Templeton Dragon Fund Inc.
03/04/2026 | Press release | Distributed by Public on 03/04/2026 15:49
Annual Report by Investment Company (Form N-CSR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
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
Franklin Templeton
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: December 31
Date of reporting period: December 31, 2025
| ITEM 1. | REPORT TO STOCKHOLDERS. |
(a) The Report to Shareholders is filed herewith
Annual
Report
Templeton
Dragon
Fund,
Inc.
December
31,
2025
Not
FDIC
Insured
No
Bank
Guarantee
May
Lose
Value
Managed
Distribution
Policy
:
Effective
March
1,
2025,
the
Board
has
implemented
a
new
managed
distribution
plan
whereby
the
Fund
will
distribute
a
level
distribution
amount
to
shareholders.
The
Fund
intends
to
make
quarterly
distributions
to
shareholders
at
the
fixed
rate
of
$0.10
per
share.
Management
will
generally
distribute
amounts
necessary
to
satisfy
the
Fund's
plan
and
the
requirements
prescribed
by
excise
tax
rules
and
Subchapter
M
of
the
Internal
Revenue
Code.
The
plan
is
intended
to
provide
shareholders
with
a
consistent
distribution
each
quarter
and
is
intended
to
narrow
the
discount
between
the
market
price
and
the
NAV
of
the
Fund's
common
shares,
but
there
is
no
assurance
that
the
plan
will
be
successful
in
doing
so.
Under
the
managed
distribution
plan,
to
the
extent
that
sufficient
investment
income
is
not
available
on
a
quarterly
basis,
the
Fund
will
distribute
long-term
capital
gains
and/or
return
of
capital
in
order
to
maintain
its
managed
distribution
rate.
No
conclusions
should
be
drawn
about
the
Fund's
investment
performance
from
the
amount
of
the
Fund's
distributions
or
from
the
terms
of
the
Fund's
managed
distribution
plan.
The
Board
may
amend
the
terms
of
the
Plan
or
terminate
the
Plan
at
any
time
without
prior
notice
to
the
Fund's
shareholders,
however,
at
this
time
there
are
no
reasonably
foreseeable
circumstances
that
might
cause
the
termination
of
the
Plan.
The
amendment
or
termination
of
the
Plan
could
have
an
adverse
effect
on
the
market
price
of
the
Fund's
common
shares.
The
Plan
will
be
subject
to
the
periodic
review
by
the
Board,
including
a
yearly
review
of
the
annual
minimum
fixed
rate
to
determine
if
an
adjustment
should
be
made.
Shareholders
should
not
draw
any
conclusions
about
the
Fund's
investment
performance
from
the
amount
of
this
distribution
or
from
the
terms
of
the
Plan.
The
Fund
will
send
a
Form
1099-DIV
to
shareholders
for
the
calendar
year
that
will
describe
how
to
report
the
Fund's
distributions
for
federal
income
tax
purposes.
Please
see
the
"Important
Information
to
Shareholders"
section
for
additional
information.
franklintempleton.com
Annual
Report
1
Contents
Fund
Overview
2
Performance
Summary
5
Consolidated
Financial
Highlights
and
Consolidated
Schedule
of
Investments
8
Consolidated
Financial
Statements
13
Notes
to
Consolidated
Financial
Statements
16
Report
of
Independent
Registered
Public
Accounting
Firm
25
Tax
Information
26
Important
Information
to
Shareholders
27
Annual
Meeting
of
Shareholders
35
Dividend
Reinvestment
and
Cash
Purchase
Plan
36
Board
Members
and
Officers
38
Shareholder
Information
42
Visit
franklintempleton.com
for
fund
updates,
to
access
your
account,
or
to
find
helpful
financial
planning
tools.
2
franklintempleton.com
Annual
Report
Templeton
Dragon
Fund,
Inc.
Dear
Shareholder,
This
annual
report
for
Templeton
Dragon
Fund,
Inc.
covers
the
fiscal
year
ended
December
31,
2025.
Fund
Overview
Q.
What
is
the
Fund's
investment
strategy?
A.
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.
Q.
What
were
the
overall
market
conditions
during
the
Fund's
reporting
period?
A.
Chinese
equities
rose
in
2025.
This
performance
was
supported
by
continued
stimulus
measures
from
China's
regulatory
authorities.
China
also
eased
monetary
policy,
including
reducing
its
benchmark
lending
rates.
Another
central
theme
for
the
outperformance
of
Chinese
equities
was
a
technology
rally.
The
China
government's
work
report
released
in
the
first
quarter
of
2025-which
focused
on
technology-was
viewed
as
signs
of
support
for
the
sector.
Artificial
intelligence
(AI)
product
rollouts
by
China's
technology
companies
fostered
confidence
in
these
companies'
AI-related
expenditure.
The
technology
rally
also
extended
to
semiconductor
firms
as
the
government
rehashed
its
intention
to
strengthen
the
domestic
semiconductor
industry,
gearing
towards
a
self-sufficiency
approach.
U.S.-China
tensions
were
inherent
throughout
the
year;
however,
the
year
ended
with
a
trade
truce
between
both
countries.
Q.
How
did
we
respond
to
these
changing
market
conditions?
A.
Our
investment
strategy
employs
a
bottom-up,
research-
driven
approach
focused
on
identifying
long-term
earnings
power
at
a
discount
to
intrinsic
value.
Our
opportunity
lies
in
identifying
companies
for
which
the
market
underestimates
or
misprices
the
probability,
magnitude,
or
timing
of
its
long-
term
earnings
power.
Sector
weightings
are
a
residual
of
our
bottom-up
stock
selection
process.
Due
to
China's
idiosyncrasies,
we
place
additional
emphasis
on
non-economic
factors
such
as
government
policy,
corporate
structure,
management
motivation,
social
and
demographic
trends,
and
local
government
interests.
We
believe
combining
our
bottom-up
approach
with
a
top-down
perspective
is
crucial.
Top-down
views
further
underpin
stock
research
focus
and
portfolio
construction,
which
remains
primarily
driven
by
bottom-up
selection.
Performance
Overview
For
the
12
months
under
review,
the
Fund
posted
cumulative
total
returns
of
+37.67%
in
market
price
terms
and
+29.67%
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
+28.94%
total
return
for
the
same
period.
1
You
can
find
the
Fund's
long-term
performance
data
in
the
Performance
Summary
on
page
5.
The
Board
has
implemented
a
managed
distribution
plan
whereby
the
Fund
distributes
a
level
distribution
amount
to
shareholders.
The
Fund
intends
to
make
quarterly
distributions
to
shareholders
at
the
fixed
rate
of
$0.10
per
share.
Management
will
generally
distribute
amounts
necessary
to
satisfy
the
Fund's
plan
and
the
requirements
Geographic
Composition
12/31/25
%
of
Total
Net
Assets
China
93.1%
Hong
Kong
3.9%
Short-Term
Investments
&
Other
Net
Assets
3.0%
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
9
.
Templeton
Dragon
Fund,
Inc.
3
franklintempleton.com
Annual
Report
prescribed
by
excise
tax
rules
and
Subchapter
M
of
the
Internal
Revenue
Code.
The
plan
is
intended
to
provide
shareholders
with
a
consistent
distribution
each
quarter
and
is
intended
to
narrow
the
discount
between
the
market
price
and
the
NAV
of
the
Fund's
common
shares,
but
there
is
no
assurance
that
the
plan
will
be
successful
in
doing
so.
For
the
fiscal
year
ended
December
31,
2025,
the
Fund
estimates
that
it
distributed
more
than
its
income
and
net
realized
capital
gains;
therefore,
a
portion
of
the
Fund
distribution
to
shareholders
may
be
a
return
of
capital.
A
return
of
capital
may
occur,
for
example,
when
some
or
all
of
the
money
that
a
shareholder
invested
in
a
Fund
is
paid
back
to
them.
A
return
of
capital
distribution
does
not
necessarily
reflect
the
Fund's
investment
performance
and
should
not
be
confused
with
"yield"
or
"income".
The
Fund
sends
a
Form
1099-DIV
to
shareholders
each
calendar
year
describing
how
to
report
the
Fund's
distributions
for
federal
income
tax
purposes.
Please
see
the
"Important
Information
to
Shareholders"
section
for
additional
information.
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.
Q.
What
were
the
leading
contributors
to
performance?
A.
During
the
12
months
under
review,
key
contributors
to
the
Fund's
absolute
performance
included
Alibaba
Group,
Tencent
Holdings
and
Yantai
China
Pet
Foods.
Alibaba
Group
Holding
is
a
leading
e-commerce
and
cloud
service
company
in
China.
Its
share
price
performance
in
2025
was
driven
by
optimism
about
its
AI
and
cloud
initiatives
where
the
company
has
increased
its
investments
meaningfully.
This
was
partially
offset
by
increased
competition
and
investments
in
on-demand
services
which
has
had
a
significant
impact
on
near-term
profitability.
The
monetisation
of
its
large
AI
investments
and
improvement
in
profitability
for
its
commerce
business
should
be
the
key
drivers
for
the
earnings
ahead.
Tencent
Holdings
is
a
technology
company
engaged
in
the
provision
of
value-added
services
including
online
and
mobile
games,
cloud,
and
payment
services.
Its
second-quarter
results
were
a
solid
beat
across
the
board,
demonstrating
the
positive
impact
of
the
adoption
of
AI
in
existing
core
businesses.
Its
development
in
AI
gave
further
legs
to
the
share
price
rally.
We
continue
to
maintain
a
positive
view
on
the
company,
especially
as
it
embraces
the
adoption
of
latest
AI
technologies
in
its
core
businesses,
which
should
prolong
its
growth
runway.
Yantai
China
Pet
Foods
is
a
manufacturer
of
pet
food.
Its
share
price
benefited
from
stimulus
policies
to
boost
consumption
and
was
further
bolstered
by
a
large
year-
on-year
increase
in
net
profit
for
the
first
quarter
of
2025.
This
was
followed
by
plans
to
distribute
cash
dividends.
The
company's
domestic
business
profitability,
in
our
view,
is
promising,
with
restructuring
efforts
starting
to
bear
fruit.
While
tariffs
remain
a
source
of
risk,
capacity
upgrades
in
North
America
may
be
helpful
in
reducing
this
risk
slightly.
Most
sectors
were
absolute
contributors;
however,
the
best
performers
on
an
absolute
level
were
consumer
discretionary,
financials
and
information
technology
(IT).
Q.
What
were
the
leading
detractors
from
performance?
A.
Key
detractors
from
the
Fund's
absolute
performance
for
the
reporting
period
included
Haier
Smart
Home,
Nari
Technology
and
Meituan.
Haier
Smart
Home
is
a
leading
global
home
appliance
company,
encompassing
brands
such
as
Haier,
Carsate,
GE
Appliances
and
Candy.
Its
share
price
registered
a
large
drop
in
the
first
quarter
of
2025
as
its
full-year
2024
net
income
missed
the
average
analyst
estimate.
While
earnings
results
for
more
recent
quarters
were
more
positive,
the
share
price
never
fully
recovered
from
the
initial
dip.
Nari
Technology
is
engaged
in
the
software
and
hardware
development
and
system
integration
for
power
system
energy
management
and
industrial
process
control
automation
in
China.
Its
share
price
jumped
in
November
Top
10
Holdings
12/31/25
Company
Industry,
Country
%
of
Total
Net
Assets
a
a
Tencent
Holdings
Ltd.
11.2%
Interactive
Media
&
Services,
China
Alibaba
Group
Holding
Ltd.
8.8%
Broadline
Retail,
China
WUS
Printed
Circuit
Kunshan
Co.
Ltd.
4.3%
Electronic
Equipment,
Instruments
&
Components,
China
Xiaomi
Corp.
3.4%
Technology
Hardware,
Storage
&
Peripherals,
China
Ping
An
Insurance
Group
Co.
of
China
Ltd.
3.0%
Insurance,
China
China
Merchants
Bank
Co.
Ltd.
2.7%
Banks,
China
Harbin
Electric
Co.
Ltd.
2.5%
Electrical
Equipment,
China
CMOC
Group
Ltd.
2.4%
Metals
&
Mining,
China
Midea
Group
Co.
Ltd.
2.4%
Household
Durables,
China
Sieyuan
Electric
Co.
Ltd.
2.2%
Electrical
Equipment,
China
Templeton
Dragon
Fund,
Inc.
4
franklintempleton.com
Annual
Report
2025
alongside
other
solar
stocks
on
optimism
on
earnings
improvement.
However,
this
resulted
in
a
bout
of
profit-
taking,
which
ultimately
sent
its
share
price
lower.
Nari's
expansion
into
non-grid
markets
such
as
renewable
energy
and
energy
storage
systems
could
be
supported
by
its
technologies
and
expertise
in
its
legacy
areas
of
power
automation
and
communication,
and
control
system
software
solutions.
Meituan
is
a
Chinese
technology
retail
company
that
operates
a
web-based
shopping
platform
for
local
consumer
products
and
retail
services,
with
a
focus
on
food
delivery.
Intensifying
competition
in
China's
food
delivery
space
accompanied
share
price
pressures
from
a
sector-wide
decline
due
to
geopolitical
tensions
between
China
and
the
U.S.
We
believe
that,
in
the
long
term,
Meituan's
business
will
not
be
majorly
impacted
given
its
status
as
a
dominant
player
and
other
growth
drivers
for
the
company.
However,
until
more
clarity
emerges
in
the
competitive
landscape,
we
believe
that
the
stock
price
may
experience
some
volatility
for
the
next
couple
of
quarters.
The
energy
and
real
estate
sectors
were
the
sole
detractors
from
absolute
performance.
Q.
Were
there
any
significant
changes
to
the
Fund
during
the
reporting
period?
A.
We
did
not
make
any
significant
changes
to
the
Fund's
investment
process
over
the
reporting
period.
In
the
past
12
months,
the
continued
search
for
undervalued
investments
led
to
additions
in
the
IT,
industrials
and
materials
sectors.
Meanwhile,
we
reduced
the
Fund's
investments
in
the
financials,
consumer
discretionary
and
energy
sectors
in
favor
of
opportunities
that
we
found
more
compelling.
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
Tony
Sun
Portfolio
Management
Team
The
foregoing
information
reflects
our
analysis,
opinions
and
portfolio
holdings
as
of
December
31,
2025,
the
end
of
the
reporting
period.
The
way
we
implement
our
main
investment
strategies
and
the
resulting
portfolio
holdings
may
change
depending
on
factors
such
as
market
and
economic
conditions.
These
opinions
may
not
be
relied
upon
as
investment
advice
or
an
offer
for
a
particular
security.
The
information
is
not
a
complete
analysis
of
every
aspect
of
any
market,
country,
industry,
security
or
the
Fund.
Statements
of
fact
are
from
sources
considered
reliable,
but
the
investment
manager
makes
no
representation
or
warranty
as
to
their
completeness
or
accuracy.
Although
historical
performance
is
no
guarantee
of
future
results,
these
insights
may
help
you
understand
our
investment
management
philosophy.
CFA
®
is
a
trademark
owned
by
CFA
Institute.
Performance
Summary
as
of
December
31,
2025
Templeton
Dragon
Fund,
Inc.
5
franklintempleton.com
Annual
Report
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
tables
and
graph
do
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
12/31/25
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.
Share
Prices
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
1-Year
+29.67%
+37.67%
+29.67%
+37.67%
5-Year
-32.03%
-36.09%
-7.43%
-8.56%
10-Year
+45.31%
+57.21%
+3.81%
+4.63%
Symbol:
TDF
12/31/25
12/31/24
Change
Net
Asset
Value
(NAV)
$13.02
$10.37
+$2.65
Market
Price
(NYSE)
$11.26
$8.49
+$2.77
Distributions
Per
Share
(1/1/25-12/31/25)
Net
Investment
Income
Tax
Return
of
Capital
Total
$0.2976
$0.1024
$0.4000
See
page
7
for
Performance
Summary
footnotes.
Templeton
Dragon
Fund,
Inc.
Performance
Summary
6
franklintempleton.com
Annual
Report
See
page
7
for
Performance
Summary
footnotes.
Total
Return
Index
Comparison
for
a
Hypothetical
$10,000
Investment
1
Total
return
represents
the
change
in
value
of
an
investment
over
the
periods
shown.
It
includes
any
applicable
maximum
sales
charge,
Fund
expenses,
account
fees
and
reinvested
distributions.
The
unmanaged
index
includes
reinvestment
of
any
income
or
distributions.
It
differs
from
the
Fund
in
composition
and
does
not
pay
management
fees
or
expenses.
One
cannot
invest
directly
in
an
index.
12/31/15-12/31/25
Templeton
Dragon
Fund,
Inc.
Performance
Summary
7
franklintempleton.com
Annual
Report
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.
5.
Source:
FactSet.
The
MSCI
China
All
Shares
Index-NR
captures
large-
and
mid-cap
representation
across
China
A-shares,
B-shares,
H-shares,
Red
Chips,
P-Chips
and
foreign
listings
(e.g.,
ADRs).
The
index
aims
to
reflect
the
opportunity
set
of
China
share
classes
listed
in
Hong
Kong,
Shanghai,
Shenzhen
and
outside
of
China.
Important
data
provider
notices
and
terms
available
at
www.franklintempletondatasources.com.
Templeton
Dragon
Fund,
Inc.
Consolidated
Financial
Highlights
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
8
a
Year
Ended
December
31,
2025
2024
2023
2022
2021
Per
share
operating
performance
(for
a
share
outstanding
throughout
the
year)
Net
asset
value,
beginning
of
year
...................
$10.37
$9.42
$11.94
$18.70
$24.93
Income
from
investment
operations:
Net
investment
income
(loss)
a
....................
0.11
0.12
0.04
(0.05)
(0.16)
Net
realized
and
unrealized
gains
(losses)
...........
2.93
0.95
(2.57)
(5.41)
(3.67)
Total
from
investment
operations
....................
3.04
1.07
(2.53)
(5.46)
(3.83)
Less
distributions
from:
Net
investment
income
..........................
(0.30)
(0.12)
-
-
-
Net
realized
gains
.............................
-
-
-
(1.30)
(2.40)
Tax
return
of
capital
............................
(0.10)
-
-
-
-
Total
distributions
...............................
(0.40)
(0.12)
-
(1.30)
(2.40)
Repurchase
of
shares
............................
0.01
-
0.01
-
-
Net
asset
value,
end
of
year
.......................
$13.02
$10.37
$9.42
$11.94
$18.70
Market
value,
end
of
year
b
.........................
$11.26
$8.49
$8.17
$10.22
$17.00
Total
return
(based
on
net
asset
value
per
share)
c
.......
29.67%
11.48%
(21.11)%
(29.46)%
(15.52)%
Total
return
(based
on
market
value
per
share)
c
.........
37.67%
5.46%
(20.06)%
(32.99)%
(17.83)%
Ratios
to
average
net
assets
Expenses
before
waiver
and
payments
by
affiliates
......
1.22%
1.36%
1.28%
1.38%
1.37%
Expenses
net
of
waiver
and
payments
by
affiliates
.......
1.21%
1.35%
1.27%
1.37%
1.37%
d
Net
investment
income
(loss)
......................
0.91%
1.26%
0.33%
(0.34)%
(0.70)%
Supplemental
data
Net
assets,
end
of
year
(000's)
.....................
$328,283
$262,882
$238,770
$403,707
$632,030
Portfolio
turnover
rate
............................
63.10%
38.79%
14.30%
3.26%
11.64%
a
Based
on
average
daily
shares
outstanding.
b
Based
on
the
last
sale
on
the
New
York
Stock
Exchange.
c
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.
d
Benefit
of
waiver
and
payments
by
affiliates
rounds
to
less
than
0.01%.
Templeton
Dragon
Fund,
Inc.
Consolidated
Schedule
of
Investments,
December
31,
2025
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Annual
Report
9
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
96.9%
Air
Freight
&
Logistics
0.6%
a
SF
Holding
Co.
Ltd.
,
H
...............................
China
436,800
$
1,947,616
Automobile
Components
2.6%
b
Fuyao
Glass
Industry
Group
Co.
Ltd.
,
A
...................
China
486,500
4,510,258
c
Hesai
Group
,
B
.....................................
China
174,020
3,982,283
8,492,541
Automobiles
2.0%
b
BYD
Co.
Ltd.
,
A
.....................................
China
213,050
2,979,090
BYD
Co.
Ltd.
,
H
....................................
China
135,141
1,651,525
Geely
Automobile
Holdings
Ltd.
.........................
China
832,065
1,924,464
6,555,079
Banks
5.7%
China
Construction
Bank
Corp.
,
H
.......................
China
6,603,544
6,536,261
b
China
Merchants
Bank
Co.
Ltd.
,
A
.......................
China
763,800
4,603,624
China
Merchants
Bank
Co.
Ltd.
,
H
.......................
China
622,570
4,235,280
Industrial
&
Commercial
Bank
of
China
Ltd.
,
H
..............
China
4,018,000
3,251,389
18,626,554
Beverages
3.3%
b
Eastroc
Beverage
Group
Co.
Ltd.
,
A
.....................
China
65,000
2,488,049
b
Kweichow
Moutai
Co.
Ltd.
,
A
...........................
China
32,445
6,397,635
b
Wuliangye
Yibin
Co.
Ltd.
,
A
............................
China
121,588
1,843,863
10,729,547
Biotechnology
2.1%
c,d
Innovent
Biologics,
Inc.
,
144A
,
Reg
S
....................
China
452,519
4,428,671
a,c
Nanjing
Leads
Biolabs
Co.
Ltd.
,
H
.......................
China
359,285
2,364,002
6,792,673
Broadline
Retail
11.1%
e
Alibaba
Group
Holding
Ltd.
............................
China
1,580,652
29,022,292
e
JD.com,
Inc.
,
A
.....................................
China
88,493
1,272,462
c,e
PDD
Holdings,
Inc.
,
ADR
..............................
China
55,299
6,270,353
36,565,107
Capital
Markets
0.3%
Hong
Kong
Exchanges
&
Clearing
Ltd.
...................
Hong
Kong
18,809
984,112
Chemicals
1.5%
Guangzhou
Tinci
Materials
Technology
Co.
Ltd.
,
A
...........
China
381,100
2,527,832
Sunresin
New
Materials
Co.
Ltd.
,
A
......................
China
255,525
2,256,945
4,784,777
Communications
Equipment
1.7%
Zhongji
Innolight
Co.
Ltd.
,
A
............................
China
65,500
5,691,083
Construction
Materials
0.6%
a
West
China
Cement
Ltd.
..............................
China
5,000,000
1,995,629
Distributors
1.7%
c
GigaCloud
Technology,
Inc.
,
A
..........................
China
143,886
5,651,842
Diversified
Consumer
Services
1.6%
c,d,e
China
East
Education
Holdings
Ltd.
,
144A
,
Reg
S
...........
China
3,109,500
2,649,001
e
New
Oriental
Education
&
Technology
Group,
Inc.
...........
China
461,611
2,535,724
5,184,725
Electrical
Equipment
8.6%
Contemporary
Amperex
Technology
Co.
Ltd.
,
A
.............
China
43,000
2,261,049
Templeton
Dragon
Fund,
Inc.
Consolidated
Schedule
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
10
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Electrical
Equipment
(continued)
b
Contemporary
Amperex
Technology
Co.
Ltd.
,
A
.
............
China
56,864
$
2,990,054
b,c
GoodWe
Technologies
Co.
Ltd.
,
A
.......................
China
103,125
916,583
Harbin
Electric
Co.
Ltd.
,
H
.............................
China
3,885,153
8,327,154
b
Hongfa
Technology
Co.
Ltd.
,
A
..........................
China
1,525,193
6,630,932
Sieyuan
Electric
Co.
Ltd.
,
A
............................
China
327,500
7,239,762
28,365,534
Electronic
Equipment,
Instruments
&
Components
6.6%
Luxshare
Precision
Industry
Co.
Ltd.
,
A
...................
China
315,031
2,562,288
Wasion
Holdings
Ltd.
................................
Hong
Kong
2,238,000
4,940,908
WUS
Printed
Circuit
Kunshan
Co.
Ltd.
,
A
..................
China
1,346,340
14,005,393
21,508,589
Entertainment
2.5%
e
NetEase,
Inc.
......................................
China
210,098
5,782,988
e
Tencent
Music
Entertainment
Group
,
ADR
.................
China
64,300
1,127,179
e
Tencent
Music
Entertainment
Group
,
A
...................
China
128,000
1,133,503
8,043,670
Food
Products
2.7%
b
Inner
Mongolia
Yili
Industrial
Group
Co.
Ltd.
,
A
.............
China
463,800
1,899,491
Yantai
China
Pet
Foods
Co.
Ltd.
,
A
......................
China
100,000
740,288
b
Yantai
China
Pet
Foods
Co.
Ltd.
,
A
.
.....................
China
838,700
6,208,793
8,848,572
Ground
Transportation
1.3%
e
Full
Truck
Alliance
Co.
Ltd.
,
ADR
........................
China
410,773
4,407,594
Health
Care
Equipment
&
Supplies
0.5%
b
Shenzhen
New
Industries
Biomedical
Engineering
Co.
Ltd.
,
A
..
China
224,388
1,806,149
Hotels,
Restaurants
&
Leisure
3.5%
c
Luckin
Coffee,
Inc.
,
ADR
..............................
China
148,868
4,987,078
e
Trip.com
Group
Ltd.
.................................
China
92,180
6,609,438
11,596,516
Household
Durables
2.4%
b
Midea
Group
Co.
Ltd.
,
A
..............................
China
691,316
7,729,694
Insurance
4.7%
PICC
Property
&
Casualty
Co.
Ltd.
,
H
....................
China
2,710,524
5,698,627
b
Ping
An
Insurance
Group
Co.
of
China
Ltd.
,
A
..............
China
258,400
2,531,309
Ping
An
Insurance
Group
Co.
of
China
Ltd.
,
H
..............
China
876,082
7,358,830
15,588,766
Interactive
Media
&
Services
12.4%
e
JOYY,
Inc.
,
ADR
....................................
China
32,330
2,093,691
d,e
Kuaishou
Technology
,
144A
,
Reg
S
......................
China
221,097
1,827,679
e
Tencent
Holdings
Ltd.
................................
China
478,491
36,721,093
40,642,463
Media
1.9%
Focus
Media
Information
Technology
Co.
Ltd.
,
A
............
China
3,290,300
3,470,254
b
Focus
Media
Information
Technology
Co.
Ltd.
,
A
.
...........
China
2,634,016
2,778,077
6,248,331
Metals
&
Mining
5.2%
c
Chuangxin
Industries
Holdings
Ltd.
......................
China
881,000
2,345,500
CMOC
Group
Ltd.
,
H
.................................
China
3,177,386
7,894,287
Templeton
Dragon
Fund,
Inc.
Consolidated
Schedule
of
Investments
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Annual
Report
11
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Common
Stocks
(continued)
Metals
&
Mining
(continued)
c
Zijin
Gold
International
Co.
Ltd.
.........................
Hong
Kong
368,374
$
6,910,533
17,150,320
Oil,
Gas
&
Consumable
Fuels
0.6%
CGN
Mining
Co.
Ltd.
.................................
China
4,600,000
1,822,698
Pharmaceuticals
3.0%
c,d
Antengene
Corp.
Ltd.
,
144A
,
Reg
S
......................
China
1,900,000
926,458
b
Jiangsu
Hengrui
Pharmaceuticals
Co.
Ltd.
,
A
...............
China
608,627
5,191,971
c
Sichuan
Biokin
Pharmaceutical
Co.
Ltd.
,
A
.................
China
82,523
3,815,485
9,933,914
Real
Estate
Management
&
Development
0.4%
a,e
KE
Holdings,
Inc.
,
ADR
...............................
China
86,022
1,355,707
Semiconductors
&
Semiconductor
Equipment
1.2%
GigaDevice
Semiconductor,
Inc.
,
A
......................
China
127,800
3,914,446
Specialty
Retail
1.2%
d,e
Pop
Mart
International
Group
Ltd.
,
144A
,
Reg
S
............
China
165,981
4,004,578
Technology
Hardware,
Storage
&
Peripherals
3.4%
c,d,e
Xiaomi
Corp.
,
B
,
144A
,
Reg
S
..........................
China
2,223,611
11,222,193
Total
Common
Stocks
(Cost
$
220,674,888
)
...................................
318,191,019
Escrows
and
Litigation
Trusts
0.1%
b,c,f
Kangmei
Pharmaceutical
Co.
Ltd.,
Escrow
Account
..........
China
592,998
84,858
Total
Escrows
and
Litigation
Trusts
(Cost
$
-
)
.................................
84,858
Total
Long
Term
Investments
(Cost
$
220,674,888
)
.............................
318,275,877
a
Short
Term
Investments
1.2%
a
a
Country
Shares
a
Value
a
a
a
a
a
a
Money
Market
Funds
0.9%
g,h
Franklin
Institutional
U.S.
Government
Money
Market
Fund
,
3.681
%
.........................................
United
States
2,841,466
2,841,466
Total
Money
Market
Funds
(Cost
$
2,841,466
)
.................................
2,841,466
Templeton
Dragon
Fund,
Inc.
Consolidated
Schedule
of
Investments
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
12
Short
Term
Investments
(continued)
a
a
Country
Shares
a
Value
a
a
a
a
a
a
i
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
0.3%
Money
Market
Funds
0.3%
g,h
Franklin
Institutional
U.S.
Government
Money
Market
Fund
,
3.681
%
.........................................
United
States
1,003,848
$
1,003,848
Total
Investments
from
Cash
Collateral
Received
for
Loaned
Securities
(Cost
$
1,003,848
)
..........................................................
1,003,848
Total
Short
Term
Investments
(Cost
$
3,845,314
)
...............................
3,845,314
a
Total
Investments
(Cost
$
224,520,202
)
98.2
%
.................................
$322,121,191
Other
Assets,
less
Liabilities
1.8
%
...........................................
6,161,881
Net
Assets
100.0%
.........................................................
$328,283,072
a
a
a
See
Abbreviations
on
page
24.
a
A
portion
or
all
of
the
security
is
on
loan
at
December
31,
2025.
See
Note
1
(
d
).
b
The
security
is
owned
by
Templeton
China
Opportunities
Fund,
Ltd.,
a
wholly-owned
subsidiary
of
the
Fund.
See
Note
1(c).
c
Non-income
producing.
d
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
December
31,
2025,
the
aggregate
value
of
these
securities
was
$25,058,580,
representing
7.6%
of
net
assets.
e
Variable
interest
entity
(VIE).
See
Note
6
regarding
investments
made
through
a
VIE
structure.
At
December
31,
2025,
the
aggregate
value
of
these
securities
was
$118,035,475,
representing
36.0%
of
net
assets.
f
Fair
valued
using
significant
unobservable
inputs.
See
Note
7
regarding
fair
value
measurements.
g
See
Note
3
(
c
)
regarding
investments
in
affiliated
management
investment
companies.
h
The
rate
shown
is
the
annualized
seven-day
effective
yield
at
period
end.
i
See
Note
1
(
d
)
regarding
securities
on
loan.
Templeton
Dragon
Fund,
Inc.
Consolidated
Financial
Statements
Consolidated
Statement
of
Assets
and
Liabilities
December
31,
2025
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Annual
Report
13
Templeton
Dragon
Fund,
Inc.
Assets:
Investments
in
securities:
Cost
-
Unaffiliated
issuers
...................................................................
$220,674,888
Cost
-
Non-controlled
affiliates
(Note
3
c
)
........................................................
3,845,314
Value
-
Unaffiliated
issuers
(Includes
securities
loaned
of
$
2,961,318
)
..................................
$318,275,877
Value
-
Non-controlled
affiliates
(Note
3
c
)
.......................................................
3,845,314
Cash
....................................................................................
12,548
Foreign
currency,
at
value
(cost
$
307,189
)
........................................................
310,167
Receivables:
Investment
securities
sold
...................................................................
7,133,683
Dividends
...............................................................................
219,538
Total
assets
..........................................................................
329,797,127
Liabilities:
Payables:
Capital
shares
redeemed
...................................................................
21,403
Management
fees
.........................................................................
288,364
Professional
fees
.........................................................................
131,438
Directors'
fees
and
expenses
................................................................
230
Payable
upon
return
of
securities
loaned
(Note
1
d
)
..................................................
1,003,848
Accrued
expenses
and
other
liabilities
...........................................................
68,772
Total
liabilities
.........................................................................
1,514,055
Net
assets,
at
value
.................................................................
$328,283,072
Net
assets
consist
of:
Paid-in
capital
.............................................................................
$279,007,757
Total
distributable
earnings
(losses)
.............................................................
49,275,315
Net
assets,
at
value
.................................................................
$328,283,072
Shares
outstanding
.........................................................................
25,216,108
Net
asset
value
per
share
a
....................................................................
$13.02
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
year
ended
December
31,
2025
franklintempleton.com
Annual
Report
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
14
Templeton
Dragon
Fund,
Inc.
Investment
income:
Dividends:
(net
of
foreign
taxes
of
$506,284)
Unaffiliated
issuers
........................................................................
$6,101,925
Non-controlled
affiliates
(Note
3
c
)
.............................................................
263,778
Income
from
securities
loaned:
Unaffiliated
entities
(net
of
fees
and
rebates)
.....................................................
549
Non-controlled
affiliates
(Note
3
c
)
.............................................................
38,633
Total
investment
income
...................................................................
6,404,885
Expenses:
Management
fees
(Note
3
a
)
...................................................................
3,190,813
Transfer
agent
fees
.........................................................................
56,851
Custodian
fees
............................................................................
71,718
Reports
to
shareholders
fees
..................................................................
39,031
Registration
and
filing
fees
....................................................................
12,993
Professional
fees
...........................................................................
241,788
Directors'
fees
and
expenses
..................................................................
38,662
Other
....................................................................................
22,267
Total
expenses
.........................................................................
3,674,123
Expenses
waived/paid
by
affiliates
(Note
3
c
)
...................................................
(19,634)
Net
expenses
.........................................................................
3,654,489
Net
investment
income
................................................................
2,750,396
Realized
and
unrealized
gains
(losses):
Net
realized
gain
(loss)
from:
Investments:
Unaffiliated
issuers
......................................................................
29,662,444
Foreign
currency
transactions
................................................................
(4,313)
Net
realized
gain
(loss)
..................................................................
29,658,131
Net
change
in
unrealized
appreciation
(depreciation)
on:
Investments:
Unaffiliated
issuers
......................................................................
44,462,061
Translation
of
other
assets
and
liabilities
denominated
in
foreign
currencies
..............................
15,926
Net
change
in
unrealized
appreciation
(depreciation)
............................................
44,477,987
Net
realized
and
unrealized
gain
(loss)
............................................................
74,136,118
Net
increase
(decrease)
in
net
assets
resulting
from
operations
..........................................
$76,886,514
Templeton
Dragon
Fund,
Inc.
Consolidated
Financial
Statements
Consolidated
Statements
of
Changes
in
Net
Assets
franklintempleton.com
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Annual
Report
15
Templeton
Dragon
Fund,
Inc.
Year
Ended
December
31,
2025
Year
Ended
December
31,
2024
Increase
(decrease)
in
net
assets:
Operations:
Net
investment
income
.................................................
$2,750,396
$3,089,785
Net
realized
gain
(loss)
.................................................
29,658,131
(22,201,132)
Net
change
in
unrealized
appreciation
(depreciation)
...........................
44,477,987
46,151,443
Net
increase
(decrease)
in
net
assets
resulting
from
operations
................
76,886,514
27,040,096
Distributions
to
shareholders
..............................................
(7,523,675)
(2,928,284)
Distributions
to
shareholders
from
tax
return
of
capital
...........................
(2,589,568)
-
Total
distributions
to
shareholders
..........................................
(10,113,243)
(2,928,284)
Capital
share
transactions
from
-
repurchase
of
shares
(Note
2)
....................
(1,371,783)
-
Net
increase
(decrease)
in
net
assets
...................................
65,401,488
24,111,812
Net
assets:
Beginning
of
year
.......................................................
262,881,584
238,769,772
End
of
year
...........................................................
$328,283,072
$262,881,584
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
16
franklintempleton.com
Annual
Report
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
December
31,
2025,
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
17
franklintempleton.com
Annual
Report
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.
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
December
31,
2025,
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
December
31,
2025,
the
net
assets
of
the
China
Fund
were
$61,870,424,
representing 18.8%
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.
d.
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
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
December
31,
2025,
the
Fund
held
$2,100,960
in
U.S.
Government
and
Agency
securities
as
collateral.
These
securities
are
held
as
1.
Organization
and
Significant
Accounting
Policies
(continued)
a.
Financial
Instrument
Valuation
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
18
franklintempleton.com
Annual
Report
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.
Securities
on
loan
outstanding
at
period
end,
if
any,
are
listed
in
the
Fund's
Consolidated
Schedule
of
Investments.
e.
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
December
31,
2025, 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).
The
Fund's
federal
and
state
income
and
federal
excise
tax
returns
for
the
prior
three
fiscal
years
are
subject
to
examination
by
the
Internal
Revenue
Service
and
state
departments
of
revenue.
f.
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. Effective
March
1,
2025,
the
Board
has
implemented
a
new
managed
distribution
plan
where
the
Fund
will
distribute
a
level
distribution
amount
to
shareholders.
The
Fund
intends
to
distribute
$0.10
per
share
quarterly.
The
Fund's
distribution
level
may
be
changed
by
the
Board
in
the
future.
Under
the
policy,
the
Fund
is
managed
with
a
goal
of
generating
as
much
of
the
distribution
as
possible
from
net
investment
income
and
short-term
capital
gains.
The
balance
of
the
distribution
will
then
come
from
long-term
capital
gains
to
the
extent
permitted
and,
if
necessary,
a
return
of
capital.
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.
g.
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)
d.
Securities
Lending
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
19
franklintempleton.com
Annual
Report
h.
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
December
31,
2025,
there
were
100
million
shares
authorized
($0.01
par
value).
During
the years
ended
December
31,
2025 and
December
31,
2024,
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.
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
Effective March
1,
2025,
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:
Year
Ended
December
31,
2025
Year
Ended
December
31,
2024
Shares
Amount
Shares
Amount
Shares
repurchased
.............................................
137,000
$1,371,783
-
$-
Weighted
average
discount
of
cost
of
repurchase
to
net
asset
value
of
shares
repurchased
.................................................
14.64%
-%
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
1.050%
Up
to
and
including
$1
billion
1.000%
Over
$1
billion,
up
to
and
including
$2
billion
0.950%
In
excess
of
$2
billion
1.
Organization
and
Significant
Accounting
Policies
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
20
franklintempleton.com
Annual
Report
Prior
to March
1,
2025,
the
Fund
paid
fees,
calculated daily and
paid
weekly,
to TAML
based
on
the
average weekly
net
assets
of
the
Fund
as
follows:
For
the
year
ended
December
31,
2025,
the
gross
effective
investment
management
fee
rate
was 1.057%
of
the
Fund's
average weekly
net
assets.
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,
if
applicable, paid
directly
or
indirectly
by
each
affiliate.
During
the
year
ended
December
31,
2025,
the
Fund
held
investments
in
affiliated
management
investment
companies
as
follows:
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
aa
Value
at
Beginning
of
Year
Purchases
Sales
Realized
Gain
(Loss)
Net
Change
in
Unrealized
Appreciation
(Depreciation)
Value
at
End
of
Year
Number
of
Shares
Held
at
End
of
Year
Investment
Income
a
a
a
a
a
a
a
a
Templeton
Dragon
Fund,
Inc.
Non-Controlled
Affiliates
Dividends
Franklin
Institutional
U.S.
Government
Money
Market
Fund,
3.681%
............
$12,194,527
$134,585,079
$(143,938,140)
$-
$-
$2,841,466
2,841,466
$263,778
Non-Controlled
Affiliates
Income
from
securities
loaned
Franklin
Institutional
U.S.
Government
Money
Market
Fund,
3.681%
............
$890,660
$28,117,683
$(28,004,495)
$-
$-
$1,003,848
1,003,848
$38,633
Total
Affiliated
Securities
...
$13,085,187
$162,702,762
$(171,942,635)
$-
$-
$3,845,314
$302,411
3.
Transactions
with
Affiliates
(continued)
a.
Management
Fees
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
21
franklintempleton.com
Annual
Report
4.
Income
Taxes
For
tax
purposes,
capital
losses
may
be
carried
over
to
offset
future
capital
gains.
At
December
31,
2025,
the
capital
loss
carryforwards
were
as
follows:
During
the
year
ended
December
31,
2025,
the
Fund
utilized
$29,834,214
of
capital
loss
carryforwards.
For
tax
purposes,
the
Fund
may
elect
to
defer
any
portion
of
a
post-October
capital
loss
or
late-year
ordinary
loss
to
the
first
day
of
the
following
fiscal
year.
At
December
31,
2025,
the
Fund
deferred
late-year
ordinary
losses
of
$488,971.
The
tax
character
of
distributions
paid
during
the
years
ended
December
31,
2025
and
2024,
was
as
follows:
At
December
31,
2025,
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
wash
sales,
passive
foreign
investment
company
shares,
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
year
ended
December
31,
2025,
aggregated
$185,668,937 and
$194,414,597,
respectively.
At
December
31,
2025,
in
connection
with
securities
lending
transactions,
the
Fund
loaned
equity
investments
and
received
$1,003,848
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.
Capital
loss
carryforwards
not
subject
to
expiration:
Short
term
................................................................................
$
8,160,434
Long
term
................................................................................
39,453,765
Total
capital
loss
carryforwards
...............................................................
$47,614,199
2025
2024
Distributions
paid
from:
Ordinary
income
..........................................................
$7,523,675
$2,928,284
Return
of
capital
...........................................................
2,589,568
-
$10,113,243
$2,928,284
Cost
of
investments
..........................................................................
$225,230,948
Unrealized
appreciation
........................................................................
$109,596,995
Unrealized
depreciation
........................................................................
(12,706,752)
Net
unrealized
appreciation
(depreciation)
..........................................................
$96,890,243
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
22
franklintempleton.com
Annual
Report
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.
7.
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)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
23
franklintempleton.com
Annual
Report
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
December
31,
2025,
in
valuing
the
Fund's assets carried
at
fair
value,
is
as
follows:
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 year.
Level
1
Level
2
Level
3
Total
Templeton
Dragon
Fund,
Inc.
Assets:
Investments
in
Securities:
a
Common
Stocks
:
Air
Freight
&
Logistics
...................
$
-
$
1,947,616
$
-
$
1,947,616
Automobile
Components
.................
-
8,492,541
-
8,492,541
Automobiles
..........................
-
6,555,079
-
6,555,079
Banks
...............................
-
18,626,554
-
18,626,554
Beverages
...........................
-
10,729,547
-
10,729,547
Biotechnology
.........................
-
6,792,673
-
6,792,673
Broadline
Retail
.......................
6,270,353
30,294,754
-
36,565,107
Capital
Markets
........................
-
984,112
-
984,112
Chemicals
...........................
-
4,784,777
-
4,784,777
Communications
Equipment
..............
-
5,691,083
-
5,691,083
Construction
Materials
..................
-
1,995,629
-
1,995,629
Distributors
...........................
5,651,842
-
-
5,651,842
Diversified
Consumer
Services
............
-
5,184,725
-
5,184,725
Electrical
Equipment
....................
-
28,365,534
-
28,365,534
Electronic
Equipment,
Instruments
&
Components
........................
-
21,508,589
-
21,508,589
Entertainment
.........................
1,127,179
6,916,491
-
8,043,670
Food
Products
........................
-
8,848,572
-
8,848,572
Ground
Transportation
..................
4,407,594
-
-
4,407,594
Health
Care
Equipment
&
Supplies
.........
-
1,806,149
-
1,806,149
Hotels,
Restaurants
&
Leisure
.............
4,987,078
6,609,438
-
11,596,516
Household
Durables
....................
-
7,729,694
-
7,729,694
Insurance
............................
-
15,588,766
-
15,588,766
Interactive
Media
&
Services
..............
2,093,691
38,548,772
-
40,642,463
Media
...............................
-
6,248,331
-
6,248,331
Metals
&
Mining
.......................
9,256,033
7,894,287
-
17,150,320
Oil,
Gas
&
Consumable
Fuels
.............
-
1,822,698
-
1,822,698
Pharmaceuticals
.......................
3,815,485
6,118,429
-
9,933,914
Real
Estate
Management
&
Development
....
1,355,707
-
-
1,355,707
Semiconductors
&
Semiconductor
Equipment
.
-
3,914,446
-
3,914,446
Specialty
Retail
........................
-
4,004,578
-
4,004,578
Technology
Hardware,
Storage
&
Peripherals
.
-
11,222,193
-
11,222,193
Escrows
and
Litigation
Trusts
...............
-
-
84,858
84,858
Short
Term
Investments
...................
3,845,314
-
-
3,845,314
Total
Investments
in
Securities
...........
$42,810,276
$279,226,057
b
$84,858
$322,121,191
a
For
detailed
categories,
see
the
accompanying
Schedule
of
Investments.
b
Includes
foreign
securities
valued
at
$279,226,057,
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.
7.
Fair
Value
Measurements
(continued)
Templeton
Dragon
Fund,
Inc.
Notes
to
Consolidated
Financial
Statements
24
franklintempleton.com
Annual
Report
8.
Operating
Segments
The Fund operates
as
a
single
operating
segment,
which
is
an
investment
portfolio.
The
chief
investment
officer
of
the
Fund's
Investment
manager serves
as
the
Chief
Operating
Decision
Maker
("CODM")
and
is
responsible
for
evaluating
the
Fund's
operating
results
and
allocating
resources
in
accordance
with
the
Fund's
investment
strategy.
Internal
reporting
provided
to
the
CODM
aligns
with
the
accounting
policies
and
measurement
principles
used
in
the consolidated
financial
statements.
For
information
regarding
segment
assets,
segment
profit
or
loss,
and
significant
expenses,
refer
to
the Consolidated
Statement
of
Assets
and
Liabilities
and
the Consolidated
Statement
of
Operations,
along
with
the
related
notes
to
the consolidated
financial
statements.
The Consolidated
Schedule
of
Investments
provides
details
of
the Fund's investments
that
generate
returns
such
as
interest,
dividends,
and
realized
and
unrealized
gains
or
losses.
Performance
metrics,
including
portfolio
turnover
and
expense
ratios,
are
disclosed
in
the Consolidated
Financial
Highlights.
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
Selected
Portfolio
ADR
American
Depositary
Receipt
Templeton
Dragon
Fund,
Inc.
Report
of
Independent
Registered
Public
Accounting
Firm
25
franklintempleton.com
Annual
Report
To
the
Board
of
Directors
and
Shareholders
of
Templeton
Dragon
Fund,
Inc.
Opinion
on
the
Financial
Statements
We
have
audited
the
accompanying
consolidated
statement
of
assets
and
liabilities,
including
the
consolidated
schedule
of
investments,
of
Templeton
Dragon
Fund,
Inc.
and
its
subsidiary
(the
"Fund")
as
of
December
31,
2025,
the
related
consolidated
statement
of
operations
for
the
year
ended
December
31,
2025,
the
consolidated
statements
of
changes
in
net
assets
for
each
of
the
two
years
in
the
period
ended
December
31,
2025,
including
the
related
notes,
and
the
consolidated
financial
highlights
for
each
of
the
five
years
in
the
period
ended
December
31,
2025
(collectively
referred
to
as
the
"consolidated
financial
statements").
In
our
opinion,
the
consolidated
financial
statements
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Fund
as
of
December
31,
2025,
the
results
of
its
operations
for
the
year
then
ended,
the
changes
in
its
net
assets
for
each
of
the
two
years
in
the
period
ended
December
31,
2025
and
the
financial
highlights
for
each
of
the
five
years
in
the
period
ended
December
31,
2025
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Basis
for
Opinion
These
consolidated
financial
statements
are
the
responsibility
of
the
Fund's
management.
Our
responsibility
is
to
express
an
opinion
on
the
Fund's
consolidated
financial
statements
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(United
States)
(PCAOB)
and
are
required
to
be
independent
with
respect
to
the
Fund
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
and
regulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
of
these
consolidated
financial
statements
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audit
to
obtain
reasonable
assurance
about
whether
the
consolidated
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud.
Our
audits
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
consolidated
financial
statements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidence
regarding
the
amounts
and
disclosures
in
the
consolidated
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significant
estimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
consolidated
financial
statements.
Our
procedures
included
confirmation
of
securities
owned
as
of
December
31,
2025
by
correspondence
with
the
custodian,
transfer
agents,
private
placement
agent
and
broker;
when
replies
were
not
received
from
a
private
placement
agent,
we
performed
other
auditing
procedures.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinion.
/s/PricewaterhouseCoopers
LLP
San
Francisco,
California
February
19,
2026
We
have
served
as
the
auditor
of
one
or
more
investment
companies
in
the
Franklin
Templeton
Group
of
Funds
since
1948.
Templeton
Dragon
Fund,
Inc.
Tax
Information
(unaudited)
26
franklintempleton.com
Annual
Report
By
mid-February,
tax
information
related
to
a
shareholder's
proportionate
share
of
distributions
paid
during
the
preceding
calendar
year
will
be
received,
if
applicable.
Please
also
refer
to
www.franklintempleton.com
for
per
share
tax
information
related
to
any
distributions
paid
during
the
preceding
calendar
year.
Shareholders
are
advised
to
consult
with
their
tax
advisors
for
further
information
on
the
treatment
of
these
amounts
on
their
tax
returns.
The
following
tax
information
for
the
Fund
is
required
to
be
furnished
to
shareholders
with
respect
to
income
earned
and
distributions
paid
during
its
fiscal
year.
The
Fund
hereby
reports
the
following
amounts,
or
if
subsequently
determined
to
be
different,
the
maximum
allowable
amounts,
for
the
fiscal
year
ended
December
31,
2025:
Under
Section
853
of
the
Internal
Revenue
Code,
the
Fund
intends
to
elect
to
pass
through
to
its
shareholders
the
following
amounts,
or
amounts
as
finally
determined,
of
foreign
taxes
paid
and
foreign
source
income
earned
by
the
Fund
during
the
fiscal
year
ended
December
31,
2025
:
Pursuant
to:
Amount
Reported
Income
Eligible
for
Dividends
Received
Deduction
(DRD)
§854(b)(1)(A)
$32,433
Qualified
Dividend
Income
Earned
(QDI)
§854(b)(1)(B)
$2,382,080
Section
163(j)
Interest
Earned
§163(j)
$193,828
Amount
Reported
Foreign
Taxes
Paid
$506,283
Foreign
Source
Income
Earned
$3,771,496
Templeton
Dragon
Fund,
Inc.
27
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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.
Managed
Distribution
Plan
The
Board
has
implemented
a
managed
distribution
plan
where
the
Fund
distributes
a
level
distribution
amount
to
shareholders.
The
Fund
intends
to
make
quarterly
distributions
to
shareholders
at
the
fixed
rate
of
$0.10
per
share.
Management
will
generally
distribute
amounts
necessary
to
satisfy
the
Fund's
plan
and
the
requirements
prescribed
by
excise
tax
rules
and
Subchapter
M
of
the
Internal
Revenue
Code.
The
plan
is
intended
to
provide
shareholders
with
a
consistent
distribution
each
quarter
and
is
intended
to
narrow
the
discount
between
the
market
price
and
the
NAV
of
the
Fund's
shares,
but
there
is
no
assurance
that
the
plan
will
be
successful
in
doing
so.
Under
the
managed
distribution
plan,
to
the
extent
that
sufficient
investment
income
is
not
available
on
a
quarterly
basis,
the
Fund
will
distribute
long-term
capital
gains
and/or
return
of
capital
in
order
to
maintain
its
managed
distribution
rate.
No
conclusions
should
be
drawn
about
the
Fund's
investment
performance
from
the
amount
of
the
Fund's
distributions
or
from
the
terms
of
the
Fund's
managed
distribution
plan.
The
Board
may
amend
the
terms
of
the
plan
or
terminate
the
plan
at
any
time.
The
amendment
or
termination
of
the
plan
could
have
an
adverse
effect
on
the
market
price
of
the
Fund's
shares.
The
plan
will
be
subject
to
the
periodic
review
by
the
Board,
including
a
yearly
review
of
the
fixed
rate
to
determine
if
an
adjustment
should
be
made.
In
compliance
with
Rule
19a-1
of
the
Investment
Company
Act
of
1940,
shareholders
will
receive
a
notice
that
details
the
source
of
income
for
each
dividend
such
as
net
investment
income,
gain
from
the
sale
of
securities
and
return
of
principal.
However,
determination
of
the
actual
source
of
the
Fund's
dividend
can
only
be
made
at
year-end.
The
actual
source
amounts
of
all
Fund
dividends
will
be
included
in
the
Fund's
annual
or
semiannual
reports.
In
addition,
the
tax
treatment
may
differ
from
the
accounting
treatment
used
to
calculate
the
source
of
the
Fund's
dividends
as
shown
on
shareholders'
statements.
Shareholders
should
refer
to
their
Form
1099-DIV
for
the
character
and
amount
of
distributions
for
income
tax
reporting
purposes.
Since
each
shareholder's
tax
situation
is
unique,
it
may
be
advisable
to
consult
a
tax
advisor
as
to
the
appropriate
treatment
of
Fund
distributions.
Information
About
the
Fund's
Goal
and
Main
Investments,
Principal
Investment
Strategy,
and
Principal
Risks
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."
"China
companies"
are
companies
(i)
organized
under
the
laws
of,
or
with
a
principal
office
in,
the
People's
Republic
of
China
("China"
or
the
"PRC")
or
Hong
Kong,
or
the
principal
business
activities
of
which
are
conducted
Templeton
Dragon
Fund,
Inc.
Important
Information
to
Shareholders
28
franklintempleton.com
Annual
Report
in
China
or
Hong
Kong,
or
for
which
the
principal
equity
securities
trading
market
is
in
China
or
Hong
Kong,
or
(ii)
that
derive
at
least
50%
of
their
revenues
from
goods
or
services
sold
or
produced,
or
have
at
least
50%
of
their
assets,
in
China
or
Hong
Kong.
Determinations
as
to
eligibility
will
be
made
by
the
investment
manager
based
on
publicly
available
information
and
inquiries
made
to
the
companies.
Principal
Investment
Strategy
Under
normal
circumstances,
the
Fund
will
invest
at
least
45%
of
its
total
assets
in
the
equity
securities
of
China
companies.
The
Fund
may
invest
in
companies
listed
on
exchanges
in
mainland
China,
Hong
Kong,
Taiwan,
or
elsewhere
that,
in
the
judgment
of
the
investment
manager,
are
expected
to
benefit
from
developments
in
the
economy
of
China.
Equity
securities
means
common
or
preferred
stock
(including
convertible
preferred
stock);
bonds,
notes
or
debentures
convertible
into
common
or
preferred
stock;
stock
purchase
warrants
or
rights;
equity
interests
in
trusts,
partnerships,
joint
ventures
or
similar
enterprises;
and
sponsored
or
unsponsored
American
or
Global
Depositary
Receipts.
Investments
in
China
companies
also
may
be
made
through
a
special
structure
known
as
a
variable
interest
entity
("VIE")
that
is
designed
to
provide
foreign
investors
with
exposure
to
China
companies
that
operate
in
certain
sectors
in
which
China
restricts
or
prohibits
foreign
investments.
The
Fund
may
also
invest
to
a
limited
degree
(up
to
20%
of
its
total
assets)
in
debt
obligations
of
China
companies,
which
may
be
lower-rated
or
non-rated,
including
debt
securities
the
issuer
of
which
is
in
payment
default,
when
consistent
with
the
Fund's
investment
objective.
The
Fund
intends
to
invest
its
assets
over
a
broad
spectrum
of
sectors
including,
among
others,
as
conditions
warrant
from
time
to
time,
consumer
discretionary,
communication
services,
health
care,
financials,
and
information
technology.
The
Fund
is
not
permitted
to
invest
more
than
25%
of
its
assets
in
any
one
industry.
In
addition,
the
Fund's
Board
of
Directors
has
adopted
a
non-fundamental
policy
under
which
the
Fund
will
not
invest
more
than
15%
of
its
assets
in
any
one
issuer.
In
addition,
the
Fund
may
invest
up
to
25%
of
its
total
assets
in
direct
equity
investments
that
the
investment
manager
expects
will
become
listed
or
otherwise
publicly
traded
securities.
Direct
investments
will
consist
of
(i)
the
private
purchase
from
an
enterprise
of
an
equity
interest
in
the
enterprise
in
the
form
of
shares
of
common
stock
or
equity
interests
in
trusts,
partnerships,
joint
ventures
or
similar
enterprises,
and
(ii)
the
purchase
of
such
an
equity
interest
in
an
enterprise
from
a
principal
investor
in
the
enterprise.
The
Fund's
investment
objective
of
long-term
capital
appreciation
and
its
policy
of
investing,
under
normal
circumstances,
at
least
45%
of
its
total
assets
in
the
equity
securities
of
China
companies,
are
fundamental
and
may
not
be
changed
without
the
approval
of
a
majority
of
the
Fund's
outstanding
voting
securities.
In
addition,
the
Fund
has
adopted
as
a
fundamental
investment
policy
the
requirement
that,
under
normal
circumstances,
the
Fund
will
invest
at
least
65%
of
its
total
assets
in
China
companies,
Japan
companies
and
Asia-Pacific
companies.
Finally,
the
Fund
has
adopted
a
fundamental
policy
that
it
may
not
invest
more
than
20%
of
the
total
value
of
its
assets
in
Japan
companies.
The
Fund
may
invest
in
eligible
China
A-shares.
China
A
shares
can
be
accessed
through
the
Stock
Connect
program,
which
covers
securities
listed
and
traded
on
the
Shanghai
Stock
Exchange
through
the
Shanghai-Hong
Kong
Stock
Connect
program,
as
well
as
securities
listed
and
traded
on
the
Shenzhen
Stock
Exchange
through
the
Shenzhen-Hong
Kong
Stock
Connect
program.
China
A
shares
can
also
be
accessed
through
other
means,
including
Qualified
Foreign
Institutional
Investor
regime
(QFII).
The
Fund
invests
in
certain
China
A-shares
through
its
investment
in
Templeton
China
Opportunities
Fund,
Ltd.
(the
"China
Fund").
The
China
Fund
is
a
Cayman
Islands
exempted
company,
and
is
a
wholly-owned
subsidiary
of
the
Fund,
and
is
able
to
invest
directly
in
China
A-shares
consistent
with
the
investment
objective
of
the
Fund.
The
China
Fund
gains
access
to
the
China
A-shares
market
through
the
Stock
Connect
program,
as
well
as
through
Templeton
Investment
Counsel,
LLC
(TIC),
which
serves
as
the
registered
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
delays
in
gaining
access
to
its
assets
or
a
loss
of
value
in
the
event
of
noncompliance
with
applicable
Chinese
rules
or
requirements.
Templeton
Dragon
Fund,
Inc.
Important
Information
to
Shareholders
29
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The
Fund
may
use
currency
forward
contracts
to
hedge
currency
risk.
A
currency
forward
contract
is
an
obligation
to
purchase
or
sell
a
specific
non-U.S.
currency
in
exchange
for
another
currency,
which
may
be
U.S.
dollars,
at
an
agreed
exchange
rate
(price)
at
a
future
date.
Currency
forwards
are
typically
individually
negotiated
and
privately
traded
by
currency
traders
and
their
customers
in
the
interbank
market.
During
periods
in
which
the
investment
manager
believes
changes
in
economic,
financial
or
political
conditions
make
it
advisable,
the
Fund
may,
for
temporary
defensive
purposes,
reduce
its
holdings
in
equity
securities
and
invest
without
limit
in
certain
short-term
(less
than
twelve
months
to
maturity)
and
medium-term
(not
greater
than
five
years
to
maturity)
debt
securities
or
hold
cash.
The
short-term
and
medium-term
debt
securities
in
which
the
Fund
may
invest
consist
of
(a)
obligations
of
the
U.S.,
Chinese
or
Hong
Kong
governments,
and
their
respective
agencies
or
instrumentalities;
(b)
bank
deposits
and
bank
obligations
(including
certificates
of
deposit,
time
deposits
and
bankers'
acceptances)
of
U.S.
or
foreign
banks
denominated
in
any
currency;
(c)
floating
rate
securities
and
other
instruments
denominated
in
any
currency
issued
by
various
governments
or
international
development
agencies;
(d)
finance
company
and
corporate
commercial
paper
and
other
short-term
corporate
debt
obligations
of
U.S.,
Chinese
or
Hong
Kong
corporations;
and
(e)
repurchase
agreements
with
banks
and
broker-dealers
with
respect
to
such
securities.
The
Fund
intends
to
invest
for
temporary
defensive
purposes
only
in
short-term
and
medium-term
debt
securities
rated,
at
the
time
of
investment,
A
or
higher
by
Moody's
Investors
Service,
Inc.
or
Standard
&
Poor's
Corporation
or,
if
unrated
by
either
rating
agency,
of
equivalent
credit
quality
to
securities
so
rated
as
determined
by
the
investment
manager.
For
purposes
of
the
Fund's
investment
restriction
prohibiting
the
investment
of
25%
or
more
of
the
total
value
of
its
assets
in
a
particular
industry,
a
foreign
government
(but
not
the
United
States
government)
is
deemed
to
be
an
"industry",
and
therefore
investments
in
the
obligations
of
any
one
foreign
government
may
not
equal
or
exceed
25%
of
the
Fund's
assets.
The
Fund
is
a
"non-diversified"
fund,
which
means
it
generally
invests
a
greater
portion
of
its
assets
in
the
securities
of
one
or
more
issuers
and
invests
overall
in
a
smaller
number
of
issuers
than
a
diversified
fund.
Environment,
Social
and
Governance
Considerations
The
investment
manager
also
focuses
on
incorporating
environmental,
social
and
governance
(ESG)
factors
throughout
the
investment
process,
including
the
Fund's
security-selection
and
portfolio
construction
process.
The
Fund
focuses
on
companies
with
appropriate
and/or
good
management
of
material
ESG
issues,
and
in
analyzing
ESG
factors,
the
investment
manager
conducts
a
materiality-
based
ESG
assessment
through
both
in-depth
research
and
engagement
with
companies
as
appropriate
to
assess
how
a
company's
practices
are
aimed
at
improving
or
maintaining
the
ESG
footprint
of
its
operating
model.
The
following
provides
examples
of
ESG
elements
that
can
be
taken
into
consideration
when
assessing
a
company:
•
Environmental
considerations,
which
can
include
issues
such
as
resource
efficiency,
carbon
emissions
management,
waste
prevention
and
recycling
and
pollution
prevention
and
control.
•
Social
considerations,
which
can
include
issues
such
as
labor
standards,
fair
wages,
diversity
and
gender
balance,
health
and
safety
practices
and
product
safety.
•
Governance
considerations,
which
can
include
issues
such
as
appropriate
accounting
practices,
alignment
of
interests,
board
effectiveness,
capital
allocation,
shareholder
rights
and
quality
of
disclosures.
In
addition,
the
investment
manager
assesses
the
potential
for
improvement
through
the
Fund's
engagement
as
an
active
owner.
These
are
targeted
engagements
with
specific
goals
and
objectives
based
on
scope
for
improvement.
The
investment
manager
seeks
companies
that
are
good
or
improving
stewards
aligned
with
shareholder
interest
and
the
investment
manager's
governance
assessment
includes
regular
dialogue
with
companies,
monitoring
material
ESG
issues
and
voting
proxies.
The
Fund
also
applies
specific
ESG
exclusions,
including
companies
which,
according
to
the
investment
manager's
analysis:
•
repeatedly
and/or
seriously
violate
the
United
Nations
Global
Compact
Principles;
•
manufacture
nuclear
or
controversial
weapons
defined
as
anti-personnel
mines,
biological
&
chemical
weaponry,
depleted
uranium
and
cluster
munitions
or
those
that
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manufacture
components
intended
for
use
in
such
weapons
(companies
that
derive
more
than
5%
revenue
from
any
other
weapons
are
also
be
excluded);
•
derive
more
than
25%
of
their
revenue
from
thermal
coal
extraction;
or
•
manufacture
tobacco
or
tobacco
products.
The
investment
manager
may
consider
selling
an
equity
security
when
it
believes
the
security
has
become
overvalued
due
to
either
its
price
appreciation
or
changes
in
the
company's
fundamentals,
when
there
is
significant
deterioration
of
its
ESG
factors,
or
when
the
investment
manager
believes
another
security
is
a
more
attractive
investment
opportunity.
Principal
Investment
Risks
You
could
lose
money
by
investing
in
the
Fund.
Closed-end
fund
shares
are
not
deposits
or
obligations
of,
or
guaranteed
or
endorsed
by,
any
bank,
and
are
not
insured
by
the
Federal
Deposit
Insurance
Corporation,
the
Federal
Reserve
Board,
or
any
other
agency
of
the
U.S.
government.
Foreign
Securities
(non-U.S.)
Investing
in
foreign
securities
typically
involves
more
risks
than
investing
in
U.S.
securities,
and
includes
risks
associated
with:
(i)
internal
and
external
political
and
economic
developments
-
e.g.,
the
political,
economic
and
social
policies
and
structures
of
some
foreign
countries
may
be
less
stable
and
more
volatile
than
those
in
the
U.S.
or
some
foreign
countries
may
be
subject
to
trading
restrictions
or
economic
sanctions;
diplomatic
and
political
developments
could
affect
the
economies,
industries,
and
securities
and
currency
markets
of
the
countries
in
which
the
Fund
is
invested,
which
can
include
rapid
and
adverse
political
changes;
social
instability;
regional
conflicts;
sanctions
imposed
by
the
United
States,
other
nations
or
other
governmental
entities,
including
supranational
entities;
terrorism;
and
war;
(ii)
trading
practices
-
e.g.,
there
may
be
less
government
supervision
and
regulation
of
foreign
securities
and
currency
markets,
trading
systems
and
brokers
than
in
the
U.S.;
(iii)
availability
of
information
-
e.g.,
foreign
issuers
may
not
be
subject
to
the
same
disclosure,
accounting
and
financial
reporting
standards
and
practices
as
U.S.
issuers;
(iv)
limited
markets
-
e.g.,
the
securities
of
certain
foreign
issuers
may
be
less
liquid
(harder
to
sell)
and
more
volatile;
and
(v)
currency
exchange
rate
fluctuations
and
policies
-
e.g.,
fluctuations
may
negatively
affect
investments
denominated
in
foreign
currencies
and
any
income
received
or
expenses
paid
by
the
Fund
in
that
foreign
currency.
The
risks
of
foreign
investments
may
be
greater
in
developing
or
emerging
market
countries.
There
are
special
risks
associated
with
investments
in
China,
Hong
Kong
and
Taiwan,
including
exposure
to
currency
fluctuations,
less
liquidity,
expropriation,
confiscatory
taxation,
nationalization
and
exchange
control
regulations
(including
currency
blockage).
Inflation
and
rapid
fluctuations
in
inflation
and
interest
rates
have
had,
and
may
continue
to
have,
negative
effects
on
the
economy
and
securities
markets
of
China,
Hong
Kong
and
Taiwan.
In
addition,
investments
in
Taiwan
and
Hong
Kong
could
be
adversely
affected
by
their
respective
political
and
economic
relationship
with
China.
China,
Hong
Kong
and
Taiwan
are
deemed
by
the
investment
manager
to
be
emerging
markets
countries,
which
means
an
investment
in
these
countries
has
more
heightened
risks
than
general
foreign
investing
due
to
a
lack
of
established
legal,
political,
business
and
social
frameworks
in
these
countries
and
accounting
standards
or
auditor
oversight
in
the
country
to
support
securities
markets
as
well
as
the
possibility
for
more
widespread
corruption
and
fraud.
In
addition,
the
standards
for
environmental,
social
and
corporate
governance
matters
in
China,
Hong
Kong
and
Taiwan
also
tend
to
be
lower
than
such
standards
in
more
developed
economies.
There
may
be
significant
obstacles
to
obtaining
information
necessary
for
investigations
into
or
litigation
against
companies
located
in
or
operating
in
China
and
shareholders
may
have
limited
legal
remedies.
The
imposition
of
tariffs
or
other
trade
barriers
by
the
U.S.
or
foreign
governments
on
exports
from
China
may
also
have
an
adverse
impact
on
Chinese
issuers.
There
is
also
the
risk
that
the
U.S.
government
or
other
governments
may
sanction
Chinese
issuers
or
otherwise
prohibit
U.S.
persons
(such
as
the
Fund)
from
investing
in
certain
Chinese
issuers
which
may
negatively
affect
the
liquidity
and
price
of
their
securities.
In
addition,
currency
fluctuations,
currency
convertibility,
interest
rate
fluctuations
and
higher
rates
of
inflation
as
a
result
of
internal
social
unrest
or
conflicts
with
other
countries
have
had,
and
may
continue
to
have,
negative
effects
on
the
economies
and
securities
markets
of
China.
Certain
investments
in
China
companies
may
be
made
through
a
special
structure
known
as
a
VIE.
In
a
VIE
structure,
foreign
investors,
such
as
the
Fund,
will
only
own
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stock
in
a
shell
company
rather
than
directly
in
the
VIE,
which
must
be
owned
by
Chinese
nationals
(and/or
China
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.
Recently,
however,
the
China
Securities
Regulatory
Commission
("CSRC")
released
new
rules
that
permit
the
use
of
VIE
structures,
provided
they
abide
by
Chinese
laws
and
register
with
the
CSRC.
The
rules,
however,
may
cause
Chinese
companies
to
undergo
greater
scrutiny
and
may
make
the
process
to
create
VIEs
more
difficult
and
costly.
Further,
while
the
rules
and
implementing
guidelines
do
not
prohibit
the
use
of
VIE
structures,
this
does
not
serve
as
a
formal
endorsement
either.
There
is
a
risk
that
the
Chinese
government
may
cease
to
tolerate
VIEs
at
any
time,
and
any
guidance
or
further
rulemaking
prohibiting
or
restricting
these
structures
by
the
Chinese
government,
generally
or
with
respect
to
specific
industries,
would
likely
cause
impacted
VIE-structured
holding(s)
to
suffer
significant,
detrimental,
and
possibly
permanent
losses.
These
losses
could
in
turn
adversely
affect
the
Fund's
returns
and
net
asset
value.
China
A-Shares
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
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.
Trading
through
Stock
Connect
is
subject
to
a
number
of
restrictions
that
may
affect
the
Fund's
investments
and
returns.
For
example,
a
primary
feature
of
the
Stock
Connect
program
is
the
application
of
the
home
market's
laws
and
rules
applicable
to
investors
in
China
A-shares.
Therefore,
a
fund's
investments
in
Stock
Connect
China
A-shares
are
generally
subject
to
the
securities
regulations
and
listing
rules
of
the
PRC,
among
other
restrictions.
Stock
Connect
can
only
operate
when
both
PRC
and
Hong
Kong
markets
are
open
for
trading
and
when
banking
services
are
available
in
both
markets
on
the
corresponding
settlement
days.
As
such,
the
Shanghai
and
Shenzhen
markets
may
be
open
at
a
time
when
Stock
Connect
is
not
trading,
with
the
result
that
prices
of
China
A-shares
may
fluctuate
at
times
when
the
fund
is
unable
to
add
to
or
exit
its
position,
which
could
adversely
affect
a
fund's
performance.
Additionally,
changes
in
the
operation
of
the
Stock
Connect
program
may
restrict
or
otherwise
affect
a
fund's
investments
or
returns.
Any
changes
in
laws,
regulations
and
policies
of
the
China
A-shares
market
or
rules
in
relation
to
Stock
Connect
may
affect
China
A-share
prices.
These
risks
are
heightened
generally
by
the
developing
state
of
the
PRC's
investment
and
banking
systems
and
the
uncertainty
about
the
precise
nature
of
the
rights
of
equity
owners
and
their
ability
to
enforce
such
rights
under
Chinese
law.
Trading
through
the
Stock
Connect
program
is
also
subject
to
daily
quotas
that
limit
the
maximum
daily
net
purchases
on
any
particular
day,
each
of
which
may
restrict
or
preclude
a
fund's
ability
to
invest
in
China
A-shares
through
the
Stock
Connect
program.
Trading
through
Stock
Connect
may
require
pre-validation
of
cash
or
securities
prior
to
acceptance
of
orders.
This
requirement
may
limit
a
fund's
ability
to
dispose
of
its
A-shares
purchased
through
Stock
Connect
in
a
timely
manner.
Regional
Adverse
conditions
in
a
certain
region
or
country
can
adversely
affect
securities
of
issuers
in
other
countries
whose
economies
appear
to
be
unrelated.
Because
the
Fund
invests
its
assets
primarily
in
companies
in
a
specific
region,
the
Fund
is
subject
to
greater
risks
of
adverse
developments
in
that
region
and/or
the
surrounding
regions
than
a
fund
that
is
more
broadly
diversified
geographically.
Political,
social
or
economic
disruptions
in
the
region,
even
in
countries
in
which
the
Fund
is
not
invested,
may
adversely
affect
the
value
of
investments
held
by
the
Fund.
Emerging
Market
Countries
The
Fund's
investments
in
securities
of
issuers
in
emerging
market
countries
are
subject
to
all
of
the
risks
of
foreign
investing
generally,
and
have
additional
heightened
risks
due
to
a
lack
of
established
legal,
political,
business
and
social
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frameworks
to
support
securities
markets,
including:
delays
in
settling
portfolio
securities
transactions;
currency
and
capital
controls;
greater
sensitivity
to
interest
rate
changes;
pervasiveness
of
corruption
and
crime;
currency
exchange
rate
volatility;
and
inflation,
deflation
or
currency
devaluation.
Market
The
market
values
of
securities
or
other
investments
owned
by
the
Fund
will
go
up
or
down,
sometimes
rapidly
or
unpredictably.
The
market
value
of
a
security
or
other
investment
may
be
reduced
by
market
activity
or
other
results
of
supply
and
demand
unrelated
to
the
issuer.
This
is
a
basic
risk
associated
with
all
investments.
When
there
are
more
sellers
than
buyers,
prices
tend
to
fall.
Likewise,
when
there
are
more
buyers
than
sellers,
prices
tend
to
rise.
In
addition,
the
value
of
the
Fund's
investments
may
go
up
or
down
due
to
general
market
or
other
conditions
that
are
not
specifically
related
to
a
particular
issuer,
such
as:
real
or
perceived
adverse
economic
changes,
including
widespread
liquidity
issues
and
defaults
in
one
or
more
industries;
changes
in
interest
or
exchange
rates;
unexpected
natural
and
man-made
world
events,
such
as
diseases
or
disasters;
financial,
political
or
social
disruptions,
including
terrorism
and
war;
and
U.S.
trade
disputes
or
other
disputes
with
specific
countries
that
could
result
in
tariffs,
trade
barriers
and
investment
restrictions
in
certain
securities
in
those
countries.
Any
of
these
conditions
can
adversely
affect
the
economies
of
many
companies,
sectors,
nations,
regions
and
the
market
in
general,
in
ways
that
cannot
necessarily
be
foreseen.
Stock
prices
tend
to
go
up
and
down
more
dramatically
than
those
of
debt
securities.
A
slower-growth
or
recessionary
economic
environment
could
have
an
adverse
effect
on
the
prices
of
the
various
stocks
held
by
the
Fund.
Depositary
Receipts
Depositary
receipts
are
subject
to
many
of
the
risks
of
the
underlying
security.
The
Fund
could
be
exposed
to
the
credit
risk
of
the
custodian
or
financial
institution,
and
in
cases
where
the
issuer's
home
country
does
not
have
developed
financial
markets,
greater
market
risk.
In
addition,
the
depository
institution
may
not
have
physical
custody
of
the
underlying
securities
at
all
times
and
may
charge
fees
for
various
services,
including
forwarding
dividends
and
interest
and
corporate
actions.
The
Fund
would
be
expected
to
pay
a
share
of
the
additional
fees,
which
it
would
not
pay
if
investing
directly
in
the
foreign
securities.
The
Fund
may
experience
delays
in
receiving
its
dividend
and
interest
payments
or
exercising
rights
as
a
shareholder.
Non-Diversification
Because
the
Fund
is
non-diversified,
it
may
be
more
sensitive
to
economic,
business,
political
or
other
changes
affecting
individual
issuers
or
investments
than
a
diversified
fund,
which
may
negatively
impact
the
Fund's
performance
and
result
in
greater
fluctuation
in
the
value
of
the
Fund's
shares.
Focus
The
greater
the
Fund's
exposure
to
any
single
type
of
investment
-
including
investment
in
a
given
industry,
sector,
region,
country,
issuer,
or
type
of
security
-
the
greater
the
losses
the
Fund
may
experience
upon
any
single
economic,
market,
business,
political,
regulatory,
or
other
occurrence.
As
a
result,
there
may
be
more
fluctuation
in
the
price
of
the
Fund's
shares.
Derivative
Instruments
The
performance
of
derivative
instruments,
such
as
currency
forwards,
depend
largely
on
the
performance
of
an
underlying
instrument,
such
as
a
currency,
and
such
instruments
often
have
risks
similar
to
their
underlying
instrument,
in
addition
to
other
risks.
Derivatives
instruments
(such
as
currency
forwards)
involve
costs
and
other
risks
such
as
illiquidity,
mispricing
or
improper
valuation
of
the
derivative
instrument,
and
imperfect
correlation
between
the
value
of
the
derivative
and
the
underlying
instrument
so
that
the
Fund
may
not
realize
the
intended
benefits.
When
a
derivative
is
used
for
hedging,
the
change
in
value
of
the
derivative
may
also
not
correlate
specifically
with
the
currency
being
hedged.
With
over-the-counter
derivatives,
there
is
a
risk
that
the
other
party
to
the
transaction
will
fail
to
perform
(known
as
counterparty
risk).
Currency
Forward
Contracts
The
successful
use
of
currency
forward
contracts
will
usually
depend
on
the
investment
manager's
ability
to
accurately
forecast
currency
exchange
rate
movements.
Should
exchange
rates
move
in
an
unexpected
manner,
the
Fund
may
not
achieve
the
anticipated
benefits
of
the
transaction,
or
it
may
realize
losses.
In
addition,
these
techniques
could
result
in
a
loss
if
the
counterparty
to
the
transaction
does
not
perform
as
promised,
including
because
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of
the
counterparty's
bankruptcy
or
insolvency.
While
the
investment
manager
uses
only
counterparties
that
meet
its
credit
quality
standards,
in
unusual
or
extreme
market
conditions,
a
counterparty's
creditworthiness
and
ability
to
perform
may
deteriorate
rapidly,
and
the
availability
of
suitable
replacement
counterparties
may
become
limited.
Currency
forward
contracts
may
limit
potential
gain
from
a
positive
change
in
the
relationship
between
the
U.S.
dollar
and
foreign
currencies.
Currency
forward
contracts
may
limit
potential
gain
from
a
positive
change
in
the
relationship
between
the
U.S.
dollar
and
foreign
currencies.
Unanticipated
changes
in
currency
prices
may
result
in
poorer
overall
performance
for
the
Fund
than
if
it
had
not
engaged
in
such
contracts.
Moreover,
there
may
be
an
imperfect
correlation
between
the
Fund's
portfolio
holdings
of
securities
denominated
in
a
particular
currency
and
the
currencies
bought
or
sold
in
the
forward
contracts
entered
into
by
the
Fund.
This
imperfect
correlation
may
cause
the
Fund
to
sustain
losses
that
will
prevent
the
Fund
from
achieving
a
complete
hedge
or
expose
the
Fund
to
risk
of
foreign
exchange
loss.
Management
The
Fund
is
subject
to
management
risk
because
it
is
an
actively
managed
portfolio.
The
Investment
Manager
will
apply
investment
techniques
and
risk
analyses
in
making
investment
decisions
for
the
Fund,
but
there
can
be
no
guarantee
that
they
will
produce
the
desired
results.
ESG
Considerations
ESG
considerations
are
one
of
a
number
of
factors
that
the
investment
manager
examines
when
considering
investments
for
the
Fund's
portfolio.
In
light
of
this,
the
issuers
in
which
the
Fund
invests
may
not
be
considered
ESG-focused
issuers
and
may
have
lower
or
adverse
ESG
assessments.
Consideration
of
ESG
factors
may
affect
the
Fund's
exposure
to
certain
issuers
or
industries
and
may
not
work
as
intended.
In
addition,
ESG
considerations
assessed
as
part
of
the
Fund's
investment
process
may
vary
across
types
of
eligible
investments
and
issuers.
In
certain
circumstances,
there
may
be
times
when
not
every
investment
is
assessed
for
ESG
factors
and,
when
they
are,
not
every
ESG
factor
may
be
identified
or
evaluated.
The
investment
manager's
assessment
of
an
issuer's
ESG
factors
is
subjective
and
will
likely
differ
from
that
of
investors,
third
party
service
providers
(e.g.,
ratings
providers)
and
other
funds.
As
a
result,
securities
selected
by
the
investment
manager
may
not
reflect
the
beliefs
and
values
of
any
particular
investor.
The
investment
manager
also
may
be
dependent
on
the
availability
of
timely,
complete
and
accurate
ESG
data
reported
by
issuers
and/or
third-
party
research
providers,
the
timeliness,
completeness
and
accuracy
of
which
is
out
of
the
investment
manager's
control.
ESG
factors
are
often
not
uniformly
measured
or
defined,
which
could
impact
the
investment
manager's
ability
to
assess
an
issuer.
While
the
investment
manager
views
ESG
considerations
as
having
the
potential
to
contribute
to
the
Fund's
long-term
performance,
there
is
no
guarantee
that
such
results
will
be
achieved.
Cybersecurity
Cybersecurity
incidents,
both
intentional
and
unintentional,
may
allow
an
unauthorized
party
to
gain
access
to
Fund
assets,
Fund
or
customer
data
(including
private
shareholder
information),
or
proprietary
information,
cause
the
Fund,
the
investment
manager
and/or
their
service
providers
(including,
but
not
limited
to,
Fund
accountants,
custodians,
sub-custodians,
transfer
agents
and
financial
intermediaries)
to
suffer
data
breaches,
data
corruption
or
loss
of
operational
functionality
or
prevent
Fund
investors
from
purchasing,
redeeming
or
exchanging
shares
or
receiving
distributions.
The
investment
manager
has
limited
ability
to
prevent
or
mitigate
cybersecurity
incidents
affecting
third
party
service
providers,
and
such
third
party
service
providers
may
have
limited
indemnification
obligations
to
the
Fund
or
the
investment
manager.
Cybersecurlty
incidents
may
result
in
financial
losses
to
the
Fund
and
its
shareholders,
and
substantial
costs
may
be
incurred
in
an
effort
to
prevent
or
mitigate
future
cybersecurity
incidents.
Issuers
of
securities
in
which
the
Fund
invests
are
also
subject
to
cybersecurity
risks,
and
the
value
of
these
securities
could
decline
if
the
issuers
experience
cybersecurity
incidents.
Because
technology
is
frequently
changing,
new
ways
to
carry
out
cyber
attacks
are
always
developing.
Therefore,
there
is
a
chance
that
some
risks
have
not
been
identified
or
prepared
for,
or
that
an
attack
may
not
be
detected,
which
puts
limitations
on
the
Fund's
ability
to
plan
for
or
respond
to
a
cyber
attack.
Like
other
funds
and
business
enterprises,
the
Fund,
the
investment
manager
and
their
service
providers
are
subject
to
the
risk
of
cyber
incidents
occurring
from
time
to
time.
Please
see
the
Performance
Summary
section
of
this
report
for
additional
risk
disclosure.
Templeton
Dragon
Fund,
Inc.
Important
Information
to
Shareholders
34
franklintempleton.com
Annual
Report
The
following
information
is
a
summary
of
material
changes
during
the
last
fiscal
year.
This
information
may
not
reflect
all
of
the
changes
that
have
occurred
since
you
purchased
shares
of
the
Fund.
Portfolio
Manager
Changes
The
following
individual
was
added
as
a
portfolio
manager
of
the
Fund:
Effective
April
30,
2025,
Tony
Sun
joined
the
Fund's
portfolio
management
team.
Based
in
Hong
Kong,
Mr.
Sun
joined
Templeton
Global
Investments
-
Emerging
Markets
Equity
in
2019.
As
Assistant
Portfolio
Manager
dedicated
to
the
China
Equity
portfolios,
he
has
been
making
recommendations
specific
to
the
various
China
portfolios.
Adding
him
as
portfolio
manager
formalizes
the
contribution
he
has
been
making
to
the
strategy.
He
also
has
research
responsibilities
for
China
technology
and
industrials
companies.
Prior
to
joining
Franklin
Templeton,
Mr.
Sun
spent
five
years
as
a
research
analyst
covering
the
tech
sector
at
Fullerton
Fund
Management.
Mr.
Sun
graduated
from
Fudan
University
with
a
Bachelor
of
Material
Science
and
International
Economy,
as
well
as
a
Master
of
Physics
Electronics.
He
had
also
been
an
exchange
student
in
Technion
in
Israel.
Templeton
Dragon
Fund,
Inc.
Annual
Meeting
of
Shareholders
May
22,
2025
(unaudited)
35
franklintempleton.com
Annual
Report
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
22,
2025.
The
purpose
of
the
meeting
was
to
elect
four
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,
2025.
At
the
meeting,
the
following
persons
were
elected
by
the
shareholders
to
serve
as
Directors
of
the
Fund:
Edith
E.
Holiday,
Larry
D.
Thompson,
Gregory
E.
Johnson,
and
Rupert
H.
Johnson,
Jr.*
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,
2025.
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
four
Directors:
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,
2025:
*
Harris
J.
Ashton,
Ann
Torre
Bates,
Terrence
J.
Checki,
Mary
C.
Choksi,
J.
Michael
Luttig,
David
W.
Niemiec
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
2028
For
%
of
Outstanding
Shares
%
of
Shares
Present
Against
%
of
Outstanding
Shares
%
of
Shares
Present
Abstain
%
of
Outstanding
Shares
%
of
Shares
Present
Edith
E.
Holiday
.............
Larry
D.
Thompson
...........
Gregory
E.
Johnson
..........
Rupert
H.
Johnson,
Jr.
.........
18,993,763
20,110,765
20,178,012
20,129,352
74.92%
79.32%
79.59%
79.40%
87.25%
92.38%
92.69%
92.46%
2,576,592
1,462,135
1,394,681
1,441,759
10.16%
5.77%
5.50%
5.69%
11.84%
6.72%
6.41%
6.62%
200,128
197,581
197,790
199,372
0.79%
0.78%
0.78%
0.79%
0.92%
0.91%
0.91%
0.92%
Shares
Voted
%
of
Outstanding
Shares
%
of
Shares
Present
For
.......................
Against
....................
Abstain
....................
21,292,639
259,047
218,800
83.98%
1.02%
0.86%
97.81%
1.19%
1.01%
Templeton
Dragon
Fund,
Inc.
Dividend
Reinvestment
and
Cash
Purchase
Plan
36
franklintempleton.com
Annual
Report
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
Computershare
Trust
Company,
N.A.
(the
"Plan
Administrator")
at
P.O.
Box
43006
Providence,
RI
02940-3078
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
Computershare
Trust
Company,
N.A.
and
sent
to
Computershare
Trust
Company,
N.A.,
P.O.
Box
43006
Providence,
RI
02940-3078,
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
Computershare
Trust
Company,
N.A.,
P.O.
Box
43006
Providence,
RI
02940-3078.
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
37
franklintempleton.com
Annual
Report
Transfer
Agent
Computershare
Trust
Company,
N.A.
P.O.
Box
43006
Providence,
RI
02940-3078
(888)
888-0151
www.computershare.com/us
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.computershare.com/us
or
dial
(888)
888-0151
(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
Computershare
Trust
Company,
N.A.
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
Computershare
Trust
Company,
N.A.
at
(888)
888-0151.
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
(888)
888-0151.
Registered
shareholders
can
access
their
Fund
account
on-line.
For
information
go
to
Computershare
Trust
Company,
N.A.'s
website
at
www.computershare.com/us
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.
Templeton
Dragon
Fund,
Inc.
Board
Members
and
Officers
38
franklintempleton.com
Annual
Report
The
name,
year
of
birth
and
address
of
the
officers
and
board
members,
as
well
as
their
affiliations,
positions
held
with
the
Trust,
principal
occupations
during
at
least
the
past
five
years
and
number
of
U.S.
registered
portfolios
overseen
in
the
Franklin
Templeton
fund
complex,
are
shown
below.
Generally,
each
board
member
serves
until
that
person's
successor
is
elected
and
qualified.
Independent
Board
Members
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Harris
J.
Ashton
(1932)
Director
Since
1994
114
Bar-S
Foods
(meat
packing
company)
(1981-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Director,
RBC
Holdings,
Inc.
(bank
holding
company)
(until
2002);
and
President,
Chief
Executive
Officer
and
Chairman
of
the
Board,
General
Host
Corporation
(nursery
and
craft
centers)
(until
1998).
Ann
Torre
Bates
(1958)
Director
Since
2008
25
Ares
Core
Infrastructure
Fund
(private
investment
management
company)
(2024-present);
Ares
Strategic
Income
Fund
(closed-end
investment
management
company)
(2022-present);
Ares
Capital
Corporation
(specialty
finance
company)
(2010-present);
and
formerly
,
United
Natural
Foods,
Inc.
(food
distribution)
(2013-2023)
and
Navient
Corporation
(loan
management,
servicing
and
asset
recovery)
(2014-2016).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Executive
Vice
President
and
Chief
Financial
Officer,
NHP
Incorporated
(manager
of
multifamily
housing)
(1995-1997);
and
Vice
President
and
Treasurer,
US
Airways,
Inc.
(until
1995).
Terrence
J.
Checki
(1945)
Director
Since
2023
114
Hess
Corporation
(exploration
of
oil
and
gas)
(2014-2025).
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Member
of
the
Council
on
Foreign
Relations
(1996-present);
Member
of
the
National
Committee
on
U.S.-China
Relations
(1999-present);
member
of
the
board
of
trustees
of
the
Economic
Club
of
New
York
(2013-present);
member
of
the
board
of
trustees
of
the
Foreign
Policy
Association
(2005-present);
member
of
the
board
of
directors
of
Council
of
the
Americas
(2007-present)
and
the
Tallberg
Foundation
(2018-present);
and
formerly
,
Executive
Vice
President
of
the
Federal
Reserve
Bank
of
New
York
and
Head
of
its
Emerging
Markets
and
Internal
Affairs
Group
and
Member
of
Management
Committee
(1995-2014);
and
Visiting
Fellow
at
the
Council
on
Foreign
Relations
(2014).
Mary
C.
Choksi
(1950)
Director
Since
2016
114
Omnicom
Group
Inc.
(advertising
and
marketing
communications
services)
(2011-present)
and
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2017-present);
and
formerly
,
Avis
Budget
Group
Inc.
(car
rental)
(2007-2020).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Founder
and
Senior
Advisor,
Strategic
Investment
Group
(investment
management
group)
(2015-2017);
Founding
Partner
and
Senior
Managing
Director,
Strategic
Investment
Group
(1987-2015);
Founding
Partner
and
Managing
Director,
Emerging
Markets
Management
LLC
(investment
management
firm)
(1987-2011);
and
Loan
Officer/Senior
Loan
Officer/Senior
Pension
Investment
Officer,
World
Bank
Group
(international
financial
institution)
(1977-1987).
Templeton
Dragon
Fund,
Inc.
39
franklintempleton.com
Annual
Report
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Edith
E.
Holiday
(1952)
Lead
Independent
Director
Director
since
1996
and
Lead
Independent
Director
since
2007
114
Santander
Holdings
USA
(holding
company)
(2019-present);
and
formerly
,
Hess
Corporation
(exploration
of
oil
and
gas)
(1993-
2025);
Santander
Consumer
USA
Holdings,
Inc.
(consumer
finance)
(2016-2023),
Canadian
National
Railway
(railroad)
(2001-2021),
White
Mountains
Insurance
Group,
Ltd.
(holding
company)
(2004-
2021),
RTI
International
Metals,
Inc.
(manufacture
and
distribution
of
titanium)
(1999-2015)
and
H.J.
Heinz
Company
(processed
foods
and
allied
products)
(1994-2013).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
or
Trustee
of
various
companies
and
trusts;
and
formerly
,
Assistant
to
the
President
of
the
United
States
and
Secretary
of
the
Cabinet
(1990-1993);
General
Counsel
to
the
United
States
Treasury
Department
(1989-1990);
and
Counselor
to
the
Secretary
and
Assistant
Secretary
for
Public
Affairs
and
Public
Liaison-United
States
Treasury
Department
(1988-1989).
J.
Michael
Luttig
(1954)
Director
Since
2009
114
Boeing
Capital
Corporation
(aircraft
financing)
(2006-2010).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
and
formerly
,
Counselor
and
Special
Advisor
to
the
CEO
and
Board
of
Directors
of
the
Coca-Cola
Company
(beverage
company)
(2021-2025);
Counselor
and
Senior
Advisor
to
the
Chairman,
CEO,
and
Board
of
Directors,
of
The
Boeing
Company
(aerospace
company),
and
member
of
the
Executive
Council
(2019-2020);
Executive
Vice
President,
General
Counsel
and
member
of
the
Executive
Council,
The
Boeing
Company
(2006-2019);
and
Federal
Appeals
Court
Judge,
United
States
Court
of
Appeals
for
the
Fourth
Circuit
(1991-2006).
David
W.
Niemiec
(1949)
Director
Since
2005
25
Hess
Midstream
LP
(oil
and
gas
midstream
infrastructure)
(2017-present).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Advisor,
Saratoga
Partners
(private
equity
fund);
and
formerly
,
Managing
Director,
Saratoga
Partners
(1998-2001)
and
SBC
Warburg
Dillon
Read
(investment
banking)
(1997-1998);
Vice
Chairman,
Dillon,
Read
&
Co.
Inc.
(investment
banking)
(1991-1997);
and
Chief
Financial
Officer,
Dillon,
Read
&
Co.
Inc.
(1982-1997).
Larry
D.
Thompson
(1945)
Director
Since
2005
114
Graham
Holdings
Company
(education
and
media
organization)
(2011-2021);
The
Southern
Company
(energy
company)
(2014-2020;
previously
2010-
2012)
and
Cbeyond,
Inc.
(business
communications
provider)
(2010-
2012).
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
of
various
companies;
Counsel,
Finch
McCranie,
LLP
(law
firm)
(2015-present);
John
A.
Sibley
Professor
of
Corporate
and
Business
Law,
University
of
Georgia
School
of
Law
(2015-present;
previously
2011-2012);
and
formerly
,
Independent
Compliance
Monitor
and
Auditor,
Volkswagen
AG
(manufacturer
of
automobiles
and
commercial
vehicles)
(2017-2020);
Executive
Vice
President
-
Government
Affairs,
General
Counsel
and
Corporate
Secretary,
PepsiCo,
Inc.
(consumer
products)
(2012-2014);
Senior
Vice
President
-
Government
Affairs,
General
Counsel
and
Secretary,
PepsiCo,
Inc.
(2004-2011);
Senior
Fellow
of
The
Brookings
Institution
(2003-2004);
Visiting
Professor,
University
of
Georgia
School
of
Law
(2004);
and
Deputy
Attorney
General,
U.S.
Department
of
Justice
(2001-2003).
Independent
Board
Members
(continued)
Templeton
Dragon
Fund,
Inc.
40
franklintempleton.com
Annual
Report
Interested
Board
Members
and
Officers
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Constantine
D.
Tseretopoulos
(1954)
Director
Since
1998
16
None
300
S.E.
2nd
Street
Fort
Lauderdale,
FL
33301-
1923
Principal
Occupation
During
at
Least
the
Past
5
Years:
Physician,
Chief
of
Staff,
owner
and
operator
of
the
Lyford
Cay
Hospital
(1987-present);
director
of
various
nonprofit
organizations;
and
formerly
,
Cardiology
Fellow,
University
of
Maryland
(1985-1987);
and
Internal
Medicine
Resident,
Greater
Baltimore
Medical
Center
(1982-
1985).
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Gregory
E.
Johnson
2
(1961)
Chairman
of
the
Board,
Vice
President
and
Director
Chairman
of
the
Board
and
Vice
President
since
2023
and
Director
since
2006
123
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Executive
Chairman,
Chairman
of
the
Board
and
Director,
Franklin
Resources,
Inc.;
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton
fund
complex;
Vice
Chairman,
Investment
Company
Institute;
and
formerly
,
Chief
Executive
Officer
(2013-2020)
and
President
(1994-2015)
Franklin
Resources,
Inc.
Rupert
H.
Johnson,
Jr.
3
(1940)
Director
Since
2013
114
None
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Director
(Vice
Chairman),
Franklin
Resources,
Inc.;
Director,
Franklin
Advisers,
Inc.;
and
officer
and/or
director
or
trustee,
as
the
case
may
be,
of
some
of
the
other
subsidiaries
of
Franklin
Resources,
Inc.
and
of
certain
funds
in
the
Franklin
Templeton
fund
complex.
Bjorn
A.
Davis
(1965)
Chief
Compliance
Officer
Since
2024
Not
Applicable
Not
Applicable
100
First
Stamford
Place
Stamford,
CT
06902
Principal
Occupation
During
at
Least
the
Past
5
Years:
Vice
President,
Franklin
Templeton
Global
Regulatory
Compliance
US
Advisory
Services;
Chief
Compliance
Officer,
Franklin
Advisers,
Inc.,
Franklin
Mutual
Advisers
LLC,
Franklin
Templeton
Institutional
LLC,
Templeton
Investment
Counsel
LLC
and
Templeton
Global
Advisors
Limited
(since
2023);
formerly
,
Director,
Franklin
Templeton
Global
Regulatory
Compliance;
Chief
Compliance
Officer,
K2
Advisors,
LLC
and
K2/D&S
Management
Co.,
LLC
(2011-2023).
Susan
Kerr
(1949)
Vice
President
-
AML
Compliance
Since
2021
Not
Applicable
Not
Applicable
One
Madison
Avenue
New
York,
NY
10010
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Compliance
Analyst,
Franklin
Templeton;
Chief
Anti-Money
Laundering
Compliance
Officer,
Legg
Mason
&
Co.,
or
its
affiliates;
Anti
Money
Laundering
Compliance
Officer;
Senior
Compliance
Officer,
Franklin
Distributors,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton
fund
complex.
Independent
Board
Members
(continued)
Templeton
Dragon
Fund,
Inc.
41
franklintempleton.com
Annual
Report
Note
1:
Rupert
H.
Johnson,
Jr.
is
the
uncle
of
Gregory
E.
Johnson.
Note
2:
Officer
information
is
current
as
of
the
date
of
this
report.
It
is
possible
that
after
this
date,
information
about
officers
may
change.
1.
Information
is
for
the
calendar
year
ended
December
31,
2025,
unless
otherwise
noted.
We
base
the
number
of
portfolios
on
each
separate
series
of
the
U.S.
registered
investment
companies
within
the
Franklin
Templeton
fund
complex.
These
portfolios
have
a
common
investment
manager
or
affiliated
investment
managers.
2.
Gregory
E.
Johnson
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
of
Franklin
Resources,
Inc.
(Resources),
which
is
the
parent
company
of
the
Fund's
investment
manager
and
distributor.
3.
Rupert
H.
Johnson,
Jr.
is
considered
to
be
an
interested
person
of
the
Fund
under
the
federal
securities
laws
due
to
his
position
as
an
officer
and
director
and
a
major
shareholder
of
Resources,
which
is
the
parent
company
of
the
Fund's
investment
manager
and
distributor.
The
Sarbanes-Oxley
Act
of
2002
and
Rules
adopted
by
the
U.S.
Securities
and
Exchange
Commission
require
the
Fund
to
disclose
whether
the
Fund's
Audit
Committee
includes
at
least
one
member
who
is
an
audit
committee
financial
expert
within
the
meaning
of
such
Act
and
Rules.
The
Fund's
Board
has
determined
that
there
is
at
least
one
such
financial
expert
on
the
Audit
Committee
and
has
designated
each
of
Ann
Torre
Bates
and
David
W.
Niemiec
as
an
audit
committee
financial
expert.
The
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
qualify
as
such
an
expert
in
view
of
their
extensive
business
background
and
experience.
Ms.
Bates
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2008.
She
currently
serves
as
a
director
of
Ares
Capital
Corporation
(2010-present)
and
United
Natural
Foods,
Inc.
(2013-present)
and
was
formerly
a
director
of
Navient
Corporation
from
2014
to
2016,
SLM
Corporation
from
1997
to
2014
and
Allied
Capital
Corporation
from
2003
to
2010,
Executive
Vice
President
and
Chief
Financial
Officer
of
NHP
Incorporated
from
1995
to
1997
and
Vice
President
and
Treasurer
of
US
Airways,
Inc.
until
1995.
Mr.
Niemiec
has
served
as
a
member
of
the
Fund
Audit
Committee
since
2005,
currently
serves
as
an
Advisor
to
Saratoga
Partners
and
was
formerly
its
Managing
Director
from
1998
to
2001
and
serves
as
a
director
of
Hess
Midstream
LP
(2017-present).
Mr.
Niemiec
was
formerly
a
director
of
Emeritus
Corporation
from
1999
to
2010
and
OSI
Pharmaceuticals,
Inc.
from
2006
to
2010,
Managing
Director
of
SBC
Warburg
Dillon
Read
from
1997
to
1998,
and
was
Vice
Chairman
from
1991
to
1997
and
Chief
Financial
Officer
from
1982
to
1997
of
Dillon,
Read
&
Co.
Inc.
As
a
result
of
such
background
and
experience,
the
Board
believes
that
Ms.
Bates
and
Mr.
Niemiec
have
each
acquired
an
understanding
of
generally
accepted
accounting
principles
and
financial
statements,
the
general
application
of
such
principles
in
connection
with
the
accounting
estimates,
accruals
and
reserves,
and
analyzing
and
evaluating
financial
statements
that
present
a
breadth
and
level
of
complexity
of
accounting
issues
generally
comparable
to
those
of
the
Fund,
as
well
as
an
understanding
of
internal
controls
and
procedures
for
financial
reporting
and
an
understanding
of
audit
committee
functions.
Ms.
Bates
and
Mr.
Niemiec
are
independent
Board
members
as
that
term
is
defined
under
the
applicable
U.S.
Securities
and
Exchange
Commission
Rules
and
Releases.
Name,
Year
of
Birth
and
Address
Position
Length
of
Time
Served
Number
of
Portfolios
in
Fund
Complex
Overseen
by
Board
Member
1
Other
Directorships
Held
During
at
Least
the
Past
5
Years
Christopher
Kings
(1974)
Chief
Executive
Officer
-
Finance
and
Administration
Since
2024
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Vice
President,
Franklin
Templeton
Services,
LLC;
and
officer
of
certain
funds
in
the
Franklin
Templeton
fund
complex.
Manraj
S.
Sekhon
(1969)
President
and
Chief
Executive
Officer
-
Investment
Management
Since
2018
Not
Applicable
Not
Applicable
7
Temasek
Blvd.
Suntec
Tower
1,
#38-03
Singapore
038987
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Investment
Officer,
Franklin
Templeton
Emerging
Markets
Equity;
and
officer
of
certain
funds
in
the
Franklin
Templeton
fund
complex.
Navid
J.
Tofigh
(1972)
Vice
President
and
Secretary
Vice
President
since
2015
and
Secretary
since
2023
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Senior
Associate
General
Counsel,
Franklin
Templeton;
and
officer
of
certain
funds
in
the
Franklin
Templeton
fund
complex.
Jeffrey
W.
White
(1971)
Chief
Financial
Officer,
Chief
Accounting
Officer
and
Treasurer
Since
2024
Not
Applicable
Not
Applicable
One
Franklin
Parkway
San
Mateo,
CA
94403-1906
Principal
Occupation
During
at
Least
the
Past
5
Years:
Chief
Financial
Officer,
Chief
Accounting
Officer
&
Treasurer
and
officer
of
certain
funds
in
the
Franklin
Templeton
fund
complex;
and
formerly
,
Director
and
Assistant
Treasurer
within
Franklin
Templeton
Global
Fund
Tax
and
Fund
Administration
and
Financial
Reporting
(2017-2023).
Interested
Board
Members
and
Officers
(continued)
Templeton
Dragon
Fund,
Inc.
Shareholder
Information
42
franklintempleton.com
Annual
Report
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,
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.
43
franklintempleton.com
Annual
Report
TERMS
AND
CONDITIONS
OF
DIVIDEND
REINVESTMENT
AND
CASH
PURCHASE
PLAN
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.
Computershare
Trust
Company,
N.A.
("Computershare")
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
Computershare
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,
Computershare
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
Computershare
has
completed
its
purchases,
the
market
price
exceeds
the
net
asset
value
per
share,
the
average
per
share
purchase
price
paid
by
Computershare
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
Computershare,
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.computershare.com/us
or
by
check
payable
to
"Computershare
Trust
Company,
N.A."
and
sent
to
Computershare
Trust
Company,
N.A.,
P.O.
Box
43006
Providence,
RI
02940-3078,
Attention:
Templeton
Dragon
Fund,
Inc.
Computershare
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.
Computershare
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.
Computershare
shall
return
to
the
participant
his
or
her
entire
voluntary
cash
payment
upon
written
notice
of
withdrawal
received
by
Computershare
not
less
than
48
hours
before
such
payment
is
to
be
invested.
Such
written
notice
shall
be
sent
to
Computershare
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
44
franklintempleton.com
Annual
Report
TERMS
AND
CONDITIONS
OF
DIVIDEND
REINVESTMENT
AND
CASH
PURCHASE
PLAN
(continued)
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.
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
Computershare
shall
determine.
Participant
funds
held
by
Computershare
uninvested
will
not
bear
interest,
and
it
is
understood
that,
in
any
event,
Computershare
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.
Computershare
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,
Computershare
may
aggregate
purchases
with
those
of
other
participants,
and
the
average
price
(including
trading
fees)
of
all
shares
purchased
by
Computershare
shall
be
the
price
per
share
allocable
to
all
participants.
7.
Computershare
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.
Computershare
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,
Computershare
will
deliver
to
participants,
without
charge,
a
certificate
or
certificates
for
all
or
a
portion
of
the
full
shares
held
by
Computershare.
8.
Computershare
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.
Computershare
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,
Computershare
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
Computershare
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,
Computershare
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.
Computershare'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.
Computershare
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
Computershare
in
writing.
Such
withdrawal
or
termination
will
be
effective
immediately
if
notice
is
received
by
Computershare
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
Computershare
or
the
Fund
upon
90
days'
notice
in
writing
mailed
to
participants.
Upon
any
withdrawal
or
termination,
Computershare
will
cause
a
certificate
or
certificates
for
the
full
shares
held
by
Computershare
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
Computershare
to
have
Computershare
sell
part
or
all
of
the
shares
held
for
him
and
to
remit
the
proceeds
to
him.
Computershare
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,
Computershare
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
Computershare
or
the
Fund
at
any
time
or
times,
except
when
necessary
or
appropriate
to
comply
with
45
franklintempleton.com
Annual
Report
TERMS
AND
CONDITIONS
OF
DIVIDEND
REINVESTMENT
AND
CASH
PURCHASE
PLAN
(continued)
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,
Computershare
receives
written
notice
of
the
termination
of
a
participant
account
under
the
Plan.
Any
such
amendment
may
include
an
appointment
by
Computershare
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
Computershare
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.
Computershare
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
Computershare'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
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to
be
given
or
made
by
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to
Computershare
shall
be
in
writing
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to
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Company,
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Providence,
RI
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or
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com/us
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to
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participant,
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have
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be
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when
received
by
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15.
