UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number 811-21914
RIVERSOURCE SHORT TERM INVESTMENTS SERIES, 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: 7/31
Date of reporting period: 7/31
Annual Report
(RIVERSOURCE INVESTMENTS LOGO)
RIVERSOURCE
SHORT-TERM CASH FUND
ANNUAL REPORT FOR
THE PERIOD ENDED
JULY 31, 2008
RIVERSOURCE SHORT-TERM CASH FUND SEEKS TO PROVIDE
SHAREHOLDERS WITH MAXIMUM CURRENT INCOME CONSISTENT
WITH LIQUIDITY AND STABILITY OF PRINCIPAL.
Shares of the Fund are issued solely in private placement transactions
that do not involve any public offering within the meaning of Section 4(2)
of the Securities Act of 1933, as amended (the 1933 Act). Investments
in the Fund may be made only by investment companies, common or
commingled trust funds or similar organizations or persons that are
accredited investors within the meaning of the 1933 Act.
TABLE OF CONTENTS --------------------------------------------------------------
<Table>
Your Fund at a Glance.............. 2
Fund Expenses Example.............. 3
Portfolio of Investments........... 4
Financial Statements............... 7
Notes to Financial Statements...... 10
Report of Independent Registered
Public Accounting Firm........... 17
Federal Income Tax Information..... 19
Board Members and Officers......... 20
Approval of Investment Management
Services Agreement............... 24
Proxy Voting....................... 26
</Table>
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RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 1
YOUR FUND AT A GLANCE ---------------------------------------------------------
PORTFOLIO BREAKDOWN (at July 31, 2008; % of portfolio assets)
- ---------------------------------------------------------------------
<Table>
<Caption>
Certificates of Deposit 2.8%
- ------------------------------------------------
Commercial Paper 75.3%
- ------------------------------------------------
Floating Rate Notes 10.9%
- ------------------------------------------------
Repurchase Agreements 2.8%
- ------------------------------------------------
U.S. Government Agencies 8.2%
- ------------------------------------------------
</Table>
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2 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
FUND EXPENSES EXAMPLE ----------------------------------------------------------
(UNAUDITED)
As a shareholder of the Fund, you incur ongoing costs which may include
custodian fees and other nonadvisory expenses. This example is intended to help
you understand your ongoing costs (in dollars) of investing in the Fund and to
compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the six months ended July 31, 2008.
ACTUAL EXPENSES
The first line of the table provides information about actual account values and
actual expenses. You may use the information in this line, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the first
line under the heading titled "Expenses paid during the period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table provides information about hypothetical account
values and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses, which is not the Fund's
actual return. The hypothetical account values and expenses may not be used to
estimate the actual ending account balance or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the
Fund and other funds. To do so, compare this 5% hypothetical example with the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
<Table>
<Caption>
BEGINNING ENDING EXPENSES
ACCOUNT VALUE ACCOUNT VALUE PAID DURING ANNUALIZED
FEB. 1, 2008 JULY 31, 2008 THE PERIOD(A) EXPENSE RATIO
- ------------------------------------------------------------------------------------------
Actual(b) $1,000 $1,014.40 $0.04 .01%
- ------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000 $1,024.83 $0.04 .01%
- ------------------------------------------------------------------------------------------
</Table>
(a) Expenses are equal to the Fund's annualized expense ratio as indicated
above, multiplied by the average account value over the period, multiplied
by 182/366 (to reflect the one-half year period).
(b) Based on the actual return of +1.44% for the six months ended July 31, 2008.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 3
PORTFOLIO OF INVESTMENTS -------------------------------------------------------
JULY 31, 2008
(Percentages represent value of investments compared to net assets)
INVESTMENTS IN SECURITIES
<Table>
<Caption>
U.S. GOVERNMENT AGENCIES (8.2%)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
Federal Home Loan Bank Disc Nts
08-01-08 2.26% $20,000,000 $20,000,000
08-04-08 1.73 33,000,000 32,993,758
08-08-08 2.02 50,000,000 49,977,833
08-26-08 2.31 75,000,000 74,876,562
10-15-08 2.68 50,000,000 49,722,917
Federal Home Loan Mtge Corp Disc Nts
08-04-08 1.75 36,500,000 36,493,004
---------------
TOTAL U.S. GOVERNMENT AGENCIES
(Cost: $264,064,074) $264,064,074
- -------------------------------------------------------------------------------------
<Caption>
CERTIFICATES OF DEPOSIT (2.8%)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
Credit Suisse (NY Branch)
10-03-08 2.87% $75,000,000(b) $74,997,404
Royal Bank of Canada
08-01-08 2.06 14,200,000 14,200,000
---------------
TOTAL CERTIFICATES OF DEPOSIT
(Cost: $89,197,404) $89,197,404
- -------------------------------------------------------------------------------------
<Caption>
FLOATING RATE NOTES (10.9%)(b)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
Bank of Ireland
09-12-08 2.67% $67,000,000 $67,000,000
Lehman Brothers Holdings
09-26-08 2.83 50,000,000(d) 50,000,000
Merrill Lynch & Co
11-17-08 2.62 75,000,000 75,000,000
MetLife Global Funding I
09-24-08 2.46 90,000,000 90,000,000
Wells Fargo & Co
08-18-09 2.61 70,000,000 70,000,000
---------------
TOTAL FLOATING RATE NOTES
(Cost: $352,000,000) $352,000,000
- -------------------------------------------------------------------------------------
<Caption>
COMMERCIAL PAPER (75.3%)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
ASSET-BACKED (26.1%)
Amsterdam Funding
08-13-08 2.65% $40,000,000 $39,965,200
08-07-08 2.31 45,000,000 44,980,050
09-04-08 2.55 50,000,000 49,878,167
Citibank Credit Card Issue Trust (Dakota Nts)
08-29-08 2.45 32,000,000(c) 31,937,778
Enterprise Funding LLC
08-08-08 2.26 62,000,000 61,969,258
FCAR Owner Trust Series 1
08-04-08 2.14 50,000,000 49,988,292
08-05-08 2.28 50,000,000 49,984,389
08-15-08 2.61 20,000,000 19,978,533
Gemini Securitization LLC
08-05-08 2.11 60,000,000(c) 59,982,667
08-15-08 2.50 14,000,000(c) 13,985,627
08-18-08 2.44 45,295,000(c) 45,240,457
09-09-08 2.60 2,400,000(c) 2,393,188
Old Line Funding LLC
08-15-08 2.40 44,552,000 44,508,166
08-19-08 2.40 40,000,000(c) 39,950,000
Salisbury Receivables LLC
08-25-08 2.46 50,000,000(c) 49,916,000
Sheffield Receivables
08-27-08 2.45 25,000,000(c) 24,954,861
Thames Asset Global Securities #1
08-08-08 2.31 28,000,000 27,985,844
08-13-08 2.43 74,700,000 74,635,509
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
4 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
<Table>
<Caption>
COMMERCIAL PAPER (CONTINUED)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
ASSET-BACKED (CONT.)
