FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-08394
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TEMPLETON DRAGON FUND, INC.
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 12/31
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Date of reporting period: 9/30/09
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ITEM 1. SCHEDULE OF INVESTMENTS.
TEMPLETON DRAGON FUND, INC.
STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2009 (UNAUDITED)
COUNTRY SHARES/UNITS VALUE
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COMMON STOCKS AND OTHER EQUITY INTERESTS 99.0%
AIR FREIGHT & LOGISTICS 0.1%
Sinotrans Ltd., H China 5,999,000 $ 1,416,538
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AUTO COMPONENTS 2.0%
Cheng Shin Rubber Industry Co. Ltd. Taiwan 9,595,108 20,392,791
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AUTOMOBILES 3.6%
Chongqing Changan Automobile Co. Ltd., B China 5,933,702 3,483,657
Denway Motors Ltd. China 5,606,000 2,495,574
Dongfeng Motor Corp., H China 22,070,000 23,465,394
Great Wall Motor Co. Ltd., H China 2,382,538 2,145,821
Jiangling Motors Corp. Ltd., B China 3,818,520 4,789,163
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36,379,609
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BEVERAGES 0.4%
Yantai Changyu Pioneer Wine Co. Ltd., B China 538,490 3,451,895
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COMMERCIAL BANKS 8.9%
Bank of China Ltd., H China 35,777,000 18,834,859
(a) Bank of China Ltd., H, 144A China 9,420,000 4,959,174
BOC Hong Kong (Holdings) Ltd. China 3,874,000 8,497,807
China Construction Bank Corp., H China 44,293,000 35,377,248
China Merchants Bank Co. Ltd., H China 562,000 1,253,079
Industrial and Commercial Bank of China Ltd., H China 27,510,000 20,730,116
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89,652,283
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COMMUNICATIONS EQUIPMENT 0.6%
D-Link Corp. Taiwan 1,908,360 1,699,899
ZTE Corp., H China 869,358 4,587,966
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6,287,865
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COMPUTERS & PERIPHERALS 3.6%
Advantech Co. Ltd. Taiwan 1,822,628 3,417,962
Asustek Computer Inc. Taiwan 14,685,817 25,336,993
Lite-On IT Corp. Taiwan 6,625,560 5,674,022
Lite-On Technology Corp. Taiwan 1,373,835 1,809,881
Simplo Technology Co. Ltd. Taiwan 68,000 387,873
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36,626,731
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CONSTRUCTION MATERIALS 0.1%
Asia Cement China Holdings Corp. China 2,055,000 1,299,290
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DISTRIBUTORS 2.5%
China Resources Enterprise Ltd. Hong Kong 5,818,000 16,928,503
Dah Chong Hong Holdings Ltd. Hong Kong 19,636,520 8,234,670
(a) Dah Chong Hong Holdings Ltd., 144A Hong Kong 550,000 230,645
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25,393,818
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DIVERSIFIED TELECOMMUNICATION SERVICES 1.1%
China Telecom Corp. Ltd., H China 10,694,000 5,050,328
China Unicom (Hong Kong) Ltd. China 4,430,752 6,277,375
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11,327,703
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ELECTRIC UTILITIES 2.8%
Cheung Kong Infrastructure Holdings Ltd. Hong Kong 7,814,000 27,928,748
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ELECTRICAL EQUIPMENT 0.3%
Dongfang Electric Co. Ltd., H China 570,000 2,875,742
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ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS 0.3%
(b) China Security & Surveillance Technology Inc. United States 202,800 1,447,992
Hon Hai Precision Industry Co. Ltd. Taiwan 466,000 1,878,856
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3,326,848
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Quarterly Statement of Investments
See Notes to Statements of Investments
FOOD & STAPLES RETAILING 18.0%
Beijing Jingkelong Co. Ltd., H China 2,947,447 $ 1,791,287
Dairy Farm International Holdings Ltd. Hong Kong 30,104,178 180,022,985
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181,814,272
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FOOD PRODUCTS 2.1%
China Foods Ltd. China 17,406,000 12,015,755
China Yurun Food Group Ltd. China 1,084,000 2,335,845
People's Food Holdings Ltd. China 3,574,000 1,928,395
Uni-President China Holdings Ltd. Taiwan 2,340,000 1,370,787
Uni-President Enterprises Corp. Taiwan 1,347,482 1,596,173
(b) Xiwang Sugar Holdings Co. Ltd. Hong Kong 9,341,681 2,217,896
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21,464,851
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HOTELS, RESTAURANTS & LEISURE 0.2%
NagaCorp Ltd. Cambodia 18,208,875 2,396,523
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INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 2.5%
Datang International Power Generation Co. Ltd., H China 34,992,000 18,286,142
Guangdong Electric Power Development Co. Ltd., B China 10,982,067 5,554,801
Huaneng Power International Inc., H China 1,454,000 962,454
