PAGE
IDS
DISCOVERY
FUND
1994 semiannual report
Picture of: Ship Icon
The goal of IDS Discovery Fund, Inc. is long-term
growth of capital. The fund invests primarily in
common stocks.
IDS
An American Express company
AMERICAN
EXPRESS
Distributed by
IDS Financial Services Inc.<PAGE>
PAGE
Picture of Ship Icon
Your piece of the future
Glance through current business magazine and newspaper articles on
the fastest-growing companies in America - and you'll find many of
the stocks that Discovery Fund owns. The fund seeks small to medium-
size firms at the forefront of rapidly growing markets or industries.
From high-tech companies in computer networking or biotechnology to
firms that have found new ways to make, manage or market traditional
products and services, these are the companies that are creating jobs
and reshaping U.S. industry today.
Contents
From the president 3
From the portfolio manager 3
Ten largest holdings 5
Financial statements 6
Notes to financial statements 9
Investments in securities 16
Directors and officers 20
IDS mutual funds 21<PAGE>
PAGE
To our shareholders
Picture of William Pearce
President of the fund
Picture of Ray Hirsch
Portfolio manager
From the president
As you read this semiannual report, you'll find it very different from
those you've received from us in the past. We've made substantial changes
in the design and organization to make the information easier to find and
understand.
A good place to begin is with the portfolio manager's letter, which
describes the events and investment strategies that most influenced the
fund's performance during the past period.
In redesigning the reports, we asked IDS financial planners and some of
you for suggestions and recommendations. We believe that you'll find the
results of our work worthwhile.
William R. Pearce
From the portfolio manager
Led by solid gains among its health care and technology holdings, IDS
Discovery Fund enjoyed a very productive first half of the fiscal year.
Including the increase in net asset value and distributions, shareholders
realized a double-digit return during the period.
Small growth stocks - stocks of smaller companies that are likely to grow
rapidly - got off to a strong start in August, the beginning of the
period. In that month alone, the fund gained approximately 5%. The fund
continued to enjoy positive, though less robust, performance during
September and the first part of October.
<PAGE>
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To our shareholders (continued)
The next several weeks, however, proved to be a stumbling block, as a
rise in long-term interest rates drove the stock market, and small stocks
in particular, down. In November alone, the fund gave back about 4% of
its previous gain. The market and the fund got back on track quickly,
though, as both advanced in December and January.
Health care recovers
The initial spark for the fund was provided by health care stocks. Their
positive performance represented a pleasant turnaround from the first few
months of 1993, when news of the administration's intention to revamp the
nation's health care system sent those stocks into a tailspin.
By summer, we had decided the worst was over for this sector and began
selectively adding to the portfolio's health care holdings. Our timing
proved to be good, as those stocks largely worked in the fund's favor
throughout the six months. Among the best performers were Zoll Medical,
which produces medical devices such as heart defibrillators, and Cardinal
Distribution, which distributes pharmaceuticals.
Technology chips in
Generally sluggish through the first several months of 1993, technology
stocks (mainly those of telecommunications, electronics and computer
hardware and software companies) made a decent comeback during the past
six months. To the fund's benefit, we maintained a substantial exposure
(approaching 40% of the portfolio) to that group, which has long been
the largest component of the portfolio. There were several prominent
performers, including Microchip, a supplier of digital semiconductors,
and Maxim, which makes analog semiconductors.
Our foreign holdings, although they constituted a relatively small
portion of the portfolio, also made a positive contribution. Some of
those stocks, in fact, recorded gains ranging from 50% to more than 100%.
Also working in the fund's favor during the period was our relatively low
level of cash reserves, whose return has been negligible in this low
interest-rate environment. We began reducing cash prior to August,
bringing it from about 15% of assets to less than 5% by the end of the
month. By keeping nearly all the assets in stocks and very little in
cash, the fund's return was enhanced.<PAGE>
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To our shareholders (continued)
At this point, we think the outlook for the market and the fund remains
reasonably good. Although it's unlikely that the falling-interest-rate
environment that stocks have benefited from in the past few years will be
sustained in the months ahead, the market continues to enjoy a healthly
influx of cash from investors. Naturally, that's good for stocks and,
therefore, the fund. As for portfolio changes, aside from probably
increasing our foreign exposure somewhat, we're comfortable with our
current structure, which we think will allow us to build on our first-
half progress.
Ray E. Hirsch
<TABLE>
<CAPTION>
6-month performance
(All figures per share)
Net asset value (NAV)
_____________________
<S> <C>
Jan. 31, 1994 $12.33
_____________________
July 31, 1993 $11.37
_____________________
Increase $ 0.96
_____________________
Distributions
Aug. 1, 1993 - Jan. 31, 1994
____________________________
<S> <C>
From capital gains $ 0.48
____________________________
Total return* +12.8%
____________________________
* If you purchased shares in the
fund during this period, your return
also would have been affected by the
sales charge, as described in the
prospectus. </TABLE>
<PAGE>
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IDS Discovery Fund, Inc.
