UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
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., SUITE 2100, 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: 2/29/08
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ITEM 1. REPORTS TO STOCKHOLDERS.
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FEBRUARY 29, 2008
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SEMIANNUAL REPORT AND SHAREHOLDER LETTER GLOBAL
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WANT TO RECEIVE
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TEMPLETON GROWTH FUND, INC.
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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Not part of the semiannual report
Contents
SHAREHOLDER LETTER ........................................................ 1
SEMIANNUAL REPORT
Templeton Growth Fund, Inc. ............................................... 3
Performance Summary ....................................................... 9
Your Fund's Expenses ...................................................... 12
Financial Highlights and Statement of Investments ......................... 14
Financial Statements ...................................................... 24
Notes to Financial Statements ............................................. 28
Shareholder Information ................................................... 37
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Semiannual 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
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 semiannual report for Templeton Growth Fund covers the period ended
February 29, 2008.
PERFORMANCE OVERVIEW
Templeton Growth Fund - Class A posted a - 10.35% cumulative total return for
the six months under review. The Fund underperformed its benchmark, the Morgan
Stanley Capital International (MSCI) World Index, which posted a -5.95% total
return for the same period. 1 For the 10-year period ended February 29, 2008,
Templeton Growth Fund - Class A delivered a +108.51% cumulative total return,
compared with the MSCI World Index's +71.71% 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 9.
ECONOMIC AND MARKET OVERVIEW
The U.S. economy experienced significantly slower gross domestic product (GDP)
growth in the fourth quarter of 2007 as housing prices declined, consumer demand
softened, and a credit crisis originally related to U.S. subprime loan losses
spread globally. In capital markets, investors quickly began broad reassessment
of risk in the stock, bond and credit markets. Some economists speculated
whether the U.S. would enter a recession while others believed one
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 2/29/08, the Fund's Class
A 10-year average annual total return not including the maximum sales charge was
+7.62%, compared with the +5.56% 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 19.
Semiannual Report | 3
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 2/29/08
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Europe 46.1%
North America 39.1%
Asia 11.6%
Latin America 0.4%
Short-Term Investments & Other Net Assets 2.8%
was already under way. Many agreed, however, that the slowing U.S. economy --
which is the world's largest and accounts for roughly 30% of global GDP -- could
have a meaningfully negative impact on growth prospects around the world.
Nevertheless, growth remained robust in certain areas, particularly in Asia
ex-Japan, where China's demand for commodities continued to have significant
impact on commodity prices and related equities.
In the six months under review, prices for oil and agricultural and industrial
commodities, as well as precious metals like platinum, silver and gold,
increased significantly and contributed to global inflationary pressures. While
inflation remained a major concern within the eurozone, the U.S. focused on
reigniting its economy through fiscal and monetary policies. Despite possible
inflationary pressure from lower interest rates, the Federal Reserve Board (Fed)
reduced its federal funds target rate from 5.25% to 3.00% during the period. The
Fed's interest rate reductions pressured the U.S. dollar as other countries'
central banks generally left rates unchanged, and the dollar's value declined
against most of the world's currencies. The U.S. dollar's weakness was another
reason for higher commodity prices, as most of these prices are set in U.S.
dollars.
Against this challenging economic backdrop, global equity markets were volatile,
and the MSCI World Index declined 5.95% for the six-month period even though the
weaker dollar aided returns. 2 Despite negative economic data and an outlook for
decelerating corporate earnings and profit margins globally, many companies'
balance sheets remained relatively strong. Although many financial institutions
were hurt by their subprime loan exposure, abundant global liquidity sources
such as sovereign wealth funds offered some relief with quick recapitalizations
during the period.
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
price/earnings ratio, price/cash flow ratio, profit margins and liquidation
value.
2. Source: Standard & Poor's Micropal. See footnote 1 for a description of the
MSCI World Index.
4 | Semiannual Report
MANAGER'S DISCUSSION
All our buy and sell decisions are based on our analysis of the long-term
(usually five years) prospects for each company. 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.
Industrials and financials were the Fund's top contributing sectors to
performance relative to the benchmark MSCI World Index during the reporting
period. 3
In the industrials sector, stock selection drove relative Fund performance.
Sector holdings that performed well included two German companies, express
delivery and logistics services provider Deutsche Post and electronics and
industrial engineering firm Siemens. Shares of Deutsche Post, Europe's largest
postal carrier, gained value during the reporting period as the company raised
its dividend, appointed a new chief executive officer and gave credence to its
announced restructuring plans by writing down the value of its U.S.-based DHL
Express business, a perennial drag on profits. Siemens' shares also rose over
the period (in U.S. dollar terms), as upside momentum from successful
restructuring initiatives, including new operations in China and Russia,
outweighed downside pressure from an ongoing bribery scandal.
In the financials sector, an underweighted allocation helped relative
performance. Stock selection in the commercial banks, diversified financial
services and real estate management and development industries and no exposure
to U.S. thrifts and mortgage finance stocks benefited relative Fund performance.
Japanese commercial bank Shinsei Bank was a notable contributor; shares surged
after private equity investor Christopher Flowers, the man who rescued Shinsei
seven years ago, signaled his intention to buy nearly one-third of the firm's
stock.
By contrast, the materials, energy and consumer discretionary sectors weighed on
Fund performance relative to the benchmark for the period under review. 4
TOP 10 COUNTRIES
Based on Equity Securities
2/29/08
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% OF TOTAL
NET ASSETS
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U.S. 39.1%
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U.K. 15.7%
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France 7.5%
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Germany 6.9%
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Japan 4.8%
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Italy 4.4%
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South Korea 4.3%
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Netherlands 4.2%
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Switzerland 3.8%
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Singapore 1.3%
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3. The industrials sector comprises aerospace and defense, air freight and
logistics, building products, commercial services and supplies, industrial
conglomerates, machinery, and trading companies and distributors in the SOI. The
financials sector comprises capital markets, commercial banks, diversified
financial services, insurance, and real estate management and development in the
SOI.
4. The materials sector comprises paper and forest products in the SOI. The
energy sector comprises oil, gas and consumable fuels in the SOI. The consumer
discretionary sector comprises auto components; automobiles; hotels, restaurants
and leisure; Internet and catalog retail; leisure equipment and products; media;
and specialty retail in the SOI.
Semiannual Report | 5
TOP 10 EQUITY HOLDINGS
2/29/08
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COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
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Siemens AG 2.8%
INDUSTRIAL CONGLOMERATES, GERMANY
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Microsoft Corp. 2.7%
SOFTWARE, U.S.
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Pfizer Inc. 2.4%
PHARMACEUTICALS, U.S.
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Oracle Corp. 2.3%
SOFTWARE, U.S.
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News Corp., A 2.3%
MEDIA, U.S.
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General Electric Co. 2.3%
INDUSTRIAL CONGLOMERATES, U.S.
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Vodafone Group PLC 2.0%
WIRELESS TELECOMMUNICATION
SERVICES, U.K.
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Accenture Ltd., A 1.9%
IT SERVICES, U.S.
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Viacom Inc., B 1.8%
MEDIA, U.S.
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Time Warner Inc. 1.7%
MEDIA, U.S.
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Stock selection and an underweighted position in the materials sector hurt
relative performance. An overweighting in the underperforming paper and forest
products industry negatively impacted Fund performance, as Finnish paper and
forest products companies Stora Enso and UPM-Kymmene declined sharply in value.
Rising wood costs, falling paper prices and the euro's appreciation created
strong cyclical headwinds for the industry, compressing valuations and, in our
view, offering favorable opportunities for patient, value-oriented, long-term
investors. A lack of exposure to the chemicals industry and metals and mining
industry also hurt relative Fund performance.
Stock selection and an underweighted allocation in the energy sector,
particularly in the oil, gas and consumable fuels industry, dampened relative
Fund performance. In the consumer discretionary sector, an overweighted
allocation in the underperforming sector hurt the Fund's relative results.
Significant detractors included U.S. companies Eastman Kodak, women's apparel
retailer Chico's FAS and Time Warner. Kodak disappointed as the firm continued
its restructuring process; however, signs of cash flow and revenue stabilization
and a renewed focus on its critical digital imaging business were indications of
progress. Shares of Chico's fell as the U.S. consumer economy deteriorated and
the retailer reported disappointing fourth quarter sales, though the stock
rallied toward the end of the period based on news that the company would
strengthen its management team. The media conglomerate Time Warner had poor
performance as industry headwinds and competition from telecommunication
companies pressured its cable television unit.
From a geographic perspective, stock selection in Asia, particularly in Japan
and Singapore, positively impacted performance relative to the benchmark for the
reporting period. On the other hand, stock selection in North America and Europe
dragged on relative performance, and investments in the U.S. and the U.K. were
significant detractors.
