<PAGE>
[LOGO APPEARS HERE]
ANNUAL REPORT
December 31, 1999
LaSalle
U.S. Real Estate Fund
LaSalle
Master Trust
[LOGO APPEARS HERE]
Global Leadership in the New World of Real Estate/SM/
<PAGE>
LaSalle Master Trust
LaSalle U.S. Real Estate Fund
Annual Report - December 31, 1999
Table of Contents
Page
----
Report Highlights................................... 1
Letter To Shareholders.............................. 2
LaSalle Master Trust - U.S. Real Estate Portfolio
Statement of Net Assets........................ 9
Statement of Operations........................ 11
Statement of Changes in Net Assets............. 12
Financial Highlights........................... 13
Notes to Financial Statements.................. 14
Report of Independent Accountants.............. 16
LaSalle Investment Management Funds Inc. -
LaSalle U.S. Real Estate Fund
Statement of Assets and Liabilities............ 17
Statement of Operations........................ 18
Statement of Changes in Net Assets............. 19
Financial Highlights........................... 20
Notes to Financial Statements.................. 21
Report of Independent Accountants.............. 24
<PAGE>
- --------------------------------------------------------------------------------
LASALLE U.S. REAL ESTATE FUND
ANNUAL REPORT
DECEMBER 31, 1999
Report Highlights
. U.S. real estate fundamentals are healthy for most property types and
markets, and the vast majority of companies are posting excellent results.
The real estate business continues to benefit from the strength of the
overall economy.
. Capitals markets conditions for REITs remained negative for much of 1999,
but have improved recently. Diminished selling pressure and heavy share
repurchase activity has created a more favorable supply/demand picture for
REIT shares. We believe that this change will begin to shift investors'
focus toward company operating performance and current valuation levels and
away from short-term technical factors.
. Despite limited access to capital, we expect REIT earnings growth to remain
at respectable levels. We are currently targeting FFO per share growth of
8% - 9% in 2000 and 6% - 8% in 2001. For most REITs, the primary driver of
earnings growth is the leveraged effect of higher net operating income from
existing assets. The majority of REITs with properties subject to long-term
leases continue to benefit from the rollover of below market rate leases.
A number of REITs are generating above average growth due to new
development activity.
. The REIT market is as inexpensive as it has been in our fifteen years in
this business. As of the end of December, REIT stocks in the Fund's
portfolio were trading at a discount of roughly 20% to our year-end NAV
estimates. Also, the overall REIT industry is currently trading at an FFO
multiple of 7.5x 2000 estimates versus an historical average multiple of
over 12x.
. We believe these factors make this an excellent time to allocate assets to
the real estate sector.
- --------------------------------------------------------------------------------
1
<PAGE>
Dear Shareholder:
The LaSalle U.S. Real Estate Fund seeks total return, with a significant income
component, by investing in a diversified portfolio of REITs and real-estate
operating companies. The Fund operates under a "master/feeder" structure whereby
it invests all of its assets in the U.S. Real Estate Portfolio of LaSalle Master
Trust, a separate mutual fund with an investment objective identical to the
Fund.
The investment advisor and portfolio manager, LaSalle Investment Management
(Securities), Inc., has more than a dozen professionals dedicated solely to
investing in public real-estate securities. Its management team brings direct
operating experience in property development, management, investment and
finance, as well as more than a decade of successful real estate portfolio
management experience, to its efforts on behalf of your Fund.
Fund Performance
The following graph represents the total return based on $10,000 investment made
in the LaSalle U.S. Real Estate Fund at the trading commencement date of March
30, 1998 and held through December 31, 1999 as well as the performance of the
Wilshire Real Estate Securities and NAREIT Indices over the same period. Past
performance is not predictive of future performance.
[LEGEND APPEARS HERE]
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
LaSalle U.S. Real Estate Fund - Institutional Class LaSalle U.S. Real Estate Fund - Retail Class
--------------------------------------------------- --------------------------------------------
<S> <C> <C>
3/30/98 10,000 10,000
6/30/98 9,563 9,537
12/31/98 8,008 7,978
6/30/99 8,408 8,322
12/31/99 7,620 7,543
</TABLE>
<TABLE>
<CAPTION>
LaSalle U.S. Real Estate Fund - Retail Class
adjusted for maximum 5.0% sales charge Wilshire Real Estate Securities Index NAREIT Index
-------------------------------------------- ------------------------------------- ------------
<S> <C> <C> <C>
3/30/98 9,500 10,000 10,000
6/30/98 9,056 9,540 9,540
12/31/98 7,576 8,320 8,290
6/30/99 7,903 8,880 8,680
12/31/99 7,163 8,060 7,910
</TABLE>
- --------------------------------------------------------------------------------
Since Commencement
of Operations
Total Return 1 Year March 30, 1998
------------ ------ ------------------
LaSalle U.S. Real Estate Fund - Institutional Class (4.6%) (23.6%)
LaSalle U.S. Real Estate Fund - Retail Class (5.2%) (24.4%)
LaSalle U.S. Real Estate Fund - Retail Class
adjusted for maximum 5.0% sales charge (9.9%) (28.2%)
- --------------------------------------------------------------------------------
On December 31, 1999, the net asset value (NAV) of the Fund was $7.17 per
Institutional Class share and $7.17 per Retail Class share. In addition,
quarterly dividends were paid in 1999, totaling $0.24 per Institutional Class
share and $0.20 per Retail Class share.
1999 was a year in which stock market leadership was commanded by a narrow group
of high tech and large cap companies, with companies offering stable growth and
current income almost completely ignored. REIT earnings were up more than 10%
for the year, yet the stocks produced a negative total return. Most of this
letter is devoted
2
<PAGE>
to analyzing the real estate market and the prospects of its public companies.
In summary, we believe that there is little connection today between the
companies' fundamentals and the market's perception, but that this situation
will change, to the benefit of holders of real estate shares.
