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IDS Utilities Income Fund
1995 annual report
(prospectus enclosed)
(Icon of) An electrical cord
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.
(This annual report includes a prospectus that describes in detail
the fund's objective, investment policies, risks, sales charges,
fees and other matters of interest. Please read the prospectus
carefully before you invest or send money.)
Distributed by American Express Financial Advisors Inc.
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PAGE 2
(Icon of) An electrical cord
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.
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Contents
(Icon of) One open book inside of another.
The purpose of this annual report is to tell investors how the fund
performed.
The prospectus, which is bound into the middle of this annual
report, describes the fund in detail.
1995 annual report
From the president 4
From the portfolio manager 4
Ten largest holdings 6
Making the most of your fund 7
Long-term performance 8
Independent auditors' report 9
Financial statements 10
Notes to financial statements 13
Investments in securities 24
IDS mutual funds 28
Federal income tax information 31
1995 prospectus
The fund in brief
Goals 3p
Types of fund investments and their risks 3p
Manager and distributor 3p
Portfolio manager 3p
Alternative sales arrangements 3p
Sales charge and fund expenses 4p
Performance
Financial highlights 6p
Total returns 7p
Key terms 9p
Investment policies and risks
Facts about investments and their risks 10p
Alternative investment option 15p
Valuing assets 15p
How to buy, exchange or sell shares
Alternative sales arrangements 16p
How to buy shares 18p
How to exchange shares 21p
How to sell shares 21p
Reductions and waivers of the sales charge 25p
Special shareholder services
Services 29p
Quick telephone reference 29p
Distributions and taxes
Dividend and capital gain distributions 30p
Reinvestments 30p
Taxes 31p
How the fund is organized
Shares 34p
Voting rights 34p
Shareholder meetings 34p
Directors and officers 34p
Investment manager and transfer agent 36p
Distributor 37p
About American Express Financial Corporation
General information 38p
Appendix
Descriptions of derivative instruments 39p
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PAGE 4
To our shareholders
(Photo of) William R. Pearce, President of the fund
(Photo of) Bernhard M. Fleming, Portfolio manager
From the president
As I indicated in the fund's previous reports, new agreements
between the fund and American Express Financial Corporation were
approved by shareholders in November 1994. The new agreements
became effective when the fund began offering multiple classes of
shares on March 20, 1995.
The advantage of offering more than a single class of shares is
that investors may choose how they wish to pay sales charges.
These charges compensate your American Express financial advisor
(formerly called your IDS planner), who is committed to providing
you with outstanding services.
Adding new classes of mutual fund shares does make the presentation
of financial information in this report more complex. However, we
will continue our effort to make the reports easier to read and
understand. Meanwhile, your American Express financial advisor is
available to answer your questions.
I also want to introduce the new manager of this fund, Bernhard
Fleming, who assumed his duties in January 1995. His review of the
past period follows this letter.
William R. Pearce
From the portfolio manager
Utilities stocks staged a comeback during the second half of the
fiscal year, giving the fund a positive-return for the entire 12-
month period (July 1994 through June 1995).
Changes in interest rates play a key role in the performance of
utilities stocks. When interest rates decline, prices of these
stocks usually go up. When rates rise, stock prices usually fall.
During the last half of 1994, interest rates, prompted by the
Federal Reserve's desire to restrain the economy and thereby keep
inflation under control, generally crept higher.
Still, the major sectors of the portfolio - stocks of domestic
electric, telephone and natural gas companies - held their own 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.
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PAGE 5
Turnaround begins
However, the first half of this calendar year, we're pleased to
report, was a different story. Interest rates declined, boosting
the value of utilities stocks in general. Stocks of domestic
electric companies, which had been poor performers for more than
two years as they suffered from uncertainty stemming from talk of
industry deregulation, led the rebound. They were supported by
more moderate advances in telephone/telecommunications and natural
gas stocks.
Although they do not comprise a large portion of the portfolio,
REITs (real estate investment trusts) have recently been relatively
poor performers. Nevertheless, they have continued to provide a
generous yield, and we expect them to perform better should
interest rates decline.
On the foreign front, where we maintained about 20% of portfolio
assets, results were mixed. For example, our holdings among
electric utility stocks in the United Kingdom generated good
performance in 1994, but slumped this year.
As for portfolio changes, they were modest. Most of them stemmed
from a change in portfolio managers last January, which resulted in
some portfolio pruning during the early months of 1995. Worth
noting is the fact that our recent purchases have centered on
increasing dividend income without raising the overall risk level
of the portfolio. As part of that strategy, we added some higher-
yielding debt securities issued by domestic utilities.
