UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number
811-08394
Templeton Dragon Fund, Inc.
(Exact name of registrant as specified in charter)
300 S.E. 2nd Street, Fort Lauderdale, FL 33301-1923
(Address of principal executive offices) (Zip code)
Alison Baur,
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: 6/30/24
Item 1. Reports to Stockholders.
| a.) | The following is a copy of the report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30e-1). |
| | | |
| b.) | Include a copy of each notice transmitted to stockholders in reliance on Rule 30e-3 under the Act (17 CFR 270.30e-3) that contains disclosures specified by paragraph (c)(3) of that rule. |
Not Applicable.
Templeton
Dragon
Fund,
Inc.
June
30,
2024
Not
FDIC
Insured
No
Bank
Guarantee
May
Lose
Value
Contents
Fund
Overview
2
Performance
Summary
3
Consolidated
Financial
Highlights
and
Consolidated
Schedule
of
Investments
5
Consolidated
Financial
Statements
9
Notes
to
Consolidated
Financial
Statements
12
Important
Information
to
Shareholders
20
Annual
Meeting
of
Shareholders
21
Dividend
Reinvestment
and
Cash
Purchase
Plan
22
Shareholder
Information
24
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
Templeton
Dragon
Fund,
Inc.
Dear
Shareholder,
This
semiannual
report
for
Templeton
Dragon
Fund,
Inc.
covers
the
period
ended
June
30,
2024.
Fund
Overview
Your
Fund’s
Goal
and
Main
Investments
The
Fund
seeks
long-term
capital
appreciation
by
investing
at
least
45%
of
its
total
assets
in
equity
securities
of
“China
companies.”
Our
investment
strategy
employs
a
fundamental,
value-oriented,
long-term
approach.
In
selecting
companies
for
investment,
we
will
consider
overall
growth
prospects,
competitive
positions
in
export
markets,
technologies,
research
and
development,
productivity,
labor
costs,
and
raw
material
costs
and
sources.
Additional
considerations
include
profit
margins,
returns
on
investment,
capital
resources,
government
regulation,
management,
and
other
factors
in
comparison
to
other
companies
around
the
world
that
we
believe
are
comparable.
Our
approach
to
selecting
investments
emphasizes
fundamental,
company-by-company
analysis
(rather
than
broader
analyses
of
specific
industries
or
sectors
of
the
economy),
to
construct
an
“action
list”
from
which
we
make
our
buy
decisions.
Although
we
will
consider
historical
value
measures,
the
primary
factor
in
selecting
securities
for
investment
by
the
Fund
will
be
the
company’s
current
price
relative
to
its
long-term
earnings
potential.
Performance
Overview
For
the
six
months
under
review,
the
Fund
posted
cumulative
total
returns
of
-1.84%
in
market
price
terms
and
+0.11%
in
net
asset
value
terms.
In
comparison,
the
MSCI
China
All
Shares
Index-NR,
which
measures
the
performance
of
China
share
classes
listed
in
Hong
Kong,
Shanghai,
Shenzhen
and
outside
of
China,
posted
a
+2.28%
total
return
for
the
same
period.
1
You
can
find
the
Fund's
long-term
performance
data
in
the
Performance
Summary
on
page
3.
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
Thank
you
for
your
continued
participation
in
Templeton
Dragon
Fund,
Inc.
We
look
forward
to
serving
your
future
investment
needs.
Sincerely,
Nicholas
Chui,
CFA
Lead
Portfolio
Manager
Eric
Mok,
CFA
Portfolio
Manager
Geographic
Composition
6/30/24
%
of
Total
Net
Assets
China
95.0%
Hong
Kong
2.3%
Short-Term
Investments
&
Other
Net
Assets
2.7%
Top
10
Holdings
6/30/24
Company
Industry,
Country
%
of
Total
Net
Assets
a
a
Tencent
Holdings
Ltd.
10.9%
Interactive
Media
&
Services,
China
China
Yangtze
Power
Co.
Ltd.
6.8%
Independent
Power
and
Renewable
Electricity
Producers,
China
Alibaba
Group
Holding
Ltd.
6.1%
Broadline
Retail,
China
Kweichow
Moutai
Co.
Ltd.
4.5%
Beverages,
China
NetEase,
Inc.
4.4%
Entertainment,
China
Focus
Media
Information
Technology
Co.
Ltd.
3.6%
Media,
China
China
Construction
Bank
Corp.
3.5%
Banks,
China
PDD
Holdings,
Inc.
3.3%
Broadline
Retail,
China
Meituan
Dianping
3.0%
Hotels,
Restaurants
&
Leisure,
China
PetroChina
Co.
Ltd.
2.9%
Oil,
Gas
&
Consumable
Fuels,
China
1.
Source:
Morningstar.
The
index
is
unmanaged
and
includes
reinvestment
of
any
income
or
distributions.
It
does
not
reflect
any
fees,
expenses
or
sales
charges.
One
cannot
invest
directly
in
an
index,
and
an
index
is
not
representative
of
the
Fund's
portfolio.
Net
Return
(NR)
reflects
no
deduction
for
fees,
expenses
or
taxes
but
are
net
of
dividend
tax
withholding.
Important
data
provider
notices
and
terms
available
at
www.franklintempletondatasources.com.
The
dollar
value,
number
of
shares
or
principal
amount,
and
names
of
all
portfolio
holdings
are
listed
in
the
Fund’s
Consolidated
Schedule
of
Investments
(SOI).
The
Consolidated
SOI
begins
on
page
6
.
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Performance
Summary
as
of
June
30,
2024
Total
return
reflects
reinvestment
of
the
Fund’s
dividends
and
capital
gain
distributions,
if
any,
and
any
unrealized
gains
or
losses.
Total
returns
do
not
reflect
any
sales
charges
paid
at
inception
or
brokerage
commissions
paid
on
secondary
market
purchases.
The
performance
table
does
not
reflect
any
taxes
that
a
shareholder
would
pay
on
Fund
dividends,
capital
gain
distributions,
if
any,
or
any
realized
gains
on
the
sale
of
Fund
shares.
Your
dividend
income
will
vary
depending
on
dividends
or
interest
paid
by
securities
in
the
Fund’s
portfolio,
adjusted
for
operating
expenses.
Capital
gain
distributions
are
net
profits
realized
from
the
sale
of
portfolio
securities.
Performance
as
of
06/30/24
1
Performance
data
represent
past
performance,
which
does
not
guarantee
future
results.
Investment
return
and
principal
value
will
fluctuate,
and
you
may
have
a
gain
or
loss
when
you
sell
your
shares.
Current
performance
may
differ
from
figures
shown.
Cumulative
Total
Return
2
Average
Annual
Total
Return
2
Based
on
NAV
3
Based
on
market
price
4
Based
on
NAV
3
Based
on
market
price
4
6-Month
+0.11%
-1.84%
+0.11%
-1.84%
1-Year
-11.37%
-11.96%
-11.37%
-11.96%
5-Year
-25.85%
-25.67%
-5.81%
-5.76%
10-Year
-0.69%
+6.66%
-0.07%
+0.65%
See
page
4
for
Performance
Summary
footnotes.
Templeton
Dragon
Fund,
Inc.
Performance
Summary
Events
such
as
the
spread
of
deadly
diseases,
disasters,
and
financial,
political
or
social
disruptions,
may
heighten
risks
and
adversely
affect
performance.
The
Fund
is
actively
managed
but
there
is
no
guarantee
that
the
manager's
investment
decisions
will
produce
the
desired
results.
All
investments
involve
risks,
including
possible
loss
of
principal.
International
investments
are
subject
to
special
risks,
including
currency
fluctuations
and
social,
economic
and
political
uncertainties,
which
could
increase
volatility.
These
risks
are
magnified
in
emerging
markets
.
There
are
special
risks
associated
with
investments
in
China,
Hong
Kong
and
Taiwan
,
including
less
liquidity,
expropriation,
confiscatory
taxation,
international
trade
tensions,
nationalization,
and
exchange
control
regula-
tions
and
rapid
inflation,
all
of
which
can
negatively
impact
the
Fund.
Investments
in
Taiwan
and
Hong
Kong
could
be
adversely
affected
by
their
respective
political
and
economic
relationship
with
China.
To
the
extent
the
Fund
invests
in
companies
in
a
specific
country
or
region
,
the
Fund
may
experience
greater
volatility
than
a
Fund
that
is
more
broadly
diversified
geographically.
The
portfolio
is
non-diversified
and
may
invest
in
a
relatively
small
number
of
issuers,
which
may
negatively
impact
the
Fund's
performance
and
result
in
greater
fluctuation
in
the
value
of
the
Fund's
shares.
The
managers’
environmental
social
and
governance
(ESG)
strategies
may
limit
the
types
and
number
of
investments
available
and,
as
a
result,
may
forgo
favorable
market
opportunities
or
underperform
strategies
that
are
not
subject
to
such
criteria.
There
is
no
guarantee
that
the
strategy's
ESG
directives
will
be
successful
or
will
result
in
better
performance.
The
Fund
may
invest
in
eligible
China
A
shares
(“Stock
Connect
Securities”)
listed
and
traded
on
the
Shanghai
Stock
Exchange
through
the
Shanghai-Hong
Kong
Stock
Con-
nect
program,
as
well
as
eligible
China
A
shares
listed
and
traded
on
the
Shenzhen
Stock
Exchange
through
the
Shenzhen-Hong
Kong
Stock
Connect
program
(collectively,
“Stock
Connect”)
and
may
invest
in
China
Interbank
bonds
traded
on
the
China
Interbank
Bond
Market
(“CIBM”)
through
the
China
–
Hong
Kong
Bond
Connect
program
(“Bond
Connect”).
Trading
through
Stock
Connect
is
subject
to
a
number
of
restrictions
that
may
affect
the
Fund’s
investments
and
returns.
For
example,
investors
in
Stock
Connect
Securi-
ties
are
generally
subject
to
Chinese
securities
regulations
and
the
listing
rules
of
the
respective
Exchange,
among
other
restrictions.
In
addition,
Stock
Connect
Securities
generally
may
not
be
sold,
purchased
or
otherwise
transferred
other
than
through
Stock
Connect
in
accordance
with
applicable
rules.
While
Stock
Connect
is
not
subject
to
individual
investment
quotas,
daily
and
aggregate
investment
quotas
apply
to
all
Stock
Connect
participants,
which
may
restrict
or
preclude
the
Fund’s
ability
to
invest
in
Stock
Connect
Securities.
Trading
in
the
Stock
Connect
program
is
subject
to
trading,
clearance
and
settlement
procedures,
which
could
pose
risks
to
the
Fund.
In
China,
the
Hong
Kong
Monetary
Authority
Central
Money
Markets
Unit
holds
Bond
Connect
securities
on
behalf
of
ultimate
investors
(such
as
the
Fund)
in
accounts
maintained
with
a
China-based
custodian
(either
the
China
Central
Depository
&
Clearing
Co.
or
the
Shanghai
Clearing
House).
This
recordkeeping
system
subjects
the
Fund
to
various
risks,
including
the
risk
that
the
Fund
may
have
a
limited
ability
to
enforce
rights
as
a
bondholder
and
the
risks
of
settlement
delays
and
counterparty
default
of
the
Hong
Kong
sub-custodian.
In
addition,
enforcing
the
ownership
rights
of
a
beneficial
holder
of
Bond
Connect
securities
is
untested
and
courts
in
China
have
limited
experience
in
apply-
ing
the
concept
of
beneficial
ownership.
Bond
Connect
uses
the
trading
infrastructure
of
both
Hong
Kong
and
China
and
is
not
available
on
trading
holidays
in
Hong
Kong.
As
a
result,
prices
of
securities
purchased
through
Bond
Connect
may
fluctuate
at
times
when
a
Fund
is
unable
to
add
to
or
exit
its
position.
Securities
offered
through
Bond
Connect
may
lose
their
eligibility
for
trading
through
the
program
at
any
time.
If
Bond
Connect
securities
lose
their
eligibility
for
trading
through
the
program,
they
may
be
sold
but
can
no
longer
be
purchased
through
Bond
Connect.
The
application
and
interpretation
of
the
laws
and
regulations
of
Hong
Kong
and
China,
and
the
rules,
policies
or
guidelines
published
or
applied
by
relevant
regulators
and
exchanges
in
respect
of
the
Stock
Connect
and
Bond
Connect
programs,
are
uncertain,
and
they
may
have
a
detrimental
effect
on
the
Fund’s
investments
and
returns.
1.
Gross
expenses
are
the
Fund’s
total
annual
operating
expenses
as
of
the
Fund's
annual
report
available
at
the
time
of
publication.
Actual
expenses
may
be
higher
and
may
impact
portfolio
returns.
Net
expenses
reflect
voluntary
fee
waivers,
expense
caps
and/or
reimbursements.
Voluntary
waivers
may
be
modified
or
discontinued
at
any
time
without
notice.
2.
Total
return
calculations
represent
the
cumulative
and
average
annual
changes
in
value
of
an
investment
over
the
periods
indicated.
Return
for
less
than
one
year,
if
any,
has
not
been
annualized.
3.
Assumes
reinvestment
of
distributions
based
on
net
asset
value.
4.
Assumes
reinvestment
of
distributions
based
on
the
dividend
reinvestment
and
cash
purchase
plan.
Important
data
provider
notices
and
terms
available
at
www.franklintempletondatasources.com.
Consolidated
Financial
Highlights
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Semiannual
Report
a
Six
Months
Ended
June
30,
2024
(unaudited)
Year
Ended
December
31,
2023
2022
2021
2020
2019
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
period)
Net
asset
value,
beginning
of
period
.....
$9.42
$11.94
$18.70
$24.93
$21.81
$19.01
Income
from
investment
operations
a
:
Net
investment
income
(loss)
.........
0.06
0.04
(0.05)
(0.16)
(0.06)
0.19
Net
realized
and
unrealized
gains
(losses)
(0.05)
(2.57)
(5.41)
(3.67)
8.96
4.70
Total
from
investment
operations
........
0.01
(2.53)
(5.46)
(3.83)
8.90
4.89
Less
distributions
from:
Net
investment
income
..............
—
—
—
—
(0.16)
(0.30)
Net
realized
gains
.................
—
—
(1.30)
(2.40)
(5.62)
(1.79)
Total
distributions
...................
—
—
(1.30)
(2.40)
(5.78)
(2.09)
Repurchase
of
shares
..............
—
0.01
—
—
—
—
b
Net
asset
value,
end
of
period
..........
$9.43
$9.42
$11.94
$18.70
$24.93
$21.81
Market
value,
end
of
period
c
...........
$8.02
$8.17
$10.22
$17.00
$23.36
$19.45
Total
return
(based
on
net
asset
value
per
share)
d
...........................
0.11%
(21.11)%
(29.46)%
(15.52)%
42.18%
26.49%
Total
return
(based
on
market
value
per
share)
d
...........................
(1.84)%
(20.06)%
(32.99)%
(17.83)%
52.46%
27.55%
Ratios
to
average
net
assets
e
Expenses
before
waiver
and
payments
by
affiliates
..........................
1.40%
1.28%
1.38%
1.37%
1.34%
1.35%
Expenses
net
of
waiver
and
payments
by
affiliates
..........................
1.39%
1.27%
1.37%
1.37%
f
1.33%
1.34%
Net
investment
income
(loss)
..........
1.26%
0.33%
(0.34)%
(0.70)%
(0.26)%
0.88%
Supplemental
data
Net
assets,
end
of
period
(000’s)
........
$239,186
$238,770
$403,707
$632,030
$842,645
$737,427
Portfolio
turnover
rate
................
15.88%
14.30%
3.26%
11.64%
39.50%
36.70%
a
Based
on
average
daily
shares
outstanding.
b
Amount
rounds
to
less
than
$0.01
per
share.
c
Based
on
the
last
sale
on
the
New
York
Stock
Exchange.
d
The
Market
Value
Total
Return
is
calculated
assuming
a
purchase
of
common
shares
on
the
opening
of
the
first
business
day
and
a
sale
on
the
closing
of
the
last
business
day
of
each
period.
Dividends
and
distributions
are
assumed
for
the
purposes
of
this
calculation
to
be
reinvested
at
prices
obtained
under
the
Fund's
Dividend
Reinvestment
and
Cash
Purchase
Plan.
