IDS
Precious
Metals Fund
1999 ANNUAL REPORT
(PROSPECTUS ENCLOSED)
(icon of) ruler
The goal of IDS Precious Metals Fund, Inc. is long-term growth of capital. The
Fund invests primarily in securities of companies engaged in exploration,
mining, processing or distribution of gold and other precious metals. Most of
these companies will be located outside of the United States.
(This annual report includes a prospectus that describes in detail the Fund's
objective, investment strategy, risks, sales charges, fees and other matters of
interest. Please read the prospectus carefully before you invest or send money.)
Distributed by American Express Financial Advisors Inc.
AMERICAN EXPRESS Financial Advisors
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A Historical Hedge
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. These stocks, which form the bedrock of IDS
Precious Metals Fund, usually move in tandem with the prices of the metals.
IDS PRECIOUS METALS FUND (This annual report is not part of the prospectus.)
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Table of Contents
1999 ANNUAL REPORT
The purpose of this annual report is to tell investors how the Fund performed.
From the Chairman 4
From the Portfolio Manager 4
Fund Facts 6
The 10 Largest Holdings 7
Making the Most of the Fund 8
The Fund's Long-term Performance 9
Independent Auditors' Report 10
Financial Statements 11
Notes to Financial Statements 14
Investments in Securities 22
Federal Income Tax Information 26
1999 prospectus
The prospectus, which is bound into the middle of this annual report, describes
the Fund in detail.
The Fund 3p
Goal 3p
Investment Strategy 3p
Risks 5p
Past Performance 8p
Fees and Expenses 10p
Management 11p
Buying and Selling Shares 11p
Valuing Fund Shares 11p
Investment Options 12p
Purchasing Shares 13p
Sales Charges 16p
Exchanging/Selling Shares 20p
Distributions and Taxes 25p
Personalized Shareholder
Information 27p
About the Company 28p
Quick Telephone Reference 30p
Financial Highlights 31p
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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(picture of) Arne H. Carlson
Arne H. Carlson
Chairman of the board
From the Chairman
It is an honor for me to join the IDS Mutual Fund Group as chairman of the board
and chief executive officer for each of the funds. I have served for the past
eight years as governor of Minnesota and also for the past 20 years as a
constitutional officer responsible for the pension investments made on behalf of
government employees. My responsibility in the upcoming years is to serve your
interests.
By law, half the members of a mutual fund board must be independent of their
investment manager and distributor. I am one of those persons. I am not an
employee of American Express Financial Corporation (AEFC), nor do I own stock in
American Express Company. Both are fine companies, but the law clearly states
that to fully represent your interests I must be independent.
Having said that, I have a great deal of respect for the capabilities of AEFC
and for the services it provides to investors. Your financial advisor assists
you in financial planning, conducts regular investment reviews and responds to
your questions and needs. This is a very personal service that makes AEFC a
partner in your financial future. I know that AEFC has an investment focus on
the long-term performance of our economy and that it wants you to participate in
that growth. Consistent with that, our board is here to serve you and represent
your interests in a professional manner.
Arne H. Carlson
(picture of) Richard H. Warden
Richard H. Warden
Portfolio manager
From the Portfolio Manager
Stocks of gold-mining and exploration companies remained under pressure for most
of the past fiscal year. IDS Precious Metals Fund's performance reflected the
difficult environment, as its Class A shares lost 19.40% over the period --
April 1998 through March 1999.
Three factors kept a lid on the price of gold and, consequently, the prices of
gold stocks for much of the 12 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. Third, the strength of
the U.S. dollar 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 last summer, the combination of those
factors had pushed gold stocks and the Fund well into negative territory.
A BRIEF REBOUND
There was one exception to the trend, however. That came last fall, when Russia
and Latin America were hit by the economic malaise known as 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. Gold-stock
prices responded by rising in spectacular fashion, only to resume a downward
trend over the following several months.
Meanwhile, in the face of all that activity, there was little change in the
fundamentals for gold over the fiscal year. Demand remained reasonably strong,
while producers continued to hold back on supply because of still-unattractive
price levels. Over the 12 months, the price of gold went from about $302 per
ounce to about $280.
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 reached a high of about 19% of assets in
mid-period. In the ensuing months, I put most of that money back into stocks,
concentrating on the larger gold producers, which I believe have the best
potential in the months ahead.
Richard H. Warden
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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Fund Facts
Class A -- 12-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1999 $5.45
March 31, 1998 $6.82
Decrease $1.37
Distributions -- April 1, 1998 - March 31, 1999
From income $0.05
From capital gains $ --
Total distributions $0.05
Total return* -19.40%**
Class B -- 12-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1999 $5.38
March 31, 1998 $6.73
Decrease $1.35
Distributions -- April 1, 1998 - March 31, 1999
From income $0.01
From capital gains $ --
Total distributions $0.01
Total return* -20.02%**
Class Y -- 12-month performance
(All figures per share)
Net asset value (NAV)
March 31, 1999 $5.43
March 31, 1998 $6.80
Decrease $1.37
Distributions -- April 1, 1998 - March 31, 1999
From income $0.06
From capital gains $ --
Total distributions $0.06
Total return* -19.31%**
*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.
IDS PRECIOUS METALS FUND (This annual report is not part of the prospectus.)
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The 10 Largest Holdings
Percent Value
(of net assets) (as of March 31, 1999)
Stillwater Mining 17.08% $10,088,437
Meridian Gold 9.76 5,765,408
Getchell Gold 6.63 3,918,750
Barrick Gold 6.07 3,583,125
Franco-Nevada Mining 5.36 3,167,661
Goldcorp Cl A 5.10 3,015,242
Sons of Gwalia 4.23 2,501,120
Acacia Resources 4.02 2,373,000
Placer Dome 3.40 2,009,275
Euro-Nevada Mining 2.83 1,669,152
For further detail about these holdings, please refer to the section entitled
"Investments in Securities" herein.
