SERVICE AND DISTRIBUTION PLAN
WHEREAS, Pilgrim Troika Dialog Russia Fund, Inc. (the "Company") engages in
business as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of common stock of the Company currently consist of one
series, Pilgrim Troika Dialog Russia Fund, Inc. (the "Fund");
WHEREAS, shares of common stock of the Fund are divided into classes of
shares, one of which is designated Class B;
WHEREAS, the Company employs Pilgrim Securities, Inc. as distributor of the
securities of which it is the issuer and may from time to time retain, pursuant
to the terms of a distribution agreement with such person (each, an
"Underwriting Agreement") other persons to so act pursuant to the Plan (each
such person so acting from time to time, the "Distributor");
WHEREAS, the Company and the Distributor have entered into an Underwriting
Agreement pursuant to which the Company has employed the Distributor in such
capacity during the continuous offering of shares of the Company; and
WHEREAS, the Company wishes to adopt the Distribution Plan and the
Shareholder Service Plan of the Fund with respect to all Class B shares, whether
issued before or after the date hereof, as set forth hereinafter.
NOW, THEREFORE, the Company hereby adopts this Plan on behalf of the Fund
with respect to its Class B shares, in accordance with Rule 12b-l under the Act,
on the following terms and conditions:
1. A. The Fund shall pay to each Distributor, as compensation for acting as
principal distributor in respect of the Class B Shares (as hereinafter defined)
of the Fund its "Allocable Portion" (as hereinafter defined) of a fee (the
"Distribution Fee"), which shall accrue daily at the rate of 0.75% per annum of
the Fund's average daily net assets attributable to Class B Shares of the Fund
and be payable monthly or at such other intervals as the Directors shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc. ("NASD").
The Underwriting Agreement between the Company and each Distributor
relating to the Class B Shares shall provide that:
(I) the Distributor will be deemed to have performed all services
required to be performed in order to be entitled to receive its
Allocable Portion (as defined below) of the Distribution Fee payable
in respect of the Class B Shares upon the settlement date of each
sale of a "Commission Share" (as defined in the Allocation Schedule
attached to the Underwriting Agreement) taken into account in
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determining such Distributor's Allocable Portion of such
Distribution Fee;
(II) notwithstanding anything to the contrary in this Plan or the
Underwriting Agreement, the Fund's obligation to pay such
Distributor its Allocable Portion of the Distribution Fee payable
shall not be terminated or modified (including, without limitation,
by change in the rules applicable to the conversion of Class B
Shares into shares of another class) for any reason (including a
termination of the Underwriting Agreement between such Distributor
and the Fund) except:
(a) to the extent required by a change in the Investment Company
Act of 1940 (the "Act"), the rules and regulations under the
Act, the Conduct Rules of the NASD or other applicable law, in
each case enacted or promulgated after ________ ___, 2000,
(b) on a basis which does not alter the Distributor's Allocable
Portion of the Distribution Fee computed with reference to
Commission Shares the Date of Original Issuance (as defined in
the Allocation Schedule attached to the Underwriting
Agreement) of which occurs on or prior to the adoption of such
termination or modification and with respect to Free Shares
(as defined in the Allocation Schedule) which would be
attributed to such Distributor under the Allocation Schedule
with reference such Commission Shares,
(c) in connection with a "Complete Termination" (as hereinafter
defined) of the Plan; or
(d) on a basis, determined by the Board of Directors of the
Company, including a majority of those who are not "interested
persons" of the Company (as such term is defined in the Act),
acting in good faith, so long as from and after the effective
date of such modification or termination, neither the Company
or any Affected Fund (as hereinafter defined) nor Pilgrim
Securities, Inc. or any successor sponsor of the Affected Fund
or any affiliate of any of the foregoing, pay, directly or
indirectly, a fee, trailer fee, or expense reimbursement to
any person for the provision of shareholder services to the
holders of Class B Shares;
(III) the Fund will not take any action to waive or change any CDSC in
respect of the Class B Shares the Date of Original Issuance (as
defined in the Allocation Schedule attached to the Underwriting
Agreement) of which occurs, on or prior to the taking of such action
except as provided in the Fund's prospectus or statement of
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additional information on the date such Commission Share was issued,
without the consent of such Distributor and its Transferees;
(IV) notwithstanding anything to the contrary in this Distribution Plan
or the Underwriting Agreement, neither the termination of such
Distributor's role as principal distributor of the Class B Shares,
nor the termination of such Underwriting Agreement nor the
termination of this Plan will terminate such Distributor's right to
its Allocable Portion of the CDSCs; and
(V) notwithstanding anything to the contrary in the Distribution Plan or
the Underwriting Agreement, such Distributor may assign, sell or
pledge (collectively, "Transfer") its rights to its Allocable
Portion of the Distribution Fees and CDSCs and, upon receipt of
notice of such Transfer, each Fund shall pay to the assignee,
purchaser or pledgee (collectively with their subsequent
transferees, "Transferees"), as third party beneficiaries of such
Underwriting Agreement, such portion of such Distributor's Allocable
Portion of the Distribution Fees or CDSCs in respect of the Class B
Shares so sold or pledged, and except as provided in (II) above and
notwithstanding anything of the contrary set forth in this Plan or
in the Underwriting Agreement, the Fund's obligation to pay such
Distributor's Allocable Portion of the Distribution Fees and CDSCs
payable in respect of the Class B Shares shall be absolute and
unconditional and shall not be subject to dispute, offset,
counterclaim or any defense whatsoever, at law or equity, including,
without limitation, any of the foregoing based on the insolvency or
bankruptcy of such Distributor.
