Edgar Filing: TEMPLETON DRAGON FUND INC

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-08874
---------

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)

MURRAY L. SIMPSON, 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: 9/30/04
--------

ITEM 1. SCHEDULE OF INVESTMENTS.

TEMPLETON DRAGON FUND, INC.

QUARTERLY STATEMENT OF INVESTMENTS
SEPTEMBER 30, 2004

--------------------------------------------------------------------------------

CONTENTS

Statement of Investments .................................................. 3

Notes to Statement of Investments ......................................... 6

[LOGO](R)
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS

Franklin o TEMPLETON o Mutual Series

Quarterly Statement of Investments | 1

This page intentionally left blank.

TEMPLETON DRAGON FUND, INC.

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2004 (UNAUDITED)

--------------------------------------------------------------------------------------------------
COUNTRY SHARES VALUE
--------------------------------------------------------------------------------------------------

COMMON STOCKS 96.0%
AIR FREIGHT & LOGISTICS .1%
Sinotrans Ltd. ................................ China 2,342,000 $ 810,983
-----------
AUTO COMPONENTS 1.7%
Cheng Shin Rubber Industry Co. Ltd. ........... Taiwan 9,409,160 11,522,551
-----------
BEVERAGES .1%
Kingway Brewery Holdings Ltd. ................. China 2,094,000 644,539
-----------
CAPITAL MARKETS 1.1%
(a)Yuanta Core Pacific Securities Co. ............ Taiwan 10,819,067 7,643,733
-----------
COMMERCIAL BANKS 8.5%
Chinatrust Financial Holding Co. Ltd. ......... Taiwan 8,763,477 9,441,956
HSBC Holdings PLC ............................. United Kingdom 1,366,309 21,728,610
Mega Financial Holdings Co. Ltd. .............. Taiwan 27,217,000 17,145,829
Sinopac Holdings .............................. Taiwan 16,506,737 8,649,394
-----------
56,965,789
-----------

COMMUNICATIONS EQUIPMENT .7%
D-Link Corp. .................................. Taiwan 2,052,309 2,253,492

(a)TCL Communication Technology Holdings ......... China 19,584,000 2,762,838
-----------
5,016,330
-----------

COMPUTERS & PERIPHERALS 5.5%
Acer Inc. ..................................... Taiwan 12,232,022 16,563,821
Advantech Co. Ltd. ............................ Taiwan 2,929,282 5,993,085
Asustek Computer Inc. ......................... Taiwan 2,883,512 6,323,864
Lenovo Group Ltd. ............................. China 7,604,000 2,559,957
Lite-on Technology Corp. ...................... Taiwan 5,776,100 5,390,120
-----------
36,830,847
-----------

CONSTRUCTION MATERIALS 4.6%
Anhui Conch Cement Co. Ltd. ................... China 1,306,000 1,867,581
Cheung Kong Infrastructure Holdings Ltd. ...... Hong Kong 11,060,000 28,581,927
(a)China Resources Cement ........................ China 872,000 212,486
-----------
30,661,994
-----------

DISTRIBUTORS 2.9%
China Resources Enterprise Ltd. ............... China 12,628,000 16,438,491
Test-Rite International Co. Ltd. .............. Taiwan 5,126,125 2,927,490
-----------
19,365,981
-----------

DIVERSIFIED TELECOMMUNICATION SERVICES .7%
China Telecom Corp. Ltd., H ................... China 14,280,000 4,624,352
-----------

ELECTRIC UTILITIES 4.2%
Datang International Power Generation Co. Ltd. China 26,502,000 21,583,094
Guangdong Electric Power Development Co Ltd., B China 4,371,100 2,668,450
Huadian Power International Corp. Ltd., H ..... China 3,978,000 1,300,967
Huaneng Power International Inc., H ........... China 3,388,000 2,737,444
-----------
28,289,955
-----------

ELECTRICAL EQUIPMENT .5%
Phoenixtec Power Co. Ltd. ..................... Taiwan 3,632,945 3,475,735
-----------

Quarterly Statement of Investments | 3

TEMPLETON DRAGON FUND, INC.

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2004 (UNAUDITED) (CONTINUED)

COMMON STOCKS (CONT.)
ELECTRONIC EQUIPMENT & INSTRUMENTS 2.4%
Delta Electronics Inc. ........................ Taiwan 11,788,952 $ 16,484,404
------------
FOOD & STAPLES RETAILING 14.9%
Dairy Farm International Holdings Ltd. ........ Singapore 39,911,478 100,177,810
------------
FOOD PRODUCTS 1.2%
UNI-President Enterprises Corp. ............... Taiwan 16,069,030 7,757,789
------------
HOTELS RESTAURANTS & LEISURE 2.3%
Hong Kong & Shanghai Hotels Ltd. .............. Hong Kong 21,534,000 15,742,036
------------
HOUSEHOLD DURABLES 3.2%
TCL International Holdings Inc. ............... China 48,960,000 14,599,087
Tsann Kuen Enterprise Co. Ltd. ................ Taiwan 5,655,580 6,792,689
------------
21,391,776
------------
INDUSTRIAL CONGLOMERATES 4.6%
Beijing Enterprises Holdings Ltd. ............. China 3,058,000 3,706,215
CITIC Pacific Ltd. ............................ China 7,081,000 18,208,338
Shanghai Industrial Holdings Ltd. ............. China 4,954,000 9,022,059
------------
30,936,612
------------
IT SERVICES .3%
Travelsky Technology Ltd., H .................. China 2,837,000 2,328,631
------------
LEISURE EQUIPMENT & PRODUCTS .2%
Altek Corp. ................................... Taiwan 2,571,840 1,317,339
------------

