UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-08394
(Exact name of registrant as specified in charter)
(Address of principal executive offices) (Zip code)
(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: 3/31/16_
Item 1. Schedule of Investments.
Templeton Dragon Fund, Inc.
Consolidated Statement of Investments, March 31, 2016 (unaudited)
Country | Shares | Value | ||
Common Stocks 96.1% | ||||
Aerospace & Defense 0.4% | ||||
a AVIC Helicopter Co. Ltd., A | China | 445,739 | $ | 3,009,378 |
Auto Components 0.7% | ||||
a Fuyao Glass Industry Group Co. Ltd., A | China | 1,963,200 | 4,532,803 | |
Automobiles 6.8% | ||||
Brilliance China Automotive Holdings Ltd. | China | 1,798,000 | 1,861,195 | |
Chongqing Changan Automobile Co. Ltd., B | China | 5,357,019 | 10,034,030 | |
Dongfeng Motor Group Co. Ltd., H | China | 16,656,000 | 20,762,699 | |
Jiangling Motors Corp. Ltd., B | China | 4,937,808 | 14,296,527 | |
46,954,451 | ||||
Banks 8.1% | ||||
BOC Hong Kong (Holdings) Ltd. | Hong Kong | 2,439,600 | 7,280,417 | |
a China Construction Bank Corp., A | China | 13,009,928 | 9,784,176 | |
China Construction Bank Corp., H | China | 29,398,272 | 18,797,067 | |
a China Merchants Bank Co. Ltd., A | China | 768,689 | 1,917,849 | |
a Industrial & Commercial Bank of China Ltd., A | China | 4,562,118 | 3,041,883 | |
Industrial and Commercial Bank of China Ltd., H | China | 17,811,155 | 9,987,757 | |
a Ping An Bank Co. Ltd., A | China | 2,968,096 | 4,896,967 | |
55,706,116 | ||||
Beverages 2.4% | ||||
a Kweichow Moutai Co. Ltd., A | China | 401,919 | 15,434,836 | |
Yantai Changyu Pioneer Wine Co. Ltd., B | China | 387,494 | 1,211,333 | |
16,646,169 | ||||
Capital Markets 1.6% | ||||
a Changjiang Securities Co. Ltd., A | China | 4,927,400 | 7,854,500 | |
a CITIC Securities Co. Ltd., A | China | 238,928 | 659,840 | |
a,b Huatai Securities Co. Ltd., A | China | 899,600 | 2,389,541 | |
10,903,881 | ||||
Chemicals 0.3% | ||||
Green Seal Holding Ltd. | China | 568,100 | 2,222,448 | |
Communications Equipment 0.5% | ||||
a Guangzhou Haige Communication Group Inc. Co., A | China | 1,558,700 | 3,125,134 | |
Construction & Engineering 0.2% | ||||
a China Railway Construction Corp. Ltd., A | China | 557,300 | 969,593 | |
a China State Construction Engineering Corp. Ltd., A | China | 211,099 | 186,254 | |
a Shenzhen Tagen Group Co. Ltd., A | China | 74,800 | 163,426 | |
1,319,273 | ||||
Construction Materials 0.3% | ||||
Asia Cement China Holdings Corp. | China | 9,652,629 | 1,941,140 | |
Containers & Packaging 0.0%† | ||||
a ORG Packaging Co. Ltd., A | China | 51,800 | 195,987 | |
a Shantou Dongfeng Printing Co. Ltd., A | China | 9,600 | 17,640 | |
213,627 | ||||
Distributors 1.1% | ||||
Dah Chong Hong Holdings Ltd. | China | 18,567,520 | 7,563,583 | |
Diversified Telecommunication Services 0.3% | ||||
China Telecom Corp. Ltd., H | China | 2,948,000 | 1,558,109 | |
China Unicom (Hong Kong) Ltd. | China | 170,752 | 225,399 | |
a Dr. Peng Telecom & Media Group Co. Ltd., A | China | 62,400 | 205,517 | |
1,989,025 | ||||
Electric Utilities 3.1% | ||||
Cheung Kong Infrastructure Holdings Ltd. | Hong Kong | 2,177,000 | 21,300,354 | |
Quarterly Statement of Investments | See Notes to Statement of Investments. |
Templeton Dragon Fund, Inc.
