UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

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: December 31, 2010

 

 

Item 1. Reports to Stockholders.

Annual Report

 

Annual Report

 

RiverSource LaSalle International Real Estate Fund

 

Annual Report for the Period Ended

December 31, 2010

 

RiverSource LaSalle International Real Estate Fund seeks long-term capital appreciation and, secondly, current income.

 

 

 

Table of Contents

 

 

 

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  1

Your Fund at a Glance

 

FUND SUMMARY

 

 

ANNUALIZED TOTAL RETURNS (for period ended Dec. 31, 2010)

 

 

 

The performance information shown represents past performance and is not a guarantee of future results. The investment return and principal value of your investment will fluctuate so that your shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information shown. You may obtain performance information current to the most recent month-end by visiting 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.

2  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

The indices do not reflect the effects of sales charges, expenses and taxes. It is not possible to invest directly in an index.

 

 

PRICE PER SHARE

 

 

DISTRIBUTIONS PAID PER COMMON SHARE

 

 

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 ANNUAL REPORT  3

Manager Commentary

 

LaSalle Investment Management (Securities), L.P. and LaSalle Investment Securities B.V., two independent money managers, manage RiverSource LaSalle International Real Estate Fund’s portfolio.

 

Dear Stockholders,

 

RiverSource LaSalle International Real Estate Fund (the Fund) Common Stock gained 18.88%, based on net asset value, and 38.42%, based on market price, for the 12-months ended Dec. 31, 2010. In comparison, the FTSE NAREIT Equity REITs Index (FTSE Index) of U.S. real estate companies rose 27.95%, the UBS Global Investors Index of global real estate stocks gained 23.51%, and the UBS Global Investors Index (excluding US) rose 18.87% in the same period.

 

The Fund is a closed-end fund. The Fund’s subadvisers may allocate up to 30% of the Fund’s portfolio assets to dividend capture trades to enhance the potential current income of the Fund. The Fund invests, under normal market conditions, at least 80% of its “managed assets” (as defined in Note 1 in the Notes to Financial Statements) in equity or equity-related securities of international real estate companies.

 

COUNTRY BREAKDOWN⁽¹⁾ (at Dec. 31, 2010)

 

4  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

Significant performance factors

There was significant improvement in the investment real estate market — and in the broad financial market — in 2010. Investors and strategists came into the year with considerable relief that the financial crisis of the prior eighteen months was subsiding. A vigorous recovery has taken hold in the developing countries in the Asia-Pacific region. Underpinned by a healthy Chinese economy, property and general business has moved forward at a rapid pace in Hong Kong and Singapore. Australia is benefitting from an increased appetite for natural resources from China and other countries. New development is a factor in this region, and governments are concerned with inflation and are trying to cool booming property markets, particularly residential housing but with increased scrutiny of all types of real estate investment.

 

The more mature economies in the West (and Japan) are on a different track, with slow but positive growth, low inflation, and low interest rates. In almost all instances, real estate fundamentals have turned up, with higher retail sales and stable-to-improving vacancy rates. In this environment, institutional interest in core income-producing properties is

 

TOP TEN HOLDINGS⁽¹⁾ (at Dec. 31, 2010)

 

 

For further detail about these holdings, please refer to the section entitled “Portfolio of Investments.”

 

Fund holdings are of the date given, are subject to change at any time, and are not recommendations to buy or sell any security.

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  5

 

Manager Commentary (continued)

 

triggering valuation recovery, and the stage is being set for improvement in net operating income performance and increased company earnings.

 

Positive contributors to the Fund’s return in 2010 included stock selection in Continental Europe and Hong Kong. The dividend-capture program in U.S. real estate investment trusts performed in-line with the FTSE Index of U.S. real estate companies. Stock selection in Japan and Singapore made negative contributions to relative performance.

 

Positive contributors to the Fund’s return came from holdings in NTT Urban (Japan), Hongkong Land, and Stockland (Australia). Negative contributors included holdings in Corio NV (Netherlands) and CapitaLand (Singapore).

