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.
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(Name of Registrant as Specified in Its Charter)

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(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.:

(3) Filing party:

(4) Date filed:

[LOGO]
FRANKLIN/R/ TEMPLETON/R/
INVESTMENTS

TEMPLETON DRAGON FUND, INC.

IMPORTANT SHAREHOLDER INFORMATION

These materials are for the Annual Meeting of Shareholders scheduled for May
25, 2004 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, separate instructions
are enclosed.

[LOGO]
FRANKLIN/R/ TEMPLETON/R/
INVESTMENTS

TEMPLETON DRAGON FUND, INC.

NOTICE OF 2004 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 25, 2004 at
12 Noon Eastern time.

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

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

By Order of the Board of Directors,

Barbara J. Green
Secretary

April 13, 2004

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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 the Japan Securities Clearing Corporation may exercise a
vote on the Proposal on your behalf if you do not return a proxy card.
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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 April 2, 2004 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 proxy statement were first mailed to
shareholders of record on or about April 13, 2004.

On what issue am I being asked to vote?

You are being asked to vote on the election of four 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
four 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, separate 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 (the "Committee") consisting of Edith E. Holiday
(Chairman), Frank J. Crothers and Gordon S. Macklin, 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 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 Committee generally
considers the potential candidate's educational background, business or
professional experience, and reputation. In addition, the 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, (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 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
shareholders. Such individuals are evaluated based upon the criteria described
above. To date, the 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 Committee, however, will review shareholders'
recommendations to fill vacancies on the Board if these recommendations are
submitted in writing and addressed to the Committee at the Fund's offices.

The Board has adopted and approved a formal written charter for the
Committee. A copy of the charter is attached as Exhibit A to this proxy
statement.

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 three Directors expire. Edith E. Holiday, Martin L. Flanagan and Charles B.
Johnson have been nominated for three-year terms, set to expire at the 2007
Annual Meeting of Shareholders. Frank A. Olson has been nominated for a
two-year term, set to expire at the 2006 Annual Meeting of Shareholders. These
terms continue, however, until successors are duly elected and qualified. Among
these Directors, Martin L. Flanagan and Charles B. Johnson are each deemed to
be an "interested person" for purposes of the 1940 Act. All of the nominees are
currently members of the Board; however, Mr. Olson is standing for election by
shareholders of the Fund for the first time. An incumbent Independent Director
recommended Mr. Olson for consideration by the Committee as a nominee 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 18.23% and
15.22%, respectively, of its outstanding shares as of December 31, 2003.
Resources, a global investment 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 any
other directorships held by the nominee or Director.

Nominee for Independent Director to serve until 2007 Annual Meeting of
Shareholders:

Number of
Portfolios in
Franklin
Templeton
Investments
Fund Complex
Length of Overseen by
Name, Age and Address Position Time Served Director* Other Directorships Held
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Edith E. Holiday (52) Director Since 1996 97 Director, Amerada Hess
500 East Broward Blvd. Corporation (exploration and
Suite 2100 refining of oil and gas);
Fort Lauderdale, FL 33394-3091 Beverly Enterprises, Inc.
(health care); H.J. Heinz
Company (processed foods and
allied products); RTI
International Metals, Inc.
(manufacture and distribution
of titanium); and Canadian
National Railway (railroad).

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).
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Nominee for Independent Director to serve until 2006 Annual Meeting of
Shareholders:

Frank A. Olson (71) Director Since 2003 21 Director, Becton Dickinson and
500 East Broward Blvd. Co. (medical technology);
Suite 2100 White Mountains Insurance
Fort Lauderdale, FL 33394-3091 Group Ltd. (holding company);
and Amerada Hess Corporation
(exploration and refining of oil
and gas).

Principal Occupation During Past 5 Years:
Chairman of the Board, The Hertz Corporation (car rental) (since 1980) (Chief Executive Officer 1977-1999); and
formerly, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
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Nominees for Interested Director to serve until 2007 Annual Meeting of Shareholders:
**Martin L. Flanagan (43) Director and Since 1994 5 None
One Franklin Parkway Vice President
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Co-President and Chief Executive Officer, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer,
Franklin Mutual Advisers, LLC; Executive Vice President, Chief Financial Officer and Director, Templeton
Worldwide, Inc.; Executive Vice President and Chief Operating Officer, Templeton Investment Counsel, LLC;
President and Director, Franklin Advisers, Inc.; Executive Vice President, Franklin Investment Advisory Services, Inc.
and Franklin Templeton Investor Services, LLC; Chief Financial Officer, Franklin Advisory Services, LLC; Chairman,
Franklin Templeton Services, LLC; and officer and/or director or trustee, as the case my be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
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**Charles B. Johnson (71) Chairman of Director and 142 None
One Franklin Parkway the Board, Vice President
San Mateo, CA 94403-1906 Director and since 1994 and
Vice President Chairman of the
Board since
1995

