PAGE
IDS
Utilities
Income
Fund
1995 semiannual report
(Picture of icon: 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.
Distributed by
American Express
Financial Advisors Inc.
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(Picture of icon: 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.
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 20
Board members and officers 24
IDS mutual funds 25
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To our shareholders
(Picture of: William R. Pearce)
William R. Pearce
President of the Fund
(Picture of: Bernhard M. Fleming)
Bernhard M. Fleming
Portfolio manager
From the president
If you're an experienced investor, you know that 1995 was an
unusually strong year for the U.S. financial markets. Perhaps
just as important, you also know that history shows that bull
markets don't last forever. Though they're often unpredictable,
declines -- whether they're brief or long-lasting, moderate or
substantial-- are always a possibility.
That fact reinforces the need for investors to review periodically
their long-term goals and assess whether their investment program
remains on track to achieving them. Your quarterly investment
statements are one part of that monitoring process. The other is a
meeting with your American Express financial advisor. That becomes
even more important if there's a major change in your financial
situation or in the financial markets.
William R. Pearce
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From the portfolio manager
A repositioned portfolio and an improving environment for utilities
combined to produce IDS Utilities Income Fund's best six-month
performance in years. For the July through December 1995 period, the
Fund generated a total return (net asset value change plus
distributions) of approximately 14% for investors in Class A shares.
As is normally the case, the primary influence on utility stocks'
performance was the trend of long-term interest rates. (Falling rates
usually are positive for prices of utility stocks, especially electric
utilities, while rising rates often have the opposite effect.) Prompted
by a modestly growing economy and an ongoing low rate of inflation,
long-term rates continued to decline during the past six months.
In the process, utility stock prices rose, ultimately boosting the
Fund's net asset value. Also proving beneficial, though to a smaller
degree, was a lessening of the concern created by deregulation in the
utilities industry, a trend that particularly penalized electric utility
stocks in 1994.
Successful strategies
Against that backdrop, we made several shifts in the portfolio's asset
mix that paid off well for the Fund. First, we lowered the cash reserves
and put the money to work in telephone utility stocks, which provided a
much better return. (Telephones, in fact, were the industry's
best-performing sector for all of 1995.) Second, we sold the majority
of our investments in real estate investment trusts, which had been a
drag on Fund performance for some time. Third, we sold some holdings
among utilities' bonds, which had reached their price-appreciation
potential, and reinvested the money in telephone utility stocks.
Finally, we reduced our exposure to foreign utilities in favor of
higher-returning domestic holdings. At the end of the year, that left
the majority of the portfolio's utility-stock investments in electric
companies, followed by telecommunication (including telephones) and
natural gas companies.
Outlook still positive
At this writing (mid-January), we think the investment environment
continues to hold promise for utilities. Thanks to ongoing low inflation,
long-term interest rates seem unlikely to rise markedly and could even
reach lower levels as 1996 progresses. As the past year made clear, that
would provide solid support for utility stocks.
We also think that companies will find it more difficult to generate the
substantial earnings growth many of them enjoyed in 1995. That could work
to utilities' advantage in that their earnings are less subject to
downfalls than most companies', and, for that reason, might lure more
investors to utility stocks. In addition, should the stock market stumble
in 1996, the above-average dividend stream provided by utility stocks is
likely to help cushion a potential price decline.
Bernhard M. Fleming
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Class A
6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1995 $ 7.00
June 30, 1995 $ 6.26
Increase $ 0.74
Distribution
July 1, 1995 - Dec. 31, 1995
From income $ 0.15
From capital gain $ --
Total distributions $ 0.15
Total return* +14.4%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1995 $ 7.00
June 30, 1995 $ 6.26
Increase $ 0.74
Distribution
July 1, 1995 - Dec. 31, 1995
From income $ 0.13
From capital gain $ --
Total distributions $ 0.13
Total return* +14.0%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1995 $ 7.00
June 30, 1995 $ 6.26
Increase $ 0.74
Distribution
July 1, 1995 - Dec. 31, 1995
From income $ 0.16
From capital gain $ --
Total distributions $ 0.16
Total return* +14.5%**
*The prospectus discusses
the effect of sales charges
on the various classes.
