UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04892
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TEMPLETON GROWTH FUND, INC.
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 8/31
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Date of reporting period: 8/31/06
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ITEM 1. REPORTS TO STOCKHOLDERS
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AUGUST 31, 2006
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ANNUAL REPORT AND SHAREHOLDER LETTER | GLOBAL
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WANT TO RECEIVE
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Eligible shareholders can
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See inside for details.
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[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS
Franklin o TEMPLETON o Mutual Series
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.
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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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[GRAPHIC OMITTED]
Not part of the annual report
Contents
SHAREHOLDER LETTER ......................................................... 1
ANNUAL REPORT
Templeton Growth Fund, Inc. ................................................ 3
Performance Summary ........................................................ 7
Your Fund's Expenses ....................................................... 13
Financial Highlights and Statement of Investments .......................... 15
Financial Statements ....................................................... 25
Notes to Financial Statements .............................................. 29
Report of Independent Registered Public Accounting Firm ........ ........... 39
Tax Designation ............................................................ 40
Board Members and Officers ................................................. 44
Shareholder Information .................................................... 50
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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 primarily in
the equity securities of companies located anywhere in the world, including
emerging markets.
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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. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
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This annual report for Templeton Growth Fund covers the fiscal year ended August
31, 2006.
PERFORMANCE OVERVIEW
Templeton Growth Fund - Class A posted a +14.52% cumulative total return for the
12 months under review. The Fund underperformed its benchmark, the Morgan
Stanley Capital International (MSCI) World Index, which posted a +16.34% total
return for the same period. 1 In line with our long-term investment strategy, we
are pleased with our long-term results. For the 10-year period ended August 31,
2006, Templeton Growth Fund - Class A delivered a +182.88% cumulative total
return, compared with the MSCI World Index's +115.64% cumulative 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. You can find more
performance data in the Performance Summary beginning on page 7.
ECONOMIC AND MARKET OVERVIEW
Global economic growth remained strong during the 12-month period ended August
31, 2006. However, signs of moderation appeared toward the end of the period
primarily due to three factors. Many central banks, including those of the
world's three largest economies, continued to tighten monetary policy, thereby
reducing the immense liquidity that helped fuel the global recovery that began
in 2001. Oil prices remained elevated and reached a historical high during the
period. Lastly, the U.S. housing market showed evidence of cooling.
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. As of 8/31/06, the
Fund's Class A 10-year average annual total return not including the
maximum sales charge was +10.96%, compared with the +7.99% 10-year average
annual total return of the MSCI World Index. 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 20.
Annual Report | 3
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 8/31/06
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
North America 40.9%
Europe 39.3%
Asia 11.2%
Latin America 0.6%
Middle East & Africa 0.6%
Short-Term Investments & Other Net Assets 7.4%
Robust economic expansion sustained strong demand for oil and other commodities,
which kept prices high during most of the reporting period. In particular, many
industrial metals prices continued to rise at double-digit rates. This
contributed to economic growth in countries that are tied to mining and
industrial commodities.
Intensified corporate activity, including mergers and acquisitions, as well as
leveraged buyouts, continued across many sectors during the period. This was
fueled by the strong cash positions many companies built over the past few years
with ample cash available at historically low interest rates. In the first half
of 2006, the total value of global deals announced was $1.83 trillion, an
increase of 43% over the comparable period in 2005.2 Cross-border mergers and
acquisitions were about 40% of total deal volume, and European companies were
the most active worldwide. 2
In this environment, global equity markets performed strongly, particularly
outside the U.S. As of August 31, 2006, the 12-month total return for the MSCI
Europe, Australasia, Far East (EAFE) Index was +24.78%, while the MSCI All
Country (AC) World ex USA Index posted a total return of +25.44%. 3 By
comparison, the total return for the MSCI USA Index was +8.79% (all returns in
U.S. dollars) over the same period. 4
INVESTMENT STRATEGY
Our investment strategy employs a bottom-up, value-oriented, long-term approach.
We focus on the market price of a company's securities relative to our
evaluation of the company's long-term earnings, asset value and cash flow
potential. As we look worldwide, we consider specific companies, rather than
sectors or countries, while doing in-depth research to construct a bargain list
from which we buy. Before we make a purchase, we look at the company's potential
for earnings and growth over a five-year horizon.
MANAGER'S DISCUSSION
Our bottom-up investment strategy frequently results in a portfolio that has a
very different geographic and industry mix than that of the Fund's benchmark,
the MSCI World Index. One of the most significant factors contributing to
performance during the year under review was the Fund's relatively low exposure
2. Source: "Merger Machine Keeps Churning out Deals," THE WALL STREET
JOURNAL, 7/3/06.
3. Source: Standard & Poor's Micropal. The MSCI EAFE Index is a free
float-adjusted, market capitalization-weighted index designed to measure
equity market performance in global developed markets excluding the U.S.
and Canada. The MSCI AC World ex USA Index is a free float-adjusted,
market capitalization-weighted index designed to measure equity market
performance in global developed and emerging markets excluding the U.S.
4. 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.
4 | Annual Report
to the U.S. At the start of the reporting period, the Fund had less than 25% of
total net assets invested in the U.S., compared with the benchmark's more than
50% weighting. The MSCI USA Index appreciated +8.79% over the Fund's fiscal
year, compared with the +24.68% return for the MSCI World ex USA Index. 5
In recent years, we steadily increased the Fund's exposure to the global media
industry. Five years ago, on August 31, 2001, the Fund had only about 0.5% of
total net assets invested in the media industry. The MSCI World Media Index
declined about 18% over the subsequent four years. 6 As prices fell and
valuations, in our opinion, became more attractive, we increased the Fund's
media exposure to 8% of total net assets on August 31, 2005, and 12% on August
31, 2006. A number of media holdings aided Fund performance in the past 12
months, including News Corp., a media conglomerate; Comcast, a U.S. cable
operator; and professional publishers Reed Elsevier, Pearson and VNU. In July
2006, a consortium of private equity investors acquired VNU, the
Netherlands-based owner of ACNielsen, a marketing information company, and
Nielsen Media Research, a media measurement and information provider, at an
attractive premium to the Fund's purchase price. We subsequently sold VNU.
The Fund's exposure to the pharmaceuticals industry also contributed to Fund
performance. In particular, U.S. pharmaceutical company Merck & Co. performed
well and appreciated 50% in value during the reporting period. Pharmaceuticals
was another industry where we increased the Fund's exposure in recent years.
Five years ago, on August 31, 2001, less than 2% of the Fund's total net assets
were invested in the pharmaceuticals industry, and the weighting increased to
12% on August 31, 2006.
In contrast, the Fund's exposure to the telecommunications sector was a drag on
relative performance during the year under review. 7 One of the largest
underperformers was Vodafone Group, the U.K.-based mobile telecommunications
operator. Vodafone suffered in Europe's highly competitive pricing environment
for mobile telecommunication services.
Six of the Fund's ten largest detractors during the year were U.S.-listed
companies. Hospital operator Tenet Healthcare underperformed, in part due to the
impact of Hurricane Katrina, which affected six of its hospitals. Eastman Kodak,
a recent Fund purchase, also delivered disappointing short-term
TOP 10 COUNTRIES
Based On Equity Securities
8/31/06
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% OF TOTAL
NET ASSETS
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U.S. 38.7%
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U.K. 16.0%
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Japan 6.6%
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Germany 5.1%
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Switzerland 4.3%
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Netherlands 3.8%
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France 3.6%
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South Korea 3.3%
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Italy 2.4%
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Finland 1.9%
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5. Source: Standard & Poor's Micropal. See footnote 4 for a description of
the MSCI USA Index. The MSCI World ex USA Index is a free float-adjusted,
market capitalization-weighted index designed to measure equity market
performance in global developed markets excluding the U.S.
6. Source: Standard & Poor's Micropal. The MSCI World Media Index is a free
float-adjusted, market capitalization-weighted index designed to measure
equity performance of the media sector of the MSCI World Index.
7. The telecommunication services sector comprises diversified
telecommunication services and wireless telecommunication services in the
SOI.
Annual Report | 5
TOP 10 EQUITY HOLDINGS
8/31/06
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COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
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News Corp., A 2.2%
MEDIA, U.S.
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Microsoft Corp. 2.2%
SOFTWARE, U.S.
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Tyco International Ltd. 2.2%
INDUSTRIAL CONGLOMERATES, U.S.
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American International Group Inc. 2.0%
INSURANCE, U.S.
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Merck & Co. Inc. 1.9%
PHARMACEUTICALS, U.S.
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Pfizer Inc. 1.9%
PHARMACEUTICALS, U.S.
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Siemens AG 1.9%
INDUSTRIAL CONGLOMERATES, GERMANY
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Royal Bank of Scotland Group PLC 1.8%
COMMERCIAL BANKS, U.K.
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Viacom Inc., B 1.7%
MEDIA, U.S.
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GlaxoSmithKline PLC 1.7%
PHARMACEUTICALS, U.K.
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performance, with its share price falling to a 26-year low in August 2006. The
company announced additional restructuring charges and job cuts, as it
transforms from a film to a digital business model.
Following a U.S. equity market decline in May, our team of analysts identified
an increasing number of opportunities that we believed were attractively valued.
For example, we initiated positions in Oracle, a leading database and middleware
software vendor and enterprise software company, and Viacom, a global cable
television and film entertainment content company. Other new holdings included
American Standard, an air conditioning and bath and kitchen product
manufacturer; Harley-Davidson, a motorcycle manufacturer; and Expedia, an online
travel operator. Partly as a result of such purchases, the Fund's equity
exposure to the U.S. rose to 38% of total net assets on August 31, 2006, up from
24% a year earlier.
Elsewhere, we added to the Fund's exposure to the financials sector with
purchases of two U.K.-based insurance companies -- Aviva and Standard Life
Assurance. 8 Aviva is the largest U.K.-based insurer in terms of premiums, with
roughly 50% of its business in the U.K. and the remainder primarily in France,
Netherlands, Spain, Italy and Ireland. In July, Standard Life Assurance changed
its structure from a mutually owned life insurance company to one publicly
traded on the London Stock Exchange. It is one of the largest life insurance
companies in the U.K. and Canada.
Thank you for investing in Templeton Growth Fund. We welcome your comments and
look forward to serving your future investment needs.
[PHOTO OMITTED] \s\ Murdo Murchison
Murdo Murchison, CFA
Portfolio Manager
Templeton Growth Fund, Inc.
8. The financials sector comprises capital markets, commercial banks,
insurance and real estate in the SOI.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF AUGUST 31, 2006, 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.
6 | Annual Report
Performance Summary as of 8/31/06
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
that a shareholder would pay 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
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CLASS A (SYMBOL: TEPLX) CHANGE 8/31/06 8/31/05
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Net Asset Value (NAV) +$1.43 $25.29 $23.86
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DISTRIBUTIONS (9/1/05-8/31/06)
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Dividend Income $0.4109
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Short-Term Capital Gain $0.0712
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Long-Term Capital Gain $1.2482
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TOTAL $1.7303
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CLASS B (SYMBOL: TMGBX) CHANGE 8/31/06 8/31/05
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Net Asset Value (NAV) +$1.38 $24.75 $23.37
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DISTRIBUTIONS (9/1/05-8/31/06)
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Dividend Income $0.2368
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Short-Term Capital Gain $0.0712
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Long-Term Capital Gain $1.2482
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TOTAL $1.5562
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CLASS C (SYMBOL: TEGTX) CHANGE 8/31/06 8/31/05
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Net Asset Value (NAV) +$1.35 $24.63 $23.28
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DISTRIBUTIONS (9/1/05-8/31/06)
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Dividend Income $0.2529
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Short-Term Capital Gain $0.0712
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Long-Term Capital Gain $1.2482
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TOTAL $1.5723
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CLASS R (SYMBOL: TEGRX) CHANGE 8/31/06 8/31/05
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Net Asset Value (NAV) +$1.38 $25.06 $23.68
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DISTRIBUTIONS (9/1/05-8/31/06)
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Dividend Income $0.3732
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Short-Term Capital Gain $0.0712
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Long-Term Capital Gain $1.2482
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TOTAL $1.6926
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Annual Report | 7
Performance Summary (CONTINUED)
PRICE AND DISTRIBUTION INFORMATION (CONTINUED)
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ADVISOR CLASS (SYMBOL: TGADX) CHANGE 8/31/06 8/31/05
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Net Asset Value (NAV) +$1.44 $25.34 $23.90
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DISTRIBUTIONS (9/1/05-8/31/06)
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Dividend Income $0.4665
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Short-Term Capital Gain $0.0712
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Long-Term Capital Gain $1.2482
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TOTAL $1.7859
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8 | Annual Report
Performance Summary (CONTINUED)
PERFORMANCE
CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. 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/ADVISOR CLASS: NO SALES CHARGES. THE FUND MAY
CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.