<TABLE>
<CAPTION>
Your fund's ten largest holdings
_____________________________________________________________________________________________________________
Percent Value
(of fund's net assets)(as of Jan. 31, 1994)
____________________________________________________________________________________
<S> <C> <C>
HBO 3.12% $ 16,843,750
A health-care information service company that
provides a variety of computer-based information
systems and services to hospitals and their
affiliates.
Cisco Systems 3.02 16,312,500
The designer and builder of devices that
link personal computers in powerful networks,
(Pie graph) Cisco is a leader in the fast-growing business
network market.
The ten holdings
listed here make Oracle Systems 2.64 14,295,625
up 19.59% if the
fund's net assets One of the largest independent vendors of database-
management software, offering a variety of new
products, enhancements and applications software.
First Financial Management 1.64 8,868,750
A leading provider of information services,
including processing credit card transactions
and health care claims.
Sybase Inc. 1.62 8,740,000
A provider of relational database-management
software products and services for on-line
applications in networked computing environments.
Forest Laboratories 1.55 8,394,375
A worldwide pharmaceutical company that produces and
markets prescription and over-the-counter drugs
through independent distribution and under exclusive
marketing contracts with leading pharmaceutical
companies.
Parametric Technology 1.54 8,343,750
A producer of software products for the automation
of complex engineering tasks that are essential to
the development of virtually all manufactured
products.
/TABLE
<PAGE>
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IDS Discovery Fund, Inc.
<TABLE>
<CAPTION>
Your fund's ten largest holdings
_____________________________________________________________________________________________________________
Percent Value
(of fund's net assets)(as of Jan. 31, 1994)
____________________________________________________________________________________
<S> <C> <C>
Tellabs 1.53% $ 8,280,000
Tellabs designs, manufactures and markets a broad
range of products and equipment for use by telephone
companies, the Bell System, specialized common
carrier and other providers of telecommunication
services.
Brinker International 1.49 8,027,500
An operator of several restaurant chains,
including Chili's Grady's Grill, Spageddi's
Italian Food and Macaroni Grill, across
40 states.
Phillips-Van Heusen 1.44 7,782,500
The largest participant in the rapidly growing
field of outlet mall retailing, Phillips-Van
Heusen operates stores under the name Van Heusen,
Bass Shoes, Cape Isle Knitter, Geoffrey Beene and
Windsor shirt.
/TABLE
<PAGE>
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Financial statements
<TABLE>
<CAPTION>
Statement of assets and liabilities
IDS Discovery Fund, Inc.
Jan. 31, 1994
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Investments in securities, at value (Note 1)
(identified cost $398,140,585) $543,198,485
Cash in bank on demand deposit 1,201,884
Receivable for investment securities sold 6,787,359
Dividends and accrued interest receivable 117,172
_____________________________________________________________________________________________________________
Total assets 551,304,900
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Payable for investment securities purchased 6,765,560
Payable upon return of securities loaned (Note 5) 3,542,000
Accrued investment management and services fee 265,017
Accrued distribution fee 36,884
Accrued transfer agency fee 92,211
Other accrued expenses 120,495
_____________________________________________________________________________________________________________
Total liabilities 10,822,167
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $540,482,733
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value;
outstanding 43,841,655 shares $ 438,417
Additional paid-in capital 395,887,028
Net operating loss (962,220)
Accumulated net realized gain on investments (Note 1) 61,608
Unrealized appreciation of investments 145,057,900
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $540,482,733
_____________________________________________________________________________________________________________
Net asset value per share of outstanding capital stock $ 12.33
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
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Financial statements
<TABLE>
<CAPTION>
Statement of operations
IDS Discovery Fund, Inc.
Six months ended Jan. 31, 1994
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
<S> <C>
(Unaudited)
Income:
Interest $ 937,415
Dividends (net of foreign taxes withheld of $9,236) 534,996
_____________________________________________________________________________________________________________
Total income 1,472,411
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management and services fee 1,484,400
Distribution fee 211,535
Transfer agency fee 526,342
Compensation of directors 7,373
Compensation of officers 3,169
Custodian fees 30,401
Postage 67,719
Registration fees 66,062
Reports to shareholders 17,872
Audit fees 10,750
Administrative 4,067
Other 4,941
_____________________________________________________________________________________________________________
Total expenses 2,434,631
_____________________________________________________________________________________________________________
Investment loss -- net (962,220)
_____________________________________________________________________________________________________________
Realized and unrealized gain on investments and foreign currency-- net
_____________________________________________________________________________________________________________
Net realized gain on security and foreign currency transactions (including loss
of $757 from foreign currency transactions)(Note 3) 6,566,654
Net realized gain on closed option contracts written (Note 4) 156,549
_____________________________________________________________________________________________________________
Net realized gain on investments and foreign currency 6,723,203
Net change in unrealized appreciation or depreciation of investments 52,853,511
_____________________________________________________________________________________________________________
Net gain on investments and foreign currency 59,576,714
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations $58,614,494
_____________________________________________________________________________________________________________
See accompanying notes to financial statements./TABLE
<PAGE>
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Financial statements
<TABLE>
<CAPTION>
Statements of changes in net assets
IDS Discovery Fund, Inc.
