IDS
Utilities
Income Fund
1998 semiannual report
(icon of)magnifying glass
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.
American Express Financial Advisors
<PAGE>
Dependable
Dividends
Making money in the stock market isn't limited to trying to find stockswith
rising prices. Many investorsprefer 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 Chairman 3
From the Portfolio Manager 3
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements 7
Notes to Financial Statements 10
Investments in Securities 19
<PAGE>
From the Chairman
If you're an experienced investor, you know that the past several months was a
highly volatile period in many financial markets. But history tells us that
substantial market moves are nothing new. Though they're often unpredictable,
declines -- whether they're brief or long-lasting, moderate or substantial --
are always a possibility.
The potential for such volatility reinforces the need for investors to review
periodically their long-term goals and examine 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
(picture of) William R. Pearce
William R. Pearce
Chairman of the board
<PAGE>
From the Portfolio Manager
IDS Utilities Income Fund provided relatively consistent performance in what
turned out to be a highly volatile six months for the stock market. In the
process, the Fund's Class A shares also generated a total return of 13.67% for
the July through December 1998 period, the first half of the fiscal year. (A
portion of the Fund's return came in the form of a capital gain, which was paid
to shareholders last December and reduced the Fund's net asset value by a like
amount at that time.)
At the outset of the period, it appeared that the U.S. stock market might be
gearing up for another spectacular surge, as it spurted to an all-time high by
mid-July. But just as quickly, the environment changed. The catalyst was a new
outbreak of the so-called "Asian flu," the economic malady that first struck
Southeast Asia in 1997. This time it surfaced in Russia and, soon after, Latin
America, and re-ignited fear that American companies' profits would suffer as a
result of reduced business overseas. Investors responded with heavy
stock-selling that, by the time things quieted down in the fall, would drive the
broad market down by nearly 20%. But, supported in large part by three
interest-rate reductions by the Federal Reserve, stocks soon got back on their
feet and, with another display of the remarkable resilience they've shown in
recent years, staged a spectacular rally through the end of 1998. So strong was
the rebound that it more than made up for the late-summer decline.
Phones set the pace
For their part, utilities stocks experienced a less-volatile ride, as their
"defensive" nature allowed them to hold up better than the market as a whole
during the downturn. For the period overall, telephone stocks were the clear
winners, led by big gains by major players such as AT&T and WorldCom. Well
behind phones' performance, though still making a solid contribution, were
electric companies, which were followed by natural gas providers, easily the
weakest of the three groups.
As for the portfolio mix, I kept the great majority of assets (about 70%-75%) in
phone and electric securities, with roughly equal amounts in each. Almost all
the rest went into natural gas issues and cash reserves. On a geographic basis,
foreign investments, primarily in European phone companies, were reduced from
about 11% of assets in the summer to 4% at the end of the year, as I believed
the U.S. market offered better opportunity for gain. As the period progressed, I
also reduced the natural gas exposure and put the proceeds into the phone group.
Looking toward the second half of the fiscal year, I think the environment
remains positive for utilities stocks. The telephone sector appears especially
interesting, thanks to a merger/acquisition trend in the overall
telecommunications industry stemming from companies' desires to expand their
global market penetration. As for electric and natural gas stocks, I think both
groups continue to offer good investment value, which could set the stage for an
upturn in prices.
Bernhard Fleming
(picture of) Bernhard Fleming
Bernhard Fleming
Portfolio manager
<PAGE>
Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1998 $ 9.48
June 30, 1998 $ 8.98
Increase $ 0.50
Distributions -- July 1, 1998 - Dec. 31, 1998
From income $ 0.27
From capital gains $ 0.43
Total distributions $ 0.70
Total return* +13.67%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1998 $ 9.48
June 30, 1998 $ 8.98
Increase $ 0.50
Distributions -- July 1, 1998 - Dec. 31, 1998
From income $ 0.24
From capital gains $ 0.43
Total distributions $ 0.67
Total return* +13.27%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Dec. 31, 1998 $ 9.48
June 30, 1998 $ 8.98
Increase $ 0.50
Distributions -- July 1, 1998 - Dec. 31, 1998
From income $ 0.27
From capital gains $ 0.43
Total distributions $ 0.70
Total return* +13.71%**
*The prospectus discusses the effect of sales charges, if any, on the various
classes.