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 46 of the investment
companies in Franklin Templeton Investments.
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Independent Directors serving until 2006 Annual Meeting of Shareholders:

Gordon S. Macklin (75) Director Since 1994 142 Director, White Mountains
500 East Broward Blvd. Insurance Group, Ltd.
Suite 2100 (holding company); Martek
Fort Lauderdale, FL 33394-3091 Biosciences Corporation;
MedImmune, Inc.
(biotechnology); and
Overstock.com (Internet
services); and formerly,
Director, MCI Communication
Corporation (subsequently
known as MCI WorldCom, Inc.
and WorldCom, Inc.)
(communication services)
(1988-2002) and Spacehab,
Inc. (aerospace services)
(1994-2003).

Principal Occupation During Past 5 Years:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company); and formerly, 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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Fred R. Millsaps (74) Director Since 1994 28 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Director of various business and nonprofit organizations; manager of personal investments (1978-present);
and formerly, Chairman and Chief Executive Officer, Landmark Banking Corporation (1969-1978); Financial
Vice President, Florida Power and Light (1965-1969); and Vice President, Federal Reserve Bank of Atlanta
(1958-1965).
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Independent Directors serving until 2005 Annual Meeting of Shareholders:

Harris J. Ashton (71) Director Since 1994 142 Director, Bar-S Foods (meat
500 East Broward Blvd. 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).
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Frank J. Crothers (59) Director Since 1998 21 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091

Principal Occupation During Past 5 Years:
Chairman, Ventures Resources Corporation (Vice Chairman 1996-2003); Vice Chairman, Caribbean Utilities
Co. Ltd.; Director and President, Provo Power Company Ltd.; Director, Caribbean Electric Utility Services
Corporation (Chairman until 2002); director of various other business and nonprofit organizations; and formerly,
Chairman, Atlantic Equipment & Power Ltd. (1977-2003).
----------------------------------------------------------------------------------------------------------------
S. Joseph Fortunato (71) Director Since 1994 143 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.
----------------------------------------------------------------------------------------------------------------
Constantine D. Tseretopoulos (50) Director Since 1998 21 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).
----------------------------------------------------------------------------------------------------------------

Interested Director serving until 2005 Annual Meeting of Shareholders:

**Nicholas F. Brady (73) Director Since 1994 21 Director, Amerada Hess
500 East Broward Blvd. Corporation (exploration and
Suite 2100 refining of oil and gas); and
Fort Lauderdale, FL 33394-3091 C2, Inc. (operating and
investment business); and
formerly, Director, H.J. Heinz
Company (processed foods and
allied products) (1987-1988;
1993-2003).

Principal Occupation During Past 5 Years:
Chairman, Darby Overseas Investments, Ltd., Darby Emerging Markets Investments LDC and Darby
Technology Ventures Group, LLC (investment firms) (1994-present); Director, Templeton Capital Advisors
Ltd. and Franklin Templeton Investment Fund; and formerly, Chairman, Templeton Emerging Markets
Investment Trust PLC (until 2003); Secretary of the United States Department of the Treasury (1988-1993);
Chairman of the Board, Dillon, Read & Co., Inc. (investment banking) (until 1988); and U.S. Senator, New
Jersey (April 1982-December 1982).
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*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.

**Nicholas F. Brady, Martin L. Flanagan, and Charles B. Johnson are "interested
persons" 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.
Mr. Flanagan is considered as an interested person of the Fund due to his
position as an officer of Resources and his position with the Fund. Mr. Brady's
status as an interested person results from his business affiliations with
Resources and Templeton Global Advisors Limited. On October 1, 2003, Resources
acquired all of the shares of Darby Overseas Investments, Ltd. ("Darby
Investments") and the remaining portion of the limited partner interests not
currently owned by Resources of Darby Overseas Partners, L.P. ("Darby
Partners"). Concurrently with this transaction, the Fund ceased paying
directors' fees to Mr. Brady, effective October 1, 2003. Mr. Brady, formerly a
shareholder of Darby Investments and a partner of Darby Partners, will continue
as Chairman of Darby Investments, which is the corporate general partner of
Darby Partners. In addition, Darby Partners and Templeton Global Advisors
Limited are limited partners of Darby Emerging Markets Fund, L.P. ("DEMF"). Mr.
Brady will also continue to serve as Chairman of the corporate general partner
of DEMF, and Darby Partners and Darby Investments own 100% of the stock of the
general partner of DEMF. Resources also is an investor in Darby Technology
Ventures Group, LLC ("DTV") in which Darby Partners is a significant