Six months ended Year ended
_____________________________________________________________________________________________________________
Operations and distributions Jan. 31, 1994 July 31, 1993
_____________________________________________________________________________________________________________
<S> <C> <C>
(Unaudited)
Investment loss -- net $ (962,220) $ (638,737)
Net realized gain on investments and foreign currency 6,723,203 21,245,988
Net change in unrealized appreciation or
depreciation of investments 52,853,511 35,065,405
_____________________________________________________________________________________________________________
Net increase in net assets resulting from operations 58,614,494 55,672,656
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net realized gain on investments (19,911,836) (7,803,311)
_____________________________________________________________________________________________________________
Capital share transactions
_____________________________________________________________________________________________________________
Proceeds from sales of
9,131,362 and 18,957,346 shares (Note 2) 111,037,638 206,523,903
Net asset value of 1,654,184 and 685,001 shares
issued in reinvestment of distributions 19,772,465 7,746,704
Payments for redemptions of
6,100,882 and 10,179,672 shares (74,080,402) (110,097,573)
_____________________________________________________________________________________________________________
Increase in net assets from capital share transactions
representing net addition of
4,684,664 and 9,462,675 shares 56,729,701 104,173,034
_____________________________________________________________________________________________________________
Total increase in net assets 95,432,359 152,042,379
Net assets at beginning of period 445,050,374 293,007,995
_____________________________________________________________________________________________________________
Net assets at end of period $540,482,733 $445,050,374
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
/TABLE
<PAGE>
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Notes to financial statements
IDS Discovery Fund, Inc.
(Unaudited as to Jan. 31, 1994)
______________________________________________________________________________
1. Summary of significant accounting policies
The fund is registered under the Investment Company
Act of 1940 (as amended) as a diversified, open-end
management investment company. Significant accounting
policies followed by the fund are summarized below:
Valuation of securities
All securities are valued at the close of each
business day. Securities traded on national
securities exchanges or included in national market
systems are valued at the last quoted sales price;
securities for which market quotations are not
readily available are valued at fair value according
to methods selected in good faith by the board of
directors. Determination of fair value involves,
among other things, reference to market indexes,
matrixes and data from independent brokers.
Short-term securities maturing in more than 60 days
from the valuation date are valued at the market
price or approximate market value based on current
interest rates; those maturing in 60 days or less are
valued at amortized cost.
Options transactions
In order to produce incremental earnings, protect
gains, and facilitate buying and selling of
securities for investment purposes, the fund 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.
<PAGE>
PAGE
Notes to financial statements
IDS Discovery Fund, Inc.
(Unaudited as to Jan. 31, 1994)
______________________________________________________________________________
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.
Foreign currency translations and
forward 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. It is not practicable to identify
that portion of realized and unrealized gain (loss)
arising from changes in the exchange rates from the
portion arising from changes in the market value of
investments.
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 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.
<PAGE>
PAGE
Notes to financial statements
IDS Discovery Fund, Inc.
(Unaudited as to Jan. 31, 1994)
______________________________________________________________________________
Net investment income (loss) and net realized gains
(losses) may differ for financial statement and tax
purposes primarily because of the deferral of losses
on certain futures contracts, the recognition of
certain foreign currency gains (losses) as ordinary
income (loss) for tax purposes, and losses deferred
due to "wash sale" transactions. The character of
distributions made during the year from net
investment income or net realized gains may differ
from their ultimate characterization for federal
income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that
the income or realized gains (losses) were recorded
by the fund.
Dividends to shareholders
An annual dividend declared and paid at the end of
the calendar year from net investment income is
reinvested in additional shares of the fund at net
asset value or payable in cash. Capital gains, when
available, are distributed along with the income
dividend.
Other
Security transactions are accounted for on the date
securities are purchased or sold. Dividend income is
recognized on the ex-dividend date and interest
income, including level-yield amortization of premium
and discount, is accrued daily.
<PAGE>
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Notes to financial statements
IDS Discovery Fund, Inc.
(Unaudited as to Jan. 31, 1994)
______________________________________________________________________________
2. Expenses and sales charges
Under terms of an agreement dated Nov. 14, 1991, the
fund pays IDS Financial Corporation (IDS) a fee for
managing its investments, recordkeeping and other
specified services. The fee is a percentage of the
fund's average daily net assets consisting of a group
asset charge in reducing percentages from 0.46% to
0.32% annually on the combined net assets of all
non-money market funds in the IDS MUTUAL FUND GROUP
and an individual annual asset charge of 0.23% of
average daily net assets. 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 Small Company Growth Fund Index.
The maximum adjustment is 0.12% of the fund's average
daily net assets after deducting 1% from the
performance difference. If the performance difference
is less than 1%, the adjustment will be zero. The
adjustment decreased the fee by $89,551 for the six
months ended Jan. 31, 1994.
The fund also pays IDS a distribution fee at an
annual rate of $6 per shareholder account and a
transfer agency fee at an annual rate of $15 per
shareholder account. The transfer agency fee is
reduced by earnings on monies pending shareholder
redemptions.
IDS will assume and pay any expenses (except taxes
and brokerage commissions) that exceed the most
restrictive applicable state expense limitation.
Sales charges by IDS Financial Services Inc. for
distributing fund shares were $1,374,749 for the six
months ended Jan. 31, 1994. The fund also pays
custodian fees to IDS Bank & Trust, an affiliate of
IDS.
