N-Q 1 tch-nq_506.txt TEMP CHINA WORLD FUND QUARTERLY INVESTMENTS 5/31/06 FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07876 --------- TEMPLETON CHINA WORLD FUND -------------------------------------------------- (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: 08/31 ----- Date of reporting period: 5/31/06 -------- ITEM 1. SCHEDULE OF INVESTMENTS. Templeton China World Fund QUARTERLY STATEMENT OF INVESTMENTS MAY 31, 2006 -------------------------------------------------------------------------------- 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 This page intentionally left blank. Templeton China World Fund STATEMENT OF INVESTMENTS, MAY 31, 2006 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ COUNTRY SHARES VALUE ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS 91.4% AIR FREIGHT & LOGISTICS 0.1% Sinotrans Ltd., H .............................................. China 1,238,000 $ 394,943 ------------- AIRLINES 0.4% Air China Ltd., H .............................................. China 6,088,000 2,413,008 a Air China Ltd., H, 144A ........................................ China 500,000 198,177 ------------- 2,611,185 ------------- AUTO COMPONENTS 1.3% Cheng Shin Rubber Industry Co. Ltd. ............................ Taiwan 6,876,540 5,838,673 Weifu High-Technology Co. Ltd., B .............................. China 1,212,987 1,020,959 Xinyi Glass Holding Co. Ltd. ................................... China 2,120,000 785,621 ------------- 7,645,253 ------------- AUTOMOBILES 1.2% Brilliance China Automotive Holdings Ltd. ...................... China 3,642,000 582,104 China Motor Corp. .............................................. Taiwan 4,381,000 4,615,538 Chongqing Changan Automobile Co. Ltd., B ....................... China 4,046,380 2,268,793 ------------- 7,466,435 ------------- CAPITAL MARKETS 0.4% Yuanta Core Pacific Securities Co. ............................. Taiwan 3,784,156 2,646,015 ------------- COMMERCIAL BANKS 12.6% a,b Bank of China Ltd., H, 144A .................................... China 41,306,000 15,706,311 China Construction Bank, H ..................................... China 1,003,000 436,329 a China Construction Bank, H, 144A ............................... China 35,740,000 15,547,743 Chinatrust Financial Holding Co. Ltd. .......................... Taiwan 8,501,002 6,846,445 DBS Group Holdings Ltd. ........................................ Singapore 308,000 3,374,113 HSBC Holdings PLC .............................................. United Kingdom 1,251,368 21,920,150 Mega Financial Holding Co. Ltd. ................................ Taiwan 16,791,000 12,002,931 ------------- 75,834,022 ------------- COMMUNICATIONS EQUIPMENT 0.7% D-Link Corp. ................................................... Taiwan 3,558,521 4,309,993 ------------- COMPUTERS & PERIPHERALS 3.3% Acer Inc. ...................................................... Taiwan 4,154,960 6,796,314 Asustek Computer Inc. .......................................... Taiwan 1,212,268 2,864,638 Lite-On It Corp. ............................................... Taiwan 3,231,000 4,357,084 Lite-On Technology Corp. ....................................... Taiwan 3,769,586 5,895,310 ------------- 19,913,346 ------------- CONSTRUCTION MATERIALS 0.2% Anhui Conch Cement Co. Ltd., H ................................. China 720,000 1,336,393 ------------- DISTRIBUTORS 2.0% China Resources Enterprise Ltd. ................................ China 5,548,000 10,690,959 Test-Rite International Co. Ltd. ............................... Taiwan 2,225,980 1,657,238 ------------- 12,348,197 ------------- DIVERSIFIED TELECOMMUNICATION SERVICES 2.9% China Telecom Corp. Ltd., H .................................... China 53,807,833 17,512,410 ------------- ELECTRIC UTILITIES 2.6% Cheung Kong Infrastructure Holdings Ltd. ....................... Hong Kong 5,384,548 15,928,357 -------------