For purposes of this Plan, the term "Allocable Portion" of
Distribution Fees or CDSCs payable in respect of the Class B Shares as applied
to any Distributor shall mean the portion of such Distribution Fees or CDSCs
payable in respect of such Class B Shares allocated to such Distributor in
accordance with the Allocation Schedule (attached to the Underwriting Agreement
as it relates to the Class B Shares). For purposes of this Plan and each
Distribution Agreement, the term "Complete Termination" of the Plan means a
termination of this Plan and every other distribution plan of the Fund for Class
B shares, each successor company or fund, and each company or fund acquiring a
substantial portion of the assets of the Fund (collectively, the "Affected
Fund") involving the complete cessation of the payment of Distribution Fees in
respect of all current Class B shares of the Affected Fund and each future class
of shares of the Affected Fund which has substantially similar characteristics
to the shares of the current Class B shares of the Fund, including the manner of
payment and amount of sales charge, contingent deferred sales charge or other
similar charges borne directly or indirectly by the holders of such shares (all
such classes of shares "Class B Shares").
B. In addition to the amount provided in 1.A. above, the Fund shall
pay to the Distributor, as the distributor of the Class B shares of the Fund, a
service fee at the rate of 0.25% on an annualized basis of the average daily net
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assets of the Fund's Class B shares, provided that, at any time such payment is
made, whether or not this Plan continues in effect, the making thereof will not
cause the limitation upon such payments established by this Plan to be exceeded.
Such fee shall be calculated and accrued daily and paid monthly or at such
intervals as the Board of Directors shall determine, subject to any applicable
restriction imposed by rules of the NASD.
2. The amount set forth in paragraph 1.A. of this Plan shall be paid for
the Distributor's services as distributor of the shares of the Fund in
connection with any activities or expenses primarily intended to result in the
sale of the Class B shares of the Fund, including, but not limited to, payment
of compensation, including incentive compensation, to securities dealers (which
may include the Distributor itself) and other financial institutions and
organizations (collectively, the "Service Organizations") to obtain various
distribution related and/or administrative services for the Fund. These services
may include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers and serving as the primary
source of information to customers in providing information and answering
questions concerning the Fund and their transactions with the Fund. The
Distributor is also authorized to engage in advertising, the preparation and
distribution of sales literature and other promotional activities on behalf of
the Fund. In addition, this Plan hereby authorizes payment by the Fund of the
cost of printing and distributing Fund Prospectuses and Statements of Additional
Information to prospective investors and of implementing and operating the Plan.
Distribution expenses also include an allocation of overhead of the Distributor
and accruals for interest on the amount of distribution expenses that exceed
distribution fees and contingent deferred sales charges received by the
Distributor. Payments under the Plan are not tied exclusively to actual
distribution and service expenses, and the payments may exceed distribution and
service expenses actually incurred.
The amount set forth in paragraph 1.B. of this Plan may be used by the
Distributor to pay securities dealers (which may include the Distributor itself)
and other financial institutions and organizations for servicing shareholder
accounts, including a continuing fee which may accrue immediately after the sale
of shares.
3. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Company's
Board of Directors and (b) those Directors of the Company who are not
"interested persons" of the Company (as defined in the Act) and who have no
direct or indirect financial interest in the operation of this Plan or any
agreements related to it (the "Rule 12b-l Directors"), cast in person at a
meeting (or meetings) called for the purpose of voting on this Plan and such
related agreements.
4. After approval as set forth in paragraph 3, and any other approvals
required pursuant to the Act and Rule 12b-1 thereunder, this Plan shall take
effect at the time specified by the Company's Board of Directors. The Plan shall
continue in full force and effect as to the Class B shares of the Fund for so
long as such continuance is specifically approved at least annually in the
manner provided for approval of this Plan in paragraph 3.
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5. The Distributor shall provide to the Directors of the Company, at least
quarterly, a written report of the amounts so expended and the purposes for
which such expenditures were made.
6. This Plan may be terminated as to the Fund at any time, without payment
of any penalty, by vote of the Directors of the Company, by vote of a majority
of the Rule 12b-l Directors, or by a vote of a majority of the outstanding
voting securities of Class B shares of the Fund on not more than 30 days'
written notice to any other party to the Plan.
7. This Plan may not be amended to increase materially the amount of
distribution fee (including any service fee) provided for in paragraph 1 hereof
unless such amendment is approved by a vote of the shareholders of the Class B
shares of the Fund, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 3
hereof.
8. While this Plan is in effect, the selection and nomination of Directors
who are not interested persons (as defined in the Act) of the Company shall be
committed to the discretion of the Directors who are not such interested
persons.
9. The Company shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
Dated: July 26, 2000
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