<PAGE>
PAGE 1
1996 ANNUAL REPORT
IDS
Precious
Metals
Fund
(prospectus enclosed)
[icon of a mining car filled with gems]
The goal of IDS Precious Metals Fund, Inc. is long-term growth of
capital. The Fund invests primarily in securities of companies
engaged in exploration, mining, processing or distribution of gold
and other precious metals. Most of these companies will be located
outside of the United States.
(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.)
AMERICAN
EXPRESS
Financial
Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
PAGE 2
[icon of a mining car filled with gems]
While investors typically look to stocks and bonds for the best
return on their money, there are times when hard assets such as
gold can play a small but important role in a diversified
portfolio. Because owning the metal itself is often impractical,
most investors put their money in stocks of companies that mine
gold and other precious metals. Those stocks, which form the
bedrock of IDS Precious Metals Fund, usually move in tandem with
the prices of the metals.
<PAGE>
PAGE 3
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.
1996 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 26
IDS mutual funds 28
Federal income tax information 31
1996 prospectus
The Fund in brief 3p
Goal 3p
Types of Fund investments and their risks 3p
Manager and distributor 3p
Portfolio manager 3p
Alternative purchase arrangements 3p
Sales charge and Fund expenses 4p
Performance 6p
Financial highlights 6p
Total returns 8p
Investment policies and risks 10p
Facts about investments and their risks 10p
Alternative investment option 15p
Valuing Fund shares 15p
How to purchase, exchange or redeem shares 16p
Alternative purchase arrangements 16p
How to purchase shares 18p
How to exchange shares 21p
How to redeem shares 21p
Reductions and waivers of the sales charge 25p
Special shareholder services 29p
Services 29p
Quick telephone reference 29p
Distributions and taxes 30p
Dividend and capital gain distributions 30p
Reinvestments 31p
Taxes 31p
How to determine the correct TIN 33p
How the Fund is organized 34p
Shares 34p
Voting rights 34p
Shareholder meetings 34p
Board members and officers 34p
Investment manager and transfer agent 36p
Distributor 37p
About American Express Financial Corporation 38p
General information 38p
Appendix 39p
Descriptions of derivative instruments 39p
<PAGE>
PAGE 4
To our shareholders
[photo of William Pearce]
William R. Pearce
President of the Fund
[photo of Richard Warden]
Richard H. Warden
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.
[reproduced signature]
William R. Pearce
From the portfolio manager
A highly favorable supply/demand situation for gold led to a
substantial run-up in the value of gold-producer stocks during the
past 12 months. IDS Precious Metals Fund was well positioned to
take advantage of the positive trend, generating a total return of
approximately 70% (Class A shares) for the fiscal year -- April
1995 through March 1996.
The period got off to a spectacular start, as surging stock prices
resulted in the Fund advancing strongly in the spring of 1995.
Much of the rally resulted from concerns that labor disputes in
South Africa and torrential rains in Australia, which caused the
shut-down of many mines in that country, would soon sharply curtail
gold production.
With gold demand already outstripping supply, gold and the stocks
of its producers quickly captured investors' fancy and their
investment capital, driving prices higher. Complementing the
supply/demand situation was reluctance on the part of central banks
to lend or sell their gold reserves. Aside from dips in August and
October, the uptrend for gold stocks continued through the end of
the fiscal year.
<PAGE>
PAGE 5
Inflation not a factor
In addition to the stocks' relatively steady advance, the period
was unusual in that the inflation rate in most major countries
remained tame. Historically, gold prices have moved largely in
tandem with inflation -- rising inflation leading to higher gold
prices and vice-versa. Clearly, the positive supply/demand
situation was an over-powering factor during the past 12 months.
Also benefiting the Fund's performance was our strategy of
maintaining a low level of cash reserves, approximately 5% of
portfolio assets throughout the year. This meant we kept nearly
all of the assets at work in gold stocks, which provided a far
higher return that cash-equivalent investments.
Modest portfolio shifts
Looking at changes to the portfolio, we made some small shifts in
our exposure to the major markets, including a reduction in our
Australian and South African holdings last year. For the most
part, though, our investment mix is much the same as it has been
for quite some time: the majority in North America, followed by
Australia and South Africa. In an effort to boost future returns,
we did add some stocks of small gold-exploration companies, which,
because of their size, may be more flexible than their larger
counterparts in seizing new business opportunities.
