AXP(SM)
Precious
Metals Fund
1999 SEMIANNUAL REPORT
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AXP Precious Metals Fund seeks to provide shareholders with long-term growth of
capital.
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
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All That Glitters ...
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 AXP
Precious Metals Fund, usually move in tandem with the prices of the metals.
CONTENTS
From the Chairman 3
From the Portfolio Manager 3
Fund Facts 5
The 10 Largest Holdings 6
Financial Statements 7
Notes to Financial Statements 10
Investments in Securities 20
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(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
American Express(R) Funds held shareholder meetings in June 1999. Shareholders
approved all of the proposals advanced by management. Among the proposals were:
o The election of Board members and the selection of KPMG LLP as independent
auditors.
o Change in the Fund name from "IDS" to "AXP."
o A new shareholder service and distribution plan.
o Changes with respect to fundamental investment policies.
No other business was presented at the meeting, which was concluded by a report
to shareholders from the Investment Department of American Express Financial
Corporation. Thanks to all of you for your effort in reviewing the proxy
material and voting your proxies.
Before closing, I want to introduce Clay Hoes, who became the Fund's new
portfolio manager in July. Please see his letter for a review of the past six
months.
Arne H. Carlson
From the Portfolio Manager
A sharp run-up in the price of gold provided the spark for a strong gain by AXP
Precious Metals Fund during the first half of the fiscal year. For the six
months -- April through September 1999 -- the Fund's Class A shares generated a
total return of 16.60%.
Remarkably, during the first five months of the period, there was little
indication of things to come. In April, the price of gold did rise a bit on
concerns of potentially higher inflation in the U.S., and the Fund responded
positively. But before long gold was back in a slump, hitting a 20-year low of
$252 per ounce in mid-summer and dragging the Fund down into negative territory.
Along the way, the fundamentals were pretty much the same as they've been for
years. Demand for gold jewelry and coins remained healthy in the U.S., as well
in overseas markets such as China and the Middle East. On the other hand, the
supply of gold remained relatively low, as producers continued to cut back
production because of weak prices.
Among other factors, the United Kingdom announced that it would sell about half
of its gold reserves to meet reserve-ratio requirements of the new European
Union. Beyond that, the International Monetary Fund (IMF) said that it was
considering selling some of its gold reserves to provide financial relief for
third-world countries. Those events helped keep the lid on gold prices during
the summer.
The turnabout in the gold market came in September, when the IMF decided to
abandon its plan to sell gold, thereby washing away worries that the market
would be flooded with more supply. That sense of relief was soon bolstered by a
gold auction by the Bank of England, at which demand swamped the supply. Then,
to top things off, 15 European central banks agreed to limit their gold sales
for the next five years. More important, they said they would not lease their
reserves, a very positive change that is expected to curtail speculation
activity in the gold market.
The price of gold responded immediately, running all the way to $299.50 an ounce
by the end of September. Stocks of gold producers, which form the core of the
Fund's portfolio, were swept along by the rally. To illustrate the strength of
the upturn, the Fund's value rose by more than 20% in the final two weeks of
September.
Looking at changes to the portfolio, upon being named portfolio manager in July
I began to eliminate several smaller positions, ultimately reducing the total
number of holdings to about 30. I also employed a small amount of options (less
than 1% of assets), which substantially boosted Fund performance when the price
of gold rose late in the period.
As we head into the second half of the fiscal year, while gold could move
somewhat higher in the months ahead, I do not expect a continuation of the
recent run-up. I do, however, think we'll see considerable price volatility.
Therefore, I would suggest that investors use gold as only a small hedge (no
more than 10% of assets) in a diversified portfolio.
Clay Hoes
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Fund Facts
Class A -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $6.35
March 31, 1999 $5.45
Increase $0.90
Distributions -- April 1, 1999 - Sept. 30, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +16.60%**
Class B -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $6.24
March 31, 1999 $5.38
Increase $0.86
Distributions -- April 1, 1999 - Sept. 30, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +16.07%**
Class Y -- 6-month performance
(All figures per share)
Net asset value (NAV)
Sept. 30, 1999 $6.35
March 31, 1999 $5.43
Increase $0.92
Distributions -- April 1, 1999 - Sept. 30, 1999
From income $ --
From capital gains $ --
Total distributions $ --
Total return* +16.88%**
*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.