**The total return is a hypothetical investment in the Fund with all
distributions reinvested.
<PAGE>
The 10 Largest Holdings
Percent Value
(of net assets) (as of Dec. 31, 1998)
MCI WorldCom 4.79% $71,749,999
Ameritech 4.02 60,206,250
U S WEST Communications Group 3.88 58,162,500
BellSouth 3.66 54,862,500
AT&T 3.52 52,675,000
SBC Communications 3.22 48,262,500
Century Telephone Enterprises 3.16 47,250,000
CMS Energy 2.26 33,906,250
AirTouch Communications 2.17 32,456,250
Enron 1.91 28,531,250
For further detail about these holdings, please refer to the section entitled
"Investments in Securities" herein.
(icon of) pie chart
The 10 holdings listed here make up 32.59% of net assets
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<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
IDS Utilities Income Fund, Inc.
Dec. 31, 1998 (Unaudited)
Assets
Investments in securities, at value (Note 1)
<S> <C>
(identified cost $1,140,638,568) $1,492,118,005
Cash in bank on demand deposit 2,488,375
Dividends and accrued interest receivable 3,765,726
Receivable for investment securities sold 328,114
-------
Total assets 1,498,700,220
-------------
Liabilities
Dividends payable to shareholders 632,484
Payable upon return of securities loaned (Note 4) 711,900
Accrued investment management services fee 20,578
Accrued distribution fee 6,443
Accrued service fee 9,953
Accrued transfer agency fee 3,732
Accrued administrative services fee 1,427
Other accrued expenses 67,727
------
Total liabilities 1,454,244
---------
Net assets applicable to outstanding capital stock $1,497,245,976
==============
Represented by
Capital stock -- $.01 par value (Note 1) $ 1,579,572
Additional paid-in capital 1,128,098,882
Undistributed net investment income 2,183
Accumulated net realized gain (loss) 16,093,240
Unrealized appreciation (depreciation) on investments and on translation
of assets and liabilities in foreign currencies 351,472,099
-----------
Total -- representing net assets applicable to outstanding capital stock $1,497,245,976
==============
Net assets applicable to outstanding shares: Class A $1,180,058,954
Class B $ 316,796,433
Class Y $ 390,589
Net asset value per share of outstanding capital stock:
Class A shares 124,490,184 $ 9.48
Class B shares 33,425,784 $ 9.48
Class Y shares 41,222 $ 9.48
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Statement of operations
IDS Utilities Income Fund, Inc.
Six months ended Dec. 31, 1998 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 16,951,932
Interest 3,276,026
Less foreign taxes withheld (35,250)
-------
Total income 20,192,708
----------
Expenses (Note 2):
Investment management services fee 3,226,298
Distribution fee -- Class B 898,019
Transfer agency fee 613,517
Incremental transfer agency fee-- Class B 9,847
Service fee
Class A 893,057
Class B 209,115
Class Y 57
Administrative services fees and expenses 233,769
Compensation of board members 5,733
Custodian fees 56,771
Postage 59,796
Registration fees 34,250
Reports to shareholders 38,116
Audit fees 12,750
Other 5,977
-----
Total expenses 6,297,072
Earnings credits on cash balances (Note 2) (28,069)
-------
Total net expenses 6,269,003
---------
Investment income (loss) -- net 13,923,705
----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions 29,752,357
Foreign currency transactions (2,243)
------
Net realized gain (loss) on investments 29,750,114
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 131,455,982
-----------
Net gain (loss) on investments and foreign currencies 161,206,096
-----------
Net increase (decrease) in net assets resulting from operations $175,129,801
============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Utilities Income Fund, Inc.
