-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, fjDxWb2eP5PkXooqqYC2k6H98IzWDVM+EqZtlE35DJCJO9ULPJt5SlMZnXGB7/nI tS1CEEER0VbW9KPE3mXQAA== 0000928385-95-000343.txt : 19950905 0000928385-95-000343.hdr.sgml : 19950905 ACCESSION NUMBER: 0000928385-95-000343 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950831 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLETON DRAGON FUND INC CENTRAL INDEX KEY: 0000919893 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 650473580 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 033-76050 FILM NUMBER: 95569333 BUSINESS ADDRESS: STREET 1: 700 CENTRAL AVE CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 8138238712 N-30B-2 1 QUARTERLY REPORT Templeton Dragon Fund, Inc. [PHOTO] Dr. Mobius has been living overseas since earning his Ph.D. in economics and political science at J. Mark Mobius, Ph.D. Massachusetts Institute of Technology in 1964. During President his extensive travels, he has acquired a thorough Templeton Dragon knowledge of the business practices and customs that are Fund, Inc. unique to developing nations. Together with his team of - --------------------- Templeton analysts, Dr. Mobius currently oversees more than $6 billion in emerging markets investments for the Templeton Group of Funds. - -------------------------------------------------------------------------------- Mutual Funds, annuities, and other investment products: . are not FDIC insured; . are not deposits or obligations of, or guarantee by, any financial institution; . are subject to investment risks, including possible loss of the principal amount invested. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Your Fund's Objective The Templeton Dragon Fund, Inc. seeks long-term capital appreciation by investing at least 45% of its total assets in the equity securities of "China companies." - -------------------------------------------------------------------------------- August 18, 1995 Dear Shareholder: This update for the quarter ended June 30, 1995, includes your Fund's long-term performance, a listing of its investments, and a brief discussion by Dr. Mark Mobius on a topic of current interest. On July 25, 1995, the Fund's Board of Directors approved changing the Fund's non-fundamental investment policy to authorize investments in equity securities of Taiwanese companies. Please keep in mind that this summary is one of four reports you will receive during the Fund's fiscal year. Next quarter, you will receive the annual report, which is more comprehensive. It will include a discussion of the 1 financial markets and a summary of the Fund's performance and investment direction during the fiscal year. The portfolio manager's outlook and the Fund's financial statements and investment portfolio will also be included. If you have any questions regarding this report, you may call the Franklin Templeton Fund Information Department, toll free, at 1-800/342-5236. - -------------------------------------------------------------------------------- Templeton Dragon Fund Cumulative Total Returns* Period ended June 30, 1995
Since Inception (9/21/94) Based on change in net asset value 4.11% Based on change in market price -18.5%
*Cumulative total return represents the change in value of an investment over the specified periods. These calculations assume reinvestment of all distributions and capital gains at net asset value or at market price on the reinvestment date. Past performance is not predictive of future results. Investing in geographically concentrated developing markets involves special considerations, which may include increased risks related to market and currency volatility, adverse social and political developments, and the relatively small size and lesser liquidity of these markets. While short-term volatility can be disconcerting, declines of as much as 40% to 50% are not unusual in emerging markets. For example, the Hong Kong market has increased 1000% in the last 15 years, but has suffered nine declines of more than 20% during that time. - -------------------------------------------------------------------------------- A Closer Look at China by Dr. Mark Mobius. Dear Shareholder: It's hard to argue with Deng Xiaoping's overall economic record. During his time in power, he's opened his country's doors to the world, and the world has responded with foreign investment at record levels. In the process, he has paved the way for