FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-08394
TEMPLETON DRAGON FUND, INC.
(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
(Name and address of agent for service)
Registrant's telephone number, including area code: 954/527-7500
Date of fiscal year end: 12/31
Date of reporting period: 3/31/07
ITEM 1. SCHEDULE OF INVESTMENTS.
Templeton Dragon Fund, Inc.
QUARTERLY STATEMENT OF INVESTMENTS
MARCH 31, 2007
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CONTENTS
Statement of Investments ................................................ 3
Notes to Statement of Investments ....................................... 7
[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS
Franklin o TEMPLETON o Mutual Series
Quarterly Statement of Investments | 1
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Templeton Dragon Fund, Inc.
STATEMENT OF INVESTMENTS, MARCH 31, 2007 (UNAUDITED)
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COUNTRY SHARES VALUE
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COMMON STOCKS 99.2%
AIR FREIGHT & LOGISTICS 0.4%
Shenzhen International Holdings Ltd. ...................................... China 34,708,000 $ 2,398,848
Sinotrans Ltd., H ......................................................... China 3,017,000 1,208,646
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3,607,494
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AUTO COMPONENTS 1.7%
Cheng Shin Rubber Industry Co. Ltd. ....................................... Taiwan 10,923,563 10,200,607
Norstar Founders Group Ltd. ............................................... China 13,376,000 5,992,026
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16,192,633
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AUTOMOBILES 0.8%
a Brilliance China Automotive Holdings Ltd. ................................. China 6,510,000 1,591,453
Chongqing Changan Automobile Co. Ltd., B .................................. China 3,190,536 3,258,711
a Dongfeng Motor Corp., H ................................................... China 5,574,000 3,039,177
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7,889,341
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COMMERCIAL BANKS 12.3%
a,b Bank of China Ltd., H, 144A ............................................... China 20,840,000 10,375,922
China Construction Bank Corp., H .......................................... China 7,894,000 4,516,313
b China Construction Bank Corp., H, 144A .................................... China 38,097,000 21,796,045
a,b China Merchants Bank Co. Ltd., H, 144A .................................... China 2,118,000 4,272,298
Chinatrust Financial Holding Co. Ltd. ..................................... Taiwan 11,281,896 8,813,449
HSBC Holdings PLC ......................................................... United Kingdom 2,001,251 34,784,097
a,b Industrial and Commercial Bank of China, H, 144A .......................... China 31,104,000 17,436,919
Mega Financial Holding Co. Ltd. ........................................... Taiwan 27,217,000 17,766,310
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119,761,353
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COMMUNICATIONS EQUIPMENT 0.7%
a,b Citic 1616 Holdings Ltd., 144A ............................................ Hong Kong 449,000 148,268
D-Link Corp. .............................................................. Taiwan 3,604,962 6,329,655
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6,477,923
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COMPUTERS & PERIPHERALS 5.1%
Acer Inc. ................................................................. Taiwan 4,216,621 8,091,733
Advantech Co. Ltd. ........................................................ Taiwan 1,803,865 5,778,474
Asustek Computer Inc. ..................................................... Taiwan 12,357,049 29,128,130
LITE-ON IT Corp. .......................................................... Taiwan 3,506,760 3,030,926
Lite-On Technology Corp. .................................................. Taiwan 2,821,424 3,645,085
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49,674,348
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CONSTRUCTION & ENGINEERING 0.1%
a,b China Communications Construction Co. Ltd., H, 144A ....................... China 890,000 1,073,051
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DISTRIBUTORS 3.0%
China Resources Enterprise Ltd. ........................................... China 8,038,000 26,851,460
Test-Rite International Co. Ltd. .......................................... Taiwan 4,494,760 2,519,728
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29,371,188
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Quarterly Statement of Investments | 3
Templeton Dragon Fund, Inc.
