Templeton Dragon Fund Inc

SCHEDULE TO
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES
EXCHANGE ACT OF 1934

Barbara J. Green, Esq.
Templeton Dragon Fund, Inc.
Broward Financial Centre
500 E. Broward Blvd., Suite 2100
Ft. Lauderdale, FL 33394-3091
Tel: (954) 527-7500
Fax: (954) 847-2288

(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)

Check the appropriate boxes to designate any transactions to which this statement relates:

Check the following box if the filing is a final amendment reporting the results of the tender offer. o

This Issuer Tender Offer Statement on Schedule TO relates to an offer by Templeton Dragon Fund, Inc, a Maryland corporation (the “Fund”), to purchase for cash up to 6,656,425 shares of its issued and outstanding common stock, par value $0.01 per share, upon the terms and subject to the conditions contained in the Offer to Purchase dated April 24, 2003 and the related Letter of Transmittal and are filed as exhibits to this Schedule TO.

This Issuer Tender Offer Statement on Schedule TO is being filed in satisfaction of the reporting requirements of Rule 13e-4(c)(2) promulgated under the Securities Exchange Act of 1934, as amended.

The information in the Offer to Purchase and the related Letter of Transmittal is incorporated herein by reference in answer to Items 1 through 11 of this Issuer Tender Offer Statement on Schedule TO.

After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

-3- EX-99.(A)(1)(I) 3 a89354exv99wxayx1yxiy.htm EXHIBIT (A)(1)(I) exv99wxayx1yxiy

THIS OFFER TO PURCHASE AND THE ACCOMPANYING LETTER OF TRANSMITTAL (WHICH, TOGETHER WITH ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, COLLECTIVELY CONSTITUTE THE “OFFER”) ARE NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED, BUT ARE SUBJECT TO OTHER CONDITIONS AS OUTLINED HEREIN AND IN THE LETTER OF TRANSMITTAL.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY TEMPLETON DRAGON FUND, INC. THE PRESIDENT AND FELLOWS OF HARVARD COLLEGE, WHICH OWNS APPROXIMATELY 14% OF THE OUTSTANDING SHARES AND MAY BE DEEMED AN AFFILIATE OF THE FUND, HAS ANNOUNCED THAT IT INTENDS TO TENDER ALL OF ITS SHARES IN THIS OFFER. OTHER THAN THE FOREGOING, THE FUND HAS BEEN ADVISED THAT NO DIRECTOR OR OFFICER OF THE FUND, OR ANY AFFILIATE OF THE FUND, INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.

Any holder of Shares (each a “Shareholder”) desiring to tender any portion of his or her Shares should either: (1) complete and sign the Letter of Transmittal in accordance with the instructions in the Letter of Transmittal, and mail or deliver the Letter of Transmittal with his or her certificates for the tendered Shares if such Shareholder has been issued physical certificates, signature guarantees for all Shareholders tendering uncertificated Shares, and any other required documents to Mellon Investor Services LLC (the “Depositary”); or (2) request his or her broker, dealer, commercial bank, trust company or other nominee to effect the transaction for him or her. Shareholders having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee are urged to contact the broker, dealer, commercial bank, trust company or other nominee if they desire to tender their Shares.

Questions, requests for assistance and requests for additional copies of this Offer to Purchase and the Letter of Transmittal may be directed to Mellon Investor Services LLC (the “Information Agent”), in the manner set forth on the last page of this Offer to Purchase.

This Summary Term Sheet highlights certain information concerning this tender offer. To understand the Offer fully and for a more complete discussion of the terms and conditions of the Offer, you should read carefully this entire Offer to Purchase and the related Letter of Transmittal.


		can only tender your Shares by directing that firm to complete, compile and deliver the necessary documents for submission to the Depositary by May 22, 2003 (or if the Offer is extended, the expiration date as extended). See Section 3 of this Offer to Purchase.

Is There Any Cost To Me To Tender?		No fees or commission will be payable to the Fund in connection with the Offer. However, brokers, dealers or other persons may charge Shareholders a fee for soliciting tenders for Shares pursuant to this Offer. See the Letter of Transmittal.

May I Withdraw My Shares After I Have Tendered Them And, If So, By When?		Yes, you may withdraw your Shares at any time at or prior to 12:00 midnight, Eastern time, on May 22, 2003 (or if the Offer is extended, at any time at or prior to 12:00 midnight, Eastern time, on the new expiration date). Withdrawn Shares may be re-tendered by following the tender procedures before the Offer expires (including any extension period). See Section 4 of this Offer to Purchase.

How Do I Withdraw Tendered Shares?		A notice of withdrawal of tendered Shares must be timely received by the Depositary, which specifies the name of the Shareholder who tendered the Shares, the number of Shares being withdrawn (which must be all of the Shares tendered) and, with respect to share certificates representing tendered Shares that have been delivered or otherwise identified to the Depositary, the name of the registered owner of such Shares if different from the person who tendered the Shares. See Section 4 of this Offer to Purchase.

May I Place Any Conditions On My Tender Of Shares?		No.

Is There A Limit On The Number Of Shares I May Tender?		No, however only 6,656,425 Shares will be accepted for tender. See Section 1 of this Offer to Purchase.

What If More Than 6,656,425 Shares Are Tendered (And Not Timely Withdrawn)?		The Fund will purchase duly tendered Shares from tendering Shareholders pursuant to the terms and conditions of the Offer on a pro rata basis (disregarding fractions) according to the number of Shares tendered by each Shareholder (and not timely withdrawn), unless the Fund determines not to purchase any Shares in the event that the conditions described in Section 13 of this Offer to Purchase are not met. The Fund’s present intention, if the Offer is oversubscribed, is not to purchase more than 6,656,425 Shares. See Section 1 of this Offer to Purchase.

If I Decide Not To Tender, How Will The Tender Offer Affect The Fund Shares I Hold?		Your percentage ownership interest in the Fund will increase after completion of the tender offer.


		does not issue an exemptive order permitting an in-kind tender offer and the Fund does not make additional cash tender offer(s), subject to conditions related to the number of Shares tendered in prior tender offers, which are similar to the conditions to the in- kind tender offers, certain of the restrictions imposed on Harvard under the settlement agreement will terminate.

		Other than the foregoing, the Fund does not have any current plans for a subsequent tender offer. However, the Board of Directors of the Fund periodically considers potential actions to address the extent to which the Shares may be trading at a discount from their NAV. These actions may include recommending a subsequent tender offer depending upon market conditions and regulatory and tax considerations. See Section 6 of this Offer to Purchase.

How Do I Obtain Additional Information?		Questions and requests for assistance should be directed to Mellon Investor Services LLC, the Information Agent for the tender offer, toll free at 1-888-788-1635. Requests for additional copies of the Offer to Purchase, the Letter of Transmittal and all other tender offer documents should also be directed to the Information Agent for the tender offer. If you do not hold certificates for your Shares or if you are not the record holder of your Shares, you should obtain this information and the documents from your broker, dealer, commercial bank, trust company or other nominee, as appropriate.

Templeton Dragon Fund, Inc., a Maryland corporation (the “Fund”) registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a closed-end, non-diversified management investment company, hereby offers to purchase up to 15% of the Fund’s outstanding shares of common stock, par value $0.01 per share (the “Shares”) or 6,656,425 Shares in the aggregate (the “Offer Amount”), at a price (the “Purchase Price”) per Share, net to the seller in cash, equal to 92.5% of the net asset value (“NAV”) in U.S. Dollars per Share as determined by the Fund at the close of regular trading on the New York Stock Exchange (“NYSE”) on May 22, 2003, or such later date to which the Offer is extended, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements to those documents, collectively constitute the “Offer”). The depositary for the Offer is Mellon Investor Services LLC (the “Depositary”). The Fund has mailed materials for the Offer to record holders as of April 17, 2003.

THIS OFFER IS BEING EXTENDED TO ALL HOLDERS OF THE SHARES (THE “SHAREHOLDERS”) AND IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED, BUT IS SUBJECT TO OTHER CONDITIONS AS OUTLINED HEREIN AND IN THE LETTER OF TRANSMITTAL. SEE SECTION 13 OF THIS OFFER TO PURCHASE.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN AND IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THE PRESIDENT AND FELLOWS OF HARVARD COLLEGE (“HARVARD COLLEGE”), WHICH OWNS APPROXIMATELY 14% OF THE OUTSTANDING SHARES AND MAY BE DEEMED TO BE AN AFFILIATE OF THE FUND, HAS ANNOUNCED THAT IT INTENDS TO TENDER ALL OF ITS SHARES IN THIS OFFER. OTHER THAN THE FOREGOING, THE FUND HAS BEEN ADVISED THAT NO DIRECTOR OR OFFICER OF THE FUND, OR ANY AFFILIATE OF THE FUND, INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.

As of April 15, 2003, there were 44,376,167 Shares issued and outstanding, and the NAV was $10.27 per Share. The Fund does not expect that the number of Shares issued and outstanding will be materially different on the Termination Date (as defined below). Shareholders may contact Mellon Investor Services LLC, the Fund’s Information Agent, toll free at 1-888-788-1635, business days between 9:00 a.m. and 7:00 p.m. Eastern time, or contact Franklin Templeton Fund Information at its toll free number, 1-800-DIAL BEN® (1-800-342-5236), business days between 8:30 a.m. and 8:00 p.m. Eastern time, to obtain current NAV quotations for the Shares.

Any Shares acquired by the Fund pursuant to the Offer will become authorized but unissued Shares and will be available for issuance by the Fund without further Shareholder action (except as required by applicable law). Tendering Shareholders may be obligated to pay brokerage fees or commissions or, subject to Instruction 7 of the Letter of Transmittal, transfer taxes on the purchase of Shares by the Fund. Shareholders may also be subject to other transaction costs, as described in Section 2.

1. Terms of the Offer; Termination Date. Upon the terms and subject to the conditions set forth in the Offer, the Fund will accept for payment, and pay for, up to 15% of the Fund’s outstanding Shares, or 6,656,425 Shares in the aggregate, validly tendered at or prior to 12:00 midnight, Eastern time, on May 22, 2003, or such later date to which the Offer is extended (the “Termination Date”) and not withdrawn as permitted by Section 4.

If the number of Shares properly tendered and not withdrawn prior to the Termination Date is less than or equal to the Offer Amount, the Fund will, upon the terms and conditions of the Offer, purchase all Shares

so tendered. If more than 6,656,425 Shares are properly tendered pursuant to the Offer (and not withdrawn as provided in Section 4), the Fund will purchase Shares from tendering Shareholders, in accordance with the terms and conditions specified in the Offer, on a pro rata basis (disregarding fractions) according to the number of Shares tendered by each Shareholder (and not timely withdrawn). In either case, the Fund, in its discretion, may determine not to purchase any Shares in the event that the conditions described in Section 13 of this Offer to Purchase occur. The Fund reserves the absolute right to waive any of the conditions described in Section 13 of this Offer. The Fund does not contemplate extending the Offer and increasing the number of Shares covered thereby by reason of more than 6,656,425 Shares having been tendered.

Shareholders should consider the relative costs of tendering Shares at a 7.5% discount to NAV per Share pursuant to the Offer or selling Shares at the market price with the associated transaction costs.

The Fund expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to the Depositary. Any such extension will also be publicly announced by press release issued no later than 9:00 a.m., Eastern time, on the next business day after the previously scheduled Termination Date. If the Fund makes a material change in the terms of the Offer or is otherwise required by applicable law, the Fund will extend the Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). During any extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering Shareholder to withdraw his or her Shares.

Subject to the terms and conditions of the Offer, the Fund will pay the consideration offered or return the tendered securities as soon as reasonably practicable after the termination or withdrawal of the Offer. Any extension, delay or termination will be followed as promptly as practicable by public announcement thereof, such announcement, in the case of an extension, to be issued no later than 9:00 a.m., Eastern time, on the next business day after the previously scheduled Termination Date.

2. Acceptance for Payment and Payment for Shares. Upon the terms and subject to the conditions of the Offer, the Fund will accept for payment, and will pay for, Shares validly tendered on or before the Termination Date and not properly withdrawn in accordance with Section 4 as soon as reasonably practicable after the Termination Date. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (unless such Shares are held in uncertificated form), a properly completed and duly executed Letter of Transmittal and any other documents required by the Letter of Transmittal. The Fund expressly reserves the right, in its sole discretion, to delay the acceptance for payment of, or payment for, Shares, in order to comply, in whole or in part, with any applicable law.

For purposes of the Offer, the Fund will be deemed to have accepted for payment Shares validly tendered and not withdrawn as, if and when the Fund gives oral or written notice to the Depositary of its acceptance for payment of such Shares pursuant to the Offer. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the aggregate purchase price therefor with the Depositary, which will act as agent for the tendering Shareholders for purpose of receiving payments from the Fund and transmitting such payments to the tendering Shareholders. Under no circumstances will interest on the purchase price for Shares be paid, regardless of any delay in making such payment.

If any tendered Shares are not accepted for payment pursuant to the terms and conditions of the Offer for any reason, or are not paid because of an invalid tender, or if certificates are submitted for more Shares than are tendered: (a) certificates for such unpurchased Shares will be returned, without expense to the tendering Shareholder, as soon as practicable following expiration or termination of the Offer; and (b) Shares delivered pursuant to the Book-Entry Delivery Procedure (as defined in Section 3 below) will be credited to the appropriate account maintained within the appropriate Book-Entry Transfer Facility.