As this is being written in April, the strong market fundamentals
of healthy demand and restricted supply remain in place for gold.
While that's no guarantee that prices will continue to rise during
the current fiscal year, we think the long-term trend continues to
be positive.
[reproduced signature]
Richard H. Warden
Class A
12-month performance
(All figures per share)
Net Asset Value (NAV)
March 31, 1996 $13.75
March 31, 1995 $ 7.99
Increase $ 5.76
Distributions
April 1, 1995 - March 31, 1996
From income $ 0.01
From capital gain $ --
Total distributions $ 0.01
Total return* 72.1%**
Class B
12-month performance
(All figures per share)
Net Asset Value (NAV)
March 31, 1996 $13.65
March 31, 1995 $ 7.99
Increase $ 5.66
Distributions
April 1, 1995 - March 31, 1996
From income $ --
From capital gain $ --
Total distributions $ --
Total return* 70.8%**
Class Y
12-month performance
(All figures per share)
Net Asset Value (NAV)
March 31, 1996 $13.76
March 31, 1995 $ 7.99
Increase $ 5.77
Distributions
April 1, 1995 - March 31, 1996
From income $ --
From capital gain $ --
Total distributions $ --
Total return* 72.3%**
*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>
PAGE 6
<TABLE>
<CAPTION>
IDS Precious Metals Fund, Inc.
The Fund's ten largest holdings
Picture of pie chart: The ten holdings listed here make up 48.63% of the Funds's net assets
Percent Value
(of Fund's net assets) (as of March 31, 1996)
<S> <C> <C>
Bre X Minerals 6.88% $7,192,490
This company, directly and through joint ventures, is engaged in the
acquisition, exploration and development of mining properties.
Freeport McMoRan Copper & Gold 6.81 7,115,625
A gold, silver and copper producer in Indonesia.
Dayton Mining 6.61 6,911,831
A South American precious metals producer.
Barrick Gold 5.23 5,467,500
This company is engaged in the mining and exploration of gold in the
United States, Chile and Canada.
Sons of Gwalia 5.18 5,415,300
An Australian precious metals producer.
TVX Gold 4.30 4,493,265
A Canadian and South American precious metals producer.
Intl Gold Resources 3.48 3,631,293
A Canadian company exploring for gold in West Africa.
Stillwater Mining 3.48 3,622,147
This company explores, develops, mines and produces platinum, palladium
and associated metals from the Stillwater Complex located in the
Beartooth Mountains in southern Montana.
Acacia Resources 3.43 3,586,500
An Australian precious metals producer.
Plutonic Resources 3.23 3,375,600
An Australian precious metals producer.
</TABLE>
<PAGE>
PAGE 7
Making the most of the Fund
Average annual total return
(as of March 31, 1996)
1 year 5 years 10 years
Class A +63.48% +20.01% +13.78%
Class B* +63.94% -- --
Class Y* +72.30% -- --
*Inception date was March 20, 1995.
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 for Class A and Class B reflect the effect 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
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 XXXXX
Feb 100 18 5.56 XXXXXx
March 100 17 5.88 XXXXXx
April 100 15 6.67 XXXXXXx
May 100 16 6.25 XXXXXXx
June 100 18 5.56 XXXXXx
July 100 17 5.88 XXXXXx
Aug 100 19 5.26 XXXXXx
Sept 100 21 4.76 XXXXx
Oct 100 20 5.00 XXXXX
By investing an equal number of dollars each month...
you automatically buy more shares when the per share market price
is low... [arrow pointing to April line in table above]
and fewer shares when the per share market price is high. [arrow
pointing to Sept line in table above]
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.
<PAGE>
PAGE 8
Your Fund's long-term performance
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 stock 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.
How your $10,000 has grown in IDS Precious Metals Fund
S&P 500
Stock Index
$36,400
IDS Precious
Metals Fund
Class A
$20,000
Lipper Gold Fund Index
$9,500
'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96
Average annual total return
(as of March 31, 1996)
1 year 5 years 10 years
Class A +63.48% +20.01% +13.78%
Class B* +63.94% -- --
Class Y* +72.30% -- --
*Inception date was March 20, 1995.
Assumes: Holding period from 4/1/86 to 3/31/96. Returns do not
reflect taxes payable on distributions. Reinvestment of all income
and capital gain distributions for the Fund, with a value of
$7,679. Also see "Performance" in the Fund's current prospectus.
The Standard & Poor's 500 Stock Index, 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.
