PAGE
IDS
Utilities
Income
Fund
1994 semiannual report
The primary goal of IDS Utilities Income Fund, Inc. is a high level of
current income. Secondary goals are growth of income and capital.
The fund invests primarily in securities of public utility companies.
Distributed by
American Express
Financial Advisors Inc.
<PAGE>
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Dependable
dividends
Making money in the stock market isn't limited to trying to find stocks
with rising prices. Many investors prefer to focus on the steady income
stream provided by securities that pay substantial dividends.
And perhaps no segment of the market has a more consistent record
of paying dividends than the utilities industry - the companies
that provide basics such as electricity, water and telephone service.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 16
Directors and officers 20
IDS mutual funds 21
<PAGE>
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To our shareholders
(Picture of William R. Pearce)
William R. Pearce
President of the fund
(Picture of Richard H. Warden)
Richard H. Warden
Portfolio manager
From the president
All of the funds in the ids mutual fund group held shareholder meetings on
Nov. 9, 1994. The meetings, which were well-attended, approved all of the
proposals advanced by management. Among the proposals were:
- - The election of directors and the selection of KPMG Peat Marwick LLP
as independent auditors for each of the funds in the group.
- - A new investment management agreement that will become effective for
each fund when it begins offering multiple classes of shares, now
planned to occur in March, 1995.
- - A change in investment policy that will permit the funds to adopt
a master/feeder structure if and when the board of each fund
determines that it is in the best interest of the shareholders.
- - And, finally, changes to the funds' "fundamental investment
policies" that, among other things, allow the board to
modify them should it deem appropriate.
Specifically related to this fund, in January, Bern Fleming succeeded
Richard Warden as portfolio manager. Mr. Fleming has been with the
company since 1985, and previously served as a securities analyst
covering the utilities industry.
William R. Pearce
From the portfolio manager
Despite pressure on prices of utilities stocks caused primarily by
rising interest rates, IDS Utilities Fund continued to provide a
solid dividend and produced a positive total return during the first
half of its fiscal year (July through December 1994). While the fund's
net asset value was lower at the end of the period, distributions to
shareholders, which include dividends and capital gains payments, more
than made up for the difference. (When capital gains are paid, the net
asset value is automatically reduced by a like amount. Total return
includes net asset value change and distributions.)
Changes in interest rates play a key role in the performance of utilities
stocks. When interest rates decline, the dividends paid by utilities stocks
provide greater relative value to investors, and that in turn usually makes
prices of those stocks go up. When rates rise, utility stock prices usually
fall. During the past six months, interest rates, prompted by the Federal
Reserve's desire to restrain the economy and thereby keep inflation under
control, generally crept higher, though not nearly to the degree they rose
during the first several months of 1994.
<PAGE>
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(From the portofolio manager continued)
Holding their own
Still, the major sectors of the portfolio - stocks of domestic electric,
telephone and natural gas companies - either held their own or performed
positively much of the time. The only notable exception was last November,
when a rapid rise in interest rates resulted in a sharp decline,
particularly among prices of electric utility stocks - the most
interest-rate sensitive stocks in the utility group. The most consistently
productive holdings were those of foreign utilities, which comprised about
20% of the portfolio's assets during the period. Electric companies based
in the United Kingdom, to which we had increased our exposure, were
especially strong. Although they made up a relatively small portion of the
portfolio, companies that supply telecommunications equipment to telephone
companies generated the biggest stock-price gains.
As for changes to the portfolio, they were modest. We reduced our holdings
among natural gas stocks because of falling natural gas prices, and we
let our cash reserves build up somewhat toward the end of the year. On
Dec. 31, 1994, approximately 80% of the portfolio's assets were invested
in pure utility securities, both here and abroad.
Encouraging signs
During the opening weeks of 1995, utility stocks, led by electrics, enjoyed
a strong advance. While we think it's unlikely that will be sustained
throughout the year, we do expect better overall performance from the
group than we saw last year.
As we noted at the outset of this letter, the biggest factor will continue
to be interest rates. At this writing, it appears that we're nearing the
peak for rates during this economic cycle. Once rates stabilize, that
should provide a more solid foundation for utility stock prices. In
addition, with some question about whether other types of companies
will be able to generate enough profits to justify higher stock prices as
the year progresses, investors may be increasingly attracted to utilities
given their substantial and consistent dividend stream. If that scenario
plays out, it would lend further support to utilities' performance this year.
