PAGE 1
000 B000000 12/31/98
000 C000000 919893
000 D000000 Y
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0
000 J000000 A
001 A000000 TEMPLETON DRAGON FUND, INC.
001 B000000 811-8874
001 C000000 9545277591
002 A000000 500 E. BROWARD BLVD. SUITE 2100
002 B000000 FT. LAUDERDALE
002 C000000 FL
002 D010000 33394
002 D020000 3091
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
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007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
008 A000001 TEMPLETON ASSET MANAGEMENT LIMITED
008 B000001 A
008 C000001 801-0005
008 D010001 HONG KONG
008 D050001 HONG KONG
010 A000001 FRANKLIN TEMPLETON SERVICES, INC
010 B000001 8-31192
010 C010001 FORT LAUDERDALE
010 C020001 FL
010 C030001 33394
010 C040001 3091
012 A000001 CHASEMELLON SHAREHOLDER SERVICES
012 B000001 85-0000
012 C010001 RIDGEFIELD PARK
012 C020001 NJ
PAGE
PAGE 2
012 C030001 07660
012 A000002 NOMURA CAPITAL MANAGEMENT
012 B000002 85-0000
012 C010002 NEW YORK
012 C020002 NY
012 C030002 10038
013 A000001 MCGLADREY & PULLEN, LLP
013 B010001 NEW YORK
013 B020001 NY
013 B030001 10017
013 B040001 2416
015 A000001 THE CHASE MANHATTAN BANK
015 B000001 C
015 C010001 NEW YORK
015 C020001 NY
015 C030001 10081
015 E010001 X
015 A000002 THE CHASE MANHATTAN BANK
015 B000002 S
015 C010002 BUENOS AIRES
015 D010002 ARGENTINA
015 D020002 1061
015 E040002 X
015 A000003 THE CHASE MANHATTAN BANK
015 B000003 S
015 C010003 SYDNEY
015 D010003 AUSTRALIA
015 D020003 2000
015 E040003 X
015 A000004 CREDITANSTALT AG
015 B000004 S
015 C010004 VIENNA
015 D010004 AUSTRIA
015 D020004 A-1011
015 E040004 X
015 A000005 STANDARD CHARTERED BANK
015 B000005 S
015 C010005 DHAKA
015 D010005 BANGLADESH
015 D020005 1000
015 E040005 X
015 A000006 GENERALE BANK
015 B000006 S
015 C010006 BRUSSELS
015 D010006 BELGIUM
015 D020006 1000
015 E040006 X
015 A000007 THE ROYAL BANK OF CANADA
015 B000007 S
015 C010007 TORONTO
015 D010007 CANADA
PAGE
PAGE 3
015 D020007 M5J 2J5
015 E040007 X
015 A000008 THE FIRST NATIONAL BANK OF CHICAGO
015 B000008 S
015 C010008 LONDON
015 D010008 UNITED KINGDOM
015 D020008 NW1 3FN
015 E040008 X
015 A000009 CESKOSLOVENSKA OBCHODNI BANKA, A.S.
015 B000009 S
015 C010009 PRAGUE
015 D010009 CZECH REPUBLIC
015 D020009 1
015 E040009 X
015 A000010 DEN DANSKE BANK
015 B000010 S
015 C010010 COPENHAGEN
015 D010010 DENMARK
015 D020010 1091
015 E040010 X
015 A000011 NATIONAL BANK OF EGYPT
015 B000011 S
015 C010011 CAIRO
015 D010011 EGYPT
015 E040011 X
015 A000012 MERITA BANK LTD
015 B000012 S
015 C010012 HELSINKI
015 D010012 FINLAND
015 D020012 29B
015 E040012 X
015 A000013 BANQUE PARIBAS
015 B000013 S
015 C010013 PARIS
015 D010013 FRANCE
015 D020013 75078
015 E040013 X
015 A000014 DRESDNER BANK A.G.
015 B000014 S
015 C010014 FRANKFURT
015 D010014 GERMANY
015 E040014 X
015 A000015 BARCLAYS BANK PLC
015 B000015 S
015 C010015 ATHENS
015 D010015 GREECE
015 D020015 10562
015 E040015 X
