PAGE
1996 semiannual report
IDS
Discovery
Fund
The goal of IDS Discovery
Fund, Inc. is long-term
growth of capital. The Fund
invests primarily in common stocks.
AMERICAN
EXPRESS
Financial
Advisors
Distributed by American Express Financial Advisors Inc.
<PAGE>
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Your piece
of the future
Glance through current business magazines 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 20
Board members and officers 24
IDS mutual funds 25
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To our shareholders
(picture of William R. Pearce)
William R. Pearce
President of the Fund
(picture of Kurt Winters)
Kurt Winters
Portfolio manager
From the president
If you're an experienced investor, you know that 1995 was an unusually
strong year for the U.S. financial markets. Perhaps just as important,
you also know that history shows that bull markets don't last forever.
Though they're often unpredictable, declines - whether they're brief or
long-lasting, moderate or substantial - are always a possibility.
That fact reinforces the need for investors to review periodically their
long-term goals and assess whether their investment program remains on
track to achieving them. Your quarterly investment statements are one
part of that monitoring process. The other is a meeting with your
American Express financial advisor. That becomes even more important if
there's a major change in your financial situation or in the financial
markets.
William R. Pearce
From the portfolio manager
The past six months were difficult for small-capitalization stocks,
especially those of the technology-related companies that comprised much
of IDS Discovery Fund's portfolio. As a result, the Fund realized a
slight loss for the August 1995 through January 1996 period, which marked
the first half of the Fund's fiscal year.
After turning in a spectacular, market-leading performance through the
summer of 1995, technology stocks began to lose ground in the fall,
highlighted by a sharp downturn in October. The drop was particularly
punishing for this Fund because of its substantial exposure to technology
stocks (more than a third of the portfolio at times).
"Small-caps" struggle to keep up with broad market
The Fund's performance also was tempered by its overall emphasis on
stocks of companies with small market capitalizations. (Market
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To our shareholders
capitalization is derived by multiplying the price of the stock by the
number of shares outstanding.) These "small-caps" not only lagged the
often-stellar performance of larger stocks throughout 1995, they tended
to fall farther when the market would occasionally stumble.
Fund performance was also affected by our investments in Russell 2000
futures contracts, a type of derivative security whose value is linked
to the value of that small-cap stock index. Overall, these contracts,
which represented about 10% of the portfolio's assets, gave us positive
results for the six months.
Increase in median
market capitalization
At the outset of the fiscal year last August, the median market cap of
stocks in the portfolio was about $400 million - at the low end of the
small-cap scale. When it became clear that stocks of that size were
struggling compared to their bigger brethren, we began selling some
stocks and reinvesting the proceeds in somewhat larger and more liquid
(easily traded) securities. While this strategy ultimately began to pay
off, in the process we were often forced to sell stocks at substantially
discounted prices due to a shortage of buyers.
This portfolio repositioning resulted in the median market cap of our
holdings climbing to about $600 million by the end of the period. From
this point, we intend to keep the portfolio's median market cap below
$1 billion. In the long run, the larger median market cap should lessen
the Fund's volatility.
As for the stock market, we look for a positive return again this year,
though nothing like the extraordinary gain in 1995. More important to us,
though, is positioning IDS Discovery Fund to take better advantage of the
long-term capital appreciation potential that stock investing has
historically offered. Much of that work has been accomplished, and we look
forward to reporting on the Fund's progress in the months and years ahead.
Kurt Winters
Class A
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1996 $10.19
July 31, 1995 $13.16
Decrease $ 2.97
Distributions
Aug. 1, 1995 - Jan. 31, 1996
From income $0.83
From capital gains $2.00
Total distributions $2.83
Total return* (1.3%)**
Class B
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1996 $10.13
July 31, 1995 $13.12
Decrease $ 2.99
Distributions
Aug. 1, 1995 - Jan. 31, 1996
From income $0.80
From capital gains $2.00
Total distributions $2.80
Total return* (1.7%)**
Class Y
6-month performance
(All figures per share)
Net asset value (NAV)
Jan. 31, 1996 $10.18
July 31, 1995 $13.17
Decrease $ 2.99
Distributions
Aug. 1, 1995 - Jan. 31, 1996
From income $0.85
From capital gains $2.00
Total distributions $2.85
Total return* (1.2%)**
*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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<TABLE>
<CAPTION>
IDS Discovery Fund, Inc.
Your Fund's ten largest holdings
(Pie chart)
The ten holdings listed here make up 19.87% of the Fund's net assets
____________________________________________________________________________________
Percent Value
(of Fund's net assets)(as of Jan. 31, 1996)
____________________________________________________________________________________
<S> <C> <C>
Caremark Intl 2.20% $15,946,875
Provides various health care products and services including
intravenous therapies, HIV/AIDS care, immune therapies and
prescription drug services
OfficeMax 2.14 15,525,000
The second-largest company in the office products industry. The
company currently operates 345 office superstores in 39 states.
MFS Communications 2.09 15,125,000
Owns and operates digital fiber optic telecommunication networks in
several metropolitan areas across the United States.
Sterling Software 2.04 14,812,500
A diversified computer software and service company that operates
three business lines: enterprise software; electronic commerce, also
referred to as electronic data interchange; and federal systems, which
provides contract programming for NASA and the like.
Mutual Risk Management 1.97 14,306,250
An international holding company. Through its subsidiaries, the
company provides risk management services related to the design and
implementation of alternative insurance programs for clients.