Consolidated Statement of Investments, March 31, 2016 (unaudited) (continued)
Electrical Equipment 1.5% | |||
a Jiangsu Linyang Energy Co. Ltd., A | China | 779,452 | 4,270,125 |
a Luxshare Precision Industry Co. Ltd., A | China | 1,263,423 | 5,730,365 |
10,000,490 | |||
Electronic Equipment, Instruments & Components 0.9% | |||
a China Aviation Optical-Electrical Technology Co. Ltd., A | China | 1,117,167 | 6,193,010 |
a Shenzhen Everwin Precision Technology Co. Ltd., A | China | 1,400 | 6,328 |
6,199,338 | |||
Food & Staples Retailing 6.9% | |||
c Beijing Jingkelong Co. Ltd., H | China | 11,416,429 | 2,384,141 |
Dairy Farm International Holdings Ltd. | Hong Kong | 7,408,878 | 44,749,623 |
47,133,764 | |||
Food Products 2.9% | |||
Uni-President China Holdings Ltd. | China | 21,735,000 | 17,315,488 |
Uni-President Enterprises Corp. | Taiwan | 1,386,831 | 2,432,810 |
19,748,298 | |||
Gas Utilities 0.7% | |||
ENN Energy Holdings Ltd. | China | 904,700 | 4,991,545 |
Hotels, Restaurants & Leisure 1.5% | |||
a China International Travel Service Corp. Ltd., A | China | 253,250 | 1,792,660 |
a Shenzhen Overseas Chinese Town Holdings Co., A | China | 2,160,934 | 2,348,914 |
a Songcheng Performance Development Co. Ltd., A | China | 1,292,813 | 5,865,670 |
10,007,244 | |||
Household Durables 0.8% | |||
a,d Gree Electric Appliances Inc., A | China | 473,776 | 1,477,757 |
a Hang Zhou Great Star Industrial Co. Ltd., A | China | 387,287 | 1,015,510 |
a Qingdao Haier Co. Ltd., A | China | 2,463,316 | 3,239,094 |
5,732,361 | |||
Independent Power & Renewable Electricity Producers 0.1% | |||
Huaneng Renewables Corp. Ltd., H | China | 1,100,000 | 340,322 |
a Sichuan Chuantou Energy Co. Ltd., A | China | 102,400 | 135,761 |
476,083 | |||
Industrial Conglomerates 1.7% | |||
CK Hutchison Holdings Ltd. | Hong Kong | 366,000 | 4,741,697 |
Hopewell Holdings Ltd. | Hong Kong | 2,196,000 | 7,091,313 |
11,833,010 | |||
Insurance 3.1% | |||
AIA Group Ltd. | Hong Kong | 2,437,180 | 13,808,074 |
a Ping An Insurance (Group) Co. of China Ltd., A | China | 1,489,650 | 7,350,079 |
21,158,153 | |||
Internet & Catalog Retail 0.2% | |||
b JD.com Inc., ADR | China | 62,655 | 1,660,357 |
Internet Software & Services 8.3% | |||
b Alibaba Group Holding Ltd., ADR | China | 103,410 | 8,172,492 |
b Baidu Inc., ADR | China | 45,000 | 8,589,600 |
Tencent Holdings Ltd. | China | 1,918,600 | 39,201,287 |
a Wangsu Science & Technology Co. Ltd., A | China | 104,100 | 942,856 |
56,906,235 | |||
IT Services 2.0% | |||
a,b,d DHC Software Co. Ltd., A | China | 217,200 | 674,948 |
TravelSky Technology Ltd., H | China | 8,100,559 | 13,303,657 |
13,978,605 | |||
Leisure Products 0.2% | |||
a Alpha Group, A | China | 40,000 | 252,504 |
Templeton Dragon Fund, Inc.