015 A000016 THE CHASE MANHATTAN BANK
015 B000016 S
015 C010016 HONG KONG
PAGE
PAGE 4
015 D010016 HONG KONG
015 E040016 X
015 A000017 THE HONGKONG AND SHANGHAI BANKING CORP. LTD.
015 B000017 S
015 C010017 JAKARTA
015 D010017 INDONESIA
015 D020017 10023
015 E040017 X
015 A000018 BANK OF IRELAND
015 B000018 S
015 C010018 DUBLIN
015 D010018 IRELAND
015 D020018 1
015 E040018 X
015 A000019 BANK LEUMI LE-ISRAEL B.M.
015 B000019 S
015 C010019 TEL AVIV
015 D010019 ISRAEL
015 D020019 61000
015 E040019 X
015 A000020 BANQUE PARIBAS
015 B000020 S
015 C010020 MILAN
015 D010020 ITALY
015 D020020 20121
015 E040020 X
015 A000021 THE FUJI BANK LTD
015 B000021 S
015 C010021 TOKYO
015 D010021 JAPAN
015 E040021 X
015 A000022 THE CHASE MANHATTAN BANK
015 B000022 S
015 C010022 KUALA LUMPUR
015 D010022 MALAYSIA
015 D020022 50250
015 E040022 X
015 A000023 THE CHASE MANHATTAN BANK, S.A.
015 B000023 S
015 C010023 MEXICO DF
015 D010023 MEXICO
015 D020023 01210
015 E040023 X
015 A000024 BANQUE COMMERCIALE DU MAROC
015 B000024 S
015 C010024 CASABLANCA
015 D010024 MOROCCO
015 D020024 20000
015 E040024 X
015 A000025 ABN AMRO N.V.
015 B000025 S
PAGE
PAGE 5
015 C010025 DE BREDA
015 D010025 NETHERLANDS
015 D020025 4800
015 E040025 X
015 A000026 NATIONAL NOMINEES LIMITED
015 B000026 S
015 C010026 AUCKLAND
015 D010026 NEW ZEALAND
015 E040026 X
015 A000027 DEN NORSKE BANK AS
015 B000027 S
015 C010027 OSLO
015 D010027 NORWAY
015 D020027 N-0107
015 E040027 X
015 A000028 THE HONGKONG AND SHANGHAI BANKING CORP. LTD.
015 B000028 S
015 C010028 PASIG CITY
015 D010028 PHILIPPINES
015 E040028 X
015 A000029 BANCO ESPIRITO SANTO E COMERCIAL DE LISBOA S.
015 B000029 S
015 C010029 LISBON
015 D010029 PORTUGAL
015 D020029 1250
015 E040029 X
015 A000030 THE HONGKONG AND SHANGHAI BANKING CORP. LTD.
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015 C010030 SHANGHAI
015 D010030 CHINA
015 D020030 200120
015 E040030 X
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015 E040031 X
015 A000032 STANDARD CHARTERED BANK
015 B000032 S
015 C010032 SINGAPORE
015 D010032 SINGAPORE
015 D020032 049909
015 E040032 X
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015 B000033 S
015 C010033 JOHANNESBURG
015 D010033 SOUTH AFRICA
015 E040033 X
015 A000034 THE CHASE MANHATTAN BANK
015 B000034 S
015 C010034 MADRID
PAGE
PAGE 6
015 D010034 SPAIN
015 D020034 28046
015 E040034 X
015 A000035 SKANDINAVISKA ENSKILDA BANKEN
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015 E040035 X
015 A000036 UNION BANK OF SWITZERLAND AG
015 B000036 S
015 C010036 ZURICH
015 D010036 SWITZERLAND
015 D020036 8021
015 E040036 X
015 A000037 THE CHASE MANHATTAN BANK
015 B000037 S
015 C010037 BANGKOK
015 D010037 THAILAND
015 D020037 10500
015 E040037 X
015 A000038 THE CHASE MANHATTAN BANK
015 B000038 S
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015 D020038 EC2N 4AJ
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015 A000039 THE FIRST NATIONAL BANK OF BOSTON
