-----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, Q1e1gAyFcUvs7hsD9J5rPABlfs3Og/ZSH/KSUyXRfTpdqGFG2qoIrgI0Z8Z25XT2 OUASDDrGLf4q5EvKWu711Q== 0000928385-96-000145.txt : 19960305 0000928385-96-000145.hdr.sgml : 19960305 ACCESSION NUMBER: 0000928385-96-000145 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960304 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: 811-08394 FILM NUMBER: 96530663 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. Dr. Mobius has been living overseas since earning [PHOTO APPEARS HERE] his Ph.D. in economics and political science at J. Mark Mobius, Ph.D. President Massachusetts Institute of Technology in 1964. Templeton Dragon Fund, Inc. During his extensive travels, he has acquired a - --------------------------- thorough knowledge of the business practices and customs that are unique to developing nations. Together with his team of Templeton analysts, Dr. Mobius currently oversees more than $7 billion in emerging markets investments for the Templeton Group of Funds. - -------------------------------------------------------------------------------- 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." - -------------------------------------------------------------------------------- February 15, 1996 Dear Shareholder: This update for the quarter ended December 31, 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. 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 financial markets and a summary of the Fund's performance and investment direction during the fiscal year. The manager's outlook and the Fund's financial statements and investment portfolio will also be included. 1 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* Periods ended 12/31/95 Since Inception One-Year (9/21/94) Based on change in net asset value 11.27% 7.68% Based on change in market price 19.45% -6.66% *Cumulative total returns show the change in value of an investment over the periods indicated. These calculations assume reinvestment of all distributions and capital gains, either at net asset value or at market price on the reinvest- ment date, in accordance with the dividend reinvestment plan. 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 584% in the last 15 years, but has suffered six declines of more than 20% during that time. (Source: Bloomberg. Based on quarterly percentage change over 15 years ended December 31, 1995.) - -------------------------------------------------------------------------------- THE FOLLOWING LETTER WAS WRITTEN BY DR. MOBIUS AFTER A TRIP TO CHINA IN MID-1995. Dear Shareholder: As you travel around China, the description that most often springs to mind is "messy." The streets are full of dust, and windows are caked with grime. In this country where everything was owned for so long by the state, there seems to be no pride of ownership. But not all the mess can be blamed on a lack of pride. Much of it results from rapid development. Hazy cement dust on new highways, land being readied for a factory or office tower, and an abundance of unsightly cranes and steel reinforcing rods all indicate the tremendous potential presently being unlocked in China. In the coastal areas we visited during the first part of this trip, development was proceeding at a fast pace. As we drove to the hotel in Nanjing it was clear that the city was experiencing a construction boom. The glass-encased lobby of our hotel, which was built in 1982, was huge, featuring a free-floating red marble ball revolving in a fountain. The building was well maintained and the service was even 2 [MAP OF CHINA APPEARS HERE] better than in Shanghai, which is regarded as the most "international" of China's cities. I tried out my Mandarin but was quickly met with responses in good English. We drove from Nanjing to Maanshan City, where we visited Maanshan Iron & Steel Company Limited, which produced 2.91 million tons of pig iron, 2.41 million tons of crude steel and 2.07 million tons of steel products in 1994. Although demand for steel products has decreased due to the implementation by the Chinese government of macro-economic adjustments, the company's management has responded actively to changing market conditions, and is, we believe, well positioned for an eventual pick-up in demand for its products. Dalian, another coastal city, also appeared to be a big construction site, with lots of 20-, 30- and 40-story buildings being erected. However, it