Thunder Bay Funding LLC
08-15-08 2.37% $39,416,000(c) $39,377,679
Windmill Funding
08-08-08 2.36 40,000,000 39,979,311
08-12-08 2.44 30,000,000 29,975,983
---------------
Total 841,566,959
- -------------------------------------------------------------------------------------
BANKING (40.3%)
Allied Irish Banks North America
08-18-08 2.26 71,000,000 70,920,873
08-29-08 2.40 47,600,000 47,509,296
Bank of America
08-01-08 2.63 40,000,000 40,000,000
08-25-08 2.49 60,000,000 59,898,000
Bank of Ireland
08-06-08 2.16 45,000,000(c) 44,984,063
08-11-08 2.36 30,000,000(c) 29,978,667
Bank of Scotland
08-15-08 2.24 50,000,000 49,953,917
Barclays US Funding
09-09-08 2.61 40,000,000 39,886,033
09-30-08 2.64 40,000,000 39,824,000
10-07-08 2.77 50,000,000 49,743,167
HSBC Finance
08-28-08 2.50 100,000,000 99,808,749
10-09-08 2.71 30,000,000 29,844,750
ING (US) Funding LLC
08-01-08 2.50 22,300,000 22,300,000
08-25-08 2.50 50,000,000 49,914,667
JPMorgan Chase & Co
10-14-08 2.65 50,000,000 49,729,694
Kredietbank Finance
09-03-08 2.44 50,000,000 49,886,792
Nordea North America
08-21-08 2.27 50,000,000 49,934,722
Rabobank USA Financial
09-09-08 2.53 45,000,000 44,875,688
Scotiabanc
08-06-08 2.04 50,000,000(c) 49,983,264
08-14-08 2.26 60,000,000(c) 59,947,999
Skandinaviska Enskilda Banken
08-07-08 2.11 50,000,000 49,979,750
09-12-08 2.56 50,000,000 49,849,792
Swedbank
08-20-08 2.39 50,000,000 49,934,688
08-22-08 2.40 50,000,000 49,927,667
UBS Finance (Delaware) LLC
08-27-08 2.55 55,000,000 54,896,325
09-02-08 2.54 30,948,000 30,877,026
09-10-08 2.53 34,000,000 33,903,667
---------------
Total 1,298,293,256
- -------------------------------------------------------------------------------------
BROKERAGE (4.7%)
Lehman Brothers Holdings
08-01-08 2.53 72,000,000(c,d) 72,000,000
Morgan Stanley
08-19-08 2.38 50,000,000 49,938,250
08-21-08 2.38 28,000,000 27,961,733
---------------
Total 149,899,983
- -------------------------------------------------------------------------------------
OTHER FINANCIAL INSTITUTIONS (4.2%)
Citigroup Funding
08-12-08 2.49 27,000,000 26,977,890
08-26-08 2.61 48,000,000 47,911,000
Toronto Dominion Holdings USA
08-29-08 2.39 60,000,000 59,886,133
---------------
Total 134,775,023
- -------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost: $2,424,535,221) $2,424,535,221
- -------------------------------------------------------------------------------------
<Caption>
REPURCHASE AGREEMENTS (2.8%)
AMOUNT
EFFECTIVE PAYABLE AT
ISSUER YIELD MATURITY VALUE(a)
BROKERAGE
Morgan Stanley & Co
dated 07-31-08, matures 08-01-08, repurchase price $90,005,350
(collateralized by U.S. Treasury STRIPS: total market value
$91,990,640)
08-01-08 5.40-6.38% $90,000,000 $90,000,000
- -------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENTS
(Cost: $90,000,000) $90,000,000
- -------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $3,219,796,699)(e) $3,219,796,699
=====================================================================================
</Table>
See accompanying Notes to Portfolio of Investments.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 5
NOTES TO PORTFOLIO OF INVESTMENTS
(a) Securities are valued by using procedures described in Note 1 to the
financial statements.
(b) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on July 31,
2008. The maturity date disclosed represents the final maturity. For
purposes of Rule 2a-7, maturity is the later of the next put or interest
rate reset date.
(c) Commercial paper sold within terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid
under guidelines established by the Fund's Board of Directors. These
securities may be resold in transactions exempt from registration, normally
to qualified institutional buyers. At July 31, 2008, the value of these
securities amounted to $564,632,250 or 17.5% of net assets.
(d) Subsequent events. See Note 7 to the financial statements.
(e) Also represents the cost of securities for federal income tax purposes at
July 31, 2008.