 

Changes to the Fund’s portfolio

Our investment process for the international portion of the Fund’s portfolio is driven by our estimates of the intrinsic values of the stocks in our investment universe, and our evaluation of the relative values offered by property sectors and individual stocks. In the international portion of the portfolio, a larger percentage of assets was invested at the end of the year compared with the beginning of the year in Singapore, Australia, and Canada. Percentage holdings were less at year end than at the beginning of the year in Continental Europe, Hong Kong, Japan, and the United Kingdom. The strategy of the dividend-capture portion of the portfolio did not change during the year.

 

Our future strategy

In both mature and emerging economies, modest supply and recovering demand make for real estate fundamentals that are increasingly positive. This is resulting in improved operations and better company earnings reports. We think that the companies in our global investment universe will show a significant improvement in earnings in 2011, with good gains continuing in subsequent years, as the real estate and economic cycles remain on track. This should produce improved earnings visibility.

 

The capital markets worked to the advantage of publicly-traded global real estate companies this year, and are having a positive effect on property valuation. We expect capital to continue to be broadly available and attractively priced. Most public real estate companies have been able to strengthen their balance sheets on favorable terms, and are well

6  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

positioned to access reasonably-priced capital to take advantage of real estate opportunities as they arise.

 

The Fund’s portfolio includes companies we believe offer an attractive combination of favorable stock prices relative to our estimate of their values, current dividend income, high-quality properties, qualified managers, and the potential for long-term growth through a combination of internal growth and the ability to make attractive new investments or develop new properties. The portfolio is broadly-diversified by region and type of property.

 

 

LaSalle Investment Management (Securities), L.P.
LaSalle Investment Management Securities B.V.

 

 

Any specific securities mentioned are for illustrative purposes only and are not a complete list of securities that have increased or decreased in value. The views expressed in this statement reflect those of the portfolio manager(s) only through the end of the period of the report as stated on the cover and do not necessarily represent the views of Columbia Management Investment Advisers, LLC (the Investment Manager) or any subadviser to the Fund or any other person in the Investment Manager or subadviser organizations. Any such views are subject to change at any time based upon market or other conditions and the Investment Manager disclaims any responsibility to update such views. These views may not be relied on as investment advice and, because investment decisions for a Fund are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any Fund.

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  7

 

Portfolio of Investments

 

Dec. 31, 2010

(Percentages represent value of investments compared to net assets)

 

Investments in Securities

 

 

 

See accompanying Notes to Portfolio of Investments.

8  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

 

 

See accompanying Notes to Portfolio of Investments.

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  9

 

Portfolio of Investments (continued)

 

 

Summary of Investments in Securities by Industry

 

The following table represents the portfolio investments of the Fund by industry classifications as a percentage of net assets at Dec. 31, 2010:

 

 

 

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

 

 

10  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

Notes to Portfolio of Investments (continued)

 

 

 

Unrealized appreciation			$543,151
Unrealized depreciation			(2,725,570	)
Net unrealized depreciation			$(2,182,419	)

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  11

 

Portfolio of Investments (continued)

 

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:

 

 

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 where there is a significant delay in the local close relative to the New York Stock Exchange (NYSE) are classified as Level 2. The values of these securities may include an adjustment to reflect the impact of significant market movements following the close of local trading, 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

12  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

Notes to 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 valuations may include, but are not limited to, financial statement analysis, capital account balances, discount rates and estimated cash flows, and comparable company data.

 

The following table is a summary of the inputs used to value the Fund’s investments as of Dec. 31, 2010:

 

 

 

 

How to find information about the Fund’s quarterly portfolio holdings

 

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  13

 

Statement of Assets and Liabilities

Dec. 31, 2010

 

 

The accompanying Notes to Financial Statements are an integral part of this statement.

14  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

Statement of Operations

Year ended Dec. 31, 2010

 

 

The accompanying Notes to Financial Statements are an integral part of this statement.

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  15

Statements of Changes in Net Assets

 

 

The accompanying Notes to Financial Statements are an integral part of this statement.

16  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL 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.

 

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  17

 

Financial Highlights (continued)

 

 

The accompanying Notes to Financial Statements are an integral part of this statement.

18  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

Notes to Financial Statements

 

 

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.

 

 

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 ANNUAL 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 policy adopted by the Fund’s Board of Directors (the Board) generally contemplates 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. In those situations, foreign securities will be fair valued pursuant to the policy adopted by the Board, including utilizing a third party pricing service to determine these fair values. This policy takes 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 an approximation of market value. Investments in money market funds are valued at net asset value.