Dec. 31, 1998 June 30, 1998
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 13,923,705 26,495,897
Net realized gain (loss) on investments 29,750,114 120,504,923
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 131,455,982 93,538,469
----------- ----------
Net increase (decrease) in net assets resulting from operations 175,129,801 240,539,289
----------- -----------
Distributions to shareholders from:
Net investment income
Class A (12,042,512) (23,512,270)
Class B (1,877,891) (2,690,811)
Class Y (1,117) (2,108)
Net realized gain
Class A (68,741,354) (91,228,835)
Class B (18,236,859) (13,882,130)
Class Y (22,739) (3,554)
------- ------
Total distributions (100,922,472) (131,319,708)
------------ ------------
Capital share transactions (Note 5)
Proceeds from sales
Class A shares (Note 2) 142,295,049 159,688,007
Class B shares 100,421,474 98,078,706
Class Y shares 323,973 --
Reinvestment of distributions at net asset value
Class A shares 74,919,993 106,764,256
Class B shares 19,673,053 16,012,247
Class Y shares 23,695 4,647
Payments for redemptions
Class A shares (69,323,808) (128,470,542)
Class B shares (Note 2) (19,303,217) (21,041,055)
Class Y shares (354) (247,100)
---- --------
Increase (decrease) in net assets from capital share transactions 249,029,858 230,789,166
----------- -----------
Total increase (decrease) in net assets 323,237,187 340,008,747
Net assets at beginning of period 1,174,008,789 834,000,042
------------- -----------
Net assets at end of period $1,497,245,976 $1,174,008,789
============== ==============
Undistributed (excess of distributions over) net investment income $ 2,183 $ (2)
-------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements
IDS Utilities Income Fund, Inc.
(Unaudited as to Dec. 31, 1998)
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 has 10 billion
authorized shares of capital stock. The Fund invests primarily in securities of
public utilities companies.
The Fund offers Class A, Class B and Class Y shares.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend and liquidation rights.
The 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.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
<PAGE>
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. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost.
Option transactions
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends 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 portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
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 being unable 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 when the option transaction expires or closes. 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.
<PAGE>
Futures transactions
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of 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,
if any, may arise from sales of foreign currency, closed forward contracts,
exchange gains or losses realized between the trade date and settlement date 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 its contract obligations.
<PAGE>
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to shareholders. No provision for income or excise taxes is thus
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred 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.
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.
<PAGE>
2. EXPENSES AND SALES CHARGES
The Fund entered into agreements with American Express Financial Corporation
(AEFC) for managing its portfolio and providing administrative services. 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 its Administrative Services Agreement, the Fund pays AEFC a fee 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.
Additional administrative service expenses paid by the Fund are office expenses,
consultants' fees and compensation of officers and employees. Under this
agreement, the Fund also pays taxes, audit and certain legal fees, registration
fees for shares, compensation of board members, corporate filing fees and any
other expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $15
o Class B $16
o Class Y $15
The Fund entered into agreements with American Express Financial Advisors Inc.
for distribution and shareholder services. 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
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 and 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors Inc. for
distributing Fund shares were $2,402,550 for Class A and $81,229 for Class B for
the six months ended Dec. 31, 1998. The Fund also pays custodian fees to
American Express Trust Company, an affiliate of AEFC.
During the six months ended Dec. 31, 1998, the Fund's custodian and transfer
agency fees were reduced by $28,069 as a result of earnings credits from
overnight cash balances.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $542,067,359 and $380,059,553, respectively, for the six
months ended Dec. 31, 1998. Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $3,276 for the
six months ended Dec. 31, 1998.
4. LENDING OF PORTFOLIO SECURITIES
As of Dec. 31, 1998, securities valued at $676,588 were on loan to brokers. For
collateral, the Fund received $711,900 in cash. Income from securities lending
amounted to $87,897 for the six months ended Dec. 31, 1998. The risks to the
Fund of securities lending are that the borrower may not provide additional
collateral when required or return the securities when due.