is not just China's coastal areas which are undergoing rapid change and development. The inland province of Sichuan is one of China's main agricultural areas and supports 10% of the country's population. Once a province of peasants and land lords, Sichuan now boasts two important cities: Chongqing and Chengdu. An urban center more 3 than 2,000 years ago, and the capital of kingdoms in the region for a number of years, Chengdu is a bustling city with street hawkers, huge department stores, and a population of about three million people. At the end of the main thoroughfare is a huge statue of Chairman Mao, with his hand raised in blessing. From Chengdu, we travelled two hours by car to Mianyang, 124 miles north of Chengdu. The road between Chengdu and Mianyang is like a washboard with intervals of nice, cement-paved highway. When we arrived there, we saw a 50- story skyscraper under construction on the outskirts of the city. We had been told to expect the worst in this remote part of China, but were ushered into lavishly decorated suites complete with American-made whirlpool baths. Notwithstanding this, the interior decoration and quality, as in other parts of China, leave much to be desired. Mianyang, like so many other cities in China, is being rebuilt and redeveloped, with a number of high-rise towers under way. At the entrance to the city, we passed an industrial zone where some factories were complete and more were under construction. Since it has a reputation as an electronics center and center of high-tech military work, it is not surprising that Mianyang is being promoted as a high-tech zone. While in town, we visited Sichuan Changhong Electric Co., Ltd., a manufacturer of TV sets which produces three million units annually and has 17% of the national market. The company, which has ties to Siemens and Philips, already has sales branches in all the provinces and it plans to further expand into coastal cities and overseas markets with its brand name. After leaving Mianyang, we went to Deyang, to visit Dongfang Electrical Machinery Co., Ltd., a major manufacturer of steam turbine generators and hydro turbine generators, whose "H" shares, listed on the Hong Kong Stock Exchange, are potential investments for the Fund. Chongqing, Sichuan's other main city, was the Chinese capital during World War II. It is in the Southeast part of Sichuan Province and hangs on the deep gorges made by the Yangtze and Jialing Rivers. Sometimes referred to as one of the "three furnaces" of China (the others are Wuhan and Nanjing), it gets hot here in the summer, and when we stepped off the plane, we really felt the heat. 4 Chongqing's airport is quite unusual and beautiful, in a strange sort of way. The control tower is like an onion standing on its stem. It has few straight corners and curves around the site like a white caterpillar. The architect must have admired Salvador Dali's paintings because he gave an other-worldly feeling to the building. It is done in white tiles and has blue windows in the hallway. Driving into the city, we saw that Chongqing has not escaped China's building boom. As we crossed the Jialing River bridge, we counted no fewer than 12 cranes on top of high rise buildings. Chongqing is the home town of Qingling Motors Company Limited, a company engaged in the production, assembly and sale of Isuzu light-duty trucks, pickup trucks and minibuses. Through its long-standing and close relationship with Isuzu, it has access to the most up-to-date international technology. The construction we noticed throughout our trip is one indication of the progress of China's reform program. While some aspects of this process may not appeal to all foreign investors, there's no doubting the government's general commitment to economic development and expansion of trade. If it continues, the country's economic picture could improve substantially, which may be good news for investors in the Templeton Dragon Fund. Although it's impossible to predict the future, we are optimistic about potential long-term investment opportunities in China and will continue to utilize our disciplined, value oriented approach in our efforts to achieve the best possible results for our shareholders. Of course, investing in an emerging market such as China involves special considerations, which may include risks related to the relatively small size and lesser liquidity of this market, adverse social and political developments, and market and currency volatility. 