It is important to recognize the effect of currency movements on the Fund's
performance. In general, if the value of the U.S. dollar goes up compared with a
foreign currency, an investment traded in that foreign currency will go down in
value because it will be worth fewer U.S. dollars. This can have a negative
effect on Fund performance. Conversely, when the U.S. dollar weakens in relation
to a foreign currency, an investment traded in that foreign currency will
increase in value, which can contribute to Fund performance. For the six months
ended February 29, 2008, the U.S. dollar declined in value relative to most
non-U.S. currencies. As a result, the Fund's performance was positively affected
by the portfolio's substantial investment in securities with non-U.S. currency
exposure. However, one cannot expect the same result in future periods.
6 | Semiannual Report
Thank you for investing in Templeton Growth Fund. We welcome your comments and
look forward to serving your future investment needs.
[PHOTO OMITTED] /s/ Cynthia L. Sweeting
Cynthia L. Sweeting, CFA
[PHOTO OMITTED] /s/ Lisa F. Myers
Lisa F. Myers, J.D., CFA
[PHOTO OMITTED] /s/ Tucker Scott
Tucker Scott, CFA
Portfolio Management Team
Templeton Growth Fund, Inc.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF FEBRUARY 29, 2008, 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.
Semiannual Report | 7
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CYNTHIA L. SWEETING assumed portfolio manager responsibilities for Templeton
Growth Fund in December 2007. She is also president of Templeton Global Advisors
Limited and director of portfolio management for the Templeton Global Equity
Group and has portfolio management responsibility for other retail funds and
institutional separate account relationships with global and international
mandates.
Ms. Sweeting has 25 years of experience in the investment industry. She joined
Franklin Templeton Investments in Templeton's Nassau office in 1997, and most
recently served as director of research for the Templeton Global Equity Group,
before assuming her current responsibilities.
Prior to joining Templeton, she was the senior vice president of investments
with McDermott International Investments Co., Inc., in Nassau. At McDermott, she
was responsible for the investment department, which encompassed portfolio
management and pension administration.
Ms. Sweeting graduated summa cum laude from Georgetown University, where she
earned her B.S. in business administration with a concentration in finance. She
has served as vice president of the board of directors of the International
Society of Financial Analysts (ISFA), which has now merged with the CFA
Institute. She was a founding member and past president of the Bahamas Chapter
of ISFA. Ms. Sweeting is a Chartered Financial Analyst (CFA) Charterholder.
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LISA F. MYERS has been portfolio manager of Templeton Growth Fund since 2003.
Ms. Myers also manages other Templeton retail funds and institutional separate
accounts with international and global mandates. She is the coordinator of the
global consumer team and has direct research responsibility for the global
retail and textile and apparel industries.
Prior to joining Templeton in 1996, Ms. Myers practiced law with Wilkie, Farr &
Gallagher in New York City, where she specialized in corporate/real estate law
and was involved in initial public offerings, acquisitions, and loan initiation
and restructuring, among other securities-related transactions.
Ms. Myers earned her B.A. from the University of Pennsylvania and her J.D. from
Georgetown University, where she also taught legal research and writing. Ms.
Myers is a Chartered Financial Analyst (CFA) Charterholder and is a member of
the CFA Institute.
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TUCKER SCOTT assumed portfolio manager responsibilities for Templeton Growth
Fund in October 2007. In addition to managing other Templeton funds, he has
global research responsibility for the commercial services and supplies
industry.
Prior to joining Templeton in 1996, Mr. Scott worked for Aeltus Investment
Management, where his industry coverage included telecommunication equipment and
financial services.
Mr. Scott earned his B.A. in history from the University of Virginia and an
M.B.A. from the Amos Tuck School of Business at Dartmouth College. Mr. Scott is
a Chartered Financial Analyst (CFA) Charterholder and member of the CFA
Institute.
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8 | Semiannual Report
Performance Summary as of 2/29/08
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 does 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 2/29/08 8/31/07
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Net Asset Value (NAV) -$4.63 $21.52 $26.15
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DISTRIBUTIONS (9/1/07-2/29/08)
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Dividend Income $0.3725
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Short-Term Capital Gain $0.1173
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Long-Term Capital Gain $1.6883
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TOTAL $2.1781
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CLASS B (SYMBOL: TMGBX) CHANGE 2/29/08 8/31/07
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Net Asset Value (NAV) -$4.46 $21.09 $25.55
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DISTRIBUTIONS (9/1/07-2/29/08)
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Dividend Income $0.1660
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Short-Term Capital Gain $0.1173
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Long-Term Capital Gain $1.6883
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TOTAL $1.9716
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CLASS C (SYMBOL: TEGTX) CHANGE 2/29/08 8/31/07
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Net Asset Value (NAV) -$4.46 $20.94 $25.40
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DISTRIBUTIONS (9/1/07-2/29/08)
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Dividend Income $0.1841
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Short-Term Capital Gain $0.1173
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Long-Term Capital Gain $1.6883
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TOTAL $1.9897
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CLASS R (SYMBOL: TEGRX) CHANGE 2/29/08 8/31/07
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Net Asset Value (NAV) -$4.56 $21.32 $25.88
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DISTRIBUTIONS (9/1/07-2/29/08)
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Dividend Income $0.3068
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Short-Term Capital Gain $0.1173
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Long-Term Capital Gain $1.6883
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TOTAL $2.1124
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Semiannual Report | 9
Performance Summary (CONTINUED)
PRICE AND DISTRIBUTION INFORMATION (CONTINUED)
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ADVISOR CLASS (SYMBOL: TGADX) CHANGE 2/29/08 8/31/07
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Net Asset Value (NAV) -$4.67 $21.55 $26.22
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DISTRIBUTIONS (9/1/07-2/29/08)
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Dividend Income $0.4382
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Short-Term Capital Gain $0.1173
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Long-Term Capital Gain $1.6883
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TOTAL $2.2438
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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 6-MONTH 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 -10.35% -8.10% +97.61% +108.51%
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Average Annual Total Return 2 -15.52% -13.40% +13.25% +6.99%
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Value of $10,000 Investment 3 $8,448 $8,660 $18,625 $19,653
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Avg. Ann. Total Return (3/31/08) 4 -15.66% +13.45% +6.38%
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Total Annual Operating Expenses 5 1.01%
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CLASS B 6-MONTH 1-YEAR 5-YEAR INCEPTION (1/1/99)
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Cumulative Total Return 1 -10.66% -8.77% +90.46% +112.88%
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Average Annual Total Return 2 -13.96% -12.14% +13.51% +8.60%
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Value of $10,000 Investment 3 $8,604 $8,786 $18,846 $21,288
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Avg. Ann. Total Return (3/31/08) 4 -14.49% +13.72% +8.36%
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Total Annual Operating Expenses 5 1.76%
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CLASS C 6-MONTH 1-YEAR 5-YEAR 10-YEAR
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Cumulative Total Return 1 -10.66% -8.75% +90.45% +93.62%
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Average Annual Total Return 2 -11.48% -9.60% +13.75% +6.83%
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Value of $10,000 Investment 3 $8,852 $9,040 $19,045 $19,362
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Avg. Ann. Total Return (3/31/08) 4 -11.99% +13.97% +6.22%
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Total Annual Operating Expenses 5 1.76%
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10 | Semiannual Report
Performance Summary (CONTINUED)
PERFORMANCE (CONTINUED)
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CLASS R 6-MONTH 1-YEAR 5-YEAR INCEPTION (1/1/02)
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Cumulative Total Return 1 -10.42% -8.29% +95.26% +66.23%
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Average Annual Total Return 2 -10.42% -8.29% +14.32% +8.61%
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Value of $10,000 Investment 3 $8,958 $9,171 $19,526 $16,623
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Avg. Ann. Total Return (3/31/08) 4 -10.71% +14.54% +8.24%
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Total Annual Operating Expenses 5 1.26%
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ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------------------------------------------------------------------------------------------------------------
Cumulative Total Return 1 -10.25% -7.86% +100.06% +113.92%
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Average Annual Total Return 2 -10.25% -7.86% +14.88% +7.90%
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Value of $10,000 Investment 3 $8,975 $9,214 $20,006 $21,392
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Avg. Ann. Total Return (3/31/08) 4 -10.29% +15.09% +7.29%
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Total Annual Operating Expenses 5 0.76%
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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.
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. Six-month return has not been
annualized.
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. Figures are as stated in the Fund's prospectus current as of the date of
this report.
Semiannual Report | 11
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.