The fund has a retirement plan for its independent
directors. Upon retirement, directors receive monthly
payments equal to one-half of the retainer fee for as
many months as they served as directors up to 120
months. There are no death benefits. The plan is not
funded but the fund recognizes the cost of payments
during the time the directors serve on the board.
The retirement plan expense amounted to $1,171 for
the six months ended Jan. 31, 1994.
<PAGE>
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Notes to financial statements
IDS Discovery Fund, Inc.
(Unaudited as to Jan. 31, 1994)
______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of
securities (other than short-term obligations)
aggregated $187,089,550 and $105,473,263,
respectively, for the six months ended Jan. 31, 1994.
Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with
IDS were $18,632 for the six months ended Jan. 31,
1994.
______________________________________________________________________________
4. Option contracts written
The number of contracts and premium amounts
associated with call options written is as follow:
<TABLE>
<CAPTION>
Six months ended
Jan. 31, 1994
Contracts Premium
_____________________________________________________
<S> <C> <C>
Balance July 31, 1993 550 $160,815
Opened 550 87,722
Closed (1,100)
(248,537) _____________________________________________________
Balance Jan. 31, 1994 -- $ --
_____________________________________________________
</TABLE>
______________________________________________________________________________
5. Lending of portfolio securities
At Jan. 31, 1994, securities valued at $3,413,000
were on loan to brokers. For collateral, the fund
received $3,542,000 in cash. Income from securities
lending amounted to $37,478 for the six months ended
Jan. 31, 1994. The risks to the fund of securities
lending are that the borrower may not provide
additional collateral when required or return the
securities when due.
<PAGE>
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Notes to financial statements
IDS Discovery Fund, Inc.
(Unaudited as to Jan. 31, 1994)
_______________________________________________________________________________
6. Financial highlights
The table below shows certain important financial
information for evaluating the fund's results.
<TABLE>
<CAPTION>
Fiscal period ended July 31,
Per share income and capital changes*
1994** 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $11.37 $9.87 $9.58 $9.05 $7.75 $6.69
beginning of period
Income from investment operations:
Net investment income (.02) (.02) (.01) .04 .14 .13
(loss)
Net gains on securites 1.46 1.75 1.01 1.03 1.35 .98
(both realized and unrealized)
Total from investment 1.44 1.73 1.00 1.07 1.49 1.11
operations
Less distributions:
Dividends from net -- -- (.02) (.11) (.14) (.05)
investment income
Distributions from (.48) (.23) (.69) (.43) (.05) --
realized gains
Total distributions (.48) (.23) (.71) (.54) (.19) (.05)
Net asset value, $12.33 $11.37 $9.87 $9.58 $9.05 $7.75
end of period
Ratios/supplemental data
1994** 1993 1992 1991 1990 1989
Net assets, end of period $540 $445 $293 $207 $168 $167
(in millions)
Ratio of expenses to .97%*** 1.03% 1.04% .98% .76% .66%
average daily net assets
Ratio of net income to (.38%)*** (.17%) (.11%) .40% 1.51% 1.86%
average daily net assets
Portfolio turnover rate 24% 76% 90% 95% 76% 109%
(excluding short-term
securities)
Total return+ 12.8%++ 17.5% 9.9% 13.4% 19.8% 16.7%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Jan. 31, 1994 (Unaudited).
***Adjusted to an annual basis.
+Total return does not reflect payment of a sales charge.
++For the fiscal period ended Jan. 31, 1994, the annualized total return is 27%.
</TABLE> <PAGE>
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Investments in securities
<TABLE>
<CAPTION>
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (91.5%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Aerospace & defense (0.5%)
OEA 100,000 $ 2,800,000
_____________________________________________________________________________________________________________________________
Airlines (2.1%)
Mesa Airlines 250,000 (b) 4,500,000
Southwest Airlines 180,000 6,705,000
____________
Total 11,205,000
_____________________________________________________________________________________________________________________________
Automotive & related (1.5%)
EK Chor China Motorcycle 145,000 5,056,875
Gentex 90,000 (b) 2,857,500
____________
Total 7,914,375
_____________________________________________________________________________________________________________________________
Banks and savings & loans (0.9%)
Mercantile Bancorp 100,000 4,900,000
_____________________________________________________________________________________________________________________________
Beverages & tobacco (0.6%)
Celestial Seasonings 100,000 (b) 2,975,000
_____________________________________________________________________________________________________________________________
Communications equipment (13.2%)
ADC Telecom 110,000 (b) 4,042,500
Andrew 75,000 (b) 3,318,750
BroadBand Technologies 45,000 (b) 1,355,625
Cellular 240,000 (b) 4,980,000
Centigram Communications 80,000 (b) 2,760,000
Chipcom 100,000 (b) 5,400,000
Cisco Systems 225,000 (b) 16,312,500
ECI Telecom 105,000 2,940,000
InterVoice 75,000 (b) 1,031,250
Mitel 230,200 (b) 1,611,400
New Bridge Networks 100,000 (b) 6,700,000
Novell 80,000 (b) 1,810,000
Octus 65,000 (b) 755,625
