0000909226-10-000011.txt : 20100728 0000909226-10-000011.hdr.sgml : 20100728 20100728092619 ACCESSION NUMBER: 0000909226-10-000011 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20100531 FILED AS OF DATE: 20100728 DATE AS OF CHANGE: 20100728 EFFECTIVENESS DATE: 20100728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLETON CHINA WORLD FUND CENTRAL INDEX KEY: 0000909226 IRS NUMBER: 593192206 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-07876 FILM NUMBER: 10973079 BUSINESS ADDRESS: STREET 1: BROWARD FINANCIAL CENTRE STREET 2: 500 EAST BROWARD BLVD SUITE 2100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33394 BUSINESS PHONE: 9545277500 MAIL ADDRESS: STREET 1: BROWARD FINANCIAL CENTRE STREET 2: 500 EAST BROWARD BLVD SUITE 2100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33394 FORMER COMPANY: FORMER CONFORMED NAME: TEMPLETON CHINA WORLD FUND INC DATE OF NAME CHANGE: 19930716

0000909226 S000008743 Templeton China World Fund

C000023803 Class A TCWAX

C000023804 Class B TCWBX

C000023805 Class C TCWCX

C000023806 Advisor Class TACWX

N-Q 1 tch_nq-053110.htm TCH QUARTERLY REPORT PE 5/31/10 tch_nq-053110.htm - Generated by SEC Publisher for SEC Filing

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF

REGISTERED MANAGEMENT INVESTMENT COMPANY

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: 8/31

Date of reporting period: 05/31/10_

Item 1. Schedule of Investments.

Templeton China World Fund

Statement of Investments, May 31, 2010 (unaudited)


		Country	Shares		Value

	Common Stocks 98.8%
	Air Freight & Logistics 0.2%
	Sinotrans Ltd., H	China		8,192,000	$	1,830,638


	Auto Components 1.3%
	Cheng Shin Rubber Industry Co. Ltd.	Taiwan		5,389,065		11,270,036


	Automobiles 4.0%
	Chongqing Changan Automobile Co. Ltd., B	China		7,507,924		4,724,755
	Denway Motors Ltd.	China		6,988,000		2,961,625
	Dongfeng Motor Corp., H	China		12,299,478		14,958,910
	Great Wall Motor Co. Ltd., H	China		4,517,538		8,110,960
	Jiangling Motors Corp. Ltd., B	China		2,853,195		5,130,064

						35,886,314


	Beverages 0.3%
	Yantai Changyu Pioneer Wine Co. Ltd., B	China		358,600		3,048,818


	Chemicals 0.3%
^a,b	Yingde Gases Group Co. Ltd., 144A	Hong Kong		2,826,000		2,914,412


	Commercial Banks 11.1%
	Bank of China Ltd., H	China		66,866,000		33,319,645
^a	Bank of China Ltd., H, 144A	China		4,752,000		2,367,944
	BOC Hong Kong (Holdings) Ltd.	China		7,077,000		15,960,151
	China Construction Bank Corp., H	China		30,168,230		24,409,207
^a,b	China Minsheng Banking Corp. Ltd., H, 144A	China		4,780,000		4,806,766
	Industrial and Commercial Bank of China Ltd., H	China		25,705,000		19,048,321

						99,912,034


	Commercial Services & Supplies 0.1%
^b	Fook Woo Group Holdings Ltd.	China		2,400,000		616,459


	Communications Equipment 0.5%
	HTC Corp.	Taiwan		139,000		1,890,122
	ZTE Corp., H	China		821,612		2,732,938

						4,623,060


	Computers & Peripherals 3.6%
^c	Asustek Computer Inc.	Taiwan		1,473,660		13,364,857
	Lite-On IT Corp.	Taiwan		11,868,076		13,300,110
^b,c	Pegatron Corp.	Taiwan		3,966,377		2,602,631
	Simplo Technology Co. Ltd.	Taiwan		610,000		3,441,857