20  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

Foreign currency exchange contracts are marked-to-market daily based upon foreign currency exchange rates provided by a pricing service.

 

Foreign currency translations

Securities and other assets and liabilities denominated in foreign currencies are translated daily into U.S. dollars. Foreign currency amounts related to the purchase or sale of securities and income and expenses are translated at the exchange rate on the transaction date. The effect of changes in foreign exchange rates on realized and unrealized security gains or losses is reflected as a component of such gains or losses. In the Statement of Operations, net realized gains or losses from foreign currency transactions, if any, may arise from sales of foreign currency, closed forward contracts, exchange gains or losses realized between the trade date and settlement date on securities transactions, and other translation gains or losses on dividends, interest income and foreign withholding taxes. At Dec. 31, 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.

 

Guarantees and indemnifications

Under the Fund’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, certain of the Fund’s contracts with its service providers contain general indemnification clauses. The Fund’s maximum exposure under these arrangements is unknown since the amount of any future claims that may be made against the Fund cannot be determined and the Fund has no historical basis for predicting the likelihood of any such claims.

 

Federal taxes

The Fund’s policy is to comply with Subchapter M of the Internal Revenue Code that applies to regulated investment companies and to distribute substantially all of its taxable income (which includes net short-term capital gains) to Stockholders. No provision for income or excise taxes is thus required.

 

Management of the Fund has concluded that there are no significant uncertain tax positions that would require recognition in the financial statements.

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  21

 

Notes to Financial Statements (continued)

 

Generally, the tax authorities can examine all tax returns filed for the last three years.

 

Foreign capital gains taxes

The Fund may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries, as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.

 

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 normally 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 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 if actual information has not yet been reported. Return of capital is recorded as a reduction of the cost basis of securities held. Management’s estimates are subsequently adjusted when the actual character of the distributions is disclosed by the REITs which could result in a proportionate increase/decrease in return of capital to Stockholders.

22  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

 

The Fund invests in certain derivative instruments as detailed below to meet its investment objectives. Derivatives are instruments 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. 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. Derivatives may involve various risks, including the potential inability of the counterparty to fulfill its obligation under the terms of the contract, the potential for an illiquid secondary market and the potential for market movements which may expose the Fund to gains or losses in excess of the amount shown in the Statement of Assets and Liabilities.

 

The Fund and any counterparty are required to maintain an agreement that requires the Fund and that counterparty to monitor (on a daily basis) the net fair value of all derivatives entered into pursuant to the contract between the Fund and such counterparty. If the net fair value of such derivatives between the Fund and that counterparty exceeds a certain threshold (as defined in the agreement), the Fund or the counterparty (as the case may be) is required to post cash and/or securities as collateral. Fair values of derivatives presented in the financial statements are not netted with the fair value of other derivatives or with any collateral amounts posted by the Fund or any counterparty.

 

Forward foreign currency exchange contracts

Forward foreign currency exchange contracts are agreements between two parties to buy and sell a currency at a set price on a future date. These contracts are intended to be used to minimize the exposure to foreign exchange rate fluctuations during the period between the trade and settlement dates of the contract. The Fund utilized forward foreign currency exchange contracts in connection with the settlement of purchases and sales of securities.

 

The market values of forward foreign currency exchange contracts fluctuate with changes in foreign currency exchange rates. The Fund will record a realized gain or loss when the forward foreign currency exchange contract is closed.

 

The use of forward foreign currency exchange contracts does not eliminate fluctuations in the prices of the Fund’s portfolio securities. 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 counterparties will not complete their contractual obligations,

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  23

 

Notes to Financial Statements (continued)

 

which may be in excess of the amount reflected, if any, 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 Investments present additional information regarding derivative instruments outstanding at the end of the period, if any.

 

Fair values of derivative instruments at Dec. 31, 2010

At Dec. 31, 2010, the Fund had no outstanding derivatives.

 

Effect of derivative instruments in the Statement of Operations
for the year ended Dec. 31, 2010

 

 

 

Volume of derivative activity

Forward foreign currency exchange contracts

At Dec. 31, 2010, the Fund had no outstanding forward foreign currency exchange contracts. The average gross notional amount of forward foreign currency exchange contracts opened, and subsequently closed, was $335,000 for the year ended Dec. 31, 2010.