12 | Semiannual Report
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 9/1/07 VALUE 2/29/08 PERIOD* 9/1/07-2/29/08
- -------------------------------------------------------------------------------------------------------------
Actual $ 1,000 $ 896.50 $ 4.86
- -------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000 $ 1,019.74 $ 5.17
- -------------------------------------------------------------------------------------------------------------
CLASS B
- -------------------------------------------------------------------------------------------------------------
Actual $ 1,000 $ 893.40 $ 8.38
- -------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000 $ 1,016.01 $ 8.92
- -------------------------------------------------------------------------------------------------------------
CLASS C
- -------------------------------------------------------------------------------------------------------------
Actual $ 1,000 $ 893.40 $ 8.33
- -------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000 $ 1,016.06 $ 8.87
- -------------------------------------------------------------------------------------------------------------
CLASS R
- -------------------------------------------------------------------------------------------------------------
Actual $ 1,000 $ 895.80 $ 6.03
- -------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000 $ 1,018.50 $ 6.42
- -------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- -------------------------------------------------------------------------------------------------------------
Actual $ 1,000 $ 897.50 $ 3.68
- -------------------------------------------------------------------------------------------------------------
Hypothetical (5% return before expenses) $ 1,000 $ 1,020.98 $ 3.92
- -------------------------------------------------------------------------------------------------------------
* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 1.03%; B: 1.78%; C: 1.77%; R: 1.28%; and Advisor:
0.78%), multiplied by the average account value over the period, multiplied by
182/366 to reflect the one-half year period.
Semiannual Report | 13
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS
-------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 29, 2008 YEAR ENDED AUGUST 31,
CLASS A (UNAUDITED) 2007 2006 2005 2004 2003
-------------------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value, beginning
of period ................... $ 26.15 $ 25.29 $ 23.86 $ 21.03 $ 18.54 $ 17.10
-------------------------------------------------------------------------------------------------
Income from investment
operations a:
Net investment income b ..... 0.12 0.37 0.43 0.36 0.36 0.34
Net realized and
unrealized gains
(losses) ................. (2.57) 2.66 2.73 3.66 2.58 1.46
-------------------------------------------------------------------------------------------------
Total from investment
operations .................. (2.45) 3.03 3.16 4.02 2.94 1.80
-------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ....... (0.37) (0.49) (0.41) (0.41) (0.45) (0.36)
Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- --
-------------------------------------------------------------------------------------------------
Total distributions ............ (2.18) (2.17) (1.73) (1.19) (0.45) (0.36)
-------------------------------------------------------------------------------------------------
Redemption fees ................ -- e -- e -- e -- e -- e -- e
-------------------------------------------------------------------------------------------------
Net asset value, end of
period ...................... $ 21.52 $ 26.15 $ 25.29 $ 23.86 $ 21.03 $ 18.54
=================================================================================================
Total return c ................. (10.35)% 12.60% 14.52% 19.72% 16.14% 10.90%
RATIOS TO AVERAGE NET ASSETS d
Expenses ....................... 1.03% f 1.01% f 1.05% f 1.06% f 1.10% f 1.13%
Net investment income .......... 1.03% 1.44% 1.82% 1.61% 1.75% 2.05%
SUPPLEMENTAL DATA
Net assets, end of
period (000's) .............. $ 23,078,913 $ 27,997,564 $23,966,739 $20,786,173 $15,771,174 $13,021,261
Portfolio turnover rate ........ 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to the timing of
sales and repurchases 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 Ratios are annualized for periods less than one year.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
14 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 29, 2008 YEAR ENDED AUGUST 31,
CLASS B (UNAUDITED) 2007 2006 2005 2004 2003
-------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value, beginning
of period ................... $ 25.55 $ 24.75 $ 23.37 $ 20.64 $ 18.24 $ 16.85
-------------------------------------------------------------------------------------------------
Income from investment
operations a:
Net investment income b...... 0.03 0.17 0.24 0.19 0.21 0.22
Net realized and unrealized
gains (losses) ........... (2.51) 2.61 2.70 3.59 2.54 1.43
-------------------------------------------------------------------------------------------------
Total from investment
operations .................. (2.48) 2.78 2.94 3.78 2.75 1.65
-------------------------------------------------------------------------------------------------
Less distributions from:
Net investment
income .................... (0.17) (0.30) (0.24) (0.27) (0.35) (0.26)
Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- --
-------------------------------------------------------------------------------------------------
Total distributions ............ (1.98) (1.98) (1.56) (1.05) (0.35) (0.26)
-------------------------------------------------------------------------------------------------
Redemption fees ................ -- e -- e -- e -- e -- e -- e
-------------------------------------------------------------------------------------------------
Net asset value, end of
period ...................... $ 21.09 $ 25.55 $ 24.75 $ 23.37 $ 20.64 $ 18.24
=================================================================================================
Total return c ................. (10.66)% 11.78% 13.65% 18.84% 15.27% 10.08%
RATIOS TO AVERAGE NET ASSETS d
Expenses ....................... 1.78% f 1.76% f 1.79% f 1.81% f 1.85% f 1.88%
Net investment income .......... 0.28% 0.69% 1.08% 0.86% 1.00% 1.30%
SUPPLEMENTAL DATA
Net assets, end of period
(000's) ..................... $ 436,935 $ 563,335 $ 580,530 $ 557,670 $ 433,467 $ 278,340
Portfolio turnover rate ........ 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to the timing of
sales and repurchases 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 Ratios are annualized for periods less than one year.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 15
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 29, 2008 YEAR ENDED AUGUST 31,
CLASS C (UNAUDITED) 2007 2006 2005 2004 2003
-------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value, beginning of
period ...................... $ 25.40 $ 24.63 $ 23.28 $ 20.56 $ 18.15 $ 16.74
-------------------------------------------------------------------------------------------------
Income from investment
operations a:
Net investment income b...... 0.04 0.17 0.25 0.19 0.20 0.21
Net realized and unrealized
gains (losses) ........... (2.51) 2.60 2.67 3.57 2.54 1.44
-------------------------------------------------------------------------------------------------
Total from investment
operations .................. (2.47) 2.77 2.92 3.76 2.74 1.65
-------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ....... (0.18) (0.32) (0.25) (0.26) (0.33) (0.24)
Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- --
-------------------------------------------------------------------------------------------------
Total distributions ............ (1.99) (2.00) (1.57) (1.04) (0.33) (0.24)
-------------------------------------------------------------------------------------------------
Redemption fees ................ -- e -- e -- e -- e -- e -- e
-------------------------------------------------------------------------------------------------
Net asset value, end of
period ...................... $ 20.94 $ 25.40 $ 24.63 $ 23.28 $ 20.56 $ 18.15
=================================================================================================
Total return c ................. (10.66)% 11.78% 13.71% 18.77% 15.30% 10.08%
RATIOS TO AVERAGE NET ASSETS d
Expenses ....................... 1.77% f 1.76% f 1.79% f 1.81% f 1.85% f 1.88%
Net investment income .......... 0.29% 0.69% 1.08% 0.86% 1.00% 1.30%
SUPPLEMENTAL DATA
Net assets, end of period
(000's) ..................... $ 2,269,605 $ 2,759,141 $ 2,362,844 $ 1,965,909 $ 1,394,289 $ 1,064,405
Portfolio turnover rate ........ 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to the timing of
sales and repurchases 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 Ratios are annualized for periods less than one year.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
16 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 29, 2008 YEAR ENDED AUGUST 31,
CLASS R (UNAUDITED) 2007 2006 2005 2004 2003
-------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value, beginning
of period ................... $ 25.88 $ 25.06 $ 23.68 $ 20.90 $ 18.44 $ 17.07
-------------------------------------------------------------------------------------------------
Income from investment
operations a:
Net investment income b...... 0.09 0.31 0.45 0.32 0.33 0.32
Net realized and unrealized
gains (losses) ........... (2.53) 2.63 2.62 3.62 2.56 1.42
-------------------------------------------------------------------------------------------------
Total from investment
operations .................. (2.44) 2.94 3.07 3.94 2.89 1.74
-------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ....... (0.31) (0.44) (0.37) (0.38) (0.43) (0.37)
Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- --
-------------------------------------------------------------------------------------------------
Total distributions ............ (2.12) (2.12) (1.69) (1.16) (0.43) (0.37)
-------------------------------------------------------------------------------------------------
Redemption fees ................ -- e -- e -- e -- e -- e -- e
-------------------------------------------------------------------------------------------------
Net asset value, end of
period ...................... $ 21.32 $ 25.88 $ 25.06 $ 23.68 $ 20.90 $ 18.44
=================================================================================================
Total return c ................. (10.42)% 12.33% 14.22% 19.44% 15.85% 10.58%
RATIOS TO AVERAGE NET ASSETS d
Expenses ....................... 1.28% f 1.26% f 1.30% f 1.31% f 1.35% f 1.39%
Net investment income .......... 0.78% 1.19% 1.57% 1.36% 1.50% 1.79%
SUPPLEMENTAL DATA
Net assets, end of period
(000's) ..................... $ 353,512 $ 467,391 $ 403,334 $ 123,139 $ 57,951 $ 28,584
Portfolio turnover rate ........ 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to the timing of
sales and repurchases 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 Ratios are annualized for periods less than one year.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 17
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
FEBRUARY 29, 2008 YEAR ENDED AUGUST 31,
ADVISOR CLASS (UNAUDITED) 2007 2006 2005 2004 2003
-------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding
throughout the period)
Net asset value, beginning of
period ...................... $ 26.22 $ 25.34 $ 23.90 $ 21.07 $ 18.57 $ 17.13
-------------------------------------------------------------------------------------------------
Income from investment
operations a:
Net investment income b...... 0.16 0.45 0.51 0.45 0.48 0.38
Net realized and unrealized
gains (losses) ........... (2.58) 2.66 2.72 3.63 2.52 1.46
-------------------------------------------------------------------------------------------------
Total from investment
operations .................. (2.42) 3.11 3.23 4.08 3.00 1.84
-------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income ....... (0.44) (0.55) (0.47) (0.47) (0.50) (0.40)
Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- --
-------------------------------------------------------------------------------------------------
Total distributions ............ (2.25) (2.23) (1.79) (1.25) (0.50) (0.40)
-------------------------------------------------------------------------------------------------
Redemption fees ................ -- e -- e -- e -- e -- e -- e
-------------------------------------------------------------------------------------------------
Net asset value, end of
period ...................... $ 21.55 $ 26.22 $ 25.34 $ 23.90 $ 21.07 $ 18.57
=================================================================================================
Total return c ................. (10.25)% 12.93% 14.83% 19.97% 16.43% 11.19%
RATIOS TO AVERAGE NET ASSETS d
Expenses ....................... 0.78% f 0.76% f 0.80% f 0.81% f 0.85% f 0.88%
Net investment income .......... 1.28% 1.69% 2.07% 1.86% 2.00% 2.30%
SUPPLEMENTAL DATA
Net assets, end of period
(000's) ..................... $ 5,824,464 $ 6,458,094 $ 3,972,615 $ 2,549,202 $ 911,764 $ 137,776
Portfolio turnover rate ...... 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not
correlate with the statement of operations for the period due to the timing of
sales and repurchases 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 is not annualized for periods less than one year.