investor and for which Darby Partners has the right to appoint a majority of the
directors. Templeton Global Advisors Limited also is a limited partner in
Darby--BBVA Latin America Private Equity Fund, L.P. ("DBVA"), a private equity
fund in which Darby Partners is a significant investor, and the general partner
of which Darby Partners controls jointly with an unaffiliated third party. Mr.
Brady is also a director of Templeton Capital Advisors Ltd. ("TCAL"), which
serves as investment manager to certain unregistered funds. TCAL and Templeton
Global Advisors Limited are both indirect subsidiaries of Resources. The
remaining nominees and Directors of the Fund are Independent Directors.

The following tables provide the dollar range of the equity securities of
the Fund and of all funds overseen by the Directors in the Franklin Templeton
Investments fund complex beneficially owned by the Fund's Directors as of March
31, 2004.

Independent Directors:

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
Fred R. Millsaps............ None Over $100,000
Frank A. Olson.............. None Over $100,000
Constantine D. Tseretopoulos None Over $100,000

Interested Directors:

Aggregate Dollar Range of Equity
Securities in all Funds Overseen by the
Dollar Range of Equity Director in the Franklin Templeton
Name of Director Securities in the Fund Investments Fund Complex
-------------------------------------------------------------------------------------------
Nicholas F. Brady........... $10,001--$50,000 Over $100,000
Martin L. Flanagan.......... Over $100,000 Over $100,000
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 $2,000 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, 2003, there were seven 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 29, 2003.

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 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* Investments Fund Complex** on which Director Serves***
--------------------------------------------------------------------------------------------------

Harris J. Ashton............ $4,800 $369,700 46
Nicholas F. Brady........... 3,200 82,300 15
Frank J. Crothers........... 4,926 106,600 15
S. Joseph Fortunato......... 4,800 369,700 47
Andrew H. Hines, Jr.****.... 4,872 202,225 0
Edith E. Holiday............ 4,800 297,707 33
Betty P. Krahmer*****....... 4,800 136,100 0
Gordon S. Macklin........... 4,800 369,700 46
Fred R. Millsaps............ 4,872 204,225 17
Frank A. Olson******........ 2,241 54,150 15
Constantine D. Tseretopoulos 4,884 104,600 15

--------
*Compensation received for the fiscal year ended December 31, 2003.
**Compensation received for the calendar year ended December 31, 2003.
***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 51 registered
investment companies, with approximately 154 U.S. based funds or
series.
****Mr. Hines retired from the Board effective December 31, 2003.
*****Ms. Krahmer retired from the Board effective February 24, 2004.
******Mr. Olson was appointed to the Board in May 2003.

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. In implementing this policy, a board member's fund
holdings existing on February 27, 1998 were valued as of such date, with
subsequent investments valued at cost.

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 Vice since 1994 and Chairman of the
President Board since 1995
Please refer to the table "Nominees for Interested Director to serve until 2007 Annual Meeting of Shareholders"
for additional information about Mr. Charles B. Johnson.
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Mark Mobius (67) President and Chief President since 1994 and Chief
17th Floor, The Chater House Executive Officer-- Executive Officer--Investment
8 Connaught Road Investment Management 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).
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Jimmy D. Gambill (56) 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
51 of the investment companies in Franklin Templeton Investments.
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Name, Age and Address Position Length of Time Served
---------------------------------------------------------------------------------------------------------------

Rupert H. Johnson, Jr. (63) 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. and
Franklin Investment Advisory Services, 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 49 of the investment companies in Franklin Templeton Investments.
---------------------------------------------------------------------------------------------------------------
Harmon E. Burns (59) 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.; Director, Franklin Investment Advisory Services, 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 49 of
the investment companies in Franklin Templeton Investments.
---------------------------------------------------------------------------------------------------------------
Martin L. Flanagan Director and Vice Since 1994
President
Please refer to the table "Nominees for Interested Director to serve until 2007 Annual Meeting of Shareholders"
for additional information about Mr. Martin L. Flanagan.
---------------------------------------------------------------------------------------------------------------
Jeffrey A. Everett (40) 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; officer of 15 of the investment
companies in Franklin Templeton Investments; and formerly, Investment Officer, First Pennsylvania
Investment Research (until 1989).
---------------------------------------------------------------------------------------------------------------
John R. Kay (63) 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 35 of the investment companies in Franklin
Templeton Investments; and formerly, Vice President and Controller, Keystone Group, Inc.
---------------------------------------------------------------------------------------------------------------