If the Fund is delayed in its acceptance for payment of, or in its payment for, Shares, or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Fund’s rights under this Offer, the Depositary may, on behalf of the Fund, retain tendered Shares, and such

The purchase price of the Shares will equal 92.5% of their NAV (a 7.5% discount) per Share as determined by the Fund at the close of regular trading on the NYSE on May 22, 2003, or such later date to which the Offer is extended (the “Pricing Date”). Tendering Shareholders may be required to pay brokerage commissions or fees. Under the circumstances set forth in Instruction 7 of the Letter of Transmittal, Shareholders may be subject to transfer taxes on the purchase of Shares by the Fund.

The Fund normally calculates the NAV of its Shares as of and at the close of each NYSE trading day and the calculation is usually available the following business day. On April 15, 2003, the NAV was $10.27 per Share. The Shares are listed on the NYSE and the Osaka Securities Exchange. On April 15, 2003, the last sales price at the close of regular trading on the NYSE was $9.32 per Share, representing a - -9.25% discount from NAV per Share. The NAV of the Fund’s Shares will be available daily until the Termination Date, by calling the Fund’s Information Agent, toll free at 1-888-788-1635, business days between 9:00 a.m. and 7:00 p.m. Eastern time, or through Franklin Templeton Fund Information’s toll free number at 1-800-DIAL BEN®(1-800-342-5236), business days between 8:30 a.m. and 8:00 p.m. Eastern time.

3. Procedure for Tendering Shares. Shareholders having Shares that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee should contact such firm if they desire to tender their Shares. For a Shareholder validly to tender Shares pursuant to the Offer: (a)(i) a properly completed and duly executed Letter of Transmittal, together with any required signature guarantees, and any other documents required by the Letter of Transmittal, must be transmitted to and received by the Depositary at one of its addresses set forth on the last page of this Offer to Purchase, and (ii) either the certificate for Shares must be transmitted to and received by the Depositary at one of its addresses set forth on the last page of this Offer to Purchase or the tendering Shareholder must comply with the Book-Entry Delivery Procedure set forth in this Section 3; or (b) Shareholders must comply with the Guaranteed Delivery Procedure set forth in this Section 3, in all cases prior to the Termination Date.

Signatures on Letters of Transmittal must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office, branch or agency in the U.S. (each, an “Eligible Institution”) unless: (a) the Letter of Transmittal is signed by the registered holder of the Shares tendered, including those Shareholders who are participants in a Book-Entry Transfer Facility and whose name appears on a security position listing as the owner of the Shares, but excluding those registered Shareholders who have completed either the “Special Payment Instructions” box or the “Special Delivery Instructions” box on the Letter of Transmittal; or (b) such Shares are tendered for the account of an Eligible Institution. In all other cases, all signatures on the Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 6 of the Letter of Transmittal for further information.

All questions as to the validity, form, eligibility (including time of receipt), payment and acceptance for payment of any tender of Shares will be determined by the Fund, in its sole discretion, which determination shall be final and binding. The Fund reserves the absolute right to reject any and all tenders of Shares it determines not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. The Fund also reserves the absolute right to waive any defect or irregularity in the tender of any Shares. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Fund, Templeton Asset Management Ltd., the Fund’s investment manager (the “Investment Manager”), the Information Agent, the Depositary, or any other person shall be under any duty to give notification of any defects or irregularities in tenders, nor shall any of the foregoing incur any liability for failure to give any such notification. The Fund’s interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and instructions thereto) will be final and binding.

Payment for Shares tendered and accepted for payment pursuant to the Offer will be made, in all cases, only after timely receipt of: (a) certificates for such Shares by the Depositary or book-entry confirmation of delivery of such Shares to the account of the Depositary; (b) a properly completed and duly executed Letter of Transmittal for such Shares; and (c) any other documents required by the Letter of Transmittal. The

THE METHOD OF DELIVERY OF ALL REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF EACH TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.

The Depositary will establish an account with respect to the Shares at the Depository Trust Company (the “Book-Entry Transfer Facility”) for purposes of the Offer within two business days after the date of this Offer. Any financial institution that is a participant in any of the Book-Entry Transfer Facility’s systems may make delivery of tendered Shares by: (a) causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary’s account in accordance with such Book-Entry Transfer Facility’s procedure for such transfer; and (b) causing a confirmation of receipt of such delivery to be received by the Depositary (the “Book-Entry Delivery Procedure”). The Book-Entry Transfer Facility may charge the account of such financial institution for tendering Shares on behalf of Shareholders. Notwithstanding that delivery of Shares may be properly effected in accordance with this Book-Entry Delivery Procedure, the Letter of Transmittal, with signature guarantee, if required, and all other documents required by the Letter of Transmittal must be transmitted to and received by the Depositary at the appropriate address set forth on the last page of this Offer before the Termination Date, or the tendering Shareholder must comply with the Guaranteed Delivery Procedure set forth below. Delivery of documents to a Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility’s procedures does not constitute delivery to the Depositary for purposes of this Offer.

If certificates for Shares are not immediately available or time will not permit the Letter of Transmittal and other required documents to reach the Depositary on or prior to the Termination Date, Shares may be properly tendered provided that: (a) such tenders are made by or through an Eligible Institution; and (b) the Depositary receives, on or prior to the Termination Date, a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Fund (delivered by hand, mail, telegram or facsimile transmission); and (c) the certificates for all tendered Shares, or confirmation of the delivery of Shares delivered into the Depositary’s account in accordance with such Book-Entry Transfer Facility’s procedure for such transfer, together with a properly completed and duly executed Letter of Transmittal and any other documents required by the Letter of Transmittal are received by the Depositary within three (3) business days after the Termination Date (the “Guaranteed Delivery Deadline”).

4. Rights of Withdrawal. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Termination Date. After the Termination Date, (including any date to which the Offer is extended) all tenders made pursuant to the Offer are irrevocable.

To be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the last page of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who previously executed the particular Letter of Transmittal or Notice of Guaranteed Delivery, the number of Shares to be withdrawn, which must be all of the Shares tendered, and the names in which the Shares to be withdrawn are registered. Any signature on the notice of withdrawal must be guaranteed by an Eligible Institution. If certificates have been delivered to the Depositary, the name of the registered holder and the serial numbers of the particular certificates evidencing the Shares withdrawn also must be furnished to the Depositary. If Shares have been delivered pursuant to the Book-Entry Delivery Procedure set forth in Section 3 of this Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares (which must be the same name, number, and Book-Entry Transfer Facility from which the Shares were tendered), and must comply with the procedures of the Book-Entry Transfer Facility.

All questions as to the form and validity, including time of receipt, of any notice of withdrawal will be determined by the Fund, in its sole discretion, which determination shall be final and binding. None of the Fund, the Investment Manager, the Information Agent, the Depositary, or any other person shall be under any duty to give notification of any defects or irregularities in any notice of withdrawal nor shall any of the foregoing incur any liability for failure to give such notification. Any Shares properly withdrawn will be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered by following the procedures described in Section 3 of this Offer to Purchase at any time on or prior to the Termination Date.

If the Fund is delayed in its acceptance for payment of Shares, or it is unable to accept for payment Shares tendered pursuant to the Offer, for any reason, then, without prejudice to the Fund’s rights under this Offer, the Depositary may, on behalf of the Fund, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering Shareholders are entitled to withdrawal rights as set forth in this Section 4. Notwithstanding the foregoing, if the Fund has not yet accepted the Shares for payment by June 19, 2003 (40 business days from the commencement date of this Offer on April 24, 2003), tendering Shareholders will be entitled to withdrawal rights.

5. Source and Amount of Funds; Effect of the Offer. The actual cost of the Offer to the Fund cannot be determined at this time because the number of Shares to be purchased will depend on the number tendered, and the price will be based on the NAV per Share on the Pricing Date. If the NAV per Share on the Pricing Date were the same as the NAV per Share on April 15, 2003, and if Shareholders tender 15% of the Fund’s outstanding Shares pursuant to the Offer, the estimated payments by the Fund to the Shareholders would be approximately $63,236,038. See the Pro Forma Capitalization table below.

The Fund expects that the monies to be used by the Fund to purchase Shares pursuant to the Offer will be obtained from cash on hand, the sale of portfolio securities and/or borrowing, each in the amount or amounts determined by the Investment Manager, in its reasonable discretion, subject to restrictions or limitations contained in the Fund’s charter documents or prospectus, or any of the Fund’s material agreements, each as amended from time to time, or the rules and regulations promulgated under the 1940 Act. At this time, the Fund has not entered into any financing arrangement to enable any such borrowings. However, the Fund may enter into a credit facility on or before the Termination Date. Any such credit facility will have commercially reasonable terms in the determination of the Investment Manager and will provide for credit up to an amount sufficient to fund the entire purchase price for Shares in the Offer.

THE OFFER MAY HAVE CERTAIN ADVERSE CONSEQUENCES FOR TENDERING AND NON-TENDERING SHAREHOLDERS.

Effect on NAV and Consideration Received by Tendering Shareholders. If the Fund were required to sell a substantial amount of portfolio securities to raise cash to finance the Offer, the market prices of the portfolio securities being sold and/or the Fund’s remaining portfolio securities may decline and hence the Fund’s NAV may decline. If any such decline occurs, the Fund cannot predict what its magnitude might be or whether such a decline would be temporary or continue to or beyond the Termination Date. Further, the Fund’s portfolio securities are primarily traded on foreign markets that are particularly volatile. If the value of the portfolio securities were to decline for any reason before the termination of the Offer, the NAV of the Shares would decline. Because the price per Share to be paid in the Offer will be dependent upon the NAV per Share as determined on the Pricing Date, if such a decline continued up to the Termination Date, the consideration received by tendering Shareholders would be reduced.

In addition, the sale of portfolio securities will cause the Fund to incur increased brokerage and related transaction expenses, and the Fund may receive proceeds from the sale of portfolio securities less than their valuations by the Fund. Accordingly, obtaining the cash to consummate the Offer may result in a decrease in the Fund’s NAV per Share, thereby reducing the amount of proceeds received by tendering Shareholders and the NAV per Share for non-tendering Shareholders.

Shareholders should note, however, that the Offer may result in an increase to the Fund’s NAV per Share following the Offer, due to the fact that the Purchase Price represents a 7.5% discount to the Fund’s NAV per

The Fund will likely sell portfolio securities during the pendency of the Offer, and possibly for a short time thereafter, to raise cash for the purchase of Shares. Thus, during the pendency of the Offer, and possibly for a short time thereafter, the Fund will likely hold a greater than normal percentage of its net assets in cash and cash equivalents. The Fund will pay for tendered Shares it accepts for payment as soon as reasonably practicable after the Termination Date of this Offer. Because the Fund will not know the number of Shares tendered until the Termination Date, the Fund will not know until the Termination Date the amount of cash required to pay for such Shares. If on or prior to the Termination Date the Fund does not have, or believes it is unlikely to have, sufficient cash to pay for all Shares tendered, it may extend the Offer to allow additional time to raise sufficient cash through the sale of portfolio securities, borrowings or both, as determined by the Investment Manager.

Recognition of Capital Gains by the Fund. As noted, the Fund will likely be required to sell portfolio securities to finance the Offer. If the Fund’s tax basis for the securities sold is less than the sale proceeds, the Fund will recognize capital gains. The Fund would expect to declare and distribute any such gains to Shareholders of record (reduced by any capital loss carryovers that are available and by net capital losses realized during the fiscal year, if any). This recognition and distribution of gains, if any, would have certain negative consequences: first, Shareholders at the time of a declaration of distributions would be required to pay taxes on a greater amount of capital gain distributions than otherwise would be the case; second, to raise cash to make the distributions, the Fund might need to sell additional portfolio securities thereby possibly being forced to realize and recognize additional capital gains. It is impossible to predict what the amount of unrealized gains or losses would be in the Fund’s portfolio at the time that the Fund is required to liquidate portfolio securities (and hence the amount of capital gains or losses that would be realized and recognized). As of December 31, 2002, there was $97,908,454 of net capital loss carryovers that for tax purposes could offset future gains actually realized.

In addition, some of the distributed gains may be realized on securities held for one year or less, which would generate income taxable to the Shareholders at ordinary income rates. This could adversely affect the Fund’s after-tax performance.

Tax Consequences of Repurchases to Shareholders. The Fund’s purchase of tendered Shares pursuant to the Offer will have tax consequences for tendering Shareholders and may have tax consequences for non-tendering Shareholders. See Section 8 of this Offer to Purchase.

Higher Expense Ratio and Less Investment Flexibility. The purchase of Shares pursuant to the Offer will reduce the net assets of the Fund accordingly. The reduced net assets of the Fund as a result of the Offer may result in a higher expense ratio for the Fund and possibly in less investment flexibility for the Fund, depending on the number of Shares repurchased.

Pro Forma Effects on Capitalization. The following table sets forth the net assets of the Fund as of April 15, 2003, adjusted to give effect to the Offer (excluding expenses and assuming the Fund repurchases the full 6,656,425 Shares):


(1)	This table assumes purchases by the Fund of 6,656,425 Shares, equal to 15% of the Fund’s outstanding Shares as of April 15, 2003.