HOW TO FIND INFORMATION ABOUT THE FUND'S PORTFOLIO HOLDINGS
(i) The Fund files its complete schedule of portfolio holdings with the
Securities and Exchange Commission (Commission) for the first and third
quarters of each fiscal year on Form N-Q;
(ii) The Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov;
(iii)The Fund's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC (information on the operations of the
Public Reference Room may be obtained by calling 1-800-SEC-0330); and
(iv) The Fund's complete schedule of portfolio holdings, as disclosed in its
annual and semiannual shareholder reports and in its filings on Form N-Q,
is available upon request by calling (888) 791-3380.
- --------------------------------------------------------------------------------
6 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
FINANCIAL STATEMENTS -----------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2008
<Table>
<Caption>
ASSETS
Investments in securities, at value (identified cost
$3,219,796,699) $3,219,796,699
Cash 5,209
Accrued interest receivable 912,586
- -----------------------------------------------------------------------------
Total assets 3,220,714,494
- -----------------------------------------------------------------------------
LIABILITIES
Dividends payable to shareholders 708,324
Other accrued expenses 85,187
- -----------------------------------------------------------------------------
Total liabilities 793,511
- -----------------------------------------------------------------------------
Net assets applicable to outstanding capital stock $3,219,920,983
- -----------------------------------------------------------------------------
REPRESENTED BY
Capital stock -- $.01 par value $ 32,199,248
Additional paid-in capital 3,187,725,516
Accumulated net realized gain (loss) (3,781)
- -----------------------------------------------------------------------------
Total -- representing net assets applicable to outstanding
capital stock $3,219,920,983
- -----------------------------------------------------------------------------
Shares outstanding 3,219,924,764
- -----------------------------------------------------------------------------
Net asset value per share of outstanding capital stock $ 1.00
- -----------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 7
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2008
<Table>
<Caption>
INVESTMENT INCOME
Income:
Interest $128,933,278
- ---------------------------------------------------------------------------
Expenses:
Custodian fees 218,520
Printing and postage 16,327
Professional fees 47,478
Other 22,504
- ---------------------------------------------------------------------------
Total expenses 304,829
Earnings and bank fee credits on cash balances (9,219)
- ---------------------------------------------------------------------------
Total net expenses 295,610
- ---------------------------------------------------------------------------
Investment income (loss) -- net 128,637,668
- ---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) -- NET
Net realized gain (loss) on security transactions (3,781)
- ---------------------------------------------------------------------------
Net gain (loss) on investments (3,781)
- ---------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $128,633,887
- ---------------------------------------------------------------------------
</Table>
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
8 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE PERIOD FROM
YEAR ENDED SEPT. 26, 2006*
JULY 31, 2008 TO JULY 31, 2007
OPERATIONS AND DISTRIBUTIONS
Investment income (loss) -- net $ 128,637,668 $ 147,386,987
Net realized gain (loss) on investments (3,781) --
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations 128,633,887 147,386,987
- ----------------------------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income (128,637,668) (147,386,987)
- ----------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS AT A CONSTANT $1 NET ASSET VALUE
Proceeds from sales of shares 34,092,040,785 34,617,708,403
Net asset value of shares issued for reinvestment of
distributions 130,978,218 144,318,990
Payments for redemptions of shares (34,231,937,417) (31,533,284,215)
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets from capital share
transactions (8,918,414) 3,228,743,178
- ----------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets (8,922,195) 3,228,743,178
Net assets at beginning of year 3,228,843,178 100,000**
- ----------------------------------------------------------------------------------------------------
Net assets at end of year $ 3,219,920,983 $ 3,228,843,178
- ----------------------------------------------------------------------------------------------------
</Table>
* Date the Fund became available.
** Initial capital of $100,000 was contributed on Sept. 7, 2006.
The accompanying Notes to Financial Statements are an integral part of this
statement.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 9
NOTES TO FINANCIAL STATEMENTS --------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RiverSource Short-Term Cash Fund (the Fund) is a series of RiverSource Short
Term Investments Series, Inc. and is registered under the Investment Company Act
of 1940 (as amended) as a diversified, open-end management investment company.
RiverSource Short Term Investments Series, Inc. has 100 billion authorized
shares of capital stock that can be allocated among the separate series as
designated by the Board of Directors (the Board). The Fund invests primarily in
money market instruments.
Investments in the Fund may be made only by investment companies, common or
commingled trust funds or similar organizations or persons that are accredited
investors within the meaning of the Securities Act of 1933 (as amended).
At July 31, 2008, RiverSource Investments, LLC (the Investment Manager) and the
affiliated RiverSource Funds owned 100% of the Fund's outstanding shares.
The Fund's significant accounting policies are summarized below:
USE OF ESTIMATES
Preparing financial statements that conform to U.S. generally accepted
accounting principles requires management to make estimates (e.g., on assets,
liabilities and contingent assets and liabilities) that could differ from actual
results.
VALUATION OF SECURITIES
Pursuant to Rule 2a-7 of the 1940 Act, all securities are valued daily at
amortized cost, which approximates market value, in order to maintain a constant
net asset value of $1 per share.
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 to the shareholders. No provision for income or excise
taxes is thus required. The Fund is treated as a separate entity for federal
income tax purposes.
- --------------------------------------------------------------------------------
10 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
Financial Accounting Standards Board (FASB) Interpretation 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes," clarifies the accounting for
uncertainty in income taxes recognized in accordance with FASB Statement 109,
"Accounting for Income Taxes." FIN 48 prescribes a two-step process to recognize
and measure a tax position taken or expected to be taken in a tax return. The
first step is to determine whether a tax position has met the more-likely-than-
not recognition threshold and the second step is to measure a tax position that
meets the threshold to determine the amount of benefit to recognize. Management
of the Fund has concluded that there are no significant uncertain tax positions
that would require recognition in the financial statements. Generally, the tax
authorities can examine all the tax returns filed for the last three years.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of post-October losses.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded by the Fund.