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The 10 Largest Holdings
Percent Value
(of net assets) (as of Sept. 30, 1999)
Stillwater Mining 12.04% $8,062,499
Placer Dome 11.40 7,633,849
Meridian Gold 9.19 6,155,993
Barrick Gold 8.44 5,655,000
Franco-Nevada Mining 7.10 4,753,964
Newmont Mining 5.80 3,881,250
Acadia Resources 5.52 3,694,565
Homestake Mining 4.12 2,756,250
Goldcorp Cl A 3.94 2,640,713
Harmony Gold Mining 2.70 1,806,747
For further detail about these holdings, please refer to the section entitled
"Investments in Securities."
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The 10 holdings listed here
make up 70.25% of net assets
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Financial Statements
Statement of assets and liabilities
AXP Precious Metals Fund, Inc.
Sept. 30, 1999 (Unaudited)
Assets
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers (identified cost
<S> <C>
$64,336,598) $68,855,843
Investments in securities of affiliated issuers (identified cost $2,541,305) 1,108,011
---------
Total investments in securities (identified cost $66,877,903) 69,963,854
Unrealized appreciation on foreign currency contracts held,
at value (Notes 1 and 6) 9,553
Cash in bank on demand deposit 223,825
Dividends and accrued interest receivable 48,675
Receivable for investment securities sold 2,644,488
---------
Total assets 72,890,395
----------
Liabilities
Payable for investment securities purchased 5,667,412
Unrealized depreciation on foreign currency contracts held,
at value (Notes 1 and 6) 17,318
Accrued investment management services fee 1,619
Accrued distribution fee 745
Accrued transfer agency fee 641
Other accrued expenses 189,414
Options contracts written, at value (premium received $52,250) (Note 5) 41,176
------
Total liabilities 5,918,325
---------
Net assets applicable to outstanding capital stock $66,972,070
===========
Represented by
Capital stock-- $.01 par value (Note 1) $ 105,789
Additional paid-in capital 94,252,222
Net operating loss (49,000)
Accumulated net realized gain (loss) (Note 8) (30,429,263)
Unrealized appreciation (depreciation) on investments and
on translation of assets and liabilities in foreign currencies 3,092,322
---------
Total -- representing net assets applicable to outstanding capital stock $66,972,070
===========
Net assets applicable to outstanding shares: Class A $55,885,835
Class B $11,085,372
Class Y $ 863
Net asset value per share of outstanding capital stock: Class A shares 8,802,921 $ 6.35
Class B shares 1,775,795 $ 6.24
Class Y shares 136 $ 6.35
--- -----------
See accompanying notes to financial statements.
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Statement of operations
AXP Precious Metals Fund, Inc.
Six months ended Sept. 30, 1999 (Unaudited)
Investment income
Income:
<S> <C>
Dividends $ 260,820
Interest 225,741
Less foreign taxes withheld (22,622)
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Total income 463,939
-------
Expenses (Note 2):
Investment management services fee 228,450
Distribution fee
Class A 29,217
Class B 36,781
Transfer agency fee 108,324
Incremental transfer agency fee
Class A 10,656
Class B 3,129
Service fee
Class A 20,840
Class B 3,512
Administrative services fees and expenses 16,591
Compensation of board members 3,442
Custodian fees 14,330
Printing and postage 14,911
Registration fees 14,162
Audit fees 10,000
Other 1,028
-----
Total expenses 515,373
Earnings credits on cash balances (Note 2) (2,434)
------
Total net expenses 512,939
-------
Investment income (loss) -- net (49,000)
-------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (including $36,203 realized gain on
investments of affiliated issuers) (Note 3) (943,813)
Foreign currency transactions (Note 6) 4,654
Options contracts written (Note 5) 10,746
------
Net realized gain (loss) on investments (928,413)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign currencies 10,949,281
----------
Net gain (loss) on investments and foreign currencies 10,020,868
----------
Net increase (decrease) in net assets resulting from operations $ 9,971,868
============
See accompanying notes to financial statements.
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Statements of changes in net assets
AXP Precious Metals Fund, Inc.