(2)	This amount represents 92.5% of the Fund’s NAV as determined on April 15, 2003. Shares tendered pursuant to the Offer will be purchased at a 7.5% discount to NAV on the Pricing Date, which may be more or less than $9.50 per Share, and the adjusted NAV per Share also may be more or less than that shown above.

(3)	The NAV per Share of the Fund is normally determined as of and at the close of each NYSE trading day and is usually available the following business day. NAV is determined by dividing the total net assets of the Fund by the number of Shares outstanding.

6. Purpose of the Offer; Plans or Proposals of the Fund. The Board of Directors of the Fund periodically considers potential actions to reduce the extent to which the Shares are trading at a discount from their NAV. On June 22, 2001, in a continuing effort to improve the discount between the Fund’s share price and its NAV per Share, the Board of Directors of the Fund established a nine-month measurement period (commencing August 1, 2001 and ending April 30, 2002) (the “Measurement Period”) for evaluating the discount of the market value of the Shares from their NAV per Share. According to the June 22, 2001 announcement, if the Shares traded at an average discount from NAV per Share 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 would take one of three actions, which included commencement of a tender offer for a portion of the outstanding Shares. On May 10, 2002, the Board announced that the average discount of the Shares during the last 90 days of the Measurement Period exceeded 10%. Consistent with the announcement made on June 22, 2001, the Board, at its May 10, 2002 meeting, approved a tender offer that was commenced in June 2002 and completed in July 2002 for 10% of the Fund’s then outstanding Shares, or a total of 4,874,109 shares at a price equal to 90% of the Fund’s NAV on the termination date. A total of 4,364,925.9071 Shares (approximately 9% of the then outstanding Shares) were properly tendered and not withdrawn by July 10, 2002, the expiration date for such tender offer. The Fund purchased all properly tendered Shares at a price of $9.45 per Share. At the May 2002 Board Meeting, the Board also approved an additional tender offer to commence prior to April 30, 2003 for a minimum of 10% of the Fund’s outstanding Shares at a price of not less than 90% of NAV per Share.

Potential Future Tender Offers. On January 29, 2003, the Fund, together with Templeton China World Fund, Inc. (“China Fund”), another closed-end management investment company in the Franklin Templeton Investments fund complex, and the Investment Manager, the investment adviser to the Fund and China Fund, filed a complaint in the United States District Court for the District of Maryland, Northern Division, against Harvard College, Harvard Management Company, Inc. (“Harvard Management”), which is an investment advisor to Harvard College, and Steven Alperin, an officer of Harvard Management (referred to collectively as “Harvard”). The complaint alleged that Harvard violated several provisions of the Federal securities laws and the rules of the U.S. Securities and Exchange Commission (“SEC”) related to Harvard’s ownership of Shares and actions as a Shareholder. On February 7, 2003, Harvard counterclaimed, alleging that the Fund, China Fund, the Investment Manager and each fund’s directors violated certain provisions of the federal securities

laws and SEC rules. Harvard also asserted counterclaims of breach of fiduciary duty under Maryland state law against the Investment Manager and each fund’s directors. On March 20, 2003, the parties announced a settlement that resulted in, among other things, the dismissal of their litigation claims against each other and the withdrawal of shareholder proposals submitted by Harvard College for the Fund’s 2003 annual meeting of shareholders.

The summary of the settlement reached by Harvard and the Fund included in this Offer is qualified in its entirety by reference to the full text of the settlement agreement. A copy of the settlement agreement was filed by the Fund with the SEC and is available for free at the SEC’s website, www.sec.gov.

Pursuant to the settlement agreement between the Fund and Harvard, the complaint brought by the Fund, China Fund and the Investment Manager against Harvard, as well as the counterclaims brought by Harvard against the Fund, its directors and the Investment Manager, were dismissed without prejudice. The parties have also entered into covenants not to sue each other with respect to the claims that were made or could have been made in the litigation absent a breach of the settlement agreement. As part of the settlement: (a) Harvard College has agreed to withdraw all of its shareholder proposals for the Fund’s 2003 annual meeting of shareholders; (b) Harvard agreed not to submit any proposals for consideration by shareholders of the Fund, or any other closed-end fund or similar investment vehicle managed by the Investment Manager or its affiliates, nor to encourage others to do so, for a period of four years; (c) Harvard also has agreed not to acquire additional shares of the Fund or any other closed-end fund or similar investment vehicle managed by the Investment Manager or its affiliates (except, under certain conditions, Harvard may acquire additional Shares of the Fund as long as its beneficial ownership remains less than 10%); and (d) the Fund agreed to take the actions described below.

As part of its settlement with Harvard, the Fund has agreed to take, and the Board approved, the following actions:


	•	April 2003 cash tender offer — The Fund agreed to commence this Offer, which was required to be commenced on or prior to April 30, 2003, for 15% of the Fund’s outstanding Shares at 92.5% of NAV per Share as of the date the Offer expires. If 20% or less of the Fund’s outstanding Shares are tendered in this Offer, the Fund will have no further obligations under the Harvard settlement to make subsequent tenders.

	•	In-kind tender offers — The Fund has applied to the SEC for an exemptive order allowing the Fund to make up to three occasional, non-periodic, “in-kind” tender offers, each for up to 20% of the Fund’s outstanding shares at a price equal to 95% of NAV as of the date the offer expires. An “in-kind” tender offer is a tender offer where the consideration for Shares purchased by the Fund will be a pro rata distribution of the Fund’s marketable portfolio securities and available cash. If more than 20% of the Fund’s Shares are tendered in this Offer, subject to certain conditions, including the issuance of the exemptive order by the SEC and the conditions described below, the settlement requires the Fund to commence such an in-kind tender offer for 20% of the Fund’s shares within three months after the issuance of the SEC exemptive order. The Fund may also be required under the settlement to conduct, on substantially identical terms, up to two additional in-kind tender offers under certain circumstances. There is no assurance that the SEC will issue the exemptive order, nor is it possible to predict the date when an exemptive order may be issued.

The obligation of the Fund to make subsequent tender offers under the settlement agreement is conditioned on the number of Shares tendered by Shareholders into preceding tender offers and the SEC’s issuance of the exemptive order. The first in-kind tender offer is required, if more than 20% of the Shares are tendered in this Offer. However, the Fund is not required by the settlement agreement to conduct any tender offer if at any time, based on information available to the Fund (including SEC filings), there is no person who beneficially owns, holds or has investment discretion over 5% or more of the total number of the outstanding Shares.

If the Fund conducts the first in-kind tender offer, the settlement agreement requires the commencement of the second in-kind tender offer within one year after the completion of the first in-kind tender offer;

Each percentage in the above table reflects the percentage of the Shares then outstanding immediately prior to the commencement of the respective tender offer referenced in the first column of the corresponding row.

If the Fund conducts the first and second in-kind tender offers, the settlement agreement requires the commencement of the third in-kind tender offer within one year after the completion of the second in-kind tender offer; provided that, the Fund will not be required to commence the third in-kind tender offer if any one of the following situations related to the number of Shares tendered in the various tender offers occurs:

Each percentage in the above table reflects the percentage of the shares then outstanding immediately prior to the commencement of the respective tender offer referenced in the first column of the corresponding row.

If the SEC does not issue the exemptive order for in-kind tender offers by March 26, 2004, the settlement provides that the Fund may, but is not obligated to, conduct an additional cash tender offer, and possibly later follow-on cash tender offers, each for 15% of the Fund’s outstanding shares at a price of 92.5% of net asset value per share as of the date the offer expires. Under certain circumstances, if the Fund does not conduct these tender offers, Harvard will be relieved of its obligation to refrain from making shareholder proposals and taking other actions with respect to the Fund, as described above.

Harvard announced that it intends to tender, and the Fund’s obligations under the settlement agreement are conditioned on Harvard actually tendering, all of the Shares Harvard then owns into each tender offer described above that is commenced, including this Offer. At present, Harvard owns approximately 14% of the Shares.

Any Shares acquired by the Fund pursuant to this Offer will become authorized but unissued shares and will be available for issuance by the Fund in the future without further Shareholder action (except as required by applicable law or the rules of national securities exchanges on which the Shares are listed).

NEITHER THE FUND NOR ITS BOARD OF DIRECTORS, NOR THE INVESTMENT MANAGER MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO

7. NAV and Market Price Range of Shares; Dividends. The Shares are traded on the NYSE and the Osaka Securities Exchange. During each fiscal quarter of the Fund during the past two fiscal years and for the first and second fiscal quarter of 2003 (to April 15, 2003), the High and Low NYSE Market Price per Share during such period and the NAV per Share (as of the last day of such period) were as follows:

IT IS ANTICIPATED THAT NO CASH DIVIDEND WILL BE DECLARED BY THE BOARD OF DIRECTORS WITH A RECORD DATE OCCURRING BEFORE THE EXPIRATION OF THE OFFER AND THAT, ACCORDINGLY, NO DIVIDEND WILL BE PAID ON SHARES PURCHASED PURSUANT TO THE OFFER. THE AMOUNT AND FREQUENCY OF DIVIDENDS IN THE FUTURE WILL DEPEND ON CIRCUMSTANCES EXISTING AT THAT TIME.

8. Federal Income Tax Consequences of the Offer. The following discussion describes certain U.S. federal income tax consequences of tendering Shares in the Offer. Except where noted, it deals only with Shares held as capital assets and does not deal with special situations, such as those of dealers in securities or commodities, traders in securities that elect to mark their holdings to market, insurance companies, persons holding Shares as a part of a hedging, conversion or constructive sale transaction or a straddle or Shareholders whose functional currency is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified, either prospectively or retroactively, so as to result in U.S. federal income tax consequences different from those discussed below. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.

As used herein, a “U.S. Shareholder” means a Shareholder that is: (a) a citizen or resident of the U.S.; (b) a corporation or partnership created or organized in or under the laws of the U.S. or any political subdivision thereof; (c) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (d) a trust if it (i) is subject to the supervision of a court within the U.S. and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. A “Non-U.S. Shareholder” is a Shareholder that is not a U.S. Shareholder.

An exchange of Shares for cash in the Offer will be a taxable transaction for U.S. federal income tax purposes. As a consequence of the exchange, the Shareholder will, depending on such Shareholder’s particular circumstances, be treated either as recognizing gain or loss from the disposition of the Shares or as receiving a dividend distribution from the Fund. Under Section 302(b) of the Code, a sale of Shares pursuant to the Offer generally will be treated as a sale or exchange if the receipt of cash by the Shareholder: (a) results in a complete termination of the Shareholder’s interest in the Fund; (b) results in a substantially disproportionate redemption with respect to the Shareholder, or (c) is not essentially equivalent to a dividend with respect to the Shareholder. In determining whether any of these tests has been met, Shares actually owned, as well as Shares considered to be owned by the Shareholder by reason of certain constructive ownership rules set forth in Section 318 of the Code, generally must be taken into account. If any of these three tests for sale or exchange treatment is met, a Shareholder will recognize gain or loss equal to the difference between the price paid by the Fund for the Shares purchased in the Offer and the Shareholder’s adjusted basis in such Shares. If such Shares are held as a capital asset, the gain or loss will be capital gain or loss. In general, the maximum tax rate applicable to net capital gains recognized by individuals and other non-corporate taxpayers is (a) the same as the applicable ordinary income rate for capital assets held for one year or less or (b) 20% for capital assets held for more than one year.

If the requirements of Section 302(b) of the Code for sale or exchange treatment are not met, amounts received by a Shareholder who sells Shares pursuant to the Offer will be taxable to the Shareholder as a dividend to the extent of the Fund’s current or accumulated earnings and profits. To the extent that amounts received exceed the Fund’s current or accumulated earnings and profits, they will be treated as a non-taxable return of capital to the extent of the Shareholder’s adjusted basis in the Shares sold pursuant to the Offer, and any amounts in excess of the Shareholder’s adjusted basis will constitute taxable gain. Any remaining adjusted basis in the Shares tendered to the Fund will be transferred to any remaining Shares held by such Shareholder. In addition, if a tender of Shares is treated as a dividend to a tendering Shareholder, a constructive dividend under Section 305(c) of the Code may result to a non-tendering Shareholder whose proportionate interest in the fund has been increased by such tender.

Non-U.S. Shareholders. The U.S. federal income taxation of a Non-U.S. Shareholder on a sale of Shares pursuant to the offer depends on whether such transaction is “effectively connected” with a trade or business carried on in the U.S. by the Non-U.S. Shareholder as well as the tax characterization of the transaction as either a sale or exchange transaction or distribution by the Fund.

If the sale of Shares pursuant to the Offer is effectively connected with a trade or business carried on in the U.S. by the Non-U.S. Shareholder, the Non-U.S. Shareholder will generally be subject to taxation in the same manner as a U.S. Shareholder, described above. In addition, the Non-U.S. Shareholder must deliver to the Depositary a properly completed and executed Internal Revenue Service (“IRS”) Form W-8ECI, in order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the U.S.

