-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KUDTQQTdZC3erWlEE1RgOGXmLIGuTQjlyPeAzS1bUmFMB659j2HoW1c78c/Q/rwe Jy1hpB94pL/DqiBbPVg68Q== 0000927016-02-005903.txt : 20021213 0000927016-02-005903.hdr.sgml : 20021213 20021213170345 ACCESSION NUMBER: 0000927016-02-005903 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20021213 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PRESIDENT & FELLOWS OF HARVARD COLLEGE CENTRAL INDEX KEY: 0000315016 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042103580 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O HARVARD MANAGEMENT COMPANY INC STREET 2: 600 ATLANTIC AVENUE CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6175234400 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLETON CHINA WORLD FUND INC CENTRAL INDEX KEY: 0000909226 IRS NUMBER: 593192206 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-56561 FILM NUMBER: 02857528 BUSINESS ADDRESS: STREET 1: BROWARD FINANCIAL CENTRE STREET 2: 500 EAST BROWARD BLVD STE 2100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33394-3091 BUSINESS PHONE: 9545277500 MAIL ADDRESS: STREET 1: BROWARD FINANCIAL CENTRE STREET 2: 500 EAST BROWARD BLVD SUITE 2100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33394 SC 13D/A 1 dsc13da.txt AMENDMENT # 2 TO SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Rule 13d-1) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 2) Templeton China World Fund, Inc. -------------------------------------- (Name of Issuer) Common Stock, $0.01 par value -------------------------------------- (Title of Class of Securities) 88018X102 -------------------------------------- (CUSIP Number) COPY TO: Michael Pradko Timothy W. Diggins, Esq. Harvard Management Company, Inc. Ropes & Gray 600 Atlantic Avenue One International Place Boston, MA 02210 Boston, MA 02110 (617) 523-4400 (617) 951-7389 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 13, 2002 ---------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: |X|. Page 1 of 13 Pages SCHEDULE 13D - ------------------- ------------------ CUSIP No. 88018X102 Page 2 of 13 Pages - ------------------- ------------------ - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON President and Fellows of Harvard College - -------------------------------------------------------------------------------- (a) [_] 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS* WC - -------------------------------------------------------------------------------- CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS 5. REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Massachusetts - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 4,934,600 SHARES BENEFICIALLY --------------------------------------------------- OWNED BY EACH 8. SHARED VOTING POWER REPORTING ---- PERSON WITH --------------------------------------------------- 9. SOLE DISPOSITIVE POWER 4,934,600 --------------------------------------------------- 10. SHARED DISPOSITIVE POWER ---- - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,934,600 - -------------------------------------------------------------------------------- CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES [_] 12. CERTAIN SHARES* - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9) 30.3% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON* EP - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! Page 2 of 13 Pages SCHEDULE 13D Templeton China World Fund, Inc. Item 1. Security and Issuer. This statement relates to the shares of common stock, $0.01 par value (the "Common Stock"), of Templeton China World Fund, Inc., a Maryland corporation (the "Fund" or "Issuer"), which has its principal executive offices at 500 East Broward Blvd., Suite 2100, Fort Lauderdale, FL 33394. Item 2. Identity and Background. This statement is filed by President and Fellows of Harvard College ("Harvard"), a Massachusetts educational corporation. The principal executive offices of Harvard are located at c/o Harvard Management Company, 600 Atlantic Avenue, Boston, Massachusetts 02210. Harvard's investment activities are carried on from the offices of Harvard Management Company at 600 Atlantic Avenue, Boston, Massachusetts 02210. Information relating to each of the President, Fellows and executive officers of Harvard is contained in Exhibit A attached hereto and incorporated herein by reference. Each of the President, Fellows and executive officers of Harvard is a citizen of the United States of America. None of Harvard or, to the best of Harvard's knowledge or belief, any of the persons listed in Exhibit A has, during the past five years, been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors). Neither Harvard, nor to the best of Harvard's knowledge and belief, any of the persons listed in Exhibit A has, during the past five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. Beneficial ownership of the Common Stock of the Fund to which this statement relates was acquired by Harvard with