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 ---------- TEMPLETON GROWTH FUND, INC. ------------------------------ (Exact name of registrant as specified in charter) 500 EAST BROWARD BLVD., FORT LAUDERDALE, FL 33394-3091 -------------------------------------------------------- (Address of principal executive offices) (Zip code) CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906 ------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (954) 527-7500 --------------- Date of fiscal year end: 8/31 ---- Date of reporting period: 8/31/05 ------- ITEM 1. REPORTS TO STOCKHOLDERS AUGUST 31, 2005 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ANNUAL REPORT AND SHAREHOLDER LETTER GLOBAL - -------------------------------------------------------------------------------- TEMPLETON GROWTH FUND, INC. WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL? Eligible shareholders can sign up for eDelivery at franklintempleton.com. See inside for details. - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] (LOGO) FRANKLIN TEMPLETON INVESTMENTS Franklin o TEMPLETON o Mutual Series [GRAPHIC OMITTED] Franklin Templeton Investments GAIN FROM OUR PERSPECTIVE(R) 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 offices in over 25 countries, Templeton offers investors a truly global perspective. MUTUAL SERIES. Founded in 1949, Mutual Series is dedicated to a unique style of value investing, searching aggressively for opportunity among what it believes are undervalued stocks, as well as arbitrage situations and distressed securities. TRUE DIVERSIFICATION Because our management groups work independently and adhere to different investment approaches, Franklin, Templeton and Mutual Series funds typically have distinct portfolios. That's why our funds can be used to build truly diversified allocation plans 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, accurate and personal service that has helped us become one of the most trusted names in financial services. - -------------------------------------------------------------------------------- MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] Not part of the annual report Contents SHAREHOLDER LETTER ............... 1 ANNUAL REPORT Templeton Growth Fund, Inc. ....................... 4 Performance Summary .............. 9 Your Fund's Expenses ............. 15 Financial Highlights and Statement of Investments ......... 17 Financial Statements ............. 27 Notes to Financial Statements ....................... 31 Report of Independent Registered Public Accounting Firm .................. 41 Tax Designation .................. 42 Board Members and Officers ....... 47 Shareholder Information .......... 53 - -------------------------------------------------------------------------------- Annual Report Templeton Growth Fund, Inc. 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. - ---------------------------------------- PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. INVEST- MENT 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. - --------------------------------------- We are pleased to bring you Templeton Growth Fund's annual report for the fiscal year ended August 31, 2005. PERFORMANCE OVERVIEW For the 12 months under review, Templeton Growth Fund - Class A posted a 19.72% cumulative total return. The Fund outperformed its benchmark, the Morgan Stanley Capital International (MSCI) World Index, which posted an 18.69% total return for the same period. 1 Please note that index performance information is provided for reference and that we do not attempt to track the index, but rather undertake investments on the basis of fundamental research. We are pleased with this short-term performance, but place more significance on the long-term performance delivered by our consistent investment strategy. For the 10-year period ended August 31, 2005, Templeton Growth Fund - Class A delivered a 173.82% cumulative total return, compared with the MSCI World Index's 109.64% cumulative total return for the same period. 1 You can find more performance data in the Performance Summary beginning on page 9. ECONOMIC AND MARKET OVERVIEW The global economic recovery continued in the 12-month period ended August 31, 2005, at a pace that appeared to defy prior expectations of a global slowdown. U.S. gross domestic product (GDP) has expanded during fifteen consecutive quarters, with an annualized growth rate at or above 3.3% in each of the past nine. Apart from western Europe, foreign growth also appeared to be beating the expectations of a slowdown. China's industrial production 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. 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 22. 4 | Annual Report EDGAR REPRESENTATION OF DATA USED IN PRINTED DOCUMENT [GRAPHIC OMITTED] GEOGRAPHIC BREAKDOWN Based on Total Net Assets as of 8/31/05 Europe 46.2% North America 28.3% Asia 17.6% Latin America 0.8% Australia & New Zealand 0.7% Middle East & Africa 0.6% Short-Term Investments & Other Net Assets 5.8% and GDP expanded at annualized rates of 16.4% and 9.5% for the first half of 2005, and Japan's economic outlook seemed brighter after GDP grew 4.9% and 3.3% annualized in the first and second quarters of 2005. 2 More recently, Japanese domestic demand continued to recover underpinned by strengthening private consumption and business investment. Oil prices remained a major concern for the global economy as they climbed higher, reaching a record price of almost $70 per barrel in August. 3 Rising energy costs impacted companies and sentiment around the world. Continental European economic growth lagged as consumer and business sentiment were weak for a number of reasons in addition to high energy costs. This region continued to face political and economic integration issues. Unemployment in Germany and France remained at or above 10%. 4 Largely in consideration of these factors, the European Central Bank (ECB) revised its growth expectations for the 12-nation euro zone. The ECB lowered its 2005 GDP growth estimate to a more modest range of 1.1% to 1.7% from a December 2004 forecast of 1.4% to 2.4%. In the political arena, France and the Netherlands defeated a referendum to adopt a European constitution, raising some uncertainty about the European Union's political future. Despite the predominantly weak outlook for the European economy, many European equity markets performed well during the fiscal year. In the 12-month period, European equity markets returned 26.06%, as measured by the MSCI Europe Index, using the local currencies of this index's constituents. 5 The MSCI Pacific Index, which includes Japan, returned 17.50% in local currencies over the same period. 6 U.S. markets, as measured by the MSCI USA Index, returned 13.24%. 7 While the U.S. dollar depreciated in the foreign exchange market in the first half of the period, it appreciated in the latter half. Overall for the year under review, foreign currency conversion had little effect on European and Pacific region investment returns. 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 2. Sources: National Bureau of Statistics, China; Economic and Social Research Institute (Japan). 3. Source: Bloomberg Energy/Commodity Service. 4. Sources: Deutsche Bundesbank (Germany); INSEE National Statistics Office (France). Unemployment data for France as of 7/31/05. 5. Source: Standard & Poor's Micropal. The MSCI Europe Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in Europe. 6. Source: Standard & Poor's Micropal. The MSCI Pacific Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in the Pacific region. 7. Source: Standard & Poor's Micropal. The MSCI USA Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in the U.S. Annual Report | 5 TOP 10 COUNTRIES Based on Equity Securities 8/31/05 - ---------------------------------------- % OF TOTAL NET ASSETS - ---------------------------------------- U.S. 24.6% - ---------------------------------------- U.K. 19.8% - ---------------------------------------- Japan 10.6% - ---------------------------------------- Netherlands 6.1% - ---------------------------------------- Switzerland 4.9% - ---------------------------------------- Germany 4.7% - ---------------------------------------- South Korea 3.6% - ---------------------------------------- France 3.1% - ---------------------------------------- Hong Kong 2.8% - ---------------------------------------- Spain 2.2% - ---------------------------------------- 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. MANAGER'S DISCUSSION Our bottom-up investment strategy frequently results in a portfolio that has a very different geographic and industry mix compared to the Fund's benchmark, the MSCI World Index. In particular, the Fund was substantially overweighted in the U.K. and underweighted in the U.S. Both factors positively contributed to Fund performance during the year under review. Strong stock selection and an overweighted position in the aerospace and defense industry also helped the Fund's relative performance. For example, British airplane and defense company BAE Systems appreciated in value 70%, while British civil and defense aerospace company Rolls Royce rose 50%. Another strong performer was U.S. aerospace and defense manufacturer Boeing. We purchased the company's shares in 2002 and 2003 at an average price of $30.86 per share, at a time when there was widespread pessimism about the outlook for global commercial aircraft sales. The Fund sold its stake in Boeing during the period at an average price of $62.78 per share. The Fund also benefited from its German investments. Chemicals company Bayer, power utility company E.ON and auto manufacturer Volkswagen all performed well. Although we sold our stake in Bayer during the fiscal year as the stock reached our price target, our German exposure increased with the addition of such holdings as industrial conglomerate Siemens and carmaker BMW. Consistent with our investment strategy, we believe both stocks traded at attractive levels relative to their long-term earnings potential at period-end. Siemens was in the process of restructuring its portfolio and cutting costs under the leadership of a new chief executive officer (CEO). BMW introduced a strong line-up of new models and recently announced a buy-back of up to 10% of its shares. Telecommunication services was a strong performing sector for the Fund. 8 The Fund added to sector holdings through the purchase of France Telecom, one of Europe's largest telecom operators. France Telecom boasted a strong balance 8. In the SOI, the telecommunication services sector comprises diversified telecommunication services and wireless telecommunication services. 6 | Annual Report sheet and cash flow. It recently doubled its dividend and owns Orange, one of Europe's leading mobile businesses. We believe France Telecom had one of the sector's most attractive valuations. The Fund's bank holdings also contributed positively to performance. In particular, Kookmin Bank in South Korea and Nordea Bank in Sweden performed well, appreciating in value 59% and 31%. The Fund sold its stake in Nordea during the reporting period. Despite the Fund's strong performance during the year, there were detractors including a number of the Fund's Japanese investments. Japanese equity markets have underperformed those in the U.S. by a wide margin in the past 10 years. Consistent with our strategy, we found opportunities to invest in companies we believe were undervalued on a five-year view. As a result, exposure to the Japanese market increased from 7.1% of the Fund's total net assets one year ago to 10.6% on August 31, 2005. For example, we added Mitusbishi Tokyo Financial Group, one of Japan's largest banks, and KDDI, a leading wireless telecom operator, to the portfolio during the period. The materials sector was also a drag on Fund performance, largely as a result of poor performance from paper and forest products industry stocks. 9 During the period, the Fund increased its weighting in the sector. Although the immediate outlook for the industry remained challenging, our analysis indicated that many paper stocks traded at attractive valuations relative to their long-term earnings potential. We added to holdings of Stora Enso and UPM-Kymmene in Finland, and initiated a position in Sappi, South Africa's largest paper producer and leading global producer of coated fine paper. The Fund also purchased shares in Svenska Cellulosa, a Swedish paper company. Investments in the paper and forest products industry totaled 3.2% at period-end. Holdings in the media sector also negatively affected performance. The MSCI World Media Index has performed poorly relative to the MSCI World Index in the past five years, providing what we consider additional opportunities in the sector.10 We increased our media sector weighting by purchasing shares of News Corp., a media conglomerate with interests in pay television, film, television programming and publishing. We believe that the company traded at an attractive discount to the value of its underlying assets. We also purchased VNU, the Dutch-listed owner of Nielsen Media Research, a media measurement and information provider, and A.C. Nielsen, a marketing information company. TOP 10 EQUITY HOLDINGS 8/31/05 - --------------------------------------------------- COMPANY % OF TOTAL SECTOR/INDUSTRY, COUNTRY NET ASSETS - --------------------------------------------------- Royal Dutch Shell PLC, ord. & ADR 2.1% OIL, GAS & CONSUMABLE FUELS, U.K. - --------------------------------------------------- GlaxoSmithKline PLC 1.9% PHARMACEUTICALS, U.K. - --------------------------------------------------- BP PLC 1.7% OIL, GAS & CONSUMABLE FUELS, U.K. - --------------------------------------------------- Nestle SA 1.7% FOOD PRODUCTS, SWITZERLAND - --------------------------------------------------- Royal Bank of Scotland Group PLC, common & restricted 1.6% COMMERCIAL BANKS, U.K. - --------------------------------------------------- Vodafone Group PLC 1.6% WIRELESS TELECOMMUNICATION SERVICES, U.K. - --------------------------------------------------- News Corp., A 1.6% MEDIA, U.S. - --------------------------------------------------- Eni SpA 1.5% OIL, GAS & CONSUMABLE FUELS, ITALY - --------------------------------------------------- Merck & Co. Inc. 1.5% PHARMACEUTICALS, U.S. - --------------------------------------------------- Siemens AG 1.5% INDUSTRIAL CONGLOMERATES, GERMANY - --------------------------------------------------- 9. In the SOI, the materials sector comprises chemicals, metals and mining, and paper and forest products. 10. Source: Standard & Poor's Micropal. The MSCI World Media Index is a free float-adjusted, market-capitalization weighted index that is designed to measure global developed equity market performance of the media industry of the MSCI World Index. Annual Report | 7 Shares of Bank of New York were recently added to the portfolio. Bank of New York is one of the oldest U.S. banks and one of the world's largest securities services providers. Elsewhere in the financials sector, the Fund initiated a position in insurance company American International Group (AIG).11 AIG stock declined during the year as a result of negative publicity associated with the resignation of its high-profile CEO and the restatement of its prior year results. In our assessment this created an opportunity to buy shares of AIG at an attractive price relative to the company's long-term growth prospects. This decision had a positive impact on Fund performance by period-end. Thank you for investing in Templeton Growth Fund. We welcome your comments and look forward to serving your future investment needs. /s/ MURDO MURCHISON Murdo Murchison, CFA Portfolio Manager Templeton Growth Fund, Inc. [PHOTO OMITTED] 11. In the SOI, the financials sector comprises commercial banks, capital markets, insurance and real estate. THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF AUGUST 31, 2005, 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. 