Richard H. Warden
<PAGE>
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6-month performance
(All figures per share)
Net asset value (NAV)
______________________________
Dec. 31, 1994 $ 5.94
June 30, 1994 $ 6.23
Decrease $(0.29)
______________________________
Distributions
July 1, 1994 - Dec. 31, 1994
______________________________
From income $ 0.21
From capital gains $ 0.11
Total distributions $ 0.32
______________________________
Total return* +0.5%
*If you purchased shares in the fund during this period,
your return also would have been affected by the sales
charge, as described in the prospectus.<PAGE>
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<TABLE>
<CAPTION>
IDS Utilities Income Fund, Inc.
Your fund's ten largest holdings
(Pie chart) The ten holdings listed here make up 20.78% of the fund's net assets
______________________________________________________________________________________________________________
Percent Value
(as fund's net assets)(as of Dec. 30, 1994)
_____________________________________________________________________________________
<S> <C> <C>
AT&T 3.43% $20,100,000
Provides long distance services throughout the United States and to
other countries. The company also manfactures, for itself and others,
many of the products used in long-distance communications.
Enron 2.60 15,250,000
Enron Corp. is an integrated natural gas company divided into four
business segments: Enron Gas Services is a relatively new business
that was created to meet the need for long-term gas contracting; Enron
Power is a builder and operator of cogeneration projects worldwide;
and Enron Liquid Fuels is one of the nation's processors on natural gas.
U S WEST 2.43 14,250,000
Provides telecommunications services to more than 40% of the
United States in 14 western states.
Pacific Telesis Group 2.19 12,825,000
The sixth-largest U.S. telephone holing company, it provides local
phone service in parts of California and Nevada.
Eskom (11% Bond Series E 2008) 2.18 12,755,705
South African electric utility.
BellSouth 1.85 10,825,000
Provides telecommunication services to Florida, Georgia, Louisiana,
Tennessee, North Carolina, Alabama, South Carolina, Kentucky and
Mississippi.
CINergy 1.60 9,350,000
Supplies electricity and natural gas to the southwestern portion of
Ohio and adjacent areas in Kentucky and Indiana. The company's fuel
mix is 100% coal.
Equitable Resources 1.51 8,815,625
Equitable Resources is an integrated natural gas company involved in
all segments of the natural gas industry.
Northern States Power 1.50 8,800,000
Northern States Power Co. is well-run electric and gas utility serving
Minnesota,Wisconsin, North and South Dakota, and Michigan, with
Minneapolis-St. Paul as the principal service area. Primarily an electric
utility, the company's fuel mix 60% coal, 40% nuclear, negligible
amounts of hydro and gas.
Veba 1.49 8,711,925
Conglomerate with interest in energy, chemicals and telecommunications.
/TABLE
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Financial statements
Statement of assets and liabilities
IDS Utilities Income Fund, Inc.
Dec. 31, 1994
<TABLE>
<CAPTION>
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
(Unaudited)
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $612,518,569) $592,985,356
Receivable for investment securities sold 599,206
Dividends and accrued interest receivable 5,733,569
U.S. government securities held as collateral (Note 4) 8,091,864
_____________________________________________________________________________________________________________
Total assets 607,409,995
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 93,943
Dividends payable to shareholders 1,797,403
Payable for investment securities purchased 3,228,340
Payable upon return of securities loaned (Note 4) 16,115,864
Accrued investment management and services fee 256,332
Accrued distribution fee 30,250
Accrued transfer agency fee 75,129
Other accrued expenses 128,006
Open option contracts written, at value (premium received $76,872) (Note 5) 75,000
_____________________________________________________________________________________________________________
Total liabilities 21,800,267
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $585,609,728
_____________________________________________________________________________________________________________
Represented by
Capital stock -- authorized 10,000,000,000 shares $.01 par value;
outstanding 98,624,785 shares $ 986,248
Additional paid-in capital 607,723,278
Undistributed net investment income (Note 1) 379
Accumulated net realized loss (Note 6) (3,568,836)
Unrealized depreciation (19,531,341)
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $585,609,728
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 5.94
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
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Financial statements
Statement of operations
IDS Utilities Income Fund, Inc.