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CLASS A 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +14.52% +71.27% +182.88%
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Average Annual Total Return 2 +7.95% +10.06% +10.31%
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Value of $10,000 Investment 3 $10,795 $16,146 $26,667
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Avg. Ann. Total Return (9/30/06) 4 +8.00% +12.47% +10.30%
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CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return 1 +13.65% +64.96% +111.34%
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Average Annual Total Return 2 +9.65% +10.26% +10.25%
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Value of $10,000 Investment 3 $10,965 $16,296 $21,134
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Avg. Ann. Total Return (9/30/06) 4 +9.72% +12.71% +10.41%
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CLASS C 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +13.71% +65.02% +162.46%
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Average Annual Total Return 2 +12.71% +10.54% +10.13%
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Value of $10,000 Investment 3 $11,271 $16,502 $26,246
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Avg. Ann. Total Return (9/30/06) 4 +12.73% +12.97% +10.13%
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CLASS R 1-YEAR 3-YEAR INCEPTION (1/1/02)
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Cumulative Total Return 1 +14.22% +58.05% +65.19%
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Average Annual Total Return 2 +14.22% +16.48% +11.37%
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Value of $10,000 Investment 3 $11,422 $15,805 $16,519
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Avg. Ann. Total Return (9/30/06) 4 +14.28% +17.13% +11.63%
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ADVISOR CLASS 5 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 +14.83% +73.35% +192.33%
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Average Annual Total Return 2 +14.83% +11.63% +11.32%
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Value of $10,000 Investment 3 $11,483 $17,335 $29,233
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Avg. Ann. Total Return (9/30/06) 4 +14.87% +14.10% +11.33%
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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 | 9
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
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CLASS A 8/31/06
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1-Year +7.95%
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5-Year +10.06%
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10-Year +10.31%
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CLASS A (9/1/96-8/31/06)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
DATE TEMPLETON GROWTH FUND MSCI WORLD INDEX 6 CPI 6
- ---------- --------------------- ------------------ -------
9/1/1996 $ 9,427 $10,000 $10,000
9/30/1996 $ 9,618 $10,393 $10,032
10/31/1996 $ 9,775 $10,468 $10,064
11/30/1996 $10,307 $11,056 $10,083
12/31/1996 $10,516 $10,881 $10,083
1/31/1997 $10,769 $11,014 $10,114
2/28/1997 $10,855 $11,143 $10,146
3/31/1997 $10,806 $10,924 $10,172
4/30/1997 $11,049 $11,283 $10,184
5/31/1997 $11,597 $11,982 $10,178
6/30/1997 $12,060 $12,581 $10,191
7/31/1997 $12,518 $13,162 $10,203
8/31/1997 $12,093 $12,284 $10,223
9/30/1997 $12,873 $12,953 $10,248
10/31/1997 $12,031 $12,273 $10,273
11/30/1997 $12,068 $12,493 $10,267
12/31/1997 $12,217 $12,647 $10,254
1/31/1998 $12,236 $13,001 $10,273
2/28/1998 $12,910 $13,883 $10,292
3/31/1998 $13,483 $14,471 $10,312
4/30/1998 $13,552 $14,615 $10,331
5/31/1998 $13,143 $14,434 $10,350
6/30/1998 $12,765 $14,778 $10,362
7/31/1998 $12,463 $14,757 $10,375
8/31/1998 $10,567 $12,791 $10,388
9/30/1998 $10,832 $13,019 $10,401
10/31/1998 $11,754 $14,199 $10,426
11/30/1998 $12,176 $15,045 $10,426
12/31/1998 $11,914 $15,783 $10,420
1/31/1999 $11,827 $16,130 $10,445
2/28/1999 $11,740 $15,704 $10,458
3/31/1999 $12,562 $16,360 $10,490
4/30/1999 $14,120 $17,007 $10,566
5/31/1999 $13,610 $16,388 $10,566
6/30/1999 $14,243 $17,154 $10,566
7/31/1999 $14,229 $17,105 $10,598
8/31/1999 $14,236 $17,077 $10,623
9/30/1999 $13,727 $16,914 $10,674
10/31/1999 $13,738 $17,795 $10,693
11/30/1999 $14,348 $18,298 $10,699
12/31/1999 $15,541 $19,782 $10,699
1/31/2000 $14,474 $18,651 $10,731
2/29/2000 $13,983 $18,704 $10,795
3/31/2000 $14,996 $19,999 $10,884
4/30/2000 $14,801 $19,156 $10,890
5/31/2000 $15,073 $18,673 $10,903
6/30/2000 $15,151 $19,304 $10,960
7/31/2000 $15,050 $18,763 $10,985
8/31/2000 $15,323 $19,376 $10,985
9/30/2000 $14,855 $18,348 $11,043
10/31/2000 $14,990 $18,043 $11,062
11/30/2000 $14,899 $16,950 $11,068
12/31/2000 $15,811 $17,226 $11,062
1/31/2001 $16,026 $17,561 $11,132
2/28/2001 $15,811 $16,079 $11,176
3/31/2001 $15,071 $15,026 $11,202
4/30/2001 $15,682 $16,140 $11,246
5/31/2001 $15,991 $15,940 $11,297
6/30/2001 $15,699 $15,443 $11,316
7/31/2001 $15,639 $15,239 $11,284
8/31/2001 $15,570 $14,511 $11,284
9/30/2001 $14,246 $13,234 $11,335
10/31/2001 $14,716 $13,489 $11,297
11/30/2001 $15,646 $14,289 $11,278
12/31/2001 $15,896 $14,380 $11,233
1/31/2002 $15,552 $13,946 $11,259
2/28/2002 $15,861 $13,828 $11,303
3/31/2002 $16,453 $14,442 $11,367
4/30/2002 $16,541 $13,957 $11,430
5/31/2002 $16,885 $13,989 $11,430
6/30/2002 $16,196 $13,143 $11,437
7/31/2002 $15,092 $12,037 $11,449
8/31/2002 $15,101 $12,062 $11,488
9/30/2002 $13,450 $10,738 $11,507
10/31/2002 $14,139 $11,533 $11,526
11/30/2002 $15,065 $12,157 $11,526
12/31/2002 $14,390 $11,570 $11,500
1/31/2003 $14,101 $11,221 $11,551
2/28/2003 $13,622 $11,029 $11,640
3/31/2003 $13,315 $10,998 $11,710
4/30/2003 $14,571 $11,981 $11,685
5/31/2003 $15,718 $12,671 $11,666
6/30/2003 $16,007 $12,895 $11,678
7/31/2003 $16,368 $13,159 $11,691
8/31/2003 $16,748 $13,447 $11,736
9/30/2003 $16,802 $13,532 $11,774
10/31/2003 $17,518 $14,338 $11,761
11/30/2003 $17,950 $14,560 $11,729
12/31/2003 $19,117 $15,477 $11,716
1/31/2004 $19,515 $15,728 $11,774
2/29/2004 $20,005 $15,997 $11,837
3/31/2004 $19,700 $15,897 $11,914
4/30/2004 $19,524 $15,581 $11,952
5/31/2004 $19,635 $15,733 $12,022
6/30/2004 $19,987 $16,063 $12,060
7/31/2004 $19,358 $15,543 $12,041
8/31/2004 $19,450 $15,618 $12,047
9/30/2004 $19,922 $15,918 $12,072
10/31/2004 $20,396 $16,311 $12,136
11/30/2004 $21,641 $17,175 $12,142
12/31/2004 $22,367 $17,836 $12,098
1/31/2005 $21,819 $17,438 $12,123
2/28/2005 $22,787 $17,998 $12,193
3/31/2005 $22,435 $17,658 $12,289
4/30/2005 $21,976 $17,284 $12,371
5/31/2005 $22,064 $17,604 $12,359
6/30/2005 $22,357 $17,765 $12,365
7/31/2005 $22,933 $18,389 $12,422
8/31/2005 $23,285 $18,536 $12,486
9/30/2005 $23,744 $19,023 $12,638
10/31/2005 $22,940 $18,565 $12,664
11/30/2005 $23,382 $19,194 $12,562
12/31/2005 $24,189 $19,624 $12,511
1/31/2006 $25,085 $20,504 $12,606
2/28/2006 $25,106 $20,482 $12,632
3/31/2006 $25,528 $20,942 $12,702
4/30/2006 $26,424 $21,589 $12,810
5/31/2006 $25,739 $20,871 $12,873
6/30/2006 $25,739 $20,873 $12,899
7/31/2006 $26,055 $21,008 $12,937
8/31/2006 $26,667 $21,564 $12,962
AVERAGE ANNUAL TOTAL RETURN
- ----------------------------------------------------
CLASS B 8/31/06
- ----------------------------------------------------
1-Year +9.65%
- ----------------------------------------------------
5-Year +10.26%
- ----------------------------------------------------
Since Inception (1/1/99) +10.25%
- ----------------------------------------------------
CLASS B (1/1/99-8/31/06)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
DATE TEMPLETON GROWTH FUND MSCI WORLD INDEX 6 CPI 6
- ---------- --------------------- ------------------ -------
1/1/1999 $10,000 $10,000 $10,000
1/31/1999 $ 9,927 $10,220 $10,024
2/28/1999 $ 9,847 $ 9,950 $10,037
3/31/1999 $10,525 $10,366 $10,067
4/30/1999 $11,820 $10,776 $10,140
5/31/1999 $11,387 $10,383 $10,140
6/30/1999 $11,906 $10,869 $10,140
7/31/1999 $11,888 $10,838 $10,171
8/31/1999 $11,888 $10,820 $10,195
9/30/1999 $11,454 $10,717 $10,244
10/31/1999 $11,463 $11,275 $10,262
11/30/1999 $11,962 $11,594 $10,268
12/31/1999 $12,945 $12,534 $10,268
1/31/2000 $12,044 $11,818 $10,299
2/29/2000 $11,633 $11,851 $10,360
3/31/2000 $12,468 $12,672 $10,445
4/30/2000 $12,299 $12,137 $10,451
5/31/2000 $12,521 $11,831 $10,464
6/30/2000 $12,579 $12,231 $10,519
7/31/2000 $12,481 $11,889 $10,543
8/31/2000 $12,697 $12,277 $10,543
9/30/2000 $12,305 $11,626 $10,598
10/31/2000 $12,408 $11,432 $10,616
11/30/2000 $12,324 $10,740 $10,622
12/31/2000 $13,070 $10,915 $10,616
1/31/2001 $13,242 $11,127 $10,683
2/28/2001 $13,056 $10,188 $10,726
3/31/2001 $12,439 $ 9,520 $10,750
4/30/2001 $12,934 $10,227 $10,793
5/31/2001 $13,185 $10,100 $10,842
6/30/2001 $12,926 $ 9,785 $10,860
7/31/2001 $12,876 $ 9,656 $10,830
8/31/2001 $12,812 $ 9,194 $10,830
9/30/2001 $11,715 $ 8,385 $10,879
10/31/2001 $12,091 $ 8,547 $10,842
11/30/2001 $12,848 $ 9,054 $10,824
12/31/2001 $13,049 $ 9,112 $10,781
1/31/2002 $12,749 $ 8,837 $10,805
2/28/2002 $12,998 $ 8,761 $10,848
3/31/2002 $13,474 $ 9,151 $10,909
4/30/2002 $13,547 $ 8,843 $10,970
5/31/2002 $13,818 $ 8,864 $10,970
6/30/2002 $13,240 $ 8,328 $10,976
7/31/2002 $12,332 $ 7,627 $10,988
8/31/2002 $12,332 $ 7,643 $11,025
9/30/2002 $10,978 $ 6,804 $11,043
10/31/2002 $11,534 $ 7,307 $11,062
11/30/2002 $12,276 $ 7,703 $11,062
12/31/2002 $11,722 $ 7,331 $11,037
1/31/2003 $11,484 $ 7,110 $11,086
2/28/2003 $11,082 $ 6,988 $11,171
3/31/2003 $10,821 $ 6,969 $11,239
4/30/2003 $11,841 $ 7,591 $11,214
5/31/2003 $12,764 $ 8,029 $11,196
6/30/2003 $12,987 $ 8,170 $11,208
7/31/2003 $13,277 $ 8,338 $11,220
8/31/2003 $13,575 $ 8,520 $11,263
9/30/2003 $13,612 $ 8,574 $11,300
10/31/2003 $14,179 $ 9,085 $11,287
11/30/2003 $14,519 $ 9,225 $11,257
12/31/2003 $15,450 $ 9,806 $11,245
1/31/2004 $15,769 $ 9,966 $11,300
2/29/2004 $16,155 $10,136 $11,361
3/31/2004 $15,898 $10,073 $11,434
4/30/2004 $15,746 $ 9,872 $11,470
5/31/2004 $15,822 $ 9,969 $11,538
6/30/2004 $16,102 $10,178 $11,574
7/31/2004 $15,579 $ 9,848 $11,556
8/31/2004 $15,648 $ 9,895 $11,562
9/30/2004 $16,011 $10,086 $11,586
10/31/2004 $16,390 $10,335 $11,647
11/30/2004 $17,376 $10,883 $11,653
12/31/2004 $17,950 $11,301 $11,611
1/31/2005 $17,496 $11,049 $11,635
2/28/2005 $18,261 $11,404 $11,702
3/31/2005 $17,966 $11,188 $11,794
4/30/2005 $17,592 $10,951 $11,873
5/31/2005 $17,648 $11,154 $11,861
6/30/2005 $17,878 $11,256 $11,867
7/31/2005 $18,324 $11,651 $11,922
8/31/2005 $18,595 $11,745 $11,983
9/30/2005 $18,946 $12,053 $12,129
10/31/2005 $18,289 $11,763 $12,154
11/30/2005 $18,640 $12,161 $12,056
12/31/2005 $19,273 $12,434 $12,007
1/31/2006 $19,973 $12,992 $12,099
2/28/2006 $19,973 $12,978 $12,123
3/31/2006 $20,298 $13,269 $12,190
4/30/2006 $20,998 $13,679 $12,294
5/31/2006 $20,443 $13,224 $12,355
6/30/2006 $20,426 $13,225 $12,379
7/31/2006 $20,665 $13,311 $12,416
8/31/2006 $21,134 $13,663 $12,441
10 | Annual Report
Performance Summary (CONTINUED)
CLASS C (9/1/96-8/31/06)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
DATE TEMPLETON GROWTH FUND MSCI WORLD INDEX 6 CPI 6
- ---------- --------------------- ------------------ -------
9/1/1996 $10,000 $10,000 $10,000
9/30/1996 $10,194 $10,393 $10,032
10/31/1996 $10,351 $10,468 $10,064
11/30/1996 $10,907 $11,056 $10,083
12/31/1996 $11,129 $10,881 $10,083
1/31/1997 $11,387 $11,014 $10,114
2/28/1997 $11,467 $11,143 $10,146
