1997 SEMIANNUAL REPORT
IDS
Precious
Metals
Fund
(icon of) cart of precious 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
AMERICAN EXPRESS Financial Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
(icon of) cart of precious 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.
Contents
From the chairman 3
From the portfolio manager 3
The Fund's ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 25
Board members and officers 27
IDS mutual funds 28
<PAGE>
To our shareholders
From the chairman
If you're an experienced investor, you know that the past few years have
been unusually strong ones in many financial markets. Perhaps just as
important, 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. We saw
evidence of that in late October, when declines in certain Asian markets
spawned a sharp drop in the U.S. stock market.
That fact 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
A decline in the price of gold put stocks of gold mining and exploration
companies under selling pressure for much of the past six months. That
situation was reflected in the performance of IDS Precious Metals Fund,
whose Class A shares produced a loss of 10.7% in the first half of its
fiscal year -- April through September 1997.
The period began with the gold market in turmoil resulting from what
proved to be a false gold-discovery claim by Bre-X, a Canadian mining
company that had been exploring a site in Indonesia. Although no other
company was involved in the claim, gold stocks in general suffered by
implication.
Central banks sell
gold reserves
Compounding the situation was the fact that a number of central banks were
selling portions of their gold reserves, a trend that continued throughout
the six months. Australia, for example, sold about two-thirds of its gold
reserves in May alone. The selling pressure pushed down the price of gold
and, consequently, the prices of gold stocks. Also contributing to the
difficult environment were tame inflation rates in virtually all major
economies. Although gold has, in recent years, lost much of its appeal as
a store of value in times of rising inflation, the price of gold still
reacts positively to an inflation spike.
Despite the negatives, there were periodic upturns for gold stocks and,
thus, the Fund during the period. In fact, three of the six months yielded
moderately positive results. The driving force on the upside, as it has
been for quite some time, was the simple fact that demand for gold,
principally in the form of jewelry, continued to exceed the supply. This
was particularly true in Asian countries.
Increased focus on
major companies
Changes to the portfolio were relatively modestduring the period. The most
notable was a reduction in the number of gold-exploration companies, as I
concentrated more on the larger, well-established companies with gold
reserves. In addition to being better able to operate in a challenging
environment, their stocks are more easily tradable. Beyond that, I
increased the level of cash reserves moderately last spring to cushion the
Fund in the event of ongoing gold-market erosion. Lastly, I added some
stocks of diamond producers to provide greater diversification.
As for the rest of the
fiscal year, I expect more of what we've seen in the first six months -- a
volatile gold market lacking a sustained stimulus for higher prices.
Therefore, at this writing (mid-October), I am staying with a somewhat
conservative portfolio structure that includes higher-than-normal cash
reserves.
Richard H. Warden
(picture of) Richard H. Warden
Richard H. Warden
Portfolio manager
<PAGE>
To our shareholders
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1997 $ 9.34
March 31, 1997 $ 10.47
Decrease $ 1.13
Distributions
April 1, 1997 - Sept. 30, 1997
From income $ --
From capital gains $ --
Total distributionsb $ --
Total return* -10.7%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1997 $ 9.16
March 31, 1997 $ 10.30
Decrease $ 1.14
Distributions
April 1, 1997 - Sept. 30, 1997
From income $ --
From capital gains $ --
Total distributions $ --
Total return* -11.1%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1997 $ 9.40
March 31, 1997 $ 10.52
Decrease $ 1.12
Distributions
April 1, 1997 - Sept. 30, 1997
From income $ --
From capital gains $ --
Total distributions $ --
Total return* -10.7%**
*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 Fund's ten largest holdings
Percent Value
(of Fund's net assets) (as of Sept. 30, 1997)
Getchell Gold 7.51% $7,175,000
Stillwater Mining 5.58 5,338,778
Meridian Gold 5.19 4,957,481
Freeport -McMoRan Copper & Gold 4.52 4,321,875
Francisco Gold 4.13 3,948,949
Placer Dome 4.00 3,825,000
TVX Gold 3.26 3,111,996
Kinross Gold 2.88 2,750,136
Sons of Gwalia 2.68 2,566,950
Dayton Mining 2.57 2,457,029
(icon of) pie chart
The ten holdings listed here make up 42.32% of the Fund's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Precious Metals Fund, Inc.