Six months ended Dec. 31, 1994
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Dividends (net of foreign taxes withheld of $201,899) $13,098,733
Interest 3,808,878
_____________________________________________________________________________________________________________
Total income 16,907,611
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 1,680,376
Distribution fee 192,718
Transfer agency fee 479,611
Compensation of directors 6,616
Compensation of officers 3,717
Custodian fees 95,619
Postage 81,508
Registration fees 36,558
Reports to shareholders 29,957
Audit fees 10,250
Administrative 5,719
Other 13,046
_____________________________________________________________________________________________________________
Total expenses 2,635,695
_____________________________________________________________________________________________________________
Investment income -- net 14,271,916
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions (including gain of $461,791
from foreign currency transactions) (Note 3) (322,420)
Net realized gain on expired option contracts written (Note 5) 1,183,435
_____________________________________________________________________________________________________________
Net realized gain on investments and foreign currency 861,015
Net change in unrealized appreciation or depreciation (11,347,576)
_____________________________________________________________________________________________________________
Net loss on investments and foreign currency (10,486,561)
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $ 3,785,355
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
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<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Utilities Income Fund, Inc.
_____________________________________________________________________________________________________________
Operations and distributions Dec. 31, 1994 June 30, 1994
Six months ended Year ended
_____________________________________________________________________________________________________________
(Unaudited)
<S> <C> <C>
Investment income -- net $ 14,271,916 $ 33,188,365
Net realized gain on investments and foreign currency 861,015 33,152,763
Net change in unrealized appreciation or depreciation (11,347,576) (79,156,630)
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations 3,785,355 (12,815,502)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income (15,477,915) (33,138,713)
Net realized gain (15,343,476) (47,384,723)
Excess distribution of realized gain (Note 1) (461,791) --
_____________________________________________________________________________________________________________
Total distributions (31,283,182) (80,523,436)
_____________________________________________________________________________________________________________
Capital share transactions
_____________________________________________________________________________________________________________
Proceeds from sales of
5,023,473 and 30,856,915 shares (Note 2) 31,507,766 218,564,064
Net asset value of 4,855,945 and 11,002,888 shares
issued in reinvestment of distributions 29,160,718 75,411,470
Payments for redemptions of
15,739,154 and 30,240,418 shares (98,459,126) (204,489,583)
_____________________________________________________________________________________________________________
Increase (decrease) in net assets from capital share transactions
representing net reduction of
5,859,736 and net addition of 11,619,385 shares (37,790,642) 89,485,951
_____________________________________________________________________________________________________________
Total decrease in net assets (65,288,469) (3,852,987)
Net assets at beginning of period 650,898,197 654,751,184
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$379 and $1,206,378) $585,609,728 $650,898,197
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
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Notes to financial statements
IDS Utilities Income Fund, Inc.
(Unaudited as to Dec. 31, 1994)
______________________________________________________________________________
1. Summary of significant accounting policies
The fund is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company. Significant
accounting policies followed by the fund are summarized below:
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price; securities for which market quotations
are not readily available are valued at fair value according to methods
selected in good faith by the board of directors. Determination of fair value
involves, among other things, reference to market indexes, matrixes and data
from independent brokers. Short-term securities maturing in more than 60 days
from the valuation date are valued at the market price or approximate market
value based on current interest rates; those maturing in 60 days or less are
valued at amortized cost.
Option transactions
In order to produce incremental earnings, protect gains, and facilitate buying
and selling of securities for investment purposes, the fund may buy or write
options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the
credit standing of the other party. The fund also may buy and sell put and
call options and write covered call options on portofolio securities and may
write cash-secured put options. The risk in writing a call option is that the
fund gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the fund pays a premium whether or not the
option is exercised. The fund also has the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not
exist.
<PAGE>
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The fund
will realize a gain or loss upon expiration or closing of the option
transaction. When options on debt securities or futures are exercised, the
fund will realize a gain or loss. When other options are exercised, the
proceeds on sales for a written call option, the purchase cost for a written
put option or the cost of a security for a purchased put or call option is
adjusted by the amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
fund may buy and sell stock index futures contracts traded on any U.S. or
foreign exchange. The fund also may buy or write put and call options on these
contracts. Risks of entering into futures contracts and related options
include the possibility that there may be an illiquid market and that a change
in the value of the contracts or option may not correlate with changes in
the value of the underlying securities. Upon entering into a futures contract,
the fund is required to deposit either cash or securities in an amount
(initial margin) equal to a certain percentage of the contract value.
Subsequent payments (variation margin) are made or received by the fund
each day. The variation margin payments are equal to the daily changes in the
contract value and are recorded as unrealized gains and losses. the fund
recognizes a realized gain or loss when the contract is closed or expires.
<PAGE>
Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange.
