Edgar Filing: TEMPLETON DRAGON FUND INC

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No. ______________)

Filed by the Registrant /X/
Filed by a party other than the Registrant / /

Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-12

TEMPLETON DRAGON FUND, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)

------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transactions applies:

(2) Aggregate number of securities to which transactions applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

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(4) Date filed:

[LOGO] FRANKLIN TEMPLETON INVESTMENTS

TEMPLETON DRAGON FUND, INC.

NOTICE OF 2006 ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders (the "Meeting") of Templeton Dragon Fund,
Inc. (the "Fund") will be held at the Fund's offices, 500 East Broward
Boulevard, 12th Floor, Fort Lauderdale, Florida 33394-3091 on May 19, 2006 at
12 Noon, Eastern time.

During the Meeting, shareholders of the Fund will vote on the following
Proposal:

. The election of five Directors of the Fund to hold office for the
terms specified.

By Order of the Board of Directors,

Robert C. Rosselot
Secretary

April 17, 2006

Please sign and promptly return the proxy card in the enclosed self-addressed
envelope regardless of the number of shares you own. Japanese shareholders
should be aware that Japan Securities Settlement & Custody, Inc. may exercise
a vote on the Proposal on your behalf if you do not return a proxy card.

[LOGO] FRANKLIN TEMPLETON INVESTMENTS

TEMPLETON DRAGON FUND, INC.

IMPORTANT SHAREHOLDER INFORMATION

These materials are for the Annual Meeting of Shareholders scheduled for
May 19, 2006 at 12 Noon, Eastern time. The enclosed materials discuss the
proposal (the "Proposal") to be voted on at the meeting, and contain the Notice
of Meeting, proxy statement and proxy card. A proxy card is, in essence, a
ballot. When you vote your proxy, it tells us how you wish to vote on important
issues relating to Templeton Dragon Fund, Inc. (the "Fund"). If you specify a
vote on the Proposal, your proxy will be voted as you indicate. If you simply
sign and date the proxy card, but do not specify a vote on the Proposal, your
proxy will be voted FOR the Proposal.

We urge you to spend a few minutes reviewing the Proposal in the proxy
statement. Then, please fill out and sign the proxy card and return it to us so
that we know how you would like to vote. When shareholders return their proxies
promptly, the Fund may be able to save money by not having to conduct
additional mailings.

We welcome your comments. If you have any questions, call Fund Information
at 1-800/DIAL BEN(R) (1-800-342-5236).

TELEPHONE AND INTERNET VOTING

For your convenience, you may be able to vote by telephone or through the
Internet, 24 hours a day. If your account is eligible, instructions are
enclosed.

TEMPLETON DRAGON FUND, INC.

PROXY STATEMENT

..INFORMATION ABOUT VOTING

Who is asking for my vote?

The Directors of Templeton Dragon Fund, Inc. (the "Fund"), in connection
with the Fund's Annual Meeting of Shareholders, have requested your vote.

Who is eligible to vote?

Shareholders of record at the close of business on March 31, 2006 are
entitled to be present and to vote at the Meeting or any adjourned Meeting.
Each share of record is entitled to one vote (and a proportionate fractional
vote for each fractional share) on each matter presented at the Meeting. The
Notice of Meeting, the proxy card, and the proxy statement were first mailed to
shareholders of record on or about April 17, 2006.

On what issue am I being asked to vote?

You are being asked to vote on the election of five nominees to the position
of Director.

How do the Fund's Directors recommend that I vote?

The Directors unanimously recommend that you vote FOR the election of the
five nominees.

How do I ensure that my vote is accurately recorded?

You may attend the Meeting and vote in person or you may complete and return
the enclosed proxy card. If you are eligible to vote by telephone or through
the Internet, instructions are enclosed.

Proxy cards that are properly signed, dated and received at or prior to the
Meeting will be voted as specified. If you specify a vote on the Proposal, your
proxy will be voted as you indicate. If you simply sign, date and return the
proxy card, but do not specify a vote on the Proposal, your shares will be
voted FOR the election of all nominees as Director.

May I revoke my proxy?

You may revoke your proxy at any time before it is voted by forwarding a
written revocation or a later-dated proxy to the Fund that is received by the
Fund at or prior to the Meeting, or by attending the Meeting and voting in
person.

What if my shares are held in a brokerage account?

If your shares are held by your broker, then in order to vote in person at
the Meeting, you will need to obtain a "Legal Proxy" from your broker and
present it to the Inspector of Election at the Meeting.

..THE PROPOSAL: ELECTION OF DIRECTORS

How are nominees selected?

The Board of Directors of the Fund (the "Board" or the "Directors") has a
Nominating Committee consisting of Edith E. Holiday (Chairman), Frank J.
Crothers, Gordon S. Macklin and Frank A. Olson, none of whom is an "interested
person" of the Fund as defined by the Investment Company Act of 1940, as
amended (the "1940 Act"). Directors who are not interested persons of the Fund
are referred to as the "Independent Directors," and Directors who are
interested persons of the Fund are referred to as the "Interested Directors."

The Nominating Committee is responsible for selecting candidates to serve as
Directors and recommending such candidates (a) for selection and nomination as
Independent Directors by the incumbent Independent Directors and the full
Board; and (b) for selection and nomination as Interested Directors by the full
Board. In considering a candidate's qualifications, the Nominating Committee
generally considers the potential candidate's educational background, business
or professional experience, and reputation. In addition, the Nominating
Committee has established as minimum qualifications for Board membership as an
Independent Director (1) that such candidate be independent from relationships
with the Fund's investment manager and other principal service providers both
within the terms and the spirit of the statutory independence requirements
specified under the 1940 Act and the rules thereunder, (2) that such candidate
demonstrate an ability and willingness to make the considerable time
commitment, including personal attendance at Board meetings, believed necessary
to his or her function as an effective Board member, and (3) that such
candidate have no continuing relationship as a director, officer or board
member of any investment company other than those within the Franklin Templeton
Investments fund complex.