Net
Asset
Value
Total
Return
is
calculated
on
the
same
basis,
except
that
the
Fund's
net
asset
value
is
used
on
the
purchase,
sale
and
dividend
reinvestment
dates
instead
of
market
value.
Total
return
does
not
reflect
brokerage
commissions
or
sales
charges
in
connection
with
the
purchase
or
sale
of
Fund
shares.
Total
return
is
not
annualized
for
periods
less
than
one
year.
e
Ratios
are
annualized
for
periods
less
than
one
year.
f
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Consolidated
Schedule
of
Investments
(unaudited),
June
30,
2024
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
97.3%
Air
Freight
&
Logistics
0.6%
a
SF
Holding
Co.
Ltd.,
A
..................................
China
272,100
$
1,333,788
Automobile
Components
2.8%
a
Fuyao
Glass
Industry
Group
Co.
Ltd.,
A
.....................
China
886,922
5,845,893
b
Fuyao
Glass
Industry
Group
Co.
Ltd.,
H,
144A,
Reg
S
..........
China
150,400
871,243
6,717,136
Automobiles
0.7%
a
BYD
Co.
Ltd.,
A
.......................................
China
47,000
1,615,215
Banks
6.4%
China
Construction
Bank
Corp.,
H
.........................
China
11,278,000
8,336,946
a
China
Merchants
Bank
Co.
Ltd.,
A
.........................
China
763,800
3,589,228
China
Merchants
Bank
Co.
Ltd.,
H
.........................
China
732,570
3,328,904
15,255,078
Beverages
7.0%
China
Resources
Beer
Holdings
Co.
Ltd.
....................
China
467,394
1,572,280
Kweichow
Moutai
Co.
Ltd.,
A
.............................
China
2,700
543,912
a
Kweichow
Moutai
Co.
Ltd.,
A
.............................
China
51,145
10,303,098
a,c
Wuliangye
Yibin
Co.
Ltd.,
A
..............................
China
241,588
4,246,202
16,665,492
Broadline
Retail
9.4%
d
Alibaba
Group
Holding
Ltd.
..............................
China
1,616,151
14,566,110
c,d
PDD
Holdings,
Inc.,
ADR
................................
China
58,809
7,818,656
22,384,766
Chemicals
1.4%
a
Guangzhou
Tinci
Materials
Technology
Co.
Ltd.,
A
.............
China
633,280
1,528,369
a
Hangzhou
Oxygen
Plant
Group
Co.
Ltd.,
A
..................
China
603,200
1,844,244
3,372,613
Distributors
1.5%
c,e
GigaCloud
Technology,
Inc.,
A
............................
Hong
Kong
120,699
3,671,664
Diversified
Consumer
Services
2.1%
c,d
New
Oriental
Education
&
Technology
Group,
Inc.
.............
China
444,869
3,419,315
c,d,e
New
Oriental
Education
&
Technology
Group,
Inc.,
ADR
........
China
20,000
1,554,600
4,973,915
Electrical
Equipment
5.5%
a
Contemporary
Amperex
Technology
Co.
Ltd.,
A
...............
China
73,164
1,812,080
a
GoodWe
Technologies
Co.
Ltd.,
A
.........................
China
103,125
794,571
a
Hongfa
Technology
Co.
Ltd.,
A
............................
China
1,155,209
4,392,482
a
NARI
Technology
Co.
Ltd.,
A
.............................
China
1,764,643
6,047,921
13,047,054
Electronic
Equipment,
Instruments
&
Components
2.0%
Wasion
Holdings
Ltd.
..................................
Hong
Kong
2,116,000
1,853,181
a
WUS
Printed
Circuit
Kunshan
Co.
Ltd.,
A
....................
China
593,410
2,960,180
4,813,361
Entertainment
4.7%
b,c,d,e
Maoyan
Entertainment,
144A,
Reg
S
.......................
China
883,354
907,122
d
NetEase,
Inc.
........................................
China
547,088
10,447,151
11,354,273
Food
Products
2.4%
b
China
Feihe
Ltd.,
144A,
Reg
S
...........................
China
4,300,000
1,983,678
Templeton
Dragon
Fund,
Inc.
Consolidated
Schedule
of
Investments
(unaudited)
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Semiannual
Report
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Food
Products
(continued)
a
Inner
Mongolia
Yili
Industrial
Group
Co.
Ltd.,
A
...............
China
1,073,900
$
3,813,338
5,797,016
Health
Care
Equipment
&
Supplies
1.5%
a
Shenzhen
Mindray
Bio-Medical
Electronics
Co.
Ltd.,
A
..........
China
87,501
3,500,190
Health
Care
Providers
&
Services
1.4%
a
Aier
Eye
Hospital
Group
Co.
Ltd.,
A
........................
China
1,634,922
2,318,793
b,c,d,e,f
New
Horizon
Health
Ltd.,
144A,
Reg
S
.....................
China
594,000
1,075,567
3,394,360
Hotels,
Restaurants
&
Leisure
6.7%
b,c
Meituan
Dianping,
B,
144A,
Reg
S
........................
China
507,943
7,220,049
c,d
Trip.com
Group
Ltd.
...................................
China
85,350
4,039,262
c,d,e
Trip.com
Group
Ltd.,
ADR
...............................
China
25,000
1,175,000
Yum
China
Holdings,
Inc.
...............................
China
117,578
3,626,106
16,060,417
Household
Durables
4.5%
a
Haier
Smart
Home
Co.
Ltd.,
A
............................
China
1,278,400
4,978,368
a
Midea
Group
Co.
Ltd.,
A
................................
China
663,316
5,879,824
10,858,192
Independent
Power
and
Renewable
Electricity
Producers
6.8%
China
Yangtze
Power
Co.
Ltd.,
A
..........................
China
900,000
3,581,547
a
China
Yangtze
Power
Co.
Ltd.,
A
..........................
China
3,188,520
12,688,706
16,270,253
Insurance
3.1%
c
PICC
Property
&
Casualty
Co.
Ltd.,
H
......................
China
4,014,524
4,977,042
a
Ping
An
Insurance
Group
Co.
of
China
Ltd.,
A
................
China
258,400
1,466,748
Ping
An
Insurance
Group
Co.
of
China
Ltd.,
H
................
China
199,598
904,294
7,348,084
Interactive
Media
&
Services
11.9%
c,d
Baidu,
Inc.,
A
.........................................
China
208,179
2,253,756
d
Tencent
Holdings
Ltd.
..................................
China
550,933
26,136,442
28,390,198
Machinery
1.9%
a
Shenzhen
Inovance
Technology
Co.
Ltd.,
A
..................
China
662,300
4,669,793
Media
3.8%
a
Focus
Media
Information
Technology
Co.
Ltd.,
A
..............
China
10,275,916
8,555,197
b,c,d,e
Mobvista,
Inc.,
144A,
Reg
S
.............................
China
1,879,671
605,349
9,160,546
Oil,
Gas
&
Consumable
Fuels
2.9%
a
PetroChina
Co.
Ltd.,
A
..................................
China
901,000
1,277,406
PetroChina
Co.
Ltd.,
H
.................................
China
5,614,805
5,669,580
6,946,986
Pharmaceuticals
2.6%
a,c
Jiangsu
Hengrui
Pharmaceuticals
Co.
Ltd.,
A
.................
China
1,171,427
6,190,666
Semiconductors
&
Semiconductor
Equipment
0.7%
a
Sino
Wealth
Electronic
Ltd.,
A
............................
China
617,220
1,666,338
Software
0.7%
a
Hundsun
Technologies,
Inc.,
A
............................
China
726,621
1,759,084
Templeton
Dragon
Fund,
Inc.
Consolidated
Schedule
of
Investments
(unaudited)
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
See
Abbreviations
on
page
19.
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Technology
Hardware,
Storage
&
Peripherals
0.6%
b,c,d,g
Xiaomi
Corp.,
B,
144A,
Reg
S
............................
China
677,104
$
1,423,413
Textiles,
Apparel
&
Luxury
Goods
1.7%
ANTA
Sports
Products
Ltd.
..............................
China
422,443
4,040,241
Total
Common
Stocks
(Cost
$214,047,474)
.....................................
232,680,132
Escrows
and
Litigation
Trusts
0.0%
†
a,c,f,h
Kangmei
Pharmaceutical
Co.
Ltd.,
Escrow
Account
............
China
673,786
92,300
Total
Escrows
and
Litigation
Trusts
(Cost
$–)
...................................
92,300
Total
Long
Term
Investments
(Cost
$214,047,474)
...............................
232,772,432
a
Short
Term
Investments
1.0%
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Money
Market
Funds
0.2%
i,j
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.972%
....
United
States
530,087
530,087
Total
Money
Market
Funds
(Cost
$530,087)
.....................................
530,087
k
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.8%
Money
Market
Funds
0.8%
i,j
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.972%
....
United
States
1,885,121
1,885,121
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$1,885,121)
............................................................
1,885,121
Total
Short
Term
Investments
(Cost
$2,415,208
)
.................................
2,415,208
a
Total
Investments
(Cost
$216,462,682)
98.3%
...................................
$235,187,640
Other
Assets,
less
Liabilities
1.7%
.............................................
3,997,885
Net
Assets
100.0%
...........................................................
$239,185,525
a
a
a
†
Rounds
to
less
than
0.1%
of
net
assets.
a
The
security
is
owned
by
Templeton
China
Opportunities
Fund,
Ltd.,
a
wholly-owned
subsidiary
of
the
Fund.
See
Note
1(d).
b
Security
was
purchased
pursuant
to
Rule
144A
or
Regulation
S
under
the
Securities
Act
of
1933.
144A
securities
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.
Regulation
S
securities
cannot
be
sold
in
the
United
States
without
either
an
effective
registration
statement
filed
pursuant
to
the
Securities
Act
of
1933,
or
pursuant
to
an
exemption
from
registration.
At
June
30,
2024,
the
aggregate
value
of
these
securities
was
$14,086,421,
representing
5.9%
of
net
assets.
c
Non-income
producing.
d
Variable
interest
entity
(VIE).
See
the
Fund’s
notes
to
financial
statements
regarding
investments
made
through
a
VIE
structure.
At
June
30,
2024,
the
aggregate
value
of
these
securities
was
$75,421,743,
representing
31.5%
of
net
assets.
e
A
portion
or
all
of
the
security
is
on
loan
at
June
30,
2024.
See
Note
1(e).
f
Fair
valued
using
significant
unobservable
inputs.
See
Note
8
regarding
fair
value
measurements.
g
A
portion
or
all
of
the
security
purchased
on
a
delayed
delivery
basis.
See
Note
1(c).
h
See
Note
7
regarding
restricted
securities.
i
See
Note
3(c)
regarding
investments
in
affiliated
management
investment
companies.
j
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
k
See
Note
1(e)
regarding
securities
on
loan.
Templeton
Dragon
Fund,
Inc.
Consolidated
Financial
Statements
Consolidated
Statement
of
Assets
and
Liabilities
June
30,
2024
(unaudited)
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Semiannual
Report
Templeton
Dragon
Fund,
Inc.
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$214,047,474
Cost
-
Non-controlled
affiliates
(Not
e
3c)
........................................................
2,415,208
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$2,538,377)
..................................
$232,772,432
Value
-
Non-controlled
affiliates
(Not
e
3c)
.......................................................
2,415,208
Cash
....................................................................................
81,492
Foreign
currency,
at
value
(cost
$6,096,517)
......................................................
6,057,857
Receivables:
Dividends
...............................................................................
574,895
Total
assets
..........................................................................
241,901,884
Liabilities:
Payables:
Investment
securities
purchased
..............................................................
300,282
Management
fees
.........................................................................
223,581
Custodian
fees
...........................................................................
166,592
Director
s'
fees
and
expenses
................................................................
16
Payable
upon
return
of
securities
loaned
(Note
1
e
)
..................................................
1,885,121
Accrued
expenses
and
other
liabilities
...........................................................
140,767
Total
liabilities
.........................................................................
2,716,359
Net
assets,
at
value
.................................................................
$239,185,525
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$282,969,108
Total
distributable
earnings
(losses)
.............................................................
(43,783,583)
Net
assets,
at
value
.................................................................
$239,185,525
Shares
outstanding
.........................................................................
25,353,108
Net
asset
value
per
share
a
....................................................................
$9.43
a
Net
asset
value
per
share
may
not
recalculate
due
to
rounding.
Templeton
Dragon
Fund,
Inc.
Consolidated
Financial
Statements
Consolidated
Statement
of
Operations
for
the
six
months
ended
June
30,
2024
(unaudited)
Semiannual
Report
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Templeton
Dragon
Fund,
Inc.
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$209,854)
Unaffiliated
issuers
........................................................................
$2,933,636
Non-controlled
affiliates
(Not
e
3c)
.............................................................
154,783
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates
)
.....................................................
6,244
Non-controlled
affiliates
(Not
e
3c)
.............................................................
39,700
Total
investment
income
...................................................................
3,134,363
Expenses:
Management
fees
(Note
3
a
)
...................................................................
1,292,905
Transfer
agent
fees
.........................................................................
134,273
Custodian
fees
.............................................................................
89,117
Reports
to
shareholders
fees
..................................................................
12,403
Registration
and
filing
fees
....................................................................
44,398
Professional
fees
...........................................................................
57,825
Directors'
fees
and
expenses
..................................................................
15,489
Other
....................................................................................
12,542
Total
expenses
.........................................................................
1,658,952
Expenses
waived/paid
by
affiliates
(Note
3c)
...................................................
(13,191)
Net
expenses
.........................................................................
1,645,761
Net
investment
income
................................................................
1,488,602
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
(12,800,621)
Foreign
currency
transactions
................................................................
13,955
Net
realized
gain
(loss)
..................................................................
(12,786,666)
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
11,757,952
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
(44,135)
Net
change
in
unrealized
appreciation
(depreciation)
............................................
11,713,817
Net
realized
and
unrealized
gain
(loss)
............................................................
(1,072,849)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$415,753
Templeton
Dragon
Fund,
Inc.
Consolidated
Financial
Statements
Consolidated
Statements
of
Changes
in
Net
Assets
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Semiannual
Report
Templeton
Dragon
Fund,
Inc.
Six
Months
Ended
June
30,
2024
(unaudited)
Year
Ended
December
31,
2023
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$1,488,602
$1,224,738
Net
realized
gain
(loss)
.................................................
(12,786,666)
(40,947,413)
Net
change
in
unrealized
appreciation
(depreciation)
...........................
11,713,817
(48,732,691)
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
415,753
(88,455,366)
Capital
share
transactions
from
-
repurchase
of
shares
(Note
2
)
....................
—
(76,481,867)
Net
increase
(decrease)
in
net
assets
...................................
415,753
(164,937,233)
Net
assets:
Beginning
of
period
.....................................................
238,769,772
403,707,005
End
of
period
..........................................................
$239,185,525
$238,769,772
Notes
to
Consolidated
Financial
Statements
(unaudited)
1.
Organization
and
Significant
Accounting
Policies
Templeton
Dragon
Fund,
Inc. (Fund)
is
registered under
the
Investment
Company
Act
of
1940
(1940
Act)
as
a
closed-end
management
investment
company.
The
Fund
follows
the
accounting
and
reporting
guidance
in
Financial
Accounting
Standards
Board
(FASB)
Accounting
Standards
Codification
Topic
946,
Financial
Services
–
Investment
Companies
(ASC
946)
and
applies
the
specialized
accounting
and
reporting
guidance
in
U.S.
Generally
Accepted
Accounting
Principles
(U.S.
GAAP),
including,
but
not
limited
to,
ASC
946.
The
following
summarizes
the Fund's
significant
accounting
policies.
a.
Financial
Instrument
Valuation
The
Fund's
investments
in
financial
instruments
are
carried
at
fair
value
daily.
Fair
value
is
the
price
that
would
be
received
to
sell
an
asset
or
paid
to
transfer
a
liability
in
an
orderly
transaction
between
market
participants
on
the
measurement
date.
The
Fund
calculates
the
net
asset
value
(NAV)
per
share
each business
day as
of
4
p.m.
Eastern
time
or
the
regularly
scheduled
close
of
the
New
York
Stock
Exchange
(NYSE),
whichever
is
earlier.