3/31/1997 $11,410 $10,924 $10,172
4/30/1997 $11,657 $11,283 $10,184
5/31/1997 $12,231 $11,982 $10,178
6/30/1997 $12,713 $12,581 $10,191
7/31/1997 $13,183 $13,162 $10,203
8/31/1997 $12,730 $12,284 $10,223
9/30/1997 $13,539 $12,953 $10,248
10/31/1997 $12,649 $12,273 $10,273
11/30/1997 $12,675 $12,493 $10,267
12/31/1997 $12,828 $12,647 $10,254
1/31/1998 $12,841 $13,001 $10,273
2/28/1998 $13,537 $13,883 $10,292
3/31/1998 $14,126 $14,471 $10,312
4/30/1998 $14,193 $14,615 $10,331
5/31/1998 $13,751 $14,434 $10,350
6/30/1998 $13,350 $14,778 $10,362
7/31/1998 $13,022 $14,757 $10,375
8/31/1998 $11,041 $12,791 $10,388
9/30/1998 $11,309 $13,019 $10,401
10/31/1998 $12,263 $14,199 $10,426
11/30/1998 $12,695 $15,045 $10,426
12/31/1998 $12,418 $15,783 $10,420
1/31/1999 $12,317 $16,130 $10,445
2/28/1999 $12,225 $15,704 $10,458
3/31/1999 $13,065 $16,360 $10,490
4/30/1999 $14,676 $17,007 $10,566
5/31/1999 $14,136 $16,388 $10,566
6/30/1999 $14,784 $17,154 $10,566
7/31/1999 $14,769 $17,105 $10,598
8/31/1999 $14,761 $17,077 $10,623
9/30/1999 $14,229 $16,914 $10,674
10/31/1999 $14,232 $17,795 $10,693
11/30/1999 $14,849 $18,298 $10,699
12/31/1999 $16,074 $19,782 $10,699
1/31/2000 $14,962 $18,651 $10,731
2/29/2000 $14,439 $18,704 $10,795
3/31/2000 $15,485 $19,999 $10,884
4/30/2000 $15,273 $19,156 $10,890
5/31/2000 $15,543 $18,673 $10,903
6/30/2000 $15,616 $19,304 $10,960
7/31/2000 $15,502 $18,763 $10,985
8/31/2000 $15,763 $19,376 $10,985
9/30/2000 $15,273 $18,348 $11,043
10/31/2000 $15,410 $18,043 $11,062
11/30/2000 $15,306 $16,950 $11,068
12/31/2000 $16,228 $17,226 $11,062
1/31/2001 $16,443 $17,561 $11,132
2/28/2001 $16,210 $16,079 $11,176
3/31/2001 $15,448 $15,026 $11,202
4/30/2001 $16,058 $16,140 $11,246
5/31/2001 $16,372 $15,940 $11,297
6/30/2001 $16,058 $15,443 $11,316
7/31/2001 $15,986 $15,239 $11,284
8/31/2001 $15,905 $14,511 $11,284
9/30/2001 $14,542 $13,234 $11,335
10/31/2001 $15,012 $13,489 $11,297
11/30/2001 $15,959 $14,289 $11,278
12/31/2001 $16,199 $14,380 $11,233
1/31/2002 $15,833 $13,946 $11,259
2/28/2002 $16,144 $13,828 $11,303
3/31/2002 $16,729 $14,442 $11,367
4/30/2002 $16,821 $13,957 $11,430
5/31/2002 $17,159 $13,989 $11,430
6/30/2002 $16,437 $13,143 $11,437
7/31/2002 $15,312 $12,037 $11,449
8/31/2002 $15,312 $12,062 $11,488
9/30/2002 $13,629 $10,738 $11,507
10/31/2002 $14,320 $11,533 $11,526
11/30/2002 $15,246 $12,157 $11,526
12/31/2002 $14,552 $11,570 $11,500
1/31/2003 $14,254 $11,221 $11,551
2/28/2003 $13,762 $11,029 $11,640
3/31/2003 $13,437 $10,998 $11,710
4/30/2003 $14,700 $11,981 $11,685
5/31/2003 $15,852 $12,671 $11,666
6/30/2003 $16,130 $12,895 $11,678
7/31/2003 $16,483 $13,159 $11,691
8/31/2003 $16,855 $13,447 $11,736
9/30/2003 $16,901 $13,532 $11,774
10/31/2003 $17,604 $14,338 $11,761
11/30/2003 $18,028 $14,560 $11,729
12/31/2003 $19,188 $15,477 $11,716
1/31/2004 $19,576 $15,728 $11,774
2/29/2004 $20,067 $15,997 $11,837
3/31/2004 $19,746 $15,897 $11,914
4/30/2004 $19,557 $15,581 $11,952
5/31/2004 $19,651 $15,733 $12,022
6/30/2004 $19,992 $16,063 $12,060
7/31/2004 $19,349 $15,543 $12,041
8/31/2004 $19,434 $15,618 $12,047
9/30/2004 $19,888 $15,918 $12,072
10/31/2004 $20,353 $16,311 $12,136
11/30/2004 $21,572 $17,175 $12,142
12/31/2004 $22,287 $17,836 $12,098
1/31/2005 $21,722 $17,438 $12,123
2/28/2005 $22,675 $17,998 $12,193
3/31/2005 $22,307 $17,658 $12,289
4/30/2005 $21,841 $17,284 $12,371
5/31/2005 $21,920 $17,604 $12,359
6/30/2005 $22,198 $17,765 $12,365
7/31/2005 $22,754 $18,389 $12,422
8/31/2005 $23,082 $18,536 $12,486
9/30/2005 $23,528 $19,023 $12,638
10/31/2005 $22,715 $18,565 $12,664
11/30/2005 $23,143 $19,194 $12,562
12/31/2005 $23,923 $19,624 $12,511
1/31/2006 $24,797 $20,504 $12,606
2/28/2006 $24,797 $20,482 $12,632
3/31/2006 $25,202 $20,942 $12,702
4/30/2006 $26,065 $21,589 $12,810
5/31/2006 $25,383 $20,871 $12,873
6/30/2006 $25,362 $20,873 $12,899
7/31/2006 $25,660 $21,008 $12,937
8/31/2006 $26,246 $21,564 $12,962
AVERAGE ANNUAL TOTAL RETURN
- ----------------------------------------------------
CLASS C 8/31/06
- ----------------------------------------------------
1-Year +12.71%
- ----------------------------------------------------
5-Year +10.54%
- ----------------------------------------------------
10-Year +10.13%
- ----------------------------------------------------
CLASS R (1/1/02-8/31/06)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
DATE TEMPLETON GROWTH FUND MSCI WORLD INDEX 6 CPI 6
- ---------- --------------------- ------------------ -------
1/1/2002 $10,000 $10,000 $10,000
1/31/2002 $ 9,745 $ 9,698 $10,023
2/28/2002 $ 9,944 $ 9,616 $10,062
3/31/2002 $10,309 $10,043 $10,119
4/30/2002 $10,365 $ 9,705 $10,175
5/31/2002 $10,581 $ 9,728 $10,175
6/30/2002 $10,144 $ 9,140 $10,181
7/31/2002 $ 9,446 $ 8,370 $10,192
8/31/2002 $ 9,451 $ 8,388 $10,226
9/30/2002 $ 8,416 $ 7,467 $10,243
10/31/2002 $ 8,846 $ 8,020 $10,260
11/30/2002 $ 9,416 $ 8,454 $10,260
12/31/2002 $ 8,995 $ 8,046 $10,238
1/31/2003 $ 8,813 $ 7,803 $10,283
2/28/2003 $ 8,512 $ 7,669 $10,362
3/31/2003 $ 8,314 $ 7,648 $10,424
4/30/2003 $ 9,102 $ 8,331 $10,402
5/31/2003 $ 9,816 $ 8,811 $10,385
6/30/2003 $ 9,992 $ 8,967 $10,396
7/31/2003 $10,218 $ 9,151 $10,407
8/31/2003 $10,451 $ 9,351 $10,447
9/30/2003 $10,484 $ 9,410 $10,481
10/31/2003 $10,927 $ 9,970 $10,470
11/30/2003 $11,193 $10,125 $10,441
12/31/2003 $11,922 $10,762 $10,430
1/31/2004 $12,165 $10,937 $10,481
2/29/2004 $12,472 $11,124 $10,538
3/31/2004 $12,281 $11,055 $10,606
4/30/2004 $12,165 $10,835 $10,640
5/31/2004 $12,229 $10,941 $10,702
6/30/2004 $12,449 $11,170 $10,736
7/31/2004 $12,055 $10,808 $10,719
8/31/2004 $12,107 $10,860 $10,724
9/30/2004 $12,397 $11,069 $10,747
10/31/2004 $12,693 $11,343 $10,804
11/30/2004 $13,460 $11,944 $10,809
12/31/2004 $13,911 $12,403 $10,770
1/31/2005 $13,568 $12,126 $10,792
2/28/2005 $14,168 $12,516 $10,855
3/31/2005 $13,948 $12,279 $10,939
4/30/2005 $13,660 $12,019 $11,013
5/31/2005 $13,710 $12,242 $11,002
6/30/2005 $13,893 $12,353 $11,007
7/31/2005 $14,247 $12,788 $11,058
8/31/2005 $14,461 $12,890 $11,115
9/30/2005 $14,742 $13,228 $11,251
10/31/2005 $14,238 $12,910 $11,273
11/30/2005 $14,515 $13,347 $11,183
12/31/2005 $15,008 $13,646 $11,138
1/31/2006 $15,562 $14,258 $11,222
2/28/2006 $15,568 $14,243 $11,245
3/31/2006 $15,832 $14,563 $11,307
4/30/2006 $16,380 $15,013 $11,404
5/31/2006 $15,951 $14,513 $11,460
6/30/2006 $15,951 $14,515 $11,483
7/31/2006 $16,142 $14,609 $11,517
8/31/2006 $16,519 $14,995 $11,539
AVERAGE ANNUAL TOTAL RETURN
- ----------------------------------------------------
CLASS R 8/31/06
- ----------------------------------------------------
1-Year +14.22%
- ----------------------------------------------------
3-Year +16.48%
- ----------------------------------------------------
Since Inception (1/1/02) +11.37%
- ----------------------------------------------------
Annual Report | 11
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- ----------------------------------------------------
ADVISOR CLASS 5 8/31/06
- ----------------------------------------------------
1-Year +14.83%
- ----------------------------------------------------
5-Year +11.63%
- ----------------------------------------------------
10-Year +11.32%
- ----------------------------------------------------
ASVISOR CLASS (9/1/96-8/31/06) 5
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
DATE TEMPLETON GROWTH FUND MSCI WORLD INDEX 6 CPI 6
- ---------- --------------------- ------------------ -------
9/1/1996 $10,000 $10,000 $10,000
9/30/1996 $10,203 $10,393 $10,032
10/31/1996 $10,369 $10,468 $10,064
11/30/1996 $10,933 $11,056 $10,083
12/31/1996 $11,155 $10,881 $10,083
1/31/1997 $11,523 $11,014 $10,114
2/28/1997 $11,616 $11,143 $10,146
3/31/1997 $11,563 $10,924 $10,172
4/30/1997 $11,823 $11,283 $10,184
5/31/1997 $12,411 $11,982 $10,178
6/30/1997 $12,911 $12,581 $10,191
7/31/1997 $13,400 $13,162 $10,203
8/31/1997 $12,952 $12,284 $10,223
9/30/1997 $13,787 $12,953 $10,248
10/31/1997 $12,898 $12,273 $10,273
11/30/1997 $12,937 $12,493 $10,267
12/31/1997 $13,101 $12,647 $10,254
1/31/1998 $13,128 $13,001 $10,273
2/28/1998 $13,850 $13,883 $10,292
3/31/1998 $14,465 $14,471 $10,312
4/30/1998 $14,546 $14,615 $10,331
5/31/1998 $14,101 $14,434 $10,350
6/30/1998 $13,702 $14,778 $10,362
7/31/1998 $13,377 $14,757 $10,375
8/31/1998 $11,345 $12,791 $10,388
9/30/1998 $11,635 $13,019 $10,401
10/31/1998 $12,629 $14,199 $10,426
11/30/1998 $13,082 $15,045 $10,426
12/31/1998 $12,808 $15,783 $10,420
1/31/1999 $12,723 $16,130 $10,445
2/28/1999 $12,629 $15,704 $10,458
3/31/1999 $13,512 $16,360 $10,490
4/30/1999 $15,193 $17,007 $10,566
5/31/1999 $14,653 $16,388 $10,566
6/30/1999 $15,334 $17,154 $10,566
7/31/1999 $15,326 $17,105 $10,598
8/31/1999 $15,334 $17,077 $10,623
9/30/1999 $14,795 $16,914 $10,674
10/31/1999 $14,805 $17,795 $10,693
11/30/1999 $15,469 $18,298 $10,699
12/31/1999 $16,760 $19,782 $10,699
1/31/2000 $15,610 $18,651 $10,731
2/29/2000 $15,081 $18,704 $10,795
3/31/2000 $16,181 $19,999 $10,884
4/30/2000 $15,971 $19,156 $10,890
5/31/2000 $16,272 $18,673 $10,903
6/30/2000 $16,356 $19,304 $10,960
7/31/2000 $16,247 $18,763 $10,985
8/31/2000 $16,550 $19,376 $10,985
9/30/2000 $16,045 $18,348 $11,043
10/31/2000 $16,196 $18,043 $11,062
11/30/2000 $16,097 $16,950 $11,068
12/31/2000 $17,086 $17,226 $11,062
1/31/2001 $17,329 $17,561 $11,132
2/28/2001 $17,097 $16,079 $11,176
3/31/2001 $16,307 $15,026 $11,202
4/30/2001 $16,956 $16,140 $11,246
5/31/2001 $17,309 $15,940 $11,297
6/30/2001 $16,985 $15,443 $11,316
7/31/2001 $16,929 $15,239 $11,284
8/31/2001 $16,864 $14,511 $11,284
9/30/2001 $15,424 $13,234 $11,335
10/31/2001 $15,943 $13,489 $11,297
11/30/2001 $16,958 $14,289 $11,278
12/31/2001 $17,234 $14,380 $11,233
1/31/2002 $16,850 $13,946 $11,259
2/28/2002 $17,195 $13,828 $11,303
3/31/2002 $17,836 $14,442 $11,367
4/30/2002 $17,942 $13,957 $11,430
5/31/2002 $18,324 $13,989 $11,430
6/30/2002 $17,569 $13,143 $11,437
7/31/2002 $16,372 $12,037 $11,449
8/31/2002 $16,391 $12,062 $11,488
9/30/2002 $14,602 $10,738 $11,507
10/31/2002 $15,359 $11,533 $11,526
11/30/2002 $16,355 $12,157 $11,526
12/31/2002 $15,635 $11,570 $11,500
1/31/2003 $15,320 $11,221 $11,551
2/28/2003 $14,810 $11,029 $11,640
3/31/2003 $14,477 $10,998 $11,710
4/30/2003 $15,841 $11,981 $11,685
5/31/2003 $17,097 $12,671 $11,666
6/30/2003 $17,411 $12,895 $11,678
7/31/2003 $17,804 $13,159 $11,691
8/31/2003 $18,225 $13,447 $11,736
9/30/2003 $18,294 $13,532 $11,774
10/31/2003 $19,071 $14,338 $11,761
11/30/2003 $19,541 $14,560 $11,729
12/31/2003 $20,817 $15,477 $11,716
1/31/2004 $21,260 $15,728 $11,774
2/29/2004 $21,803 $15,997 $11,837
3/31/2004 $21,472 $15,897 $11,914
4/30/2004 $21,280 $15,581 $11,952
5/31/2004 $21,401 $15,733 $12,022
6/30/2004 $21,793 $16,063 $12,060
7/31/2004 $21,108 $15,543 $12,041
8/31/2004 $21,219 $15,618 $12,047
9/30/2004 $21,733 $15,918 $12,072
10/31/2004 $22,265 $16,311 $12,136
11/30/2004 $23,623 $17,175 $12,142
12/31/2004 $24,413 $17,836 $12,098
1/31/2005 $23,826 $17,438 $12,123
2/28/2005 $24,882 $17,998 $12,193
3/31/2005 $24,509 $17,658 $12,289
4/30/2005 $24,008 $17,284 $12,371
5/31/2005 $24,115 $17,604 $12,359
6/30/2005 $24,434 $17,765 $12,365
7/31/2005 $25,074 $18,389 $12,422
8/31/2005 $25,458 $18,536 $12,486
9/30/2005 $25,971 $19,023 $12,638
10/31/2005 $25,089 $18,565 $12,664
11/30/2005 $25,584 $19,194 $12,562
12/31/2005 $26,476 $19,624 $12,511
1/31/2006 $27,468 $20,504 $12,606
2/28/2006 $27,491 $20,482 $12,632
3/31/2006 $27,964 $20,942 $12,702
4/30/2006 $28,944 $21,589 $12,810