Foreign currency amounts related to the purchase or sale of securities and
income and expenses are translated at the exchange rate on the transaction
date. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses. In the statement of operations, net realized gains or losses from
foreign currency transactions may arise from sales for foreign currency,
closed forward contracts, exchanges gains or losses realized between the trade
date and settlement dates on securities transactions, and other translation
gains or losses on dividend, interest income and foreign withholding taxes.
The fund may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The fund is subject to the credit risk that the
other party will not complete the obligations of the contract.
Federal taxes
Since the fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of
losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes, and losses
deferred due to "wash sale" transactions. 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. The
effect on dividend distributions of certain book-to-tax differences is
presented as "excess distributions" in the statement of changes in net assets.
Also, due to the timing of
<PAGE>
PAGE
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.
Dividends to shareholders
Dividends from net investment income, declared daily and paid each calendar
quarter, are reinvested in additional shares of the fund at net asset value or
payable in cash. Capital gains, when available, are distributed along with the
last income dividend of the calendar year.
Other
Security transactions are accounted for on the date securities are purchased
or sold. Dividend income is recognized on the ex-dividend date and interest
income, including level-yield amortization of premium and discount, is accrued
daily.
______________________________________________________________________________
2. Expenses and sales charges
Under terms of an agreement dated Nov. 14, 1991, the fund pays American
Express Financial Corporation a fee for managing its investments,
recordkeeping and other specified services. The fee is a percentage of the
fund's average daily net assets consisting of a group asset charge in reducing
percentages from 0.46% to 0.32% annually on the combined net assets of all
non-money market funds in the IDS MUTUAL FUND GROUP and an individual annual
asset charge of 0.14% of average daily net assets. <PAGE>
PAGE
The fund also pays American Express Financial Corporation a distribution fee
at an annual rate of $6 per shareholder account and a transfer agency fee at
an annual rate of $15 per shareholder account. The transfer agency fee is
reduced by earnings on monies pending shareholder redemptions.
American Express Financial Corporation will assume and pay any expenses
(except taxes and brokerage commissions) that exceed the most restrictive
applicable state expense limitation.
Sales charges by American Express Financial Advisors Inc. for distributing
fund shares were $675,782 for the six months ended Dec. 31, 1994. The fund
also pays custodian fees to American Express Trust Company, an affiliate of
American Express Financial Corporation.
The fund has a retirement plan for its independent directors. Upon retirement,
directors receive monthly payments equal to one-half of the retainer fee for
as many months as they served as directors up to 120 months. There are no
death benefits. The plan is not funded but the fund recognizes the cost of
payments during the time the directors serve on the board. The retirement
plan expense amounted to $2,890 for the six months ended Dec. 31, 1994.
______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $161,306,902 and $226,265,121, respectively, for the
six months ended Dec. 31, 1994. Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with American Express
Financial Corporation were $28,225 for the six months ended Dec. 30, 1994.
______________________________________________________________________________
4. Lending of portfolio securities
At Dec. 31, 1994, securities valued at $15,676,227 were on loan to brokers.
For collateral, the fund received $8,024,000 in cash and U.S. government
securities valued at $8,091,864. Income from securities lending amounted to
$74,358 for the six months ended Dec. 31, 1994. The risks to the fund of
securities lending are that the borrower may not provide additional collateral
when required or return the securities when due.
<PAGE>
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5. Option contracts written
The number of contracts and premium amounts associated with option contracts
written is as follows:
Six months ended Dec. 31, 1994
___________________________________________________________________________
Puts Calls
Contracts Premium Contracts Premium
____________________________________________________________________________
Balance June 30, 1994 -- $ -- -- $ --
Open 3,300 274,353 14,900 1,586,892
Closed (1,000) (66,748) (3,250) (708,414)
Exercised (250) (27,374) (2,900) (334,405)
Expired (1,550) (103,359) (8,750) (544,073)
____________________________________________________________________________
Balance Dec. 31, 1994 500 $ 76,872 -- $ --
____________________________________________________________________________
6. Capital loss carryover
For federal income tax purposes, the fund had a capital loss carryover of
approximately $3,586,000 at Dec. 31, 1994, that if not offset by subsequent
capital gains, will expire in 2003.<PAGE>
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<TABLE>
<CAPTION>
7. Financial highlights
The table below shows certain important financial
information for evaluating the fund's results.