**The total return is a
hypothetical investment in
the Fund with all
distributions reinvested.
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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 23.37% of the Fund's net assets
Percent Value
as Fund's net assets) (as of Dec. 31, 1995)
<S> <C> <C>
Ameritech 2.95% $20,650,000
A leading global supplier of full-service communications
and advances information services.
AT&T 2.78 19,425,000
Provides long distance services throughout the
United States and to other countries. The company
also manufactures, for itself and others, many of the
products used in long-distance communications.
GTE 2.67 18,700,000
The corporation's two major business segments are
telephone operations and telecommunications
products and services.
SBC Communications 2.67 18,687,500
Provides services and products through several subsidiaries,
which include: Southwestern Bell Telephone Company (Telephone
Company), Southwestern Bell Telephone Company (Telephone Company),
Southwestern Bell Mobile Systems, Inc. (Mobile Systems), SBC
International, Inc. (SBC International), Southwestern Bell Yellow
Pages, Inc. (Yellow Pages), Southwestern Bell Telecommunications,
Inc. (Telecom) and SBC Media Ventures, Inc. (Media Ventures).
BellSouth 2.49 17,400,000
Provides telecommunication services to Florida,
Georgia, Louisiana, Tennessee, North Carolina,
Alabama, South Carolina, Kentucky and Mississippi.
Eskom (11% Bond Series E 2008) 2.39 16,736,809
An eclectic utility company that produces more than 95%
of South Africa's electricity.
Cincinnati Bell 2.19 15,290,000
A holding company with principal subsidiaries divided
into three industry segments: telephone operations,
information systems and marketing services.
General Public Utilities 1.94 13,600,000
A registered public utility holding company that services
about half the land ares of Pennsylvania and New Jersey.
FPL Group 1.66 11,593,750
A diversified electric utility. The company's fuel mix
is 25% purchased power, 50% oil and gas and 25% nuclear.
Enron 1.63 11,437,500
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.
</TABLE>
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<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Utilities Income Fund, Inc.
Dec. 31, 1995
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $618,730,709) $705,802,796
Receivable for investment securities sold 6,034,800
Dividends and accrued interest receivable 3,166,102
U.S. government securities held as collateral (Note 4) 3,988,051
_____________________________________________________________________________________________________________
Total assets 718,991,749
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 315,539
Dividends payable to shareholders 914,941
Payable for investment securities purchased 13,142,789
Payable upon return of securities loaned (Note 4) 4,860,351
Accrued investment management services fee 19,745
Accrued distribution fee 1,075
Accrued service fee 6,603
Accrued transfer agency fee 4,955
Accrued administrative services fee 1,458
Other accrued expenses 66,257
_____________________________________________________________________________________________________________
Total liabilities 19,333,713
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $699,658,036
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 999,673
Additional paid-in capital 619,298,863
Undistributed net investment income 642,668
Accumulated net realized loss (Note 1) (8,363,520)
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies 87,080,352
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $699,658,036
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $672,430,005
Class B $ 27,053,881
Class Y $ 174,150
Net asset value per share of outstanding capital stock: Class A shares 96,076,543 $ 7.00
Class B shares 3,865,867 $ 7.00
Class Y shares 24,882 $ 7.00
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, 1995
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Dividends (net of foreign taxes withheld of $87,714) $12,361,027
Interest 4,903,964
_____________________________________________________________________________________________________________
Total income 17,264,991
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 1,673,421
Distribution fee -- Class B 56,895
Transfer agency fee 430,745
Incremental transfer agency fee - Class B 965
Service fee
Class A 543,506
Class B 13,275
Administrative services fee 124,133
Compensation of board members 4,250
Compensation of officers 3,240
Custodian fees 36,597
Postage 9,974
Registration fees 2,300
Reports to shareholders 5,794
Audit fees 11,750
Administrative 506
_____________________________________________________________________________________________________________
Total expenses 2,917,351
_____________________________________________________________________________________________________________
Earnings credits on cash balances (Note 2) (4,712)
_____________________________________________________________________________________________________________
Total net expenses 2,912,639
_____________________________________________________________________________________________________________
Investment income -- net 14,352,352
_____________________________________________________________________________________________________________
Realized and unrealized gain -- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions (including gain of $39,491
from foreign currency transactions) (Note 3) 6,247,201
Net realized gain on closed or expired option contracts written (Note 5) 35,999