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24,803,397
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INDUSTRIAL CONGLOMERATES 2.9%
Shanghai Industrial Holdings Ltd. China 6,539,000 29,488,781
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INSURANCE 2.2%
China Life Insurance Co. Ltd., H China 4,967,000 21,630,484
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INTERNET SOFTWARE & SERVICES 0.7%
(b) Sohu.com Inc. China 107,800 7,414,484
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IT SERVICES 0.4%
Travelsky Technology Ltd., H China 5,629,706 4,314,897
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LEISURE EQUIPMENT & PRODUCTS 0.3%
Yorkey Optical International Cayman Ltd. China 11,491,000 2,891,284
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MACHINERY 1.4%
China International Marine Containers (Group) Co. Ltd., B China 4,030,376 4,129,185
Lonking Holdings Ltd. China 6,965,000 3,990,271
Shin Zu Shing Co. Ltd. Taiwan 1,078,504 6,050,679
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14,170,135
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MARINE 0.3%
China Shipping Development Co. Ltd., H China 1,264,000 1,598,348
Sinotrans Shipping Ltd. Hong Kong 4,017,500 1,617,368
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3,215,716
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MEDIA 0.1%
(b) Next Media Ltd. Hong Kong 5,588,000 713,822
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METALS & MINING 0.4%
Angang Steel Co. Ltd., H China 1,880,000 3,531,974
(c) China Zhongwang Holdings Ltd. China 857,600 843,215
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4,375,189
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OIL, GAS & CONSUMABLE FUELS 24.4%
China Coal Energy Co., H China 3,237,000 4,235,249
China Petroleum and Chemical Corp., H China 97,904,000 83,249,982
China Shenhua Energy Co. Ltd., H China 7,424,000 32,426,116
CNOOC Ltd. China 38,862,000 52,250,586
PetroChina Co. Ltd., H China 52,788,000 59,667,468
Yanzhou Coal Mining Co. Ltd., H China 9,996,000 14,420,036
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246,249,437
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PHARMACEUTICALS 0.1%
Tong Ren Tang Technologies Co. Ltd., H China 713,000 $ 1,069,040
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REAL ESTATE MANAGEMENT & DEVELOPMENT 4.1%
Agile Property Holdings Ltd. China 536,000 630,751
Cheung Kong (Holdings) Ltd. Hong Kong 933,000 11,840,071
Hopewell Holdings Ltd. Hong Kong 7,088,000 22,270,038
Soho China Ltd. China 11,126,500 5,958,061
(a) Soho China Ltd., 144A China 764,000 409,110
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41,108,031
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 4.3%
MediaTek Inc. Taiwan 540,567 9,055,912
Novatek Microelectronics Corp. Ltd. Taiwan 513,144 1,218,908
Taiwan Semiconductor Manufacturing Co. Ltd. Taiwan 16,377,136 33,015,323
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43,290,143
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SOFTWARE 0.6%
Kingdee International Software Group Co. Ltd., fgn. Hong Kong 12,774,000 2,159,218
(b) Shanda Interactive Entertainment Ltd., ADR China 80,200 4,106,240
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6,265,458
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SPECIALTY RETAIL 0.1%
(b) I.T Ltd. Hong Kong 8,513,993 856,892
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TEXTILES, APPAREL & LUXURY GOODS 0.3%
Anta Sports Products Ltd. China 1,547,000 1,918,280
Weiqiao Textile Co. Ltd., H China 1,545,500 957,213
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2,875,493
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TRANSPORTATION INFRASTRUCTURE 1.1%
Cosco Pacific Ltd. China 6,792,906 9,746,725
Hopewell Highway Infrastructure Ltd. Hong Kong 708,800 435,340
Rickmers Maritime (Trust Units) Singapore 2,904,000 783,444
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10,965,509
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WIRELESS TELECOMMUNICATION SERVICES 6.2%
China Mobile Ltd. China 6,271,000 61,172,594
Taiwan Mobile Co. Ltd. Taiwan 900,831 1,675,244
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62,847,838
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TOTAL COMMON STOCKS AND OTHER EQUITY INTERESTS
(COST $477,660,872) 1,000,581,537
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SHORT TERM INVESTMENTS (COST $2,645,803) 0.3%
MONEY MARKET FUNDS 0.3%
(d) Institutional Fiduciary Trust Money Market Portfolio,
0.00% United States 2,645,803 2,645,803
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TOTAL INVESTMENTS (COST $480,306,675) 99.3% 1,003,227,340
OTHER ASSETS, LESS LIABILITIES 0.7% 7,165,768
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NET ASSETS 100.0% 1,010,393,108
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PORTFOLIO ABBREVIATIONS
ADR - American Depositary Receipt
(a) 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 Trustees. At September 30, 2009,
the aggregate value of these securities was $5,598,929, representing 0.55%
of net assets.