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 584% in the last 15 years, but has suffered six declines of more than 20% during that time.* Sincerely, /s/ J. Mark Mobius J. Mark Mobius, Ph.D. President Templeton Dragon Fund, Inc. * Source: Bloomberg. Based on quarterly percentage change over 15 years ended December 31, 1995. 5 Templeton Dragon Fund, Inc. Investment Portfolio, December 31, 1995 (unaudited) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS: 85.1% - ------------------------------------------------------------------------------- Appliances & Household Durables: 2.1% Foshan Electrical and Lighting Co. Ltd., B Chn. 700,000 $ 470,740 Hualing Holdings Ltd. H.K. 5,868,000 705,754 Luks Industrial Co. Ltd. H.K. 12,076,000 1,233,759 Semi-Tech (Global) Co. Ltd. H.K. 5,580,302 8,984,773 Shanghai Narcissus Electric Appliances Co. Ltd., B Chn. 8,701,200 1,479,204 Shanghai Shangling Electric Appliance, B Chn. 1,804,000 1,104,048 Shanghai Vacuum Electron Devices Co. Ltd., B Chn. 5,396,092 1,251,893 Shenzhen Huafa Electronics Co. Ltd., B Chn. 1,184,000 202,884 Shenzhen Konka Electronic Group Co. Ltd., B Chn. 2,120,000 1,082,962 Tsann Kuen Enterprise Co. Ltd., B Chn. 546,000 105,917 ------------ 16,621,934 - ------------------------------------------------------------------------------- Automobiles: 1.6% Jardine International Motor Holdings Ltd. H.K. 8,015,000 9,121,500 Qing Ling Motors Co. Ltd., H Chn. 12,000,000 3,491,756 ------------ 12,613,256 - ------------------------------------------------------------------------------- Banking: 10.1% HSBC Holdings PLC H.K. 5,268,392 79,715,728 - ------------------------------------------------------------------------------- Broadcasting & Publishing: 0.2% Leefung-Asco Printers Holdings Ltd. H.K. 8,221,000 1,169,492 - ------------------------------------------------------------------------------- Building Materials & Components: 0.9% China Southern Glass Co. Ltd., B Chn. 4,747,000 1,964,488 K Wah International Holdings Ltd. H.K. 14,200,045 2,130,236 K Wah International Holdings Ltd., wts. H.K. 988,700 31,326 Shanghai Yaohua Pilkington Glass, B Chn. 3,686,800 3,244,384 ------------ 7,370,434 - ------------------------------------------------------------------------------- Chemicals: 1.5% Shanghai Chlor-Alkali Chemical Co. Ltd., B Chn. 10,050,000 2,552,700 Shanghai Pechemical Co. Ltd., H Chn. 30,148,000 8,674,982 Shenzhen Petrochemical (Group) Shareholding Co. Ltd., B Chn. 885,192 194,611 ------------ 11,422,293 - ------------------------------------------------------------------------------- Construction & Housing: 4.1% Hopewell Holdings Ltd. H.K. 50,615,021 29,128,593 Wai Kee Holdings Ltd. H.K. 24,868,000 3,119,555 ------------ 32,248,148 - -------------------------------------------------------------------------------
6 Templeton Dragon Fund, Inc. Investment Portfolio, December 31, 1995 (unaudited) (cont.) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS (CONT.) - ------------------------------------------------------------------------------- Electrical & Electronics: 0.7% China Treasure Telecomunications Holdings Ltd. H.K. 19,650,000 $ 876,722 China Treasury Telecomunications Holdings Ltd., wts. H.K. 3,930,000 35,577 G.P. Batteries International Ltd. Sing. 900,000 2,169,000 Gold Peak Industries (Holdings) Ltd. H.K. 676,000 334,394 GP Batteries International Ltd., wts. Sing. 225,000 153,000 Great Wall Electronic International Ltd. H.K. 13,282,000 979,081 Shanghai Automation Instrumentation Co., B Chn. 4,511,000 825,513 ------------ 5,373,287 - ------------------------------------------------------------------------------- Electronic Components & Instruments: 0.1% S. Megga International Holdings Ltd. H.K. 18,862,000 707,401 - ------------------------------------------------------------------------------- Financial Services: 1.8% JCG Holdings Ltd. H.K. 3,445,000 2,517,200 Min Xin Holdings H.K. 11,196,000 1,592,706 Peregrine Investments Holdings Ltd. H.K. 4,756,000 6,150,663 Sun Hung Kai & Co. Ltd. H.K. 16,294,000 3,476,896 ------------ 13,737,465 - ------------------------------------------------------------------------------- Food & Household Products: 0.9% C.P. Pokphand Co. Ltd. H.K. 1,789,000 717,220 Fairwood Holdings Ltd. H.K. 14,768,000 1,126,818 Golden Resources Development International Ltd. H.K. 10,138,000 930,874 Shanghai New Asia Group