Lipper Gold Fund Index, published by Lipper Analytical Services,
Inc., includes 10 funds that are generally similar to this Fund,
although some funds in the index may have somewhat different
investment policies or objectives.
On the graph above you can see how the Fund's total return compared
to two widely cited performance indexes, the S&P 500 and the Lipper
Gold Fund Index. In comparing Precious Metals Fund to the two
indexes, 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 indexes. If
you were actually to buy either individual stocks or growth mutual
funds, any sales charges 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.
Average annual total return 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.
<PAGE>
PAGE 9
Independent auditors' report
___________________________________________________________________
The board and shareholders
IDS Precious Metals Fund, Inc.:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments in securities,
of IDS Precious Metals Fund, Inc. as of March 31, 1996, 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 March 31, 1996, and the financial highlights
for each of the years in the ten-year period ended March 31, 1996.
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 but
not received 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.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of IDS
Precious Metals Fund, Inc. at March 31, 1996, 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 March 31,
1996, 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
May 3, 1996
<PAGE>
PAGE 10
<TABLE>
<CAPTION>
Statement of assets and liabilities
IDS Precious Metals Fund, Inc.
March 31, 1996
______________________________________________________________________________________________________________
Assets
______________________________________________________________________________________________________________
<S> <C>
Investments in securities, at value (Note 1)
(identified cost $70,254,629) $110,473,509
Dividends and accrued interest receivable 144,121
U.S. government securities held as collateral (Note 7) 6,814,838
______________________________________________________________________________________________________________
Total assets 117,432,468
______________________________________________________________________________________________________________
Liabilities
______________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 3,334,220
Payable for investment securities purchased 954,374
Unrealized depreciation on foreign contracts held, at value (Notes 1 and 4) 700
Payable upon return of securities loaned (Note 7) 8,614,838
Accrued investment management services fee 12,854
Accrued distribution fee 144
Accrued service fee 1,048
Accrued transfer agency fee 1,061
Accrued administrative services fee 359
Other accrued expenses 21,132
______________________________________________________________________________________________________________
Total liabilities 12,940,730
______________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $104,491,738
______________________________________________________________________________________________________________
Represented by
______________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 75,987
Undistributed net investment income 71,839,367
Net operating loss 700
Accumulated net realized loss (Notes 1 and 6) (7,642,496)
Unrealized appreciation of investments and on translation
of assets and liabilities in foreign currencies (Note 4) 40,218,180
______________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $104,491,738
______________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $101,110,693
Class B $ 3,379,352
Class Y $ 1,693
Net asset value per share of outstanding capital stock: Class A shares 7,350,968 $ 13.75
Class B shares 247,587 $ 13.65
Class Y shares 123 $ 13.76
See accompanying notes to financial statements.
<PAGE>
PAGE 11
Financial statements
Statement of operations
IDS Precious Metals Fund, Inc.
Year ended March 31, 1996
______________________________________________________________________________________________________________
Investment income
______________________________________________________________________________________________________________
Income:
Interest $ 268,438
Dividends (net of foreign taxes withheld of $8,448) 515,024
______________________________________________________________________________________________________________
Total income 783,462
______________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 705,799
Distribution fee -- Class B 7,723
Transfer agency fee 190,272
Incremental transfer agency fee -- Class B 226
Service fee
Class A 133,846
Class B 1,800
Administrative services fee 46,912
Compensation of board members 7,862
Compensation of officers 615
Custodian fees 81,278
Postage 28,525
Registration fees 42,472
Reports to shareholders 4,295
Audit fees 20,750
Administrative 1,917
Other 27,338
______________________________________________________________________________________________________________
Total expenses 1,301,630
Earnings credits on cash balances (Note 2) (13,316)
______________________________________________________________________________________________________________
Total net expenses 1,288,314
______________________________________________________________________________________________________________
Investment loss -- net (504,852)
______________________________________________________________________________________________________________
Realized and unrealized gain -- net
______________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions
(including loss of $1,705 from foreign currency transactions) (Note 3) 17,556,494
Net change in unrealized appreciation or depreciation of investments and on
translation of assets and liabilities in foreign currencies 28,256,105
______________________________________________________________________________________________________________
Net gain on investments and foreign currency 45,812,599
______________________________________________________________________________________________________________
Net increase in net assets resulting from operations $45,307,747
______________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 12
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Precious Metals Fund, Inc.