 

 

Investment management services fees

Under an Investment Management Services Agreement, Columbia Management Investment Advisers, LLC (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

24  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

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 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 the Fund Administrator 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 year ended Dec. 31, 2010 was 0.08% of the Fund’s average daily Managed Assets. Prior to Jan. 1, 2011, Ameriprise Financial, Inc. served as the Fund Administrator. Since Jan. 1, 2011, Columbia Management Investment Advisers, LLC has served as the Fund Administrator.

 

Other fees

Other expenses are for, among other things, certain expenses of the Fund or the Board including: Fund boardroom and office expense, employee compensation, employee health and retirement benefits, and certain other expenses. Payment of these Fund and Board expenses is facilitated by a company providing limited administrative services to the Fund and the Board. For the year ended Dec. 31, 2010, other expenses paid to this company were $108.

 

Compensation of board members

Under a Deferred Compensation Plan (the Plan), the board members who are not “interested persons” of the Fund as defined 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 certain other funds managed by the Investment Manager. The Fund’s liability for these amounts is adjusted for market value changes and remains in the Fund until distributed in accordance with the Plan.

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  25

 

Notes to Financial Statements (continued)

 

 

Cost of purchases and proceeds from sales of securities (other than short-term obligations) aggregated $180,061,819 and $182,232,847, respectively, for the year ended Dec. 31, 2010. Realized gains and losses are determined on an identified cost basis.

 

 

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 150,664 shares were issued to Plan participants during the year ended Dec. 31, 2010 for proceeds of $1,298,616, a weighted average discount of 7.5% from the net asset value of those shares.

 

Pursuant to the Plan, unless a Common Stockholder elects otherwise, all cash dividends, capital gains distributions, and other distributions are automatically reinvested in additional Common Stock. If you hold your shares in street name or other nominee (i.e., through a broker), you should contact them to determine their policy, as the broker firm’s policy with respect to Fund distributions may be to default to a cash payment. Common Stockholders who elect not to participate in the Plan (including those whose intermediaries do not permit participation in the Plan by their customers) will receive all dividends and distributions payable in cash directly to the Common Stockholder of record (or, if the shares of Common Stock are held in street or other nominee name, then to such nominee). Common Stockholders may elect not to participate in the Plan and to receive all distributions of dividends and capital gains or other distributions in cash by sending written instructions to American Stock Transfer & Trust Company, LLC (AST), 59 Maiden Lane Plaza Level, New York, New York 10038. Participation in the Plan may be terminated or resumed at any time without penalty by written notice if received by AST, prior to the record date for the next distribution. Otherwise, such termination or resumption will be effective with respect to any subsequently declared distribution.

 

Under the Plan, Common Stockholders receive shares of Common Stock in lieu of cash distributions unless they have elected otherwise as described above. Common Stock will be issued in lieu of cash by the Fund from previously authorized but unissued Common Stock. If the market price of a share on the ex-dividend date of such a distribution is at or above the Fund’s net asset value per 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

26  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

share on such date or 95% of the market price of a share on such date. If the market price of a share on such an ex-dividend date is below the net asset value per share, the number of shares to be issued to such Common Stockholders will be determined by dividing such amount by the per share market price. The issuance of Common Stock at less than net asset value per share will dilute the net asset value of all Common Stock outstanding at that time. Market price on any day means the closing price for the Common Stock at the close of regular trading on the NYSE on such day or, if such day is not a day on which the Common Stock trades, the closing price for the Common Stock at the close of regular trading on the immediately preceding day on which trading occurs.

 

The Fund, under its stock repurchase program, currently intends to make open market purchases of its Common Stock from time to time when the Fund is trading at a discount to its net asset value, in an amount approximately sufficient to offset the growth in the number of shares of Common Stock issued as a result of the reinvestment of the portion of its distributions to Common Stockholders that are attributable to distributions received by the Fund from its underlying portfolio investments less Fund expenses. For the year ended Dec. 31, 2010, 63,859 shares were purchased in the open market at an aggregate cost of $474,704, 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.