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

Murray L. Simpson (66) Vice President and Since 2000
One Franklin Parkway Assistant Secretary
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case
may be, of some of the subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in
Franklin Templeton Investments; and formerly, Chief Executive Officer and Managing Director, Templeton
Franklin Investment Services (Asia) Limited (until 2000); and Director, Templeton Asset Management Ltd.
(until 1999).
------------------------------------------------------------------------------------------------------------
Barbara J. Green (56) Vice President and Vice President since 2000
One Franklin Parkway Secretary and Secretary since 1996
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, Inc., 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 51 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 (56) Vice President and Since 2000
One Franklin Parkway Assistant Secretary
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of
Franklin Resources, Inc.; officer of 51 of the investment companies in Franklin Templeton Investments; and
formerly, President, Chief Executive Officer and Director, Property Resources Equity Trust (until 1999) and
Franklin Select Realty Trust (until 2000).
------------------------------------------------------------------------------------------------------------
Michael O. Magdol (66) Vice President-- Since 2002
600 Fifth Avenue AML Compliance
Rockefeller Center
New York, NY 10048-0772

Principal Occupation During Past 5 Years:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; Director, FTI
Banque, Arch Chemicals, Inc. and Lingnan Foundation; and officer and/or director, as the case may be, of
some of the other subsidiaries of Franklin Resources, Inc. and of 48 of the investment companies in Franklin
Templeton Investments.
------------------------------------------------------------------------------------------------------------

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

Diomedes Loo-Tam (65) Treasurer and Chief Since
One Franklin Parkway Financial Officer March 2004
San Mateo, CA 94403-1906

Principal Occupation During Past 5 Years:
Officer of 51 of the investment companies in Franklin Templeton Investments; Consultant, MyVest
Corporation (software development company and investment advisory services); and formerly,
Director and member of Audit and Valuation Committees, Runkel Funds, Inc. (2002-2003); Treasurer/
Controller of most of the investment companies in Franklin Templeton Investments (1985-2000) and
Senior Vice President, Franklin Templeton Services, LLC (1997-2000).
---------------------------------------------------------------------------------------------------

..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, FT Services has 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, 85 Challenger Road,
Ridgefield Park, New Jersey 07660.

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, 2003, 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 April 2, 2004, the Fund had 37,770,115 shares
outstanding and total net assets of $662,840,655. 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
April 2, 2004, 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 April 2, 2004,
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. However, Charles B. Johnson, who
is Chairman of the Board, Director and an officer of the Fund, Martin L.
Flanagan, who is Director and an officer of the Fund, and Rupert H. Johnson and
Harmon E. Burns, who are officers of the Fund, serve on the administrative
committee of the Franklin Templeton Profit Sharing and 401(k) Plan, which owns
435,940 shares or approximately 1.15% of the outstanding shares of the Fund. In
that capacity, they participate in the voting of such shares. Charles B.
Johnson, Martin L. Flanagan, Rupert H. Johnson and Harmon E. Burns disclaim
beneficial ownership of any shares of the Fund owned by the Franklin Templeton
Profit Sharing and 401(k) Plan, except to the extent of their pecuniary
interest.

Section 16(a) Beneficial Ownership Reporting Compliance. U.S. securities
laws require that the Fund's Directors, officers and shareholders owning more
than 10% of outstanding shares, as well as affiliated persons of its Investment
Manager, report their ownership of the Fund's shares and any changes in that
ownership. Specific due dates for these reports have been established and the
Fund is required to report in this proxy statement any failure to file by these
dates during the fiscal year ended December 31, 2003. All of the filing dates
of these reports were met except that two reports involving one transaction
filed on behalf of Martin L. Flanagan were inadvertently filed late. In making
this disclosure, the Fund relied upon the written representations of the
persons affected and copies of their relevant filings.

Contacting the Board of Directors. If a shareholder wishes to send a
communication to the Board of Directors, 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 its review and
consideration.

..AUDIT COMMITTEE

Audit Committee and Independent Auditors. The Fund's Audit Committee is
responsible for the selection of the Fund's independent auditors, including
evaluating their independence, and meeting with such auditors to consider and
review matters relating to the Fund's financial reports and internal
accounting. The Audit Committee also reviews the maintenance of the Fund's
records and the safekeeping arrangements of the Fund's custodian. The Audit
Committee is comprised of Messrs. Millsaps (Chairman), Crothers, Olson and
Tseretopoulos, all of whom are Independent Directors and also are considered to
be "independent" as that term is defined by the NYSE's listing standards.

