SCHEDULE 14A
(RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. )
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[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[]] Definitive Additional Materials
[X] Soliciting Material Pursuant to Sec. 240.14a-12
TEMPLETON DRAGON FUND, INC.
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(Name of Registrant as Specified in its Charter)
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[GRAPHICS OMITTED]
TEMPLETON DRAGON FUND, INC.
IMPORTANT
December 21, 2002
DEAR SHAREHOLDER:
The following is the text of a press release issued on December 11, 2002:
FRANKLIN TEMPLETON AND THE BOARD OF TEMPLETON
DRAGON FUND STRONGLY OPPOSE THE HARVARD COLLEGE
PRESIDENT AND FELLOWS' SHAREHOLDER PROPOSAL
TO REMOVE INVESTMENT MANAGER
San Mateo, CA, December 11, 2002 - Franklin Templeton Investments, whose
Templeton Asset Management unit manages Templeton Dragon Fund (the Fund)
today responded to a proposal submitted by the President and Fellows of
Harvard College for the Fund's 2003 annual meeting of shareholders, calling
for the termination of the investment management agreement between the Fund
and the manager. The following is a statement by Franklin Templeton
Investments in response to that proposal:
"Franklin Templeton Investments strongly opposes the Harvard College
President and Fellows' proposal. Templeton Asset Management's primary job
is to manage the Fund's assets, and it has achieved strong relative
performance - a fact Harvard does not dispute. Based on Harvard's
statements and on conversations that Fund management has had with Harvard
representatives, we believe Harvard's proposal is a tactic aimed at
imposing a self-serving, short-term agenda on the Fund by trying to
influence the Board of Directors of the Fund to pursue open-ending or to
take other actions which would benefit Harvard, but could deplete the
Fund's assets to the detriment of the Fund's long-term investors."
"According to Lipper Analytical Services, the Fund was the top ranked
Pacific Region fund of the six in its Lipper category based on both market
price and net asset value for the six-month, year-to-date, one- and
three-year periods ended November 30, 2002. It ranked second out of six
funds based on market price for the five-year period ended November 30,
2002, and third for the period since its September 1994 inception. We find
it troubling that the President and Fellows of Harvard College want to
remove the investment manager who is producing these solid results."
"Harvard's complaint about the manager is that the Fund's shares trade at a
discount to net asset value. However, as we have pointed out, the manager's
primary focus must be on managing the Fund's investment portfolio, not on
trying to eliminate the discount, which is the result of market forces not
within the manager's control. Based on Harvard's statements and on
conversations between Fund management and Harvard representatives, we see
the Harvard College President and Fellows' proposal as a pressure tactic to
cause the Fund to open-end or to engage in substantial share buy-backs at
net asset value in order to reduce the discount and give Harvard greater
liquidity in the short-term, regardless of the cost to long-term
shareholders. Our view is further supported by the fact that Harvard has
acquired substantial shareholdings at, we believe, significant discounts to
net asset value in at least four other closed-end emerging markets funds
and later made, or threatened to make, proposals to terminate the
investment management agreement, citing in certain instances the `discount'
as a reason for its actions."
"Although conversion to an open-end fund or substantial share buy-backs, at
or near net asset value, could eliminate or produce a short-term narrowing
of the discount, the Board of the Fund must consider whether these actions
may be more in the interests of shareholders seeking short-term profits
than those seeking long-term capital appreciation. In less liquid markets,
a closed-end fund can be managed with a view toward achieving long-term
portfolio returns without the need to provide short-term liquidity in its
investments, which is one of the key advantages of a closed-end fund."
"The Fund's Board of Directors, in addition to overseeing the manager's
strong relative investment performance, is also focused on the market
price. For instance, early this year the Board announced two tender offers
to provide liquidity and to address the discount, one of which has been
completed. These actions followed an open-market share repurchase program
instituted in 1997 and a managed distribution policy implemented in 1998.
The discount now has lessened considerably and stood at 10.10% on December
10, 2002.* This amount is within the range of those experienced by the
Fund's Lipper peer group."
"The Board of Directors of the Templeton Dragon Fund has informed Franklin
Templeton that it also strongly opposes the Harvard College President and
Fellows' proposal to terminate the Fund's investment management agreement
and remains committed to pursuing the best interests of all of the Fund's
shareholders in accordance with the Fund's stated investment objective."
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Templeton Dragon Fund intends to file relevant materials with the U.S.
Securities and Exchange Commission ("SEC"), including a proxy statement.
Because those documents contain important information, shareholders of
Templeton Dragon Fund are urged to read them, when they become available.
When filed with the SEC, they will be available for free at the SEC's
website, www.sec.gov. Shareholders can also obtain copies of these
documents and other related documents, when available, for free by calling
Templeton Dragon Fund at 1-800/342-5236.
Templeton Dragon Fund, its directors and executive officers and certain
other persons, may be deemed to be participants in Templeton Dragon Fund's
solicitation of proxies from its shareholders. Information about the
directors is set forth in the proxy statement for Templeton Dragon Fund's
2002 annual meeting of shareholders. Participants in Templeton Dragon
Fund's solicitation may also be deemed to include the following executive
officers or other persons whose interests in Templeton Dragon Fund may not
be described in the proxy statement for Templeton Dragon Fund's 2002 annual
meeting: Mark Mobius (President and C.E.O. - Investment Management); Jimmy
D. Gambill (Senior Vice President and C.E.O. - Finance and Administration);
Charles B. Johnson (Vice President); Rupert H. Johnson, Jr. (Vice
President); Harmon E. Burns (Vice President); Martin L. Flanagan (Vice
President); Jeffrey A. Everett (Vice President); Gregory E. Johnson
(President - Office of the President, Franklin Resources, Inc.); John R.
Kay (Vice President); Murray L. Simpson (Vice President and Asst.
Secretary); David P. Goss (Vice President and Asst. Secretary); Barbara J.
Green (Vice President and Secretary); Michael O. Magdol (Vice President -
AML Compliance); Bruce S. Rosenberg (Treasurer and Chief Financial
Officer); and Holly Gibson Brady (Director of Corporate Communications -
Franklin Resources, Inc.).
As of the date of this communication, none of the foregoing participants
individually, or as a group, beneficially own in excess of 1% of Templeton
Dragon Fund's common stock. Except as disclosed above, to the knowledge of
Templeton Dragon Fund, none of its respective directors or executive
officers have any interest, direct or indirect, by security holdings or
otherwise, in Templeton Dragon Fund.
Shareholders may obtain additional information regarding the interests of
the participants by reading the proxy statement of Templeton Dragon Fund
when it becomes available.
# # #
* In the period subsequent to the issuance of the press release, December
11 - 20, 2002, the discount has ranged from a high of 11.09% to a low of
6.87%.
We will keep you informed as we believe further developments warrant.
SINCERELY,
/S/CHARLES B. JOHNSON
Charles B. Johnson
On behalf of the Board of Directors