Powersoft 70,000 (b) 3,920,000
Summa Four 17,000 (b) 637,500
Tellabs 180,000 (b) 8,280,000
Vanguard Cellular System 125,000 (b) 3,968,750
Xircom 80,000 (b) 1,600,000
____________
Total 71,423,900
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
/TABLE
<PAGE>
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Investments in securities
<TABLE>
<CAPTION>
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Computers & office equipment (14.5%)
Acclaim Entertainment 150,000 (b) $ 3,318,750
Adobe Systems 50,000 1,512,500
Amer Management Systems 30,900 (b) 621,862
Avid Technology 12,000 (b) 276,000
BMC Software 80,000 (b) 5,100,000
Compuware 22,000 (b) 720,500
Electronic Arts 95,000 (b) 2,719,375
IMRS 31,300 (b) 845,100
Informix 155,000 (b) 2,518,750
Microsoft 60,000 (b) 5,107,500
NetFRAME Systems 145,000 (b) 2,392,500
Oracle Systems 445,000 (b) 14,295,625
Parametric Technology 250,000 (b) 8,343,750
Robotic Vision System 195,000 (b) 950,625
SHL Systemhouse 150,000 (b) 975,000
Silicon Graphics 140,000 (b) 3,587,500
Software Toolworks 160,000 (b) 1,580,000
Storage Technology 170,000 (b) 5,673,750
Sybase Software 190,000 (b) 8,740,000
Synopsys 120,000 (b) 5,415,000
Viewlogic Systems 155,000 (b) 3,797,500
____________
Total 78,491,587
_____________________________________________________________________________________________________________________________
Electronics (7.2%)
Amtech 200,000 5,200,000
Applied Materials 150,000 (b) 6,618,750
Linear Technology 150,000 6,487,500
Maxim Integrated Products 108,000 (b) 5,373,000
Micro-chip 60,000 (b) 2,385,000
Quickturn Design System 15,100 (b) 234,050
Sensormatic Electric 180,000 5,962,500
Tri Quint 66,000 (b) 1,039,500
Valence Technology 280,000 (b) 5,530,000
____________
Total 38,830,300
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
/TABLE
<PAGE>
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Investments in securities
<TABLE>
<CAPTION>
IDS Discovery Fund, Inc. (Perecentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Energy (1.5%)
Devon Energy 115,000 $ 2,357,500
Enron Oil & Gas 65,000 2,868,125
HS Resources 125,000 (b) 2,875,000
____________
Total 8,100,625
_____________________________________________________________________________________________________________________________
Energy equipment & services (0.2%)
Energy Bio 84,000 (b) 892,500
_____________________________________________________________________________________________________________________________
Financial services (3.6%)
CMAC Investment 40,000 1,205,000
First Financial Management 150,000 8,868,750
Mark Centers Trust 150,000 2,231,250
McArthur/Glen Realty 33,000 907,500
Paychex 90,000 3,600,000
Tanger Factory Outlet Centers 90,000 2,632,500
____________
Total 19,445,000
_____________________________________________________________________________________________________________________________
Food (0.2%)
Performance Food Group 56,000 (b) 1,176,000
_____________________________________________________________________________________________________________________________
Health care (12.4%)
Affymax NV 75,000 (b) 1,293,750
Amgen 95,000 (b) 4,631,250
Amylin Pharmaceuticals 127,500 (b) 1,832,812
Biogen 27,800 (b) 1,449,075
Chiron 60,000 (b) 5,707,500
Forest Laboratories 165,000 (b) 8,394,375
Genentech 58,000 (b) 2,921,750
Gensia Pharmaceuticals 112,000 (b) 2,842,000
Haemonetics 190,000 (b) 4,417,500
Heart Technology 131,400 (b) 3,022,200
IDEXX Laboratories 250,000 (b) 6,750,000
I-STAT 109,000 (b) 1,635,000
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
Investments in securities
<TABLE>
<CAPTION>
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Mitek Surgical Products 72,100 (b) $ 1,243,725
Molecular Dynamics 140,000 (b) 1,855,000
PLC Systems Unit 250,000 (b) 1,562,500
Sofamor/Danek Group 120,000 (b,c) 4,260,000
Stryker 69,700 2,439,500
U.S. Surgical 30,000 956,250
Ventritex 120,000 (b) 4,770,000
Viagene 54,600 (b) 546,000
Zoll Medical 120,000 (b,c) 4,320,000
____________
Total 66,850,187
_____________________________________________________________________________________________________________________________
Health care services (4.2%)
Anesta 60,000 (b) 765,000
HBO 350,000 16,843,750
PhyCor 55,000 (b) 1,856,250
United Healthcare 40,000 3,420,000
____________
Total 22,885,000
_____________________________________________________________________________________________________________________________
Industrial equipment & services (0.9%)
Calgon Carbon 150,000 1,893,750
Ensys Environmental 65,000 (b) 601,250
KENETECH 80,000 (b) 2,080,000
Purus 7,600 (b) 93,100
____________
Total 4,668,100
_____________________________________________________________________________________________________________________________
Industrial transportation (0.5%)
Amer Freightways 30,400 (b) 539,600
Heartland Express 16,600 (b) 510,450
Landair Services 40,500 (b) 901,125
M.S. Carriers 19,600 (b) 485,100
____________
Total 2,436,275
_____________________________________________________________________________________________________________________________
Insurance (0.7%)
Equitable of Iowa 40,000 1,165,000
Mercury General 90,000 2,700,000
____________
Total 3,865,000
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
Investments in securities
<TABLE>
<CAPTION>
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Leisure time & entertainment (2.2%)
Aldila 75,700 (b) $ 2,479,175
Bally Gaming Intl 130,000 (b) 1,820,000
Iwerks Entertainment 20,000 (b) 510,000