Harvard's general funds. Item 4. Purpose of Transaction. Harvard has sent the letter set forth in Exhibit B hereto to the Fund, notifying the Fund of certain matters that Harvard intends to propose for consideration at the Fund's 2003 annual meeting of stockholders. Harvard has today sent to the Fund the open letter to the independent Directors of Templeton China World Fund, Inc. and Templeton Dragon Fund, Inc. attached hereto as Exhibit C. This Schedule 13D filing is occasioned by the sending of such letters and Harvard's intention to propose the matters described in the letter set forth in Exhibit B for consideration at the Fund's 2003 annual meeting of stockholders. The securities of the Fund acquired and held by Harvard were acquired in the ordinary course of business and were not acquired for the purpose of or, except as described herein, with the effect of changing or influencing the control of the Fund. Except as described above or in previous filings by Harvard on Schedule 13D, Harvard does not have any plans or proposals which relate to or would result in any of the actions set forth in Page 3 of 13 Pages parts (a) through (j) of Item 4. Harvard reserves the right to make any such plans or proposals in the future or to take any other steps to enhance the value of its investment. Item 5. Interest in Securities of the Fund. (a), (b) Harvard is the beneficial owner of 4,934,600 shares of Common Stock (approximately 30.3% of the shares of Common Stock). Harvard has sole power to vote and sole power to dispose of such shares to which this Statement relates. (c) Not applicable. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to the Securities of the Fund. Not applicable. Item 7. Material to be Filed as Exhibits. Exhibit A -- Information concerning the President, Fellows and executive officers of Harvard. Exhibit B -- Letter from Harvard to the Fund. Exhibit C -- Open letter to the independent Directors of Templeton China World Fund, Inc. and Templeton Dragon Fund, Inc. Page 4 of 13 Pages Signature After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: December 13, 2002 PRESIDENT AND FELLOWS OF HARVARD COLLEGE By: /s/ Michael S. Pradko ---------------------------- Name: Michael S. Pradko Title: Authorized Signatory Page 5 of 13 Pages EXHIBIT INDEX Page Number In Exhibit Sequentially Number Description Numbered Copy - ------- ----------- -------------- A Information Concerning the President, 7 Fellows and executive officers of Harvard B Letter from Harvard to the Fund 8 C Open letter to the independent Directors of 9 Templeton China World Fund, Inc. and Templeton Dragon Fund, Inc. Page 6 of 13 Pages EX-99.A 3 dex99a.txt INFORMATION CONCERNING THE PRESIDENT EXHIBIT A Directors and Executive Officers The names of the President, Fellows and Executive Officers of Harvard and their business addresses and present principal occupation or employment are set forth below. If no business address is given, the business address of such director or executive officer is c/o Harvard Management Company, Inc., 600 Atlantic Avenue, Boston, Massachusetts 02210. President, Fellows and Executive Officers of Harvard College Name Office/Position - ---- --------------- Lawrence H. Summers President D. Ronald Daniel Treasurer Mark Goodheart Secretary Hanna H. Gray Fellow Conrad K. Harper Fellow James R. Houghton Fellow Robert E. Rubin Fellow Robert D. Reischauer Fellow Page 7 of 13 Pages EX-99.B 4 dex99b.txt LETTER FROM HARVARD TO THE FUND EXHIBIT B Letter from Harvard to the Fund December 12, 2002 Templeton China World Fund, Inc. 500 East Broward Boulevard Fort Lauderdale, Florida 33394-3091 Attention: Secretary Dear Sir or Madam: President and Fellows of Harvard College ("Harvard"), the beneficial owner of 4,934,600 shares of common stock of Templeton China World Fund, Inc. (the "Fund"), hereby notifies the Fund that it intends to submit the following matters for consideration at the Fund's 2003 annual meeting of stockholders: (i) RESOLVED: That the stockholders of the Fund recommend that the Board of Directors take all necessary legal and other actions to adopt interval-fund status for the Fund under Rule 23c-3 under the Investment Company Act of 1940, as amended, and, in accordance with such status, to make repurchase offers at three-month intervals for not less than 15% of the Fund's shares of common stock outstanding at the relevant time at net asset value without any repurchase fee, and to effect the first such repurchase offer not later than September 30, 2003. This resolution will be of no effect if stockholders approve a proposal at the Fund's 2003 annual meeting to convert the Fund into an open-end investment company. (ii) RESOLVED: That the investment management agreement between the Fund and Templeton Asset Management Ltd. be and it hereby is terminated. In accordance with Rule 14a-4(c)(2)(i) under the Securities Exchange Act of 1934, as amended, Harvard hereby notifies the Fund that it intends to deliver a proxy