MACHINERY 2.4%
China International Marine Containers ......... China 7,773,186 14,096,451
Yung Tay Engineering Co. Ltd. ................. Taiwan 3,958,000 2,039,005
------------
16,135,456
------------
METALS & MINING .1%
Aluminum Corp. of China Ltd., H ............... China 1,028,000 665,803
China Oriental Group Co. Ltd., 144A ........... China 422,000 82,266
------------
748,069
------------
OFFICE ELECTRONICS .1%
Kinpo Electronics Inc. ........................ Taiwan 1,454,000 612,075
------------

OIL & GAS 9.0%
China Petroleum & Chemical Corp., H ........... China 109,224,000 44,475,735
PetroChina Co. Ltd., H ........................ China 30,780,000 16,481,109
------------
60,956,844
------------
REAL ESTATE 10.4%
Cheung Kong Holdings Ltd. ..................... Hong Kong 2,575,000 22,043,971
Hang Lung Group Ltd. .......................... Hong Kong 19,441,042 30,418,703
Henderson China Holdings Ltd. ................. China 9,215,000 4,490,971
Henderson Investment Ltd. ..................... Hong Kong 7,485,000 9,695,596
Hong Kong Land Holdings Ltd. .................. Hong Kong 1,904,000 3,750,880
------------
70,400,121
------------

4 | Quarterly Statement of Investments

TEMPLETON DRAGON FUND, INC.

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2004 (UNAUDITED) (CONTINUED)

-------------------------------------------------------------------------------------------------------------------
COUNTRY SHARES VALUE
-------------------------------------------------------------------------------------------------------------------

COMMON STOCKS (CONT.)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT 4.0%
Elan Microelectronics Corp. ................................... Taiwan 3,517,396 $ 2,464,352
Faraday Technology Corp. ...................................... Taiwan 432,259 636,236
Princeton Technology Corp. .................................... Taiwan 546,600 452,148
Samsung Electronics Co. Ltd. .................................. South Korea 10,780 4,287,660
Siliconware Precision Industries Co. Ltd. ..................... Taiwan 4,340,000 2,976,803
Sunplus Technology Co. Ltd. ................................... Taiwan 6,264,390 8,906,978
Taiwan Semiconductor Manufacturing Co. ........................ Taiwan 5,844,000 7,449,079
------------
27,173,256
------------
TEXTILES APPAREL & LUXURY GOODS .6%
Tack Fat Group International Ltd. ............................. Hong Kong 26,080,000 2,040,322
Tainan Enterprises Co., Ltd. .................................. Taiwan 1,846,000 2,309,538
------------
4,349,860
------------
TRANSPORTATION INFRASTRUCTURE 3.0%
China Merchants Holdings (International) Co. Ltd. ............. China 4,878,000 7,350,908
Cosco Pacific Ltd. ............................................ China 6,678,000 11,133,997
Zhejiang Expressway Co. Ltd., H ............................... China 2,426,000 1,586,800
------------
20,071,705
------------
WIRELESS TELECOMMUNICATION SERVICES 6.7%
China Mobile (Hong Kong) Ltd. ................................. China 12,576,000 38,225,414
Taiwan Cellular Corp. ......................................... Taiwan 7,047,764 6,763,530
------------
44,988,944
------------
TOTAL COMMON STOCKS (COST $448,977,016) ....................... 647,425,516
------------
SHORT TERM INVESTMENTS (COST $24,521,521) 3.6%
(b)Franklin Institutional Fiduciary Trust Money Market Portfolio . United States 24,521,521 24,521,521
------------
TOTAL INVESTMENTS (COST $473,498,537) 99.6% ................... 671,947,037
OTHER ASSETS, LESS LIABILITIES .4% ............................ 2,371,361
------------
NET ASSETS 100.0% ............................................. $674,318,398
============

(a) Non-income producing.

(b) The Franklin Institutional Fiduciary Trust Money Market Portfolio is
managed by an affiliate of the fund's investment manager.

Quarterly Statement of Investments |
See Notes to Statement of Investments. | 5

TEMPLETON DRAGON FUND, INC.

NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)

Templeton Dragon Fund, Inc. (the Fund), is registered under the Investment
Company Act of 1940 as a closed-end, non-diversified investment company.

1. INCOME TAXES

At September 30, 2004, the net unrealized appreciation (depreciation) based on
the cost of investments for income tax purposes was as follows:

Cost of investments ..................................... $ 475,003,236
-------------
Unrealized appreciation ................................. $ 210,984,135
Unrealized depreciation ................................. (14,040,334)
-------------
Net unrealized appreciation (depreciation) .............. $ 196,943,801
=============

For information regarding the Fund's policy regarding valuation of investments
and other significant accounting policies, please refer to the Fund's most
recent semiannual or annual shareholder report.

6 | Quarterly Statement of Investments

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) Certifications pursuant to Section 30a-2 of the Investment Company Act of
1940 of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration,
and Galen G. Vetter, Chief Financial 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/JIMMY D. GAMBILL
-----------------------
Jimmy D. Gambill
Chief Executive Officer -
Finance and Administration
Date November 29, 2004

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/JIMMY D. GAMBILL
-----------------------
Jimmy D. Gambill
Chief Executive Officer -
Finance and Administration
Date November 29, 2004

By /s/GALEN G. VETTER
------------------------------
Galen G. Vetter
Chief Financial Officer
Date November 29, 2004