Year ended March 31,
______________________________________________________________________________________________________________
Operations and distributions 1996 1995
______________________________________________________________________________________________________________
<S> <C> <C>
Investment income gain (loss) -- net $ (504,852) $ 216,565
Net realized gain on investments and foreign currency 17,556,494 2,803,911
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies 28,256,105 (6,250,409)
______________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations 45,307,747 (3,229,933)
______________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (63,093) (320,491)
______________________________________________________________________________________________________________
Total distributions (63,093) (320,491)
______________________________________________________________________________________________________________
Capital share transactions (Note 5)
______________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 114,090,666 87,414,117
Class B shares 5,261,955 39,862
Class Y shares 1,000 20
Reinvestment of distributions at net asset value
Class A shares 61,004 314,487
Payments for redemptions
Class A shares (129,488,052) (86,077,835)
Class B shares (Note 2) (2,659,608) --
______________________________________________________________________________________________________________
Increase (decrease) in net assets from capital share transactions (12,733,035) 1,690,651
______________________________________________________________________________________________________________
Total increase (decrease) in net assets 32,511,619 (1,859,773)
Net assets at beginning of year 71,980,119 73,839,892
______________________________________________________________________________________________________________
Net assets at end of year
(including undistributed net investment income of
$700 and $62,735) $104,491,738 $71,980,119
______________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 13
Notes to financial statements
IDS Precious Metals Fund, Inc.
___________________________________________________________________
1. Summary of significant accounting policies
The Fund is registered under the Investment Company Act of 1940 (as
amended) as a non-diversified, open-end management investment
company. The Fund invests primarily in securities of companies
engaged in explorations, mining, processing or distribution of gold
and other precious metals. Most of these companies will be located
outside of the United States. 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 may be subject to a contingent deferred
sales charge and such automatically convert to Class A after eight
years. Class Y shares, 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,
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.
Investments in metals, if any, are valued daily using data from
independent brokers and pricing services.
<PAGE>
PAGE 14
___________________________________________________________________
1. Summary of significant accounting policies (continued)
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 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 futures contracts
traded on any U.S. or foreign exchange. The Fund also may buy or
write put and call options on these futures 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.
<PAGE>
PAGE 15
___________________________________________________________________
1. Summary of significant accounting policies (continued)
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 of 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 dividends, interest income and
foreign withholding taxes.
The Fund may enter into forward foreign currency exchange contracts
for hedging 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.
On the statement of assets and liabilities, as a result of
permanent book-to-tax difference, undistributed net investment
income has been increased by $505,910 and accumulated net realized
loss has been decreased by $13,064, resulting in a net
reclassification adjustment to decrease paid-in-capital by
$518,974.
<PAGE>
PAGE 16
___________________________________________________________________
1. Summary of significant accounting policies (continued)
Dividends to shareholders
An annual dividend declared and paid by the end of the calendar
year from net investment income is reinvested in additional shares
of the Fund at net asset value or payable in cash. Capital gains,
when available, are distributed along with the income dividend.
Other
Security transactions are accounted for on the date securities are
purchased or sold. Dividend income is recognized on the ex-dividend
date or upon receipt of ex-dividend notification in the case of
certain foreign securities. Interest income, including level-yield
amortization of premium and discount is accrued daily.
___________________________________________________________________
2. Expenses and sales charges
Effective March 20, 1995, 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 0.8% to 0.675%
annually. The fee is adjusted upward or downward by a performance
incentive adjustment based on the Fund's average daily net assets
over a rolling 12-month period as measured against the change in
the Lipper Gold Fund Index. The maximum adjustment is 0.12% of the
Fund's average daily net assets after deducting 1% from the
performance difference. If the performance difference is less than
1%, the adjustment will be zero. The adjustment increased the fee
by $80,308 for the year ended March 31, 1996.
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 0.06%
to 0.035% 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>
PAGE 17
___________________________________________________________________
2. Expenses and sales charges (continued)
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 for
distributing Fund shares were $182,723 for Class A and $1,046 for
Class B for the year ended March 31, 1996. The Fund also pays
custodian fees to American Express Trust Company, an affiliate of
AEFC.
During the year ended March 31, 1996 the Fund's custodian and
transfer agency fees were reduced by $13,316 as a result of
earnings 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 board members serve on the board. The retirement
plan expense amounted to $727 for the year ended March 31, 1996.