statement and form of proxy to holders of at least the percentage of the Fund's voting shares required under applicable law to carry each of the foregoing proposals. Very truly yours, PRESIDENT AND FELLOWS OF HARVARD COLLEGE By Harvard Management Company, Inc. By /s/ Steven Alperin -------------------- By /s/ Michael S. Pradko ----------------------- Page 8 of 13 Pages EX-99.C 5 dex99c.txt OPEN LETTER TO INDEPENDENT DIRECTORS EXHIBIT C Open letter to the independent Directors of Templeton China World Fund, Inc. and Templeton Dragon Fund, Inc. [VERITAS] HARVARD MANAGEMENT COMPANY, INC. ________________________________________________________________________________ 600 Atlantic Avenue (617)523-4400 Boston, MA 02210-2203 Telex # 62-189780 December 13, 2002 An open letter to the independent Directors of Templeton China World Fund, Inc. (TCH) and Templeton Dragon Fund, Inc. (TDF): On Wednesday, Templeton Asset Management Ltd. issued a public statement criticizing Harvard for its actions toward the Funds. This letter is intended to make several points. First, we respond to accusations Templeton makes against Harvard. Second, we point out Templeton's lack of adequate solutions. Third, we reiterate what we believe is the optimal solution. Lastly, we call upon the independent directors of the China Fund and the Dragon Fund to fulfill their fiduciary duties to the Funds and their shareholders. Response to the Accusations against Harvard Templeton has accused Harvard of pursuing a "short-term agenda." This is puzzling since Harvard has been a continuous shareholder of each Fund for over four years. During the last two years, Harvard has corresponded several times with both Boards and Templeton and urged actions that would improve shareholder value. In February 2001, Harvard suggested several specific actions that would enhance value. (See Attachment.) Templeton has accused Harvard of not representing the interests of shareholders generally. This is wrong on two counts. First, Harvard is the largest shareholder in the Funds. Second, the chronic discount itself is evidence of overall investor dissatisfaction with Templeton. As Dr. Mark Mobius, the portfolio manager for both Funds, wrote in his book, The Investor's Guide to Emerging Markets (Pitman Publishing 1995) on page 224: "Emerging markets closed-end funds have generally tended to trade at discounts to their net asset value . . . A continuous discount indicates investor perception that the manager of the fund is not adding value to the fund, while a premium indicates that investors believe the fund manager's efforts enhance the value of the fund assets." (Emphasis supplied.) Page 9 of 13 Pages Harvard is a value investor and has invested in literally hundreds of companies that trade at a discount to fair value. In the large majority of cases, Harvard invests passively with the expectation that management will act appropriately in the interests of the company and its shareholders. In a handful of cases, where management is either incapable or unwilling to take steps to enhance shareholder value, it may be necessary for Harvard to become active. Templeton, as an advocate of shareholder rights, should certainly understand this approach. Templeton's Lack of Adequate Solutions Templeton recently made a raft of statements that are both internally inconsistent and contradictory to the Board's statements. For example, on November 13, the China Fund Board approved, on Templeton's advice, conversion to an open-end investment company. On November 19, Greg Johnson, Franklin Resources President, stated at an investment conference, "...we brought out closed-end country funds because those markets are not ready to have an open-end fund. In the case of China, we still don't think it's appropriate." On Wednesday of this week, Johnson contradicted his own November 19 pronouncement, stating in an interview that open-ending is an appropriate step for the China Fund because of its small size and "trigger" provision for open-ending. Yet, in the same interview Johnson states, "we believe open-ending the closed-end structure really disfranchises small investors' ability to access these fast growing markets." Templeton asserts that Harvard's concentrated ownership makes open-ending unattractive. Why then, did Templeton choose to recommend open-ending at all? Perhaps, facing next year's trigger provision, Templeton chose to accelerate an alternative it believed inferior for shareholders, rather than propose the correct solution now. The Optimal Solution If both Templeton and the Board truly believed open-ending both Funds were appropriate and were fully committed to its implementation in a manner designed to enhance shareholder value, then Harvard would support such a proposal. Open-ending is not the optimal solution. Templeton, not Harvard, proposed open-ending. Harvard has consistently sought a better alternative to open-ending: merging the two Funds and implementing an interval fund