UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04892
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TEMPLETON GROWTH FUND, INC.
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., 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: 8/31/08
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ITEM 1. REPORTS TO STOCKHOLDERS.
AUGUST 31, 2008
ANNUAL REPORT AND SHAREHOLDER LETTER
GLOBAL
TEMPLETON GROWTH FUND, INC.
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(GRAPHIC)
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)
Franklin - TEMPLETON - 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.
MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
(GRAPHIC)
Not part of the annual report
Contents
CEO'S MESSAGE ............................................ 1
ANNUAL REPORT
Templeton Growth Fund, Inc. .............................. 4
Performance Summary ...................................... 13
Your Fund's Expenses ..................................... 19
Financial Highlights and Statement of Investments ........ 21
Financial Statements ..................................... 30
Notes to Financial Statements ............................ 34
Report of Independent Registered Public Accounting Firm .. 42
Tax Designation .......................................... 43
Board Members and Officers ............................... 44
Shareholder Information .................................. 49
A Message from Gregory E. Johnson,
President and Chief Executive Officer of Franklin Resources, Inc.
October 12, 2008
Dear Shareholder:
The enclosed annual report for Templeton Growth Fund covers the 12 months ended
August 31, 2008, but I would like to add some comments on market events that
occurred in September and early October. Recent market volatility has been
jarring to everyone, including those of us who have worked in financial markets
for many years. Bank lending around the world has seized up, and the fallout has
impacted venerable firms alongside broader stock and bond indexes.
This environment is bound to provoke great concern, but it's equally important
to put the latest market developments in perspective. That's why I'd like to
offer a few thoughts on these events, our company's approach to investing and
the strong health of our organization.
A key point to recognize is that global financial turmoil is being addressed by
global action. Central banks around the world have coordinated their efforts to
cut interest rates and supply liquidity to frozen funding markets. A number of
governments have also intervened to rescue major financial institutions or find
an orderly way for them to be acquired. Here in the U.S., the Federal
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Not part of the annual report | 1
Reserve and Treasury Department have moved rapidly to establish new programs for
easing money-market pressures and handling troubled financial assets. The
outcome of all of these efforts may take a while to be realized, but I believe
that the latest actions here and abroad mark a significant turning point.
It's also important to remember that as daunting as current market conditions
may be, we have navigated through other periods of market volatility. U.S. stock
markets recorded three bear markets during the 1960s as the nation grappled with
the Vietnam War and a turbulent economy.(1) The quintupling of oil prices in
1973 led to a deep U.S. recession and a stock market plunge of 45.1% from
January 1973 through December 1974.(1) And the "Black Monday" stock market crash
of 1987 remains the largest single day percentage decline in the history of the
Dow Jones Industrial Average.(2)
Advice applicable throughout these upheavals remains true today. The late Sir
John Templeton, writing 15 years ago, ended a list of his core investment
principles with these thoughts: "Do not be fearful or negative too often. . . .
For 100 years optimists have carried the day in U.S. stocks. Even in the dark
'70s, many professional money managers -- and many individual investors too --
made money in stocks . . . . In this century or the next it's still 'Buy low,
sell high.'"(3)
Sir John knew that these simple concepts were difficult to execute in the face
of pessimism. Nonetheless, that is precisely how our Franklin, Templeton and
Mutual Series portfolio managers are contending with today's challenging
environment. They are using their expertise to sort through investment
opportunities, avoiding those firms that have become merely cheap and
identifying those firms best positioned to be eventual winners. This kind of
rigorous, bottom-up, security-by-security analysis is the fundamental investment
discipline practiced across our global platform.
These asset management strengths are also the core of our business. Unlike
financial firms that have dominated recent headlines, Franklin Templeton derives
its revenue primarily from investment management, not investment banking or
securities brokerage. Additionally, our assets under management are diversified
by fund objective, investment clientele, management brand and geographic region.
Diversified positioning helps our firm maintain healthy operating margins even
when volatile markets reduce assets under management.
(1.) Source: Ned Davis Research, Inc.
(2.) Source: NYSE Euronext. The Dow Jones Industrial Average is price weighted
based on the average market price of 30 blue chip stocks of companies that
are generally industry leaders.
(3.) Source: "16 Rules for Investment Success" by Sir John Templeton.
2 | Not part of the annual report
It is also important to note that maintaining a strong balance sheet has been a
pillar of our management strategy. We have a substantial pool of cash and
investments and low levels of debt, and we are in the enviable position of not
having to depend on credit to meet our operating needs. In fact, our strong
franchise, sound capitalization and minimal leverage led Standard & Poor's to
recently raise its credit ratings on Franklin Resources, Inc. (BEN) to the
highest level currently applied to a publicly traded asset manager.(4)
Franklin Templeton's six-decade growth into a premier global asset manager has
given us the conviction that although conditions on the ground remain
challenging, there are ample reasons to be optimistic about eventual market
stabilization and recovery. Being able to take advantage of markets shaken by
maximum pessimism has helped our firm develop into an organization that
stretches across 29 countries and manages assets for more than 20 million
shareholder accounts.
In the enclosed annual report for Templeton Growth Fund, the portfolio managers
discuss market conditions, investment decisions and Fund performance during the
12 months ended August 31, 2008. The report contains additional performance data
and financial information. Our website, FRANKLINTEMPLETON.COM, offers more
timely discussions, daily prices, portfolio holdings and other information. We
encourage you to discuss your concerns with your financial advisor, who can
review your overall portfolio, reassess your goals and help you stay focused on
the long term. As times like these illustrate, all securities markets fluctuate,
as do fund share prices.
We are grateful for the trust you have placed in Franklin Templeton and remain
focused on serving your investment needs.
Sincerely,
/s/ Gregory E. Johnson
Gregory E. Johnson
President and Chief Executive Officer
Franklin Resources, Inc.
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF OCTOBER 12, 2008. THE
INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY,
INDUSTRY, SECURITY OR FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED
RELIABLE.
(4.) Source: Standard & Poor's press release, October 6, 2008.
Not part of the annual report | 3
Annual Report
Templeton Growth Fund, Inc.
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Growth Fund seeks long-term
capital growth. Under normal market conditions, the Fund invests primarily in
equity securities of companies located anywhere in the world, including emerging
markets.
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 (800) 342-5236 FOR
MOST RECENT MONTH-END PERFORMANCE.
This annual report for Templeton Growth Fund covers the fiscal year ended August
31, 2008.
PERFORMANCE OVERVIEW
Templeton Growth Fund - Class A had a -17.43% cumulative total return for the 12
months under review. The Fund underperformed its benchmark, the Morgan Stanley
Capital International (MSCI) World Index, which had a -11.57% total return for
the same period.(1) For the 10-year period ended August 31, 2008, Templeton
Growth Fund - Class A delivered a +134.61% cumulative total return, compared
with the MSCI World Index's +75.22% 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 13.