The tax character of distributions paid for the period indicated is as follows:
<Table>
<Caption>
YEAR ENDED JULY 31, 2008 2007*
- -----------------------------------------------------------------
Distributions paid from:
Ordinary income.................. $128,637,668 $147,386,987
Long-term capital gain........... -- --
</Table>
* For the period from Sept. 26, 2006 (date the Fund became available) to July
31, 2007.
At July 31, 2008, the components of distributable earnings on a tax basis are as
follows:
<Table>
Undistributed ordinary income.................... $708,324
Undistributed accumulated long-term gain......... $ --
Accumulated realized loss........................ $ 3,781
Unrealized appreciation (depreciation)........... $ --
</Table>
RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161 (SFAS 161), "Disclosures about Derivative Instruments and Hedging
Activities -- an amendment of FASB Statement No. 133," which requires enhanced
disclosures about a fund's derivative and hedging activities. Funds are required
to provide enhanced disclosures about (a) how and why a fund uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect a fund's financial
position, financial performance, and cash flows. SFAS 161 is effective for
financial
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 11
statements issued for fiscal years and interim periods beginning after Nov. 15,
2008. As of July 31, 2008, management does not believe the adoption of SFAS 161
will impact the financial statement amounts; however, additional footnote
disclosures may be required about the use of derivative instruments and hedging
items.
On Sept. 20, 2006, the FASB released Statement of Financial Accounting Standards
No. 157 "Fair Value Measurements" (SFAS 157). SFAS 157 establishes an
authoritative definition of fair value, sets out a hierarchy for measuring fair
value, and requires additional disclosures about the inputs used to develop the
measurements of fair value and the effect of certain measurements reported in
the Statement of Operations for a fiscal period. The application of SFAS 157
will be effective for the Fund's fiscal year beginning Aug. 1, 2008. The
adoption of SFAS 157 is not anticipated to have a material impact on the Fund's
financial statements; however, additional disclosures will be required about the
inputs used to develop the measurements of fair value and the effect of certain
measurements reported in the Statement of Operations for a fiscal period.
DIVIDENDS TO SHAREHOLDERS
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the Fund at net asset value or payable in
cash.
OTHER
Security transactions are accounted for on the date securities are purchased or
sold. Interest income, including amortization of premium and discount, is
recognized daily.
2. EXPENSES
INVESTMENT MANAGEMENT SERVICES FEES
Under the Investment Management Services Agreement, the Investment Manager,
subject to the policies set by the Board, provides investment management
services. The Fund does not pay the investment manager a fee for services, but
it does pay taxes, brokerage commissions and nonadvisory expenses.
COMPENSATION OF BOARD MEMBERS
The Fund does not pay compensation to the board members. Compensation and
certain other core expenses are paid directly by the other RiverSource funds
that invest in this Fund.
EARNINGS CREDITS AND CUSTODIAN FEES
During the year ended July 31, 2008, the Fund's custodian fees were reduced by
$9,219 as a result of earnings credits from overnight cash balances. The Fund
pays custodian fees to Ameriprise Trust Company, a subsidiary of Ameriprise
Financial, Inc. (Ameriprise Financial), parent company of the Investment
Manager.
- --------------------------------------------------------------------------------
12 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities aggregated
$121,702,193,251 and $121,712,842,532, respectively, for the year ended July 31,
2008. Realized gains and losses are determined on an identified cost basis.
4. BANK BORROWINGS
The Fund has entered into a revolving credit facility with a syndicate of banks
headed by JPMorgan Chase Bank, N.A. (JPMCB), whereby the Fund may borrow for the
temporary funding of shareholder redemptions or for other temporary or emergency
purposes. The credit facility became effective on Oct. 18, 2007, replacing a
prior credit facility. The credit facility agreement, which is a collective
agreement between the Fund and certain other RiverSource funds, severally and
not jointly, permits collective borrowings up to $500 million. Interest is
charged to each Fund based on its borrowings at a rate equal to the federal
funds rate plus 0.30%. Each borrowing under the credit facility matures no later
than 60 days after the date of borrowing. The Fund also pays a commitment fee
equal to its pro rata share of the amount of the credit facility at a rate of
0.06% per annum. Under the prior credit facility, a Fund paid interest on its
outstanding borrowings at a rate equal to either the higher of the federal funds
effective rate plus 0.40% or the JPMCB Prime Commercial Lending Rate. The Fund
had no borrowings during the year ended July 31, 2008.
5. CAPITAL LOSS CARRY-OVER AND POST-OCTOBER LOSS
For federal income tax purposes, the Fund had a capital loss carry-over of
$1,875 at July 31, 2008, that if not offset by capital gains will expire in
2016.
Because the measurement periods for a regulated investment company's income are
different for excise tax purposes versus income tax purposes, special rules are
in place to protect the amount of earnings and profits needed to support excise
tax distributions. As a result, the Fund is permitted to treat net capital
losses realized between Nov. 1, 2007 and its fiscal year end ("post-October
loss") as occurring on the first day of the following tax year. At July 31,
2008, the Fund had a post-October loss of $1,906 that is treated for income tax
purposes as occurring on Aug. 1, 2008.
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.
6. INFORMATION REGARDING PENDING AND SETTLED LEGAL PROCEEDINGS
In June 2004, an action captioned John E. Gallus et al. v. American Express
Financial Corp. and American Express Financial Advisors Inc., was filed in the
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 13
United States District Court for the District of Arizona. The plaintiffs allege
that they are investors in several American Express Company 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. In response to defendants' motion to dismiss the
complaint, the 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 on
August 8, 2007.
In December 2005, without admitting or denying the allegations, American Express
Financial Corporation (AEFC, which is now known as Ameriprise Financial, Inc.