Quarterly Statement of Investments | 3 Templeton China World Fund STATEMENT OF INVESTMENTS, MAY 31, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ COUNTRY SHARES VALUE ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) ELECTRICAL EQUIPMENT 0.6% BYD Co. Ltd., H ............................................................. China 1,429,342 $ 2,763,544 Phoenixtec Power Co. Ltd. ................................................... Taiwan 727,055 739,878 ------------- 3,503,422 ------------- ELECTRONIC EQUIPMENT & INSTRUMENTS 2.9% Delta Electronics Inc. ...................................................... Taiwan 3,167,163 8,848,481 Synnex Technology International Corp. ....................................... Taiwan 6,978,800 7,864,357 b Yageo Corp. ................................................................. Taiwan 2,810,000 1,087,685 ------------- 17,800,523 ------------- FOOD & STAPLES RETAILING 7.0% Dairy Farm International Holdings Ltd. ...................................... Hong Kong 10,219,776 36,178,007 President Chain Store Corp. ................................................. Taiwan 2,844,088 5,930,547 ------------- 42,108,554 ------------- FOOD PRODUCTS 1.8% COFCO International Ltd. .................................................... China 4,114,000 2,386,249 People's Food Holdings Ltd. ................................................. China 1,162,000 824,114 Uni-President Enterprises Corp. ............................................. Taiwan 10,775,950 7,904,942 ------------- 11,115,305 ------------- HOTELS, RESTAURANTS & LEISURE 0.8% The Hongkong and Shanghai Hotels Ltd. ....................................... Hong Kong 4,248,978 4,956,466 ------------- HOUSEHOLD DURABLES 0.1% b TCL Multimedia Technology Holdings Ltd. ..................................... China 5,052,000 599,087 ------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 3.4% Datang International Power Generation Co. Ltd., H ........................... China 11,586,320 7,616,488 Guangdong Electric Power Development Co. Ltd., B ............................ China 11,958,943 6,150,419 Huadian Power International Corp. Ltd., H ................................... China 16,098,000 4,253,680 Huaneng Power International Inc., H ......................................... China 3,692,776 2,379,918 ------------- 20,400,505 ------------- INDUSTRIAL CONGLOMERATES 2.5% Citic Pacific Ltd. .......................................................... China 1,589,092 4,741,754 LG Corp. .................................................................... South Korea 121,110 3,937,964 Shanghai Industrial Holdings Ltd. ........................................... China 3,358,253 6,666,121 ------------- 15,345,839 ------------- INSURANCE 0.9% China Life Insurance Co. Ltd., H ............................................ China 3,681,000 5,503,802 ------------- IT SERVICES 0.1% Travelsky Technology Ltd., H ................................................ China 435,000 532,662 ------------- LEISURE EQUIPMENT & PRODUCTS 0.6% Premier Image Technology Corp. .............................................. Taiwan 2,261,090 3,317,348 ------------- MACHINERY 1.6% b China International Marine Containers (Group) Co. Ltd., B ................... China 5,591,330 8,006,970 Yungtay Engineering Co. Ltd. ................................................ Taiwan 2,524,000 1,457,594 ------------- 9,464,564 -------------
4 | Quarterly Statement of Investments Templeton China World Fund STATEMENT OF INVESTMENTS, MAY 31, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ COUNTRY SHARES VALUE ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS (CONTINUED) MEDIA 0.0% c Next Media Ltd. ..................................................... Hong Kong 80,000 $ 41,247 ------------- METALS & MINING 0.3% Aluminum Corp. of China Ltd., H ..................................... China 372,000 299,683 d Aluminum Corp. of China Ltd., Reg S ................................. China 1,760,000 1,417,855 ------------- 1,717,538 ------------- OFFICE ELECTRONICS 0.2% Kinpo Electronics Inc. .............................................. Taiwan 3,042,648 1,220,478 ------------- OIL, GAS & CONSUMABLE FUELS 19.7% China Petroleum and Chemical Corp., H ............................... China 48,455,395 28,730,223 China Shenhua Energy Co. Ltd., H .................................... China 8,145,000 13,963,097 CNOOC Ltd. .......................................................... China 29,002,000 22,242,518 a CNOOC Ltd., 144A .................................................... China 978,000 750,058 PetroChina Co. Ltd., H .............................................. China 44,791,903 48,208,655 a PetroChina Co. Ltd., H, 144A ........................................ China 4,460,000 4,800,212 ------------- 118,694,763 ------------- PAPER & FOREST PRODUCTS 0.6% b Shandong Chenming Paper Holdings Ltd., B ............................ China 6,705,000 3,750,831 ------------- PHARMACEUTICALS 0.2% Tong Ren Tang Technologies Co. Ltd., H .............................. China 435,000 897,115 ------------- REAL ESTATE 3.4% Cheung Kong (Holdings) Ltd. ......................................... Hong Kong 1,360,690 14,750,075 Henderson Investment Ltd. ........................................... Hong Kong 2,641,756 4,443,674 Hongkong Land Holdings Ltd. ......................................... Hong Kong 434,000 1,614,480 ------------- 20,808,229 ------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 4.6% Faraday Technology Corp. ............................................ Taiwan 309,560 573,993 Realtek Semiconductor Corp. ......................................... Taiwan 3,031,000 3,453,457 Samsung Electronics Co. Ltd. ........................................ South Korea 5,510 3,565,740 Sunplus Technology Co. Ltd. ......................................... Taiwan 3,361,247 4,029,089 Taiwan Semiconductor Manufacturing Co. Ltd. ......................... Taiwan 8,555,189 16,103,571 ------------- 27,725,850 ------------- TEXTILES, APPAREL & LUXURY GOODS 0.1% Tack Fat Group International Ltd. ................................... Hong Kong 6,352,000 818,747 ------------- TRANSPORTATION INFRASTRUCTURE 3.7% China Merchants Holdings International Co. Ltd. ..................... China 719,451 2,137,525 Cosco Pacific Ltd. .................................................. China 1,641,449 3,385,216 Hainan Meilan International Airport Co. Ltd., H ..................... China 3,717,000 1,952,357 Hopewell Holdings Ltd. .............................................. Hong Kong 5,384,000 14,642,881 ------------- 22,117,979 ------------- WIRELESS TELECOMMUNICATION SERVICES 8.6% China Mobile (Hong Kong) Ltd. ....................................... China 9,450,770 49,274,786 Taiwan Mobile Co. Ltd. .............................................. Taiwan 2,496,930 2,494,202 ------------- 51,768,988 ------------- TOTAL COMMON STOCKS (COST $408,075,685) ............................. 552,156,391 -------------
Quarterly Statement of Investments | 5 Templeton China World Fund STATEMENT OF INVESTMENTS, MAY 31, 2006 (UNAUDITED) (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ COUNTRY PRINCIPAL AMOUNT VALUE ------------------------------------------------------------------------------------------------------------------------------------ SHORT TERM INVESTMENTS (COST $60,100,219) 10.0% U.S. GOVERNMENT SECURITIES 10.0% e U.S. Treasury Bills, 6/08/06 - 10/05/06 ............................ United States $ 60,609,000 $ 60,103,551 ------------- TOTAL INVESTMENTS (COST $468,175,904) 101.4% ....................... 612,259,942 OTHER ASSETS, LESS LIABILITIES (1.4)% .............................. (8,405,842) ------------- NET ASSETS 100.0% .................................................. $ 603,854,100 =============
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 May 31, 2006, the aggregate value of these securities was $37,002,501, representing 6.13% of net assets. b Non-income producing. c Rounds to less than 0.1% of net assets. d Security was purchased pursuant to Regulation S under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. These securities have been deemed liquid under guidelines approved by the Fund's Board of Trustees. At May 31, 2006, the value of this security was $1,417,855, representing 0.23% of net assets. e The security is traded on a discount basis with no stated coupon rate. 6 | See Notes to Statement of Investments. | Quarterly Statement of Investments Templeton China World Fund NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) Templeton China World Fund (the Fund) is registered under the Investment Company Act of 1940 as a non-diversified, open-end investment company. 1. INCOME TAXES At May 31, 2006, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Cost of investments ....................................... $469,251,643 ============ Unrealized appreciation ................................... $151,992,523 Unrealized depreciation ................................... (8,984,224) ------------ Net unrealized appreciation (depreciation) ................ $143,008,299 ============ 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. Quarterly Statement of Investments | 7 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) Certifications pursuant to Section 30a-2 of 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 CHINA WORLD FUND By /s/JIMMY D. GAMBILL ----------------------- Jimmy D. Gambill Chief Executive Officer - Finance and Administration Date July 27, 2006 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 July 27, 2006 By /s/GALEN G. VETTER ------------------------------ Galen G. Vetter Chief Financial Officer Date July 27, 2006