AccuStaff 1.90 13,800,000
A national provider of temporary staffing personnel to businesses,
professional and service organizations and government agencies.
American Re 1.90 13,731,250
An insurance holding company which, through its subsidiary, operates
in the porperty and casualty reinsurance industry.
Cincinnati Milacron 1.90 13,728,125
Manufacturer of plastics machinery, machine tools and industrial
consumable products for metalworking, as well as related computer
controls and software for factory automation.
Harnischfeger Industries 1.87 13,550,000
A holding company for subsidiaries involved in the worldwide
manufacture and distribution of paper machinery (Beloit Corporation),
surface mining and material handling equipment (Harnischfeger
Corporation), underground mining equipment (Joy Technologies Inc.)
and systems integration services (Syscon Corporation).
Boston Chicken 1.86 13,500,000
Operates and franchises food service stores that specialize in
complete meals. The company operates over 250 stores in 18 states.
</TABLE>
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<TABLE>
<CAPTION>
Financial statements
Statement of assets and liabilities
IDS Discovery Fund, Inc.
Jan. 31, 1996
_____________________________________________________________________________________________________________
Assets
_____________________________________________________________________________________________________________
(Unaudited)
<S> <C>
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated issuers
(identified cost $675,256,592) $720,510,352
Investments in securities of affiliated issuers
(identified cost $10,956,674) 12,525,000
Receivable for investment securities sold 7,585,789
Dividends and accrued interest receivable 1,571,063
_____________________________________________________________________________________________________________
Total assets 742,192,204
_____________________________________________________________________________________________________________
Liabilities
_____________________________________________________________________________________________________________
Disbursements in excess of cash on demand deposit 1,463,841
Payable for investment securities purchased 11,707,956
Accrued investment management services fee 24,109
Accrued distribution fee 879
Accrued service fee 6,429
Accrued transfer agency fee 7,650
Accrued administrative services fee 2,161
Other accrued expenses 310,571
Open option contracts written, at value
(premium received $3,436,661)(Note 6) 3,689,905
_____________________________________________________________________________________________________________
Total liabilities 17,213,501
_____________________________________________________________________________________________________________
Net assets applicable to outstanding capital stock $724,978,703
_____________________________________________________________________________________________________________
Represented by
_____________________________________________________________________________________________________________
Capital stock -- authorized 10,000,000,000 shares of $.01 par value $ 711,921
Additional paid-in capital 678,130,330
Undistributed net investment income 311,136
Accumulated net realized loss (Note 1) (2,571,298)
Unrealized appreciation of investments and on translation of
assets and liabilities in foreign currencies (Note 4) 48,396,614
_____________________________________________________________________________________________________________
Total -- representing net assets applicable to outstanding capital stock $724,978,703
_____________________________________________________________________________________________________________
Net assets applicable to outstanding shares: Class A $659,348,746
Class B $ 21,925,290
Class Y $ 43,704,667
Net asset value per share of outstanding capital stock: Class A shares 64,737,020 $ 10.19
Class B shares 2,163,806 $ 10.13
Class Y shares 4,291,288 $ 10.18
See accompanying notes to financial statements.<PAGE>
PAGE
Financial statements
Statement of operations
IDS Discovery Fund, Inc.
Six months ended Jan. 31, 1996
_____________________________________________________________________________________________________________
Investment income
_____________________________________________________________________________________________________________
(Unaudited)
Income:
Interest $ 4,904,574
Dividends 690,086
_____________________________________________________________________________________________________________
Total income 5,594,660
_____________________________________________________________________________________________________________
Expenses (Note 2):
Investment management services fee 1,933,822
Distribution fee - Class B 60,666
Transfer agency fee 719,897
Incremental transfer agency fee - Class B 1,800
Service fee
Class A 609,682
Class B 14,146
Administrative services fee 208,248
Compensation of board members 7,680
Compensation of officers 6,665
Custodian fees 173,168
Postage 110,046
Registration fees 155,676
Reports to shareholders 3,512
Audit fees 12,250
Administrative 736
Other 8,047
_____________________________________________________________________________________________________________
Total expenses 4,026,041
Earnings credits on cash balances (Note 2) (25,667)
_____________________________________________________________________________________________________________
Total net expenses 4,000,374
_____________________________________________________________________________________________________________
Investment income -- net 1,594,286
_____________________________________________________________________________________________________________
Realized and unrealized gain (loss) -- net
_____________________________________________________________________________________________________________
Net realized loss on security and foreign currency transactions (9,665,258)
Net realized gain on closed stock index futures contracts (Note 4) 15,511,650
Net realized gain on closed, exercised or expired option contracts written (Note 6) 4,978,292
_____________________________________________________________________________________________________________
Net realized gain on investments and foreign currency 10,824,684
Net change in unrealized appreciation or depreciation of investments and on translation
of assets and liabilities in foreign currencies (22,402,064)
_____________________________________________________________________________________________________________
Net loss on investments and foreign currency (11,577,380)
_____________________________________________________________________________________________________________
Net decrease in net assets resulting from operations $(9,983,094)
_____________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets
IDS Discovery Fund, Inc.
