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
Date of reporting period: 3/31/10_
ITEM 1. SCHEDULE OF INVESTMENTS.
TEMPLETON DRAGON FUND, INC.
STATEMENT OF INVESTMENTS, MARCH 31, 2010 (UNAUDITED)
COUNTRY SHARES/UNITS VALUE
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COMMON STOCKS AND OTHER EQUITY INTERESTS 99.0%
AIR FREIGHT & LOGISTICS 0.2%
Sinotrans Ltd., H China 5,999,000 $ 1,661,184
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AUTO COMPONENTS 1.5%
Cheng Shin Rubber Industry Co. Ltd. Taiwan 7,512,108 15,998,063
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AUTOMOBILES 4.4%
Chongqing Changan Automobile Co. Ltd., B China 5,849,502 5,168,250
Denway Motors Ltd. China 7,716,000 4,114,272
Dongfeng Motor Corp., H China 17,906,000 29,058,261
Great Wall Motor Co. Ltd., H China 2,332,538 4,896,850
Jiangling Motors Corp. Ltd., B China 3,163,420 5,512,583
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48,750,216
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BEVERAGES 0.4%
Yantai Changyu Pioneer Wine Co. Ltd., B China 538,490 4,480,337
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CHEMICALS 0.1%
(a, b) Yingde Gases Group Co. Ltd., 144A Hong Kong 1,273,500 1,407,300
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COMMERCIAL BANKS 9.0%
Bank of China Ltd., H China 40,014,000 21,284,454
(a) Bank of China Ltd., H, 144A China 9,420,000 5,010,735
BOC Hong Kong (Holdings) Ltd. China 5,056,500 12,061,227
China Construction Bank Corp., H China 43,922,797 35,922,305
(a, b) China Minsheng Banking Corp. Ltd., 144A China 3,862,500 3,964,855
Industrial and Commercial Bank of China Ltd., H China 27,510,000 21,010,954
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99,254,530
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COMMERCIAL SERVICES & SUPPLIES 0.1%
(b) Fook Woo Group Holdings Ltd. China 3,020,000 1,050,198
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COMMUNICATIONS EQUIPMENT 0.6%
D-Link Corp. Taiwan 1,908,360 1,971,937
ZTE Corp., H China 819,758 4,967,590
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6,939,527
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COMPUTERS & PERIPHERALS 3.8%
Advantech Co. Ltd. Taiwan 1,822,628 3,893,020
Asustek Computer Inc. Taiwan 14,685,817 25,584,805
HTC Corp. Taiwan 135,000 1,577,853
Lite-On IT Corp. Taiwan 6,625,560 7,169,819
Lite-On Technology Corp. Taiwan 629,835 836,341
Simplo Technology Co. Ltd. Taiwan 380,000 2,166,811
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41,228,649
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CONSTRUCTION MATERIALS 0.2%
Asia Cement China Holdings Corp. China 3,337,500 1,848,376
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DISTRIBUTORS 3.2%
China Resources Enterprise Ltd. Hong Kong 5,818,000 21,505,825
Dah Chong Hong Holdings Ltd. Hong Kong 19,608,520 13,082,027
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34,587,852
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DIVERSIFIED TELECOMMUNICATION SERVICES 0.9%
China Telecom Corp. Ltd., H China 9,538,000 4,729,536
China Unicom (Hong Kong) Ltd. China 4,430,752 4,993,281
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9,722,817
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ELECTRIC UTILITIES 2.6%
Cheung Kong Infrastructure Holdings Ltd. Hong Kong 7,492,000 28,851,570
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Quarterly Statement of Investments See Notes to Statements of Investments.
TEMPLETON DRAGON FUND, INC.
