EX-99.77B ACCT LTTR

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Templeton  Dragon Fund, Inc.

 In planning and performing our audit of the financial statements of Templeton
 Dragon Fund, Inc. (the "Fund") as of and for the year ended December 31, 2006,
 in accordance with the standards of the Public Company Accounting Oversight
 Board (United States), we considered the Fund's internal control over financial
 reporting, including control activities for safeguarding securities, as a basis
 for designing our auditing procedures for the purpose of expressing our opinion
 on the financial statements and to comply with the requirements of Form N-SAR,
 but not for the purpose of expressing an opinion on the effectiveness of the
 Fund's internal control over financial reporting. Accordingly, we express no
 such opinion.

 The management of the Fund is responsible for establishing and maintaining
 effective internal control over financial reporting. In fulfilling this
 responsibility, estimates and judgments by management are required to assess
 the expected benefits and related costs of controls. A fund's internal control
 over financial reporting is a process designed 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. Such internal control over financial reporting
 includes policies and procedures that provide reasonable assurance regarding
 prevention or timely detection of unauthorized acquisition, use or disposition
 of a fund's assets that could have a material effect on the financial
 statements.

 Because of its inherent limitations, internal control over financial reporting
 may not prevent or detect misstatements. Also, projections of any evaluation of
 effectiveness to future periods are subject to the risk that controls may
 become inadequate because of changes in conditions, or that the degree of
 compliance with the policies or procedures may deteriorate.

 A control deficiency exists when the design or operation of a control does not
 allow management or employees, in the normal course of performing their
 assigned functions, to prevent or detect misstatements on a timely basis. A
 significant deficiency is a control deficiency, or combination of control
 deficiencies, that adversely affects the fund's ability to initiate, authorize,
 record, process or report external financial data reliably in accordance with
 generally accepted accounting principles such that there is more than a remote
 likelihood that a misstatement of the fund's annual or interim financial
 statements that is more than inconsequential will not be prevented or detected.
 A material weakness is a control deficiency, or combination of control
 deficiencies, that results in more than a remote likelihood that a material
 misstatement of the annual or interim financial statements will not be
 prevented or detected.

 Our consideration of the Fund's internal control over financial reporting was
 for the limited purpose described in the first paragraph and would not
 necessarily disclose all deficiencies in internal control over financial
 reporting that might be significant deficiencies or material weaknesses under
 standards established by the Public Company Accounting Oversight Board (United
 States). However, we noted no deficiencies in the Fund's internal control over
 financial reporting and its operation, including controls for safeguarding
 securities, that we consider to be material weaknesses as defined above as of
 December 31, 2006.

 This report is intended solely for the information and use of management and
 the Board of Directors of Templeton Dragon Fund, Inc. and the Securities and
 Exchange Commission and is not intended to be and should not be used by anyone
 other than these specified parties.

/s/PRICEWATERHOUSECOOPERS LLP

San Francisco, CA
February 22, 2007

EX-99.77E LEGAL

NAME OF REGISTRANT:
Templeton Dragon Fund, Inc.
File No. 811-08394

EXHIBIT ITEM No. 77(e): Legal Proceedings

As part of various  investigations  by a number of federal,  state,  and foreign
regulators  and  governmental  entities,  including the  Securities and Exchange
Commission  ("SEC"),  relating to certain practices in the mutual fund industry,
including  late  trading,  market  timing  and  marketing  support  payments  to
securities  dealers  who  sell  fund  shares  ("marketing  support"),   Franklin
Resources, Inc. and certain of its subsidiaries  (collectively,  the "Company"),
entered into settlements  with certain of those  regulators.  Specifically,  the
Company entered into settelements with the SEC, among others,  concerning market
timing and marketing support.

On June 23, 2006,  the SEC approved the proposed  plan of  distribution  for the
marketing support  settlement,  and disbursement of the settlement monies to the
designated funds, in accordance with the terms and conditions of that settlement
and plan, was completed in September 2006. The Fund did not participate in that
Settlement.

The plan of distribution for the  market timing settlement is currently under
review by the SEC staff. After publication of notice of the plan and a 30-day
comment period, the proposed plan of distribution will be submitted to the SEC
for approval. Following the SEC's approval of the plan of distribution, with
modifications as appropriate, distribution of the settlement monies will begin
in accordance with the terms and conditions of the settlement and plan.

In addition,  the Company,  as well as most of the mutual funds within  Franklin
Templeton   Investments  and  certain  current  or  former  officers,   Companiy
directors,  fund directors,  and employees,  have been named in private lawsuits
(styled as  shareholder  class  actions,  or as derivative  actions on behalf of
either the named funds or Franklin Resources,  Inc.). The lawsuits relate to the
industry  practices   referenced  above,  as  well  as  to  allegedly  excessive
commissions and advisory and distribution fees.

The  Company  and fund  management  believe  that the claims made in each of the
private lawsuits referenced above are without merit and intend to defend against
them vigorously.  The Company cannot predict with certainty the eventual outcome
of these lawsuits,  nor whether they will have a material negative impact on the
Company.  If it is  determined  that the Company  bears  responsibility  for any
unlawful  or  inappropriate  conduct  that  caused  losses  to the  Fund,  it is
committed to making the Fund or its shareholders whole, as appropriate.