-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RfGbdOnEVRXFwu4xxm7K3l3xqiVzLNebTRpg3dPClskUUjUCBb7oD1Q4D76GGVKv fCcEXrVMRzkmoZlVl7yoGQ== 0000919893-08-000030.txt : 20081126 0000919893-08-000030.hdr.sgml : 20081126 20081126144922 ACCESSION NUMBER: 0000919893-08-000030 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20080831 FILED AS OF DATE: 20081126 DATE AS OF CHANGE: 20081126 EFFECTIVENESS DATE: 20081126 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLETON DRAGON FUND INC CENTRAL INDEX KEY: 0000919893 IRS NUMBER: 650473580 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-08394 FILM NUMBER: 081217486 BUSINESS ADDRESS: STREET 1: 500 E BROWARD BLVD. STREET 2: SUITE 2100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33394-3091 BUSINESS PHONE: 9545277500 MAIL ADDRESS: STREET 1: 500 E. BROWARD BLVD. STREET 2: SUITE 2100 CITY: FORT LAUDERDALE STATE: FL ZIP: 33394-3091 N-Q 1 tdf-nq908.txt NQ FOR TDF FORM N-Q QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company Act file number 811-08394 --------- TEMPLETON DRAGON FUND, INC. ------------------------------------------ (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: 12/31 ----------- Date of reporting period: 9/30/08 ---------- ITEM 1. SCHEDULE OF INVESTMENTS. Templeton Dragon Fund, Inc. QUARTERLY STATEMENT OF INVESTMENTS SEPTEMBER 30, 2008 CONTENTS
Statement of Investments .................................................... 3 Notes to Statement of Investments ........................................... 7
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) Franklin - TEMPLETON - Mutual Series Quarterly Statement of Investments | 1 This page intentionally left blank. Templeton Dragon Fund, Inc. STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2008 (UNAUDITED)
COUNTRY SHARES/UNITS VALUE ------------- ------------ ------------ COMMON STOCKS AND OTHER EQUITY INTERESTS 98.3% AIR FREIGHT & LOGISTICS 0.1% Sinotrans Ltd., H ..................................................... China 4,063,000 $ 793,666 ------------ AUTO COMPONENTS 2.1% Cheng Shin Rubber Industry Co. Ltd. ................................... Taiwan 12,778,099 15,297,896 Norstar Founders Group Ltd. ........................................... Hong Kong 13,376,000 2,323,502 (a) Zhejiang Glass Co. Ltd., H ............................................ China 1,884,000 474,250 ------------ 18,095,648 ------------ AUTOMOBILES 1.7% (a) Chongqing Changan Automobile Co. Ltd., B .............................. China 4,395,302 1,032,015 Dongfeng Motor Corp., H ............................................... China 27,354,000 10,066,045 Great Wall Motor Co. Ltd., H .......................................... China 2,496,000 1,052,784 Jiangling Motors Corp. Ltd., B ........................................ China 3,818,520 2,513,712 ------------ 14,664,556 ------------ COMMERCIAL BANKS 8.4% Bank of China Ltd., H ................................................. China 56,321,000 21,823,289 China Construction Bank Corp., H ...................................... China 50,251,000 33,526,901 (b) Industrial and Commercial Bank of China, H, 144A ...................... China 27,510,000 16,624,972 ------------ 71,975,162 ------------ COMMUNICATIONS EQUIPMENT 0.3% ZTE Corp., H .......................................................... China 590,337 2,235,833 ------------ COMPUTERS & PERIPHERALS 4.8% Acer Inc. ............................................................. Taiwan 3,245,905 5,513,126 Advantech Co. Ltd. .................................................... Taiwan 1,813,561 3,489,087 Asustek Computer Inc. ................................................. Taiwan 14,656,504 28,935,308 Lite-On IT Corp. ...................................................... Taiwan 6,206,598 3,529,630 ------------ 41,467,151 ------------ DISTRIBUTORS 2.1% China Resources Enterprise Ltd. ....................................... Hong Kong 5,818,000 14,204,392 Dah Chong Hong Holdings Ltd. .......................................... Hong Kong 16,316,520 3,375,589 (b) Dah Chong Hong Holdings Ltd., 144A .................................... Hong Kong 550,000 113,785 ------------ 17,693,766 ------------ DIVERSIFIED TELECOMMUNICATION SERVICES 1.1% China Netcom Group Corp. (Hong Kong) Ltd. ............................. China 844,000 1,868,780 China Telecom Corp. Ltd., H ........................................... China 18,936,000 7,770,302 ------------ 9,639,082 ------------ ELECTRIC UTILITIES 4.9% Cheung Kong Infrastructure Holdings Ltd. .............................. Hong Kong 9,037,000 42,050,077 ------------ ELECTRICAL EQUIPMENT 0.1% BYD Co. Ltd., H ....................................................... China 556,700 931,649 ------------