President Riverboat 110,000 (b) 2,007,500
Rio Hotel & Casino 210,000 (b) 3,202,500
Savoy Pictures Entertainment 89,400 (b) 1,631,550
____________
Total 11,650,725
_____________________________________________________________________________________________________________________________
Media (4.3%)
Catalina Marketing 60,000 (b) 3,195,000
Comcast Cl A 130,000 4,078,750
Information Resources 175,000 (b) 6,562,500
Multimedia 165,000 (b) 5,775,000
RHI Entertainment 23,400 (b) 704,925
University Patents 200,000 (b) 1,275,000
Viacom Cl B 50,000 (b) 1,737,500
____________
Total 23,328,675
_____________________________________________________________________________________________________________________________
Metals (0.2%)
Molten Metal Technology 50,000 (b) 1,262,500
_____________________________________________________________________________________________________________________________
Restaurants & lodging (5.9%)
Brinker Intl 190,000 (b) 8,027,500
Buffets 200,000 (b) 5,300,000
Cracker Barrel Old Country 175,000 4,856,250
Intl Game Technology 180,000 5,310,000
Outback Steakhouse 90,000 (b) 3,555,000
Shoney's 201,800 (b) 4,641,400
____________
Total 31,690,150
_____________________________________________________________________________________________________________________________
Retail (7.7%)
Bombay 180,000 (b) 4,927,500
Cardinal Distribution 124,200 5,464,800
Consolidated Stores 120,000 (b) 2,175,000
CUC Intl 105,000 (b) 3,360,000
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
Investments in securities
<TABLE>
<CAPTION>
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Common stocks (continued)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Gap 90,000 $ 3,802,500
Home Shopping Network 85,000 (b) 1,211,250
Kohl's 125,000 (b) 6,046,875
Mens Wearhouse 60,000 (b) 1,620,000
Musicland Stores 150,000 (b) 2,831,250
PETsMART 78,000 (b) 2,632,500
Phillips-Van Heusen 220,000 7,782,500
____________
Total 41,854,175
_____________________________________________________________________________________________________________________________
Utilities - Gas (0.5%)
Enron 85,000 2,794,375
_____________________________________________________________________________________________________________________________
Utilities - Telephone (1.5%)
ALC Communications 180,000 (b) 5,760,000
LCI Intl 50,000 (b) 1,862,500
U.S. Long Distance 65,400 (b) 727,575
____________
Total 8,350,075
_____________________________________________________________________________________________________________________________
Foreign (4.5%)(e)
Cifra ADR Series B 1,000,000 3,462,000
Danka Business Systems ADR 50,000 2,062,500
Grupo Situr 200,000 (d) 6,000,000
Hornbach 1,012 (d) 633,771
Renaissance Energy 27,100 (b,d) 612,545
Renaissance Energy 53,000 (b) 1,197,966
Soft Image 120,000 (b) 1,860,000
Tarragon Oil & Gas 130,000 1,591,637
Television Broadcasts 1,000,000 4,207,000
Vodafone Group ADR 35,000 3,097,500
____________
Total 24,724,919
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $354,776,151) $494,514,443
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
Investments in securities
<TABLE>
<CAPTION>
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Bond (0.7%)
_____________________________________________________________________________________________________________________________
Issuer and Principal Value(a)
coupon rate amount
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Intl Game Technology
5.50% Cv Deb 2001 $1,000,000 $ 3,890,000
_____________________________________________________________________________________________________________________________
Total bond
(Cost: $838,750) $ 3,890,000
_____________________________________________________________________________________________________________________________
<CAPTION>
Preferred stocks & other (1.0%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Centocor
Warrants 25,000 $ 203,125
Hornbach
Non-Voting Pfd 2,700 (e) 2,714,737
SAP
Preferred 2,500 2,556,735
_____________________________________________________________________________________________________________________________
Total preferred stocks & other
(Cost: $3,204,530) $ 5,474,597
_____________________________________________________________________________________________________________________________
<CAPTION>
Short-term securities (7.3%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (0.3%)
Federal Home Loan
Mtge Corp Disc Note
02-14-94 3.00% $1,600,000 $ 1,598,272
_____________________________________________________________________________________________________________________________
Commercial paper (6.7%)
A.I. Credit
02-23-94 3.04 700,000 698,704
Amer General Investment
03-21-94 3.10 5,300,000 (f) 5,278,235
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
Investments in securities
<TABLE>
<CAPTION>
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Short-term securities (continued)
_____________________________________________________________________________________________________________________________
Annualized Amount Value(a)
yield on payable at
date of maturity
Issuer purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
Cafco
02-07-94 3.19% $1,200,000 $ 1,199,364
Ciesco LP
02-11-94 3.25 1,800,000 1,798,385
03-10-94 3.17 1,200,000 1,195,929
Coca-Cola
03-22-94 3.08 3,300,000 3,285,113
Dun & Bradstreet
02-08-94 3.08 5,100,000 5,096,956
Fleet Funding
02-25-94 3.09 2,700,000 (f) 2,694,456
03-02-94 3.08 1,700,000 (f) 1,695,796
Heinz (H.J.)
