1998 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 22
Board members and officers 24
IDS mutual funds 25
<PAGE>
To our shareholders
From the chairman
If you're an experienced investor, you know that the past 12 months was a
highly volatile period in many financial markets. But history tells us
that substantial market moves are nothing new. Though they're often
unpredictable, declines -- whether they're brief or long-lasting, moderate
or substantial -- are always a possibility.
That potential for such volatility reinforces the need for investors to
periodically review 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
Stocks of gold-mining and exploration companies remained under pressure
for most of the past six months. IDS Precious Metals Fund's performance
reflected the difficult environment, as its Class A shares lost 16.8%
during the first half of the fiscal year -- April through September 1998.
Three factors kept a lid on the price of gold and, consequently, the
prices of gold stocks, for much of the six months. Most important was the
continued selling of gold bullion by central banks throughout the world.
Second, inflation remained remarkably low in virtually all major
economies. In fact, at times there was more concern about a potential
decline in prices rather than an increase. Third, the strength of the
dollar through the summer continued to attract capital from foreign
investors, who viewed our stock and bond markets as a safer haven than
gold in the face of financial turmoil in many overseas markets. By late
summer, the combination of those factors had pushed gold stocks and the
Fund deep into negative territory. But that would soon change.
Stocks rebound
First, Russia and Latin America were hit by the "Asian flu," which raised
concerns about the possibility of a worldwide recession that might greatly
erode the profits of U.S. companies. That, along with measures announced
by the Japanese government to shore up its economy, caused the dollar to
decline versus the yen and, in turn, drove some investors out of U.S.
financial assets and into gold. The final impetus came from rumors that
some financially troubled hedge funds would be forced to cover their short
positions in gold.
Soon, gold-stock prices rose in spectacular fashion, propelling the Fund
to a gain of 41% in September.
Part of that gain came from a substantial investment in Stillwater Mining,
a U.S. producer of palladium whose stock was extremely strong throughout
the six months. (Although the bulk of the Fund's holdings are in gold
stocks, it also owns stocks of palladium, silver and diamond companies.)
Palladium is used in catalytic converters, and Stillwater is the major
supplier of the metal to U.S. auto and truck manufacturers.
Meanwhile, in the face of all that activity, there was little change in
the fundamentals for gold over the period. Demand remained reasonably
strong, while producers continued to hold back on supply because of
still-unattractive price levels.
As for changes to the portfolio, I continued to pare back holdings among
stocks of smaller gold producers and explorers, as I believe they are more
vulnerable to potential consolidation in the industry. I kept most of the
proceeds from those sales in cash reserves, which ranged between 13% and
19% of assets during the period. In the months ahead, should it appear
that the price of gold is likely to move higher, I plan to put that money
to work in stocks.
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, 1998 $ 5.67
March 31, 1998 $ 6.82
Decrease $ 1.15
Distributions
April 1, 1998 - Sept. 30, 1998
From income $ --
From capital gains $ --
Total distributions $ --
Total return* -16.8%**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1998 $ 5.58
March 31, 1998 $ 6.73
Decrease $ 1.15
Distributions
April 1, 1998 - Sept. 30, 1998
From income $ --
From capital gains $ --
Total distributions $ --
Total return* -17.1%**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
Sept 30, 1998 $ 5.66
March 31, 1998 $ 6.80
Decrease $ 1.14
Distributions
April 1, 1998 - Sept. 30, 1998
From income $ --
From capital gains $ --
Total distributions $ --
Total return* -16.7%**
*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, 1998)
Stillwater Mining 11.99% $8,048,438
Meridian Gold 6.64 4,456,678
Barrick Gold 6.26 4,200,001
Franco-Nevada Mining 6.19 4,155,197
Getchell Gold 5.49 3,685,938
Placer Dome 4.12 2,762,500
Goldcorp Cl A 3.83 2,572,421
Francisco Gold 3.73 2,502,871
Battle Mountain Gold 3.61 2,425,000
Sons of Gwalia 3.18 2,137,440
For further detail about these holdings, please refer to the section
entitled "Investments in securities" herein.
(icon of) pie chart
The ten holdings listed here make up 55.04% of the Fund's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Precious Metals Fund, Inc.