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notice
or
other
communication
which
by
any
provision
of
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Plan
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to
be
given
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to
the
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be
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have
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being
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16.
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conditions
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governed
by
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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.
TLTDF
A
02/26
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(b) Not applicable
| ITEM 2. | CODE OF ETHICS. |
(a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 19(a) (1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer.
| ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
The Board of Trustees of the Registrant has determined that Ann Torre Bates and David W. Niemiec possess the technical attributes identified in Item 3 to Form N-CSR to qualify as "audit committee financial experts," and has designated Ann Torre Bates and David W. Niemiec as the Audit Committee's financial experts. Ann Torre Bates and David W. Niemiec are "independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification of a person as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. The designation or identification of a person as an audit committee financial expert does not affect the duties, obligations, or liability of any other member of the audit committee or board of directors.
| ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
(a) Audit Fees. The aggregate fees billed in the last two fiscal years ending December 31, 2024 and December 31, 2025 (the "Reporting Periods") for professional services rendered by the Registrant's principal accountant (the "Auditor") for the audit of the Registrant's annual financial statements, or services that are normally provided by the Auditor in connection with the statutory and regulatory filings or engagements for the Reporting Periods, were $58,505 in December 31, 2024 and $50,547 in December 31, 2025.
(b) Audit-Related Fees. The aggregate fees billed in the Reporting Periods for assurance and related services by the Auditor that are reasonably related to the performance of the Registrant's financial statements were $0 in December 31, 2024 and $0 in December 31, 2025.
(c) Tax Fees. The aggregate fees billed in the Reporting Periods for professional services rendered by the Auditor for tax compliance, tax advice and tax planning ("Tax Services") were $11,000 in December 31, 2024 and $11,000 in December 31, 2025. These services consisted of (i) review or preparation of U.S. federal, state, local and excise tax returns; (ii) U.S. federal, state and local tax planning, advice and assistance regarding statutory, regulatory or administrative developments, and (iii) tax advice regarding tax qualification matters and/or treatment of various financial instruments held or proposed to be acquired or held.
The aggregate fees paid to the Auditor for products and services rendered by the Auditor to the Service Affiliates were $59,972 for the fiscal year ended December 31, 2024. The services for which these fees were paid included professional fees in connection with SOC 1 reports.
(d) All Other Fees. The aggregate fees billed in the Reporting Periods for products and services provided by the Auditor to the Registrant, other than the services reported in paragraphs (a) through (c) of this item, were $0 in December 31, 2024 and $0 in December 31, 2025.
The aggregate fees paid to the Auditor for products and services rendered by the Auditor to the Service Affiliates were $59,972 for the fiscal year ended December 31, 2024, and $0 for the fiscal year ended December 31, 2025. The services for which these fees were paid included fees in connection with a license for accounting and business knowledge platform Viewpoint, for the fiscal year ended December 31, 2024, and professional fees in connection with SOC 1 reports, for the fiscal year ended December 31, 2025.
(e) Audit Committee's pre-approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X.
(1) The Registrant's Audit Committee is directly responsible for approving the services to be provided by the Auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to the Registrant by the Auditors;
(iii) pre-approval of all non-audit related services to be provided by the Auditors to the Registrant and the Service Affiliates where the non-audit services relate directly to the operations or financial reporting of the Registrant; and
(iv) establishment by the Audit Committee, if deemed necessary or appropriate, as an alternative to committee pre-approval of services to be provided by the Auditors, as required by paragraphs (ii) and (iii) above, of policies and procedures to permit such services to be pre-approved by other means, such as through establishment of guidelines or by action of a designated member or members of the committee; provided the policies and procedures are detailed as to the particular service and the committee is informed of each service and such policies and procedures do not include delegation of Audit Committee responsibilities, as contemplated under the Securities Exchange Act of 1934, to management; subject, in the case of (ii) through (iv), to any waivers, exceptions or exemptions that may be available under applicable law or rules.
(2) None of the services described in paragraphs (b) through (d) of this Item were performed in reliance on paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) Non-audit fees billed by the Auditor for services rendered to the Registrant and the Service Affiliates during the reporting period were $140,972 in December 31, 2024 and $358,404 in December 31, 2025.
(h) Yes. The Registrant's Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates, which were not pre-approved (not requiring pre-approval), is compatible with maintaining the Auditor's independence. All services provided by the Auditor to the Registrant or to the Service Affiliates, which were required to be pre-approved, were pre-approved as required.
(i) Not applicable.
(j) Not applicable
| ITEM 5. | AUDIT COMMITTEE OF LISTED REGISTRANTS. |
(a) The independent board members are acting as the registrant's audit committee as specified in Section 3(a)(58)(B) of the Exchange Act. The Audit Committee consists of the following Board members:
Ann Torre Bates
Terrence J. Checki
David W. Niemiec
J. Michael Luttig
Constantine D. Tseretopoulos
(b) Not applicable
| ITEM 6. | SCHEDULE OF INVESTMENTS. |
| (a) | Please see schedule of investments contained in the Financial Statements and Financial Highlights included under Item 1 of this Form N-CSR. |
| (b) | Not applicable. |
| ITEM 7. | FINANCIAL STATEMENTS AND FINANCIAL HIGHLIGHTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 9. | PROXY DISCLOSURES FOR OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| ITEM 10. | REMUNERATION PAID TO DIRECTORS, OFFICERS, AND OTHERS OF OPEN-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
| 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-CSR, as applicable.
| ITEM 12. | DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
FRANKLIN TEMPLETON EMERGING MARKETS EQUITY GROUP
Proxy Voting Policies & Procedures
An SEC Compliance Rule Policy and Procedures*
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).
* 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").
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, 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 guidelines, and TGEG's custom sustainability guidelines, where appropriate. 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 guidelines'' or Glass Lewis's US guidelines (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 may request 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 make their 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 issues throughout the year.
THE PROXY GROUP
The Proxy Group's '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.
(a)(1) As of February 28, 2026, the portfolio managers of the Fund are as follows:
Nicholas Chui, CFA, has been the lead portfolio manager of the Fund since May 2023. He joined Franklin Templeton in April 2023. Prior to joining Franklin Templeton, Mr. Chui was a portfolio manager focused on China and Asia equity strategies and a research pod leader at BlackRock.
Erik Mok, CFA, has been a portfolio manager of the Fund since 2020. He joined Franklin Templeton in 1998.
Effective April 30, 2025, Tony Sun has been added as a portfolio manager of the Fund.
(a)(2) This section reflects information about the portfolio managers as of the fiscal year ended December 31, 2025.
The following table shows the number of other accounts managed by each portfolio manager and the total assets in the accounts managed within each category:
| Name | Number of Other Registered Investment Companies Managed |
Assets of Other Registered Investment Companies Managed (x $1 million) |
Number of Other Pooled Investment Vehicles Managed1 |
Assets of Other Pooled Investment Vehicles Managed (x $1 million) 1 |
Number of Other Accounts Managed1 |
Assets of Other Accounts Managed (x $1 million) 1 |
| Nicholas Chui | 1 | 328.3 | 6 | 433.2 | 1 | 1,610.1 |
| Erik Mok | 1 | 328.3 | 8 | 2,334.7 | 4 | 1,894.8 |
| Tony Sun | 1 | 328.3 | 3 | 358.5 | 0 | 0 |
1. The various pooled investment vehicles and accounts listed are managed by a team of investment professionals. Accordingly, the individual manager listed would not be solely responsible for managing such listed amounts.
Portfolio managers that provide investment services to the Fund may also provide services to a variety of other investment products, including other funds, institutional accounts and private accounts. The advisory fees for some of such other products and accounts may be different than that charged to the Fund but does not include performance based compensation. This may result in fees that are higher (or lower) than the advisory fees paid by the Fund. As a matter of policy, each fund or account is managed solely for the benefit of the beneficial owners thereof. As discussed below, the separation of the trading execution function from the portfolio management function and the application of objectively based trade allocation procedures help to mitigate potential conflicts of interest that may arise as a result of the portfolio managers managing accounts with different advisory fees.
Conflicts. The management of multiple funds, including the Fund, and accounts may also give rise to potential conflicts of interest if the funds and other accounts have different objectives, benchmarks, time horizons, and fees as the portfolio manager must allocate his or her time and investment ideas across multiple funds and accounts. The investment manager seeks to manage such competing interests for the time and attention of portfolio managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment strategies that are used in connection with the management of the Fund. Accordingly, portfolio holdings, position sizes, and industry and sector exposures tend to be similar across similar portfolios, which may minimize the potential for conflicts of interest. As noted above, the separate management of the trade execution and valuation functions from the portfolio management process also helps to reduce potential conflicts of interest. However, securities selected for funds or accounts other than the Fund may outperform the securities selected for the Fund. Moreover, if a portfolio manager identifies a limited investment opportunity that may be suitable for more than one fund or other account, the Fund may not be able to take full advantage of that opportunity due to an allocation of that opportunity across all eligible funds and other accounts. The investment manager seeks to manage such potential conflicts by using procedures intended to provide a fair allocation of buy and sell opportunities among funds and other accounts.
The structure of a portfolio manager's compensation may give rise to potential conflicts of interest. A portfolio manager's base pay and bonus tend to increase with additional and more complex responsibilities that include increased assets under management. As such, there may be a relationship between a portfolio manager's marketing or sales efforts and his or her bonus.
Finally, the management of personal accounts by a portfolio manager may give rise to potential conflicts of interest. While the funds and the investment manager have adopted a code of ethics which they believe contains provisions designed to prevent a wide range of prohibited activities by portfolio managers and others with respect to their personal trading activities, there can be no assurance that the code of ethics addresses all individual conduct that could result in conflicts of interest.
The investment manager and the Fund have adopted certain compliance procedures that are designed to address these, and other, types of conflicts. However, there is no guarantee that such procedures will detect each and every situation where a conflict arises.
Compensation. The investment manager seeks to maintain a compensation program that is competitively positioned to attract, retain and motivate top-quality investment professionals. Portfolio managers receive a base salary, a cash incentive bonus opportunity, an equity compensation opportunity, and a benefits package. Portfolio manager compensation is reviewed annually, and the level of compensation is based on individual performance, the salary range for a portfolio manager's level of responsibility and Franklin Templeton guidelines. Portfolio managers are provided no financial incentive to favor one fund or account over another. Each portfolio manager's compensation consists of the following three elements:
Base salary Each portfolio manager is paid a base salary.
Annual bonus Annual bonuses are structured to align the interests of the portfolio manager with those of the Fund's shareholders. Each portfolio manager is eligible to receive an annual bonus. Bonuses generally are split between cash (50% to 65%) and restricted shares of Resources stock (17.5% to 25%) and mutual fund shares (17.5% to 25%). The deferred equity-based compensation is intended to build a vested interest of the portfolio manager in the financial performance of both Resources and mutual funds advised by the investment manager. The bonus plan is intended to provide a competitive level of annual bonus compensation that is tied to the portfolio manager achieving consistently strong investment performance, which aligns the financial incentives of the portfolio manager and Fund shareholders. The Chief Investment Officer of the investment manager and/or other officers of the investment manager, with responsibility for the Fund, have discretion in the granting of annual bonuses to portfolio managers in accordance with Franklin Templeton guidelines. The following factors are generally used in determining bonuses under the plan:
| • | Investment performance. Primary consideration is given to the historic investment performance over the 1, 3 and 5 preceding years of all accounts managed by the portfolio manager. The pre-tax performance of each fund managed is measured relative to a relevant peer group and/or applicable benchmark as appropriate. |
| • | Non-investment performance. The more qualitative contributions of the portfolio manager to the investment manager's business and the investment management team, including professional knowledge, productivity, responsiveness to client needs and communication, are evaluated in determining the amount of any bonus award. |
| • | Responsibilities. The characteristics and complexity of funds managed by the portfolio manager are factored in the investment manager's appraisal. |
Additional long-term equity-based compensation Portfolio managers may also be awarded restricted shares or units of Resources stock or restricted shares or units of one or more mutual funds. Awards of such deferred equity-based compensation typically vest over time, so as to create incentives to retain key talent.
Benefits Portfolio managers also participate in benefit plans and programs available generally to all employees of the investment manager.
Ownership of Fund shares. The investment manager has a policy of encouraging portfolio managers to invest in the funds they manage. Exceptions arise when, for example, a fund is closed to new investors or when tax considerations or jurisdictional constraints cause such an investment to be inappropriate for the portfolio manager. The following is the dollar range of Fund shares beneficially owned by the portfolio managers (such amounts may change from time to time):
| Portfolio Manager | Dollar Range of Fund Shares |
| Beneficially Owned | |
| Nicholas Chui | None |
| Erik Mok | None |
| Tony Sun | None |
Note: Because the portfolio manager is a foreign national, they do not hold shares in this U.S. registered fund, however they own shares in other similar Franklin Templeton funds managed by them, registered offshore and appropriate for foreign nationals.
| Item 14. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
| (d) | ||||
| Period |
(a) Total Number of Shares Purchased |
(b) Average Price Paid per Share |
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Program |
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs |
| January 1 - January 31, 2025 | - | - | - | 2,604,719 |
| February 1 - February 28, 2025 | - | - | - | 2,604,719 |
| March 1 - March 31, 2025 | 21,804 | $9.71 | 21,804 | 2,582,915 |
| April 1 - April 30, 2025 | 59,196 | $8.80 | 59,196 | 2,523,719 |
| May 1 - May 31, 2025 | - | - | - | 2,523,719 |
| June 1 - June 30, 2025 | - | - | - | 2,523,719 |
| July 1 - July 31, 2025 | - | - | - | 2,523,719 |
| August 1 - August 31, 2025 | - | - | - | 2,523,719 |
| September 1 - September 30, 2025 | - | - | - | 2,523,719 |
| October 1 - October 31, 2025 | 20,000 | $11.56 | 20,000 | 2,503,719 |
| November 1 - November 30, 2025 | 16,000 | $11.09 | 16,000 | 2,487,719 |
| December 1 - December 31, 2025 | 20,000 | $11.40 | 20,000 | 2,467,719 |
| Total | 137,000 | 137,000 |
| 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 Trustees that would require disclosure herein.
| ITEM 16. | CONTROLS AND PROCEDURES. |
| (a) | The Registrant's chief executive officer and principal financial officer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the "1940 Act")) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934. |
| (b) | During the period covered by this report, the Registrant transitioned to a new third-party service provider who performs certain accounting and administrative services for the Registrant that are subject to Franklin Templeton's oversight. |
| 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.
For the year ended December 31, 2025, 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 | $68,123 |
| Fees and/or compensation paid by the Fund for securities lending activities and related services | |
| Fees paid to Securities Lending Agent from revenue split | $3,420 |
| 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) | $25,200 |
| Other fees not included above | $321 |
| Aggregate fees/compensation paid by the Fund for securities lending activities | $28,941 |
| Net income from securities lending activities | $39,182 |
| ITEM 18. | RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION. |
| (a) | Not applicable. |
| (b) | Not applicable. |
| ITEM 19. | EXHIBITS. |
Exhibit 99.CODE ETH
Exhibit 99.CERT
Exhibit 99.906CERT
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, there unto duly authorized.
Templeton Dragon Fund, Inc.
| By: | /s/ Christopher Kings | |
| Christopher Kings | ||
| Chief Executive Officer - Finance and Administration | ||
| Date: | March 02, 2026 |
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: | March 02, 2026 | |
| By: | /s/ Jeffrey White | |
| Jeffrey White | ||
| Chief Financial Officer, Chief Accounting Officer and Treasurer | ||
| Date: | March 02, 2026 |
Templeton Dragon Fund Inc. published this content on March 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on March 04, 2026 at 21:49 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]