Fiscal period ended June 30,
Per share income and capital changes*
1994** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $6.23 $7.05 $6.35 $5.67 $5.67 $5.54
beginning of period
Income from investment operations:
Net investment income .14 .31 .32 .33 .35 .37
Net gains (losses) (.11) (.38) .89 .73 .05 .19
(both realized
and unrealized)
Total from investment .03 (.07) 1.21 1.06 .40 .56
operations
Less distributions:
Dividends from net (.15) (.31) (.33) (.32) (.35) (.37)
investment income
Distributions from (.16) (.44) (.18) (.06) (.05) (.06)
realized gains
Excess distribution (.01) -- -- -- -- --
of realized gains
Total distributions (.32) (.75) (.51) (.38) (.40) (.43)
Net asset value, $5.94 $6.23 $7.05 $6.35 $5.67 $5.67
end of period
Ratios/supplemental data
1994** 1994 1993 1992 1991 1990
Net assets, end of period $586 $651 $655 $406 $252 $197
(in millions)
Ratio of expenses to .84%*** .82% .86% .92% .90% .96%
average daily net assets
Ratio of net income to 4.53%*** 4.55% 4.78% 5.37% 6.37% 6.65%
average daily net assets
Portfolio turnover rate 27% 102% 64% 49% 57% 53%
(excluding short-term
securities)
Total return+ 0.5%++ (1.7%) 19.9% 19.2% 7.3% 10.3%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Dec. 31, 1994 (Unaudited).
***Adjusted to an annual basis.
+Total return does not reflect payment of a sales charge.
++For the fiscal period ended Dec. 31, 1994, the annualized total return is 1.0%
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
Investments in securities
IDS Utilities Income Fund, Inc.
(Percentages represents value of
Dec. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (76.8%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Communications equipment (2.1%)
Motorola 100,000 $ 5,787,500
Northern Telecom 200,000 6,675,000
____________
Total 12,462,500
_____________________________________________________________________________________________________________________________
Energy (0.9%)
Amoco 50,000 2,956,250
Noble Affiliates 100,000 2,475,000
____________
Total 5,431,250
_____________________________________________________________________________________________________________________________
Financial services (9.1%)
Alexander Haagan Property 200,000 2,950,000
Avalon Property 150,000 3,450,000
Crown Amer 200,000 (b) 2,700,000
Equity Residential 75,000 2,250,000
First Industrial Realty 175,000 3,412,500
Home Properties REIT 210,000 4,121,250
JDN Realty 53,100 1,062,000
Malan Realty 175,000 2,340,625
MGI Properties 75,000 1,050,000
Mid-Amer Apart Communities REIT 64,600 1,728,050
Mills 170,000 3,081,250
Price Club REIT 94,500 2,929,500
Prime Residential REIT 108,000 1,714,500
Regency Realty 175,000 2,931,250
Simon Property 100,000 2,425,000
Sizeler Property Investment 275,000 2,887,500
Southwestern Property Trust 175,000 2,143,750
Summit Properties 200,000 3,850,000
Weeks 100,000 2,187,500
Wellsford Residential 183,825 3,860,325
____________
Total 53,075,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
<PAGE>
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Health care (2.5%)
Amer Health Property 120,000 2,370,000
LTC Properties 300,000 3,975,000
Meditrust 120,000 3,630,000
Omega Healthcare Investors 200,000 4,825,000
____________
Total 14,800,000
_____________________________________________________________________________________________________________________________
Utilities - electric (18.8%)
Amer Electric Power 190,000 6,246,250
Central Louisiana Electric 260,000 6,142,500
CINergy 400,000 9,350,000
DPL 250,000 5,125,000
DQE 100,000 2,962,500
Enron Global Power & Pipeline 260,000 (b,e) 5,720,000
IES Inds 200,000 5,050,000
Illinova 175,000 3,806,250
LG&E Energy 165,000 6,084,375
Northeast Utilities 300,000 6,487,500
Northern States Power 200,000 8,800,000
PacifiCorp 350,000 6,343,750
Public Service Colorado 200,000 5,875,000
Rochester Gas & Electric 200,000 4,175,000
SCANA 107,300 4,520,013
SCE 400,000 5,850,000
Southern Co 300,000 6,000,000
Southwestern Public Service 150,000 3,975,000
Texas Utilities 100,000 3,200,000
UtiliCorp United 150,000 3,975,000
____________
Total 109,688,138
______________________________________________________________________________________________________________________________
<PAGE>
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Utilities - gas (10.3%)
Brooklyn Union Gas 275,000 6,118,750
Coastal 100,000 2,575,000
Connecticut Energy 18,900 368,550
Enron 500,000 15,250,000