the likely emergence of a 21st Century economic giant. Today, the ultimate architect of all this progress sits in Beijing, an ailing 90-year-old man widely believed to be in his final days. Although the political succession issue has not been clearly defined, we can make some educated guesses regarding what can be expected in the near term. One thing is clear: It may be extremely difficult for China to sink back into a Communist centralist state. The capitalist, entrepreneurial cat has been let out of the bag and it will probably be impossible to get it back in. Despite the astounding growth of recent years, I believe that China has only begun to scratch the surface of its economic potential. I can well remember my early years in the Far East, when China was cut off from the rest of the world, keeping itself on the sidelines while Japan, Hong Kong, Singapore, Taiwan, Korea and the other Pacific Rim economies were 2 starting their rapid economic ascents. When Mao died in 1976, it still had virtually no contact with the international business community. Even after Deng began his market-oriented reforms in 1978, it took several years for the world to notice an across-the-board impact. But once Beijing began to unleash, rather than suppress, the legendary natural entrepreneurship of its people, Gross National Product (GNP) growth skyrocketed and began to average two-digit numbers, the highest of all major countries in the world. Imagine a situation where people talk about the economy "slowing down" when it is growing by 10.5% a year! That's actually the case in China so far this year, where current growth has dipped a bit from 12.8% in 1992, 13.4% in 1993 and 11.8% in 1994 -- figures which were probably so high as to be unsustainable in the first place. Deng's policies have made China the developing world's single largest recipient of direct foreign investment, with a total of $90 billion attracted over the last decade. Although the country was doing well in this regard prior to 1992, these investments rose appreciably that year, as the economic fallout from the 1989 Tienanmen Square massacres finally subsided and Deng gave his blessing to Chinese business. Direct foreign investment in China -- and by that I mean utilized, not just pledged -- rose from $4.4 billion to $11.2 billion between 1991 and 1992, then to $25.8 billion in 1993. 1994's figure was an astounding $28.8 billion, which means China received about half the total volume of fixed investment that all private investors put into factories, machinery, and other industrial needs in all the emerging markets of the world. Add to this the approximately $2.5 billion in equity that Chinese companies raised internationally from private portfolio investors through placement of shares on the B (Shanghai and Shenzhen), H (Hong Kong) and N (New York) exchanges, and China's overall 1994 foreign investment total reaches $31.3 billion. That's larger than the entire GDPs of some developing nations. Although some of that external capital (we don't know exactly how much) was actually domestic Chinese money being recycled through Hong Kong for tax reasons, these are impressive numbers by any standard. And they may be just the tip of the iceberg, considering China's market of 1.2 billion people, natural resource base, strong educational traditions, rising consumer culture, rapidly growing technological sophistication, natural links with the influential Chinese community in the rest of Asia, and the unleashing of a liberal, entrepreneurial wave after so many years of economic oppression and central planning. 3 [MAP APPEARS HERE] Despite the exciting economic environment of the first half of the 1990s, China still has not made many of the fundamental reforms that other emerging markets have adopted. That's why, given the uncertainty of what form of political leadership will follow Deng, and what its economic policies will be, the coming months are so important. What are the big differences between China and other emerging markets? For one thing, the central bank has no autonomy. It is firmly under the aegis of the ruling State Council, and thus does not have the independence it needs to set a non-political monetary policy. Like almost everything else of importance in the Chinese economy, commercial banking remains in state hands and thus in a state of extreme inefficiency with loans seemingly made on the basis of political