ECONOMIC AND MARKET OVERVIEW
The U.S. experienced uneven gross domestic product (GDP) growth as housing
prices declined, consumer demand softened, and a credit crisis originally
related to U.S. subprime loan losses spread globally. Although GDP growth
rebounded in the second quarter of 2008, largely due to fiscal stimulus, the
domestic economy generally was in a slowing trend. Some economists speculated
whether the U.S. would enter a recession while others believed one was
(1.) Source: (C) 2008 Morningstar. All Rights Reserved. The information
contained herein: (1) is proprietary to Morningstar and/or its content
providers; (2) may not be copied or distributed; and (3) is not warranted
to be accurate, complete or timely. Neither Morningstar nor its content
providers are responsible for any damages or losses arising from any use of
this information. The MSCI World Index is a free float-adjusted, market
capitalization-weighted index designed to measure equity market performance
in global developed markets. As of 8/31/08, the Fund's Class A 10-year
average annual total return not including the maximum sales charge was
+8.90%, compared with the +5.77% 10-year average annual total return of the
MSCI World Index. 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 26.
4 | Annual Report
already under way. Many agreed, however, that the slowing U.S. economy -- which
is the world's largest and accounts for roughly 25% of global GDP -- could have
a meaningfully negative impact on growth prospects around the world. Signs of a
global slowdown did surface in the latter half of the reporting period, but for
the entire period growth remained robust in developing economies, particularly
in Asia.
China's demand for commodities continued to significantly affect commodity
prices and related equities. The steep rise in oil prices was one of the most
extreme market trends of recent months and a major focus of attention, due to
its wide-ranging impact on everything from inflation to corporate earnings to
consumer spending. The commodity price boom, however, comprised a wide spectrum,
from natural gas and precious metals, to most agricultural and industrial
commodities, all of which added to global inflationary pressures. Many of the
world's monetary authorities faced the choice between lowering short-term
interest rates to stimulate growth and raising them to fight rising inflation.
The U.S. focused on reigniting its economy through fiscal and monetary policies,
and accordingly the Federal Reserve Board (Fed) eased rates aggressively down to
2.00% from 5.25%. The eurozone made controlling inflation its main goal and kept
rates steady at 4.00% until July, when the European Central Bank joined many of
the world's central banks whose concerns about inflation had led them to raise
rates. Overall, interest rate differentials pressured the U.S. dollar, which
declined versus many of the world's currencies. The greenback, however, regained
some ground as the Fed paused in April and implied that its next move could be a
rate hike, and oil and other commodity prices that are set in U.S. dollars
declined toward period-end.
Against this challenging economic backdrop, many global equity markets were
volatile, and generally declined over the 12-month period even though the weaker
U.S. dollar aided returns. 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 its long-term earnings, asset value and cash flow potential. As we
look worldwide, we consider specific companies, rather than sectors
Annual Report | 5
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 8/31/08
(PERFORMANCE GRAPH)
Europe 46.1%
North America 41.1%
Asia 11.9%
Short-Term Investments & Other Net Assets 0.9%
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.
MANAGER'S DISCUSSION
The 12-month period under review was challenging for equity investors,
particularly those like us who practice the discipline of value investing, or
buying out-of-favor stocks that trade at a discount to their future earnings,
cash flow or asset value potential. The sharp correction in global equity
markets and the pessimism that accompanied it broadly depressed stock indexes to
bear market levels. At the heart of the crisis was a large scale contraction of
credit and liquidity that severely -- and in some cases fatally -- impaired
firms reliant on leverage as an integral part of their business models. These
were primarily financials firms, and given the financial industry's role as
liquidity provider, market maker, security underwriter and business advisor, the
systemic delever-aging in the financial system began to compromise the health of
the economy at large, inducing a widespread crisis of confidence on Wall Street
and Main Street. As in past crises, an upwelling of fear and uncertainty led to
reflexive selling, and lumped in with stocks that genuinely deserved to be
penalized were many of the market's most venerable, highest-quality companies.
The persistence of momentum trends throughout the Fund's fiscal year -- the rise
of energy, metals and mining stocks and fall of consumer, financials, health
care and media stocks -- presented a critical opportunity for investors with the
ability to distinguish between the temporarily injured and the permanently
impaired. It is important for shareholders to remember that our performance has
suffered before at the hands of momentum driven markets such as the Japanese
bubble of the 1980s and the technology bubble of the late 1990s. But such
periods offered us the environment to identify opportunities amid the confusion
and set the stage for long-term performance.
While past performance may provide some comfort, the expectation of future gains
has less emotional immediacy than the realization of current losses. Although we
believe the market is rich with long-term opportunity, it is also fraught with
near-term challenges for value investors. The performance of the Fund's
materials sector holdings illustrates the difficulties that faced bargain
hunters.(2) The Fund's materials stocks declined sharply in value despite the
sector's positive total return during the year under review. To a disciplined
value
(2.) The materials sector comprises chemicals, construction materials,
containers and packaging, metals and mining, and paper and forest products
in the SOI.
6 | Annual Report
investor, metals and mining stocks -- trading at historical peak valuations and
with high sensitivity to their underlying commodities' price swings --
represented neither safety nor sustainability as investment options. For this
reason, the Fund remained underweighted in the materials sector throughout the
period, particularly in what we assessed as expensive metals and mining firms.
This decision hurt relative performance and highlights a difficulty of value
investing in momentum markets. We were, however, encouraged by the more recent
rotation out of expensive commodities that we began to witness at the end of the
reporting period.
Avoiding expensive investments is a difficult task, yet it is potentially
rewarding for the long term. For example, financial companies' recent dependence
on risky loan growth and excessive leverage to sustain peak levels of
profitability was cause for concern. This was despite the historic rally that
doubled the value of global financial stocks in the four years leading up to
their undoing in the summer of 2007. At Templeton, we began reducing exposure to
the sector some time ago and held an underweighted allocation relative to the
benchmark throughout the credit crisis. Our caution was well-founded, and the
reduced exposure helped limit the Fund's losses during the year under review.
Nonetheless, the Fund's financial stocks retreated sharply on an absolute basis
and half of the period's 10 worst detractors were financial companies.(3) Most
notable was American International Group (AIG), the world's largest insurer. The
stock lost roughly two-thirds of its value during the period when the company
reported losses on contracts an AIG subsidiary wrote in the form of credit
default swaps (CDS) that protect against default of collateralized debt
obligations backed by mortgage securities. As the unfolding credit crisis
eliminated the liquidity in these CDS policies, the company was required to mark
them to market based on other similar asset pools. This practice could
potentially be misleading as the actual default rates were running at levels far
less than the unrealized losses indicated but which nevertheless significantly
depleted the insurer's capital base. Given continued limited liquidity in
financial markets at period-end AIG faced the ongoing risk that it would have
difficulty raising capital to meet increased collateral obligations caused by
mark-to-market requirements. Financials stocks overall fell severely during the
period under review, creating a tempting scenario for bargain hunters. However,
while we continued to monitor the sector closely, legitimate concerns existed
about the remaining
WHAT IS MARK-TO-MARKET?
Mark-to-market is an accounting standard by which companies value their assets
using current market values, which may be higher or lower than their purchase
price or book value. Financial institutions are required to "mark-to-market"
their securities.
(3.) The financials sector comprises capital markets, commercial banks, consumer
finance, diversified financial services, insurance, real estate, and
thrifts and mortgage finance in the SOI.
Annual Report | 7
TOP 10 COUNTRIES
Based on Equity Securities
8/31/08
% OF TOTAL
NET ASSETS
----------
U.S. 41.1%
U.K. 15.5%
France 8.0%
Germany 6.7%
Japan 4.5%
Netherlands 4.0%
South Korea 3.9%
Switzerland 3.7%
Italy 3.7%
Singapore 1.5%
credit exposure and future earnings power of U.S. and European investment and
commercial banks, and our analysis indicated that the risk-reward profile
remained generally unfavorable for a larger scale reentry into the embattled
sector.