Sept. 30, 1997
Assets
(Unaudited)
Investment in securities, at value (Note 1):
<S> <C>
Investments in securities of unaffiliated issuers (identified cost $95,106,699) $ 99,642,294
Investments in securities of affiliated issuer (identified cost $1,887,643) 361,860
Dividends and accrued interest receivable 13,878
Receivable for investment securities sold 8,388,804
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 30,584
------
Total assets 108,437,420
-----------
Liabilities
Disbursements in excess of cash on demand deposit 4,999,394
Payable for investment securities purchased 7,764,548
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) 762
Accrued investment management services fee 1,842
Accrued distribution fee 182
Accrued service fee 403
Accrued transfer agency fee 659
Accrued administrative services fee 138
Other accrued expenses 79,704
------
Total liabilities 12,847,632
----------
Net assets applicable to capital stock $ 95,589,788
============
Represented by
Capital stock-- $.01 par value (Note 1) $ 102,542
Additional paid-in capital 98,643,863
Net operating loss (12,330)
Accumulated net realized gain (loss) (6,154,099)
Unrealized appreciation (depreciation) on investments 3,009,812
---------
Total-- representing net assets applicable to outstanding capital stock $ 95,589,788
============
Net assets applicable to outstanding shares: Class A $ 86,219,716
Class B $ 9,368,859
Class Y $ 1,213
Net asset value per share of outstanding capital stock: Class A shares 9,230,733 $ 9.34
Class B shares 1,023,324 $ 9.16
Class Y shares 129 $ 9.40
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
IDS Precious Metals Fund, Inc.
Six months ended Sept. 30, 1997
Investment income
(Unaudited)
Income:
<S> <C>
Dividends $ 314,415
Interest 367,283
Less: Foreign taxes withheld (23,312)
-------
Total income 658,386
-------
Expenses (Note 2):
Investment management services fee 322,872
Distribution fee -- Class B 31,689
Transfer agency fee 120,908
Incremental transfer agency fee-- Class B 1,129
Service fee
Class A 65,684
Class B 7,284
Administrative services fees and expenses 29,149
Compensation of board members 4,605
Custodian fees 41,376
Postage 5,178
Registration fees 26,795
Reports to shareholders 2,833
Audit fees 10,750
Other 17,749
------
Total expenses 688,001
Earnings credits on cash balances (Note 2) (10,514)
-------
Total net expenses 677,487
-------
Investment income (loss) -- net (19,101)
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (7,049,123)
Foreign currency transactions (1,238)
------
Net realized gain (loss) on investments (7,050,361)
Net change in unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign currencies (1,689,906)
----------
Net gain (loss) on investments and foreign currencies (8,740,267)
----------
Net increase (decrease) in net assets resulting from operations $(8,759,368)
===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Precious Metals Fund, Inc.
Operations and distributions Sept. 30, 1997 March 31, 1997
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ (19,101) $ (718,269)
Net realized gain (loss) on investments (7,050,361) 13,933,568
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (1,689,906) (35,518,462)
---------- -----------
Net increase (decrease) in net assets resulting from operations (8,759,368) (22,303,163)
---------- -----------
Distributions to shareholders from:
Net realized gain
Class A -- (4,975,911)
Class B -- (416,645)
Class Y -- (81)
---
Total distributions -- (5,392,637)
----------
Capital share transactions (Note 5)
Proceeds from sales
Class A shares (Note 2) 96,092,874 205,793,924
Class B shares 4,331,008 14,073,563
Reinvestment of distributions at net asset value
Class A shares -- 4,825,220
Class B shares -- 415,636
Class Y shares -- 81
Payments for redemptions
Class A shares (85,510,975) (203,245,482)
Class B shares (Note 2) (2,268,620) (6,954,011)
- ---------- ----------
Increase (decrease) in net assets from capital share transactions 12,644,287 14,908,931
---------- ----------
Total increase (decrease) in net assets 3,884,919 (12,786,869)
Net assets at beginning of period 91,704,869 104,491,738
---------- -----------
Net assets at end of period $95,589,788 $91,704,869
=========== ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Precious Metals Fund, Inc.