Under
compliance
policies
and
procedures
approved
by
the Fund's
Board
of
Directors
(the
Board),
the
Board
has
designated
the
Fund’s
investment
manager
as
the
valuation
designee
and
has
responsibility
for
oversight
of
valuation.
The
investment
manager
is
assisted
by
the
Fund’s
administrator
in
performing
this
responsibility,
including
leading
the
cross-
functional
Valuation
Committee
(VC).
The
Fund
may
utilize
independent
pricing
services,
quotations
from
securities
and
financial
instrument
dealers,
and
other
market
sources
to
determine
fair
value.
Equity
securities
listed
on
an
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.
Foreign
equity
securities
are
valued
as
of
the
close
of
trading
on
the
foreign
stock
exchange
on
which
the
security
is
primarily
traded,
or
as
of
4
p.m.
Eastern
time.
The
value
is
then
converted
into
its
U.S.
dollar
equivalent
at
the
foreign
exchange
rate
in
effect
at
4
p.m.
Eastern
time
on
the
day
that
the
value
of
the
security
is
determined.
Over-the-counter
(OTC)
securities
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.
Certain
equity
securities
are
valued
based
upon
fundamental
characteristics
or
relationships
to
similar
securities.
Investments
in open-end mutual
funds
are
valued
at
the
closing
NAV.
The
Fund
has
procedures
to
determine
the
fair
value
of
financial
instruments
for
which
market
prices
are
not
reliable
or
readily
available.
Under
these
procedures,
the Fund
primarily
employs
a
market-based
approach
which
may
use
related
or
comparable
assets
or
liabilities,
recent
transactions,
market
multiples,
and
other
relevant
information
for
the
investment
to
determine
the
fair
value
of
the
investment.
An
income-based
valuation
approach
may
also
be
used
in
which
the
anticipated
future
cash
flows
of
the
investment
are
discounted
to
calculate
fair
value.
Discounts
may
also
be
applied
due
to
the
nature
or
duration
of
any
restrictions
on
the
disposition
of
the
investments.
Due
to
the
inherent
uncertainty
of
valuations
of
such
investments,
the
fair
values
may
differ
significantly
from
the
values
that
would
have
been
used
had
an
active
market
existed.
Trading
in
securities
on
foreign
securities
stock
exchanges
and
OTC
markets
may
be
completed
before
4
p.m.
Eastern
time.
In
addition,
trading
in
certain
foreign
markets
may
not
take
place
on
every
Fund's
business
day. Events
can occur
between
the
time
at
which
trading
in
a
foreign
security
is
completed
and
4
p.m.
Eastern
time
that
might
call
into
question
the
reliability
of
the
value
of
a
portfolio
security
held
by
the
Fund.
As
a
result,
differences
may
arise
between
the
value
of
the
Fund's
portfolio
securities
as
determined
at
the
foreign
market
close
and
the
latest
indications
of
value
at
4
p.m.
Eastern
time. In
order
to
minimize
the
potential
for
these
differences,
an
independent
pricing
service
may
be
used
to
adjust
the
value
of
the
Fund's
portfolio
securities
to
the
latest
indications
of
fair
value
at
4
p.m.
Eastern
time.
At
June
30,
2024,
certain
securities
may
have
been
fair
valued
using
these
procedures,
in
which
case
the
securities
were
categorized
as
Level
2
within
the
fair
value
hierarchy
(referred
to
as
“market
level
fair
value”).
See
the
Fair
Value
Measurements
note
for
more
information.
When
the
last
day
of
the
reporting
period
is
a
non-business
day,
certain
foreign
markets
may
be
open
on
those
days
that
the
Fund's
NAV
is
not
calculated,
which
could
result
in
differences
between
the
value
of
the
Fund's
portfolio
securities
on
the
last
business
day
and
the
last
calendar
day
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
(unaudited)
of
the
reporting
period.
Any
security
valuation
changes
due
to
an
open
foreign
market
are
adjusted
and
reflected
by
the
Fund
for
financial
reporting
purposes.
b.
Foreign
Currency
Translation
Portfolio
securities
and
other
assets
and
liabilities
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
based
on
the
exchange
rate
of
such
currencies
against
U.S.
dollars
on
the
date
of
valuation.
The
Fund
may
enter
into
foreign
currency
exchange
contracts
to
facilitate
transactions
denominated
in
a
foreign
currency.
Purchases
and
sales
of
securities,
income
and
expense
items
denominated
in
foreign
currencies
are
translated
into
U.S.
dollars
at
the
exchange
rate
in
effect
on
the
transaction
date.
Portfolio
securities
and
assets
and
liabilities
denominated
in
foreign
currencies
contain
risks
that
those
currencies
will
decline
in
value
relative
to
the
U.S.
dollar.
Occasionally,
events
may
impact
the
availability
or
reliability
of
foreign
exchange
rates
used
to
convert
the
U.S.
dollar
equivalent
value.
If
such
an
event
occurs,
the
foreign
exchange
rate
will
be
valued
at
fair
value
using
procedures
established
and
approved
by
the
Board.
The
Fund
does
not
separately
report
the
effect
of
changes
in
foreign
exchange
rates
from
changes
in
market
prices
on
securities
held.
Such
changes
are
included
in
net
realized
and
unrealized
gain
or
loss
from
investments
in
the
Consolidated
Statement of
Operations.
Realized
foreign
exchange
gains
or
losses
arise
from
sales
of
foreign
currencies,
currency
gains
or
losses
realized
between
the
trade
and
settlement
dates
on
securities
transactions
and
the
difference
between
the
recorded
amounts
of
dividends,
interest,
and
foreign
withholding
taxes
and
the
U.S.
dollar
equivalent
of
the
amounts
actually
received
or
paid.
Net
unrealized
foreign
exchange
gains
and
losses
arise
from
changes
in
foreign
exchange
rates
on
foreign
denominated
assets
and
liabilities
other
than
investments
in
securities
held
at
the
end
of
the
reporting
period.
c.
Securities
Purchased
on
a
When-Issued,
Forward
Commitment or
Delayed
Delivery
Basis
The
Fund
may
purchase
securities
on
a when-issued,
forward
commitment
or
delayed
delivery basis,
with
payment
and
delivery
scheduled
for
a
future
date.
These
transactions
are
subject
to
market
fluctuations
and
are
subject
to
the
risk
that
the
value
at
delivery
may
be
more
or
less
than
the
trade
date
purchase
price.
Although
the
Fund
will
generally
purchase
these
securities
with
the
intention
of
holding
the
securities, it
may
sell
the
securities
before
the
settlement
date.
d.
Investments
in
Templeton
China
Opportunities
Fund,
Ltd.
(China
Fund)
The
Fund
invests
in
certain
China
A-shares
through
its
investment
in
the
China
Fund.
The
China
Fund
is
a
Cayman
Islands
exempted
company,
and
is
a
wholly-
owned
subsidiary
of
the
Templeton
Dragon
Fund,
and
is
able
to
invest
directly
in
China
A-shares
consistent
with
the
investment
objective
of
the
Templeton
Dragon
Fund.
At
June
30,
2024,
the
China
Fund’s
investments
as
well
as
any
other
assets
and
liabilities
of
the
China
Fund
are
reflected
in
the
Fund’s
Consolidated Schedule
of
Investments
and
Consolidated
Statement of
Assets
and
Liabilities.
All
intercompany
transactions
and
balances
have
been
eliminated.
At
June
30,
2024,
the
net
assets
of
the
China
Fund
were
$111,177,279,
representing
46.5%
of
the
Fund’s
consolidated
net
assets.
The
China
Fund
gains
access
to
the
A-shares
market
through
Templeton
Investment
Counsel,
LLC
(TIC),
which
serves
as
the
registered
Qualified
Foreign
Institutional
Investor
(QFII)
for
the
China
Fund.
Investment
decisions
related
to
the
China
Fund
A-shares
are
specific
to
the
Fund
and
it
bears
the
resultant
economic
and
tax
consequences
of
its
holdings
and
transactions
in
A-shares.
The
China
Fund
is
subject
to
certain
restrictions
and
administrative
processes
relating
to
its
ability
to
repatriate
cash
balances,
investment
proceeds,
and
earnings
associated
with
its
A-shares
and
may
incur
substantial
delays
in
gaining
access
to
its
assets
or
a
loss
of
value
in
the
event
of
noncompliance
with
applicable
Chinese
rules
or
requirements.
e.
Securities
Lending
The
Fund
participates
in
an
agency
based
securities
lending
program
to
earn
additional
income.
The
Fund
receives
collateral
in
the
form
of
cash
and/or
U.S.
Government
and
Agency
securities
against
the
loaned
securities
in
an
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
(unaudited)
amount
equal
to
at
least
102%
of
the
fair
value
of
the
loaned
securities.
Collateral
is
maintained
over
the
life
of
the
loan
in
an
amount
not
less
than
100%
of
the
fair
value
of
loaned
securities,
as
determined
at
the
close
of
Fund
business
each
day;
any
additional
collateral
required
due
to
changes
in
security
values
is
delivered
to
the
Fund
on
the
next
business
day.
Any
cash
collateral
received
is
deposited
into
a
joint
cash
account
with
other
funds
and
is
used
to
invest
in
a
money
market
fund
managed
by
Franklin
Advisers,
Inc.,
an
affiliate
of
the
Fund.
Additionally,
at
June
30,
2024,
the
Fund
held
$752,266
in
U.S.
Government
and
Agency
securities
as
collateral.
These
securities
are
held
as
collateral
in
segregated
accounts
with
the
Fund's
custodian.
The
Fund
cannot
repledge
or
resell
these
securities
held
as
collateral.
As
such,
the
non-cash
collateral
is
excluded
from
the
Consolidated
Statement
of
Assets
and
Liabilities. The
Fund
may
receive
income
from
the
investment
of
cash
collateral,
in
addition
to
lending
fees paid
by
the
borrower.
Income
from
securities
loaned,
net
of
fees
paid
to
the
securities
lending
agent
and/or
third-party
vendor,
is
reported
separately
in
the Consolidated
Statement of
Operations.
The
Fund
bears
the
market
risk
with
respect
to
any
cash
collateral
investment,
securities
loaned,
and
the
risk
that
the
agent
may
default
on
its
obligations
to
the
Fund.
If
the
borrower
defaults
on
its
obligation
to
return
the
securities
loaned,
the
Fund
has
the
right
to
repurchase
the
securities
in
the
open
market
using
the
collateral
received.
The
securities
lending
agent
has
agreed
to
indemnify
the
Fund
in
the
event
of
default
by
a
third
party
borrower.
f.
Income
and
Deferred
Taxes
It
is the Fund's
policy
to
qualify
as
a
regulated
investment
company
under
the
Internal
Revenue
Code. The Fund
intends
to
distribute
to
shareholders
substantially
all
of
its
taxable
income
and
net
realized
gains
to
relieve
it
from
federal
income
and
excise
taxes.
As
a
result,
no
provision
for
U.S.
federal
income
taxes
is
required.
The Fund
may
be
subject
to
foreign
taxation
related
to
income
received,
capital
gains
on
the
sale
of
securities
and
certain
foreign
currency
transactions
in
the
foreign
jurisdictions
in
which
it
invests.
Foreign
taxes,
if
any,
are
recorded
based
on
the
tax
regulations
and
rates
that
exist
in
the
foreign
markets
in
which
the
Fund
invests.
When
a
capital
gain
tax
is
determined
to
apply,
the
Fund
records
an
estimated
deferred
tax
liability
in
an
amount
that
would
be
payable
if
the
securities
were
disposed
of
on
the
valuation
date.
The Fund
may
recognize
an
income
tax
liability
related
to
its
uncertain
tax
positions
under
U.S.
GAAP
when
the
uncertain
tax
position
has
a
less
than
50%
probability
that
it
will
be
sustained
upon
examination
by
the
tax
authorities
based
on
its
technical
merits.
As
of
June
30,
2024, the Fund
has
determined
that
no
tax
liability
is
required
in
its
financial
statements
related
to
uncertain
tax
positions
for
any
open
tax
years
(or
expected
to
be
taken
in
future
tax
years).
Open
tax
years
are
those
that
remain
subject
to
examination
and
are
based
on
the
statute
of
limitations
in
each
jurisdiction
in
which
the Fund
invests.
g.
Security
Transactions,
Investment
Income,
Expenses
and
Distributions
Security
transactions
are
accounted
for
on
trade
date.
Realized
gains
and
losses
on
security
transactions
are
determined
on
a
specific
identification basis.
Interest
income
(including
interest
income
from
payment-in-kind
securities,
if
any)
and
estimated
expenses
are
accrued
daily.
Amortization
of
premium
and
accretion
of
discount
on
debt
securities
are
included
in
interest
income.
Dividend
income
is recorded
on
the
ex-dividend
date
except
for
certain
dividends
from
securities
where
the
dividend
rate
is
not available.
In
such
cases,
the
dividend
is
recorded
as
soon
as
the
information
is
received
by
the Fund.
Distributions
to
shareholders
are
recorded
on
the
ex-dividend
date.
Distributable
earnings are
determined
according
to
income
tax
regulations
(tax
basis)
and
may
differ
from
earnings recorded
in
accordance
with
U.S.
GAAP.
These
differences
may
be
permanent
or
temporary.
Permanent differences
are
reclassified
among
capital
accounts
to
reflect
their
tax
character.
These reclassifications
have
no
impact
on
net
assets
or
the
results
of
operations.
Temporary
differences are
not
reclassified,
as
they
may
reverse
in
subsequent
periods.
h.
Accounting
Estimates
The
preparation
of
financial
statements
in
accordance
with
U.S.
GAAP
requires
management
to
make
estimates
and
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
at
the
date
of
the
financial
statements
and
the
amounts
of
income
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
those
estimates.
1.
Organization
and
Significant
Accounting
Policies
(continued)
e.
Securities
Lending
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
(unaudited)
i.
Guarantees
and
Indemnifications
Under
the Fund's
organizational
documents,
its
officers
and directors
are
indemnified
by
the
Fund against
certain
liabilities
arising
out
of
the
performance
of
their
duties
to
the
Fund.
Additionally,
in
the
normal
course
of
business,
the
Fund
enters
into
contracts
with
service
providers
that
contain
general
indemnification
clauses.
The Fund's
maximum
exposure
under
these
arrangements
is
unknown
as
this
would
involve
future
claims
that
may
be
made
against
the Fund
that
have
not
yet
occurred.
Currently,
the Fund
expects
the
risk
of
loss
to
be
remote.
2.
Capital
Stock
At
June
30,
2024,
there
were
100
million
shares
authorized
($0.01
par
value).
During
the periods
ended
June
30,
2024 and
December
31,
2023,
there
were
no
shares
issued;
all
reinvested
distributions
were
satisfied
with
previously
issued
shares
purchased
in
the
open
market.
Under
the
Board
approved
open-market
share
repurchase
program,
the
Fund
may
purchase,
from
time
to
time,
Fund
shares
in
open-market
transactions,
at
the
discretion
of
management.
Since
the
inception
of
the
program,
the
Fund
has
repurchased
a
total
of 9,335,184
shares.
Transactions
in
the
Fund's
shares
were
as
follows:
3.
Transactions
with
Affiliates
Franklin
Resources,
Inc.
is
the
holding
company
for
various
subsidiaries
that
together
are
referred
to
as
Franklin
Templeton.
Certain
officers
and directors
of
the Fund are
also
officers
and/or
directors
of
the
following
subsidiaries:
a.
Management
Fees
The
Fund
pays
an
investment
management
fee,
calculated weekly
and
paid
monthly,
to
TAML
based
on
the
average weekly
net
assets
of
the
Fund
as
follows:
For
the
period
ended
June
30,
2024,
the
annualized
gross
effective
investment
management
fee
rate
was 1.100%
of
the
Fund’s
average weekly
net
assets.
Period
Ended
June
30,
2024
Year
Ended
December
31,
2023
Shares
Amount
Shares
Amount
Shares
repurchased
......................
—
$—
8,451,035
a
$76,481,867
Weighted
average
discount
of
cost
of
repurchase
to
net
asset
value
of
shares
repurchased
.....
—%
2%
a
On
November
14,
2023,
the
Fund
announced
a
tender
offer
to
purchase
for
cash
up
to
25
percent
of
its
issued
and
outstanding
common
shares
(33,804,143
shares),
each
without
par
value.