Equitable Resources 325,000 8,815,625
New Jersey Resources 375,000 8,484,375
NICOR 175,000 3,981,250
Seagull Energy 100,000 (b) 1,912,500
Sonat 100,000 2,800,000
Southwest Gas 100,000 1,412,500
Tenneco 84,917 3,608,972
Williams 200,000 5,025,000
____________
Total 60,352,522
_____________________________________________________________________________________________________________________________
Utilities - telephone (15.6%)
AirTouch Communications 200,000 (b) $ 5,825,000
AT&T 400,000 20,100,000
BellSouth 200,000 10,825,000
Comsat 150,000 2,793,750
GTE 100,000 3,037,500
MCI Communications 350,000 6,431,250
MFS Communications 100,000 (b) 3,275,000
Nynex 100,000 3,675,000
Pacific Telesis Group 450,000 12,825,000
SBC Communications 200,000 8,075,000
U S WEST 400,000 14,250,000
____________
Total 91,112,500
_____________________________________________________________________________________________________________________________
<PAGE>
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Foreign (17.5%)(c)
Aboitiz Equity Ventures 18,920 (b) 411,510
Anglian Water 350,000 2,806,650
British Sky Broadcasting 61,300 (b) 1,471,200
Capex 150,000 (b) 2,250,000
Chile Telephone 55,000 4,331,250
Eastern Electric 250,000 3,035,500
Empresa Nacional de Electric ADR 100,000 (e) 4,050,000
Endesa 62,600 (e) 1,611,950
Hong Kong Telecom 2,000,000 (e) 3,812,000
Iberdrola 1,000,000 6,169,000
Kepco Rural Electric 170,000 (b,e) 3,633,750
London Electricity 275,000 (b) 3,209,800
Lyonnaise Des Eaux & De L'Eclairage 30,000 2,634,330
Manweb 235,000 (b) 3,202,580
Natl Power 800,000 6,120,800
Northern Electric 150,000 2,347,050
Powergen 1,000,000 8,371,000
Sceptre Resources 600,000 (b) 3,903,060
Seabil 1,500,000 (b) 816,000
Seaboard Electric 450,000 3,407,850
Severn Trent Water 350,000 (b) 2,902,200
Shandong Huaneng Power 200,000 (b) 1,925,000
Southern Electric 150,000 (b) 1,894,050
Tarragon Oil & Gas 150,000 (b) 1,523,790
Tele Danmark ADR 205,000 (b) 5,227,500
Telefonica de Espana ADR 200,000 7,025,000
Telefonos de Mexico Cl A ADR 25,000 (h) 1,025,000
Telewest Communications 75,000 (b) 1,987,500
Veba 25,000 (e) 8,711,925
Yorkshire Electricity Group 250,000 (b) 2,843,750
____________
Total 102,660,995
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $459,710,222) $449,582,905
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
Preferred stocks (6.8%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Boise Cascade
1.625% Cv 140,000 $ 3,342,500
Cointel
5.04% Cv 100,000 (g) 5,000,000
Freeport-McMoran
$4.375 Cv 50,000 (d) 2,350,000
Kaiser Aluminum 275,000 (g) 2,921,875
KENETECH
1.67% Cv 197,500 (g) 3,036,562
Natural Gas
10.50% Cv 5,000,000 4,480,000
NEXTEL Communications
5.50% Cv 194,000 3,395,000
Philippine Long Distance
3.50% Cm Cv 80,000 (e) 4,330,000
5.75% Cv 70,000 (d) 2,310,000
Transco Energy
$4.75 Cm Cv 105,000 5,250,000
Western Gas Resources
2.625% Cv 110,000 3,492,500
_____________________________________________________________________________________________________________________________
Total preferred stocks
(Cost: $48,073,541) $ 39,908,437
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
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<TABLE>
<CAPTION>
Bonds (9.5%)
_____________________________________________________________________________________________________________________________
Issuer and Principal Value(a)
coupon rate amount
______________________________________________________________________________________________________________________________
<S> <C> <C>
Domestic (5.6%)
Appalachian Power
9.125% 1st Mtge 2019 $5,640,000 $ 5,604,750
Bell Telephone Pennsylvania
7.375% 2033 5,000,000 4,275,000
GTE South
9% Deb 2029 5,000,000 4,900,000
Pacific Gas & Electric
7.25% 1st Mtge 2026 7,500,000 6,253,125
Public Service Electric & Gas
8.50% 1st Mtge 2022 2,970,000 2,832,637
Questar Pipeline
9.375% 2021 3,000,000 3,131,250
Southern California Edison
8.875% 2023 6,000,000 5,842,500
____________
Total 32,839,262
_______________________________________________________________________________________________________________________________
Foreign (3.9%)(c)
Eskom
(South African Rand)
11% 2008 74,875,000 12,755,705
Hydro-Quebec
(Canadian Dollar)
8.50% 2029 5,000,000 4,712,500
Rainy River Forest
(Canadian Dollar)
8% 2004 700,500 496,879
Seabil
(New Zealand Dollar)
9% 1999 4,500,000 2,563,856
TransCanada Pipeline
(U.S. Dollar)
