Templeton Developing Markets Trust Class C (TDMTX)
Filed: 20 Mar 02, 12:00am
Filing by Templeton
Developing Markets Trust
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.
TEMPLETON DEVELOPING MARKETS TRUST
TEMPLETON DRAGON FUND, INC.
Broward Financial Centre
500 E. Broward Blvd.
Suite 2100
FRANKLIN(R)TEMPLETON(R) Ft. Lauderdale, FL 33394-3091
INVESTMENTS Tel 954-527-7500
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FOR IMMEDIATE RELEASE:
For more information, please contact Franklin Templeton Investments at
1-800-342-5236. Members of the media should contact Franklin Templeton Corporate
Communications at 650-312-3395.
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC. AND TEMPLETON
DEVELOPING MARKETS TRUST ANNOUNCE PROPOSED REORGANIZATION
TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC. AND TEMPLETON
DRAGON FUND, INC. ANNOUNCE THAT PROPOSED REORGANIZATION WILL
NOT PROCEED
MARCH 19, 2002 -- PRESS RELEASE Q's AND A's
Q: What actions did the Boards of Directors/Trustees take on March 19, 2002?
A: (1) Boards Approved Templeton Vietnam and Southeast Asia Fund, Inc.
(Vietnam Fund)--Developing Markets Trust Reorganization.
The Board of Directors of Vietnam Fund and the Board of Trustees of
Developing Markets Trust approved a proposal providing for the
reorganization of Vietnam Fund into Developing Markets Trust. It is
expected that the proposal will be submitted to shareholders of Vietnam
Fund for their approval sometime in late Summer of 2002. In the
transaction, Developing Markets Trust would acquire substantially all of
the assets of Vietnam Fund in exchange for Advisor Class shares of
Developing Markets Trust, which shares would then be distributed to Vietnam
Fund's shareholders. After completion of the reorganization, Vietnam Fund
shareholders would become Advisor Class shareholders of Developing Markets
Trust, and Vietnam Fund would cease to exist. The transaction is expected
to be tax-free.
(2) Vietnam Fund Board Affirmed Discontinuance of Open-Market Share
Repurchase Program.
On January 4, 2002, the Vietnam Fund's Board discontinued its open-market
share repurchase program in connection with a proposed reorganization of
Vietnam Fund into Dragon Fund. In connection with the proposed merger of
Vietnam Fund into Developing Markets Trust, the Vietnam Fund's Board has
determined that the discontinuation of the open-market share repurchase
program remains appropriate.
(3) Boards Announced That Vietnam Fund--Dragon Fund Reorganization Will
Not Proceed.
The Boards of Directors of Vietnam Fund and Dragon Fund, also a closed-end
fund, determined that the previously announced proposal to reorganize
Vietnam Fund into Dragon Fund will not proceed.
(4) Dragon Fund Board Affirmed Tender Offers.
Although it was determined that the reorganization of Dragon Fund into
Vietnam Fund would not proceed, Dragon Fund's Board determined that the
previously announced tender offers will proceed, but that it will consider
whether to make any modifications to the terms and timing of the tender
offers, including increasing the amount of the first tender offer or
combining the first and second tender offers. The Dragon Fund Board
previously announced a tender offer for up to 10% of Dragon Fund's
outstanding shares at not less than 90% of net asset value during an
initial 12-month period, to be followed by one or more subsequent tender
offers aggregating up to 10% of outstanding Dragon Fund shares during the
following 12-month period. Dragon Fund's Board may recommend additional
tender offers in subsequent 12-month periods, depending upon market
conditions and regulatory and tax considerations.
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(5) Dragon Fund Board Affirmed Discontinuation of Managed Distribution
Policy.
The managed distribution policy is still discontinued due to tax
considerations relating to Dragon Fund's tender offer program.
VIETNAM FUND--DEVELOPING MARKETS TRUST REORGANIZATION
Q: Why did the Boards of Vietnam Fund and Developing Markets Trust take action
proposing the reorganization?
A: Vietnam Fund. The Board of Directors of the Vietnam Fund considered a
number of factors, and took these actions in the best interests of its
shareholders. Among the factors considered by the Board was:
(1) The trading discount of the Vietnam Fund over the past several years.
Since January 2001, the Vietnam Fund has traded at a discount to net
asset value that has ranged from -27.22 % on January 5, 2001 to -
11.20% on December 7, 2001. A merger of the Vietnam Fund with an
open-end fund, such as Developing Markets Trust, would eliminate any
trading discount and would permit those shareholders who wish to
redeem their shares at net asset value to do so, less a redemption fee
of up to 2% if redeemed within six months to help defray the costs
associated with redeeming.