Sept. 30, 1999 March 31, 1999
Six months ended Year ended
(Unaudited)
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ (49,000) $ (184,054)
Net realized gain (loss) on investments (928,413) (22,569,856)
Net change in unrealized appreciation (depreciation) on investments
and on translation of assets and liabilites in foreign currencies 10,949,281 10,022,737
---------- ----------
Net increase (decrease) in net assets resulting from operations 9,971,868 (12,731,173)
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Distributions to shareholders from:
Net investment income
Class A -- (452,075)
Class B -- (9,356)
Class Y -- (8)
------ --
Total distributions -- (461,439)
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Capital share transactions (Note 4)
Proceeds from sales
Class A shares (Note 2) 58,414,889 199,772,930
Class B shares 3,356,229 4,080,111
Class Y shares 1 --
Reinvestment of distributions at net asset value
Class A shares -- 415,613
Class B shares -- 9,356
Class Y shares -- 8
Payments for redemptions
Class A shares (62,394,486) (198,890,935)
Class B shares (Note 2) (1,442,887) (3,382,627)
---------- ----------
Increase (decrease) in net assets from capital share transactions (2,066,254) 2,004,456
---------- ---------
Total increase (decrease) in net assets 7,905,614 (11,188,156)
Net assets at beginning of period 59,066,456 70,254,612
---------- ----------
Net assets at end of period $ 66,972,070 $ 59,066,456
============ =============
See accompanying notes to financial statements.
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Notes to Financial Statements
AXP Precious Metals Fund, Inc.
(Unaudited as to Sept. 30, 1999)
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.
o Class A shares are sold with a front-end sales charge.
o Class B shares may be subject to a contingent deferred sales charge and
automatically convert to Class A shares during the ninth calendar year of
ownership.
o Class Y shares have no sales charge and are offered only to qualifying
institutional investors.
All classes of shares have identical voting, dividend, and liquidation rights.
The distribution fee, incremental transfer agency fee and service fee (class
specific expenses) differs among classes. Income, expenses (other than class
specific expenses) and realized and unrealized gains or losses on investments
are allocated to each class of shares based upon its relative net assets.
The Fund's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price that reflects fair value
as quoted by dealers in these securities or by an independent pricing service.
Securities for which market quotations are not readily available are valued at
fair value according to methods selected in good faith by the board. Short-term
securities maturing in more than 60 days from the valuation date are valued at
the market price or approximate market value based on current interest rates;
those maturing in 60 days or less are valued at amortized cost. Investments in
metals, if any, are valued daily using data from independent brokers and pricing
services.
Option transactions
To produce incremental earnings, protect gains, and facilitate buying and
selling of securities for investments, the Fund may buy and write options traded
on any U.S. or foreign exchange or in the over-the-counter market where
completing the obligation depends upon the credit standing of the other party.
The Fund also may buy and sell put and call options and write covered call
options on portfolio securities as well as write cash-secured put options. The
risk in writing a call option is that the Fund gives up the opportunity for
profit if the market price of the security increases. The risk in writing a put
option is that the Fund may incur a loss if the market price of the security
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of being unable to enter into a closing transaction if a
liquid secondary market does not exist.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund will
realize a gain or loss when the option transaction expires or closes. When an
option is exercised, the proceeds on sales for a written call option, the
purchase cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
To gain exposure to or protect itself from market changes, the Fund may buy and
sell financial futures contracts traded on any U.S. or foreign exchange. The
Fund also may buy and write put and call options on these futures contracts.
Risks of entering into futures contracts and related options include the
possibility of an illiquid market and that a change in the value of the contract
or option may not correlate with changes in the value of the underlying
securities.
Upon entering into a futures contract, the Fund is required to deposit either
cash or securities in an amount (initial margin) equal to a certain percentage
of the contract value. Subsequent payments (variation margin) are made or
received by the Fund each day. The variation margin payments are equal to the
daily changes in the contract value and are recorded as unrealized gains and
losses. The Fund recognizes a realized gain or loss when the contract is closed
or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars. 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
operational purposes and to protect against adverse exchange rate fluctuation.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete its contract obligations.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute all of its
taxable income to shareholders. No provision for income or excise taxes is thus
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred losses on
certain futures contracts, the recognition of certain foreign currency gains
(losses) as ordinary income (loss) for tax purposes and losses deferred due to
"wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
Dividends to shareholders
An annual dividend from net investment income, declared and paid at the end of
the calendar year, 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 and interest income,
including level-yield amortization of premium and discount, is accrued daily.
2. EXPENSES AND SALES CHARGES
The Fund has agreements with American Express Financial Corporation (AEFC) to
manage its portfolio and provide administrative services. Under an 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
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 $3,207 for the
six months ended Sept. 30, 1999.