The
tender
period
commenced
on
November
21,
2023
and
expired
at
5:00
p.m.
Eastern
time
on
December
20,
2023.
The
Fund
accepted
8,451,035
shares
for
cash
payment
at
a
price
equal
to
$9.05
per
share.
This
purchase
price
was
98%
of
the
Fund’s
NAV
per
share
of
$9.23
as
of
the
close
of
regular
trading
on
the
NYSE
on
December
21,
2023.
Subsidiary
Affiliation
Templeton
Asset
Management
Ltd.
(TAML)
Investment
manager
Templeton
Investment
Counsel,
LLC
(TIC)
Investment
manager
Franklin
Templeton
Services,
LLC
(FT
Services)
Administrative
manager
Annualized
Fee
Rate
Net
Assets
1.100%
Up
to
and
including
$1
billion
1.050%
Over
$1
billion,
up
to
and
including
$2
billion
1.000%
In
excess
of
$2
billion
1.
Organization
and
Significant
Accounting
Policies
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
(unaudited)
Under
an
agreement
with
TAML,
TIC
is
paid
a
fee
for
serving
as
the
QFII
for
the
China
Fund.
The
fee
is
paid
by
TAML
and
is
not
an
additional
expense
of
the
Fund.
b.
Administrative
Fees
Under
an
agreement
with
TAML,
FT
Services
provides
administrative
services
to
the
Fund.
The
fee
is
paid
by
TAML
based
on
the
Fund’s
average weekly
net
assets,
and
is
not
an
additional
expense
of
the
Fund.
c.
Investments
in
Affiliated
Management
Investment
Companies
The
Fund
invests
in
one
or
more
affiliated
management
investment
companies.
As
defined
in
the
1940
Act,
an
investment
is
deemed
to
be
a
“Controlled
Affiliate”
of
a
fund
when
a
fund
owns,
either
directly
or
indirectly,
25%
or
more
of
the
affiliated
fund’s
outstanding
shares
or
has
the
power
to
exercise
control
over
management
or
policies
of
such
fund.
The
Fund
does
not
invest
for
purposes
of
exercising
a
controlling
influence
over
the
management
or
policies.
Management
fees
paid
by
the
Fund
are
waived
on
assets
invested
in
the
affiliated
management
investment
companies,
as
noted
in
the
Consolidated
Statement
of
Operations,
in
an
amount
not
to
exceed
the
management
and
administrative
fees
paid
directly
or
indirectly
by
each
affiliate.
During
the
period
ended
June
30,
2024,
the
Fund
held
investments
in
affiliated
management
investment
companies
as
follows:
4.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains.
At
December
31,
2023,
the
capital
loss
carryforwards
were
as
follows:
aa
Value
at
Beginning
of
Period
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Period
Number
of
Shares
Held
at
End
of
Period
Investment
Income
a
a
a
a
a
a
a
a
Templeton
Dragon
Fund,
Inc.
Non-Controlled
Affiliates
Dividends
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.972%
$5,872,616
$21,126,152
$(26,468,681)
$—
$—
$530,087
530,087
$154,783
Non-Controlled
Affiliates
Income
from
securities
loaned
Institutional
Fiduciary
Trust
-
Money
Market
Portfolio,
4.972%
$433,283
$19,265,684
$(17,813,846)
$—
$—
$1,885,121
1,885,121
$39,700
Total
Affiliated
Securities
...
$6,305,899
$40,391,836
$(44,282,527)
$—
$—
$2,415,208
$194,483
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
................................................................................
$12,009,210
Long
term
................................................................................
43,258,498
Total
capital
loss
carryforwards
...............................................................
$55,267,708
3.
Transactions
with
Affiliates
(continued)
a.
Management
Fees
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
(unaudited)
At
June
30,
2024,
the
cost
of
investments
and
net
unrealized
appreciation
(depreciation) for
income
tax
purposes
were
as
follows:
Differences
between
income
and/or
capital
gains
as
determined
on
a
book
basis
and
a
tax
basis
are
primarily
due
to
differing
treatments
of
foreign
currency
transactions,
pass-through
entity
income,
investments
in
the
China
Fund
and
corporate
actions.
5.
Investment
Transactions
Purchases
and
sales
of
investments (excluding
short
term
securities) for
the
period
ended
June
30,
2024,
aggregated
$41,783,404 and
$36,656,346,
respectively.
At
June
30,
2024,
in
connection
with
securities
lending
transactions,
the
Fund
loaned
equity
investments
and
received
$1,885,121
of
cash
collateral.
The
gross
amount
of
recognized
liability
for
such
transactions
is
included
in
payable
upon
return
of
securities
loaned
in
the
Consolidated
Statement
of
Assets
and
Liabilities.
The
agreements
can
be
terminated
at
any
time.
6.
Concentration
of
Risk
Investing
in
foreign
securities
may
include
certain
risks
and
considerations
not
typically
associated
with
investing
in
U.S.
securities,
such
as
fluctuating
currency
values
and
changing
local,
regional
and
global
economic,
political
and
social
conditions,
which
may
result
in
greater
market
volatility.
Political
and
financial
uncertainty
in
many
foreign
regions
may
increase
market
volatility
and
the
economic
risk
of
investing
in
foreign
securities.
In
addition,
certain
foreign
securities
may
not
be
as
liquid
as
U.S.
securities.
Investing
in
China
A
shares
may
include
certain
risks
and
considerations
not
typically
associated
with
investing
in
U.S.
securities.
In
general,
A
shares
are
issued
by
companies
incorporated
in
the
People’s
Republic
of
China
(PRC)
and
listed
on
the
Shanghai
and
Shenzhen
Stock
Exchanges
and
available
for
investment
by
domestic
(Chinese)
investors
and
holders
of
a QFII
license
and,
in
the
case
of
certain
eligible
A
shares,
through
the
Shanghai
and
Shenzhen
Stock
Connect
programs.
The
Shanghai
and
Shenzhen
Stock
Exchanges
are,
however,
substantially
smaller,
less
liquid
and
more
volatile
than
the
major
securities
markets
in
the
United
States.
Certain
investments
in
Chinese
companies
are
made
through
a
special
structure
known
as
a
VIE.
In
a
VIE
structure,
foreign
investors,
such
as
the
Fund,
will
only
own
stock
in
a
shell
company
rather
than
directly
in
the
VIE,
which
must
be
owned
by
Chinese
nationals
(and/or
Chinese
companies)
to
obtain
the
licenses
and/or
assets
required
to
operate
in
a
restricted
or
prohibited
sector
in
China.
The
value
of
the
shell
company
is
derived
from
its
ability
to
consolidate
the
VIE
into
its
financials
pursuant
to
contractual
arrangements
that
allow
the
shell
company
to
exert
a
degree
of
control
over,
and
obtain
economic
benefits
arising
from,
the
VIE
without
formal
legal
ownership.
While
VIEs
are
a
longstanding
industry
practice
and
are
well
known
by
Chinese
officials
and
regulators,
the
structure
historically
has
not
been
formally
recognized
under
Chinese
law
and
it
is
uncertain
whether
Chinese
officials
or
regulators
will
withdraw
their
implicit
acceptance
of
the
structure.
It
is
also
uncertain
whether
the
contractual
arrangements,
which
may
be
subject
to
conflicts
of
interest
between
the
legal
owners
of
the
VIE
and
foreign
investors,
would
be
enforced
by
Chinese
courts
or
arbitration
bodies.
Prohibitions
of
these
structures
by
the
Chinese
government,
or
the
inability
to
enforce
such
contracts,
from
which
the
shell
company
derives
its
value,
would
likely
cause
the
VIE-structured
holding(s)
to
suffer
significant,
detrimental,
and
possibly
permanent
losses,
and
in
turn,
adversely
affect
the
Fund’s
returns
and
net
asset
value.
Cost
of
investments
..........................................................................
$216,839,665
Unrealized
appreciation
........................................................................
$48,389,323
Unrealized
depreciation
........................................................................
(30,041,348)
Net
unrealized
appreciation
(depreciation)
..........................................................
$18,347,975
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
(unaudited)
7.
Restricted
Securities
The
Fund
invests
in
securities
that
are
restricted
under
the
Securities
Act
of
1933
(1933
Act).
Restricted
securities
are
often
purchased
in
private
placement
transactions,
and
cannot
be
sold
without
prior
registration
unless
the
sale
is
pursuant
to
an
exemption
under
the
1933
Act.
Disposal
of
these
securities
may
require
greater
effort
and
expense,
and
prompt
sale
at
an
acceptable
price
may
be
difficult.
The Fund
may
have
registration
rights
for
restricted
securities.
The
issuer
generally
incurs
all
registration
costs.
At
June
30,
2024,
investments
in
restricted
securities,
excluding
securities
exempt
from
registration
under
the
1933
Act,
were
as
follows:
8.
Fair
Value
Measurements
The
Fund
follows
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 financial
instruments
and
are
summarized
in
the
following
fair
value
hierarchy:
Level
1
–
quoted
prices
in
active
markets
for
identical
financial
instruments
Level
2
–
other
significant
observable
inputs
(including
quoted
prices
for
similar
financial
instruments,
interest
rates,
prepayment
speed,
credit
risk,
etc.)
Level
3
–
significant
unobservable
inputs
(including
the
Fund's
own
assumptions
in
determining
the
fair
value
of
financial
instruments)
The
input
levels
are
not
necessarily
an
indication
of
the
risk
or
liquidity
associated
with
financial
instruments
at
that
level.
A
summary
of
inputs
used
as
of
June
30,
2024,
in
valuing
the
Fund's assets carried
at
fair
value,
is
as
follows:
Shares
Issuer
Acquisition
Date
Cost
Value
Templeton
Dragon
Fund
Inc
673,786
Kangmei
Pharmaceutical
Co.
Ltd.
................
4/06/22
$
—
$
92,300
Total
Restricted
Securities
(Value
is
0.0%
†
of
Net
Assets)
.............
$—
$92,300
†
Rounds
to
less
than
0.1%
of
net
assets.
Level
1
Level
2
Level
3
Total
Templeton
Dragon
Fund,
Inc.
Assets:
Investments
in
Securities:
Common
Stocks
:
Air
Freight
&
Logistics
...................
$
—
$
1,333,788
$
—
$
1,333,788
Automobile
Components
.................
5,845,893
871,243
—
6,717,136
Automobiles
..........................
—
1,615,215
—
1,615,215
Banks
...............................
—
15,255,078
—
15,255,078
Beverages
...........................
—
16,665,492
—
16,665,492
Broadline
Retail
.......................
7,818,656
14,566,110
—
22,384,766
Chemicals
...........................
—
3,372,613
—
3,372,613
Distributors
...........................
3,671,664
—
—
3,671,664
Diversified
Consumer
Services
............
1,554,600
3,419,315
—
4,973,915
Electrical
Equipment
....................
—
13,047,054
—
13,047,054
Electronic
Equipment,
Instruments
&
Components
........................
—
4,813,361
—
4,813,361
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
(unaudited)
A
reconciliation
in
which
Level
3
inputs
are
used
in
determining
fair
value
is
presented
when
there
are
significant
Level
3
assets
and/or
liabilities
at
the
beginning
and/or
end
of
the period.
9.
Subsequent
Events
The
Fund
has
evaluated
subsequent
events
through
the
issuance
of
the
consolidated
financial
statements
and
determined
that
no
events
have
occurred
that
require
disclosure.
Abbreviations
Level
1
Level
2
Level
3
Total
Templeton
Dragon
Fund,
Inc.
(continued)
Assets:
(continued)
Investments
in
Securities:
Common
Stocks:
Entertainment
.........................
$
—
$
11,354,273
$
—
$
11,354,273
Food
Products
........................
—
5,797,016
—
5,797,016
Health
Care
Equipment
&
Supplies
.........
—
3,500,190
—
3,500,190
Health
Care
Providers
&
Services
..........
—
2,318,793
1,075,567
3,394,360
Hotels,
Restaurants
&
Leisure
.............
4,801,106
11,259,311
—
16,060,417
Household
Durables
....................
—
10,858,192
—
10,858,192
Independent
Power
and
Renewable
Electricity
Producers
..........................
16,270,253
—
—
16,270,253
Insurance
............................
—
7,348,084
—
7,348,084
Interactive
Media
&
Services
..............
—
28,390,198
—
28,390,198
Machinery
............................
—
4,669,793
—
4,669,793
Media
...............................
—
9,160,546
—
9,160,546
Oil,
Gas
&
Consumable
Fuels
.............
—
6,946,986
—
6,946,986
Pharmaceuticals
.......................
—
6,190,666
—
6,190,666
Semiconductors
&
Semiconductor
Equipment
.
—
1,666,338
—
1,666,338
Software
.............................
—
1,759,084
—
1,759,084
Technology
Hardware,
Storage
&
Peripherals
.
—
1,423,413
—
1,423,413
Textiles,
Apparel
&
Luxury
Goods
..........
—
4,040,241
—
4,040,241
Escrows
and
Litigation
Trusts
...............
—
—
92,300
92,300
Short
Term
Investments
...................
2,415,208
—
—
2,415,208
Total
Investments
in
Securities
...........
$42,377,380
$191,642,393
a
$1,167,867
$235,187,640
a
Includes
foreign
securities
valued
at
$191,642,393,
which
were
categorized
as
Level
2
as
a
result
of
the
application
of
market
level
fair
value
procedures.
See
the
Financial
Instrument
Valuation
note
for
more
information.
Selected
Portfolio
ADR
American
Depositary
Receipt
8.
Fair
Value
Measurements
(continued)
Important
Information
to
Shareholders
Share
Repurchase
Program
The
Fund’s
Board
has
approved
an
open-market
share
repurchase
program
which
includes
an
initial
authorization
for
the
Fund
to
repurchase
up
to
10%
of
its
outstanding
shares
in
open-market
transactions,
as
well
as
up
to
an
additional
10%
of
its
outstanding
shares,
above
and
in
addition
to
the
initial
10%
previously
authorized.
This
authorization
remains
in
effect.
The
timing
and
amount
of
repurchases
continue
to
be
at
the
discretion
of
the
investment
manager,
taking
into
account
various
factors,
including,
but
not
limited
to,
the
level
of
the
discount,
the
Fund’s
performance,
portfolio
holdings,
dividend
history,
market
conditions,
cash
on
hand,
the
availability
of
other
attractive
investments
and
whether
the
sale
of
certain
portfolio
securities
would
be
undesirable
because
of
liquidity
concerns
or
because
the
sale
might
subject
the
Fund
to
adverse
tax
consequences.
Any
repurchases
would
be
made
on
a
national
securities
exchange
at
the
prevailing
market
price,
subject
to
exchange
requirements,
federal
securities
laws
and
rules
that
restrict
repurchases,
and
the
terms
of
any
outstanding
leverage
or
borrowing
of
the
Fund.
If
and
when
the
Fund’s
additional
10%
threshold
is
reached,
no
further
repurchases
could
be
completed
until
authorized
by
the
Board.
Until
the
additional
10%
threshold
is
reached,
Fund
management
will
have
the
flexibility
to
commence
share
repurchases
if
and
when
it
is
determined
to
be
appropriate
in
light
of
prevailing
circumstances.
The
share
repurchase
program
is
intended
to
benefit
shareholders
by
enabling
the
Fund
to
repurchase
shares
at
a
discount
to
net
asset
value,
thereby
increasing
the
proportionate
interest
of
each
remaining
shareholder
in
the
Fund.
In
the
Notes
to
Consolidated
Financial
Statements
section,
please
see
note
2
(Capital
Stock)
for
additional
information
regarding
shares
repurchased.
Annual
Meeting
of
Shareholders
May
23,
2024
(unaudited)
The
Annual
Meeting
of
Shareholders
of
Templeton
Dragon
Fund,
Inc.
(the
“Fund”)
was
held
at
the
Fund’s
offices,
300
S.E.
2nd
Street,
Fort
Lauderdale,
Florida,
on
May
23,
2024.
The
purpose
of
the
meeting
was
to
elect
three
Directors
of
the
Fund
and
to
ratify
the
selection
of
PricewaterhouseCoopers
LLP
as
the
independent
registered
public
accounting
firm
for
the
Fund
for
the
fiscal
year
ending
December
31,
2024.