(1) The similarity of investment policies and the compatibility of
portfolio holdings. A merger with Developing Markets Trust, which
mainly invests in emerging market securities including most of the
countries that Vietnam Fund currently invests in, also would allow
those longer term shareholders who wish to remain in an investment
product focused on emerging market investments to do so in a tax-free
transaction. Country and asset allocations for Vietnam Fund as of
December 31, 2001 are attached.
(2) The vote taken at the Vietnam Fund's January 23, 2002 Annual
Shareholders Meeting on a shareholder proposal. At the January 23,
2002 Annual Meeting, a majority of the Vietnam Fund's shareholders
approved a proposal that requested the Board consider authorizing a
one time unlimited tender offer at net asset value of Vietnam Fund
shares or otherwise take steps necessary to permit shareholders to
realize net asset value for their shares. Merging into the open-end
Developing Markets Trust would allow shareholders interested in
realizing net asset value to do so.
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Developing Markets Trust. The Board of Trustees of Developing Markets Trust
considered a number of factors, and took these actions in the best
interests of its shareholders. Among the factors considered were:
(1) The similarity of investment policies and compatibility of portfolio
holdings.
(2) The fact that the transaction would result in an increase in the
assets of Developing Markets Trust.
(3) The transaction would not result in a dilution of Developing Markets
Trust's outstanding shares.
More Detailed Information Will be Forthcoming. As stated in the March 19,
2002 press release, Vietnam Fund and Developing Markets Trust intend to
file relevant materials with the U.S. Securities and Exchange Commission,
including a proxy statement by the Vietnam Fund and registration statement
by Developing Markets Trust 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. It is anticipated
that these materials will be available in the Summer of 2002.
Q: Will the reorganization result in Developing Markets Trust receiving cash
that will need to be invested, and will this adversely impact management of
Developing Markets Trust?
A: No, we do not anticipate any material adverse impact on the management of
Developing Markets Trust because the Trust will primarily receive portfolio
securities in the reorganization. The proposed transaction will be
structured as a reorganization. Developing Markets Trust will acquire
substantially all of the assets of Vietnam Fund in exchange for Advisor
Class shares of Developing Markets Trust.
Q: When will Vietnam Fund shareholders be asked to vote on the reorganization?
A: It is expected that Vietnam Fund's shareholders will be asked to approve
the proposed reorganization at a Special Meeting of Shareholders, currently
expected to take place by late Summer 2002.
Any solicitation of proxies in connection with the proposed reorganization
will be made only pursuant to separate prospectus and proxy materials filed
under federal securities laws.
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Q: If the reorganization is approved, how many shares of Developing Markets
Trust will each Vietnam Fund shareholder receive?
A: If the proposed reorganization is approved, 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 Advisor Class shares of
Developing Markets Trust immediately prior to the reorganization. A Vietnam
Fund shareholder will receive Advisor Class shares of Developing Markets
Trust 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 Advisor Class shares of Developing Markets
Trust 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: Are there restrictions on the Developing Markets Trust shares that will be
distributed to Vietnam Fund shareholders if the proposed reorganization is
approved?
A: Yes. The Advisor Class shares of Developing Markets Trust that are received
by shareholders of Vietnam Fund in the reorganization will be subject to a
redemption fee of up to 2% if the shareholder sells the shares within 6
months of the reorganization. If a shareholder holds the Advisor Class
shares of Developing Markets Trust received in the reorganization for at
least 6 months, the shares will not be subject to the redemption fee, but
will be subject to any other restrictions described in the Developing
Markets Trust's prospectus, including restrictions on the exchange of
Advisor Class shares into other Franklin Templeton Funds.
Q: What is the purpose of the redemption fee applicable to shares received in
the reorganization?
A: The redemption fee is charged to help Developing Markets Trust defray the
costs of a redemption of Advisor Class shares received in the
reorganization. The fee is charged only on Advisor Class shares that are
sold within 6 months following the completion of the transaction. The fee
will be in an amount reasonably related to the anticipated costs expected
to be incurred in honoring redemption requests. The fee is paid to, and
retained by, Developing Markets Trust.
The fee is intended to protect the longer-term investors in Developing
Markets Trust by preventing those shareholders from bearing the entire cost
of redemptions by shareholders that acquire shares in the reorganization.
Q: What are Vietnam Fund's investment goal and principal strategies?
A: Vietnam Fund is designed for investors seeking long-term capital
appreciation. Vietnam Fund invests primarily in the equity and debt
securities of "Region Country" issuers. Region Countries currently include
Vietnam, China, Hong Kong, India, Indonesia, Malaysia, Myanmar, the
Philippines, Singapore, South Korea, Taiwan and Thailand.
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Q: What are Developing Markets Trust's investment goal and principal
strategies?