Selection of Independent Auditors. The Audit Committee and the Board
selected the firm of PricewaterhouseCoopers LLP ("PwC") as independent 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 $32,549 for the fiscal year ended
December 31, 2003 and $33,650 for the fiscal year ended December 31, 2002.

Audit-Related Fees. The aggregate fees paid to PwC for assurance and
related services by PwC that are reasonably related to the performance of the
audit or review of the Fund's financial statements and are not reported under
"Audit Fees" above were $0 for the fiscal year ended December 31, 2003 and $378
for the fiscal year ended December 31, 2002. The services for which these fees
were paid included payments for internal control examination pursuant to
Statement of Auditing Standards No. 70 and other attestation services.

In addition, the Audit Committee pre-approves PwC's engagement for
audit-related services with 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 $3,134 for the fiscal year ended December 31, 2003 and $195,862 for the
fiscal year ended December 31, 2002. The services for which these fees were
paid included payments for internal control examination pursuant to Statement
of Auditing Standards No. 70 and other attestation services.

Tax Fees. PwC did not render any tax compliance, tax advice or tax planning
services to the Fund for the fiscal year ended December 31, 2003 or for the
fiscal year ended December 31, 2002.

In addition, the Audit Committee pre-approves PwC's engagement for tax
services with 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, 2003 and $84,424 for the fiscal
year ended December 31, 2002. The services for which these fees were paid
included payments for tax compliance and advice.

All Other Fees. PwC did not bill for other products and services, other
than the services reported above, for the fiscal year ended December 31, 2003
or for the fiscal year ended December 31, 2002.

In addition, the Audit Committee pre-approves PwC's engagement for other
services with 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. No such services were provided
for the fiscal years ended December 31, 2003 and December 31, 2002.

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

Aggregate Non-Audit Fees. PwC did not render any non-audit services to the
Fund. The aggregate fees paid to PWC for non-audit services 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
$3,134 for the fiscal year ended December 31, 2003 and $280,664 for the fiscal
year ended December 31, 2002.

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

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 is attached as Exhibit B to this proxy
statement.

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
independent 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, their 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 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, 2003 for filing
with the U.S. Securities and Exchange Commission.

AUDIT COMMITTEE

Fred R. Millsaps (Chairman)
Frank J. Crothers
Frank A. Olson
Constantine D. Tseretopoulos

.. FURTHER INFORMATION ABOUT VOTING AND THE MEETING

Solicitation of Proxies. Your vote is being solicited by the Board of
Directors of the Fund. 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 Clearing Corporation ("JSCC")
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 JSCC's
proxy solicitation materials, the Fund understands that NYSE Rules permit the
broker-dealers and JSCC 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 JSCC 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.

Methods 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 2003 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 2005 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 2005 Annual Meeting of Shareholders
will be held on or about May 25, 2005. A shareholder who wishes to submit a
proposal for consideration for inclusion in the Fund's proxy statement for the
2005 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 14, 2004 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 14, 2004, as described
above, may nonetheless present a proposal at the Fund's 2005 Annual Meeting of
Shareholders if such shareholder notifies the Fund, at the Fund's offices, of
such proposal by February 27, 2005. If a shareholder fails to give notice by
this date, then the persons designated as proxies for the 2005 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 2005 Annual Meeting of Shareholders will be held on or
about May 25, 2005. A shareholder who wishes to submit a proposal for
consideration for inclusion in the Trust's proxy statement for the 2005 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 14, 2004 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 proxy statement by December 14, 2004, as described above, may
nonetheless present a proposal at the Trust's 2005 Annual Meeting of
Shareholders if such shareholder notifies the Trust, at the Trust's offices, of
such proposal not earlier than December 26, 2004 and not later than January 25,
2005. 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 2005 Annual Meeting of Shareholders, the persons
designated as proxy holders for proxies solicited by the Board of Trustees for
the 2005 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 February 27, 2005.

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 (iii) have been a shareholder of record at the time the
shareholder's notice was received by 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 2005 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,

Barbara J. Green
Secretary

April 13, 2004

EXHIBIT A

NOMINATING COMMITTEE CHARTER

I. The Committee.

The Nominating Committee (the "Committee") is a committee of, and
established by, the Board of Directors/Trustees of the Fund (the "Board"). The
Committee consists of such number of members as set by the Board from time to
time and its members shall be selected by the Board. The Committee shall be
comprised entirely of "independent members." For purposes of this Charter,
independent members shall mean members who are not interested persons of the
Fund ("Disinterested Board members") as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act").