At
the
meeting,
the
following
persons
were
elected
by
the
shareholders
to
serve
as
Directors
of
the
Fund:
Ann
Torre
Bates,
Terrence
J.
Checki
and
David
W.
Niemiec.*
Shareholders
also
ratified
the
selection
of
PricewaterhouseCoopers
LLP
as
the
independent
registered
public
accounting
firm
for
the
Fund
for
the
fiscal
year
ending
December
31,
2024.
No
other
business
was
transacted
at
the
meeting
with
respect
to
the
Fund.
The
results
of
the
voting
at
the
Annual
Meeting
are
as
follows:
1.
Election
of
three
Directors:
The
Fund
is
not
aware
of
broker
non-votes
received
with
respect
to
this
item.
2.
Ratification
of
the
selection
of
PricewaterhouseCoopers
LLP
as
the
independent
registered
public
accounting
firm
for
the
Fund
for
the
fiscal
year
ending
December
31,
2024:
The
Fund
is
not
aware
of
broker
non-votes
received
with
respect
to
this
item.
*
Harris
J.
Ashton,
Mary
C.
Choksi,
Edith
E.
Holiday,
Rupert
H.
Johnson,
Jr.,
Gregory
E.
Johnson,
J.
Michael
Luttig
,
Larry
D.
Thompson
and
Constantine
D.
Tseretopoulos
are
Directors
of
the
Fund
who
are
currently
serving
and
whose
terms
of
office
continued
after
the
Annual
Meeting
of
Shareholders.
Term
Expiring
2027
For
%
of
Outstanding
Shares
%
of
Shares
Present
Against
%
of
Outstanding
Shares
%
of
Shares
Present
Abstain
%
of
Outstanding
Shares
%
of
Shares
Present
Ann
Torre
Bates
.............
Terrence
J.
Checki
...........
David
W.
Niemiec
............
19,882,600
19,778,428
19,747,784
78.42%
78.01%
77.89%
94.51%
94.01%
93.87%
961,344
1,055,813
1,088,161
3.79%
4.16%
4.29%
4.57%
5.02%
5.17%
194,490
204,192
202,487
0.77%
0.81%
0.80%
0.92%
0.97%
0.96%
Shares
Voted
%
of
Outstanding
Shares
%
of
Shares
Present
For
.......................
Against
....................
Abstain
....................
20,689,061
184,298
165,073
81.60%
0.73%
0.65%
98.34%
0.88%
0.78%
Dividend
Reinvestment
and
Cash
Purchase
Plan
The
Fund
offers
a
Dividend
Reinvestment
and
Cash
Purchase
Plan
(the
“Plan”)
with
the
following
features:
If
shares
of
the
Fund
are
held
in
the
shareholder’s
name,
the
shareholder
will
automatically
be
a
participant
in
the
Plan
unless
he
elects
to
withdraw.
If
the
shares
are
registered
in
the
name
of
a
broker-dealer
or
other
nominee
(i.e.,
in
“street
name”),
the
broker-dealer
or
nominee
will
elect
to
participate
in
the
Plan
on
the
shareholder’s
behalf
unless
the
shareholder
instructs
them
otherwise,
or
unless
the
reinvestment
service
is
not
provided
by
the
broker-dealer
or
nominee.
To
receive
dividends
or
distributions
in
cash,
the
shareholder
must
notify
Equiniti
Trust
Company,
LLC
(the
“Plan
Administrator”)
at
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560
or
the
institution
in
whose
name
the
shares
are
held.
The
Plan
Administrator
must
receive
written
notice
ten
business
days
before
the
record
date
for
the
distribution.
Whenever
the
Fund
declares
dividends
in
either
cash
or
shares
of
the
Fund,
if
the
market
price
is
equal
to
or
exceeds
net
asset
value
at
the
valuation
date,
the
participant
will
receive
the
dividends
entirely
in
new
shares
at
a
price
equal
to
the
net
asset
value,
but
not
less
than
95%
of
the
then
current
market
price
of
the
Fund’s
shares.
If
the
market
price
is
lower
than
net
asset
value
or
if
dividends
and/or
capital
gains
distributions
are
payable
only
in
cash,
the
participant
will
receive
shares
purchased
on
the
New
York
Stock
Exchange
or
otherwise
on
the
open
market.
A
participant
has
the
option
of
submitting
additional
cash
payments
to
the
Plan
Administrator,
in
any
amounts
of
at
least
$100,
up
to
a
maximum
of
$5,000
per
month,
for
the
purchase
of
Fund
shares
for
his
or
her
account.
These
payments
can
be
made
by
check
payable
to
Equiniti
Trust
Company,
LLC
and
sent
to
Equiniti
Trust
Company,
LLC,
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560,
Attention:
Templeton
Dragon
Fund,
Inc.
The
Plan
Administrator
will
apply
such
payments
(less
a
$5.00
service
charge
and
less
a
pro
rata
share
of
trading
fees)
to
purchases
of
the
Fund’s
shares
on
the
open
market.
Whenever
shares
are
purchased
on
the
New
York
Stock
Exchange
or
otherwise
on
the
open
market,
each
participant
will
pay
a
pro
rata
portion
of
trading
fees.
Trading
fees
will
be
deducted
from
amounts
to
be
invested.
The
Plan
Administrator’s
fee
for
a
sale
of
shares
through
the
Plan
is
$15.00
per
transaction
plus
a
$0.12
per
share
trading
fee.
The
automatic
reinvestment
of
dividends
and/or
capital
gains
does
not
relieve
the
participant
of
any
income
tax
that
may
be
payable
on
dividends
or
distributions.
The
participant
may
withdraw
from
the
Plan
without
penalty
at
any
time
by
written
notice
to
the
Plan
Administrator
sent
to
Equiniti
Trust
Company,
LLC,
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560.
Upon
withdrawal,
the
participant
will
receive,
without
charge,
share
certificates
issued
in
the
participant’s
name
for
all
full
shares
held
by
the
Plan
Administrator;
or,
if
the
participant
wishes,
the
Plan
Administrator
will
sell
the
participant’s
shares
and
send
the
proceeds
to
the
participant,
less
a
service
charge
of
$15.00
and
less
trading
fees
of
$0.12
per
share.
The
Plan
Administrator
will
convert
any
fractional
shares
held
at
the
time
of
withdrawal
to
cash
at
current
market
price
and
send
a
check
to
the
participant
for
the
net
proceeds.
For
more
information,
please
see
the
Plan’s
Terms
and
Conditions
located
at
the
back
of
this
report.
Templeton
Dragon
Fund,
Inc.
Dividend
Reinvestment
and
Cash
Purchase
Plan
Transfer
Agent
Equiniti
Trust
Company,
LLC
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-056
(800)
416-5585
www.equiniti.com
Direct
Deposit
Service
for
Registered
Shareholders
Cash
distributions
can
now
be
electronically
credited
to
a
checking
or
savings
account
at
any
financial
institution
that
participates
in
the
Automated
Clearing
House
(“ACH”)
system.
The
Direct
Deposit
service
is
provided
for
registered
shareholders
at
no
charge.
To
enroll
in
the
service,
access
your
account
online
by
going
to
www.equiniti.com
or
dial
(800)
416-
5585
(toll
free)
and
follow
the
instructions.
Direct
Deposit
will
begin
with
the
next
scheduled
distribution
payment
date
following
enrollment
in
the
service.
Direct
Registration
If
you
are
a
registered
shareholder
of
the
Fund,
purchases
of
shares
of
the
Fund
can
be
electronically
credited
to
your
Fund
account
at
Equiniti
Trust
Company,
LLC
through
Direct
Registration.
This
service
provides
shareholders
with
a
convenient
way
to
keep
track
of
shares
through
book
entry
transactions,
electronically
move
book-entry
shares
between
broker-dealers,
transfer
agents
and
DRS
eligible
issuers,
and
eliminate
the
possibility
of
lost
certificates.
For
additional
information,
please
contact
Equiniti
Trust
Company,
LLC
at
(800)
416-5585.
Shareholder
Information
Shares
of
Templeton
Dragon
Fund,
Inc.
are
traded
on
the
New
York
Stock
Exchange
under
the
symbol
“TDF.”
Information
about
the
net
asset
value
and
the
market
price
is
available
at
franklintempleton.com.
For
current
information
about
dividends
and
shareholder
accounts,
call
(800)
416-5585.
Registered
shareholders
can
access
their
Fund
account
on-line.
For
information
go
to
Equiniti
Trust
Company,
LLC
website
at
www.equiniti.com
and
follow
the
instructions.
The
daily
closing
net
asset
value
as
of
the
previous
business
day
may
be
obtained
when
available
by
calling
Franklin
Templeton
Fund
Information
after
7
a.m.
Pacific
time
any
business
day
at
(800)
DIAL
BEN/342-5236.
The
Fund’s
net
asset
value
and
dividends
are
also
listed
on
the
NASDAQ
Stock
Market,
Inc.’s
Mutual
Fund
Quotation
Service
(“NASDAQ
MFQS”).
Shareholders
not
receiving
copies
of
reports
to
shareholders
because
their
shares
are
registered
in
the
name
of
a
broker
or
a
custodian
can
request
that
they
be
added
to
the
Fund’s
mailing
list,
by
writing
Templeton
Dragon
Fund,
Inc.,
100
Fountain
Parkway,
P.O.
Box
33030,
St.
Petersburg,
FL,
33733-8030.
Board
Approval
of
Investment
Management
Agreements
TEMPLETON
DRAGON
FUND,
INC.
(Fund)
At
an
in-person
meeting
held
on
May
22,
2024
(Meeting),
the
Board
of
Directors
(Board)
of
the
Fund,
including
a
majority
of
the
directors
who
are
not
“interested
persons”
as
defined
in
the
Investment
Company
Act
of
1940
(Independent
Directors),
reviewed
and
approved
the
continuance
of
the
investment
management
agreement
between
Templeton
Asset
Management
Ltd.
(Manager)
and
the
Fund
(Management
Agreement)
for
an
additional
one-year
period.
The
Independent
Directors
received
advice
from
and
met
separately
with
Independent
Director
counsel
in
considering
whether
to
approve
the
continuation
of
the
Management
Agreement.
In
considering
the
continuation
of
the
Management
Agreement,
the
Board
reviewed
and
considered
information
provided
by
the
Manager
at
the
Meeting
and
throughout
the
year
at
meetings
of
the
Board
and
its
committees.
The
Board
also
reviewed
and
considered
information
provided
in
response
to
a
detailed
set
of
requests
for
information
submitted
to
the
Manager
by
Independent
Director
counsel
on
behalf
of
the
Independent
Directors
in
connection
with
the
annual
contract
renewal
process.
In
addition,
prior
to
the
Meeting,
the
Independent
Directors
held
a
virtual
contract
renewal
meeting
at
which
the
Independent
Directors
first
conferred
amongst
themselves
and
Independent
Director
counsel
about
contract
renewal
matters,
and
then
met
with
management
to
request
additional
information
that
the
Independent
Directors
reviewed
and
considered
prior
to
and
at
the
Meeting.
The
Board
reviewed
and
considered
all
of
the
factors
it
deemed
relevant
in
approving
the
continuance
of
the
Management
Agreement,
including,
but
not
limited
to:
(i)
the
nature,
extent
and
quality
of
the
services
provided
by
the
Manager;
(ii)
the
investment
performance
of
the
Fund;
(iii)
the
costs
of
the
services
provided
and
profits
realized
by
the
Manager
and
its
affiliates
from
the
relationship
with
the
Fund;
(iv)
the
extent
to
which
economies
of
scale
are
realized
as
the
Fund
grows;
and
(v)
whether
fee
levels
reflect
these
economies
of
scale
for
the
benefit
of
Fund
investors.
In
approving
the
continuance
of
the
Management
Agreement,
the
Board,
including
a
majority
of
the
Independent
Directors,
determined,
through
the
exercise
of
its
business
judgment,
that
the
terms
of
the
Management
Agreement
are
fair
and
reasonable
and
that
the
continuance
of
the
Management
Agreement
is
in
the
best
interests
of
the
Fund
and
its
shareholders.
While
attention
was
given
to
all
information
furnished,
the
following
discusses
some
primary
factors
relevant
to
the
Board’s
determination.
Nature,
Extent
and
Quality
of
Services
The
Board
reviewed
and
considered
information
regarding
the
nature,
extent
and
quality
of
investment
management
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
This
information
included,
among
other
things,
the
qualifications,
background
and
experience
of
the
senior
management
and
investment
personnel
of
the
Manager,
as
well
as
information
on
succession
planning
where
appropriate;
the
structure
of
investment
personnel
compensation;
oversight
of
third-party
service
providers;
investment
performance
reports
and
related
financial
information
for
the
Fund
(including
its
share
price
discount
to
net
asset
value);
reports
on
expenses
and
shareholder
services;
legal
and
compliance
matters;
risk
controls;
pricing
and
other
services
provided
by
the
Manager
and
its
affiliates;
and
management
fees
charged
by
the
Manager
and
its
affiliates
to
US
funds
and
other
accounts,
including
management’s
explanation
of
differences
among
accounts
where
relevant.
The
Board
acknowledged
the
ongoing
integration
of
the
Putnam
family
of
funds
into
the
Franklin
Templeton
(FT)
family
of
funds
and
management’s
continued
development
of
strategies
to
address
areas
of
heightened
concern
in
the
mutual
fund
industry,
including
various
regulatory
initiatives
and
continuing
geopolitical
concerns.
The
Board
also
considered
the
investment
management
services
that
Templeton
Investment
Counsel,
LLC
(TICL)
provides
to
the
Cayman
Islands-based
company,
which
is
wholly
owned
by
the
Fund
(Cayman
Subsidiary).
The
Board
also
reviewed
and
considered
the
benefits
provided
to
Fund
shareholders
of
investing
in
a
fund
that
is
part
of
the
FT
family
of
funds.
The
Board
noted
the
financial
position
of
Franklin
Resources,
Inc.
(FRI),
the
Manager’s
parent,
and
its
commitment
to
the
mutual
fund
business
as
evidenced
by
its
continued
reassessment
of
the
fund
offerings
in
response
to
FT
acquisitions
and
the
market
environment,
as
well
as
project
initiatives
and
capital
investments
relating
to
the
services
provided
to
the
Fund
by
the
FT
organization.
The
Board
specifically
noted
FT’s
commitment
to
technological
innovation
and
advancement,
including
its
initiative
to
create
a
new
enterprise-wide
artificial
intelligence
platform.
Templeton
Dragon
Fund,
Inc.
Shareholder
Information
Following
consideration
of
such
information,
the
Board
was
satisfied
with
the
nature,
extent
and
quality
of
services
provided
by
the
Manager
and
its
affiliates
to
the
Fund
and
its
shareholders.
Fund
Performance
The
Board
reviewed
and
considered
the
performance
results
of
the
Fund
over
various
time
periods
ended
December
31,
2023.
The
Board
considered
the
performance
returns
for
the
Fund
in
comparison
to
the
performance
returns
of
mutual
funds
deemed
comparable
to
the
Fund
included
in
a
universe
(Performance
Universe)
selected
by
Broadridge
Financial
Solutions,
Inc.
(Broadridge),
an
independent
provider
of
investment
company
data.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
the
Performance
Universe.
The
Board
also
considered
the
performance
returns
for
the
Fund
in
comparison
to
the
performance
returns
of
a
customized
peer
group
(Performance
Customized
Peer
Group)
selected
by
the
Manager.
The
Board
also
reviewed
and
considered
Fund
performance
reports
provided
and
discussions
that
occurred
with
portfolio
managers
at
Board
meetings
throughout
the
year.
A
summary
of
the
Fund’s
performance
results
is
below.
Such
results
are
based
on
net
asset
value
without
regard
to
market
discounts
or
premiums.
The
Performance
Universe
for
the
Fund
included
the
Fund
and
all
non-leveraged
closed-end
emerging
markets
funds.
The
Performance
Customized
Peer
Group
for
the
Fund
consisted
only
of
emerging
markets
funds
that
invest
at
least
45%
of
total
assets
in
the
equity
securities
of
China
companies.
The
Board
noted
that
the
Fund’s
annualized
total
return
for
the
one-,
three-,
five-
and
10-year
periods
was
below
the
median
of
its
Performance
Universe.