d Ratios are annualized for periods less than one year.
e Amount rounds to less than $0.01 per share.
f Benefit of expense reduction rounds to less than 0.01%.
18 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 97.2%
FINLAND 1.2%
Stora Enso OYJ, R ................................ Paper & Forest Products 11,800,820 $ 148,683,258
UPM-Kymmene OYJ .................................. Paper & Forest Products 12,784,220 222,980,073
---------------
371,663,331
---------------
FRANCE 7.5%
Accor SA ......................................... Hotels, Restaurants & Leisure 1,214,988 87,127,182
France Telecom SA ................................ Diversified Telecommunication Services 13,767,620 465,635,247
Peugeot SA ....................................... Automobiles 4,500,000 345,375,375
Sanofi-Aventis ................................... Pharmaceuticals 7,000,000 518,442,562
Total SA, B ...................................... Oil, Gas & Consumable Fuels 6,400,000 485,662,869
Vivendi SA ....................................... Media 12,000,000 477,623,540
---------------
2,379,866,775
---------------
GERMANY 6.9%
Bayerische Motoren Werke AG ...................... Automobiles 7,072,930 390,494,077
Deutsche Post AG ................................. Air Freight & Logistics 14,751,030 490,162,292
a Infineon Technologies AG ......................... Semiconductors & Semiconductor Equipment 19,668,050 160,028,702
Muenchener Rueckversicherungs- Gesellschaft AG ... Insurance 688,370 121,422,691
SAP AG ........................................... Software 3,530,820 167,225,292
Siemens AG ....................................... Industrial Conglomerates 6,883,810 884,038,193
---------------
2,213,371,247
---------------
HONG KONG 1.0%
Cheung Kong (Holdings) Ltd. ...................... Real Estate Management & Development 13,767,800 210,558,755
Swire Pacific Ltd., A ............................ Real Estate Management & Development 9,037,000 104,817,377
---------------
315,376,132
---------------
ITALY 4.4%
Eni SpA .......................................... Oil, Gas & Consumable Fuels 8,850,624 307,935,880
Intesa Sanpaolo SpA .............................. Commercial Banks 68,115,200 460,125,007
Mediaset SpA ..................................... Media 18,090,872 164,085,120
UniCredit SpA .................................... Commercial Banks 65,000,000 482,002,971
---------------
1,414,148,978
---------------
JAPAN 4.8%
FUJIFILM Holdings Corp. .......................... Electronic Equipment & Instruments 7,867,100 300,658,327
Konica Minolta Holdings Ltd. ..................... Office Electronics 19,667,500 284,182,879
Mitsubishi UFJ Financial Group Inc. .............. Commercial Banks 30,279,975 275,749,484
NGK Spark Plug Co. Ltd. .......................... Auto Components 5,079,000 80,673,373
NOK Corp. ........................................ Auto Components 4,011,600 84,765,710
Shinsei Bank Ltd. ................................ Commercial Banks 39,879,000 163,923,113
Sumitomo Mitsui Financial Group Inc. ............. Commercial Banks 39,335 292,324,028
Toyota Motor Corp. ............................... Automobiles 1,154,200 63,887,659
---------------
1,546,164,573
---------------
Semiannual Report | 19
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
MEXICO 0.4%
Telefonos de Mexico SAB de CV, L, ADR ............ Diversified Telecommunication Services 4,182,580 $ 138,861,656
---------------
NETHERLANDS 4.2%
ING Groep NV ..................................... Diversified Financial Services 13,974,480 471,995,069
Koninklijke Philips Electronics NV ............... Industrial Conglomerates 11,800,820 465,396,511
Randstad Holding NV .............................. Commercial Services & Supplies 1,801,390 69,073,726
Reed Elsevier NV ................................. Media 18,381,449 345,160,615
---------------
1,351,625,921
---------------
RUSSIA 0.6%
Gazprom, ADR ..................................... Oil, Gas & Consumable Fuels 3,650,000 183,138,750
---------------
SINGAPORE 1.3%
a Flextronics International Ltd. ................... Electronic Equipment & Instruments 4,580,000 46,441,200
Singapore Telecommunications Ltd. ................ Diversified Telecommunication Services 131,816,000 363,793,261
---------------
410,234,461
---------------
SOUTH KOREA 4.3%
Hyundai Motor Co. Ltd. ........................... Automobiles 3,000,000 213,407,167
Kookmin Bank ..................................... Commercial Banks 4,621,992 289,905,041
a KT Corp., ADR .................................... Diversified Telecommunication Services 12,922,490 313,887,282
Samsung Electronics Co. Ltd. ..................... Semiconductors & Semiconductor Equipment 844,974 503,898,025
SK Telecom Co. Ltd., ADR ......................... Wireless Telecommunication Services 1,834,410 41,090,784
---------------
1,362,188,299
---------------
SPAIN 0.7%
Telefonica SA .................................... Diversified Telecommunication Services 8,108,815 236,828,656
---------------
SWEDEN 1.1%
Telefonaktiebolaget LM Ericsson, B ............... Communications Equipment 78,573,450 170,860,357
Svenska Cellulosa AB, B .......................... Paper & Forest Products 10,292,707 170,368,958
---------------
341,229,315
---------------
SWITZERLAND 3.8%
Adecco SA ........................................ Commercial Services & Supplies 2,672,390 140,929,073
Nestle SA ........................................ Food Products 983,400 471,839,297
Novartis AG ...................................... Pharmaceuticals 7,867,210 388,807,410
UBS AG ........................................... Capital Markets 6,672,870 220,239,002
---------------
1,221,814,782
---------------
TAIWAN 0.2%
Taiwan Semiconductor Manufacturing Co. Ltd. ...... Semiconductors & Semiconductor Equipment 27,155,000 54,107,974
---------------
UNITED KINGDOM 15.7%
Aviva PLC ........................................ Insurance 40,000,000 486,007,997
BAE Systems PLC .................................. Aerospace & Defense 3,749,014 35,960,549
BP PLC ........................................... Oil, Gas & Consumable Fuels 49,232,798 534,114,199
Compass Group PLC ................................ Hotels, Restaurants & Leisure 62,486,294 405,373,091
20 | Semiannual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
UNITED KINGDOM (CONTINUED)
GlaxoSmithKline PLC .............................. Pharmaceuticals 21,052,580 $ 460,971,296
HSBC Holdings PLC ................................ Commercial Banks 31,999,897 496,383,852
Kingfisher PLC ................................... Specialty Retail 61,440,000 160,044,539
Old Mutual PLC ................................... Insurance 80,000,000 199,171,879
Pearson PLC ...................................... Media 19,142,410 253,313,191
a Rolls-Royce Group PLC ............................ Aerospace & Defense 15,734,430 135,840,026
Royal Bank of Scotland Group PLC ................. Commercial Banks 49,560,000 379,122,003
Royal Dutch Shell PLC, B ......................... Oil, Gas & Consumable Fuels 14,712,040 520,623,514
b Standard Life PLC, 144A .......................... Insurance 26,586,490 115,689,004
Vodafone Group PLC ............................... Wireless Telecommunication Services 199,750,469 645,746,890
Wolseley PLC ..................................... Trading Companies & Distributors 6,707,810 82,834,041
Yell Group PLC ................................... Media 24,918,200 108,553,350
---------------
5,019,749,421
---------------
UNITED STATES 39.1%
Accenture Ltd., A ................................ IT Services 17,508,500 617,174,625
American International Group Inc. ................ Insurance 11,000,000 515,460,000
a Amgen Inc. ....................................... Biotechnology 11,000,000 500,720,000
a Boston Scientific Corp. .......................... Health Care Equipment & Supplies 32,452,280 408,574,205
a Cadence Design Systems Inc. ...................... Software 9,834,020 104,437,292
a,c Chico's FAS Inc. ................................. Specialty Retail 13,767,620 128,176,542
a Cisco Systems Inc. ............................... Communications Equipment 1,021,570 24,895,661
a Comcast Corp., A ................................. Media 21,480,140 415,640,709
Covidien Ltd. .................................... Health Care Equipment & Supplies 6,392,110 273,518,387
c Eastman Kodak Co. ................................ Leisure Equipment & Products 16,717,830 283,868,753
El Paso Corp. .................................... Oil, Gas & Consumable Fuels 26,922,660 438,839,358
Electronic Data Systems Corp. .................... IT Services 15,263,735 264,367,890