						32,709,455


	Construction Materials 0.5%
	Asia Cement China Holdings Corp.	China		3,837,500		1,754,533
^b	Huaxin Cement Co. Ltd., B	China		1,224,758		2,471,562

						4,226,095


	Distributors 1.1%
	Dah Chong Hong Holdings Ltd.	Hong Kong		14,612,563		9,026,820
	Sichuan Xinhua Winshare Chainstore Co. Ltd.	China		1,992,000		959,365

						9,986,185


	Diversified Telecommunication Services 0.3%
	China Telecom Corp. Ltd., H	China		2,195,833		1,006,771
	China Unicom (Hong Kong) Ltd.	China		1,244,168		1,524,371

						2,531,142


	Electric Utilities 1.9%
	Cheung Kong Infrastructure Holdings Ltd.	Hong Kong		4,818,548		17,389,448

Quarterly Statement of Investments See Notes to Statements of Investments.

Templeton China World Fund

Statement of Investments, May 31, 2010 (unaudited) (continued)


		Country	Shares		Value

	Electrical Equipment 0.3%
	Dongfang Electric Co. Ltd., H	China		904,400	$	3,008,317


	Electronic Equipment, Instruments & Components 1.8%
^b	China Security & Surveillance Technology Inc.	United States		442,100		2,069,028
	Hon Hai Precision Industry Co. Ltd.	Taiwan		379,000		1,475,008
	Synnex Technology International Corp.	Taiwan		5,654,477		12,196,277

						15,740,313


	Energy Equipment & Services 0.0%^d
	Anhui Tianda Oil Pipe Co. Ltd., H	China		1,083,000		400,575


	Food & Staples Retailing 10.4%
	Beijing Jingkelong Co. Ltd., H	China		3,165,571		3,171,100
	China Resources Enterprise Ltd.	Hong Kong		5,108,000		17,646,820
	Dairy Farm International Holdings Ltd.	Hong Kong		10,138,076		64,072,640
	President Chain Store Corp.	Taiwan		2,908,259		8,318,403

						93,208,963


	Food Products 2.8%
	China Foods Ltd.	China		9,352,000		6,425,717
	China Yurun Food Group Ltd.	China		1,254,000		3,390,103
	People’s Food Holdings Ltd.	China		3,602,000		1,556,245
^a	Shenguan Holdings Group Ltd., 144A	China		11,126,000		9,916,578
	Uni-President Enterprises Corp.	Taiwan		1,205,741		1,251,347
	Xiwang Sugar Holdings Co. Ltd.	Hong Kong		12,114,439		2,800,523

						25,340,513


	Hotels, Restaurants & Leisure 0.5%
	NagaCorp Ltd.	Cambodia		17,658,548		2,086,441
	SJM Holdings Ltd.	Hong Kong		2,710,000		1,942,079

						4,028,520


	Independent Power Producers & Energy Traders 1.9%
	Datang International Power Generation Co. Ltd., H	China		28,322,640		11,094,222
	Guangdong Electric Power Development Co. Ltd., B	China		7,002,559		3,687,262
	Huaneng Power International Inc., H	China		4,158,776		2,291,322

						17,072,806


	Industrial Conglomerates 2.1%
	Shanghai Industrial Holdings Ltd.	China		4,532,253		19,033,786


	Insurance 2.7%
	China Life Insurance Co. Ltd., H	China		5,507,000		24,223,614


	Internet Software & Services 0.7%
^b	Sohu.com Inc.	China		140,075		6,191,315


	IT Services 0.3%
	Travelsky Technology Ltd., H	China		3,281,294		2,275,633


	Leisure Equipment & Products 0.2%
	Yorkey Optical International Cayman Ltd.	Hong Kong		7,933,000		1,467,112