The
Board
also
noted
that
the
Fund’s
annualized
total
return
for
the
five-year
period
was
equal
to
the
median
of
its
Performance
Customized
Peer
Group,
but
for
the
one-,
three-
and
10-
year
periods
was
below
the
median
of
its
Performance
Customized
Peer
Group.
The
Board
further
noted
the
small
size
of
the
Fund’s
Performance
Customized
Peer
Group
for
each
period
and
that
therefore
no
quintile
information
was
provided
for
the
Fund
for
those
periods.
The
Board
discussed
this
performance
with
management
and
management
explained
that
the
Performance
Universe
was
comprised
of
funds
with
different
investment
universes
and
that
only
two
of
the
peers
were
comparable
to
the
Fund,
noting
some
differences.
Management
further
explained
that
political
decisions,
geopolitical
factors
and
aggressive
central
bank
actions
in
developed
countries
have
all
affected
performance
since
2021.
Management
also
explained
that,
for
the
one-year
period
ended
December
31,
2023,
the
Fund’s
relative
underperformance
was
attributed,
in
part,
to
a
lack
of
exposure
to
state-owned
businesses
and
companies
which
do
not
fall
within
the
Fund’s
investment
guidelines.
Management
further
explained
that
the
Fund’s
three-
and
five-year
underperformance
was
largely
driven
by
the
Fund’s
performance
from
2021
to
2023.
Management
discussed
with
the
Board
the
actions
that
are
being
taken/have
been
taken
in
an
effort
to
improve
the
overall
performance
of
the
Fund,
noting
the
adjustments
that
have
been
made
to
the
Fund’s
portfolio
positioning
in
light
of
the
investment
team’s
forward
looking
views
about
China’s
corporate
regulatory
environment
and
growing
domestic
market.
The
Board
concluded
that
the
Fund’s
Management
Agreement
should
be
continued
for
an
additional
one-year
period,
while
management’s
efforts
continue
to
be
closely
monitored.
Comparative
Fees
and
Expenses
The
Board
reviewed
and
considered
information
regarding
the
Fund’s
actual
total
expense
ratio
and
its
various
components,
including,
as
applicable,
management
fees;
underlying
fund
expenses;
investment-related
expenses;
and
other
non-management
fees.
The
Board
considered
the
actual
total
expense
ratio
and,
separately,
the
contractual
management
fee
rate,
without
the
effect
of
fee
waivers,
if
any
(Management
Rate)
of
the
Fund
in
comparison
to
the
median
expense
ratio
and
median
Management
Rate,
respectively,
of
other
mutual
funds
deemed
comparable
to
and
with
a
similar
expense
structure
to
the
Fund
selected
by
Broadridge
(Expense
Group).
Broadridge
fee
and
expense
data
is
based
upon
information
taken
from
each
fund’s
most
recent
annual
or
semi-annual
report,
which
reflects
historical
asset
levels
that
may
be
quite
different
from
those
currently
existing,
particularly
in
a
period
of
market
volatility.
While
recognizing
such
inherent
limitation
and
the
fact
that
expense
ratios
and
Management
Rates
generally
increase
as
assets
decline
and
decrease
as
assets
grow,
the
Board
believed
the
independent
analysis
conducted
by
Broadridge
to
be
an
appropriate
measure
of
comparative
fees
and
expenses.
The
Broadridge
Management
Rate
includes
administrative
charges,
as
applicable.
The
Board
received
a
description
of
the
methodology
used
by
Broadridge
to
select
the
mutual
funds
included
in
the
Expense
Group.
The
Board
also
considered
the
investment
management
services
that
TICL
provides
to
the
Cayman
Subsidiary
and
the
related
fee
waivers
that
were
in
place.
The
Expense
Group
for
the
Fund
included
the
Fund
and
six
other
non-leveraged
closed-end
emerging
markets
funds.
The
Board
noted
that
the
Management
Rate
for
the
Fund
was
equal
to
the
median
of
its
Expense
Group.
The
Templeton
Dragon
Fund,
Inc.
Shareholder
Information
Board
also
noted
that
the
actual
total
expense
ratio
for
the
Fund
was
below
the
median
and
in
the
first
quintile
(least
expensive)
of
its
Expense
Group.
The
Board
concluded
that
the
Management
Rate
charged
to
the
Fund
is
reasonable.
Profitability
The
Board
reviewed
and
considered
information
regarding
the
profits
realized
by
the
Manager
and
its
affiliates
in
connection
with
the
operation
of
the
Fund.
In
this
respect,
the
Board
considered
the
Fund
profitability
analysis
provided
that
addresses
the
overall
profitability
of
FT’s
US
fund
business,
as
well
as
its
profits
in
providing
investment
management
and
other
services
to
each
of
the
individual
funds
during
the
12-month
period
ended
September
30,
2023,
being
the
most
recent
fiscal
year-end
for
FRI.
The
Board
noted
that
although
management
continually
makes
refinements
to
its
methodologies
used
in
calculating
profitability
in
response
to
organizational
and
product-related
changes,
the
overall
methodology
has
remained
consistent
with
that
used
in
the
Fund’s
profitability
report
presentations
from
prior
years.
The
Board
also
noted
that
an
independent
registered
public
accounting
firm
has
been
engaged
to
periodically
review
and
assess
the
allocation
methodologies
to
be
used
solely
by
the
Fund’s
Board
with
respect
to
the
profitability
analysis.
The
Board
noted
management’s
belief
that
costs
incurred
in
establishing
the
infrastructure
necessary
for
the
type
of
mutual
fund
operations
conducted
by
the
Manager
and
its
affiliates
may
not
be
fully
reflected
in
the
expenses
allocated
to
the
Fund
in
determining
its
profitability,
as
well
as
the
fact
that
the
level
of
profits,
to
a
certain
extent,
reflected
operational
cost
savings
and
efficiencies
initiated
by
management.
As
part
of
this
evaluation,
the
Board
considered
management’s
outsourcing
of
certain
operations,
which
effort
has
required
considerable
up-front
expenditures
by
the
Manager
but,
over
the
long
run
is
expected
to
result
in
greater
efficiencies.
The
Board
also
noted
management’s
expenditures
in
improving
shareholder
services
provided
to
the
Fund,
as
well
as
the
need
to
implement
systems
and
meet
additional
regulatory
and
compliance
requirements
resulting
from
recent
US
Securities
and
Exchange
Commission
and
other
regulatory
requirements.
The
Board
also
considered
the
extent
to
which
the
Manager
and
its
affiliates
might
derive
ancillary
benefits
from
fund
operations,
potential
benefits
resulting
from
personnel
and
systems
enhancements
necessitated
by
fund
growth,
as
well
as
increased
leverage
with
service
providers
and
counterparties.
Based
upon
its
consideration
of
all
these
factors,
the
Board
concluded
that
the
level
of
profits
realized
by
the
Manager
and
its
affiliates
from
providing
services
to
the
Fund
was
not
excessive
in
view
of
the
nature,
extent
and
quality
of
services
provided
to
the
Fund.
Economies
of
Scale
The
Board
reviewed
and
considered
the
extent
to
which
the
Manager
may
realize
economies
of
scale,
if
any,
as
the
Fund
grows
larger
and
whether
the
Fund’s
management
fee
structure
reflects
any
economies
of
scale
for
the
benefit
of
shareholders.
The
Board
believes
that
the
Manager’s
ability
to
realize
economies
of
scale
and
the
sharing
of
such
benefit
is
a
more
relevant
consideration
in
the
case
of
an
open-end
fund
whose
size
increases
as
a
result
of
the
continuous
sale
of
its
shares.
A
closed-end
fund,
such
as
the
Fund,
does
not
continuously
offer
shares,
and
growth
following
its
initial
public
offering
will
primarily
result
from
market
appreciation,
which
benefits
its
shareholders.
While
believing
economies
of
scale
to
be
less
of
a
factor
in
the
context
of
a
closed-
end
fund,
the
Board
believes
at
some
point
an
increase
in
size
may
lead
to
economies
of
scale
that
would
be
shared
with
the
Fund
and
its
shareholders.
The
Board
noted
the
existence
of
management
fee
breakpoints,
which
operate
generally
to
share
any
economies
of
scale
with
the
Fund’s
shareholders
by
reducing
the
Fund’s
effective
management
fees
as
the
Fund
grows
in
size.
The
Board
considered
the
Manager’s
view
that
any
analyses
of
potential
economies
of
scale
in
managing
a
particular
fund
are
inherently
limited
in
light
of
the
joint
and
common
costs
and
investments
the
Manager
incurs
across
the
FT
family
of
funds
as
a
whole.
The
Board
concluded
that
to
the
extent
economies
of
scale
may
be
realized
by
the
Manager
and
its
affiliates,
the
Fund’s
management
fee
structure
provided
a
sharing
of
benefits
with
the
Fund
and
its
shareholders
as
the
Fund
grows.
Conclusion
Based
on
its
review,
consideration
and
evaluation
of
all
factors
it
believed
relevant,
including
the
above-described
factors
and
conclusions,
the
Board
unanimously
approved
the
continuation
of
the
Management
Agreement
for
an
additional
one-year
period.
Proxy
Voting
Policies
and
Procedures
The
Fund’s
investment
manager
has
established
Proxy
Voting
Policies
and
Procedures
(Policies)
that
the
Fund
uses
to
determine
how
to
vote
proxies
relating
to
portfolio
securities.
Shareholders
may
view
the
Fund’s
complete
Policies
online
at
franklintempleton.com.
Alternatively,
shareholders
may
request
copies
of
the
Policies
free
of
charge
by
calling
the
Proxy
Group
collect
at
(954)
527-
7678
or
by
sending
a
written
request
to:
Franklin
Templeton
Companies,
LLC,
300
S.E.
2nd
Street,
Fort
Lauderdale,
Templeton
Dragon
Fund,
Inc.
Shareholder
Information
FL
33301,
Attention:
Proxy
Group.
Copies
of
the
Fund’s
proxy
voting
records
are
also
made
available
online
at
franklintempleton.com
and
posted
on
the
U.S.
Securities
and
Exchange
Commission’s
website
at
sec.gov
and
reflect
the
most
recent
12-month
period
ended
June
30.
Quarterly
Consolidated
Schedule
of
Investments
The
Fund
files
a
complete
consolidated
schedule
of
investments
with
the
U.S.
Securities
and
Exchange
Commission
for
the
first
and
third
quarters
for
each
fiscal
year
as
an
exhibit
to
its
report
on
Form
N-PORT.
Shareholders
may
view
the
filed
Form
N-PORT
by
visiting
the
Commission’s
website
at
sec.gov.
The
filed
form
may
also
be
viewed
and
copied
at
the
Commission’s
Public
Reference
Room
in
Washington,
DC.
Information
regarding
the
operations
of
the
Public
Reference
Room
may
be
obtained
by
calling
(800)
SEC-0330.
TERMS
AND
CONDITIONS
OF
DIVIDEND
REINVESTMENT
AND
CASH
PURCHASE
PLAN
Not
part
of
the
semiannual
report
1.
Each
holder
of
shares
(a
“Shareholder”)
in
Templeton
Dragon
Fund,
Inc.
(the
“Fund”)
whose
Fund
shares
are
registered
in
his
or
her
own
name
will
automatically
be
a
participant
in
the
Dividend
Reinvestment
and
Cash
Purchase
Plan
(the
“Plan”),
unless
any
such
Shareholder
specifically
elects
in
writing
to
receive
all
dividends
and
capital
gains
in
cash,
paid
by
check,
mailed
directly
to
the
Shareholder.
A
Shareholder
whose
shares
are
registered
in
the
name
of
a
broker-
dealer
or
other
nominee
(the
“Nominee”)
will
be
a
participant
if
(a)
such
a
service
is
provided
by
the
Nominee
and
(b)
the
Nominee
makes
an
election
on
behalf
of
the
Shareholder
to
participate
in
the
Plan.
Nominees
intend
to
make
such
an
election
on
behalf
of
Shareholders
whose
shares
are
registered
in
their
names,
as
Nominee,
unless
a
Shareholder
specifically
instructs
his
or
her
Nominee
to
pay
dividends
and
capital
gains
in
cash.
Equiniti
Trust
Company,
LLC
(“Equiniti”)
will
act
as
Plan
Administrator
and
will
open
an
account
for
each
participating
shareholder
(“participant”)
under
the
Plan
in
the
same
name
as
that
in
which
the
participant’s
present
shares
are
registered.
2.
Whenever
the
Fund
declares
a
distribution
from
capital
gains
or
an
income
dividend
payable
in
either
cash
or
shares
of
the
Fund
(“Fund
shares”),
if
the
market
price
per
share
on
the
valuation
date
equals
or
exceeds
the
net
asset
value
per
share,
participants
will
receive
such
dividend
or
distribution
entirely
in
Fund
shares,
and
Equiniti
shall
automatically
receive
such
Fund
shares
for
participant
accounts
including
aggregate
fractions.
The
number
of
additional
Fund
shares
to
be
credited
to
participant
accounts
shall
be
determined
by
dividing
the
equivalent
dollar
amount
of
the
capital
gains
distribution
or
dividend
payable
to
participants
by
the
Fund’s
net
asset
value
per
share
of
the
Fund
shares
on
the
valuation
date,
provided
that
the
Fund
shall
not
issue
such
shares
at
a
price
lower
than
95%
of
the
current
market
price
per
share.
The
valuation
date
will
be
the
payable
date
for
such
distribution
or
dividend.
3.
Whenever
the
Fund
declares
a
distribution
from
capital
gains
or
an
income
dividend
payable
only
in
cash,
or
if
the
Fund’s
net
asset
value
per
share
exceeds
the
market
price
per
share
on
the
valuation
date,
Equiniti
shall
apply
the
amount
of
such
dividend
or
distribution
payable
to
participants
to
the
purchase
of
Fund
shares
on
the
open
market
(less
their
pro
rata
share
of
trading
fees
incurred
with
respect
to
open
market
purchases
in
connection
with
the
reinvestment
of
such
dividend
or
distribution).
If,
before
Equiniti
has
completed
its
purchases,
the
market
price
exceeds
the
net
asset
value
per
share,
the
average
per
share
purchase
price
paid
by
Equiniti
may
exceed
the
net
asset
value
of
the
Fund’s
shares,
resulting
in
the
acquisition
of
fewer
shares
than
if
the
dividend
or
capital
gains
distribution
had
been
paid
in
shares
issued
by
the
Fund
at
net
asset
value
per
share.
Such
purchases
will
be
made
promptly
after
the
payable
date
for
such
dividend
or
distribution,
and
in
no
event
more
than
30
days
after
such
date
except
where
temporary
curtailment
or
suspension
of
purchase
is
necessary
to
comply
with
applicable
provisions
of
the
Federal
securities
laws.
4.
A
participant
has
the
option
of
submitting
additional
payments
to
Equiniti,
in
any
amounts
of
at
least
$100,
up
to
a
maximum
of
$5,000
per
month,
for
the
purchase
of
Fund
shares
for
his
or
her
account.
These
payments
may
be
made
electronically
through
www.equiniti.com
or
by
check
payable
to
“Equiniti
Trust
Company,
LLC”
and
sent
to
Equiniti
Trust
Company,
LLC,
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560,
Attention:
Templeton
Dragon
Fund,
Inc.
Equiniti
shall
apply
such
payments
(less
a
$5.00
service
charge
and
less
a
pro
rata
share
of
trading
fees)
to
purchases
of
Fund
shares
on
the
open
market,
as
discussed
below
in
paragraph
6.
Equiniti
shall
make
such
purchases
promptly
on
approximately
the
15th
of
each
month
or,
during
a
month
in
which
a
dividend
or
distribution
is
paid,
beginning
on
the
dividend
payment
date,
and
in
no
event
more
than
30
days
after
receipt,
except
where
necessary
to
comply
with
provisions
of
Federal
securities
law.
Any
voluntary
payment
received
less
than
two
business
days
before
an
investment
date
shall
be
invested
during
the
following
month
unless
there
are
more
than
30
days
until
the
next
investment
date,
in
which
case
such
payment
will
be
returned
to
the
participant.
Equiniti
shall
return
to
the
participant
his
or
her
entire
voluntary
cash
payment
upon
written
notice
of
withdrawal
received
by
Equiniti
not
less
than
48
hours
before
such
payment
is
to
be
invested.
Such
written
notice
shall
be
sent
to
Equiniti
by
the
participant,
as
discussed
below
in
paragraph
14.