 

 

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

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  27

 

Notes to Financial Statements (continued)

 

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 Dec. 31, 2010, securities valued at $7,806,514 were on loan, secured by cash collateral of $8,147,233 invested in short-term securities or in cash equivalents.

 

Risks of delay in recovery of securities or even loss of rights in the securities may occur should the borrower of the securities fail financially. Risks may also arise to the extent that the value of the securities loaned increases above the value of the collateral received. JPMorgan will indemnify the Fund from losses resulting from a borrower’s failure to return a loaned security when due. Such indemnification does not extend to losses associated with declines in the value of cash collateral investments. The Investment Manager is not responsible for any losses incurred by the Fund in connection with the securities lending program. 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 $33,123 earned from securities lending for the year ended Dec. 31, 2010 is included in the Statement of Operations. The Fund also continues to earn interest and dividends on the securities loaned.

 

 

The Fund may invest its daily cash balance in Columbia Short-Term Cash Fund (formerly known as RiverSource Short-Term Cash Fund), a money market fund established for the exclusive use of certain funds managed by the Investment Manager and other institutional clients of the Investment Manager. The cost of the Fund’s purchases and proceeds from sales of shares of Columbia Short-Term Cash Fund aggregated $6,878,718 and $6,143,951, respectively, for the year ended Dec. 31, 2010. The income distributions received with respect to the Fund’s investment in Columbia Short-Term Cash Fund can be found in the

28  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

Statement of Operations and the Fund’s invested balance in Columbia Short-Term Cash Fund at Dec. 31, 2010, can be found in the Portfolio of Investments.

 

 

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 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.

 

In the Statement of Assets and Liabilities, as a result of permanent book-to-tax differences, excess of distributions over net investment income has been decreased by $3,461,691 and accumulated net realized loss has been increased by $3,461,691.

 

The tax character of distributions paid for the years indicated was as follows:

 

 

At Dec. 31, 2010, the components of distributable earnings on a tax basis were as follows:

 

 

For federal income tax purposes, the Fund had a capital loss carry-over of $109,532,440 at Dec. 31, 2010, that if not offset by capital gains will expire as follows:

 

 

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.

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  29

 

Notes to Financial Statements (continued)

 

 

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 to or subtract from the value of the investment.

 

Real estate industry risk

Because of the Fund’s policy of concentrating its investments in securities of companies operating in the real estate industry, the Fund is more susceptible to risks associated with the ownership of real estate and with the real estate industry 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.

30  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

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 mid-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 mid-size companies may trade only over-the-counter or on regional securities exchanges and the frequency and volume of their trading is substantially less than is typical of larger companies.

 

 

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.

 

On Feb. 15, 2011, Stockholders of RiverSource LaSalle International Real Estate Fund, Inc. at a Special Meeting of Stockholders (the Special Meeting) approved a proposal that the Fund be acquired by Columbia Real Estate Equity Fund (the Open-End Fund), an open-end fund which is a series of Columbia Funds Series Trust I (the Acquisition). Both the Fund and the Open-End Fund are managed by Columbia Management Investment Advisers, LLC. As consideration for their shares, holders of the Fund’s Common Stock will receive Class Z 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, which is

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  31

 

Notes to Financial Statements (continued)

 

anticipated to occur on or about April 8, 2011. 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.

 

 

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 legacy RiverSource) mutual funds and they purport to bring the action derivatively on behalf of those funds under the Investment Company Act of 1940. The plaintiffs allege that fees allegedly paid to the defendants by the funds for investment advisory and administrative services are excessive. The plaintiffs seek remedies including restitution and rescission of investment advisory and distribution agreements. The plaintiffs voluntarily agreed to transfer this case to the United States District Court for the District of Minnesota (the District Court). In response to defendants’ motion to dismiss the complaint, the District Court dismissed one of plaintiffs’ four claims and granted plaintiffs limited discovery. Defendants moved for summary judgment in April 2007. Summary judgment was granted in the defendants’ favor on July 9, 2007. The plaintiffs filed a notice of appeal with the Eighth Circuit Court of Appeals (the Eighth Circuit) on August 8, 2007. On April 8, 2009, the Eighth Circuit reversed summary judgment and remanded to the District Court for further proceedings. On August 6, 2009, defendants filed a writ of certiorari with the U.S. Supreme Court (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. On December 9, 2010, the District Court reinstated its July 9, 2007 summary judgment order in favor of the defendants. On January 10, 2011, plaintiffs filed a notice of appeal with the Eighth Circuit.