II. Board Nominations and Functions.

1. The Committee shall make recommendations for nominations for
Disinterested Board members on the Board to the incumbent Disinterested Board
members and to the full Board. The Committee shall evaluate candidates'
qualifications for Board membership and the independence of such candidates
from the Fund's investment manager and other principal service providers.
Persons selected must be independent in terms of both the letter and the spirit
of the 1940 Act. The Committee shall also consider the effect of any
relationships beyond those delineated in the 1940 Act that might impair
independence, e.g., business, financial or family relationships with investment
managers or service providers.

2. The Committee also shall evaluate candidates' qualifications and make
recommendations for "interested" members on the Board to the full Board.

3. The Committee may adopt from time to time specific, minimum
qualifications that the Committee believes a candidate must meet before being
considered as a candidate for Board membership and shall comply with any rules
adopted from time to time by the U.S. Securities and Exchange Commission
regarding investment company nominating committees and the nomination of
persons to be considered as candidates for Board membership.

4. The Committee shall review shareholder recommendations for nominations to
fill vacancies on the Board if such recommendations are submitted in writing
and addressed to the Committee at the Fund's offices. The Committee shall
adopt, by resolution, a policy regarding its procedures for considering
candidates for the Board, including any recommended by shareholders.

III. Committee Nominations and Functions.

1. The Committee shall make recommendations to the full Board for nomination
for membership on all committees of the Board.

2. The Committee shall review as necessary the responsibilities of any
committees of the Board, whether there is a continuing need for each committee,
whether there is a need for additional committees of the Board, and whether
committees should be combined or reorganized. The Committee shall make
recommendations for any such action to the full Board.

A-1

3. The Committee shall, on an annual basis, review the performance of the
Disinterested Board members.

IV. Other Powers and Responsibilities.

1. The Committee shall meet at least twice each year or more frequently in
open or executive sessions. The Committee may invite members of management,
counsel, advisers and others to attend its meetings as it deems appropriate.
The Committee shall have separate sessions with management and others, as and
when it deems appropriate.

2. The Committee shall have the resources and authority appropriate to
discharge its responsibilities, including authority to retain special counsel
and other experts or consultants at the expense of the Fund.

3. The Committee shall report its activities to the Board and make such
recommendations as the Committee may deem necessary or appropriate.

4. A majority of the members of the Committee shall constitute a quorum for
the transaction of business at any meeting of the Committee. The action of a
majority of the members of the Committee present at a meeting at which a quorum
is present shall be the action of the Committee. The Committee may meet in
person or by telephone, and the Committee may act by written consent, to the
extent permitted by law and by the Fund's by-laws. In the event of any
inconsistency between this Charter and the Fund's organizational documents, the
provisions of the Fund's organizational documents shall be given precedence.

5. The Committee shall review this Charter at least annually and recommend
any changes to the full Board.

ADDITIONAL STATEMENT FOR CLOSED-END FUNDS ONLY

The Committee shall comply with any rules of any stock exchange, if any,
applicable to nominating committees of closed-end funds whose shares are
registered thereon.

A-2

EXHIBIT B

AUDIT COMMITTEE CHARTER

I. The Committee.

The Audit Committee ("Committee") is a committee of, and established by, the
Board of Directors/Trustees of the Fund (the "Board"). The Committee shall
consist of such number of members as set by the Board from time to time and its
members shall be selected by the Board. The Committee shall be comprised
entirely of "independent" members, as defined in Item 3(a)(2) of SEC Form N-CSR
("Disinterested Board members"). Members shall be financially literate. At
least one member of the Committee shall be designated by the Board as an "audit
committee financial expert," as defined in Item 3(b) of SEC Form N-CSR, unless
the Board determines that the Fund does not have an audit committee financial
expert on the Committee.

II. Purposes of the Committee.

The function of the Committee is to be directly responsible for overseeing
the Fund's accounting and auditing processes, which shall include the
appointment, compensation, retention and oversight of the work of the Fund's
independent auditors ("auditors") engaged (including resolution of
disagreements between management and the auditors regarding financial
reporting) for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Fund. It is
management's responsibility to maintain appropriate systems for accounting and
internal controls. It is the auditors' responsibility to plan and carry out a
proper audit and to report directly to the Committee.

Consistent with such allocation of functions, the purposes of the Committee
are:

(a) To oversee the Fund's accounting and financial reporting policies and
practices and its internal controls, and to obtain, where it deems
appropriate, reports on internal controls of service providers to the Fund;

(b) To oversee the quality and objectivity of the Fund's financial
statements and the independent audit thereof;

(d) To consider such other matters as it deems appropriate in carrying
out its purpose and any other matters that may be assigned to it by the
Board.