Consolidated Statement of Investments, March 31, 2016 (unaudited) (continued)
Merida Industry Co. Ltd. | Taiwan | 303,000 | 1,340,583 |
1,593,087 | |||
Machinery 2.0% | |||
a Han's Laser Technology Co. Ltd., A | China | 272,000 | 938,440 |
a,b Shenwu Environmental Technology Co. Ltd., A | China | 65,400 | 468,114 |
a Zhengzhou Yutong Bus Co. Ltd., A | China | 4,044,873 | 12,161,589 |
13,568,143 | |||
Marine 1.1% | |||
China Shipping Development Co. Ltd., H | China | 9,492,000 | 6,252,666 |
Sinotrans Shipping Ltd. | China | 6,686,000 | 1,120,460 |
7,373,126 | |||
Media 1.8% | |||
a Beijing Enlight Media Co. Ltd., A | China | 1,011,700 | 3,616,016 |
a China South Publishing & Media Group Co. Ltd., A | China | 2,314,227 | 6,807,394 |
Poly Culture Group Corp. Ltd., H | China | 865,300 | 2,032,365 |
12,455,775 | |||
Multiline Retail 0.1% | |||
a Wuhan Department Store Group Co. Ltd., A | China | 324,300 | 870,466 |
Oil, Gas & Consumable Fuels 8.7% | |||
China Petroleum and Chemical Corp., H | China | 62,467,000 | 41,068,368 |
CNOOC Ltd. | China | 6,517,400 | 7,704,249 |
PetroChina Co. Ltd., H | China | 16,985,500 | 11,298,340 |
60,070,957 | |||
Paper & Forest Products 2.8% | |||
Nine Dragons Paper Holdings Ltd. | China | 25,633,901 | 19,298,083 |
Pharmaceuticals 3.3% | |||
a Jiangsu Hengrui Medicine Co. Ltd., A | China | 2,112,238 | 15,495,423 |
a Jiangzhong Pharmaceutical Co. Ltd., A | China | 922,365 | 3,864,522 |
Tong Ren Tang Technologies Co. Ltd., H | China | 1,904,300 | 3,058,722 |
22,418,667 | |||
Real Estate Management & Development 0.4% | |||
Cheung Kong Property Holdings Ltd. | Hong Kong | 427,000 | 2,746,724 |
Semiconductors & Semiconductor Equipment 9.2% | |||
Taiwan Semiconductor Manufacturing Co. Ltd. | Taiwan | 12,520,136 | 62,973,858 |
Software 0.7% | |||
a,d Aisino Corp., A | China | 515,505 | 4,163,930 |
a Beijing Thunisoft Corp. Ltd., A | China | 283,619 | 936,748 |
5,100,678 | |||
Specialty Retail 0.1% | |||
Luk Fook Holdings (International) Ltd. | Hong Kong | 176,800 | 401,582 |
Textiles, Apparel & Luxury Goods 2.6% | |||
Anta Sports Products Ltd. | China | 8,215,600 | 18,173,693 |
Transportation Infrastructure 3.6% | |||
COSCO Pacific Ltd. | China | 8,408,274 | 11,055,888 |
a Shanghai International Airport Co. Ltd., A | China | 2,955,700 | 13,799,989 |
24,855,877 | |||
Wireless Telecommunication Services 3.1% | |||
China Mobile Ltd. | China | 1,930,000 | 21,496,001 |
Total Common Stocks (Cost $399,534,403) | 660,649,582 | ||
Short Term Investments (Cost $3,817,779) 0.5% | |||
Money Market Funds 0.5% | |||
b,e Institutional Fiduciary Trust Money Market Portfolio | United States | 3,817,779 | 3,817,779 |
Templeton Dragon Fund, Inc. | ||
Consolidated Statement of Investments, March 31, 2016 (unaudited) (continued) | ||
Total Investments (Cost $403,352,182) 96.6% | 664,467,361 | |
Other Assets, less Liabilities 3.4% | 23,250,513 | |
Net Assets 100.0% | $ | 687,717,874 |
† Rounds to less than 0.1% of net assets. | |
a The security is owned by Templeton China Opportunities Fund, Ltd., a wholly-owned subsidiary of the Fund. See Note 7. | |
b Non-income producing. | |
c See Note 5 regarding holdings of 5% voting securities. | |
d Security has been deemed illiquid because it may not be able to be sold within seven days. At March 31, 2016, the aggregate value of these securities was $6,316,635 | |
representing 0.92% of net assets. | |
e See Note 6 regarding investments in affiliated management investment companies. | |
ABBREVIATIONS | |
Selected Portfolio | |
ADR | - American Depositary Receipt |
Templeton Dragon Fund, Inc.
Notes to Consolidated Statement of Investments (unaudited)
1. ORGANIZATION
Templeton Dragon Fund, Inc. (Fund) is registered under the Investment Company Act of 1940 (1940 Act) as a closed-end management investment company and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles.
2. FINANCIAL INSTRUMENT VALUATION
The Fund's investments in financial instruments are 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. The Fund calculates the net asset value (NAV) per share as of 4 p.m. Eastern time each day the New York Stock Exchange (NYSE) is open for trading. Under compliance policies and procedures approved by the Funds Board of Directors (the Board), the Funds administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund's valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.
Equity securities listed on an 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 as of 4 p.m. Eastern time, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at 4 p.m. Eastern time on the day that the value of the security is determined. Over-the-counter (OTC) securities 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 NAV.
The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair 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 an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.