rather than commercial considerations. The People's Construction Bank of China, the Agricultural Bank of China, the Bank of China, and the Industrial and Commercial Bank of China, four specialized governmental lenders, dominate 4 the national financial system and are often subject to political considerations. In many other developing countries, privately owned banks are among the key blue chips listed on the local exchanges and appear in our portfolios, but this is not yet possible in China. Although Beijing took some initial steps last year towards making the big banks operate on a more commercial basis, it will probably take several years before the impact of these reforms is felt. In the meantime, we have to invest in China without the benefit of a fully convertible currency, something that so many other emerging markets in Asia, Latin America and elsewhere have wisely adopted in recent years. A broader and more aggressive privatization program is another important ingredient I find missing in China. Although the role of the local, private sector has risen considerably in recent years, the big, state-owned enterprises still account for 70% of all fixed-capital investment in China and employ nearly half of the industrial labor force. Vice-Premier Zhu Rongji, the top reformer in the government, has said that 40% of the enterprises lost money last year, which means the big banks that lend them money must be feeling the impact. If this is the case, I wouldn't be surprised if the Chinese learn something from the recent experience of Russia, where we saw such a serious problem when people finally take note of the uncollectible debts that these big behemoths owe each other. At this time, government entities or former government entities are practically the only listed Chinese equities foreigners can buy. Although many of these companies have first-class products and impressive management, experience in other parts of the world has shown us that privatization is inevitable. It's difficult, however, to imagine how complex a task this would be in the world's most populous country. Government enterprises play an important social welfare role in China, giving large numbers of employees housing, health care and steady jobs even when this may not be economically viable. Reforming these enterprises would involve increased urban unemployment. For now, the government seems willing to accept high inflation as the cost of not incurring the political consequences of such action. But time may be running out. Acceptance into the new World Trade Organization (WTO) would also tend to be a big plus for China's 5 reformers and companies since it would lower trade barriers for both imports and exports and apply new pressure for competitiveness. When China was allowed to join the World Bank and the International Monetary Fund (IMF) in 1980, those multilateral institutions gained a vital tool for influencing the reform process. The WTO could play a similar role in the late 1990s and beyond -- especially now that the U.S. appears to be willing to relax its long-standing objections on this issue so long as China keeps improving its record on the vital issue of intellectual property rights protection. These are just some of the crucial decision areas facing China at a time of impending leadership change. If its new leaders keep up or accelerate the momentum already established, China's economic picture could improve substantially. Although no one can know for sure what will happen, we are excited about investment opportunities there, and will continue to apply our disciplined, value-oriented selection process in whatever new environment emerges in our efforts to seek the best possible results for our shareholders. Sincerely, /s/ J. Mark Mobius J. Mark Mobius, Ph.D. President Templeton Dragon Fund, Inc. 6 Templeton Dragon Fund, Inc. Investment Portfolio, June 30, 1995 (unaudited) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS: 73.8% - ------------------------------------------------------------------------------- Appliances & Household Durables: 1.5% Hualing Holdings Ltd. H.K. 2,332,000 $ 322,474 Luks Industrial Co. Ltd. H.K. 12,076,000 1,295,340 Semi-Tech (Global) Co. Ltd. H.K. 4,347,000 6,994,255 Shanghai Narcissus Electric Appliances Co. Ltd., B Chn 4,641,200 1,206,712 Shanghai Vacuum Electron Devices Co. Ltd., B Chn 3,463,212 706,495 Shenzhen Huafa Electronics Co. Ltd., B Chn 1,126,000 