The plan was terminated April 30, 1996. The total liability for the
plan is $11,168, which will be paid out at some future date.
___________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than
short-term obligations) aggregated $37,845,001 and $50,780,040,
respectively, for the year ended March 31, 1996. Realized gains and
losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were
$2,225 for the year ended March 31, 1996.
<PAGE>
PAGE 18
___________________________________________________________________
4. Foreign currency contracts
At March 31, 1996, the Fund had entered into a foreign currency
exchange contract that obligates the Fund to deliver currency at a
specified future date. The unrealized appreciation and/or
depreciation on this contract is included in the accompanying
financial statements. The terms of the open contract are as
follows:
<TABLE>
<CAPTION>
Exchange date Currency to be Currency to be Unrealized
delivered received depreciation
______________________________________________________________________________
<S> <C> <C> <C>
April 3, 1996 954,374 1,300,000 $700
U.S. Dollar Canadian Dollar
</TABLE>
___________________________________________________________________
5. Capital share transactions
Transactions in shares of capital stock for the years indicated are
as follows:
<TABLE>
<CAPTION>
Year ended March 31, 1996
Class A Class B Class Y
__________________________________________________________________________
<S> <C> <C> <C>
Sold 11,145,976 478,047 120
Issued for reinvested 6,147 -- --
distributions
Redeemed (12,805,371) (235,650) --
__________________________________________________________________________
Net increase (decrease) (1,653,248) 242,397 120
__________________________________________________________________________
Year ended March 31, 1995
Class A Class B* Class Y*
__________________________________________________________________________
Sold 11,024,627 5,190 3
Issued for reinvested 39,672 -- --
distributions
Redeemed (10,809,372) -- --
__________________________________________________________________________
Net increase 254,927 5,190 3
__________________________________________________________________________
*Inception date was March 20, 1995.
</TABLE>
___________________________________________________________________
6. Capital loss carryover
For federal income tax purposes, the Fund has a capital loss
carryover of $6,503,745 at March 31, 1996 that will expire in 2000
and 2001 if not offset by subsequent capital gains. It is unlikely
the board will authorize a distribution of any realized capital
gain until the available capital loss carryover has been offset or
expires.
<PAGE>
PAGE 19
___________________________________________________________________
7. Lending of portfolio securities
At March 31, 1996, securities valued at $8,163,100 were on loan to
brokers. For collateral, the Fund received $1,800,000 in cash and
U.S. government securities valued at $6,814,838. Income from
securities lending amounted to $58,364 for the year ended March 31,
1996. 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.
___________________________________________________________________
8. Financial highlights
"Financial highlights" showing per share data and selected
information is presented on pages 6 and 7 of the prospectus.
<PAGE>
PAGE 20
<TABLE>
<CAPTION>
Investments in securities
IDS Precious Metals Fund, Inc.
March 31, 1996
(Percentages represent value of
investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (92.1%)(c)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Australia (16.1%)
Acacia Resources 1,500,000 (b) $ 3,586,500
Delta Gold 125,000 (b) 310,625
Golden Shamrock Mines 4,000,000 (b,d) 3,124,000
Plutonic Resources 600,000 3,375,600
Ranger Minerals 200,000 (b) 734,400
Sons of Gwalia 900,000 5,415,300
South Pacific Resources 58,500 (b) 252,127
____________
Total 16,798,552
_____________________________________________________________________________________________________________________________
North/South America (69.1%)
Arequipa Resources 100,000 (b) 880,313
Argosy Mining 296,000 (b) 492,917
Asia Pacific Resources 125,000 (b) 882,606
Baja Gold 300,000 (b) 528,186
Barrick Gold 180,000 5,467,500
Bre X Minerals 66,300 (b) 7,192,490
Cambior 212,700 2,886,658
Canarc Resources 750,000 (b) 1,303,965
Carson Gold 400,000 (b) 539,924
Crown Resources 75,000 (b) 487,500
Dayton Mining 1,125,000 (b,d) 6,911,831
Diamond Fields Resources 60,000 (b) 1,777,133
Euro-Nevada Mining 40,000 1,467,190
First Dynasty Mines 200,000 (b) 1,265,450
First Mississippi Gold 100,000 (b) 2,750,000
Francisco Gold 150,000 (b) 478,670
Franco Nevada 15,000 916,077
Freeport McMoRan Copper & Gold 225,000 7,115,625
Goldcorp 30,000 583,208
Greenstone Resources 250,000 (b) 1,879,835
High River Gold Mines 200,000 (b) 861,974
Intl Gold Resources 900,000 (b) 3,631,293
Metallica Resources 300,000 (b) 1,237,941
Nevsun Resources 230,800 (b) 1,820,121
Newmont Gold 39,000 2,188,875
Pegasus Gold 100,000 (b) 1,462,500
Pioneer Group 10,000 290,000
Placer Dome 75,000 2,165,625
Romarco Minerals 300,000 (b) 880,311
See accompanying notes to investments in securities.