a Expedia Inc. ..................................... Internet & Catalog Retail 6,073,040 139,254,807
General Electric Co. ............................. Industrial Conglomerates 22,000,000 729,080,000
Harley-Davidson Inc. ............................. Automobiles 3,441,900 127,901,004
International Paper Co. .......................... Paper & Forest Products 4,917,010 155,869,217
a The Interpublic Group of Cos. Inc. ............... Media 19,093,160 164,583,039
Merck & Co. Inc. ................................. Pharmaceuticals 6,883,810 304,952,783
Microsoft Corp. .................................. Software 31,468,870 856,582,642
News Corp., A .................................... Media 40,000,000 736,400,000
a Oracle Corp. ..................................... Software 39,336,100 739,518,680
Pentair Inc. ..................................... Machinery 2,626,600 85,679,692
Pfizer Inc. ...................................... Pharmaceuticals 34,000,000 757,520,000
Pitney Bowes Inc. ................................ Commercial Services & Supplies 3,124,070 111,779,225
Progressive Corp. ................................ Insurance 9,756,200 178,831,146
Raytheon Co. ..................................... Aerospace & Defense 1,966,800 127,527,312
Seagate Technology ............................... Computers & Peripherals 22,901,490 493,985,139
Sprint Nextel Corp. .............................. Wireless Telecommunication Services 33,000,000 234,630,000
Time Warner Inc. ................................. Media 34,419,090 537,281,995
Torchmark Corp. .................................. Insurance 2,770,230 166,934,060
Tyco Electronics Ltd. ............................ Electronic Equipment & Instruments 9,000,000 296,100,000
Tyco International Ltd. .......................... Industrial Conglomerates 6,500,000 260,390,000
United Parcel Service Inc., B .................... Air Freight & Logistics 7,000,000 491,680,000
Semiannual Report | 21
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONTINUED)
UNITED STATES (CONTINNUED)
a USG Corp. .................................................... Building Products 2,067,480 $ 70,356,344
a Viacom Inc., B ............................................... Media 14,751,030 586,353,443
Willis Group Holdings Ltd. ................................... Insurance 4,962,093 163,004,755
---------------
12,491,868,705
---------------
TOTAL COMMON STOCKS
(COST $29,000,254,192) ..................................... 31,052,238,976
---------------
------------------
PRINCIPAL AMOUNT d VALUE
------------------
SHORT TERM INVESTMENTS 2.5%
TIME DEPOSIT (COST $169,666,443) 0.5%
IRELAND 0.5%
Bank of Scotland, 4.04%, 3/03/08 ............................. 111,630,000 EUR 169,454,347
---------------
U.S. GOVERNMENT AND AGENCY SECURITIES 2.0%
e FFCB, 10/24/08 ............................................... 30,000,000 29,577,990
e FHLB, 3/03/08 - 9/15/08 ...................................... 229,522,000 228,200,499
FHLB, 4.00%, 3/10/08 ......................................... 75,000,000 75,017,550
f FHLB, 2.60%, 8/06/08 - 09/04/08 .............................. 98,660,000 98,633,778
FHLB, 4.625%, 11/21/08 ....................................... 40,000,000 40,617,120
e FHLMC, 4/07/08 - 9/25/08 ..................................... 165,195,000 163,312,700
---------------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES
(COST $634,695,158) ....................................... 635,359,637
---------------
TOTAL SHORT TERM INVESTMENTS
(COST $804,361,601) ....................................... 804,813,984
---------------
TOTAL INVESTMENTS (COST $29,804,615,793)
99.7% ..................................................... 31,857,052,960
OTHER ASSETS, LESS LIABILITIES 0.3% .......................... 106,376,202
---------------
NET ASSETS 100.0% ............................................ $31,963,429,162
===============
CURRENCY ABBREVIATION
EUR - Euro
SELECTED PORTFOLIO ABBREVIATIONS
ADR - American Depository Receipt
FFCB - Federal Farm Credit Bank
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corp.
22 | Semiannual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
a Non-income producing for the twelve months ended February 29, 2008.
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 Trust's Board of Directors. At February 29, 2008, the value of this security
was $115,689,004, representing 0.36% 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.
f A portion or all of the security purchased on a when-issued or delayed
delivery basis. See Note 1(c).
Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 23
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
February 29, 2008 (unaudited)
Assets:
Investments in securities:
Cost - Unaffiliated issuers .......................................... $29,049,983,338
Cost - Non-controlled affiliated issuers (Note 8) .................... 754,632,455
---------------
Total cost of investments ............................................ $29,804,615,793
===============
Value - Unaffiliated issuers ......................................... $31,445,007,665
Value - Controlled affiliated issuers (Note 8) ....................... 412,045,295
---------------
Total value of investments ........................................... 31,857,052,960
Cash .................................................................... 17,089,180
Foreign currency, at value (cost $38,341) ............................... 39,038
Receivables:
Investment securities sold ........................................... 79,535,923
Capital shares sold .................................................. 31,633,137
Dividends and interest ............................................... 94,502,783
---------------
Total assets ...................................................... 32,079,853,021
---------------
Liabilities:
Payables:
Investment securities purchased ...................................... 33,016,728
Capital shares redeemed .............................................. 50,943,807
Affiliates ........................................................... 30,068,729
Accrued expenses and other liabilities .................................. 2,394,595
---------------
Total liabilities ................................................. 116,423,859
---------------
Net assets, at value ........................................... $31,963,429,162
===============
Net assets consist of:
Paid-in capital ......................................................... $29,678,319,986
Undistributed net investment income ..................................... 90,802,310
Net unrealized appreciation (depreciation) .............................. 2,054,045,990
Accumulated net realized gain (loss) .................................... 140,260,876
---------------
Net assets, at value ........................................... $31,963,429,162
===============
24 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
February 29, 2008 (unaudited)
CLASS A:
Net assets, at value .................................................... $23,078,913,057
===============
Shares outstanding ...................................................... 1,072,218,518
===============
Net asset value per share a ............................................. $ 21.52
===============
Maximum offering price per share (net asset value per share / 94.25%) ... $ 22.83
===============
CLASS B:
Net assets, at value .................................................... $ 436,935,091
===============
Shares outstanding ...................................................... 20,720,881
===============
Net asset value and maximum offering price per share a .................. $ 21.09
===============
CLASS C:
Net assets, at value .................................................... $ 2,269,604,735
===============
Shares outstanding ...................................................... 108,403,213
===============
Net asset value and maximum offering price per share a .................. $ 20.94
===============
CLASS R:
Net assets, at value .................................................... $ 353,512,137
===============
Shares outstanding ...................................................... 16,584,184
===============
Net asset value and maximum offering price per share a .................. $ 21.32
===============
ADVISOR CLASS:
Net assets, at value .................................................... $ 5,824,464,142
===============
Shares outstanding ...................................................... 270,252,736
===============
Net asset value and maximum offering price per share a .................. $ 21.55
===============
a Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable, and redemption fees retained by the Fund.
Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 25
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the period ended February 29, 2008 (unaudited)
Investment income:
Dividends (net of foreign taxes of $25,635,958)
Unaffiliated issuers ..................................................... $ 332,343,720
Non-controlled affiliated issuers (Note 8) ............................... 10,362,560
Interest .................................................................... 31,386,616
---------------
Total investment income ............................................... 374,092,896
---------------
Expenses:
Management fees (Note 3a) ................................................... 102,349,076
Administrative fees (Note 3b) ............................................... 13,959,255
Distribution fees (Note 3c)
Class A .................................................................. 33,148,610
Class B .................................................................. 2,595,376
Class C .................................................................. 12,913,621
Class R .................................................................. 1,069,642
Transfer agent fees (Note 3e) ............................................... 20,630,117
Custodian fees (Note 4) ..................................................... 2,788,394
Reports to shareholders ..................................................... 896,204
Registration and filing fees ................................................ 393,394
Professional fees ........................................................... 222,842
Directors' fees and expenses ................................................ 172,942
Other ....................................................................... 416,115
---------------
Total expenses ........................................................ 191,555,588
Expense reductions (Note 4) ........................................... (47,007)
---------------
Net expenses ....................................................... 191,508,581
---------------
Net investment income ........................................... 182,584,315
---------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments
Unaffiliated issuers ............................................... 972,932,236
Non-controlled affiliated issuers (Note 8) ......................... (258,211,595)
Foreign currency transactions ............................................ 17,029,020
---------------
Net realized gain (loss) ........................................... 731,749,661
---------------
Net change in unrealized appreciation (depreciation) on:
Investments .............................................................. (4,668,354,788)
Translation of assets and liabilities denominated in
foreign currencies ................................................. 1,058,111
---------------
Net change in unrealized depreciation .............................. (4,667,296,677)
---------------
Net realized and unrealized gain (loss) ........................................ (3,935,547,016)
---------------
Net increase (decrease) in net assets resulting from operations ................ $(3,752,962,701)
===============
26 | The accompanying notes are an integral part of these financial statements.
| Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------
SIX MONTHS ENDED
FEBRUARY 29, 2008 YEAR ENDED
(UNAUDITED) AUGUST 31, 2007
------------------------------------
Increase (decrease) in net assets::
Operations:
Net investment income ................................................................. $ 182,584,315 $ 513,096,325
Net realized gain (loss) from investments and foreign currency transactions ........... 731,749,661 2,248,586,838
Net change in unrealized appreciation (depreciation) on investments
and translation of assets and liabilities denominated in foreign currencies ........ (4,667,296,677) 1,231,732,347
------------------------------------
Net increase (decrease) in net assets resulting from operations .................. (3,752,962,701) 3,993,415,510
------------------------------------
Distributions to shareholders from:
Net investment income:
Class A ............................................................................. (398,181,228) (472,698,663)
Class B ............................................................................. (3,557,189) (7,025,647)
Class C ............................................................................. (19,830,197) (30,736,178)
Class R ............................................................................. (5,511,926) (7,235,471)
Advisor Class ....................................................................... (111,295,865) (91,885,469)
Net realized gains:
Class A ............................................................................. (1,932,682,568) (1,615,535,935)
Class B ............................................................................. (38,875,981) (39,138,180)
Class C ............................................................................. (196,079,727) (163,775,141)
Class R ............................................................................. (32,335,262) (27,527,557)
Advisor Class ....................................................................... (459,221,703) (277,255,005)
------------------------------------
Total distributions to shareholders ...................................................... (3,197,571,646) (2,732,813,246)
------------------------------------
Capital share transactions: (Note 2)
Class A ............................................................................. 117,952,913 3,063,601,833
Class B ............................................................................. (29,796,731) (39,451,658)
Class C ............................................................................. 4,938,654 310,700,465
Class R ............................................................................. (34,721,422) 48,144,040
Advisor Class ....................................................................... 610,022,253 2,315,763,985
------------------------------------
Total capital share transactions ......................................................... 668,395,667 5,698,758,665
------------------------------------
Redemption fees .......................................................................... 43,918 102,551
------------------------------------
Net increase (decrease) in net assets ............................................ (6,282,094,762) 6,959,463,480
Net assets:
Beginning of period ...................................................................... 38,245,523,924 31,286,060,444
------------------------------------
End of period ............................................................................ $ 31,963,429,162 $38,245,523,924
------------------------------------
Undistributed net investment income included in net assets:
End of period ............................................................................ $ 90,802,310 $ 446,594,400
====================================
Semiannual Report |
The accompanying notes are an integral part of these financial statements. | 27
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Growth Fund, Inc. (Fund) is registered under the Investment Company
Act of 1940, as amended, (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. 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. Time deposits are valued at cost.
Government securities generally trade in the over-the-counter market rather than
on a securities exchange. The Fund may utilize independent pricing services,
quotations from bond dealers, and information with respect to bond and note
transactions, to assist in determining a current market value for each security.
The Fund's pricing services may use valuation models or matrix pricing which
considers information with respect to comparable bond and note transactions,
quotations from bond dealers, or by reference to other securities that are
considered comparable in such characteristics as rating, interest rate and
maturity date, option adjusted spread models, prepayment projections, interest
rate spreads and yield curves, to determine current value.
Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. If no sale is reported at that time, the foreign security will be
valued within the range of the most recent quoted bid and ask prices. The value
is then converted into its U.S. dollar equivalent at the foreign exchange rate
in effect at the close of the NYSE on the day that the value of the foreign
security is determined.
The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security held by the Fund. The investment
28 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. SECURITY VALUATION (CONTINUED)
manager monitors price movements following the close of trading in foreign stock
markets through a series of country specific market proxies (such as baskets of
American Depository Receipts, futures contracts and exchange traded funds).
These price movements are measured against established trigger thresholds for
each specific market proxy to assist in determining if an event has occurred. 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. SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS
The Fund may purchase securities on a when-issued or delayed delivery basis,
with payment and delivery scheduled for a future date. These transactions are
subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Fund will generally purchase these securities with the intention of holding the
securities, it may sell the securities before the settlement date. Sufficient
assets have been segregated for these securities.
Semiannual Report | 29
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. 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 at a future 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.
E. INCOME TAXES
No provision has been made for U.S. income taxes because it is the Fund's policy
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.
F. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income 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 of America. 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 per share
distributions, by class, are generally due to differences in class specific
expenses.
30 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. 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 period. Actual results could differ from those
estimates.
H. 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. 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.
I. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified by the Fund against certain liabilities arising out of the
performance of their duties to the Fund. Additionally, in the normal course of
business, the Fund enters into contracts with service providers that contain
general indemnification clauses. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that have not yet occurred. Currently, the Fund expects the
risk of loss to be remote.
2. CAPITAL STOCK
At February 29, 2008, there were 2.4 billion shares authorized ($0.01 par
value). Transactions in the Fund's shares were as follows:
----------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2008 AUGUST 31, 2007
----------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------
CLASS A SHARES:
Shares sold ......................... 76,421,231 $ 1,867,901,952 225,710,785 $ 5,875,431,840
Shares issued in reinvestment
of distributions ................. 81,526,449 2,015,497,465 73,223,640 1,796,575,224
Shares redeemed ..................... (156,363,962) (3,765,446,504) (175,958,675) (4,608,405,231)
----------------------------------------------------------------
Net increase (decrease) ............. 1,583,718 $ 117,952,913 122,975,750 $ 3,063,601,833
================================================================
CLASS B SHARES:
Shares sold ......................... 229,527 $ 5,484,649 604,753 $ 15,300,419
Shares issued in reinvestment
of distributions ................. 1,598,248 38,753,026 1,750,128 42,085,963
Shares redeemed ..................... (3,156,106) (74,034,406) (3,759,954) (96,838,040)
----------------------------------------------------------------
Net increase (decrease) ............. (1,328,331) $ (29,796,731) (1,405,073) $ (39,451,658)
================================================================
Semiannual Report | 31
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. CAPITAL STOCK (CONTINUED)
----------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 2008 AUGUST 31, 2007
----------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
----------------------------------------------------------------
CLASS C SHARES:
Shares sold ......................... 5,871,877 $ 139,837,450 18,577,793 $ 471,011,227
Shares issued in reinvestment of
distributions .................... 7,786,656 187,470,905 7,017,519 167,782,505
Shares redeemed ..................... (13,896,511) (322,369,701) (12,894,022) (328,093,267)
----------------------------------------------------------------
Net increase (decrease) ............. (237,977) $ 4,938,654 12,701,290 $ 310,700,465
================================================================
CLASS R SHARES:
Shares sold ......................... 2,117,435 $ 51,026,969 6,284,962 $ 162,082,026
Shares issued in reinvestment of
distributions .................... 1,527,061 37,405,084 1,416,323 34,427,697
Shares redeemed ..................... (5,118,314) (123,153,475) (5,736,892) (148,365,683)
----------------------------------------------------------------
Net increase (decrease) ............. (1,473,818) $ (34,721,422) 1,964,393 $ 48,144,040
================================================================
ADVISOR CLASS SHARES:
Shares sold ......................... 11,665,161 $ 293,030,165 81,193,552 $ 2,119,863,197
Shares issued in reinvestment of
distributions .................... 22,277,646 551,125,894 14,307,566 351,653,615
Shares redeemed ..................... (10,038,124) (234,133,806) (5,907,430) (155,752,827)
----------------------------------------------------------------
Net increase (decrease) ............. 23,904,683 $ 610,022,253 89,593,688 $ 2,315,763,985
================================================================
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
32 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
A. MANAGEMENT FEES
The Fund pays an investment management fee to TGAL based on the average daily
net assets of the Fund as follows:
- --------------------------------------------------------------------------------
ANNUALIZED FEE RATE NET ASSETS
- --------------------------------------------------------------------------------
0.630% Up to and including $1 billion
0.615% Over $1 billion, up to and including $5 billion
0.600% Over $5 billion, up to and including $10 billion
0.580% Over $10 billion, up to and including $15 billion
0.560% Over $15 billion, up to and including $20 billion
0.540% 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% Over $35 billion, up to and including $40 billion
0.500% Over $40 billion, up to and including $45 billion
0.490% In excess of $45 billion
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 for costs incurred in connection with the servicing,
sale and distribution of the Fund's shares up to the maximum annual plan rate.