225,555 Shenzhen Konka Electronic Group Co. Ltd., B Chn 2,058,000 997,377 ------------ 11,748,208 - ------------------------------------------------------------------------------- Automobiles: 0.9% Jardine International Motor Holdings Ltd. H.K. 7,165,000 7,037,401 - ------------------------------------------------------------------------------- Banking: 9.0% HSBC Holdings PLC H.K. 5,214,000 66,878,118 JCG Holdings Ltd. H.K. 4,708,000 3,103,053 ------------ 69,981,171 - ------------------------------------------------------------------------------- Broadcasting & Publishing: 0.7% Leefung-Asco Printers Holdings Ltd. H.K. 5,083,000 821,131 Ming Pao Enterprise Corp. Ltd. H.K. 6,803,000 3,604,681 South Sea Development Co. Ltd. H.K. 27,413,000 1,346,241 ------------ 5,772,053 - ------------------------------------------------------------------------------- Building Materials & Components: 0.5% K Wah International Holdings Ltd. H.K. 9,887,000 1,750,522 Shanghai Yaohua Pilkington Glass, B Chn 2,105,800 2,105,800 ------------ 3,856,322 - ------------------------------------------------------------------------------- Chemicals: 0.5% Shanghai Chlor-Alkali Chemical Co. Ltd., B Chn 5,796,000 1,344,672 Shanghai Pechemical Co. Ltd., H Chn 4,480,000 1,404,017 Shenzhen Petrochemical (Group) Shareholding Co. Ltd., B Chn 526,000 152,950 Zhuhai Sez Lizhu Pharmaceutical, B Chn 2,610,000 1,150,211 ------------ 4,051,850 - ------------------------------------------------------------------------------- Construction & Housing: 4.6% Hopewell Holdings Ltd. H.K. 38,372,000 32,481,661 Wai Kee Holdings Ltd. H.K. 17,962,000 3,412,358 ------------ 35,894,019 - -------------------------------------------------------------------------------
7 Templeton Dragon Fund, Inc. Investment Portfolio, June 30, 1995 (unaudited) (cont.) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS (CONT.) - ------------------------------------------------------------------------------- Electrical & Electronics: 0.6% China Treasure Telecomunications Holdings Ltd. H.K. 20,512,000 $ 1,047,099 G.P. Batteries International Ltd. Sing. 900,000 2,205,000 Gold Peak Industries (Holdings) Ltd. H.K. 1,107,000 472,111 Great Wall Electronic International Ltd. H.K. 9,622,000 833,149 Tsann Kuen Enterprise Co. Ltd., B Chn 546,000 137,950 ------------ 4,695,309 - ------------------------------------------------------------------------------- Electronic Components & Instruments: 0.2% S. Megga International Holdings Ltd. H.K. 18,862,000 1,267,575 - ------------------------------------------------------------------------------- Financial Services: 1.6% Guoco Group Ltd. H.K. 493,000 2,300,047 Min Xin Holdings H.K. 11,196,000 2,286,138 Peregrine Investments Holdings Ltd. H.K. 2,066,000 2,937,011 Sun Hung Kai & Co. Ltd. H.K. 14,294,000 5,357,156 ------------ 12,880,352 - ------------------------------------------------------------------------------- Food & Household Products: 1.2% C.P. Pokphand Co. Ltd. H.K. 10,994,000 3,871,727 Fairwood Holdings Ltd. H.K. 13,212,000 1,314,746 Golden Resources Development International Ltd. H.K. 7,340,000 645,041 Vitasoy International Holdings Ltd. H.K. 9,364,000 3,721,252 ------------ 9,552,766 - ------------------------------------------------------------------------------- Health & Personal Care: 0.3% China Pharmaceutical Enterprise & Investment Corp. Ltd. H.K. 25,345,000 2,653,138 - ------------------------------------------------------------------------------- Industrial Components: 0.2% Shanghai Refrigerator Compressor Co. Ltd., B Chn 1,050,000 375,900 Shanghai Rubber Belt Co. Ltd., B Chn 807,936 116,343 Shanghai Tyre & Rubber Co. Ltd., B Chn 4,870,000 1,461,000 ------------ 1,953,243 - ------------------------------------------------------------------------------- Leisure & Tourism: 0.5% Glynhill International Ltd. H.K. 10,442,000 384,602 Hongkong & Shanghai Hotels Ltd. H.K. 1,961,000 2,420,268 Shanghai Jin Jiang Tower Co. Ltd., B Chn 2,675,954 856,305 ------------ 3,661,175 - -------------------------------------------------------------------------------
