PLAN AND AGREEMENT OF DISTRIBUTION
                              (Classes A, B and C)

This plan and agreement, dated as of April 9, 2003, is between AXP Discovery
Series, Inc., (the "Corporation"), a Minnesota corporation, on behalf of its
underlying series AXP Core Bond Fund, AXP Income Opportunities Fund and AXP
Limited Duration Bond Fund (individually a "Fund" and collectively the "Funds"),
and American Express Financial Advisors Inc. ("AEFA"), the principal underwriter
of the Funds, for distribution services to the Funds.

The plan and agreement has been approved by members of the Board of Directors
(the "Board") of the Funds who are not interested persons of the Funds and have
no direct or indirect financial interest in the operation of the plan or any
related agreement, and all of the members of the Board, in person, at a meeting
called for the purpose of voting on the plan and agreement.

The plan and agreement provides that:

1.   The Funds will reimburse AEFA for expenses incurred in connection with
     distributing the Funds' shares and providing personal service to
     shareholders. These expenses include sales commissions; business, employee
     and financial advisor expenses charged to distribution of Class A, Class B
     and Class C shares; and overhead appropriately allocated to the sale of
     Class A, Class B and Class C shares.

2.   A portion of the fee under the agreement will be used to compensate AEFA,
     financial advisors and other servicing agents for personal service to
     shareholders. Fees paid will be used to help shareholders thoughtfully
     consider their investment goals and objectively monitor how well the goals
     are being achieved.

3.   AEFA agrees to monitor the services it provides, to measure the level and
     quality of services and to provide training and support to financial
     advisors and servicing agents. AEFA will use its best efforts to assure
     that other distributors provide comparable services to shareholders.

4.   For Class A shares, the fee under this agreement will be equal on an annual
     basis to 0.25% of the average daily net assets of the Funds attributable to
     Class A shares. The amount so determined shall be paid to AEFA in cash
     within five (5) business days after the last day of each month.

5.   For Class B and Class C shares, the fee under this agreement will be equal
     on an annual basis to 1.00% of the average daily net assets of the Funds
     attributable to Class B shares and Class C shares, respectively. Of that
     amount, 0.75% shall be reimbursed for distribution expenses. The additional
     0.25% shall be paid to AEFA to compensate AEFA, financial advisors and
     servicing agents for personal service to shareholders and


     maintenance of shareholder accounts. The amount so determined shall be paid
     to AEFA in cash  within five (5)  business  days after the last day of each
     month.

6.   For each purchase of Class B shares, the Class B shares will be converted
     to Class A shares in the ninth year of ownership.

7.   The Funds understand that if a shareholder redeems Class B shares before
     they are converted to Class A shares, AEFA will impose a sales charge
     directly on the redemption proceeds to cover those expenses it has
     previously incurred on the sale of those shares.

8.   The Funds understand that if a shareholder redeems Class C shares in the
     first year of ownership, AEFA will impose a sales charge directly on the
     redemption proceeds to cover those expenses it has previously incurred on
     the sale of those shares.

9.   AEFA agrees to provide at least quarterly an analysis of expenses under
     this agreement and to meet with representatives of the Funds as reasonably
     requested to provide additional information.

10.  The plan and agreement shall continue in effect for a period of more than
     one year provided it is reapproved at least annually in the same manner in
     which it was initially approved.

11.  The plan and agreement may not be amended to increase materially the amount
     that may be paid by the Funds without the approval of a least a majority of
     the outstanding shares of the relevant class. Any other amendment must be
     approved in the manner in which the plan and agreement was initially
     approved.

12.  This agreement may be terminated as to Class A, Class B or Class C at any
     time without payment of any penalty by a vote of a majority of the members
     of the Board who are not interested persons of the Funds and have no
     financial interest in the operation of the plan and agreement, or by vote
     of a majority of the outstanding shares of the relevant class, or by AEFA.
     The plan and agreement will terminate automatically in the event of its
     assignment as that term is defined in the Investment Company Act of 1940.

13.  This plan and agreement shall be governed by the laws of the State of
     Minnesota.



AXP DISCOVERY SERIES, INC.
         AXP Core Bond Fund
         AXP Income Opportunities Fund
         AXP Limited Duration Bond Fund


---------------------------
Leslie L. Ogg
Vice President


AMERICAN EXPRESS FINANCIAL ADVISORS INC.



--------------------------
Paula R. Meyer
Senior Vice President and General Manager - Mutual Funds