<PAGE>
PAGE 21
Santa Elina 100,000 (b) 163,224
Santa Fe Pacific 25,000 400,000
Stillwater Mining 170,454 (b,e) 3,622,147
Tiomin Resources 300,000 (b,e) 907,830
Triton Resources 140,000 (b,e) 834,463
TVI Pacific 500,000 (b,e) 1,005,025
TVI Pacific 200,000 (b) 402,010
TVX Gold 500,000 (b) 4,493,265
___________
Total 72,173,682
_____________________________________________________________________________________________________________________________
South Africa (5.4%)
Driefontein Consolidated ADR 100,000 1,587,500
Goldfields of South Africa 10,000 342,500
Loraine Gold Mines 250,000 (b) 849,000
Vaalreef Exploration Mining ADR 50,000 478,125
Western Area Gold ADR 75,928 1,229,085
Western Deep Levels ADR 25,000 1,146,875
____________
Total 5,633,085
_____________________________________________________________________________________________________________________________
United Kingdom (1.5%)
Ashanti Gold 65,000 (e) 1,600,625
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $56,867,092) $96,205,944
_____________________________________________________________________________________________________________________________
Other (2.8%)(c)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
Arequipa
Special Warrants 40,000 352,125
Campbell Resources
Units 500,000 (b) 738,707
Eldorado
Special Warrants 100,000 669,405
Oliver Gold
Special Warrants 450,000 (e) 1,130,670
_____________________________________________________________________________________________________________________________
Total other
(Cost: $2,010,879) $ 2,890,907
_____________________________________________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 22
<TABLE>
<CAPTION>
Short-term securities (10.8%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agencies (5.6%)
Federal Home Loan Mtge Corp
Disc Nts
04-15-96 5.28% $1,700,000 $ 1,696,018
04-19-96 5.29 2,800,000 2,791,802
Federal Natl Mtge Assn
Disc Nts
04-11-96 5.22 900,000 898,440
04-16-96 5.31 500,000 498,749
____________
Total 5,885,009
_____________________________________________________________________________________________________________________________
Commercial paper (5.2%)
Anheuser-Busch
04-03-96 5.22 1,500,000 1,499,134
Natl Australia Funding
04-04-96 5.43 2,400,000 2,398,190
St. Paul Companies
04-23-96 5.34 1,600,000 (f) 1,594,325
___________
Total 5,491,649
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $11,376,658) $ 11,376,658
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $70,254,629)(g) $110,473,509
_____________________________________________________________________________________________________________________________
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.
(d) Security is partially on loan. See Note 7 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) Commercial paper sold within terms of a private placement memorandum, exempt from regristration 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.
(g) At March 31, 1996, the cost of securities for federal income tax purposes was
$70,255,683 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $41,511,489
Unrealized depreciation (1,293,663)
___________________________________________________________________________________________
Net unrealized appreciation $40,217,826
___________________________________________________________________________________________
</TABLE>
<PAGE>
PAGE 23
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) coins
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 24
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) shield with eagle head enclosed
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 enclosed
<PAGE>
PAGE 25
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 star enclosed
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 U.S. equity securities, U.S. and foreign debt
securities, foreign equity securities and money market instruments.
The fund provides diversification among these major investment
categories and has a target mix that represents the way the fund's
investments will be allocated over the long term.
(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 pine 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
<PAGE>
PAGE 26
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) light bulb
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) two 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
<PAGE>
PAGE 27
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) trees
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 28
Federal income tax information
IDS Precious Metals Fund, Inc.
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. 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 Precious Metals Fund, Inc.
Fiscal year ended March 31, 1996
Class A
Income distribution none qualifying for deduction by corporations.
Payable date Per share
___________________________________________________
Dec. 29, 1995 $0.00845
___________________________________________________
<PAGE>
PAGE 29
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 Precious Metals Fund
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
PAGE 30
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 a 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.