Any payments to a Non-U.S. Shareholder that does not hold the Shares in connection with a trade or business conducted in the U.S. will be subject to U.S. withholding tax. As a result, the Depositary intends to withhold tax on these payments at a rate of 30% unless a reduced rate of withholding is available pursuant to an applicable tax treaty and the Shareholder submits a properly completed Form W8-BEN. If the sale of Shares by a Non-U.S. Shareholder is treated as a sale or exchange rather than a dividend, the Non-U.S. Shareholder will not be subject to U.S. Federal Income Tax on any gain and may seek a refund from the IRS for any U.S. withholding tax withheld from the sale proceeds unless the Shareholder is an individual who is physically present in the U.S. for 183 days or more during a calendar year. If the cash received by a tendering Non-U.S. Shareholder is treated for U.S. tax purposes as a distribution by the Fund, the portion of the distribution treated as a dividend would generally be subject to U.S. income tax at a rate of 30% (i.e., the amount of the tax withheld) unless a reduced rate of tax is available pursuant to a tax treaty.

Backup Federal Income Tax Withholding. Backup withholding tax will be imposed on the gross proceeds paid to a tendering U.S. Shareholder (as defined in Section 8) unless the U.S. Shareholder provides such U.S. Shareholder’s taxpayer identification number (employer identification number or social security

number) to the Depositary, certifies as to no loss of exemption from backup withholding, complies with applicable requirements of the backup withholding rules or is otherwise exempt from backup withholding. Therefore, each tendering U.S. Shareholder should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding, unless such U.S. Shareholder otherwise establishes to the satisfaction of the Depositary that such U.S. Shareholder is not subject to backup withholding. Certain U.S. Shareholders (including, among others, all corporations) are not subject to these backup withholding requirements. In addition, Non-U.S. Shareholders are not subject to these backup withholding requirements. In order for a Non-U.S. Shareholder to qualify as an exempt recipient, the Non-U.S. Shareholder must submit an IRS Form W-8 or a Substitute Form W-8. Such statements can be obtained from the Depositary.

TO PREVENT BACKUP U.S. FEDERAL INCOME TAX WITHHOLDING, EACH SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE SHAREHOLDER’S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL.

THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY. EACH SHAREHOLDER IS URGED TO CONSULT SUCH OWNER’S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE OFFER, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.

9. Selected Financial Information. Set forth below is a summary of selected financial information for the Fund for the fiscal years ended December 31, 2002 and December 31, 2001. The information with respect to the two fiscal years has been excerpted from the Fund’s audited financial statements contained in its Annual Reports to Shareholders for these years. These reports have previously been provided to Shareholders of the Fund. Copies of the two audited financial statements can be obtained for free at the website of the SEC (http://www.sec.gov). The summary of selected financial information set forth below is qualified in its entirety by reference to such financial statements and the financial information, the notes thereto and related matter contained therein.

10. Certain Information Concerning the Fund and the Investment Manager. The Fund is a closed-end, non-diversified management investment company, organized as a Maryland corporation. The Fund first issued Shares to the public in September 1994. On May 29, 2002, the Shareholders approved a 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 reorganization under Japanese law with respect to the Fund’s Japanese shareholders. If this reorganization occurs, it will not be effected until after completion of this Offer.

As a closed-end investment company, the Fund differs from an open-end investment company (i.e., a mutual fund) in that it does not redeem its Shares at the election of a Shareholder and does not continuously offer its Shares for sale to the public. The Fund’s investment objective is long-term capital appreciation, which it seeks to achieve by investing primarily in equity securities of China companies, Japan companies and Asia Pacific companies (each as defined in the Fund’s Prospectus). The principal executive offices and business address of the Fund are located at 500 East Broward Boulevard, Fort Lauderdale, Florida 33394-3091. The Fund’s business telephone number is (954) 527-7500.

Templeton Asset Management Ltd. serves as the Investment Manager to the Fund. The Investment Manager is an indirect wholly owned subsidiary of Franklin Resources, Inc. The Investment Manager is a corporation organized under the laws of Singapore and is a registered investment adviser under the Investment Advisers Act of 1940. The Investment Manager has served as investment manager since the Fund’s inception. The branch office of the Investment Manager from which the Fund is managed is Two Exchange Square, Suites 3905-08, Connaught Road, Central Hong Kong.

The Fund is subject to the information and reporting requirements of the 1940 Act and in accordance therewith is obligated to file reports and other information with the Commission relating to its business, financial condition and other matters. The Fund has also filed an Offer to Purchase on Schedule TO with the

Commission. Such reports and other information are available for inspection at the public reference room at the Commission’s office, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. The Fund’s filings are also available to the public on the Commission’s internet site (http://www.sec.gov). Copies may be obtained, by mail, upon payment of the Commission’s customary charges, by writing to its principal office at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.

11. Interest of Directors and Executive Officers; Transactions and Arrangements Concerning the Shares. The directors and executive officers of the Fund and the aggregate number and percentage of the Shares each of them beneficially owned as of March 31, 2003 is set forth in the table below. The address of each of them is in care of the Fund at 500 East Broward Boulevard, Suite 2100, Fort Lauderdale, Florida 33394-3091.


(1)	Includes 423,010 Shares held by Franklin Templeton Profit Sharing and 401k Plan (the “Plan”) due to such individual’s participation on the Plan’s Administrative Committee. Each individual disclaims beneficial ownership of the Shares held by the Plan, except to the extent of his pecuniary interest.

During the 60 days prior to the date of this Offer to Purchase, the Fund has not effected repurchases of any Shares in the open market.

Neither the Fund nor, to the best of the Fund’s knowledge, any of the Fund’s executive officers or directors, has effected any other transaction in Shares during the past 60 days.

Based on the Schedule 13D/A filed with the SEC by Harvard College on March 21, 2003, as of such date, Harvard College beneficially owned 6,216,250 Shares (approximately 14.0% of the issued and outstanding Shares). Harvard College’s principal executive offices are at c/o Harvard Management Company, Inc., 600 Atlantic Avenue, Boston, Massachussetts 02210. To the best knowledge of the Fund, based solely on Harvard College’s public filings with the SEC, Harvard has not effected any transactions in the Shares, other than the settlement agreement described in Section 6, during the past 60 days.

Other than the settlement agreement described in Section 6 of this Offer to Purchase or as otherwise set forth in the Offer, neither the Fund nor, to the best of the Fund’s knowledge, any of the Fund’s executive officers or directors is a party to any contract, arrangement, understanding or relationship with any other person relating, directly or indirectly to the Offer with respect to any securities of the Fund, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies, consents or authorizations.

12. Certain Legal Matters; Regulatory Approvals. The Fund is not aware of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of Shares by the Fund as contemplated herein. Should any such approval or other action be required, the Fund presently contemplates that such approval or other action will be sought. The Fund is unable to predict whether it may determine that it is required to delay the acceptance for payment of, or payment for, Shares tendered pursuant to the Offer pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained without substantial conditions or that the failure to obtain any such approval or other action might not result in adverse consequences to the Fund’s business. The Fund’s obligations under the Offer to accept for payment and pay for Shares are subject to certain conditions described in Section 13.

13. Certain Conditions of the Offer. Notwithstanding any other provision of the Offer, the Fund shall not be required to accept for payment or pay for any Shares, may postpone the acceptance for payment of, or payment for, tendered Shares, and may, in its reasonable discretion, terminate or amend the Offer as to any Shares not then paid for if: (a) such transactions, if consummated, would (i) result in the delisting of the Shares from the NYSE, the Osaka Securities Exchange or any other securities exchange, (ii) result in a failure to comply with applicable asset coverage requirements under the 1940 Act in the event any senior securities are issued and outstanding; or (iii) impair the Fund’s status as a regulated investment company under the Internal Revenue Code of 1986, as amended; (b) in the Board of Directors’ reasonable judgment, a change in market conditions occurs that prevents the liquidation of portfolio securities in an orderly manner and a liquidation would have a material adverse effect on the NAV of the Fund to the detriment of non-tendering Shareholders; (c) there is (i) in the Board of Directors’ reasonable judgment, any material legal or governmental action or proceeding instituted or threatened challenging such transactions or otherwise materially adversely affecting the Fund or the Offer, (ii) any suspension of or limitation on prices for trading

securities generally on the NYSE, the Osaka Securities Exchange or other national or foreign securities exchange(s), or NASDAQ, (iii) any declaration of a banking moratorium by federal or state authorities or any suspension of payment by banks in the U.S. or New York State, (iv) any limitation affecting the Fund or the issuers of its portfolio securities imposed by federal or state authorities on the extension of credit by lending institutions, (v) any commencement of war, armed hostilities, material act of terrorism or other international or national calamity directly or indirectly involving the U.S., (vi) in the Board of Directors’ reasonable judgment, any significant decrease in the market price of the Shares or in the general level of market prices of equity securities in the U.S. or abroad, (vii) in the Board of Directors’ reasonable judgment, any change in the general political, market, economic or financial conditions of the U.S. or abroad that could have a material adverse effect on the Fund or the Offer, (viii) in the case of the existence of any of the foregoing at the time of commencement of the Offer, any material acceleration or worsening thereof, in the Board of Directors’ reasonable judgment, or (ix) in the Board of Directors’ reasonable judgment, any other event or condition which would have a material adverse effect on the Fund or its Shareholders if Shares were repurchased; (d) a tender or exchange offer for any of the Shares (other than the Offer), or any merger, business combination or other similar transaction with or involving the Fund shall have been proposed, announced or made by any person (other than the reorganization of the Fund from a Maryland corporation to a Delaware statutory trust or a transaction initiated by the Fund or the Investment Manager), or (e) the Board of Directors determines that (i) payment of the purchase price for Shares is not authorized pursuant to the applicable rules and regulations of the Maryland General Corporation Law or the 1940 Act with respect to the repurchase of securities by an issuer, or (ii) effecting any such transaction would constitute a breach of their fiduciary duty owed the Fund or its Shareholders.

The foregoing conditions are for the sole benefit of the Fund and may be asserted by the Fund regardless of the circumstances (including any action or inaction by the Fund) giving rise to any such conditions or may be waived by the Fund in whole or in part at any time and from time to time in its sole discretion. The failure by the Fund at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right, which may be asserted at any time and from time to time. Any determination by the Fund concerning the events described in this Section shall be final and binding on all parties.

The Fund will make a public announcement of any material change in such conditions, and the Offer may, in certain circumstances, be extended in connection with any such change or as otherwise required by applicable law. Further, the Fund will make a public announcement if any of the foregoing conditions occur, and if so, whether or not the Fund intends to waive such condition. The Offer will be extended in the event of the occurrence of any of the foregoing conditions if required by applicable law.

If the Offer is suspended or postponed, the Fund will provide notice to Shareholders of such suspension or postponement.

14. Fees and Expenses. The Fund will not pay to any broker or dealer, commercial bank, trust company or other person any solicitation fee for any Shares purchased pursuant to the Offer. The Fund will reimburse such persons for customary handling and mailing expenses incurred in forwarding the Offer. No such broker, dealer, commercial bank, trust company or other person has been authorized to act as agent of the Fund or the Depositary for purposes of the Offer.

The Fund has retained Mellon Investor Services LLC to act as Depositary and Information Agent. Mellon Investor Services LLC will receive reasonable and customary compensation for its service as Depositary and Information Agent, will also be reimbursed for certain out-of-pocket expenses, and will be indemnified against certain liabilities by the Fund.

15. Miscellaneous. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. The Fund may, in its sole discretion, take such action as it may deem necessary to make the Offer in any such jurisdiction.

The Fund is not aware of any jurisdiction in which the making of the Offer or the acceptance of Shares in connection therewith would not be in compliance with the laws of such jurisdiction. Consequently, the Offer is currently being made to all holders of Shares. However, the Fund reserves the right to exclude Shareholders in any jurisdiction in which it is asserted that the Offer cannot lawfully be made. So long as the Fund makes a good faith effort to comply with any state law or the laws of any other jurisdiction deemed applicable to the Offer, the Fund believes that the exclusion of Shareholders residing in such jurisdiction is permitted under Rule 13e-4(f)(9) promulgated under the Exchange Act.

16. Contacting the Depositary and Information Agent. The Letter of Transmittal, certificates for the Shares and any other required documents should be sent by each Shareholder of the Fund or his or her broker-dealer, commercial bank, trust company or other nominee to the Depositary as set forth below.

Any questions or requests for assistance or additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery, and other documents may be directed to the Information Agent at its telephone number and location listed below. Shareholders may also contact their broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer.

Templeton Dragon Fund, Inc. EX-99.(A)(1)(II) 4 a89354exv99wxayx1yxiiy.htm EXHIBIT (A)(1)(II) exv99wxayx1yxiiy

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND EXCEPT AS OTHERWISE PROVIDED IN INSTRUCTION 2, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. THE SHAREHOLDER HAS THE RESPONSIBILITY TO CAUSE THE LETTER OF TRANSMITTAL, CERTIFICATES AND ANY OTHER DOCUMENTS TO BE TIMELY DELIVERED.