Interest rates are the key
With inflation appearing to remain under control, we see little
likelihood of a sustained run-up in long-term interest rates in the
months ahead. In fact, it's possible that rates could be even
lower by year-end. If that proves true, utilities stocks should
benefit from that environment. In addition, the cloud of
uncertainty over the industry created by potential regulatory
changes seems to be less threatening than in recent years. But
regardless of the investment environment, we'll continue to
concentrate on providing a steady income stream for shareholders.
Bernhard Fleming
Class A
12-month performance
(All figures per share)
Net assest value (NAV)
June 30, 1995 $ 6.26
June 30, 1994 $ 6.23
Increase $ 0.03
Distributions
July 1, 1994-June 30, 1995
From income $ 0.36
From capital gains $ 0.11
Total distributions $ 0.47
Total return** +8.4%***
Class B
March 20, 1995-June 30, 1995
(All figures per share)
Net asset value (NAV)
June 30, 1995 $ 6.26
March 20, 1995* $ 5.98
Increase $ 0.28
Distributions
March 20, 1995*-June 30, 1995
From income $ 0.13
From capital gains $ --
Total distributions $ 0.13
Total return** +6.9%***
Class Y
March 20, 1995-June 30, 1995
(All figures per share)
Net asset value (NAV)
June 30, 1995 $ 6.26
March 20, 1995* $ 5.98
Increase $ 0.28
Distributions
March 20, 1995*-June 30, 1995
From income $ 0.15
From capital gains $ --
Total distributions $ 0.15
Total return** +7.2%***
*Inception date.
**The prospectus discusses the effects of sales charge, if any, on
the various classes.
***The total return is a hypothetical investment in the fund with
all distributions reinvested.
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PAGE 6
<TABLE>
<CAPTION>
IDS Utilities Income Fund, Inc.
Your fund's ten largest holdings
(Pie chart) The ten holdings listed here make up 19.81% of the fund's net assets
Percent Value
as fund's net assets) (as of June 30, 1995)
<S> <C> <C>
Enron 2.89% $17,562,500
An integrated natural gas company divided into four
business segments: Enron Pipeline Group is an
interstate, federally-regulated pipeline; 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 2.74 16,650,000
Provides telecommunications services to more than
40% of the United States in 14 western states.
Eskom (11% Bond Series E 2008) 2.38 14,469,594
South African electric utility.
BellSouth 2.09 12,700,000
Provides telecommunication services to Florida,
Georgia, Louisiana, Tennessee, North Carolina,
Alabama, South Carolina, Kentucky and Mississippi.
Public Service Colorado 1.87 11,375,000
Provides electric, natural gas and steam heat services
to 75% of Colorado's population.
AT&T 1.75 10,625,000
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.
FLP Group 1.59 9,656,250
A diversified electric utility. The company's fuel mix
is 25% purchased power, 50% oil and gas and 25% nuclear.
DQE 1.55 9,400,000
The holding company for Duquesne Light Company, which
furnishes electricity to metropolitan Pittsburgh.
Northern States Power 1.52 9,225,000
An electric and gas utility serving Minnesota,
Wisconsin, North and South Dakota, and Michigan,
with Minneapolis-St. Paul as the principal service
area.
New Jersey Resources 1.42 8,671,875
A holding company that serves more than 315,000
residential, commerical and industrial customers in
suburban New Jersey through its principal subsidiary,
New Jersy Natural Gas.
</TABLE>
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PAGE 7
Making the most of your fund
Average annual total return
(as of June 30, 1995)
Class A
1 year 5 years Since inception*
+3.02% +9.20% +10.75%
*Aug. 1, 1988
Total returns for Class A, Class B and Class Y for the period from
March 20, 1995 to June 30, 1995 were +1.8%, +1.9% and +7.2%,
respectively. March 20, 1995 was the inception date for Class B
and Class Y. Total return for Class A is shown for comparative
purposes. The performance of Class B and Class Y will vary from
the performance of Class A based on differences in sales charges
and fees.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
Figures reflect the deduction of the maximum 5% sales charge. This
was a period of widely fluctuating security prices. Past
performance is no guarantee of future results.
Build your assets systematically
To keep your assets growing steadily, one of the best ways to
invest in the fund is by dollar-cost averaging -- a time-tested
strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money
regularly. You'll automatically buy more shares when the fund's
share price is low, fewer shares when it is high.