In addition, the Committee shall serve as the Fund's Qualified Legal
Compliance Committee ("QLCC") pursuant to Section 205 of the SEC's Standards of
Professional Conduct for Attorneys (the "Standards"). In this capacity, the
Committee is required to adopt and maintain written procedures for the
confidential receipt, retention and consideration of any report of evidence of
a material violation. "Evidence of a material violation" means credible
evidence, based upon which it would be unreasonable, under the circumstances,
for a prudent and competent attorney not to conclude that it is reasonably
likely that a material violation of an applicable U.S. federal or state
securities law, a material breach of fiduciary (or similar duty) to the Fund
arising under U.S. federal or state law, or a similar material violation of any
U.S. federal or state law has occurred, is ongoing, or is about to occur.

B-1

III. Powers and Duties.

The Committee shall have the following powers and duties to carry out its
purposes:

(a) To select the auditors, subject to approval both by the Board and by
a separate vote of the Disinterested Board members, and, in connection
therewith, to evaluate the independence of the auditors in accordance with
applicable law.

(b) To be directly responsible for approving the services to be provided
by, and the compensation of, the auditors, including:

(i) pre-approval of all audit and audit related services;

(ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;

(iii) pre-approval of all non-audit related services to be provided
to the Fund by the auditors to the Fund's investment adviser or to any
entity that controls, is controlled by or is under common control with
the Fund's investment adviser and that provides ongoing services to the
Fund where the non-audit services relate directly to the operations or
financial reporting of the Fund; and

(iv) establishment by the Committee, if deemed necessary or
appropriate, as an alternative to Committee pre-approval of services to
be provided by the auditors, as required by paragraphs (ii) and (iii)
above, of policies and procedures to permit such services to be
pre-approved by other means, such as through establishment of guidelines
or by action of a designated member or members of the Committee;
provided the policies and procedures are detailed as to the particular
service and the Committee is informed of each service and such policies
and procedures do not include delegation of audit committee
responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any
waivers, exceptions or exemptions that may be available under applicable
law or rules.

(c) To meet with the auditors, including private meetings, as necessary
to (i) review the arrangements for and scope of the annual audit and any
special audits; (ii) discuss any matters or concerns relating to the Fund's
financial statements, including any recorded and/or unrecorded adjustments
to such statements recommended by the auditors, or other results of audits;
(iii) consider the auditors' comments with respect to the Fund's financial
policies, procedures and internal controls and management's responses
thereto; and (iv) to review the form of opinion the auditors propose to
render.

(d) To receive and consider reports from the auditors:

(i) as required by generally accepted accounting standards; and

(ii) annually and by update as required by SEC Regulation S-X,
regarding: (w) all critical accounting policies and practices of the
Fund to be used; (x) alternative treatments within generally accepted
accounting principles for policies and practices related to material
items that have been discussed with management of the Fund, including
ramifications of the use of such alternative disclosures and treatments,
and the treatment preferred by the auditors; (y) other material written
communications between the auditors and management of the Fund, such as
any management letter or schedule of unadjusted differences; and (z) all
non-audit services provided to any entity in an investment company
complex, as defined in SEC Regulation S-X, that were not pre-approved by
the Committee pursuant to SEC Regulation S-X.

B-2

(e) To consider the effect upon the Fund of any changes in accounting
principles or practices proposed by management or the auditors.

(f) To investigate improprieties or suspected improprieties in Fund
operations.

(g) In considering the independence of the auditors, to request from the
auditors a written statement, and other reports as necessary, describing all
relationships between the auditors and the Fund, the Fund's investment
adviser and service providers, and other entities advised or serviced by,
including any entities controlling, controlled by or under common control
with, the investment adviser or any other service providers to the Fund; to
obtain and consider periodic reports from the auditors regarding whether the
provision of non-audit services is compatible with maintaining the auditor's
independence; and to request from the auditors a certificate that they are
independent auditors under the Federal securities laws and are in compliance
with all standards adopted by the Independence Standards Board.

(h) To review the experience and qualifications of the senior members of
the auditors' team and the quality control procedures of the auditors.

(i) To require that the auditors regularly provide timely information to
the Committee with respect to new rules and pronouncements by applicable
regulatory and accounting standards agencies, along with an explanation of
how such developments may affect the Fund's financial statements and
accounting principles and practices.

(j) To review, at such times and in the manner deemed appropriate by the
Committee, the results of the annual audit and financial statements, and the
report of the auditors' audit of the Fund's annual financial statements,
including footnotes and any significant audit findings.

(k) To consider management's evaluation of the Fund's disclosure controls
and procedures in connection with certifications of the Fund's Chief
Executive Officer--Finance and Administration and Chief Financial Officer
concerning (i) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Fund's ability to record,
process, summarize and report financial data and have identified for the
Fund's auditors any material weaknesses in internal controls; and (ii) any
fraud, whether or not material, that involves management or other employees
who have a significant role in the Fund's internal controls, and for any
other purposes the Committee deems appropriate.