	Machinery 1.2%
	China National Materials Co. Ltd., H	China		2,414,000		1,364,122
	Lonking Holdings Ltd.	China		12,136,000		7,450,180
	Shin Zu Shing Co. Ltd.	Taiwan		264,616		905,766
	Zhongde Waste Technology AG	Germany		36,266		607,995

						10,328,063


	Marine 1.5%
	China Shipping Development Co. Ltd., H	China		7,322,000		10,043,018

Templeton China World Fund

Statement of Investments, May 31, 2010 (unaudited) (continued)


		Country	Shares		Value

	Sinotrans Shipping Ltd.	Hong Kong		9,284,500	$	3,744,135

						13,787,153


	Metals & Mining 3.1%
	Angang Steel Co. Ltd., H	China		11,460,000		16,189,767
	China Molybdenum Co. Ltd., H	China		1,106,000		713,054
	China Zhongwang Holdings Ltd.	China		1,988,400		1,496,458
	Jiangxi Copper Co. Ltd., H	China		4,696,000		9,323,970

						27,723,249


	Office Electronics 0.1%
^b	Kinpo Electronics Inc.	Taiwan		2,372,201		641,436


	Oil, Gas & Consumable Fuels 28.2%
	China Coal Energy Co., H	China		7,355,000		10,107,174
	China Petroleum and Chemical Corp., H	China		68,233,395		54,243,902
	China Shenhua Energy Co. Ltd., H	China		8,344,500		33,650,635
	CNOOC Ltd.	China		41,286,000		66,066,932
	PetroChina Co. Ltd., H	China		42,819,903		46,909,197
	Yanzhou Coal Mining Co. Ltd., H	China		17,954,000		41,643,024

						252,620,864


	Pharmaceuticals 0.3%
	Tong Ren Tang Technologies Co. Ltd., H	China		1,509,000		2,918,620


	Real Estate Management & Development 3.6%
	Agile Property Holdings Ltd.	China		3,068,000		3,305,831
	Cheung Kong (Holdings) Ltd.	Hong Kong		532,690		6,071,642
	Hopewell Holdings Ltd.	Hong Kong		5,730,500		15,565,611
	Soho China Ltd.	China		13,105,645		7,001,886

						31,944,970


	Semiconductors & Semiconductor Equipment 4.5%
	MediaTek Inc.	Taiwan		538,062		8,796,700
	Taiwan Semiconductor Manufacturing Co. Ltd.	Taiwan		16,845,330		31,700,183

						40,496,883


	Software 0.3%
^b	Shanda Interactive Entertainment Ltd., ADR	China		55,800		2,288,358


	Specialty Retail 0.8%
^b	GOME Electrical Appliances Holdings Ltd.	Hong Kong		18,580,880		5,727,180
^b	I.T Ltd.	Hong Kong		8,643,264		1,465,261

						7,192,441


	Textiles, Apparel & Luxury Goods 1.1%
	Anta Sports Products Ltd.	China		4,143,855		7,120,721
	Victory City International Holdings Ltd.	Hong Kong		8,586,022		1,554,800
	Weiqiao Textile Co. Ltd., H	China		2,130,500		1,335,256

						10,010,777


	Transportation Infrastructure 1.2%
	Cosco Pacific Ltd.	China		6,254,610		7,711,427
	Sichuan Expressway Co. Ltd., H	China		6,662,000		3,482,269

						11,193,696


	Wireless Telecommunication Services 4.0%
	China Mobile Ltd.	China		3,771,270		35,720,123


	Total Common Stocks (Cost $584,189,275)					885,802,196

	Short Term Investments (Cost $710,956) 0.1%
	Money Market Funds 0.1%
^e	Institutional Fiduciary Trust Money Market Portfolio, 0.00%	United States		710,956		710,956

Templeton China World Fund

Statement of Investments, May 31, 2010 (unaudited) (continued)


	Country	Shares	Value

Total Investments (Cost $584,900,231) 98.9%				886,513,152
Other Assets, less Liabilities 1.1%				9,987,359

Net Assets 100.0%			$	896,500,511


^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, 2010, the aggregate value of these securities was $20,005,700, representing 2.23% of net assets.