Another sector that retreated sharply during the period was consumer
discretionary.(4) Unlike financials, however, this sector had many companies we
assessed as having strong balance sheets, solid business models and visible
future earnings drivers. Because of this, we maintained a significantly
overweighted position in the sector, a decision that negatively impacted
relative performance during the year under review as the market focused on the
potential effects a weakening economic environment could have on consumer
spending. In particular, we favored selected media and auto manufacturer stocks
within the consumer discretionary sector. Many traditional media stocks declined
due to concerns that a slowing economy could diminish advertising revenues and
that competition from online content providers would lure away viewers and
subscribers. We believed these factors were already discounted in share prices
and we remained attracted by media's high free cash-flow generation and
historically low valuations. However, the stocks declined on pessimism and News
Corp. and Viacom were among the period's 10 biggest detractors on an absolute
basis. Within the beleaguered auto industry, we found interesting opportunities
in what we assessed as inexpensive, nimble and well-managed companies such as
Toyota Motor, Hyundai Motor and Bayerische Motoren Werke (BMW). We think Toyota
is a good example of the industry's best companies that offer many attractive
features. A weak U.S. consumer environment and currency headwinds from the
strengthening yen depressed the company's earnings multiple to its lowest level
in two decades during the period. However, Toyota has a strong track record of
profitability throughout various economic cycles, has been an effective
cost-cutter, has a disciplined and conservative management team, and has
established itself as an industry leader in terms of volume, sales and
technology. It also is a proven leader in the development of fuel-efficient
cars, a competitive advantage that we believe should continue to benefit the
company as the industry evolves away from gasoline-powered vehicles.
Currently, however, the world remains reliant on carbon-based fuels, and
increased energy demand from emerging market economies boosted oil prices and
energy stocks during the year under review. Much of the sector traded on oil
price momentum, and the limited availability of bargain opportunities led us to
an underweighted position relative to the benchmark. Nonetheless, our
(4.) The consumer discretionary sector comprises auto components; automobiles;
distributors; diversified consumer services; hotels, restaurants and
leisure; household durables; Internet and catalog retail; leisure equipment
and products; media; multiline retail; specialty retail; and textiles,
apparel and luxury goods in the SOI.
8 | Annual Report
analysts identified some value in the energy sector, particularly among large,
integrated oil companies, many of which recently traded at levels implying
normalized oil prices of well below $100 per barrel. Although many of these
stocks delivered respectable performance amid the historic climb in oil prices
over the reporting period, their performance significantly lagged that of the
expensive oil-field services and equipment stocks that led sector returns. Thus,
the Fund's energy stocks overall hurt results relative to the benchmark.(5)
However, we believed the industry remained a promising sector over the longer
term and we may begin to uncover additional bargain opportunities given the
sharp pull-back in oil and energy stock prices toward period-end. Interestingly,
despite the sector's momentum-driven attraction to many investors, the Fund's
energy holdings represented the second cheapest sector in the portfolio, and at
fiscal year-end it traded at a substantial discount to the benchmark's energy
sector average. Only the financials sector traded at a lower current earnings
multiple, and our analysis indicated that our energy holdings' future cash flow
and earnings profile would likely be more sustainable than that of most
financials, which were earning at peak levels and where future earnings could
likely fall rather notably. Furthermore, we believed our energy stocks have good
valuation support in the form of high dividend yields. In fact, at period-end,
these holdings offered an average dividend yield that was roughly 40% higher
than the average dividend yield of the MSCI World Index's energy sector
holdings.(1)
Consumer staples and utilities were two sectors that also benefited from the
recent commodity price rise.(6) However, our analysis indicated that these
sectors generally remained expensive. Although our holdings' absolute returns in
these sectors outperformed the benchmark's during the period under review, the
Fund's weightings were very small, and the Fund's relative performance suffered
as a result. We believed that our cautious avoidance of these expensive sectors
could be rewarded in time, and we were more focused on finding opportunities
elsewhere.
Health care and information technology were two good examples of out-of-favor
sectors that we believed offered exciting value opportunities for long-term
investors.(7) Our overweighted allocations to these sectors benefited relative
performance during the turbulent year under review. Health care
TOP 10 EQUITY HOLDINGS
8/31/08
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------ ----------
Microsoft Corp. 3.2%
SOFTWARE, U.S.
Siemens AG 2.8%
INDUSTRIAL CONGLOMERATES, GERMANY
Oracle Corp. 2.7%
SOFTWARE, U.S.
Accenture Ltd., A 2.6%
IT SERVICES, U.S.
Amgen Inc. 2.5%
BIOTECHNOLOGY, U.S.
Pfizer Inc. 2.4%
PHARMACEUTICALS, U.S.
General Electric Co. 2.3%
INDUSTRIAL CONGLOMERATES, U.S.
News Corp., A 2.1%
MEDIA, U.S.
Time Warner Inc. 2.1%
MEDIA, U.S.
Total SA, B 2.0%
OIL, GAS & CONSUMABLE FUELS, FRANCE
(5.) The energy sector comprises energy equipment and services; and oil, gas and
consumable fuels in the SOI.
(6.) The consumer staples sector comprises beverages, food and staples
retailing, food products, household products, personal products, and
tobacco in the SOI. The utilities sector comprises electric utilities, gas
utilities, independent power producers and energy traders, multi-utilities,
and water utilities in the SOI.
(7.) The health care sector comprises biotechnology, health care equipment and
supplies, health care providers and services, and pharmaceuticals in the
SOI. The information technology sector comprises communications equipment,
computers and peripherals, electronic equipment and instruments, Internet
software and services, IT services, office electronics, semiconductor
equipment and products, semiconductors and semiconductor equipment, and
software in the SOI.
Annual Report | 9
stocks, particularly pharmaceuticals companies, attained low valuations in a
multi-year downturn as concerns over pricing pressures, pipeline productivity,
political headwinds, and competition from generics shaped the sector's tepid
consensus outlook. At period-end, the MSCI All Country (AC) World
Pharmaceuticals Index traded near its lowest-ever earnings multiple, which
offered support on the downside and also plenty of upside potential for future
multiple expansion should earnings growth exceed low current expectations.(8)
This appeared reasonable to us over the long-term given favorable demographic
trends. Four of the period's biggest contributors to absolute performance were
health care companies, including the U.S. biopharmaceutical company Amgen,
which was the period's top contributor. Safety concerns surrounding two products
and a patent challenge from Roche pressured the stock last year and shifted
investor focus away from the company's strong financials, bargain valuation, and
track record of successful drug development. During the reporting period, the
stock price rose due to promising late-stage drug trials, which narrowed the
valuation discount somewhat, although the long-term outlook looked promising to
us. At the Fund's fiscal year-end, the stock traded at 15 times next year's
projected earnings, a low multiple in the biotechnology sector, and one that
excluded the potential value of the company's pipeline.
Another four of our top 10 contributing stocks were information technology
companies.(7) Not usually associated with value investing, the "fallen growth"
sector of information technology began taking on the low-valuation, high
cash-flow profile of traditional value sectors several years after the
technology bubble burst in 2001. After many of the formerly high-flying stocks
were abandoned by many of the same investors who had bid up their valuations,
our analysts sought to identify a number of underappreciated stocks trading at
significant discounts to our assessment of their future earnings potential.