8 | Annual Report Performance Summary as of 8/31/05 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 reinvestment of the Fund's dividends and capital gain distributions, if any, and any unrealized gains or losses. PRICE AND DISTRIBUTION INFORMATION - --------------------------------------------------------------------------------------------------------- CLASS A (SYMBOL: TEPLX) CHANGE 8/31/05 8/31/04 - --------------------------------------------------------------------------------------------------------- Net Asset Value (NAV) +$2.83 $23.86 $21.03 - --------------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/04-8/31/05) - --------------------------------------------------------------------------------------------------------- Dividend Income $0.4159 - --------------------------------------------------------------------------------------------------------- Short-Term Capital Gain $0.0356 - --------------------------------------------------------------------------------------------------------- Long-Term Capital Gain $0.7421 - --------------------------------------------------------------------------------------------------------- TOTAL $1.1936 - --------------------------------------------------------------------------------------------------------- CLASS B (SYMBOL: TMGBX) CHANGE 8/31/05 8/31/04 - --------------------------------------------------------------------------------------------------------- Net Asset Value (NAV) +$2.73 $23.37 $20.64 - --------------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/04-8/31/05) - --------------------------------------------------------------------------------------------------------- Dividend Income $0.2733 - --------------------------------------------------------------------------------------------------------- Short-Term Capital Gain $0.0356 - --------------------------------------------------------------------------------------------------------- Long-Term Capital Gain $0.7421 - --------------------------------------------------------------------------------------------------------- TOTAL $1.0510 - --------------------------------------------------------------------------------------------------------- CLASS C (SYMBOL: TEGTX) CHANGE 8/31/05 8/31/04 - --------------------------------------------------------------------------------------------------------- Net Asset Value (NAV) +$2.72 $23.28 $20.56 - --------------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/04-8/31/05) - --------------------------------------------------------------------------------------------------------- Dividend Income $ 0.2656 - --------------------------------------------------------------------------------------------------------- Short-Term Capital Gain $ 0.0356 - --------------------------------------------------------------------------------------------------------- Long-Term Capital Gain $ 0.7421 - --------------------------------------------------------------------------------------------------------- TOTAL $ 1.0433 - --------------------------------------------------------------------------------------------------------- CLASS R (SYMBOL: TEGRX) CHANGE 8/31/05 8/31/04 - --------------------------------------------------------------------------------------------------------- Net Asset Value (NAV) +$2.78 $23.68 $20.90 - --------------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/04-8/31/05) - --------------------------------------------------------------------------------------------------------- Dividend Income $0.3785 - --------------------------------------------------------------------------------------------------------- Short-Term Capital Gain $0.0356 - --------------------------------------------------------------------------------------------------------- Long-Term Capital Gain $0.7421 - --------------------------------------------------------------------------------------------------------- TOTAL $1.1562 - --------------------------------------------------------------------------------------------------------- Annual Report | 9 Performance Summary (CONTINUED) PRICE AND DISTRIBUTION INFORMATION (CONTINUED) - --------------------------------------------------------------------------------------------------------- ADVISOR CLASS (SYMBOL: TGADX) CHANGE 8/31/05 8/31/04 - --------------------------------------------------------------------------------------------------------- Net Asset Value (NAV) +$2.83 $23.90 $21.07 DISTRIBUTIONS (9/1/04-8/31/05) Dividend Income $0.4688 Short-Term Capital Gain $0.0356 Long-Term Capital Gain $0.7421 TOTAL $1.2465 Templeton Growth Fund paid distributions derived from long-term capital gains totaling 74.21 cents per share in October and December 2004. The Fund designates such distributions as capital gain dividends per Internal Revenue Code Section 852(b)(3). 10 | 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. - --------------------------------------------------------------------------------------------------------- CLASS A 1-YEAR 5-YEAR 10-YEAR - --------------------------------------------------------------------------------------------------------- Cumulative Total Return 1 19.72% 51.97% 173.82% - --------------------------------------------------------------------------------------------------------- Average Annual Total Return 2 12.85% 7.45% 9.94% - --------------------------------------------------------------------------------------------------------- Value of $10,000 Investment 3 $11,285 $14,323 $25,803 - --------------------------------------------------------------------------------------------------------- Avg. Ann. Total Return (9/30/05) 4 12.35% 8.54% 9.91% - --------------------------------------------------------------------------------------------------------- CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99) - --------------------------------------------------------------------------------------------------------- Cumulative Total Return 1 18.84% 46.46% 85.95% - --------------------------------------------------------------------------------------------------------- Average Annual Total Return 2 14.84% 7.63% 9.75% - --------------------------------------------------------------------------------------------------------- Value of $10,000 Investment 3 $11,484 $14,446 $18,595 - --------------------------------------------------------------------------------------------------------- Avg. Ann. Total Return (9/30/05) 4 14.33% 8.73% 9.93% - --------------------------------------------------------------------------------------------------------- CLASS C 1-YEAR 5-YEAR 10-YEAR - --------------------------------------------------------------------------------------------------------- Cumulative Total Return 1 18.77% 46.42% 153.88% - --------------------------------------------------------------------------------------------------------- Average Annual Total Return 2 17.77% 7.93% 9.76% - --------------------------------------------------------------------------------------------------------- Value of $10,000 Investment 3 $11,777 $14,642 $25,388 - --------------------------------------------------------------------------------------------------------- Avg. Ann. Total Return (9/30/05) 4 17.31% 9.03% 9.74% - --------------------------------------------------------------------------------------------------------- CLASS R 1-YEAR 3-YEAR INCEPTION (1/1/02) - --------------------------------------------------------------------------------------------------------- Cumulative Total Return 1 19.44% 53.01% 44.62% - --------------------------------------------------------------------------------------------------------- Average Annual Total Return 2 18.44% 15.23% 10.61% - --------------------------------------------------------------------------------------------------------- Value of $10,000 Investment 3 $11,844 $15,301 $14,462 - --------------------------------------------------------------------------------------------------------- Avg. Ann. Total Return (9/30/05) 4 17.92% 9.54% 10.22% - --------------------------------------------------------------------------------------------------------- ADVISOR CLASS5 1-YEAR 5-YEAR 10-YEAR - --------------------------------------------------------------------------------------------------------- Cumulative Total Return 1 19.97% 53.83% 182.22% - --------------------------------------------------------------------------------------------------------- Average Annual Total Return 2 19.97% 9.00% 10.93% - --------------------------------------------------------------------------------------------------------- Value of $10,000 Investment 3 $11,997 $15,383 $28,222 - --------------------------------------------------------------------------------------------------------- Avg. Ann. Total Return (9/30/05) 4 19.50% 10.11% 10.90% - --------------------------------------------------------------------------------------------------------- PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236. Annual Report | 11 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 8/31/05 - ---------------------------------------- 1-Year 12.85% - ---------------------------------------- 5-Year 7.45% - ---------------------------------------- 10-Year 9.94% - ---------------------------------------- CLASS A (9/1/95-8/31/05) EDGAR REPRESENTATION OF DATA USED IN PRINTED DOCUMENT [GRAPHIC OMITTED] Period Templeton Growth Fund MSCI World Index 6 CPI 6 9/1/95 $9,423 $10,000 $10,000 9/30/95 $9,637 $10,293 $10,020 10/31/95 $9,329 $10,133 $10,052 11/30/95 $9,542 $10,487 $10,046 12/31/95 $9,666 $10,795 $10,039 1/31/96 $10,012 $10,993 $10,098 2/29/96 $10,045 $11,062 $10,131 3/31/96 $10,162 $11,248 $10,183 4/30/96 $10,391 $11,514 $10,222 5/31/96 $10,513 $11,526 $10,242 6/30/96 $10,524 $11,587 $10,249 7/31/96 $10,185 $11,179 $10,268 8/31/96 $10,446 $11,310 $10,288 9/30/96 $10,658 $11,755 $10,320 10/31/96 $10,832 $11,839 $10,353 11/30/96 $11,421 $12,504 $10,373 12/31/96 $11,653 $12,306 $10,373 1/31/97 $11,933 $12,457 $10,405 2/28/97 $12,029 $12,602 $10,438 3/31/97 $11,975 $12,355 $10,464 4/30/97 $12,243 $12,761 $10,477 5/31/97 $12,852 $13,551 $10,471 6/30/97 $13,365 $14,229 $10,484 7/31/97 $13,871 $14,887 $10,497 8/31/97 $13,400 $13,893 $10,517 9/30/97 $14,265 $14,650 $10,543 10/31/97 $13,333 $13,881 $10,569 11/30/97 $13,373 $14,129 $10,562 12/31/97 $13,539 $14,303 $10,549 1/31/98 $13,560 $14,704 $10,569 2/28/98 $14,306 $15,701 $10,589 3/31/98 $14,941 $16,367 $10,608 4/30/98 $15,018 $16,529 $10,628 5/31/98 $14,564 $16,324 $10,647 6/30/98 $14,146 $16,714 $10,661 7/31/98 $13,811 $16,690 $10,674 8/31/98 $11,710 $14,466 $10,687 9/30/98 $12,003 $14,725 $10,700 10/31/98 $13,025 $16,058 $10,726 11/30/98 $13,493 $17,016 $10,726 12/31/98 $13,203 $17,850 $10,719 1/31/99 $13,106 $18,243 $10,746 2/28/99 $13,009 $17,760 $10,759 3/31/99 $13,921 $18,502 $10,791 4/30/99 $15,647 $19,234 $10,870 5/31/99 $15,082 $18,534 $10,870 6/30/99 $15,784 $19,401 $10,870 7/31/99 $15,768 $19,346 $10,903 8/31/99 $15,776 $19,314 $10,929 9/30/99 $15,211 $19,129 $10,981 10/31/99 $15,224 $20,126 $11,001 11/30/99 $15,900 $20,695 $11,007 12/31/99 $17,221 $22,373 $11,007 1/31/00 $16,039 $21,094 $11,040 2/29/00 $15,496 $21,154 $11,105 3/31/00 $16,617 $22,619 $11,197 4/30/00 $16,402 $21,665 $11,203 5/31/00 $16,704 $21,119 $11,216 6/30/00 $16,790 $21,833 $11,275 7/31/00 $16,678 $21,221 $11,302 8/31/00 $16,980 $21,914 $11,302 9/30/00 $16,462 $20,751 $11,360 10/31/00 $16,611 $20,406 $11,380 11/30/00 $16,510 $19,170 $11,387 12/31/00 $17,521 $19,483 $11,380 1/31/01 $17,759 $19,861 $11,452 2/28/01 $17,521 $18,185 $11,498 3/31/01 $16,701 $16,994 $11,524 4/30/01 $17,378 $18,254 $11,570 5/31/01 $17,721 $18,028 $11,622 6/30/01 $17,397 $17,465 $11,642 7/31/01 $17,330 $17,235 $11,609 8/31/01 $17,254 $16,411 $11,609 9/30/01 $15,787 $14,967 $11,661 10/31/01 $16,308 $15,256 $11,622 11/30/01 $17,338 $16,160 $11,602 12/31/01 $17,615 $16,264 $11,557 1/31/02 $17,234 $15,773 $11,583 2/28/02 $17,576 $15,639 $11,629 3/31/02 $18,232 $16,334 $11,694 4/30/02 $18,330 $15,785 $11,759 5/31/02 $18,711 $15,822 $11,759 6/30/02 $17,948 $14,865 $11,766 7/31/02 $16,725 $13,614 $11,779 8/31/02 $16,735 $13,642 $11,818 9/30/02 $14,905 $12,145 $11,838 10/31/02 $15,669 $13,043 $11,857 11/30/02 $16,694 $13,749 $11,857 12/31/02 $15,946 $13,086 $11,831 1/31/03 $15,626 $12,690 $11,884 2/28/03 $15,095 $12,473 $11,975 3/31/03 $14,755 $12,439 $12,047 4/30/03 $16,146 $13,550 $12,021 5/31/03 $17,418 $14,331 $12,001 6/30/03 $17,738 $14,584 $12,014 7/31/03 $18,138 $14,883 $12,027 8/31/03 $18,559 $15,208 $12,073 9/30/03 $18,619 $15,305 $12,112 10/31/03 $19,413 $16,216 $12,099 11/30/03 $19,892 $16,467 $12,067 12/31/03 $21,185 $17,504 $12,054 1/31/04 $21,626 $17,789 $12,112 2/29/04 $22,169 $18,093 $12,178 3/31/04 $21,831 $17,980 $12,256 4/30/04 $21,636 $17,622 $12,296 5/31/04 $21,759 $17,794 $12,368 6/30/04 $22,148 $18,167 $12,407 7/31/04 $21,451 $17,579 $12,387 8/31/04 $21,554 $17,663 $12,394 9/30/04 $22,077 $18,003 $12,420 10/31/04 $22,602 $18,448 $12,485 11/30/04 $23,982 $19,425 $12,492 12/31/04 $24,786 $20,173 $12,446 1/31/05 $24,179 $19,722 $12,472 2/28/05 $25,251 $20,356 $12,544 3/31/05 $24,861 $19,971 $12,642 4/30/05 $24,352 $19,548 $12,727 5/31/05 $24,450 $19,910 $12,714 6/30/05 $24,775 $20,091 $12,721 7/31/05 $25,414 $20,798 $12,780 8/31/05 $25,803 $20,964 $12,845 AVERAGE ANNUAL TOTAL RETURN - ---------------------------------------- CLASS B 8/31/05 - ---------------------------------------- 1-Year 14.84% - ---------------------------------------- 5-Year 7.63% - ---------------------------------------- Since Inception (1/1/99) 9.75% - ---------------------------------------- CLASS B (1/1/99-8/31/05) EDGAR REPRESENTATION OF DATA USED IN PRINTED DOCUMENT [GRAPHIC OMITTED] Period Templeton Growth Fund MSCI World Index 6 CPI 6 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 $15,648 $9,895 $11,562 9/30/04 $16,011 $10,086 $11,586 10/31/04 $16,390 $10,335 $11,647 11/30/04 $17,376 $10,883 $11,653 12/31/04 $17,950 $11,301 $11,611 1/31/05 $17,496 $11,049 $11,635 2/28/05 $18,261 $11,404 $11,702 3/31/05 $17,966 $11,188 $11,794 4/30/05 $17,592 $10,951 $11,873 5/31/05 $17,648 $11,154 $11,861 6/30/05 $17,878 $11,256 $11,867 7/31/05 $18,324 $11,651 $11,922 8/31/05 $18,595 $11,745 $11,983 12 | Annual Report Performance Summary (CONTINUED) AVERAGE ANNUAL TOTAL RETURN - ---------------------------------------- CLASS C 8/31/05 - ---------------------------------------- 1-Year 17.77% - ---------------------------------------- 5-Year 7.93% - ---------------------------------------- 10-Year 9.76% - ---------------------------------------- CLASS C (9/1/95-8/31/05) EDGAR REPRESENTATION OF DATA USED IN PRINTED DOCUMENT [GRAPHIC OMITTED] Period Templeton Growth Fund MSCI World Index 6 CPI 6 9/1/95 $10,000 $10,000 $10,000 9/30/95 $10,217 $10,293 $10,020 10/31/95 $9,887 $10,133 $10,052 11/30/95 $10,102 $10,487 $10,046 12/31/95 $10,235 $10,795 $10,039 1/31/96 $10,590 $10,993 $10,098 2/29/96 $10,620 $11,062 $10,131 3/31/96 $10,733 $11,248 $10,183 4/30/96 $10,969 $11,514 $10,222 5/31/96 $11,088 $11,526 $10,242 6/30/96 $11,094 $11,587 $10,249 7/31/96 $10,733 $11,179 $10,268 8/31/96 $10,999 $11,310 $10,288 9/30/96 $11,212 $11,755 $10,320 10/31/96 $11,385 $11,839 $10,353 11/30/96 $11,997 $12,504 $10,373 12/31/96 $12,240 $12,306 $10,373 1/31/97 $12,525 $12,457 $10,405 2/28/97 $12,613 $12,602 $10,438 3/31/97 $12,550 $12,355 $10,464 4/30/97 $12,821 $12,761 $10,477 5/31/97 $13,453 $13,551 $10,471 6/30/97 $13,983 $14,229 $10,484 7/31/97 $14,500 $14,887 $10,497 8/31/97 $14,002 $13,893 $10,517 9/30/97 $14,892 $14,650 $10,543 10/31/97 $13,912 $13,881 $10,569 11/30/97 $13,941 $14,129 $10,562 12/31/97 $14,109 $14,303 $10,549 1/31/98 $14,124 $14,704 $10,569 2/28/98 $14,889 $15,701 $10,589 3/31/98 $15,537 $16,367 $10,608 4/30/98 $15,611 $16,529 $10,628 5/31/98 $15,125 $16,324 $10,647 6/30/98 $14,683 $16,714 $10,661 7/31/98 $14,323 $16,690 $10,674 8/31/98 $12,144 $14,466 $10,687 9/30/98 $12,438 $14,725 $10,700 10/31/98 $13,489 $16,058 $10,726 11/30/98 $13,963 $17,016 $10,726 12/31/98 $13,658 $17,850 $10,719 1/31/99 $13,548 $18,243 $10,746 2/28/99 $13,446 $17,760 $10,759 3/31/99 $14,370 $18,502 $10,791 4/30/99 $16,142 $19,234 $10,870 5/31/99 $15,549 $18,534 $10,870 6/30/99 $16,261 $19,401 $10,870 7/31/99 $16,244 $19,346 $10,903 8/31/99 $16,236 $19,314 $10,929 9/30/99 $15,651 $19,129 $10,981 10/31/99 $15,654 $20,126 $11,001 11/30/99 $16,333 $20,695 $11,007 12/31/99 $17,680 $22,373 $11,007 1/31/00 $16,457 $21,094 $11,040 2/29/00 $15,881 $21,154 $11,105 3/31/00 $17,033 $22,619 $11,197 4/30/00 $16,799 $21,665 $11,203 5/31/00 $17,095 $21,119 $11,216 6/30/00 $17,176 $21,833 $11,275 7/31/00 $17,051 $21,221 $11,302 8/31/00 $17,338 $21,914 $11,302 9/30/00 $16,799 $20,751 $11,360 10/31/00 $16,950 $20,406 $11,380 11/30/00 $16,835 $19,170 $11,387 12/31/00 $17,849 $19,483 $11,380 1/31/01 $18,086 $19,861 $11,452 2/28/01 $17,830 $18,185 $11,498 3/31/01 $16,991 $16,994 $11,524 4/30/01 $17,662 $18,254 $11,570 5/31/01 $18,007 $18,028 $11,622 6/30/01 $17,662 $17,465 $11,642 7/31/01 $17,583 $17,235 $11,609 8/31/01 $17,494 $16,411 $11,609 9/30/01 $15,994 $14,967 $11,661 10/31/01 $16,512 $15,256 $11,622 11/30/01 $17,553 $16,160 $11,602 12/31/01 $17,817 $16,264 $11,557 1/31/02 $17,415 $15,773 $11,583 2/28/02 $17,757 $15,639 $11,629 3/31/02 $18,401 $16,334 $11,694 4/30/02 $18,501 $15,785 $11,759 5/31/02 $18,874 $15,822 $11,759 6/30/02 $18,079 $14,865 $11,766 7/31/02 $16,841 $13,614 $11,779 8/31/02 $16,841 $13,642 $11,818 9/30/02 $14,990 $12,145 $11,838 10/31/02 $15,750 $13,043 $11,857 11/30/02 $16,769 $13,749 $11,857 12/31/02 $16,005 $13,086 $11,831 1/31/03 $15,679 $12,690 $11,884 2/28/03 $15,137 $12,473 $11,975 3/31/03 $14,780 $12,439 $12,047 4/30/03 $16,169 $13,550 $12,021 5/31/03 $17,435 $14,331 $12,001 6/30/03 $17,742 $14,584 $12,014 7/31/03 $18,130 $14,883 $12,027 8/31/03 $18,539 $15,208 $12,073 9/30/03 $18,590 $15,305 $12,112 10/31/03 $19,363 $16,216 $12,099 11/30/03 $19,829 $16,467 $12,067 12/31/03 $21,105 $17,504 $12,054 1/31/04 $21,532 $17,789 $12,112 2/29/04 $22,072 $18,093 $12,178 3/31/04 $21,719 $17,980 $12,256 4/30/04 $21,511 $17,622 $12,296 5/31/04 $21,615 $17,794 $12,368 6/30/04 $21,989 $18,167 $12,407 7/31/04 $21,282 $17,579 $12,387 8/31/04 $21,376 $17,663 $12,394 9/30/04 $21,875 $18,003 $12,420 10/31/04 $22,386 $18,448 $12,485 11/30/04 $23,727 $19,425 $12,492 12/31/04 $24,514 $20,173 $12,446 1/31/05 $23,892 $19,722 $12,472 2/28/05 $24,940 $20,356 $12,544 3/31/05 $24,536 $19,971 $12,642 4/30/05 $24,023 $19,548 $12,727 5/31/05 $24,110 $19,910 $12,714 6/30/05 $24,416 $20,091 $12,721 7/31/05 $25,027 $20,798 $12,780 8/31/05 $25,388 $20,964 $12,845 AVERAGE ANNUAL TOTAL RETURN - ---------------------------------------- CLASS R 8/31/05 - ---------------------------------------- 1-Year 18.44% - ---------------------------------------- 3-Year 15.23% - ---------------------------------------- Since Inception (1/1/02) 10.61% - ---------------------------------------- CLASS R (1/1/02-8/31/05) EDGAR REPRESENTATION OF DATA USED IN PRINTED DOCUMENT [GRAPHIC OMITTED] Period Templeton Growth Fund MSCI World Index 6 CPI 6 1/1/02 $10,000 $10,000 $10,000 1/31/02 $9,745 $9,698 $10,023 2/28/02 $9,944 $9,616 $10,062 3/31/02 $10,309 $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 $9,451 $8,388 $10,226 9/30/02 $8,416 $7,467 $10,243 10/31/02 $8,846 $8,020 $10,260 11/30/02 $9,416 $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 $8,512 $7,669 $10,362 3/31/03 $8,314 $7,648 $10,424 4/30/03 $9,102 $8,331 $10,402 5/31/03 $9,816 $8,811 $10,385 6/30/03 $9,992 $8,967 $10,396 7/31/03 $10,218 $9,151 $10,407 8/31/03 $10,451 $9,351 $10,447 9/30/03 $10,484 $9,410 $10,481 10/31/03 $10,927 $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 $12,165 $10,937 $10,481 2/29/04 $12,472 $11,124 $10,538 3/31/04 $12,281 $11,055 $10,606 4/30/04 $12,165 $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 $12,055 $10,808 $10,719 8/31/04 $12,107 $10,860 $10,724 9/30/04 $12,397 $11,069 $10,747 10/31/04 $12,693 $11,343 $10,804 11/30/04 $13,460 $11,944 $10,809 12/31/04 $13,911 $12,403 $10,770 1/31/05 $13,568 $12,126 $10,792 2/28/05 $14,168 $12,516 $10,855 3/31/05 $13,948 $12,279 $10,939 4/30/05 $13,660 $12,019 $11,013 5/31/05 $13,710 $12,242 $11,002 6/30/05 $13,893 $12,353 $11,007 7/31/05 $14,247 $12,788 $11,058 8/31/05 $14,462 $12,890 $11,115 Annual Report | 13 Performance Summary (CONTINUED) AVERAGE ANNUAL TOTAL RETURN - ---------------------------------------- ADVISOR CLASS 5 8/31/05 - ---------------------------------------- 1-Year 19.97% - ---------------------------------------- 5-Year 9.00% - ---------------------------------------- 10-Year 10.93% - ---------------------------------------- ADVISOR CLASS (9/1/95-8/31/05) 5 EDGAR REPRESENTATION OF DATA USED IN PRINTED DOCUMENT [GRAPHIC OMITTED] Period Templeton Growth Fund MSCI World Index CPI 9/1/95 $10,000 $10,000 $10,000 9/30/95 $10,227 $10,293 $10,020 10/31/95 $9,900 $10,133 $10,052 11/30/95 $10,126 $10,487 $10,046 12/31/95 $10,258 $10,795 $10,039 1/31/96 $10,624 $10,993 $10,098 2/29/96 $10,660 $11,062 $10,131 3/31/96 $10,784 $11,248 $10,183 4/30/96 $11,026 $11,514 $10,222 5/31/96 $11,156 $11,526 $10,242 6/30/96 $11,168 $11,587 $10,249 7/31/96 $10,808 $11,179 $10,268 8/31/96 $11,085 $11,310 $10,288 9/30/96 $11,310 $11,755 $10,320 10/31/96 $11,495 $11,839 $10,353 11/30/96 $12,120 $12,504 $10,373 12/31/96 $12,366 $12,306 $10,373 1/31/97 $12,774 $12,457 $10,405 2/28/97 $12,877 $12,602 $10,438 3/31/97 $12,819 $12,355 $10,464 4/30/97 $13,106 $12,761 $10,477 5/31/97 $13,758 $13,551 $10,471 6/30/97 $14,313 $14,229 $10,484 7/31/97 $14,855 $14,887 $10,497 8/31/97 $14,358 $13,893 $10,517 9/30/97 $15,284 $14,650 $10,543 10/31/97 $14,298 $13,881 $10,569 11/30/97 $14,342 $14,129 $10,562 12/31/97 $14,523 $14,303 $10,549 1/31/98 $14,553 $14,704 $10,569 2/28/98 $15,354 $15,701 $10,589 3/31/98 $16,035 $16,367 $10,608 4/30/98 $16,125 $16,529 $10,628 5/31/98 $15,631 $16,324 $10,647 6/30/98 $15,189 $16,714 $10,661 7/31/98 $14,830 $16,690 $10,674 8/31/98 $12,576 $14,466 $10,687 9/30/98 $12,898 $14,725 $10,700 10/31/98 $14,000 $16,058 $10,726 11/30/98 $14,502 $17,016 $10,726 12/31/98 $14,198 $17,850 $10,719 1/31/99 $14,104 $18,243 $10,746 2/28/99 $14,000 $17,760 $10,759 3/31/99 $14,979 $18,502 $10,791 4/30/99 $16,842 $19,234 $10,870 5/31/99 $16,244 $18,534 $10,870 6/30/99 $16,999 $19,401 $10,870 7/31/99 $16,990 $19,346 $10,903 8/31/99 $16,999 $19,314 $10,929 9/30/99 $16,401 $19,129 $10,981 10/31/99 $16,412 $20,126 $11,001 11/30/99 $17,149 $20,695 $11,007 12/31/99 $18,579 $22,373 $11,007 1/31/00 $17,303 $21,094 $11,040 2/29/00 $16,717 $21,154 $11,105 3/31/00 $17,937 $22,619 $11,197 4/30/00 $17,704 $21,665 $11,203 5/31/00 $18,039 $21,119 $11,216 6/30/00 $18,132 $21,833 $11,275 7/31/00 $18,011 $21,221 $11,302 8/31/00 $18,346 $21,914 $11,302 9/30/00 $17,788 $20,751 $11,360 10/31/00 $17,954 $20,406 $11,380 11/30/00 $17,844 $19,170 $11,387 12/31/00 $18,942 $19,483 $11,380 1/31/01 $19,210 $19,861 $11,452 2/28/01 $18,952 $18,185 $11,498 3/31/01 $18,076 $16,994 $11,524 4/30/01 $18,797 $18,254 $11,570 5/31/01 $19,189 $18,028 $11,622 6/30/01 $18,829 $17,465 $11,642 7/31/01 $18,766 $17,235 $11,609 8/31/01 $18,695 $16,411 $11,609 9/30/01 $17,098 $14,967 $11,661 10/31/01 $17,673 $15,256 $11,622 11/30/01 $18,799 $16,160 $11,602 12/31/01 $19,104 $16,264 $11,557 1/31/02 $18,680 $15,773 $11,583 2/28/02 $19,062 $15,639 $11,629 3/31/02 $19,773 $16,334 $11,694 4/30/02 $19,889 $15,785 $11,759 5/31/02 $20,314 $15,822 $11,759 6/30/02 $19,475 $14,865 $11,766 7/31/02 $18,150 $13,614 $11,779 8/31/02 $18,171 $13,642 $11,818 9/30/02 $16,188 $12,145 $11,838 10/31/02 $17,027 $13,043 $11,857 11/30/02 $18,130 $13,749 $11,857 12/31/02 $17,332 $13,086 $11,831 1/31/03 $16,984 $12,690 $11,884 2/28/03 $16,418 $12,473 $11,975 3/31/03 $16,048 $12,439 $12,047 4/30/03 $17,561 $13,550 $12,021 5/31/03 $18,953 $14,331 $12,001 6/30/03 $19,301 $14,584 $12,014 7/31/03 $19,737 $14,883 $12,027 8/31/03 $20,204 $15,208 $12,073 9/30/03 $20,280 $15,305 $12,112 10/31/03 $21,141 $16,216 $12,099 11/30/03 $21,662 $16,467 $12,067 12/31/03 $23,077 $17,504 $12,054 1/31/04 $23,568 $17,789 $12,112 2/29/04 $24,171 $18,093 $12,178 3/31/04 $23,802 $17,980 $12,256 4/30/04 $23,590 $17,622 $12,296 5/31/04 $23,724 $17,794 $12,368 6/30/04 $24,159 $18,167 $12,407 7/31/04 $23,400 $17,579 $12,387 8/31/04 $23,524 $17,663 $12,394 9/30/04 $24,092 $18,003 $12,420 10/31/04 $24,683 $18,448 $12,485 11/30/04 $26,188 $19,425 $12,492 12/31/04 $27,063 $20,173 $12,446 1/31/05 $26,413 $19,722 $12,472 2/28/05 $27,584 $20,356 $12,544 3/31/05 $27,169 $19,971 $12,642 4/30/05 $26,614 $19,548 $12,727 5/31/05 $26,732 $19,910 $12,714 6/30/05 $27,087 $20,091 $12,721 7/31/05 $27,797 $20,798 $12,780 8/31/05 $28,222 $20,964 $12,845 ENDNOTES SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY FLUCTUATIONS, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS. INVESTMENTS IN DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THESE MARKETS' SMALLER 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 128.22% and 9.99%. 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. 14 | 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 | 15 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 2/28/05 VALUE 8/31/05 PERIOD* 2/28/05-8/31/05 - --------------------------------------------------------------------------------------------------------- Actual $1,000 $1,021.90 $5.40 - --------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,019.86 $5.40 - --------------------------------------------------------------------------------------------------------- CLASS B - --------------------------------------------------------------------------------------------------------- Actual $1,000 $1,018.30 $9.21 - --------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,016.08 $9.20 - --------------------------------------------------------------------------------------------------------- CLASS C - --------------------------------------------------------------------------------------------------------- Actual $1,000 $1,018.00 $9.21 - --------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,016.08 $9.20 - --------------------------------------------------------------------------------------------------------- CLASS R - --------------------------------------------------------------------------------------------------------- Actual $1,000 $1,020.70 $6.67 - --------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,018.60 $6.67 - --------------------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------------------- Actual $1,000 $1,023.10 $4.08 - --------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $1,000 $1,021.17 $4.08 - --------------------------------------------------------------------------------------------------------- *Expenses are equal to the annualized expense ratio for each class (A: 1.06%; B: 1.81%; C: 1.81%; R: 1.31%; and Advisor: 0.80%), multiplied by the average account value over the period, multiplied by 184/365 to reflect the one-half year period. 16 | Annual Report Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS --------------------------------------------------------------------- YEAR ENDED AUGUST 31, CLASS A 2005 2004 2003 2002 2001 --------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the year) Net asset value, beginning of year .................... $21.03 $18.54 $17.10 $18.11 $19.67 --------------------------------------------------------------------- Income from investment operations: Net investment income a .............................. 0.36 0.36 0.34 0.33 0.39 Net realized and unrealized gains (losses) ........... 3.66 2.58 1.46 (0.88) (0.16) --------------------------------------------------------------------- Total from investment operations ...................... 4.02 2.94 1.80 (0.55) 0.23 --------------------------------------------------------------------- Less distributions from: Net investment income ................................ (0.41) (0.45) (0.36) (0.40) (0.37) Net realized gains ................................... (0.78) -- -- (0.06) (1.42) --------------------------------------------------------------------- Total distributions ................................... (1.19) (0.45) (0.36) (0.46) (1.79) --------------------------------------------------------------------- Redemption fees ....................................... -- c -- c -- c -- -- --------------------------------------------------------------------- Net asset value, end of year .......................... $23.86 $21.03 $18.54 $17.10 $18.11 ===================================================================== Total return b ........................................ 19.72% 16.14% 10.90% (3.01)% 1.62% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) ....................... $20,786,173 $15,771,174 $13,021,261 $11,689,389 $12,092,917 Ratios to average net assets: Expenses ............................................. 1.06% 1.10% 1.13% 1.10% 1.15% Net investment income ................................ 1.61% 1.75% 2.05% 1.85% 2.11% Portfolio turnover rate ............................... 19.95% 24.58% 32.12% 55.63% 24.29% <FN> a Based on average daily shares outstanding. b Total return does not reflect sales commissions or the contingent deferred sales charge. c Amount is less than $0.01 per share. </FN> Annual Report | See notes to financial statements. |17 Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS (CONTINUED) --------------------------------------------------------------------- YEAR ENDED AUGUST 31, CLASS B 2005 2004 2003 2002 2001 --------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the year) Net asset value, beginning of year .................... $20.64 $18.24 $16.85 $17.87 $19.45 --------------------------------------------------------------------- Income from investment operations: Net investment income a .............................. 0.19 0.21 0.22 0.20 0.25 Net realized and unrealized gains (losses) ........... 3.59 2.54 1.43 (0.87) (0.16) --------------------------------------------------------------------- Total from investment operations ...................... 3.78 2.75 1.65 (0.67) 0.09 --------------------------------------------------------------------- Less distributions from: Net investment income ................................ (0.27) (0.35) (0.26) (0.29) (0.25) Net realized gains ................................... (0.78) -- -- (0.06) (1.42) --------------------------------------------------------------------- Total distributions ................................... (1.05) (0.35) (0.26) (0.35) (1.67) --------------------------------------------------------------------- Redemption fees ....................................... -- c -- c -- c -- -- --------------------------------------------------------------------- Net asset value, end of year .......................... $23.37 $20.64 $18.24 $16.85 $17.87 ===================================================================== Total return b ........................................ 18.84% 15.27% 10.08% (3.74)% 0.91% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) ....................... $557,670 $433,467 $278,340 $166,015 $93,301 Ratios to average net assets: Expenses ............................................. 1.81% 1.85% 1.88% 1.85% 1.89% Net investment income ................................ 0.86% 1.00% 1.30% 1.10% 1.40% Portfolio turnover rate ............................... 19.95% 24.58% 32.12% 55.63% 24.29% <FN> a Based on average daily shares outstanding. b Total return does not reflect the contingent deferred sales charge. c Amount is less than $0.01 per share. </FN> 18 | See notes to financial statements. | Annual Report Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS (CONTINUED) --------------------------------------------------------------------- YEAR ENDED AUGUST 31, CLASS C 2005 2004 2003 2002 2001 --------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the year) Net asset value, beginning of year .................... $20.56 $18.15 $16.74 $17.73 $19.28 --------------------------------------------------------------------- Income from investment operations: Net investment income a .............................. 0.19 0.20 0.21 0.20 0.25 Net realized and unrealized gains (losses) ........... 3.57 2.54 1.44 (0.86) (0.16) --------------------------------------------------------------------- Total from investment operations ...................... 3.76 2.74 1.65 (0.66) 0.09 --------------------------------------------------------------------- Less distributions from: Net investment income ................................ (0.26) (0.33) (0.24) (0.27) (0.22) Net realized gains ................................... (0.78) -- -- (0.06) (1.42) --------------------------------------------------------------------- Total distributions ................................... (1.04) (0.33) (0.24) (0.33) (1.64) --------------------------------------------------------------------- Redemption fees ....................................... -- c -- c -- c -- -- --------------------------------------------------------------------- Net asset value, end of year .......................... $23.28 $20.56 $18.15 $16.74 $17.73 ===================================================================== Total return b ........................................ 18.77% 15.30% 10.08% (3.73)% 0.90% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) ....................... $1,965,909 $1,394,289 $1,064,405 $897,064 $906,390 Ratios to average net assets: Expenses ............................................. 1.81% 1.85% 1.88% 1.84% 1.89% Net investment income ................................ 0.86% 1.00% 1.30% 1.11% 1.37% Portfolio turnover rate ............................... 19.95% 24.58% 32.12% 55.63% 24.29% <FN> a Based on average daily shares outstanding. b Total return does not reflect the contingent deferred sales charge. c Amount is less than $0.01 per share </FN> Annual Report | See notes to financial statements. | 19 Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS (CONTINUED) --------------------------------------------------------- YEAR ENDED AUGUST 31, CLASS R 2005 2004 2003 2002 d --------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the year) Net asset value, beginning of year .................... $20.90 $18.44 $17.07 $18.06 --------------------------------------------------------- Income from investment operations: Net investment income a .............................. 0.32 0.33 0.32 0.32 Net realized and unrealized gains (losses) ........... 3.62 2.56 1.42 (1.31) --------------------------------------------------------- Total from investment operations ...................... 3.94 2.89 1.74 (0.99) --------------------------------------------------------- Less distributions from: Net investment income ................................ (0.38) (0.43) (0.37) -- Net realized gains ................................... (0.78) -- -- -- --------------------------------------------------------- Total distributions ................................... (1.16) (0.43) (0.37) -- --------------------------------------------------------- Redemption fees ....................................... -- c -- c -- c -- --------------------------------------------------------- Net asset value, end of year .......................... $23.68 $20.90 $18.44 $17.07 ========================================================= Total return b ........................................ 19.44% 15.85% 10.58% (5.48)% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) ....................... $123,139 $57,951 $28,584 $5,394 Ratios to average net assets: Expenses ............................................. 1.31% 1.35% 1.39% 1.35% e Net investment income ................................ 1.36% 1.50% 1.79% 1.60% e Portfolio turnover rate ............................... 19.95% 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 $0.01 per share. d For the period January 2, 2002 (effective date) to August 31, 2002. e Annualized. </FN> 20 | See notes to financial statements. | Annual Report Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS (CONTINUED) --------------------------------------------------------------------- YEAR ENDED AUGUST 31, ADVISOR CLASS 2005 2004 2003 2002 2001 --------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the year) Net asset value, beginning of year .................... $21.07 $18.57 $17.13 $18.15 $19.71 --------------------------------------------------------------------- Income from investment operations: Net investment income a .............................. 0.45 0.48 0.38 0.37 0.43 Net realized and unrealized gains (losses) ........... 3.63 2.52 1.46 (0.88) (0.15) --------------------------------------------------------------------- Total from investment operations ...................... 