This does not ensure a profit or avoid a loss if the market
declines. But, if you can continue to invest regularly through
changing market conditions, it can be an effective way to
accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Month Amount Per-share Number of shares purchased
invested market price
Jan $100 $20 5.00
Feb 100 18 5.56
Mar 100 17 5.88
Apr 100 15 6.67
May 100 16 6.25
June 100 18 5.56
July 100 17 5.88
Aug 100 19 5.26
Sept 100 21 4.76
Oct 100 20 5.00
(footnotes to table) By investing an equal number of dollars each
month...
(arrow in table pointing to April) you automatically buy more
shares when the per share market price is low.
(arrow in table pointing to September) and fewer shares when the
per share market price is high.
You have paid an average price of only $17.91 per share over the 10
months, while the average market price actually was $18.10.
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PAGE 8
Three ways to benefit from a mutual fund:
o your shares increase in value when the fund's investments do
well
o you receive capital gains when the gains on investments sold
by the fund exceed losses
o you receive income when the fund's dividends, interest and
short-term gains exceed its expenses.
All three make up your total return. And you potentially can
increase your investment if, like most investors, you reinvest your
dividends and capital gain distributions to buy additional shares
of the fund or another fund.
Class A*
How your $10,000 has grown in IDS Utilities Income Fund
$20,257
Utilities
Income Fund
S&P 500
Stock Index
Average annual total return
$9,500 (as of June 30, 1995)
Since
1 year 5 years 8/1/88
+3.02% +9.20% +10.75%
'88 '89 '90 '91 '92 '93 '94 '95
* The graph above is for Class A only. Class B and Class Y are not
shown. Total returns for class A, Class B and Class Y for the
period from March 20, 1995 to June 30, 1995 were +1.8%, +1.9% and
+7.2%, respectively. March 20, 1995 was the inception date for
Class B and Class Y. Total return for Class A is shown for
comparative purposes. The performance of Class B and Class Y will
vary from the performance of Class A based on differences in sales
charges and fees.
Assumes: Holding period from 8/1/88 to 6/30/95. Returns do not
reflect taxes payable on distributions. Also see "Performance" in
the fund's current prospectus. Reinvestment of all income and
capital gain distributions for the fund, with a value of $8,366.
Standard & Poor's 500 Stock Index (S&P 500), an unmanaged list of
common stocks, is frequently used as a general measure of market
performance. However, the S&P 500 companies are generally larger
than those in which the fund invests.
On the chart above you can see how the fund's total return compared
to a widely cited performance index, the S&P 500. In comparing
Utilities Income Fund to this index, you should take into account
the fact that the fund's performance reflects the maximum sales
charge of 5%, while such charges are not reflected in the
performance of the index. If you were actually to buy individual
stocks, any brokerage commissions that you pay would reduce your
total return as well.
Your investment and return values fluctuate so that your shares,
when redeemed, may be worth more or less than the original cost.
This was a period of widely fluctuating security prices. Past
performance is no guarantee of future results.
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IDS Utilities Income Fund, Inc.
Annual Financial Information
___________________________________________________________________
Independent auditors' report
The board of directors and shareholders
IDS Utilities Income Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Utilities Income Fund, Inc. as of June 30, 1995, and the
related statement of operations for the year then ended and the
statements of changes in net assets for each of the years in the
two-year period ended June 30, 1995, and the financial highlights
for each of the years in the six-year period ended June 30, 1995,
and for the period from August 1, 1988 (commencement of operations)
to June 30, 1989. These financial statements and the financial
highlights are the responsibility of fund management. Our
responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Investment securities held in custody are
confirmed to us by the custodian. As to securities purchased and
sold but not received or delivered, and securities on loan, we
request confirmations from brokers, and where replies are not
received, we carry out other appropriate auditing procedures. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
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PAGE 10
IDS Utilities Income Fund, Inc.
Annual Financial Information (continued)
___________________________________________________________________
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of IDS
Utilities Income Fund, Inc. at June 30, 1995, and the results of
its operations for the year then ended and the changes in its net
assets for each of the years in the two-year period ended June 30,
1995, and the financial highlights for the periods stated in the
first paragraph above, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 4, 1995
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PAGE 11
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Utilities Income Fund, Inc.