(picture of) pie chart
The 10 holdings listed here
make up 64.48% of net assets
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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Making the Most of the Fund
BUILD YOUR ASSETS SYSTEMATICALLY
One of the best ways to invest in the Fund is by dollar-cost averaging -- a
time-tested strategy that can make market fluctuations work for you. To
dollar-cost average, simply invest a fixed amount of money regularly. You'll
automatically buy more shares when the Fund's share price is low, fewer shares
when it is high. The chart below shows how dollar-cost averaging works. In these
three hypothetical scenarios, you will see six months of share price
fluctuations.
This strategy does not ensure a profit or avoid a loss if the market declines.
But, if you can continue to invest regularly through changing market conditions
even when the price of your shares fall or the market declines, it can be an
effective way to accumulate shares to meet your long-term goals.
How dollar-cost averaging works
Jan Feb Mar Apr May Jun
$15 $16 $18 $20
$10 $10 $12 $14
$ 5
Accumulated shares* Average market Your average
price per share cost per share
42.25 $15 $14.20
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Jan Feb Mar Apr May Jun
$15
$10 $10 $10
$ 5 $8 $5 $5 $8
Accumulated shares* Average market Your average
price per share cost per share
85.0 $7.66 $7.05
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Jan Feb Mar Apr May Jun
$15
$10 $10 $8 $6 $7
$ 5 $4 $4
Accumulated shares* Average market Your average
price per share cost per share
103.5 $6.50 $5.80
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$100 invested per month. Total invested: $600.
*Shares purchased is determined by dividing the amount invested per month by the
current share price.
THREE WAYS TO BENEFIT FROM A MUTUAL FUND:
o your shares increase in value when the Fund's investments do well
o you receive capital gains when the gains on investments sold by the Fund
exceed losses
o you receive income when the Fund's stock dividends, interest and short-term
gains exceed its expenses.
All three make up your total return. You potentially can increase your
investment if, like most investors, you reinvest your dividends and capital gain
distributions to buy additional shares of the Fund or another fund.
IDS PRECIOUS METALS FUND (This annual report is not part of the prospectus.)
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The Fund's Long-term Performance
How your $10,000 has grown in IDS Precious Metals Fund
$60,000
$50,000
$40,000
X
S&P 500 Index
$30,000
$20,000
X
$8,932
IDS Precious
Metals Fund
Class A
X
Lipper Gold Fund Index
$9,500
89 90 91 92 93 94 95 96 97 98 99
Average annual total return (as of March 31, 1999):
1 year Since inception (B&Y) 5 years 10 years (A)
Class A -23.42% --% -7.57% -1.12%
Class B -23.22% -7.22%* --% --%
Class Y -19.31% -5.93%* --% --%
*Inception date was March 20, 1995.
Assumes: Holding period from 4/1/89 to 3/31/99. Returns do not reflect taxes
payable on distributions. Reinvestment of all income and capital gain
distributions for the Fund, with a value of $1,274. Also see "Past Performance"
in the Fund's current prospectus.
On the graph above you can see how the Fund's total return compared to two
widely cited performance indexes, the S&P 500 Index and the Lipper Gold Fund
Index. In comparing Precious Metals Fund (Class A) to the two indexes, you
should take into account the fact that the Fund's performance reflects the
maximum sales charge of 5%, while such charges are not reflected in the
performance of the indexes.
Your investment and return values fluctuate so that your shares, when redeemed,
may be worth more or less than the original cost. Average annual total return
figures reflect the impact of the applicable sales charge up to a maximum of 5%.
This was a period of widely fluctuating security prices. Past performance is no
guarantee of future results.
S&P 500 Index, an unmanaged list of common stocks, is frequently used as a
general measure of market performance. However, the S&P 500 companies are
generally larger than those in which the Fund invests.
Lipper Gold Fund Index, published by Lipper Analytical Services, Inc., includes
10 funds that are generally similar to this Fund, although some funds in the
index may have somewhat different investment policies or objectives.
(This annual report is not part of the prospectus.) ANNUAL REPORT - 1999
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The financial statements contained in Post-Effective Amendment #33 to
Registration Statement No. 2-93745 filed on or about May 24, 1999, are
incorporated herein by reference.
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Federal Income Tax Information
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below were reported to you on Form 1099-DIV,
Dividends and Distributions. Shareholders should consult a tax advisor on how to
report distributions for state and local purposes.
IDS Precious Metals Fund, Inc.
Fiscal year ended March 31, 1999
Class A
Income distributions taxable as dividend income, 28.33% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1998 $0.04938
Class B
Income distributions taxable as dividend income, 28.33% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1998 $0.00667
Class Y
Income distributions taxable as dividend income, 28.33% qualifying for deduction
by corporations.
Payable date Per share
Dec. 23, 1998 $0.05590
IDS PRECIOUS METALS FUND (This annual report is not part of the prospectus.)
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IDS Precious Metals Fund
IDS Tower 10
Minneapolis, MN 55440-0010
AMERICAN EXPRESS Financial Advisors
S-6142 N (5/99)
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STATEMENT OF DIFFERENCES
Difference Description
1) The layout is different 1) Some of the layout in the
throughout the annual report. annual report to
shareholders is in two
columns.
2) Headings. 2) The headings in the
annual report are
placed in a blue strip
at the top of the page.
3) There are pictures, icons 3) Each picture, icon and
and graphs throughout the graph is described in
annual report. parentheses.
4) Footnotes for charts and 4) The footnotes for each
graphs are described at chart or graph are typed
the left margin. below the description of
the chart or graph.