When the Board has or expects to have a vacancy, the Nominating Committee
receives and reviews information on individuals qualified to be recommended to
the full Board as nominees for election as Directors, including any
recommendations by "Qualifying Fund Shareholders" (as defined below). Such
individuals are evaluated based upon the criteria described above. To date, the
Nominating Committee has been able to identify, and expects to continue to be
able to identify, from its own resources an ample number of qualified
candidates. The Nominating Committee, however, will review recommendations from
Qualifying Fund Shareholders to fill vacancies on the Board if these
recommendations are submitted in writing and addressed to the Nominating
Committee at the Fund's offices and are presented with appropriate background
material concerning the candidate that demonstrates his or her ability to serve
as a Director, including as an Independent Director, of the Fund. A Qualifying
Fund Shareholder is a shareholder who (i) has continuously owned of record, or
beneficially through a financial intermediary, shares of the Fund having a net
asset value of not less than two hundred fifty thousand dollars ($250,000)
during the twenty-four month period prior to submitting the recommendation; and
(ii) provides a written notice to the Nominating Committee containing the
following information: (a) the name and address of the Qualifying Fund
Shareholder making the recommendation; (b) the number of shares of the Fund
which are owned of record and beneficially by such Qualifying Fund Shareholder
and the length of time that such shares have been so owned by the Qualifying
Fund Shareholder; (c) a description of all arrangements and understandings
between such Qualifying Fund Shareholder and any other person or persons
(naming such person or persons) pursuant to which the recommendation is being
made; (d) the name, age, date of birth, business address and residence address
of the person or persons being recommended; (e) such other information
regarding each person recommended by such Qualifying Fund Shareholder as would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the U.S. Securities and Exchange Commission ("SEC") had the nominee
been nominated by the Board; (f) whether the shareholder making the
recommendation believes the person recommended would or would not be an
"interested person" of the Fund, as defined in the 1940 Act;

and (g) the written consent of each person recommended to serve as a Director
of the Fund if so nominated and elected/appointed.

The Nominating Committee may amend these procedures from time to time,
including the procedures relating to the evaluation of nominees and the process
for submitting recommendations to the Nominating Committee.

The Board has adopted and approved a formal written charter for the
Nominating Committee. A copy of the charter was included in the Fund's proxy
statement for its 2005 Annual Meeting of Shareholders.

Who are the nominees and Directors?

The Board is divided into three classes. Each class has a term of three
years. Each year the term of office of one class expires. This year, the terms
of four Directors expire. Gordon Macklin, David W. Niemiec, Frank A. Olson and
Robert E. Wade have been nominated for three-year terms, set to expire at the
2009 Annual Meeting of Shareholders. Larry D. Thompson has been nominated for a
one-year term, set to expire at the 2007 Annual Meeting of Shareholders. These
terms continue, however, until successors are duly elected and qualified. All
of the nominees are currently members of the Board and are considered
Independent Directors. Messrs. Niemiec, Thompson and Wade are standing for
election by shareholders of the Fund for the first time. A former Interested
Director and employee of an affiliate of the Investment Manager, an incumbent
Independent Director and an Interested Director recommended Messrs. Niemiec,
Thompson, and Wade, respectively, for consideration by the Nominating Committee
as nominees for Director. In addition, all of the current nominees and
Directors are also directors or trustees of other Franklin(R) funds and/or
Templeton(R) funds.

Certain Directors of the Fund hold director and/or officer positions with
Franklin Resources, Inc. ("Resources") and its affiliates. Resources is a
publicly owned holding company, the principal shareholders of which are Charles
B. Johnson and Rupert H. Johnson, Jr., who owned approximately 17.15% and
14.62%, respectively, of its outstanding shares as of December 31, 2005.
Resources, a global investment management organization operating as Franklin
Templeton Investments, is primarily engaged, through various subsidiaries, in
providing investment management, share distribution, transfer agent and
administrative services to a family of investment companies. Resources is a New
York Stock Exchange, Inc. ("NYSE") listed holding company (NYSE: BEN). Charles
B. Johnson, Chairman of the Board, Director and Vice President of the Fund, and
Rupert H. Johnson, Jr., Vice President of the Fund, are brothers. There are no
family relationships among any of the Directors or nominees for Director.

Each nominee currently is available and has consented to serve if elected.
If any of the nominees should become unavailable, the designated proxy holders
will vote in their discretion for another person or persons who may be
nominated as Directors.

Listed below, for the nominees and Directors, are their names, ages and
addresses, as well as their positions and length of service with the Fund,
principal occupations during the past five years, the number of portfolios in
the Franklin Templeton Investments fund complex that they oversee, and other
directorships held by the nominee or Director.

Nominees for Independent Director to serve until 2009 Annual Meeting of
Shareholders:

Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Time Overseen by
Name, Age and Address Position Served Director* Other Directorships Held
--------------------------------------------------------------------------------------------------------------

Gordon S. Macklin (77) Director Since 1994 140 Director, Martek Biosciences
500 East Broward Blvd. Corporation, MedImmune,
Suite 2100 Inc. (biotechnology) and
Fort Lauderdale, FL 33394-3091 Overstock.com (Internet
services); and formerly,
Director, MCI
Communication Corporation
(subsequently known as MCI
WorldCom, Inc. and
WorldCom, Inc.)
(communications services)
(1988-2002), White
Mountains Insurance Group,
Ltd. (holding company)
(1987-2004) and Spacehab,
Inc. (aerospace services)
(1994-2003).

Principal Occupation During Past 5 Years:
Director of various companies; and formerly, Deputy Chairman, White Mountains Insurance Group, Ltd. (2001-
2004); Chairman, White River Corporation (financial services) (1993-1998) and Hambrecht & Quist Group
(investment banking) (1987-1992); and President, National Association of Securities Dealers, Inc. (1970-1987).
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David W. Niemiec (56) Director Since 17 Director, Emeritus
500 East Broward Blvd. October Corporation (assisted living).
Suite 2100 2005
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Advisor, Saratoga Partners (private equity fund); Director, various private companies; and formerly, Managing
Director, Saratoga Partners (1998-2001); Managing Director, SBC Warburg Dillon Read (investment banking)
(1997-1998); Vice Chairman, Dillon, Read & Co. Inc. (1991-1997); and Chief Financial Officer, Dillon, Read &
Co. Inc. (1982-1997)
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Frank A. Olson (73) Director Since 2003 103 Director, White Mountains
500 East Broward Blvd. Insurance Group, Ltd.
Suite 2100 (holding company), Amerada
Fort Lauderdale, FL 33394-3091 Hess Corporation (exploration
and refining of oil and gas)
and Sentient Jet (private jet
service); and formerly,
Director, Becton Dickinson
and Company (medical
technology), Cooper
Industries, Inc. (electrical
products and tools and
hardware), Health Net, Inc.
(formerly, Foundation Health)
(integrated managed care),
The Hertz Corporation (car
rental), Pacific Southwest
Airlines, The RCA
Corporation, Unicom
(formerly, Commonwealth
Edison) and UAL Corporation
(airlines).

