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
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Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
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Xxxxx X. Xxxxx
Senior Vice President and General Manager - Mutual Funds