Trading in securities on foreign securities stock exchanges and OTC markets may be completed before 4 p.m. Eastern time. In addition, trading in certain foreign markets may not take place on every NYSE business day. 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 reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Funds 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 differences, the VLOC 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 Depositary 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.
When the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Funds portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.
3. INCOME TAXES
At March 31, 2016, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Cost of investments | $ | 414,405,411 | |
Unrealized appreciation | $ | 333,086,489 | |
Unrealized depreciation | (83,024,539 | ) | |
Net unrealized appreciation (depreciation) | $ | 250,061,950 | |
4. CONCENTRATION OF RISK |
Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.
Investing in China A-shares may include certain risks and considerations not typically associated with investing in U.S. securities. In general, A-shares are issued by companies incorporated in the Peoples Republic of China (PRC) and listed on the Shanghai and Shenzhen Stock Exchanges and available for investment by domestic (Chinese) investors and holders of a Qualified Foreign Institutional Investors (QFII) license. The Shanghai and Shenzhen Stock Exchanges are, however, substantially smaller, less liquid and more volatile than the major securities markets in the United States.
5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The 1940 Act defines "affiliated companies" to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. Investments in "affiliated companies" for the Fund for the three months ended March 31, 2016, were as shown below.
Number of | ||||||||
Shares | Number of Shares | Value at | ||||||
Held at Beginning Gross | Gross | Held at End of | End of Investment Realized | |||||
Name of Issuer | of Period Additions Reductions | Period | Period | Income Gain (Loss) | ||||
Non-Controlled Affiliates | ||||||||
Beijing Jingkelong Co. Ltd., H (Value is 0.35% | ||||||||
of Net Assets) | 11,416,429 | - | - | 11,416,429 | $ | 2,384,141 | $ - $ | - |
6. INVESTMENTS IN AFFILIATED MANAGEMENT INVESTMENT COMPANIES |
The Fund invests in an affiliated management investment company for purposes other than exercising a controlling influence over the management or policies. Management fees paid by the Fund are waived on assets invested in the affiliated management investment company, in an amount not to exceed the management and administrative fees paid directly or indirectly by each affiliate. Prior to January 1, 2014 the waiver was accounted for as a reduction to management fees.
% of Affiliated Fund | ||||||||||
Shares | Shares | Value at | Shares Outstanding | |||||||
Held at Beginning Gross | Gross | Held at End of | End of Investment Realized | Held at End of | ||||||
of Period Additions | Reductions | Period | Period | Income Gain (Loss) | Period | |||||
Non-Controlled Affiliates | ||||||||||
Institutional Fiduciary Trust Money Market Portfoli | 2,133,867 9,472,156 | (7,788,244 | ) | 3,817,779 | $ | 3,817,779 | $ - $ | - | 0.02 | % |
7. INVESTMENTS IN TEMPLETON CHINA OPPORTUNITIES FUND, LTD |
The Fund invests in certain China A shares through its investment in the China Fund. The China Fund is a Cayman Islands exempt company, is a wholly-owned subsidiary of the Fund, and is able to invest directly in China A shares consistent with the investment objective of the Fund. At March 31, 2016, the China Fund’s investments are reflected in the Fund’s Consolidated Statement of Investments. At March 31, 2016, the net assets of the China Fund were $184,945,931, representing 26.89% of the Fund’s consolidated net assets.
The China Fund invests in certain A-shares available to local Chinese investors and QFII. QFIIs are granted a maximum investment quota by China’s State Administration of Foreign Exchange (SAFE) for investing in the Chinese securities market (QFII Quota). The China Fund gains access to the A-shares market through Templeton Investment Counsel, LLC (TIC), which serves as the registered QFII for the China Fund and one other participating Franklin Templeton Investments sponsored investment company. Investment decisions related to A-shares are specific to each participating fund, and each fund bears the resultant economic and tax consequences of its holdings and transactions in A-shares. The China Fund is subject to certain restrictions and administrative processes relating to its ability to repatriate cash balances, investment proceeds, and earnings associated with its A-shares and may incur substantial delays in gaining access to its assets or a loss of value in the event of noncompliance with applicable Chinese rules or requirements.
8. 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 financial instruments and are summarized in the following fair value hierarchy:
The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.
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.