5.
For
all
purposes
of
the
Plan:
(a)
the
market
price
of
the
Fund’s
shares
on
a
particular
date
shall
be
the
last
sale
price
on
the
New
York
Stock
Exchange
on
that
date
if
a
business
day
and
if
not,
on
the
preceding
business
day,
or
if
there
is
no
sale
on
such
Exchange
on
such
date,
then
the
mean
between
the
closing
bid
and
asked
quotations
for
such
shares
on
such
Exchange
on
such
date,
and
(b)
net
asset
value
per
share
of
the
Fund’s
shares
on
a
particular
date
shall
be
as
determined
by
or
on
behalf
of
the
Fund.
Not
part
of
the
semiannual
report
TERMS
AND
CONDITIONS
OF
DIVIDEND
REINVESTMENT
AND
CASH
PURCHASE
PLAN
(continued)
6.
Open
market
purchases
provided
for
above
may
be
made
on
any
securities
exchange
where
Fund
shares
are
traded,
in
the
over-the-counter
market
or
in
negotiated
transactions
and
may
be
on
such
terms
as
to
price,
delivery
and
otherwise
as
Equiniti
shall
determine.
Participant
funds
held
by
Equiniti
uninvested
will
not
bear
interest,
and
it
is
understood
that,
in
any
event,
Equiniti
shall
have
no
liability
in
connection
with
any
inability
to
purchase
Fund
shares
within
30
business
days
after
the
payable
date
for
any
dividend
or
distribution
as
herein
provided,
or
with
the
timing
of
any
purchases
effected.
Equiniti
shall
have
no
responsibility
as
to
the
value
of
the
Fund
shares
acquired
for
participant
accounts.
For
the
purposes
of
purchases
in
the
open
market,
Equiniti
may
aggregate
purchases
with
those
of
other
participants,
and
the
average
price
(including
trading
fees)
of
all
shares
purchased
by
Equiniti
shall
be
the
price
per
share
allocable
to
all
participants.
7.
Equiniti
will
hold
shares
acquired
pursuant
to
this
Plan,
together
with
the
shares
of
other
participants
acquired
pursuant
to
this
Plan,
in
its
name
or
that
of
its
nominee.
Equiniti
will
forward
to
participants
any
proxy
solicitation
material
and
will
vote
any
shares
so
held
for
participants
only
in
accordance
with
the
proxies
returned
by
participants
to
the
Fund.
Upon
written
request,
Equiniti
will
deliver
to
participants,
without
charge,
a
certificate
or
certificates
for
all
or
a
portion
of
the
full
shares
held
by
Equiniti.
8.
Equiniti
will
confirm
to
participants
each
acquisition
made
for
an
account
as
soon
as
practicable
but
not
later
than
60
business
days
after
the
date
thereof.
Equiniti
will
send
to
participants
a
detailed
account
statement
showing
total
dividends
and
distributions,
date
of
investment,
shares
acquired
and
price
per
share,
and
total
shares
of
record
for
the
account.
Although
participants
may
from
time
to
time
have
an
undivided
fractional
interest
(computed
to
three
decimal
places)
in
a
share
of
the
Fund,
no
certificates
for
a
fractional
share
will
be
issued.
However,
dividends
and
distributions
on
fractional
shares
will
be
credited
to
participant
accounts.
In
the
event
of
termination
of
an
account
under
the
Plan,
Equiniti
will
adjust
for
any
such
undivided
fractional
interest
in
cash
at
the
market
price
of
the
Fund’s
shares
on
the
date
of
termination.
9.
Any
share
dividends
or
split
shares
distributed
by
the
Fund
on
shares
held
by
Equiniti
for
participants
will
be
credited
to
participant
accounts.
In
the
event
that
the
Fund
makes
available
to
its
shareholders
transferable
rights
to
purchase
additional
Fund
shares
or
other
securities,
Equiniti
will
sell
such
rights
and
apply
the
proceeds
of
the
sale
to
the
purchase
of
additional
Fund
shares
for
the
participant
accounts.
The
shares
held
for
participants
under
the
Plan
will
be
added
to
underlying
shares
held
by
participants
in
calculating
the
number
of
rights
to
be
issued.
10.
Equiniti’s
service
charge
for
capital
gains
or
income
dividend
purchases
will
be
paid
by
the
Fund
when
shares
are
issued
by
the
Fund
or
purchased
on
the
open
market.
Equiniti
will
deduct
a
$5.00
service
charge
from
each
voluntary
cash
payment.
Participants
will
be
charged
a
pro
rata
share
of
trading
fees
on
all
open
market
purchases.
11.
Participants
may
withdraw
shares
from
such
participant’s
account
or
terminate
their
participation
under
the
Plan
by
notifying
Equiniti
in
writing.
Such
withdrawal
or
termination
will
be
effective
immediately
if
notice
is
received
by
Equiniti
not
less
than
ten
days
prior
to
any
dividend
or
distribution
record
date;
otherwise
such
withdrawal
or
termination
will
be
effective
after
the
investment
of
any
current
dividend
or
distribution
or
voluntary
cash
payment.
The
Plan
may
be
terminated
by
Equiniti
or
the
Fund
upon
90
days’
notice
in
writing
mailed
to
participants.
Upon
any
withdrawal
or
termination,
Equiniti
will
cause
a
certificate
or
certificates
for
the
full
shares
held
by
Equiniti
for
participants
and
cash
adjustment
for
any
fractional
shares
(valued
at
the
market
value
of
the
shares
at
the
time
of
withdrawal
or
termination)
to
be
delivered
to
participants,
less
any
trading
fees.
Alternatively,
a
participant
may
elect
by
written
notice
to
Equiniti
to
have
Equiniti
sell
part
or
all
of
the
shares
held
for
him
and
to
remit
the
proceeds
to
him.
Equiniti
is
authorized
to
deduct
a
$15.00
service
charge
and
a
trading
fee
of
$0.12
per
share
for
this
transaction
from
the
proceeds.
If
a
participant
disposes
of
all
shares
registered
in
his
name
on
the
books
of
the
Fund,
Equiniti
may,
at
its
option,
terminate
the
participant’s
account
or
determine
from
the
participant
whether
he
wishes
to
continue
his
participation
in
the
Plan.
12.
These
terms
and
conditions
may
be
amended
or
supplemented
by
Equiniti
or
the
Fund
at
any
time
or
times,
except
when
necessary
or
appropriate
to
comply
with
applicable
law
or
the
rules
or
policies
of
the
U.S.
Securities
and
Exchange
Commission
or
any
other
regulatory
authority,
only
by
mailing
to
participants
appropriate
written
notice
at
least
90
days
prior
to
the
effective
date
thereof.
The
amendment
or
supplement
shall
be
deemed
to
be
accepted
by
participants
unless,
prior
to
the
effective
date
thereof,
Equiniti
receives
written
notice
of
the
termination
of
a
participant
account
under
the
Plan.
Any
such
amendment
Not
part
of
the
semiannual
report
TERMS
AND
CONDITIONS
OF
DIVIDEND
REINVESTMENT
AND
CASH
PURCHASE
PLAN
(continued)
may
include
an
appointment
by
Equiniti
in
its
place
and
stead
of
a
successor
Plan
Administrator
under
these
terms
and
conditions,
with
full
power
and
authority
to
perform
all
or
any
of
the
acts
to
be
performed
by
Equiniti
under
these
terms
and
conditions.
Upon
any
such
appointment
of
a
Plan
Administrator
for
the
purpose
of
receiving
dividends
and
distributions,
the
Fund
will
be
authorized
to
pay
to
such
successor
Plan
Administrator,
for
a
participant’s
account,
all
dividends
and
distributions
payable
on
Fund
shares
held
in
a
participant’s
name
or
under
the
Plan
for
retention
or
application
by
such
successor
Plan
Administrator
as
provided
in
these
terms
and
conditions.
13.
Equiniti
shall
at
all
times
act
in
good
faith
and
agree
to
use
its
best
efforts
within
reasonable
limits
to
ensure
the
accuracy
of
all
services
performed
under
this
Agreement
and
to
comply
with
applicable
law,
but
shall
assume
no
responsibility
and
shall
not
be
liable
for
loss
or
damage
due
to
errors
unless
such
error
is
caused
by
Equiniti’s
negligence,
bad
faith
or
willful
misconduct
or
that
of
its
employees.
14.
Any
notice,
instruction,
request
or
election
which
by
any
provision
of
the
Plan
is
required
or
permitted
to
be
given
or
made
by
the
participant
to
Equiniti
shall
be
in
writing
addressed
to
Equiniti
Trust
Company,
LLC,
P.O.
Box
922,
Wall
Street
Station,
New
York,
NY
10269-0560,
or
www.
equiniti.com
or
such
other
address
as
Equiniti
shall
furnish
to
the
participant,
and
shall
have
been
deemed
to
be
given
or
made
when
received
by
Equiniti.
15.
Any
notice
or
other
communication
which
by
any
provision
of
the
Plan
is
required
to
be
given
by
Equiniti
to
the
participant
shall
be
in
writing
and
shall
be
deemed
to
have
been
sufficiently
given
for
all
purposes
by
being
deposited
postage
prepaid
in
a
post
office
letter
box
addressed
to
the
participant
at
his
or
her
address
as
it
shall
last
appear
on
Equiniti’s
records.
The
participant
agrees
to
notify
Equiniti
promptly
of
any
change
of
address.
16.
These
terms
and
conditions
shall
be
governed
by
and
construed
in
accordance
with
the
laws
of
the
State
of
New
York
and
the
rules
and
regulations
of
the
U.S.
Securities
and
Exchange
Commission,
as
they
may
be
amended
from
time
to
time.
©
2024
Franklin
Templeton
Investments.
All
rights
reserved.
Investors
should
be
aware
that
the
value
of
investments
made
for
the
Fund
may
go
down
as
well
as
up.
Like
any
investment
in
securities,
the
value
of
the
Fund’s
portfolio
will
be
subject
to
the
risk
of
loss
from
market,
currency,
economic,
political
and
other
factors.
The
Fund
and
its
investors
are
not
protected
from
such
losses
by
the
investment
manager.
Therefore,
investors
who
cannot
accept
this
risk
should
not
invest
in
shares
of
the
Fund.
To
help
ensure
we
provide
you
with
quality
service,
all
calls
to
and
from
our
service
areas
are
monitored
and/or
recorded.
Semiannual
Report
Templeton
Dragon
Fund,
Inc.
Investment
Manager
Transfer
Agent
Fund
Information
Templeton
Asset
Management
Ltd.
Equiniti
Trust
Company,
LLC
6201
15th
Avenue
Brooklyn,
NY
11219
Toll
Free
Number:
(800)
416-5585
Hearing
Impaired
Number:
(866)
703-9077
International
Phone
Number:
(718)
921-8124
www.equiniti.com
(800)
DIAL
BEN
®
/
342-5236
Item 2. Code of Ethics.
N/A
Item 3. Audit Committee Financial Expert.
N/A
Item 4. Principal Accountant Fees and Services.
N/A
Item 5. Audit Committee of Listed Registrants
Members of the Audit Committee are: Ann Torre Bates, Terrence J. Checki, David W. Niemiec, J. Michael Luttig and Constantine D. Tseretopoulos
Item 6. Schedule of Investments.
N/A
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
The information is disclosed as part of the Financial Statements included in Item 1 of this Form N-CSRS.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The board of directors of the Fund has delegated the authority to vote proxies related to the portfolio securities held by the Fund to the Fund’s investment manager, Templeton Asset Management Ltd.(TAML), in accordance with the Proxy Voting Policies and Procedures (Policies) adopted by the investment manager.
RESPONSIBILITY OF THE INVESTMENT MANAGERS TO VOTE PROXIES
Franklin Templeton Emerging Markets Equity Group, a separate investment group within Franklin Templeton, comprised of investment personnel from the SEC-registered investment advisers listed on Appendix A (hereinafter individually an “Investment Manager” and collectively the “Investment Managers”) have delegated the administrative duties with respect to voting proxies for securities to the Franklin Templeton Proxy Group. Proxy duties consist of disseminating proxy materials and analyses of issuers whose stock is owned by any client (including both investment companies and any separate accounts managed by the Investment Managers) that has either delegated proxy voting administrative responsibility to the Investment Managers or has asked for information and/or recommendations on the issues to be voted. The Investment Managers will inform advisory clients that have not delegated the voting responsibility but that have requested voting advice about the Investment Managers’ views on such proxy votes. The Proxy Group also provides these services to other advisory affiliates of the Investment Managers.
The Proxy Group will process proxy votes on behalf of, and the Investment Managers vote proxies solely in the best interests of, separate account clients, the Investment Managers’-managed investment company shareholders, or shareholders of funds that have appointed Franklin Templeton International Services S.à.r.l. (“FTIS S.à.r.l.”) as the Management Company, provided such funds or clients have properly delegated such responsibility in writing, or, where employee benefit plan assets subject to the Employee Retirement Income Security Act of 1974, as amended, are involved (“ERISA accounts”), in the best interests of the plan participants and beneficiaries (collectively, “Advisory Clients”), unless (i) the power to vote has been specifically retained by the named fiduciary in the documents in which the named fiduciary appointed the Investment Managers or (ii) the documents otherwise expressly prohibit the Investment Managers from voting proxies. The Investment Managers recognize that the exercise of voting rights on securities held by ERISA plans for which the Investment Managers have voting responsibility is a fiduciary duty that must be exercised with care, skill, prudence and diligence.
In certain circumstances, Advisory Clients are permitted to direct their votes in a solicitation pursuant to the Investment Management Agreement. An Advisory Client that wishes to direct its vote shall give reasonable prior written notice to the Investment Managers indicating such intention and provide written instructions directing the Investment Managers or the Proxy Group to vote regarding the solicitation. Where such prior written notice is received, the Proxy Group will vote proxies in accordance with such written notification received from the Advisory Client.
The Investment Managers have adopted and implemented Proxy Voting Policies and Procedures (“Proxy Policies”) that they believe are reasonably designed to ensure that proxies are voted in the best interest of Advisory Clients in accordance with their fiduciary duties and rule 206(4)-6 under the Investment Advisers Act of 1940. To the extent that the Investment Managers have a subadvisory agreement with an affiliated investment manager (the “Affiliated Subadviser”) with respect to a particular Advisory Client, the Investment Managers may delegate proxy voting responsibility to the Affiliated Subadviser. The Investment Managers may also delegate proxy voting responsibility to a subadviser that is not an Affiliated Subadviser in certain limited situations as disclosed to fund shareholders (e.g., where an Investment Manager to a pooled investment vehicle has engaged a subadviser that is not an Affiliated Subadviser to manage all or a portion of the assets).
HOW THE INVESTMENT MANAGERS VOTE PROXIES
Proxy Services
All proxies received by the Proxy Group will be voted based upon the Investment Managers’ instructions and/or policies. To assist it in analyzing proxies of equity securities, the Investment Managers subscribe to Institutional Shareholder Services Inc. (“ISS”), an unaffiliated third-party corporate governance research service that provides in-depth analyses of shareholder meeting agendas and vote recommendations. In addition, the Investment Managers subscribe to ISS’s Proxy Voting Service and Vote Disclosure Service. These services include receipt of proxy ballots, custodian bank relations, account maintenance, vote execution, ballot reconciliation,
* Rule 38a-1 under the Investment Company Act of 1940 (“1940 Act”) and Rule 206(4)-7 under the Investment Advisers Act of 1940 (“Advisers Act”) (together the “Compliance Rule”) require registered investment companies and registered investment advisers to, among other things, adopt and implement written policies and procedures reasonably designed to prevent violations of the federal securities laws (“Compliance Rule Policies and Procedures”).
vote record maintenance, comprehensive reporting capabilities, and vote disclosure services. Also, the Investment Managers subscribe to Glass, Lewis & Co., LLC (“Glass Lewis”), an unaffiliated third-party analytical research firm, to receive analyses and vote recommendations on the shareholder meetings of publicly held U.S. companies, as well as a limited subscription to its international research.