Principal Occupation During Past 5 Years:
Chairman Emeritus, The Hertz Corporation (since 2000) (Chairman of the Board (1980-2000) and Chief
Executive Officer (1977-1999)); and formerly, Chairman of the Board, President and Chief Executive Officer,
UAL Corporation.
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Robert E. Wade (60) Director Since 25 Director, El Oro and
500 East Broward Blvd. March Exploration Co., p.l.c. and
Suite 2100 2006 ARC Wireless Solutions, Inc.
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Practicing attorney.
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Nominee for Independent Director to serve until 2007 Annual Meeting of Shareholders:
Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Time Overseen by
Name, Age and Address Position Served Director* Other Directorships Held
-------------------------------------------------------------------------------------------------------------
Larry D. Thompson (60) Director Since 16 None
500 East Broward Blvd. October
Suite 2100 2005
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products);
and formerly, Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp. (1997-2001);
Senior Fellow of The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of
Law (2004); and Deputy Attorney General, U.S. Department of Justice (2001-2003).
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Independent Directors serving until 2008 Annual Meeting of Shareholders:
Harris J. Ashton (73) Director Since 1994 140 Director, Bar-S Foods
500 East Broward Blvd. (meat packing company).
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Director of various companies; and formerly, Director, RBC Holdings, Inc. (bank holding company) (until
2002); and President, Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery
and craft centers) (until 1998).
-------------------------------------------------------------------------------------------------------------
Frank J. Crothers (61) Director Since 1998 20 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Chairman, Island Corporate Holding Ltd.; Director and Vice Chairman, Caribbean Utilities Co. Limited;
Director, Provo Power Company Ltd.; director of various other business and nonprofit organizations; and
formerly, Chairman, Atlantic Equipment & Power Ltd. (1977-2003).
-------------------------------------------------------------------------------------------------------------
S. Joseph Fortunato (73) Director Since 1994 141 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Attorney; and formerly, member of the law firm of Pitney, Hardin, Kipp & Szuch (until 2002) (Consultant
(2003)).
-------------------------------------------------------------------------------------------------------------

Constantine D. Tseretopoulos (52) Director Since 1998 20 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Physician, Lyford Cay Hospital (1987-present); director of various nonprofit organizations; and formerly,
Cardiology Fellow, University of Maryland (1985-1987) and Internal Medicine Resident, Greater Baltimore
Medical Center (1982-1985).
------------------------------------------------------------------------------------------------------------------

Independent Director serving until 2007 Annual Meeting of Shareholders:

Edith E. Holiday (54) Director Since 1996 136 Director, Amerada Hess
500 East Broward Blvd. Corporation (exploration and
Suite 2100 refining of oil and gas), H.J.
Fort Lauderdale, FL 33394-3091 Heinz Company (processed
foods and allied products),
RTI International Metals, Inc.
(manufacture and distribution
of titanium), Canadian
National Railway (railroad),
and White Mountains
Insurance Group, Ltd.
(holding company).
Principal Occupation During Past 5 Years:
Director or Trustee of various companies and trusts; and formerly, Assistant to the President of the United States
and Secretary of the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-
1990); and Counselor to the Secretary and Assistant Secretary for Public Affairs and Public Liaison-United
States Treasury Department (1988-1989).
------------------------------------------------------------------------------------------------------------------

Interested Director serving until 2007 Annual Meeting of Shareholders:

Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Overseen by
Name, Age and Address Position Length of Time Served Director* Other Directorships Held
------------------------------------------------------------------------------------------------------

**Charles B. Johnson (73) Chairman of Chairman of 140 None
One Franklin Parkway the Board, the Board
San Mateo, CA 94403-1906 Director and since 1995 and
Vice President Director and
Vice President
since 1994

Principal Occupation During Past 5 Years:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice
President, Franklin Templeton Distributors, Inc.; Director, Fiduciary Trust Company International; and
officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 42 of the investment companies in Franklin Templeton Investments.
------------------------------------------------------------------------------------------------------

* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment adviser or
affiliated investment advisers, and also may share a common underwriter.

** Charles B. Johnson is an "interested person" of the Fund as defined by the
1940 Act. The 1940 Act limits the percentage of interested persons that can
comprise a fund's board of directors. Mr. Johnson is considered an
interested person of the Fund due to his position as an officer and director
and major shareholder of Resources, which is the parent company of the
Fund's Investment Manager, and his position with the Fund. The remaining
Directors of the Fund are Independent Directors.

The following tables provide the dollar range of the equity securities of
the Fund and of all other funds in the Franklin Templeton Investments fund
complex beneficially owned by the Directors as of March 31, 2006.

Independent Directors:

Aggregate Dollar Range of Equity
Securities in all Funds in the
Dollar Range of Equity Franklin Templeton
Name of Director Securities in the Fund Investments Fund Complex
------------------------------------------------------------------------------------

Harris J. Ashton............ $1--$10,000 Over $100,000
Frank J. Crothers........... None Over $100,000
S. Joseph Fortunato......... $1--$10,000 Over $100,000
Edith E. Holiday............ $1--$10,000 Over $100,000
Gordon S. Macklin........... $10,001--$50,000 Over $100,000
David W. Niemiec............ None Over $100,000
Frank A. Olson.............. None Over $100,000
Larry D. Thompson........... None Over $100,000
Constantine D. Tseretopoulos None Over $100,000
Robert E. Wade.............. $10,001--$50,000 Over $100,000

Interested Director:

Charles B. Johnson Over $100,000 Over $100,000

How often do the Directors meet and what are they paid?

