Plan and Agreement of Distribution
                               For Class C Shares

This plan and agreement, effective as of ________, 2000, is between AXP Strategy
Series,  Inc. on behalf of its  underlying  series AXP Small Cap Growth Fund and
American Express Financial Advisors Inc. ("AEFA"),  the principal underwriter of
the Fund, for distribution services to the Fund.

The plan and  agreement  has been  approved by members of the Board of Directors
(the "Board") of the Fund who are not interested persons of the Fund 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 Fund will  reimburse  AEFA for expenses  incurred in connection  with the
distribution of the Fund shares and providing  personal service to shareholders.
These  expenses  include  sales  commissions;  business,  employee and financial
advisor  expenses  charged  to  distribution  of Class C  shares;  and  overhead
appropriately allocated to the sale of 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. The fee under this agreement will be equal on an annual basis to 1.00% of the
average  daily net assets of the Fund  attributable  to Class C shares.  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.

5. The Fund  understands  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.

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

7. 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.

8. The plan and agreement may not be amended to increase  materially  the amount
that may be paid by the Fund  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.



9. This  agreement may be terminated 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 Fund 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.



AXP STRATEGY SERIES, INC.
         AXP Small Cap Growth Fund




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

AMERICAN EXPRESS FINANCIAL ADVISORS INC.




-----------------------------------
Pamela J. Moret
Senior Vice President