015 B000039 S
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015 E040039 X
015 A000040 BARCLAYS BANK OF ZIMBABWE
015 B000040 S
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015 A000041 EUROCLEAR
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015 C010041 BRUSSELS
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015 D020041 B-1210
015 E040041 X
015 A000042 CEDEL BANK S.A.
015 B000042 S
015 C010042 LUXEMBOURG
015 D010042 LUXEMBOURG
015 E040042 X
015 A000043 BANQUE GENERALE DU LUXEMBOURG S.A.
015 B000043 S
015 C010043 LUXEMBOURG
PAGE
PAGE 7
015 D010043 LUXEMBOURG
015 D020043 L-2951
015 E040043 X
015 A000044 HONG KONG & SHANGHAI BANKING CORPORATION
015 B000044 S
015 C010044 PORT LOUIS
015 D010044 MAURITIUS
015 E040044 X
015 A000045 CITIBANK BUDAPEST RT.
015 B000045 S
015 C010045 BUDAPEST
015 D010045 HUNGARY
015 D020045 H-1051
015 E040045 X
015 A000046 BARCLAYS BANK OF GHANA LTD
015 B000046 S
015 C010046 ACCRA
015 D010046 GHANA
015 E040046 X
015 A000047 SOCIETE GENERALE DE BANQUES EN COTE D'IVOIRE
015 B000047 S
015 C010047 ABIDJAN
015 D010047 IVORY COAST
015 E040047 X
015 A000048 THE HONGKONG AND SHANGHAI BANKING CORP. LTD.
015 B000048 S
015 C010048 SEOUL
015 D010048 SOUTH KOREA
015 E040048 X
015 A000049 BARCLAYS BANK OF BOTSWANA LIMITED
015 B000049 S
015 C010049 GABORONE
015 D010049 BOTSWANA
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015 A000050 CESKOSLOVENSKA OBCHODNI BANKA, A.S.
015 B000050 S
015 C010050 BRATISLAVA
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015 D020050 815 63
015 E040050 X
015 A000051 BARCLAYS BANK OF KENYA
015 B000051 S
015 C010051 NAIROBI
015 D010051 KENYA
015 E040051 X
015 A000052 BARCLAYS BANK OF ZAMBIA
015 B000052 S
015 C010052 LUSAKA
015 D010052 ZAMBIA
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015 E040052 X
PAGE
PAGE 8
015 A000053 DELETE
015 A000054 BANK HANDLOWY W. WARSZAWIE S.A.
015 B000054 S
015 C010054 WARSAW
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015 D020054 00-950
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015 C010056 NICOSIA
015 D010056 CYPRUS
015 D020056 1644
015 E040056 X
015 A000057 CITIBANK, N.A.
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015 D010059 NAMIBIA
015 D020059 3327
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015 A000060 THE BRITISH BANK OF THE MIDDLE EAST
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015 C010060 MUSCAT
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015 A000061 STANBIC BANK SWAZILAND LTD
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015 C010061 MBABANE
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015 A000062 THE BANK OF BERMUDA LTD.
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PAGE
PAGE 9
020 C000002 244
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PAGE
PAGE 10
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PAGE
PAGE 11
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PAGE
PAGE 12
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PAGE
PAGE 13
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PAGE
PAGE 14
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PAGE
PAGE 15
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PAGE
PAGE 16
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SIGNATURE /s/JAMES R. BAIO
James R. Baio
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the
Templeton Dragon Fund, Inc., December 31, 1998 Annual Report and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000919893
<NAME> TEMPLETON DRAGON FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 623834380
<INVESTMENTS-AT-VALUE> 529406459
<RECEIVABLES> 800026
<ASSETS-OTHER> 28294
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 530234779
<PAYABLE-FOR-SECURITIES> 5329
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1765260
<TOTAL-LIABILITIES> 1770589
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 732373971
<SHARES-COMMON-STOCK> 52859893
<SHARES-COMMON-PRIOR> 54007093
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (45403)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (109436457)
<ACCUM-APPREC-OR-DEPREC> (94427921)
<NET-ASSETS> 528464190
<DIVIDEND-INCOME> 15975016
<INTEREST-INCOME> 3607755
<OTHER-INCOME> 0
<EXPENSES-NET> (6495278)
<NET-INVESTMENT-INCOME> 13087493
<REALIZED-GAINS-CURRENT> (88448519)
<APPREC-INCREASE-CURRENT> (88830321)
<NET-CHANGE-FROM-OPS> (164191347)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13956089)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> (1147200)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (205068423)
<ACCUMULATED-NII-PRIOR> 1841207
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (22005953)
<GROSS-ADVISORY-FEES> (5115409)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (6495278)
<AVERAGE-NET-ASSETS> 541150630
<PER-SHARE-NAV-BEGIN> 13.58
<PER-SHARE-NII> 0.25
<PER-SHARE-GAIN-APPREC> (3.26)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.27)
<RETURNS-OF-CAPITAL> (0.30)
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> 1.59<F1>
<AVG-DEBT-OUTSTANDING> 0
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<FN>
<F1>Annualized
</FN>
</TABLE>
77 Q 1- Exhibits
QUESTION 77 C - Matters submitted to a vote of security holders: Incorporated by
reference all proxy materials filed with the Securities and Exchange Commission
on August 3, 1998.
The Annual Meeting of Shareholders of TDF was held on September 29, 1998 at the
offices of Templeton Investment Counsel, Inc., 500 East Broward Boulevard, Ft.