_____________________________________________________________________________________________________________
Operations and distributions Jan. 31, 1996 July 31, 1995
_____________________________________________________________________________________________________________
Six months ended Year ended
(Unaudited)
<S> <C> <S>
Investment income -- net $ 1,594,286 $ 3,967,370
Net realized gain on investments and foreign currency 10,824,684 142,003,421
Net change in unrealized appreciation or depreciation of investments
and on translation of assets and liabilities in foreign currencies (22,402,064) 17,500,050
_____________________________________________________________________________________________________________
Net increase (decrease) in net assets resulting from operations (9,983,094) 163,470,841
_____________________________________________________________________________________________________________
Distributions to shareholders from:
Net investment income
Class A (4,780,500) --
Class B (98,939) --
Class Y (369,986) --
Net realized gain
Class A (141,682,931) (1,459,261)
Class B (4,249,927) --
Class Y (9,128,279) --
_____________________________________________________________________________________________________________
Total distributions (160,310,562) (1,459,261)
_____________________________________________________________________________________________________________
Capital share transactions (Note 5)
_____________________________________________________________________________________________________________
Proceeds from sales
Class A shares (Note 2) 150,772,678 319,261,555
Class B shares 14,360,356 9,122,076
Class Y shares 12,742,086 41,198,971
Reinvestment of distributions at net asset value
Class A shares 146,657,220 1,450,495
Class B shares 4,276,433 --
Class Y shares 9,498,265 --
Payments for redemptions
Class A shares (211,866,139) (269,336,702)
Class B shares (Note 2) (2,211,005) (84,493)
Class Y shares (7,214,265) (7,973,466)
_______________________________________________________________________________________________________________
Increase in net assets from capital share transactions 117,015,629 93,638,436
_______________________________________________________________________________________________________________
Total increase (decrease) in net assets (53,278,027) 255,650,016
Net assets at beginning of period 778,256,730 522,606,714
_______________________________________________________________________________________________________________
Net assets at end of period
(including undistributed net investment income of
$311,136 and $3,966,275) $724,978,703 $778,256,730
_______________________________________________________________________________________________________________
See accompanying notes to financial statements.
</TABLE>
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Notes to financial statements
IDS Discovery Fund, Inc.
(Unaudited as to Jan. 31, 1996)
______________________________________________________________________________
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. The Fund invests
primarily in common stocks of small- and medium-size growth companies. The
Fund offers Class A, Class B and Class Y shares. Class A shares are sold with
a front-end sales charge. Class B shares, which the Fund began offering on
March 20, 1995, may be subject to a contingent deferred sales charge. Class B
shares automatically convert to Class A after eight years. Class Y shares,
which the Fund also began offering on March 20, 1995, have no sales charge and
are offered only to qualifying institutional investors.
All classes of shares have identical voting, dividend, liquidation and other
rights, and the same terms and conditions, except that the level of
distribution fee, transfer agency fee and service fee (class specific
expenses) differs among classes. Income, expenses (other than class specific
expenses) and realized and unrealized gains or losses on investments are
allocated to each class of shares based upon its relative net assets.
Significant accounting policies followed by the Fund are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
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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. 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.
Option transactions
In order to produce incremental earnings, protect gains, and facilitate buying
and selling of securities for investment purposes, the Fund may buy or write
options traded on any U.S. or foreign exchange or in the over-the-counter
market where the completion of the obligation is dependent upon the credit
standing of the other party. The Fund also may buy and sell put and call
options and write covered call options on portfolio securities and may write
cash-secured put options. The risk in writing a call option is that the Fund
gives up the opportunity of profit if the market price of the security
increases. The risk in writing a put option is that the Fund may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Fund pays a premium whether or not the
option is exercised. The Fund also has the additional risk of not being able
to enter into a closing transaction if a liquid secondary market does not
exist.
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Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Fund
will realize a gain or loss upon expiration or closing of the option
transaction. When an option is exercised, the proceeds on sales for a written
call option, the purchase cost for a written put option or the cost of a
security for a purchased put or call option is adjusted by the amount of
premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Fund may buy and sell futures contracts traded on any U.S. or foreign
exchange. The Fund also may buy or write put and call options on these
contracts. Risks of entering into futures contracts and related options
include the possibility that there may be an illiquid market and that a change
in the value of the contract or option may not correlate with changes in the
value of the underlying security.
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.
<PAGE>
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Foreign currency translations and
foreign currency contracts
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange.
Foreign currency amounts related to the purchase or sale of securities and
income and expenses are translated at the exchange rate on the transaction
date. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses. In the statement of operations, net realized gains or losses from
foreign currency transactions may arise from sales of foreign currency, closed
forward contracts, exchange gains or losses realized between the trade date
and settlement dates on securities transactions, and other translation gains
or losses on dividends, interest income and foreign withholding taxes.
The Fund may enter into forward foreign currency exchange contracts for
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.
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Federal taxes
Since the Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of the deferral of
losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes and losses
deferred due to "wash sale" transactions. The character of distributions made
during the year from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax purposes. Also,
due to the timing of dividend distributions, the fiscal year in which amounts
are distributed may differ from the year that the income or realized gains
(losses) were recorded by the Fund.
Dividends to shareholders
An annual dividend declared and paid 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.
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_____________________________________________________________________________
2. Expenses and sales charges
Effective March 20, 1995, when the Fund began offering multiple classes of
shares, the Fund entered into agreements with American Express Financial
Corporation (AEFC) for managing its portfolio, providing administrative
services and serving as transfer agent as follows: Under its Investment
Management Services Agreement, AEFC determines which securities will be
purchased, held or sold. The management fee is a percentage of the Fund's
daily net assets in reducing percentages from 0.64% to 0.515% annually. The
fee is adjusted upward or downward by a performance incentive adjustment based
on the Fund's average daily net assets over a rolling 12-month period as
measured against the change in the Lipper 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
$397,313 for the six months ended Jan. 31, 1996.