5/31/2006 $28,206 $20,871 $12,873
6/30/2006 $28,206 $20,873 $12,899
7/31/2006 $28,564 $21,008 $12,937
8/31/2006 $29,233 $21,564 $12,962
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.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated.
3. These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated.
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 +162.06% and +10.48%.
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.
12 | 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 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 | 13
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 3/1/06 VALUE 8/31/06 PERIOD* 3/1/06-8/31/06
- ----------------------------------------------------------------------------------------------------------
Actual $1,000 $1,062.20 $5.46
- ----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,019.91 $5.35
- ----------------------------------------------------------------------------------------------------------
CLASS B
- ----------------------------------------------------------------------------------------------------------
Actual $1,000 $1,058.10 $9.34
- ----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.13 $9.15
- ----------------------------------------------------------------------------------------------------------
CLASS C
- ----------------------------------------------------------------------------------------------------------
Actual $1,000 $1,058.40 $9.29
- ----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,016.18 $9.10
- ----------------------------------------------------------------------------------------------------------
CLASS R
- ----------------------------------------------------------------------------------------------------------
Actual $1,000 $1,061.00 $6.75
- ----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,018.65 $6.61
- ----------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ----------------------------------------------------------------------------------------------------------
Actual $1,000 $1,063.40 $4.16
- ----------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $1,000 $1,021.17 $4.08
- ----------------------------------------------------------------------------------------------------------
* Expenses are equal to the annualized expense ratio for each class (A:
1.05%; B: 1.80%; C: 1.79%; R: 1.30%; and Advisor: 0.80%), multiplied by
the average account value over the period, multiplied by 184/365 to
reflect the one-half year period.
14 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS A 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........... $ 23.86 $ 21.03 $ 18.54 $ 17.10 $ 18.11
-----------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ..................... 0.43 0.36 0.36 0.34 0.33
Net realized and unrealized gains (losses) .. 2.73 3.66 2.58 1.46 (0.88)
-----------------------------------------------------------------------------
Total from investment operations ............. 3.16 4.02 2.94 1.80 (0.55)
-----------------------------------------------------------------------------
Less distributions from:
Net investment income ....................... (0.41) (0.41) (0.45) (0.36) (0.40)
Net realized gains .......................... (1.32) (0.78) -- -- (0.06)
-----------------------------------------------------------------------------
Total distributions .......................... (1.73) (1.19) (0.45) (0.36) (0.46)
-----------------------------------------------------------------------------
Redemption fees .............................. -- d -- d -- d -- d --
-----------------------------------------------------------------------------
Net asset value, end of year ................. $ 25.29 $ 23.86 $ 21.03 $ 18.54 $ 17.10
=============================================================================
Total return c ............................... 14.52% 19.72% 16.14% 10.90% (3.01)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............. $23,966,739 $20,786,173 $15,771,174 $13,021,261 $11,689,389
Ratios to average net assets:
Expenses .................................... 1.05% e 1.06% e 1.10% e 1.13% 1.10%
Net investment income ....................... 1.82% 1.61% 1.75% 2.05% 1.85%
Portfolio turnover rate ...................... 35.33% 19.95% 24.58% 32.12% 55.63%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to timing of
sales and repurchase of the fund shares in relation to income earned
and/or fluctuating market value of the investments of the fund.
b Based on average daily shares outstanding.
c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
d Amount rounds to less than $0.01 per share.
e Benefit of expense reduction rounds to less than 0.01%.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 15
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS B 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........... $ 23.37 $ 20.64 $ 18.24 $ 16.85 $ 17.87
-----------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ..................... 0.24 0.19 0.21 0.22 0.20
Net realized and unrealized gains (losses) .. 2.70 3.59 2.54 1.43 (0.87)
-----------------------------------------------------------------------------
Total from investment operations ............. 2.94 3.78 2.75 1.65 (0.67)
-----------------------------------------------------------------------------
Less distributions from:
Net investment income ....................... (0.24) (0.27) (0.35) (0.26) (0.29)
Net realized gains .......................... (1.32) (0.78) -- -- (0.06)
-----------------------------------------------------------------------------
Total distributions .......................... (1.56) (1.05) (0.35) (0.26) (0.35)
-----------------------------------------------------------------------------
Redemption fees .............................. -- d -- d -- d -- d --
-----------------------------------------------------------------------------
Net asset value, end of year ................. $ 24.75 $ 23.37 $ 20.64 $ 18.24 $ 16.85
=============================================================================
Total return c ............................... 13.65% 18.84% 15.27% 10.08% (3.74)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............. $ 580,530 $ 557,670 $ 433,467 $ 278,340 $ 166,015
Ratios to average net assets:
Expenses .................................... 1.79% e 1.81% e 1.85% e 1.88% 1.85%
Net investment income ....................... 1.08% 0.86% 1.00% 1.30% 1.10%
Portfolio turnover rate ...................... 35.33% 19.95% 24.58% 32.12% 55.63%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to timing of
sales and repurchase of the fund shares in relation to income earned
and/or fluctuating market value of the investments of the fund.
b Based on average daily shares outstanding.
c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
d Amount rounds to less than $0.01 per share.
e Benefit of expense reduction rounds to less than 0.01%.
16 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS C 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........... $ 23.28 $ 20.56 $ 18.15 $ 16.74 $ 17.73
-----------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ..................... 0.25 0.19 0.20 0.21 0.20
Net realized and unrealized gains (losses) .. 2.67 3.57 2.54 1.44 (0.86)
-----------------------------------------------------------------------------
Total from investment operations ............. 2.92 3.76 2.74 1.65 (0.66)
-----------------------------------------------------------------------------
Less distributions from:
Net investment income ....................... (0.25) (0.26) (0.33) (0.24) (0.27)
Net realized gains .......................... (1.32) (0.78) -- -- (0.06)
-----------------------------------------------------------------------------
Total distributions .......................... (1.57) (1.04) (0.33) (0.24) (0.33)
-----------------------------------------------------------------------------
Redemption fees .............................. -- d -- d -- d -- d --
-----------------------------------------------------------------------------
Net asset value, end of year ................. $ 24.63 $ 23.28 $ 20.56 $ 18.15 $ 16.74
=============================================================================
Total return c ............................... 13.71% 18.77% 15.30% 10.08% (3.73)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............. $ 2,362,844 $ 1,965,909 $ 1,394,289 $ 1,064,405 $ 897,064
Ratios to average net assets:
Expenses .................................... 1.79% e 1.81% e 1.85% e 1.88% 1.84%
Net investment income ....................... 1.08% 0.86% 1.00% 1.30% 1.11%
Portfolio turnover rate ...................... 35.33% 19.95% 24.58% 32.12% 55.63%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to timing of
sales and repurchase of the fund shares in relation to income earned
and/or fluctuating market value of the investments of the fund.
b Based on average daily shares outstanding.
c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
d Amount rounds to less than $0.01 per share.
e Benefit of expense reduction rounds to less than 0.01%.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 17
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS R 2006 2005 2004 2003 2002 f
------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........... $ 23.68 $ 20.90 $ 18.44 $ 17.07 $ 18.06
------------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ..................... 0.45 0.32 0.33 0.32 0.32
Net realized and unrealized gains (losses) .. 2.62 3.62 2.56 1.42 (1.31)
------------------------------------------------------------------------------
Total from investment operations ............. 3.07 3.94 2.89 1.74 (0.99)
------------------------------------------------------------------------------
Less distributions from:
Net investment income ....................... (0.37) (0.38) (0.43) (0.37) --
Net realized gains .......................... (1.32) (0.78) -- -- --
------------------------------------------------------------------------------
Total distributions .......................... (1.69) (1.16) (0.43) (0.37) --
------------------------------------------------------------------------------
Redemption fees .............................. -- d -- d -- d -- d --
------------------------------------------------------------------------------
Net asset value, end of year ................. $ 25.06 $ 23.68 $ 20.90 $ 18.44 $ 17.07
==============================================================================
Total return c ............................... 14.22% 19.44% 15.85% 10.58% (5.48)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............. $ 403,334 $ 123,139 $ 57,951 $ 28,584 $ 5,394
Ratios to average net assets:
Expenses .................................... 1.30% e 1.31% e 1.35% e 1.39% 1.35% g
Net investment income ....................... 1.57% 1.36% 1.50% 1.79% 1.60% g
Portfolio turnover rate ...................... 35.33% 19.95% 24.58% 32.12% 55.63%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to timing of
sales and repurchase of the fund shares in relation to income earned
and/or fluctuating market value of the investments of the fund.
b Based on average daily shares outstanding.
c Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
d Amount rounds to less than $0.01 per share.
e Benefit of expense reduction rounds to less than 0.01%.
f For the period January 2, 2002 (effective date) to August 31, 2002.
g Annualized.
