Templeton Dragon Fund, Inc. DEFA14A
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[GRAPHIC OMITTED] One Franklin Parkway
San Mateo, CA 94403-1906
tel 650/312.2000
franklintempleton.com
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From: Franklin Templeton Investments
Contact: Lisa Gallegos
Tel: (650) 312-3395
franklintempleton.com
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FOR IMMEDIATE RELEASE
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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.
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