June 30, 1995
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $584,539,760) $605,758,062
Receivable for investment securities sold 1,633,570
Dividends and accrued interest receivable 5,334,622
Receivable for foreign currency contracts held,
at value (Notes 1 and 6) 1,329,069
_____________________________________________________________________________________________________________
Total assets 614,055,323
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 340,454
Dividends payable to shareholders 1,307,530
Payable for investment securities purchased 2,058,321
Payable upon return of securities loaned (Note 4) 341,100
Payable for foeign currency contracts held, at value (Notes 1 and 6) 1,317,560
Accrued investment management services fee 200,745
Accrued distribution fee 2,667
Accrued service fee 66,832
Accrued transfer agency fee 55,592
Accrued administrative services fee 14,945
Other accrued expenses 191,403
_____________________________________________________________________________________________________________
Total liabilities 5,897,149
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $608,158,174
_____________________________________________________________________________________________________________
Represented by
Capital stock -- authorized 10,000,000,000 shares $.01 par value; $ 971,683
Additional paid-in capital 599,236,748
Undistributed net investment income 31,279
Accumulated net realized loss (Note 1) (13,311,347)
Unrealized depreciation (Note 6) 21,229,811
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $608,158,174
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $601,391,647
Class B $ 6,633,914
Class Y $ 132,613
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock: Class A shares 96,087,176 $ 6.26
Class B shares 1,059,948 $ 6.26
Class Y shares 21,188 $ 6.26
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
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PAGE 12
Financial statements
Statement of operations
IDS Utilities Income Fund, Inc.
June 30, 1995
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
Income:
Dividends (net of foreign taxes withheld of $330,426) $ 25,870,305
Interest (net of foreign taxes withheld of $12,550) 8,928,542
_____________________________________________________________________________________________________________
Total income 34,798,847
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 3,233,765
Distribution fee
Class A 271,004
Class B 6,240
Transfer agency fee 924,561
Incremental transfer agency fee - Class B 129
Service fee
Class A 291,558
Class B 1,456
Administrative services fee 65,684
Compensation of directors 9,225
Compensation of officers 6,485
Custodian fees 264,171
Postage 84,103
Registration fees 98,264
Reports to shareholders 66,001
Audit fees 23,500
Administrative 12,102
Other 37,716
_____________________________________________________________________________________________________________
Total expenses 5,395,964
_____________________________________________________________________________________________________________
Investment income -- net 29,402,883
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security and foreign currency transactions (including gain of $461,791
from foreign currency transactions) (Note 3) (9,777,951)
Net realized gain on closed or expired option contracts written (Note 5) 933,807
_____________________________________________________________________________________________________________
Net realized loss on investments and foreign currency (8,844,144)
Net change in unrealized appreciation or depreciation 29,413,576
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 20,569,432
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $ 49,972,315
_____________________________________________________________________________________________________________
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.
Year ended June 30,
_____________________________________________________________________________________________________________
Operations and distributions 1995 1994
_____________________________________________________________________________________________________________
<S> <C> <C>
Investment income -- net $ 29,402,883 $ 33,188,365
Net realized gain (loss) on investments and foreign currency (8,844,144) 33,152,763
Net change in unrealized appreciation or depreciation 29,413,576 (79,156,630)
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations 49,972,315 (12,815,502)
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (30,549,688) (33,138,713)
Class B (26,477) --
Class Y (1,817) --
Net realized gain
Class A (15,3434,476) (47,384,723)
Excess distribution of realized gain (499,143)
_____________________________________________________________________________________________________________
Total distributions (46,420,601) (80,523,436)
_____________________________________________________________________________________________________________
Capital share transactions (Note 7)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 70,513,564 218,564,064
Class B shares 6,697,079 --
Class Y shares 131,967 --
Reinvestment of distributions at net asset value
Class A shares 41,919,286 75,411,470
Class B shares 25,491 --
Class Y shares 1,812 --
Payments for redemptions
Class A shares (165,371,929) (204,489,583)
Class B shares (Note 2) (202,128) --
Class Y shares (6,879) --
_____________________________________________________________________________________________________________
Increase (decrease) in net assets from capital share transactions (46,291,737) 89,485,951
_____________________________________________________________________________________________________________
Total decrease in net assets (42,740,023) (3,385,987)
Net assets at beginning of year 650,898,197 654,751,184
_____________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$31,279 and $1,206,378) $608,158,174 $650,898,197
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
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PAGE 14
Notes to financial statements
IDS Utilities Income Fund, Inc.
___________________________________________________________________
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.