STATEMENT OF INVESTMENTS, MARCH 31, 2010 (UNAUDITED) (CONTINUED)
ELECTRICAL EQUIPMENT 0.3%
Dongfang Electric Co. Ltd., H China 570,000 $ 3,200,824
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ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS 0.5%
(b) China Security & Surveillance Technology Inc. United States 202,800 1,559,532
Hon Hai Precision Industry Co. Ltd. Taiwan 970,000 4,201,780
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5,761,312
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FOOD & STAPLES RETAILING 17.4%
Beijing Jingkelong Co. Ltd., H China 3,229,447 3,281,751
Dairy Farm International Holdings Ltd. Hong Kong 28,363,378 187,198,295
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190,480,046
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FOOD PRODUCTS 2.8%
China Foods Ltd. China 16,200,000 13,207,457
China Yurun Food Group Ltd. China 1,084,000 3,308,858
People's Food Holdings Ltd. China 3,574,000 1,520,144
(a, b) Shenguan Holdings Group Ltd., 144A China 7,362,000 7,092,476
Uni-President China Holdings Ltd. Taiwan 2,340,000 1,425,534
Uni-President Enterprises Corp. Taiwan 1,347,482 1,534,582
(b) Xiwang Sugar Holdings Co. Ltd. Hong Kong 9,359,681 3,086,040
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31,175,091
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HOTELS, RESTAURANTS & LEISURE 0.2%
NagaCorp Ltd. Cambodia 18,008,875 2,365,850
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INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 1.9%
Datang International Power Generation Co. Ltd., H China 34,992,000 15,909,040
Guangdong Electric Power Development Co. Ltd., B China 7,651,867 4,513,707
Huaneng Power International Inc., H China 1,454,000 844,581
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21,267,328
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INDUSTRIAL CONGLOMERATES 2.7%
Shanghai Industrial Holdings Ltd. China 6,539,000 29,982,085
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INSURANCE 2.3%
China Life Insurance Co. Ltd., H China 5,272,000 25,259,156
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INTERNET SOFTWARE & SERVICES 0.6%
(b) Sohu.com Inc. China 116,000 6,333,600
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IT SERVICES 0.4%
Travelsky Technology Ltd., H China 5,629,706 4,713,023
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LEISURE EQUIPMENT & PRODUCTS 0.2%
Yorkey Optical International Cayman Ltd. China 11,491,000 2,382,781
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MACHINERY 1.0%
Lonking Holdings Ltd. China 10,809,000 8,074,470
(a, b) Sany Heavy Equipment International Holdings Co. Ltd., 144A China 320,000 358,566
Shanghai Prime Machinery Co. Ltd., H China 500,000 103,036
Shin Zu Shing Co. Ltd. Taiwan 465,504 1,979,776
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10,515,848
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MARINE 0.5%
China Shipping Development Co. Ltd., H China 1,764,000 2,880,835
Sinotrans Shipping Ltd. Hong Kong 5,730,500 2,730,830
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5,611,665
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MEDIA 0.0%(C)
(b) Next Media Ltd. Hong Kong 2,594,000 384,210
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METALS & MINING 0.8%
Angang Steel Co. Ltd., H China 3,844,000 7,040,175
(b) China Zhongwang Holdings Ltd. China 857,600 751,094
TEMPLETON DRAGON FUND, INC.
STATEMENT OF INVESTMENTS, MARCH 31, 2010 (UNAUDITED) (CONTINUED)
(d) Fushan International Energy Group Ltd. Hong Kong 808,000 $ 613,994
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8,405,263
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OIL, GAS & CONSUMABLE FUELS 25.6%
China Coal Energy Co., H China 3,237,000 5,061,298
China Petroleum and Chemical Corp., H China 97,904,000 80,070,889
China Shenhua Energy Co. Ltd., H China 7,424,000 31,936,323
CNOOC Ltd. China 38,862,000 63,766,865
(b) Inner Mongolia Yitai Coal Co. Ltd., B China 163,900 1,529,023
PetroChina Co. Ltd., H China 52,788,000 61,733,592
Yanzhou Coal Mining Co. Ltd., H China 15,172,000 36,385,052
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280,483,042
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PHARMACEUTICALS 0.1%
Tong Ren Tang Technologies Co. Ltd., H China 713,000 1,294,819
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REAL ESTATE MANAGEMENT & DEVELOPMENT 3.8%
Agile Property Holdings Ltd. China 1,442,000 1,968,664
Cheung Kong (Holdings) Ltd. Hong Kong 933,000 12,016,615
Hopewell Holdings Ltd. Hong Kong 7,088,000 20,996,748
Soho China Ltd. China 12,384,000 7,065,862
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42,047,889
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SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 3.7%
MediaTek Inc. Taiwan 540,567 9,383,395
Taiwan Semiconductor Manufacturing Co. Ltd. Taiwan 16,377,136 31,730,137
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41,113,532
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SOFTWARE 0.7%
Kingdee International Software Group Co. Ltd., fgn. Hong Kong 11,536,000 4,472,210
(b) Shanda Interactive Entertainment Ltd., ADR China 61,900 2,698,221
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7,170,431
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SPECIALTY RETAIL 0.1%
(b) I.T Ltd. Hong Kong 9,303,993 1,629,704
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TEXTILES, APPAREL & LUXURY GOODS 0.4%
Anta Sports Products Ltd. China 1,766,000 2,911,395
Weiqiao Textile Co. Ltd., H China 1,545,500 1,222,188
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4,133,583