18 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
ADVISOR CLASS 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ........... $ 23.90 $ 21.07 $ 18.57 $ 17.13 $ 18.15
-----------------------------------------------------------------------------
Income from investment operations a:
Net investment income b ..................... 0.51 0.45 0.48 0.38 0.37
Net realized and unrealized gains (losses) .. 2.72 3.63 2.52 1.46 (0.88)
-----------------------------------------------------------------------------
Total from investment operations ............. 3.23 4.08 3.00 1.84 (0.51)
-----------------------------------------------------------------------------
Less distributions from:
Net investment income ....................... (0.47) (0.47) (0.50) (0.40) (0.45)
Net realized gains .......................... (1.32) (0.78) -- -- (0.06)
-----------------------------------------------------------------------------
Total distributions .......................... (1.79) (1.25) (0.50) (0.40) (0.51)
-----------------------------------------------------------------------------
Redemption fees .............................. -- c -- c -- c -- c --
-----------------------------------------------------------------------------
Net asset value, end of year ................. $ 25.34 $ 23.90 $ 21.07 $ 18.57 $ 17.13
=============================================================================
Total return ................................. 14.83% 19.97% 16.43% 11.19% (2.80)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .............. $ 3,972,615 $ 2,549,202 $ 911,764 $ 137,776 $ 98,999
Ratios to average net assets:
Expenses .................................... 0.80% d 0.81% d 0.85% d 0.88% 0.85%
Net investment income ....................... 2.07% 1.86% 2.00% 2.30% 2.10%
Portfolio turnover rate ...................... 35.33% 19.95% 24.58% 32.12% 55.63%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to timing of
sales and repurchase of the fund shares in relation to income earned
and/or fluctuating market value of the investments of the fund.
b Based on average daily shares outstanding.
c Amount rounds to less than $0.01 per share.
d Benefit of expense reduction rounds to less than 0.01%.
Annual Report |
The accompanying notes are an integral part of these financial statements. | 19
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2006
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 92.6%
BERMUDA 1.5%
ACE Ltd. ....................................... Insurance 3,700,000 $ 199,282,000
XL Capital Ltd., A ............................. Insurance 4,000,000 262,560,000
---------------
461,842,000
---------------
CANADA 0.7%
BCE Inc. ....................................... Diversified Telecommunication Services 9,000,000 224,592,686
---------------
FINLAND 1.9%
Stora Enso OYJ, R (EUR/FIM Traded) ............. Paper & Forest Products 19,000,000 288,705,595
Stora Enso OYJ, R (SEK Traded) ................. Paper & Forest Products 145,997 2,205,712
UPM-Kymmene OYJ ................................ Paper & Forest Products 13,000,000 308,128,586
---------------
599,039,893
---------------
FRANCE 3.6%
Accor SA ....................................... Hotels, Restaurants & Leisure 5,250,000 335,978,670
France Telecom SA .............................. Diversified Telecommunication Services 7,000,000 148,606,381
Peugeot SA ..................................... Automobiles 6,000,000 338,774,888
Sanofi-Aventis ................................. Pharmaceuticals 3,399,998 305,143,211
---------------
1,128,503,150
---------------
GERMANY 5.1%
Bayerische Motoren Werke AG .................... Automobiles 10,000,000 517,220,416
a Infineon Technologies AG ....................... Semiconductors & Semiconductor Equipment 15,000,000 176,421,232
Muenchener Rueckversicherungs-
Gesellschaft AG ............................. Insurance 2,100,000 315,463,455
Siemens AG ..................................... Industrial Conglomerates 7,000,000 594,156,473
---------------
1,603,261,576
---------------
HONG KONG 1.3%
Cheung Kong (Holdings) Ltd. .................... Real Estate 14,000,800 154,639,329
Hong Kong Electric Holdings Ltd. ............... Electric Utilities 31,972,000 152,927,886
Swire Pacific Ltd., A .......................... Real Estate 9,190,000 100,558,552
---------------
408,125,767
---------------
ITALY 2.4%
Eni SpA ........................................ Oil, Gas & Consumable Fuels 9,000,000 275,586,107
Mediaset SpA ................................... Media 13,000,000 150,733,173
UniCredito Italiano SpA ........................ Commercial Banks 40,800,784 325,144,044
---------------
751,463,324
---------------
JAPAN 6.6%
Fuji Photo Film Co. Ltd. ....................... Leisure Equipment & Products 8,000,000 292,977,899
Hitachi Ltd. ................................... Electronic Equipment & Instruments 24,000,000 152,280,373
a Konica Minolta Holdings Ltd. ................... Office Electronics 20,000,000 261,465,741
Mitsubishi UFJ Financial Group Inc. ............ Commercial Banks 32,000 436,060,129
Nintendo Co. Ltd. .............................. Software 600,000 123,050,717
Nomura Holdings Inc. ........................... Capital Markets 7,000,067 135,333,238
20 | Annual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
Olympus Corp. .................................. Health Care Equipment & Supplies 4,000,725 $ 118,575,335
Sony Corp. ..................................... Household Durables 5,200,000 224,979,773
Takeda Pharmaceutical Co. Ltd. ................. Pharmaceuticals 4,700,000 311,024,997
---------------
2,055,748,202
---------------
MEXICO 0.6%
Telefonos de Mexico SA de CV, L, ADR ........... Diversified Telecommunication Services 8,000,000 193,120,000
---------------
NETHERLANDS 3.8%
Koninklijke Philips Electronics NV ............. Household Durables 12,000,000 409,266,509
Reed Elsevier NV ............................... Media 30,000,000 481,218,698
Unilever NV .................................... Food Products 13,000,000 310,127,258
---------------
1,200,612,465
---------------
SOUTH AFRICA 0.6%
c Sappi Ltd. ..................................... Paper & Forest Products 14,000,000 178,303,720
---------------
SOUTH KOREA 3.3%
Kookmin Bank ................................... Commercial Banks 3,600,000 291,355,456
KT Corp., ADR .................................. Diversified Telecommunication Services 13,140,600 290,407,260
Samsung Electronics Co. Ltd. ................... Semiconductors & Semiconductor Equipment 260,000 175,803,599
SK Telecom Co. Ltd. ............................ Wireless Telecommunication Services 600,000 116,716,946
SK Telecom Co. Ltd., ADR ....................... Wireless Telecommunication Services 7,000,000 153,300,000
---------------
1,027,583,261
---------------
SPAIN 1.4%
Banco Santander Central Hispano SA ............. Commercial Banks 8,000,000 124,122,650
Repsol YPF SA .................................. Oil, Gas & Consumable Fuels 11,000,000 316,251,394
---------------
440,374,044
---------------
SWEDEN 0.8%
Svenska Cellulosa AB, B ........................ Paper & Forest Products 5,859,549 251,024,782
---------------
SWITZERLAND 4.3%
Nestle SA ...................................... Food Products 1,300,000 447,028,476
Novartis AG .................................... Pharmaceuticals 4,000,000 228,297,518
Swiss Reinsurance Co. .......................... Insurance 4,658,823 355,415,753
UBS AG ......................................... Capital Markets 5,400,000 305,569,322
---------------
1,336,311,069
---------------
UNITED KINGDOM 16.0%
Aviva PLC ...................................... Insurance 25,000,000 351,297,220
BAE Systems PLC ................................ Aerospace & Defense 16,000,000 112,872,082
BP PLC ......................................... Oil, Gas & Consumable Fuels 39,500,003 449,003,578
British Sky Broadcasting Group PLC ............. Media 27,000,000 288,149,402
Compass Group PLC .............................. Hotels, Restaurants & Leisure 68,389,574 332,379,317
GlaxoSmithKline PLC ............................ Pharmaceuticals 19,000,000 538,313,008
Annual Report | 21
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
HSBC Holdings PLC .............................. Commercial Banks 25,000,000 $ 453,887,943
National Grid PLC .............................. Multi-Utilities 25,097,959 305,124,899
Pearson PLC .................................... Media 22,000,000 312,911,572
Rentokil Initial PLC ........................... Commercial Services & Supplies 22,000,000 63,043,095
a Rolls-Royce Group PLC .......................... Aerospace & Defense 16,000,000 132,902,688
Royal Bank of Scotland Group PLC ............... Commercial Banks 16,520,000 560,526,417
Royal Dutch Shell PLC, B ....................... Oil, Gas & Consumable Fuels 14,000,000 501,145,952
Smiths Group PLC ............................... Industrial Conglomerates 5,000,000 81,874,149
a,b Standard Life Assurance Co., 144A .............. Insurance 27,035,210 135,382,908
Vodafone Group PLC ............................. Wireless Telecommunication Services 175,000,000 379,024,947
---------------
4,997,839,177
---------------
UNITED STATES 38.7%
Abbott Laboratories ............................ Pharmaceuticals 4,567,650 222,444,555
Accenture Ltd., A .............................. IT Services 11,000,000 326,260,000
American International Group Inc. .............. Insurance 10,000,000 638,200,000
American Standard Cos. Inc. .................... Building Products 4,460,400 186,310,908
a Boston Scientific Corp. ........................ Health Care Equipment & Supplies 2,362,400 41,200,256
Bristol-Myers Squibb Co. ....................... Pharmaceuticals 13,000,000 282,750,000
a Cadence Design Systems Inc. .................... Software 10,000,000 164,300,000
a Comcast Corp., A ............................... Media 10,000,000 349,100,000
DTE Energy Co. ................................. Multi-Utilities 6,500,000 271,310,000
c Eastman Kodak Co. .............................. Leisure Equipment & Products 17,000,000 361,590,000
El Paso Corp. .................................. Oil, Gas & Consumable Fuels 28,000,000 406,560,000
Electronic Data Systems Corp. .................. IT Services 12,000,000 285,960,000
a Expedia Inc. ................................... Internet & Catalog Retail 10,000,000 163,200,000
Florida East Coast Industries Inc. ............. Road & Rail 470,546 25,607,113
H&R Block Inc. ................................. Diversified Consumer Services 13,000,000 273,390,000
Harley-Davidson Inc. ........................... Automobiles 3,500,000 204,785,000
HCA Inc. ....................................... Health Care Providers & Services 7,000,000 345,240,000
International Paper Co. ........................ Paper & Forest Products 10,000,000 347,700,000
a,c Interpublic Group of Cos. Inc. ................. Media 33,000,000 302,940,000
Merck & Co. Inc. ............................... Pharmaceuticals 15,000,000 608,250,000
Microsoft Corp. ................................ Software 27,000,000 693,630,000
News Corp., A .................................. Media 36,500,000 694,595,000
a Oracle Corp. ................................... Software 26,888,000 420,797,200
Pfizer Inc. .................................... Pharmaceuticals 22,000,000 606,320,000
Raytheon Co. ................................... Aerospace & Defense 7,500,000 354,075,000
a Seagate Technology ............................. Computers & Peripherals 19,052,400 423,915,900
a,c Tenet Healthcare Corp. ......................... Health Care Providers & Services 35,000,000 275,800,000
The Bank of New York Co. Inc. .................. Capital Markets 10,000,000 337,500,000
a The DIRECTV Group Inc. ......................... Media 20,000,000 375,800,000
The St. Joe Co. ................................ Real Estate 1,415,700 72,144,072
Time Warner Inc. ............................... Media 19,000,000 315,780,000
Torchmark Corp. ................................ Insurance 2,817,000 175,245,570
Tyco International Ltd. ........................ Industrial Conglomerates 26,000,000 679,900,000
22 | Annual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
UNITED STATES (CONTINUED)
a Viacom Inc., B ................................. Media 15,000,000 $ 544,500,000
c Willis Group Holdings Ltd. ..................... Insurance 9,000,000 325,980,000
---------------
12,103,080,574
---------------
TOTAL COMMON STOCKS
(COST $23,470,610,535) ...................... 28,960,825,690
---------------
------------------
PRINCIPAL AMOUNT d
------------------
SHORT TERM INVESTMENTS 7.1%
TIME DEPOSITS 1.2%
IRELAND 0.8%
Bank of Scotland, Time Deposits,
3.04% - 3.30%, 9/01/06 - 11/29/06 ........... 205,000,000 EUR 261,393,143
---------------
UNITED KINGDOM 0.4%
Barclays Bank PLC, Time Deposit,
3.03%, 9/01/06 .............................. 29,740,000 EUR 38,140,063
Royal Bank of Scotland Group PLC,
Time Deposit, 3.03%, 9/01/06 ................ 60,000,000 EUR 76,946,999
---------------
115,087,062
---------------
TOTAL TIME DEPOSITS
(COST $378,289,565) ......................... 376,480,205
---------------
GOVERNMENT AND AGENCY SECURITIES 5.9%
UNITED STATES 5.9%
e Federal Home Loan Bank,
9/01/06 - 2/28/07 ........................... 444,308,000 439,260,715
e Federal Home Loan Mortgage Corp.,
10/15/06 - 3/30/07 .......................... 1,039,500,000 1,017,360,354
e Federal National Mortgage Association,
11/22/06 - 2/23/07 .......................... 396,192,000 389,092,911
---------------
TOTAL GOVERNMENT AND AGENCY SECURITIES
(COST $1,845,103,065) ......................... 1,845,713,980
---------------
TOTAL SHORT TERM INVESTMENTS
(COST $2,223,392,630) ......................... 2,222,194,185
---------------
Annual Report | 23
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2006 (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $25,694,003,165) 99.7% $31,183,019,875
OTHER ASSETS, LESS LIABILITIES 0.3% 103,040,569
---------------
NET ASSETS 100.0% .............................. $31,286,060,444
===============
CURRENCY ABBREVIATIONS
EUR - Euro
FIM - Finnish Markka
SEK - Swedish Krona
SELECTED PORTFOLIO ABBREVIATION
ADR - American Depository Receipt
a Non-income producing for the twelve months ended August 31, 2006.
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. At August 31, 2006,
the aggregate value of these securities was $135,382,908, representing
0.43% of net assets.
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.