The role of the Directors is to provide general oversight of the Fund's
business, and to ensure that the Fund is operated for the benefit of all
shareholders. The Directors anticipate meeting at least five times during the
current fiscal year to review the operations of the Fund and the Fund's
investment performance. The Directors also oversee the services furnished to
the Fund by Templeton Asset Management Ltd.--Hong Kong branch, the Fund's
investment manager (the "Investment Manager"), and various other service
providers. The Fund currently pays the Independent Directors an annual retainer
of $2,400 and a fee of $400 per Board meeting attended. Directors serving on
the Audit Committee of the Fund and other investment companies in Franklin
Templeton Investments receive a flat fee of $2,000 per Audit Committee meeting
attended, a portion of which is allocated to the Fund. Members of a committee
are not compensated for any committee meeting held on the day of a Board
meeting.

During the fiscal year ended December 31, 2005, there were six meetings of
the Board, three meetings of the Audit Committee, and five meetings of the
Nominating Committee. Each Director then in office attended at least 75% of the
aggregate of the total number of meetings of the Board and the total number of
meetings held by all committees of the Board on which the Director served. The
Fund does not currently have a formal policy regarding Directors' attendance at
the annual shareholders' meeting. No Directors attended the Fund's last annual
meeting held on May 20, 2005.

Certain Directors and officers of the Fund are shareholders of Resources and
may receive indirect remuneration due to their participation in management fees
and other fees received by the Investment Manager and its affiliates from the
funds in Franklin Templeton Investments. The Investment Manager or its
affiliates pay the salaries and expenses of the officers. No pension or
retirement benefits are accrued as part of Fund expenses.

The table below indicates the total fees paid to Independent Directors by
the Fund individually and by all of the funds in Franklin Templeton
Investments. These Directors also serve as directors or trustees of other funds
in Franklin Templeton Investments, many of which hold meetings at different
dates and times. The Directors and the Fund's management believe that having
the same individuals serving on the boards of many of the funds in Franklin
Templeton Investments enhances the ability of each fund to obtain, at a
relatively modest cost to each separate fund, the services of high caliber,
experienced and knowledgeable Independent Directors who can more effectively
oversee the management of the funds.

Number of Boards within
Aggregate Total Compensation from Franklin Templeton
Compensation Franklin Templeton Investments Fund Complex
Name of Director from the Fund/(1)/ Investments Fund Complex/(2)/ on which Director Serves/(3)/
---------------- ----------------- ---------------------------- ----------------------------

Harris J. Ashton............ $4,267 $404,038 42
Frank J. Crothers........... 4,352 151,466 14
S. Joseph Fortunato......... 4,267 406,036 43
Edith E. Holiday............ 4,267 403,749 41
Gordon S. Macklin........... 3,867 379,002 42
Fred R. Millsaps/(4)/....... 4,352 225,466 0
David W. Niemiec/(5)/....... 1,400 42,687 13
Frank A. Olson.............. 4,352 231,486 29
Larry D. Thompson/(5)/...... 1,000 35,187 12
Constantine D. Tseretopoulos 4,352 151,466 14
Robert E. Wade/(6)/......... 0 220,234 15

--------
/(1)/ Compensation received for the fiscal year ended December 31, 2005.
/(2)/ Compensation received for the calendar year ended December 31, 2005.
/(3)/ We base the number of boards on the number of U.S. registered investment
companies in the Franklin Templeton Investments fund complex. This number
does not include the total number of series or funds within each
investment company for which the Board members are responsible. Franklin
Templeton Investments currently includes 47 U.S. registered investment
companies, with approximately 153 U.S. based funds or series.
/(4)/ Mr. Millsaps retired effective December 31, 2005.
/(5)/ Messrs. Niemiec and Thompson were appointed to the Board in October 2005.
/(6)/ Mr. Wade was appointed to the Board effective March 1, 2006.

Board members historically have followed a policy of having substantial
investments in one or more of the funds in Franklin Templeton Investments, as
is consistent with their individual financial goals. In February 1998, this
policy was formalized through adoption of a requirement that each board member
invest one-third of the fees received for serving as a director or trustee of a
Templeton fund in shares of one or more Templeton funds and one-third of the
fees received for serving as a director or trustee of a Franklin fund in shares
of one or more Franklin funds until the value of such investments equals or
exceeds five times the annual fees paid to such board member. Investments in
the name of family members or entities controlled by a board member constitute
fund holdings of such board member for purposes of this policy, and a
three-year phase-in period applies to such investment requirements for newly
elected board members.

Who are the Executive Officers of the Fund?

Officers of the Fund are appointed by the Directors and serve at the
pleasure of the Board. Listed below, for the Executive Officers, are their
names, ages and addresses, as well as their positions and length of service
with the Fund, and principal occupations during the past five years.

Name, Age and Address Position Length of Time Served
-------------------------------------------------------------------------------------------------------------------

Charles B. Johnson Chairman of the Board, Director and Vice President
Director and since 1994 and Chairman of the Board
Vice President since 1995

Please refer to the table "Interested Director serving until 2007 Annual Meeting of Shareholders" for additional
information about Mr. Charles B. Johnson.
-------------------------------------------------------------------------------------------------------------------
Mark Mobius (69) President and President since 1994 and
17th Floor, The Chater House Chief Executive Officer-- Chief Executive Officer--
8 Connaught Road Investment Management Investment Management since 2002
Central Hong Kong

Principal Occupation During Past 5 Years:
Portfolio Manager of various Templeton advisory affiliates; Managing Director, Templeton Asset Management
Ltd.; Executive Vice President and Director, Templeton Global Advisors Limited; and officer and/or director, as
the case may be, of some of the subsidiaries of Franklin Resources, Inc. and of six of the investment companies
in Franklin Templeton Investments; and formerly, President, International Investment Trust Company Limited
(investment manager of Taiwan R.O.C. Fund) (1986-1987); and Director, Vickers da Costa, Hong Kong
(1983-1986).
-------------------------------------------------------------------------------------------------------------------
Rupert H. Johnson, Jr. (65) Vice President Since 1996
One Franklin Parkway
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Vice Chairman, Member--Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and
Director, Franklin Templeton Distributors, Inc.; Director, Franklin Advisers, Inc.; Senior Vice President,
Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 45 of the investment companies in Franklin Templeton
Investments.
-------------------------------------------------------------------------------------------------------------------
Harmon E. Burns (61) Vice President Since 1996
One Franklin Parkway
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Vice Chairman, Member--Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and
Director, Franklin Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; and officer
and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of
45 of the investment companies in Franklin Templeton Investments.
--------------------------------------------------------------------------------------------------------------------