32  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

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 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 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 ANNUAL REPORT  33

Report of Independent Registered Public Accounting Firm

 

 

To the Board of Directors and Stockholders of
RiverSource LaSalle International Real Estate Fund, Inc.:

 

We have audited the accompanying statement of assets and liabilities, including the portfolio of investments, of RiverSource LaSalle International Real Estate Fund, Inc. (the Fund) as of December 31, 2010, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the two years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights of the Fund for the periods presented through December 31, 2008, were audited by other auditors whose report dated February 27, 2009, expressed an unqualified opinion on those financial highlights.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2010, by correspondence with the custodian and brokers, or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

34  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

In our opinion, the financial statements and financial highlights audited by us as referred to above present fairly, in all material respects, the financial position of RiverSource LaSalle International Real Estate Fund, Inc. at December 31, 2010, the results of its operations for the year then ended, and the changes in its net assets and financial highlights for each of the two years in the period then ended, in conformity with U.S. generally accepted accounting principles.

 

Minneapolis, Minnesota

February 23, 2011

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  35

Federal Income Tax Information

(Unaudited)

 

The Fund is required by the Internal Revenue Code of 1986 to tell its shareholders about the tax treatment of the dividends it pays during its fiscal year. The dividends listed below are reported to you on Form 1099-DIV, Dividends and Distributions. Shareholders should consult a tax advisor on how to report distributions for state and local tax purposes.

 

Fiscal year ended Dec. 31, 2010

 

 

The Fund designates as distributions of long-term gains, to the extent necessary to fully distribute such capital gains, earnings and profits distributed to Stockholders on the sale of shares.

36  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

Board Members and Officers

 

Stockholders elect a Board that oversees the Fund’s operations. The Board appoints officers who are responsible for day-to-day business decisions based on policies set by the Board. The following is a list of the Fund’s Board members. Each Board member oversees 145 Columbia, RiverSource, Seligman and Threadneedle funds. Under current Board policy, members generally serve until the next Board meeting after he or she reaches the mandatory retirement age established by the Board, or the fifteenth anniversary of the first Board meeting they attended as members of the Board.

 

Independent Board Members

 

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  37

 

Board Members and Officers (continued)

 

Independent Board Members (continued)

 

38  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

Board Member Affiliated with the Investment Manager*

 

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  39

 

Board Members and Officers (continued)

 

The Board has appointed officers who are responsible for day-to-day business decisions based on policies it has established. The officers serve at the pleasure of the Board. In addition to Mr. Truscott, who is Vice President, the Fund’s other officers are:

 

Fund Officers

 

40  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

 

 

Fund Officers (continued)

 

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  41

 

Board Members and Officers (continued)

 

Fund Officers (continued)

 

42  RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT

Proxy Results

 

 

Special Meeting of Stockholders held on February 15, 2011.
(Unaudited)

 

A Special Meeting of Stockholders was held on February 15, 2011. Stockholders voted in favor of the Board’s proposal. A brief description of the proposal voted upon at the meeting and the number of shares voted for, against or withheld, as to the proposal is set forth below.

 

Proposal

To approve an Agreement and Plan of Reorganization between RiverSource Real Estate Fund, RiverSource LaSalle Global Real Estate Fund, RiverSource LaSalle Monthly Dividend Real Estate Fund, RiverSource LaSalle International Real Estate Fund and Columbia Real Estate Equity Fund.

 

 

Proxy Voting

 

The policy of the Board is to vote the proxies of the companies in which the Fund holds investments consistent with the procedures that can be found by visiting columbiamanagement.com. 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 columbiamanagement.com; or searching the website of the SEC at www.sec.gov.

RIVERSOURCE LASALLE INTERNATIONAL REAL ESTATE FUND — 2010 ANNUAL REPORT  43

RiverSource LaSalle International Real Estate Fund

P.O. Box 8081

Boston, MA 02266-8081

 

columbiamanagement.com

 

Item 2. Code of Ethics.

(a) The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer and principal financial officer.

(b) During the period covered by this report, there were not any amendments to a provision of the code of ethics adopted in 2(a) above.