The portfolio slightly underperformed the REIT market as a whole in 1999, with
positive contributions from its concentration in office and industrial companies
coupled with under-weighting in retail stocks. These positive contributions were
offset by under-weighting in apartments and the performance of certain specialty
REITs. Another factor that affected performance was the large influx of new
subscriptions to the Fund just after the sharp increase in the REIT market in
April.
The portfolio is largely made up of high quality, higher growth companies, which
we believe will benefit if broad market investors reallocate funds to the REIT
sector, and which should increase their dominance of their markets and sectors
in the years to come.
Market Comment
With the negative recent performance of real estate stocks versus the broad
market, it is hard to believe that we are just now concluding the best decade in
the history of the real estate business, and that industry conditions remain
healthy with the potential to be more stable than they have ever been. This,
however, is the case.
In 1990 the United States economy was in serious turmoil, with much of the
discomfort caused by the expected imminent collapse of the banking and lending
systems largely brought on by the real estate excesses of the 1980s. The savings
and loan industry was bankrupt, and every market had substantial numbers of
vacant or at least bankrupt properties and developments. The real estate
industry was in depression, and the recession of the overall United States
economy was beginning to take the California economy down to its worst levels
since the Depression.
Out of this negative environment came an effective force for building a strong
real estate industry, the public REIT. For the first time ever, the leading
owners and developers of real estate were financed principally by equity, and
had significant money to invest. In addition, the executives running the
companies now had substantial capital of their own on the table subject to loss
if their companies did not do well over the long term.
Decisions became more conservative, with less temptation to do the next highly
leveraged deal in order to make payroll for the development team. With rated
debt in the picture, company finances were more widely known, and companies were
less likely to over-leverage. More information also made it more likely that new
development would be curtailed if oversupply appeared imminent in a given
market.
These factors have resulted in current conditions, which promise solid real
growth in real estate with reduced expectations of strong cyclical swings.
Profitable prosperity is the hallmark of the United States real estate industry
today, as it is of the nation's economy as a whole.
Price Earnings Ratios: S&P 500 vs. REITs - 1986-1999
[Chart appears here]
Price/4 Quarters
Forward FFO
S&P 500 Multiple
Q1 86 14.61 14.00
Q2 15.20 14.85
Q3 14.02 15.14
Q4 86 14.68 14.97
Q1 87 17.26 16.28
Q2 17.52 16.66
Q3 17.26 15.03
Q4 87 12.61 12.78
Q1 88 12.51 13.51
Q2 12.18 13.53
Q3 11.61 13.52
Q4 88 11.34 14.14
Q1 89 11.52 13.96
Q2 12.18 14.60
Q3 13.53 14.47
Q4 89 13.67 14.52
Q1 90 13.54 13.61
Q2 14.32 13.37
Q3 12.24 10.52
Q4 90 13.34 12.06
Q1 91 15.47 12.80
Q2 15.96 12.32
Q3 17.01 12.98
Q4 91 18.79 14.64
Q1 92 17.86 12.96
Q2 17.44 12.95
Q3 17.55 13.78
Q4 92 17.68 13.98
Q1 93 17.89 15.30
Q2 17.33 14.35
Q3 16.90 14.74
Q4 93 16.37 12.54
Q1 94 15.20 12.28
Q2 14.69 12.08
Q3 14.78 11.43
Q4 94 13.92 11.30
Q1 95 14.50 10.87
Q2 15.10 11.10
Q3 13.70 11.22
Q4 95 14.50 11.36
Q1 96 15.40 11.27
Q2 15.60 11.40
Q3 14.10 11.80
Q4 96 15.80 13.70
Q1 97 16.20 12.60
Q2 18.90 12.90
Q3 20.70 13.60
Q4 97 21.20 13.00
Q1 98 24.10 12.20
Q2 25.00 11.30
Q3 19.94 9.60
Q4 98 24.10 9.50
Q1 99 25.20 8.60
Q2 26.92 8.80
Q3 23.30 8.10
Q4 99 26.70 8.10
Source: Goldman Sachs
3
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In a rational world the above would translate into solid continuing gains in the
prices of real estate companies. Alas, today's world is far from rational. The
favorite word of REIT executives and analysts alike is "disconnect." Everyone
sees that earnings and asset values are rising, but public market prices for
these assets continue to fall.
One reason for the decline in REIT prices is that in the investment market greed
has almost completely eclipsed fear. With inflation thought to be out of the
picture, investors have moved away from hard assets and stable, income-producing
investments and increasingly focused on growth and concept stocks.
Another reason for the decline in the REIT market was the unusually high levels
of equity issuance that took place in 1996 and 1997, with 25% of the entire REIT
equity market's capitalization issued in 1997 alone. The departure of broad
market investors from the REIT sector, following on the heels of such high
levels of equity issuance, created an oversupply of REIT paper.
Looking ahead, we believe the supply-demand picture for REIT shares will be much
improved. Price pressure from unit investment trust redemptions and tax-loss
selling has abated and we have begun to see some signs of renewed interest both
from both value investors and institutional real estate investors in response to
unprecedented valuation levels.
Just as important, the companies have shifted their focus from equity issuance
to share repurchase programs. Over the next twelve months, we anticipate further
shrinkage in the equity base of the industry which could help tilt the supply-
demand balance in a direction that would be favorable to REIT pricing.
Capital Strategies
More and more, companies are executing plans that assume they will not access
additional public equity capital in the foreseeable future. Strategies vary.
While development and value-added acquisitions continue, they are at a
dramatically lower pace. The required return has increased, and the number of
deals that qualify has dwindled. Capital is being recycled through the sale or
joint venture of more mature properties; occasionally these properties are spun
off into new entities.
Joint ventures with institutional financial partners are proliferating, with the
REIT as general partner with a promoted interest. These ventures are typically
more highly leveraged than the REITs are themselves, with the leverage carried
off the REITs' balance sheets. Balance sheet leverage is increasing, but
coverage continues to be strong at two to three times. Often the best economic
return on capital is the repurchase of a REIT's own stock. This is occasionally
being carried to its logical conclusion through leveraged buyouts or
liquidations.