program as outlined in our February 2001 letter. This is the optimal solution for the two Funds. Independence The independent members of the Board must resolve the issues outlined above without regard to the financial benefits Templeton or they enjoy from their association with the Franklin Templeton Group of mutual funds. Templeton obviously has a strong motivation to see both Funds continue their business as usual - since Templeton gets paid on the basis of the Funds' net asset values, not on the basis of the Funds' market prices. Although Templeton takes credit for the recent discount narrowing, it is fair to say that Harvard's public efforts have been the Page 10 of 13 Pages catalyst. We believe that Templeton is, in fact, a stumbling block to shareholders' realizing the full value of their investments. The Directors must recognize that shareholders of the Funds will be best served if Templeton is terminated and the Board takes measured and effective steps to simultaneously increase liquidity and minimize the discount of both Funds. Very truly yours, /s/ Steven Alperin Steven Alperin Vice President, Emerging Markets The Independent Directors of Templeton China World Fund, Inc. and Templeton Dragon Fund, Inc.: Harris J Ashton Frank J. Crothers S. Joseph Fortunato Andrew H. Hines, Jr. Edith E. Holiday Betty P. Krahmer Gordon S. Macklin Fred R. Millsaps Constantine D. Tseretopoulos Page 11 of 13 Pages [VERITAS] HARVARD MANAGEMENT COMPANY, INC. ________________________________________________________________________________ 600 Atlantic Avenue (617)752-3400 Boston, MA 02210-2203 Telex # 62-189780 February 23, 2001 Dr. J. Mark Mobius Chairman Board of Directors Templeton Dragon Fund, Inc. Templeton China World Fund, Inc. 777 Mariners Island Blvd. San Mateo, CA 94404 Dear Dr. Mobius: We remain disappointed with the Board of Director's failure to employ any remedy for the persistent discounts and performance of the Templeton Dragon Fund ("Dragon Fund") and the Templeton China World Fund ("China Fund"). In light of the Board's inaction, we have voted against the proposed Board of Directors in the most recent proxy. Dr. Mobius, you have proven to be a strong advocate for shareholder rights and we are extremely displeased that the discounts and performance of the above-mentioned Funds have not been addressed or remedied by you or the Boards of these Funds. Time and time again we have discussed possible alternatives for the Funds or actions that the Board could undertake. We have yet to see any developments that show promise for the reduction of the discounts or improved performance. There are a number of obvious steps that the Board can take immediately to both narrow the discount and clearly demonstrate that it is operating in the best interests of the Fund and its shareholders. First, the Board should commit publicly to narrowing the discount. Then, as soon as possible, the Board should undertake a comprehensive effort to narrow the discount to NAV. Among the measures the Board should consider: o Convert the Fund to interval status and allow periodic redemption of a portion of the holdings at NAV. Page 12 of 13 Pages o Hold a one time tender for a significant portion of the Fund and cancel the repurchased shares. o Hold periodic tenders for Fund shares triggered by discount levels. For example, buy back (and cancel) 20% of the Fund if it trades at a 10% discount. The Board should consider some of the above suggestions as well as the possible merger of the Dragon Fund and the China Fund and a tender for the shares of the merged Fund. As you know we have had regular discussions with you regarding our issues with these Funds and have previously sent you written correspondence. We hope this will be our final letter. We would be happy to discuss with you any of the above suggestions at your earliest convenience. Please feel free to contact me to arrange a conference time. Regards, /s/ Steven Alperin Steven Alperin Vice President Emerging Markets * * * Information concerning the participants in any solicitation by President and Fellows of Harvard College of proxies with respect to Templeton China World Fund, Inc.'s 2003 annual meeting, and their direct or indirect interests, can be found in a Schedule 14A filed by Harvard on December 13, 2002 with the Securities and Exchange Commission pursuant to Rule 14a-12. In connection with any solicitation by Harvard of proxies with respect to the Fund's 2003 annual meeting, Harvard would file with the Securities and Exchange Commission (the "SEC"), and furnish to security holders of the Fund, a proxy statement, which security holders would be advised to read because it would contain important information. Security holders would be able to obtain a free copy of any such proxy statement (when available) and other related documents that may be filed with the SEC by Harvard and the Fund at the SEC's website at www.sec.gov. Page 13 of 13 Pages -----END PRIVACY-ENHANCED MESSAGE-----