The fund offers Class A, Class B and Class Y shares. Class A shares
are sold with a front-end sales charge. Class B shares, which the
fund began offering on March 20, 1995, may be subject to a
contingent deferred sales charge. Class B shares automatically
convert to Class A after eight years. Class Y shares, which the
fund also began offering on March 20, 1995, have no sales charge
and are offered only to qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation
and other rights, and the same terms and conditions, except that
the level of distribution fee, transfer agency fee, and service fee
(class specific expenses) differ among classes. Income, expenses
(other than class specific expenses) and realized and unrealized
gains or losses on investments are allocated to each class of
shares based upon its relative net assets. 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,
including illiquid securities, 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.
Options 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 countermarket 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 the portfolio 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.
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PAGE 15
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 an option is 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 and interest rate
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 contract 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.
Foreign currency translations and
forward 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, exchange 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.
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PAGE 16
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.
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.
On the statement of assets and liabilities, as a result of
permanent book-to-tax differences, undistributed net investment
income and accumulated net realized gain has been decreased by
$7,595 and $995,667, respectively, resulting in a net
reclassification adjustment to increase paid-in capital by
$1,003,263.
Dividends to shareholders
Dividends from net investment income, declared 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 a prior agreement that ended March 19, 1995, the
fund paid American Express Financial Corporation (AEFC) fee for
managing its investments, recordkeeping and other specified
services. The fee was 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 17
Also under the terms of a prior agreement, the fund paid AEFC 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 was reduced by earnings on monies
pending shareholder redemptions.
Effective March 20, 1995, when the fund began offering multiple
classes of shares, the fund entered into agreements with AEFC for
managing its portfolio, providing administrative services and
serving as transfer agent as follows: Under its Investment
Management Services Agreement, AEFC determines which securities
will be purchased, held or sold. The management fee is a percentage
of the fund's average daily net assets in reducing percentages from
0.53% to 0.40% annually. Under an Administrative Services
Agreement, the fund pays AEFC for administration and accounting
services at a percentage of the fund's average daily net assets in
reducing percentages from 0.04% to 0.02% annually.
Under a separate Transfer Agency Agreement, AEFC maintains
shareholder accounts and records. The fund pays AEFC an annual fee
per shareholder account for this services as follows:
- - Class A $15
- - Class B $16
- - Class Y $15
Also effective March 20, 1995, the fund entered into agreements
with American Express Financial Advisors Inc. for distribution and
shareholder servicing -- related services as follows: Under the
Plan and Agreement of Distribution, the fund pays a distribution
fee at an annual rate of 0.75% of the fund's average daily net
assets attributable to Class B shares for distribution-related
services.
Under a Shareholder Service Agreement, the fund pays a fee for
service provided to shareholders by financial advisors and other
servicing agents. The fee is calculated at a rate of 0.175% of the
fund's average daily net assets attributable to Class A and Class B
shares.
AEFC 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 for
distributing fund shares were $1,382,896 for Class A for the year
ended June 30, 1995. The fund also pays custodian fees to American
Express Trust Company, an affiliate of AEFC.
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 $4,916 for the year ended June 30, 1995.
<PAGE>
PAGE 18
___________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $390,501,557 and $454,411,681,
respectively, for the year ended June 30, 1995. Realized gains and
losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were
$62,281 for the year ended June 30, 1995.
___________________________________________________________________
4. Lending of portfolio securities
At June 30, 1995, securities valued at $325,913 were on loan to
brokers. For collateral, the fund received $341,100 in cash. Income
from securities lending amounted to $107,812 for the year ended
June 30, 1995. 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.