Under an 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 and any
other expenses properly payable by the Fund and approved by the board.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee per shareholder account for this service as follows:
o Class A $19
o Class B $20
o Class Y $17
The Fund has agreements with American Express Financial Advisors Inc. for
distribution and shareholder services. Under a Plan and Agreement of
Distribution (the Plan), the Fund pays a distribution fee at an annual rate up
to 0.25% of the Fund's average daily net assets attributable to Class A shares
and up to 1.00% for Class B shares. The Plan went into effect July 1, 1999.
Under terms of a prior Plan and Agreement of Distribution (the Prior Plan) that
ended June 30, 1999, the Fund paid a distribution fee for Class B shares at an
annual rate up to 0.75% of average daily net assets. The Prior Plan was not
effective with respect to Class A shares.
Under a Shareholder Service Agreement, the Fund's Class Y shares pay a fee for
service provided to shareholders by financial advisors and other servicing
agents. The fee is calculated at a rate of 0.10% of the Fund's average daily net
assets attributable to Class Y shares. Under terms of a prior agreement that
ended June 30, 1999, the Fund paid a shareholder service fee for Class A and
Class B shares at a rate of 0.175% of average daily net assets. Effective July
1, 1999, the agreement for Class A and Class B shares was converted to the Plan
and Agreement of Distribution discussed above.
Sales charges received by American Express Financial Advisors for distributing
Fund shares were $41,712 for Class A and $8,266 for Class B for the six months
ended Sept. 30, 1999.
During the six months ended Sept. 30, 1999, the Fund's custodian and transfer
agency fees were reduced by $2,434 as a result of earnings credits from
overnight cash balances. The fund also pays custodian fees to American Express
Trust Company, an affiliate of AEFC.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $22,175,486 and $14,718,457, respectively, for the six
months ended Sept. 30, 1999. Realized gains and losses are determined on an
identified cost basis.
Income from securities lending amounted to $2,944 for the six months ended Sept.
30, 1999. 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. CAPITAL SHARE TRANSACTIONS
Transactions in shares of capital stock for the periods indicated are as
follows:
Six months ended Sept. 30, 1999
Class A Class B Class Y
Sold 10,656,027 620,686 --
Issued for reinvested distributions -- -- --
Redeemed (11,297,992) (264,654) --
----------- -------- ----
Net increase (decrease) (641,965) 356,032 --
Year ended March 31, 1999
Class A Class B Class Y
Sold 34,476,704 695,352 --
Issued for reinvested distributions 75,529 1,771 2
Redeemed (34,123,406) (584,214) --
----------- -------- ----
Net increase (decrease) 428,827 112,909 2
5. OPTIONS CONTRACTS WRITTEN
Contracts and premium amounts associated with options contracts written are as
follows:
Six months ended Sept. 30, 1999
Calls
Contracts Premium
Balance March 31, 1999 -- $ --
Opened 1,050 85,624
Expired (161) (10,746)
Exercised (339) (22,628)
---- -------
Balance Sept. 30, 1999 550 $52,250
See "Summary of significant accounting policies."
6. FOREIGN CURRENCY CONTRACTS
As of Sept. 30, 1999, the Fund has foreign currency exchange contracts that
obligate it 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, 1999 768,558 504,942 $3,266 $--
Australian Dollar U.S. Dollar
Oct. 1, 1999 1,784,000 1,220,163 5,979 --
Canadian Dollar U.S. Dollar
Oct 1, 1999 85,595 58,518 263 --
Canadian Dollar U.S. Dollar
Oct 5, 1999 812,750 1,243,688 -- 933
U.S. Dollar Australian Dollar
Oct 5, 1999 38,105 228,989 45 --
U.S. Dollar South African Rand
Oct 5, 1999 1,710,486 10,168,841 -- 16,385
U.S. Dollar South African Rand
Total $9,553 $17,318
7. BANK BORROWINGS
The Fund has a revolving credit agreement with U.S. Bank, N.A., whereby the Fund
is permitted to have bank borrowings for temporary or emergency purposes to fund
shareholder redemptions. The Fund must have asset coverage for borrowings not to
exceed the aggregate of 333% of advances equal to or less than five business
days plus 367% of advances over five business days. The agreement, which enables
the Fund to participate with other American Express funds, permits borrowings up
to $200 million, collectively. Interest is charged to each Fund based on its
borrowings at a rate equal to the Federal Funds Rate plus 0.30% or the
Eurodollar Rate (Reserve Adjusted) plus 0.20%. Borrowings are payable up to 90
days after such loan is executed. The Fund also pays a commitment fee equal to
its pro rata share of the amount of the credit facility at a rate of 0.05% per
annum. The Fund had no borrowings outstanding during the six months ended Sept.