4.08 3.00 1.84 (0.51) 0.28 --------------------------------------------------------------------- Less distributions from: Net investment income ................................ (0.47) (0.50) (0.40) (0.45) (0.42) Net realized gains ................................... (0.78) -- -- (0.06) (1.42) --------------------------------------------------------------------- Total distributions ................................... (1.25) (0.50) (0.40) (0.51) (1.84) --------------------------------------------------------------------- Redemption fees ....................................... -- b -- b -- b -- -- --------------------------------------------------------------------- Net asset value, end of year .......................... $23.90 $21.07 $18.57 $17.13 $18.15 ===================================================================== Total return .......................................... 19.97% 16.43% 11.19% (2.80)% 1.90% RATIOS/SUPPLEMENTAL DATA Net assets, end of year (000's) ....................... $2,549,202 $911,764 $137,776 $98,999 $84,975 Ratios to average net assets: Expenses ............................................. 0.81% 0.85% 0.88% 0.85% 0.90% Net investment income ................................ 1.86% 2.00% 2.30% 2.10% 2.36% Portfolio turnover rate ............................... 19.95% 24.58% 32.12% 55.63% 24.29% <FN> a Based on average daily shares outstanding. b Amount is less than $0.01 per share. </FN> Annual Report | See notes to financial statements. | 21 Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, AUGUST 31, 2005 - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS 92.1% BERMUDA 1.6% a Accenture Ltd., A ............................ IT Services 3,395,700 $ 82,855,080 ACE Ltd. ..................................... Insurance 3,700,000 164,317,000 XL Capital Ltd., A ........................... Insurance 2,600,000 180,700,000 ---------------- 427,872,080 ---------------- CANADA 2.1% Barrick Gold Corp. ........................... Metals & Mining 8,000,000 209,609,635 BCE Inc. ..................................... Diversified Telecommunication Services 12,325,460 322,526,670 ---------------- 532,136,305 ---------------- DENMARK 1.2% TDC AS ....................................... Diversified Telecommunication Services 6,000,000 318,481,343 ---------------- FINLAND 1.8% Stora Enso OYJ, R (EUR/FIM Traded) ........... Paper & Forest Products 17,000,000 233,781,450 Stora Enso OYJ, R (SEK Traded) ............... Paper & Forest Products 145,997 2,018,054 UPM-Kymmene Corp. ............................ Paper & Forest Products 12,000,000 239,763,197 ---------------- 475,562,701 ---------------- FRANCE 3.1% Accor SA ..................................... Hotels, Restaurants & Leisure 6,100,000 321,626,788 France Telecom SA ............................ Diversified Telecommunication Services 7,000,000 210,742,477 Sanofi-Aventis ............................... Pharmaceuticals 3,130,141 267,150,663 Total SA, B .................................. Oil, Gas & Consumable Fuels 26,062 6,849,793 ---------------- 806,369,721 ---------------- GERMANY 3.4% Bayerische Motoren Werke AG .................. Automobiles 2,502,876 112,363,945 Deutsche Post AG ............................. Air Freight & Logistics 335,080 8,459,654 E.ON AG ...................................... Electric Utilities 2,919,990 278,745,962 Muenchener Rueckversicherungs- Gesellschaft ................................ Insurance 222,060 24,854,397 b Muenchener Rueckversicherungs- Gesellschaft, 144A .......................... Insurance 5,417 606,306 Siemens AG ................................... Industrial Conglomerates 5,000,000 380,796,744 Volkswagen AG ................................ Automobiles 1,307,970 68,802,319 ---------------- 874,629,327 ---------------- HONG KONG 2.8% Cheung Kong Holdings Ltd. .................... Real Estate 33,999,800 368,799,822 Hong Kong Electric Holdings Ltd. ............. Electric Utilities 42,000,000 202,929,880 Swire Pacific Ltd., A ........................ Real Estate 9,190,000 87,327,852 Swire Pacific Ltd., B ........................ Real Estate 38,554,500 71,685,231 ---------------- 730,742,785 ---------------- ITALY 1.5% Eni SpA ...................................... Oil, Gas & Consumable Fuels 13,400,000 396,645,289 ---------------- 22 | Annual Report Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, AUGUST 31, 2005 (CONTINUED) - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS (CONT.) JAPAN 10.6% Fuji Photo Film Co. Ltd. ..................... Leisure Equipment & Products 7,500,000 $ 241,225,098 Hitachi Ltd. ................................. Electronic Equipment & Instruments 41,504,000 253,107,467 KDDI Corp. ................................... Wireless Telecommunication Services 55,000 289,695,984 Konica Minolta Holdings Ltd. ................. Office Electronics 20,000,000 191,715,228 Mitsubishi Tokyo Financial Group Inc. ........ Commercial Banks 30,000 306,274,563 Nintendo Co. Ltd. ............................ Software 2,250,000 235,804,310 Nippon Telegraph & Telephone Corp. ........... Diversified Telecommunication Services 52,000 225,504,811 Nomura Holdings Inc. ......................... Capital Markets 19,995,967 271,888,064 Olympus Corp. ................................ Health Care Equipment & Supplies 11,448,125 225,476,916 Sony Corp. ................................... Household Durables 7,999,950 267,423,906 Takeda Pharmaceutical Co. Ltd. ............... Pharmaceuticals 4,700,000 253,503,185 ---------------- 2,761,619,532 ---------------- MEXICO 0.8% Telefonos de Mexico SA de CV (Telmex), L, ADR ...................................... Diversified Telecommunication Services 11,400,000 218,880,000 ---------------- NETHERLANDS 6.1% Akzo Nobel NV ................................ Chemicals 5,500,000 225,209,670 ING Groep NV ................................. Capital Markets 271,600 7,885,377 Koninklijke Philips Electronics NV ........... Household Durables 10,000,000 263,196,843 Reed Elsevier NV ............................. Media 20,000,000 279,230,390 Unilever NV .................................. Food Products 5,500,000 379,193,389 VNU NV ....................................... Media 9,000,000 276,393,685 Wolters Kluwer NV ............................ Media 8,082,107 151,514,586 ---------------- 1,582,623,940 ---------------- SINGAPORE 0.6% DBS Group Holdings Ltd. ...................... Commercial Banks 484,900 4,498,626 Singapore Airlines Ltd. ...................... Airlines 21,999,770 154,384,351 ---------------- 158,882,977 ---------------- SOUTH AFRICA 0.6% c Sappi Ltd. ................................... Paper & Forest Products 14,000,000 149,662,745 ---------------- SOUTH KOREA 3.6% Kookmin Bank ................................. Commercial Banks 4,310,297 215,411,087 KT Corp., ADR ................................ Diversified Telecommunication Services 13,140,600 267,411,210 Samsung Electronics Co. Ltd. ................. Semiconductors & Semiconductor Equipment 360,532 188,858,361 SK Telecom Co. Ltd. .......................... Wireless Telecommunication Services 600,000 109,195,956 SK Telecom Co. Ltd., ADR ..................... Wireless Telecommunication Services 7,000,000 148,820,000 ---------------- 929,696,614 ---------------- SPAIN 2.2% Banco Santander Central Hispano SA ........... Commercial Banks 15,818,640 193,148,169 Endesa SA .................................... Electric Utilities 6,082,930 137,293,561 Repsol YPF SA ................................ Oil, Gas & Consumable Fuels 8,300,000 245,478,540 ---------------- 575,920,270 ---------------- Annual Report | 23 Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, AUGUST 31, 2005 (CONTINUED) - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS (CONT.) SWEDEN 0.9% Securitas AB, B .............................. Commercial Services & Supplies 6,000,000 $ 97,220,936 Svenska Cellulosa AB, B ...................... Paper & Forest Products 3,528,995 125,567,077 ---------------- 222,788,013 ---------------- SWITZERLAND 4.9% Lonza Group AG ............................... Chemicals 70,850 4,040,424 Nestle SA .................................... Food Products 1,600,000 448,890,129 Novartis AG .................................. Pharmaceuticals 4,000,000 193,838,919 Swiss Reinsurance Co. ........................ Insurance 3,800,000 244,721,635 Syngenta AG .................................. Chemicals 1,400,000 148,854,262 UBS AG ....................................... Capital Markets 2,700,000 220,794,644 ---------------- 1,261,140,013 ---------------- UNITED KINGDOM 19.7% BAE Systems PLC .............................. Aerospace & Defense 58,017,850 342,164,058 BP PLC ....................................... Oil, Gas & Consumable Fuels 39,500,003 449,891,003 British Sky Broadcasting Group PLC ........... Media 35,000,000 359,530,718 Cadbury Schweppes PLC ........................ Food Products 18,439,410 181,772,194 Compass Group PLC ............................ Hotels, Restaurants & Leisure 57,000,000 256,037,232 GlaxoSmithKline PLC .......................... Pharmaceuticals 20,546,447 495,804,439 National Grid PLC ............................ Electric Utilities 25,097,959 237,007,885 Pearson PLC .................................. Media 18,902,346 227,554,419 a Rentokil Initial PLC ......................... Commercial Services & Supplies 70,000,000 204,680,207 a Rolls-Royce Group PLC ........................ Aerospace & Defense 41,117,630 250,089,209 Royal Bank of Scotland Group PLC ............. Commercial Banks 12,822,000 374,569,050 b Royal Bank of Scotland Group PLC, 144A ........................................ Commercial Banks 1,698,000 49,603,669 Royal Dutch Shell PLC, B ..................... Oil, Gas & Consumable Fuels 15,504,985 525,318,024 Royal Dutch Shell PLC, B, ADR ................ Oil, Gas & Consumable Fuels 258,599 17,517,496 Shire Pharmaceuticals Group PLC .............. Pharmaceuticals 9,373,550 117,065,908 Smiths Group PLC ............................. Industrial Conglomerates 15,300,000 250,225,270 Standard Chartered PLC ....................... Commercial Banks 7,685,080 164,119,371 Unilever PLC ................................. Food Products 631,940 6,349,124 Vodafone Group PLC ........................... Wireless Telecommunication Services 151,576,988 414,529,148 William Morrison Supermarkets PLC ............ Food & Staples Retailing 60,678,271 197,106,784 ---------------- 5,120,935,208 ---------------- UNITED STATES 24.6% Abbott Laboratories .......................... Pharmaceuticals 4,567,650 206,138,044 American International Group Inc. ............ Insurance 4,200,100 248,645,920 c AmerisourceBergen Corp. ...................... Health Care Providers & Services 4,500,000 336,015,000 Bank of New York Co. Inc. .................... Capital Markets 8,000,000 244,560,000 a BMC Software Inc. ............................ Software 1,366,710 27,334,200 Bristol-Myers Squibb Co. ..................... Pharmaceuticals 11,300,000 276,511,000 a Cadence Design Systems Inc. .................. Software 8,300,500 132,891,005 CIGNA Corp. .................................. Health Care Providers & Services 1,053,200 121,455,024 a DIRECTV Group Inc. ........................... Media 17,500,000 278,425,000 24 | Annual Report Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, AUGUST 31, 2005 (CONTINUED) - ------------------------------------------------------------------------------------------------------------------------------------ INDUSTRY SHARES VALUE - ------------------------------------------------------------------------------------------------------------------------------------ COMMON STOCKS (CONT.) UNITED STATES (CONT.) DTE Energy Co. ............................... Multi-Utilities 6,000,000 $ 274,620,000 El Paso Corp. ................................ Oil, Gas & Consumable Fuels 26,000,000 301,600,000 Electronic Data Systems Corp. ................ IT Services 11,500,000 257,600,000 Florida East Coast Industries Inc. ........... Road & Rail 470,546 20,261,711 H&R Block Inc. ............................... Diversified Consumer Services 9,000,000 242,550,000 H.J. Heinz Co. ............................... Food Products 5,700,000 204,744,000 HCA Inc. ..................................... Health Care Providers & Services 4,000,000 197,200,000 International Paper Co. ...................... Paper & Forest Products 2,496,600 77,020,110 a Interpublic Group of Cos. Inc. ............... Media 8,036,800 97,486,384 a Kroger Co. ................................... Food & Staples Retailing 11,000,000 217,140,000 a,c Maxtor Corp. ................................ Computers & Peripherals 12,761,960 62,023,125 Merck & Co. Inc. ............................. Pharmaceuticals 14,000,000 395,220,000 News Corp., A ................................ Media 25,000,000 405,250,000 Noble Corp. .................................. Energy Equipment & Services 3,600,000 256,680,000 Pfizer Inc. .................................. Pharmaceuticals 13,500,000 343,845,000 Raytheon Co. ................................. Aerospace & Defense 6,000,000 235,320,000 a Seagate Technology ........................... Computers & Peripherals 9,500,000 157,605,000 St. Joe Co. .................................. Real Estate 1,415,700 106,474,797 a,c Tenet Healthcare Corp. ...................... Health Care Providers & Services 27,430,070 334,098,253 Torchmark Corp. .............................. Insurance 536,900 28,316,106 c Willis Group Holdings Ltd. ................... Insurance 8,375,200 293,132,000 ---------------- 6,380,161,679 ---------------- TOTAL COMMON STOCKS (COST $19,230,509,296) ...................... 23,924,750,542 ---------------- PREFERRED STOCKS 0.8% GERMANY 0.7% Volkswagen AG, pfd ........................... Automobiles 4,499,990 177,934,977 ---------------- UNITED KINGDOM 0.1% National Grid PLC, pfd., B ................... Electric Utilities 28,600,000 33,115,573 ---------------- TOTAL PREFERRED STOCKS (COST $201,526,330) ......................... 211,050,550 ---------------- ------------------ PRINCIPAL AMOUNT d ------------------ BONDS & NOTES 1.3% AUSTRALIA 0.4% New South Wales Treasury Corp., 6.50%, 5/01/06 ..................................... 149,000,000 AUD 113,220,535 ---------------- GERMANY 0.6% Government of Germany, 4.50%, 8/18/06 ..................................... 125,000,000 EUR 157,606,685 ---------------- Annual Report | 25 Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, AUGUST 31, 2005 (CONTINUED) - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL AMOUNT d VALUE - ------------------------------------------------------------------------------------------------------------------------------------ BONDS & NOTES (CONT.) NEW ZEALAND 0.3% Government of New Zealand, 6.50%, 2/15/06 ............................. 55,900,000 NZD $ 38,858,278 7.00%, 7/15/09 ............................. 54,000,000 NZD 39,295,969 ---------------- 78,154,247 ---------------- TOTAL BONDS & NOTES (COST $247,331,381) ......................... 348,981,467 ---------------- SHORT TERM INVESTMENTS 6.0% FRANCE 0.6% e France Treasury Bills, 10/13/05 - 2/16/06 ..................................... 125,000,000 EUR 153,349,007 ---------------- GERMANY 0.5% Deutsche Bank AG, Time Deposit, 2.00%, 9/01/05 ..................................... 39,510,000 EUR 48,288,927 e Germany Treasury Bills, 11/16/05 - 12/07/05 .................................... 62,500,000 EUR 76,664,029 ---------------- 124,952,956 ---------------- UNITED STATES 4.9% e U.S. Treasury Bills, 9/01/05 - 11/25/05 ...... 1,278,608,000 1,272,011,015 ---------------- TOTAL SHORT TERM INVESTMENTS (COST $1,556,257,268) ....................... 1,550,312,978 ---------------- TOTAL INVESTMENTS (COST $21,235,624,275) 100.2% ............... 26,035,095,537 OTHER ASSETS, LESS LIABILITIES (0.2)% ........ (53,002,927) ---------------- NET ASSETS 100.0% ............................ $25,982,092,610 ================ CURRENCY ABBREVIATIONS: AUD - Australian Dollar EUR - Euro FIM - Finnish Markka NZD - New Zealand Dollar SEK - Swedish Krona SELECTED PORTFOLIO ABBREVIATIONS: ADR -American Depository Receipt a Non-income producing. b Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Fund's Board of Directors. c See Note 8 regarding holdings of 5% voting securities. d The principal amount is stated in U.S. dollars unless otherwise indicated. e The security is traded on a discount basis with no stated coupon rate. 26 | See notes to financial statements. | Annual Report Templeton Growth Fund, Inc. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES August 31, 2005 Assets: Investments in securities: Cost - Unaffiliated issuers ................................ $20,154,201,119 Cost - Non-controlled affiliated issuers ................... 1,081,423,156 ---------------- Total cost of investments .................................. $21,235,624,275 ---------------- Value - Unaffiliated issuers ............................... $24,860,164,414 Value - Non-controlled affiliated issuers .................. 1,174,931,123 ---------------- Total value of investments ................................. 26,035,095,537 Cash ........................................................ 4,850 Foreign currency, at value (cost $14,571) ................... 13,389 Receivables: Investment securities sold ................................. 18,966,794 Capital shares sold ........................................ 50,004,064 Dividends and interest ..................................... 42,742,083 ---------------- Total assets ............................................. 26,146,826,717 ---------------- Liabilities: Payables: Investment securities purchased ............................ 