24 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2006
Assets:
Investments in securities:
Cost - Unaffiliated issuers ............................................. $24,078,664,594
Cost - Non-controlled affiliated issuers (Note 8) ....................... 1,615,338,571
---------------
Total cost of investments ............................................... $25,694,003,165
===============
Value - Unaffiliated issuers ............................................ $29,738,406,155
Value - Non-controlled affiliated issuers (Note 8) ...................... 1,444,613,720
---------------
Total value of investments .............................................. 31,183,019,875
Cash ..................................................................... 2,517,361
Foreign currency, at value (cost $15,594) ................................ 16,374
Receivables:
Investment securities sold .............................................. 43,361,793
Capital shares sold ..................................................... 40,677,169
Dividends and interest .................................................. 67,470,113
Other (Note 10) ........................................................ 5,658,175
---------------
Total assets .......................................................... 31,342,720,860
---------------
Liabilities:
Payables:
Capital shares redeemed ................................................. 24,126,869
Affiliates .............................................................. 28,794,074
Accrued expenses and other liabilities ................................... 3,739,473
---------------
Total liabilities ..................................................... 56,660,416
---------------
Net assets, at value ................................................ $31,286,060,444
===============
Net assets consist of:
Paid-in capital .......................................................... $23,311,019,184
Undistributed net investment income ...................................... 516,072,545
Net unrealized appreciation (depreciation) ............................... 5,489,610,320
Accumulated net realized gain (loss) ..................................... 1,969,358,395
---------------
Net assets, at value ................................................ $31,286,060,444
===============
Annual Report |
The accompanying notes are an integral part of these financial statements. | 25
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
August 31, 2006
CLASS A:
Net assets, at value ..................................................... $23,966,738,652
===============
Shares outstanding ....................................................... 947,659,050
===============
Net asset value per share a .............................................. $ 25.29
===============
Maximum offering price per share (net asset value per share / 94.25%)..... $ 26.83
===============
CLASS B:
Net assets, at value ..................................................... $ 580,529,726
===============
Shares outstanding ....................................................... 23,454,285
===============
Net asset value and maximum offering price per share a ................... $ 24.75
===============
CLASS C:
Net assets, at value ..................................................... $ 2,362,843,713
===============
Shares outstanding ....................................................... 95,939,900
===============
Net asset value and maximum offering price per share a ................... $ 24.63
===============
CLASS R:
Net assets, at value ..................................................... $ 403,333,766
===============
Shares outstanding ....................................................... 16,093,609
===============
Net asset value and maximum offering price per share a ................... $ 25.06
===============
ADVISOR CLASS:
Net assets, at value ..................................................... $ 3,972,614,587
===============
Shares outstanding ....................................................... 156,754,365
===============
Net asset value and maximum offering price per share a ................... $ 25.34
===============
a Redemption price is equal to net asset value less contingent deferred
sales charges, if applicable, and redemption fees retained by the Fund.
26 | The accompanying notes are an integral part of these financial statements.
| Annual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended August 31, 2006
Investment income:
Dividends: (net of foreign taxes of $40,526,876)
Unaffiliated issuers .................................................... $ 701,388,395
Non-controlled affiliated issuers (Note 8) .............................. 15,607,868
Interest ................................................................. 95,395,316
Other income (Note 10) ................................................... 5,683,649
---------------
Total investment income ............................................. 818,075,228
---------------
Expenses:
Management fees (Note 3a) ................................................ 163,994,540
Administrative fees (Note 3b) ............................................ 21,995,076
Distribution fees (Note 3c)
Class A ................................................................. 55,642,372
Class B ................................................................. 5,659,399
Class C ................................................................. 21,496,517
Class R ................................................................. 1,346,377
Transfer agent fees (Note 3e) ............................................ 31,942,384
Custodian fees (Note 4) .................................................. 6,020,091
Reports to shareholders .................................................. 1,279,501
Registration and filing fees ............................................. 1,035,828
Professional fees ........................................................ 380,711
Directors' fees and expenses ............................................. 295,179
Other .................................................................... 1,213,617
---------------
Total expenses ...................................................... 312,301,592
Expense reductions (Note 4) ......................................... (138,796)
---------------
Net expenses ...................................................... 312,162,796
---------------
Net investment income ........................................... 505,912,432
---------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments
Unaffiliated Issuers ................................................... 2,576,744,835
Non-controlled affiliated issuers (Note 8) ............................. 78,288,091
Foreign currency transactions ........................................... (5,072,398)
---------------
Net realized gain (loss) ............................................ 2,649,960,528
---------------
Net change in unrealized appreciation (depreciation) on:
Investments ............................................................. 689,545,448
Translation of assets and liabilities denominated in foreign currencies.. 756,244
---------------
Net change in unrealized appreciation (depreciation) ................ 690,301,692
---------------
Net realized and unrealized gain (loss) ................................... 3,340,262,220
---------------
Net increase (decrease) in net assets resulting from operations ........... $ 3,846,174,652
===============
Annual Report |
The accompanying notes are an integral part of these financial statements. | 27
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
-----------------------------------
STATEMENTS OF CHANGES IN NET ASSETS YEAR ENDED AUGUST 31,
2006 2005
-----------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income ........................................................ $ 505,912,432 $ 351,531,648
Net realized gain (loss) from investments and foreign currency transactions .. 2,649,960,528 1,369,927,172
Net change in unrealized appreciation (depreciation) on investments and ......
translation of assets and liabilities denominated in foreign currencies ..... 690,301,692 2,165,857,145
-----------------------------------
Net increase (decrease) in net assets resulting from operations .......... 3,846,174,652 3,887,315,965
-----------------------------------
Distributions to shareholders from:
Net investment income:
Class A ..................................................................... (364,079,156) (315,892,462)
Class B ..................................................................... (5,612,051) (5,991,689)
Class C ..................................................................... (21,758,466) (18,445,114)
Class R ..................................................................... (2,142,953) (1,133,785)
Advisor Class ............................................................... (53,652,474) (24,583,076)
Net realized gains:
Class A...................................................................... (1,182,938,830) (599,992,172)
Class B...................................................................... (31,607,148) (17,379,944)
Class C...................................................................... (115,554,681) (54,801,683)
Class R...................................................................... (7,764,923) (2,389,825)
Advisor Class................................................................ (155,086,029) (42,556,319)
-----------------------------------
Total distributions to shareholders ........................................... (1,940,196,711) (1,083,166,069)
-----------------------------------
Capital share transactions: (Note 2)
Class A ..................................................................... 1,718,287,310 2,695,206,102
Class B ..................................................................... (12,139,236) 60,798,204
Class C ..................................................................... 258,131,779 365,302,304
Class R ..................................................................... 256,489,441 54,697,709
Advisor Class ............................................................... 1,177,148,034 1,433,232,545
-----------------------------------
Total capital share transactions .............................................. 3,397,917,328 4,609,236,864
-----------------------------------
Redemption fees................................................................ 72,565 60,619
-----------------------------------
Net increase (decrease) in net assets..................................... 5,303,967,834 7,413,447,379
Net assets:
Beginning of year ............................................................. 25,982,092,610 18,568,645,231
-----------------------------------
End of year ................................................................... $31,286,060,444 $25,982,092,610
===================================
Undistributed net investment income included in net assets:
End of year ................................................................... $ 516,072,545 $ 360,503,840
===================================
28 | The accompanying notes are an integral part of these 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 (1940 Act) as a diversified, open-end investment company.
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 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.
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.
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
Annual Report | 29
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. SECURITY VALUATION (CONTINUED)
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.
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.
30 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME TAXES
No provision has been made for U.S. income taxes because the Fund intends 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 on
dividend and interest income received. Foreign taxes, if any, are recorded based
on the tax regulations and rates that exist in the foreign markets in which the
Fund invests.
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 except that certain
dividends from foreign securities are recognized as soon as the Fund is notified
of 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 accounting principles generally accepted in
the United States. These differences may be permanent or temporary. Permanent
differences are reclassified among capital accounts to reflect their tax
character. These reclassifications have no impact on net assets or the results
of operations. Temporary differences are not reclassified, as they may reverse
in subsequent periods.
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. Differences in class-level
expenses may result in payment of different per share distributions by 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
A short term trading redemption fee will be imposed, with some exceptions, on
any Fund shares that are redeemed or exchanged within seven calendar days
following their purchase date (30 days or less prior to June 1, 2004). The
redemption fee is 2% of the amount redeemed. Such fees are retained by the Fund
and accounted for as an addition to paid-in capital.
Annual | 31
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified by the Fund against certain liabilities arising out of the
performance of their duties to the Fund. Additionally, in the normal course of
business, the Fund enters into contracts with service providers that contain
general indemnification clauses. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that have not yet occurred. However, based on experience, the
Fund expects the risk of loss to be remote.
2. CAPITAL STOCK
At August 31, 2006, there were 2.4 billion shares authorized ($0.01 par value).
Transactions in the Fund's shares were as follows:
---------------------------------------------------------------
YEAR ENDED AUGUST 31,
2006 2005
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
CLASS A SHARES:
Shares sold .................... 167,053,079 $ 3,980,663,447 166,510,153 $ 3,769,562,678
Shares issued in reinvestment
of distributions ............. 60,045,373 1,335,844,057 36,405,103 779,606,003
Shares issued on merger ........
(Note 9) ..................... -- -- 32,147,751 726,223,861
Shares redeemed ................ (150,700,688) (3,598,220,194) (113,625,221) (2,580,186,440)
---------------------------------------------------------------
Net increase (decrease) ........ 76,397,764 $ 1,718,287,310 121,437,786 $ 2,695,206,102
===============================================================
CLASS B SHARES:
Shares sold .................... 816,520 $ 18,928,014 3,907,329 $ 85,406,593
Shares issued in reinvestment
of distributions ............. 1,566,113 34,247,769 1,024,375 21,602,620
Shares redeemed ................ (2,785,983) (65,315,019) (2,071,505) (46,211,009)
---------------------------------------------------------------
Net increase (decrease) ........ (403,350) $ (12,139,236) 2,860,199 $ 60,798,204
===============================================================
CLASS C SHARES:
Shares sold .................... 17,760,744 $ 413,194,076 22,347,548 $ 495,830,093
Shares issued in reinvestment
of distributions ............. 5,487,434 119,416,647 3,070,897 64,499,805
Shares redeemed ................ (11,747,282) (274,478,944) (8,798,910) (195,027,594)
---------------------------------------------------------------
Net increase (decrease) ........ 11,500,896 $ 258,131,779 16,619,535 $ 365,302,304
===============================================================
32 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. CAPITAL STOCK (CONTINUED)
---------------------------------------------------------------
YEAR ENDED AUGUST 31,
2006 2005
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
CLASS R SHARES:
Shares sold .................... 13,612,470 $ 322,598,597 3,195,510 $ 72,262,686
Shares issued in reinvestment
of distributions ............. 439,664 9,713,652 163,147 3,474,315
Shares redeemed ................ (3,159,483) (75,822,808) (930,932) (21,039,292)
---------------------------------------------------------------
Net increase (decrease) ........ 10,892,651 $ 256,489,441 2,427,725 $ 54,697,709
===============================================================
ADVISOR CLASS SHARES:
Shares sold .................... 49,901,992 $ 1,183,707,689 62,844,325 $ 1,425,501,693
Shares issued in reinvestment
of distributions ............. 8,810,789 196,212,142 3,032,942 65,074,912
Shares redeemed ................ (8,600,538) (202,771,797) (2,505,214) (57,344,060)
---------------------------------------------------------------
Net increase (decrease) ........ 50,112,243 $ 1,177,148,034 63,372,053 $ 1,433,232,545
===============================================================
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
Effective July 1, 2006, the Funds 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% Over $20 billion, up to and including $25 billion
*0.530% Over $25 billion, up to and including $30 billion
*0.520% Over $30 billion, up to and including $35 billion
*0.510% In excess of $35 billion
* Breakpoint added effective July 1, 2006.
Annual Report | 33
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 average daily
net assets of the Fund 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. Effective November 1, 2005, the Class A reimbursement
distribution plan was amended to discontinue the reimbursement of excess plan
year costs in subsequent periods.
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:
Sales charges retained net of commissions paid to
unaffiliated broker/dealers ..................... $8,172,764
Contingent deferred sales charges retained ........ $ 857,106
E. TRANSFER AGENT FEES
The Fund paid transfer agent fees of $31,942,384, of which $19,745,025 was
retained by Investor Services.
34 | 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, 2006, 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, 2006
and 2005, was as follows:
---------------------------------
2006 2005
---------------------------------
Distributions paid from:
Ordinary income ................ $ 526,805,140 $ 397,989,920
Long term capital gain ......... 1,413,391,571 685,176,149
---------------------------------
$ 1,940,196,711 $ 1,083,166,069
=================================
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions, and bond discounts
and premiums.
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, 2006, 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 ......................................... $ 25,724,045,241
================
Unrealized appreciation ..................................... $ 5,956,496,350
Unrealized depreciation ..................................... (497,521,716)
----------------
Net unrealized appreciation (depreciation) .................. $ 5,458,974,634
================
Undistributed ordinary income ............................... $ 717,394,761
Undistributed long term capital gains ....................... 1,798,060,130
----------------
Distributable earnings ...................................... $ 2,515,454,891
================
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended August 31, 2006, aggregated $10,601,494,692 and $9,321,717,220,
respectively.