Real Estate Fundamentals
Earnings growth remained strong in 1999 for most companies in the major property
sectors (apartment, retail, and office/industrial), albeit at a slightly lower
level than 1998's record pace. The extra earning power generated by accretive
acquisitions in 1997 and 1998 has been largely replaced with stronger internal
growth as portfolios are being more effectively managed, and as slower-growth
assets are being winnowed from portfolios. To some extent, then, a faster growth
rate is being traded for higher-quality earnings.
4
<PAGE>
LaSalle Investment Management Real Estate
Company Universe: Earnings Growth Estimates
- ------------------------------------------------
Current FFO/Share Growth
Property Type Div. Yield '99 vs. '98
Apartments 7.5% 10.5%
Diversified 6.9% 14.9%
Factory Outlets 13.2% 12.8%
Health Care 18.1% 3.1%
Lodging 6.5% 6.7%
Manufactured Homes 6.8% 9.5%
Net Lease 16.4% 1.4%
Office/Industrial 7.2% 12.0%
Regional Malls 9.4% 10.1%
Self Storage 7.6% 11.1%
Shopping Centers 9.6% 11.3%
Weighted Average 8.3% 10.7%
- ------------------------------------------------
Source: LaSalle Investment Management (Securities)
Apartments
1999 was a strong year in terms of fundamentals and relative performance in the
apartment sector. New construction slowed modestly from 1998 levels and rental
demand remained strong. As a result, occupancies remained between 94%-96% for
most apartment REITs and rental growth continued to exceed inflation.
Apartment REITs significantly outperformed the broader REIT market, posting a
10.7% total return. The strong relative performance of the sector reflects
improving fundamentals and continued strong operating results for the better
apartment companies.
2000 should be another solid year for the apartment REITs. We are expecting the
apartment companies to have above average FFO per share growth and NAV per share
increases. We also believe the apartment sector has below average risk of
deteriorating fundamentals. Companies focusing on infill markets and downtown
development should have the strongest operating performance due to more
favorable fundamentals. Top markets include northern and southern California,
Boston, Chicago, New York City and Washington, D.C.
Retail
1999 was a banner year in terms of fundamentals in the retail industry. Consumer
confidence and spending reached all time highs propelling total sales to
increase 8.8% during the year; holiday sales were up 7.7%. Retail REITs,
particularly the regional mall companies, should exceed expectations for the
year and post FFO growth of 10%-12%.
Unfortunately, the strong operating results did not translate into capital
market performance. Retail REITs significantly underperformed the broader REIT
market, posting an -11.8% total return for the sector as a whole. We attribute
the underperformance in retail primarily to fears about e-commerce.
We have a positive near-term outlook for the regional mall group where leasing
momentum appears to be quite strong. We believe that the strong retail
environment will continue in 2000 and lead once again to above average internal
growth and total FFO growth of 8%-10%. We are also optimistic that the fears
about e-commerce may subside somewhat this year. Savvy regional mall owners have
dropped defensive posturing with respect to the Internet and are actively
pursuing their own Internet initiatives to enhance the in-mall shopping
experience.
5
<PAGE>
The neighborhood shopping center segment, which is more resilient to economic
swings in either direction, will benefit less from the rosy economic outlook,
but should continue to post positive internal growth in 2000. We maintain a
cautious view of this type of retail because of the competitive nature of the
retailing business and the lack of barriers to entry for new construction.
Office / Industrial
Office REITs were one of the better performing sectors in 1999. The office REIT
benchmark posted a total return of 3.3%. Fundamentals for office properties
remained healthy in 1999. Suburban office vacancies increased somewhat to 10.6%
(up 1.5% from 1998) while CBD office vacancies remained flat at 8.6%. New
construction starts slowed in 1999 as a result of capital market discipline and
office absorption remained strong.
2000 is expected to be the peak year for new office deliveries. In addition, we
anticipate a decline in net absorption due to slowing job growth. If we are
correct, vacancies should increase modestly in 2000, but remain at healthy
levels, and rental growth should slow to inflationary levels in most suburban
markets. Select CBD markets should continue to experience much stronger rental
growth. Many of the public office REITs will have strong built-in internal
growth due to rollover of below market rate leases.
We remain positive on the outlook for office REITs in 2000. The rollover of
below market leases should continue to generate strong internal growth for many
of the companies in the better markets. New development activity will also be a
major earnings driver for selected companies. Many of the office REITs are still
trading at attractive discounts to NAV.
The industrial market is in a state of healthy equilibrium. Supply and demand
for industrial space is usually fairly well matched together and that is the
case today. The growth in e-commerce should lead to strong demand for warehouse
space in the next 18 months. However, we also anticipate a strong supply
response. Market rental growth in the industrial sector is likely to be
inflationary in all but the most infill or hard to replicate markets. Same store
NOI growth in the industrial REIT market is likely to be in the 1.5% to 4.0%
range.
Hotels
Despite supply outpacing demand in 1999, RevPAR growth remained ahead of
inflation at 3.2%. Full-service hotel companies continued to have the strongest
results, with occupancies at 74% versus 60% for limited service hotels.
An out-of-favor sector, hotel REIT stocks significantly underperformed the REIT
market in 1999, down -16.2%. With supply expected to exceed demand growth again
in 2000, internal growth estimates may come under pressure in 2000.
Most of the hotel REIT stocks are trading at discounts to NAV greater than 25%
and offer dividend yields greater than 12%. However, we remain cautious on the
sector due to the current weakness in fundamentals and our expectation that
fundamentals will not rebound until at least 2001.
6
<PAGE>
[CHART APPEARS HERE]
Northeast 21%
Mideast 10%
Southeast 15%
Southwest 11%
East North Central 12%
Pacific 22%
Mountain 5%
Other 4%
The portfolio is diversified among regions of the United States as well as among
sectors. Regional emphasis is on locations that have solid underlying
demographics combined with significant restrictions on the development of new
supply. Thus there is an overweighing on the Northeast and West Coast, as well
as on central business districts in "24-hour" cities.