(b) Non-income producing.
(c) Security purchased on a delayed delivery basis.
(d) The 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.
TEMPLETON DRAGON FUND
Notes to Statement of Investments (unaudited)
1. ORGANIZATION
Templeton Dragon Fund (Fund) is registered under the Investment Company Act of
1940, as amended, as a closed-end investment company.
2. SECURITY VALUATION
Equity and other 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. Certain equity securities are valued based upon
fundamental characteristics or relationships to similar securities. Investments
in open-end mutual funds are valued at the closing net asset value.
Foreign equity 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 equity 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 security is determined. Occasionally, events may impact the availability or
reliability of foreign exchange rates used to convert to the U.S. dollar
equivalent value. If such an event occurs, the foreign exchange rate will be
valued at fair value using procedures established and approved by the Fund's
Board of Directors.
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 based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, 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.
3. INCOME TAXES
At September 30, 2009, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments $483,327,165
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Unrealized appreciation $538,103,523
Unrealized depreciation (18,203,348)
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Net unrealized appreciation (depreciation) $519,900,175
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4. FAIR VALUE MEASUREMENTS
The Fund follows a fair value hierarchy that distinguishes between market data
obtained from independent sources (observable inputs) and the Fund's own market
assumptions (unobservable inputs). These inputs are used in determining the
value of the Fund's investments and are summarized in the following fair value
hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
At September 30, 2009, all of the Fund's investments in securities carried at
fair value were in Level 1 inputs. For detailed industry descriptions, see the
accompanying Statement of Investments.
At September 30, 2009, the reconciliation of assets in which significant
unobservable inputs (Level 3) were used in determining fair value, is as
follows:
NET CHANGE
IN UNREALIZED
APPRECIATION
NET NET CHANGE (DEPRECIATION)
BALANCE AT REALIZED IN UNREALIZED NET TRANSFER BALANCE AT ON ASSETS
BEGINNING GAIN APPRECIATION PURCHASES IN (OUT) END OF HELD AT
OF PERIOD (LOSS) (DEPRECIATION) (SALES) OF LEVEL 3 PERIOD PERIOD END
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ASSETS
Investments in
Securities:
Equity Investments:
Auto Components $952,764 $-- $-- $-- $(952,764) $-- $--
-------- --- --- --- --------- --- ---
Total Investments
in Securities $952,764 $-- $-- $-- $(952,764) $-- $--
======== === === === ========= === ===
5. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through November 20, 2009, the issuance
date of the financial statements and determined that no events have occurred
that require disclosure.
For information on the Fund's policy regarding other significant accounting
policies, please refer to the Fund's most recent semiannual or annual
shareholder report.
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 Laura F. Fergerson, Chief Executive Officer - Finance and
Administration, and Mark H. Otani, Chief Financial Officer and Chief Accounting
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/LAURA F. FERGERSON
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Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date November 25, 2009
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/LAURA F. FERGERSON
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Laura F. Fergerson
Chief Executive Officer -
Finance and Administration
Date November 25, 2009
By /s/MARK H. OTANI
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Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date November 25, 2009