According to our analysis, many of the world's best technology companies emerged
stronger from their post-bubble restructuring periods and were underpriced in
relation to their balance sheet health, growth potential and broad exposure to
fast-growing global consumer markets. Oracle and SAP, two of the world's largest
business software providers, were among our top 10 contributors. These companies
benefited from investors' apparent anticipation that their globally diversified
and largely recurring income streams could insulate the companies somewhat from
slowing U.S. economic growth.
(8.) The MSCI AC World Pharmaceuticals Index is a capitalization-weighted index
that monitors the performance of pharmaceutical stocks around the world.
10 | Annual Report
At period-end, we remained committed to the long-term value strategy that
Templeton has employed through various market cycles for more than 50 years.
Consistent with our strategy, we believed we were well positioned if a
fundamentals-driven equity market returns. We were encouraged near the end of
the reporting period by market activity that we believed could amount to the
initial stages of a more protracted pullback in some of the most over-extended
sectors such as cyclical industrials and commodities, and a rotation into the
market's more depressed sectors, including consumer, health care and technology
stocks. Ongoing fundamental economic imbalances, however, could support elevated
commodity prices over the longer term, and their recent weakness could be
attributable to a mere correction in a sector where momentum temporarily
overshot fundamentals. We considered the pullback as a positive sign for the
Fund's year-end positioning.
The ongoing credit crisis is certainly of intermediate-term concern and it is
difficult to forecast the end of the severe systemic deleveraging currently
being experienced by financial institutions. We remain watchful for signs of
moderation in the liquidity crunch impacting global financial markets, including
narrowing credit spreads, fewer bank write-downs, and a resurgence of merger and
acquisition activity amid the recent low-valuation environment. Perhaps most
important to the recovery is a stabilization in the U.S. housing market.
Although we have yet to see any clear signs of steadier asset prices in this
sector, lower prices should eventually trigger the clearing of the housing
oversupply, and we think it is somewhat encouraging that a number of prominent
bargain hunters have begun making forays into the beleaguered market. At
Templeton, the focus remains on our value discipline. We believe the best
bargains can be found during difficult times, and we continue our fundamental
analysis efforts to take advantage of the opportunities that recent market
turmoil has presented. We are pleased with the overall positioning of the Fund
and believe we are well prepared to capitalize on the possible future
convergence of valuation disparities.
Annual Report | 11
Thank you for investing in Templeton Growth Fund. We welcome your comments and
look forward to serving your future investment needs.
(PHOTO OF CINDY L. SWEETING)
/s/ Cindy L. Sweeting
Cindy L. Sweeting, CFA
(PHOTO OF LISA F. MYERS)
/s/ Lisa F. Myers
Lisa F. Myers, J.D., CFA
(PHOTO OF TUCKER SCOTT)
/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 AUGUST 31, 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.
12 | Annual Report
Performance Summary as of 8/31/08
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 and graphs do not reflect any taxes
that a shareholder would pay on Fund dividends, capital gain distributions, if
any, or any realized gains on the sale of Fund shares. Total return reflects
reinvestment of the Fund's dividends and capital gain distributions, if any, and
any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: TEPLX) CHANGE 8/31/08 8/31/07
- ----------------------- ------ ------- -------
Net Asset Value (NAV) -$6.33 $19.82 $26.15
DISTRIBUTIONS (9/1/07-8/31/08)
Dividend Income $0.3725
Short-Term Capital Gain $0.1173
Long-Term Capital Gain $1.6883
TOTAL $2.1781
CLASS B (SYMBOL: TMGBX) CHANGE 8/31/08 8/31/07
- ----------------------- ------ ------- -------
Net Asset Value (NAV) -$6.21 $19.34 $25.55
DISTRIBUTIONS (9/1/07-8/31/08)
Dividend Income $0.1660
Short-Term Capital Gain $0.1173
Long-Term Capital Gain $1.6883
TOTAL $1.9716
CLASS C (SYMBOL: TEGTX) CHANGE 8/31/08 8/31/07
- ----------------------- ------ ------- -------
Net Asset Value (NAV) -$6.20 $19.20 $25.40
DISTRIBUTIONS (9/1/07-8/31/08)
Dividend Income $0.1841
Short-Term Capital Gain $0.1173
Long-Term Capital Gain $1.6883
TOTAL $1.9897
CLASS R (SYMBOL: TEGRX) CHANGE 8/31/08 8/31/07
- ----------------------- ------ ------- -------
Net Asset Value (NAV) -$6.28 $19.60 $25.88
DISTRIBUTIONS (9/1/07-8/31/08)
Dividend Income $0.3068
Short-Term Capital Gain $0.1173
Long-Term Capital Gain $1.6883
TOTAL $2.1124
Annual Report | 13
Performance Summary (CONTINUED)
PRICE AND DISTRIBUTION INFORMATION (CONTINUED)
ADVISOR CLASS (SYMBOL: TGADX) CHANGE 8/31/08 8/31/07
- ----------------------------- ------ ------- -------
Net Asset Value (NAV) -$6.35 $19.87 $26.22
DISTRIBUTIONS (9/1/07-8/31/08)
Dividend Income $0.4382
Short-Term Capital Gain $0.1173
Long-Term Capital Gain $1.6883
TOTAL $2.2438
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.
CLASS A 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- --------
Cumulative Total Return(1) -17.43% +48.04% +134.61%
Average Annual Total Return(2) -22.19% +6.89% +8.26%
Value of $10,000 Investment(3) $ 7,781 $13,953 $ 22,117
Avg. Ann. Total Return
(9/30/08)(4) -33.26% +4.21% +6.66%
Total Annual
Operating Expenses(5) 1.01%
CLASS B 1-YEAR 5-YEAR INCEPTION (1/1/99)
- ------- ------- ------- ------------------
Cumulative Total Return(1) -18.07% +42.58% +96.06%
Average Annual Total Return(2) -21.10% +7.05% +7.21%
Value of $10,000 Investment(3) $ 7,890 $14,058 $19,606
Avg. Ann. Total Return
(9/30/08)(4) -32.31% +4.35% +5.80%
Total Annual
Operating Expenses(5) 1.76%
CLASS C 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- --------
Cumulative Total Return(1) -18.08% +42.59% +117.67%
Average Annual Total Return(2) -18.84% +7.35% +8.09%
Value of $10,000 Investment(3) $ 8,116 $14,259 $ 21,767
Avg. Ann. Total Return
(9/30/08)(4) -30.34% +4.67% +6.50%
Total Annual
Operating Expenses(5) 1.76%
14 | Annual Report
Performance Summary (CONTINUED)
PERFORMANCE (CONTINUED)
CLASS R 1-YEAR 5-YEAR INCEPTION (1/1/02)
- ------- ------- ------- ------------------
Cumulative Total Return(1) -17.64% +46.22% +52.82%
Average Annual Total Return(2) -17.64% +7.89% +6.57%
Value of $10,000 Investment(3) $ 8,236 $14,622 $15,282
Avg. Ann. Total Return
(9/30/08)(4) -29.39% +5.18% +7.00%
Total Annual
Operating Expenses(5) 1.26%
ADVISOR CLASS 1-YEAR 5-YEAR 10-YEAR
- ------------- ------- ------- -------
Cumulative Total Return(1) -17.24% +49.90% +140.80%
Average Annual Total Return(2) -17.24% +8.43% +9.19%
Value of $10,000 Investment(3) $ 8,276 $14,990 $ 24,080
Avg. Ann. Total Return
(9/30/08)(4) -29.04% +5.69% +7.57%
Total Annual
Operating Expenses(5) 0.76%
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 (800) 342-5236.
Annual Report | 15
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes any current, applicable, maximum sales charge, Fund expenses,
account fees and reinvested distributions. The unmanaged index includes
reinvestment of any income or distributions. It differs from the Fund in
composition and does not pay management fees or expenses. One cannot invest
directly in an index.
AVERAGE ANNUAL TOTAL RETURN
CLASS A 8/31/08
- ------- -------
1-Year -22.19%
5-Year +6.89%
10-Year +8.26%
CLASS A (9/1/98-8/31/08)
(PERFORMANCE GRAPH)
TEMPLETON GROWTH
DATE FUND - CLASS A MSCI WORLD INDEX CPI
---- ---------------- ---------------- -------
9/1/1998 $ 9,427 $10,000 $10,000
9/30/1998 $ 9,663 $10,179 $10,012
10/31/1998 $10,486 $11,101 $10,037
11/30/1998 $10,862 $11,762 $10,037
12/31/1998 $10,629 $12,339 $10,031
1/31/1999 $10,551 $12,611 $10,055
2/28/1999 $10,473 $12,277 $10,067
3/31/1999 $11,207 $12,790 $10,098
4/30/1999 $12,596 $13,296 $10,171
5/31/1999 $12,141 $12,812 $10,171
6/30/1999 $12,706 $13,411 $10,171
7/31/1999 $12,693 $13,373 $10,202
8/31/1999 $12,700 $13,351 $10,226
9/30/1999 $12,245 $13,223 $10,275
10/31/1999 $12,256 $13,912 $10,294
11/30/1999 $12,800 $14,306 $10,300
12/31/1999 $13,864 $15,465 $10,300
1/31/2000 $12,912 $14,582 $10,330
2/29/2000 $12,474 $14,623 $10,392
3/31/2000 $13,377 $15,635 $10,477
4/30/2000 $13,204 $14,976 $10,483
5/31/2000 $13,447 $14,599 $10,496
6/30/2000 $13,516 $15,092 $10,551
7/31/2000 $13,426 $14,669 $10,575
8/31/2000 $13,669 $15,148 $10,575
9/30/2000 $13,252 $14,344 $10,630
10/31/2000 $13,373 $14,106 $10,649
11/30/2000 $13,291 $13,251 $10,655
12/31/2000 $14,105 $13,468 $10,649
1/31/2001 $14,296 $13,729 $10,716
2/28/2001 $14,105 $12,570 $10,759
3/31/2001 $13,445 $11,747 $10,783
4/30/2001 $13,990 $12,618 $10,826
5/31/2001 $14,266 $12,462 $10,875
6/30/2001 $14,005 $12,073 $10,894
7/31/2001 $13,951 $11,914 $10,863
8/31/2001 $13,890 $11,344 $10,863
9/30/2001 $12,709 $10,346 $10,912
10/31/2001 $13,128 $10,546 $10,875
11/30/2001 $13,957 $11,171 $10,857
12/31/2001 $14,181 $11,243 $10,814
1/31/2002 $13,873 $10,903 $10,838
2/28/2002 $14,149 $10,811 $10,881
3/31/2002 $14,677 $11,291 $10,942
4/30/2002 $14,756 $10,911 $11,004
5/31/2002 $15,063 $10,937 $11,004
6/30/2002 $14,449 $10,275 $11,010
7/31/2002 $13,464 $ 9,411 $11,022
8/31/2002 $13,472 $ 9,430 $11,059
9/30/2002 $11,998 $ 8,395 $11,077
10/31/2002 $12,614 $ 9,016 $11,095
11/30/2002 $13,439 $ 9,504 $11,095
12/31/2002 $12,837 $ 9,046 $11,071
1/31/2003 $12,579 $ 8,772 $11,120
2/28/2003 $12,152 $ 8,622 $11,206
3/31/2003 $11,878 $ 8,598 $11,273
4/30/2003 $12,998 $ 9,366 $11,248
5/31/2003 $14,022 $ 9,906 $11,230
6/30/2003 $14,279 $10,081 $11,242
7/31/2003 $14,602 $10,288 $11,255
8/31/2003 $14,940 $10,513 $11,297
9/30/2003 $14,989 $10,579 $11,334
10/31/2003 $15,628 $11,209 $11,322
11/30/2003 $16,013 $11,383 $11,291
12/31/2003 $17,054 $12,100 $11,279
1/31/2004 $17,409 $12,296 $11,334
2/29/2004 $17,846 $12,507 $11,395
3/31/2004 $17,574 $12,429 $11,469
4/30/2004 $17,417 $12,181 $11,506
5/31/2004 $17,516 $12,300 $11,573
6/30/2004 $17,830 $12,558 $11,610
7/31/2004 $17,269 $12,152 $11,591
8/31/2004 $17,351 $12,210 $11,597
9/30/2004 $17,772 $12,445 $11,622
10/31/2004 $18,195 $12,752 $11,683
11/30/2004 $19,306 $13,428 $11,689
12/31/2004 $19,953 $13,944 $11,646
1/31/2005 $19,465 $13,633 $11,671
2/28/2005 $20,328 $14,071 $11,738
3/31/2005 $20,014 $13,804 $11,830
4/30/2005 $19,604 $13,513 $11,909
5/31/2005 $19,683 $13,763 $11,897
6/30/2005 $19,944 $13,888 $11,903
7/31/2005 $20,459 $14,377 $11,958
8/31/2005 $20,772 $14,492 $12,020
9/30/2005 $21,182 $14,872 $12,166
10/31/2005 $20,464 $14,514 $12,191
11/30/2005 $20,859 $15,006 $12,093
12/31/2005 $21,579 $15,342 $12,044
1/31/2006 $22,378 $16,030 $12,136
2/28/2006 $22,397 $16,013 $12,160
3/31/2006 $22,773 $16,372 $12,228
4/30/2006 $23,573 $16,878 $12,332
5/31/2006 $22,961 $16,317 $12,393
6/30/2006 $22,961 $16,319 $12,417
7/31/2006 $23,244 $16,424 $12,454
8/31/2006 $23,789 $16,859 $12,479
9/30/2006 $24,269 $17,065 $12,417
10/31/2006 $25,022 $17,694 $12,350
11/30/2006 $25,704 $18,137 $12,332
12/31/2006 $26,285 $18,511 $12,350
1/31/2007 $26,561 $18,733 $12,388
2/28/2007 $26,131 $18,643 $12,454
3/31/2007 $26,469 $18,992 $12,567
4/30/2007 $27,657 $19,841 $12,649
5/31/2007 $28,221 $20,417 $12,726
6/30/2007 $28,098 $20,266 $12,751
7/31/2007 $27,115 $19,822 $12,748
8/31/2007 $26,787 $19,815 $12,724
9/30/2007 $27,596 $20,764 $12,759
10/31/2007 $28,263 $21,406 $12,787
11/30/2007 $27,243 $20,540 $12,863
12/31/2007 $26,860 $20,281 $12,854
1/31/2008 $24,795 $18,736 $12,918
2/29/2008 $24,014 $18,637 $12,956
3/31/2008 $23,690 $18,467 $13,068
4/30/2008 $24,762 $19,453 $13,147
5/31/2008 $24,951 $19,773 $13,258
6/30/2008 $22,742 $18,203 $13,391
7/31/2008 $22,474 $17,763 $13,462
8/31/2008 $22,117 $17,522 $13,408
AVERAGE ANNUAL TOTAL RETURN
CLASS B 8/31/08
- ------- -------
1-Year -21.10%
5-Year +7.05%
Since Inception (1/1/99) +7.21%
CLASS B (1/1/99-8/31/08)
(PERFORMANCE GRAPH)
TEMPLETON GROWTH
DATE FUND - CLASS B MSCI WORLD INDEX CPI
---- ---------------- ---------------- -------
1/1/1999 $10,000 $10,000 $10,000
1/31/1999 $ 9,927 $10,220 $10,024
2/28/1999 $ 9,847 $ 9,950 $10,037
3/31/1999 $10,525 $10,366 $10,067
4/30/1999 $11,820 $10,776 $10,140
5/31/1999 $11,387 $10,383 $10,140
6/30/1999 $11,906 $10,869 $10,140
7/31/1999 $11,888 $10,838 $10,171
8/31/1999 $11,888 $10,820 $10,195
9/30/1999 $11,454 $10,717 $10,244
10/31/1999 $11,463 $11,275 $10,262
11/30/1999 $11,962 $11,594 $10,268
12/31/1999 $12,945 $12,534 $10,268
1/31/2000 $12,044 $11,818 $10,299
2/29/2000 $11,633 $11,851 $10,360
3/31/2000 $12,468 $12,672 $10,445
4/30/2000 $12,299 $12,137 $10,451
5/31/2000 $12,521 $11,831 $10,464
6/30/2000 $12,579 $12,231 $10,519
7/31/2000 $12,481 $11,889 $10,543
8/31/2000 $12,697 $12,277 $10,543
9/30/2000 $12,305 $11,626 $10,598
10/31/2000 $12,408 $11,432 $10,616
11/30/2000 $12,324 $10,740 $10,622
12/31/2000 $13,070 $10,915 $10,616
1/31/2001 $13,242 $11,127 $10,683
2/28/2001 $13,056 $10,188 $10,726
3/31/2001 $12,439 $ 9,520 $10,750
4/30/2001 $12,934 $10,227 $10,793
5/31/2001 $13,185 $10,100 $10,842
6/30/2001 $12,926 $ 9,785 $10,860
7/31/2001 $12,876 $ 9,656 $10,830
8/31/2001 $12,812 $ 9,194 $10,830
9/30/2001 $11,715 $ 8,385 $10,879
10/31/2001 $12,091 $ 8,547 $10,842
11/30/2001 $12,848 $ 9,054 $10,824
12/31/2001 $13,049 $ 9,112 $10,781
1/31/2002 $12,749 $ 8,837 $10,805
2/28/2002 $12,998 $ 8,761 $10,848
3/31/2002 $13,474 $ 9,151 $10,909
4/30/2002 $13,547 $ 8,843 $10,970
5/31/2002 $13,818 $ 8,864 $10,970
6/30/2002 $13,240 $ 8,328 $10,976
7/31/2002 $12,332 $ 7,627 $10,988
8/31/2002 $12,332 $ 7,643 $11,025
9/30/2002 $10,978 $ 6,804 $11,043
10/31/2002 $11,534 $ 7,307 $11,062
11/30/2002 $12,276 $ 7,703 $11,062
12/31/2002 $11,722 $ 7,331 $11,037
1/31/2003 $11,484 $ 7,110 $11,086
2/28/2003 $11,082 $ 6,988 $11,171
3/31/2003 $10,821 $ 6,969 $11,239
4/30/2003 $11,841 $ 7,591 $11,214
5/31/2003 $12,764 $ 8,029 $11,196
6/30/2003 $12,987 $ 8,170 $11,208
7/31/2003 $13,277 $ 8,338 $11,220
8/31/2003 $13,575 $ 8,520 $11,263
9/30/2003 $13,612 $ 8,574 $11,300
10/31/2003 $14,179 $ 9,085 $11,287
11/30/2003 $14,519 $ 9,225 $11,257
12/31/2003 $15,450 $ 9,806 $11,245
1/31/2004 $15,769 $ 9,966 $11,300
2/29/2004 $16,155 $10,136 $11,361
3/31/2004 $15,898 $10,073 $11,434
4/30/2004 $15,746 $ 9,872 $11,470
5/31/2004 $15,822 $ 9,969 $11,538
6/30/2004 $16,102 $10,178 $11,574
7/31/2004 $15,579 $ 9,848 $11,556
8/31/2004 $15,648 $ 9,895 $11,562
9/30/2004 $16,011 $10,086 $11,586
10/31/2004 $16,390 $10,335 $11,647
11/30/2004 $17,376 $10,883 $11,653
12/31/2004 $17,950 $11,301 $11,611
1/31/2005 $17,496 $11,049 $11,635
2/28/2005 $18,261 $11,404 $11,702
3/31/2005 $17,966 $11,187 $11,794
4/30/2005 $17,592 $10,951 $11,873
5/31/2005 $17,648 $11,154 $11,861
6/30/2005 $17,878 $11,256 $11,867
7/31/2005 $18,324 $11,651 $11,922
8/31/2005 $18,595 $11,745 $11,983
9/30/2005 $18,946 $12,053 $12,129
10/31/2005 $18,289 $11,763 $12,154
11/30/2005 $18,640 $12,161 $12,056
12/31/2005 $19,273 $12,434 $12,007
1/31/2006 $19,973 $12,992 $12,099
2/28/2006 $19,973 $12,978 $12,123
3/31/2006 $20,298 $13,269 $12,190
4/30/2006 $20,998 $13,679 $12,294
5/31/2006 $20,443 $13,224 $12,355
6/30/2006 $20,426 $13,225 $12,379
7/31/2006 $20,665 $13,311 $12,416
8/31/2006 $21,134 $13,663 $12,441
9/30/2006 $21,544 $13,830 $12,379
10/31/2006 $22,206 $14,341 $12,312
11/30/2006 $22,795 $14,699 $12,294
12/31/2006 $23,301 $15,002 $12,312
1/31/2007 $23,546 $15,182 $12,350
2/28/2007 $23,164 $15,109 $12,416
3/31/2007 $23,463 $15,392 $12,529
4/30/2007 $24,517 $16,080 $12,610
5/31/2007 $25,017 $16,547 $12,688
6/30/2007 $24,907 $16,425 $12,712
7/31/2007 $24,035 $16,064 $12,709
8/31/2007 $23,744 $16,059 $12,686
9/30/2007 $24,461 $16,828 $12,721
10/31/2007 $25,051 $17,348 $12,748
11/30/2007 $24,146 $16,647 $12,823
12/31/2007 $23,806 $16,437 $12,815
1/31/2008 $21,975 $15,185 $12,879
2/29/2008 $21,283 $15,104 $12,916
3/31/2008 $20,996 $14,967 $13,028
4/30/2008 $21,945 $15,765 $13,107
5/31/2008 $22,114 $16,025 $13,217
6/30/2008 $20,154 $14,753 $13,351
7/31/2008 $19,917 $14,396 $13,421
8/31/2008 $19,606 $14,201 $13,367
16 | Annual Report
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