Price Versus Net Asset Value
The market increasingly uses net asset value (NAV) as a method for determining
the relative attractiveness of public real estate companies. NAV changes
incorporate earnings growth and the real estate capitalization rates used to
value these operating earnings. As the markets mature, earnings increases are
expected to moderate, but to remain solid.
Cap rates have been stable to slightly higher over the past few quarters. Higher
interest rates and slowing market rent growth may continue to exert modest
upward pressure on cap rates over the next several months. However, with most of
the better companies projecting healthy net operating income increases, we
believe NAV per share estimates should still increase over the next twelve
months.
Perhaps the most critical factor regarding NAVs in evaluating REITs is the very
large discount of most companies' stock prices to their Net Asset Values today.
REIT Price Versus Net Asset Value
[GRAPH APPEARS HERE]
Source: Green Street Advisors
Investment Strategy
The majority of the Fund's portfolio continues to be invested in high quality,
market dominant real estate operating companies. These tend to be larger
companies that are well positioned to generate consistent growth
7
<PAGE>
over time. They focus on building a business in specific industry segments; some
have been able to develop brands, a rarity in the real estate industry. Quality
is cheap today and the larger high quality companies should be first to rebound
in a REIT market recovery.
We generally avoid property owners with balance sheet constraints and/or
inferior property management capabilities. Some of the companies with business
and property problems will ultimately be liquidated. Occasionally, if such
companies are trading at a compelling discount to net asset value, and we
believe that an event or change in the market's perception will cause a change
in the companies relative valuations. They may be included in our portfolios for
shorter-term trading purposes.
In general, we continue to find attractive investment opportunities in all of
the major property sectors. Based on current valuation levels, with the
exception of the health care and lodging sectors, the differences in valuation
levels between the various property sectors are modest. Our primary focus in the
current market is on buying and owning high quality companies at attractive
prices, rather than making larger bets on specific property sectors.
Very truly yours,
/s/ William K. Morrill, Jr. /s/ Keith R. Pauley /s/ James A. Ulmer III
William K. Morrill, Jr. Keith R. Pauley James A. Ulmer III
President Executive Vice President Vice President
January 31, 2000
8
<PAGE>
LaSalle Master Trust - U.S. Real Estate Portfolio
- --------------------------------------------------------------------------------
Statement of Net Assets
December 31, 1999
Shares Value
- --------------------------------------------------------------------------------
Real Estate Securities - 94.5%
Apartments - 20.9%
Apartment Investment & Management Co..... 19,100 $ 760,419
Avalon Bay Communities, Inc.............. 34,988 1,200,523
Camden Property Trust.................... 23,900 654,263
Equity Residential Properties Trust...... 16,200 691,538
Essex Property Trust, Inc................ 7,600 258,400
Post Properties, Inc..................... 22,086 844,790
-----------
4,409,933
-----------
Diversified/Other - 13.3%
Catellus Development Corp.*.............. 32,200 412,563
Entertainment Properties Trust........... 45,600 601,349
Forest City Enterprises, Inc............. 6,800 190,400
Franchise Finance Corp. of America....... 20,000 478,750
Glenborough Realty Trust, Inc............ 15,400 205,975
Vornado Realty Trust..................... 28,100 913,250
-----------
2,802,287
-----------
Factory Outlets - 2.7%
Chelsea GCA Realty, Inc.................. 19,300 574,175
-----------
Hotels - 7.4%
Host Marriott Corp....................... 38,964 321,452
Meristar Hospitality..................... 11,027 176,432
Meristar Hotels & Resorts, Inc.*......... 11,800 42,038
Starwood Hotels & Resorts*............... 37,200 874,198
Wyndham International, Inc*.............. 51,418 151,040
-----------
1,565,160
-----------
Office/Industrial - 32.5%
Beacon Capital Partners, Inc. (a) (b)*... 37,500 450,000
Boston Properties, Inc................... 18,200 566,475
Duke-Weeks Realty Corp................... 57,452 1,120,314
Equity Office Properties Trust........... 44,588 1,097,980
First Industrial Realty Trust, Inc....... 8,400 230,475
Kilroy Realty Corp....................... 25,200 554,400
Mack-Cali Realty Corp.................... 32,600 849,638
PS Business Parks, Inc................... 19,250 437,938
Reckson Associates Realty Corp........... 33,500 686,750
SL Green Realty Corp..................... 6,800 147,900
Spieker Properties, Inc.................. 19,000 692,313
-----------
6,834,183
-----------
The accompanying notes are an integral part of the financial statements.
9
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<TABLE>
<CAPTION>
LaSalle Master Trust - U.S. Real Estate Portfolio
- -----------------------------------------------------------------------------------------------
Statement of Net Assets - Continued
December 31, 1999
Shares Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Regional Malls - 5.5%
The Rouse Co...................................... 27,500 $ 584,375
Simon Property Group, Inc......................... 24,500 561,969
-----------
1,146,344
-----------
Retail - 5.9%
Developers Diversified Realty Corp................ 29,000 373,375
JDN Realty Corp................................... 29,200 470,850
Kimco Realty Corp................................. 8,500 287,938
Pan Pacific Retail Properties, Inc................ 6,600 107,663
-----------
1,239,826
-----------
Self Storage - 6.3%
Public Storage, Inc............................... 43,700 991,444
Storage USA, Inc.................................. 11,100 335,775
-----------
1,327,219
-----------
Total Real Estate Securities (Cost $25,458,380)... 19,899,127
-----------
SHORT TERM INVESTMENTS - 1.3%
Temporary Investment Fund, Inc.-TempCash Portfolio 141,512 141,512
Temporary Investment Fund, Inc.-TempFund Portfolio 141,512 141,512
-----------
Total Short Term Investments (Cost $283,024)...... 283,024
-----------
TOTAL INVESTMENTS (Cost - $25,741,404)+ - 95.8%........................... 20,182,151
Other Assets in Excess of Liabilities - 4.2%.............................. 879,860
-----------
NET ASSETS - 100.0%....................................................... $21,062,011
- ----------------------- ===========
</TABLE>
+ Cost for Federal income tax purposes is $25,681,458.
* Non-income producing security.