(Ameriprise Financial)), entered into settlement agreements with the Securities
and Exchange Commission (SEC) and Minnesota Department of Commerce (MDOC)
related to market timing activities. As a result, AEFC was censured and ordered
to cease and desist from committing or causing any violations of certain
provisions of the Investment Advisers Act of 1940, the Investment Company Act of
1940, and various Minnesota laws. AEFC agreed to pay disgorgement of $10 million
and civil money penalties of $7 million. AEFC also agreed to retain an
independent distribution consultant to assist in developing a plan for
distribution of all disgorgement and civil penalties ordered by the SEC in
accordance with various undertakings detailed at
http://www.sec.gov/litigation/admin/ia-2451.pdf. Ameriprise Financial and its
affiliates have cooperated with the SEC and the MDOC in these legal proceedings,
and have made regular reports to the RiverSource 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.
- --------------------------------------------------------------------------------
14 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
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.
7. SUBSEQUENT EVENTS
On September 15, 2008, Lehman Brothers Holdings Inc. (LEH) filed a Chapter 11
bankruptcy petition. As of the Fund's fiscal year end, it owned two LEH variable
rate note positions in its portfolio, maturing on August 1, 2008 and September
26, 2008 (August LEH Notes and September LEH Notes, respectively).The Fund
received full payment for the August LEH Notes on August 1, 2008. The value of
the September LEH Notes declined following LEH's filing of its bankruptcy
petition. In order to allow the Fund to maintain a $1 net asset value per share,
Ameriprise Financial Inc. (AFI) indicated on September 15, 2008 that it was
prepared to purchase a portion of the September LEH Notes from the Fund if
needed.
As of September 22, 2008, AFI had purchased $32.7 million of total par value of
the Fund's September LEH Notes for cash at a price equal to amortized cost plus
accrued interest in accordance with Rule 17a-9 under the 1940 Act.
Pursuant to the Fund's pricing procedures, securities are valued utilizing the
amortized cost method permitted in accordance with Rule 2a-7 under the
Investment Company Act of 1940, as amended. Rule 2a-7 also requires periodic
monitoring ("Shadow Pricing") of the deviation between the net asset value per
share of the Fund using the amortized cost method and the net asset value
determined based on fair value to ensure that the amortized cost method
continues to provide a net asset value for the Fund in accordance with
Rule 2a-7.
Consistent with the Fund's Shadow Pricing Procedure as described above, the
Fund's remaining $17.3 million position in the September LEH Notes has been fair
valued at $3.2 million as of September 22, 2008. This difference between the
fair value and the amortized cost of the LEH notes was not material to the
Fund's $1 net asset value as of September 22, 2008.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 15
8. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Fund's results.
<Table>
<Caption>
PER SHARE INCOME AND CAPITAL CHANGES(A)
Fiscal period ended July. 31, 2008 2007(b)
Net asset value, beginning of period $1.00 $1.00
- ---------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .04 .04
Net gains (losses) (both realized and
unrealized) .00(c) --
- ---------------------------------------------------------------------
Total from investment operations .04 .04
- ---------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income (.04) (.04)
- ---------------------------------------------------------------------
Net asset value, end of period $1.00 $1.00
- ---------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $3,220 $3,229
- ---------------------------------------------------------------------
Total expenses(d) .01% .01%(e)
- ---------------------------------------------------------------------
Net investment income (loss) 3.93% 5.37%(e)
- ---------------------------------------------------------------------
Total return 4.07% 4.66%(f)
- ---------------------------------------------------------------------
</Table>
(a) For a share outstanding throughout the period. Rounded to the nearest cent.
(b) For the period from Sept. 26, 2006 (date the Fund became available) to July
31, 2007.
(c) Rounds to zero.
(d) Expense ratio is before reduction for earnings and bank fee credits on cash
balances. Earnings and bank fee credits for the year ended July 31, 2008
were less than 0.01% of average net assets.
(e) Adjusted to an annual basis.
(f) Not annualized.
- --------------------------------------------------------------------------------
16 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ------------------------
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
RIVERSOURCE SHORT-TERM CASH FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of RiverSource Short-Term Cash Fund (the Fund) of
the RiverSource Short Term Investments Series, Inc. as of July 31, 2008, and the
related statement of operations for the year then ended, the statement of
changes in net assets and financial highlights for each of the periods indicated
therein. 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.
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 July 31, 2008, 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.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 17
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
RiverSource Short-Term Cash Fund of the RiverSource Short Term Investments
Series, Inc. at July 31, 2008, the results of its operations for the year then
ended, and changes in its net assets and the financial highlights for each of
the periods indicated herein, in conformity with U.S. generally accepted
accounting principles.
/s/ Ernst & Young LLP
Minneapolis, Minnesota
September 22, 2008
- --------------------------------------------------------------------------------
18 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
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 July 31, 2008
<Table>
<Caption>
INCOME DISTRIBUTIONS -- the Fund designates the following tax attributes for
distributions:
Qualified Dividend Income for individuals.................... 0.00%
Dividends Received Deduction for corporations................ 0.00%
U.S. Government Obligations.................................. 0.00%
</Table>
The Fund also designates as distributions of long-term gains, to the extent
necessary to fully distribute such capital gains, earnings and profits
distributed to shareholders on the redemption of shares.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 19
BOARD MEMBERS AND OFFICERS -----------------------------------------------------
Shareholders 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 member oversees 104
RiverSource funds. Board members serve until the next regular shareholders'
meeting or until he or she reaches the mandatory retirement age established by
the Board. Under the current Board policy, members may serve until the end of
the meeting following their 75th birthday, or the fifteenth anniversary of the
first Board meeting they attended as members of the Board, whichever occurs
first. This policy does not apply to Ms. Jones who may retire after her 75th
birthday.