___________________________________________________________________
5. Option contracts written
The number of contracts and premium amounts associated with option
contracts written is as follows:
<TABLE>
<CAPTION>
Year ended June 30, 1995
_____________________________________________________
Puts Calls
Contracts Premium Contracts Premium
_____________________________________________________________________________
<S> <C> <C> <C> <C>
Balance June 30, 1994 -- $ -- -- $ --
Opened 3,300 274,353 14,900 1,586,892
Closed (1,500) (143,620) (3,250) (708,413)
Expired (1,800) (130,733) (10,000) (709,537)
Exercised -- -- (1,650) (168,942)
______________________________________________________________________________
Balance June 30, 1995 -- $ -- -- $ --
______________________________________________________________________________
</TABLE>
___________________________________________________________________
6. Foreign currency contracts
At June 30, 1995, the fund had entered into four foreign currency
exchange contracts that obligate the fund to deliver currency at a
specified future date. The unrealized appreciation of $11,509 on
these contracts is included in the accompanying financial
statements. The terms of the open contracts are as follows:
<PAGE>
PAGE 19
<TABLE>
<CAPTION>
U.S. Dollar value U.S. Dollar value
Currency to be as of Currency to be as of
Exchange date delivered June 30, 1995 received June 30, 1995
____________________________________________________________________________________________________
<S> <C> <C> <C> <C>
July 31, 1995 140,202 $ 140,202 232,181,239 $ 141,898
U.S. Dollar Italian Lira
July 31, 1995 318,559 318,559 528,393,323 322,929
U.S. Dollar Italian Lira
July 31, 1995 409,185 409,185 672,249,949 410,848
U.S. Dollar Italian Lira
July 31, 1995 449,614 449,614 741,864,525 453,394
U.S. Dollar Italian Lira
___________ __________
$1,317,560 $1,329,069
</TABLE>
___________________________________________________________________
7. Capital share transactions
Transactions in shares of capital stock for the periods indicated
are as follows:
<TABLE>
<CAPTION>
________________________________________________________________________________________
Year ended June 30, 1995 Year ended
6/30/94
Class A Class B* Class Y* Class A
________________________________________________________________________________________
<S> <C> <C> <C> <C>
Sold 11,454,333 1,088,208 22,020 30,856,915
Issued for reinvested
distributions 6,941,920 4,084 292 11,002,888
Redeemed (26,793,598) (32,344) (1,124) (30,240,418)
________________________________________________________________________________________
Net increase (decrease) (8,397,345) 1,059,948 21,188 11,619,385
________________________________________________________________________________________
*Commencement of operations was March 20, 1995.
________________________________________________________________________________________
</TABLE>
___________________________________________________________________
8. Capital loss carryover
For federal income tax purposes, the fund had a capital loss
carryover of $15,605,429 at June 30, 1995, that if not offset by
subsequent capital gains, will expire in 2004.
___________________________________________________________________
9. Financial highlights
"Financial highlights" showing per share data and selected
information is presented on page 6 of the prospectus.
<PAGE>
PAGE 20
<TABLE>
<CAPTION>
Investments in securities
IDS Utilities Income Fund, Inc.
June 30, 1995 (Percentages represents value of
investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (75.3%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Communications equipment (1.2%)
Northern Telecom 200,000 $ 7,300,000
_____________________________________________________________________________________________________________________________
Energy (0.6%)
Amoco 50,000 3,331,250
_____________________________________________________________________________________________________________________________
Real estate investment trusts (11.4%)
Alexander Haagan Property 200,000 2,300,000
Avalon Property 250,000 4,968,750
Camden Property Trust 100,000 2,187,500
Crown Amer 300,000 3,787,500
Equity Residential 150,000 4,181,250
Home Properties 210,000 3,701,250
JDN Realty 103,100 2,100,663
LTC Properties 300,000 3,937,500
Malan Realty 175,000 2,537,500
Manufactured Home Communities 250,000 3,843,750
Meditrust 120,000 4,095,000
Mid-Amer Apart Communities 64,600 1,615,000
Mills 170,000 3,378,750
Nationwide Health Properties 100,000 3,900,000
Prime Residential 108,000 1,633,500
RFS Hotel Investors 69,000 1,052,250
Regency Realty 175,000 2,975,000
Simon Property 100,000 2,512,500
Sizeler Property Investment 100,000 950,000
Southwestern Property Trust 175,000 2,012,500
Summit Properties 200,000 3,450,000
Weeks 100,000 2,500,000
Wellsford Residential 260,000 5,915,000
____________
Total 69,535,163
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
<PAGE>
PAGE 21
Utilities - electric (27.7%)