(a) Security valued at fair value as determined in good faith under
procedures established and monitored by the Board of Trustees. At
December 31, 1999, this security represented 2.1% of net assets.
(b) Security exempt from registration under Rule 144A of Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
LaSalle Master Trust - U.S. Real Estate Portfolio
- --------------------------------------------------------------------------------
Statement of Operations
For the year ended December 31, 1999
- --------------------------------------------------------------------------------
Investment Income:
Dividend income............................................. $1,807,185
Interest income............................................. 32,083
----------
Total Investment Income............................. 1,839,268
----------
Expenses:
Advisory fees............................................... 201,354
Administration and accounting fees.......................... 95,002
Trustees fees............................................... 24,037
Audit fees.................................................. 23,240
Legal fees.................................................. 20,999
Amortization of deferred organizational costs............... 18,422
Shareholder reports......................................... 18,401
Custodian fees.............................................. 9,999
Insurance expense........................................... 6,971
Transfer agent fees......................................... 6,168
Other expenses.............................................. 5,673
----------
Total Expenses...................................... 430,266
----------
Less: Fee waivers........................................... (58,366)
----------
Net Expenses........................................ 371,900
----------
Net Investment Income............................................... 1,467,368
----------
Net realized and unrealized gain (loss) on investment:
Net realized (loss) on investments.......................... (3,622,763)
Net change in unrealized appreciation on investments........ 1,322,748
----------
Net realized and unrealized gain (loss) on investment transactions.. (2,300,015)
----------
Net (decrease) in net assets resulting from operations.............. $ (832,647)
==========
- ------------------
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
LaSalle Master Trust -- U.S. Real Estate Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Changes in Net Assets For the For the
year ended period ended
December 31, 1999 December 31, 1998*
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income.............................................. $ 1,467,368 $ 1,134,371
Net realized (loss) on investments................................. (3,622,763) (658,102)
Net change in unrealized appreciation (depreciation)
on investments..................................................... 1,322,748 (6,882,001)
----------- -----------
Net (decrease) in net assets resulting from operations............. (832,647) (6,405,732)
----------- -----------
Capital Share Transactions:
Contributions...................................................... 4,033,038 43,527,414
Withdrawals........................................................ (12,053,595) (7,306,467)
----------- -----------
Net (decrease) increase in net assets resulting from
operations......................................................... (8,020,557) 36,220,947
----------- -----------
Net (decrease) increase in net assets...................................... (8,853,204 29,815,215
Net assets at beginning of period.......................................... 29,915,215 100,000
----------- -----------
Net assets at end of period................................................ $21,062,011 $29,915,215
=========== ===========
</TABLE>
- ------------------
* Commencement of operations was March 30, 1998.
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
LaSalle Master Trust - U.S. Real Estate Portfolio
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the year For the period from
ended March 30, 1998* through
December 31, 1999 December 31, 1998
----------------- -----------------------
<S> <C> <C>
Net assets, end of period (000's)..................... $21,062 $29,915
Ratio of net expenses to average net assets (1)(2).... 1.39% 1.27%
Ratio of net investment income to average net assets (1)(3) 5.47% 5.10%
Portfolio turnover rate............................... 23% 31%
- ----------------
* Commencement of operations
</TABLE>
(1) Annualized for periods less than 1 year.
(2) The expense ratio without waivers and reimbursements for the year ended
December 31, 1999 and the period ended December 31, 1998 would have been
1.60% and 1.55%, respectively.
(3) The net investment income ratio without waivers and reimbursements for
the year ended December 31, 1999 and the period ended December 31, 1998
would have been 5.25% and 4.82%, respectively.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
LaSalle Master Trust -- U.S. Real Estate Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1 -- Organization
LaSalle Master Trust (the "Trust"), formerly known as LaSalle Partners Master
Trust, a Delaware business trust, is registered under the Investment Company Act
of 1940, as amended, as a diversified open-end management investment company
currently offering one portfolio: U.S. Real Estate Portfolio (the "Portfolio").
The Trust was organized on December 29, 1997 and commenced operations on March
30, 1998. On that date, the LaSalle U.S. Public Real Estate Securities Fund,
L.P. and the LaSalle U.S. Real Estate Fund, formerly known as LaSalle Partners
U.S. Real Estate Fund, contributed assets with a value of $38,411,064 and
$100,000, respectively, in exchange for beneficial interest in the Portfolio.
The Trust operates under a "master/feeder" structure where the feeder funds
invest substantially all of their investable assets in the Trust.
Note 2 -- Significant Accounting Policies
The following is a summary of significant accounting policies followed by the
Trust in conformity with generally accepted accounting principles for investment
companies. Such policies are consistently followed by the Trust in the
preparation of its financial statements. The preparation of financial statements
in accordance with generally accepted accounting principles may require
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
a) Security Valuation:
Portfolio securities traded on a national exchange on the valuation date are
valued at the last quoted sales price. Exchange traded securities for which
there have been no reported sales on the valuation date and securities traded
primarily in the over-the-counter market are valued at the last quoted bid
price. Securities or other assets for which market quotations are not readily
available are valued at their fair value determined in good faith under
procedures established and monitored by the Trust's Board of Trustees. These
procedures may include the use of an independent pricing service which
calculates prices based upon yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to value from dealers; and
general market conditions. Proceeds resulting from the sale of these securities
may differ significantly from their fair value. Debt obligations with maturities
of 60 days or less are valued at amortized cost.
b) Federal Income Taxes:
The Trust is classified as a partnership for federal income tax purposes. Any
interest, dividends and gains or losses of the Trust will be deemed to have been
"passed through" to the feeder funds. It is intended that the Portfolio will be
managed in such a way that an investor will be able to satisfy the requirements
of the Internal Revenue Code applicable to regulated investment companies.
c) Investment Income and Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold. Costs used in determining realized gains and losses on the sale of
investment securities are those specific to securities sold. Dividend income is
recorded on the ex-dividend date. Interest income is recorded on an accrual
basis. Expenses solely attributable to the Trust are charged directly to the
Trust, while expenses attributable to both the Trust and a feeder fund are
allocated among both.