INDEPENDENT BOARD MEMBERS
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Kathleen Blatz Board member since Chief Justice, Minnesota Supreme Court, 1998-2006; None
901 S. Marquette Ave. 2006 Attorney
Minneapolis, MN 55402
Age 54
- ------------------------------------------------------------------------------------------------------------------------------
Arne H. Carlson Board member since Chair, RiverSource Funds, 1999-2006; former Governor of None
901 S. Marquette Ave. 1999 Minnesota
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Pamela G. Carlton Board member since President, Springboard -- Partners in Cross Cultural None
901 S. Marquette Ave. 2007 Leadership (consulting company)
Minneapolis, MN 55402
Age 53
- ------------------------------------------------------------------------------------------------------------------------------
Patricia M. Flynn Board member since Trustee Professor of Economics and Management, Bentley None
901 S. Marquette Ave. 2004 College; former Dean, McCallum Graduate School of
Minneapolis, MN 55402 Business, Bentley College
Age 57
- ------------------------------------------------------------------------------------------------------------------------------
Anne P. Jones Board member since Attorney and Consultant None
901 S. Marquette Ave. 1985
Minneapolis, MN 55402
Age 73
- ------------------------------------------------------------------------------------------------------------------------------
Jeffrey Laikind, CFA Board member since Former Managing Director, Shikiar Asset Management American Progressive
901 S. Marquette Ave. 2005 Insurance
Minneapolis, MN 55402
Age 72
- ------------------------------------------------------------------------------------------------------------------------------
Stephen R. Lewis, Jr. Board member since President Emeritus and Professor of Economics, Carleton Valmont Industries,
901 S. Marquette Ave. 2002 and Chair of College Inc. (manufactures
Minneapolis, MN 55402 the Board since 2007 irrigation systems)
Age 69
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
20 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
INDEPENDENT BOARD MEMBERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
Catherine James Paglia Board member since Director, Enterprise Asset Management, Inc. (private None
901 S. Marquette Ave. 2004 real estate and asset management company)
Minneapolis, MN 55402
Age 55
- ------------------------------------------------------------------------------------------------------------------------------
Alison Taunton-Rigby Board member since Chief Executive Officer and Director, RiboNovix, Inc. Idera
901 S. Marquette Ave. 2002 since 2003 (biotechnology); former President, Forester Pharmaceutical, Inc.
Minneapolis, MN 55402 Biotech (biotechnology);
Age 64 Healthways, Inc.
(health management
programs)
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
BOARD MEMBER AFFILIATED WITH RIVERSOURCE INVESTMENTS*
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION OTHER
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS DIRECTORSHIPS
- ------------------------------------------------------------------------------------------------------------------------------
William F. Truscott Board member since President -- U.S. Asset Management and Chief Investment None
53600 Ameriprise 2001, Officer, Ameriprise Financial, Inc. and President,
Financial Center Vice President since Chairman of the Board and Chief Investment Officer,
Minneapolis, MN 55474 2002 RiverSource Investments, LLC since 2005; Director,
Age 47 President and Chief Executive Officer, Ameriprise
Certificate Company since 2006; Chairman of the Board,
Chief Executive Officer and President, RiverSource
Distributors, Inc. since 2006; Senior Vice
President -- Chief Investment Officer, Ameriprise
Financial, Inc. and Chairman of the Board and Chief
Investment Officer, RiverSource Investments, LLC, 2001-
2005
- ------------------------------------------------------------------------------------------------------------------------------
</Table>
* Interested person by reason of being an officer, director, security holder
and/or employee of RiverSource Investments.
The SAI has additional information about the Fund's Board members and is
available, without charge, upon request by calling RiverSource Funds at (888)
791-3380 or contacting your financial institution.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 21
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
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Patrick T. Bannigan President since 2006 Director and Senior Vice President -- Asset Management,
172 Ameriprise Financial Products and Marketing, RiverSource Investments, LLC
Center since 2006; Director and Vice President -- Asset
Minneapolis, MN 55474 Management, Products and Marketing, RiverSource
Age 42 Distributors, Inc. since 2006; Managing Director and
Global Head of Product, Morgan Stanley Investment
Management, 2004-2006; President, Touchstone
Investments, 2002-2004
- --------------------------------------------------------------------------------------------------------
Michelle M. Keeley Vice President since Executive Vice President -- Equity and Fixed Income,
172 Ameriprise Financial 2004 Ameriprise Financial, Inc. and RiverSource Investments,
Center LLC since 2006; Vice President -- Investments,
Minneapolis, MN 55474 Ameriprise Certificate Company since 2003; Senior Vice
Age 44 President -- Fixed Income, Ameriprise Financial, Inc.,
2002-2006 and RiverSource Investments, LLC, 2004-2006
- --------------------------------------------------------------------------------------------------------
Amy K. Johnson Vice President since Vice President -- Asset Management and Trust Company
5228 Ameriprise Financial 2006 Services, RiverSource Investments, LLC since 2006; Vice
Center Minneapolis, MN President -- Operations and Compliance, RiverSource
55474 Investments, LLC, 2004-2006; Director of Product
Age 42 Development -- Mutual Funds, Ameriprise Financial,
Inc., 2001-2004
- --------------------------------------------------------------------------------------------------------
Jeffrey P. Fox Treasurer since 2002 Vice President -- Investment Accounting, Ameriprise
105 Ameriprise Financial Financial, Inc. since 2002; Chief Financial Officer,
Center RiverSource Distributors, Inc. since 2006
Minneapolis, MN 55474
Age 53
- --------------------------------------------------------------------------------------------------------
Scott R. Plummer Vice President, Vice President and Chief Counsel -- Asset Management,
5228 Ameriprise Financial General Counsel and Ameriprise Financial, Inc. since 2005; Chief Counsel,
Center Secretary since 2006 RiverSource Distributors, Inc. since 2006; Vice
Minneapolis, MN 55474 President, General Counsel and Secretary, Ameriprise
Age 49 Certificate Company since 2005; Vice President -- Asset
Management Compliance, Ameriprise Financial, Inc.,
2004-2005; Senior Vice President and Chief Compliance
Officer, USBancorp Asset Management, 2002-2004
- --------------------------------------------------------------------------------------------------------