This Letter of Transmittal is to be used: (a) if certificates for Shares (as defined below) are to be provided to the Depositary (including delivery pursuant to a Notice of Guaranteed Delivery) herewith; (b) if tenders are to be made by book-entry transfer to any of the accounts maintained by the Depositary at the Depository Trust Company (“DTC” or the “Book-Entry Transfer Facility”) pursuant to the procedure set forth in Section 3, “Procedure for Tendering Shares,” of the Fund’s Offer to Purchase; or (c) if the certificates for the Shares have been lost. Shareholders whose certificates are not immediately available or who cannot deliver certificates for Shares or deliver confirmation of the book-entry transfer of their Shares into the Depositary’s account at the Book-Entry Transfer Facility and all other documents required hereby to the Depositary at or prior to 12:00 midnight, Eastern time, on the Termination Date may nevertheless tender their Shares according to the guaranteed delivery procedures set forth in Section 3, “Procedure for Tendering Shares,” of the Fund’s Offer to Purchase. See Instruction 2 below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.


o	CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:

If the tendered Shares are being tendered by a Nominee Holder on behalf of its customers, please state the number of customer accounts for whose benefit the tender is made:


o	CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:


o	CHECK HERE IF YOU HAVE LOST ONE OR MORE OF YOUR CERTIFICATE(S) FOR SHARES OF COMMON STOCK OF THE FUND DETAILED ABOVE AND COMPLETE THE AFFIDAVIT OF LOST, MISSING OR DESTROYED CERTIFICATE(S) AND AGREEMENT OF INDEMNITY ON THE FOLLOWING PAGE. SEE INSTRUCTION 3.

By signing this form I/ We swear, depose and state that: I/ We am/are the lawful owner(s) of the certificate(s) hereinafter referred to as the “securities” described in the enclosed Letter of Transmittal. The securities have not been endorsed, pledged, cashed, negotiated, transferred, assigned, or otherwise disposed of. I/ We have made a diligent search for the securities and have been unable to find it or them and make this Affidavit for the purpose of inducing the sale, exchange, redemption, or cancellation of the securities, as outlined in the Letter of Transmittal, without the surrender of the original(s), and also to request and induce the Federal Insurance Company to provide suretyship for me to cover the missing securities under its Blanket Bond #8302-00-67. I/we hereby agree to surrender the securities for cancellation should I/ We, at any time, find the securities.

I/ We hereby agree for myself/ourselves, my/our heirs, successors, assigns and personal representatives, in consideration of the proceeds of the sale, exchange, redemption or cancellation of the securities, and the aforementioned suretyship, to indemnify, protect and hold harmless Federal Insurance Company (the Surety), Mellon Investor Services LLC, Templeton Dragon Fund, Inc. or its successor and any other party to the transaction, from and against any and all loss, costs, and damages including court costs and attorney’s fees, which they may be subject to or liable for in respect to the sale, exchange, redemption or cancellation of the securities without requiring surrender of the original securities. The rights accruing to the parties under the preceding sentence shall not be limited or abridged by their negligence, inadvertence, accident, oversight, or breach or failure to inquire into, contest, or litigate any claim, whenever such negligence, inadvertence, accident, oversight, breach or failure may occur or may have occurred. I/ We agree that this Affidavit and Indemnity Agreement is to become part of Blanket Bond #8302-00-67 underwritten by Federal Insurance Company.

Any person who, knowingly and with intent to defraud any insurance company or other person, files an application or statement of claim, containing any materially false information, or conceals for the purpose of misleading, information concerning any fact material thereto, commits a fraudulent insurance act, which is a crime, and shall also be subject to civil penalties as prescribed by law.

THE BELOW FORMULA IS USED TO DETERMINE THE FEE THAT WILL BE DEDUCTED FROM YOUR CASH ENTITLEMENT.


1.	Enter the number of shares that are lost: × (Cash Rate) $9.50 = $ Share Value* *If the Share Value exceeds $500,000, or if the shareholder is foreign or deceased, do not continue with calculation. Contact Mellon Investor Services at 1-888-788-1635.

2.	Please Enter Share Value $ (Share Value) × (3%) or .03 = Multiply by 3% (.03) for Surety Premium.	$	Surety Premium

3.	Add $50.00 for Service Fee	$	Service Fee

4.	Total Amount that will deducted from your cash entitlement (Add Lines 2 & 3)	$	Total Fee

The undersigned hereby tenders to Templeton Dragon Fund, Inc., a Maryland corporation (the “Fund”), the shares of the Fund’s common stock, par value $0.01 per share (the “Shares”) described below, at a price per Share, in cash (the “Purchase Price”), equal to 92.5% of the net asset value (“NAV”) in U.S. dollars per Share as determined by the Fund at the close of regular trading on the New York Stock Exchange on May 22, 2003, or such later date to which the Offer is extended, upon the terms and subject to the conditions set forth in the Fund’s Offer to Purchase, dated April 24, 2003, receipt of which is hereby acknowledged, and this Letter of Transmittal (which, together with the Fund’s Offer to Purchase, and any amendments or supplements to these documents, collectively constitute the “Offer”). The “Termination Date” of the Offer is 12:00 midnight, Eastern time, on May 22, 2003. If the Fund, in its sole discretion, shall have extended the period for which the Offer is open, the “Termination Date” shall mean the latest time and date on which the Offer, as so extended by the Fund, shall expire.

Subject to, and effective upon, acceptance of payment for the Shares tendered herewith in accordance with the terms and subject to the conditions of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Fund all right, title and interest in and to all the Shares that are being tendered hereby and that are being accepted for purchase pursuant to the Offer (and any and all dividends, distributions, other Shares or other securities or rights issued or issuable in respect of such Shares on or after the Termination Date) and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and any such dividends, distributions, other Shares or securities or rights), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to: (a) deliver certificates for such Shares (and any such other dividends, distributions, other Shares or securities or rights) or transfer ownership of such Shares (and any such other dividends, distributions, other Shares or securities or rights), together, in either such case, with all accompanying evidences of transfer and authenticity to or upon the order of the Fund, upon receipt by the Depositary, as the undersigned’s agent, of the Purchase Price; (b) present such Shares (and any such other dividends, distributions, other Shares or securities or rights) for transfer on the books of the Fund; and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any such other dividends, distributions, other Shares or securities or rights), all in accordance with the terms of the Offer.

The undersigned hereby represents and warrants that: (a) the undersigned has full power and authority to tender, sell, assign and transfer the tendered Shares (and any and all dividends, distributions, other Shares or other securities or rights issued or issuable in respect of such Shares on or after the Termination Date); (b) when and to the extent the Fund accepts the Shares for purchase, the Fund will acquire good, marketable and unencumbered title thereto, free and clear of all liens, restrictions, charges, proxies, encumbrances or other obligations relating to their sale or transfer, and not subject to any adverse claim; (c) on request, the undersigned will execute and deliver any additional documents deemed by the Depositary or the Fund to be necessary or desirable to complete the sale, assignment and transfer of the tendered Shares (and any and all dividends, distributions, other Shares or securities or rights issued or issuable in respect of such Shares on or after the Termination Date); and (d) the undersigned has read and agreed to all of the terms of the Offer.

All authority conferred or agreed to be conferred in this Letter of Transmittal shall be binding upon the successors, assigns, heirs, executors, administrators and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Termination Date in accordance with Section 4, “Rights of Withdrawal,” of the Fund’s Offer to Purchase. After the Termination Date, tenders made pursuant to the Fund’s Offer to Purchase will be irrevocable.

The undersigned understands that the valid tender of Shares pursuant to any one of the procedures described in Section 3, “Procedure for Tendering Shares,” of the Fund’s Offer to Purchase will constitute a binding agreement between the undersigned and the Fund upon the terms and subject to the conditions of the Offer.

The undersigned recognizes that under certain circumstances set forth in the Offer, the Fund may not be required to purchase any of the Shares tendered hereby, or may accept for purchase fewer than all of the Shares tendered hereby.

Unless otherwise indicated herein under “Special Payment Instructions,” please return any certificates for Shares not tendered or accepted for payment (and accompanying documents, as appropriate) in the name(s) of the registered holder(s) appearing under “Description of Shares Tendered.” Similarly, unless otherwise indicated under “Special Delivery Instructions,” please return any certificates for Shares not tendered or accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under “Description of Shares Tendered.” In the event that either the Special Delivery Instructions or the Special Payment Instructions are completed, please return such certificates to the person or persons so indicated. The undersigned recognizes that the Fund has no obligation pursuant to the Special Payment Instructions to transfer any Shares from the name of the registered holder thereof if the Fund does not accept for payment any of the Shares so tendered. The undersigned further recognizes that the Special Payment Instructions and the Special Delivery Instructions are not applicable to Shares tendered by book-entry transfer.

To be completed ONLY if certificates for Shares not tendered or not purchased are to be issued in the name of and sent to someone other than the undersigned.

Issue Certificate to:

To be completed ONLY if certificates for Shares not tendered or not purchased are to be issued in the name of the undersigned, but sent to someone other than the undersigned or to the undersigned at an address other than that shown above.

(Must be signed by the registered holder(s) exactly as name(s) appear(s) on certificate(s) for the Shares or on a security position listing or by person(s) authorized to become registered holder(s) by certificate(s) and documents transmitted herewith. If signature is by attorney-in-fact, executor, administrator, trustee, guardian, agent, officer of a corporation or another person acting in a fiduciary or representative capacity, please provide the following information. See Instructions 1 and 6.)

1. Guarantee of Signatures. No signature guarantee on this Letter of Transmittal is required (a) if this Letter of Transmittal is signed by the registered holder of the Shares (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) tendered herewith, unless such holder has completed either the box entitled “Special Delivery Instructions” or the box entitled “Special Payment Instructions” herein, or (b) if such Shares are tendered for the account of a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc. (“NASD”), a commercial bank, credit union, savings association or trust company having an office, branch or agency in the United States, or other entity which is a member in good standing of a stock transfer association’s approved medallion program (each being hereinafter referred to as an “Eligible Institution”). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 6.

2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This Letter of Transmittal is to be used only (a) if certificates are to be forwarded herewith or (b) if tenders are to be made pursuant to the procedures for delivery by book-entry transfer set forth in Section 3, “Procedure for Tendering Shares,” of the Fund’s Offer to Purchase. Certificates for all physically tendered Shares, or confirmation of a book-entry transfer in the Depositary’s account at the Book-Entry Transfer Facility of Shares tendered by book-entry transfer, together, in each case, with a properly completed and duly executed Letter of Transmittal with any required signature guarantees, any other documents required by this Letter of Transmittal should be mailed or delivered to the Depositary at the appropriate address set forth herein and must be received by the Depositary at or prior to 12:00 midnight, Eastern time, on the Termination Date.

Shareholders whose certificates are not immediately available or who cannot deliver Shares and all other required documents to the Depositary at or prior to 12:00 midnight, Eastern time, on the Termination Date, or whose Shares cannot be delivered on a timely basis pursuant to the procedures for book-entry transfer on or prior to the Termination Date, may tender their Shares by or through any Eligible Institution by properly completing and duly executing and delivering a Notice of Guaranteed Delivery (or facsimile thereof), which must be received by the Depositary on or prior to the Termination Date, and by otherwise complying with the guaranteed delivery procedures set forth in Section 3, “Procedure for Tendering Shares,” of the Fund’s Offer to Purchase. Pursuant to these guaranteed delivery procedures, the certificates for all physically tendered Shares, or confirmation of book-entry transfer, as the case may be, as well as a properly completed and duly executed Letter of Transmittal, and all other documents required by this Letter of Transmittal must be received by the Depositary within three (3) business days after the Termination Date, all as provided in Section 3, “Procedure for Tendering Shares,” of the Fund’s Offer to Purchase.

THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATES FOR SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER AND EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. THE SHAREHOLDER HAS THE RESPONSIBILITY TO CAUSE THE LETTER OF TRANSMITTAL, CERTIFICATES AND ANY OTHER DOCUMENTS TO BE TIMELY DELIVERED.

No alternative, conditional or contingent tenders will be accepted, except as may be permitted in the Fund’s Offer to Purchase. All tendering Shareholders, by execution of this Letter of Transmittal, waive any right to receive any notice of the acceptance for payment of Shares.

3. Lost Certificates. In the event that any Shareholder is unable to deliver to the Depositary the Fund Certificate(s) representing his, her or its Shares due to the loss or destruction of such Certificate(s), check the appropriate box on Page 2 of this Letter of Transmittal and complete the Affidavit of Lost, Missing or Destroyed Certificate(s) and Agreement of Indemnity. There is a fee charged by the Depositary related to this form which will be deducted from the payment for the Shares tendered by you and accepted by the Fund.

4. Inadequate Space. If the space provided is inadequate, the certificate numbers and/or number of Shares should be listed on a separate, signed schedule attached hereto.