Co. Ltd., B Chn. 311,800 164,630 Vitasoy International Holdings Ltd. H.K. 10,354,000 4,418,778 ------------ 7,358,320 - ------------------------------------------------------------------------------- Health & Personal Care: 0.2% China Pharmaceutical Enterprise & Investment Corp. Ltd. H.K. 7,289,000 904,939 Zhuhai Sez Lizhu Pharmaceutical, B Chn. 2,610,000 860,718 ------------ 1,765,657 - ------------------------------------------------------------------------------- Industrial Components: 0.3% Shanghai Refrigerator Compressor Co. Ltd., B Chn. 1,221,720 434,932 Shanghai Rubber Belt Co. Ltd., B Chn. 807,936 131,694 Shanghai Tyre & Rubber Co. Ltd., B Chn. 7,739,000 1,594,234 ------------ 2,160,860 - ------------------------------------------------------------------------------- Leisure & Tourism: 0.7% Glynhill International Ltd. H.K. 22,556,000 490,062 Hongkong & Shanghai Hotels Ltd. H.K. 1,961,000 2,840,375 Shanghai Jin Jiang Tower Co. Ltd., B Chn. 8,182,954 2,307,593 ------------ 5,638,030 - -------------------------------------------------------------------------------
7 Templeton Dragon Fund, Inc. Investment Portfolio, December 31, 1995 (unaudited) (cont.) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS (CONT.) - ------------------------------------------------------------------------------- Machinery & Engineering: 1.1% China Textile Machinery Co. Ltd., B Chn. 3,948,000 $ 631,680 Guangzhou Shipyard International Co. Ltd., H Chn. 10,530,000 2,669,098 Northeast Electric Transmission & Transformation H.K. 2,168,000 353,273 Shanghai Erfangji Textile Machinery Co. Ltd., B Chn. 20,014,656 2,842,081 Shanghai Industrial Sewing Machine Corp. Chn. 9,514,700 1,541,381 Shanghai Steel Tube Co. Ltd., B Chn. 5,088,600 712,404 ------------ 8,749,917 - ------------------------------------------------------------------------------- Merchandising: 4.5% Dairy Farm International Holdings Ltd. H.K. 20,118,904 18,509,392 Dickson Concepts (International) Ltd. H.K. 10,864,000 10,115,849 Fortei Holdings Ltd. H.K. 3,978,000 149,191 Joyce Boutique Holdings Ltd. H.K. 6,855,000 1,595,732 Le Saunda Holdings Ltd. H.K. 3,616,000 299,287 LI & Fung Ltd. H.K. 1,157,897 1,033,235 Linkful International Holdings Ltd. H.K. 2,211,000 154,405 Wo Kee Hong Holdings Ltd. H.K. 22,409,000 3,506,614 Yaohan Hongkong Corp. Ltd. H.K. 4,000,000 212,092 ------------ 35,575,797 - ------------------------------------------------------------------------------- Metals & Mining: 0.3% Maanshan Iron & Steel Co. Ltd., H Chn. 19,076,000 2,664,349 - ------------------------------------------------------------------------------- Miscellaneous Materials & Commodities: 0.2% Luoyang Glass Co. Ltd., H Chn. 4,331,000 1,114,606 - ------------------------------------------------------------------------------- Multi-Industry: 22.4% Cheung Kong Holdings Ltd. H.K. 10,449,000 63,646,673 Jardine Matheson Holdings Ltd. H.K. 3,673,313 25,162,194 Jardine Strategic Holdings Ltd. H.K. 8,123,625 24,858,293 Jardine Strategic Holdings Ltd., wts. H.K. 349,625 111,880 Lai Sun Garment International Ltd. H.K. 7,023,000 6,811,833 Shenzhen Gintian Industrial Co. Ltd., B Chn. 599,200 205,351 Shenzhen Tellus Machinery & Electronics Co. Ltd., B Chn. 162,800 23,580 Stelux International Holdings Ltd. H.K. 8,274,000 2,118,658 Swire Pacific Ltd., B H.K. 13,145,000 16,404,688 WBL Corp. Ltd. Sing. 83,000 192,464 Wheelock & Co. Ltd. H.K. 21,431,000 36,723,020 ------------ 176,258,634 - -------------------------------------------------------------------------------
8 Templeton Dragon Fund, Inc. Investment Portfolio, December 31, 1995 (unaudited) (cont.) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS (CONT.) - ------------------------------------------------------------------------------- Real Estate: 24.0% China Overseas Land & Investment Ltd. H.K. 30,733,000 $ 5,405,351 Hang Lung Development Co. Ltd. H.K. 23,035,000 36,641,513 Hang Lung Development Co. Ltd., wts. H.K. 535,000 80,259 Lai Sun Development Co. Ltd. H.K. 79,990,000 9,620,524 New World Development Co. Ltd. H.K. 15,783,000 68,785,917 Shanghai Jinqiao Export Processing Zone Development, B Chn. 8,338,200 3,118,487 Shanghai Lujiaxui Finance & Trade Zn Dev Stock Co. Ltd, B Chn. 9,559,000 5,429,512 Shanghai Outer Gaoqiao Free Trade Zone Develop. Co., B Chn. 1,571,000 574,986 Shenzhen Properties & Resources Develop. (Group) Ltd., B Chn. 3,473,800 696,332 Shenzhen Vanke Co. Ltd., B Chn. 4,184,900 