(Unaudited as to Sept. 30, 1997)
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 has 10 billion authorized shares of capital stock. The Fund invests
primarily in securities of companies engaged in the exploration, 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 shares automatically convert to Class A
shares during the ninth calendar year of ownership. 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. Debt securities
are generally traded in the over-the-counter market and are valued at a
price deemed best to reflect fair value as quoted by dealers who make
markets in these securities or by an independent pricing service.
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.
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 financial 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.
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.
Dividends to shareholders
An annual dividend declared and paid by the end of the calendar year from
net investment income, when available, 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. 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 decreased the fee by $20,354 for the six months ended Sept. 30,
1997.
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 0.06% to 0.035%
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, organizational expenses and any other
expenses properly payable by the Fund approved by the board.
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. 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.
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 commencing on May 9,
1997, the fee is calculated at a rate of 0.10% of the Fund's average daily
net assets attributable to Class Y shares.
Sales charges received by American Express Financial Advisors for
distributing Fund shares were $116,229 for Class A and $6,869 for Class B
for the six months ended Sept. 30, 1997. The Fund also pays custodian fees
to American Express Trust Company, an affiliate of AEFC.
During the six months ended Sept. 30, 1997, the Fund's custodian and
transfer agency fees were reduced by $10,514 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 $39,785,644 and $38,434,984,
respectively, for the six months ended Sept. 30, 1997. Realized gains and
losses are determined on an identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $3,300 for
the six months ended Sept. 30, 1997.
Income from securities lending amounted to $6,478 for the six months ended
Sept. 30, 1997. 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>
<TABLE>
<CAPTION>
4
Foreign currency
contracts
At Sept. 30, 1997, the Fund had entered into foreign currency exchange
contracts that obligate the Fund to deliver currencies at specified future
dates. The unrealized appreciation and/or depreciation on these contracts
is included in the accompanying financial statements. See Summary of
significant accounting policies. The terms of the open contracts are as
follows:
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
<S> <C> <C> <C> <C>
Oct. 1, 1997 364,953 505,500 $ 887 $--
U.S. Dollar Canadian Dollar
Oct. 1, 1997 128,471 177,676 116 --
U.S. Dollar Canadian Dollar
Oct. 2, 1997 1,868,256 3,040,568 28,939 --
British Pound U.S. Dollar
Oct. 3, 1997 835,200 1,153,245 -- 574
U.S. Dollar Canadian Dollar
Oct. 3, 1997 472,415 652,500 -- 188
U.S. Dollar Canadian Dollar
Oct. 7, 1997 383,558 1,790,413 609
U.S. Dollar South African Commercial Rand
Oct. 7, 1997 192,119 895,524 33 --
U.S. Dollar South African Commercial Rand
$30,584 $762
</TABLE>
<PAGE>
5
Capital share
transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Sept. 30, 1997
Class A Class B Class Y
Sold 10,420,525 474,995 --
Redeemed (9,160,986) (253,595) --
Net increase (decrease) 1,259,539 221,400 --
Year ended March 31, 1997
Class A Class B Class Y
Sold 15,209,456 1,037,294 --
Issued for reinvested 381,893 33,366 6
distributions
Redeemed (14,971,123) (516,323) --
Net increase (decrease) 620,226 554,337 6
<PAGE>
<TABLE>
<CAPTION>
6
Financial
Highlights
The table below shows certain important financial information for
evaluating the Fund's results.