Name, Age and Address Position Length of Time Served
-------------------------------------------------------------------------------------------------------------

Jimmy D. Gambill (58) Senior Vice President and Since 2002
500 East Broward Blvd. Chief Executive Officer--
Suite 2100 Finance and Administration
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of
47 of the investment companies in Franklin Templeton Investments.
-------------------------------------------------------------------------------------------------------------
Jeffrey A. Everett (42) Vice President Since 2001
P. O. Box N-7759
Lyford Cay, Nassau
Bahamas

Principal Occupation During Past 5 Years:
President and Director, Templeton Global Advisors Limited; and officer of 14 of the investment companies in
Franklin Templeton Investments.
-------------------------------------------------------------------------------------------------------------
John R. Kay (65) Vice President Since 1994
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Vice President, Templeton Worldwide, Inc.; Assistant Vice President, Franklin Templeton Distributors, Inc.;
Senior Vice President, Franklin Templeton Services, LLC; and officer of some of the other subsidiaries of
Franklin Resources, Inc. and of 32 of the investment companies in Franklin Templeton Investments; and
formerly, Vice President and Controller, Keystone Group, Inc.
-------------------------------------------------------------------------------------------------------------
Craig S. Tyle (45) Vice President and Since October 2005
One Franklin Parkway Assistant Secretary
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of 47 of the investment
companies in Franklin Templeton Investments; and formerly, Partner, Shearman & Sterling, LLP (2004-2005);
and General Counsel, Investment Company Institute (ICI) (1997-2004).
-------------------------------------------------------------------------------------------------------------

Name, Age and Address Position Length of Time Served
-------------------------------------------------------------------------------------------------------------

Barbara J. Green (58) Vice President and Vice President since 2000 and
One Franklin Parkway Assistant Secretary Assistant Secretary since 2004
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice
President, Templeton Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC,
Franklin Investment Advisory Services, LLC, Franklin Mutual Advisers, LLC, Franklin Templeton Alternative
Strategies, Inc., Franklin Templeton Investor Services, LLC, Franklin Templeton Services, LLC, Franklin
Templeton Distributors, Inc., Templeton Investment Counsel, LLC and Templeton/Franklin Investment Services,
Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the investment
companies in Franklin Templeton Investments; and formerly, Deputy Director, Division of Investment
Management, Executive Assistant and Senior Advisor to the Chairman, Counselor to the Chairman, Special
Counsel and Attorney Fellow, U.S. Securities and Exchange Commission (1986-1995); Attorney, Rogers &
Wells (until 1986); and Judicial Clerk, U.S. District Court (District of Massachusetts) (until 1979).
-------------------------------------------------------------------------------------------------------------
David P. Goss (58) Vice President and Since 2000
One Franklin Parkway Assistant Secretary
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Senior Associate General Counsel, Franklin Templeton Investments; officer and director of one of the
subsidiaries of Franklin Resources, Inc.; and officer of 47 of the investment companies in Franklin Templeton
Investments.
-------------------------------------------------------------------------------------------------------------
Robert C. Rosselot (45) Secretary Since 2004
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice
President and Assistant Secretary, Templeton Investment Counsel, LLC; Vice President, Secretary and Trust
Officer, Fiduciary Trust International of the South; and officer of 14 of the investment companies in Franklin
Templeton Investments.
--------------------------------------------------------------------------------------------------------------
Galen G. Vetter (54) Chief Financial Officer and Since 2004
500 East Broward Blvd. Chief Accounting Officer
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Senior Vice President, Franklin Templeton Services, LLC; officer of 47 of the investment companies in Franklin
Templeton Investments; and formerly, Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner,
McGladrey & Pullen, LLP (1979-1987 and 1991-2004).
--------------------------------------------------------------------------------------------------------------

Name, Age and Address Position Length of Time Served
------------------------------------------------------------------------------------------------------------

Gregory R. Seward (49) Treasurer Since 2004
500 East Broward Blvd. Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Vice President, Franklin Templeton Services, LLC; officer of 16 of the investment companies in Franklin
Templeton Investments; and formerly, Vice President, JPMorgan Chase (2000-2004) and American General
Financial Group (1991-2000).
------------------------------------------------------------------------------------------------------------
James M. Davis (53) Chief Compliance Officer Chief Compliance Officer since
One Franklin Parkway and Vice President-- 2004 and Vice President--AML
San Mateo, CA 94403-1906 AML Compliance Compliance since February 2006

Principal Occupation During Past 5 Years:
Director, Global Compliance, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin
Templeton Investments; and formerly, Director of Compliance, Franklin Resources, Inc. (1994-2001).
------------------------------------------------------------------------------------------------------------

..ADDITIONAL INFORMATION ABOUT THE FUND

The Investment Manager. The Investment Manager of the Fund is Templeton
Asset Management Ltd.--Hong Kong branch, a Singapore company with a branch
office at The Chater House, 17th Floor, 8 Connaught Road, Central Hong Kong.
Pursuant to an investment management agreement, the Investment Manager manages
the investment and reinvestment of Fund assets. The Investment Manager is an
indirect, wholly owned subsidiary of Resources.

The Administrator. The administrator of the Fund is Franklin Templeton
Services, LLC ("FT Services"), with offices at 500 East Broward Boulevard,
Suite 2100, Fort Lauderdale, Florida 33394-3091. FT Services is an indirect,
wholly owned subsidiary of Resources and an affiliate of the Investment
Manager. Pursuant to an administration agreement, FT Services performs certain
administrative functions for the Fund. In addition, the Fund and FT Services
have entered into a Japanese shareholder servicing and administration agreement
with Nomura Asset Management U.S.A. Inc. ("NAM-USA"), formerly Nomura Capital
Management, Inc., under which NAM-USA performs certain administrative functions
in Japan, subject to FT Services' supervision. NAM-USA is an affiliate of
Nomura International (Hong Kong) Limited, an initial underwriter of the Fund's
shares. NAM-USA has offices at 180 Maiden Lane, 26th Floor, New York, New York
10038.

The Transfer Agent. The transfer agent, registrar and dividend disbursement
agent for the Fund is Mellon Investor Services LLC, 480 Washington Boulevard,
Jersey City, New Jersey 07310.

The Custodian. The custodian for the Fund is JPMorgan Chase Bank, MetroTech
Center, Brooklyn, New York 11245.