1,542,446 South Sea Development Co. Ltd. H.K. 46,054,000 1,435,372 Sun Hung Kai Properties Ltd. H.K. 6,306,000 51,581,571 Tian An China Investments Co. Ltd. H.K. 27,670,000 3,435,267 ------------ 188,347,537 - ------------------------------------------------------------------------------- Recreation, Other Consumer Goods: 1.1% Fu Hui Jewellery Co. (H.K.) Ltd. H.K. 7,710,000 299,127 KTP Holdings Ltd. H.K. 15,374,000 516,940 Phoenix Co. Ltd. Chn. 5,322,300 883,502 Shanghai Forever Bicycle Co. Ltd., B Chn. 3,752,000 521,528 Shanghai Wingsung Stationery Co. Ltd., B Chn. 200,000 39,200 Shenzhen China Bicycles Co. (Holdings) Ltd., B Chn. 4,442,400 729,628 Yue Yuen Industrial (Holdings) Ltd. H.K. 20,662,000 5,477,801 ------------ 8,467,726 - ------------------------------------------------------------------------------- Textiles & Apparel: 1.4% Goldlion Holdings Ltd. H.K. 10,974,000 8,018,506 Laws International Holdings Ltd. H.K. 17,288,000 1,542,673 Shanghai Lian Hua Fibre Corp., B Chn. 296,000 50,320 Top Form International Ltd. H.K. 16,937,000 898,050 Tungtex (Holdings) Co. Ltd. H.K. 2,600,000 268,995 Victor Onward Textile Industrial Co. Ltd., B Chn. 81,400 11,580 ------------ 10,790,124 - ------------------------------------------------------------------------------- Transportation: 0.9% China Merchants Shekou Port Service Co. Ltd., B Chn. 1,776,000 643,104 Chiwan Wharf Holdings Ltd., B Chn. 6,634,000 2,496,597 Cross Harbour Tunnel Co. Ltd. H.K. 644,000 1,220,123 Shanghai Dazhong Taxi Shareholding Co. Ltd., B Chn. 3,614,000 2,761,096 ------------ 7,120,920 - -------------------------------------------------------------------------------
9 Templeton Dragon Fund, Inc. Investment Portfolio, December 31, 1995 (unaudited) (cont.) - --------------------------------------------------------------------------------
INDUSTRY ISSUE COUNTRY SHARES VALUE - ------------------------------------------------------------------------------ COMMON STOCKS (CONT.) - ------------------------------------------------------------------------------ Utilities Electrical & Gas: 3.9% Guangdong Electric Power Development Co Ltd, B, 144A Chn. 3,380,000 $ 1,617,329 Hongkong Electric Holdings Ltd. H.K. 6,410,000 21,014,355 Shandong Huaneng Power Chn. 886,000 5,980,500 Wing Shan International Ltd. H.K. 21,654,000 2,240,310 ------------ 30,852,494 - ------------------------------------------------------------------------------ Wholesale & International Trade: 0.1% East Asiatic Co. (Hong Kong) Ltd. (The) H.K. 7,520,000 894,717 ------------ TOTAL COMMON STOCKS 668,739,126 - ------------------------------------------------------------------------------ PRINCIPAL IN LOCAL CURRENCY* - ------------------------------------------------------------------------------ SHORT TERM INVESTMENTS: 17.5% - ------------------------------------------------------------------------------ U.S. Treasury Bills, 4.25% to 5.34% with maturities to 2/22/96 U.S. 137,817,000 137,154,120 - ------------------------------------------------------------------------------ TOTAL INVESTMENTS: 102.6% 805,893,246 OTHER ASSETS, LESS LIABILITIES: (2.6%) (20,089,752) ------------ TOTAL NET ASSETS: 100.0% $785,803,494 ============
* CURRENCY OF COUNTRY INDICATED. 10 Templeton Dragon Fund, Inc. Financial Highlights, December 31, 1995 (unaudited) - --------------------------------------------------------------------------------
NET ASSET VALUE TOTAL NET ASSETS PER SHARE -------------------------- ----------------- Net Asset Value: Beginning of period, October 1, 1995 $795,847,280 $ 14.74 Net investment income $ 6,483,989 $ .12 Distribution from net investment income (21,332,802) (.40) Net gain from security and foreign currency transactions 4,805,027 .09 ------------ ------- Net decrease in net asset value (10,043,786) (.19) ------------ -------- End of period, December 31, 1995 $785,803,494 $ 14.55 ============ ========
- --- 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. 11 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. 12 NOTES ----- - -------------------------------------------------------------------------------- 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. TEMPLETON DRAGON FUND, INC. Third Quarter Report December 31, 1995 [LOGO OF FRANKLIN TEMPLETON APPEARS HERE] [LOGO OF RECYCLED PAPER APPEARS HERE] TLTDF Q95 02/96 - -------------------------------------------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----