Sept. 30, 1998
Assets
(Unaudited)
Investments in securities, at value (Note 1):
<S> <C>
Investments in securties of unaffiliated issuers (identified cost $82,332,596) $62,979,261
Investments in securties of affiliated issuer (identified cost $2,769,689) 486,728
-------
Total investments in securities (identified cost $85,102,285) 63,465,989
Unrealized appreciation on foreign currency contracts held, at value (Notes 1 and 4) 259
Cash in bank on demand deposit 3,498,477
Dividends and accrued interest receivable 136,351
Receivable for investment securities sold 54,379
------
Total assets 67,155,455
----------
Liabilities
Unrealized depreciation on foreign currency contracts held, at value (Notes 1 and 4) 28
Accrued investment management services fee 1,503
Accrued distribution fee 164
Accrued service fee 329
Accrued administrative services fee 113
Other accrued expenses 37,029
------
Total liabilities 39,166
------
Net assets applicable to outstanding capital stock $67,116,289
===========
Represented by
Capital stock-- $.01 par value (Note 1) $ 118,527
Additional paid-in capital 102,586,135
Investment loss-- net (5,216)
Accumulated net realized gain (loss) (13,949,489)
Unrealized appreciation (depreciation) on investments and on translation
of assets and liabilities in foreign currencies (21,633,668)
-----------
Total-- representing net assets applicable to outstanding capital stock $67,116,289
===========
Net assets applicable to outstanding shares: Class A $59,162,154
Class B $ 7,953,376
Class Y $ 759
Net asset value per share of outstanding capital stock: Class A shares 10,427,154 $ 5.67
Class B shares 1,425,433 $ 5.58
Class Y shares 134 $ 5.66
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
IDS Precious Metals Fund, Inc.
Six months ended Sept. 30, 1998
Investment income
(Unaudited)
Income:
<S> <C>
Dividends $ 363,976
Interest 160,260
Less foreign taxes withheld (11,297)
-------
Total income 512,939
-------
Expenses (Note 2):
Investment management services fee 256,756
Distribution fee -- Class B 30,076
Transfer agency fee 113,848
Incremental transfer agency fee-- Class B 1,183
Service fee
Class A 47,679
Class B 6,964
Administrative services fees and expenses 20,066
Compensation of board members 2,823
Custodian fees 24,287
Postage 9,108
Registration fees 20,000
Reports to shareholders 5,564
Audit fees 10,750
Other 781
---
Total expenses 549,885
Earnings credits on cash balances (Note 2) (5,215)
------
Total net expenses 544,670
-------
Investment income (loss) -- net (31,731)
-------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (7,016,930)
Foreign currency transactions (3,286)
------
Net realized gain (loss) on investments (7,020,216)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (3,753,972)
----------
Net gain (loss) on investments and foreign currencies (10,774,188)
-----------
Net increase (decrease) in net assets resulting from operations $(10,805,919)
============
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, 1998 March 31, 1998
Six months ended Year ended
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ (31,731) $ (17,343)
Net realized gain (loss) on investments (7,020,216) (6,702,372)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies (3,753,972) (22,579,414)
---------- -----------
Net increase (decrease) in net assets resulting from operations (10,805,919) (29,299,129)
----------- -----------
Distributions to shareholders from:
Net investment income
Class A -- (689,009)
Class B -- (8,688)
Class Y -- (16)
Net realized gain
Class A -- (933,070)
Class B -- (121,916)
Class Y -- (14)
--- ---
Total distributions -- (1,752,713)
--- ----------
Capital share transactions (Note 5)
Proceeds from sales
Class A shares (Note 2) 130,633,765 213,456,021
Class B shares 2,428,903 7,860,617
Reinvestment of distributions at net asset value
Class A shares -- 1,544,415
Class B shares -- 130,311
Class Y shares -- 30
Payments for redemptions
Class A shares (123,705,283) (209,315,816)
Class B shares (Note 2) (1,689,789) (4,073,993)
---------- ----------
Increase (decrease) in net assets from capital share transactions 7,667,596 9,601,585
--------- ---------
Total increase (decrease) in net assets (3,138,323) (21,450,257)
Net assets at beginning of period 70,254,612 91,704,869
---------- ----------
Net assets at end of period $ 67,116,289 $ 70,254,612
============= =============
Undistributed net investment income $ (5,216) $ 26,515
------------- -------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
IDS Precious Metals Fund, Inc.