Fiscal period ended March 31,
Per share income and capital changesa
Class A
1997b 1997 1996 1995 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $10.47 $13.75 $7.99 $8.44 $6.00 $5.15 $5.40 $6.98 $6.76 $7.06
beginning of period
Income from investment operations:
Net investment income (loss) .01 (.08) (.05) .04 .04 .04 .06 .12 .21 .12
Net gains (losses) (1.14) (2.54) 5.82 (.45) 2.44 .84 (.24) (1.57) .10 (.30)
(both realized
and unrealized)
Total from investment (1.13) (2.62) 5.77 (.41) 2.48 .88 (.18) (1.45) .31 (.18)
operations
Less distributions:
Dividends from net -- -- (.01) (.04) (.04) (.03) (.07) (.13) (.09) (.12)
investment income
Distributions from -- (.66) -- -- -- -- -- -- -- --
realized gains
Total distributions -- (.66) (.01) (.04) (.04) (.03) (.07) (.13) (.09) (.12)
Net asset value, $9.34 $10.47 $13.75 $7.99 $8.44 $6.00 $5.15 $5.40 $6.98 $6.76
end of period
Ratios/supplemental data
Class A
1997b 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of $86 $83 $101 $72 $74 $53 $53 $68 $91 $103
period (in millions)
Ratio of expenses to 1.53%f 1.50% 1.65% 1.61% 1.51% 1.79% 1.59% 1.48% 1.46% 1.33%
average daily net assetsd
Ratio of net income (loss) .04%f (.58%) (.64%) .31% .46% .86% .64% 1.95% 2.75% 1.60%
to average daily net assets
Portfolio turnover rate 50% 76% 50% 37% 49% 19% 21% 54% 76% 49%
(excluding short-term
securities)
Total returnc (10.7%) (19.9%) 72.1% (4.9%) 41.3% 17.2% (3.3%) (20.8%) 4.4% (2.5%)
Average brokerage $.0215 $.0236 -- -- -- -- -- -- -- --
commission ratee
aFor a share outstanding throughout the period. Rounded to the nearest
cent.
bSix months ended Sept. 30, 1997 (Unaudited).
cTotal return does not reflect payment of a sales charge.
dEffective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
eEffective fiscal year 1997, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which
commissions are charged. The comparability of this information may be
affected by the fact that commission rates per share vary significantly
among foreign countries.
fAdjusted to an annual basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Precious Metals Fund, Inc.
Fiscal period ended March 31,
Per share income and capital changesa
Class B Class Y
1997b 1997 1996 1995c 1997b 1997 1996 1995c
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $10.30 $13.65 $7.99 $7.72 $10.52 $13.76 $7.99 $7.62
beginning of period
Income from investment operations:
Net investment income
(loss) (.02) (.14) (.09) .01 .01 (.05) (.04) --
Net gains (losses) (1.12) (2.55) 5.75 .26 (1.13) (2.53) 5.81 .37
(both realized and unralized)
Total from investment (1.14) (2.69) 5.66 .27 (1.12) (2.58) 5.77 .37
operations
Less distributions:
Distributions from -- (.66) -- -- -- (.66) -- --
realized gains
Net asset value, $9.16 $10.30 $13.65 $7.99 $9.40 $10.52 $13.76 $7.99
end of period
Ratios/supplemental data
Class B Class Y
1997b 1997 1996 1995c 1997b 1997 1996 1995c
Net assets, end of $9 $8 $3 $-- $-- $-- $-- $--
period (in millions)
Ratio of expenses to 2.31%f 2.27% 2.31% .08%f 1.25%f 1.27% 1.39% --%g
average daily net assetsd
Ratio of net income (loss) (.79%)f (1.46%) (1.18%) .28%f .36%f (.33%) (.43%) --%g
to average daily net assets
Portfolio turnover rate 50% 76% 50% 37% 50% 76% 50% 37%
(excluding short-term
securities)
Total returnh (11.1%) (20.5%) 70.8% 3.5% (10.7%) (19.8%) 72.3% 4.9%
Average brokerage $.0215 $.0236 -- -- $.0215 $.0236 -- --
commission ratee
aFor a share outstanding throughout the period. Rounded to the nearest
cent.