9.875% 2021 2,000,000 2,180,000
____________
Total 22,708,940
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $56,788,994) $ 55,548,202
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE
<TABLE>
<CAPTION>
Short-term securities (8.2%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agencies (1.3%)
Federal Home Loan
Bank Disc Note
01-04-95 5.92% $3,600,000 $3,597,640
Federal Home Loan Bank
Western Financial Savings
01-09-95 6.02 3,800,000 3,794,300
Federal Home Loan
Mortgage Corp Disc Note
01-11-95 5.81 600,000 598,937
____________
Total 7,990,877
_____________________________________________________________________________________________________________________________
Commercial paper (6.7%)
Aon
01-24-95 6.01 6,600,000 6,573,732
Avco Financial Services
01-23-95 5.98 3,900,000 3,885,175
Boc Group
01-03-95 5.86 4,000,000 3,998,050
Campbell Soup
01-31-95 5.86 4,000,000 3,979,953
Corporate Asset Funding
01-24-95 5.85 4,500,000 4,482,540
Exxon Asset Management
01-06-95 5.78 5,700,000 (f) 5,694,519
Pitney Bowes
01-26-95 5.88 2,800,000 2,788,170
Reed Elsevier
01-27-95 6.00 2,200,000 (f) 2,190,149
St. Paul Companies
01-12-95 5.96 1,500,000 (f) 1,497,040
Siemens
02-17-95 6.00 4,000,000 3,968,320
__________
Total 39,057,648
_______________________________________________________________________________________________________________________________<PAGE>
Letter of credit (0.2%)
Bank of America-
Hyundai Motor Finance
01-18-95 6.07 900,000 897,287
_______________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $47,945,812) $ 47,945,812
_______________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $612,518,569)(i) $592,985,356
_______________________________________________________________________________________________________________________________
<PAGE>
PAGE
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities, principal amounts are denominated
in the currency indicated.
(d) Represents a security sold under Rule 144A, which is exempt from registration under the Securities Act
of 1933, as amended. This security has been determined to be liquid under guidelines established
by the board of directors.
(e) Security is partially or fully on loan. See Note 4 to the financial statements.
(f) 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 board of directors.
(g) PRIDES - Preferred Redeemed Increased Dividend Equity Securities are structured as convertible
preferred securities issued by a company. Investors receive an enhanced yield but based upon a specific
formula, potential appreciation is limited. PRIDES pay dividends, have voting rights, are noncallable
for three years and upon maturity, convert into shares of common stocks.
(h) At Dec. 31, 1994, cash or short-term securities were designated to cover open put options
written as follows:
Number of Exercise Expiration
Issuer contracts price date Value(a)
_____________________________________________________________________________________
Telefonos de Mexico 500 $40 Jan. 1995 $75,000
_____________________________________________________________________________________
(i) At Dec. 31, 1994, the cost of securities for federal income tax purposes was approximately $612,498,000
and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $26,313,000
Unrealized depreciation (45,826,000)
_____________________________________________________________________________________________________________________________
Net unrealized depreciation $(19,513,000)
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE
Directors and officers
Directors and officers of the fund
_____________________________________________________________________
President and interested director
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent directors
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international affairs,
The Reader's Digest Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer,
Minnesota Mining and Manufacturing Company (3M).
Edson W. Spencer
Former chairman and chief executive officer, Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar Corporation.
_____________________________________________________________________
Interested directors who are officers and/or employees of American
Express Financial Corporation.
William H. Dudley
Exective vice president, American Express Financial Corporation.
David R. Hubers
President and chief executive officer, American Express Fianacial
Corporation.