STATEMENT OF INVESTMENTS, MARCH 31, 2007 (UNAUDITED) (CONTINUED)
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COUNTRY SHARES VALUE
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COMMON STOCKS (CONTINUED)
DIVERSIFIED TELECOMMUNICATION SERVICES 1.6%
China Telecom Corp. Ltd., H ............................................... China 32,240,000 $ 15,845,489
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ELECTRIC UTILITIES 3.9%
Cheung Kong Infrastructure Holdings Ltd. .................................. Hong Kong 11,060,000 38,503,785
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ELECTRICAL EQUIPMENT 1.0%
BYD Co. Ltd., H ........................................................... China 1,193,500 5,888,792
Phoenixtec Power Co. Ltd. ................................................. Taiwan 3,811,945 3,594,218
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9,483,010
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ELECTRONIC EQUIPMENT & INSTRUMENTS 0.9%
AU Optronics Corp. ........................................................ Taiwan 5,439,000 7,774,696
Yorkey Optical International Cayman Ltd. .................................. China 3,087,000 1,086,548
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8,861,244
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FOOD & STAPLES RETAILING 13.8%
Dairy Farm International Holdings Ltd. .................................... Hong Kong 34,636,578 135,082,654
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FOOD PRODUCTS 0.2%
Uni-President Enterprises Corp. ........................................... Taiwan 2,248,030 2,153,598
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HOTELS, RESTAURANTS & LEISURE 0.7%
The Hongkong and Shanghai Hotels Ltd. ..................................... Hong Kong 2,479,856 3,916,706
a Nagacorp Ltd. ............................................................. Cambodia 11,467,000 2,744,548
a,b Shanghai Jin Jiang International Hotels (Group) Co. Ltd., H, 144A ......... China 406,000 236,438
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6,897,692
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HOUSEHOLD DURABLES 0.1%
Samson Holding Ltd. ....................................................... China 1,982,000 1,136,478
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INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 2.9%
Datang International Power Generation Co. Ltd., H ......................... China 17,204,000 16,294,482
Guangdong Electric Power Development Co. Ltd., B .......................... China 10,562,100 7,989,455
Huadian Power International Corp. Ltd., H ................................. China 8,404,000 3,011,782
Huaneng Power International Inc., H ....................................... China 1,454,000 1,265,472
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28,561,191
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INDUSTRIAL CONGLOMERATES 4.3%
Citic Pacific Ltd. ........................................................ China 7,081,000 26,192,191
Shanghai Industrial Holdings Ltd. ......................................... China 6,850,000 15,816,359
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42,008,550
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INSURANCE 0.4%
China Life Insurance Co. Ltd., H .......................................... China 1,452,000 4,172,173
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IT SERVICES 0.5%
SinoCom Software Group Ltd. ............................................... China 1,010,000 180,979
Travelsky Technology Ltd., H .............................................. China 2,837,000 4,996,400
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5,177,379
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4 | Quarterly Statement of Investments
Templeton Dragon Fund, Inc.
STATEMENT OF INVESTMENTS, MARCH 31, 2007 (UNAUDITED) (CONTINUED)
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COUNTRY SHARES VALUE
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COMMON STOCKS (CONTINUED)
MACHINERY 2.6%
China International Marine Containers (Group) Co. Ltd., B ................. China 10,312,519 $ 22,610,050
Yungtay Engineering Co. Ltd. .............................................. Taiwan 5,686,000 3,213,303
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25,823,353
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MARINE 0.2%
China Shipping Container Lines Co. Ltd., H ................................ China 5,000,000 1,945,463
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MEDIA 0.2%
b Next Media Ltd., 144A ..................................................... Hong Kong 4,974,000 1,712,527
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METALS & MINING 0.1%
Aluminum Corp. of China Ltd., H ........................................... China 1,028,000 1,060,492
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OIL, GAS & CONSUMABLE FUELS 20.0%
a,b China Coal Energy Co., H, 144A ............................................ China 1,367,000 1,460,947
China Petroleum and Chemical Corp., H ..................................... China 103,150,000 87,267,008
China Shenhua Energy Co. Ltd., H .......................................... China 6,448,000 15,597,903
CNOOC Ltd. ................................................................ China 18,177,000 15,936,472
b CNOOC Ltd., 144A ......................................................... China 14,270,000 12,511,055
PetroChina Co. Ltd., H .................................................... China 45,320,000 53,771,114
b PetroChina Co. Ltd., H, 144A .............................................. China 1,512,000 1,793,952
Yanzhou Coal Mining Co. Ltd., H ........................................... China 7,680,000 7,352,622
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195,691,073
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PHARMACEUTICALS 0.1%
Tong Ren Tang Technologies Co. Ltd., H .................................... China 628,000 1,110,829
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REAL ESTATE 2.6%
Cheung Kong (Holdings) Ltd. ............................................... Hong Kong 1,259,000 15,936,811
Henderson Investment Ltd. ................................................. Hong Kong 4,554,000 9,314,278
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25,251,089
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ROAD & RAIL 0.3%
MTR Corp. Ltd. ............................................................ Hong Kong 1,215,000 3,041,757
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 4.2%
Samsung Electronics Co. Ltd. .............................................. South Korea 10,780 6,450,356
Sunplus Technology Co. Ltd. ............................................... Taiwan 3,456,617 7,949,488
Taiwan Semiconductor Manufacturing Co. Ltd. ............................... Taiwan 13,202,911 27,092,102
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41,491,946
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SPECIALTY RETAIL 0.1%
I.T. Ltd. ................................................................. Hong Kong 5,772,000 1,041,657
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TEXTILES, APPAREL & LUXURY GOODS 0.6%
Tack Fat Group International Ltd. ......................................... Hong Kong 19,824,000 2,968,633
Tainan Enterprises Co. Ltd. ............................................... Taiwan 1,641,104 2,499,597
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5,468,230
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Quarterly Statement of Investments | 5
Templeton Dragon Fund, Inc.