8 Templeton Dragon Fund, Inc. Investment Portfolio, June 30, 1995 (unaudited) (cont.) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS (CONT.) - ------------------------------------------------------------------------------- Machinery & Engineering: 0.8% China Textile Machinery Co. Ltd., B Chn 776,000 $ 100,880 Guangzhou Shipyard International Co. Ltd., H Chn 7,590,000 3,187,922 Shanghai Erfangji Textile Machinery Co. Ltd., B Chn 5,655,000 836,940 Shanghai Industrial Sewing Machine Corp. Chn 9,514,700 1,750,705 Shanghai Steel Tube Co. Ltd., B Chn 5,088,600 865,062 ------------ 6,741,509 - ------------------------------------------------------------------------------- Merchandising: 2.0% Dickson Concepts (International) Ltd. H.K. 10,380,000 6,204,283 Fortei Holdings Ltd. H.K. 3,978,000 226,204 Joyce Boutique Holdings Ltd. H.K. 4,048,000 873,654 Le Saunda Holdings Ltd. H.K. 3,616,000 266,370 LI & Fung Ltd. H.K. 4,516,000 3,385,045 Linkful International Holdings Ltd. H.K. 2,211,000 142,870 Wo Kee Hong Holdings Ltd. H.K. 17,787,000 4,137,688 Yaohan Hongkong Corp. Ltd. H.K. 4,000,000 325,674 ------------ 15,561,788 - ------------------------------------------------------------------------------- Miscellaneous Materials & Commodities: 0.2% Luoyang Glass Co. Ltd., H Chn 3,301,000 1,674,433 - ------------------------------------------------------------------------------- Multi-Industry: 21.8% Cheung Kong Holdings Ltd. H.K. 10,449,000 51,719,701 China Southern Glass Co. Ltd., B Chn 1,902,000 1,204,451 Dairy Farm International Holdings Ltd. H.K. 12,967,000 11,151,620 Jardine Matheson Holdings Ltd. H.K. 3,632,400 26,698,140 Jardine Strategic Holdings Ltd. H.K. 6,892,625 22,194,253 Jardine Strategic Holdings Ltd., wts. H.K. 349,625 153,835 Lai Sun Garment International Ltd. H.K. 4,992,000 5,193,414 Shenzhen Gintian Industrial Co. Ltd., B Chn 226,000 93,463 Shenzhen Tellus Machinery & Electronics Co. Ltd., B Chn 148,000 30,794 Stelux International Holdings Ltd. H.K. 7,848,000 2,307,400 Swire Pacific Ltd., B H.K. 13,760,000 16,715,862 Wheelock & Co. Ltd. H.K. 19,649,000 32,630,677 ------------ 170,093,610 - ------------------------------------------------------------------------------- Real Estate: 19.9% China Overseas Land & Investment Ltd. H.K. 18,245,000 3,654,753 Hang Lung Development Co. Ltd. H.K. 21,177,000 33,662,940 Hang Lung Development Co. Ltd., wts. H.K. 535,000 91,958 Lai Sun Development Co. Ltd. H.K. 71,630,000 8,794,296 New World Development Co. Ltd. H.K. 15,783,000 52,522,972
9 Templeton Dragon Fund, Inc. Investment Portfolio, June 30, 1995 (unaudited) (cont.) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS (CONT.) - ------------------------------------------------------------------------------- Real Estate (cont.) Shanghai Jinqiao Export Processing Zone Development, B Chn 3,468,700 $ 1,664,976 Shanghai Lujiaxui Finance & Trade Zone Dev. Stock Co. Ltd., B Chn 1,929,000 1,354,158 Shanghai Outer Gaoqiao Free Trade Zone Develop. Co., B Chn 1,571,000 662,962 Shenzhen Properties & Resources Develop. (Group) Ltd., B Chn 2,908,000 958,334 Shenzhen Vanke Co. Ltd., B Chn 3,086,000 1,076,818 Sun Hung Kai Properties Ltd. H.K. 6,306,000 46,656,479 Tian An China Investments Co. Ltd. H.K. 27,670,000 4,291,142 ------------ 155,391,788 - ------------------------------------------------------------------------------- Recreation, Other Consumer Goods: 1.0% Fu Hui Jewellery Co. (H.K.) Ltd. H.K. 7,710,000 448,383 KTP Holdings Ltd. H.K. 7,484,000 889,824 Shanghai Forever Bicycle Co. Ltd., B Chn 3,752,000 532,784 Shanghai Phoenix Bicycle Co. Ltd., B Chn 822,300 177,617 Shanghai Wingsung Stationery Co. Ltd., B Chn 200,000 39,000 Shenzhen China Bicycles Co. Ltd., B Chn 1,478,000 477,526 Yue Yuen Industrial (Holdings) Ltd. H.K. 20,828,000 5,060,436 ------------ 7,625,570 - ------------------------------------------------------------------------------- Telecommunications: 0.1% Shanghai Posts & Telecommunications Equipment Co., B Chn 50,000 29,900 - ------------------------------------------------------------------------------- Textiles & Apparel: 1.1% Goldlion Holdings Ltd. H.K. 13,711,000 4,341,279 Laws International Holdings Ltd. H.K. 11,398,000 1,988,588 Shanghai Lian Hua Fibre Corp., B Chn 96,000 23,040 Top Form International Ltd. H.K. 16,937,000 1,575,983 Tungtex (Holdings) Co. Ltd. H.K. 2,600,000 487,219 Victor Onward Textile Industrial Co. Ltd., B Chn 74,000 15,493 ------------ 8,431,602 - ------------------------------------------------------------------------------- Transportation: 0.3% Chiwan Wharf Holdings Ltd., B Chn 2,234,000 1,111,543 Cross Harbour Tunnel Co. Ltd. H.K. 535,000 1,030,202 ------------ 2,141,745 - -------------------------------------------------------------------------------