115,589,704 Capital shares redeemed .................................... 23,122,249 Affiliates ................................................. 23,497,572 Other liabilities ........................................... 2,524,582 ---------------- Total liabilities ........................................ 164,734,107 ---------------- Net assets, at value ................................... $25,982,092,610 ================ Net assets consist of: Paid-in capital ............................................. $19,913,029,291 Undistributed net investment income ......................... 360,503,840 Net unrealized appreciation (depreciation) .................. 4,799,308,628 Accumulated net realized gain (loss) ........................ 909,250,851 ---------------- Net assets, at value ................................... $25,982,092,610 ================ Annual Report | See notes to financial statements. | 27 Templeton Growth Fund, Inc. FINANCIAL STATEMENTS (CONTINUED) STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) August 31, 2005 CLASS A: Net assets, at value ..................................................... $20,786,173,489 =============== Shares outstanding ....................................................... 871,261,286 =============== Net asset value per share a .............................................. $ 23.86 =============== Maximum offering price per share (net asset value per share / 94.25%) .... $ 25.32 =============== CLASS B: Net assets, at value ..................................................... $ 557,669,968 =============== Shares outstanding ....................................................... 23,857,635 =============== Net asset value and maximum offering price per share a ................... $ 23.37 =============== CLASS C: Net assets, at value ..................................................... $ 1,965,908,747 =============== Shares outstanding ....................................................... 84,439,004 =============== Net asset value and maximum offering price per share a ................... $ 23.28 =============== CLASS R: Net assets, at value ..................................................... $ 123,138,657 =============== Shares outstanding ....................................................... 5,200,958 =============== Net asset value and maximum offering price per share a ................... $ 23.68 =============== ADVISOR CLASS: Net assets, at value ..................................................... $ 2,549,201,749 =============== Shares outstanding ....................................................... 106,642,122 =============== Net asset value and maximum offering price per share a ................... $ 23.90 =============== <FN> a Redemption price is equal to net asset value less contingent deferred sales charges, if applicable, and redemption fees retained by the Fund. </FN> 28 | See notes to financial statements. | Annual Report Templeton Growth Fund, Inc. FINANCIAL STATEMENTS (CONTINUED) STATEMENT OF OPERATIONS for the year ended August 31, 2005 Investment income: Dividends (net of foreign taxes of $38,520,671) Unaffliated issuers ........................................................ $ 528,077,789 Non-controlled affiliated issuers (Note 8) ................................. 5,198,081 Interest .................................................................... 65,823,569 Other income (Note 10) ...................................................... 3,770,745 -------------- Total investment income ................................................ 602,870,184 -------------- Expenses: Management fees (Note 3a) ................................................... 131,703,245 Administrative fees (Note 3b) ............................................... 17,495,823 Distribution fees (Note 3c) Class A .................................................................... 46,484,900 Class B .................................................................... 5,256,783 Class C .................................................................... 17,087,086 Class R .................................................................... 437,386 Transfer agent fees (Note 3e) ............................................... 24,651,000 Custodian fees (Note 4) ..................................................... 5,229,818 Reports to shareholders ..................................................... 861,000 Registration and filing fees ................................................ 819,600 Professional fees ........................................................... 297,853 Directors' fees and expenses ................................................ 244,520 Other ....................................................................... 809,500 -------------- Total expenses ......................................................... 251,378,514 Expense reductions (Note 4) ............................................ (39,978) -------------- Net expenses ......................................................... 251,338,536 -------------- Net investment income .............................................. 351,531,648 -------------- Realized and unrealized gains (losses): Net realized gain (loss) from: Investments Unaffilated issuers ....................................................... 1,371,285,985 Non-controlled affilated issuers (Note 8) ................................. 7,851,379 Foreign currency transactions .............................................. (9,210,192) -------------- Net realized gain (loss)................................................ 1,369,927,172 -------------- Net change in unrealized appreciation (depreciation) on: Investments ................................................................ 2,166,203,505 Translation of assets and liabilities denominated in foreign currencies .... (346,360) -------------- Net change in unrealized appreciation (depreciation) ................... 2,165,857,145 -------------- Net realized and unrealized gain (loss) ...................................... 3,535,784,317 -------------- Net increase (decrease) in net assets resulting from operations .............. $3,887,315,965 ============== Annual Report | See notes to financial statements. | 29 Templeton Growth Fund, Inc. FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------- YEAR ENDED AUGUST 31, 2005 2004 --------------------------------------- Increase (decrease) in net assets: Operations: Net investment income .............................................................. $ 351,531,648 $ 292,335,544 Net realized gain (loss) from investments and foreign currency transactions ........ 1,369,927,172 523,495,346 Net change in unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies ............. 2,165,857,145 1,545,861,371 --------------------------------------- Net increase (decrease) in net assets resulting from operations ................ 3,887,315,965 2,361,692,261 --------------------------------------- Distributions to shareholders from: Net investment income: Class A ........................................................................... (315,892,462) (320,678,462) Class B ........................................................................... (5,991,689) (5,758,813) Class C ........................................................................... (18,445,114) (20,147,122) Class R ........................................................................... (1,133,785) (743,202) Advisor Class ..................................................................... (24,583,076) (5,422,599) Net realized gains: Class A ........................................................................... (599,992,172) -- Class B ........................................................................... (17,379,944) -- Class C ........................................................................... (54,801,683) -- Class R ........................................................................... (2,389,825) -- Advisor Class ..................................................................... (42,556,319) -- --------------------------------------- Total distributions to shareholders ................................................. (1,083,166,069) (352,750,198) --------------------------------------- Capital share transactions: (Note 2) Class A ........................................................................... 2,695,206,102 960,883,954 Class B ........................................................................... 60,798,204 114,858,204 Class C ........................................................................... 365,302,304 182,022,934 Class R ........................................................................... 54,697,709 25,116,249 Advisor Class ..................................................................... 1,433,232,545 746,429,648 --------------------------------------- Total capital share transactions .................................................... 4,609,236,864 2,029,310,989 --------------------------------------- Redemption fees ..................................................................... 60,619 25,291 --------------------------------------- Net increase (decrease) in net assets ......................................... 7,413,447,379 4,038,278,343 Net assets: Beginning of year ................................................................... 18,568,645,231 14,530,366,888 --------------------------------------- End of year ......................................................................... $25,982,092,610 $18,568,645,231 ======================================= Undistributed net investment income included in net assets: End of year ......................................................................... $ 360,503,840 $ 273,529,958 ======================================= 30 | 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 following summarizes the Fund's significant accounting policies. a. SECURITY VALUATION Securities listed on a securities exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Over-the-counter securities and listed securities for which there is no reported sale are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Short term securities are valued at cost. Corporate debt securities and government securities generally trade in the over-the-counter market rather than on a securities exchange. The Fund may utilize independent pricing services, quotations from bond dealers and information with respect to bond and note transactions, to assist in determining a current market value for each security. The Fund's pricing services may use valuation models or matrix pricing which considers information with respect to comparable bond and note transactions, quotations from bond dealers, or by reference to other securities that are considered comparable in such characteristics as rating, interest rate and maturity date, option adjusted spread models, prepayment projections, interest rate spreads and yield curves, to determine current value. Foreign securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or the NYSE, whichever is earlier. If no sale is reported at that time, the foreign security will be valued within the range of the most recent quoted bid and ask prices. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the close of the NYSE on the day that the value of the foreign security is determined. The Fund has procedures to determine the fair value of individual securities and other assets for which market prices are not readily available or which may not be reliably priced. Methods for valuing these securities may include: fundamental analysis, matrix pricing, discounts from market prices of similar securities, or discounts applied due to the nature and duration of restrictions on the disposition of the securities. Due to the inherent uncertainty of valuations of such securities, the fair values may differ significantly from the values that would have been used had a ready market for such investments existed. Occasionally, events occur between the time at which trading in a security is completed and the close of the NYSE that might call into question the availability (including the reliability) of the value of a portfolio security held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services. All security valuation procedures are approved by the Fund's Board of Directors. Annual Report | 31 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Fund's Board of Directors. 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 on the Statement of Operations. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. c. 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 on these contracts are included in the Statement of Operations. 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, which may be in excess of the amount reflected in the Statement of Assets and Liabilities. d. INCOME TAXES No provision has been made for U.S. income taxes because the Fund's policy is to continue to qualify as a regulated investment company under the Internal Revenue Code and to distribute to shareholders substantially all of its taxable income and net realized gains. Foreign securities held by the Fund may be subject to foreign taxation. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. 32 | Annual Report Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with generally accepted accounting principles. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they will reverse in subsequent periods. 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. h. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified by the Fund against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service Annual Report | 33 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) h. GUARANTEES AND INDEMNIFICATIONS (CONTINUED) 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. 2. CAPITAL STOCK The Fund offers five classes of shares: Class A, Class B, Class C, Class R and Advisor Class. Effective March 1, 2005, Class B shares are only offered to existing Class B shareholders in the form of reinvested distributions and certain exchanges from other Franklin Templeton funds' Class B shares. Each class of shares differs by its initial sales load, contingent deferred sales charges, distribution fees, voting rights on matters affecting a single class and its exchange privilege. At August 31, 2005, there were 1.9 billion shares authorized ($0.01 par value). Transactions in the Fund's shares were as follows: ---------------------------------------------------------------------------------- YEAR ENDED AUGUST 31, 2005 2004 SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------------------------- CLASS A SHARES: Shares sold ........................... 166,510,153 $ 3,769,562,678 151,863,531 $ 3,135,962,308 Shares issued in reinvestment of distributions ...................... 36,405,103 779,606,003 14,025,891 267,015,432 Shares issued on merger (Note 9) ............................. 32,147,751 726,223,861 -- -- Shares redeemed ....................... (113,625,221) (2,580,186,440) (118,389,653) (2,442,093,786) ---------------------------------------------------------------------------------- Net increase (decrease) ............... 121,437,786 $ 2,695,206,102 47,499,769 $ 960,883,954 ================================================================================== CLASS B SHARES: Shares sold ........................... 3,907,329 $ 85,406,593 7,037,365 $ 141,865,950 Shares issued in reinvestment of distributions ...................... 1,024,375 21,602,620 281,765 5,275,760 Shares redeemed ....................... (2,071,505) (46,211,009) (1,582,087) (32,283,506) ---------------------------------------------------------------------------------- Net increase (decrease) ............... 2,860,199 $ 60,798,204 5,737,043 $ 114,858,204 ================================================================================== CLASS C SHARES: Shares sold ........................... 22,347,548 $ 495,830,093 16,462,909 $ 330,900,817 Shares issued in reinvestment of distributions ...................... 3,070,897 64,499,805 944,695 17,612,652 Shares redeemed ....................... (8,798,910) (195,027,594) (8,228,281) (166,490,535) ---------------------------------------------------------------------------------- Net increase (decrease) ............... 16,619,535 $ 365,302,304 9,179,323 $ 182,022,934 ================================================================================== 34 | Annual Report Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. CAPITAL STOCK (CONTINUED) ------------------------------------------------------------------------------- YEAR ENDED AUGUST 31, 2005 2004 SHARES AMOUNT SHARES AMOUNT ------------------------------------------------------------------------------- CLASS R SHARES: Shares sold ........................... 3,195,510 $ 72,262,686 1,690,820 $ 34,688,338 Shares issued in reinvestment of distributions ...................... 163,147 3,474,315 39,132 741,176 Shares redeemed ....................... (930,932) (21,039,292) (506,552) (10,313,265) ------------------------------------------------------------------------------- Net increase (decrease) ............... 2,427,725 $ 54,697,709 1,223,400 $ 25,116,249 =============================================================================== ADVISOR CLASS SHARES: Shares sold ........................... 62,844,325 $1,425,501,693 38,145,813 $794,058,266 Shares issued in reinvestment of distributions ...................... 