<PAGE>
5. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Dec. 31, 1998
Class A Class B Class Y
Sold 15,654,146 11,016,562 34,622
Issued for reinvested distributions 8,155,857 2,139,746 2,575
Redeemed (7,653,882) (2,137,827) (37)
Net increase (decrease) 16,156,121 11,018,481 37,160
Year ended June 30, 1998
Class A Class B Class Y
Sold 18,523,901 11,322,130 --
Issued for reinvested distributions 12,750,754 1,914,883 556
Redeemed (14,979,351) (2,448,225) (30,749)
Net increase (decrease) 16,295,304 10,788,788 (30,193)
6. BANK BORROWINGS
The Fund entered into a revolving credit agreement with U.S. Bank, N.A., whereby
the Fund is permitted to have bank borrowings for temporary or emergency
purposes to fund shareholder redemptions. The Fund must have asset coverage for
borrowings not to exceed the aggregate of333% of advances equal to or less than
five business days plus 367% of advances over five business days. The agreement,
which enables the Fund to participate with other IDS Funds, permits borrowings
up to $200 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the
Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90
days after such loan is executed. The Fund also pays a commitment fee equal to
its pro rata share of the amount of the credit facility at a rate of 0.05% per
annum. The Fund had no borrowings outstanding during the six months ended Dec.
31, 1998.
<PAGE>
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS
The tables below show certain important financial information for evaluating the
Fund's results.
Fiscal period ended June 30,
Per share income and capital changes(a)
Class A
1998(b) 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.98 $8.04 $7.24 $6.26 $6.23
Income from investment operations:
Net investment income (loss) .11 .24 .25 .30 .29
Net gains (losses) (both realized and unrealized) 1.09 1.93 1.01 .96 .21
Total from investment operations 1.20 2.17 1.26 1.26 .50
Less distributions:
Dividends from net investment income (.11) (.23) (.24) (.28) (.31)
Distributions from realized gains (.59) (1.00) (.22) -- (.16)
Total distributions (.70) (1.23) (.46) (.28) (.47)
Net asset value, end of period $9.48 $8.98 $8.04 $7.24 $6.26
Ratios/supplemental data
Class A
1998b 1998 1997 1996 1995
Net assets, end of period (in millions) $1,180 $973 $740 $677 $601
Ratio of expenses to average daily net assets(d) .85%c .86% .89% .90% .89%
Ratio of net investment income
(loss) to average daily net assets 2.35%c 2.81% 3.42% 4.03% 4.84%
Portfolio turnover rate (excluding
short-term securities) 31% 83% 90% 84% 68%
Total return(e) 13.67% 28.40% 18.12% 20.28% 8.44%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Dec. 31, 1998 (Unaudited).
c Adjusted to an annual basis.
d Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
e Total return does not reflect payment of a sales charge.
</TABLE>
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<TABLE>
<CAPTION>
Fiscal period ended June 30,
Per share income and capital changes(a)
Class B Class Y
1998(c) 1998 1997 1996 1995(b) 1998(c) 1998 1997 1996 1995(b)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $8.98 $8.04 $7.23 $6.26 $5.98 $8.98 $8.04 $7.24 $6.26 $5.98
Income from investment operations:
Net investment income (loss) .08 .17 .19 .23 .15 .11 .24 .26 .31 .16
Net gains (losses) (both
realized and unrealized) 1.09 1.94 1.03 .96 .26 1.09 1.94 1.02 .96 .27
Total from investment operations 1.17 2.11 1.22 1.19 .41 1.20 2.18 1.28 1.27 .43
Less distributions:
Dividends from net
investment income (.08) (.17) (.19) (.22) (.13) (.11) (.24) (.26) (.29) (.15)
Distributions from realized gains (.59) (1.00) (.22) -- -- (.59) (1.00) (.22) -- --
Total distributions (.67) (1.17) (.41) (.22) (.13) (.70) (1.24) (.48) (.29) (.15)
Net asset value, end of period $9.48 $8.98 $8.04 $7.23 $6.26 $9.48 $8.98 $8.04 $7.24 $6.26
Ratios/supplemental data
Class B Class Y
1998(c) 1998 1997 1996 1995(b) 1998(c) 1998 1997 1996 1995(b)
Net assets, end of period
(in millions) $317 $201 $93 $47 $7 $-- $-- $-- $-- $--
Ratio of expenses to average
daily net assetse 1.61%d 1.62% 1.65% 1.68% 1.83%d .80%d .79% .74% .73% .84%d
Ratio of net investment income
(loss) to average daily net assets 1.57%d 2.01% 2.66% 3.05% 4.83%d 1.99%d 3.02% 3.57% 4.13% 5.84%d
Portfolio turnover rate
(excluding short-term securities) 31% 83% 90% 84% 68% 31% 83% 90% 84% 68%
Total return(f) 13.27% 27.47% 17.27% 19.38% 7.41% 13.71% 28.43% 18.30% 20.48% 7.68%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was March 20, 1995. c Six months ended Dec. 31, 1998
(Unaudited).