14
<PAGE>
LaSalle Master Trust - U.S. Real Estate Portfolio
- --------------------------------------------------------------------------------
Notes to Financial Statements - Continued
- --------------------------------------------------------------------------------
d) Deferred Organization Costs:
The Trust has capitalized certain costs in connection with its organization. All
such costs are being amortized on a straight-line basis over a five-year period
beginning on the date of the commencement of operations.
Note 3 - Agreements and Other Transactions with Affiliates
The Trust has entered into an Investment Management Agreement with LaSalle
Investment Management (Securities) L.P. (the "Manager"). The Manager is entitled
to a fee from the Portfolio, which is accrued daily and payable monthly, at an
annual rate of 0.75% of the Portfolio's average daily net assets. For the year
ended December 31, 1999, the Manager voluntarily waived fees totalling $26,847.
Certain officers and trustees of the Trust are also affiliates of the Manager.
No officer or trustee of the Trust who is an officer, employee, or affiliate of
the Manager receives any compensation from the Trust.
The Trust has entered into an Administration and Accounting Services Agreement
with PFPC Inc. (the "Administrator"), under which the Administrator provides
administration and accounting services to the Trust. For the year ended December
31, 1999, the Administrator voluntarily waived fees totalling $31,519.
Note 4 - Securities Transactions
For the year ended December 31, 1999, purchases of portfolio securities (other
than short-term securities) were $6,020,903. Sales of portfolio securities were
$12,679,755.
Note 5 - Investment Transactions
At December 31, 1999, gross unrealized appreciation and depreciation for federal
income tax purposes of investment securities for the Portfolio was as follows:
Gross Unrealized Appreciation................. $ 62,903
Gross Unrealized Depreciation................. (5,623,848)
-----------
$(5,560,945)
===========
15
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Investors and Board of Trustees
of LaSalle Master Trust:
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the U.S. Real Estate Portfolio of LaSalle Master Trust (the "Trust") (formerly
LaSalle Partners Master Trust) at December 31, 1999, the results of its
operations for the year then ended and the changes in its net assets and the
financial highlights for the year then ended and the period March 30, 1998
(commencement of operations) through December 31, 1998, in conformity with
accounting principles generally accepted in the United States. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999 by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 18, 2000
16
<PAGE>
LaSalle Investment Management Funds, Inc. - LaSalle U.S. Real Estate Fund
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment in LaSalle Master Trust -- U.S. Real Estate Portfolio........ $1,681,186
Deferred organization costs............................................. 71,293
Receivable from Investment Manager...................................... 21,034
Prepaid expenses........................................................ 19,244
----------
Total Assets.................................................... 1,792,757
----------
LIABILITIES:
Accrued expenses and other liabilities.................................. 30,851
----------
NET ASSETS...................................................................... $1,761,906
==========
COMPOSITION OF NET ASSETS:
Capital Stock, par value $.01 per share, 100,000,000 shares authorized.. $ 2,457
Additional paid-in capital.............................................. 2,074,740
Accumulated undistributed net investment income......................... 28,053
Accumulated net realized (loss) on investments.......................... (85,950)
Net unrealized (depreciation) on investments............................ (257,394)
----------
$1,761,906
==========
NET ASSET VALUE PER SHARE:
Institutional Class: Net Assets........................................ $1,469,564
Shares outstanding..................................................... 204,877
----------
Net Asset Value, Offering and Redemption Price per Share............... $ 7.17
==========
Retail Class: Net Assets............................................... $ 292,342
Shares outstanding..................................................... 40,785
----------
Net Asset Value and Redemption Price per Share......................... $ 7.17
==========
Maximum Offering Price Per Share ($7.17/0.95).......................... $ 7.55
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE>
LaSalle Investment Management Funds, Inc. - LaSalle U.S. Real Estate Fund
- --------------------------------------------------------------------------------
Statement of Operations
For the year ended December 31, 1999
- --------------------------------------------------------------------------------
Investment Income:
Investment Income allocated from LaSalle Master Trust -
U.S. Real Estate Portfolio............................$ 98,932
Expenses allocated from LaSalle Master Trust -
U.S. Real Estate Portfolio............................ (19,764)
---------
Net Investment Income allocated from LaSalle Master Trust -
U.S. Real Estate Portfolio............................ 79,168
---------
Expenses:
Administration and accounting fees............................ 57,444
Transfer agent fees........................................... 49,525
Insurance fees................................................ 27,886
Directors fees................................................ 23,748
State registration fees....................................... 21,086
Legal fees.................................................... 20,605
Shareholders' reports......................................... 20,001
Amortization of organizational costs.......................... 19,013
Audit fees.................................................... 4,760
Distribution fees - Retail Class.............................. 746
Other expenses................................................ 5,717
---------
Total Expenses........................................ 250,531
---------
Less: Fee Waivers............................................. (32,661)
Expense reimbursements................................ (221,724)
---------
Net Investment Income................................................. 83,022
---------
Net realized and unrealized (loss) on investments from LaSalle Master
Trust - U.S. Real Estate Portfolio:
Net realized (loss) on investments............................ (82,421)
Net change in unrealized (depreciation) on investments........ (215,537)
---------
Net realized and unrealized (loss) on investments..................... (297,958)
---------
Net (decrease) in net assets resulting from operations................$(214,936)
=========
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
LaSalle Investment Management Funds, Inc. -- LaSalle U.S. Real Estate Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
For the For the
year ended period ended
December 31, December 31,
1999 1998*
- --------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income........................ $ 83,022 $ 5,812
Net realized (loss) on investments from
LaSalle Master Trust -- U.S Real
Estate Portfolio........................... (82,421) (3,529)
Change in unrealized (depreciation) of
investments from LaSalle Master Trust --
U.S. Real Estate Portfolio................. (215,537) (41,857)
---------- --------
Net (decrease) in net assets resulting from
operations................................. (214,936) (39,574)
---------- --------
Distributions to Shareholders:
From net investment income:
Institutional Class.......................... (46,734) (4,261)
Retail Class................................. (8,235) (1,193)
---------- --------
Total from net investment income............. (54,969) (5,454)
---------- --------
From capital:
Institutional Class.......................... -- (338)
Retail Class................................. -- (71)
---------- --------
Total from capital........................... -- (409)
---------- --------
Total Distributions.......................... (54,969) (5,863)
---------- --------
Capital Share Transactions:
Net increase in net assets resulting
from capital share transactions............ 1,833,177 144,071
---------- --------
Total increase in net assets................. 1,563,272 98,634
---------- --------
Net assets at beginning of period............ 198,634 100,000
---------- --------
Net assets at end of period.................. $1,761,906 $198,634
========== ========
</TABLE>
- ----------------
* Commencement of operations was March 30, 1998.