(Unaudited as to Sept. 30, 1998)
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. 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. Securities for which
market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued
at the market price or approximate market value based on current interest
rates; those maturing in 60 days or less are valued at amortized cost.
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
and 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 and 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, if any, may
arise from sales of foreign currency, closed forward contracts, exchange
gains or losses realized between the trade date and settlement date on
securities transactions, and other translation gains or losses on
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 from net investment income, declared and paid at the end
of the calendar year, 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 and
providing administrative services. Under its Investment Management Services
Agreement, AEFC determines which securities will be purchased, held or
sold. The management fee is a percentage of the Fund's average daily net
assets in reducing percentages from 0.8% 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
$1,999 for the six months ended Sept. 30, 1998.
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 and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund
pays AECSC an annual fee per shareholder account for this service as
follows:
oClass A $15
oClass B $16
oClass 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 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 $92,562 for Class A and $7,355 for Class B
for the six months ended Sept. 30, 1998. The Fund also pays custodian fees
to American Express Trust Company, an affiliate of AEFC.
During the six months ended Sept. 30, 1998, the Fund's custodian and
transfer agency fees were reduced by $5,215 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 $13,450,286 and $7,452,927,
respectively, for the six months ended Sept. 30, 1998. Realized gains and
losses are determined on an identified cost basis.
Income from securities lending amounted to $3,802 for the six months ended
Sept. 30, 1998. The risks to the Fund of securities lending are that the
borrower may not provide additional collateral when required or return the
securities when due.
4
Foreign currency
contracts
At Sept. 30, 1998, 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
Oct. 1, 1998 37,950 25,132 $259 $--
Canadian Dollar U.S. Dollar
Oct. 2, 1998 45,018 29,477 -- 28
Canadian Dollar U.S. Dollar
Total $259 $28
<PAGE>
5
Capital share
transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Sept. 30, 1998
Class A Class B Class Y
Sold 22,380,126 399,203 --
Issued for reinvested -- -- --
distributions
Redeemed (20,969,031) (280,624) --
Net increase (decrease) 1,411,095 118,579 --
Year ended March 31, 1998
Class A Class B Class Y
Sold 27,809,382 1,011,160 --
Issued for reinvested 254,938 21,804 5
distributions
Redeemed (27,019,455) (528,034) --
Net increase (decrease) 1,044,865 504,930 5
6
Capital loss
carryover
For federal income tax purposes, the Fund had a capital loss carryover of
$6,148,261 at March 31, 1998, that will expire in 2006 if not offset by
capital gains. It is unlikely the board will authorize a distribution of
any net realized capital gains until the available capital loss carryover
has been offset or expires.
<PAGE>
<TABLE>
<CAPTION>
Financial Highlights
The tables below show certain important financial information for
evaluating the Fund's results.
Fiscal period ended March 31,
Per share income and capital changes(a)
Class A
1998b 1998 1997 1996 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $6.82 $10.47 $13.75 $7.99 $8.44 $6.00 $5.15 $5.40 $6.98 $6.76
beginning of period
Income from investment operations:
Net investment income (loss) .01 -- (.08) (.05) .04 .04 .04 .06 .12 .21
Net gains (losses) (1.16) (3.46) (2.54) 5.82 (.45) 2.44 .84 (.24) (1.57) .10
(both realized
and unrealized)
Total from investment (1.15) (3.46) (2.62) 5.77 (.41) 2.48 .88 (.18) (1.45) .31
operations
Less distributions:
Dividends from net -- (.08) -- (.01) (.04) (.04) (.03) (.07) (.13) (.09)
investment income
Distributions from -- (.11) (.66) -- -- -- -- -- -- --
realized gains
Total distributions -- (.19) (.66) (.01) (.04) (.04) (.03) (.07) (.13) (.09)
Net asset value, $5.67 $6.82 $10.47 $13.75 $7.99 $8.44 $6.00 $5.15 $5.40 $6.98
end of period
Ratios/supplemental data
Class A
1998b 1998 1997 1996 1995 1994 1993 1992 1991 1990
Net assets, end of $59 $61 $83 $101 $72 $74 $53 $53 $68 $91
period (in millions)
Ratio of expenses to 1.63%f 1.51% 1.50% 1.65% 1.61% 1.51% 1.79% 1.59% 1.48% 1.46%
average daily net assetsc
Ratio of net income (loss) --%f .06% (.58%) (.64%) .31% .46% .86% .64% 1.95% 2.75%
to average daily net assets
Portfolio turnover rate 14% 112% 76% 50% 37% 49% 19% 21% 54% 76%
(excluding short-term
securities)
Total returnd (16.8%) (32.9%) (19.9%) 72.1% (4.9%) 41.3% 17.2% (3.3%) (20.8%) 4.4%
Average brokerage $.0151 $.0216 $.0236 -- -- -- -- -- -- --
commission ratee
a For a share outstanding throughout the period. Rounded to the nearest
cent.