_____________________________________________________________________________________________________________
Net realized gain on investments and foreign currency 6,283,200
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies 65,850,541
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 72,133,741
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $86,486,093
_____________________________________________________________________________________________________________
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, 1995 June 30, 1995
_____________________________________________________________________________________________________________
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income -- net $14,352,352 $ 29,402,883
Net realized gain (loss) on investments and foreign currency 6,283,200 (8,844,144)
Net change in unrealized appreciation or depreciation of investments
and on translations of assets and liabilities in foreign currencies 65,850,541 29,413,576
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 86,486,093 49,972,315
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (13,472,470) (30,549,688)
Class B (257,877) (26,477)
Class Y (3,021) (1,817)
Net realized gain
Class A (299,241) (15,343,476)
Class B (11,873) --
Class Y (78) --
Excess distribution of realized gain
Class A (27,971) (499,143)
Class B (536) --
Class Y (6) --
_____________________________________________________________________________________________________________
Total distributions (14,073,073) (46,420,601)
_____________________________________________________________________________________________________________
Capital share transactions (Note 6)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 41,399,371 70,513,564
Class B shares 18,920,036 6,697,079
Class Y shares 48,486 131,967
Reinvestment of distributions at net asset value
Class A shares 13,385,211 41,919,286
Class B shares 258,793 25,491
Class Y shares 3,105 1,812
Payments for redemptions
Class A shares (54,217,466) (165,371,929)
Class B shares (Note 2) (684,522) (202,128)
Class Y shares (26,172) (6,879)
_____________________________________________________________________________________________________________
Increase (decrease) in net assets from capital share transactions 19,086,842 (46,291,737)
_____________________________________________________________________________________________________________
Total increase (decrease) in net assets 91,499,862 (42,740,023)
Net assets at beginning of period 608,158,174 650,898,197
_____________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$642,668 and $23,684) $699,658,036 $608,158,174
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
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Notes to financial statements
IDS Utilities Income Fund, Inc.
(Unaudited as to Dec. 31, 1995)
______________________________________________________________________________
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 invests primarily in securities of public utilities companies.
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) differs 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:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
increase and decrease in net assets from operations during the period.
Actual results could differ from those estimates.
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. 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.
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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 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.
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
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.
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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. 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.
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.
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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
Effective March 20, 1995, when the Fund began offering multiple classes
of shares, the Fund entered into agreements with American Express
Financial Corporation (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 service as follows:
o Class A $15
o Class B $16
o 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 a 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.
<PAGE>
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 received by American Express Financial Advisors Inc. for
distributing Fund shares were $856,353 for Class A and $3,137 for
Class B for the six months ended Dec. 31, 1995.
The Fund also pays custodian fees to American Express Trust Company,
an affiliate of AEFC.
During the six months ended Dec. 31, 1995, the Fund's custodian and
transfer agency fees were reduced by $4,712 as a result of earning
credits from overnight cash balances.
The Fund has a retirement plan for its independent board members.
Upon retirement, board members receive monthly payments equal to
one-half of the retainer fee for as many months as they served as
board members 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 board members serve on the board.
____________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other
than short-term obligations) aggregated $273,813,238 and
$254,207,645, respectively, for the six months ended Dec. 31, 1995.
Realized gains and losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $52,588
for the six months ended Dec. 31, 1995.