(c) During the period covered by this report, there were no waivers, including any implicit waivers, from a provision of the code of ethics described in 2(a) above that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.

Item 3. Audit Committee Financial Expert.

The Registrant’s board of directors has determined that independent directors Pamela G. Carlton, Jeffrey Laikind, John F. Maher and Anne P. Jones, each qualify as audit committee financial experts.

Item 4. Principal Accountant Fees and Services

(a)

Audit Fees. The fees for the years ended Dec. 31 indicated below, charged by Ernst & Young LLP for professional services rendered for the audit of the annual financial statements for RiverSource LaSalle International Real Estate Fund, Inc. were as follows:

2010: $34,987                                          2009: $34,625

(b)

Audit-Related Fees. The fees for the years ended Dec. 31 indicated below, charged by Ernst & Young LLP for audit-related services rendered to the registrant related to the semiannual financial statement review and other consultations and services required to complete the audit for RiverSource LaSalle International Real Estate Fund, Inc. were as follows:

2010: $5,386                                         2009: $2,109

The fees for the years ended Dec. 31 indicated below, charged by Ernst & Young LLP for audit-related services rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were required to be pre-approved by the registrant’s audit committee related to an internal controls review performed initially in 2010 were as follows:

2010: $96,000                                         2009: $0

(c)

Tax Fees. The fees for the years ended Dec. 31 indicated below, charged by Ernst & Young LLP for tax compliance related services rendered to RiverSource LaSalle International Real Estate Fund, Inc. were as follows:

2010: $5,014                                         2009: $3,498

The fees for the years ended Dec. 31 indicated below, charged by Ernst & Young LLP for tax services rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were required to be pre-approved by the registrant’s audit committee related to tax consulting services and a subscription to a tax database were as follows:

2010: $95,840                                         2009: $60,000

(d)

All Other Fees. The fees for the years ended Dec. 31 indicated below, charged by Ernst & Young LLP for additional professional services rendered to RiverSource LaSalle International Real Estate Fund, Inc. were as follows:

2010: $0                                         2009: $0

The fees for the years ended Dec. 31 indicated below, charged by Ernst & Young LLP for other services rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were required to be pre-approved by the registrant’s audit committee were as follows:

2010: $0                                         2009: $0

(e)

(1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley pre-approval requirements, all services to be performed by Ernst & Young LLP for the registrant and for the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant must be pre-approved by the registrant’s audit committee.

(e)

(2) 100% of the services performed for items (b) through (d) above during 2010 and 2009 were pre-approved by the registrant’s audit committee.

(f)

Not applicable.

(g)

Non-Audit Fees. The fees for the years ended Dec. 31 indicated below, charged by Ernst & Young LLP to the registrant for non-audit fees and to the registrant’s

investment adviser, and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant were as follows:

2010: $2,976,201                                         2009: $804,293

(h)

100% of the services performed in item (g) above during 2010 and 2009 were pre-approved by the Ameriprise Financial Audit Committee and/or the RiverSource/Columbia Mutual Funds Audit Committee.

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.

Proxy Voting

General guidelines, policies and procedures

These Proxy Voting Policies and Procedures apply only to the funds and portfolios (the “Funds”) that historically bore the RiverSource or Seligman brands, including those renamed to bear the “Columbia” brand effective September 27, 2010.

The Funds uphold a long tradition of supporting sound and principled corporate governance. For more than 30 years, the Funds’ Boards of Trustees/Directors (“Board”), which consist of a majority of independent Board members, has determined policies and voted proxies. The Funds’ investment manager and administrator, Columbia Management Investment Advisers, LLC (“Columbia Management”), provide support to the Board in connection with the proxy voting process.

General Guidelines

The Board supports proxy proposals that it believes are tied to the interests of shareholders and votes against proxy proposals that appear to entrench management. For example:

Election of Directors

	•		The Board generally votes in favor of proposals for an independent chairman or, if the chairman is not independent, in favor of a lead independent director.
	•		The Board supports annual election of all directors and proposals to eliminate classes of directors.
	•		In a routine election of directors, the Board will generally vote with the recommendations of the company’s nominating committee because the Board believes that nominating committees of independent directors are in the best position to know what qualifications are required of directors