For accounts managed by the Templeton Global Equity Group (“TGEG”), in making voting decisions, the Investment Managers may consider Glass Lewis’s Proxy Voting Guidelines, ISS’s Benchmark Policies, ISS’s Sustainability Policy, and TGEG’s custom sustainability guidelines, which reflect what TGEG believes to be good environmental, social, and governance practices. Although analyses provided by ISS, Glass Lewis, and/or another independent third-party proxy service provider (each a “Proxy Service”) are thoroughly reviewed and considered in making a final voting decision, the Investment Managers do not consider recommendations from a Proxy Service or any third-party to be determinative of the Investment Managers’ ultimate decision. Rather, the Investment Managers exercise their independent judgment in making voting decisions. As a matter of policy, the officers, directors and employees of the Investment Managers and the Proxy Group will not be influenced by outside sources whose interests conflict with the interests of Advisory Clients.
For ease of reference, the Proxy Policies often refer to all Advisory Clients. However, our processes and practices seek to ensure that proxy voting decisions are suitable for individual Advisory Clients. In some cases, the Investment Managers’ evaluation may result in an individual Advisory Client or Investment Manager voting differently, depending upon the nature and objective of the fund or account, the composition of its portfolio, whether the Investment Manager has adopted a specialty or custom voting policy, and other factors.
Proxy Services
Certain of the Investment Managers’ separate accounts or funds (or a portion thereof) are included under Franklin Templeton Investment Solutions (“FTIS”), a separate investment group within Franklin Templeton, and employ a quantitative strategy.
For such accounts, FTIS’s proprietary methodologies rely on a combination of quantitative, qualitative, and behavioral analysis rather than fundamental security research and analyst coverage that an actively-managed portfolio would ordinarily employ. Accordingly, absent client direction, in light of the high number of positions held by such accounts and the considerable time and effort that would be required to review proxy statements and ISS or Glass Lewis recommendations, the Investment Manager may review ISS’s non-US Benchmark guidelines, ISS’s specialty guidelines (in particular, ISS’s Sustainability guidelines), or Glass Lewis’s US guidelines (the “the ISS and Glass Lewis Proxy Voting Guidelines”) and determine, consistent with the best interest of its clients, to provide standing instructions to the Proxy Group to vote proxies according to the recommendations of ISS or Glass Lewis.
In addition, the Investment Managers receive in-house voting research from Franklin Templeton’s Stewardship Team (FT Stewardship). FT Stewardship provides customized research on specific corporate governance issues that is tailored to the investment manager and corporate engagement undertaken. This research may include opinions on voting decisions, however there is no obligation or inference for the Investment Manager to formally vote in line with these opinions. This research supports the independent vote decision making process, and may reduce reliance on third-party advice for certain votes.
The Investment Manager, however, retains the ability to vote a proxy differently than ISS or Glass Lewis recommends if the Investment Manager determines that it would be in the best interests of Advisory Clients.
Conflicts of Interest
All conflicts of interest will be resolved in the best interests of the Advisory Clients. The Investment Managers are affiliates of a large, diverse financial services firm with many affiliates and makes its best efforts to mitigate conflicts of interest. However, as a general matter, the Investment Managers take the position that relationships between certain affiliates that do not use the “Franklin Templeton” name (“Independent Affiliates”) and an issuer (e.g., an investment management relationship between an issuer and an Independent Affiliate) do not present a conflict of interest for an Investment Manager in voting proxies with respect to such issuer because: (i) the Investment Managers operate as an independent business unit from the Independent Affiliate business units, and (ii) informational barriers exist between the Investment Managers and the Independent Affiliate business units.
Material conflicts of interest could arise in a variety of situations, including as a result of the Investment Managers’ or an affiliate’s (other than an Independent Affiliate as described above): (i) material business relationship with an issuer or proponent, (ii) direct or indirect pecuniary interest in an issuer or proponent; or (iii) significant personal or family relationship with an issuer or proponent. Material conflicts of interest are identified by the Proxy Group based upon analyses of client, distributor, broker dealer, and vendor lists, information periodically gathered from directors and officers, and information derived from other sources, including public filings. The Proxy Group gathers and analyzes this information on a best-efforts basis, as much of this information is provided directly by individuals and groups other than the Proxy Group, and the Proxy Group relies on the accuracy of the information it receives from such parties.
Nonetheless, even though a potential conflict of interest between the Investment Managers or an affiliate (other than an Independent Affiliate as described above) and an issuer may exist: (1) the Investment Managers may vote in opposition to the recommendations of an issuer’s management even if contrary to the recommendations of a third-party proxy voting research provider; (2) if management has made no recommendations, the Proxy Group may defer to the voting instructions of the Investment Managers; and (3) with respect to shares held by Franklin Resources, Inc. or its affiliates for their own corporate accounts, such shares may be voted without regard to these conflict procedures.
Otherwise, in situations where a material conflict of interest is identified between the Investment Managers or one of its affiliates (other than Independent Affiliates) and an issuer, the Proxy Group may vote consistent with the voting recommendation of a Proxy Service or send the proxy directly to the relevant Advisory Clients with the Investment Managers’ recommendation regarding the vote for approval. To address certain affiliate conflict situations, the Investment Managers will employ pass-through voting or mirror voting when required pursuant to a fund’s governing documents or applicable law.
Where the Proxy Group refers a matter to an Advisory Client, it may rely upon the instructions of a representative of the Advisory Client, such as the board of directors or trustees, a committee of the board, or an appointed delegate in the case of a U.S. registered investment company, a conducting officer in the case of a fund that has appointed FTIS S.à.r.l as its Management Company, the Independent Review Committee for Canadian investment funds, or a plan administrator in the case of an employee benefit plan. A quorum of the board of directors or trustees or of a committee of the board can be reached by a majority of members, or a majority of non-recused members. The Proxy Group may determine to vote all shares held by Advisory Clients of the Investment Managers and affiliated Investment Managers (other than Independent Affiliates) in accordance with the instructions of one or more of the Advisory Clients.
The Investment Managers may also decide whether to vote proxies for securities deemed to present conflicts of interest that are sold following a record date, but before a shareholder meeting date. The Investment Managers may consider various factors in deciding whether to vote such proxies, including the Investment Managers’ long-term view of the issuer’s securities for investment, or it may defer the decision to vote to the applicable Advisory Client. The Investment Managers also may be unable to vote, or choose not to vote, a proxy for securities deemed to present a conflict of interest for any of the reasons outlined in the first paragraph of the section of these policies entitled “Proxy Procedures.”
Weight Given Management Recommendations
One of the primary factors the Investment Managers consider when determining the desirability of investing in a particular company is the quality and depth of that company’s management. Accordingly, the recommendation of management on any issue is a factor that the Investment Managers consider in determining how proxies should be voted. However, the Investment Managers do not consider recommendations from management to be determinative of the Investment Managers’ ultimate decision. Each issue is considered on its own merits, and the Investment Managers will not support the position of a company’s management in any situation where it determines that the ratification of management’s position would adversely affect the investment merits of owning that company’s shares.
Engagement with Issuers
The Investment Managers believe that engagement with issuers is important to good corporate governance and to assist in making proxy voting decisions. The Investment Managers may engage with issuers to discuss specific ballot items to be voted on in advance of an annual or special meeting to obtain further information or clarification on the proposals. The Investment Managers may also engage with management on a range of environmental, social or corporate governance issues throughout the year.
THE PROXY GROUP
The Proxy Group is part of Franklin Templeton’s Stewardship Team. Full-time staff members and support staff are devoted to proxy voting administration and oversight and providing support and assistance where needed. On a daily basis, the Proxy Group will review each proxy upon receipt as well as any agendas, materials and recommendations that they receive from a Proxy Service or other sources. The Proxy Group maintains a record of all shareholder meetings that are scheduled for companies whose securities are held by the Investment Managers’ managed funds and accounts. For each shareholder meeting, a member of the Proxy Group will consult with the research analyst that follows the security and provide the analyst with the agenda, analyses of one or more Proxy Services, recommendations and any other information provided to the Proxy Group. Except in situations identified as presenting material conflicts of interest, the Investment Managers’ research analyst and relevant portfolio manager(s) are responsible for making the final voting decision based on their review of the agenda, analyses of one or more Proxy Services, proxy statements, their knowledge of the company and any other information publicly available.
In situations where the Investment Managers have not responded with vote recommendations to the Proxy Group by the deadline date, the Proxy Group may vote consistent with the vote recommendations of a Proxy Service. Except in cases where the Proxy Group is voting consistent with the voting recommendation of a Proxy Service, the Proxy Group must obtain voting instructions from the Investment Managers’ research analysts, relevant portfolio manager(s), legal counsel and/or the Advisory Client prior to submitting the vote. In the event that an account holds a security that an Investment Manager did not purchase on its behalf, and the Investment Manager does not normally consider the security as a potential investment for other accounts, the Proxy Group may vote consistent with the voting recommendations of a Proxy Service or take no action on the meeting.
PROXY ADMINISTRATION PROCEDURES
Situations Where Proxies Are Not Voted
The Proxy Group is fully cognizant of its responsibility to process proxies and maintain proxy records as may be required by relevant rules and regulations. In addition, the Investment Managers understand their fiduciary duty to vote proxies and that proxy voting decisions may affect the value of shareholdings. Therefore, the Investment Managers will generally attempt to process every proxy they receive for all domestic and foreign securities.
However, there may be situations in which the Investment Managers may be unable to successfully vote a proxy, or may choose not to vote a proxy, such as where: (i) a proxy ballot was not received from the custodian bank; (ii) a meeting notice was received too late; (iii) there are fees imposed upon the exercise of a vote and it is determined that such fees outweigh the benefit of voting; (iv) there are legal encumbrances to voting, including blocking restrictions in certain markets that preclude the ability to dispose of a security if an Investment Manager votes a proxy or where the Investment Manager is prohibited from voting by applicable law, economic or other sanctions, or other regulatory or market requirements, including but not limited to, effective Powers of Attorney; (v) additional documentation or the disclosure of beneficial owner details is required; (vi) the Investment Managers held shares on the record date but has sold them prior to the meeting date; (vii) the Advisory Client held shares on the record date, but the Advisory Client closed the account prior to the meeting date; (viii) a proxy voting service is not offered by the custodian in the market; (ix) due to either system error or human error, the Investment Managers’ intended vote is not correctly submitted; (x) the Investment Managers believe it is not in the best interest of the Advisory Client to vote the proxy for any other reason not enumerated herein; or (xi) a security is subject to a securities lending or similar program that has transferred legal title to the security to another person.
Rejected Votes
Even if the Investment Managers use reasonable efforts to vote a proxy on behalf of their Advisory Clients, such vote or proxy may be rejected because of (a) operational or procedural issues experienced by one or more third parties involved in voting proxies in such jurisdictions; (b) changes in the process or agenda for the meeting by the issuer for which the Investment Managers do not have sufficient notice; or (c) the exercise by the issuer of its discretion to reject the vote of the Investment Managers. In addition, despite the best efforts of the Proxy Group and its agents, there may be situations where the Investment Managers’ votes are not received, or properly tabulated, by an issuer or the issuer’s agent.
Securities on Loan
The Investment Managers or their affiliates may, on behalf of one or more of the proprietary registered investment companies advised by the Investment Managers or their affiliates, make efforts to recall any security on loan where the Investment Manager or its affiliates (a) learn of a vote on an event that may materially affect a security on loan and (b) determine that it is in the best interests of such proprietary registered investment companies to recall the security for voting purposes. The ability to timely recall shares is not entirely within the control of the Investment Managers. Under certain circumstances, the recall of shares in time for such shares to be voted may not be possible due to applicable proxy voting record dates or other administrative considerations.
Split Voting
There may be instances in certain non-U.S. markets where split voting is not allowed. Split voting occurs when a position held within an account is voted in accordance with two differing instructions. Some markets and/or issuers only allow voting on an entire position and do not accept split voting. In certain cases, when more than one Franklin Templeton investment manager has accounts holding shares of an issuer that are held in an omnibus structure, the Proxy Group will seek direction from an appropriate representative of the Advisory Client with multiple Investment Managers (such as a conducting officer of the Management Company in the case of a SICAV), or the Proxy Group will submit the vote based on the voting instructions provided by the Investment Manager with accounts holding the greatest number of shares of the security within the omnibus structure.
Bundled Items
If several issues are bundled together in a single voting item, the Investment Managers will assess the total benefit to shareholders and the extent that such issues should be subject to separate voting proposals.
PROCEDURES FOR MEETINGS INVOLVING FIXED INCOME SECURITIES & PRIVATELY HELD ISSUERS
From time to time, certain custodians may process events for fixed income securities through their proxy voting channels rather than corporate action channels for administrative convenience. In such cases, the Proxy Group will receive ballots for such events on the ISS voting platform. The Proxy Group will solicit voting instructions from the Investment Managers for each account or fund involved. If the Proxy Group does not receive voting instructions from the Investment Managers, the Proxy Group will take no action on the event. The Investment Managers may be unable to vote a proxy for a fixed income security, or may choose not to vote a proxy, for the reasons described under the section entitled “Proxy Procedures.”
In the rare instance where there is a vote for a privately held issuer, the decision will generally be made by the relevant portfolio managers or research analysts.
The Proxy Group will monitor such meetings involving fixed income securities or privately held issuers for conflicts of interest in accordance with these procedures. If a fixed income or privately held issuer is flagged as a potential conflict of interest, the Investment Managers may nonetheless vote as it deems in the best interests of its Advisory Clients. The Investment Managers will report such decisions on an annual basis to Advisory Clients as may be required.
Appendix A
These Proxy Policies apply to accounts managed by personnel within Franklin Templeton Emerging Markets Equity Group, which includes the following Investment Managers:
Franklin Templeton Investment Management Limited
Templeton Asset Management Ltd.
Franklin Templeton Investments (ME) Limited
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
N/A
| Item 14. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
N/A
Item 15. Submission of Matters to a Vote of Security Holders.
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Directors that would require disclosure herein.
Item 16. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934, as amended, 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 Shareholder Report on Form N-CSRS, 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 changes in the Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the internal control over financial reporting.
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Company.
Securities lending agent The board of trustees has approved the Fund’s participation in a securities lending program. Under the securities lending program, JP Morgan Chase Bank serves as the Fund’s securities lending agent.
The securities lending agent is responsible for the implementation and administration of the Funds’ securities lending program. Pursuant to the respective Securities Lending Agreements with the Fund, the securities lending agent performs a variety of services, including (but not limited to) the following:
o Trade finding, execution and settlement
o Settlement monitoring and controls, reconciliations, corporate actions and recall management
o Collateral management and valuation information
o Invoice management and billing from counterparties
For the period ended June 30, 2024, the income earned by the Fund as well as the fees and/or compensation paid by the Fund in dollars pursuant to a securities lending agreement between the Trust with respect to the Fund and the Securities Lending Agent were as follows (figures may differ from those shown in shareholder reports due to time of availability and use of estimates):
| Gross income earned by the Fund from securities lending activities | $51,325 |
| Fees and/or compensation paid by the Fund for securities lending activities and related services | |
| Fees paid to Securities Lending Agent from revenue split | $4,025 |
| Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) not included in a revenue split | $- |
| Administrative fees not included in a revenue split | $- |
| Indemnification fees not included in a revenue split | $- |
| Rebate (paid to borrower) | $979 |
| Other fees not included above | $377 |
| Aggregate fees/compensation paid by the Fund for securities lending activities | $5,381 |
| Net income from securities lending activities | $45,944 |
Item 18. Recovery of Erroneously Awarded Compensation.
(a) N/A
(b) N/A
Item 19. Exhibits.
(a)(1) N/A
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Christopher Kings, Chief Executive Officer - Finance and Administration, and Jeffrey White, Chief Financial Officer, Chief Accounting Officer and Treasurer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Christopher Kings, Chief Executive Officer - Finance and Administration, and Jeffrey White, Chief Financial Officer, Chief Accounting Officer and Treasurer
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/ CHRISTOPHER KINGS | |
| | Christopher Kings | |
| | Chief Executive Officer - Finance and Administration | |
| | | |
| Date | August 29, 2024 | |
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/ CHRISTOPHER KINGS | |
| | Christopher Kings | |
| | Chief Executive Officer - Finance and Administration | |
| | | |
| Date | August 29, 2024 | |
| By | /s/ JEFFREY WHITE | |
| | Jeffrey White | |
| | Chief Financial Officer, Chief Accounting Officer and Treasurer | |
| | | |
| Date | August 29, 2024 | |