bSix months ended Sept 30, 1997 (Unaudited).
c Inception date was March 20, 1995.
dEffective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
eEffective fiscal year 1997, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which
commissions are charged. The comparability of this information may be
affected by the fact that commission rates per share vary significantly
among foreign countries.
fAdjusted to an annual basis.
gRatio of expenses and net investment income to average daily net assets
is not presented for Class Y as only three shares were outstanding during
the period.
hTotal return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
Investments in securities
IDS Precious Metals, Inc. (Percentages represent value of
Sept. 30, 1997 (Unaudited) investments compared to net assets)
Investments in securities of unaffiliated issuers
Common stocks (73.0%)(c)
Issuer Shares Value(a)
Australia (6.3%)
Acacia Resources 1,500,000(b) $ 1,840,277
Plutonic Resources 600,000(b) 1,650,805
Sons of Gwalia 800,000 2,566,950
Total 6,058,032
North/South America (66.7%)
Aber Resources 50,000(b) 660,394
America Mineral Fields 150,000(b) 705,946
Argosy Mining 1,500,000(b) 689,779
Banro Resource 132,000(b) 883,662
Barrick Gold 30,000 742,500
Cambiex Exploration 500,000(b) 173,693
Cambior 150,000 1,688,077
Canarc Resources 1,000,000(b) 535,553
Dayton Mining 700,000(b) 2,457,029
Dia Met Minerals 40,000(b) 910,440
Diamondworks 300,000(b) 366,926
Euro-Nevada Mining 140,000 2,446,897
Francisco Gold 258,600(b) 3,948,949
Franco Nevada Mining 100,000 2,388,276
Freeport-McMoRan Copper
& Gold 150,000 4,321,875
Gencor 250,000 590,064
Getchell Gold 175,000(b) 7,175,000
Goldcorp 210,000(b) 1,383,029
Greenstone Resources 100,000(b) 1,027,682
Intl Pursuit 183,333(b) 218,925
Java Gold 500,000(b) 233,519
Kinross Gold 500,000(b) 2,750,136
Meridian Gold 1,000,000(b) 4,957,481
Metallica Resources 300,000(b) 651,348
Minefinders 171,600(b) 521,599
Nevsun Resources 501,200(b) 1,976,870
Newmont Mining 50,000 2,246,875
Oliver Gold 350,000(b) 189,977
Placer Dome 200,000 3,825,000
Rangold Resources 30,000(b) 356,250
Rio Narcia Gold Mines 400,000(b) 1,157,952
Romarco Minerals 250,000(b) 1,040,348
Stillwater Mining 250,000(b) 5,338,778
Tombstone Explorations 1,050,000(b) 1,177,854
TVX Gold 500,000(b) 3,111,996
Williams Resources 933,333(b) 857,848
Total 63,708,527
Total common stocks
(Cost: $62,911,910) $69,766,559
Other (2.5%)(c)
Issuer Shares Value(a)
America Mineral Fields
Warrants 45,000(d) $--
Argosy Mining
Warrants 250,000(d) --
Banro Resource
Special Warrants 88,000 589,108
Warrants 44,000(d) --
Campbell Resources
Warrants 250,000 43,423
Canarc Resources
Warrants 230,000(d) --
Diamondworks
Warrants 300,000(d) --
Golden Bear Minerals
Warrants 500,000(d) --
Granges
Warrants 75,000(d) --
Minefinders
Special Warrants 125,000 379,953
Nevsun Resources
Special Warrants 250,000 978,983
Oliver Gold
Warrants 225,000(d) --
Panorama Resources
Special Warrants 2,500,000 290,378
South American Gold & Copper
Special Warrants 410,000 148,363
Steppe Gold
Warrants 150,000(d) --
Valerie Gold Resources
Warrants 5,500(d) --
Total other
(Cost: $4,489,262) $2,430,208
Bond (1.8%)
Issuer and Principal Value(a)
coupon rate amount
Dayton Mining
7.00% Cv 2002 $2,000,000 $1,740,000
Total bond
(Cost $2,000,000) $1,740,000
Short-term securities (26.9%)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agency (3.8%)