Other Matters. The Fund's last audited financial statements and annual
report for the fiscal year ended December 31, 2005, are available free of
charge. To obtain a copy, please call 1-800/DIAL BEN(R) (1-800-342-5236) or
forward a written request to Franklin Templeton Investor Services, LLC, P.O.
Box 33030, St. Petersburg, Florida 33733-8030.

On May 29, 2002, the Fund's shareholders approved an Agreement and Plan of
Reorganization (the "Plan") that provides for the reorganization of the Fund
from a Maryland corporation to a Delaware statutory trust. The completion of
the reorganization is pending guidance from the National Tax Agency in Japan
relating to the tax treatment of the Plan under Japanese laws with respect to
the Fund's Japanese shareholders. If and when the reorganization is completed,
the Delaware statutory trust will be the successor to the Fund. Therefore, the
use of the term "Fund" in this proxy statement includes such successor entity.

Principal Shareholders. As of March 31, 2006, the Fund had 37,770,115
shares outstanding and total net assets of $847,861,598. The Fund's shares are
listed on the NYSE (NYSE: TDF) and on the Osaka Securities Exchange (Symbol:
8683). From time to time, the number of shares held in "street name" accounts
of various securities dealers for the benefit of their clients may exceed 5% of
the total shares outstanding. To the knowledge of the Fund's management, as of
March 31, 2006, there were no other entities holding beneficially or of record
more than 5% of the Fund's outstanding shares.

In addition, to the knowledge of the Fund's management, as of March 31,
2006, no nominee or Director of the Fund owned 1% or more of the outstanding
shares of the Fund, and the Directors and officers of the Fund owned, as a
group, less than 1% of the outstanding shares of the Fund.

Contacting the Board of Directors. If a shareholder wishes to send a
communication to the Board, such correspondence should be in writing and
addressed to the Board of Directors at the Fund's offices, 500 East Broward
Boulevard, Suite 2100, Fort Lauderdale, FL 33394-3091, Attention: Secretary.
The correspondence will be given to the Board for review and consideration.

..AUDIT COMMITTEE

Audit Committee and Independent Registered Public Accounting Firm. The
Fund's Audit Committee is responsible for the appointment, compensation and
retention of the Fund's independent registered public accounting firm
("auditors"), including evaluating their independence, recommending the
selection of the Fund's auditors to the full Board, and meeting with such
auditors to consider and review matters relating to the Fund's financial
reports and internal accounting. The Audit Committee is currently comprised of
Messrs. Crothers, Niemiec, Olson and Tseretopoulos, all of whom are Independent
Directors and also are considered to be "independent" as that term is defined
by the listing standards applicable to the Fund.

Selection of Auditors. The Audit Committee and the Board have selected the
firm of PricewaterhouseCoopers LLP ("PwC") as auditors of the Fund for the
current fiscal year. Representatives of PwC are not expected to be present at
the Meeting, but will have the opportunity to make a statement if they wish,
and will be available should any matter arise requiring their presence.

Audit Fees. The aggregate fees paid to PwC for professional services
rendered by PwC for the audit of the Fund's annual financial statements or for
services that are normally provided by PwC in connection with statutory and
regulatory filings or engagements were $46,955 for the fiscal year ended
December 31, 2005 and $43,500 for the fiscal year ended December 31, 2004.

Audit-Related Fees. There were no fees paid to PwC for assurance and
related services by PwC to the Fund that are reasonably related to the
performance of the audit or review of the Fund's financial statements and not
reported under "Audit Fees" above.

In addition, the Audit Committee pre-approves PwC's engagement for
audit-related services to be provided to the Investment Manager and certain
entities controlling, controlled by, or under common control with the
Investment Manager that provide ongoing services to the Fund, which engagements
relate directly to the operations and financial reporting of the Fund. The fees
for these services were $0 for the fiscal year ended December 31, 2005 and
$48,759 for the fiscal year ended December 31, 2004. The services for which
these fees were paid included attestation services.

Tax Fees. PwC did not render any tax compliance, tax advice or tax planning
services ("tax services") to the Fund for the fiscal year ended December 31,
2005 or for the fiscal year ended December 31, 2004.

In addition, the Audit Committee pre-approves PwC's engagement for tax
services to be provided to the Investment Manager and certain entities
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund, which engagements relate directly to
the operations and financial reporting of the Fund. The fees for these services
were $22,571 for the fiscal year ended December 31, 2005 and $0 for the fiscal
year ended December 31, 2004. The services for which these fees were paid
included tax compliance and advice.

All Other Fees. The aggregate fees paid for products and services provided
by PwC to the Fund, other than the services reported above, were $0 for the
fiscal year ended December 31, 2005 and $441 for the fiscal year ended
December 31, 2004. The services for which these fees were paid included review
of materials provided to the Board in connection with the investment management
contract renewal process.

In addition, the Audit Committee pre-approves PwC's engagement for other
services to be provided to the Investment Manager and certain entities
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund, which engagements relate directly to
the operations and financial reporting of the Fund. The aggregate fees paid to
PwC for such other services and not reported above were $289 for the Fund's
fiscal year ended December 31, 2005 and $159,559 for the fiscal year ended
December 31, 2004. The services for which these fees were paid included review
of materials provided to the Board in connection with the investment management
contract renewal process.

Aggregate Non-Audit Fees. The aggregate non-audit fees for services
provided by PwC to the Fund, to the Investment Manager or to any entity
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund were $22,860 for the fiscal year
ended December 31, 2005 and $208,579 for the fiscal year ended December 31,
2004.

The Audit Committee has determined that the provision of the non-audit
services that were rendered to the Investment Manager and to any entities
controlling, controlled by, or under common control with the Investment Manager
that provide ongoing services to the Fund is compatible with maintaining PWC's
independence.

Audit Committee Pre-Approval Policies and Procedures. As of the date of
this proxy statement, the Audit Committee has not adopted written pre-approval
policies and procedures. As a result, all such services described above and
provided by PwC must be directly pre-approved by the Audit Committee.

Audit Committee Report. The Board has adopted and approved a formal written
charter for the Audit Committee, which sets forth the Audit Committee's
responsibilities. A copy of the charter was included in the Fund's proxy
statement for its 2005 Annual Meeting of Shareholders.