____________________________________________________________________
4. Lending of portfolio securities
At Dec. 31, 1995, securities valued at $4,830,163 were on loan
to brokers. For collateral, the Fund received $872,300 in cash
and U.S. government securities valued at $3,988,051. Income from
securities lending amounted to $14,710 for the six months ended
Dec. 31, 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:
Six months ended Dec. 31, 1995
_____________________________________________
Puts
Contracts Premium
______________________________________________________________________
Balance June 30, 1995 -- $ --
Opened 1,000 35,999
Expired (1,000) (35,999)
______________________________________________________________________
Balance Dec. 31, 1995 -- $ --
______________________________________________________________________
<PAGE>
6. Capital share transactions
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<TABLE>
<CAPTION>
Transactions in shares of capital stock for the periods indicated are as follows:
________________________________________________________________________
Six months ended Dec. 31, 1995
Class A Class B Class Y
_______________________________________________________________________
<S> <C> <C> <C>
Sold 6,285,984 2,871,843 7,288
Issued for reinvested 1,981,584 37,956 492
distributions
Redeemed (8,278,201) (103,880) (4,086)
_______________________________________________________________________
Net increase (decrease) (10,633) 2,805,919 3,694
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
Year ended June 30, 1995
Class A Class B* Class Y*
_______________________________________________________________________
Sold 11,454,333 1,088,208 22,020
Issued for reinvested 6,941,920 4,084 292
distributions
Redeemed (26,793,598) (32,344) (1,124)
_______________________________________________________________________
Net increase (decrease) (8,397,345) 1,059,948 21,188
_______________________________________________________________________
*Inception date was March 20, 1995.
</TABLE>
________________________________________________________________________
7. Capital loss carryover
For federal income tax purposes, the Fund had a capital loss carryover
of approximately $8,376,000 at Dec. 31, 1995, that if not offset by
subsequent capital gains, will expire in 2004. It is unlikely the
board will authorize a distribution of any net realized capital gains
until the available capital loss carryover has been offset or expires.
<PAGE>
____________________________________________________________________________
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<TABLE>
<CAPTION>
8.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*
Class A
1995** 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $6.26 $6.23 $7.05 $6.35 $5.67 $5.67
beginning of period
Income from investment operations:
Net investment income .16 .29 .31 .32 .33 .35
Net gains (losses) .73 .21 (.38) .89 .73 .05
(both realized
and unrealized)
Total from investment .89 .50 ((.07) 1.21 1.06 .40
operations
Less distributions:
Dividends from net (.15) (.31) (.31) (.33) (.32) (.35)
investment income
Dividends from -- (.16) (.44) (.18) (.06) (.05)
realized gains
Total distributions (.15) (.47) (.75) (.51) (.38) (.40)
Net asset value, $7.00 $6.26 $6.23 $7.05 $6.35 $5.67
end of period
Ratios/supplemental data
1995** 1995 1994 1993 1992 1991
Net assets, end of period $672 $601 $651 1$655 $406 $252
(in millions)
Ratio of expenses to .90%+ .89% .82% .86% .92% .90%
average daily net assets
Ratio of net income 4.52%+ 4.84% 4.55% 4.78% 5.37% 6.37%
to average daily net assets
Portfolio turnover rate 77% 68% 102% 64% 49% 57%
(excluding short-term
securities)
Total return++ 14.4% 8.4% (1.7%) 19.9% 19.2% 7.3%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Dec. 31, 1995 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
<PAGE>
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*
Class B Class Y
1995*** 1995** 1995*** 1995**
Net asset value, $6.26 $5.98 $6.26 $5.98
beginning of period
Income from investment operations:
Net investment income .14 .15 .17 .16
Net gains .73 .26 .73 .27
(both realized
and unrealized)
Total from investment .87 .41 .90 .43
operations
Less distributions:
Dividends from net (.13) (.13) (.16) (.15)
investment income
Net asset value, $7.00 $6.26 $7.00 $6.26
end of period
Ratios/supplemental data
Class B Class Y
1995*** 1995** 1995*** 1995**
Net assets, end of period $27 $7 $ -- $ --
(in millions)
Ratio of expenses to 1.66%+ 1.83%+ .72%+ .84%+
average daily net assets
Ratio of net income 3.69%+ 4.83%+ 4.68%+ 5.84%+
to average daily net assets
Portfolio turnover rate 77% 68% 77% 68%
(excluding short-term
securities)
Total return++ 14.0% 6.9% 14.5% 7.2%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class B and Class Y. Significant shareholder activity
began March 21, 1995 for Class B and March 28, 1995 for Class Y.
***Six months ended Dec. 31, 1995 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
/TABLE
<PAGE>
PAGE
<TABLE>
<CAPTION>
Investments in securities
IDS Utilities Income Fund, Inc.