A summary of inputs used as of March 31, 2016, in valuing the Fund’s assets carried at fair value, is as follows:
Level 1 | Level 2 | Level 3 | Total | |||||
Assets: | ||||||||
Investments in Securities: | ||||||||
Equity Investments:a | ||||||||
Household Durables | $ | 4,254,604 | $ | - | $ | 1,477,757 | $ | 5,732,361 |
IT Services | 13,303,657 | - | 674,948 | 13,978,605 | ||||
Softw are | 936,748 | - | 4,163,930 | 5,100,678 | ||||
All Other Equity Investmentsb | 635,837,938 | - | - | 635,837,938 | ||||
Short Term Investments | 3,817,779 | - | - | 3,817,779 | ||||
Total Investments in Securities | $ | 658,150,726 | $ | - | $ | 6,316,635 | $ | 664,467,361 |
aIncludes common stocks.
bFor detailed categories, see the accompanying Consolidated Statement of Investments.
A reconciliation of assets in which Level 3 inputs are used in determining fair value is presented when there are significant Level 3 financial instruments at the end of the period. The reconciliation of assets for the three months ended March 31, 2016, is as follows:
Unrealized | ||||||||||||||||||||
Appreciation | ||||||||||||||||||||
Balance at | Net Unrealized | (Depreciation) on | ||||||||||||||||||
Beginning of | Purchases | Transfers | Transfers Out | Cost Basis | Net Realized | Appreciation | Balance at | Assets Held at Period | ||||||||||||
Period | (Sales) | Into Level 3a | of Level 3b | Adjustments | Gain (Loss) | (Depreciation) End of Period | End | |||||||||||||
Assets | ||||||||||||||||||||
Investments in Securities: | ||||||||||||||||||||
Equity Investments: | ||||||||||||||||||||
Household Durables | $ | 5,218,096 | $ - | $ | 1,262,555 | $ | (4,164,879 | ) | $ | - | $ | - | $ | (838,015 | ) | $ | 1,477,757 | $ | 215,202 | |
IT Services | - | - | 731,137 | - | - | - | (56,189 | ) | 674,948 | (56,189 | ) | |||||||||
Softw are | 4,953,007 | - | - | - | - | - | (789,077 | ) | 4,163,930 | (789,077 | ) | |||||||||
Total Investments in Securities | $ | 10,171,103 | $ - | $ | 1,993,692 | $ | (4,164,879 | ) | $ | - | $ | - | $ | (1,683,281 | ) | $ | 6,316,635 | $ | (630,064 | ) |
aThe investments w ere transferred into Level 3 as a result of the unavailability of a quoted market price in an active market for identical securities and other significantobservable valuation inputs.
bThe investment w as transferred out of Level 3 as a result of the availability of a quoted price in an active market for identical securities and other significant observable valuation inputs.
Significant unobservable valuation inputs developed by the VLOC for material Level 3 financial instruments and impact to fair value as a result of changes in unobservable valuation inputs as of March 31, 2016, are as follows:
Impact to Fair | |||||||
Fair Value at | Amount/ | Value if Input | |||||
Description | End of Period | Valuation Technique | Unobservable Inputs | Range | Increasesa | ||
Assets: | |||||||
Investments in Securities | |||||||
Equity Investments: | |||||||
Household Durables | $ | 1,477,757 | Market Approach | Last Traded Price | 19.22 | Increase | |
Market Index Adjustment | 3.36 | % | Increase | ||||
Beta Adjustment | 1.39 | Increase/Decrease b | |||||
IT Services | 674,948 | Market Approach | Last Traded Price | 25.11 | Increase | ||
Market Index Adjustment | -19.21 | % | Increase | ||||
Beta Adjustment | 1.05 | Increase/Decrease b | |||||
Softw are | 4,163,930 | Market Approach | Last Traded Price | 55.91 | Increase | ||
Market Index Adjustment | -5.83 | % | Increase | ||||
Beta Adjustment | 1.17 | Increase/Decrease b | |||||
Total | $ | 6,316,635 |
a Represents the directional change in the fair value of the Level 3 investments that w ould result from a significant and reasonable increase
in the corresponding input. A significant and reasonable decrease in the input w ould have the opposite effect. Significant impacts, if any, to
fair value and/or net assets have been indicated.
b Generally, there are direct relationships betw een the Beta Adjustment and the Market Index Adjustment.
9. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through the issuance of the Consolidated Statement of Investments and determined that no events have occurred that require disclosure.
For additional information on the Fund's 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 changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting 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.
By /s/LAURA F. FERGERSON
Laura F. Fergerson
Chief Executive Officer –
Finance and Administration
Date May 26, 2016
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
Laura F. Fergerson
Chief Executive Officer –
Finance and Administration
Date May 26, 2016
By /s/MARK H. OTANI
Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date May 26, 2016