Jennifer D. Lammers Chief Compliance U.S. Asset Management Chief Compliance Officer,
172 Ameriprise Financial Officer since 2006 RiverSource Investments, LLC since 2006;
Center Director -- Mutual Funds, Voyageur Asset Management,
Minneapolis, MN 55474 2003-2006; Director of Finance, Voyageur Asset
Age 47 Management, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
22 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
FUND OFFICERS (CONTINUED)
<Table>
<Caption>
NAME, POSITION HELD
ADDRESS, WITH FUND AND PRINCIPAL OCCUPATION
AGE LENGTH OF SERVICE DURING PAST FIVE YEARS
- --------------------------------------------------------------------------------------------------------
Neysa M. Alecu Money Laundering Compliance Director and Anti-Money Laundering Officer,
2934 Ameriprise Financial Prevention Officer Ameriprise Financial, Inc. since 2004; Manager Anti-
Center since 2004 Money Laundering, Ameriprise Financial, Inc., 2003-
Minneapolis, MN 55474 2004; Compliance Director and Bank Secrecy Act Officer,
Age 44 American Express Centurion Bank, 2000-2003
- --------------------------------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 23
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT ----------------------------------------------------------------------
RiverSource Investments, LLC ("RiverSource Investments" or the "investment
manager"), a wholly-owned subsidiary of Ameriprise Financial, Inc. ("Ameriprise
Financial"), serves as the investment manager to the Fund. Under an investment
management services agreement (the "IMS Agreement") RiverSource Investments
provides investment advice and other services to the Fund and all RiverSource
funds (collectively, the "Funds").
On an annual basis, the Fund's Board of Directors (the "Board"), including the
independent Board members (the "Independent Directors"), considers renewal of
the IMS Agreement. RiverSource Investments prepared detailed reports for the
Board and its Contracts Committee in March and April 2008, including reports
based on data provided by independent organizations to assist the Board in
making this determination. In addition, throughout the year, the Board (or its
committees) reviews information prepared by RiverSource Investments addressing
the services RiverSource Investments provides and Fund performance. The Board
accords particular weight to the work, deliberations and conclusions of the
Contracts, Investment Review and Compliance Committees in determining whether to
continue the IMS Agreement. At the April 9-10, 2008 in-person Board meeting,
independent legal counsel to the Independent Directors reviewed with the
Independent Directors various factors relevant to the Board's consideration of
advisory agreements and the Board's legal responsibilities related to such
consideration. Following an analysis and discussion of the factors identified
below, the Board, including all of the Independent Directors, approved renewal
of the IMS Agreement.
Nature, Extent and Quality of Services Provided by RiverSource Investments: The
Board analyzed various reports and presentations it had received detailing the
services performed by RiverSource Investments, as well as its expertise,
resources and capabilities. The Board specifically considered many developments
during the past year concerning the services provided by RiverSource
Investments, including, in particular, the continued investment in, and
resources dedicated to, the Fund's operations, particularly in the areas of
trading systems, new product initiatives, legal and compliance. Further, in
connection with the Board's evaluation of the overall package of services
provided by RiverSource Investments, the Board considered the quality of the
administrative and transfer agency services provided by RiverSource Investments'
affiliates to the Fund. The Board also reviewed the financial condition of
RiverSource Investments (and its affiliates) and each entity's ability to carry
out its responsibilities under the IMS Agreement. The Board also discussed the
acceptability of the terms of the IMS Agreement (including the relatively broad
scope of services required to be performed by RiverSource Investments). The
Board concluded that the services
- --------------------------------------------------------------------------------
24 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
- --------------------------------------------------------------------------------
being performed under the IMS Agreement were of a reasonably high quality,
particularly in light of recent market conditions.
Based on the foregoing, and based on other information received (both oral and
written, including the information on investment performance referenced below)
and other considerations, the Board concluded that RiverSource Investments and
its affiliates were in a position to continue to provide a high quality and
level of services to the Fund.
Investment Performance: For purposes of evaluating the nature, extent and
quality of services provided under the IMS Agreement, the Board carefully
reviewed the investment performance of the Fund. In this regard, the Board
considered a report detailing the Fund's performance over various periods
(including since inception), recent Fund inflows (and outflows) and a comparison
of the Fund's net assets from December 2006 to December 2007. The Board observed
that the Fund's investment performance met expectations.
Comparative Fees, Costs of Services Provided and the Profits Realized By
RiverSource Investments and its Affiliates from their Relationships with the
Fund: The Board reviewed comparative fees and the costs of services to be
provided under the IMS Agreement. The Board accorded particular weight to the
notion that the level of fees should reflect a rational pricing model applied
consistently across the various product lines in the Funds' family, while
assuring that the overall fees for each fund are generally in line with the
"pricing philosophy" (i.e., that the total expense ratio of each fund, with few
exceptions, is at or below the median expense ratio of funds in the same
comparison group). The Board observed that the Fund, commonly referred to as a
"cash pool fund," is designed to serve as a vehicle for other RiverSource funds
to invest their cash balances as a way to improve their portfolio
diversification and returns. Because RiverSource Investments collects management
fees on the funds that invest in the Fund, the Fund does not carry management
fees. The Board also noted that the Fund does not carry administrative fees,
transfer agency fees or distribution fees.
The Board also considered the expected profitability of RiverSource Investments
and its affiliates in connection with RiverSource Investments providing
investment management services to the Fund. In this regard, the Board referred
to a detailed profitability report, discussing the profitability to RiverSource
Investments and Ameriprise Financial from managing and operating the Fund,
including data showing comparative profitability since inception. The Board
concluded that profitability levels were reasonable.