^b		Non-income producing.

^c		Security has been deemed illiquid because it may not be able to be sold within seven days. At May 31, 2010, the aggregate value of these securities was $15,967,488, representing 1.78% of net assets.

^d		Rounds to less than 0.1% of net assets.

^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.

Selected Portfolio

ADR American Depository Receipt

Templeton China World Fund

Notes to Statement of Investments (unaudited)

1. ORGANIZATION

Templeton China World Fund (Fund) is registered under the Investment Company Act of 1940, as amended, as an open-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 Trustees, 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.

Additionally, for certain equity securities, the Fund’s pricing services use multiple valuation techniques to determine fair value. In instances where sufficient market activity exists, the pricing services utilize a market-based approach through which quotes from market makers are used to determine fair value. In other instances, the pricing services utilize proprietary valuation models to develop an income-based valuation which may consider characteristics such as credit risk, yield spreads, benchmark quotes and other unique security features in order to estimate the relevant cash flows which are then used to calculate the fair value.

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 May 31, 2010, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:



Cost of investments	$	588,641,925


Unrealized appreciation	$	336,745,327
Unrealized depreciation		(38,874,100	)

Net unrealized appreciation (depreciation)	$	297,871,227

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.

The following is a summary of the inputs used as of May 31, 2010, in valuing the Fund’s assets carried at fair value:


	Level 1		Level 2		Level 3		Total

Assets:
Investments in Securities:
Equity Investments:^a
Computers & Peripherals	$	16,741,967	$	—	$	15,967,488	$	32,709,455
All other Equity Investments^b		853,092,741		—		—		853,092,741
Short Term Investments		710,956		—		—		710,956

Total Investments in Securities	$	870,545,664	$	—	$	15,967,488	$	886,513,152


^a		Includes common stock.

^b		For detailed industry descriptions, see the accompanying Statement of Investments.

At May 31, 2010, 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 in

(Depreciation)

Balance at

Realized

Unrealized

Net

Transfer In

Balance at

on Assets

Beginning

Gain

Appreciation

Purchases

(Out of)

End of

Held at Period

of Year

(Loss)

(Depreciation)

(Sales)

Level 3

Period

End

Assets:

Investments in Securities:

Computers & Peripherals

—

1,052,561

—

14,914,927

15,967,488

1,052,561

5. NEW ACCOUNTING PRONOUNCEMENTS

In January 2010, the Financial Accounting Standards Board issued an (ASU) which enhances and clarifies existing fair value measurement disclosure requirements and is effective for interim and annual periods beginning after December 15, 2009. The Fund believes the adoption of this ASU will not have a material impact on its financial statements.

SUBSEQUENT EVENTS

The Fund has evaluated subsequent events through the issuance of statement of investments 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 principa l 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 China World Fund

By /s/Laura F. Fergerson

Laura F. Fergerson

Chief Executive Officer –

Finance and Administration

Date July 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

Laura F. Fergerson

Chief Executive Officer –

Finance and Administration

Date July 27, 2010

By /s/MARK H. OTANI

Mark H. Otani

Chief Financial Officer and

Chief Accounting Officer

Date July 27, 2010

EX-99.CERT 2 tch302cert_053110.htm SECTION 302 CERTIFICATIONS tch302cert_053110.htm - Generated by SEC Publisher for SEC Filing

0; Exhibit 3(a)

I, Laura F. Fergerson, certify that:

1. I have reviewed this report on Form N-Q of Templeton China World Fund;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

7/27/2010

S\LAURA F. FERGERSON

Laura F. Fergerson

Chief Executive Officer - Finance and Administration

I, Mark H. Otani, certify that:

1. I have reviewed this report on Form N-Q of Templeton China World Fund;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

7/27/2010

S\MARK H. OTANI

Mark H. Otani

Chief Financial Officer and Chief Accounting Officer