Under the Class A reimbursement distribution plan, costs exceeding the maximum
for the current plan year cannot be reimbursed in subsequent periods.
In addition, under the Fund's Class B, C, and R compensation distribution plans,
the Fund pays Distributors for costs incurred in connection with the servicing,
sale and distribution of the Fund's shares up to the maximum annual plan rate
for each class.
Semiannual Report | 33
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
The maximum annual plan rates, based on the average daily net assets, for each
class, are as follows:
Class A ............................................................... 0.25%
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 period:
Sales charges retained net of commissions paid to unaffiliated
broker/dealers ............................................... $ 2,604,549
Contingent deferred sales charges retained ...................... $ 477,699
E. TRANSFER AGENT FEES
For the period ended February 29, 2008, the Fund paid transfer agent fees of
$20,630,117, of which $10,611,398 was retained by Investor Services.
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the period ended February 29, 2008, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
At February 29, 2008, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ........................................ $ 29,821,947,069
================
Unrealized appreciation .................................... $ 4,629,721,800
Unrealized depreciation .................................... (2,594,615,909)
----------------
Net unrealized appreciation (depreciation) ................. $ 2,035,105,891
================
Net investment income (loss) differs for financial statement and tax purposes
primarily due to differing treatments of foreign currency transactions, and bond
discounts and premiums.
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions, and bond discounts and premiums.
34 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
period ended February 29, 2008, aggregated $3,533,397,890 and $5,504,084,107,
respectively.
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 period ended February 29, 2008,
were as shown below.
- ------------------------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF
SHARES HELD SHARES HELD VALUE REALIZED
AT BEGINNING GROSS GROSS AT END AT END INVESTMENT CAPITAL
NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS OF PERIOD OF PERIOD INCOME GAIN (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------------
NON-CONTROLLED AFFILIATES
Chico's FAS, Inc. ............ 13,897,527 102,473 232,380 13,767,620 $128,176,542 $ -- $ (3,788,899)
Eastman Kodak Co. ............ 17,000,000 -- 282,170 16,717,830 283,868,753 4,250,000 (3,037,813)
The Interpublic Group of
Cos. Inc. ................. 33,000,000 -- 13,906,840 19,093,160 -- a -- (46,171,952)
Seagate Technology ........... 33,000,000 -- 10,098,510 22,901,490 -- a 6,112,560 (10,316,368)
Tenet Healthcare Corp. ....... 35,000,000 -- 35,000,000 -- -- a -- (194,896,563)
---------------------------------------------
TOTAL AFFILIATED SECURITIES (1.29% of Net Assets) ............................ $412,045,295 $10,362,560 $(258,211,595)
=============================================
a As of 2/29/08, no longer an affiliate.
9. REGULATORY AND LITIGATION MATTERS
As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, including the Securities and Exchange
Commission ("SEC"), 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 ("marketing support"), Franklin
Resources, Inc. and certain of its subsidiaries (collectively, the "Company"),
entered into settlements with certain of those regulators and governmental
entities. Specifically, the Company entered into settlements with the SEC, among
others, concerning market timing and marketing support.
Semiannual Report | 35
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
9. REGULATORY AND LITIGATION MATTERS (CONTINUED)
On June 6, 2007, the SEC posted for public comment the proposed plan of
distribution for the market timing settlement. Once the SEC approves the final
plan of distribution, disbursements of settlement monies will be made promptly
to individuals who were shareholders of the designated funds during the relevant
period, in accordance with the terms and conditions of the settlement and plan.
In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, Company directors,
fund directors, and 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.). The lawsuits relate to the industry
practices referenced above.
The Company and fund management 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.
10. NEW ACCOUNTING PRONOUNCEMENTS
The Fund adopted 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), as required, on February 29,
2008. FIN 48 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. The Fund has reviewed
the tax positions for each of the three open tax years as of August 31, 2007 and
has determined that the implementation of FIN 48 did not have a material impact
on the Fund's financial statements.
In September 2006, the FASB issued FASB Statement No. 157, "Fair Value
Measurement" (SFAS 157), which defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements.
SFAS 157 is effective for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. The Fund believes the adoption of
SFAS 157 will have no material impact on its financial statements.
36 | Semiannual Report
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION
PROXY VOTING POLICIES AND PROCEDURES
The Fund has established Proxy Voting Policies and Procedures (Policies) that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/527-7678 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.
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.
Semiannual Report | 37
GOF P-5 SUPPLEMENT DATED MARCH 1, 2008
TO THE CURRENTLY EFFECTIVE PROSPECTUS
OF EACH OF THE LISTED FUNDS
FRANKLIN CALIFORNIA TAX-FREE INCOME FUND
FRANKLIN CALIFORNIA TAX-FREE TRUST
Franklin California Insured Tax-Free Income Fund
Franklin California Intermediate-Term Tax-Free Income Fund
Franklin California Limited-Term Tax-Free Income Fund
Franklin California Tax-Exempt Money Fund
FRANKLIN CAPITAL GROWTH FUND
FRANKLIN CUSTODIAN FUNDS
Franklin DynaTech Fund
Franklin Growth Fund
Franklin Income Fund
Franklin U.S. Government Securities Fund
Franklin Utilities Fund
FRANKLIN FEDERAL TAX-FREE INCOME FUND
FRANKLIN GLOBAL TRUST
Franklin Global Real Estate Fund
FRANKLIN GOLD AND PRECIOUS METALS FUND
FRANKLIN HIGH INCOME TRUST
Franklin High Income Fund
FRANKLIN INVESTORS SECURITIES TRUST
Franklin Adjustable U.S. Government Securities Fund
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Limited Maturity U.S. Government Securities Fund
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Total Return Fund
FRANKLIN MANAGED TRUST
Franklin Rising Dividends Fund
FRANKLIN MUNICIPAL SECURITIES TRUST
Franklin California High Yield Municipal Fund
Franklin Tennessee Municipal Bond Fund
FRANKLIN MUTUAL SERIES FUND INC.
Mutual Beacon Fund
Mutual Discovery Fund
Mutual European Fund
Mutual Financial Services Fund
Mutual Qualified Fund
Mutual Shares Fund
FRANKLIN NEW YORK TAX-FREE INCOME FUND
FRANKLIN NEW YORK TAX-FREE TRUST
Franklin New York Insured Tax-Free Income Fund
Franklin New York Intermediate-Term Tax-Free Income Fund
Franklin New York Limited-Term Tax-Free Income Fund
Franklin New York Tax-Exempt Money Fund
FRANKLIN REAL ESTATE SECURITIES TRUST
Franklin Real Estate Securities Fund
FRANKLIN STRATEGIC MORTGAGE PORTFOLIO
FRANKLIN STRATEGIC SERIES
Franklin Biotechnology Discovery Fund
Franklin Flex Cap Growth Fund
Franklin Focused Core Equity Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Growth Opportunities Fund
Franklin Natural Resources Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund
Franklin Strategic Income Fund
Franklin Technology Fund
FRANKLIN TAX-FREE TRUST
Franklin Alabama Tax-Free Income Fund
Franklin Arizona Tax-Free Income Fund
Franklin Colorado Tax-Free Income Fund
Franklin Connecticut Tax-Free Income Fund
Franklin Double Tax-Free Income Fund
Franklin Federal Intermediate-Term Tax-Free Income Fund
Franklin Federal Limited-Term Tax-Free Income Fund
Franklin Florida Insured Tax-Free Income Fund
Franklin Florida Tax-Free Income Fund
Franklin Georgia Tax-Free Income Fund
Franklin High Yield Tax-Free Income Fund
Franklin Insured Tax-Free Income Fund
Franklin Kentucky Tax-Free Income Fund
Franklin Louisiana Tax-Free Income Fund
Franklin Maryland Tax-Free Income Fund
Franklin Massachusetts Insured Tax-Free Income Fund
Franklin Michigan Insured Tax-Free Income Fund
Franklin Minnesota Insured Tax-Free Income Fund
Franklin Missouri Tax-Free Income Fund
Franklin New Jersey Tax-Free Income Fund
Franklin North Carolina Tax-Free Income Fund
Franklin Ohio Insured Tax-Free Income Fund
Franklin Oregon Tax-Free Income Fund
Franklin Pennsylvania Tax-Free Income Fund
Franklin Virginia Tax-Free Income Fund
FRANKLIN TEMPLETON FUND ALLOCATOR SERIES
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Perspectives Allocation Fund
FRANKLIN TEMPLETON GLOBAL TRUST
Franklin Templeton Hard Currency Fund
FRANKLIN TEMPLETON INTERNATIONAL TRUST
Franklin India Growth Fund
Templeton Foreign Smaller Companies Fund
Templeton Global Long-Short Fund
FRANKLIN VALUE INVESTORS TRUST
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
TEMPLETON CHINA WORLD FUND
TEMPLETON DEVELOPING MARKETS TRUST
TEMPLETON FUNDS
Templeton Foreign Fund
Templeton World Fund
TEMPLETON GLOBAL INVESTMENT TRUST
Templeton BRIC Fund
Templeton Emerging Markets Small Cap Fund
Templeton Income Fund
TEMPLETON GLOBAL OPPORTUNITIES TRUST
TEMPLETON GLOBAL SMALLER COMPANIES FUND
TEMPLETON GROWTH FUND, INC.