A: Developing Markets Trust is designed for investors seeking long-term
capital appreciation. Under normal market conditions, Developing Markets
Trust invests mainly in equity securities of developing markets companies.
Developing Markets Fund invests in most of the countries that Vietnam Fund
invests in. Shareholders of Vietnam Fund should review the prospectus for
Developing Markets Trust for more information about the Fund's investment
strategies and risks.
Q: How do the Funds compare in size?
A: As of March 19, 2002, Vietnam Fund had total assets of approximately $41
million and Developing Markets Trust had total assets of approximately $1.5
billion.
Q: As a shareholder of Vietnam Fund, am I being asked to take any action at
this time?
A: No. Shareholders of Vietnam Fund are not being asked to take any action at
the present time, but are being advised that the Board of Directors has
approved a proposed reorganization that will be submitted to shareholders
for consideration and a vote in the future.
VIETNAM FUND--DRAGON FUND REORGANIZATION
Q: Why did the Board of Vietnam Fund decide not to proceed with the previously
proposed reorganization with Dragon Fund?
A: The Board of Directors of Vietnam Fund determined that a reorganization of
Vietnam Fund into Developing Markets Trust, an open-end fund, would better
address the discount of the market value of Vietnam Fund's shares to their
net asset value.
DRAGON FUND TENDER OFFERS
Q: When is the initial tender offer of Dragon Fund shares expected to occur?
A: The first tender offer for Dragon Fund shares will commence within 90 days
following April 30, 2002 (i.e., on or before July 29, 2002).
Q: What is a "tender offer"?
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A: A "tender offer" is an offer by a company to buy its own shares, for cash,
at a designated price per share. Shareholders are free to sell, or
"tender," their shares at their election, in the amount they choose,
subject to the terms of the offer. Shareholders that tender shares should
consult with their advisors regarding the tax or other implications of the
transaction.
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 also will 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.
Q: Why is the Dragon Fund's managed distribution policy still discontinued?
A: Effective January 4, 2002, Dragon Fund's Board of Directors discontinued
the Dragon Fund's managed distribution program, in part, to facilitate
compliance with the requirements that would have applied if the proposed
Dragon Fund/Vietnam Fund merger were to qualify as a tax-free
reorganization. The Board believes that the discontinuance of the Dragon
Fund's managed distribution program remains appropriate in view of the
Board's commitment to continue the Dragon Fund's tender offer program.
Specifically, if the managed distribution program were to remain in effect
any increased sale of portfolio securities necessary to meet the cash needs
of the two programs could result in a greater proportion of any
distribution under the managed distribution program being treated as
ordinary income as opposed to a tax-free return of capital.
Description of the managed distribution policy. In July 1998, the Dragon
Fund Board of Directors approved the implementation of a managed
distribution policy under which approximately 10% of the Fund's average net
asset value would be distributed to Fund shareholders on an annual basis.
Under this distribution policy, the Fund made quarterly distributions to
Fund shareholders equal to 2.5% of the Fund's net asset value at the close
of the NYSE on the Friday prior to each distribution's declaration date. If
the total amount distributed exceeded the Fund's aggregate net investment
income and net realized capital gains with respect to a given year, the
excess amount distributed generally constituted a return of capital to
shareholders. The Fund was granted an order from the Securities and
Exchange Commission on February 9, 1999 that permitted the Fund to use
realized capital gains when making the quarterly distributions, which began
under this policy on September 15, 1998.
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.
* * * * *
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In connection with the proposed reorganization transaction, Vietnam Fund
and Developing Markets Trust intend to file relevant materials with the
U.S. Securities and Exchange Commission ("SEC"), including a Form N-14
combined proxy statement for Vietnam Fund and registration statement for
Developing Markets Trust that contains a prospectus. Because those
documents contain important information, Vietnam Fund shareholders 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.
Vietnam Fund 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.
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); Barbara J. Green (Vice President and
Secretary); David P. Goss (Vice President and Asst. Secretary); Bruce S.
Rosenberg (Treasurer); Holly Gibson Brady (Director of Corporate
Communications - Franklin Resources, Inc.).