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
LaSalle Investment Management Funds, Inc. - LaSalle U.S. Real Estate Fund
- ----------------------------------------------------------------------------------------------------------
Financial Highlights
For a share outstanding throughout each period
- ----------------------------------------------------------------------------------------------------------
For the Year For the period from
Ended March 30, 1998* through
December 31, 1999 December 31, 1998
----------------------------- -----------------------------
Institutional Retail Institutional Retail
Class Class Class Class
------- ------- ------- -------
Net asset value, beginning of period............ $ 7.76 $ 7.77 $ 10.00 $ 10.00
------- ------- ------- -------
Increase/(Decrease) from operations:
Net investment income........................... 0.35 0.31 0.26 0.22
Net realized and unrealized (loss)
on investments................................ (0.70) (0.71) (2.24) (2.23)
------- ------- ------- -------
Total from investment operations................ (0.35) (0.40) (1.98) (2.01)
------- ------- ------- -------
Less Distributions:
Distributions from net investment income........ (0.24) (0.20) (0.24) (0.20)
Distributions from capital...................... - - (0.02) (0.02)
------- ------- ------- -------
Total Distributions............................. (0.24) (0.20) (0.26) (0.22)
------- ------- ------- -------
Net asset value, end of period.................. $ 7.17 $ 7.17 $ 7.76 $ 7.77
======= ======= ======= =======
Total Return (1)................................ (4.58)% (5.19)% (19.92)% (20.22)%
Ratios/Supplementary Data:
Net assets, end of period (000)................. $ 1,470 $ 292 $ 154 $ 45
Ratio of net expenses to
average net assets (2) (3) (5)................ 1.05% 1.45% 1.05% 1.45%
Ratio of net investment income
to average net assets (2) (4) (5)............. 6.15% 5.11% 4.28% 3.93%
Portfolio turnover rate on LaSalle Master
Trust - U.S. Real Estate Portfolio............ 23% 23% 31% 31%
- ----------------------------------
</TABLE>
* Commencement of operations.
(1) Not annualized.
(2) Annualized for periods less than 1 year.
(3) The expense ratio without waivers and reimbursements for the year ended
December 31, 1999 and the period ended December 31, 1998 for the
Institutional Class would have been 16.82% and 113.17%, respectively. For
the same periods, the Retail Class ratios would have been 28.39% and143.31%,
respectively. (4) The net investment income ratio without waivers and
reimbursements for the year ended December 31, 1999 and the period ended
December 31, 1998 for the Institutional Class would have been (9.63)% and
(106.79)%, respectively. For the same periods, the Retail Class ratios would
have been (21.80)% and (136.93)%, respectively.
(5) Expense and net investment income ratios represent the combined ratios for
the LaSalle U.S. Real Estate Fund and its pro rata share of the LaSalle
Master Trust - U.S. Real Estate Portfolio's expenses and income.
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
LaSalle Investment Management Funds, Inc. - LaSalle U.S. Real Estate Fund
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
Note 1 - Organization
LaSalle Investment Management Funds, Inc. (the "Company"), formerly known as
LaSalle Partners Funds, Inc., a Maryland corporation, is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end management
investment company currently offering one series: LaSalle U.S. Real Estate Fund
(the "Fund"), formerly known as LaSalle Partners U.S. Real Estate Fund. The
Company was organized on December 29, 1997 and commenced operations on March 30,
1998. The Fund invests solely in the U.S. Real Estate Portfolio of the LaSalle
Master Trust (the "Portfolio"), formerly known as LaSalle Partners Master Trust.
The value of the Fund's investment in the Portfolio, included in the
accompanying Statement of Assets and Liabilities, reflects the Fund's beneficial
interest in the net assets of the Portfolio. At December 31, 1999 the Fund held
a 8.0% interest in the Portfolio. The financial statements of the Portfolio are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements.
Note 2 - Significant Accounting Policies
The following significant accounting policies are consistently followed by the
Fund in the preparation of its financial statements. The preparation of
financial statements in accordance with generally accepted accounting principles
may require management to make estimates and assumptions that affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
a) Security Valuations:
The value of the Fund's beneficial interest in the Portfolio is determined by
multiplying the net assets of the Portfolio by the Fund 's proportionate share
of the Portfolio. Valuation of securities held by the Portfolio is discussed in
Note 2(a) of the financial sta tements of LaSalle Master Trust.
b) Federal Income Taxes:
It is the Fund's intention to qualify as a regulated investment company under
the Internal Revenue Code and distribute all of its taxable income, including
any net realized gains to shareholders. Accordingly, no provision for federal
taxes is required in the financial statements.
c) Investment Income and Security Transactions:
The Fund records its proportionate share of the Portfolio's net investment
income, realized and unrealized gains and losses. The Fund receives daily
allocations of investment operations from the Portfolio based on its beneficial
interest in the Portfolio.
d) Deferred Organization Expenses:
The Fund bears all costs in connection with its organization. All such costs are
amortized on a straight-line basis over a five-year period beginning on the date
of the commencement of operations.
e) Distributions to Shareholders:
Dividends, if any, from net investment income are declared and paid quarterly.
Net realized gains from investment transactions, if any, are distributed at
least annually. Distributions to shareholders are recorded on the ex-dividend
date.