03-02-94 3.17 700,000 698,224
Mobil Australia Finance
02-10-94 3.09 6,100,000 (f) 6,095,303
Pacific Energy Fuels
02-25-94 3.12 900,000 898,134
Reed Publishing (USA)
03-17-94 3.09 1,400,000 (f) 1,394,366
St. Paul Companies
02-23-94 3.07 4,000,000 (f) 3,992,520
____________
Total 36,021,485
_____________________________________________________________________________________________________________________________
Letter of credit (0.3%)
First Natl Chicago-
Commonwealth Fuel
02-03-94 3.31 1,700,000 1,699,688
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $39,321,154) $ 39,319,445
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $398,140,585)(g) $543,198,485
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
/TABLE
<PAGE>
PAGE
Investments in securities
<TABLE>
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1994 (Unaudited) investments compared to net assets)
_____________________________________________________________________________________________________________________________
Notes to investments in securities
_____________________________________________________________________________________________________________________________
(a) Securities are valued by procedures described in Note 1 to the financial statements.
(b) Presently non-income producing.
(c) Security is partially or fully on loan. See Note 5 to the financial statements.
(d) 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 of directors.
(e) Foreign security values are stated in U.S. dollars.
(f) Commercial paper sold within terms of a private placement memorandum, exempt from registration under
Section 4(2) of the Securities Act of 1933, as amended, and may be sold only to dealers in that
program or other "accredited investors". This security has been determined to be liquid under
guidelines established by the board of directors.
(g) At Jan. 31, 1994, the cost of securities for federal income tax purposes was approximately $398,140,000
and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
<CAPTION>
<S> <C>
Unrealized appreciation $163,283,000
Unrealized depreciation (18,225,000)
_____________________________________________________________________________________________________________________________
Net unrealized appreciation $145,058,000
_____________________________________________________________________________________________________________________________
/TABLE
<PAGE>
PAGE
Directors and officers
Directors and officers of the fund
President and William R. Pearce
interested director President of all funds in the IDS MUTUAL FUND
GROUP.
_______________________________________________________________________
Independent Lynne V. Cheney
directors Distinguished fellow, American Enterprise
Institute for Public Policy Research.
Robert F. Froehike
Former president of all funds in the IDS
MUTUAL FUND GROUP.
Donald M. Kendall
Former chairman and chief executive officer,
PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and inter-
national affairs. The Reader's Digest
Association, Inc.
Lewis W. Lehr
Former chairman and chief executive officer,
Minnesota Mining and Manufacturing Company
(3M).
Edson W. Spencer
Former chairman and chief executive officer,
Honeywell, Inc.
Wheelock Whitney
Chairman, Whitney Management Company.
_______________________________________________________________________
Interested director Anne P. Jones
who is a partner in Partner, law firm of Sutherland, Asbill &
a law firm that has Brennan.
represented an IDS
subsidiary
<PAGE>
PAGE
Directors and officers (continued)
Directors and officers of the fund
Interested directors William H. Dudley
who are officers Executive vice president, IDS.
and/or employees of
IDS David R. Hubers
President and chief executive officer, IDS.
John R. Thomas
Senior vice president, IDS.
_______________________________________________________________________
Other officer Leslie L. Ogg
Vice president of all funds in the IDS Mutual
FUND GROUP and general counsel and treasurer
of the publicly offered funds.
<PAGE>
PAGE
IDS mutual funds
Cash equivalent investments
These money market funds have three main goals: conservation of capital,
constant liquidity and the highest possible current income consistent
with these objectives. Very limited risk.
IDS Cash Management Fund
Invests in such money market securities as high quality commerical 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
Income investments
The funds in this group invest their assets primarily in corporate bonds
of government securities to seek interest income. Secondary objective is
capital growth. Risk varies by bond quality.
IDS Global Bond Fund
Invests primarily in debt securities of U.S. and foreign issuers to seek
high total return through income and growth of capital.
(icon of) globe
IDS Extra Income Fund
Invests mainly in long-term, high-yielding corporate fixed-income
securities in the lower rated, higher risk bond categories to seek
high current income. Secondary objective is capital growth.
(icon of) cornucopia
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated,
lower risk bond categories, or the equivalent, and in government bonds.
(icon of) greek column<PAGE>
PAGE
IDS mutual funds (continued)
IDS Strategy, Income Fund
Invests primarily in corporate and government bonds to seek high current
income while conserving capital. Also may seek capital appreciation when
consistent with its primary goals.
(icon of) chess piece
IDS Selective Fund
Invests in high quality corporate bonds and other high rated debt
instruments including government securities and short-term investments.
Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests primarily in securities issued or guaranteed as to the timely
payment of principal and interest by the U.S. government, its agencies
and instrumentalities. Seeks a high level of current income and safety
of principal consistent with its type of investments.
(icon of) federal building
IDS Strategy, Short-Term Income Fund
Invests primarily in short-term and intermediate-term bonds and notes
to seek a high level of current income.
(icon of) chess piece
Tax-exempt income investments
These funds provide tax-free income by investing in municipal bonds.
The income is generally free from federal income tax. Risk varies by
bond quality.
IDS High Yield Tax-Exempt Fund
Invests primarily in medium- and lower-quality municipal bonds and
notes. Lower-quality securities generally involve greater risk of
principal and income.
(icon of) shield with basket of apples enclosed
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities to
provide income to residents of each respective state that is exempt from
federal, state and local income taxes. (New York is the only state that
is exempt at the local level.)
(icon of) shield with U.S. enclosed<PAGE>
PAGE
IDS mutual funds (continued)
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 eagle head
Growth and income investments
These funds focus on securities of medium to large, well-established
companies that offer long-term growth of capital and reasonable income
from dividens and interest. Moderate risk.
IDS International Fund
Invest 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 Strategy, Worldwide Growth Fund
Invests primarily in common stocks of companies throughout the world
that offer potential for superior growth. Holdings may range from
small- to large-capitalization stocks, including those of companies
involved in areas of rapid economic growth.
(icon of) chess piece
IDS Managed Retirement Fund
Invests in a combination common stocks, fixed-income investments and
money market securities to seek a maximum total return through a
combination of growth of capital and current income.
(icon of) bird in a nest<PAGE>
PAGE
IDS mutual funds (continued)
IDS Equity Plus Fund
Invests primarily in a combination of moderate growth stocks, higher-
yielding equities and bonds. Seeks growth of capital and income.
(icon of) three apple trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by IDS research analysts as the best
from each industry represented on the index. Offers potential for
long-term growth as well as dividend income.
(icon of) ribbon
IDS Stock Fund
Invests in common stock of companies representing many sectors of the
economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Strategy, Equity Fund
Invests primarily in undervalued common stocks that offer potential for
growth of capital and income.
(icon of) chess piece
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 electrical cord
IDS Diversified Equity Income Fund
Invests primarily in high-yielding common stocks to seek high current
income and, secondarily, to benefit from the growth potential offered
by stock investments.
(icon of) four puzzle pieces
IDS Mutual
Invests in a balance between common stocks and senior securities
(preferred stocks and bonds). Seeks a balance of growth of capital
and current income.
(icon of) scale of justice<PAGE>
PAGE
IDS mutual funds (continued)
Growth investments
Funds in this group seek capital growth, primarily from common stocks.
They are high risk mutual funds with a potential for high reward.
IDS Discovery Fund
Invests in small- and medium-size, growth-oriented companies emphasizing
technological innovation and productivity enhancement. Buys and holds
larger growth-oriented stocks.
(icon of) ship
IDS Growth Fund
Invests primarily in companies that have above-average potential for
long-term growth as a result of new management, marketing opportunities
or technological superiority.
(icon of) flower
IDS Strategy, Aggressive Equity Fund
Invests primarily in common stocks of companies that are selected for
their potential for above-average growth. Above-average means that their
growth potential is better, in the opinion of the portfolio's investment
manager, than the Standard & Poor's Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS New Dimensions Fund
Invests primarily in companies with significant growth potential due to
superiority in technology, marketing or management. The fund frequently
changes it 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
IDS Global Growth Fund
Invests in stocks of companies throughout the world that are positioned
to meet market needs in a changing world economy. These companies offer
above-average potential for long-term growth.
(icon of) world<PAGE>
PAGE
IDS mutual funds (continued)
Specialty growth investment
This fund aggressively seeks capital growth as a hedge against
inflation.
IDS Precious Metals Fund
Invests primarily in the securities of foreign or domestic companies
that explore for, mine and process or distribute gold and other precious
metals. This is the most aggressive and most speculative IDS mutal fund.
(icon of) cart of precious gems
For more complete information about any of these funds, including
charges and expenses, you can obtain a prospectus by contacting your
financial planner or writing to IDS Shareholder Service, P.O. Box 534,
Minneapolis, MN 55440-0534. Read it carefully before you invest or send
money.
<PAGE>
PAGE
Quick telephone reference
IDS Telephone Redemptions and exchanges, National/Minnesota:
Transaction Service dividend payments or 800-437-3133
reinvestments and automatic
payment arrangements Mpls/St. Paul area:
671-3800
IDS Shareholder Fund performance, objectives 612-671-3733
Service and account inquiries
TTY Service For the hearing impaired 800-846-4852
IDS Infoline Automated account information National/Minnesota:
(TouchTone phones only), 800-272-4445
including current fund prices
and performance, account Mpls./St. Paul area:
values and recent account 671-1630
transactions
Your IDS financial planner:
AN AMERICAN EXPRESS COMPANY
1894 IDS 1994
A CENTURY OF INVESTING IN THE FUTURE
IDS DISCOVERY FUND
IDS Tower 10
Minneapolis, MN 55440-0010