10 Templeton Dragon Fund, Inc. Investment Portfolio, June 30, 1995 (unaudited) (cont.) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ---------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONT.) - ---------------------------------------------------------------------------------------------------------- Utilities Electrical & Gas: 4.2% Guangdong Electric Power Development Co. Ltd., B Chn 3,380,000 $ 1,703,585 Hongkong Electric Holdings Ltd. H.K. 6,710,000 22,806,612 Shandong Huaneng Power Chn 790,500 6,027,563 Wing Shan International Ltd. H.K. 17,062,000 2,293,220 ------------ 32,830,980 - ---------------------------------------------------------------------------------------------------------- Wholesale & International Trade: 0.1% East Asiatic Co. Ltd. H.K. 5,689,000 794,040 ------------ TOTAL COMMON STOCKS 576,321,547 - ---------------------------------------------------------------------------------------------------------- PRINCIPAL IN LOCAL CURRENCY - ---------------------------------------------------------------------------------------------------------- SHORT TERM OBLIGATIONS: 27.5% - ---------------------------------------------------------------------------------------------------------- U.S. Treasury Bills, 5.29% to 5.62% with maturities to 8/24/95 U.S. 216,096,000 214,673,577 - ---------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS: 101.3% 790,995,124 OTHER ASSETS, LESS LIABILITIES: (1.3)% (10,556,321) ------------ TOTAL NET ASSETS: 100.0% $780,438,803 ============
11 Templeton Dragon Fund, Inc. Financial Highlights, June 30, 1995 (unaudited) - --------------------------------------------------------------------------------
NET ASSET VALUE TOTAL NET ASSETS PER SHARE ------------------------- ---------------- Net Asset Value: Beginning of period, April 1, 1995 $754,226,863 $ 13.97 Net investment income $ 9,007,915 $ 0.17 Distribution from net investment income (7,020,922) (0.13) Net realized and unrealized gain from security transactions 24,224,947 0.44 ----------- ------- Net increase in net asset value 26,211,940 0.48 ------------ ------- End of period, June 30, 1995 $780,438,803 $ 14.45 ============ =======
- --- This report is sent to the shareholders of Templeton Dragon Fund, Inc. for their information. It is not a prospectus, circular, or representation intended for use in the purchase or sale of shares of the Fund or of any securities men- tioned in the report. 12 Templeton Dragon Fund, Inc. - -------------------------------------------------------------------------------- TRANSFER AGENT Chemical Mellon Shareholder Services Securities Transfer Services 450 West 33rd Street New York, NY 10001 800-526-0801 SHAREHOLDER INFORMATION Weekly comparative net asset value and market price information about Templeton Dragon Fund, Inc. shares is published each Monday in The Wall Street Journal, weekly in Barron's and each Saturday in The New York Times and other newspapers in a table called "Publicly Traded Funds." The Fund's New York Stock Exchange trading symbol is TDF. For current information about the net asset value, call 1-800-292-9293. If any shareholder is not receiving copies of the Reports to Shareholders be- cause shares are registered in a broker's name or in a custodian's name, he or she can write and request that his or her name be added to the Fund's mailing list, by writing Templeton Dragon Fund, Inc., 700 Central Avenue, St. Peters- burg, FL 33701. 13 Notes ----- The Franklin Templeton Group - -------------------------------------------------------------------------------- To receive a free brochure and prospectus, which contain more complete informa- tion, including charges and expenses on each of the funds listed below, call Franklin Fund Information, toll free, at 1-800-DIAL-BEN (1-800-342-5236) or Templeton Fund Information at 1-800-292-9293. Please read the prospectus care- fully before you invest or send money. TEMPLETON FAMILY OF FUNDS Franklin Templeton Japan Fund Templeton American Trust Templeton Americas Government Securities Fund Templeton Developing Markets Trust Templeton Foreign Fund Templeton Global Infrastructure Fund Templeton Global Opportunities Trust Templeton Growth Fund Templeton Growth and Income Fund Templeton Income Fund Templeton Money Fund Templeton Real Estate Securities Fund Templeton Smaller Companies Growth Fund Templeton World Fund FRANKLIN GROUP OF FUNDS(R) FRANKLIN GLOBAL/ INTERNATIONAL FUNDS