30, 1999.
8. CAPITAL LOSS CARRYOVER
For federal income tax purposes, the Fund had a capital loss carryover of
$16,477,515 as of March 31, 1999, that will expire in 2006 and 2007 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.
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9. 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 changesa
Class A
1999b 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $5.45 $6.82 $10.47 $13.75 $7.99
Income from investment operations:
Net investment income (loss) -- (.01) -- (.08) (.05)
Net gains (losses) (both realized and unrealized) .90 (1.31) (3.46) (2.54) 5.82
Total from investment operations .90 (1.32) (3.46) (2.62) 5.77
Less distributions:
Dividends from net investment income -- (.05) (.08) -- (.01)
Distributions from realized gains -- -- (.11) (.66) --
Total distributions -- (.05) (.19) (.66) (.01)
Net asset value, end of period $6.35 $5.45 $6.82 $10.47 $13.75
Ratios/supplemental data
Net assets, end of period (in millions) $56 $51 $61 $83 $101
Ratio of expenses to average daily net assetsc 1.71%d 1.66% 1.51% 1.50% 1.65%
Ratio of net investment income (loss)
to average daily net assets (.06%)d (.20%) .06% (.58%) (.64%)
Portfolio turnover rate
(excluding short-term securities) 30% 44% 112% 76% 50%
Total returne 16.60% (19.40%) (32.87%) (19.91%) 72.10%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Sept. 30, 1999 (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 Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
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Fiscal period ended March 31,
Per share income and capital changesa
Class B Class Y
1999b 1999 1998 1997 1996 1999b 1999 1998 1997 1996
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
beginning of period $5.38 $6.73 $10.30 $13.65 $7.99 $5.43 $6.80 $10.52 $13.76 $7.99
Income from investment operations:
Net investment
income (loss) (.02) (.05) (.04) (.14) (.09) .01 (.01) .03 (.05) (.04)
Net gains (losses) (both
realized and unrealized) .88 (1.29) (3.41) (2.55) 5.75 .91 (1.30) (3.52) (2.53) 5.81
Total from investment
operations .86 (1.34) (3.45) (2.69) 5.66 .92 (1.31) (3.49) (2.58) 5.77
Less distributions:
Dividends from net
investment income -- (.01) (.01) -- -- -- (.06) (.12) -- --
Distributions from
realized gains -- -- (.11) (.66) -- -- -- (.11) (.66) --
Total distributions -- (.01) (.12) (.66) -- -- (.06) (.23) (.66) --
Net asset value, end
of period $6.24 $5.38 $6.73 $10.30 $13.65 $6.35 $5.43 $6.80 $10.52 $13.76
Ratios/supplemental data
Net assets, end of
period (in millions) $11 $8 $9 $8 $3 $-- $-- $-- $-- $--
Ratio of expenses to
average daily
net assetsc 2.50%d 2.46% 2.28% 2.27% 2.31% 1.28%d 1.38% 1.26% 1.27% 1.39%
Ratio of net
investment income
(loss) to average daily
net assets (.84%)d (.97%) (.74%) (1.46%) (1.18%) .41%d .01% .36% (.33%) (.43%)
Portfolio turnover rate
(excluding short-term
securities) 30% 44% 112% 76% 50% 30% 44% 112% 76% 50%
Total returne 16.07% (20.02%) (33.41%) (20.52%) 70.80% 16.88% (19.31%) (32.79%) (19.75%) 72.30%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Sept. 30, 1999 (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 Adjusted to an annual basis.
e Total return does not reflect payment of a sales charge.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
AXP Precious Metals Fund, Inc.