5. Partial Tenders and Unpurchased Shares. (Not applicable to Shareholders who tender by book-entry transfer.) If fewer than all the Shares evidenced by any certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the column entitled “Number of Shares Tendered.” In such case, a new certificate for the remainder of the Shares evidenced by the old certificate(s) will be issued and sent to the registered holder, unless otherwise specified in the “Special Payment Instructions” or “Special Delivery Instructions” boxes in this Letter of Transmittal, as soon as practicable after the Termination Date. All Shares represented by certificates listed and delivered to the Depositary are deemed to have been tendered unless otherwise indicated.


	a. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly with the name(s) on the face of the certificates.

	b. If any of the tendered Shares are held of record by two or more joint holders, ALL such holders must sign this Letter of Transmittal.

	c. If any tendered Shares are registered in different names on several certificates, it will be necessary to complete, sign and submit as many Letters of Transmittal as there are different registrations of certificates.

	d. If this Letter of Transmittal is signed by the registered holder(s) of the Shares listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made, or the certificates for Shares not tendered or purchased are to be issued, to a person other than the registered holder(s), in which case the endorsements or signatures on the stock powers, as the case may be, must be signed exactly as the name(s) of the registered holder(s) appear(s) on the certificates. Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. See also Instruction 1.

	e. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, agents, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Fund of their authority to so act.

	f. If this Letter of Transmittal is signed by a person(s) other than the registered holder(s) of the certificates listed and transmitted hereby, the certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holder(s) appear on the certificates. Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. See also Instruction 1.

7. Stock Transfer Taxes. Except as set forth in this Instruction 7, no stock transfer tax stamps or funds to cover such stamps need accompany this Letter of Transmittal, and the Fund will pay all stock transfer taxes, if any, with respect to the transfer and sale of Shares to it pursuant to the Offer. If, however, payment of the repurchase price is to be made to, or (in the circumstances permitted by the Fund’s Offer to Purchase) if Shares not tendered or not purchased are to be registered in the name of any person other than the registered holder, or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder or such other person) payable on account of the transfer to such person will be deducted from the Purchase Price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted.

8. Tender of More Than 6,656,425 Shares. If more than 6,656,425 Shares are duly tendered prior to the expiration of the Offer (and not timely withdrawn), the Fund will purchase Shares from tendering Shareholders, in accordance with the terms and conditions specified in the Offer to Purchase, on a pro rata basis (disregarding fractions), according to the number of Shares tendered by each Shareholder (and not timely withdrawn), unless the Fund determines not to purchase any Shares. Certificates representing Shares tendered but not purchased will be returned as soon as reasonably practicable following the termination, expiration or withdrawal of the Offer, without further expense to the tendering Shareholder.

9. Special Payment and Delivery Instructions. If certificates for Shares not tendered or not purchased are to be issued in the name of a person other than the person signing this Letter of Transmittal or if such certificates are to be sent to someone other than the person signing this Letter of Transmittal or to the person signing this Letter of Transmittal at

10. Irregularities. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Fund, in its sole discretion, which determination shall be final and binding. The Fund reserves the absolute right to reject any or all tenders of any particular Shares: (a) determined by it not to be in proper form; or (b) the acceptance of or payment for which may, in the opinion of the Fund’s counsel, be unlawful. The Fund also reserves the absolute right to waive any of the conditions of the Offer, in whole or in part, or any defect or irregularity in tender of any particular Shares or Shareholder, and the Fund’s interpretations of the terms and conditions of the Offer (including these instructions) shall be final and binding. No tender of Shares will be deemed to be properly made until all defects and irregularities have been cured or waived. None of the Fund, the Depositary, the Information Agent or any other person shall be obligated to give notice of defects or irregularities in tenders, nor shall any of them incur any liability for failure to give any such notice. Unless waived, any defects or irregularities must be cured within such time as the Fund shall determine.

11. Requests for Assistance and Additional Copies. Requests for assistance should be directed to, and additional copies of the Fund’s Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of Transmittal may be obtained from, the Information Agent at the address set forth at the end of this Letter of Transmittal or from your broker, dealer, commercial bank, trust company, or other nominee. The Information Agent will also provide Shareholders, upon request, with a Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (W-8BEN) or a Certificate of Foreign Person’s Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United States (W-8ECI).

12. Backup Withholding. Each Shareholder that desires to participate in the Offer must, unless an exemption applies, provide the Depositary with the Shareholder’s taxpayer identification number on the Substitute Form W-9 set forth in this Letter of Transmittal, with the required certifications being made under penalties of perjury. If the Shareholder is an individual, the taxpayer identification number is his or her social security number. If the Depositary is not provided with the correct taxpayer identification number, the Shareholder may be subject to a $50 penalty imposed by the Internal Revenue Service in addition to being subject to backup withholding.

Shareholders are required to give the Depositary the taxpayer identification number of the record owner of the Shares by completing the Substitute Form W-9 included with this Letter of Transmittal. If the Shares are registered in more than one name or are not in the name of the actual owner, consult the “Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9,” which immediately follow the Substitute Form W-9.

If backup withholding applies, the Depositary is required to withhold 30% of any payment made to the Shareholder with respect to Shares purchased pursuant to the Offer. Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of persons subject to backup withholding may result in an overpayment of taxes for which a refund may be obtained by the Shareholder from the Internal Revenue Service.

Certain Shareholders (including, among others, most corporations and certain foreign persons) are exempt from backup withholding requirements. To qualify as an exempt recipient on the basis of foreign status, a Shareholder must submit a properly completed Form W-8BEN or Form W-8ECI, signed under penalties of perjury, attesting to that person’s exempt status. A Shareholder would use a Form W-8BEN to certify that it: (a) is neither a citizen nor a resident of the United States; (b) has not been and reasonably does not expect to be present in the United States for a period aggregating 183 days or more during the calendar year; and (c) reasonably expects not to be engaged in a trade or business within the United States to which the gain on the sale of the Shares would be effectively connected; and would use a Form W-8ECI to certify that: (x) it is neither a citizen nor resident of the U.S.; and (y) the proceeds of the sale of the Shares is effectively connected with a U.S. trade or business. A foreign Shareholder may also use a Form W-8BEN to certify that it is eligible for benefits under a tax treaty between the United States and such foreign person’s country of residence.

A SHAREHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR AS TO HIS OR HER QUALIFICATION FOR EXEMPTION FROM THE BACKUP WITHHOLDING REQUIREMENTS AND THE PROCEDURE FOR OBTAINING AN EXEMPTION.

13. Withholding for Non-U.S. Shareholders. Even if a Non-U.S. Shareholder has provided the required certification to avoid backup withholding, the Depositary will withhold U.S. federal income taxes equal to 30% of the gross payments payable to a Non-U.S. Shareholder or his or her agent unless the Depositary determines that a reduced rate of withholding is available pursuant to a tax treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business within the U.S. In order to obtain a reduced rate of withholding pursuant to a tax treaty, a Non-U.S. Shareholder must deliver to the Depositary before the payment a properly completed and executed IRS Form W-8BEN. In order to obtain an exemption from withholding on the grounds that the gross proceeds paid pursuant to the Offer are effectively connected with the conduct of a trade or business within the U.S., a Non-U.S. Shareholder must deliver to the Depositary a properly completed and executed IRS Form W-8ECI. The Depositary will determine a shareowner’s status as a Non-U.S. Shareholder and eligibility for a reduced rate of, or exemption from, withholding by reference to any outstanding certificates or statements concerning eligibility for a reduced rate of, or exemption from, withholding (e.g., IRS Forms W-8BEN or W-8ECI) unless facts and circumstances indicate that such reliance is not warranted. A Non-U.S. Shareholder may be eligible to obtain a refund of all or a portion of any tax withheld if such Shareholder satisfies certain requirements or is otherwise able to establish that no tax or a reduced amount of tax is due. Backup withholding generally will not apply to amounts subject to the 30% or a treaty-reduced rate of withholding. Non-U.S. Shareholders are urged to consult their own tax advisors regarding the application of federal income tax withholding, including eligibility for a withholding tax reduction or exemption, and the refund procedure.


NOTE:	FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 30% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 AND INSTRUCTION NOS. 12 AND 13 FOR ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF PART 1(b) OR PART 3 OF THE SUBSTITUTE FORM W-9 APPLIES TO YOU.

I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either: (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office; or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 30% of all reportable payments made to me will be withheld.

Any questions or requests for assistance or additional copies of this Letter of Transmittal, the Fund’s Offer to Purchase, the Notice of Guaranteed Delivery and other accompanying materials may be directed to the Information Agent at its telephone number and location listed below. Shareholders may also contact their broker, commercial bank or trust company or other nominee for assistance concerning the Offer.

Toll Free: 1-888-788-1635 EX-99.(A)(1)(III) 5 a89354exv99wxayx1yxiiiy.htm EXHIBIT (A)(1)(III) exv99wxayx1yxiiiy

This form, or one substantially equivalent hereto, must be used to accept the Offer (as defined below) if Shareholders’ certificates for common stock, par value $0.01 per share (the “Shares”) of Templeton Dragon Fund, Inc., are not immediately available or time will not permit the Letter of Transmittal and other required documents to be delivered to the Depositary at or before 12:00 midnight, Eastern time, on May 22, 2003, or such later date to which the Offer is extended (the “Termination Date”). Such form may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary, and must be received by the Depositary on or before the Termination Date. See Section 3, “Procedure for Tendering Shares,” of the Offer to Purchase.

The undersigned hereby tenders to Templeton Dragon Fund, Inc. (the “Fund”), upon the terms and subject to the conditions set forth in its Offer to Purchase, dated April 24, 2003 and the related Letter of Transmittal (which, together with any amendments or supplements to these documents, collectively constitute the “Offer”), receipt of which is hereby acknowledged, the number of Shares set forth on this page pursuant to the guaranteed delivery procedures set forth in Section 3, “Procedure for Tendering Shares,” of the Offer to Purchase.

The undersigned, a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office, branch, or agency in the United States, hereby: (a) guarantees to deliver to the Depository certificates representing the Shares tendered hereby, in proper form for transfer (or tender shares pursuant to the procedures for book-entry transfer) into the Depositary’s account at The Depository Trust Company, together with (i) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees and (ii) other required documents, within three business days after the Termination Date of the Offer; and (b) represents that such tender of Shares complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended.

3 EX-99.(A)(1)(IV) 6 a89354exv99wxayx1yxivy.htm EXHIBIT (A)(1)(IV) exv99wxayx1yxivy

We are enclosing herewith the material listed below relating to the offer of Templeton Dragon Fund, Inc., a Maryland corporation, registered under the Investment Company Act of 1940, as amended, as a closed-end, non-diversified management investment company (the “Fund”), to purchase up to 15% of the Fund’s issued and outstanding shares of Common Stock, par value $0.01 per share (the “Shares”), or 6,656,425 Shares upon the terms and conditions set forth in its Offer to Purchase, dated April 24, 2003 and in the related Letter of Transmittal (which, together with any amendments or supplements to these documents, collectively constitute the “Offer”). The price to be paid for the Shares is an amount per Share, equal to 92.5% of the net asset value per Share as determined by the Fund at the close of regular trading on the New York Stock Exchange on May 22, 2003, or such later date to which the Offer is extended.

We are asking you to contact your clients for whom you hold Shares registered in your name (or in the name of your nominee) or who hold Shares registered in their own names. Please bring the Offer to their attention as promptly as possible. No fees or commission will be payable to the Fund in connection with the Offer. However, brokers, dealers or other persons may charge Shareholders a fee for soliciting tenders for Shares pursuant to the Offer. The Fund will, upon request, reimburse you for reasonable and customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. The Fund will pay all transfer taxes on its purchase of Shares, subject to Instruction 7, “Stock Transfer Taxes,” of the Letter of Transmittal. HOWEVER, BACKUP WITHHOLDING AT A 30% RATE MAY BE REQUIRED UNLESS EITHER AN EXEMPTION IS PROVED OR THE REQUIRED TAXPAYER IDENTIFICATION INFORMATION AND CERTIFICATIONS ARE PROVIDED. SEE SECTION 8, “FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER,” OF THE OFFER TO PURCHASE AND INSTRUCTION 12, “BACKUP WITHHOLDING,” OF THE LETTER OF TRANSMITTAL.

For your information and for forwarding to your clients, we are enclosing the following documents:


	1. A letter to Shareholders of the Fund from Mark Mobius, President and Chief Executive Officer — Investment Management of the Fund;

	2. The Offer to Purchase dated April 24, 2003;

	3. The Letter of Transmittal for your use and to be provided to your clients;

	4. Notice of Guaranteed Delivery;


	5. Form of letter to clients that may be sent to your clients for whose accounts you hold Shares registered in your name (or in the name of your nominee); and

	6. Return envelope addressed to Mellon Investor Services LLC (the “Depositary”).

The Offer is not being made to, nor will the Fund accept tenders from, holders of Shares in any state or other jurisdiction in which the Offer would not be in compliance with the securities or Blue Sky laws of such jurisdiction.

As described in the Fund’s Offer to Purchase under Section 3, “Procedure for Tendering Shares,” tenders may be made without the concurrent deposit of stock certificates if: (1) such tenders are made by or through a broker or dealer that is a member firm of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office, branch, or agency in the United States; and (2) the Depositary receives, on or prior to the Termination Date, a properly completed and duly executed Notice of Guarantee Delivery; and (3) certificates for Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary’s account at a Book-Entry Transfer Facility (as defined in the Letter of Transmittal)), together with a properly completed and duly executed Letter of Transmittal, and any other documents required by the Letter of Transmittal, are received by the Depositary within three (3) business days after the Termination Date.

NONE OF THE FUND, ITS BOARD OF DIRECTORS OR ITS INVESTMENT MANAGER MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER WHETHER TO TENDER ANY SHARES.

For additional information or copies of the enclosed material, please contact Mellon Investor Services LLC (the “Information Agent”) toll free at 1-888-788-1635.