3,032,942 65,074,912 236,873 4,531,408 Shares redeemed ....................... (2,505,214) (57,344,060) (2,532,086) (52,160,026) ------------------------------------------------------------------------------- Net increase (decrease) ............... 63,372,053 $1,433,232,545 35,850,600 $746,429,648 =============================================================================== 3. TRANSACTIONS WITH AFFILIATES Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and directors of the Fund are also officers and/or directors of the following subsidiaries: - ------------------------------------------------------------------------------------------------ SUBSIDIARY AFFILIATION - ------------------------------------------------------------------------------------------------ Templeton Global Advisors Limited (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 average daily net assets of the Fund 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% In excess of $20 billion Annual Report | 35 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. TRANSACTIONS WITH AFFILIATES (CONTINUED) 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% Up to and including $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% In excess of $1.2 billion c. DISTRIBUTION FEES The Fund's Board of Directors has adopted distribution plans for each share class, with the exception of Advisor class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Fund's Class A reimbursement distribution plan, the Fund reimburses Distributors up to 0.25% per year of Class A's average daily net assets for costs incurred in connection with the sale and distribution of the Fund's shares. Under the Class A reimbursement distribution plan, costs exceeding the maximum for the current plan year may be reimbursed in subsequent periods. At August 31, 2005, Distributors advised the Fund that unreimbursed costs were $29,483,490. Under the Fund's compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the sale and distribution of the Fund's shares up to a certain percentage per year of its average daily net assets of each class as follows: Class B .......................................................... 1.00% Class C .......................................................... 1.00% Class R .......................................................... 0.50% d. SALES CHARGES/UNDERWRITING AGREEMENTS Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund's shares for the year: Net sales charges receiveda ............................. $6,428,705 Contingent deferred sales charges retained .............. $ 786,521 a Net of commissions paid to unaffiliated broker/dealers. e. TRANSFER AGENT FEES The Fund paid transfer agent fees of $24,651,000, of which $17,819,411 was retained by Investor Services. 36 | Annual Report Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 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, 2005, the custodian fees were reduced as noted in the Statement of Operations. 5. INCOME TAXES The tax character of distributions paid during the years ended August 31, 2005 and 2004, was as follows: - ------------------------------------------------------------------------- 2005 2004 - ------------------------------------------------------------------------- Distributions paid from: Ordinary income ....................... $ 397,989,920 $352,750,198 Long term capital gain ................ 685,176,149 -- ------------------------------- $1,083,166,069 $352,750,198 =============================== Net investment income differs for financial statement and tax purposes primarily due to differing treatments of foreign currency transactions, bond discounts and premiums, and merger expenses. Net realized gains (losses) differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, and bond discounts and premiums. At August 31, 2005, 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 ...................................... $21,271,003,871 ================ Unrealized appreciation .................................. $ 5,049,439,926 Unrealized depreciation .................................. (285,348,260) ---------------- Net unrealized appreciation (depreciation) ............... $ 4,764,091,666 ================ Undistributed ordinary income ............................ $ 432,790,965 Undistributed long term capital gains .................... 872,343,322 ---------------- Distributable earnings ................................... $ 1,305,134,287 ================ 6. INVESTMENT TRANSACTIONS Purchases and sales of investments (excluding short-term securities) for the year ended August 31, 2005 aggregated $7,330,499,121 and $4,164,647,598, respectively. Annual Report | 37 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. RISK OF INVESTING IN FOREIGN SECURITIES Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. 8. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES The Investment Company Act of 1940 defines "affiliated companies" to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. Investments in "affiliated companies" for the year ended August 31, 2005 were as shown below: - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF NUMBER OF SHARES HELD SHARES HELD VALUE AT BEGINNING GROSS GROSS AT END AT END OF INVESTMENT REALIZED CAPITAL NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS OF YEAR YEAR INCOME GAIN (LOSS) - ------------------------------------------------------------------------------------------------------------------------------------ AmerisourceBergen Corp. ... 3,902,500 1,297,500 700,000 4,500,000 $ 336,015,000 $ 450,062 $7,851,379 Maxtor Corp. .............. 12,500,000 261,960 -- 12,761,960 62,023,125 -- -- Sappi Ltd. ................ -- 14,000,000 -- 14,000,000 149,662,745 -- -- Tenet Healthcare Corp. .... -- 27,430,070 -- 27,430,070 334,098,253 -- -- Willis Group Holdings Ltd. 5,000,000 3,375,200 -- 8,375,200 293,132,000 4,748,019 -- ---------------------------------------------- TOTAL AFFILIATED SECURITIES (4.52% of Net Assets) $1,174,931,123 $5,198,081 $7,851,379 ============================================== 9. MERGERS On May 20, 2005, the Fund acquired the net assets of Templeton Capital Accumulator Fund ("TCA Fund") pursuant to a plan of reorganization approved by TCA Fund's shareholders. The merger was accomplished by a tax-free exchange of 32,147,751 shares of the Fund (valued at $22.59) for the net assets of the TCA Fund which aggregated $726,223,861, including $101,976,718 of unrealized appreciation. The combined net assets of the Fund immediately after the merger were $24,020,113,056. 38 | Annual Report Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 10. REGULATORY MATTERS INVESTIGATIONS AND SETTLEMENTS As part of various investigations by a number of federal, state, and foreign regulators and governmental entities, including the Securities and Exchange Commission ("SEC"), the California Attorney General's Office ("CAGO"), and the National Association of Securities Dealers, Inc. ("NASD"), relating to certain practices in the mutual fund industry, including late trading, market timing and marketing support payments to securities dealers who sell fund shares, Franklin Resources, Inc. and certain of its subsidiaries (as used in this section, together, the "Company"), as well as certain current or former executives and employees of the Company, provided documents and information in response to subpoenas and/or requests for documents, information and/or testimony. Beginning in August 2004, the Company entered into settlements with certain of the regulators and a governmental entity investigating the mutual fund industry practices noted above. The Company believes that settlement of each of the matters is in the best interest of the Company and shareholders of the Franklin, Templeton, and Mutual Series mutual funds (the "funds"). Two of the settlement agreements, those with the SEC and the CAGO concerning marketing support payments, provide that the distribution of settlement monies are to be made to the relevant funds, not to individual shareholders. The CAGO has approved the distribution plan pertaining to the distribution of the monies owed under the CAGO settlement agreement and, in accordance with the terms and conditions of that settlement, the monies were disbursed to the participating funds, including the Fund, and are recorded as other income in the current period. The SEC has not yet approved the distribution plan pertaining to the SEC settlement. When approved, disbursements of settlement monies under the SEC's settlement will be made promptly in accordance with the terms and conditions of that order. OTHER LEGAL PROCEEDINGS On April 12, 2005, the Attorney General of West Virginia filed a complaint in the Circuit Court of Marshall County, West Virginia against a number of companies engaged in the mutual fund industry, including Franklin Resources, Inc. and its subsidiary, Franklin Advisers, Inc., and certain other parties alleging violations of the West Virginia Consumer Credit and Protection Act and seeking, among other things, civil penalties and attorneys' fees and costs. Defendants have since removed the matter to the United States District Court for the Northern District of West Virginia. To the extent applicable to the Company, the complaint arises from activity that occurred in 2001 and duplicates, in whole or in part, the allegations asserted in the February 4, 2004 Massachusetts Administrative Complaint concerning one instance of market timing (the "Administrative Complaint") and the SEC's findings regarding market timing in its August 2, 2004 Order (the "SEC Order"), both of which matters were previously reported. Annual Report | 39 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (CONTINUED) 10. REGULATORY MATTERS (CONTINUED) OTHER LEGAL PROCEEDINGS (CONTINUED) The Company, in addition to certain funds, and certain current and former officers, employees, and directors have been named in multiple lawsuits in different courts alleging violations of various federal securities and state laws and seeking, among other relief, monetary damages, restitution, removal of fund trustees, directors, advisers, administrators, and distributors, rescission of management contracts and 12b-1 plans, and/or attorneys' fees 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 Templeton funds managed by Franklin Resources, Inc. subsidiaries, allegedly resulting in market timing activity. The majority of these lawsuits duplicate, in whole or in part, the allegations asserted in the Administrative Complaint and the SEC's findings regarding market timing in the SEC Order. The lawsuits are styled as class actions, or derivative actions on behalf of either the named funds or Franklin Resources, Inc. The Company, in addition to certain funds, and 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 marketing support payments and/or payment of allegedly excessive commissions and/or advisory or distribution fees, and seeking, among other relief, monetary damages, restitution, rescission of advisory contracts, including recovery of all fees paid pursuant to those contracts, an accounting of all monies paid to the named advisers, declaratory relief, injunctive relief, and/or attorneys' fees and costs. These lawsuits are styled as class actions or derivative actions brought on behalf of the named funds. The Company and fund management strongly believe that the claims made in each of the lawsuits described above are without merit and intend to defend against them vigorously. The Company cannot predict with certainty the eventual outcome of these lawsuits, nor whether they will have a material negative impact on the Company. Public trust and confidence are critical to the Company's business and any material loss of investor and/or client confidence could result in a significant decline in assets under management by the Company, which would have an adverse effect on future financial results. If it is determined that the Company 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. The Company is committed to taking all appropriate actions to protect the interests of its funds' shareholders. 40 | 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, 2005, 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, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP San Francisco, California October 10, 2005 Annual Report | 41 Templeton Growth Fund, Inc. TAX DESIGNATION (UNAUDITED) Under Section 852(b)(3)(C) of the Internal Revenue Code (Code), the Fund designates the maximum amount allowable but no less than $1,200,972,368 as a capital gain dividend for the fiscal year ended August 31, 2005. Under Section 854(b)(2) of the Code, the Fund designates 20.61% of the ordinary income dividends as income qualifying for the dividends received deduction for the fiscal year ended August 31, 2005. Under Section 854(b)(2) of the Internal Revenue Code, the Fund designates the maximum amount allowable but not less than $533,722,339 as qualified dividends for purposes of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended 2005. In January 2006, shareholders will receive Form 1099-DIV which will include their share of qualified dividends distributed during the calendar year 2005. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their individual income tax returns. At August 31, 2005, more than 50% of the Templeton Growth Fund's 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 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 20, 2005, 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, and foreign qualified dividends as designated by the Fund, to Class A, Class B, Class C, Class R and Advisor Class shareholders of record. 42 | Annual Report Templeton Growth Fund, Inc. TAX DESIGNATION (UNAUDITED) (CONTINUED) RECORD DATE: 10/20/2005 - -------------------------------------------------------------------------------- CLASS A FOREIGN TAX FOREIGN FOREIGN PAID SOURCE INCOME QUALIFIED DIVIDENDS COUNTRY PER SHARE PER SHARE PER SHARE - -------------------------------------------------------------------------------- Australia ............ $0.0000 $0.0042 $0.0001 Belgium .............. 0.0000 0.0002 0.0000 Bermuda .............. 0.0000 0.0052 0.0052 Canada ............... 0.0023 0.0110 0.0110 Denmark .............. 0.0018 0.0086 0.0085 Finland .............. 0.0024 0.0115 0.0114 France ............... 0.0020 0.0121 0.0094 Germany .............. 0.0030 0.0273 0.0101 Hong Kong ............ 0.0000 0.0147 0.0000 Italy ................ 0.0020 0.0094 0.0094 Japan ................ 0.0015 0.0148 0.0148 Mexico ............... 0.0000 0.0044 0.0044 Netherlands .......... 0.0060 0.0280 0.0277 New Zealand .......... 0.0000 0.0030 0.0000 Portugal ............. 0.0000 0.0002 0.0002 Singapore ............ 0.0000 0.0034 0.0000 South Korea .......... 0.0054 0.0228 0.0228 Spain ................ 0.0023 0.0112 0.0111 Sweden ............... 0.0009 0.0041 0.0041 Switzerland .......... 0.0053 0.0180 0.0161 United Kingdom ....... 0.0000 0.1210 0.1209 ------------------------------------------------------ TOTAL ................ $0.0349 $0.3351 $0.2872 ================================================================================ - -------------------------------------------------------------------------------- CLASS B FOREIGN TAX FOREIGN FOREIGN PAID SOURCE INCOME QUALIFIED DIVIDENDS COUNTRY PER SHARE PER SHARE PER SHARE - -------------------------------------------------------------------------------- Australia ............ $0.0000 $0.0028 $0.0001 Belgium .............. 0.0000 0.0001 0.0000 Bermuda .............. 0.0000 0.0035 0.0035 Canada ............... 0.0023 0.0074 0.0074 Denmark .............. 0.0018 0.0058 0.0058 Finland .............. 0.0024 0.0078 0.0077 France ............... 0.0020 0.0082 0.0064 Germany .............. 0.0030 0.0183 0.0068 Hong Kong ............ 0.0000 0.0099 0.0000 Italy ................ 0.0020 0.0063 0.0063 Japan ................ 0.0015 0.0099 0.0099 Mexico ............... 0.0000 0.0030 0.0030 Netherlands .......... 0.0060 0.0188 0.0186 New Zealand .......... 0.0000 0.0020 0.0000 Portugal ............. 0.0000 0.0001 0.0001 Singapore ............ 0.0000 0.0023 0.0000 South Korea .......... 0.0054 0.0153 0.0153 Spain ................ 0.0023 0.0075 0.0074 Sweden ............... 0.0009 0.0028 0.0028 Switzerland .......... 0.0053 0.0121 0.0109 United Kingdom ....... 0.0000 0.0812 0.0811 ------------------------------------------------------ TOTAL ................ $0.0349 $0.2251 $0.1931 ====================================================== Annual Report | 43 Templeton Growth Fund, Inc. TAX DESIGNATION (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- CLASS C FOREIGN TAX FOREIGN FOREIGN PAID SOURCE INCOME QUALIFIED DIVIDENDS COUNTRY PER SHARE PER SHARE PER SHARE - -------------------------------------------------------------------------------- Australia ............ $0.0000 $0.0030 $0.0001 Belgium .............. 0.0000 0.0001 0.0000 Bermuda .............. 0.0000 0.0037 0.0037 Canada ............... 0.0023 0.0078 0.0078 Denmark .............. 0.0018 0.0062 0.0062 Finland .............. 0.0024 0.0083 0.0082 France ............... 0.0020 0.0087 0.0068 Germany .............. 0.0030 0.0195 0.0072 Hong Kong ............ 0.0000 0.0105 0.0000 Italy ................ 0.0020 0.0067 0.0067 Japan ................ 0.0015 0.0105 0.0105 Mexico ............... 0.0000 0.0032 0.0032 Netherlands .......... 0.0060 0.0200 0.0198 New Zealand .......... 0.0000 0.0021 0.0000 Portugal ............. 0.0000 0.0001 0.0001 Singapore ............ 0.0000 0.0024 0.0000 South Korea .......... 0.0054 0.0163 0.0163 Spain ................ 0.0023 0.0080 0.0079 Sweden ............... 