Filed by Templeton Dragon
                                                  Fund, Inc.
                                                  Pursuant to Rule 425 under
                                                  the Securities Act of 1933
                                                  and deemed filed pursuant
                                                  to Rule 14a-12 under the
                                                  Securities Exchange Act of
                                                  1934

                                                  Subject Company: Templeton
                                                  Vietnam and Southeast Asia
                                                  Fund, Inc.
                                                  Commission File No. 811-08632



               TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC. AND
                 TEMPLETON DRAGON FUND, INC. ANNOUNCE PROPOSED
                                 REORGANIZATION

                  TEMPLETON DRAGON FUND ANNOUNCES TENDER OFFERS

                  JANUARY 4, 2002 -- PRESS RELEASE Q'S AND A'S

Q:  WHY DID THE BOARDS OF VIETNAM FUND AND DRAGON FUND TAKE THESE ACTIONS?

A:   As noted in the January 4, 2002 press release, Vietnam Fund and Dragon Fund
     intend to file relevant materials with the U.S. Securities and Exchange
     Commission, including a proxy statement by Vietnam Fund, a proxy statement
     by Dragon Fund, and a registration statement by Dragon Fund that contains a
     prospectus. These materials will include detailed information regarding the
     transactions, the Boards' considerations and the Boards' recommendations
     and will be provided to shareholders in accordance with federal securities
     laws.

Q:  HOW ARE THE RECENT ACTIONS TAKEN BY DRAGON FUND'S BOARD OF DIRECTORS RELATED
    TO THE DRAGON FUND'S "MEASUREMENT PERIOD" AS ANNOUNCED IN JUNE 2001?

A:  As announced in a press release dated June 22, 2001,  Dragon  Fund's Board
    established a nine month  "measurement  period"  (ending on April 30, 2002)
    for evaluating the discount of the market value of the Dragon Fund's shares
    from their net asset  value.  The press  release  stated that if the Dragon
    Fund's share have traded at an average discount from net asset value of 10%
    or more during the last 90 days of the "measurement  period," (based on the
    closing  price of every  trading day during those 90 days),  the Board will
    either: (i) commence a tender offer for a portion of the Fund's outstanding
    shares;  or (ii) submit to  shareholders  a proposal to reorganize the Fund
    with either an open-end or closed-end  investment  company; or (iii) submit
    to  shareholders  a proposal to convert the Fund to an open-end  investment
    company.  Dragon Fund's Board  believes that the Dragon  Fund/Vietnam  Fund
    reorganization  and the Dragon  Fund  tender  offers  will  satisfy  and be
    consistent with the announcement made in the June 22, 2001 press release.

Q: WHY WAS DRAGON FUND'S MANAGED DISTRIBUTION POLICY DISCONTINUED?

A:  Effective January 4, 2002, Dragon Fund's Board of Directors discontinued the
    Dragon Fund's managed  distribution policy to help comply with requirements
    necessary to preserve the tax-free status of the Dragon  Fund/Vietnam  Fund
    reorganization.  The  tax-free  status  of  the  Dragon  Fund/Vietnam  Fund
    reorganization is dependent upon, among other things, the continued holding
    by the Dragon Fund of a significant  portion of the assets  previously held
    by the Vietnam Fund.  Maintaining  the managed  distribution  program could
    involve the sale of some of those  assets.  In addition,  suspension of the
    managed  distribution  policy helps  preserve the benefit of capital losses
    that  may  be  available  to  shareholders  after  the  completion  of  the
    reorganization. The Dragon Fund's last distribution pursuant to the managed
    distribution policy was paid on December 24, 2001 to shareholders of record
    on December 13, 2001. The Dragon Fund Board may recommend  similar programs
    in the future,  depending  upon market  conditions  and  regulatory and tax
    considerations. Of course there can be no assurance that they will do so.

Q: IF THE REORGANIZATION IS APPROVED, HOW MANY SHARES OF DRAGON FUND WILL EACH
   VIETNAM FUND SHAREHOLDER RECEIVE?

A: If the proposed reorganization is consummated, the number of shares to be
   received by a Vietnam Fund shareholder will be determined based upon the
   relative net asset values of Vietnam Fund and Dragon Fund immediately prior
   to the reorganization. A Vietnam Fund shareholder will receive Dragon Fund
   shares equal, on a net asset value basis, to the aggregate net asset value
   of the shareholder's Vietnam Fund shares immediately prior to the
   reorganization. The number of Dragon Fund shares received may be more or
   less than the number of Vietnam Fund shares exchanged, but the aggregate
   net asset value of each shareholder's holdings immediately before and after
   the transaction will be the same.