As required by the charter, the Audit Committee reviewed the Fund's audited
financial statements and met with management, as well as with PwC, the Fund's
auditors, to discuss the financial statements.

The Audit Committee received the written disclosures and the letter from PwC
required by Independence Standards Board Standard No. 1. The Audit Committee
also received the report of PwC regarding the results of their audit. In
connection with their review of the financial statements and the auditors'
report, the members of the Audit Committee discussed with a representative of
PwC, PwC's independence, as well as the following: the auditors'
responsibilities in accordance with generally accepted auditing standards; the
auditors' responsibilities for information prepared by management that
accompanies the Fund's audited financial statements and any procedures
performed and the results; the initial selection of, and whether there were any
changes in, significant accounting policies or their application; management's
judgments and accounting estimates; whether there were any significant audit
adjustments; whether there were any disagreements with management; whether
there was any consultation with other accountants; whether there were any major
issues discussed with management prior to the auditors' retention; whether the
auditors encountered any difficulties in dealing with management in performing
the audit; and the auditors' judgments about the quality of the Fund's
accounting principles.

Based on its review and discussions with management and the Fund's auditors,
the Audit Committee did not become aware of any material misstatements or
omissions in the financial statements. Accordingly, the Audit Committee
recommended to the Board that the audited financial statements be included in
the Fund's Annual Report to Shareholders for the fiscal year ended December 31,
2005 for filing with the U.S. Securities and Exchange Commission.

AUDIT COMMITTEE

Fred R. Millsaps (Chairman through
December 31, 2005)
Frank A. Olson, Chairman
Frank J. Crothers
David W. Niemiec
Constantine D. Tseretopoulos

..FURTHER INFORMATION ABOUT VOTING AND THE MEETING

Solicitation of Proxies. Your vote is being solicited by the Directors. The
cost of soliciting proxies, including the fees of a proxy soliciting agent, is
borne by the Fund. The Fund reimburses brokerage firms and others for their
expenses in forwarding proxy material to the beneficial owners and soliciting
them to execute proxies. In addition, the Fund may retain a professional proxy
solicitation firm to assist with any necessary solicitation of proxies. The
Fund expects that the solicitation would be primarily by mail, but may also
include telephone, facsimile, electronic or other means of communication. If
the Fund does not receive your proxy by a certain time you may receive a
telephone call from a proxy soliciting agent asking you to vote. If
professional proxy solicitors are retained, it is expected that soliciting fees
would be approximately $5,000, plus expenses. The Fund does not reimburse
Directors and officers of the Fund, or regular employees and agents of the
Investment Manager involved in the solicitation of proxies. The Fund intends to
pay all costs associated with the solicitation and the Meeting.

Voting by Broker-Dealers. The Fund expects that, before the Meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers, as well as the Japan Securities Settlement & Custody, Inc. ("JSSC")
holding shares of the Fund for its beneficial owners, will request voting
instructions from their

customers and beneficial owners. If these instructions are not received by the
date specified in the broker-dealer firms' or JSSC's proxy solicitation
materials, the Fund understands that NYSE Rules permit the broker-dealers and
JSSC to vote on the Proposal on behalf of their customers and beneficial
owners. Certain broker-dealers may exercise discretion over shares held in
their name for which no instructions are received by voting these shares in the
same proportion as they vote shares for which they received instructions.

Quorum. A majority of the shares entitled to vote--present in person or
represented by proxy-- constitutes a quorum at the Meeting. The shares over
which broker-dealers and JSSC have discretionary voting power, the shares that
represent "broker non-votes" (i.e., shares held by brokers or nominees as to
which (i) instructions have not been received from the beneficial owners or
persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter), and the shares whose
proxies reflect an abstention on any item will all be counted as shares present
and entitled to vote for purposes of determining whether the required quorum of
shares exists.

Method of Tabulation. The Proposal to elect Directors requires the
affirmative vote of the holders of a plurality of the Fund's shares present and
voting on the Proposal at the Meeting. Abstentions and broker non-votes will be
treated as votes present at the Meeting, but will not be treated as votes cast.
Abstentions and broker non-votes, therefore, will have no effect on the
Proposal.

Adjournment. The holders of a majority of shares entitled to vote at the
Meeting and present in person or by proxy, whether or not sufficient to
constitute a quorum, or any officer present entitled to preside or act as
Secretary of the Meeting may adjourn the Meeting. Such authority to adjourn the
Meeting may be used in the event that a quorum is not present at the Meeting or
in the event that a quorum is present but sufficient votes have not been
received to approve the Proposal or to permit further solicitation of proxies
or for any other reason consistent with Maryland law and the Fund's Articles of
Incorporation and By-Laws. Unless otherwise instructed by a shareholder
granting a proxy, the persons designated as proxies may use their discretionary
authority to vote as instructed by management of the Fund on questions of
adjournment and on any other proposals raised at the Meeting to the extent
permitted by the SEC's proxy rules, including proposals for which management of
the Fund did not have timely notice, as set forth in the SEC's proxy rules and
the Fund's proxy statement for the 2005 annual meeting.

Shareholder Proposals. If and when the reorganization of the Fund from a
Maryland corporation to a Delaware statutory trust is completed will dictate
the requirements relating to shareholder proposals for the 2007 Annual Meeting
of Shareholders. This section describes those requirements.

Submission of Shareholder Proposals to the Fund. If the reorganization is
not completed, the Fund will remain a Maryland corporation, and the proxy rules
under the federal securities laws alone will continue to govern shareholder
proposals. The Fund anticipates that its 2007 Annual Meeting of Shareholders
will be held on or about May 18, 2007. A shareholder who wishes to submit a
proposal for consideration for inclusion in the Fund's proxy statement for the
2007 Annual Meeting of Shareholders must send such written proposal to the
Fund's offices, at 500 East Broward Boulevard, Suite 2100, Fort Lauderdale,
Florida 33394-3091, Attention: Secretary, so that it is received no later than
December 18, 2006 in order to be included in the Fund's proxy statement and
proxy card relating to that meeting and presented at the meeting.

A shareholder of the Fund who has not submitted a written proposal for
inclusion in the Fund's proxy statement by December 18, 2006, as described
above, may nonetheless present a proposal at the Fund's 2007 Annual Meeting of
Shareholders if such shareholder notifies the Fund in writing, at the Fund's
offices, of such

proposal by March 3, 2007. If a shareholder fails to give notice by this date,
then the persons designated as proxies for the 2007 Annual Meeting of
Shareholders may exercise discretionary voting power with respect to any such
proposal.