Under an Administrative Services Agreement, the Fund pays AEFC 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.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder
accounts and records. The Fund pays AEFC an annual fee per shareholder account
for this service as follows:
o Class A $15
o Class B $16
o Class Y $15
Also effective March 20, 1995, the Fund entered into agreements with American
Express Financial Advisors Inc. for distribution and shareholder servicing-
related services as follows: Under a Plan and Agreement of Distribution, the
Fund pays a distribution fee at an annual rate of 0.75% of the Fund's average
daily net assets attributable to Class B shares for distribution-related
services.
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Under a Shareholder Service Agreement, the Fund pays a fee for service
provided to shareholders by financial advisors and other servicing agents.
The fee is calculated at a rate of 0.175% of the Fund's average daily net
assets attributable to Class A and Class B shares.
AEFC will assume and pay any expenses (except taxes and brokerage commissions)
that exceed the most restrictive applicable state expense limitation.
Sales charges received by American Express Financial Advisors Inc. for
distributing fund shares were $840,943 for Class A and $3,089 for Class B for
the six months ended Jan. 31, 1996. The Fund also pays custodian fees to
American Express Trust Company, an affiliate of AEFC.
During the six months ended Jan. 31, 1996, the Fund's custodian and transfer
agency fees were reduced by $25,667 as a result of earnings credits from
overnight cash balances.
The Fund has a retirement plan for its independent board members. Upon
retirement, board members receive monthly payments equal to one-half of the
retainer fee for as many months as they served as board members 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 board members serve on
the board. The retirement plan expense amounted to $4,226 for the six months
ended Jan. 31, 1996.
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______________________________________________________________________________
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $694,024,862 and $567,884,585, respectively, for the
six months ended Jan. 31, 1996. Realized gains and losses are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with AEFC were $87,935 for
the six months ended Jan. 31, 1996.
Income from securities leaning amounted to $13,526 for the six months ended
Jan. 31, 1996. 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. Stock index futures contracts
Investments in securities at Jan. 31, 1996, included securities valued at
$5,605,000 that were pledged as collateral to cover initial margin deposits on
purchase contracts. The market value of the open contracts at Jan. 31, 1996
was $61,747,000 (8.5% of the Fund's net assets as of Jan. 31, 1996) with a
$647,378 unrealized gain. To cover these long futures positions, the Fund
maintains short-term securities amounts at least equal to the market value of
the outstanding contracts. Included in the open contracts are OTC Emerging
Market Index futures entered into in order to gain exposure to the global
market. The indexes represent a basket of securities primarily from Asia and
South America. The risks with these contracts are that the foreign markets
will under perform the U.S. market or the other party will be unable to
complete the obligation of the contract upon close.
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5. Capital share transactions
Transactions in shares of capital stock for the periods indicated are as
follows:
<TABLE>
<CAPTION>
________________________________________________________________________
Six months ended Jan. 31, 1996
Class A Class B Class Y
_________________________________________________________________________
<S> <C> <C> <C>
Sold 12,709,951 1,183,358 1,047,140
Issued for reinvested 14,113,870 417,865 924,046
distributions
Redeemed (17,555,205) (193,825) (608,430)
_________________________________________________________________________
Net increase 9,268,616 1,407,398 1,362,756
_________________________________________________________________________
_________________________________________________________________________
Year ended July 31, 1995
Class A Class B* Class Y*
_________________________________________________________________________
Sold 28,277,355 763,482 3,603,336
Issued for reinvested 130,627 -- --
distributions
Redeemed (23,508,861) (7,074) (674,804)
_________________________________________________________________________
Net increase 4,899,121 756,408 2,928,532
_________________________________________________________________________
*Inception date was March 20, 1995.
______________________________________________________________________________
</TABLE>
6. Option contracts written
The number of contracts and premium amounts associated with options contracts
written is as follow:
<TABLE>
<CAPTION>
Six months ended Jan. 31, 1996
________________________________________________
Puts Calls
________________________________________________
Contracts Premium Contracts Premium
_______________________________________________________________________
<S> <C> <C> <C> <C>
Balance July 31, 1995 7,750 $ 446,734 2,650 $ 247,380
Opened 73,339 7,653,548 71,960 9,152,918
Closed (45,175) (4,589,924) (32,805) (4,256,245)
Exercised (7,755) (1,170,695) (6,869) (1,116,207)
Expired (22,750) (1,606,582) (18,496) (1,324,266)
_______________________________________________________________________
Balance Jan. 31, 1996 5,409 $ 733,081 16,440 $ 2,703,580
_________________________________________________________________________
______________________________________________________________________________
</TABLE>
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<TABLE>
<CAPTION>
7. Financial highlights
The table below shows certain important financial
information for evaluating the Fund's results.