Annual Report | 35
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. CONCENTRATION OF RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local 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 1940 Act 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, 2006 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)
- -----------------------------------------------------------------------------------------------------------------------------------
NON-CONTROLLED AFFILIATES
AmerisourceBergen Corp. 4,500,000 -- 4,500,000 -- $ -- a $ -- $ 94,051,103
Eastman Kodak Co. ........ -- 17,000,000 -- 17,000,000 361,590,000 3,523,200 --
Interpublic Group of
Cos. Inc. .............. 8,036,800 24,963,200 -- 33,000,000 302,940,000 -- --
Maxtor Corp. ............. 12,761,960 -- 12,761,960 -- -- a, b -- (15,763,012)
Sappi Ltd. ............... 14,000,000 -- -- 14,000,000 178,303,720 4,199,668 --
Tenet Healthcare Corp. ... 27,430,070 7,569,930 -- 35,000,000 275,800,000 -- --
Willis Group Holdings Ltd. 8,375,200 624,800 -- 9,000,000 325,980,000 7,885,000 --
----------------------------------------------------
TOTAL AFFILIATED SECURITIES (4.62% of Net Assets) $1,444,613,720 $ 15,607,868 $ 78,288,091
====================================================
a As of August 31, 2006, no longer an affiliate.
b On May 22, 2006, 8,354,260 shares merged into Seagate Technology shares.
9. MERGER
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.
36 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. REGULATORY MATTERS
As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, 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 (collectively, the "Company"), entered into
settlements with certain of those regulators.
Specifically, the Company entered into settlements with the Securities and
Exchange Commission ("SEC") concerning market timing (the "August 2, 2004 SEC
Order") and marketing support payments to securities dealers who sell fund
shares (the "December 13, 2004 SEC Order") and with the California Attorney
General's Office ("CAGO") concerning marketing support payments to securities
dealers who sell fund shares (the "CAGO Settlement"). Under the terms of the
settlements with the SEC and the CAGO, the Company retained an Independent
Distribution Consultant ("IDC") to develop separate plans for the distribution
of the respective settlement monies. The CAGO approved the distribution plan
pertaining to the distribution of the monies owed under the CAGO settlement
agreement, and in March 2005, the disbursement of monies to the relevant funds
in accordance with the terms and conditions of that settlement was completed.
On June 23, 2006, the SEC approved the IDC's proposed plan of distribution
arising from the December 13, 2004 SEC Order . The relevant funds recorded the
settlement as other income and disbursement of the settlement monies to the
designated funds in accordance with the terms and conditions of the SEC's order
and the plan was completed in September 2006.
The IDC has also completed a proposed Plan of Distribution under the August 2,
2004 SEC Order resolving the SEC's market timing investigation and has submitted
that plan to the SEC staff, where it is under review. The SEC has announced the
following expected schedule with respect to the market timing Plan of
Distribution. The SEC anticipates that Notice of the Plan will be published on
or after November 15, 2006. After publication and comment, the proposed
Distribution Plan will be submitted to the SEC for approval. When the SEC
approves the proposed Distribution Plan, with modifications as appropriate,
distributions will begin pursuant to that Plan.
In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, directors, and/or
employees, have been named in private lawsuits (styled as shareholder class
actions, or as derivative actions on behalf of either the named funds or
Franklin Resources, Inc.) relating to the industry practices referenced above,
as well as to allegedly excessive advisory fees, commissions, and/or 12b-1 fees.
The lawsuits were filed in different courts throughout the country. Many of
those suits are now pending in a multi-district litigation in the United States
District Court for the District of Maryland.
Annual Report | 37
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. REGULATORY MATTERS (CONTINUED)
The Company and fund management strongly believe that the claims made in each of
the private lawsuits referenced 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. 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.
11. NEW ACCOUNTING PRONOUNCEMENT
In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
Interpretation of FASB Statement No. 109" ("FIN 48"), which clarifies the
accounting for uncertainty in tax positions taken or expected to be taken in a
tax return. FIN 48 provides guidance on the measurement, recognition,
classification and disclosure of tax positions, along with accounting for the
related interest and penalties. FIN 48 is effective for fiscal years beginning
after December 15, 2006, and is to be applied to all open tax years as of the
date of effectiveness. The Fund is currently evaluating the impact, if any, of
applying the various provisions of FIN 48.
38 | 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 Templeton Growth Fund, Inc. (the
"Fund") at August 31, 2006, 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 five years in the period
then ended, 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, 2006 by correspondence with the custodian provide a reasonable basis for our
opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 18, 2006
Annual Report | 39
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 $2,339,108,379 as a
long term capital gain dividend for the fiscal year ended August 31, 2006.
Under Section 871(k)(2)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $213,949,537 as a short term capital gain dividend
for purposes of the tax imposed under Section 871(a)(1)(A) of the Code for the
fiscal year ended August 31, 2006.
Under Section 854(b)(2) of the Code, the Fund designates 30.24% of the ordinary
income dividends as income qualifying for the dividends received deduction for
the fiscal year ended August 31, 2006.
Under Section 854(b)(2) of the Code, the Fund designates the maximum amount
allowable but no less than $721,649,519 as qualified dividends for purposes of
the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
August 31, 2006. In January 2007, shareholders will receive Form 1099-DIV which
will include their share of qualified dividends distributed during the calendar
year 2006. Shareholders are advised to check with their tax advisors for
information on the treatment of these amounts on their individual income tax
returns.
Under Section 871(k)(1)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $76,707,541 as interest related dividends for
purposes of the tax imposed under Section 871(a)(1)(A) of the Code for the
fiscal year ended August 31, 2006.
At August 31, 2006, 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 table 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 19, 2006, 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.
40 | Annual Report
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED) (CONTINUED)
RECORD DATE: 10/19/2006
- --------------------------------------------------------------------------------
CLASS A
FOREIGN FOREIGN FOREIGN
TAX SOURCE QUALIFIED
PAID INCOME DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Australia .............................. $ 0.0000 $ 0.0029 $ 0.0000
Bermuda ................................ 0.0000 0.0053 0.0053
Canada ................................. 0.0017 0.0242 0.0242
Finland ................................ 0.0027 0.0131 0.0131
France ................................. 0.0051 0.0271 0.0261
Germany ................................ 0.0047 0.0276 0.0232
Hong Kong .............................. 0.0000 0.0126 0.0000
Ireland ................................ 0.0000 0.0012 0.0000
Italy .................................. 0.0022 0.0111 0.0111
Japan .................................. 0.0018 0.0190 0.0190
Mexico ................................. 0.0000 0.0046 0.0046
Netherlands ............................ 0.0041 0.0201 0.0201
New Zealand ............................ 0.0000 0.0013 0.0000
Singapore .............................. 0.0000 0.0005 0.0000
South Africa ........................... 0.0000 0.0025 0.0025
South Korea ............................ 0.0039 0.0176 0.0176
Spain .................................. 0.0017 0.0082 0.0082
Sweden ................................. 0.0010 0.0050 0.0050
Switzerland ............................ 0.0035 0.0189 0.0189
United Kingdom ......................... 0.0000 0.1418 0.1335
------------------------------------
TOTAL .................................. $ 0.0324 $ 0.3646 $ 0.3324
====================================
- --------------------------------------------------------------------------------
CLASS B
FOREIGN FOREIGN FOREIGN
TAX SOURCE QUALIFIED
PAID INCOME DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Australia .............................. $ 0.0000 $ 0.0021 $ 0.0000
Bermuda ................................ 0.0000 0.0039 0.0039
Canada ................................. 0.0017 0.0177 0.0177
Finland ................................ 0.0027 0.0096 0.0096
France ................................. 0.0051 0.0198 0.0190
Germany ................................ 0.0047 0.0202 0.0170
Hong Kong .............................. 0.0000 0.0092 0.0000
Ireland ................................ 0.0000 0.0009 0.0000
Italy .................................. 0.0022 0.0081 0.0081
Japan .................................. 0.0018 0.0139 0.0139
Mexico ................................. 0.0000 0.0034 0.0034
Netherlands ............................ 0.0041 0.0147 0.0147
New Zealand ............................ 0.0000 0.0009 0.0000
Singapore .............................. 0.0000 0.0003 0.0000
South Africa ........................... 0.0000 0.0018 0.0018
South Korea ............................ 0.0039 0.0129 0.0129
Spain .................................. 0.0017 0.0060 0.0060
Sweden ................................. 0.0010 0.0036 0.0036
Switzerland ............................ 0.0035 0.0138 0.0138
United Kingdom ......................... 0.0000 0.1036 0.0976
------------------------------------
TOTAL .................................. $ 0.0324 $ 0.2664 $ 0.2430
====================================
Annual Report | 41
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
CLASS C
FOREIGN FOREIGN FOREIGN
TAX SOURCE QUALIFIED
PAID INCOME DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Australia .............................. $ 0.0000 $ 0.0022 $ 0.0000
Bermuda ................................ 0.0000 0.0040 0.0040
Canada ................................. 0.0017 0.0184 0.0184
Finland ................................ 0.0027 0.0100 0.0100
France ................................. 0.0051 0.0206 0.0198
Germany ................................ 0.0047 0.0210 0.0176
Hong Kong .............................. 0.0000 0.0096 0.0000
Ireland ................................ 0.0000 0.0009 0.0000
Italy .................................. 0.0022 0.0084 0.0084
Japan .................................. 0.0018 0.0144 0.0144
Mexico ................................. 0.0000 0.0035 0.0035
Netherlands ............................ 0.0041 0.0153 0.0153
New Zealand ............................ 0.0000 0.0010 0.0000
Singapore .............................. 0.0000 0.0004 0.0000
South Africa ........................... 0.0000 0.0019 0.0019
South Korea ............................ 0.0039 0.0134 0.0134
Spain .................................. 0.0017 0.0063 0.0063
Sweden ................................. 0.0010 0.0038 0.0038
Switzerland ............................ 0.0035 0.0144 0.0144
United Kingdom ......................... 0.0000 0.1080 0.1017
------------------------------------
TOTAL .................................. $ 0.0324 $ 0.2775 $ 0.2529
====================================
- --------------------------------------------------------------------------------
CLASS R
FOREIGN FOREIGN FOREIGN
TAX SOURCE QUALIFIED
PAID INCOME DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Australia .............................. $ 0.0000 $ 0.0028 $ 0.0000
Bermuda ................................ 0.0000 0.0051 0.0051
Canada ................................. 0.0017 0.0233 0.0233
Finland ................................ 0.0027 0.0126 0.0126
France ................................. 0.0051 0.0261 0.0251
Germany ................................ 0.0047 0.0266 0.0223
Hong Kong .............................. 0.0000 0.0121 0.0000
Ireland ................................ 0.0000 0.0011 0.0000
Italy .................................. 0.0022 0.0107 0.0107
Japan .................................. 0.0018 0.0183 0.0183
Mexico ................................. 0.0000 0.0045 0.0045
Netherlands ............................ 0.0041 0.0194 0.0194
New Zealand ............................ 0.0000 0.0012 0.0000
Singapore .............................. 0.0000 0.0005 0.0000
South Africa ........................... 0.0000 0.0024 0.0024
South Korea ............................ 0.0039 0.0170 0.0170
Spain .................................. 0.0017 0.0079 0.0079
Sweden ................................. 0.0010 0.0048 0.0048
Switzerland ............................ 0.0035 0.0182 0.0182
United Kingdom ......................... 0.0000 0.1366 0.1286
------------------------------------
TOTAL .................................. $ 0.0324 $ 0.3512 $ 0.3202
====================================
42 | Annual Report
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
ADVISOR
CLASS
FOREIGN FOREIGN FOREIGN
TAX SOURCE QUALIFIED
PAID INCOME DIVIDENDS
COUNTRY PER SHARE PER SHARE PER SHARE
- --------------------------------------------------------------------------------
Australia .............................. $ 0.0000 $ 0.0032 $ 0.0000
Bermuda ................................ 0.0000 0.0058 0.0058
Canada ................................. 0.0017 0.0262 0.0262
Finland ................................ 0.0027 0.0142 0.0141
France ................................. 0.0051 0.0294 0.0283
Germany ................................ 0.0047 0.0299 0.0251
Hong Kong .............................. 0.0000 0.0137 0.0000
Ireland ................................ 0.0000 0.0013 0.0000
Italy .................................. 0.0022 0.0120 0.0120
Japan .................................. 0.0018 0.0206 0.0206
Mexico ................................. 0.0000 0.0050 0.0050
Netherlands ............................ 0.0041 0.0218 0.0218
New Zealand ............................ 0.0000 0.0014 0.0000
Singapore .............................. 0.0000 0.0005 0.0000
South Africa ........................... 0.0000 0.0027 0.0027
South Korea ............................ 0.0039 0.0191 0.0191
Spain .................................. 0.0017 0.0089 0.0089
Sweden ................................. 0.0010 0.0054 0.0054
Switzerland ............................ 0.0035 0.0205 0.0205
United Kingdom ......................... 0.0000 0.1538 0.1448
------------------------------------
TOTAL .................................. $ 0.0324 $ 0.3954 $ 0.3603
====================================
Foreign Tax Paid per Share (Column 1) is the amount per share available to you,
as a tax credit (assuming you held your shares in the Fund for a minimum of 16
days during the 31-day period beginning 15 days before the ex-dividend date of
the Fund's distribution to which the foreign taxes relate), or, as a tax
deduction.
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 that have not been adjusted for the
rate differential applicable to such dividend income. 1
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. 1
In January 2007, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2006. The Foreign Source Income reported on Form 1099-DIV has not
been adjusted for the 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 2006 individual income
tax returns.
1 Qualified dividends are taxed at a maximum rate of 15% (5% for those in
the 10% and 15% income tax brackets). In determining the amount of foreign
tax credit that may be applied against the U.S. tax liability of
individuals receiving foreign source qualified dividends, adjustments may
be required to the foreign tax credit limitation calculation to reflect
the rate differential applicable to such dividend income. The rules
however permit certain individuals to elect not to apply the rate
differential adjustments for capital gains and/or dividends for any
taxable year. Please consult your tax advisor and the instructions to Form
1116 for more information.