Sept. 30, 1999 (Unaudited)
(Percentages represent value of investments compared to net assets)
Common stocks (95.9%)
Issuer Shares Value(a)
Australia (8.7%)(c)
<S> <C> <C>
Acacia Resources 2,000,000(b) $3,694,565
Delta Gold 500,000(b,c) 909,934
Kingsgate Consolidated 1,500,000(b,c) 734,344
Newcrest Mining 150,000(b) 488,583
Total 5,827,426
Canada (49.1%)(c)
Aber Resources 100,000(b) 626,149
Agnico-Eagle Mines 100,000(c) 769,074
Barrick Gold 260,000 5,655,000
Dia Met Minerals Cl B 40,000(b) 707,820
Francisco Gold 100,000(b) 598,925
Franco-Nevada Mining 220,000(e) 4,753,964
Goldcorp Cl A 400,000(b) 2,640,713
IAMGOLD 300,000(b) 724,835
Ivanhoe Mines 700,000(b,d) 733,683
Kinross Gold 400,000(b) 1,121,623
Meridian Gold 900,000(b) 6,155,993
Minefinders 550,000(b,d) 374,328
Nevsun Resources 650,000(b) 331,791
Placer Dome 513,200 7,633,849
Total 32,827,747
Colombia (0.7%)(c)
Rio Narcea Gold Mines 375,000(b) 497,686
Malta (12.0%)(c)
Stillwater Mining 300,000(b) 8,062,499
Papua New Guinea (1.2%)(c)
Lihir Gold 750,000(b) 822,465
Peru (2.1%)(c)
Compania de Minas Buenaventura ADR 80,000 1,385,000
South Africa (5.0%)(c)
Anglo American Platinum 50,000(b) 1,326,114
Harmony Gold Mining 300,000 1,806,747
Kroondal Platinum Mines 100,000(b) 213,244
Total 3,346,105
United Kingdom (2.4%)(c)
Ashanti Goldfields GDR 200,000 1,575,000
United States (14.7%)
AK Steel Holdings 75,000 1,368,750
Battle Mountain Gold 450,000 1,462,500
Homestake Mining 300,000 2,756,250
Martin Marietta Materials 10,000 399,375
Newmont Mining 150,000 3,881,250
Total 9,868,125
Total common stocks
(Cost: $60,318,492) $64,212,053
Other (0.1%)(c)
Issuer Shares Value(a)
Canada
Minefinders 125,000 $85,075
Special Warrants
Total other
(Cost: $458,278) $85,075
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Options purchased (0.3%)
Issuer Shares Exercise Expiration Value(a)
price date
Calls
<S> <C> <C> <C> <C>
Barrick Gold 200,000 $25 Nov. 1999 $125,000
Freeport McMoran 100,000 18 Oct. 1999 34,375
Philadelphia Gold & Silver 5,000 90 Nov. 1999 15,938
Total options purchased
(Cost: $608,650) $175,313
Short-term securities (8.2%)
Issuer Annualized Amount Value(a)
yield on date payable at
of purchase maturity
U.S. government agencies
Federal Home Loan Bank Disc Nt
10-01-99 5.05% $2,200,000 $2,199,681
Federal Home Loan Mtge Corp Disc Nt
10-07-99 5.16 900,000 899,099
Federal Natl Mtge Assn Disc Nts
10-12-99 5.14 2,000,000 1,996,420
12-02-99 5.29 400,000 396,213
Total 5,491,413
Total short-term securities
(Cost: $5,492,483) $5,491,413
Total investments in securities
(Cost: $66,877,903)(f) $69,963,854
See accompanying notes to investments in securities.
</TABLE>
<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. As of Sept. 30, 1999,
the value of foreign securities represented 81.27% of net assets.
(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, 1999 are as follows:
Issuer Beginning Purchase Sales Ending Dividend Value(a)
cost cost cost cost income
Ivanhoe Mines* $-- $1,372,900 $411,870 $961,030 $-- $733,683
Minefinders* 1,580,275 -- -- 1,580,275 -- 374,328
Sedna Geotech* 1,571,774 -- 1,571,774 -- -- --
Total $3,152,049 $1,372,900 $1,983,644 $2,541,305 $-- $1,108,011
*Issuer was not an affiliate for the entire period ended Sept. 30, 1999.
(e) At Sept. 30, 1999, securities valued at $1,188,491 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value
price date
Franco-Nevada Mining 55,000 $35 Nov. 1999 $41,176
(f) At Sept. 30, 1999, the cost of securities for federal income tax purposes
was approximately $66,878,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $10,286,000
Unrealized depreciation (7,200,000)
----------
Net unrealized appreciation $3,086,000
<PAGE>
Quick telephone reference
AMERICAN EXPRESS FINANCIAL ADVISORS TELEPHONE TRANSACTION SERVICE
Sales and exchanges, dividend payments or reinvestments and automatic payment
arrangements: 800-437-3133
AMERICAN EXPRESS CLIENT SERVICE CORPORATION
Fund performance, fund prices, account values, recent account transactions and
account inquiries: 800-862-7919
TTY SERVICE
For the hearing impaired: 800-846-4852
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SPENCER, IA
PERMIT NO. 85
S-6144 N (11/99)
AXP Precious Metals Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors
