PAGE 1
000 B000000 12/31/99
000 C000000 919893
000 D000000 N
000 E000000 NC
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
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002 B000000 FT. LAUDERDALE
002 C000000 FL
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007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
PAGE 2
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
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010 A000002 DELETE
010 A000005 DELETE
011 A000001 DELETE
011 A000002 DELETE
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012 C020002 NY
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PAGE 3
015 D020002 1061
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PAGE 4
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PAGE 5
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PAGE 6
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PAGE 7
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PAGE 8
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PAGE 9
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PAGE 10
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PAGE 11
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PAGE 12
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PAGE 13
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PAGE 14
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PAGE 15
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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, 1999 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> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 528579686
<INVESTMENTS-AT-VALUE> 673934796
<RECEIVABLES> 1871224
<ASSETS-OTHER> 40
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 675806060
<PAYABLE-FOR-SECURITIES> 92770
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1844591
<TOTAL-LIABILITIES> 1937361
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 689154917
<SHARES-COMMON-STOCK> 52859893
<SHARES-COMMON-PRIOR> 52859893
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (12829)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (160628499)
<ACCUM-APPREC-OR-DEPREC> 145355110
<NET-ASSETS> 673868699
<DIVIDEND-INCOME> 24297589
<INTEREST-INCOME> 1728441
<OTHER-INCOME> 0
<EXPENSES-NET> (9431501)
<NET-INVESTMENT-INCOME> 16594529
<REALIZED-GAINS-CURRENT> (50855494)
<APPREC-INCREASE-CURRENT> 239783031
<NET-CHANGE-FROM-OPS> 205522066
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (16898503)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (43219054)
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 145404509
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (45403)
<OVERDIST-NET-GAINS-PRIOR> (109436457)
<GROSS-ADVISORY-FEES> (7380081)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (9431501)
<AVERAGE-NET-ASSETS> 591973779
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.31<F1>
<PER-SHARE-GAIN-APPREC> 3.58<F1>
<PER-SHARE-DIVIDEND> (0.32)<F1>
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> (0.82)
<PER-SHARE-NAV-END> 12.75
<EXPENSE-RATIO> 1.59
<FN>
<F1>BASED ON AVERAGE WEIGHTED SHARES OUTSTANDING.
</FN>
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Templeton Dragon Fund, Inc.
In planning and performing our audit of the financial statements of Templeton
Dragon Fund, Inc. (the "Fund") for the year ended December 31, 1999, we
considered its internal control, including control activities for 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 the Fund 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 the safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that controls may become inadequate
because of changes in conditions or that the effectiveness of their 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 one or more
of the internal control components does not reduce to a relatively low level the
risk that misstatements caused by error 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 and its operation, including controls for safeguarding
securities, that we consider to be material weaknesses as defined above as of
December 31, 1999.
This report is intended solely for the information and use of the Board of
Directors, management and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these specified
parties.
PricewaterhouseCoopers LLP
New York, New York
January 28, 2000
EXHIBIT 77K
TEMPLETON DRAGON FUND, INC.
CHANGE IN INDEPENDENT AUDITOR
On August 13, 1999, McGladrey & Pullen, LLP (McGladrey) resigned as independent
auditors of the Fund. McGladrey resigned pursuant to their agreement to sell
their investment company practice to PricewaterhouseCoopers LLP (PwC). The
McGladrey partners and professionals previously serving the Fund, have joined
PwC and performed the December 31, 1999 audit.
None of the reports of McGladrey on the financial statements of the Fund,
including those of the past two fiscal years have ever contained an adverse
opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles.
During the period McGladrey served the Fund, including the two most recent
fiscal years and subsequent interim period, there were no disagreements with
McGladrey on any matter of accounting principle or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of McGladrey would have caused it to make
reference to the subject matter of disagreement in connection with its report.
On October 21, 1999, the Fund, with the approval of its Board of Directors and
its Audit Committee, engaged PwC as its independent auditors.
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street
Washington D.C. 20549
We were previously the independent accountants for Templeton Dragon Fund, Inc.
We have read their notification of change in independent accountants made
in Item 77K of Form N-SAR. We agree with the statements in the filing.
/s/MCGLADREY & PULLEN, LLP
New York, New York
February 29, 2000