0.0009 0.0029 0.0029 Switzerland .......... 0.0053 0.0129 0.0116 United Kingdom ....... 0.0000 0.0863 0.0862 ------------------------------------------------------ TOTAL ................ $0.0349 $0.2392 $0.2052 ====================================================== - -------------------------------------------------------------------------------- CLASS R FOREIGN TAX FOREIGN FOREIGN PAID SOURCE INCOME QUALIFIED DIVIDENDS COUNTRY PER SHARE PER SHARE PER SHARE - -------------------------------------------------------------------------------- Australia ............ $0.0000 $0.0040 $0.0001 Belgium .............. 0.0000 0.0002 0.0000 Bermuda .............. 0.0000 0.0050 0.0050 Canada ............... 0.0023 0.0104 0.0104 Denmark .............. 0.0018 0.0082 0.0081 Finland .............. 0.0024 0.0110 0.0109 France ............... 0.0020 0.0115 0.0090 Germany .............. 0.0030 0.0259 0.0096 Hong Kong ............ 0.0000 0.0140 0.0000 Italy ................ 0.0020 0.0089 0.0089 Japan ................ 0.0015 0.0140 0.0140 Mexico ............... 0.0000 0.0042 0.0042 Netherlands .......... 0.0060 0.0266 0.0263 New Zealand .......... 0.0000 0.0028 0.0000 Portugal ............. 0.0000 0.0001 0.0001 Singapore ............ 0.0000 0.0032 0.0000 South Korea .......... 0.0054 0.0217 0.0217 Spain ................ 0.0023 0.0107 0.0106 Sweden ............... 0.0009 0.0039 0.0039 Switzerland .......... 0.0053 0.0171 0.0153 United Kingdom ....... 0.0000 0.1149 0.1148 ------------------------------------------------------ TOTAL ................ $0.0349 $0.3183 $0.2729 ====================================================== 44 | Annual Report Templeton Growth Fund, Inc. TAX DESIGNATION (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- ADVISOR CLASS FOREIGN TAX FOREIGN FOREIGN PAID SOURCE INCOME QUALIFIED DIVIDENDS COUNTRY PER SHARE PER SHARE PER SHARE - -------------------------------------------------------------------------------- Australia ............ $0.0000 $0.0046 $0.0002 Belgium .............. 0.0000 0.0002 0.0000 Bermuda .............. 0.0000 0.0058 0.0058 Canada ............... 0.0023 0.0121 0.0121 Denmark .............. 0.0018 0.0095 0.0094 Finland .............. 0.0024 0.0127 0.0126 France ............... 0.0020 0.0134 0.0105 Germany .............. 0.0030 0.0301 0.0111 Hong Kong ............ 0.0000 0.0162 0.0000 Italy ................ 0.0020 0.0104 0.0104 Japan ................ 0.0015 0.0163 0.0163 Mexico ............... 0.0000 0.0049 0.0049 Netherlands .......... 0.0060 0.0309 0.0306 New Zealand .......... 0.0000 0.0033 0.0000 Portugal ............. 0.0000 0.0002 0.0002 Singapore ............ 0.0000 0.0037 0.0000 South Korea .......... 0.0054 0.0252 0.0252 Spain ................ 0.0023 0.0124 0.0123 Sweden ............... 0.0009 0.0045 0.0045 Switzerland .......... 0.0053 0.0199 0.0179 United Kingdom ....... 0.0000 0.1334 0.1333 ------------------------------------------------------ TOTAL ................ $0.0349 $0.3697 $0.3173 ====================================================== 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. 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 have foreign source qualified dividends, you may be required to make certain adjustments to those amounts before taking them into account on line 1 of Form 1116. However, you may qualify for an adjustment exception. Please see the instructions to Form 1116 for more information. Annual Report | 45 Templeton Growth Fund, Inc. TAX DESIGNATION (UNAUDITED) (CONTINUED) In January 2006, shareholders will receive Form 1099-DIV which will include their share of taxes paid and foreign source income distributed during the calendar year 2005. The Foreign Source Income reported on Form 1099-DIV has not been reduced to take account the tax rate differential on foreign source qualified dividend income. Shareholders are advised to check with their tax advisors for information on the treatment of these amounts on their 2005 individual income tax returns. 46 | Annual Report Templeton Growth Fund, Inc. BOARD MEMBERS AND OFFICERS The name, year of birth 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 NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD - ------------------------------------------------------------------------------------------------------------------------------------ HARRIS J. ASHTON (1932) Director Since 1992 141 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 (1944) Director Since 2000 20 None 500 East Broward Blvd. Suite 2100 Fort Lauderdale, FL 33394-3091 - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Chairman, Island Corporate Holding Ltd.; Director and Vice Chairman, Caribbean Utilities Co. Limited; Director, Provo Power Company Ltd.; director of various other business and nonprofit organizations; and FORMERLY, Chairman, Atlantic Equipment & Power Ltd. (1977-2003). ==================================================================================================================================== S. JOSEPH FORTUNATO (1932) Director Since 1992 142 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 (until 2002) (Consultant (2003)). ==================================================================================================================================== EDITH E. HOLIDAY (1952) Director Since 2000 137 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. (manufacture and distribution of titanium), Canadian National Railway (railroad), and White Mountains Insurance Group, Ltd. (holding company). - ------------------------------------------------------------------------------------------------------------------------------------ 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 | 47 - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD - ------------------------------------------------------------------------------------------------------------------------------------ GORDON S. MACKLIN (1928) Director Since 1993 141 Director, Martek Biosciences 500 East Broward Blvd. Corporation, MedImmune, Inc. Suite 2100 (biotechnology), and Overstock.com Fort Lauderdale, FL 33394-3091 (Internet services); and FORMERLY, Director, MCI Communication Corporation (subsequently known as MCI WorldCom, Inc. and WorldCom, Inc.) (communications services) (1988-2002), White Mountains Insurance Group, Ltd. (holding company) (1987-2004) and Spacehab, Inc. (aerospace services) (1994-2003). - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Director of various companies; and FORMERLY, Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company) (2001-2004); 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 (1929) Director Since 1990 27 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 (1932) Director Since 2003 101 Director, White Mountains Insurance 500 East Broward Blvd. Group, Ltd. (holding company), Suite 2100 Amerada Hess Corporation Fort Lauderdale, FL 33394-3091 (exploration and refining of oil and gas) and Sentient Jet (private jet service); and FORMERLY, Director, Becton Dickinson and Company (medical technology), Cooper Industries, Inc. (electrical products and tools and hardware), Health Net, Inc. (formerly, Foundation Health) (integrated managed care), The Hertz Corporation, Pacific Southwest Airlines, The RCA Corporation, Unicom (formerly, Commonwealth Edison) and UAL Corporation (airlines). - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and Chief Executive Officer (1977-1999)); and FORMERLY, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines). ==================================================================================================================================== 48 | Annual Report - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD - ------------------------------------------------------------------------------------------------------------------------------------ CONSTANTINE D. TSERETOPOULOS Director Since 2000 20 None (1954) 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). ==================================================================================================================================== INTERESTED BOARD MEMBERS AND OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD - ------------------------------------------------------------------------------------------------------------------------------------ **NICHOLAS F. BRADY Director Since 1993 15 Director, Amerada Hess Corporation (1930) (exploration and refining of oil and 500 East Broward Blvd. gas), Total Logistics, Inc. Suite 2100 (formerly C2, Inc.) (operating and Fort Lauderdale, FL 33394-3091 investment business) and Weatherford International, Ltd (oilfield products and servicing) (2004-present); 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 Technology Ventures Group, LLC (investment firms) and Franklin Templeton Investment Funds (1994-present); Director, Templeton Capital Advisors Ltd.; and formerly, Chairman, Darby Emerging Markets Investments LDC (until 2004) and 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 (1933) Director, Director and 141 None One Franklin Parkway Chairman of Chairman of the San Mateo, CA 94403-1906 the Board and Board since 1995 Vice President and Vice President since 1992 - ------------------------------------------------------------------------------------------------------------------------------------ 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 43 of the investment companies in Franklin Templeton Investments. ==================================================================================================================================== Annual Report | 49 - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD - ------------------------------------------------------------------------------------------------------------------------------------ HARMON E. BURNS (1945) Vice President Since 1996 Not Applicable Not Applicable 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.; 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. ==================================================================================================================================== JAMES M. DAVIS (1952) Chief Since 2004 Not Applicable Not Applicable One Franklin Parkway Compliance San Mateo, CA 94403-1906 Officer - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Director, Global Compliance, Franklin Resources, Inc.; officer of 48 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001). ==================================================================================================================================== JEFFREY A. EVERETT (1964) President, Since 2001 Not Applicable Not Applicable PO Box N-7759 Chief Executive Lyford Cay, Nassau, Bahamas Officer - Investment Management since 2002. - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: President and Director, Templeton Global Advisors Limited; officer of 14 of the investment companies in Franklin Templeton Investments. ==================================================================================================================================== JIMMY D. GAMBILL (1947) Senior Vice Since 2002 Not Applicable Not Applicable 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 48 of the investment companies in Franklin Templeton Investments. ==================================================================================================================================== DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable One Franklin Parkway San Mateo, CA 94403-1906 - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Senior Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources, Inc.; officer of 48 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). ==================================================================================================================================== 50 | Annual Report - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD - ------------------------------------------------------------------------------------------------------------------------------------ BARBARA J. GREEN (1947) Vice President Since 2000 Not Applicable Not Applicable One Franklin Parkway San Mateo, CA 94403-1906 - ------------------------------------------------------------------------------------------------------------------------------------ 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, LLC, 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 48 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. (1940) Vice President Since 1996 Not Applicable Not Applicable 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.; 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 46 of the investment companies in Franklin Templeton Investments. ==================================================================================================================================== JOHN R. KAY (1940) Vice President Since 1994 Not Applicable Not Applicable 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 32 of the investment companies in Franklin Templeton Investments; and FORMERLY, Vice President and Controller, Keystone Group, Inc. ==================================================================================================================================== MICHAEL O. MAGDOL (1937) Vice President Since 2002 Not Applicable Not Applicable 600 Fifth Avenue - AML Rockefeller Center Compliance New York, NY 10020-2302 - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; Director, Franklin Templeton Institutional Suisse SA, Arch Chemicals, Inc. and Lingnan Foundation; and officer and/or director, 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. ==================================================================================================================================== ROBERT C. ROSSELOT (1960) Secretary Since December Not Applicable Not Applicable 500 East Broward Blvd. 2004 Suite 2100 Fort Lauderdale, FL 33394-3091 - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Associate General Counsel and Assistant Secretary, Franklin Resources, Inc.; Vice President and Assistant Secretary, Templeton Investment Counsel, LLC and Fiduciary Trust International of the South; and officer of 14 of the investment companies in Franklin Templeton Investments; and FORMERLY, Assistant General Counsel, The Prudential Insurance Company of America. ==================================================================================================================================== Annual Report | 51 - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD - ------------------------------------------------------------------------------------------------------------------------------------ GREGORY R. SEWARD (1956) Treasurer Since 2004 Not Applicable Not Applicable 500 East Broward Blvd. Suite 2100 Fort Lauderdale, FL 33394-3091 - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Vice President, Franklin Templeton Services, LLC; officer of 14 of the investment companies in Franklin Templeton Investments; and FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000). ==================================================================================================================================== MURRAY L. SIMPSON (1937) Vice President Since 2000 Not Applicable Not Applicable 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 48 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 (1951) Chief Financial Since 2004 Not Applicable Not Applicable 500 East Broward Blvd. Officer and Suite 2100 Chief Fort Lauderdale, FL 33394-3091 Accounting Officer - ------------------------------------------------------------------------------------------------------------------------------------ PRINCIPAL OCCUPATION DURING PAST 5 YEARS: Senior Vice President, Franklin Templeton Services, LLC; officer of 48 of the investment companies in Franklin Templeton Investments; and FORMERLY, Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and 1991-2004). ==================================================================================================================================== <FN> *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 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. Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers. </FN> THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD 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 HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE SINCE 2003, CURRENTLY SERVES AS CHAIRMAN EMERITUS OF THE HERTZ CORPORATION AND WAS FORMERLY CHAIRMAN FROM 1980-2000 AND 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 CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF UAL CORPORATION. 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 U.S. 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. 