Observations were made on the inclusions of H. anomala grown in dist. water, 0.2% (NH4)2SO4 and 0.2% glucose. The results indicated that this yeast utilized volutin as a source of N. In the absence of nutrients, volutin free cells grown aerobically utilized the lipoid inclusions as a source of energy and N. Under certain conditions, one type of inclusion was transformed to the other. They appeared to be by-products of normal metabolic processes of growth.