- --------------------------------------------------------------------------------
RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT 25
APPROVAL OF INVESTMENT MANAGEMENT SERVICES
AGREEMENT (continued) ----------------------------------------------------------
Economies of Scale to be Realized: Given that the Fund does not pay any
investment management services fees, the Board determined not to accord weight
to the lack of any material economies of scale associated with the growth of the
Fund.
Based on the foregoing, the Board, including all of the Independent Directors,
concluded that the fees were fair and reasonable in light of the extent and
quality of services provided. In reaching this conclusion, no single factor was
determinative. On April 10, 2008, the Board, including all of the Independent
Directors, approved the renewal of the IMS Agreement.
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 as stated in the Statement
of Additional Information (SAI). You may obtain a copy of the SAI without charge
by calling RiverSource Funds at (888) 791-3380; contacting your financial
institution; or searching the website of the Securities and Exchange Commission
(SEC) at http://www.sec.gov. Information regarding how the Fund voted proxies
relating to portfolio securities is filed with the SEC by August 31 for the most
recent 12-month period ending June 30 of that year, and is available without
charge by visiting riversource.com/funds; or searching the website of the SEC at
www.sec.gov.
S-6283 D (9/08)
- --------------------------------------------------------------------------------
26 RIVERSOURCE SHORT-TERM CASH FUND -- 2008 ANNUAL REPORT
Item 2. (a) The Registrant has adopted a code of ethics that applies to the
Registrant's principal executive officer and principal financial
officer. A copy of the code of ethics is filed as an exhibit to this
form N-CSR.
(b) During the period covered by this report, there were not any
amendments to the provisions of the code of ethics adopted in 2(a)
above.
(c) During the period covered by this report, there were not any
implicit or explicit waivers to the provisions of the code of ethics
adopted in 2(a).
Item 3. The Registrant's board of directors has determined that independent
directors Pamela G. Carlton, Jeffrey Laikind and Anne P. Jones, each
qualify as audit committee financial experts.
Item 4. Principal Accountant Fees and Services
Fund - Related Fees
(a) Audit Fees. The fees for the year ended July 31, to Ernst & Young LLP for
professional services rendered for the audits of the annual financial
statements for RiverSource Short Term Investments Series, Inc. were as
follows:
2008 - $26,125 2007 - $24,650
(b) Audit - Related Fees. The fees for the year ended July 31, to Ernst & Young
LLP for additional professional services rendered in connection with the
registrant's security count pursuant to Rule 17f-2 and the semiannual
financial statement reviews for RiverSource Short Term Investments Series,
Inc. were as follows:
2008 - $875 2007 - $795
(c) Tax Fees. The fees for the year ended July 31, to Ernst & Young LLP for tax
compliance related services for RiverSource Short Term Investments Series,
Inc. were as follows:
2008 - $3,180 2007 - $3,000
(d) All Other Fees. The fees for the year ended July 31, to Ernst & Young LLP
for additional professional services rendered for RiverSource Short Term
Investments Series, Inc. were as follows:
2008 - $0 2007 - $0
(e) (1) Audit Committee Pre-Approval Policy. Pursuant to Sarbanes-Oxley
pre-approval requirements, all services to be performed by Ernst & Young
LLP for the registrant and to the registrant's investment adviser and any
entity controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant must be
pre-approved by the audit committee.
(e) (2) 100% of the services performed for items (b) through (d) above during
2008 and 2007 were pre-approved by the audit committee.
(f) Not applicable.
(g) Non-Audit Fees. The fees for the year ended July 31, to Ernst & Young LLP
by the registrant for non-audit fees and by the registrant's investment
adviser, and any entity controlling, controlled by, or under common control
with the adviser that provides ongoing services to the registrant were as
follows:
2008 - $617,255 2007 - $235,875
(h) 100% of the services performed in item (g) above during 2008 and 2007 were
pre-approved by the Ameriprise Financial Audit Committee and/or the
RiverSource Mutual Funds Audit Committee.
Item 5. Audit Committee of Listed Registrants. Not applicable.
Item 6. The complete schedule of investments is included in Item 1 of this
Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies. Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchase of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers. Not applicable.
Item 10. Submission of matters to a vote of security holders. Not
applicable.
Item 11. Controls and Procedures.
(a) Based upon their evaluation of the registrant's disclosure controls
and procedures as conducted within 90 days of the filing date of this
Form N-CSR, the registrant's Principal Financial
Officer and Principal Executive Officer have concluded that those
disclosure controls and procedures provide reasonable assurance that
the material information required to be disclosed by the registrant on
this report is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's
rules and forms.
(b) There were no changes in the registrant's internal controls over
financial reporting that occurred during the registrant's last fiscal
half-year (the registrant's second fiscal half-year in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
Item 12. Exhibits.
(a)(1) Code of ethics as applies to the Registrant's principal
executive officer and principal financial officer, as required to be
disclosed under Item 2 of Form N-CSR, is attached as Ex. 99.CODE ETH.
(a)(2) Separate certification for the Registrant's principal executive
officer and principal financial officer, as required by Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are attached as EX.99.CERT.
(a)(3) Not applicable.
(b) A certification by the Registrant's principal executive officer and
principal financial officer, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(b) under the Investment
Company Act of 1940, is attached as EX.99.906 CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) RiverSource Short Term Investments Series, Inc.
By /s/ Patrick T. Bannigan
-------------------------------------
Patrick T. Bannigan
President and Principal Executive
Officer
Date October 3, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By /s/ Patrick T. Bannigan
-------------------------------------
Patrick T. Bannigan
President and Principal Executive
Officer
Date October 3, 2008
By /s/ Jeffrey P. Fox
-------------------------------------
Jeffrey P. Fox
Treasurer and Principal Financial
Officer
Date October 3, 2008