STATEMENT OF INVESTMENTS, MARCH 31, 2007 (UNAUDITED) (CONTINUED)
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COUNTRY SHARES VALUE
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COMMON STOCKS (CONTINUED)
TRANSPORTATION INFRASTRUCTURE 3.4%
Cosco Pacific Ltd. ....................................................... China 3,354,000 $ 8,310,895
a Hainan Meilan International Airport Co. Ltd., H .......................... China 2,994,000 1,755,079
Hopewell Holdings Ltd. ................................................... Hong Kong 5,876,000 22,863,082
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32,929,056
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WIRELESS TELECOMMUNICATION SERVICES 10.4%
China Mobile Ltd. ........................................................ China 10,350,000 94,120,414
Taiwan Mobile Co. Ltd. ................................................... Taiwan 7,047,764 7,550,415
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101,670,829
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TOTAL COMMON STOCKS (COST $488,613,641) .................................. 970,168,875
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SHORT TERM INVESTMENT (COST $44,138,348) 4.5%
MONEY MARKET FUND 4.5%
c Franklin Institutional Fiduciary Trust Money Market Portfolio, 4.99% ..... United States 44,138,348 44,138,348
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TOTAL INVESTMENTS (COST $532,751,989) 103.7% ............................. 1,014,307,223
OTHER ASSETS, LESS LIABILITIES (3.7)% .................................... (36,654,750)
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NET ASSETS 100.0% ........................................................ $ 977,652,473
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a Non-income producing for the twelve months ended March 31, 2007.
b Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be sold in transactions exempt from registration only to
qualified institutional buyers or in a public offering registered under
the Securities Act of 1933. These securities have been deemed liquid under
guidelines approved by the Fund's Board of Directors. At March 31, 2007,
the aggregate value of these securities was $72,817,422, representing
7.45% of net assets.
c The Franklin Institutional Fiduciary Trust Money Market Portfolio is
managed by an affiliate of the Fund's investment manager. The rate shown
is the annualized seven-day yield at period end.
6 | See Notes to Statement of Investments. | Quarterly Statement of Investments
Templeton Dragon Fund, Inc.
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)
1. ORGANIZATION
Templeton Dragon Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940, as amended, as a non-diversified, closed-end investment
company.
2. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market. Investments in open-end mutual funds are valued at the closing net asset
value. Short term investments are valued at cost.
Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. If no sale is reported at that time, the foreign security will be
valued within the range of the most recent quoted bid and ask prices. The value
is then converted into its U.S. dollar equivalent at the foreign exchange rate
in effect at the close of the NYSE on the day that the value of the foreign
security is determined.
The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. The investment manager monitors price movements
following the close of trading in foreign stock markets through a series of
country specific market proxies (such as baskets of American Depository
Receipts, futures contracts and exchange traded funds). These price movements
are measured against established trigger thresholds for each specific market
proxy to assist in determining if an event has occurred. If such an event
occurs, the securities may be valued using fair value procedures, which may
include the use of independent pricing services. All security valuation
procedures are approved by the Fund's Board of Directors.
Quarterly Statement of Investments | 7
Templeton Dragon Fund, Inc.
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
3. INCOME TAXES
At March 31, 2007, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ........................................... $ 532,927,324
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Unrealized appreciation ....................................... $ 485,126,679
Unrealized depreciation ....................................... (3,746,780)
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Net unrealized appreciation (depreciation) .................... $ 481,379,899
=============
For information on the Fund's policy regarding valuation of investments and
other significant accounting policies, please refer to the Fund's most recent
semiannual or annual shareholder report.
8 | Quarterly Statement of Investments
ITEM 2. CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Quarterly Schedule of Portfolio
Holdings on Form N-Q, the Registrant had carried out an evaluation, under the
supervision and with the participation of the Registrant's management, including
the Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(b) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Quarterly Schedule of Portfolio Holdings
on Form N-Q.
ITEM 3. EXHIBITS.
(a) Certification pursuant to Section 30a-2 under the Investment Company Act of
1940 of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration,
and Galen G. Vetter, Chief Financial Officer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON DRAGON FUND, INC.
By /s/JIMMY D. GAMBILL
-------------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date May 24, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/JIMMY D. GAMBILL
-------------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date May 24, 2007
By /s/GALEN G. VETTER
-------------------------
Galen G. Vetter
Chief Financial Officer
Date May 24, 2007