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TRANSPORTATION INFRASTRUCTURE 1.0%
Cosco Pacific Ltd. China 6,792,906 10,306,267
Rickmers Maritime (Trust Units) Singapore 2,469,000 476,539
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10,782,806
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WIRELESS TELECOMMUNICATION SERVICES 5.0%
China Mobile Ltd. China 5,676,000 54,608,906
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TOTAL COMMON STOCKS AND OTHER EQUITY INTERESTS (COST $498,137,646) 1,086,883,413
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SHORT TERM INVESTMENTS (COST $8,904,594) 0.8%
MONEY MARKET FUNDS 0.8%
(e) Institutional Fiduciary Trust Money Market Portfolio,
0.00% United States 8,904,594 8,904,594
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TOTAL INVESTMENTS (COST $507,042,240) 99.8% 1,095,788,007
OTHER ASSETS, LESS LIABILITIES 0.2% 1,786,409
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NET ASSETS 100.0% $1,097,574,416
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TEMPLETON DRAGON FUND, INC.
STATEMENT OF INVESTMENTS, MARCH 31, 2010 (UNAUDITED) (CONTINUED)
(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 March 31, 2010, the
aggregate value of these securities was $17,833,932, representing 1.62% of
net assets.
(b) Non-income producing.
(c) Rounds to less than 0.1% of net assets.
(d) A portion or all of the security purchased on a delayed delivery basis.
(e) 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, Inc. (Fund) is registered under the Investment Company
Act of 1940, as amended, as a closed-end investment company.
2. FINANCIAL INSTRUMENT VALUATION
The Fund values its investments in securities and other assets and liabilities
carried at fair value daily. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between
market participants on the measurement date.
Under procedures approved by the Fund's Board of Directors, the Fund may utilize
independent pricing services, quotations from securities and financial
instrument dealers, and other market sources to determine fair value.
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. 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. 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 may be valued
utilizing a market-based approached in which the fundamental characteristics or
relationships to similar securities are used to determine the fair value of the
security held.
The Fund has procedures to determine the fair value of investments for which
market prices are not readily available or which may not be reliably priced.
Under these procedures, the Fund primarily employs a market-based approach,
which may use prices of recent transactions, various market multiples, book
values, and other relevant information for the investment, related assets or
liabilities or other comparable assets or liabilities to determine the fair
value of the investment. In developing this fair value, the Fund may also give
consideration to an income-based approach valuation, which considers anticipated
future cash flows of the investment and converts those amounts into a net
present value. Discounts may also be applied due to the nature or duration of
any restrictions on the disposition of the investments. Due to the inherent
uncertainty of valuations of such investments, the fair values may differ
significantly from the values that would have been used had a ready market
existed.
Trading in securities on foreign exchanges and over-the-counter markets may be
completed before the daily close of business on the NYSE. Occasionally, events
occur between the time at which trading in a foreign security is completed and
the close of the NYSE that might call into question the availability (including
the reliability) of the value of a foreign security held by the Fund. As a
result, variances may arise between the value of the Fund's portfolio securities
as determined at the foreign market close and the latest indications of value at
the close of the NYSE. In order to minimize the potential for these
discrepancies, 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 that may call into question the reliability
of the values of the foreign securities held by the Fund. If such an event
occurs, the securities may be valued using fair value procedures, which may
include the use of independent pricing services.
Investments in open-end mutual funds are valued at the closing net asset value.
3. INCOME TAXES
At March 31, 2010, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments $510,093,044
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Unrealized appreciation $601,460,880
Unrealized depreciation (15,765,917)
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Net unrealized appreciation (depreciation) $585,694,963
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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.
For movements between the levels within the fair value hierarchy, the Fund has
adopted a policy of recognizing the transfers as of the date of the underlying
event which caused the movement.
At March 31, 2010, 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.
5. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through the issuance of the financial
statements and determined that no events have occurred that require disclosure.
ABBREVIATIONS
PORTFOLIO
ADR - American Depository Receipts
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 May 27, 2010
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 May 27, 2010
By /s/MARK H. OTANI
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Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date May 27, 2010