b Six months ended Sept. 30, 1998 (Unaudited).
c Effective fiscal year 1996, expense ratio is based on total expenses of
the Fund before reduction of earnings credits on cash balances.
d Total return does not reflect payment of a sales charge.
e Effective 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.
f Adjusted to an annual basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Precious Metals Fund, Inc.
Fiscal period ended March 31,
Per share income and capital changes(a)
Class B Class Y
1998b 1998 1997 1996 1995c 1998b 1998 1997 1996 1995c
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, $6.73 $10.30 $13.65 $7.99 $7.72 $6.80 $10.52 $13.76 $7.99 $7.62
beginning of period
Income from investment operations:
Net investment income
(loss) (.07) (.04) (.14) (.09) .01 .03 .03 (.05) (.04) --
Net gains (losses) (1.08) (3.41) (2.55) 5.75 .26 (1.17) (3.52) (2.53) 5.81 .37
(both realized and unrealized)
Total from investment (1.15) (3.45) (2.69) 5.66 .27 (1.14) (3.49) (2.58) 5.77 .37
operations
Less distributions:
Dividends from net -- (.01) -- -- -- -- (.12) -- -- --
Investment income
Distributions from -- (.11) (.66) -- -- -- (.11) (.66) -- --
realized gains
Total distributions -- (.12) (.66) -- -- -- (23) (.66) -- --
Net asset value, $5.58 $6.73 $10.30 $13.65 $7.99 $5.66 $6.80 $10.52 $13.76 $7.99
end of period
Ratios/supplemental data
Class B Class Y
1998b 1998 1997 1996 1995c 1998b 1998 1997 1996 1995c
Net assets, end of $8 $9 $8 $3 $-- $-- $-- $-- $-- $--
period (in millions)
Ratio of expenses to 2.42%e 2.28% 2.27% 2.31% .08%e 1.36%e 1.26% 1.27% 1.39% --%f
average daily net assets(d)
Ratio of net income (loss) (.79%)e (.74%) (1.46%) (1.18%) .28%e .20%e .36% (.33%) (.43%) --%f
to average daily net assets
Portfolio turnover rate 14% 112% 76% 50% 37% 14% 112% 76% 50% 37%
(excluding short-term
securities)
Total return(g) (17.1%) (33.4%) (20.5%) 70.8% 3.5% (16.7%) (32.8%) (19.8%) 72.3% 4.9%
Average brokerage $.0151 $.0216 $.0236 -- -- $.0151 $.0216 $.0236 -- --
commission rate(h)
a For a share outstanding throughout the period. Rounded to the nearest
cent.
b Six months ended Sept. 30, 1998 (Unaudited).
c Inception date was March 20, 1995.
d Effective fiscal year 1996, expense ratio is based on total expenses
of the Fund before reduction of earnings credits on cash balances.
e Adjusted to an annual basis.
f Ratio 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.
g Total return does not reflect payment of a sales charge.
h Effective 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.
</TABLE>
<PAGE>
Investments in securities
IDS Precious Metals Fund, Inc.