Amer Electric Power 215,000 7,551,875
Baltimore Gas & Electric 300,000 7,500,000
California Energy 225,000 (b) 3,684,375
Central Louisiana Electric 260,000 6,110,000
CMS Energy 200,000 4,925,000
Delmarva Power & Light 250,000 5,125,000
DPL 350,000 7,743,750
DQE 400,000 9,400,000
Enron Global Power & Pipeline 100,000 2,375,000
Entergy 175,000 4,221,875
FPL Group 250,000 9,656,250
Houston Industries 150,000 6,318,750
IES Industries 200,000 4,450,000
LG&E Energy 165,000 6,435,000
MDU Resources Group 175,000 5,206,250
New England Electric System 200,000 6,900,000
NIPSCO Industries 200,000 6,800,000
Northern States Power 200,000 9,225,000
Pinnacle West Capital 225,000 5,512,500
Public Service Colorado 350,000 11,375,000
Rochester Gas & Electric 250,000 5,312,500
SCANA 214,600 4,801,675
Southern Co 300,000 6,712,500
Southwestern Public Service 250,000 7,375,000
Teco Energy 225,000 4,921,875
UtiliCorp United 150,000 4,218,750
Washington Water Power 300,000 4,800,000
____________
Total 168,657,925
_____________________________________________________________________________________________________________________________
Utilities - gas (10.5%)
Brooklyn Union Gas 275,000 7,218,750
Columbia Gas System 150,000 (b) 4,762,500
Consolidated Natural Gas 100,000 3,775,000
Enron 500,000 17,562,500
KN Energy 225,000 5,709,375
New Jersey Resources 375,000 8,671,875
NICOR 175,000 4,703,125
Tenneco 84,917 3,906,182
Washington Gas Light 250,000 4,718,750
Westcoast Energy 200,000 2,950,000
____________
Total 63,978,057
_____________________________________________________________________________________________________________________________
Utilities - telephone (13.1%)
AirTouch Communications 200,000 (b) 5,700,000
Ameritech 150,000 6,600,000
AT&T 200,000 10,625,000
BellSouth 200,000 12,700,000
Cincinnati Bell 250,000 6,312,500
GTE 100,000 3,412,500
MCI Communications 250,000 5,500,000
MFS Communications 184,800 (b) 5,959,800
Millicom International Cellular 44,100 (b) 1,306,463
SBC Communications 100,000 4,762,500
U S WEST 400,000 16,650,000
____________
Total 79,528,763
_____________________________________________________________________________________________________________________________
Foreign (10.8%)(c)
British Sky Broadcasting 61,300 (b) 1,601,462
Capex 150,000 (b,d) 2,306,250
Empresa Nacional de Electric ADR 100,000 4,925,000
Kepco Rural Electric 170,000 3,846,250
Manweb 235,000 2,466,090
Natl Power 145,000 1,794,375
Powergen 1,000,000 7,688,000
Powergen ADR 90,000 1,102,500
Repsol ADR 150,000 4,743,750
Royal Dutch Petroleum ADR 40,000 4,875,000
Scottish Power 600,000 (b) 3,090,600
Seaboard Electric 200,000 1,237,000
Severn Trent Water 350,000 3,016,300
Tele Danmark ADR 245,000 6,860,000
Telecom Italia 2,500,000 5,285,000
Telewest Communications 75,000 (b) 1,931,250
<PAGE>
PAGE 22
Transport adora de Gas del Sur 250,000 (d) 2,625,000
Veba 10,000 3,929,860
Yorkshire Electricity Group 220,000 2,427,700
____________
Total 65,751,387
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $442,733,422) $458,082,545
_____________________________________________________________________________________________________________________________
Preferred stocks (5.5%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
Boise Cascade
1.625% Cv 140,000 $ 4,672,500
Cointel
5.04% Cv 150,000 (e) 7,462,500
Kaiser Aluminum 275,000 (e) 3,712,500
KENETECH
1.67% Cv 197,500 (e) 2,765,000
MFS Communications
2.68% Cv 140,000 4,830,000
Natural Gas
10.50% Cv 5,000,000 6,050,000
Western Gas Resources
2.625% Cv 110,000 3,850,000
_____________________________________________________________________________________________________________________________
Total preferred stocks
(Cost: $34,288,342) $ 33,342,500
_____________________________________________________________________________________________________________________________
Bonds (14.1%)
_____________________________________________________________________________________________________________________________
Issuer and Principal Value(a)
coupon rate amount
_____________________________________________________________________________________________________________________________
Domestic (10.4%)
Alabama Power
9.00% 2024 $ 5,000,000 $ 5,453,050
Bell Telephone Pennsylvania
7.375% 2033 5,000,000 4,945,800
Duquesne Light
8.75% 2022 5,000,000 5,399,150
GTE South
9% Deb 2029 5,000,000 5,265,900
Pacific Gas & Electric
7.25% 1st Mtge 2026 7,500,000 7,112,175
Public Service Co of Colorado
8.75% 2022 6,000,000 6,436,140
Public Service Electric & Gas
8.50% 1st Mtge 2022 2,941,000 3,098,755
Questar Pipeline
9.375% 2021 3,000,000 3,443,940
San Diego Gas & Electric
9.625% 2020 5,000,000 5,702,150
Southern California Edison
8.875% 2023 6,000,000 6,481,680
Southwestern Public Service
8.50% 2025 5,000,000 5,558,350
Texas Utility Electric
9.75% 2021 4,000,000 4,645,760
____________
Total 63,542,850
_____________________________________________________________________________________________________________________________
Foreign (3.7%)(c)
Eskom