TEMPLETON INCOME TRUST
Templeton Global Bond Fund
Templeton International Bond Fund
The prospectus is revised as follows:
1. Effective October 1, 2008, for all funds that are offered with an initial
sales charge, the cumulative quantity discount and letter of intent portion of
the "Sales Charge Reductions and Waivers" section is amended to read:
1. CUMULATIVE QUANTITY DISCOUNT - lets you combine certain existing
holdings of Franklin Templeton fund shares - referred to as "cumulative
quantity discount eligible shares" - with your current purchase of Class A
shares to determine if you qualify for a sales charge breakpoint.
Cumulative quantity discount eligible shares are Franklin Templeton Fund
shares registered to (or held by a financial intermediary for):
o You, individually;
o Your spouse or domestic partner, as recognized by applicable state
law, and your children under the age of 21 (each a "Family Member");
Not part of the semiannual report
o You jointly with one or more Family Members;
o You jointly with another person(s) who is(are) not Family Members if
that other person has not included the value of the shares as
cumulative quantity discount eligible shares for purposes of that
person's separate investments in Franklin Templeton fund shares;
o A trustee/custodian of a Coverdell Education Savings account for
which you or a Family Member is the identified responsible person;
o A trustee/custodian of an IRA (which includes a Roth IRA and an
employer sponsored IRA such as a SIMPLE IRA) or your non-ERISA
covered 403(b), if the shares are registered/recorded under yours or
a Family Member's Social Security number
o A 529 college savings plan over which you or a Family Member has
investment discretion and control;
o Any entity over which you or a Family Member has (have) individual
or shared authority, as principal, has investment discretion and
control (for example, an UGMA/UTMA account for a child on which you
or a Family Member is the custodian, a trust on which you or a
Family Member is the trustee, a business account [not to include
retirement plans] for your solely owned business [or the solely
owned business of a Family Member] on which you or a Family Member
is the authorized signer);
o A trust established by you or a Family Member as grantor.
Franklin Templeton fund shares held through an administrator or
trustee/custodian of an Employer Sponsored Retirement plan such as a
401(k) plan (see definition below) do not qualify for a cumulative
quantity discount.
If you believe there are cumulative quantity discount eligible shares that
can be combined with your current purchase to achieve a sales charge
breakpoint (for example, shares held in a different broker-dealer's
brokerage account or with a bank or an investment advisor), it is your
responsibility to specifically identify those shares to your financial
adviser at the time of your purchase (including at the time of any future
purchase). If you have not designated a financial adviser associated with
your Franklin Templeton Fund shares, it is your responsibility to
specifically identify any cumulative quantity discount eligible shares to
the Fund's transfer agent at the time of any purchase.
If there are cumulative quantity discount eligible shares that would
qualify for combining with your current purchase and you do not tell your
financial adviser or the Franklin Templeton Funds' transfer agent at the
time of any purchase, you may not receive the benefit of a reduced sales
charge that might otherwise be available since your financial adviser and
the Fund generally will not have that information.
The value of cumulative quantity discount eligible shares equals the cost
or current value of those shares, whichever is higher. The current value
of shares is determined by multiplying the number of shares by their
highest current public offering price. It is your responsibility to retain
any records necessary to substantiate historical share costs because
neither your current financial adviser nor the Franklin Templeton Funds
may have or maintain this information.
An "Employer Sponsored Retirement Plan" is a Qualified Retirement Plan,
ERISA covered 403(b) and certain non-qualified deferred compensation
arrangements that operate in a similar manner to a Qualified Retirement
Plan, such as 457 plans and executive deferred compensation arrangements,
but not including employer sponsored IRAs. A "Qualified Retirement Plan"
is an employer sponsored pension or profit sharing plan that qualifies
under section 401(a) of the Internal Revenue Code, including 401(k), money
purchase pension, profit sharing and defined benefit plans.
2. LETTER OF INTENT (LOI) - expresses your intent to buy a stated dollar
amount of "cumulative quantity discount eligible shares" (as defined in
the "Cumulative Quantity Discount" section above) over a 13-month period
and lets you receive the same sales charge as if all shares had been
purchased at one time. We will reserve 5% of your total intended purchase
in Class A shares registered in your name until you fulfill your LOI to
cover any additional sales charge that may apply if you do not buy the
amount stated in your LOI. It is your responsibility to tell your
financial adviser when you believe you have fulfilled your LOI with
sufficient cumulative quantity discount eligible shares. If you have not
designated a financial adviser associated with your Franklin Templeton
Fund shares, it is your responsibility to tell the Funds' transfer agent
when you believe you have fulfilled your LOI with sufficient cumulative
quantity discount eligible shares. Please refer to the Statement of
Additional Information for more LOI details.
To sign up for these programs, complete the appropriate section of your
account application.
2. Effective October 1, 2008, the second sentence of the section "Investments of
$1 Million or More" is amended as follows:
However, there is a 1% Contingent Deferred Sales Charge ("CDSC") for funds
that have a maximum initial sales charge of 5.75%; for all other funds,
the maximum CDSC will be 0.75%. The CDSC is assessed on any shares you
redeem within 18 months of purchase.
3. The "Qualified Investors - Advisor Class" (and "Qualified Investors - Class
Z" for Mutual Series funds) section is revised to include the following category
of investor:
o Unaffiliated U.S. registered mutual funds, including those that
operate as "fund of funds." Minimum initial investment: $1 million
in Advisor Class or Class Z shares of any Franklin Templeton fund.
PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE.
Not part of the semiannual report
This page intentionally left blank.
Literature Request
LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS
SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES
BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE
CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. TO ENSURE THE HIGHEST QUALITY OF
SERVICE, WE MAY MONITOR, RECORD AND ACCESS TELEPHONE CALLS TO OR FROM OUR
SERVICE DEPARTMENTS. THESE CALLS CAN BE IDENTIFIED BY THE PRESENCE OF A REGULAR
BEEPING TONE.
FRANKLIN TEMPLETON FUNDS
INTERNATIONAL
Franklin India Growth Fund
Mutual European Fund
Templeton BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund 1
GLOBAL
Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund 1
Templeton Growth Fund
Templeton World Fund
GROWTH
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Growth Opportunities Fund 2
Franklin Small Cap Growth Fund 3
Franklin Small-Mid Cap Growth Fund
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 1
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund 4
Mutual Shares Fund
BLEND
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Focused Core Equity Fund
Franklin Growth Fund
Franklin Rising Dividends 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(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
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 5
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Income Fund
Franklin Limited Maturity U.S. Government Securities Fund 5
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 5
Templeton Global Bond Fund
Templeton Income Fund
Templeton International Bond Fund
TAX-FREE INCOME 6
NATIONAL FUNDS
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 7
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 8
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 7
Michigan 7
Minnesota 7
Missouri
New Jersey
New York 8
North Carolina
Ohio 7
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust 9
1. The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
2. Effective 11/1/07, Franklin Aggressive Growth Fund changed its name to
Franklin Growth Opportunities Fund. The fund's investment goal and strategy
remained the same.
3. Effective 3/31/08, Franklin Small Cap Growth Fund II changed its name to
Franklin Small Cap Growth Fund. The fund's investment goal and strategy remained
the same.
4. 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.
5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
6. For investors subject to the alternative minimum tax, a small portion of fund
dividends may be taxable. Distributions of capital gains are generally taxable.
7. The fund invests primarily in insured municipal securities.
8. 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).
9. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
04/08 Not part of the semiannual 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.
SEMIANNUAL 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 S2008 04/08
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 expert is David W. Niemiec and he is
"independent" as defined under the relevant Securities and Exchange
Commission Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A
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
COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no changes to the procedures by which shareholders may recommend
nominees to the Registrant's Board of 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 Galen G. Vetter, Chief Executive Officer - Finance and Administration, and
Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura
F. Fergerson, Chief Financial Officer and Chief Accounting 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/GALEN G. VETTER
---------------------------
Galen G. Vetter
Chief Executive Officer -
Finance and Administration
Date: April 28, 2008
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/GALEN G. VETTER
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Galen G. Vetter
Chief Executive Officer -
Finance and Administration
Date: April 28, 2008
By /s/LAURA F. FERGERSON
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Laura F. Fergerson
Chief Financial Officer and
Chief Accounting Officer
Date: April 28, 2008