Lauderdale, Florida. At the meeting, shareholders voted to approve (i) election
of directors, and (ii) the selection of McGladrey & Pullen, LLP as independent
auditors. Shareholders voted to reject a shareholders proposal that requested
and recommended that the Board of Directors consider approving and submitting
for shareholder approval, a proposal to convert the Fund from a closed-end fund
to an open-end fund. The voting results and other agenda items are outlined
below:
PAGE
TEMPLETON DRAGON FUND, INC.:
1. The election of six (6) Directors:
<TABLE>
<CAPTION>
% OF OUTSTANDING % OF SHARES % OF OUTSTANDING
TERM EXPIRING 1999: FOR SHARES VOTED WITHHELD SHARES
- ------------------- --- ---------------- ----------- -------- ------
<S> <C> <C> <C> <C> <C>
Frank J. Crothers 43,769,006 82.80% 94.06% 2,764,469 5.23%
Constantine D. Tseretopoulos 43,721,843 82.71% 93.96% 2,811,632 5.32%
</TABLE>
<TABLE>
<CAPTION>
% OF OUTSTANDING % OF SHARES % OF OUTSTANDING
TERM EXPIRING 2001: FOR SHARES VOTED WITHHELD SHARES
- ------------------- --- ----------------- ------------ -------- ------------------
<S> <C> <C> <C> <C> <C>
Martin L. Flanagan 43,822,876 82.90% 94.18% 2,710,599 5.13%
Andrew H. Hines, Jr. 43,656,190 82.59% 93.82% 2,877,285 5.44%
Edith E. Holiday 43,754,374 82.77% 94.03% 2,779,101 5.26%
Charles B. Johnson 43,895,763 83.04% 94.33% 2,637,712 4.99%
</TABLE>
2. The ratification of the selection of McGladrey & Pullen, LLP, as independent
auditors for the Fund for the fiscal year ending March 31, 1999:
<TABLE>
<CAPTION>
NO. OF SHARES % OF OUTSTANDING SHARES % OF SHARES VOTED
------------------ ----------------------- ----------------
<S> <C> <C> <C>
FOR 44,160,359 83.54% 96.54%
AGAINST 1,584,167 3.00% 3.46%
ABSTAIN 788,947 1.49% --
BROKER NON-VOTES 2 0.00% --
----------------- --------- -----------
TOTAL 46,533,475 88.03% 100.00%
</TABLE>
PAGE
3. The rejection of a shareholder proposal to request and recommend that the
Board of Directors consider approving and submitting for shareholder
approval, a proposal to convert the Fund from a close-end fund to an
open-end fund:
<TABLE>
<CAPTION>
NO. OF SHARES % OF OUTSTANDING SHARES % OF SHARES VOTED
----------------- ------------------------ -----------------
<S> <C> <C> <C>
FOR 7,518,096 14.22% 28.43%
AGAINST 18,929,368 35.81% 71.57%
ABSTAIN 3,429,203 6.49% --
BROKER NON-VOTES 16,656,808 31.51% --
---------------- ---------- ---------
TOTAL 46,533,475 88.03% 100.00%
</TABLE>
4. The transaction of any other business as may properly come before the
meeting:
<TABLE>
<CAPTION>
NO. OF SHARES % OF OUTSTANDING SHARES % OF SHARES VOTED
----------------- ------------------------ -------------------
<S> <C> <C> <C>
FOR 41,038,109 77.64% 93.04%
AGAINST 3,071,950 5.81% 6.96%
ABSTAIN 2,423,415 4.58% --
BROKER NON-VOTES 1 0.00% --
---------------- --------- -----------
TOTAL 46,533,475 88.03% 100.00%
</TABLE>
The Board of Directors and Shareholders
Templeton Dragon Fund, Inc.
In planning and performing our audit of the financial statements of Templeton
Dragon Fund, Inc. for the period from April 1, 1998 to December 31, 1998, we
considered its internal control, including controls over safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on internal control.
The management of Templeton Dragon Fund, Inc. is responsible for establishing
and maintaining internal control. In fulfilling this responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial statements for external
purposes that are fairly presented in conformity with generally accepted
accounting principles. Those controls include safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, error or fraud may occur
and may not be detected. Also, projection of any evaluation of internal control
to future periods is subject to the risk that it may become inadequate because
of changes in conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of the
specific internal control component does not reduce to a relatively low level
the risk that errors or fraud in amounts that would be material in relation to
the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal control, including
controls over safeguarding securities, that we consider to be material
weaknesses as defined above as of December 31, 1998.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/MCGLADREY & PULLEN, LLP
New York, New York
January 28, 1999