(l) To inform the chief legal officer ("CLO") and chief executive officer
("CEO") of the Fund (or the equivalents thereof) of any report of evidence
of a material violation by the Fund, its officers, directors/trustees,
employees (if any), or agents (collectively, "affiliates").

(m) To determine whether an investigation is necessary regarding any
report of evidence of a material violation by the Fund or its affiliates.

(n) If the Committee determines such an investigation is necessary or
appropriate, (i) to notify the Board; (ii) to initiate an investigation,
which may be conducted by either the CLO or by outside attorneys; and (iii)
to retain such additional expert personnel as the Committee deems necessary
to assist in the investigation.

(o) At the conclusion of any such investigation, (i) to recommend by a
majority vote, that the Fund implement an appropriate response (as defined
in Section 205.2(b) of the Standards) to evidence of a material violation,
and (ii) to inform the CLO and the CEO and the Board of the results of such
investigation and the appropriate remedial measures to be adopted.

B-3

(p) Acting by majority vote, to take all other appropriate action,
including the authority to notify the SEC in the event the Fund fails in any
material respect to implement an appropriate response that the Committee has
recommended the Fund to take.

(q) To otherwise respond to evidence of a material violation.

IV. Other Functions and Procedures of the Committee.

(a) The Committee shall meet at least twice each year or more frequently, in
open or executive sessions. The Committee shall meet as frequently as
circumstances require with (i) the auditors as provided in III (c), above; and
(ii) management's internal audit department to review and discuss internal
audit functions and reports. The Committee may invite members of management,
the auditors, counsel, advisers and others to attend its meetings as it deems
appropriate. The Committee shall have separate sessions with the auditors,
management and others, as and when it deems appropriate.

(b) The Committee shall establish procedures for (i) the receipt, retention
and treatment of complaints received by the Fund or the Fund's adviser
regarding accounting, internal accounting controls, or accounting matters; and
(ii) the confidential, anonymous submission by employees of the Fund or such
Fund's adviser, principal underwriter, administrator or other provider of
accounting related services, of concerns regarding questionable accounting or
auditing matters.

(c) The Committee shall have the authority to engage special counsel,
experts and advisers as and when it determines necessary to carry out its
duties and the Fund must provide for appropriate funding, as determined by the
Committee, for payment of (i) compensation to any auditors engaged for the
purpose of preparing or issuing an audit report or performing other audit,
review or attest services for the Fund; (ii) compensation to any advisers
employed by the Committee; and (iii) ordinary administrative expenses of the
Committee that are necessary or appropriate in carrying out its duties.

(d) The Committee shall have unrestricted access to the Fund's management
and management of the Fund's adviser, including, but not limited to, their
chief executive officer(s), chief financial officer(s), internal auditors and
any other executives and financial officers.

(e) The Committee shall report its activities to the Board and make such
recommendations as the Committee may deem necessary or appropriate.

(f) The Committee shall review this Charter annually, or more frequently if
it chooses, and recommend any changes to the Board.

ADDITIONAL STATEMENT FOR CLOSED-END FUNDS ONLY

The Committee shall comply with rules of the New York Stock Exchange, Inc.
and the U.S. Securities and Exchange Commission applicable to closed-end funds,
including (i) the preparation of the Audit Committee Disclosure Report required
to be included in the Fund's annual proxy statement; and (ii) the review and
discussion of Fund financial statements and management policies in accordance
with applicable Corporate Governance Rules of the New York Stock Exchange, Inc.

B-4

TLTDF PROXY 04/04

TEMPLETON DRAGON FUND, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 25, 2004

The undersigned hereby revokes all previous proxies for his/her shares and
appoints BARBARA J. GREEN, 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 the 25th day of May 2004, including any
postponements or adjournments thereof, upon matters set forth below and
instructs them to vote upon any 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 DIRECTORS). 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 SIGNED ON THE OTHER SIDE)

FOLD AND DETACH HERE

Please mark your votes as
indicated in this example [x]

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL

Proposal - Election of Directors.

FOR all nominees WITHHOLD Nominees: 01 Martin L. Flanagan, 02 Edith E. Holiday,
listed (except as AUTHORITY 03 Charles B. Johnson and 04 Frank A. Olson
marked to the right) to vote for all
nominees listed

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

------------------------------------------------------------

I PLAN TO ATTEND THE MEETING. YES NO
[ ] [ ]

SIGNATURE(S): DATED , 2004
-------------------------------------------- ---------
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