Filed by Templeton Dragon
Fund, Inc.
Pursuant to Rule 425 under
the Securities Act of 1933
and deemed filed pursuant
to Rule 14a-12 under the
Securities Exchange Act of
1934
Subject Company: Templeton
Vietnam and Southeast Asia
Fund, Inc.
Commission File No. 811-08632
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC. AND
TEMPLETON DRAGON FUND, INC. ANNOUNCE PROPOSED
REORGANIZATION
TEMPLETON DRAGON FUND ANNOUNCES TENDER OFFERS
JANUARY 4, 2002 -- PRESS RELEASE Q'S AND A'S
Q: WHY DID THE BOARDS OF VIETNAM FUND AND DRAGON FUND TAKE THESE ACTIONS?
A: As noted in the January 4, 2002 press release, Vietnam Fund and Dragon Fund
intend to file relevant materials with the U.S. Securities and Exchange
Commission, including a proxy statement by Vietnam Fund, a proxy statement
by Dragon Fund, and a registration statement by Dragon Fund that contains a
prospectus. These materials will include detailed information regarding the
transactions, the Boards' considerations and the Boards' recommendations
and will be provided to shareholders in accordance with federal securities
laws.
Q: HOW ARE THE RECENT ACTIONS TAKEN BY DRAGON FUND'S BOARD OF DIRECTORS RELATED
TO THE DRAGON FUND'S "MEASUREMENT PERIOD" AS ANNOUNCED IN JUNE 2001?
A: As announced in a press release dated June 22, 2001, Dragon Fund's Board
established a nine month "measurement period" (ending on April 30, 2002)
for evaluating the discount of the market value of the Dragon Fund's shares
from their net asset value. The press release stated that if the Dragon
Fund's share have traded at an average discount from net asset value of 10%
or more during the last 90 days of the "measurement period," (based on the
closing price of every trading day during those 90 days), the Board will
either: (i) commence a tender offer for a portion of the Fund's outstanding
shares; or (ii) submit to shareholders a proposal to reorganize the Fund
with either an open-end or closed-end investment company; or (iii) submit
to shareholders a proposal to convert the Fund to an open-end investment
company. Dragon Fund's Board believes that the Dragon Fund/Vietnam Fund
reorganization and the Dragon Fund tender offers will satisfy and be
consistent with the announcement made in the June 22, 2001 press release.
Q: WHY WAS DRAGON FUND'S MANAGED DISTRIBUTION POLICY DISCONTINUED?
A: Effective January 4, 2002, Dragon Fund's Board of Directors discontinued the
Dragon Fund's managed distribution policy to help comply with requirements
necessary to preserve the tax-free status of the Dragon Fund/Vietnam Fund
reorganization. The tax-free status of the Dragon Fund/Vietnam Fund
reorganization is dependent upon, among other things, the continued holding
by the Dragon Fund of a significant portion of the assets previously held
by the Vietnam Fund. Maintaining the managed distribution program could
involve the sale of some of those assets. In addition, suspension of the
managed distribution policy helps preserve the benefit of capital losses
that may be available to shareholders after the completion of the
reorganization. The Dragon Fund's last distribution pursuant to the managed
distribution policy was paid on December 24, 2001 to shareholders of record
on December 13, 2001. The Dragon Fund Board may recommend similar programs
in the future, depending upon market conditions and regulatory and tax
considerations. Of course there can be no assurance that they will do so.
Q: IF THE REORGANIZATION IS APPROVED, HOW MANY SHARES OF DRAGON FUND WILL EACH
VIETNAM FUND SHAREHOLDER RECEIVE?
A: If the proposed reorganization is consummated, the number of shares to be
received by a Vietnam Fund shareholder will be determined based upon the
relative net asset values of Vietnam Fund and Dragon Fund immediately prior
to the reorganization. A Vietnam Fund shareholder will receive Dragon Fund
shares equal, on a net asset value basis, to the aggregate net asset value
of the shareholder's Vietnam Fund shares immediately prior to the
reorganization. The number of Dragon Fund shares received may be more or
less than the number of Vietnam Fund shares exchanged, but the aggregate
net asset value of each shareholder's holdings immediately before and after
the transaction will be the same.