Fiscal period ended July 31,
Per share income and capital changes*
Class A
1996** 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $13.16 $10.33 $11.37 $9.87 $9.58 $9.05
beginning of period
Income from investment operations:
Net investment income .03 .07 (.04) (.02) (.01) .04
(loss)
Net gains (losses) (.17) 2.79 (.52) 1.75 1.01 1.03
(both realized
and unrealized)
Total from investment (.14) 2.86 (.56) 1.73 1.00 1.07
operations
Less distributions:
Dividends from net (.09) -- -- -- (.02) (.11)
investment income
Distributions from (2.74) (.03) (.48) (.23) (.69) (.43)
realized gains
Total distributions (2.83) (.03) (.48) (.23) (.71) (.54)
Net asset value, $10.19 $13.16 $10.33 $11.37 $9.87 $9.58
end of period
Ratios/supplemental data
Class A
1996** 1995 1994 1993 1992 1991
Net assets, end of period $659 $730 $523 $445 $293 $207
(in millions)
Ratio of expenses to 1.06%+ .99% .97% 1.03% 1.04% .98%
average daily net assets
Ratio of net income .43%+ .59% (.39%) (.17%) (.11%) .40%
to average daily net assets
Portfolio turnover rate 94% 192% 67% 76% 90% 95%
(excluding short-term
securities)
Total return++ (1.3%) 27.6% (5.5%) 17.5% 9.9% 13.4%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Six months ended Jan. 31, 1996 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
</TABLE> <PAGE>
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<TABLE>
<CAPTION>
Financial highlights
Fiscal period ended July 31,
Per share income and capital changes*
Class B Class Y
1996*** 1995** 1996*** 1995**
<S> <C> <C> <C> <C>
Net asset value, $13.12 $11.31 $13.17 $11.31
beginning of period
Income from investment operations:
Net investment income (.03) .01 .03 .06
(loss)
Net gains (both realized (.16) 1.80 (.17) 1.80
and unrealized)
Total from investment (.19) 1.81 (.14) 1.86
operations
Less distributions:
Dividends from net (.06) -- (.11) --
investment income
Distributions from (2.74) -- (2.74) --
realized gains
Total distributions (2.80) -- (2.85) --
Net asset value, $10.13 $13.12 $10.18 $13.17
end of period
Ratios/supplemental data
Class B Class Y
1996*** 1995** 1996*** 1995**
Net assets, end of period $22 $10 $44 $39
(in millions)
Ratio of expenses to 1.83%+ 1.95%+ .89%+ .93%+
average daily net assets
Ratio of net income (.36%)+ .44%+ .59%+ 1.51%+
(loss) to average daily
net assets
Portfolio turnover rate 94% 192% 94% 192%
(excluding short-term
securities)
Total return++ (1.7%) 16.0% (1.2%) 16.4%
*For a share outstanding throughout the period. Rounded to the nearest cent.
**Inception date was March 20, 1995 for Class B and Class Y.
***Six months ended Jan. 31, 1996 (Unaudited).
+Adjusted to an annual basis.
++Total return does not reflect payment of a sales charge.
/TABLE
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<TABLE>
<CAPTION>
Investments in securities
IDS Discovery Fund, Inc. (Percentages represent value of
Jan. 31, 1996 (Unaudited) investments compared to net assets)
Investments in securities of unaffiliated issuers
_____________________________________________________________________________________________________________________________
Common stocks (76.6%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Automotive & related (0.8%)
Superior Industries Intl 225,000 $ 5,512,500
_____________________________________________________________________________________________________________________________
Banks and savings & loans (0.8%)
Roosevelt Financial 350,000 6,081,250
_____________________________________________________________________________________________________________________________
Communications equipment (2.8%)
PairGain Technologies 150,000 (b,c) 7,087,500
StrataCom 174,000 (b,c) 13,050,000
____________
Total 20,137,500
_____________________________________________________________________________________________________________________________
Computers & office equipment (16.3%)
Exabyte 450,000 (b,c) 6,075,000
FileNet 100,000 (b,c) 5,550,000
Landmark Graphics 275,000 (b) 5,706,250
Manugistics Group 241,000 (b) 2,441,138
Mylex 400,000 (b) 8,150,000
Network General 200,000 (b) 8,000,000
Parametric Technology 50,000 (b) 3,237,500
PeopleSoft 200,000 (b,c) 9,500,000
PLATINUM Technology 450,000 (b) 6,103,125
Shiva 100,000 (b) 7,175,000
Sterling Software 250,000 (b,c) 14,812,500
Storemedia 225,000 (b) 6,581,250
Synopsys 225,000 (b) 6,581,250
System Software 300,000 (c) 6,768,750
Tech Data 925,000 (b) 12,603,125
3Com 200,000 (b) 9,175,000
____________
Total 118,459,888
_____________________________________________________________________________________________________________________________
Electronics (10.0%)
Credence Systems 300,000 (b,c) 7,387,500
Elsag Bailey Process Auto N.V. 300,000 (b,d) 6,412,500
Fusion Systems 325,000 (b,c) 8,125,000
Lattice Semiconductor 250,000 (b) 8,187,500
Level One Communications 350,000 (b) 7,700,000
Methode Electronics Cl A 450,000 6,412,500
Microchip Technology 200,000 (b,c) 6,650,000
Symbol Technologies 200,000 (b) 6,675,000
Tencor Instruments 300,000 (b) 6,918,750
Zilog 225,000 (b) 8,184,375
____________
Total 72,653,125
_____________________________________________________________________________________________________________________________
See accompanying notes to investments in securities.