Developing Markets Trust, its trustees and executive officers and certain
other persons, may be deemed to be participants in Developing Markets
Trust's solicitation of proxies, if any, from its shareholders in
connection with the proposed transaction. Information about the trustees is
set forth in the statement of additional information for Developing Markets
Trust dated May 1, 2001, as supplemented January 1, 2002. Participants in
Developing Markets Trust's solicitation may also be deemed to include the
following executive officers or other persons whose interests in Developing
Markets Trust may not be described in the statement of additional
information for Developing Markets Trust, dated May 1, 2001, as
supplemented January 1, 2002: 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); Barbara
J. Green (Vice President and Secretary); David P. Goss (Vice President and
Asst. Secretary); Bruce S. Rosenberg (Treasurer); and 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 the total number of outstanding shares of beneficial
interest of Developing Markets Trust. As of December 3, 2001, the officers
and trustees of Developing Markets Trust, as a group, owned of record and
beneficially less than 14.40% of the outstanding Advisor Class shares and
less than 1% of the other classes of Developing Markets Trust. To the
knowledge of Vietnam Fund and Developing Markets Trust, respectively, none
of their respective directors, trustees, or executive officers has any
interest, direct or indirect, by security holdings or otherwise in Vietnam
Fund or Developing Markets Trust, respectively, except as set forth in the
proxy statement relating to the Vietnam Fund's 2001 Annual Meeting of
Shareholders, the statement of additional information for Developing
Markets Trust, dated May 1, 2001, as supplemented January 1, 2002, or as
otherwise disclosed above.
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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 Developing Markets Trust 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.
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TEMPLETON VIETNAM AND SOUTHEAST ASIA FUND, INC.
AS OF DECEMBER 31, 2001
TOTAL ASSETS: $36,175,480
NET ASSET VALUE PER SHARE: $7.96
PERCENT PERCENT
ASSET ALLOCATION OF TOTAL TEN LARGEST POSITIONS OF TOTAL
- ---------------- -------- --------------------- --------
SHORT TERM & OTHER 2.9% HEA HOLDINGS LIMITED 12.0%
EQUITY* 97.1% INDOTEL LTD 9.9%
------
100.0% SINGAPORE AIRLINES LTD 6.2%
SIAM CEMENT PUBLIC CO LTD (THE) 6.1%
SINGAPORE TELECOMMUNICATIONS LTD 5.6%
KEPPEL CORPORATION LTD 4.8%
SK TELECOM CO LTD 4.5%
SHIN CORPORATION PUBLIC COMPANY LTD 3.6%
COMPAL ELECTRONICS INC 3.5%
P T TELEKOMUNIKASI INDONESIA TBK, 3.2%
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59.4%
PERCENT PERCENT
INTERNATIONAL ALLOCATION** OF TOTAL INDUSTRY ALLOCATION OF TOTAL
- ----------------------------- -------- ----------------------------------------------------
ASIA 97.1% CONSUMER DISCRETIONARY 15.6%
- -------------------------------------- ----------------------------------------------------
CHINA 4.6% AUTOMOBILES & COMPONENTS 1.5%
HONG KONG 14.0% CONSUMER DURABLES & APPAREL 9.9%
INDIA 3.0% HOTELS RESTAURANT & LEISURE 2.1%
INDONESIA 7.1% RETAILING 2.1%
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MALAYSIA 3.3% CONSUMER STAPLES 5.5%
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PHILIPPINES 2.8% FOOD BEVERAGE & TOBACCO 5.2%
SINGAPORE 31.4% HOUSEHOLD & PERSONAL PRODUCTS 0.3%
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SOUTH KOREA 11.6% ENERGY 2.6%
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TAIWAN 8.7% ENERGY 2.6%
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THAILAND 10.6% FINANCIALS 20.8%
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TOTAL EQUITY* 97.1% BANKS 1.0%
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DIVERSIFIED FINANCIALS 4.8%
REAL ESTATE 15.0%
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INDUSTRIALS 7.4%
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CAPITAL GOODS 1.3%
TRANSPORTATION 6.2%
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INFORMATION TECHNOLOGY 11.8%
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TECHNOLOGY HARDWARE & EQUIPMENTS 11.8%
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MATERIALS 7.1%
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MATERIALS 7.1%
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TELECOMMUNICATION SERVICES 25.5%
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TELECOMMUNICATION SERVICES 25.5%
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UTILITIES 0.9%
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UTILITIES 0.9%
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TOTAL EQUITY* 97.1%
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You may request a copy of the Fund's current Report to Shareholders by
contacting Fund Information at 1-800/DIAL BEN(R) (1-800-342-5236).Since markets
can go down as well as up, investment return and principal value will fluctuate
with market conditions, currency volatility, and the economic, social and
political climates of countries where the Fund invests. Emerging markets involve
heightened risks related to the same factors, in addition to those associated
with their relatively small size and lesser liquidity. You may have a gain or
loss when you sell your shares. The industry allocation uses MSCI's industry
definitions for the convenience of comparison. The information provided is as of
the date shown. The Fund's portfolio is actively managed and investment
allocations can be expected to change.
* Equity includes convertible and preferred securities.
** 21.9% of the Fund's total assets are held in direct investments in Vietnam
made through companies domiciled in Hong Kong and Singapore.
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