d Adjusted to an annual basis.
e Effective fiscal year 1996, expense ratio is based on total expenses of the
Fund before reduction of earnings credits on cash balances.
f Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
Investments in Securities
IDS Utilities Income Fund, Inc.
Dec. 31, 1998 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (89.9%)
Issuer Shares Value(a)
Communications equipment & services (0.9%)
Motorola 100,000 $6,106,250
Northern Telecom 150,000(c) 7,518,750
Total 13,625,000
Computers & office equipment (1.7%)
America Online 75,000(b) 12,000,000
Cisco Systems 75,000(b) 6,960,938
EQUANT 100,000(b,c) 6,781,250
Total 25,742,188
Miscellaneous (1.3%)
American Water Works 410,000 13,837,500
Suez Lyonnaise des Eaux 30,000(c) 6,159,900
Total 19,997,400
Utilities -- electric (35.5%)
Allegheny Energy 600,000 20,700,000
Black Hills Corp 150,000 3,956,250
Carolina Power & Light 550,000 25,884,375
Cinergy 350,000 12,031,250
CMS Energy 700,000 33,906,250
Consolidated Edison 250,000 13,218,750
DPL 900,000 19,462,500
DQE 550,000 24,165,625
Duke Energy 350,000 22,421,875
Edison Intl 600,000 16,725,000
Endesa ADR 370,000(c) 9,788,905
FirstEnergy 500,000 16,281,250
FPL Group 350,000 21,568,750
GPU 300,000 13,256,250
Houston Inds 550,000 17,668,750
LG&E Energy 768,000 21,744,000
MDU Resources Group 525,000 13,814,063
Nevada Power 200,000 5,200,000
New Century Energies 575,000 28,031,250
NIPSCO Inds 900,000 27,393,750
Northern States Power 500,000 13,875,000
PECO Energy 500,000 20,812,500
Pinnacle West Capital 500,000 21,187,500
Public Service Enterprise Group 300,000 12,000,000
Sierra Pacific Resources 400,000 15,200,000
SIGCORP 200,000 7,137,500
Southern Co 400,000 11,625,000
Teco Energy 800,000 22,549,999
Texas Utilities 450,000 21,009,375
Unicom 500,000 19,281,250
Total 531,896,967
Utilities -- gas (11.1%)
Coastal 600,000 20,962,500
Columbia Energy Group 350,000 20,212,500
Consolidated Natural Gas 100,000 5,400,000
Eastern Enterprises 200,000 8,750,000
El Paso Energy 700,000 24,368,750
Energen 400,000 7,800,000
Enron 500,000 28,531,250
New Jersey Resources 350,000 13,825,000
NICOR 200,000 8,450,000
Northwest Natural Gas 162,500 4,204,688
ONEOK 200,000 7,225,000
Washington Gas Light 300,000 8,137,500
WICOR 400,000 8,725,000
Total 166,592,188
Utilities -- telephone (39.4%)
AirTouch Communications 450,000(b) 32,456,250
ALLTEL 450,000 26,915,625
Ameritech 950,000 60,206,250
AT&T 700,000 52,675,000
Bell Atlantic 350,000 19,884,375
BellSouth 1,100,000 54,862,500
Cable & Wireless Optus 5,000,000(b,c) 10,509,500
Century Telephone Enterprises 700,000 47,250,000
Cincinnati Bell 600,000 22,687,500
COLT Telecom Group ADR 100,000(b,c,d) 5,987,500
Frontier 400,000 13,600,000
GTE 350,000 23,603,125
Hellenic Telecommunications ADR 500,000(b,c) $6,625,000
Manitoba Telecom Services 600,000(c) 7,833,921
MCI WorldCom 1,000,000(b) 71,749,999
SBC Communications 900,000 48,262,500