Franklin Global Health Care Fund Franklin Global Government Income Fund Franklin Global Utilities Fund Franklin International Equity Fund Franklin Pacific Growth Fund FUNDS SEEKING CAPITAL GROWTH Franklin California Growth Fund Franklin DynaTech Fund Franklin Equity Fund Franklin Gold Fund Franklin Growth Fund Franklin Rising Dividends Fund Franklin Small Cap Growth Fund FUNDS SEEKING GROWTH AND INCOME Franklin Balance Sheet Investment Fund Franklin Convertible Securities Fund Franklin Income Fund Franklin Equity Income Fund Franklin Utilities Fund FUNDS SEEKING HIGH CURRENT INCOME Franklin's AGE High Income Fund Franklin Investment Grade Income Fund Franklin Premier Return Fund Franklin U.S. Government Securities Fund FUNDS SEEKING TAX-FREE INCOME Franklin Federal Tax- Free Income Fund Franklin High Yield Tax-Free Income Fund Franklin California High Yield Municipal Fund Franklin Alabama Tax- Free Income Fund Franklin Arizona Tax- Free Income Fund Franklin California Tax- Free Income Fund Franklin Colorado Tax- Free Income Fund Franklin Connecticut Tax-Free Income Fund Franklin Florida Tax- Free Income Fund Franklin Georgia Tax- Free Income Fund Franklin Hawaii Municipal Bond Fund Franklin Indiana Tax- Free Income Fund Franklin Kentucky Tax- Free Income Fund Franklin Louisiana Tax-Free Income Fund Franklin Maryland Tax- Free Income Fund Franklin Missouri Tax- Free Income Fund Franklin New Jersey Tax- Free Income Fund Franklin New York Tax-Free Income Fund Franklin North Carolina Tax- Free Income Fund Franklin Oregon Tax- Free Income Fund Franklin Pennsylvania Tax-Free Income Fund Franklin Puerto Rico Tax-Free Income Fund Franklin Texas Tax- Free Income Fund Franklin Virginia Tax- Free Income Fund Franklin Washington Municipal Bond Fund FUNDS SEEKING TAX-FREE INCOME THROUGH INSURED PORTFOLIOS Franklin Insured Tax- Free Income Fund Franklin Arizona Insured Tax- Free Income Fund Franklin California Insured Tax- Free Income Fund Franklin Florida Insured Tax- Free Income Fund Franklin Massachusetts Insured Tax- Free Income Fund Franklin Michigan Insured Tax- Free Income Fund Franklin Minnesota Insured Tax- Free Income Fund Franklin New York Insured Tax-Free Income Fund Franklin Ohio Insured Tax- Free Income Fund FUNDS SEEKING HIGH CURRENT INCOME AND STABILITY OF PRINCIPAL Franklin Adjustable Rate Securities Fund Franklin Adjustable U.S. Government Securities Fund Franklin Short- Intermediate U.S. Government Securities Fund FUND SEEKING HIGH AFTER-TAX INCOME FOR CORPORATIONS Franklin Corporate Qualified Dividend Fund MONEY MARKET FUNDS SEEKING SAFETY OF PRINCIPAL AND INCOME Franklin Money Fund Franklin Federal Money Fund Franklin Tax- Exempt Money Fund Franklin California Tax-Exempt Money Fund Franklin New York Tax- Exempt Money Fund IFT Franklin U.S. Treasury Money Market Portfolio FUNDS FOR NON-U.S. INVESTORS FRANKLIN PARTNERS FUNDS(R) Franklin Tax- Advantaged High Yield Securities Fund Franklin Tax- Advantaged International Bond Fund Franklin Tax- Advantaged U.S. Government Securities Fund To ensure the highest quality of service, telephone calls to or from our serv- ice departments may be monitored, recorded and accessed. These calls can be de- termined by the presence of a regular beeping tone. ------------------------------------------------------------------------------ TEMPLETON DRAGON FUND, INC. 700 Central Avenue St. Petersburg, Florida 33701-3628 Investors should be aware that the value of investments made for the Fund may go up as well as down and that the Investment Manager may make errors in selecting securities for the Fund's portfolio. Like any investment in securities, the Fund's portfolio will be subject to the risk of loss from market, currency, economic, political, and other factors. The Fund and Fund investors are not protected from such losses by the Investment Manager. Therefore, investors who cannot accept the risk of such losses should not invest in shares of the Fund. To ensure the highest quality of service, telephone calls to or from our service departments may be monitored, recorded, and accessed. These calls can be determined by the presence of a regular beeping tone. - ------------------------------------------------------------------------------- [LOGO OF RECYCLED PAPER APPEARS HERE] TLTDF Q95 06/95 TEMPLETON DRAGON FUND, INC. First Quarter Report June 30, 1995 [LOGO OF FRANKLIN TEMPLETON APPEARS HERE] -----END PRIVACY-ENHANCED MESSAGE-----