Submission of a proposal by a shareholder does not guarantee that the
proposal will be included in the Fund's proxy statement or presented at the
meeting.

Submission of Shareholder Proposals to the Trust. If the reorganization is
completed, the Fund will be reorganized as a Delaware statutory trust (the
"Trust"), and the Trust's By-Laws, in addition to the proxy rules under the
federal securities laws, will govern shareholder proposals. The Trust
anticipates that the 2007 Annual Meeting of Shareholders will be held on or
about May 18, 2007. A shareholder who wishes to submit a proposal for
consideration for inclusion in the Trust's proxy statement for the 2007 Annual
Meeting of Shareholders must send such written proposal to the Trust's offices,
at 500 East Broward Boulevard, Suite 2100, Fort Lauderdale, Florida 33394-3091,
Attention: Secretary, so that it is received no later than December 18, 2006 in
order to be included in the Trust's proxy statement and proxy card relating to
that meeting and presented at the meeting.

A shareholder of the Trust who has not submitted a written proposal for
inclusion in the Trust's proxy statement by December 18, 2006, as described
above, may nonetheless present a proposal at the Trust's 2007 Annual Meeting of
Shareholders if such shareholder notifies the Trust in writing, at the Trust's
offices, of such proposal not earlier than December 19, 2006 and not later than
January 18, 2007. If a shareholder fails to give notice within these dates,
then the matter shall not be eligible for consideration at the shareholders'
meeting. If, notwithstanding the effect of the foregoing notice provisions, a
shareholder proposal is acted upon at the 2007 Annual Meeting of Shareholders,
the persons designated as proxy holders for proxies solicited by the Board for
the 2007 Annual Meeting of Shareholders may exercise discretionary voting power
with respect to any shareholder proposal not received by the Trust at the
Trust's offices by March 3, 2007.

In addition to the requirements set forth above, a shareholder must comply
with the following:

1. A shareholder intending to present a proposal must (i) be entitled to
vote at the meeting; (ii) comply with the notice procedures set forth in
this proxy statement and the Trust's By-Laws; and (iii) have been a
shareholder of record at the time the shareholder's notice was received
by the Secretary of the Trust.

2. Each notice regarding nominations for the election of Trustees shall set
forth (i) the name, age, business address and, if known, residence
address of each nominee proposed in such notice; (ii) the principal
occupation or employment of each such nominee; (iii) the number of
outstanding shares of the Trust which are beneficially owned by each
such nominee; and (iv) all such other information regarding each such
nominee that would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the SEC had each such
nominee been nominated by the Trustees of the Trust. In addition, the
shareholder making such nomination shall promptly provide any other
information reasonably requested by the Trust.

3. Each notice regarding business proposals shall set forth as to each
matter: (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the
meeting; (ii) the name and address, as they appear on the Trust's books,
of the shareholder proposing such business; (iii) the number of
outstanding shares of the Trust which are beneficially owned by the
shareholder; (iv) any material interest of the shareholder in such
business; and (v) all such other information regarding each such matter
that would have been required to be included in a proxy

statement filed pursuant to the proxy rules of the SEC had each such
matter been proposed by the Trustees of the Trust.

Submission of a proposal by a shareholder does not guarantee that the
proposal will be included in the Trust's proxy statement or presented at the
meeting.

A shareholder proposal may be presented at the 2007 Annual Meeting of
Shareholders only if such proposal concerns a matter that may be properly
brought before the meeting under applicable federal proxy rules and state law.

By Order of the Board of Directors,

Robert C. Rosselot
Secretary

April 17, 2006

TLTDF PROXY 4/06

The Board of Directors unanimously recommends a vote FOR the Proposal.

Proposal - Election of Directors.

FOR all nominees WITHHOLD AUTHORITY
listed (except as to vote for
marked to the right) all nominees listed

|_| |_|

Nominees: 01 Gordon S. Macklin, 02 David W. Niemiec, 03 Frank A. Olson,
04 Larry D. Thompson and 05 Robert E. Wade

To withhold authority to vote for any individual nominee, write that nominee's
name on the line below.

________________________________________________________________________________

YES NO

I PLAN TO ATTEND THE MEETING. |_| |_|

Signature(s): ______________________________________________ Dated _______, 2006

NOTE: Please sign exactly as your name appears on this Proxy. If signing for
estates, trusts or corporations, title or capacity should be stated. If shares
are held jointly, each holder should sign.

--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^

TEMPLETON DRAGON FUND, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 19, 2006

The undersigned hereby revokes all previous proxies for his/her shares and
appoints SHEILA M. BARRY, ROBERT C. ROSSELOT and LORI A. WEBER, and each of
them, proxies of the undersigned with full power of substitution to vote all
shares of Templeton Dragon Fund, Inc. (the "Fund") that the undersigned is
entitled to vote at the Fund's Annual Meeting of Shareholders (the "Meeting") to
be held at 500 East Broward Boulevard, 12th Floor, Fort Lauderdale, Florida
33394 at 12 Noon, Eastern time, on May 19, 2006, including any postponements or
adjournments thereof, upon the matter set forth below and instructs them to vote
upon any other matters that may properly be acted upon at the Meeting.

This Proxy is solicited on behalf of the Board of Directors. It will be
voted as specified. If no specification is made, this Proxy shall be voted FOR
the Proposal (including all nominees for director). If any other matters
properly come before the Meeting to be voted on, the proxy holders will vote,
act and consent on those matters in accordance with the views of management.

(Continued and to be marked, dated and signed, on the other side)

--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^

You can now access your Templeton Dragon Fund, Inc. account online.

Access your Fund account online via Investor ServiceDirect(R) (ISD).

Mellon Investor Services LLC, Transfer Agent for the Fund, now makes it easy and
convenient to get current information on your shareholder account.

o View account status o Make address changes
o View certificate history o Obtain a duplicate 1099 tax form
o View book-entry information o Establish/change your PIN
o View payment history for dividends

Visit us on the web at http://www.melloninvestor.com/isd

For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday, Eastern Time

Investor ServiceDirect(R) is a registered trademark of
Mellon Investor Services LLC