Annual Report | 43
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 143 Director, Bar-S Foods (meat
500 East Broward Blvd. packing 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 19 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Island Corporate Holdings Ltd.; Director and Vice Chairman, Caribbean Utilities Co. Ltd.; 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 144 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 139 Director, Hess Corporation
500 East Broward Blvd. (formerly, Amerada Hess
Suite 2100 Corporation) (exploration and
Fort Lauderdale, FL 33394-3091 refining of oil and gas),
H.J. Heinz Company (processed
foods and allied products), RTI
International Metals, Inc.
(manufacture and distribution of
titani- um), Canadian National
Railway (rail- road) 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).
- ----------------------------------------------------------------------------------------------------------------------------------
44 | 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
- ----------------------------------------------------------------------------------------------------------------------------------
***GORDON S. MACKLIN (1928) Director Since 1993 143 Director, MedImmune, Inc.
500 East Broward Blvd. (biotechnology) and
Suite 2100 Overstock.com (Internet
Fort Lauderdale, FL 33394-3091 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),
Spacehab, Inc. (aerospace
services) (1994-2003) and Martek
Biosciences Corporation
(1998-2006).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; Senior Business Advisor, Martek Biosciences Corporation (research and development); 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).
- ----------------------------------------------------------------------------------------------------------------------------------
DAVID W. NIEMIEC (1949) Director Since 2005 19 Director, Emeritus Corporation
500 East Broward Blvd. (assisted living) and OSI
Suite 2100 Pharmaceuticals, Inc.
Fort Lauderdale, FL 33394-3091 (pharmaceutical products).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Advisor, Saratoga Partners (private equity fund); Director, various private companies; and FORMERLY, Managing Director, Saratoga
Partners (1998-2001) and SBC Warburg Dillon Read (investment banking) (1997-1998); Vice Chairman, Dillon, Read & Co. Inc.
(investment banking) (1991-1997); and Chief Financial Officer, Dillon, Read & Co. Inc. (1982-1997).
- ----------------------------------------------------------------------------------------------------------------------------------
FRANK A. OLSON (1932) Director Since 2003 102 Director, Hess Corporation
500 East Broward Blvd. (formerly, Amerada Hess
Suite 2100 Corporation) (exploration and
Fort Lauderdale, FL 33394-3091 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 man- aged care), The
Hertz Corporation, Pacific
Southwest Airlines, The RCA
Corporation, Unicom (formerly,
Commonwealth Edison), UAL
Corporation (airlines) and White
Mountains Insurance Group, Ltd.
(holding company).
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).
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Report | 45
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ----------------------------------------------------------------------------------------------------------------------------------
LARRY D. THOMPSON (1945) Director Since 2005 19 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products); and FORMERLY,
Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp. (1997-2001); Senior Fellow of The Brookings
Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General, U.S.
Department of Justice (2001-2003).
- ----------------------------------------------------------------------------------------------------------------------------------
CONSTANTINE D. TSERETOPOULOS Director Since 2003 19 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).
- ----------------------------------------------------------------------------------------------------------------------------------
****ROBERT E. WADE (1946) Director Since March 2006 29 Director, El Oro and Exploration
500 East Broward Blvd. Co., p.l.c. (investments) and
Suite 2100 ARC Wireless Solutions, Inc.
Fort Lauderdale, FL 33394-3091 (wireless components and network
products).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Practicing attorney.
- ----------------------------------------------------------------------------------------------------------------------------------
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 (1930) Director Since 1993 10 Director, Hess Corporation
500 East Broward Blvd. (formerly, Amerada Hess
Suite 2100 Corporation) (exploration and
Fort Lauderdale, FL 33394-3091 refining of oil and gas) 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) and Total Logistics,
Inc. (operating and investment
business) (until 2005).
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).
- ----------------------------------------------------------------------------------------------------------------------------------
46 | 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
- ----------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (1933) Director, Director and 143 None
One Franklin Parkway Chairman of Chairman of the
San Mateo, CA 94403-1906 the Board Board since 1995
and Vice and Vice President
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.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 42 of the investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (1945) Vice Since 1996 Not Applicable Not Applicable
One Franklin Parkway President
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 45 of the investment companies in Franklin
Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since 2004
San Mateo, CA 94403-1906 Officer and and Vice
Vice President - AML
President Compliance since
- AML February 2006
Compliance
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Director of Compliance, Franklin Resources, Inc. (1994-2001).
- ----------------------------------------------------------------------------------------------------------------------------------
JEFFREY A. EVERETT (1964) President President since Not Applicable Not Applicable
PO Box N-7759 and Chief 2001 and Chief
Lyford Cay, Nassau, Bahamas Executive Executive Officer
Officer - - Investment
Investment Manager since
Manager 2002
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Templeton Global Advisors Limited; and 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
Suite 2100 and 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 47 of the
investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (1947) Vice Since 2000 Not Applicable Not Applicable
One Franklin Parkway President
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; officer and director of one of the subsidiaries of Franklin
Resources, Inc.; and officer of 47 of the investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (1947) Vice Since 2000 Not Applicable Not Applicable
One Franklin Parkway President
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
47 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 Since 1996 Not Applicable Not Applicable
One Franklin Parkway President
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 45
of the investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
JOHN R. KAY (1940) Vice Since 1994 Not Applicable Not Applicable
500 East Broward Blvd. President
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.
- ----------------------------------------------------------------------------------------------------------------------------------
ROBERT C. ROSSELOT (1960) Secretary Since 2004 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale,FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and
Assistant Secretary, Templeton Investment Counsel, LLC; Vice President, Secretary and Trust Officer, Fiduciary Trust
International of the South; and officer of 14 of the investment companies in Franklin Templeton Investments.
- ----------------------------------------------------------------------------------------------------------------------------------
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
- ----------------------------------------------------------------------------------------------------------------------------------
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 16 of the investment companies in Franklin Templeton Investments;
and FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000).
- ----------------------------------------------------------------------------------------------------------------------------------
CRAIG S. TYLE (1960) Vice Since 2005 Not Applicable Not Applicable
One Franklin Parkway President
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of 47 of the investment companies in Franklin
Templeton Investments; and FORMERLY, Partner, Shearman & Sterling, LLP (2004-2005); and General Counsel, Investment Company
Institute (ICI) (1997-2004).
- ----------------------------------------------------------------------------------------------------------------------------------
GALEN VETTER (1951) Chief Since 2004 Not Applicable Not Applicable
500 East Broward Blvd. Financial
Suite 2100 Officer and
Fort Lauderdale, FL 33394-3091 Chief
Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of 47 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).
- ----------------------------------------------------------------------------------------------------------------------------------
* 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 manager or
affiliated investment managers.
** Charles B. Johnson is considered to be interested person of the Fund under
the federal securities laws due to his position as officer and director
and major shareholder of Franklin Resources, Inc. (Resources), which is
the parent company of the Fund's investment manager 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.
*** Subsequent to August 31, 2006, Mr. Fortunato and Mr. Macklin each ceased
to be a director of the Fund.
**** During the reporting period, Mr. Wade became a director.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers. Prior to
August 31, 2006, Mr. Fred R. Millsaps ceased to be a director of the Fund.
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 TRUSTEES
HAS DETERMINED THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT
COMMITTEE AND HAS DESIGNATED EACH OF FRANK A. OLSON AND DAVID W. NIEMIEC AS AN
AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD BELIEVES THAT MESSRS. OLSON AND
NIEMIEC QUALIFY AS SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND
AND EXPERIENCE. MR. OLSON HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE
SINCE 2003. HE CURRENTLY SERVES AS CHAIRMAN EMERITUS OF THE HERTZ CORPORATION
AND WAS FORMERLY ITS CHAIRMAN OF THE BOARD FROM 1980 TO 2000 AND ITS CHIEF
EXECUTIVE OFFICER FROM 1977 TO 1999. MR. OLSON IS ALSO A DIRECTOR AND AUDIT
COMMITTEE MEMBER OF HESS CORPORATION (FORMERLY AMERADA HESS CORPORATION), AND A
FORMER DIRECTOR AND AUDIT COMMITTEE MEMBER OF WHITE MOUNTAINS INSURANCE GROUP,
LTD, AND FORMER CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF UAL
CORPORATION. MR. NIEMIEC HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE
SINCE 2005, CURRENTLY SERVES AS AN ADVISOR TO SARATOGA PARTNERS AND WAS FORMERLY
ITS MANAGING DIRECTOR FROM 1998 TO 2001. MR. NIEMIEC IS A DIRECTOR OF EMERITUS
CORPORATION AND OSI PHARMACEUTICALS, INC. AND VARIOUS PRIVATE COMPANIES, AND WAS
FORMERLY MANAGING DIRECTOR OF SBC WARBURG DILLON READ FROM 1997 TO 1998, AND WAS
VICE CHAIRMAN FROM 1991 TO 1997 AND CHIEF FINANCIAL OFFICER FROM 1982 TO 1997 OF
DILLON, READ & CO. INC. AS A RESULT OF SUCH BACKGROUND AND EXPERIENCE, THE BOARD
OF TRUSTEES BELIEVES THAT MR. OLSON AND MR. NIEMIEC HAVE EACH ACQUIRED AN
UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND FINANCIAL
STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION WITH THE
ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND EVALUATING
FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY OF
ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MESSRS. OLSON AND NIEMIEC ARE
INDEPENDENT TRUSTEES 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.
Annual Report | 49
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT
At a meeting held May 11, 2006, the Board of Directors ("Board"), including a
majority of non-interested or independent Directors, approved renewal of the
investment management agreement 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, Inc. ("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 and its affiliates 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 management agreement 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 management agreement was in the best interests of the Fund and its
shareholders. While attention was given to all information furnished, the
following discusses some primary factors relevant to the Board's decision.
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
50 | Annual Report
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
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. Among other factors taken into account by the Board were the Manager's
best execution trading policies, including a favorable report by an independent
portfolio trading analytical firm. 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 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.
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 reports furnished for the agreement
renewals. The Lipper report prepared for the Fund showed the investment
performance of its Class A shares for the one-year period ended February 28,
2006, 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 middle quintile of its Lipper
performance universe and that its total return on an annualized basis placed it
in the second-highest quintile and highest quintile of such universe for the
previous three- and five-year periods, respectively, and was the highest of the
five funds in the universe that 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 fees 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 management agreement 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 reports. 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
Annual Report | 51
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
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 fee
rate for the Fund was in the middle quintile of its Lipper expense group and
that its actual total expenses were in the least expensive quintile of such
group. The Board was satisfied with the management fees and total expenses of
the Fund in comparison to its Lipper expense group.
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
each of the individual 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 that financed 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 the Fund's independent registered public accounting firm
had been engaged by the Manager to perform certain procedures on a biennial
basis, specified and approved by the Manager and the Fund's Board solely for
their purposes and use in reference to the profitability analysis. Included in
the analysis were the revenue and related costs involved in providing services
to the Fund, as well as the Fund's relative contribution 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 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 its consideration of all these factors, the Board determined that the
level of profits realized by the Manager and its affiliates from providing
services to the Fund was not excessive in view of the nature, quality and extent
of services provided.
52 | Annual Report
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (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's
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 management
agreement 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 that 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 2005, the Fund's net assets
were approximately $27.5 billion, and the independent Directors discussed the
prospect of adding additional fee breakpoints with management. As a result of
such discussions, management agreed that the Fund's investment management
agreement would be amended effective July 1, 2006, so as to provide a fee of
0.53% on assets in excess of $25 billion up to $30 billion; 0.52% on assets in
excess of $30 billion up to $35 billion; and 0.51% on assets in excess of $35
billion. The Board believed that to the extent economies of scale may be
realized by the manager and its affiliates the schedules of fees under the
investment management agreement provides 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 1-954/527-7678 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.
Annual Report | 53
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION (CONTINUED)
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.
54 | Annual Report
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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 BRIC 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 Balanced Fund
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 Global Real Estate 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
RETIREMENT TARGET FUNDS
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement 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 Fund 6
LIMITED-TERM FUNDS
California Limited-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Limited-Term Tax-Free Income Fund
INTERMEDIATE-TERM FUNDS
California Intermediate-Term
Tax-Free Income Fund
Federal Intermediate-Term
Tax-Free Income Fund
New York Intermediate-Term
Tax-Free Income Fund
STATE-SPECIFIC
Alabama
Arizona
California 7
Colorado
Connecticut
Florida 7
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 6
Michigan 6
Minnesota 6
Missouri
New Jersey
New York 7
North Carolina
Ohio 6
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.
07/06
Not part of the annual report
[LOGO](R)
FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS San Mateo, CA 94403-1906
o 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 A2006 10/06
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 David W. Niemiec 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 $152,274 for the fiscal year ended August 31, 2006 and $118,011 for the
fiscal year ended August 31, 2005.
(b) Audit-Related Fees
The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4 were $4,160 for
the fiscal year ended August 31, 2006 and $4,000 for the fiscal year ended
August 31, 2005. The services for which these fees were paid included
attestation services.
There were no 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.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $16,186 for the fiscal year ended August 31,
2006 and $0 for the fiscal year ended August 31, 2005. 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 $159,675 for the fiscal year ended August
31, 2006 and $4,500 for the fiscal year ended August 31, 2005. 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 $180,021 for the fiscal year ended August 31, 2006 and $8,500
for the fiscal year ended August 31, 2005.
(h) The registrant's audit committee of the board 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 26, 2006
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 26, 2006
By /s/GALEN G. VETTER
Chief Financial Officer
Date October 26, 2006