Energy (4.5%)
Devon Energy 250,000 6,156,250
Nuevo Energy 275,000 (b) 6,600,000
Parker & Parsley Petroleum 300,000 6,412,500
Pogo Producing 250,000 7,218,750
United Meridian 375,000 (b) 6,328,125
____________
Total 32,715,625
_____________________________________________________________________________________________________________________________
Energy equipment & services (1.7%)
Input/Output 250,000 (b) 6,062,500
Smith Intl 275,000 6,462,500
____________
Total 12,525,000
_____________________________________________________________________________________________________________________________
Financial services (1.6%)
Aames Financial 175,000 6,431,250
FINOVA Group 100,000 5,050,000
____________
Total 11,481,250
_____________________________________________________________________________________________________________________________
Health care (1.7%)
Sybron Intl 275,000 (b) 6,668,750
Ventritex 325,000 (b) 5,565,625
____________
Total 12,234,375
_____________________________________________________________________________________________________________________________
Health care services (10.1%)
American Oncology Resources 125,000 (b) 5,906,250
Caremark Intl 675,000 15,946,875
Community Health Systems 350,000 (b) 13,475,000
Foundation Health 275,000 (b) 11,893,750
Genesis Health Ventures 150,000 (b) 6,318,750
Medaphis 175,000 (b) 7,000,000
Mid Atlantic Medical Services 600,000 (b,h) 12,450,000
____________
Total 72,990,625
_____________________________________________________________________________________________________________________________
Industrial equipment & services (8.0%)
Cincinnati Milacron 575,000 (h) 13,728,125
Greenfield Industries 200,000 5,700,000
Harnischfeger Industries 400,000 13,550,000
Measurex 200,000 5,925,000
United Waste Systems 150,000 (b) 6,468,750
Wolverine Tube 350,000 (b) 12,468,750
____________
Total 57,840,625
_____________________________________________________________________________________________________________________________
Industrial transportation (1.6%)
Fritz Companies 175,000 (b) 6,135,937
Landstar System 234,100 (b) 5,852,500
____________
Total 11,988,437
_____________________________________________________________________________________________________________________________
Insurance (5.1%)
ACE Limited 67,300 2,969,613
American Re 325,000 13,731,250
HCC Insurance Holdings 150,000 (b) 7,350,000
PXRE 250,000 6,562,500
Risk Capital Holdings 300,000 (b) 6,112,500
____________
Total 36,725,863
_____________________________________________________________________________________________________________________________
Metals (1.7%)
IMCO Recycling 300,000 6,300,000
Stillwater Mining 300,000 (b) 6,187,500
____________
Total 12,487,500
_____________________________________________________________________________________________________________________________
Multi-industry (1.9%)
AccuStaff 300,000 (b) 13,800,000
_____________________________________________________________________________________________________________________________
Paper & packaging (0.9%)
Sealed Air 225,000 (b) 6,609,375
_____________________________________________________________________________________________________________________________
Restaurants & lodging (1.0%)
Red Lion Hotels 375,000 (b) 7,078,125
_____________________________________________________________________________________________________________________________
Retail (3.0%)
Gymboree 375,000 (b) 6,281,250
OfficeMax 675,000 (b) 15,525,000
____________
Total 21,806,250
_____________________________________________________________________________________________________________________________
Utilities - telephone (3.1%)
Intermedia Communications of Florida 450,000 (b) 7,200,000
MFS Communications 250,000 (b) 15,125,000
____________
Total 22,325,000
_____________________________________________________________________________________________________________________________
Total common stocks
(Cost: $513,642,343) $555,452,313
_____________________________________________________________________________________________________________________________
Bonds (7.6%)
_____________________________________________________________________________________________________________________________
Issuer and Principal Value(a)
coupon rate amount
____________________________________________________________________________________________________________________________
Boston Chicken
Zero Coupon Cv with attached put
6.64% 2015 $45,000,000 (i) $13,500,000
Career Horizons
7.00% Cv 2002 5,000,000 (e) 6,325,000
Mutual Risk Management
Zero Coupon Cv with attached put
7.03% 2015 30,000,000 (e,i) 14,306,250
Office Depot
Zero Coupon Cv with attached put
4.38% 2008 22,500,000 (i) 13,050,000
Sanmina
5.50% Cv 2002 7,500,000 (e) 7,910,000
_____________________________________________________________________________________________________________________________
Total bonds
(Cost: $51,603,951) $55,091,250
____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Options purchased (--)
_____________________________________________________________________________________________________________________________
Issuer Number of Exercise Expiration Value(a)
contracts price date
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Call
Office Depot 2,000 $25 April 1996 $62,500
(Cost: $104,000)
_____________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Short-term securities (15.2%)
_____________________________________________________________________________________________________________________________
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
_____________________________________________________________________________________________________________________________
<S> <C> <C> <C>
U.S. government agency (1.4%)
Federal Farm Credit
Disc Note 5.27% $ 9,800,000 $ 9,771,417
_____________________________________________________________________________________________________________________________
Certificates of deposit (1.7%)
Nations Bank
02-02-96 5.52 5,300,000 5,299,999
NBD Bank
02-02-96 5.52 12,300,000 7,000,000
_____________
Total 12,299,999
_____________________________________________________________________________________________________________________________
Commercial paper (12.1%)
Albertson's