Quarterly Statement of Investments | 3 Templeton Dragon Fund, Inc. STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2008 (UNAUDITED) (CONTINUED)
COUNTRY SHARES/UNITS VALUE ------------- ------------ ------------ COMMON STOCKS AND OTHER EQUITY INTERESTS (CONTINUED) ELECTRONIC EQUIPMENT & INSTRUMENTS 0.2% Yorkey Optical International Cayman Ltd. .............................. China 10,531,000 $ 1,752,415 ------------ FOOD & STAPLES RETAILING 19.0% Beijing Jingkelong Supermarket Chain Group Co. Ltd., H ................ China 1,870,000 821,836 Dairy Farm International Holdings Ltd. ................................ Hong Kong 32,157,478 161,805,013 ------------ 162,626,849 ------------ FOOD PRODUCTS 0.8% China Foods Ltd. ...................................................... China 9,716,000 3,085,641 China Huiyuan Juice Group Ltd. ........................................ China 806,000 997,217 People's Food Holdings Ltd. ........................................... China 3,031,000 1,013,594 Uni-President Enterprises Corp. ....................................... Taiwan 1,290,692 1,162,063 Xiwang Sugar Holdings Co. Ltd. ........................................ Hong Kong 3,638,000 937,896 ------------ 7,196,411 ------------ HOTELS, RESTAURANTS & LEISURE 0.4% NagaCorp Ltd. ......................................................... Cambodia 17,265,000 3,285,656 ------------ INDEPENDENT POWER PRODUCERS & ENERGY TRADERS 2.8% Datang International Power Generation Co. Ltd., H ..................... China 29,806,000 16,635,247 Guangdong Electric Power Development Co. Ltd., B ...................... China 10,224,960 3,978,765 Huadian Power International Corp. Ltd., H ............................. China 8,404,000 2,109,071 Huaneng Power International Inc., H ................................... China 1,454,000 966,575 ------------ 23,689,658 ------------ INDUSTRIAL CONGLOMERATES 3.8% Citic Pacific Ltd. .................................................... Hong Kong 5,726,000 16,735,926 Shanghai Industrial Holdings Ltd. ..................................... China 6,850,000 15,656,386 ------------ 32,392,312 ------------ INSURANCE 0.2% China Life Insurance Co. Ltd., H ...................................... China 523,000 1,948,135 ------------ IT SERVICES 0.3% Travelsky Technology Ltd., H .......................................... China 5,087,000 2,526,526 ------------ MACHINERY 1.5% China International Marine Containers (Group) Co. Ltd., B ............. China 11,778,895 7,786,599 Lonking Holdings Ltd. ................................................. Hong Kong 2,433,000 1,810,827 Mirle Automation Corp. ................................................ Taiwan 679,000 498,018 Shin Zu Shing Co. Ltd. ................................................ Taiwan 714,637 2,944,214 ------------ 13,039,658 ------------ MARINE 0.1% Sinotrans Shipping Ltd. ............................................... Hong Kong 2,026,000 639,209 ------------
4 | Quarterly Statement of Investments Templeton Dragon Fund, Inc. STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2008 (UNAUDITED) (CONTINUED)
COUNTRY SHARES/UNITS VALUE ------------- ------------ ------------ COMMON STOCKS AND OTHER EQUITY INTERESTS (CONTINUED) MEDIA 0.1% Next Media Ltd. ....................................................... Hong Kong 5,588,000 $ 1,365,300 ------------ METALS & MINING 0.1% Aluminum Corp. of China Ltd., H ....................................... China 952,000 579,489 ------------ OIL, GAS & CONSUMABLE FUELS 23.2% (b) China Coal Energy Co., H, 144A ........................................ China 891,000 941,854 China Petroleum and Chemical Corp., H ................................. China 97,904,000 77,259,974 China Shenhua Energy Co. Ltd., H ...................................... China 6,125,500 15,023,627 CNOOC Ltd. ............................................................ China 35,637,000 40,029,828 PetroChina Co. Ltd., H ................................................ China 55,370,000 57,472,630 Yanzhou Coal Mining Co. Ltd., H ....................................... China 7,984,000 8,231,783 ------------ 198,959,696 ------------ PAPER & FOREST PRODUCTS 0.2% Nine Dragons Paper Holdings Ltd. ...................................... China 4,104,000 1,535,090 ------------ PHARMACEUTICALS 0.1% Tong Ren Tang Technologies Co. Ltd., H ................................ China 679,000 579,652 ------------ REAL ESTATE MANAGEMENT & DEVELOPMENT 4.4% Cheung Kong (Holdings) Ltd. ........................................... Hong Kong 1,105,000 12,516,571 Hopewell Holdings Ltd. ................................................ Hong Kong 6,568,000 23,849,952 Soho China Ltd. ....................................................... China 4,206,500 1,421,436 (b) Soho China Ltd., 144A ................................................. China 764,000 258,166 ------------ 38,046,125 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 4.2% MediaTek Inc. ......................................................... Taiwan 383,800 3,969,911 Novatek Microelectronics Corp. Ltd. ................................... Taiwan 2,875,766 4,283,837 (a) Semiconductor Manufacturing International Corp. ....................... China 6,395,000 193,514 Sunplus Technology Co. Ltd. ........................................... Taiwan 181,362 84,013 Taiwan Semiconductor Manufacturing Co. Ltd. ........................... Taiwan 16,295,661 27,260,618 ------------ 35,791,893 ------------ SOFTWARE 0.1% Kingdee International Software Group Co. Ltd., fgn. ................... Hong Kong 4,140,000 798,010 ------------ SPECIALTY RETAIL 0.0%(c) I.T Ltd. .............................................................. Hong Kong 1,152,000 139,861 ------------ TEXTILES, APPAREL & LUXURY GOODS 0.2% (a, d)Tack Fat Group International Ltd. ..................................... Hong Kong 19,824,000 -- Tainan Enterprises Co. Ltd. ........................................... Taiwan 1,657,443 1,029,933 Weiqiao Textile Co. Ltd., H ........................................... China 1,113,000 545,978 ------------ 1,575,911 ------------
Quarterly Statement of Investments | 5 Templeton Dragon Fund, Inc. STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2008 (UNAUDITED) (CONTINUED)
COUNTRY SHARES/UNITS VALUE ------------- ------------ ------------ COMMON STOCKS AND OTHER EQUITY INTERESTS (CONTINUED) TRANSPORTATION INFRASTRUCTURE 0.7% Cosco Pacific Ltd. .................................................... China 3,972,000 $ 4,558,215 (b) Rickmers Maritime, 144A ............................................... Singapore 2,904,000 1,703,093 ------------ 6,261,308 ------------ WIRELESS TELECOMMUNICATION SERVICES 10.3% China Mobile Ltd. ..................................................... China 8,311,500 83,252,246 Taiwan Mobile Co. Ltd. ................................................ Taiwan 2,972,831 4,753,258 ------------ 88,005,504 ------------ TOTAL COMMON STOCKS AND OTHER EQUITY INTERESTS (COST $486,416,372) ................................................ 842,281,258 ------------ SHORT TERM INVESTMENTS (COST $3,461,767) 0.4% MONEY MARKET FUNDS 0.4% (e) Franklin Institutional Fiduciary Trust Money Market Portfolio, 1.98% .. United States 3,461,767 3,461,767 ------------ TOTAL INVESTMENTS (COST $489,878,139) 98.7% ........................... 845,743,025 OTHER ASSETS, LESS LIABILITIES 1.3% ................................... 10,916,692 ------------ NET ASSETS 100.0% ..................................................... $856,659,717 ============
(a) Non-income producing for the twelve months ended September 30, 2008. (b) 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 Directors. At September 30, 2008, the aggregate value of these securities was $19,641,870, representing 2.29% of net assets. (c) Rounds to less than 0.1% of net assets. (d) Security has been deemed illiquid because it may not be able to be sold within seven days. At September 30, 2008, the value of this security was $0. (e) The Franklin 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. See Notes to Statement of Investments. 6 | Quarterly Statement of Investments Templeton Dragon Fund, Inc. NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) 1. ORGANIZATION Templeton Dragon Fund (Fund) is registered under the Investment Company Act of 1940, as amended, as a non-diversified, closed-end investment company. 2. SECURITY VALUATION 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. 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. Investments in open-end mutual funds are valued at the closing net asset value. Foreign 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. If no sale is reported at that time, the foreign security will be valued within the range of the most recent quoted bid and ask prices. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the close of the NYSE on the day that the value of the foreign security is determined. The Fund has procedures to determine the fair value of individual securities and other assets for which market prices are not readily available or which may not be reliably priced. Methods for valuing these securities may include: fundamental analysis, matrix pricing, discounts from market prices of similar securities, or discounts applied due to the nature and duration of restrictions on the disposition of the securities. Due to the inherent uncertainty of valuations of such securities, the fair values may differ significantly from the values that would have been used had a ready market for such investments existed. Occasionally, events occur between the time at which trading in a security is completed and the close of the NYSE that might call into question the availability (including the reliability) of the value of a portfolio security held by the Fund. 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. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services. All security valuation procedures are approved by the Fund's Board of Directors. Quarterly Statement of Investments | 7 Templeton Dragon Fund, Inc. NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) 3. INCOME TAXES At September 30, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Cost of investments ........................................ $490,023,193 ------------ Unrealized appreciation .................................... $416,863,416 Unrealized depreciation .................................... (61,143,584) ------------ Net unrealized appreciation (depreciation) ................. $355,719,832 ------------ 4. FAIR VALUE MEASUREMENTS The Fund adopted Financial Accounting Standards Board (FASB) issued FASB Statement No. 157, "Fair Value Measurement" (SFAS 157), on January 1, 2008. SFAS 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The Fund has determined that the implementation of SFAS 157 did not have a material impact on the Fund's financial statements. SFAS 157 establishes 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 September 30, 2008, in valuing the Fund's assets carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL ---------- ------------ ------- ------------ ASSETS: Investments in Securities......... $6,747,423 $838,995,602 $-- $845,743,025
8 | Quarterly Statement of Investments Templeton Dragon Fund, Inc. NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED) 4. FAIR VALUE MEASUREMENTS (CONTINUED) At September 30, 2008, the reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value, is as follows:
INVESTMENTS IN SECURITIES ------------- Beginning Balance - January 2008 .............................. $ -- Net realized gain (loss) ................................... -- Net change in unrealized appreciation (depreciation) ....... (1,016,029) Net purchases (sales) ...................................... -- Transfers in and/or out of Level 3 ............................ 1,016,029 ----------- Ending Balance ................................................ $ -- ----------- Net change in unrealized appreciation (depreciation) attributable to assets still held at end of period ......... $(1,016,029) -----------
5. NEW ACCOUNTING PRONOUNCEMENT In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" (SFAS 161), which expands disclosures about derivative investments and hedging activities. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. The Fund is currently evaluating the impact, if any, of applying the various provisions of SFAS 161. 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. Quarterly Statement of Investments | 9 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 Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura F. Fergerson, 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/GALEN G. VETTER ------------------------------ Galen G. Vetter Chief Executive Officer - Finance and Administration Date November 25, 2008 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/GALEN G. VETTER ------------------------------ Galen G. Vetter Chief Executive Officer - Finance and Administration Date November 25, 2008 By /s/LAURA F. FERGERSON ----------------------------- Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer Date November 25, 2008 EX-99.CERT 2 tdf302certs_0908.txt 302 CERTS Exhibit 3 (a) I, Galen G. Vetter, certify that: 1. I have reviewed this report on Form N-Q of TEMPLETON DRAGON FUND, INC.; 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. 11/25/2008 S\ GALEN G. VETTER Galen G. Vetter Chief Executive Officer - Finance and Administration I, Laura F. Fergerson, certify that: 1. I have reviewed this report on Form N-Q of TEMPLETON DRAGON FUND, INC.; 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. 11/25/2008 S\ LAURA F. FERGERSON Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----