Dec. 31, 1995 (Unaudited) (Percentages represent value of
investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (84.6%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Communications equipment (0.6%)
Andrew 115,000 $ 4,398,750
_____________________________________________________________________________________________________________________________
Energy (1.3%)
Amoco 50,000 3,593,750
Mobil 50,000 5,600,000
___________
Total 9,193,750
_____________________________________________________________________________________________________________________________
Real estate investment trusts (4.0%)
Avalon Property 250,000 5,375,000
Equity Residential 150,000 4,593,750
Home Properties 210,000 3,596,250
LTC Properties 300,000 4,500,000
Security Capital 200,000 3,500,000
Simon Property Group 100,000 2,437,500
Summit Properties 200,000 3,975,000
____________
Total 27,977,500
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
<PAGE>
Utilities - electric (30.4%)
Central & South West 275,000 7,665,625
CMS Energy 350,000 10,456,250
Delmarva Power & Light 300,000 6,825,000
Dominion Resources 150,000 6,187,500
DPL 450,000 11,137,500
DQE 250,000 7,687,500
Duke Power 200,000 9,475,000
FPL Group 250,000 11,593,750
General Public Utilities 400,000 13,600,000
Houston Industries 300,000 7,275,000
LG&E Energy 165,000 6,971,250
MDU Resources Group 262,500 5,217,187
New England Electric System 250,000 9,906,250
NIPSCO Industries 250,000 9,562,500
Northern States Power 200,000 9,825,000
Oklahoma Gas & Electric 200,000 8,600,000
PECO Energy 325,000 9,790,625
Pinnacle West Capital 375,000 10,781,250
Public Service Co of Colorado 221,000 7,817,875
SCEcorp 400,000 7,100,000
TECO Energy 425,000 10,890,625
Union Electric 225,000 (d) 9,393,750
United Illuminating 115,000 4,298,125
Wisconsin Energy 200,000 6,125,000
____________
Total 212,901,312
_____________________________________________________________________________________________________________________________
Utilities - gas (10.7%)
Brooklyn Union Gas 275,000 8,043,750
CMS Energy Class G 250,000 4,718,750
Columbia Gas System 150,000 (b) 6,581,250
Enron 300,000 11,437,500
KN Energy 225,000 6,553,125
MCN 140,000 3,255,000
New Jersey Resources 375,000 11,296,875
NICOR 225,000 6,187,500
Panhandle Eastern 200,000 5,575,000
Washington Gas Light 250,000 5,125,000
WICOR 200,000 6,450,000
Williams Companies 100,000 4,387,500
____________
Total 74,892,500
_____________________________________________________________________________________________________________________________
Utilities - telephone (26.8%)
AirTouch Communications 350,000 (b) 9,887,500
Ameritech 350,000 20,650,000
AT&T 300,000 19,425,000
BellSouth 400,000 17,400,000
Century Telephone Enterprises 316,700 10,055,225
Cincinnati Bell 440,000 15,290,000
GTE 425,000 18,700,000
MCI Communications 300,000 7,837,500
MFS Communications 190,119 (b) 10,123,837
Millicom Intl Cellular 145,000 (b) 4,422,500
NYNEX 200,000 10,800,000
Paging Network 200,000 4,875,000
SBC Communications 325,000 18,687,500
Southern New England Telecom 214,000 8,506,500
U S WEST 300,000 10,725,000
____________
Total 187,385,562
Foreign (10.8%)(c)
Empresa Nacional de Electric ADR 100,000 5,725,000
Ericsson (LM) 200,000 3,900,000
Grupo Iusacell 300,000 3,037,500
Iberdrola 700,000 6,405,000
Natl Power 145,000 1,341,250
Nokia Preferred 75,000 2,915,625
Northern Telecom 200,000 8,600,000
Powergen ADR 90,000 1,181,250
Repsol ADR 200,000 6,575,000
Royal Dutch Petroleum ADR 40,000 5,645,000
Scottish Power 600,000 (b) 3,447,600
Severn Trent Water 360,492 3,851,497
Tele Danmark ADR 245,000 6,768,125
Telecom Italia 5,000,000 6,110,000
Transport adora de Gas del Sur 250,000 (d) 3,218,750
Veba 150,000 6,367,950
____________
Total 75,089,547
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $513,382,631) $591,838,921
_____________________________________________________________________________________________________________________________
Preferred stocks (3.3%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
Cointel
5.04% Cv 150,000 (e) 8,625,000
Kaiser Aluminum 275,000 (e) 3,609,375
MFS Communications
2.68% Cv 140,000 6,816,250
Western Gas Resources
2.625% Cv 110,000 3,850,000
_____________________________________________________________________________________________________________________________
Total preferred stocks
(Cost: $21,995,888) $ 22,900,625