02-22-96 5.48 4,600,000 4,585,376
Allegheny Generating
02-15-96 5.50 5,000,000 4,989,344
American General
02-08-96 5.74 2,700,000 2,697,013
Cargill
02-05-96 5.53 5,000,000 (f) 4,996,944
02-07-96 5.50 3,500,000 3,496,803
Commerzbank US Finance
02-20-96 5.51 5,200,000 5,184,961
Fleet Funding
02-14-96 5.50 5,970,000 (f) 5,958,208
02-21-96 5.50 7,500,000 (f) 7,477,208
Household Finance
02-22-96 5.50 6,500,000 6,479,298
Lincoln Natl
02-13-96 5.50 4,700,000 (f) 4,691,430
Metlife Funding
02-16-96 5.50 10,000,000 9,977,208
Mobil Australia Finance (Delaware)
02-29-96 5.45 2,000,000 (f) 1,991,569
Northern States Power
02-28-96 5.49 2,500,000 2,489,781
Siemens
08-17-95 5.49 4,700,000 4,679,366
Societe Generale North Amer
08-25-95 5.72 4,900,000 4,877,265
Toyota Motor Credit
02-27-96 5.44 3,400,000 3,386,715
Transamerica Finance
02-12-96 5.51 4,300,000 4,292,800
02-26-96 5.50 900,000 896,581
USL Capital
08-24-95 5.51 4,700,000 4,685,003
_____________
Total 87,832,873
_____________________________________________________________________________________________________________________________
Total short-term securities
(Cost: $109,906,298) $109,904,289
_____________________________________________________________________________________________________________________________
Total investments in securities of unaffiliated issuers
(Cost: $675,256,592) $720,510,352
_____________________________________________________________________________________________________________________________
</TABLE>
<TABLE>
<CAPTION>
Investments in securities of affiliated issuers (g)
_____________________________________________________________________________________________________________________________
Common stocks (1.7%)
_____________________________________________________________________________________________________________________________
Issuer Shares Value(a)
_____________________________________________________________________________________________________________________________
<S> <C> <C>
Renaissance Solutions 300,000 $ 7,275,000
Sterling Electronics 350,000 5,250,000
_____________________________________________________________________________________________________________________________
Total investments in securities of affiliated issuers
(Cost: $10,956,674) $ 12,525,000
_____________________________________________________________________________________________________________________________
Total investments in securities
(Cost: $686,213,266)(j) $733,035,352
_____________________________________________________________________________________________________________________________
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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) At Jan. 31, 1996, securities valued at $13,398,780 were held to cover open call
options written as follows:
Issuer Number of Exercise Expiration Value(a)
contracts price date
_________________________________________________________________________
AccuStaff 750 $50 April 1996 $ 267,187
American Oncology 1,250 55 March 1996 156,250
Caremark Intl 500 20 Feb. 1996 168,750
Credence Systems 500 25 Feb. 1996 75,000
Exabyte 1,000 17 May 1996 25,000
Fusion Systems 750 25 Feb. 1996 121,875
Gymboree 1,000 22 April 1996 43,750
HCC Insurance Holdings 250 50 March 1996 81,250
Input/Output 500 27 Feb. 1996 15,625
FileNet 1,000 55 March 1996 412,500
Level One 500 20 Feb. 1996 125,000
Mid Atlantic Medical Services 1,000 25 June 1996 59,375
Medaphis 500 45 March 1996 65,625
Office Max 1,250 22 March 1996 234,375
Parker & Parsley Petroleum 500 22 Feb. 1996 6,250
PairGain Technologies 750 60 Feb. 1996 18,750
PeopleSoft 250 40 Feb. 1996 187,500
Sealed Air 250 30 Feb. 1996 15,625
StrataCom 740 65 Feb. 1996 772,375
Smith Intl 2,000 25 April 1996 175,000
Sterling Software 250 55 Feb. 1996 117,188
System Software 750 25 May 1996 159,375
Zilog 200 40 March 1996 37,500
__________
Total $3,341,125
At Jan. 31, 1996, cash or short-term securities were designated to cover open
put options written as follows:
Issuer Number of Exercise Expiration Value(a)
contracts price date
_________________________________________________________________________
FINOVA Group 250 50 Feb. 1996 23,437
Foundation Health 1,750 35 Feb. 1996 32,812
Landstar System 159 25 Feb. 1996 19,875
Microchip Technology 250 30 Feb. 1996 20,313
Parametric Technology 750 60 Feb. 1996 103,125
SHIVA 250 50 Feb. 1996 3,125
Superior Industries 250 25 Feb. 1996 22,656
Synopsys 250 30 Feb. 1996 20,313
Tech Data 750 12 June 1996 70,314
3Com 750 40 Feb. 1996 32,810
________
Total $348,780
(d) Foreign security values are stated in U.S. dollars. For debt securities, principal
amounts are denominated in the currency indicated.
(e) Represents a security sold under 144A, which is exempt from registration under the
Securities Act of 1933, as amended. This security has been determined to be liquid under
guidelines established by the board.
(f) 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.
(g) Investments representing 5% or more of the outstanding voting securities of the issuer.
(h) Partially pledged as initial margin deposit on the following open stock index futures
purchase contracts. (See Note 4 to the financial statements):
Type of Security Notional Amount
________________________________________________
Emerging Market Index OTC, Feb. 1996 100,000
Emerging Market Index OTC, March 1996 150,000
Type of Security Contracts
________________________________________________
Russell 2000, March 1996 225
(i) For zero coupon bonds, the interest rate disclosed represents the annualized effective yield on the
date of acquisition.
(j) At Jan. 31, 1996, the cost of securities for federal income tax purposes was approximately $686,213,000
and the approximate aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $66,321,000
Unrealized depreciation (19,499,000)
____________________________________________________________
Net unrealized appreciation $46,822,000
____________________________________________________________
</TABLE>
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Board members and officers
Board members and officers of the Fund
_____________________________________________________________________
President and interested board member
William R. Pearce
President of all funds in the IDS MUTUAL FUND GROUP.