Sprint 300,000 25,237,500
U S WEST Communications Group 900,000 58,162,500
Total 588,509,045
Total common stocks
(Cost: $1,004,375,705) $1,346,362,788
Preferred stocks (3.5%)
Issuer Shares Value(a)
Intermedia Communications
7.00% Cv Series F 350,000 $4,900,000
MediaOne Group
6.25% Cv 358,100 23,813,650
Omnipoint
Cv 200,000(e) 4,475,000
SBH-Cincinnati Bell
6.25% 150,000 9,937,500
Sprint
8.25% Cv 112,675 9,295,688
Total preferred stocks
(Cost: $49,576,815) $52,421,838
Bonds (4.4%)
Issuer Coupon Principal Value(a)
rate amount
Mortgage-backed security (0.3%)
Federal Natl Mtge Assn
04-01-26 7.00% $4,627,591 $4,721,578
U.S. government obligation (0.6%)
U.S. Treasury
08-15-23 6.25 7,500,000 8,381,475
Media (0.4%)
Tele-Communications
06-15-22 9.88 4,500,000 6,272,841
Miscellaneous (0.5%)
California Infrastructure
Southern California Edison
09-25-08 6.38 7,000,000 7,371,420
Utilities -- electric (1.6%)
AES
Cv
08-15-05 4.50 10,000,000 10,699,999
Hydro-Quebec
Local Govt Guaranty Series 1989HH
12-01-29 8.50 5,000,000(c) 6,340,911
TU Electric Capital
Company Guaranty
01-30-37 8.18 6,000,000 6,563,653
Total 23,604,563
Utilities -- gas (0.2%)
Trans-Canada Pipelines
01-01-21 9.88 2,000,000(c) 2,659,827
Utilities -- telephone (0.8%)
Bell Atlantic Financial Services
Cv
04-01-03 5.75 7,000,000 7,261,240
Bell Telephone of Pennsylvania
03-15-33 7.38 5,000,000 5,323,393
Total 12,584,633
Total bonds
(Cost: $58,949,006) $65,596,337
Short-term securities (1.9%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies (1.1%)
Federal Home Loan Bank Disc Nt
01-20-99 5.07% $2,300,000 $2,293,858
Federal Home Loan Mtge Corp Disc Nts
01-08-99 5.12 2,500,000 2,497,521
01-11-99 5.12 3,100,000 3,095,608
02-09-99 5.07 6,700,000 6,663,490
02-10-99 5.04 600,000 596,660
Total 15,147,137
Commercial paper (0.8%)
Ciesco LP
01-06-99 5.32 4,900,000 4,896,393
Consolidated Natural Gas
02-09-99 5.26 600,000 596,607
Natl Australia Funding (Delaware)
01-04-99 5.43 4,000,000 3,998,197
Pacific Life Insurance
01-04-99 5.00 3,100,000 3,098,708
Total 12,589,905
Total short-term securities
(Cost: $27,737,042) $27,737,042
Total investments in securities
(Cost: $1,140,638,568)(f) $1,492,118,005
See accompanying notes to investments in securities.
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated. As of Dec. 31,
1998, the value of foreign securities represented 4.69% of net assets.
(d) Security is partially or fully on loan. See Note 4 to the financial
statements.
(e) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(f) At Dec. 31, 1998, the cost of securities for federal income tax purposes was
approximately $1,140,633,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $357,354,000
Unrealized depreciation (5,869,000)
Net unrealized appreciation $351,485,000
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 85
SPENCER, IA
S-6342 L (2/99)
IDS Utilities Income Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