_____________________________________________________________________________________________________________________________
Bonds (7.7%)
_____________________________________________________________________________________________________________________________
Issuer and Principal Value(a)
coupon rate amount
_____________________________________________________________________________________________________________________________
Domestic (4.1%)
Bell Telephone Pennsylvania
7.375% 2033 5,000,000 $ 5,337,000
Pacific Gas & Electric
6.75% 2023 5,000,000 4,788,350
7.25% 2026 7,500,000 7,572,600
San Diego Gas & Electric
9.625% 2020 5,000,000 5,785,450
Tele-Communications
9.875% 2022 4,500,000 5,503,050
____________
Total 28,986,450
_____________________________________________________________________________________________________________________________
Foreign (3.6%)(c)
Eskom
(South African Rand)
11% 2008 74,875,000 16,736,809
Hydro-Quebec
(Canadian Dollar)
8.50% 2029 5,000,000 5,892,800
TransCanada Pipeline
(U.S. Dollar)
9.875% 2021 2,000,000 2,668,340
____________
Total 25,297,949
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $46,573,339) $ 54,284,399
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE
<TABLE>
<CAPTION>
Short-term securities (5.3%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.5%)
Federal Home Loan Mtge Corp
Disc Note
01-22-96 5.70% $3,500,000 $ 3,487,321
_____________________________________________________________________________________________________________________________
Commercial paper (4.1%)
AT&T
02-02-96 5.79 4,900,000 4,873,390
BellSouth
01-03-96 5.86 4,200,000 4,197,270
CAFCO
01-23-96 5.74 4,300,000 4,283,660
Ciesco LP
01-09-96 5.79 500,000 499,201
Commerzbank U.S. Finance
01-26-96 5.68 4,400,000 4,381,355
CPC Intl
01-08-96 5.78 2,200,000 (f) 2,196,838
Fleet Funding
01-25-96 5.77 3,000,000 (f) 2,987,585
Gillette
01-03-96 5.76 1,300,000 (f) 1,299,169
Household Finance
01-11-96 5.80 1,800,000 1,796,544
TransAmerica Finance
01-17-96 5.77 2,100,000 2,093,994
___________
Total 28,609,006
_____________________________________________________________________________________________________________________________
Letter of credit (0.7%)
Bank of America-
Hyundai Motor Finance
01-22-96 5.85 4,700,000 4,682,524
______________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $36,778,851) $ 36,778,851
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $618,730,709)(g) $705,802,796
_______________________________________________________________________________________________________________________________
<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) 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 Dec. 31, 1995, the cost of securities for federal income tax purposes was approximately $618,718,000
and the approximate aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation $93,401,000
Unrealized depreciation (6,316,000)
______________________________________________________
Net unrealized appreciation $ 87,085,000
______________________________________________________
</TABLE>
<PAGE>
PAGE
Board members and officers
Board members and officers of the Fund
_____________________________________________________________________
President and interested board member
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent board members
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 board members who are officers and/or employees of AEFC
William H. Dudley
Executive vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
_____________________________________________________________________
<PAGE>
PAGE
Officers who are officers and/or employees of AEFC
Peter J. Anderson
Vice President of all funds in the IDS MUTUAL FUND GROUP.
Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.
___________________________________________________________________
Other officer
Leslie L. Ogg
Vice president general Counsel and secretary of all funds in
the IDS MUTUAL FUND GROUP.
<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 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<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 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 Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
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 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