	Very truly yours,


	MARK MOBIUS
	President and Chief Executive Officer — Investment Management
	Templeton Dragon Fund, Inc.

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF TEMPLETON DRAGON FUND, INC., THE INFORMATION AGENT, OR THE DEPOSITARY OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY MATERIAL ON THEIR BEHALF WITH RESPECT TO THE OFFER, OTHER THAN THE MATERIAL ENCLOSED HEREWITH AND THE STATEMENTS SPECIFICALLY SET FORTH IN SUCH MATERIAL.

Enclosed for your consideration is the Offer to Purchase, dated April 24, 2003, of Templeton Dragon Fund, Inc., a Maryland corporation registered under the Investment Company Act of 1940 as a closed-end, non-diversified management investment company (the “Fund”), and a related Letter of Transmittal (which, together with any amendments or supplements to these documents, collectively constitute the “Offer”), pursuant to which the Fund is offering to purchase up to 15% of the Fund’s outstanding shares of common stock, par value $0.01 per share (the “Shares”), or 6,656,425 Shares, upon the terms and conditions set forth in the Offer.

The Offer to Purchase and the Letter of Transmittal are being forwarded to you for your information only and cannot be used by you to tender Shares held by us for your account. We are the holder of record of Shares held for your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND ONLY PURSUANT TO YOUR INSTRUCTIONS.


	(1) The purchase price to be paid for the Shares is an amount per Share, equal to 92.5% of the net asset value per Share as determined by the Fund at the close of regular trading on the New York Stock Exchange on May 22, 2003, or such later date to which the Offer is extended. The current net asset value of the Fund is calculated on each business day and may be obtained by calling Mellon Investor Services LLC, the Fund’s Information Agent, toll free at 1-888-788-1635, business days between 9:00 a.m. and 7:00 p.m. Eastern time, or by calling Franklin Templeton Fund Information toll free at 1-800-DIAL BEN® (1-800-342-5236), business days between 8:30 a.m. and 8:00 p.m. Eastern time.

	(2) The Offer is not conditioned upon any minimum number of Shares being tendered.

	(3) Upon the terms and subject to the conditions of the Offer, the Fund will purchase all Shares validly tendered on or prior to 12:00 midnight, Eastern time, on May 22, 2003, or such later date to which the Offer is extended (the “Termination Date”).

	(4) No fees or commission will be payable to the Fund in connection with the tender offer. However, tendering Shareholders may be obligated to pay brokerage commissions, or subject to Instruction 7 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Fund pursuant to the Offer.


	(5) Your instructions to us should be forwarded in ample time before the Termination Date to permit us to submit a tender on your behalf. An envelope to return your instructions to us is enclosed.

The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of Shares in any jurisdiction in which the making or acceptance of the Offer would not be in compliance with the applicable law.

NONE OF THE FUND, ITS BOARD OF DIRECTORS OR THE INVESTMENT MANAGER TO THE FUND IS MAKING ANY RECOMMENDATION TO ANY SHAREHOLDER WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES IN THE OFFER. EACH SHAREHOLDER IS URGED TO READ AND EVALUATE THE OFFER AND ACCOMPANYING MATERIALS CAREFULLY.

The undersigned acknowledge(s) receipt of your letter, and the enclosed Offer, dated April 24, 2003 relating to Templeton Dragon Fund, Inc., a Maryland corporation (the “Fund”) to purchase up to 6,656,425 Shares.

This will instruct you to tender to the Fund the number of Shares indicated below (which are held by you for the account of the undersigned), upon the terms and subject to the conditions set forth in the Offer that you have furnished to the undersigned.

2 EX-99.(A)(1)(VI) 8 a89354exv99wxayx1yxviy.htm EXHIBIT (A)(1)(VI) exv99wxayx1yxviy

As announced on March 20, 2003, the Board of Directors of the Templeton Dragon Fund, Inc. (the “Fund”), approved a tender offer for the Fund’s common stock, par value $0.01 per share (the “Shares”). Accordingly, the Fund is hereby commencing an offer to purchase up to 15% of the Fund’s outstanding Shares. The offer is for cash at a price equal to 92.5% of the Fund’s net asset value (“NAV”) per share as determined by the Fund at the close of regular trading on the New York Stock Exchange (“NYSE”) on May 22, 2003, or such later date to which the Offer is extended, upon the terms and conditions set forth in the enclosed Offer to Purchase, dated April 24, 2003 and related Letter of Transmittal (which, together with any amendments or supplements to these documents, collectively constitute the “Offer”).

The deadline for participating in the Offer is 12:00 midnight, Eastern time, May 22, 2003, or such later date to which the Offer is extended (the “Termination Date”). The pricing date for the Offer is the close of regular trading on the NYSE on May 22, 2003, unless the Offer is extended (the “Pricing Date”). Should the Offer be extended, the Pricing Date will be the close of regular trading on the NYSE on the same date as the Termination Date, as extended. Shareholders who choose to participate in the Offer can expect to receive payment for Shares tendered and accepted as soon as reasonably practicable after the Termination Date of the Offer.

If, after carefully evaluating all information set forth in the Offer, you wish to tender Shares pursuant to the Offer, please either follow the instructions contained in the Offer or, if your Shares are held of record in the name of a broker, dealer, commercial bank, trust company or other nominee, contact such firm to effect the tender for you. Shareholders are urged to consult their own investment and tax advisors and make their own decisions whether to tender any Shares.

As of April 15, 2003, the Fund’s NAV was $10.27 per share and 44,376,167 Shares were issued and outstanding. The Fund’s NAV during the pendency of this Offer may be obtained by contacting Mellon Investor Services LLC, the Fund’s Information Agent, toll free at 1-888-788-1635, business days between 9:00 a.m. and 7:00 p.m. Eastern time, or by calling Franklin Templeton Fund Information toll free at 1-800-DIAL BEN® (1-800-342-5236), business days between 8:30 a.m. and 8:00 p.m. Eastern time.

None of the Fund, its Board of Directors (the “Board”), or its investment manager are making any recommendation to any Shareholder whether to tender or refrain from tendering Shares in the Offer. The Fund and the Board urge each Shareholder to read and evaluate the Offer and related materials carefully and make his or her own decision.

Questions, requests for assistance and requests for additional copies of this Offer and related materials should be directed to Mellon Investor Services LLC at 1-888-788-1635.


	Sincerely,


	MARK MOBIUS
	President and Chief Executive Officer-Investment Management
	Templeton Dragon Fund, Inc.

EX-99.(A)(5) 9 a89354exv99wxayx5y.htm EXHIBIT (A)(5) exv99wxayx5y

For more information, please contact Franklin Templeton Investments at 1-800-342-5236. Members of the media should contact Lisa Gallegos at Franklin Templeton Corporate Communications at 650-312-3395.

Ft. Lauderdale, Florida, April 24, 2003. Templeton Dragon Fund, Inc. (NYSE: TDF) (the “Fund”), a closed-end management investment company, today announced that it has commenced a tender offer to purchase up to 6,656,425 shares, or 15% of its outstanding common stock, for cash, at a price per share equal to 92.5% of the net asset value per share as of the date the offer expires. The offer begins today and will expire at 12:00 midnight, Eastern time on May 22, 2003, unless the offer is extended. In the event that the shares tendered exceed 6,656,425, the number of shares purchased will be pro-rated in accordance with the number of shares tendered by each shareholder. On April 23, 2003, the Fund’s net asset value per share was $9.98. The net asset value per share as of the date the offer expires may be higher or lower than the net asset value per share on April 23, 2003.

Although the Fund’s Board of Directors has approved this tender offer, neither the Fund, its Board of Directors nor its investment manager is making any recommendation to shareholders as to whether to tender or refrain from tendering their shares. Shareholders are urged to evaluate carefully all information regarding the tender offer and consult their own investment and tax advisors before making their decision as to whether to tender their shares and, if so, how many shares to tender.

This press release is for informational purposes only and is not an offer to purchase or a solicitation of an offer to sell shares of the Fund. The tender offer will be made and shareholders will be notified in accordance with the requirements of the Securities and Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended. The Offer to Purchase, the Letter of Transmittal and certain other materials are being mailed to shareholders today. In addition, the Fund is also filing today with the SEC on Schedule TO, the Offer to Purchase, the Letter of Transmittal and other materials. Holders of the Fund’s shares should read the Offer to Purchase and the related Letter of Transmittal and the other materials filed with the SEC on Schedule TO, as well as any amendments or supplements to the Schedule when they become available, because they

contain important information. Documents filed with the SEC will be available to investors for free at the website of the SEC (www.sec.gov). Questions and requests for assistance or for copies of the Offer to Purchase, Letter of Transmittal and related documents should be directed to the Information Agent, Mellon Investor Services LLC, 85 Challenger Road, 2nd Floor, Ridgefield Park, NJ 07660, or by calling toll-free 1-888-788-1635. Requests for current net asset value information may be directed to the Information Agent or Franklin Templeton Fund Information at 1-800 DIAL BEN (1-800-342-5236).

The Fund’s investment manager is Templeton Asset Management Ltd., an indirect wholly owned subsidiary of Franklin Resources, Inc. (NYSE: BEN), a global investment organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management services through its Franklin, Templeton, Mutual Series and Fiduciary Trust subsidiaries. The San Mateo, CA-based company has over 50 years of investment experience and more than $252 billion in assets under management as of March 31, 2003. For more information, please call 1-800-DIAL BEN® (1-800-342-5236).

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TRANSACTION VALUATION*	AMOUNT OF FILING FEE

$63,236,038(a)	$	5,116	(b)


		Amount Previously Paid:		Not applicable.
		Form or Registration No.:		Not applicable.
		Filing Party:		Not applicable.
		Date Filed:		Not applicable.


o				third party tender offer subject to Rule 14d-1
o				going-private transaction subject to Rule 13e-3
x				issuer tender offer subject to Rule 13e-4
o				amendment to Schedule 13D under Rule 13d-2


EXHIBIT NO.		DESCRIPTION

(a)(1)(i)		Offer to Purchase, dated April 24, 2003.
(a)(1)(ii)		Form of Letter of Transmittal.
(a)(1)(iii)		Form of Notice of Guaranteed Delivery.
(a)(1)(iv)		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(v)		Form of Letter to Clients of Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
(a)(1)(vi)		Form of Letter to Stockholders.
(a)(5)		Press release issued on April 24, 2003.


	TEMPLETON DRAGON FUND, INC.

	By:	/s/ BARBARA J. GREEN Name: Barbara J. Green, Esq. Title: Vice President and Secretary

Dated: April 24, 2003

Table of Contents

Table of Contents

Table of Contents


John F. Della Grotta, Esq. Paul, Hastings, Janofsky & Walker LLP 695 Town Center Drive Costa Mesa, California 92626-1924 Tel: (714) 668-6200 Fax: (714) 979-1921		Bruce G. Leto, Esq. Stradley, Ronon, Stevens & Young, LLP 2600 One Commerce Square Philadelphia, PA 19103-7098 Tel: (215) 564-8000 Fax: (215) 564-8120

(a)		Calculated as the aggregate maximum purchase price to be paid for 6,656,425 shares in the offer, based upon a price of $9.50 (92.5% of the net asset value per share of $10.27 on April 17, 2003).

(b)		Calculated at $80.90 per $1,000,000 of the Transaction Value.


o		Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.


o		Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.


	ITEM 12. EXHIBITS
	ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3
SIGNATURE
EXHIBIT (A)(1)(I)
EXHIBIT (A)(1)(II)
EXHIBIT (A)(1)(III)
EXHIBIT (A)(1)(IV)
EXHIBIT (A)(1)(V)
EXHIBIT (A)(1)(VI)
EXHIBIT (A)(5)


What Is The Tender Offer?		Templeton Dragon Fund, Inc. (the “Fund”) is offering to purchase up to 15% of its outstanding Shares, or 6,656,425 Shares, for cash at a price per share equal to 92.5% of the net asset value (“NAV”) per Share as determined by the Fund at the close of regular trading on the New York Stock Exchange (“NYSE”) on May 22, 2003, (or if the Offer is extended, on the date to which the Offer is extended), upon specified terms and subject to conditions as set forth in the tender offer documents.

When Will The Tender Offer Expire, And May The Offer Be Extended?		The tender offer will expire at 12:00 midnight, Eastern time, on May 22, 2003, unless extended. The Fund may extend the period of time the Offer will be open by issuing a press release or making some other public announcement by no later than the next business day after the Offer otherwise would have expired. See Section 1 of this Offer to Purchase.

What Is The Net Asset Value Per Fund Share As Of A Recent Date?		As of April 15, 2003, the net asset value per Share was $10.27. See Section 7 of this Offer to Purchase for additional information regarding net asset values and market prices. During the pendency of the tender offer, current per Share NAV quotations can be obtained from Mellon Investor Services LLC by calling toll free at 1-888-788-1635, between 9:00 a.m. and 7:00 p.m. Eastern time, Monday through Friday (except holidays). You may also call Franklin Templeton Fund Information’s toll free number at 1-800-DIAL BEN®(1-800-342-5236), between 8:30 a.m. and 8:00 p.m. Eastern time, Monday through Friday (except holidays).