Federal Home Loan Mortgage Corp Disc Nt
10-10-97 5.43% $ 400,000 $ 399,459
10-14-97 5.42 2,200,000 2,195,710
10-14-97 5.44 500,000 499,021
Federal Natl Mtge Assn Disc Nt
10-14-97 5.49 500,000 499,011
Total 3,593,201
Commercial paper (20.8%)
A.I. Credit
10-01-97 5.53% $ 700,000 $ 700,000
BellSouth Capital Funding
05-08-97 5.54 8,000,000 7,959,520
Colgate-Palmolive
11-07-97 5.56 2,200,000(f) 2,187,496
Commerzbank U.S. Finance
10-16-97 5.54 1,300,000 1,297,015
Gillete
10-01-97 6.35 1,600,000(f) 1,600,000
Metlife Funding
10-23-97 5.52 3,900,000 3,886,892
Pfizer
10-27-97 5.54 2,300,000(f) 2,290,831
Total 19,921,754
Letter of credit (2.3%)
Student Loan Marketing Assn-
USA Group Secondary Market Service
10-29-97 5.53 2,200,000 2,190,572
Total short-term securities
(Cost: $25,705,527) $25,705,527
Total investments in securities of unaffiliated issuers
(Cost: $95,106,699) $99,642,294
Investments in securities of affiliated issuer (e)
Common stock (0.4%)
Issuer Shares Value(a)
First Dynasty Mines 400,000(b) $ 361,860
Total investments in securities of affiliated issuer
(Cost: $1,887,643) $ 361,860
Total investments in securities
(Cost: $96,994,342)(g) $100,004,154
<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.
(d) Negligible market value.
(e) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
six months ended Sept. 30, 1997 are as follows:
Issuer Beginning Purchase Sales Ending Dividend
cost cost cost cost income
First Dynasty Mines $1,887,643 $-- $-- $1,887,643 $--
(f) Commercial paper sold within terms of a private placement memorandum, exempt
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 Sept. 30, 1997, the cost of securities for federal income tax purposes
was approximately $96,994,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation..........................................$14,149,000
Unrealized depreciation..........................................(11,139,000)
-----------
Net unrealized appreciation.....................................$ 3,010,000
<PAGE>
Board members and officers
Independent board members and officers
Chariman of
the board
William R. Pearce
Chairman of the board, Board Services Corporation (provides
administrative services to boards including the boards of the IDS and
IDSLife funds and Master Trust portfolios).
H. Brewster Atwater, Jr.
Former chairman and chief executive officer, General Mills, Inc.
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for Public Policy
Research.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Alan K. Simpson
Former United States senator for Wyoming.
Edson W. Spencer
Former chairman and chief executive officer,
Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
C. Angus Wurtele
Chairman of the board, The Valspar Corporation.
Officer
Vice president,
general counsel
and secretary
Leslie L. Ogg*
President, treasurer and corporate secretary of Board Services
Corporation.
Board members and officers associated with AEFC
President
John R. Thomas*
Senior vice president, AEFC.
William H. Dudley*
Senior advisor to the chief executive officer, AEFC.
David R. Hubers*
President and chief executive officer, AEFC.
Officers associated with AEFC
Vice president
Peter J. Anderson*
Senior vice president, AEFC.
Reasurer
Melinda S. Urion
Senior vice president and chief financial officer, AEFC.
*Interested persons as defined by the Investment Company Act of 1940.