CLASS C 8/31/08
- ------- -------
1-Year -18.84%
5-Year +7.35%
10-Year +8.09%
CLASS C (9/1/98-8/31/08)
(PERFORMANCE GRAPH)
TEMPLETON GROWTH
DATE FUND - CLASS C MSCI WORLD INDEX CPI
---- ---------------- ---------------- -------
9/1/1998 $10,000 $10,000 $10,000
9/30/1998 $10,242 $10,179 $10,012
10/31/1998 $11,107 $11,101 $10,037
11/30/1998 $11,498 $11,762 $10,037
12/31/1998 $11,247 $12,339 $10,031
1/31/1999 $11,156 $12,611 $10,055
2/28/1999 $11,072 $12,277 $10,067
3/31/1999 $11,833 $12,790 $10,098
4/30/1999 $13,292 $13,296 $10,171
5/31/1999 $12,804 $12,812 $10,171
6/30/1999 $13,390 $13,411 $10,171
7/31/1999 $13,376 $13,373 $10,202
8/31/1999 $13,369 $13,351 $10,226
9/30/1999 $12,887 $13,223 $10,275
10/31/1999 $12,890 $13,912 $10,294
11/30/1999 $13,449 $14,306 $10,300
12/31/1999 $14,559 $15,465 $10,300
1/31/2000 $13,551 $14,582 $10,330
2/29/2000 $13,078 $14,623 $10,392
3/31/2000 $14,025 $15,635 $10,477
4/30/2000 $13,833 $14,976 $10,483
5/31/2000 $14,077 $14,599 $10,496
6/30/2000 $14,144 $15,092 $10,551
7/31/2000 $14,040 $14,669 $10,575
8/31/2000 $14,277 $15,148 $10,575
9/30/2000 $13,833 $14,344 $10,630
10/31/2000 $13,957 $14,106 $10,649
11/30/2000 $13,863 $13,251 $10,655
12/31/2000 $14,698 $13,468 $10,649
1/31/2001 $14,893 $13,729 $10,716
2/28/2001 $14,682 $12,570 $10,759
3/31/2001 $13,991 $11,747 $10,783
4/30/2001 $14,544 $12,618 $10,826
5/31/2001 $14,828 $12,462 $10,875
6/30/2001 $14,544 $12,073 $10,894
7/31/2001 $14,479 $11,914 $10,863
8/31/2001 $14,405 $11,344 $10,863
9/30/2001 $13,170 $10,346 $10,912
10/31/2001 $13,597 $10,546 $10,875
11/30/2001 $14,454 $11,171 $10,857
12/31/2001 $14,672 $11,243 $10,814
1/31/2002 $14,340 $10,903 $10,838
2/28/2002 $14,622 $10,811 $10,881
3/31/2002 $15,152 $11,291 $10,942
4/30/2002 $15,235 $10,911 $11,004
5/31/2002 $15,541 $10,937 $11,004
6/30/2002 $14,887 $10,275 $11,010
7/31/2002 $13,868 $ 9,411 $11,022
8/31/2002 $13,868 $ 9,430 $11,059
9/30/2002 $12,344 $ 8,395 $11,077
10/31/2002 $12,970 $ 9,016 $11,095
11/30/2002 $13,809 $ 9,504 $11,095
12/31/2002 $13,180 $ 9,046 $11,071
1/31/2003 $12,910 $ 8,772 $11,120
2/28/2003 $12,465 $ 8,622 $11,206
3/31/2003 $12,170 $ 8,598 $11,273
4/30/2003 $13,314 $ 9,366 $11,248
5/31/2003 $14,357 $ 9,906 $11,230
6/30/2003 $14,609 $10,081 $11,242
7/31/2003 $14,929 $10,288 $11,255
8/31/2003 $15,265 $10,513 $11,297
9/30/2003 $15,308 $10,579 $11,334
10/31/2003 $15,944 $11,209 $11,322
11/30/2003 $16,328 $11,383 $11,291
12/31/2003 $17,379 $12,100 $11,279
1/31/2004 $17,730 $12,296 $11,334
2/29/2004 $18,175 $12,507 $11,395
3/31/2004 $17,884 $12,429 $11,469
4/30/2004 $17,713 $12,181 $11,506
5/31/2004 $17,799 $12,300 $11,573
6/30/2004 $18,107 $12,558 $11,610
7/31/2004 $17,525 $12,152 $11,591
8/31/2004 $17,602 $12,210 $11,597
9/30/2004 $18,013 $12,445 $11,622
10/31/2004 $18,434 $12,752 $11,683
11/30/2004 $19,538 $13,428 $11,689
12/31/2004 $20,186 $13,944 $11,646
1/31/2005 $19,674 $13,633 $11,671
2/28/2005 $20,537 $14,071 $11,738
3/31/2005 $20,204 $13,804 $11,830
4/30/2005 $19,781 $13,513 $11,909
5/31/2005 $19,853 $13,763 $11,897
6/30/2005 $20,105 $13,888 $11,903
7/31/2005 $20,609 $14,377 $11,958
8/31/2005 $20,905 $14,492 $12,020
9/30/2005 $21,310 $14,872 $12,166
10/31/2005 $20,573 $14,514 $12,191
11/30/2005 $20,961 $15,006 $12,093
12/31/2005 $21,668 $15,342 $12,044
1/31/2006 $22,459 $16,030 $12,136
2/28/2006 $22,459 $16,013 $12,160
3/31/2006 $22,826 $16,372 $12,228
4/30/2006 $23,608 $16,878 $12,332
5/31/2006 $22,990 $16,317 $12,393
6/30/2006 $22,971 $16,319 $12,417
7/31/2006 $23,241 $16,424 $12,454
8/31/2006 $23,772 $16,859 $12,479
9/30/2006 $24,235 $17,065 $12,417
10/31/2006 $24,974 $17,694 $12,350
11/30/2006 $25,641 $18,137 $12,332
12/31/2006 $26,206 $18,511 $12,350
1/31/2007 $26,457 $18,733 $12,388
2/28/2007 $26,017 $18,643 $12,454
3/31/2007 $26,342 $18,992 $12,567
4/30/2007 $27,503 $19,841 $12,649
5/31/2007 $28,047 $20,417 $12,726
6/30/2007 $27,900 $20,266 $12,751
7/31/2007 $26,906 $19,822 $12,748
8/31/2007 $26,572 $19,815 $12,724
9/30/2007 $27,346 $20,764 $12,759
10/31/2007 $27,991 $21,406 $12,787
11/30/2007 $26,976 $20,540 $12,863
12/31/2007 $26,574 $20,281 $12,854
1/31/2008 $24,510 $18,736 $12,918
2/29/2008 $23,740 $18,637 $12,956
3/31/2008 $23,399 $18,467 $13,068
4/30/2008 $24,442 $19,453 $13,147
5/31/2008 $24,612 $19,773 $13,258
6/30/2008 $22,424 $18,203 $13,391
7/31/2008 $22,141 $17,763 $13,462
8/31/2008 $21,767 $17,522 $13,408
AVERAGE ANNUAL TOTAL RETURN
CLASS R 8/31/08
- ------- -------
1-Year -17.64%
5-Year +7.89%
Since Inception (1/1/02) +6.57%
CLASS R (1/1/02-8/31/08)
(PERFORMANCE GRAPH)
TEMPLETON GROWTH