21
<PAGE>
LaSalle Investment Management Funds, Inc. - LaSalle U.S. Real Estate Fund
- --------------------------------------------------------------------------------
Notes to Financial Statements - Continued
- --------------------------------------------------------------------------------
The amount of dividends from net investment income and distributions from net
realized gains are determined in accordance with federal income tax regulations
which may differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the composition of net assets based on their federal tax-basis treatment;
temporary differences do not require reclassification. Distributions which
exceed net investment income and net realized capital gains for financial
reporting purposes but not for tax purposes are reported as distributions in
excess of net investment income or net realized gains. To the extent they exceed
net investment income and net realized capital gains for tax purposes, they are
reported as distributions of capital.
f) Multiple Classes of Shares:
The Fund is divided into Institutional and Retail Class shares. The Retail Class
of shares is separately charged its distribution and shareholder services fees.
Income and expenses that are not specific to a particular class, and realized
and unrealized gains and losses, are allocated to each class based on the daily
value of the shares of each class in relation to the total value of the Fund.
Dividends are declared separately for each class and the per-share amounts
reflect differences in class-specific expenses.
Note 3 - Agreements and Other Transactions with Affiliates
LaSalle Investment Management (Securities) L.P. (the "Manager") has
contractually agreed to reimburse operating expenses in excess of 1.45% and
1.05% for the Retail and Institutional Classes, respectively, until April 30,
2000. For the year ended December 31, 1999, the Manager reimbursed the Fund
$221,724. Certain officers and directors of the Company are also officers,
employees or affilliates of the Manager. No officer or director of the Company
who is an officer, employee or affiliate of the Manager receives any
compensation from the Fund.
The Company has entered into an Administration Agreement with PFPC Inc. (the
"Administrator"), under which the Administrator provides certain fund accounting
and administrative services to the Fund. For the year ended December 31, 1999,
the Administrator voluntarily waived $32,661.
Funds Distributor, Inc. (the "Distributor") serves as the principal underwriter
and distributor of the Fund. The Company has adopted a distribution plan for the
Retail Class of the Fund pursuant to Rule 12b-1 under the Investment Company Act
of 1940. The plan provides for the payment of a distribution fee from the assets
of the Retail Class for activities primarily intended to result in the sale of
Retail Class shares. Distribution fees paid under the plan may not exceed 0.75%
annually of the average daily net assets of the Retail Class. The Board of
Directors of the Company has authorized payment of an annual distribution fee of
0.25%. For the year ended December 31, 1999 there was $746 accrued in
distribution fees.
Under a shareholder services plan adopted for the Retail Class, the Fund may pay
shareholder services fees to financial services firms and others who have
entered into shareholder services agreements with the Company. These fees are
paid for services provided to Retail Class shareholders, including shareholder
assistance and communications, and maintenance of shareholder accounts.
Shareholder services fees paid under the plan may not exceed 0.25% annually of
the average daily net assets of the Retail Class attributable to applicable
shareholder accounts. The Board of Directors of the Company has authorized
payment of an annual shareholder services fee of 0.15%. For the year ended
December 31, 1999, there was $447 accrued in shareholder services fees.
22
<PAGE>
LaSalle Investment Management Funds, Inc. - LaSalle U.S. Real Estate Fund
- --------------------------------------------------------------------------------
Notes to Financial Statements - Continued
- --------------------------------------------------------------------------------
Note 4 - Share Capital:
The Fund is authorized to issue up to 50 million Retail Class shares and 50
million Institutional Class shares with a par value of $.01 per share.
Transactions in shares of capital stock, were as follows:
<TABLE>
<CAPTION>
Institutional Class
------------------------------------------------------
Year ended Period ended
December 31, 1999 December 31, 1998
----------------------- ----------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares issued.......................... 294,434 $2,307,986 11,576 $105,054
Shares reinvested...................... 6,384 46,679 563 4,599
Shares redeemed........................ (115,757) (824,614) (2,223) (21,054)
------- ---------- ------ --------
Net increase........................... 185,061 $1,530,051 9,916 $ 88,599
======= ========== ====== ========
</TABLE>
<TABLE>
<CAPTION>
Retail Class
------------------------------------------------------
Year ended Period ended
December 31, 1999 December 31, 1998
----------------------- ----------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares issued.......................... 153,051 $1,200,009 5,613 $55,008
Shares reinvested...................... 1,056 7,966 57 472
Shares redeemed........................ (119,091) (904,849) (1) (8)
------- ---------- ----- -------
Net increase........................... 35,016 $ 303,126 5,669 $55,472
======= ========== ===== =======
</TABLE>
Note 5 - Capital Loss Carryover:
The Fund had the following capital loss carryforwards as of December 31, 1999:
Capital Loss
Carryforward Expiration Date
------------ ---------------
$ 3,529 2006
78,892 2007
These carryforwards may be applied against any realized net taxable capital
gains in subsequent years until fully utilized or until the expiration date,
whichever occurs first.
23
<PAGE>
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
of LaSalle Investment Management Funds, Inc.:
In our opinion, the accompanying statement of assets and liabilities and the
related statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
the LaSalle U.S. Real Estate Fund (the "Fund") of LaSalle Investment Management
Funds, Inc. (formerly LaSalle Partners Funds, Inc.) at December 31, 1999, the
results of its operations for the year then ended and the changes in its net
assets and the financial highlights for the year then ended and the period March
30, 1998 (commencement of operations) through December 31, 1998, in conformity
with accounting principles generally accepted in the United States. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999 by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 18, 2000
24
<PAGE>
This report and the financial statements
contained herein are submitted for the general
information of the shareholders of the Fund. This
report is not authorized for distribution to
prospective investors in the Fund unless preceded
or accompanied by a Fund prospectus containing
more information about the Fund, including
expenses. Please read the prospectus carefully
before you invest or send your money.
The Fund's shares are not deposits or obligations
of, or guaranteed or endorsed by, any bank. The
shares are not federally insured by the FDIC,
Federal Reserve Board or any other governmental
agency, and are subject to investment risks,
including possible loss of principal amount
invested.