Q: HOW WILL DRAGON FUND SHAREHOLDERS BE NOTIFIED ABOUT THE COMMENCEMENT OF THE
   TENDER OFFER FOR SHARES OF DRAGON FUND?

A: A press release will be issued once the tender offer has commenced. When
   available, Dragon Fund shareholders will also receive written tender offer
   materials, including a tender offer statement, which will provide detailed
   information about the tender offer. Shareholders are urged to read these
   materials.

                                    * * * * *

In connection with the proposed reorganization transaction, Vietnam Fund and
Dragon Fund intend to file relevant materials with the U.S. Securities and
Exchange Commission ("SEC"), including a proxy statement by Vietnam Fund, a
proxy statement by Dragon Fund, and a registration statement on Form N-14 by
Dragon Fund that contains a prospectus. Because those documents contain
important information, shareholders of Vietnam Fund and Dragon Fund are urged to
read them, if and when they become available. When filed with the SEC, they will
be available for free at the SEC's website, www.sec.gov. Shareholders can also
obtain copies of these documents and other transaction-related documents, when
available, for free by calling Vietnam Fund at 1-800-342-5236 or by calling
Dragon Fund at 1-800-342-5236.

Vietnam Fund,  its directors and executive  officers and certain other  persons,
may be deemed to be participants in Vietnam Fund's  solicitation of proxies from
its shareholders in connection with the proposed transaction.  Information about
the directors is set forth in the proxy statement for Vietnam Fund's 2001 annual
meeting of shareholders. Participants in Vietnam Fund's solicitation may also be
deemed to include  the  following  executive  officers  or other  persons  whose
interests  in  Vietnam  Fund may not be  described  in the proxy  statement  for
Vietnam Fund's 2001 annual meeting: Mark Mobius (President);  Charles B. Johnson
(Vice President); Rupert H. Johnson, Jr. (Vice President); Harmon E. Burns (Vice
President);  Charles E.  Johnson  (Vice  President);  Martin L.  Flanagan  (Vice
President);  Jeffrey A. Everett (Vice President);  John R. Kay (Vice President);
Murray L. Simpson  (Vice  President  and Asst.  Secretary);  David P. Goss (Vice
President and Asst. Secretary); Barbara J. Green (Vice President and Secretary);
Bruce S.  Rosenberg  (Treasurer);  Holly  Gibson  Brady  (Director  of Corporate
Communications - Franklin Resources, Inc.).

Dragon Fund, its directors and executive officers and certain other persons, may
be deemed to be participants  in Dragon Fund's  solicitation of proxies from its
shareholders in connection with the proposed transaction.  Information about the
directors  is set forth in the proxy  statement  for Dragon  Fund's  2001 annual
meeting of shareholders.  Participants in Dragon Fund's solicitation may also be
deemed to include  the  following  executive  officers  or other  persons  whose
interests in Dragon Fund may not be described in the proxy  statement for Dragon
Fund's 2001 annual meeting:  Mark Mobius  (President);  Charles B. Johnson (Vice
President);  Rupert H.  Johnson,  Jr.  (Vice  President);  Harmon E. Burns (Vice
President);  Charles E.  Johnson  (Vice  President);  Martin L.  Flanagan  (Vice
President);  Jeffrey A. Everett (Vice President);  John R. Kay (Vice President);
Murray L. Simpson  (Vice  President  and Asst.  Secretary);  David P. Goss (Vice
President and Asst. Secretary); Barbara J. Green (Vice President and Secretary);
Bruce S.  Rosenberg  (Treasurer);  Holly  Gibson  Brady  (Director  of Corporate
Communications - Franklin Resources, Inc.).

As of the date of this communication, none of the foregoing participants
individually beneficially owns in excess of 1% of Vietnam Fund's common stock,
or 1% of Dragon Fund's common stock. Except as disclosed above, to the knowledge
of Vietnam Fund and Dragon Fund, none of their respective directors or executive
officers has any interest, direct or indirect, by security holdings or
otherwise, in Vietnam Fund or Dragon Fund.

Shareholders may obtain additional information regarding the interests of the
participants by reading the proxy statement of Vietnam Fund and the proxy
statement and prospectus of Dragon Fund if and when they become available.

This communication shall not constitute an offer to sell or the solicitation of
an offer to buy, nor shall there be any sale of securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended.

Dragon Fund shareholders are advised to read the tender offer statement when it
is available as it will contain important information. The tender offer
statement, when it is available, and other documents filed by Dragon Fund with
the SEC, including Dragon Fund's most recent annual report, will be available
for free at the SEC's web site (www.sec.gov) or by calling Dragon Fund at
1-800-342-5236.