<PAGE>
IDS mutual funds
Global/International funds
Funds in this group seek capital growth and/or income by investing primarily in
foreign securities. Foreign investments may be subject to currency fluctuations
and political and economic risks of the countries in which the investments are
made. They are high risk mutual funds with a potential for high reward.
IDS Emerging Markets Fund
Invests in a Portfolio comprised primarily of stocks of companies in developing
countries throughout the world that are believed to offer growth potential.
Seeks to provide long-term growth of capital.
(icon of) world with countries
IDS Global Growth Fund
Invests in a Portfolio comprised primarily of 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 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 Global Balanced Fund
Invests in stocks and bonds in, for the most part, major markets throughout the
world, including the U.S. Seeks to provide a balance of growth of capital and
current income.
(icon of) scale of globes
IDS Global Bond Fund
Invests in a Portfolio comprised primarily of debt securities of U.S. and
foreign issuers to seek high total return through income and growth of capital.
(icon of) globe
Growth funds
Funds in this group seek capital growth, primarily from common stocks. They are
high risk mutual funds with a potential for high reward.
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. A
highly aggressive and speculative fund that seeks long-term growth of capital.
(icon of) cart of precious gems
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 Small Company Index Fund
Invests in all or a representative group of the equity securities comprising the
S&P SmallCap 600 Index, as it strives to provide long-term capital appreciation.
(icon of) building
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 Research Opportunities Fund
Invests in a Portfolio comprised primarily of equity securities of companies
included in the S&P 500 Index that are believed to have strong growth potential.
The Portfolio is managed using a research methodology by the Research Department
of AEFC. Goal is long-term appreciation.
(icon of) magnifying glass
IDS Growth Fund
Invests in a Portfolio comprised primarily of 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 New Dimensions Fund
Invests in a Portfolio comprised primarily of 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
Growth & income funds
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. Foreign investments may be subject to currency fluctuations and
political and economic risks of the countries in which the investments are made.
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 Managed Allocation Fund
Invests in a Portfolio comprised primarily of 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. Seeks maximum total return.
(icon of) gyroscope
IDS Stock Fund
Invests in a Portfolio comprised primarily of common stock of companies
representing many sectors of the economy. Seeks current income and growth of
capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential for growth
of capital and income.
(icon of) three growing flowers
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 in a Portfolio comprised 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 Portfolio which seeks to 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
Income funds
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 Extra Income Fund
Invests in a Portfolio comprised mainly of 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) two 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
IDS Selective Fund
Invests in a Portfolio comprised primarily of 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 in a Portfolio comprised primarily of 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
Tax-exempt income funds
These funds provide tax-free income by investing in municipal bonds. The income
is generally free from federal income tax, but a portion of the income may be
subject to state and local taxes. Risk varies by bond quality.
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 star
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 High Yield Tax-Exempt Fund
Invests in a Portfolio comprised primarily of 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 Intermediate Tax-Exempt Fund
Invests in mainly investment-grade bonds and other debt securities with
intermediate-term maturities issued by state and local government units. Goal is
to seek a high level of current income exempt from federal taxes.
(icon of) shield with tree enclosed
Money market funds
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent with these
objectives. An investment in these funds is neither insured nor guaranteed by
the U.S. government, and there can be no assurance that these funds will be able
to maintain a stable net asset value of $1.00 per share. 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
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>
Quick telephone reference
American Express Redemptions and exchanges, National/Minnesota
Financial Advisors dividend payments or 800-437-3133
Telephone Transaction reinvestments and automatic
Service payment arrangements Mpls./St. Paul area:
671-3800
TTY Service For the hearing impaired 800-846-4852
American Express Automated account information 800-862-7919
Financial Advisors (TouchTone(R) phones only),
Easy Access Line including current fund prices
and performance, account values
and recent account transactions
AMERICAN EXPRESS Financial Advisors
IDS Precious Metals Fund
IDS Tower 10
Minneapolis, MN 55440-0010