Sept. 30, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Common stocks (81.6%)(c)
Issuer Shares Value(a)
Australia (7.7%)
Acacia Resources 1,000,000(b) $1,404,300
Broken Hill Proprietary 100,000 715,800
Normandy Mining 1,000,000 844,400
Sons of Gwalia 800,000(b) 2,137,440
Tanganyika Gold 1,875,000 94,500
Total 5,196,440
Canada (41.9%)
Aber Resources 160,000 880,849
Argosy Mining 764,000(b) 95,137
Argosy Mining 651,800(b,e) 81,165
Banro Resource 330,600 140,838
Barrick Gold 210,000 4,200,001
Cambior 150,000 899,528
Canarc Resource 856,500(b) 162,790
Dayton Mining 1,000,000(b,e) 511,207
Dia Met Minerals Cl B 40,000 563,639
Euro-Nevada Mining 125,000 2,068,587
First Dynasty Mines 275,500(d) 54,168
Francisco Gold 345,600(b) 2,502,871
Franco-Nevada Mining 200,000 4,155,197
Goldcorp Cl A 500,000 2,572,421
Meridian Gold 1,000,000 4,456,678
Metallica Resources 300,000(b) 214,314
Minefinders 550,000(d) 432,560
Nevsun Resources 751,200(b) 310,170
Placer Dome 200,000 2,762,500
Prime Resource Group 70,000 598,702
Romarco Minerals 250,000 262,158
Sedna Geotek 980,712 167,115
Tombstone Explorations 169,000(b) 23,260
Total 28,115,855
North/South America (27.7%)
Battle Mountain Gold 400,000 2,425,000
Compania de Minas
Buenaventura ADR 80,000 930,000
EASCO 70,000 621,250
Getchell Gold 175,000(b) 3,685,938
Homestake Mining 100,000 1,212,500
Newmont Mining 40,000 970,000
Rio Narcea Gold Mines 397,000 728,536
Stillwater Mining 255,000(b) 8,048,438
Total 18,621,662
Papua New Guinea (1.0%)
Lihir Gold 500,000(b) 645,900
South Africa (3.1%)
Gencor 1,000,000 1,803,400
Western Areas Gold
Mining 100,000 297,730
Total 2,101,130
United Kingdom (0.1%)
Randgold Resources 30,000(b) 66,000
Total common stocks
(Cost: $73,521,294) $54,746,987
Other (0.3%)
Issuer Shares Value(a)
America Mineral Fields
Warrants 45,000(f) --
Banro Resource
Warrants 44,000(f) --
Campbell Resources
Warrants 250,000 4,915
Golden Bear Minerals
Warrants 500,000 1
Minefinders
Special Warrants 125,000(b) 98,308
Sedna Geotek
Warrants 814,454 1
South American Gold & Copper
Special Warrants 340,000(e) 15,599
Tombstone Explorations
Warrants 700,000(e) 96,342
Total other
(Cost: $1,697,155) $215,166
Bond (0.9%)
Issuer Coupon Principal Value(a)
rate amount
Dayton Mining
Cv Sub Deb
04-01-02 7.00% $2,000,000 $620,000
Total bond
(Cost: $2,000,000) $620,000
Short-term securities (11.7%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
Federal Home Loan Bank Disc Nt
10-23-98 5.20% $2,500,000 $2,492,086
Federal Home Loan Mtge Corp Disc Nts
10-02-98 5.46 500,000 499,925
10-07-98 5.46 600,000 599,457
10-08-98 5.46 2,400,000 2,397,460
10-26-98 5.43 1,100,000 1,095,875
Federal Natl Mtge Assn Disc Nt
10-09-98 5.45 800,000 799,033
Total 7,883,836
Total short-term securities
(Cost: $7,883,836) $7,883,836
Total investments in securities
(Cost: $85,102,285)(g) $63,465,989
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) 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, 1998 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
First Dynasty Mines $1,887,642 $-- $698,228 $1,189,414 $-- $ 54,168
Minefinders* 1,580,275 -- -- 1,580,275 -- 432,560
Total $3,467,917 $-- $698,228 $2,769,689 $-- $486,728
*Issuer was not an affiliate for the entire period ended Sept. 30, 1998.
(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) Negligible market value.
(g) At Sept. 30, 1998, the cost of securities for federal income tax purposes
was approximately $85,102,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation....................................$ 4,422,000
Unrealized depreciation..................................... (26,058,000)
Net unrealized depreciation................................ $(21,636,000)
<PAGE>
Board members and officers
Independent board members and officers
Chairman William R. Pearce*
of the board 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
Retired 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, Leslie L. Ogg*
general counsel President of Board Services Corporation.
and secretary
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
Vice president Frederick C. Quirsfeld*
Vice president, AEFC
* Interested person 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 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 Stock 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 that generaly pay
dividends 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 that 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:
612-671-3800
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
*You may experience delays when call volumes are high.
<PAGE>
AMERICAN EXPRESS Financial Advisors
IDS Precious Metals Fund
IDS Tower 10
Minneapolis, MN 55440-0010