John R. Thomas
Senior vice president, American Express Financial Corporation.
_____________________________________________________________________
Other officer
Leslie L. Ogg
Vice president of all funds in the IDS MUTUAL FUND GROUP and general
counsel and treasurer of the publicly offered funds.<PAGE>
PAGE
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of
capital, constant liquidity and the highest possible current income
consistent with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
Income investments
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income.
Secondary objective is capital growth. Risk varies by bond quality.
IDS Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to
seek high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in long-term, high-yielding corporate fixed-income
securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) cornucopia<PAGE>
PAGE
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated,
lower risk bond categories, or the equivalent, and in government bonds.
(icon of) greek column
IDS Strategy, Income Fund
Invests primarily in corporate and government bonds to seek high
current income while conserving capital. Also may seek capital
appreciation when consistent with its primary goals.
(icon of) chess piece
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the timely
payment of principal and interest by the U.S. government, its agencies
and instrumentalities. Seeks a high level of current income and
safety of principal consistent with its type of investments.
(icon of) federal building
IDS Strategy, Short-Term Income Fund
Invests primarily in short-term and intermediate-term bonds and notes
to seek a high level of current income.
(icon of) chess piece
Tax-exempt income investments
These funds provide tax-free income by investing in municipal bonds.
The income is generally free from federal income tax. Risk varies
by bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in medium- and lower-quality municipal bonds and
notes. Lower-quality securities generally involve greater risk of
principal and income.
(icon of) shield with basket of apples enclosed<PAGE>
PAGE
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities
to provide income to residents of each respective state that is
exempt from federal, state and local income taxes. (New York
is the only state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
IDS Tax-Exempt Bond Fund
Invests mainly in bonds and notes of state or local government
units, with at least 75% in the four highest rated, lowest risk bond
categories.
(icon of) shield with Greek column
IDS Insured Tax-Exempt Fund
Invests primarily in municipal securities that are insured as to
the timely payment of principal and interest. The insurance
feature minimizes credit risk of the fund but does not guarantee
the market value of the fund's shares.
(icon of) shield with eagle head
Growth and income investments
These funds focus on securities of medium to large, well-established
companies that offer long-term growth of capital and reasonable income
from dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20%
of its assets in the U.S. market.
(icon of) three flags
IDS Strategy, Worldwide Growth Fund
Invests primarily in common stocks of companies throughout the world
that offer potential for superior growth. Holdings may range from
small- to large- capitalization stocks, including those of companies
involved in areas of rapid economic growth.
(icon of) chess piece
IDS Managed Retirement Fund
Invests in a combination of common stocks, fixed-income
investments and money market securities to seek a maximum total
return through a combination of growth of capital and current income.
(icon of) bird in a nest
<PAGE>
PAGE
IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
(icon of) three apple trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Stock Fund
Invests in common stocks of companies representing many
sectors of the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Strategy, Equity Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) chess piece
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) electrical cord
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high current
income and, secondarily, to benefit from the growth potential offered
by stock investments.
(icon of) four puzzle pieces
IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice<PAGE>
PAGE
Growth investments
Funds in this group seek capital growth, primarily from common stocks.
They are high risk mutual funds with a potential for high reward.
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies
emphasizing technological innovation and productivity enhancement.
Buys and holds larger growth-oriented stocks.
(icon of) ship
IDS Strategy, Aggressive Equity Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS Growth Fund
Invests primarily in companies that have above-average potential
for long-term growth as a result of new management, marketing
opportunities or technological superiority.
(icon of) flower
IDS Global Growth Fund
Invests in stocks of companies throughout the world that are
positioned to meet market needs in a changing world economy.
These companies offer above-average potential for long-term growth.
(icon of) world
IDS New Dimensions Fund
Invests primarily in companies with significant growth
potential due to superiority in technology, marketing or management.
The fund frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
<PAGE>
PAGE
Specialty growth investment
This fund aggressively seeks capital growth as a hedge against inflation.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies
that explore for, mine and process or distribute gold and other
precious metals. This is the most aggressive and most speculative
IDS mutual fund.
(icon of) cart of precious gems
For more complete information about any of these funds, including charges
and expenses, you can obtain a prospectus by contacting your financial
planner or writing to American Express Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534. Read it carefully before you invest or
send money.
<PAGE>
PAGE
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone phones only), including current
fund prices and performance, account values and recent account
transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Utilities Income Fund
IDS Tower 10
Minneapolis, MN 55440-0010