Q: HOW WILL DRAGON FUND SHAREHOLDERS BE NOTIFIED ABOUT THE COMMENCEMENT OF THE
TENDER OFFER FOR SHARES OF DRAGON FUND?
A: A press release will be issued once the tender offer has commenced. When
available, Dragon Fund shareholders will also receive written tender offer
materials, including a tender offer statement, which will provide detailed
information about the tender offer. Shareholders are urged to read these
materials.
* * * * *
In connection with the proposed reorganization transaction, Vietnam Fund and
Dragon Fund intend to file relevant materials with the U.S. Securities and
Exchange Commission ("SEC"), including a proxy statement by Vietnam Fund, a
proxy statement by Dragon Fund, and a registration statement on Form N-14 by
Dragon Fund that contains a prospectus. Because those documents contain
important information, shareholders of Vietnam Fund and Dragon Fund are urged to
read them, if and 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 transaction-related documents, when
available, for free by calling Vietnam Fund at 1-800-342-5236 or by calling
Dragon Fund at 1-800-342-5236.
Vietnam Fund, its directors and executive officers and certain other persons,
may be deemed to be participants in Vietnam Fund's solicitation of proxies from
its shareholders in connection with the proposed transaction. Information about
the directors is set forth in the proxy statement for Vietnam Fund's 2001 annual
meeting of shareholders. Participants in Vietnam Fund's solicitation may also be
deemed to include the following executive officers or other persons whose
interests in Vietnam Fund may not be described in the proxy statement for
Vietnam Fund's 2001 annual meeting: Mark Mobius (President); Charles B. Johnson
(Vice President); Rupert H. Johnson, Jr. (Vice President); Harmon E. Burns (Vice
President); Charles E. Johnson (Vice President); Martin L. Flanagan (Vice
President); Jeffrey A. Everett (Vice President); 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);
Bruce S. Rosenberg (Treasurer); Holly Gibson Brady (Director of Corporate
Communications - Franklin Resources, Inc.).
Dragon Fund, its directors and executive officers and certain other persons, may
be deemed to be participants in Dragon Fund's solicitation of proxies from its
shareholders in connection with the proposed transaction. Information about the
directors is set forth in the proxy statement for Dragon Fund's 2001 annual
meeting of shareholders. Participants in Dragon Fund's solicitation may also be
deemed to include the following executive officers or other persons whose
interests in Dragon Fund may not be described in the proxy statement for Dragon
Fund's 2001 annual meeting: Mark Mobius (President); Charles B. Johnson (Vice
President); Rupert H. Johnson, Jr. (Vice President); Harmon E. Burns (Vice
President); Charles E. Johnson (Vice President); Martin L. Flanagan (Vice
President); Jeffrey A. Everett (Vice President); 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);
Bruce S. Rosenberg (Treasurer); Holly Gibson Brady (Director of Corporate
Communications - Franklin Resources, Inc.).
As of the date of this communication, none of the foregoing participants
individually beneficially owns in excess of 1% of Vietnam Fund's common stock,
or 1% of Dragon Fund's common stock. Except as disclosed above, to the knowledge
of Vietnam Fund and Dragon Fund, none of their respective directors or executive
officers has any interest, direct or indirect, by security holdings or
otherwise, in Vietnam Fund or Dragon Fund.
Shareholders may obtain additional information regarding the interests of the
participants by reading the proxy statement of Vietnam Fund and the proxy
statement and prospectus of Dragon Fund if and when they become available.
This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.
Dragon Fund shareholders are advised to read the tender offer statement when it
is available as it will contain important information. The tender offer
statement, when it is available, and other documents filed by Dragon Fund with
the SEC, including Dragon Fund's most recent annual report, will be available
for free at the SEC's web site (www.sec.gov) or by calling Dragon Fund at
1-800-342-5236.