(South African Rand)
11% 2008 74,875,000 14,469,594
Hydro-Quebec
(Canadian Dollar)
8.50% 2029 5,000,000 5,428,550
TransCanada Pipeline
(U.S. Dollar)
9.875% 2021 2,000,000 2,479,880
____________
<PAGE>
PAGE 23
Total 22,378,024
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $79,105,853) $ 85,920,874
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (4.7%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agencies (0.2%)
Federal Home Loan
Mortgage Corp Disc Note
07-05-95 5.88 $ 600,000 $ 599,609
07-20-95 5.93 600,000 598,131
____________
Total 1,197,740
_____________________________________________________________________________________________________________________________
Commercial paper (4.5%)
Corporate Asset Funding
08-04-95 5.99 4,600,000 4,574,151
Fleet Funding
07-11-95 5.93 4,100,000 (f) 4,093,280
Motorola
07-26-95 5.97 5,800,000 5,776,075
Natl Bank Detroit Canada
07-06-95 5.90 2,800,000 2,797,717
Penny (JC) Funding
07-21-95 5.91 4,000,000 3,986,956
Pepsico
07-12-95 5.99 2,600,000 2,595,273
Pfizer
07-20-95 5.96 1,200,000 (f) 1,196,251
Siemens
07-11-95 5.97 1,600,000 1,597,364
Toyota Motor Credit
07-28-95 5.98 600,000 597,336
__________
Total 27,214,403
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $28,412,143) $ 28,412,143
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $584,539,760)(g) $605,758,062
_____________________________________________________________________________________________________________________________
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) Security is partially or fully on loan. See Note 4 to the financial statements.
(e) 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.
(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) At June 30, 1995, the cost of securities for federal income tax purposes was $584,529,304 and the aggregate gross
unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $ 39,583,970
Unrealized depreciation (18,355,212)
________________________________________________________________
Net unrealized appreciation $ 21,228,758
________________________________________________________________
</TABLE>
<PAGE>
PAGE 24
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 deposits (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
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
<PAGE>
PAGE 25
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
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
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
<PAGE>
PAGE 26
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 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
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 stock of companies representing many sectors of
the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
<PAGE>
PAGE 27
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
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 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
<PAGE>
PAGE 28
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
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 advisor 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 29
Federal income tax information
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. Some of the dividends listed below were
reported to you on a Form 1099-DIV, Dividends and Distributions,
last January. Dividends paid to you since the end of last year
will be reported to you on a tax statement sent next January.
Shareholders should consult a tax advisor on how to report
distributions for state and local purposes.
IDS Utilities Income Fund, Inc.
Fiscal year ended June 30, 1995
Class A
Income distributions
taxable as dividend income, 62.60% qualifying for deduction by
corporations.
Payable date Per share
Sept. 28, 1994 $0.06661
Dec. 29, 1994 0.14530
March 29, 1995 0.07311
June 27, 1995 0.07287
Total $0.35789
Capital gain distribution
taxable as long-term capital gain.
Payable date Per share
Dec. 29, 1994 $0.11000
Total distributions $0.46789
The distribution of $0.25530 per share, payable Dec. 29, 1994,
consisted of $0.09380 derived from net investment income, $0.05150
from net short-term capital gains (a total of $0.14530 taxable as
dividend income) and $0.11000 from net long-term capital gains.
Class B
Income distributions
taxable as dividend income, 62.60% qualifying for deduction by
corporations.
Payable date Per share
March 29, 1995 $0.07254
June 27, 1995 0.06180
Total $0.13434
Class Y
Income distributions
taxable as dividend income, 62.60% qualifying for deduction by
corporations.
Payable date Per share
March 29, 1995 $0.07336
June 27, 1995 0.07555
Total $0.14891
<PAGE>
PAGE 30
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 (TouchToneR 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
<PAGE>
PAGE 31
STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report and
prospectus are placed
in blue strip at the top
of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report and prospectus. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