52 | Annual Report Templeton Growth Fund, Inc. SHAREHOLDER INFORMATION BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT At a meeting held May 11, 2005, the Board of Directors ("Board"), including a majority of non-interested or independent Directors, approved renewal of the investment advisory contract for the Fund. In reaching this decision, the Board took into account information furnished throughout the year at regular Board meetings, as well as information prepared specifically in connection with the annual renewal review process. Information furnished and discussed throughout the year included investment performance reports and related financial information for the Fund, as well as periodic reports on shareholder services, legal, compliance, pricing, brokerage commissions and execution and other services provided by the Investment Manager ("Manager") and its affiliates. Information furnished specifically in connection with the renewal process included a report for the Fund prepared by Lipper Financial Services ("Lipper"), an independent organization, as well as a Fund profitability analysis report prepared by management. The Lipper report compared the Fund's investment performance and expenses with those of other mutual funds deemed comparable to the Fund as selected by Lipper. The Fund profitability analysis report discussed the profitability to Franklin Templeton Investments from its overall U.S. fund operations, as well as on an individual fund-by-fund basis. Included with such profitability analysis report was information on a fund-by-fund basis listing portfolio managers and other accounts they manage, as well as information on management fees charged by the Manager including management's explanation of differences where relevant, and a three-year expense analysis with an explanation for any increase in expense ratios. Additional information accompanying such report was a memorandum prepared by management describing enhancements to the services provided to the Fund by the Franklin Templeton Investments organization, as well as a memorandum relating to economies of scale. In considering such materials, the independent Directors received assistance and advice from and met separately with independent counsel. In approving continuance of the investment advisory contract for the Fund, the Board, including a majority of independent Directors, determined that the existing management fee structure was fair and reasonable and that continuance of the investment advisory contract was in the best interests of the Fund and its shareholders. While attention was given to all information furnished, the following discusses the primary factors relevant to the Board's decision. Annual Report | 53 Templeton Growth Fund, Inc. SHAREHOLDER INFORMATION (CONTINUED) BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT (CONTINUED) NATURE, EXTENT AND QUALITY OF SERVICES. The Board was satisfied with the nature and quality of the overall services provided by the Manager and its affiliates to the Fund and its shareholders. In addition to investment performance and expenses discussed later, the Board's opinion was based, in part, upon periodic reports furnished them showing that the investment policies and restrictions for the Fund were consistently complied with as well as other reports periodically furnished the Board covering matters such as the compliance of portfolio managers and other management personnel with the code of ethics adopted throughout the Franklin Templeton fund complex, the adherence to fair value pricing procedures established by the Board, and the accuracy of net asset value calculations. The Board also noted the extent of benefits provided Fund shareholders from being part of the Franklin Templeton family of funds, including the right to exchange investments between the same class of funds without a sales charge, the ability to reinvest Fund dividends into other funds and the right to combine holdings in other funds to obtain a reduced sales charge. Favorable consideration was given to management's efforts and expenditures in establishing back-up systems and recovery procedures to function in the event of a natural disaster, it being noted by the Board that such systems and procedures had functioned smoothly during the hurricanes and blackout experienced last year in Florida. Other factors taken into account by the Board were the Manager's best execution trading policies, including a favorable third-party report on portfolio execution, as well as the compliance procedures and qualifications of the Chief Compliance Officer established in accordance with recently adopted SEC requirements. Consideration was also given to the experience of the Fund's portfolio management team, the number of accounts managed and general method of compensation. In this latter respect, the Board noted that a primary factor in management's determination of a portfolio manager's bonus compensation was the relative investment performance of the funds he or she managed so as to be aligned with the interests of Fund shareholders. The Board also took into account the transfer agent and shareholder services provided Fund shareholders by an affiliate of the Manager, noting continuing expenditures by management to increase and improve the scope of such services, periodic favorable reports on such service conducted by third parties such as Dalbar, and the firsthand experience of the individual Directors who deal with the shareholder services department in their capacities as shareholders in one or more of the various Franklin Templeton funds. 54 | Annual Report Templeton Growth Fund, Inc. SHAREHOLDER INFORMATION (CONTINUED) BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT (CONTINUED) INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment performance of the Fund in view of its importance to shareholders. While consideration was given to performance reports and discussions with portfolio managers at Board meetings during the year, particular attention in assessing performance was given to the Lipper report furnished for the contract renewal. The Lipper report prepared for the Fund showed the investment performance of its Class A shares for the one-year period ended February 28, 2005, as well as during the previous ten years ended that date in comparison to a performance universe consisting of all retail and institutional global large-cap value funds as selected by Lipper. The Board noted that the Fund's total return for the one-year period was in the highest quintile of its Lipper performance universe and that its total return on an annualized basis placed it in the highest quintile for the previous three- and five-year periods, and was the highest of the three funds in the universe, which were in existence for the full ten-year period. The Board was satisfied with such performance. COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the management fee and total expense ratios of the Fund compared with a group of other funds selected by Lipper as constituting its appropriate Lipper expense group. Prior to making such comparison, the Board relied upon a survey showing that the scope of management advisory services covered under the Fund's investment advisory contract was similar to those provided by fund managers to other mutual fund groups that would be used as a basis of comparison in the Lipper report. In reviewing comparative costs, emphasis was given to the Fund's management fee in comparison with the effective management fee that would have been charged by other funds within its Lipper expense group assuming they were the same size as the Fund, as well as the actual total expenses of the Fund in comparison with those of its Lipper expense group. The Lipper effective management fee analysis includes administrative charges as being part of a management fee, and actual total expenses, for comparative consistency, are shown by Lipper for Fund Class A shares. The results of such expense comparisons showed that the effective management fee rate for the Fund was in the third or middle quintile of its Lipper expense group and that its actual total expenses were in the lowest quintile of such group. The Board was satisfied with the management fee and total expenses of the Fund in comparison to its Lipper expense group, noting that in the previous year it had taken steps to lower the Fund's expenses through adding additional breakpoints to the Fund's management fee, which took effect June 1, 2004. Annual Report | 55 Templeton Growth Fund, Inc. SHAREHOLDER INFORMATION (CONTINUED) BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT (CONTINUED) MANAGEMENT PROFITABILITY. The Board also considered the level of profits realized by the Manager and its affiliates in connection with the operation of the Fund. In this respect, the Board reviewed the Fund profitability analysis that addresses the overall profitability of Franklin Templeton's U.S. fund business, as well as its profits in providing management and other services to the funds. The Board also considered the extent to which the Manager and its affiliates might derive ancillary benefits from fund operations, including its interest in a joint venture entity which finances up-front commissions paid to brokers/dealers who sold fund Class B shares, as well as potential benefits resulting from allocation of fund brokerage and the use of "soft" commission dollars to pay for research. Specific attention was given to the methodology followed in allocating costs to the Fund, it being recognized that allocation methodologies are inherently subjective and various allocation methodologies may each be reasonable while producing different results. In this respect, the Board noted that the cost allocation methodology was consistent with that followed in profitability report presentations for the Fund made in prior years and that it had engaged on a biennial basis the Fund's independent accountants to perform certain procedures specified by the Board solely for its purpose and use. It was also noted that legal costs and payments incurred by Franklin Templeton in resolving various legal proceedings arising from its U.S. fund operations had not been allocated to the Fund for purposes of determining profitability. Included in the analysis for the Fund were the revenue and related costs broken down separately from the management, underwriting and shareholder services functions provided by the Manager and its affiliates to the Fund, as well as the relative contribution of the Fund to the profitability of the Manager's parent. In reviewing and discussing such analysis, management discussed with the Board its belief that costs incurred in establishing the infrastructure necessary to the type of mutual fund operations conducted by the Manager and its corporate affiliates may not be fully reflected in the expenses allocated to the Fund in determining its profitability, as well as the fact that the level of profits, to a certain extent, reflected operational cost savings and efficiencies initiated by management. The Board also took into account management's expenditures in improving shareholder services provided the Fund, as well as the need to meet additional regulatory and compliance requirements resulting from the Sarbanes-Oxley Act and recent SEC requirements. In addition, the Board considered a third-party study comparing the profitability of the Manager's parent on an overall basis as compared to other publicly held managers broken down to show profitability from management operations exclusive of distribution expenses, as well as profitability including distribution expenses. Based upon their consideration of all these factors, the Board determined that the level of profits realized by the Manager under its investment advisory contract with the Fund was not excessive in view of the nature, quality and extent of services provided. 56 | Annual Report Templeton Growth Fund, Inc. SHAREHOLDER INFORMATION (CONTINUED) BOARD REVIEW OF INVESTMENT ADVISORY CONTRACT (CONTINUED) ECONOMIES OF SCALE. The Board also considered whether economies of scale are realized by the Manager and its affiliates as the Fund grows larger and the extent to which this is reflected in the level of management fees charged. While recognizing that any precise determination is inherently subjective, the Board noted that based upon the Fund profitability analysis, it appears that as some funds get larger, at some point economies of scale do result in the Manager realizing a larger profit margin on management services provided such a fund. The Board also noted that economies of scale are shared with a fund and its shareholders through management fee breakpoints so that as a fund grows in size, its effective management fee rate declines. The Fund's investment advisory contract, as revised effective June 1, 2004, provides a fee at the rate of 0.63% on the first $1 billion of Fund net assets; 0.615% on the next $4 billion of Fund net assets; 0.60% on the next $5 billion of Fund net assets; 0.58% on the next $5 billion of Fund net assets; 0.56% on the next $5 billion of Fund net assets; and 0.54% on net assets in excess of $20 billion. The Fund is also charged a separate fee for administrative services, which starts at 0.15% on the first $200 million of Fund net assets, and declines through breakpoints to a fixed rate of 0.075% after net assets reach the $1.2 billion level. At the end of 2004, the Fund's net assets were approximately $22 billion, and to the extent economies of scale may be realized by the Manager and its affiliates, the Board believes the schedules of management advisory and administrative fees provide a sharing of benefits with the Fund and its shareholders. 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 U.S. Securities and Exchange Commission's website at sec.gov and reflect the most recent 12-month period ended June 30. QUARTERLY STATEMENT OF INVESTMENTS The Fund files a complete statement of investments with the U.S. 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 | 57 This page intentionally left blank. This page intentionally left blank. EThis page intentionally left blank. Literature Request 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 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-Mid Cap Growth Fund Franklin Small Cap Growth Fund II 1 VALUE Franklin Balance Sheet Investment Fund 2 Franklin Equity Income Fund Franklin Large Cap Value Fund Franklin MicroCap Value Fund 2 Franklin MidCap Value Fund 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 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 4 Franklin's AGE High Income Fund Franklin Floating Rate Daily Access Fund Franklin Income Fund Franklin Limited Maturity U.S. Government Securities Fund 4 Franklin Low Duration Total Return Fund Franklin Real Return Fund Franklin Strategic Income Fund Franklin Strategic Mortgage Portfolio Franklin Templeton Hard Currency Fund Franklin Total Return Fund Franklin U.S. Government Securities Fund 4 Templeton Global Bond Fund Templeton Income Fund TAX-FREE INCOME 5 NATIONAL FUNDS Double Tax-Free Income Fund Federal Tax-Free Income Fund High Yield Tax-Free Income Fund Insured Tax-Free Income Fund6 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 7 Colorado Connecticut Florida 7 Georgia Kentucky Louisiana Maryland Massachusetts 6 Michigan 6 Minnesota 6 Missouri New Jersey New York 7 North Carolina Ohio 7 Oregon Pennsylvania Tennessee Virginia INSURANCE FUNDS Franklin Templeton Variable Insurance Products Trust 8 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.An investment in the fund is neither insured nor guaranteed by the U.S. government or by any other entity or institution. 5.For investors subject to the alternative minimum tax, a small portion of fund dividends may be taxable. Distributions of capital gains are generally taxable. 6.Portfolio of insured municipal securities. 7.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). 8.The funds of the Franklin Templeton Variable Insurance Products Trust are generally available only through insurance company variable contracts. 09/05 Not part of the annual report (LOGO) FRANKLIN TEMPLETON One Franklin Parkway INVESTMENTS San Mateo, CA 94403-1906 [GRAPHIC OMITTED] [ ] 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 A2005 10/05 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 12(a)(1), the registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (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 $165,311 for the fiscal year ended August 31, 2005 and $93,245 for the fiscal year ended August 31, 2004. (b) Audit-Related Fees There were no 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. 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 their financial statements were $0 for the fiscal year ended August 31, 2005 and $48,579 for the fiscal year ended August 31, 2004. 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. The aggregate 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 were $19,591 for the fiscal year ended August 31, 2005 and $0 for the fiscal year ended August 31, 2004. The services for which these fees were paid included tax compliance and advise. (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 $0 for the fiscal year ended August 31, 2005 and $7,403 for the fiscal year ended August 31, 2004. 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 $4,500 for the fiscal year ended August 31, 2005 and $92,597 for the fiscal year ended August 31, 2004. 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 and the review of the 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 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 $24,091 for the fiscal year ended August 31, 2005 and $148,579 for the fiscal year ended August 31, 2004. (h) The registrant's audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. 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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANIES AND AFFILIATED PURCHASES. N/A ITEM 10. 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 11. 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 12. EXHIBITS (a)(1) Code of Ethics (a)(2) 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)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 21, 2005 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 21, 2005 By /s/GALEN G. VETTER Chief Financial Officer Date October 21, 2005