
portfolio transactions. The Board noted that the fees paid by the Fund should
permit the investment manager to offer competitive compensation to its
personnel, make necessary investments in its business and earn an appropriate
profit. The Board concluded that profitability levels were reasonable.
Economies of Scale to be Realized: The Board noted that the management fee
schedule for the Fund does not contain breakpoints that reduce the fee rate on
assets above specified levels. However, due to the Fund's closed-end structure,
the Board did not view the potential for realization of economies of scale as
the Fund's assets grow to be a material factor in their deliberations.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the investment management service fees and subadvisory fees were
fair and reasonable in light of the extent and quality of services provided. In
reaching this conclusion, no single factor was determinative. On April 8, 2010,
the Board, including all of the Independent Directors, approved the renewal of
each of the Advisory Agreements for an additional annual period.
PROXY RESULTS -----------------------------------------------------------------
The Second Annual Meeting of Stockholders of the Fund was held on April 8, 2010.
Stockholders voted in favor of each of the Board's two proposals. The
description of each proposal and number of shares voted are as follows:
PROPOSAL 1
To elect five Directors to the Fund's Board, one of which (Ms. Jones) to hold
office until the 2012 annual meeting of Stockholders and four of which to hold
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 37
PROXY RESULTS (continued) -----------------------------------------------------
office until the 2013 annual meeting of Stockholders and all until their
successors are elected and qualify:
DIRECTOR FOR WITHHELD
----------------------------------------------
Arne H. Carlson 7,950,359 418,671
Anne P. Jones 7,952,395 416,635
John F. Maher 7,953,752 415,278
Leroy C. Richie 7,945,641 423,389
William F. Truscott 7,947,200 421,830
PROPOSAL 2
To ratify the selection of Ernst & Young LLP as the Fund's independent
registered public accounting firm for 2010:
FOR AGAINST ABSTAINING
----------------------------------------------
8,281,338 45,141 42,550
----------------------------------------------
--------------------------------------------------------------------------------
38 RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT
PROXY VOTING ------------------------------------------------------------------
The policy of the Board is to vote the proxies of the companies in which the
Fund holds investments consistent with Board-adopted procedures. For a copy of
these procedures, contact American Stock Transfer & Trust Company at
800.937.5449; contact your financial intermediary; visit
riversource.com/funds(*); or search the website of the Securities and Exchange
Commission (SEC) at http://www.sec.gov. 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.
* Information will be available at riversource.com/funds through September 26,
2010 and thereafter at columbiamanagement.com
--------------------------------------------------------------------------------
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND -- 2010 SEMIANNUAL REPORT 39
RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND
734 Ameriprise Financial Center
Minneapolis, MN 55474
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 regular 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.
(COLUMBIA MANAGEMENT LOGO) (C)2010 Columbia Management Investment Advisers, LLC SL-9945 C 8/10)
Item 2. Code of Ethics. Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert. Not applicable for semi-annual
reports.
Item 4. Principal Accountant Fees and Services. Not applicable for semi-annual
reports.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. Investments.
(a) The registrant's "Schedule 1 - Investments in securities of
unaffiliated issuers" (as set forth in 17 CFR 210.12-12) 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. Not applicable for semi-annual
reports.
Item 8. Portfolio Managers of Closed-End Management Investment Companies. Not
applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Total Number of Shares Maximum Number of Shares
Total Number Purchased as Part of that May Yet Be Purchased
of Shares Average Price Publicly Announced Plans Under the Plans or
Period Purchased Paid Per Share or Programs(1) Programs(1)
------ ------------ -------------- ------------------------ -------------------------
1-01-10 to 1-31-10 14,000 $7.27 14,000 N/A
2-01-10 to 2-28-10 35,035 7.29 35,035 N/A
3-01-10 to 3-31-10 -- -- -- N/A
4-01-10 to 4-30-10 14,824 7.92 14,824 N/A
5-01-10 to 5-31-10 -- -- -- N/A
6-01-10 to 6-30-10 -- -- -- N/A
(1) The registrant has a stock repurchase program. 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.
There were no material changes to the procedure by which shareholders
may recommend nominees to the registrant's board of directors.
Item 11. Controls and Procedures.
(a) The registrant's principal executive officer and principal financial
officer, based on their evaluation of the registrant's disclosure controls
and procedures as of a date within 90 days of the filing of this report,
have concluded that such controls and procedures are adequately designed to
ensure that information required to be disclosed by the registrant in Form
N-CSR is accumulated and communicated to the registrant's management,
including the principal executive officer and principal financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
(b) There was no change in the registrant's internal controls over
financial reporting that occurred during the registrant's second fiscal
quarter of the period covered by this 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 required to be disclosed under Item 2 of Form N-CSR: Not
applicable for semi annual reports.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940 (17 CFR 270.30a-2(a)) attached hereto as Exhibit 99.CERT.
(a)(3) Not applicable.
(b) Certification pursuant to Rule 30a-2(b) under the Investment Company Act of
1940 (17 CFR 270.30a-2(b)) attached hereto as Exhibit 99.906CERT.
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/ J. Kevin Connaughton
----------------------------------
J. Kevin Connaughton
President and Principal Executive
Officer
Date September 7, 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/ J. Kevin Connaughton
----------------------------------
J. Kevin Connaughton
President and Principal Executive
Officer
Date September 7, 2010
By /s/ Jeffrey P. Fox
----------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial
Officer
Date September 7, 2010