_____________________________________________________________________
Independent board members
Lynne V. Cheney
Distinguished fellow, American Enterprise Institute for
Public Policy Research.
Robert F. Froehlke
Former president of all funds in the IDS MUTUAL FUND GROUP.
Heinz F. Hutter
Former president and chief operating officer, Cargill, Inc.
Anne P. Jones
Attorney and telecommunications consultant.
Donald M. Kendall
Former chairman and chief executive officer, PepsiCo, Inc.
Melvin R. Laird
Senior counsellor for national and international 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.
C. Angus Wurtele
Chairman of the board and chief executive officer, The Valspar Corporation.
_____________________________________________________________________
Interested board members who are officers and/or employees of AEFC
William H. Dudley
Exective vice president, AEFC.
David R. Hubers
President and chief executive officer, AEFC.
John R. Thomas
Senior vice president, AEFC.
_____________________________________________________________________
Officers who are officers and/or employees of AEFC
Peter J. Anderson
Vice President of all funds in the IDS MUTUAL FUND GROUP.
Melinda S. Urion
Treasurer of all funds in the IDS MUTUAL FUND GROUP.
___________________________________________________________________
Other officer
Leslie L. Ogg
Vice president general Counsel and secretary of all funds in
the IDS MUTUAL FUND GROUP.<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 commercial
paper, bankers' acceptances, certificates of deposit (CDs) and
other bank securities.
(icon of) piggy bank
IDS Tax-Free Money Fund
Invests primarily in short-term bonds and notes issued by state and
local governments to seek high current income exempt from federal
income taxes.
(icon of) shield with piggy bank enclosed
Income investments
The funds in this group invest their assets primarily in corporate
bonds or government securities to seek interest income.
Secondary objective is capital growth. Risk varies by bond quality.
IDS 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<PAGE>
PAGE
IDS Bond Fund
Invests mainly in corporate bonds, at least 50% in the higher rated,
lower risk bond categories, or the equivalent, and in government bonds.
(icon of) greek column
IDS Selective Fund
Invests in high-quality corporate bonds and other highly rated debt
instruments including government securities and short-term
investments. Seeks current income and preservation of capital.
(icon of) skyline
IDS Federal Income Fund
Invests 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
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<PAGE>
PAGE
IDS State Tax-Exempt Funds
(CA, MA, MI, MN, NY, OH)
Invests primarily in high- and medium-grade municipal securities
to provide income to residents of each respective state that is
exempt from federal, state and local income taxes. (New York
is the only state that is exempt at the local level.)
(icon of) shield with U.S. enclosed
IDS 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 dividends and interest. Moderate risk.
IDS International Fund
Invests primarily in common stocks of foreign companies that offer
potential for superior growth. The fund may invest up to 20%
of its assets in the U.S. market.
(icon of) three flags
IDS Managed Retirement Fund
Invests in a combination of 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>
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IDS Equity Select Fund
Invests primarily in a combination of moderate growth stocks,
higher-yielding equities and bonds. Seeks growth of
capital and income.
(icon of) three apple trees
IDS Blue Chip Advantage Fund
Invests in selected stocks from a major market index. Securities
purchased are those recommended by our research analysts as the
best from each industry represented on the index. Offers potential
for long-term growth as well as dividend income.
(icon of) ribbon
IDS Stock Fund
Invests in common stocks of companies representing many
sectors of the economy. Seeks current income and growth of capital.
(icon of) building with columns
IDS Equity Value Fund
Invests primarily in undervalued common stocks that offer potential
for growth of capital and income.
(icon of) three growing flowers
IDS Utilities Income Fund
Invests primarily in the stocks of public utility companies to seek
high current income and growth of income and capital with reduced
volatility.
(icon of) 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
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 Strategy Aggressive Fund
Invests primarily in common stocks of companies that are selected
for their potential for above-average growth. Above-average means
that their growth potential is better, in the opinion of the
portfolio's investment manager, than the Standard & Poor's
Corporation (S&P) 500 Stock Index.
(icon of) chess piece
IDS 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 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
IDS New Dimensions Fund
Invests primarily in companies with significant growth
potential due to superiority in technology, marketing or management.
The fund frequently changes its industry mix.
(icon of) dimension
IDS Progressive Fund
Invests primarily in undervalued common stocks. The fund holds
stocks for the long term with the goal of capital growth.
(icon of) shooting star
<PAGE>
PAGE
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 mutual 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 advisor or writing to American Express Shareholder Service,
P.O. Box 534, Minneapolis, MN 55440-0534. Read it carefully before you
invest or send money.
<PAGE>
PAGE
Quick telephone reference
American Express Telephone Transaction Service
Redemptions and exchanges, dividend payments or reinvestments and
automatic payment arrangements
National/Minnesota:
800-437-3133
Mpls./St. Paul area:
671-3800
American Express Shareholder Service
Fund performance, objectives and account inquiries
612-671-3733
TTY Service
For the hearing impaired
800-846-4852
American Express Infoline
Automated account information (TouchTone phones only), including current
fund prices and performance, account values and recent account
transactions
National/Minnesota:
800-272-4445
Mpls./St. Paul area:
671-1630
AMERICAN EXPRESS FINANCIAL ADVISORS
IDS Discovery Fund
IDS Tower 10
Minneapolis, MN 55440-0010
