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 811-04892
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TEMPLETON GROWTH FUND, INC.
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 8/31
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Date of reporting period: 8/31/04
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ITEM 1. REPORTS TO STOCKHOLDERS
AUGUST 31, 2004
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ANNUAL REPORT AND SHAREHOLDER LETTER | GLOBAL
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TEMPLETON GROWTH FUND, INC.
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WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for edelivery at
franklintempleton.com. See inside for details.
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FRANKLIN [R] TEMPLETON [R]
INVESTMENTS
Franklin o TEMPLETON o Mutual Series
Franklin Templeton Investments
GAIN FROM OUR PERSPECTIVE
Franklin Templeton's distinct multi-manager structure combines the specialized
expertise of three world-class investment management groups--Franklin, Templeton
and Mutual Series.
SPECIALIZED EXPERTISE
Each of our portfolio management groups operates autonomously, relying on its
own research and staying true to the unique investment disciplines that underlie
its success.
FRANKLIN. Founded in 1947, Franklin is a recognized leader in fixed income
investing and also brings expertise in growth- and value-style U.S. equity
investing.
TEMPLETON. Founded in 1940, Templeton pioneered international investing and, in
1954, launched what has become the industry's oldest global fund. Today, with
research offices in over 25 countries, they offer investors the broadest global
reach in the industry.
MUTUAL SERIES. Founded in 1949, Mutual Series is dedicated to a unique style of
value investing, searching aggressively for opportunity among undervalued
stocks, arbitrage situations and distressed companies.
TRUE DIVERSIFICATION
Because our management groups work independently and adhere to distinctly
different investment approaches, Franklin, Templeton and Mutual Series funds
typically have a low overlap of securities. That's why our funds can be used to
build truly diversified portfolios covering every major asset class.
RELIABILITY YOU CAN TRUST
At Franklin Templeton Investments, we seek to consistently provide investors
with exceptional risk-adjusted returns over the long term, as well as the
reliable account services that have helped us become one of the most trusted
names in financial services.
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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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Not part of the annual report
Contents
SHAREHOLDER LETTER.......................... 1
SPECIAL FEATURE:
Templeton Growth Fund:
Half a Century of Experience
Working For You............................. 3
ANNUAL REPORT
Templeton Growth Fund....................... 8
Performance Summary ........................ 14
Your Fund's Expenses........................ 19
Financial Highlights and
Statement of Investments ................... 21
Financial Statements ....................... 31
Notes to Financial
Statements ................................. 35
Report of Independent
Registered Public
Accounting Firm ............................ 43
Tax Designation............................. 44
Board Members and Officers.................. 49
Shareholder Information..................... 55
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Annual Report
Templeton Growth Fund
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Growth Fund seeks long-term
capital growth. Under normal market conditions, the Fund invests mainly in the
equity securities of companies located anywhere in the world, including emerging
markets.
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PERFORMANCE DATA QUOTED REPRESENTS 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. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL
1-800/342-5236 FOR MOST RECENT MONTH-END PERFORMANCE.
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We are pleased to bring you Templeton Growth Fund's annual report for the fiscal
year ended August 31, 2004.
PERFORMANCE OVERVIEW
For the 12 months under review, Templeton Growth Fund - Class A posted a 16.14%
cumulative total return. The Fund's performance matched that of its benchmark,
the Morgan Stanley Capital International (MSCI) World Index, which also posted a
16.14% total return for the same period.1 In line with our long-term investment
strategy, we are pleased with our long-term results. For the 10-year period
ended August 31, 2004, Templeton Growth Fund - Class A delivered a 150.48%
cumulative total return, compared with the MSCI World Index's 92.14% cumulative
total return for the same period. 1 You can find more performance data in the
Performance Summary beginning on page 14.
ECONOMIC AND MARKET OVERVIEW
The global economy expanded rapidly over the past few quarters, led by strong
economic growth in the U.S. and China. As of June 30, 2004, U.S. gross domestic
product (GDP) had increased for 11 consecutive quarters. In China, GDP grew at a
strong 9.1% pace in 2003.2 Despite an effort by Chinese authorities to curb this
growth, China's economy expanded 9.7% in the first half of 2004, slightly more
moderate than the 9.9% rate reported for the fourth quarter of 2003. 2,3 The
continued economic strength reflected strong consumer and business confidence in
1. Source: Standard & Poor's Micropal. The MSCI World Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
market performance in global developed markets. The index is unmanaged and
includes reinvested dividends. One cannot invest directly in an index, nor is an
index representative of the Fund's portfolio. Past performance does not
guarantee future results.
2. Source: www.china.org.cn, "China GDP Speeds up; Pace Seen Continuing."
3. Source: Ministry of Foreign Affairs of the People's Republic of China,
www.china-embassy.org, "China's GDP rose 9.7 percent in the first half of 2004,"
7/16/04.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 26.
8 | Annual Report
China, the U.S., Japan and Europe. The 12-nation euro zone lagged other regions
in the current recovery. However, the European Central Bank recently projected
euro zone growth may be between 1.6% and 2.2% in 2004, compared with 0.5% in
2003. In addition, the outlook for emerging European economies improved, led by
double-digit growth in industrial production in Turkey and Poland and steady
growth in Russia. In Japan, the economy has been emerging from its decade-long
deflation. Japan's consumer and business confidence reached their highest levels
since 1991. In Latin America, although growth was slow relative to Asia and the
U.S., there was evidence of a rebound in industrial activity.
Regarding stock market performance, the global equity rally that began in March
2003 extended into the early part of this year propelled by strong liquidity,
reasonably solid economic growth and higher corporate earnings. However, by the
second quarter investor focus shifted to the challenges of rising commodity
prices, especially oil, Iraqi unrest and a potential slowdown in the Chinese
economy. The prospect of higher interest rates also damaged investor confidence.
These factors hindered global equity performance, and consequently most stock
markets traded within a relatively narrow range in the first eight months of
2004. However, stock market performance in aggregate was positive over the
fiscal year. The MSCI All Country World Index's total return was 16.34% for the
year ended August 31, 2004. 4
INVESTMENT STRATEGY
Our investment strategy employs a bottom-up, value-oriented, long-term approach.
We focus on the market price of a company's securities relative to our
evaluation of the company's long-term earnings, asset value and cash flow
potential. As we look worldwide, we consider specific companies, rather than
sectors or countries, while doing in-depth research to construct a bargain list
from which we buy. Before we make a purchase, we look at the company's potential
for earnings and growth over a five-year horizon.
4. Source: Standard & Poor's Micropal. The MSCI All Country World Index is a
free float-adjusted, market capitalization-weighted index designed to measure
equity market performance in global developed and emerging markets.
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets as of 8/31/04
Europe 48.1%
North America 26.3%
Asia 16.1%
Australia & New Zealand 1.0%
Latin America 1.0%
Middle East & Africa 0.4%
Short-Term Investments & Other Net Assets 7.1%
Annual Report | 9
TOP 10 COUNTRIES
Based on Equity Securities
8/31/04
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% OF TOTAL
NET ASSETS
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U.S. 21.5%
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U.K. 20.4%
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Japan 7.1%
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Switzerland 6.0%
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Netherlands 4.5%
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Germany 3.8%
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South Korea 3.7%
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Hong Kong 3.6%
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Canada 3.1%
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France 2.9%
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MANAGER'S DISCUSSION
As in past reporting periods, our bottom-up investment strategy for the Fund
resulted in a geographic and industry mix that was very different than the
benchmark MSCI World Index. In particular, we held a substantial overweighted
exposure to the U.K. compared with the benchmark. In contrast, U.S. exposure was
well below the benchmark. Both factors contributed positively to Fund
performance during the year under review. In the U.K., the Fund's holdings in
Reuters Group, the country's top information services provider, and BHP
Billiton, one of the world's largest mining and oil resources companies, aided
Fund performance. We sold the position in Reuters in the latter half of the
Fund's fiscal year, while reducing substantially the exposure to BHP as the
shares appreciated in value.
We initiated new positions in a number of U.K.-listed stocks that fit our
investment strategy. We believe these stocks had lagged the recovery in global
markets for the 18 months through period-end. In particular, in June 2004 we
began purchasing shares of British Sky Broadcasting Group (Sky), the U.K.'s most
successful pay television broadcaster. The company announced a major strategy
shift in early August 2004, one that entailed higher investment spending and
lower short-term profitability, with the aim of delivering better long-term
subscriber growth and, ultimately, greater value to its shareholders. Sky's
stock price fell 19% in one day as many investors sold the shares. We concluded
the decline represented an opportunity to increase the Fund's exposure to what
we considered a strong franchise at an even more attractive price. Although Sky
had a negative impact on the Fund's overall returns during the year under
review, it is a good example of a hallmark of our investment philosophy: buy for
the long term, during times of short-term pessimism.
Also in the U.K., we invested in Vodafone Group, the world's largest mobile
telecommunications operator in terms of revenues, and second largest in terms of
wireless phone service subscribers. We started purchasing Vodafone shares in May
2004 and completed purchases in July 2004 -- at prices 63% to 70% below the
company's peak share price in March 2000. In 2000, the bubble in technology and
telecommunications stock valuations was at its peak, and market expectations for
Vodafone were simply far too ambitious. In contrast, in 2004 we believed
expectations were too low. We found Vodafone offered an excellent brand name, a
very strong balance sheet and a solid management team. Furthermore, the company
generates positive cash flow, another important consideration in our bottom-up
analysis. We are encouraged when we find high-quality businesses such as
Vodafone and Sky available at prices we believe are very attractive.
10 | Annual Report
Two of the largest portfolio holdings in the U.K. were in the oil and gas
sector. BP and Shell Transport & Trading offered attractive dividend yields and
were trading at levels we believed did not fully reflect the strength of oil
prices in recent months. We believe it is very challenging to forecast the
short-term direction of any commodity consistently, and we did not make these
investments on the basis of any strongly held view of where oil prices will be
six months hence. Rather, consistent with our strategy, we believe both stocks
have attractive, long-life assets that can continue to generate surplus cash
flow at current or even lower oil prices.
The Fund had an average weighting of less than 22% of its total net assets in
U.S. securities during the year under review, compared with the benchmark
index's weighting of more than 55%. This relatively low exposure to the
benchmark reflected the challenges we found in identifying sufficient numbers of
undervalued U.S.-listed stocks during the 12-month reporting period. Frequently,
we were able to find more attractive opportunities elsewhere in the world. There
were exceptions: for example, AT&T Wireless Services was the Fund's
top-performing U.S. stock by a considerable margin this fiscal year, largely the
result of a bid for the company by Cingular Wireless in February 2004. Boeing,
the world's largest aerospace company, was another strong performer, as it
recovered from the market's excessive concerns about the airline industry's
prospects and negative publicity surrounding its defense business. Elsewhere,
the Fund's exposure to the capital goods sector increased with our purchase of
shares in Raytheon, the U.S. defense electronics contractor.
Our U.S.-listed holdings of supermarket chain Albertson's and local phone
service provider SBC Communications were sold by period-end. Both companies
struggled in highly competitive markets that faced mounting structural
challenges. Consistent with our strategy, we considered it appropriate to reduce
exposure to these and reinvest the proceeds in other opportunities where we
believed the balance between risk and reward appeared more favorable and
valuations equally attractive.
The Fund started its fiscal year with a lower-than-index exposure to Japan.
Although this increased by a number of purchases through period-end, the low
weighting was still a hindrance to our overall performance compared with the
benchmark index. One notable purchase was Takeda Pharmaceutical. Takeda is
Japan's largest drug company. It traded at the low end of the range compared
with its major global pharmaceutical company peer group, despite considerable
success in new drug development and its transition from a Japanese to a global
stage. By period-end, the US$35 billion company held close to US$11 billion of
net cash and equivalents on its balance sheet and generated free cash of nearly
US$2 billion per annum.
Looking at the Fund from an industry perspective, a number of features stood
out. First, the Fund's low exposure to semiconductor and semiconductor equipment
TOP 10 EQUITY HOLDINGS
8/31/04
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COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
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Shell Transport & Trading Co. PLC 2.1%
OIL & GAS, U.K.
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GlaxoSmithKline PLC 2.1%
PHARMACEUTICALS, U.K.
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AT&T Wireless Services Inc. 2.0%
WIRELESS TELECOMMUNICATION
SERVICES, U.S.
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BP PLC 1.8%
OIL & GAS, U.K.
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E.ON AG 1.8%
ELECTRIC UTILITIES, GERMANY
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Eni SpA 1.5%
OIL & GAS, ITALY
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Cheung Kong Holdings Ltd. 1.5%
REAL ESTATE, HONG KONG
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BCE Inc. 1.5%
DIVERSIFIED TELECOMMUNICATION
SERVICES, CANADA
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National Grid Transco PLC 1.4%
MULTI-UTILITIES & UNREGULATED
POWER, U.K.
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Nestle SA 1.4%
FOOD PRODUCTS, SWITZERLAND
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Annual Report | 11
industry stocks was a positive factor for total returns. We avoided a sector
that declined more than 22% in value over the year, while enjoying exposure to
one of the few stocks that actually rose in value -- Samsung Electronics. In
general, the Fund retained a low exposure to technology-related stocks because
we considered the sector's valuations too high. However, we took advantage of
the sector's recent weakness and bought two technology companies in the hard
disk drive manufacturing industry. The industry has consolidated in recent years
and five producers now control about 80% of supply. Long-term demand growth is
very attractive, due to increasing storage demands from consumers and
businesses, but in the short term we believe the major producers have managed
inventories poorly. Seagate Technology and Maxtor both fell around 60% in value
between October 2003 and May 2004, presenting an opportunity for us to gain
exposure to what we considered two attractive businesses at a point when
short-term pessimism was extreme. By period-end, both stocks were trading at
lower prices than our purchase prices, and had a negative impact on Fund
performance over this short run.
Second, our increased pharmaceutical sector exposure in recent years had a
positive effect on total returns this reporting period. Most notable was the
acquisition of Aventis, the French drug company, by its local rival,
Sanofi-Synthelabo. Following our strategy, we believed the merged company,
Sanofi-Aventis, was an attractive investment, and the Fund continued to hold the
stock at period-end.
Offsetting these gains, our low exposure to the commercial banking and insurance
sectors had a negative impact on our overall results, despite the positive
impact of a bid for U.K. retail bank Abbey National by Spain's Banco Santander.
We increased the portfolio's weighting in banks largely through the purchase of
Royal Bank of Scotland shares. We have met the management at Royal Bank of
Scotland on a number of occasions. In our opinion, Royal Bank is one of Europe's
best-managed banks, supported by one of the best growth profiles in its field,
but at the time of purchase its underlying stock traded at one of the lowest
valuations in the European banking sector. In April 2004 Royal Bank announced
the purchase of Charter One, a Michigan-based regional bank, for $10.5 billion.
The Fund bought stock at a discount in an equity offering to finance the deal.
The Fund's overweighted exposure to the materials sector versus the benchmark,
mentioned one year ago, remained in place this fiscal year, but the composition
changed. Some holdings in the metals and mining sector were sold by period-end,
including AK Steel Holding in the U.S. (completely sold), BHP Billiton in the
U.K. (partially sold), Cia Vale do Rio Doce in Brazil (completely sold), and
POSCO of South Korea (completely sold). All these companies benefited from
strong demand for basic commodities, especially from China, which in turn fueled
large price
12 | Annual Report
increases for steel and iron ore. Offsetting these sales, we added to the Fund's
holdings in paper producers Stora Enso and UPM-Kymmene, and in September 2003
built up a new holding in Syngenta, the Swiss crop protection products and seeds
producer.
As of period-end, the Fund held 7.1% of total net assets in short-term
investments and other net assets. Given the rise in global equity markets, this
was a drag on the Fund's performance.
Thank you for investing in Templeton Growth Fund. We welcome your comments and
look forward to serving your future investment needs.
[PHOTO OMITTED]
/S/SIGNATURE
Murdo Murchison, CFA
Portfolio Manager
Templeton Growth Fund
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF AUGUST 31, 2004, 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.
Annual Report | 13
Performance Summary as of 8/31/04
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table and graphs do not reflect any taxes
due on Fund dividends, capital gain distributions, if any, or any realized gains
on the sale of Fund shares. Total return reflects the Fund's dividend income,
capital gain distributions, if any, and any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
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CLASS A CHANGE 8/31/04 8/31/03
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Net Asset Value (NAV) +$2.49 $21.03 $18.54
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DISTRIBUTIONS (9/1/03-8/31/04)
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DIVIDEND INCOME $0.4523
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CLASS B CHANGE 8/31/04 8/31/03
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Net Asset Value (NAV) +$2.40 $20.64 $18.24
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DISTRIBUTIONS (9/1/03-8/31/04)
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Dividend Income $0.3477
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CLASS C CHANGE 8/31/04 8/31/03
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Net Asset Value (NAV) +$2.41 $20.56 $18.15
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DISTRIBUTIONS (9/1/03-8/31/04)
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Dividend Income $0.3323
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CLASS R CHANGE 8/31/04 8/31/03
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Net Asset Value (NAV) +$2.46 $20.90 $18.44
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DISTRIBUTIONS (9/1/03-8/31/04)
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Dividend Income $0.4261
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ADVISOR CLASS CHANGE 8/31/04 8/31/03
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Net Asset Value (NAV) +$2.50 $21.07 $18.57
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DISTRIBUTIONS (9/1/03-8/31/04)
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Dividend Income $0.4954
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14 | Annual Report
Performance Summary (CONTINUED)
PERFORMANCE
CLASS A: 5.75% MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES
CHARGE (CDSC) DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER;
CLASS C: 1% CDSC IN FIRST YEAR ONLY; CLASS R: 1% CDSC FOR FIRST 18 MONTHS ONLY.
CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES.
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CLASS A 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 16.14% 36.63% 150.48%
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Average Annual Total Return 2 9.47% 5.19% 8.97%
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Value of $10,000 Investment 3 $10,947 $12,879 $23,603
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Avg. Ann. Total Return (9/30/04) 4 11.78% 6.47% 9.48%
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CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return 1 15.27% 31.63% 56.48%
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Average Annual Total Return 2 11.27% 5.33% 8.10%
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Value of $10,000 Investment 3 $11,127 $12,963 $15,548
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Avg. Ann. Total Return (9/30/04) 4 13.62% 6.62% 8.42%
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CLASS C 1-YEAR 5-YEAR INCEPTION (5/1/95)
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Cumulative Total Return 1 15.30% 31.66% 131.25%
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Average Annual Total Return 2 14.30% 5.66% 9.39%
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Value of $10,000 Investment 3 $11,430 $13,166 $23,125
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Avg. Ann. Total Return (9/30/04) 4 16.67% 6.93% 9.58%
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CLASS R 1-YEAR INCEPTION (1/1/02)
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Cumulative Total Return 1 15.85% 21.08%
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Average Annual Total Return 2 14.85% 7.45%
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Value of $10,000 Investment 3 $11,485 $12,108
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Avg. Ann. Total Return (9/30/04) 4 17.24% 8.15%
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ADVISOR CLASS 5 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 16.43% 38.38% 157.60%
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Average Annual Total Return 2 16.43% 6.71% 9.92%
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Value of $10,000 Investment 3 $11,643 $13,838 $25,760
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Avg. Ann. Total Return (9/30/04) 4 18.80% 8.00% 10.44%
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PERFORMANCE DATA QUOTED REPRESENTS 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.
FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.
Annual Report | 15
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes any current, 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. The Consumer Price Index (CPI), calculated by the U.S.
Bureau of Labor Statistics, is a commonly used measure of the inflation rate.
AVERAGE ANNUAL TOTAL RETURN
- ---------------------------------------
CLASS A 8/31/04
- ---------------------------------------
1-Year 9.47%
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5-Year 5.19%
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10-Year 8.97%
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CLASS A (9/1/94-8/31/04)
[GRAPHIC OMITTED]
[EDGAR REPRESENTATION OF DATA POINTS USE IN PRINTED GRAPHIC AS FOLLOWS:]
The following line graph compares the performance of Templeton Growth Fund -
Class A with that of the MSCI World Index 6 and the CPI 6 based on a $10,000
investment from 9/1/94 to 8/31/04.
Templeton Growth Fund -Class A MSCI World Index CPI
9/1/94 $9,423 $10,000 $10,000
9/30/94 $9,209 $9,739 $10,027
10/31/94 $9,294 $10,018 $10,034
11/30/94 $8,912 $9,585 $10,047
12/31/94 $8,833 $9,680 $10,047
1/31/95 $8,763 $9,536 $10,087
2/28/95 $9,024 $9,677 $10,128
3/31/95 $9,193 $10,145 $10,161
4/30/95 $9,514 $10,501 $10,195
5/31/95 $9,797 $10,593 $10,215
6/30/95 $9,938 $10,592 $10,235
7/31/95 $10,385 $11,124 $10,235
8/31/95 $10,319 $10,878 $10,262
9/30/95 $10,553 $11,197 $10,282
10/31/95 $10,216 $11,023 $10,315
11/30/95 $10,449 $11,407 $10,309
12/31/95 $10,585 $11,743 $10,302
1/31/96 $10,964 $11,958 $10,362
2/29/96 $11,000 $12,033 $10,396
3/31/96 $11,128 $12,235 $10,450
4/30/96 $11,378 $12,525 $10,490
5/31/96 $11,513 $12,538 $10,510
6/30/96 $11,525 $12,604 $10,517
7/31/96 $11,153 $12,161 $10,537
8/31/96 $11,439 $12,303 $10,557
9/30/96 $11,671 $12,787 $10,591
10/31/96 $11,862 $12,878 $10,624
11/30/96 $12,507 $13,602 $10,644
12/31/96 $12,761 $13,387 $10,644
1/31/97 $13,068 $13,550 $10,678
2/28/97 $13,172 $13,708 $10,711
3/31/97 $13,113 $13,440 $10,738
4/30/97 $13,407 $13,881 $10,752
5/31/97 $14,073 $14,741 $10,745
6/30/97 $14,635 $15,478 $10,758
7/31/97 $15,190 $16,193 $10,772
8/31/97 $14,674 $15,112 $10,792
9/30/97 $15,621 $15,936 $10,819
10/31/97 $14,600 $15,100 $10,846
11/30/97 $14,644 $15,369 $10,839
12/31/97 $14,826 $15,559 $10,826
1/31/98 $14,849 $15,995 $10,846
2/28/98 $15,666 $17,080 $10,866
3/31/98 $16,362 $17,803 $10,886
4/30/98 $16,446 $17,980 $10,906
5/31/98 $15,949 $17,757 $10,926
6/30/98 $15,491 $18,181 $10,940
7/31/98 $15,124 $18,155 $10,953
8/31/98 $12,823 $15,736 $10,966
9/30/98 $13,144 $16,017 $10,980
10/31/98 $14,264 $17,468 $11,007
11/30/98 $14,776 $18,510 $11,007
12/31/98 $14,458 $19,417 $11,000
1/31/99 $14,352 $19,845 $11,027
2/28/99 $14,246 $19,320 $11,040
3/31/99 $15,244 $20,127 $11,074
4/30/99 $17,134 $20,923 $11,154
5/31/99 $16,516 $20,161 $11,154
6/30/99 $17,284 $21,104 $11,154
7/31/99 $17,267 $21,044 $11,188
8/31/99 $17,276 $21,010 $11,215
9/30/99 $16,657 $20,809 $11,268
10/31/99 $16,672 $21,893 $11,289
11/30/99 $17,411 $22,512 $11,295
12/31/99 $18,858 $24,337 $11,295
1/31/00 $17,564 $22,946 $11,329
2/29/00 $16,969 $23,011 $11,396
3/31/00 $18,197 $24,604 $11,490
4/30/00 $17,961 $23,567 $11,497
5/31/00 $18,292 $22,973 $11,510
6/30/00 $18,386 $23,750 $11,570
7/31/00 $18,263 $23,084 $11,597
8/31/00 $18,594 $23,838 $11,597
9/30/00 $18,027 $22,573 $11,658
10/31/00 $18,191 $22,198 $11,678
11/30/00 $18,079 $20,853 $11,685
12/31/00 $19,186 $21,193 $11,678
1/31/01 $19,447 $21,605 $11,752
2/28/01 $19,186 $19,781 $11,799
3/31/01 $18,289 $18,486 $11,826
4/30/01 $19,030 $19,857 $11,872
5/31/01 $19,405 $19,610 $11,926
6/30/01 $19,051 $18,998 $11,946
7/31/01 $18,978 $18,748 $11,913
8/31/01 $18,894 $17,852 $11,913
9/30/01 $17,288 $16,281 $11,966
10/31/01 $17,858 $16,595 $11,926
11/30/01 $18,986 $17,579 $11,906
12/31/01 $19,290 $17,692 $11,859
1/31/02 $18,872 $17,158 $11,886
2/28/02 $19,247 $17,012 $11,933
3/31/02 $19,965 $17,768 $12,000
4/30/02 $20,072 $17,171 $12,067
5/31/02 $20,490 $17,210 $12,067
6/30/02 $19,654 $16,170 $12,074
7/31/02 $18,315 $14,809 $12,087
8/31/02 $18,325 $14,840 $12,128
9/30/02 $16,321 $13,211 $12,148
10/31/02 $17,158 $14,188 $12,168
11/30/02 $18,282 $14,956 $12,168
12/31/02 $17,462 $14,235 $12,141
1/31/03 $17,111 $13,804 $12,195
2/28/03 $16,530 $13,568 $12,289
3/31/03 $16,158 $13,531 $12,362
4/30/03 $17,681 $14,739 $12,336
5/31/03 $19,073 $15,589 $12,315
6/30/03 $19,424 $15,864 $12,329
7/31/03 $19,863 $16,190 $12,342
8/31/03 $20,323 $16,543 $12,389
9/30/03 $20,389 $16,648 $12,430
10/31/03 $21,258 $17,639 $12,416
11/30/03 $21,783 $17,912 $12,383
12/31/03 $23,199 $19,040 $12,369
1/31/04 $23,681 $19,350 $12,430
2/29/04 $24,276 $19,681 $12,497
3/31/04 $23,906 $19,558 $12,577
4/30/04 $23,693 $19,168 $12,617
5/31/04 $23,827 $19,356 $12,691
6/30/04 $24,254 $19,762 $12,732
7/31/04 $23,491 $19,122 $12,711
8/31/04 $23,603 $19,214 $12,718
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS B 8/31/04
- --------------------------------------
1-Year 11.27%
- --------------------------------------
5-Year 5.33%
- --------------------------------------
Since Inception (1/1/99) 8.10%
- --------------------------------------
CLASS B (1/1/99-8/31/04)
[GRAPHIC OMITTED]
[EDGAR REPRESENTATION OF DATA POINTS USE IN PRINTED GRAPHIC AS FOLLOWS:]
The following line graph compares the performance of Templeton Growth Fund -
Class B with that of the MSCI World Index 6 and the CPI 6 based on a $10,000
investment from 1/1/99 to 8/31/04.
Templeton Growth Fund- Class B MSCI World Index CPI
1/1/99 $10,000 $10,000 $10,000
1/31/99 $9,927 $10,220 $10,024
2/28/99 $9,847 $9,950 $10,037
3/31/99 $10,525 $10,366 $10,067
4/30/99 $11,820 $10,776 $10,140
5/31/99 $11,387 $10,383 $10,140
6/30/99 $11,906 $10,869 $10,140
7/31/99 $11,888 $10,838 $10,171
8/31/99 $11,888 $10,820 $10,195
9/30/99 $11,454 $10,717 $10,244
10/31/99 $11,463 $11,275 $10,262
11/30/99 $11,962 $11,594 $10,268
12/31/99 $12,945 $12,534 $10,268
1/31/00 $12,044 $11,818 $10,299
2/29/00 $11,633 $11,851 $10,360
3/31/00 $12,468 $12,672 $10,445
4/30/00 $12,299 $12,137 $10,451
5/31/00 $12,521 $11,831 $10,464
6/30/00 $12,579 $12,231 $10,519
7/31/00 $12,481 $11,889 $10,543
8/31/00 $12,697 $12,277 $10,543
9/30/00 $12,305 $11,626 $10,598
10/31/00 $12,408 $11,432 $10,616
11/30/00 $12,324 $10,740 $10,622
12/31/00 $13,070 $10,915 $10,616
1/31/01 $13,242 $11,127 $10,683
2/28/01 $13,056 $10,188 $10,726
3/31/01 $12,439 $9,520 $10,750
4/30/01 $12,934 $10,227 $10,793
5/31/01 $13,185 $10,100 $10,842
6/30/01 $12,926 $9,785 $10,860
7/31/01 $12,876 $9,656 $10,830
8/31/01 $12,812 $9,194 $10,830
9/30/01 $11,715 $8,385 $10,879
10/31/01 $12,091 $8,547 $10,842
11/30/01 $12,848 $9,054 $10,824
12/31/01 $13,049 $9,112 $10,781
1/31/02 $12,749 $8,837 $10,805
2/28/02 $12,998 $8,761 $10,848
3/31/02 $13,474 $9,151 $10,909
4/30/02 $13,547 $8,843 $10,970
5/31/02 $13,818 $8,864 $10,970
6/30/02 $13,240 $8,328 $10,976
7/31/02 $12,332 $7,627 $10,988
8/31/02 $12,332 $7,643 $11,025
9/30/02 $10,978 $6,804 $11,043
10/31/02 $11,534 $7,307 $11,062
11/30/02 $12,276 $7,703 $11,062
12/31/02 $11,722 $7,331 $11,037
1/31/03 $11,484 $7,110 $11,086
2/28/03 $11,082 $6,988 $11,171
3/31/03 $10,821 $6,969 $11,239
4/30/03 $11,841 $7,591 $11,214
5/31/03 $12,764 $8,029 $11,196
6/30/03 $12,987 $8,170 $11,208
7/31/03 $13,277 $8,338 $11,220
8/31/03 $13,575 $8,520 $11,263
9/30/03 $13,612 $8,574 $11,300
10/31/03 $14,179 $9,085 $11,287
11/30/03 $14,519 $9,225 $11,257
12/31/03 $15,450 $9,806 $11,245
1/31/04 $15,769 $9,966 $11,300
2/29/04 $16,155 $10,136 $11,361
3/31/04 $15,898 $10,073 $11,434
4/30/04 $15,746 $9,872 $11,470
5/31/04 $15,822 $9,969 $11,538
6/30/04 $16,102 $10,178 $11,574
7/31/04 $15,579 $9,848 $11,556
8/31/04 $15,548 $9,895 $11,562
16 | Annual Report
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS C 8/31/04
- --------------------------------------
1-Year 14.30%
- --------------------------------------
5-Year 5.66%
- --------------------------------------
Since Inception (5/1/95) 9.39%
- --------------------------------------
CLASS C (5/1/95-8/31/04)
[GRAPHIC OMITTED]
[EDGAR REPRESENTATION OF DATA POINTS USE IN PRINTED GRAPHIC AS FOLLOWS:]
The following line graph compares the performance of Templeton Growth Fund -
Class C with that of the MSCI World Index 6 and the CPI 6 based on a $10,000
investment from 5/1/95 to 8/31/04.
Templeton Growth Fund- Class C MSCI World Index CPI
5/1/95 $10,000 $10,000 $10,000
5/31/95 $10,292 $10,087 $10,020
6/30/95 $10,435 $10,086 $10,039
7/31/95 $10,899 $10,593 $10,039
8/31/95 $10,819 $10,359 $10,066
9/30/95 $11,053 $10,663 $10,086
10/31/95 $10,697 $10,497 $10,118
11/30/95 $10,929 $10,863 $10,112
12/31/95 $11,073 $11,183 $10,105
1/31/96 $11,457 $11,387 $10,165
2/29/96 $11,489 $11,459 $10,197
3/31/96 $11,611 $11,651 $10,250
4/30/96 $11,867 $11,927 $10,290
5/31/96 $11,995 $11,940 $10,309
6/30/96 $12,002 $12,002 $10,316
7/31/96 $11,611 $11,580 $10,336
8/31/96 $11,899 $11,716 $10,355
9/30/96 $12,130 $12,177 $10,388
10/31/96 $12,316 $12,264 $10,421
11/30/96 $12,979 $12,953 $10,441
12/31/96 $13,242 $12,748 $10,441
1/31/97 $13,550 $12,904 $10,474
2/28/97 $13,645 $13,054 $10,507
3/31/97 $13,577 $12,798 $10,533
4/30/97 $13,871 $13,219 $10,546
5/31/97 $14,554 $14,037 $10,540
6/30/97 $15,127 $14,740 $10,553
7/31/97 $15,687 $15,421 $10,566
8/31/97 $15,148 $14,391 $10,586
9/30/97 $16,111 $15,176 $10,612
10/31/97 $15,051 $14,379 $10,639
11/30/97 $15,082 $14,636 $10,632
12/31/97 $15,264 $14,817 $10,619
1/31/98 $15,280 $15,232 $10,639
2/28/98 $16,108 $16,265 $10,658
3/31/98 $16,809 $16,954 $10,678
4/30/98 $16,888 $17,122 $10,698
5/31/98 $16,363 $16,910 $10,718
6/30/98 $15,885 $17,314 $10,731
7/31/98 $15,495 $17,289 $10,744
8/31/98 $13,138 $14,986 $10,757
9/30/98 $13,457 $15,253 $10,770
10/31/98 $14,593 $16,635 $10,797
11/30/98 $15,106 $17,627 $10,797
12/31/98 $14,776 $18,490 $10,790
1/31/99 $14,657 $18,898 $10,816
2/28/99 $14,547 $18,398 $10,829
3/31/99 $15,547 $19,166 $10,862
4/30/99 $17,464 $19,925 $10,941
5/31/99 $16,822 $19,199 $10,941
6/30/99 $17,592 $20,097 $10,941
7/31/99 $17,574 $20,040 $10,974
8/31/99 $17,564 $20,007 $11,001
9/30/99 $16,932 $19,816 $11,053
10/31/99 $16,935 $20,849 $11,073
11/30/99 $17,670 $21,438 $11,080
12/31/99 $19,127 $23,176 $11,080
1/31/00 $17,804 $21,851 $11,113
2/29/00 $17,181 $21,913 $11,178
3/31/00 $18,427 $23,430 $11,271
4/30/00 $18,174 $22,442 $11,277
5/31/00 $18,495 $21,877 $11,290
6/30/00 $18,582 $22,616 $11,350
7/31/00 $18,446 $21,983 $11,376
8/31/00 $18,758 $22,700 $11,376
9/30/00 $18,174 $21,496 $11,435
10/31/00 $18,337 $21,139 $11,455
11/30/00 $18,213 $19,858 $11,461
12/31/00 $19,310 $20,182 $11,455
1/31/01 $19,567 $20,574 $11,527
2/28/01 $19,289 $18,837 $11,573
3/31/01 $18,382 $17,604 $11,600
4/30/01 $19,108 $18,909 $11,646
5/31/01 $19,481 $18,674 $11,698
6/30/01 $19,108 $18,092 $11,718
7/31/01 $19,022 $17,854 $11,685
8/31/01 $18,926 $17,000 $11,685
9/30/01 $17,304 $15,505 $11,738
10/31/01 $17,864 $15,803 $11,698
11/30/01 $18,990 $16,740 $11,679
12/31/01 $19,276 $16,848 $11,633
1/31/02 $18,840 $16,339 $11,659
2/28/02 $19,210 $16,200 $11,705
3/31/02 $19,907 $16,920 $11,771
4/30/02 $20,016 $16,351 $11,837
5/31/02 $20,419 $16,389 $11,837
6/30/02 $19,559 $15,398 $11,843
7/31/02 $18,220 $14,102 $11,856
8/31/02 $18,220 $14,132 $11,896
9/30/02 $16,217 $12,581 $11,916
10/31/02 $17,040 $13,511 $11,935
11/30/02 $18,142 $14,243 $11,935
12/31/02 $17,316 $13,555 $11,909
1/31/03 $16,962 $13,146 $11,962
2/28/03 $16,376 $12,921 $12,054
3/31/03 $15,990 $12,885 $12,126
4/30/03 $17,492 $14,036 $12,100
5/31/03 $18,863 $14,845 $12,080
6/30/03 $19,194 $15,108 $12,093
7/31/03 $19,614 $15,417 $12,107
8/31/03 $20,056 $15,754 $12,153
9/30/03 $20,111 $15,854 $12,192
10/31/03 $20,948 $16,798 $12,179
11/30/03 $21,452 $17,058 $12,146
12/31/03 $22,833 $18,132 $12,133
1/31/04 $23,294 $18,427 $12,192
2/29/04 $23,879 $18,742 $12,258
3/31/04 $23,496 $18,625 $12,337
4/30/04 $23,272 $18,254 $12,377
5/31/04 $23,384 $18,433 $12,449
6/30/04 $23,789 $18,819 $12,488
7/31/04 $23,024 $18,210 $12,469
8/31/04 $23,125 $18,297 $12,475
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
CLASS R 8/31/04
- --------------------------------------
1-Year 14.85%
- --------------------------------------
Since Inception (1/1/02) 7.45%
- --------------------------------------
CLASS R (1/1/02-8/31/04)
[GRAPHIC OMITTED]
[EDGAR REPRESENTATION OF DATA POINTS USE IN PRINTED GRAPHIC AS FOLLOWS:]
The following line graph compares the performance of Templeton Growth Fund -
Class R with that of the MSCI World Index 6 and the CPI 6 based on a $10,000
investment from 1/1/02 to 8/31/04.
Templeton Growth Fund - R Class MSCI World Index CPI
1/1/02 $10,000 $10,000 $10,000
1/31/02 $9,745 $9,698 $10,023
2/28/02 $9,945 $9,616 $10,062
3/31/02 $10,310 $10,043 $10,119
4/30/02 $10,365 $9,705 $10,175
5/31/02 $10,581 $9,728 $10,175
6/30/02 $10,144 $9,140 $10,181
7/31/02 $9,446 $8,370 $10,192
8/31/02 $9,452 $8,388 $10,226
9/30/02 $8,416 $7,467 $10,243
10/31/02 $8,847 $8,020 $10,260
11/30/02 $9,417 $8,454 $10,260
12/31/02 $8,995 $8,046 $10,238
1/31/03 $8,813 $7,803 $10,283
2/28/03 $8,513 $7,669 $10,362
3/31/03 $8,314 $7,648 $10,424
4/30/03 $9,103 $8,331 $10,402
5/31/03 $9,816 $8,811 $10,385
6/30/03 $9,993 $8,967 $10,396
7/31/03 $10,219 $9,151 $10,407
8/31/03 $10,452 $9,351 $10,447
9/30/03 $10,486 $9,410 $10,481
10/31/03 $10,928 $9,970 $10,470
11/30/03 $11,193 $10,125 $10,441
12/31/03 $11,922 $10,762 $10,430
1/31/04 $12,166 $10,937 $10,481
2/29/04 $12,473 $11,124 $10,538
3/31/04 $12,282 $11,055 $10,606
4/30/04 $12,166 $10,835 $10,640
5/31/04 $12,229 $10,941 $10,702
6/30/04 $12,449 $11,170 $10,736
7/31/04 $12,056 $10,808 $10,719
8/31/04 $12,108 $10,860 $10,724
Annual Report | 17
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- --------------------------------------
ADVISOR CLASS 5 8/31/04
- --------------------------------------
1-Year 16.43%
- --------------------------------------
5-Year 6.71%
- --------------------------------------
10-Year 9.92%
- --------------------------------------
ADVISOR CLASS (9/1/94-8/31/04)
[GRAPHIC OMITTED]
[EDGAR REPRESENTATION OF DATA POINTS USE IN PRINTED GRAPHIC AS FOLLOWS:]
The following line graph compares the performance of Templeton Growth Fund -
Advisor Class 5 with that of the MSCI World Index 6 and the CPI 6 based on a
$10,000 investment from 9/1/94 to 8/31/04.
Templeton Growth Fund - Advisor Class MSCI World Index CPI
9/1/94 $10,000 $10,000 $10,000
9/30/94 $9,773 $9,739 $10,027
10/31/94 $9,863 $10,018 $10,034
11/30/94 $9,457 $9,585 $10,047
12/31/94 $9,374 $9,680 $10,047
1/31/95 $9,299 $9,536 $10,087
2/28/95 $9,576 $9,677 $10,128
3/31/95 $9,755 $10,145 $10,161
4/30/95 $10,096 $10,501 $10,195
5/31/95 $10,397 $10,593 $10,215
6/30/95 $10,547 $10,592 $10,235
7/31/95 $11,020 $11,124 $10,235
8/31/95 $10,951 $10,878 $10,262
9/30/95 $11,199 $11,197 $10,282
10/31/95 $10,842 $11,023 $10,315
11/30/95 $11,089 $11,407 $10,309
12/31/95 $11,233 $11,743 $10,302
1/31/96 $11,635 $11,958 $10,362
2/29/96 $11,674 $12,033 $10,396
3/31/96 $11,810 $12,235 $10,450
4/30/96 $12,075 $12,525 $10,490
5/31/96 $12,217 $12,538 $10,510
6/30/96 $12,230 $12,604 $10,517
7/31/96 $11,835 $12,161 $10,537
8/31/96 $12,140 $12,303 $10,557
9/30/96 $12,386 $12,787 $10,591
10/31/96 $12,588 $12,878 $10,624
11/30/96 $13,273 $13,602 $10,644
12/31/96 $13,542 $13,387 $10,644
1/31/97 $13,989 $13,550 $10,678
2/28/97 $14,101 $13,708 $10,711
3/31/97 $14,037 $13,440 $10,738
4/30/97 $14,352 $13,881 $10,752
5/31/97 $15,065 $14,741 $10,745
6/30/97 $15,673 $15,478 $10,758
7/31/97 $16,268 $16,193 $10,772
8/31/97 $15,722 $15,112 $10,792
9/30/97 $16,736 $15,936 $10,819
10/31/97 $15,657 $15,100 $10,846
11/30/97 $15,705 $15,369 $10,839
12/31/97 $15,903 $15,559 $10,826
1/31/98 $15,936 $15,995 $10,846
2/28/98 $16,813 $17,080 $10,866
3/31/98 $17,559 $17,803 $10,886
4/30/98 $17,658 $17,980 $10,906
5/31/98 $17,117 $17,757 $10,926
6/30/98 $16,633 $18,181 $10,940
7/31/98 $16,239 $18,155 $10,953
8/31/98 $13,772 $15,736 $10,966
9/30/98 $14,124 $16,017 $10,980
10/31/98 $15,329 $17,468 $11,007
11/30/98 $15,880 $18,510 $11,007
12/31/98 $15,548 $19,417 $11,000
1/31/99 $15,443 $19,845 $11,027
2/28/99 $15,329 $19,320 $11,040
3/31/99 $16,403 $20,127 $11,074
4/30/99 $18,443 $20,923 $11,154
5/31/99 $17,789 $20,161 $11,154
6/30/99 $18,614 $21,104 $11,154
7/31/99 $18,605 $21,044 $11,188
8/31/99 $18,614 $21,010 $11,215
9/30/99 $17,959 $20,809 $11,268
10/31/99 $17,971 $21,893 $11,289
11/30/99 $18,779 $22,512 $11,295
12/31/99 $20,344 $24,337 $11,295
1/31/00 $18,949 $22,946 $11,329
2/29/00 $18,307 $23,011 $11,396
3/31/00 $19,642 $24,604 $11,490
4/30/00 $19,387 $23,567 $11,497
5/31/00 $19,754 $22,973 $11,510
6/30/00 $19,856 $23,750 $11,570
7/31/00 $19,722 $23,084 $11,597
8/31/00 $20,090 $23,838 $11,597
9/30/00 $19,478 $22,573 $11,658
10/31/00 $19,660 $22,198 $11,678
11/30/00 $19,540 $20,853 $11,685
12/31/00 $20,742 $21,193 $11,678
1/31/01 $21,036 $21,605 $11,752
2/28/01 $20,753 $19,781 $11,799
3/31/01 $19,795 $18,486 $11,826
4/30/01 $20,584 $19,857 $11,872
5/31/01 $21,013 $19,610 $11,926
6/30/01 $20,618 $18,998 $11,946
7/31/01 $20,551 $18,748 $11,913
8/31/01 $20,471 $17,852 $11,913
9/30/01 $18,723 $16,281 $11,966
10/31/01 $19,352 $16,595 $11,926
11/30/01 $20,586 $17,579 $11,906
12/31/01 $20,920 $17,692 $11,859
1/31/02 $20,456 $17,158 $11,886
2/28/02 $20,873 $17,012 $11,933
3/31/02 $21,652 $17,768 $12,000
4/30/02 $21,779 $17,171 $12,067
5/31/02 $22,244 $17,210 $12,067
6/30/02 $21,326 $16,170 $12,074
7/31/02 $19,875 $14,809 $12,087
8/31/02 $19,898 $14,840 $12,128
9/30/02 $17,726 $13,211 $12,148
10/31/02 $18,645 $14,188 $12,168
11/30/02 $19,854 $14,956 $12,168
12/31/02 $18,979 $14,235 $12,141
1/31/03 $18,598 $13,804 $12,195
2/28/03 $17,978 $13,568 $12,289
3/31/03 $17,573 $13,531 $12,362
4/30/03 $19,229 $14,739 $12,336
5/31/03 $20,754 $15,589 $12,315
6/30/03 $21,136 $15,864 $12,329
7/31/03 $21,612 $16,190 $12,342
8/31/03 $22,124 $16,543 $12,389
9/30/03 $22,208 $16,648 $12,430
10/31/03 $23,150 $17,639 $12,416
11/30/03 $23,721 $17,912 $12,383
12/31/03 $25,269 $19,040 $12,369
1/31/04 $25,808 $19,350 $12,430
2/29/04 $26,468 $19,681 $12,497
3/31/04 $26,064 $19,558 $12,577
4/30/04 $25,832 $19,168 $12,617
5/31/04 $25,978 $19,356 $12,691
6/30/04 $26,456 $19,762 $12,732
7/31/04 $25,624 $19,122 $12,711
8/31/04 $25,760 $19,214 $12,718
ENDNOTES
THE FUND INVESTS IN FOREIGN SECURITIES, WHICH CAN INVOLVE EXPOSURE TO CURRENCY
VOLATILITY AND POLITICAL, ECONOMIC AND REGULATORY UNCERTAINTY. INVESTMENTS IN
DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN
ADDITION TO THOSE ASSOCIATED WITH THEIR RELATIVELY SMALL SIZE AND LESSER
LIQUIDITY. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN
INVESTMENT RISKS.
CLASS B: These shares have higher annual fees and expenses than Class
A shares.
CLASS C: Prior to 1/1/04, these shares were offered with an initial
sales charge; thus actual total returns would have differed.
These shares have higher annual fees and expenses than Class A
shares.
CLASS R: Shares are available to certain eligible investors as
described in the prospectus. These shares have higher annual
fees and expenses than Class A shares.
ADVISOR CLASS: Shares are available to certain eligible investors as described
in the prospectus.
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include a sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes any current, applicable,
maximum sales charge.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include any current, applicable, maximum
sales charge.
4. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
5. Effective 1/2/97, the Fund began offering Advisor Class shares, which do not
have sales charges or a Rule 12b-1 plan. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 1/2/97, a
restated figure is used based upon the Fund's Class A performance, excluding the
effect of Class A's maximum initial sales charge, but reflecting the effect of
the Class A Rule 12b-1 fees; and (b) for periods after 1/1/97, actual Advisor
Class performance is used reflecting all charges and fees applicable to that
class. Since 1/2/97 (commencement of sales), the cumulative and average annual
total returns of Advisor Class shares were 90.23% and 8.75%.
6. Source: Standard & Poor's Micropal. The MSCI World Index is a free
float-adjusted, market capitalization-weighted index designed to measure equity
market performance in global developed markets.
18 | Annual Report
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
o Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and
o Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs,
sometimes referred to as operating expenses.
The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.
ACTUAL FUND EXPENSES
The first line (Actual) for each share class listed in the table below provides
actual account values and expenses. The "Ending Account Value" is derived from
the Fund's actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period, by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:
1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.
2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.
In this illustration, the estimated expenses paid this period are $64.50.
HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS
Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.
Annual Report | 19
YOUR FUND'S EXPENSES (CONTINUED)
PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.
- -----------------------------------------------------------------------------------------------------
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
CLASS A VALUE 2/29/04 VALUE 8/31/04 PERIOD* 2/29/04-8/31/04
- -----------------------------------------------------------------------------------------------------
Actual $1,000 $972.30 $5.45
- -----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,019.61 $5.58
- -----------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------
Actual $1,000 $968.60 $9.15
- -----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.84 $9.37
- -----------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------
Actual $1,000 $968.40 $9.15
- -----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,015.84 $9.37
- -----------------------------------------------------------------------------------------------------
CLASS R
- -----------------------------------------------------------------------------------------------------
ACTUAL $1,000 $970.70 $6.69
- -----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.35 $6.85
- -----------------------------------------------------------------------------------------------------
ADVISOR CLASS
- -----------------------------------------------------------------------------------------------------
Actual $1,000 $973.20 $4.22
- -----------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,020.86 $4.32
- -----------------------------------------------------------------------------------------------------
<FN>
*Expenses are equal to the annualized expense ratio for each class (A: 1.10%; B:
1.85%; C: 1.85%; R: 1.35%; and Advisor: 0.85%), multiplied by the average
account value over the period, multiplied by 184/366 to reflect the one-half
year period.
</FN>
20 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS A 2004 2003 2002 2001 2000
---------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ...................... $18.54 $17.10 $18.11 $19.67 $19.56
---------------------------------------------------------------------
Income from investment operations:
Net investment income a ................................ .36 .34 .33 .39 .35
Net realized and unrealized gains (losses) ............. 2.58 1.46 (.88) (.16) .99
---------------------------------------------------------------------
Total from investment operations ........................ 2.94 1.80 (.55) .23 1.34
---------------------------------------------------------------------
Less distributions from:
Net investment income .................................. (.45) (.36) (.40) (.37) (.54)
Net realized gains ..................................... -- -- (.06) (1.42) (.69)
---------------------------------------------------------------------
Total distributions ..................................... (.45) (.36) (.46) (1.79) (1.23)
---------------------------------------------------------------------
Redemption fees ......................................... --c --c -- -- --
---------------------------------------------------------------------
Net asset value, end of year ............................ $21.03 $18.54 $17.10 $18.11 $19.67
---------------------------------------------------------------------
Total return b .......................................... 16.14% 10.90% (3.01)% 1.62% 7.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ......................... $15,771,174 $13,021,261 $11,689,389 $12,092,917 $13,191,493
Ratios to average net assets:
Expenses ............................................... 1.10% 1.13% 1.10% 1.15% 1.11%
Net investment income .................................. 1.75% 2.05% 1.85% 2.11% 1.83%
Portfolio turnover rate ................................. 24.58% 32.12% 55.63% 24.29% 50.57%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
c Amount is less than $0.001 per share.
</FN>
Annual Report | See notes to financial statements. | 21
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS B 2004 2003 2002 2001 2000
-----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............................... $18.24 $16.85 $17.87 $19.45 $19.46
-----------------------------------------------------------
Income from investment operations:
Net investment income a ......................................... .21 .22 .20 .25 .22
Net realized and unrealized gains (losses) ...................... 2.54 1.43 (.87) (.16) .97
-----------------------------------------------------------
Total from investment operations ................................. 2.75 1.65 (.67) .09 1.19
-----------------------------------------------------------
Less distributions from:
Net investment income ........................................... (.35) (.26) (.29) (.25) (.51)
-----------------------------------------------------------
Net realized gains .............................................. -- -- (.06) (1.42) (.69)
-----------------------------------------------------------
Total distributions .............................................. (.35) (.26) (.35) (1.67) (1.20)
-----------------------------------------------------------
Redemption fees .................................................. --c --c -- -- --
-----------------------------------------------------------
Net asset value, end of year ..................................... $20.64 $18.24 $16.85 $17.87 $19.45
-----------------------------------------------------------
Total return b ................................................... 15.27% 10.08% (3.74)% .91% 6.81%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .................................. $433,467 $278,340 $166,015 $93,301 $69,297
Ratios to average net assets:
Expenses ........................................................ 1.85% 1.88% 1.85% 1.89% 1.86%
Net investment income ........................................... 1.00% 1.30% 1.10% 1.40% 1.16%
Portfolio turnover rate .......................................... 24.58% 32.12% 55.63% 24.29% 50.57%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
c Amount is less than $0.001 per share.
</FN>
22 | See notes to financial statements. | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS C 2004 2003 2002 2001 2000
-----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............................. $18.15 $16.74 $17.73 $19.28 $19.15
-----------------------------------------------------------
Income from investment operations:
Net investment income a ....................................... .20 .21 .20 .25 .20
Net realized and unrealized gains (losses) .................... 2.54 1.44 (.86) (.16) .98
-----------------------------------------------------------
Total from investment operations ............................... 2.74 1.65 (.66) .09 1.18
-----------------------------------------------------------
Less distributions from:
Net investment income ......................................... (.33) (.24) (.27) (.22) (.36)
Net realized gains ............................................ -- -- (.06) (1.42) (.69)
-----------------------------------------------------------
Total distributions ............................................ (.33) (.24) (.33) (1.64) (1.05)
-----------------------------------------------------------
Redemption fees ................................................ --c --c -- -- --
-----------------------------------------------------------
Net asset value, end of year ................................... $20.56 $18.15 $16.74 $17.73 $19.28
-----------------------------------------------------------
Total return b ................................................. 15.30% 10.08% (3.73)% .90% 6.79%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................ $1,394,289 $1,064,405 $897,064 $906,390 $995,687
Ratios to average net assets:
Expenses ...................................................... 1.85% 1.88% 1.84% 1.89% 1.85%
Net investment income ......................................... 1.00% 1.30% 1.11% 1.37% 1.08%
Portfolio turnover rate ........................................ 24.58% 32.12% 55.63% 24.29% 50.57%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
c Amount is less than $0.001 per share.
</FN>
Annual Report | See notes to financial statements. | 23
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------
YEAR ENDED AUGUST 31,
CLASS R 2004 2003 2002 D
--------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................................. $18.44 $17.07 $18.06
--------------------------------------
Income from investment operations:
Net investment income a ........................................... .33 .32 .32
Net realized and unrealized gains (losses) ........................ 2.56 1.42 (1.31)
--------------------------------------
Total from investment operations ................................... 2.89 1.74 (.99)
--------------------------------------
Less distributions from net investment income ...................... (.43) (.37) --
--------------------------------------
Redemption fees .................................................... --c --c --
--------------------------------------
Net asset value, end of year ....................................... $20.90 $18.44 $17.07
--------------------------------------
Total return b ..................................................... 15.85% 10.58% (5.48)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .................................... $57,951 $28,584 $5,394
Ratios to average net assets:
Expenses .......................................................... 1.35% 1.39% 1.35%e
Net investment income ............................................. 1.50% 1.79% 1.60%e
Portfolio turnover rate ............................................ 24.58% 32.12% 55.63%
<FN>
a Based on average daily shares outstanding.
b Total return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
c Amount is less than $0.001 per share.
d For the period January 2, 2002 (effective date) to August 31, 2002.
e Annualized.
</FN>
24 | See notes to financial statements. | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------
YEAR ENDED AUGUST 31,
ADVISOR CLASS 2004 2003 2002 2001 2000
-----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............................. $18.57 $17.13 $18.15 $19.71 $19.61
-----------------------------------------------------------
Income from investment operations:
Net investment income a ....................................... .48 .38 .37 .43 .40
Net realized and unrealized gains (losses) .................... 2.52 1.46 (.88) (.15) .99
-----------------------------------------------------------
Total from investment operations ............................... 3.00 1.84 (.51) .28 1.39
-----------------------------------------------------------
Less distributions from:
Net investment income ......................................... (.50) (.40) (.45) (.42) (.60)
Net realized gains ............................................ -- -- (.06) (1.42) (.69)
-----------------------------------------------------------
Total distributions ............................................ (.50) (.40) (.51) (1.84) (1.29)
-----------------------------------------------------------
Redemption fees ................................................ --c --c -- -- --
-----------------------------------------------------------
Net asset value, end of year ................................... $21.07 $18.57 $17.13 $18.15 $19.71
-----------------------------------------------------------
Total return b ................................................. 16.43% 11.19% (2.80)% 1.90% 7.87%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................ $911,764 $137,776 $98,999 $84,975 $118,679
Ratios to average net assets:
Expenses ...................................................... .85% .88% .85% .90% .86%
Net investment income ......................................... 2.00% 2.30% 2.10% 2.36% 2.10%
Portfolio turnover rate ...................................... 24.58% 32.12% 55.63% 24.29% 50.57%
<FN>
a Based on average daily shares outstanding.
b Total return is not annualized for periods less than one year.
c Amount is less than $0.001 per share.
</FN>
Annual Report | See notes to financial statements. | 25
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2004
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 88.9%
BERMUDA 1.8%
ACE Ltd. .............................. Insurance 3,938,200 $ 151,817,610
XL Capital Ltd., A .................... Insurance 2,500,000 175,500,000
----------------
327,317,610
----------------
CANADA 3.1%
Barrick Gold Corp. .................... Metals & Mining 10,000,000 199,605,343
BCE Inc. .............................. Diversified Telecommunication Services 13,135,375 272,656,729
TransCanada Corp. ..................... Oil & Gas 5,025,600 104,852,568
----------------
577,114,640
----------------
CHINA .7%
China Mobile (Hong Kong) Ltd., fgn. ... Wireless Telecommunication Services 43,000,000 125,417,470
----------------
DENMARK 1.1%
TDC AS ................................ Diversified Telecommunication Services 6,000,000 211,013,896
----------------
FINLAND 2.0%
Stora Enso OYJ, R (EUR/FIM Traded) .... Paper & Forest Products 14,000,000 186,986,535
UPM-Kymmene Corp. ..................... Paper & Forest Products 10,000,000 190,802,586
----------------
377,789,121
----------------
FRANCE 2.9%
Accor SA .............................. Hotels Restaurants & Leisure 4,392,492 185,235,857
Michelin SA, B ........................ Auto Components 2,100,017 110,942,272
Sanofi-Aventis ........................ Pharmaceuticals 3,385,014 240,246,971
----------------
536,425,100
----------------
GERMANY 3.2%
Bayer AG, Br. ......................... Chemicals 8,250,000 211,052,574
E. ON AG .............................. Electric Utilities 4,750,000 337,125,079
Volkswagen AG ......................... Automobiles 1,200,000 46,230,130
----------------
594,407,783
----------------
HONG KONG 3.6%
Cheung Kong Holdings Ltd. ............. Real Estate 32,999,800 284,519,330
Hong Kong Electric Holdings Ltd. ...... Electric Utilities 42,000,000 187,385,817
Shangri-La Asia Ltd. .................. Hotels Restaurants & Leisure 40,592,584 37,730,528
Swire Pacific Ltd., A ................. Real Estate 13,444,200 95,230,361
Swire Pacific Ltd., B ................. Real Estate 54,837,000 67,140,603
----------------
672,006,639
----------------
ISRAEL .4%
a Check Point Software Technologies Ltd. Software 4,000,000 70,160,000
----------------
ITALY 1.5%
Eni SpA ............................... Oil & Gas 14,000,000 286,009,431
----------------
JAPAN 7.1%
Fuji Photo Film Co. Ltd. .............. Leisure Equipment & Products 393,000 12,318,739
Hitachi Ltd. .......................... Electronic Equipment & Instruments 31,000,000 194,341,428
Nintendo Co. Ltd. ..................... Software 2,200,000 236,548,362
Nippon Telegraph & Telephone Corp. .... Diversified Telecommunication Services 50,000 215,955,169
Nomura Holdings Inc. .................. Capital Markets 14,999,167 206,102,727
26 | Annual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
JAPAN (CONT.)
Olympus Corp. ......................... Health Care Equipment & Supplies 4,805,400 $ 91,076,878
Sony Corp. ............................ Household Durables 5,400,000 185,994,806
Takeda Pharmaceutical Co. Ltd. ........ Pharmaceuticals 3,889,800 175,093,280
----------------
1,317,431,389
----------------
MEXICO 1.0%
Telefonos de Mexico SA de CV
(Telmex), L, ADR ..................... Diversified Telecommunication Services 5,500,000 178,145,000
----------------
NETHERLANDS 4.5%
Akzo Nobel NV ......................... Chemicals 6,000,000 201,618,784
Koninklijke Philips Electronics NV .... Household Durables 5,000,000 115,089,203
Reed Elsevier NV ...................... Media 13,500,000 172,761,412
Unilever NV ........................... Food Products 3,600,000 215,341,986
Wolters Kluwer NV ..................... Media 7,931,217 130,509,793
----------------
835,321,178
----------------
SINGAPORE 1.0%
DBS Group Holdings Ltd. ............... Commercial Banks 4,163,000 37,923,910
Singapore Airlines Ltd. ............... Airlines 21,999,770 142,601,213
----------------
180,525,123
----------------
SOUTH KOREA 3.7%
a Kookmin Bank .......................... Commercial Banks 4,199,993 134,183,915
KT Corp., ADR ......................... Diversified Telecommunication Services 13,000,000 227,760,000
Samsung Electronics Co. Ltd. .......... Semiconductors & Semiconductor Equipment 316,500 123,923,688
SK Telecom Co. Ltd. ................... Wireless Telecommunication Services 600,000 90,376,351
SK Telecom Co. Ltd., ADR .............. Wireless Telecommunication Services 6,000,000 113,400,000
----------------
689,643,954
----------------
SPAIN 2.0%
Endesa SA ............................. Electric Utilities 7,000,000 129,478,392
Iberdrola SA, Br. ..................... Electric Utilities 2,000,000 40,809,878
Repsol YPF SA ......................... Oil & Gas 6,000,000 123,960,916
Telefonica SA ......................... Diversified Telecommunication Services 6,000,000 85,168,441
----------------
379,417,627
----------------
SWEDEN 1.4%
Nordea Bank AB ....................... Commercial Banks 20,007,000 153,125,666
Securitas AB, B ....................... Commercial Services & Supplies 8,400,000 104,262,059
----------------
257,387,725
----------------
SWITZERLAND 6.0%
Nestle SA ............................. Food Products 1,100,000 259,808,367
Novartis AG ........................... Pharmaceuticals 5,500,000 253,952,920
Swiss Reinsurance Co. ................. Insurance 3,600,000 203,556,642
Syngenta AG ........................... Chemicals 2,250,000 201,835,495
UBS AG ................................ Capital Markets 3,000,000 200,859,588
----------------
1,120,013,012
----------------
Annual Report | 27
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
UNITED KINGDOM 20.4%
Abbey National PLC .................... Commercial Banks 19,271,475 $ 207,317,084
BAE Systems PLC ....................... Aerospace & Defense 61,567,664 222,068,011
BHP Billiton PLC ...................... Metals & Mining 1,091,230 10,266,843
BP PLC ................................ Oil & Gas 38,295,155 339,460,633
Brambles Industries PLC ............... Commercial Services & Supplies 3,037,142 13,249,387
British Sky Broadcasting Group PLC .... Media 26,000,000 223,573,433
Cadbury Schweppes PLC ................. Food Products 20,000,000 160,286,393
GlaxoSmithKline PLC ................... Pharmaceuticals 19,000,000 386,576,240
HSBC Holdings PLC ..................... Commercial Banks 4,036,381 62,616,055
J Sainsbury PLC ....................... Food & Staples Retailing 18,628,156 87,212,665
National Grid Transco PLC ............. Multi-Utilities & Unregulated Power 32,000,000 268,547,168
Pearson PLC ........................... Media 18,000,000 200,600,849
Rentokil Initial PLC .................. Commercial Services & Supplies 70,000,000 189,204,504
Rolls-Royce Group PLC ................. Aerospace & Defense 40,000,000 166,762,611
Royal Bank of Scotland Group PLC ...... Commercial Banks 7,303,200 203,246,211
Shell Transport & Trading Co. PLC ..... Oil & Gas 53,172,268 387,877,863
a Shire Pharmaceuticals Group PLC ....... Pharmaceuticals 11,000,000 95,380,298
Smiths Group PLC ...................... Industrial Conglomerates 15,000,000 187,270,634
Standard Chartered PLC ................ Commercial Banks 9,000,000 152,676,837
Vodafone Group PLC .................... Wireless Telecommunication Services 95,558,191 217,029,244
----------------
3,781,222,963
----------------
UNITED STATES 21.5%
Abbott Laboratories ................... Pharmaceuticals 4,400,000 183,436,000
AmerisourceBergen Corp. ............... Health Care Providers & Services 3,902,500 211,125,250
a AT&T Wireless Services Inc. ........... Wireless Telecommunication Services 25,000,000 365,500,000
Boeing Co. ............................ Aerospace & Defense 4,000,000 208,880,000
Bowater Inc. .......................... Paper & Forest Products 2,500,000 89,825,000
Bristol-Myers Squibb Co. .............. Pharmaceuticals 6,000,000 142,380,000
a Cadence Design Systems Inc. ........... Software 6,000,000 74,580,000
Carnival Corp. ........................ Hotels Restaurants & Leisure 600,000 27,474,000
CIGNA Corp. ........................... Health Care Providers & Services 2,800,000 186,368,000
a DIRECTV Group Inc. .................... Media 10,725,000 170,205,750
DTE Energy Co. ........................ Electric Utilities 4,600,000 190,072,000
Electronic Data Systems Corp. ......... IT Services 9,380,500 180,293,210
Florida East Coast Industries Inc. .... Road & Rail 470,546 18,831,251
General Mills Inc. .................... Food Products 2,200,000 103,950,000
H.J. Heinz Co. ........................ Food Products 5,200,000 197,132,000
HCA Inc. .............................. Health Care Providers & Services 3,600,000 139,716,000
International Paper Co. ............... Paper & Forest Products 4,000,000 160,080,000
a Interpublic Group of Cos. Inc. ........ Media 4,000,000 42,200,000
a Kroger Co. ............................ Food & Staples Retailing 11,000,000 181,830,000
Mattel Inc. ........................... Leisure Equipment & Products 1,944,600 31,288,614
a,bMaxtor Corp. .......................... Computers & Peripherals 12,500,000 52,500,000
a Noble Corp. ........................... Energy Equipment & Services 4,308,200 173,275,804
Pfizer Inc. ........................... Pharmaceuticals 6,000,000 196,020,000
Raytheon Co. .......................... Aerospace & Defense 4,500,000 156,285,000
a Seagate Technology .................... Computers & Peripherals 9,500,000 103,835,000
28 | Annual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
UNITED STATES (CONT.)
St. Joe Co. ........................... Real Estate 1,415,700 $ 68,519,880
Temple-Inland Inc. .................... Containers & Packaging 632,400 43,180,272
a Time Warner Inc. ...................... Media 5,000,000 81,750,000
Waste Management Inc. ................. Commercial Services & Supplies 1,000,000 27,790,000
Willis Group Holdings Ltd. ............ Insurance 5,000,000 174,850,000
----------------
3,983,173,031
----------------
TOTAL COMMON STOCKS (COST $14,086,473,317) 16,499,942,692
----------------
PREFERRED STOCKS (COST $181,562,463) .6%
GERMANY .6%
Volkswagen AG, pfd. ................... Automobiles 4,499,990 119,056,903
----------------
--------------------
PRINCIPAL AMOUNT C
--------------------
BONDS & NOTES 3.4%
AUSTRALIA .6%
New South Wales Treasury Corp., 6.50%, 5/01/06 149,000,000 AUD 107,036,572
----------------
GERMANY 2.4%
Federal Republic of Germany, 4.50%, 8/18/06 350,000,000 EUR 441,689,757
----------------
NEW ZEALAND .4%
Government of New Zealand,
6.50%, 2/15/06 ...................... 55,900,000 NZD 36,834,749
7.00%, 7/15/09 ...................... 54,000,000 NZD 36,610,260
----------------
73,445,009
----------------
TOTAL BONDS & NOTES (COST $448,389,718) 622,171,338
----------------
SHORT TERM INVESTMENTS 7.1%
BELGIUM .3%
Government of Belgium, Strip, 2.115%, 11/18/04 50,000,000 EUR 60,462,344
----------------
FRANCE 1.0%
French Treasury Bills, 2.00% to 2.02%, 12/09/04 to 5/26/05 150,000,000 EUR 180,462,417
----------------
GERMANY 1.7%
Deutsche Bank AG, Time Deposit, 2.00%, 9/01/04 81,325,000 EUR 98,834,524
Dresdner Bank AG, Time Deposit, 1.71%, 9/01/04 100,000,000 EUR 121,530,310
German Treasury Bill, 2.02%, 11/17/04 . 75,000,000 EUR 90,720,176
----------------
311,085,010
----------------
Annual Report | 29
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2004 (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT C VALUE
- ---------------------------------------------------------------------------------------------------------------------------
SHORT TERM INVESTMENTS (CONT.)
UNITED KINGDOM .1%
Bank of England, Strip, 2.054%, 11/11/04 25,000,000 EUR $ 30,252,847
----------------
UNITED STATES 4.0%
U.S. Treasury Bills, 1.143% to 1.536%, 9/02/04 to 11/26/04 741,895,000 739,971,294
----------------
TOTAL SHORT TERM INVESTMENTS (COST $1,315,688,307) 1,322,233,912
----------------
TOTAL INVESTMENTS (COST $16,032,113,805) 100.0% 18,563,404,845
OTHER ASSETS, LESS LIABILITIES ........ 5,240,386
----------------
NET ASSETS 100.0% ..................... $18,568,645,231
----------------
<FN>
CURRENCY ABBREVIATIONS: | AUD - Australian Dollar | EUR - Euro | FIM - Finnish Markka | NZD - New Zealand Dollar
a Non-income producing.
b See Note 7 regarding Holdings of 5% Voting Securities.
c The principal amount is stated in U.S. dollars unless otherwise indicated.
</FN>
30 | See notes to financial statements. | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2004
ASSETS:
Investments in securities:
Cost - Unaffiliated issuers................................................ $15,938,004,040
Cost - Non-controlled affiliated issuers................................... 94,109,765
----------------
Value - Unaffiliated issuers .............................................. 18,510,904,845
Value - Non-controlled affiliated issuers.................................. 52,500,000
Foreign currency, at value (cost $139,637).................................. 138,278
Receivables:
Investment securities sold................................................. 36,160,797
Capital shares sold........................................................ 35,341,719
Dividends and interest..................................................... 44,433,789
----------------
Total assets.............................................................. 18,679,479,428
----------------
Liabilities:
Payables:
Investment securities purchased............................................ 66,769,413
Capital shares redeemed.................................................... 20,561,588
Affiliates................................................................. 17,316,775
Funds advanced by custodian................................................. 3,917,474
Other liabilities........................................................... 2,268,947
----------------
Total liabilities........................................................ 110,834,197
----------------
Net assets, at value................................................... $18,568,645,231
----------------
Net assets consist of:
Undistributed net investment income......................................... $ 273,529,958
Net unrealized appreciation (depreciation).................................. 2,531,474,765
Accumulated net realized gain (loss)........................................ 357,740,992
Capital shares.............................................................. 15,405,899,516
----------------
Net assets, at value................................................... $18,568,645,231
----------------
Annual Report | See notes to financial statements. | 31
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
August 31, 2004
CLASS A:
Net assets, at value ................................................................... $15,771,173,608
----------------
Shares outstanding ..................................................................... 749,823,500
----------------
Net asset value per share a ............................................................ $21.03
----------------
Maximum offering price per share (net asset value per share / 94.25%) .................. $22.31
----------------
CLASS B:
Net assets, at value ................................................................... $ 433,467,563
----------------
Shares outstanding ..................................................................... 20,997,436
----------------
Net asset value and maximum offering price per share a ................................. $20.64
----------------
CLASS C:
Net assets, at value ................................................................... $ 1,394,288,570
----------------
Shares outstanding ..................................................................... 67,819,469
----------------
Net asset value and maximum offering price per share a ................................. $20.56
----------------
CLASS R:
Net assets, at value ................................................................... $ 57,951,428
----------------
Shares outstanding ..................................................................... 2,773,233
----------------
Net asset value and maximum offering price per share a ................................. $20.90
----------------
ADVISOR CLASS:
Net assets, at value ................................................................... $ 911,764,062
----------------
Shares outstanding ..................................................................... 43,270,069
----------------
Net asset value and maximum offering price per share b ................................. $21.07
----------------
<FN>
a Redemption price is equal to net asset value less any applicable contingent
deferred sales charge and redemption fees retained by the Fund.
b Redemption price is equal to net asset value less any applicable redemption
fees retained by the Fund.
</FN>
32 | See notes to financial statements. | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended August 31, 2004
Investment income:
(net of foreign taxes of $43,224,639)
Dividends ............................................................................ $ 445,744,392
Interest ............................................................................. 49,427,309
---------------
Total investment income ......................................................... 495,171,701
---------------
Expenses:
Management fees (Note 3) ............................................................. 104,450,557
Administrative fees (Note 3) ......................................................... 13,573,455
Distribution fees (Note 3)
Class A ............................................................................. 37,819,161
Class B ............................................................................. 3,785,022
Class C ............................................................................. 13,017,307
Class R ............................................................................. 221,390
Transfer agent fees (Note 3) ......................................................... 22,669,100
Custodian fees (Note 4) .............................................................. 4,349,744
Reports to shareholders .............................................................. 1,284,500
Registration and filing fees ......................................................... 456,200
Professional fees .................................................................... 278,600
Directors' fees and expenses ......................................................... 242,100
Other ................................................................................ 692,400
---------------
Total expenses .................................................................. 202,839,536
Expense reductions (Note 4) ..................................................... (3,379)
---------------
Net expenses .................................................................. 202,836,157
---------------
Net investment income ....................................................... 292,335,544
---------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers .............................................................. 523,531,796
Non-controlled affiliated issuers ................................................. (12,577,329)
Foreign currency transactions ....................................................... 12,540,879
---------------
Net realized gain (loss) ........................................................ 523,495,346
Net unrealized appreciation (depreciation) on:
Investments ......................................................................... 1,547,294,362
Translation of assets and liabilities denominated in foreign currencies ............. (1,432,991)
---------------
Net unrealized appreciation (depreciation) ...................................... 1,545,861,371
---------------
Net realized and unrealized gain (loss) ............................................... 2,069,356,717
---------------
Net increase (decrease) in net assets resulting from operations ....................... $2,361,692,261
---------------
Annual Report | See notes to financial statements. | 33
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended August 31, 2004 and 2003
------------------------------------
2004 2003
------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income ............................................................. $ 292,335,544 $ 250,136,388
Net realized gain (loss) from investments and foreign currency transactions ....... 523,495,346 151,976,893
Net unrealized appreciation (depreciation) on investments and translation of
assets and liabilities denominated in foreign currencies ......................... 1,545,861,371 985,926,499
------------------------------------
Net increase (decrease) in net assets resulting from operations ............... 2,361,692,261 1,388,039,780
Distributions to shareholders from:
Net investment income:
Class A ........................................................................... (320,678,462) (244,598,042)
Class B ........................................................................... (5,758,813) (2,724,439)
Class C ........................................................................... (20,147,122) (12,624,079)
Class R ........................................................................... (743,202) (204,811)
Advisor Class ..................................................................... (5,422,599) (2,379,816)
------------------------------------
Total distributions to shareholders ................................................. (352,750,198) (262,531,187)
Capital share transactions (Note 2):
Class A ........................................................................... 960,883,954 326,612,716
Class B ........................................................................... 114,858,204 88,939,787
Class C ........................................................................... 182,022,934 84,919,852
Class R ........................................................................... 25,116,249 20,310,323
Advisor Class ..................................................................... 746,429,648 27,200,279
------------------------------------
Total capital share transactions .................................................... 2,029,310,989 547,982,957
Redemption fees (Note 1g) ........................................................... 25,291 14,830
Net increase (decrease) in net assets ........................................ 4,038,278,343 1,673,506,380
Net assets:
Beginning of year .................................................................. 14,530,366,888 12,856,860,508
------------------------------------
End of year ........................................................................ $18,568,645,231 $14,530,366,888
------------------------------------
Undistributed net investment income included in net assets:
End of year ........................................................................ $ 273,529,958 $ 259,846,653
------------------------------------
34 | See notes to financial statements. | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Growth Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company. The Fund
seeks long-term capital growth. Under normal market conditions, the Fund invests
mainly in the equity securities of companies located anywhere in the world,
including emerging markets. The following summarizes the Fund's significant
accounting policies.
A. SECURITY VALUATION
Securities listed or traded on a recognized national exchange are valued at the
last reported sales price. Securities listed or traded on NASDAQ are valued at
their official closing price. Debt securities, other over-the-counter securities
and listed securities for which no sale is reported are valued within the range
of the latest quoted bid and asked prices by independent pricing services or
recognized dealers in such securities. Foreign securities are valued at the
close of trading of the foreign exchange or the NYSE, whichever is earlier. If
events occur that materially affect the values of securities after the prices or
foreign exchange rates are determined, but prior to 4:00 p.m. Eastern time or
the close of trading on the NYSE, whichever is earlier, or if market quotations
are deemed not readily available or reliable, the securities will be valued at
fair value. All security valuation procedures are approved by the Board of
Directors.
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. 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.
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.
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. FOREIGN CURRENCY CONTRACTS
When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate on a specified date. Realized and unrealized gains and losses are included
in the Statement of Operations.
Annual Report | 35
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. FOREIGN CURRENCY CONTRACTS (CONTINUED)
The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts.
D. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its taxable income. Fund distributions to
shareholders are determined on a tax basis and may differ from net investment
income and realized gains for financial reporting purposes.
E. 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.
Certain income from foreign securities is recorded as soon as information is
available. Interest income and estimated expenses are accrued daily. Discounts
and premiums on securities purchased are amortized over the lives of the
respective securities. Dividend income and distributions to shareholders are
recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
F. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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 year. Actual results could differ from those
estimates.
G. REDEMPTION FEES
Redemptions and exchanges of Fund shares held five trading days or less (30 days
or less prior to June 1, 2004 and 90 days or less prior to January 1, 2004) may
be subject to the Fund's redemption fee, which is 2% of the amount redeemed.
Such fees are retained by the Fund and accounted for as additional paid in
capital as noted on the Statement of Changes.
H. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liability 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. However, based on experience, the Fund expects the
risk of loss to be remote.
36 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. CAPITAL STOCK
The Fund offers five classes of shares: Class A, Class B, Class C, Class R and
Advisor Class. Each class of shares differs by its initial sales load,
contingent deferred sales charges, distribution fees, voting rights on matters
affecting a single class of shares and its exchange privilege.
At August 31, 2004, there were 1.9 billion shares authorized ($0.01 par value),
of which 1.2 billion shares were designated as Class A, 100 million shares as
Class B, 400 million shares as Class C, 100 million shares as Class R, and 100
million shares as Advisor Class. Transactions in the Fund's shares were as
follows:
----------------------------------------------------------------------
YEAR ENDED AUGUST 31,
2004 2003
----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------------
CLASS A SHARES:
Shares sold .................. 151,863,531 $ 3,135,962,308 111,354,884 $ 1,837,694,341
Shares issued in reinvestment
of distributions ........... 14,025,891 267,015,432 13,138,355 206,272,476
Shares redeemed .............. (118,389,653) (2,442,093,786) (105,632,985) (1,717,354,101)
----------------------------------------------------------------------
Net increase (decrease) ...... 47,499,769 $ 960,883,954 18,860,254 $ 326,612,716
----------------------------------------------------------------------
CLASS B SHARES:
Shares sold .................. 7,037,365 $ 141,865,950 6,805,348 $ 111,090,081
Shares issued in reinvestment
of distributions ........... 281,765 5,275,760 161,304 2,499,842
Shares redeemed .............. (1,582,087) (32,283,506) (1,557,186) (24,650,136)
----------------------------------------------------------------------
Net increase (decrease) ...... 5,737,043 $ 114,858,204 5,409,466 $ 88,939,787
----------------------------------------------------------------------
CLASS C SHARES:
Shares sold .................. 16,462,909 $ 330,900,817 12,806,211 $ 208,138,873
Shares issued in reinvestment
of distributions ........... 944,695 17,612,652 720,715 11,118,293
Shares redeemed .............. (8,228,281) (166,490,535) (8,459,122) (134,337,314)
----------------------------------------------------------------------
Net increase (decrease) ...... 9,179,323 $ 182,022,934 5,067,804 $ 84,919,852
----------------------------------------------------------------------
CLASS R SHARES:
Shares sold .................. 1,690,820 $ 34,688,338 1,420,208 $ 23,373,682
Shares issued in reinvestment
of distributions ........... 39,132 741,176 13,043 204,221
Shares redeemed .............. (506,552) (10,313,265) (199,354) (3,267,580)
----------------------------------------------------------------------
Net increase (decrease) ...... 1,223,400 $ 25,116,249 1,233,897 $ 20,310,323
----------------------------------------------------------------------
ADVISOR CLASS SHARES:
Shares sold .................. 38,145,813 $ 794,058,266 3,336,075 $ 55,404,834
Shares issued in reinvestment
of distributions ........... 236,873 4,531,408 114,622 1,799,763
Shares redeemed .............. (2,532,086) (52,160,026) (1,809,363) (30,004,318)
----------------------------------------------------------------------
Net increase (decrease) ...... 35,850,600 $ 746,429,648 1,641,334 $ 27,200,279
----------------------------------------------------------------------
Annual Report | 37
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also officers or directors of the following
entities:
- --------------------------------------------------------------------------------------------
ENTITY AFFILIATION
- --------------------------------------------------------------------------------------------
Templeton Global Advisors Ltd. (TGAL) Investment manager
Franklin Templeton Services, LLC (FT Services) Administrative manager
Franklin Templeton/Distributors, Inc. (Distributors) Principal underwriter
Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent
A. MANAGEMENT FEES
The Fund pays an investment management fee to TGAL based on the Fund's average
daily net assets as follows:
- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.630% Up to and including $1 billion
0.615% Over $1 billion, up to and including $5 billion
0.600% Over $5 billion, up to and including $10 billion
0.580% Over $10 billion, up to and including $15 billion
0.560% Over $15 billion, up to and including $20 billion
0.540% Over $20 billion
Prior to June 1, 2004, the Fund paid an investment management fee to TGAL based
on the average daily net assets of the Fund as follows:
- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.750% First $200 million
0.675% Over $200 million, up to and including $1.3 billion
0.600% Over $1.3 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets as follows:
- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.150% First $200 million
0.135% Over $200 million, up to and including $700 million
0.100% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
C. DISTRIBUTION FEES
The Fund reimburses Distributors up to 0.25%, 1.00%, 1.00% and 0.50% per year of
the average daily net assets of Class A, Class B, Class C, and Class R shares,
respectively, for costs incurred in marketing the Fund's shares under a Rule
12b-1 plan.
20 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
C. DISTRIBUTION FEES (CONTINUED)
Under the Class A distribution plan, costs exceeding the maximum for the current
plan year may be reimbursed in subsequent periods. At August 31, 2004,
Distributors advised the Fund unreimbursed costs were $23,438,026.
D. SALES CHARGES/UNDERWRITING AGREEMENTS
Distributors has advised the Fund of the following commission transactions
related to the sale of the Fund's shares for the year:
Sales charges received .................................... $4,378,524
Contingent deferred sales charges retained ................ $ 624,099
E. TRANSFER AGENT FEES
The Fund paid transfer agent fees of $22,669,100 of which $16,489,164 was paid
to Investor Services.
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended August 31, 2004, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
At August 31, 2004, the cost of investments, net unrealized appreciation
(depreciation), undistributed ordinary income and undistributed long term
capital gains for income tax purposes were as follows:
Cost of investments ................................. $16,068,059,765
----------------
Unrealized appreciation ............................. $ 2,880,100,876
Unrealized depreciation ............................. (384,755,796)
----------------
Net unrealized appreciation (depreciation) .......... $ 2,495,345,080
----------------
Undistributed ordinary income ....................... $ 310,669,805
Undistributed long-term capital gains ............... 356,547,103
----------------
Distributable earnings .............................. $ 667,216,908
----------------
Net investment income (loss) differs for financial statement and tax purposes
primarily due to differing treatments of foreign currency transactions and bond
discounts and premiums.
Net realized gains differ for financial statement and tax purposes primarily due
to differing treatment of wash sales and foreign currency transactions.
Annual Report | 39
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INCOME TAXES (CONTINUED)
The tax character of distributions paid during the years ended August 31, 2004
and 2003, was as follows:
------------------------------
2004 2003
------------------------------
Distributions paid from:
Ordinary income ........................ $352,750,198 $262,531,187
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short-term securities) for the
year ended August 31, 2004 aggregated $6,068,780,781 and $3,830,214,930,
respectively.
7. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF
SHARES HELD SHARES HELD VALUE
AT BEGINNING GROSS GROSS AT END AT END INVESTMENT REALIZED CAPITAL
NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS OF YEAR OF YEAR INCOME GAINS (LOSS)
- ---------------------------------------------------------------------------------------------------------------------------
AK Steel Holding
Corp. ............ 6,445,700 -- (6,445,700) * * $-- $(12,577,329)
Maxtor Corp. ..... -- 12,500,000 -- 12,500,000 $52,500,000 -- --
-----------------------------------------------
TOTAL AFFILIATED SECURITIES (0.28% OF NET ASSETS) $52,500,000 $-- $(12,577,329)
-----------------------------------------------
<FN>
*As of August 31, 2004, no longer an affiliate.
</FN>
8. REGULATORY MATTERS
MASSACHUSETTS ADMINISTRATIVE PROCEEDING
On September 20, 2004, Franklin Resources, Inc. (Franklin Resources, Inc. and
its subsidiaries are referred to collectively as the "Company") announced that
an agreement has been reached by two of its subsidiaries, Franklin Advisers,
Inc. ("Franklin Advisers") and Franklin Templeton Alternative Strategies, Inc.
("FTAS"), with the Securities Division of the Office of the Secretary of the
Commonwealth of Massachusetts (the "State of Massachusetts") related to an
administrative complaint filed on February 4, 2004. The administrative complaint
addressed one instance of market timing that was also a subject of the August 2,
2004 settlement that Franklin Advisers reached with the SEC, as described below.
Under the terms of the settlement consent order issued by the State of
Massachusetts, Franklin Advisers and FTAS have consented to the entry of a
cease-and-desist order and agreed to pay a $5 million administrative fine to the
State of Massachusetts. The consent order has multiple sections, including
"Statements of Fact" and "Violations of Massachusetts Securities Laws." The
Company admitted the "Statements of Fact." The Company did not admit or deny the
"Violations of the
40 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. REGULATORY MATTERS (CONTINUED)
MASSACHUSETTS ADMINISTRATIVE PROCEEDING (CONTINUED)
Massachusetts Securities Laws." While Franklin Advisers and FTAS did not admit
or deny engaging in any wrongdoing, the Company believes that it is in its best
interest and the interests of its funds' shareholders to settle this issue now
and move forward.
U.S. SECURITIES AND EXCHANGE COMMISSION (SEC) SETTLEMENT
On August 2, 2004, the Company announced that an agreement has been reached by
Franklin Advisers with the SEC that resolves the issues resulting from the SEC's
investigation of market timing activity and the SEC issued an "Order instituting
administrative and cease-and-desist proceedings pursuant to sections 203(e) and
203(k) of the Investment Advisers Act of 1940 and sections 9(b) and 9(f) of the
Investment Company Act of 1940, making findings and imposing remedial sanctions
and a cease-and-desist order" (the "Order"). The SEC's Order concerns the
activities of a limited number of third parties that ended in 2000 and those
that are the subject of the Massachusetts administrative complaint described
above.
Under the terms of the SEC's Order, pursuant to which Franklin Advisers neither
admits nor denies any wrongdoing, Franklin Advisers has agreed to pay $50
million, of which $20 million is a civil penalty, to be distributed to
shareholders of certain funds in accordance with a plan to be developed by an
Independent Distribution Consultant. At this time, it is unclear which funds
will receive distributions or which shareholders of any particular fund will
receive distributions. The SEC Order also requires Franklin Advisers to, among
other things, enhance and periodically review compliance policies and
procedures.
OTHER GOVERNMENTAL INVESTIGATIONS
As part of ongoing investigations by the SEC, the U.S. Attorney for the Northern
District of California, the New York Attorney General, the California Attorney
General, the U.S. Attorney for the District of Massachusetts, the Florida
Department of Financial Services and the Commissioner of Securities, the West
Virginia Attorney General, the Vermont Department of Banking, Insurance,
Securities, and Health Care Administration and the National Association of
Securities Dealers, relating to certain practices in the mutual fund industry,
including late trading, market timing and payments to securities dealers who
sell fund shares, the Company and its subsidiaries, as well as certain current
or former executives and employees of the Company, have received requests for
information and/or subpoenas to testify or produce documents. The Company and
its current employees have been providing documents and information in response
to these requests and subpoenas. In addition, the Company has responded to
requests for similar kinds of information from regulatory authorities in some of
the foreign countries where the Company conducts its global asset management
business.
Annual Report | 41
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. REGULATORY MATTERS (CONTINUED)
OTHER GOVERNMENTAL INVESTIGATIONS (CONTINUED)
The staff of the SEC has also informed the Company that it is considering
recommending a civil action or proceeding against Franklin Advisers and Franklin
Templeton Distributors, Inc. ("FTDI") concerning payments to securities dealers
who sell fund shares (commonly referred to as "revenue sharing"). The staff of
the California Attorney General's Office ("CAGO") also has advised the Company
that the California Attorney General is authorized to bring a civil action
against the Company and FTDI arising from the same events. Even though the
Company currently believes that the charges the SEC staff and CAGO staff are
contemplating are unwarranted, it also believes that it is in the best interest
of the Company's and funds' shareholders to resolve these issues voluntarily, to
the extent the Company can reasonably do so. The Company continues to have
discussions towards resolving these governmental investigations.
OTHER LEGAL PROCEEDINGS
The Fund, in addition to other entities within Franklin Templeton Investments,
including the Company and certain of its subsidiaries, other funds, and current
and former officers, employees, and directors have been named in multiple
lawsuits in different federal courts in Nevada, California, Illinois, New York
and Florida, alleging violations of various federal securities laws and seeking,
among other things, monetary damages and costs. Specifically, the lawsuits claim
breach of duty with respect to alleged arrangements to permit market timing
and/or late trading activity, or breach of duty with respect to the valuation of
the portfolio securities of certain funds managed by Company subsidiaries,
resulting in alleged market timing activity. The majority of these lawsuits
duplicate, in whole or in part, the allegations asserted in the Massachusetts
administrative complaint described above. The lawsuits are styled as class
actions or derivative actions on behalf of either the named funds or the
Company.
Various subsidiaries of the Company have also been named in multiple lawsuits
filed in state courts in Illinois alleging breach of duty with respect to
valuation of the portfolio securities of certain funds managed by such
subsidiaries.
In addition, the Company and certain of its subsidiaries, as well as certain
current and former officers, employees, and directors have been named in
multiple lawsuits alleging violations of various securities laws and pendent
state law claims relating to the disclosure of directed brokerage payments
and/or payment of allegedly excessive advisory, commission, and distribution
fees. These lawsuits are styled as class actions and derivative actions brought
on behalf of certain funds.
The Company's management strongly believes that the claims made in each of these
lawsuits are without merit and intends to vigorously defend against them.
The Company cannot predict with certainty the eventual outcome of the foregoing
governmental investigations or class actions or other lawsuits. If the Company
finds that it bears responsibility for any unlawful or inappropriate conduct
that caused losses to the Fund, it is committed to making the Fund or its
shareholders whole, as appropriate.
42 | Annual Report
Templeton Growth Fund, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF TEMPLETON GROWTH FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Templeton Growth Fund, Inc.
(the "Fund") at August 31, 2004, 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
then ended and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2004 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 13, 2004
Annual Report | 43
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED)
Under Section 852(b)(3)(C) of the Internal Revenue Code (Code), the Fund hereby
designates $356,547,103 as a capital gain dividend for the fiscal year ended
August 31, 2004.
Under Section 854(b)(2) of the Code, the Fund hereby designates up to a maximum
of $445,187,269 as qualified dividends for purposes of the maximum rate under
Section 1(h)(11) of the Code for the fiscal year ended August 31, 2004. In
January 2005, shareholders will receive Form 1099-DIV which will include their
share of qualified dividends distributed during the calendar year 2004.
Shareholders are advised to check with their tax advisors for information on the
treatment of these amounts on their individual income tax returns.
Under Section 854(b)(2) of the Code, the Fund hereby designates 17.73% of the
ordinary income dividends as income qualifying for the dividends received
deduction for the fiscal year ended August 31, 2004.
At August 31, 2004, more than 50% of the Templeton Growth Fund total assets were
invested in securities of foreign issuers. In most instances, foreign taxes were
withheld from dividends paid to the Fund on these investments. As shown in the
tables below, the Fund hereby designates to shareholders the foreign source
income and foreign taxes paid, pursuant to Section 853 of the Code. This
designation will allow shareholders of record on October 21, 2004, to treat
their proportionate share of foreign taxes paid by the Fund as having been paid
directly by them. The shareholder shall consider these amounts as foreign taxes
paid in the tax year in which they receive the Fund distribution.
The following tables provide a detailed analysis, by country, of foreign tax
paid, foreign source income, foreign qualified dividends, and adjusted foreign
source income as designated by the Fund, to Class A, Class B, Class C, Class R,
and Advisor Class shareholders of record. As a service to individual
shareholders filing Form 1116, "Adjusted Foreign Source Income per Share" in
column 4 below reports foreign source income with the required adjustments to
foreign source qualified dividends. This information is provided to simplify
your reporting of foreign source income for line 1 of Form 1116.
44 | Annual Report
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
CLASS A
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Australia .............................. 0.0000 0.0041 0.0000 0.0041
Belgium ................................ 0.0000 0.0009 0.0000 0.0009
Bermuda ................................ 0.0000 0.0055 0.0055 0.0024
Brazil ................................. 0.0007 0.0023 0.0000 0.0023
Canada ................................. 0.0025 0.0117 0.0117 0.0050
Denmark ................................ 0.0020 0.0092 0.0092 0.0039
Finland ................................ 0.0014 0.0122 0.0065 0.0085
France ................................. 0.0025 0.0145 0.0117 0.0078
Germany ................................ 0.0039 0.0345 0.0134 0.0268
Hong Kong .............................. 0.0000 0.0193 0.0000 0.0193
Italy .................................. 0.0021 0.0100 0.0100 0.0043
Japan .................................. 0.0009 0.0075 0.0075 0.0032
Mexico ................................. 0.0000 0.0040 0.0040 0.0017
Netherlands ............................ 0.0043 0.0208 0.0202 0.0093
New Zealand ............................ 0.0000 0.0034 0.0000 0.0034
Singapore .............................. 0.0003 0.0031 0.0000 0.0031
South Korea ............................ 0.0042 0.0179 0.0179 0.0077
Spain .................................. 0.0020 0.0110 0.0109 0.0048
Sweden ................................. 0.0013 0.0063 0.0063 0.0027
Switzerland ............................ 0.0030 0.0164 0.0164 0.0070
United Kingdom ......................... 0.0172 0.1494 0.1467 0.0656
-----------------------------------------------------------
TOTAL .................................. $0.0483 $0.3640 $0.2979 $0.1938
-----------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
CLASS B
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Australia .............................. 0.0000 0.0031 0.0000 0.0031
Belgium ................................ 0.0000 0.0007 0.0000 0.0007
Bermuda ................................ 0.0000 0.0041 0.0041 0.0018
Brazil ................................. 0.0007 0.0017 0.0000 0.0017
Canada ................................. 0.0025 0.0088 0.0088 0.0038
Denmark ................................ 0.0020 0.0069 0.0069 0.0030
Finland ................................ 0.0014 0.0092 0.0049 0.0064
France ................................. 0.0025 0.0109 0.0088 0.0059
Germany ................................ 0.0039 0.0259 0.0101 0.0201
Hong Kong .............................. 0.0000 0.0145 0.0000 0.0145
Italy .................................. 0.0021 0.0075 0.0075 0.0032
Japan .................................. 0.0009 0.0057 0.0057 0.0024
Mexico ................................. 0.0000 0.0030 0.0030 0.0013
Netherlands ............................ 0.0043 0.0156 0.0152 0.0069
New Zealand ............................ 0.0000 0.0025 0.0000 0.0025
Singapore .............................. 0.0003 0.0023 0.0000 0.0023
South Korea ............................ 0.0042 0.0134 0.0134 0.0057
Spain .................................. 0.0020 0.0082 0.0081 0.0036
Sweden ................................. 0.0013 0.0047 0.0047 0.0020
Switzerland ............................ 0.0030 0.0123 0.0123 0.0053
United Kingdom ......................... 0.0172 0.1117 0.1097 0.0490
-----------------------------------------------------------
TOTAL .................................. $0.0483 $0.2727 $0.2232 $0.1452
-----------------------------------------------------------
Annual Report | 45
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
CLASS C
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Australia .............................. 0.0000 0.0030 0.0000 0.0030
Belgium ................................ 0.0000 0.0007 0.0000 0.0007
Bermuda ................................ 0.0000 0.0040 0.0040 0.0017
Brazil ................................. 0.0007 0.0017 0.0000 0.0017
Canada ................................. 0.0025 0.0085 0.0085 0.0036
Denmark ................................ 0.0020 0.0066 0.0066 0.0028
Finland ................................ 0.0014 0.0088 0.0047 0.0061
France ................................. 0.0025 0.0105 0.0085 0.0056
Germany ................................ 0.0039 0.0249 0.0097 0.0194
Hong Kong .............................. 0.0000 0.0140 0.0000 0.0140
Italy .................................. 0.0021 0.0072 0.0072 0.0031
Japan .................................. 0.0009 0.0054 0.0054 0.0023
Mexico ................................. 0.0000 0.0029 0.0029 0.0012
Netherlands ............................ 0.0043 0.0150 0.0146 0.0067
New Zealand ............................ 0.0000 0.0024 0.0000 0.0024
Singapore .............................. 0.0003 0.0023 0.0000 0.0023
South Korea ............................ 0.0042 0.0129 0.0129 0.0055
Spain .................................. 0.0020 0.0079 0.0078 0.0034
Sweden ................................. 0.0013 0.0045 0.0045 0.0019
Switzerland ............................ 0.0030 0.0118 0.0118 0.0051
United Kingdom ......................... 0.0172 0.1077 0.1058 0.0472
-----------------------------------------------------------
TOTAL .................................. $0.0483 $0.2627 $0.2149 $0.1397
-----------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
CLASS R
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Australia .............................. 0.0000 0.0039 0.0000 0.0039
Belgium ................................ 0.0000 0.0009 0.0000 0.0009
Bermuda ................................ 0.0000 0.0052 0.0052 0.0022
Brazil ................................. 0.0007 0.0022 0.0000 0.0022
Canada ................................. 0.0025 0.0111 0.0111 0.0048
Denmark ................................ 0.0020 0.0087 0.0087 0.0037
Finland ................................ 0.0014 0.0116 0.0061 0.0081
France ................................. 0.0025 0.0138 0.0112 0.0074
Germany ................................ 0.0039 0.0327 0.0127 0.0254
Hong Kong .............................. 0.0000 0.0183 0.0000 0.0183
Italy .................................. 0.0021 0.0094 0.0094 0.0040
Japan .................................. 0.0009 0.0072 0.0072 0.0031
Mexico ................................. 0.0000 0.0038 0.0038 0.0016
Netherlands ............................ 0.0043 0.0197 0.0192 0.0087
New Zealand ............................ 0.0000 0.0032 0.0000 0.0032
Singapore .............................. 0.0003 0.0030 0.0000 0.0030
South Korea ............................ 0.0042 0.0170 0.0170 0.0073
Spain .................................. 0.0020 0.0104 0.0103 0.0045
Sweden ................................. 0.0013 0.0059 0.0059 0.0025
Switzerland ............................ 0.0030 0.0155 0.0155 0.0066
United Kingdom ......................... 0.0172 0.1415 0.1390 0.0621
-----------------------------------------------------------
TOTAL .................................. $0.0483 $ 0.3450 $0.2823 $ 0.1835
-----------------------------------------------------------
46 | Annual Report
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------
ADVISOR CLASS
ADJUSTED
FOREIGN TAX FOREIGN FOREIGN FOREIGN
PAID SOURCE INCOME QUALIFIED DIVIDENDS SOURCE INCOME
COUNTRY PER SHARE PER SHARE PER SHARE PER SHARE
- -----------------------------------------------------------------------------------------------------------
Australia .............................. 0.0000 0.0046 0.0000 0.0046
Belgium ................................ 0.0000 0.0010 0.0000 0.0010
Bermuda ................................ 0.0000 0.0061 0.0061 0.0026
Brazil ................................. 0.0007 0.0026 0.0000 0.0026
Canada ................................. 0.0025 0.0129 0.0129 0.0055
Denmark ................................ 0.0020 0.0101 0.0101 0.0043
Finland ................................ 0.0014 0.0134 0.0071 0.0093
France ................................. 0.0025 0.0160 0.0129 0.0086
Germany ................................ 0.0039 0.0380 0.0148 0.0295
Hong Kong .............................. 0.0000 0.0213 0.0000 0.0213
Italy .................................. 0.0021 0.0110 0.0110 0.0047
Japan .................................. 0.0009 0.0083 0.0083 0.0036
Mexico ................................. 0.0000 0.0044 0.0044 0.0019
Netherlands ............................ 0.0043 0.0229 0.0223 0.0102
New Zealand ............................ 0.0000 0.0037 0.0000 0.0037
Singapore .............................. 0.0003 0.0035 0.0000 0.0035
South Korea ............................ 0.0042 0.0197 0.0197 0.0084
Spain .................................. 0.0020 0.0121 0.0120 0.0052
Sweden ................................. 0.0013 0.0069 0.0069 0.0030
Switzerland ............................ 0.0030 0.0180 0.0180 0.0077
United Kingdom ......................... 0.0172 0.1638 0.1609 0.0719
-----------------------------------------------------------
TOTAL .................................. $0.0483 $0.4003 $0.3274 $0.2131
-----------------------------------------------------------
Annual Report | 47
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED) (CONTINUED)
Foreign Tax Paid per Share (Column 1) is the amount per share available to you,
as a tax credit or deduction (assuming you held your shares in the Fund for a
minimum of 16 days during the 30-day period beginning 15 days before the
ex-dividend date of the Fund's distribution to which the foreign taxes relate).
Foreign Source Income per Share (Column 2) is the amount per share of income
dividends paid to you that is attributable to foreign securities held by the
Fund, plus any foreign taxes withheld on these dividends. The amounts reported
include foreign source qualified dividends without adjustment for the lower U.S.
tax rates. Generally, this is the foreign source income to be reported by
certain trusts and corporate shareholders.
Foreign Qualified Dividends per Share (Column 3) is the amount per share of
foreign source qualified dividends the Fund paid to you, plus any foreign taxes
withheld on these dividends. These amounts represent the portion of the Foreign
Source Income reported to you in column 2 that were derived from qualified
foreign securities held by the Fund. If you are an individual shareholder who
does not meet the qualified dividend holding period requirements, you may find
this information helpful to calculate the foreign source income adjustment
needed to complete line 1 of Form 1116.
Adjusted Foreign Source Income per Share (Column 4) is the adjusted amount per
share of foreign source income the Fund paid to you. These amounts reflect the
Foreign Source Income reported in column 2 adjusted for the tax rate
differential on foreign source qualified dividends that may be required for
certain individual shareholders pursuant to Internal Revenue Code 904(b)(2)(B).
If you are an individual shareholder who meets the qualified dividend holding
period requirements, generally, these Adjusted Foreign Source Income amounts may
be reported directly on line 1 of Form 1116 without additional adjustment.
In January 2005, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2004. The Foreign Source Income reported on Form 1099-DIV has been
reduced to take into account the tax rate differential on foreign source
qualified dividend income pursuant to Internal Revenue Code 904(b)(2)(B).
Shareholders are advised to check with their tax advisors for information on the
treatment of these amounts on their 2004 individual income tax returns.
48 | Annual Report
Board Members and Officers
The name, age and address of the officers and board members, as well as their
affiliations, positions held with the Fund, principal occupations during the
past five years and number of U.S. registered portfolios overseen in the
Franklin Templeton Investments fund complex are shown below. Each board member
will serve until that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (72) Director Since 1992 140 Director, Bar-S Foods (meat packing
500 East Broward Blvd. company).
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING 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).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK J. CROTHERS (60) Director Since 2000 21 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Island Corporate Holdings Ltd. (Vice Chairman 1996-2003); Vice Chairman, Caribbean Utilities Co. Ltd.; Director and
President, Provo Power Company Ltd.; Director, Caribbean Electric Utility Services Corporation (Chairman until 2002); director of
various other business and nonprofit organizations; and FORMERLY, Chairman, Atlantic Equipment & Power Ltd. (1977-2003).
- ------------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (72) Director Since 1992 141 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch.
- ------------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (52) Director Since 2000 96 Director, Amerada Hess Corporation
500 East Broward Blvd. (exploration and refining of oil and
Suite 2100 gas); H.J. Heinz Company (processed
Fort Lauderdale, FL 33394-3091 foods and allied products); RTI
International Metals, Inc. (manufac-
ture and distribution of titanium); and
Canadian National Railway (railroad).
PRINCIPAL OCCUPATION DURING 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).
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 49
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (76) Director Since 1993 140 Director, White Mountains Insurance
500 East Broward Blvd. Group, Ltd. (holding company);
Suite 2100 Martek Biosciences Corporation;
Fort Lauderdale, FL 33394-3091 MedImmune, Inc. (biotechnology);
and Overstock.com (Internet servi-
ces); and FORMERLY, Director, MCI
Communication Corporation (subse-
quently known as MCI WorldCom,
Inc. and WorldCom, Inc.) (communi-
cations services) (1988-2002) and
Spacehab, Inc. (aerospace services)
(1994-2003).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company); and FORMERLY, Chairman, White River Corporation
(financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992); and President, National
Association of Securities Dealers, Inc. (1970-1987).
- ------------------------------------------------------------------------------------------------------------------------------------
FRED R. MILLSAPS (75) Director Since 1990 28 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various business and nonprofit organizations; manager of personal investments (1978-present); and FORMERLY, Chairman
and Chief Executive Officer, Landmark Banking Corporation (1969-1978); Financial Vice President, Florida Power and Light
(1965-1969); and Vice President, Federal Reserve Bank of Atlanta (1958-1965).
- ------------------------------------------------------------------------------------------------------------------------------------
FRANK A. OLSON (72) Director Since 2003 21 Director, Becton, Dickinson and Co.
500 East Broward Blvd. (medical technology); White
Suite 2100 Mountains Insurance Group Ltd.
Fort Lauderdale, FL 33394-3091 (holding company); and Amerada
Hess Corporation (exploration and
refining of oil and gas).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, The Hertz Corporation (car rental) (since 1980) (Chief Executive Officer 1977-1999); and FORMERLY,
Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
- ------------------------------------------------------------------------------------------------------------------------------------
CONSTANTINE D. TSERETOPOULOS Director Since 2003 21 None
(50)
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Physician, 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).
- ------------------------------------------------------------------------------------------------------------------------------------
50 | Annual Report
INTERESTED BOARD MEMBERS AND OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
**NICHOLAS F. BRADY (74) Director Since 1993 21 Director, Amerada Hess Corporation
500 East Broward Blvd. (exploration and refining of oil and
Suite 2100 gas); and C2, Inc. (operating and
Fort Lauderdale, FL 33394-3091 investment business); and FORMERLY,
Director, H.J. Heinz Company
(processed foods and allied products)
(1987-1988; 1993-2003).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Darby Overseas Investments, Ltd., Darby Emerging Markets Investments LDC and Darby Technology Ventures Group, LLC
(investment firms) (1994-present); Director, Templeton Capital Advisors Ltd. and Franklin Templeton Investment Fund; and
FORMERLY, Chairman, Templeton Emerging Markets Investment Trust PLC (until 2003), Secretary of the United States Department of
the Treasury (1988-1993); Chairman of the Board, Dillon, Read & Co., Inc. (investment banking) (until 1988); and U.S. Senator,
New Jersey (April 1982-December 1982).
- ------------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (71) Director, Director and 140 None
One Franklin Parkway Chairman of Vice President
San Mateo, CA 94403-1906 the Board and since 1992 and
Vice President Chairman of the
Board since 1995
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President, Franklin Templeton
Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or trustee, as the case may be,
of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies in Franklin Templeton
Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (59) Vice President Since 1996 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Director, Franklin Investment Advisory Services,
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 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (52) Chief Since July 2004 Not Applicable None
One Franklin Parkway Compliance
San Mateo, CA 94403-1906 Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments; Director, Global Compliance, Franklin Resources,
Inc.; and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 51
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
JEFFREY A. EVERETT (40) President and President since Not Applicable None
PO Box N-7759 Chief 2001 and Chief
Lyford Cay, Nassau, Bahamas Executive Executive
Officer - Officer -
Investment Investment
Management Management
since 2002
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Templeton Global Advisors Limited; officer of 15 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Investment Officer, First Pennsylvania Investment Research (until 1989).
- ------------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (44) Vice President Since 1990 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Co-President and Chief Executive Officer, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer, Franklin
Mutual Advisers, LLC; Executive Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.; Executive Vice
President and Chief Operating Officer, Templeton Investment Counsel, LLC; President and Director, Franklin Advisers, Inc.;
Executive Vice President, Franklin Investment Advisory Services, Inc. and Franklin Templeton Investor Services, LLC; Chief
Financial Officer, Franklin Advisory Services, LLC; Chairman, Franklin Templeton Services, LLC; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies
in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (57) Senior Vice Since 2002 Not Applicable None
500 East Broward Blvd. President and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 51 of the
investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (57) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources, Inc.;
officer of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief Executive Officer and
Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- ------------------------------------------------------------------------------------------------------------------------------------
52 | Annual Report
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (56) Vice President Vice President Not Applicable None
One Franklin Parkway and Secretary since 2000
San Mateo, CA 94403-1906 and Secretary
since 1996
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Deputy General Counsel and Secretary, Franklin Resources, Inc.; Secretary and Senior Vice President, Templeton
Worldwide, Inc.; Secretary, Franklin Advisers, Inc., Franklin Advisory Services, LLC, Franklin Investment Advisory Services,
Inc., Franklin Mutual Advisers, LLC, Franklin Templeton Alternative Strategies, Inc., Franklin Templeton Investor Services, LLC,
Franklin Templeton Services, LLC, Franklin Templeton Distributors, Inc., Templeton Investment Counsel, LLC, and
Templeton/Franklin Investment Services, Inc.; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 51
of the investment companies in Franklin Templeton Investments; and FORMERLY, Deputy Director, Division of Investment Management,
Executive Assistant and Senior Advisor to the Chairman, Counselor to the Chairman, Special Counsel and Attorney Fellow, U.S.
Securities and Exchange Commission (1986-1995); Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S. District Court
(District of Massachusetts) (until 1979).
- ------------------------------------------------------------------------------------------------------------------------------------
RUPERT H. JOHNSON, JR. (64) Vice President Since 1996 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc. and Franklin Investment Advisory Services, Inc.; Senior Vice
President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
JOHN R. KAY (64) Vice President Since 1994 Not Applicable None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Templeton Worldwide, Inc.; Assistant Vice President, Franklin Templeton Distributors, Inc.; Senior Vice
President, Franklin Templeton Services, LLC; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 35
of the investment companies in Franklin Templeton Investments; and FORMERLY, Vice President and Controller, Keystone Group, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
DIOMEDES LOO-TAM (65) Treasurer Since March 2004 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 15 of the investment companies in Franklin Templeton Investments; Consultant, MyVest Corporation (software development
company and investment advisory services); and FORMERLY, Director and member of Audit and Valuation Committees, Runkel Funds,
Inc. (2002-2003); Treasurer/Controller of most of the investment companies in Franklin Templeton Investments (1985-2000); and
Senior Vice President, Franklin Templeton Services, LLC (1997-2000).
- ------------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (67) Vice President Since 2002 Not Applicable Director, FTI Banque, Arch
600 Fifth Avenue - AML Chemicals, Inc. and Lingnan
Rockefeller Center Compliance Foundation
New York, NY 10020-2302
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; and officer and/or director, as the
case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 48 of the investment companies in Franklin
Templeton Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Report | 53
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
MURRAY L. SIMPSON (67) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case may be, of some of
the subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia) Limited (until 2000); and
Director, Templeton Asset Management Ltd. (until 1999).
- ------------------------------------------------------------------------------------------------------------------------------------
GALEN G. VETTER (52) Chief Financial Since May 2004 Not Applicable None
500 East Broward Blvd. Officer and
Suite 2100 Chief
Fort Lauderdale, FL 33394-3091 Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Officer of 51 of the investment companies in Franklin Templeton Investments; Senior Vice President, Franklin Templeton Services,
LLC; and FORMERLY, Managing Director, RSM McGladrey, Inc.; and Partner, McGladrey & Pullen, LLP.
- ------------------------------------------------------------------------------------------------------------------------------------
*We base the number of portfolios on each separate series of the U.S. registered
investment companies within the Franklin Templeton Investments fund complex.
These portfolios have a common investment adviser or affiliated investment
advisers.
**Charles B. 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 and
major shareholder of Franklin Resources, Inc. (Resources), which is the parent
company of the Fund's adviser and distributor. Nicholas F. Brady is considered
to be an interested person of the Fund under the federal securities laws due to
his ownership interest in a subsidiary of Resources, as well as his director
positions with such company and certain other related companies.
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE 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 OF DIRECTORS HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED EACH OF FRED R. MILLSAPS AND FRANK A. OLSON AS AN AUDIT COMMITTEE
FINANCIAL EXPERT. THE BOARD BELIEVES THAT MESSRS. MILLSAPS AND OLSON QUALIFY AS
SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND AND EXPERIENCE.
MR. MILLSAPS WHO IS CURRENTLY A DIRECTOR OF VARIOUS BUSINESS AND NONPROFIT
ORGANIZATIONS, HAS SERVED AS A MEMBER AND CHAIRMAN OF THE FUND AUDIT COMMITTEE
SINCE 1991 AND WAS FORMERLY CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF LANDMARK
BANKING CORPORATION AND FINANCIAL VICE PRESIDENT OF FLORIDA POWER AND LIGHT. MR.
OLSON WHO CURRENTLY SERVES AS CHAIRMAN OF THE BOARD OF THE HERTZ CORPORATION AND
WAS ITS CHIEF EXECUTIVE OFFICER FROM 1977 TO 1999, IS A DIRECTOR AND AUDIT
COMMITTEE MEMBER OF AMERADA HESS CORPORATION AND WHITE MOUNTAINS INSURANCE
GROUP, LTD. AND A FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER OF UNITED
AIRLINES. AS A RESULT OF SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF DIRECTORS
BELIEVES THAT MR. MILLSAPS AND MR. OLSON 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. MESSRS. MILLSAPS AND OLSON ARE INDEPENDENT DIRECTORS AS
THAT TERM IS DEFINED UNDER THE APPLICABLE SECURITIES AND EXCHANGE COMMISSION
RULES AND RELEASES.
THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.
54 | Annual Report
Templeton Growth Fund
SHAREHOLDER INFORMATION
PROXY VOTING POLICIES AND PROCEDURES
The Fund 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 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records are also made available online
at franklintempleton.com and posted on the Securities and Exchange Commission's
website at sec.gov and reflect the 12-month period beginning July 1, 2003, and
ending June 30, 2004.
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q 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
1-800/SEC-0330.
Annual Report | 55
This page intentionally left blank.
Literature Request
TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT 1-800/DIAL BEN(R)
(1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS SHOULD CAREFULLY
CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES BEFORE
INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE CAREFULLY
READ THE PROSPECTUS BEFORE INVESTING. TO ENSURE THE HIGHEST QUALITY OF SERVICE,
WE MAY MONITOR, RECORD AND ACCESS TELEPHONE CALLS TO OR FROM OUR SERVICE
DEPARTMENTS. THESE CALLS CAN BE IDENTIFIED BY THE PRESENCE OF A REGULAR BEEPING
TONE.
FRANKLIN TEMPLETON INVESTMENTS
INTERNATIONAL
Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund
GLOBAL
Mutual Discovery Fund
Templeton Capital Accumulator Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
GROWTH
Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small Cap Growth Fund II 1
Franklin Small-Mid Cap Growth Fund
VALUE
Franklin Balance Sheet
Investment Fund 2
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 2
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 3
Mutual Shares Fund
BLEND
Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund 4
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund
ASSET ALLOCATION
Franklin Templeton Corefolio
Allocation Fund
Franklin Templeton Founding Funds
Allocation Fund
Franklin Templeton Perspectives
Allocation Fund
TARGET FUNDS
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
INCOME
Franklin Adjustable U.S. Government Securities Fund 5
Franklin's AGE High Income Fund
Franklin Federal Money Fund 5, 6
Franklin Floating Rate Daily Access Fund
Franklin Floating Rate Trust 3
Franklin Income Fund
Franklin Limited Maturity
U.S. Government Securities Fund 5, 7
Franklin Money Fund 5, 6
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund 5
Templeton Global Bond Fund
TAX-FREE INCOME 8
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 9
Tax-Exempt Money Fund 5, 6
LIMITED-TERM FUNDS
California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund
INTERMEDIATE-TERM FUNDS
California Intermediate-Term
Tax-Free Income Fund
Federal Intermediate-Term
Tax-Free Income Fund
New York Intermediate-Term
Tax-Free Income Fund
STATE-SPECIFIC
Alabama
Arizona
California 10
Colorado
Connecticut
Florida 10
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 9
Michigan 9
Minnesota 9
Missouri
New Jersey
New York 10
North Carolina
Ohio 9
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance
Products Trust 11
1. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.
2. The fund is only open to existing shareholders and select retirement plans.
3. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.
4. Upon reaching approximately $350 million in assets, the fund intends to close
to all investors.
5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
6. Although the fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
7. Formerly Franklin Short-Intermediate U.S. Government Securities Fund.
Effective 9/1/04, the fund's name changed; its investment goal and strategy
remained the same.
8. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.
9. Portfolio of insured municipal securities.
10. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).
11. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
09/04 Not part of the annual report
[LOGO OMITTED]
FRANKLIN [R] TEMPLETON [R] One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906
WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at
franklintempleton.com. See inside for details.
ANNUAL REPORT AND SHAREHOLDER LETTER
TEMPLETON GROWTH FUND, INC.
INVESTMENT MANAGER
Templeton Global Advisors Limited
PRINCIPAL UNDERWRITER
Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
Authorized for distribution only when accompanied or preceded by a prospectus.
Investors should carefully consider a fund's investment goals, risks, charges
and expenses before investing. Like any investment in securities, the value of
the Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political and other factors. The Fund and its investors are not
protected from such losses by the Investment Manager. Therefore, investors who
cannot accept this risk should not invest in shares of the Fund. The prospectus
contains this and other information; please read it carefully before investing.
To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.
101 A2004 10/04
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 11(a), 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.
(A)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial experts are Fred R. Millsaps and Frank A.
Olson, they are "independent" as defined under the relevant Securities and
Exchange Commission Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $93,245 for the fiscal year ended August 31, 2004 and $145,414 for the
fiscal year ended August 31, 2003.
(b) Audit-Related Fees
The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4 were $0 for the
fiscal year ended August 31, 2004 and $3,614 for the fiscal year ended August
31, 2003. The services for which these fees were paid included attestation
services.
The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of the their financial
statements were $45,000 for the fiscal year ended August 31, 2004 and $0 for the
fiscal year ended August 31, 2003. The services for which these fees were paid
included attestation services.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $7,403 for the fiscal year ended August 31,
2004 and $0 for the fiscal year ended August 31, 2003. The services for which
these fees were paid included review of materials provided to the fund Board in
connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not reported
in paragraphs (a)-(c) of Item 4 were $92,597 for the fiscal year ended August
31, 2004 and $12,994 for the fiscal year ended August 31, 2003. The services for
which these fees were paid included review of materials provided to the fund
Board in connection with the investment management contract renewal process,
subscription fees and a review of an ICI transfer agent survey.
(e) (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 Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant 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.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were pre-approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $145,000 for the fiscal year ended August 31, 2004 and $16,608
for the fiscal year ended August 31, 2003.
(h) No disclosures are required by this Item 4(h).
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANIES AND AFFILIATED PURCHASES. N/A
ITEM 9. SUBMISSION OF MATTERS OF A VOTE OF SECURITY HOLDERS.
There have been no changes to the procedures by which shareholders may recommend
nominees to the Registrant's Board of Directors that would require disclosure
herein.
ITEM 10. CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 11. EXHIBITS
(a) Code of Ethics
(b)(1) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
(b)(2) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
of Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON GROWTH FUND, INC.
By /s/JIMMY D. GAMBILL
Chief Executive Officer - Finance and Administration
Date October 29, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/JIMMY D. GAMBILL
Chief Executive Officer - Finance and Administration
Date October 29, 2004
By /s/GALEN G. VETTER
Chief Financial Officer
Date October 29, 2004