Will The Net Asset Value Be Higher Or Lower On The Date That The Price To Be Paid For Tendered Shares Is To Be Determined?		No one can accurately predict the NAV at a future date, but you should realize that the NAV on the date the purchase price for tendered Shares is to be determined may be higher or lower than the NAV on April 15, 2003.

How Do I Tender My Shares?		If your Shares are registered in your name, you should obtain the tender offer materials, including this Offer to Purchase and the related Letter of Transmittal, read them, and if you decide to tender, complete a Letter of Transmittal and submit any other documents required by the Letter of Transmittal. These materials must be received by Mellon Investor Services LLC, the Depositary, in proper form, at or prior to 12:00 midnight, Eastern time, on May 22, 2003 (unless the tender offer is extended by the Fund, in which case the new deadline will be as stated in the public announcement of the extension). If your Shares are held by a broker, dealer, commercial bank, trust company or other nominee (e.g., in “street name”), you should contact that firm to obtain the package of information necessary to make your decision, and you


Does The Fund Have The Financial Resources To Make Payment?		Yes. The purchase price of the Shares in the Offer will be financed through cash on hand, the sale of portfolio securities and/or borrowing, each in the amount or amounts determined by Templeton Asset Management Ltd., the Fund’s investment manager, in its reasonable discretion, subject to restrictions or limitations contained in the Fund’s charter documents or prospectus, any of the Fund’s material agreements, each as amended from time to time, or the rules and regulations promulgated under the Investment Company Act of 1940, as amended. See Section 5 of this Offer to Purchase.

If Shares I Tender Are Accepted By The Fund, When Will Payment Be Made?		Payment for tendered Shares, if accepted, will be made as soon as reasonably practicable after May 22, 2003 (or if the Offer is extended, on the date to which the Offer is extended).

Is My Sale Of Shares In The Tender Offer A Taxable Transaction For U.S. Federal Income Tax Purposes?		For most Shareholders, yes. The sale of the Shares pursuant to the tender offer by U.S. Shareholders, other than those who are tax exempt, will be a taxable transaction for U.S. federal income tax purposes, either as a sale or exchange, or, under certain circumstances, as a dividend. The Depositary will withhold federal income taxes equal to 30% of the gross payments payable to Non-U.S. Shareholders unless the Depositary determines that a Non-U.S. Shareholder is eligible for a reduced rate of withholding pursuant to a treaty or that an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business within the U.S. See Section 8 of the Offer to Purchase for a more detailed discussion of certain U.S. federal income tax consequences. U.S. and Non-U.S. Shareholders are advised to consult their own tax advisors.

Is The Fund Required To Complete The Tender Offer And Purchase All Shares Tendered Up To The Maximum Of 6,656,425 Shares?		Under most circumstances, yes. There are certain circumstances, however, in which the Fund will not be required to purchase any Shares tendered, as described in Section 13 of this Offer to Purchase.

Is There Any Reason Shares Tendered Would Not Be Accepted?		In addition to those circumstances described in Section 13 of this Offer to Purchase in which the Fund is not required to accept tendered Shares, the Fund has reserved the right to reject any and all tenders determined by it not to be in appropriate form. For example, tenders will be rejected if the tender does not include the original signature(s) or the original of any required signature guarantee(s).


How Will Tendered Shares Be Accepted For Payment?		The Fund will accept for payment properly tendered Shares, as determined by the Fund, up to a maximum of 6,656,425 Shares, by delivering a notice of acceptance to the Depositary. Payment will thereafter be made as directed by the Fund with monies to be deposited with the Depositary by the Fund. See Section 2 of this Offer to Purchase.

What Action Need I Take If I Decide Not To Tender My Shares?		None.

Does Management Encourage Shareholders To Participate In The Tender Offer, And Will Management Participate In The Tender Offer?		None of the Fund, its Board of Directors or the Fund’s investment manager, Templeton Asset Management Ltd., is making any recommendation to tender or not to tender Shares in the tender offer. The President and Fellows of Harvard College (“Harvard College”), which owns approximately 14% of the outstanding Shares and may be deemed an affiliate of the Fund, has announced that it intends to tender all of its Shares in this Offer. Other than the foregoing, no director or officer of the Fund, or any affiliate of the Fund, intends to tender Shares. See Section 6 of this Offer to Purchase.

Will This Be My Last Opportunity To Tender Shares To The Fund?		Pursuant to the settlement agreement recently entered into by the Fund and Harvard College (and other persons and entities affiliated with Harvard College), related to the litigation described in Section 6 of this Offer to Purchase, the Fund has agreed to take certain actions related to tendering shares of the Fund, as described below. If 20% or less of the Fund’s outstanding Shares are tendered in this Offer, the Fund will have no further obligations under the settlement to make subsequent tenders.

		If more than 20% of the Fund’s Shares are tendered in this Offer, subject to the prior issuance of an exemptive order by the U.S. Securities and Exchange Commission (“SEC”), under the terms of the settlement agreement, the Fund may be required to make up to three additional “in-kind” tender offers, each for 20% of the then outstanding Shares at a price equal to 95% of NAV. An “in-kind” tender offer will involve a pro rata distribution of the Fund’s marketable portfolio securities. The number of in-kind tender offers that the Fund is required to make is dependent on the total amount of Shares tendered in the prior tender offers. If the number of Shares tendered is less than certain thresholds, the Fund is not obligated to make subsequent tender offers. It is not possible to predict when or if the SEC will issue an exemptive order for the in-kind tender offers.

		If the SEC does not issue an exemptive order permitting the in-kind tender offers by March 26, 2004, the Fund may, but is not obligated, to conduct one or more additional cash tender offers, each for an additional 15% of the Fund’s then outstanding Shares at a price of not less than 92.5% of NAV per Share. If the SEC


			Adjustment for
			Purchase at
			$9.50 Per			Pro Forma as
	As of April 15, 2003		Share⁽²⁾			Adjusted

Total net assets	$	455,853,037	$	(63,236,038	)	$	392,616,999
Shares outstanding		44,376,167		(6,656,425	)		37,719,742
NAV per Share⁽³⁾	$	10.27	$	0.14		$	10.41




	Situation 1	Situation 2	Situation 3	Situation 4	Situation 5


The total number of Shares tendered in this Offer:	exceeds 20% but is less than or equal to 26%	exceeds 26% but is less than or equal to 30%	exceeds 30% but is less than or equal to 35%	exceeds 35% but is less than or equal to 60%	exceeds 60%

and the total number of Shares tendered in the first in-kind offer:	is less than or equal to 45%	is less than or equal to 40%	is less than or equal to 35%	is less than or equal to 30%	is less than or equal to 25%



	Market Price

	High		Low		Net Asset Value

Fiscal Year Ended December 31, 2001
First Quarter	$	9.00	$	7.31	$	10.08
Second Quarter		9.36		7.70		10.60
Third Quarter		8.90		6.06		7.98
Fourth Quarter		7.90		6.51		8.82

Fiscal Year Ended December 31, 2002
First Quarter	$	8.42	$	7.33	$	9.57
Second Quarter		9.94		7.95		10.32
Third Quarter		9.27		7.52		9.41
Fourth Quarter		9.92		7.28		9.73

Fiscal Year Ended December 31, 2003
First Quarter	$	9.75	$	8.79	$	10.21
Second Quarter (to April 15, 2003)		9.49		8.94		10.27


		Year Ended		Year Ended
		December 31,		December 31,
		2002		2001

		(Audited)		(Audited)
Statement of Operations:
Investment Income		$	15,600,064	$	19,424,840
Expenses			7,408,345		7,243,396
	Net investment income		8,191,719		12,181,444
Net realized gain (loss) on investments and foreign currency transactions			3,663,821		(35,849,637	)
Net unrealized appreciation (depreciation)			39,095,638		18,013,935
Net increase (decrease) in net assets from operations		$	50,951,178	$	(5,654,258	)


		Number of Shares		Percentage of Shares
Name and Position		Beneficially Owned		Beneficially Owned

Charles B. Johnson,⁽¹⁾			433,010		0.976	%
	Chairman of the Board, Director & Vice President
Harris J. Ashton,			500		0.001	%
	Director
Nicholas F. Brady,			1,000		0.002	%
	Director
Harmon E. Burns,⁽¹⁾			423,010		0.953	%
	Vice President
Frank J. Crothers,			0		0.000	%
	Director
Jeffrey A. Everett,			0		0.000	%
	Vice President
Martin L. Flanagan,⁽¹⁾			424,010		0.955	%
	Director & Vice President
S. Joseph Fortunato,			100		0.000	%
	Director
Jimmy D. Gambill,			2,000		0.005	%
	Senior Vice President & Chief Executive Officer — Finance and Administration
David P. Goss,			0		0.000	%
	Vice President & Assistant Secretary
Barbara J. Green,			0		0.000	%
	Vice President & Secretary
Andrew H. Hines, Jr.,			0		0.000	%
	Director
Edith E. Holiday,			100		0.000	%
	Director
Rupert H. Johnson, Jr.,⁽¹⁾			425,010		0.958	%
	Vice President
John R. Kay,			0		0.000	%
	Vice President
Betty P. Krahmer,			9,000		0.020	%
	Director
Gordon S. Macklin,			2,000		0.005	%
	Director
Michael O. Magdol,			0		0.000	%
	Vice President, AML Compliance


		Number of Shares		Percentage of Shares
Name and Position		Beneficially Owned		Beneficially Owned

Murray L. Simpson,			0		0.000	%
	Vice President & Assistant Secretary
Constantine D. Tseretopoulos,			0		0.000	%
	Director


By First Class Mail: Post Office Box 3301 South Hackensack, NJ 07606 Attention: Reorganization Dept.		By Registered, Certified, Express Mail or Overnight Courier: 85 Challenger Road Mail Stop-Reorg Ridgefield Park, NJ 07660 Attention: Reorganization Dept.		By Hand: 120 Broadway, 13th Floor New York, NY 10271 Attention: Reorganization Dept.





DESCRIPTION OF SHARES TENDERED


Name(s) and Address(es) of Registered Holder(s):
(Please Fill in, if Blank, Exactly as	Shares Tendered
Name(s) Appear(s) on Certificate(s))	(Attach Additional Signed Schedule if necessary)


		Total Number
		of Shares
	Share	Evidenced by	Number
	Certificate(s)	Share	of Shares
	Number(s)	Certificate(s)*	Tendered**




AFFIX LABEL HERE






	Total Shares Tendered


*	Need not be completed by Shareholders who tender Shares by book-entry transfer.


**	Unless otherwise indicated, it will be assumed that all Shares evidenced by any certificates delivered to the Depositary are being tendered. See Instruction 5.



TOTAL SHARES LOST:		Tax Payer ID or Social Security Number

Please Fill In Certificate No(s), If Known	Number of Shares of Common Stock







Attach Separate Schedule If Needed


X Signed by Affiant (shareholder)		on this (date)
	(Deponent) (Indemnitor) (Heirs Individually)		Month Day Year


Substitute Form W-9	Part 1(a) — PLEASE PROVIDE YOUR NAME AND TIN IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND DATING BELOW	TIN

Department of the Treasury Internal Revenue Service		(Social Security Number or Employer Identification Number)


Payer’s Request for Taxpayer Identification Number (TIN)	Part 1(b) — PLEASE CHECK THE BOX AT RIGHT IF YOU HAVE APPLIED FOR AND ARE WAITING RECEIPT OF YOUR TIN. o Part 2 — FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING PLEASE WRITE “EXEMPT” HERE (SEE INSTRUCTIONS)

	Part 3 — CERTIFICATION — Under penalty of perjury, I certify that:
	(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me and either: (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office; or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, a percentage of all reportable payments made to me will be withheld);
	(2) I am not subject to backup withholding because: (a) I am exempt from backup withholding; (b) I have not been notified by the Internal Revenue Service (the “IRS”) that I am subject to backup withholding as a result of a failure to report all interest or dividends; or (c) the IRS has notified me that I am no longer subject to backup withholding; and
	(3) I am a U.S. person (including U.S. resident alien).

	CERTIFICATION INSTRUCTIONS — You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return.

	SIGNATURE
	DATE


	By Registered, Certified,
	Express Mail or
By First Class Mail:	Overnight Courier:	By Hand:
Post Office Box 3301 South Hackensack, NJ 07606 Attention: Reorganization Dept.	85 Challenger Road Mail Stop-Reorg Ridgefield Park, NJ 07660 Attention: Reorganization Dept.	120 Broadway, 13th Floor New York, NY 10271 Attention: Reorganization Dept.


	By Registered, Certified,
	Express Mail
By First Class Mail:	or Overnight Courier:	By Hand:
Post Office Box 3301 South Hackensack, NJ 07606 Attention: Reorganization Dept.	85 Challenger Road Mail Stop-Reorg Ridgefield Park, NJ 07660 Attention: Reorganization Dept.	120 Broadway, 13th Floor New York, NY 10271 Attention: Reorganization Dept.


Name of Firm:
		(Authorized Signature)

Address:		Name:

		(Please Print)

		Title:


To	Brokers, Dealers, Commercial Banks Trust Companies and Other Nominees:


FRANKLIN® TEMPLETON® INVESTMENTS		TEMPLETON DRAGON FUND, INC. Broward Financial Centre 500 E. Broward Blvd., Suite 2100 Fort Lauderdale, FL 33394-3091 Tel 954-527-7500