DATE FUND - CLASS R MSCI WORLD INDEX CPI
---- ---------------- ---------------- -------
1/1/2002 $10,000 $10,000 $10,000
1/31/2002 $ 9,745 $ 9,698 $10,023
2/28/2002 $ 9,944 $ 9,616 $10,062
3/31/2002 $10,309 $10,043 $10,119
4/30/2002 $10,365 $ 9,705 $10,175
5/31/2002 $10,581 $ 9,728 $10,175
6/30/2002 $10,144 $ 9,140 $10,181
7/31/2002 $ 9,446 $ 8,370 $10,192
8/31/2002 $ 9,451 $ 8,388 $10,226
9/30/2002 $ 8,416 $ 7,467 $10,243
10/31/2002 $ 8,846 $ 8,020 $10,260
11/30/2002 $ 9,416 $ 8,454 $10,260
12/31/2002 $ 8,995 $ 8,046 $10,238
1/31/2003 $ 8,813 $ 7,803 $10,283
2/28/2003 $ 8,512 $ 7,669 $10,362
3/31/2003 $ 8,314 $ 7,648 $10,424
4/30/2003 $ 9,102 $ 8,331 $10,402
5/31/2003 $ 9,816 $ 8,811 $10,385
6/30/2003 $ 9,992 $ 8,967 $10,396
7/31/2003 $10,218 $ 9,151 $10,407
8/31/2003 $10,451 $ 9,351 $10,447
9/30/2003 $10,484 $ 9,410 $10,481
10/31/2003 $10,927 $ 9,970 $10,470
11/30/2003 $11,193 $10,125 $10,441
12/31/2003 $11,922 $10,762 $10,430
1/31/2004 $12,165 $10,937 $10,481
2/29/2004 $12,472 $11,124 $10,538
3/31/2004 $12,281 $11,055 $10,606
4/30/2004 $12,165 $10,835 $10,640
5/31/2004 $12,229 $10,941 $10,702
6/30/2004 $12,449 $11,170 $10,736
7/31/2004 $12,055 $10,808 $10,719
8/31/2004 $12,107 $10,860 $10,724
9/30/2004 $12,397 $11,069 $10,747
10/31/2004 $12,693 $11,343 $10,804
11/30/2004 $13,460 $11,944 $10,809
12/31/2004 $13,911 $12,403 $10,770
1/31/2005 $13,568 $12,126 $10,792
2/28/2005 $14,168 $12,516 $10,855
3/31/2005 $13,948 $12,278 $10,939
4/30/2005 $13,660 $12,019 $11,013
5/31/2005 $13,710 $12,242 $11,002
6/30/2005 $13,893 $12,353 $11,007
7/31/2005 $14,247 $12,788 $11,058
8/31/2005 $14,461 $12,890 $11,115
9/30/2005 $14,742 $13,228 $11,251
10/31/2005 $14,238 $12,910 $11,273
11/30/2005 $14,515 $13,347 $11,183
12/31/2005 $15,008 $13,646 $11,138
1/31/2006 $15,562 $14,258 $11,222
2/28/2006 $15,568 $14,243 $11,245
3/31/2006 $15,832 $14,563 $11,307
4/30/2006 $16,380 $15,013 $11,404
5/31/2006 $15,951 $14,513 $11,460
6/30/2006 $15,951 $14,515 $11,483
7/31/2006 $16,142 $14,609 $11,517
8/31/2006 $16,518 $14,995 $11,539
9/30/2006 $16,847 $15,179 $11,483
10/31/2006 $17,369 $15,739 $11,420
11/30/2006 $17,840 $16,132 $11,404
12/31/2006 $18,239 $16,465 $11,420
1/31/2007 $18,426 $16,662 $11,455
2/28/2007 $18,125 $16,582 $11,517
3/31/2007 $18,354 $16,893 $11,622
4/30/2007 $19,179 $17,648 $11,697
5/31/2007 $19,566 $18,160 $11,768
6/30/2007 $19,473 $18,026 $11,791
7/31/2007 $18,784 $17,631 $11,788
8/31/2007 $18,555 $17,625 $11,767
9/30/2007 $19,114 $18,469 $11,799
10/31/2007 $19,569 $19,040 $11,824
11/30/2007 $18,863 $18,270 $11,895
12/31/2007 $18,594 $18,040 $11,887
1/31/2008 $17,160 $16,665 $11,946
2/29/2008 $16,622 $16,577 $11,980
3/31/2008 $16,389 $16,426 $12,084
4/30/2008 $17,129 $17,303 $12,157
5/31/2008 $17,262 $17,588 $12,260
6/30/2008 $15,726 $16,191 $12,383
7/31/2008 $15,538 $15,800 $12,448
8/31/2008 $15,282 $15,585 $12,399
Annual Report | 17
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
ADVISOR CLASS 8/31/08
- ------------- -------
1-Year -17.24%
5-Year +8.43%
10-Year +9.19%
ADVISOR CLASS (9/1/98-8/31/08)
(PERFORMANCE GRAPH)
TEMPLETON GROWTH
FUND -
DATE ADVISOR CLASS MSCI WORLD INDEX CPI
---- ---------------- ---------------- -------
9/1/1998 $10,000 $10,000 $10,000
9/30/1998 $10,256 $10,179 $10,012
10/31/1998 $11,131 $11,101 $10,037
11/30/1998 $11,531 $11,762 $10,037
12/31/1998 $11,290 $12,339 $10,031
1/31/1999 $11,214 $12,611 $10,055
2/28/1999 $11,131 $12,277 $10,067
3/31/1999 $11,910 $12,790 $10,098
4/30/1999 $13,392 $13,296 $10,171
5/31/1999 $12,916 $12,812 $10,171
6/30/1999 $13,516 $13,411 $10,171
7/31/1999 $13,509 $13,373 $10,202
8/31/1999 $13,516 $13,351 $10,226
9/30/1999 $13,041 $13,223 $10,275
10/31/1999 $13,050 $13,912 $10,294
11/30/1999 $13,636 $14,306 $10,300
12/31/1999 $14,772 $15,465 $10,300
1/31/2000 $13,759 $14,582 $10,330
2/29/2000 $13,293 $14,623 $10,392
3/31/2000 $14,262 $15,635 $10,477
4/30/2000 $14,077 $14,976 $10,483
5/31/2000 $14,343 $14,599 $10,496
6/30/2000 $14,417 $15,092 $10,551
7/31/2000 $14,321 $14,669 $10,575
8/31/2000 $14,587 $15,148 $10,575
9/30/2000 $14,143 $14,344 $10,630
10/31/2000 $14,276 $14,106 $10,649
11/30/2000 $14,188 $13,251 $10,655
12/31/2000 $15,061 $13,468 $10,649
1/31/2001 $15,274 $13,729 $10,716
2/28/2001 $15,069 $12,570 $10,759
3/31/2001 $14,373 $11,747 $10,783
4/30/2001 $14,946 $12,618 $10,826
5/31/2001 $15,258 $12,462 $10,875
6/30/2001 $14,971 $12,073 $10,894
7/31/2001 $14,922 $11,914 $10,863
8/31/2001 $14,865 $11,344 $10,863
9/30/2001 $13,595 $10,346 $10,912
10/31/2001 $14,052 $10,546 $10,875
11/30/2001 $14,948 $11,171 $10,857
12/31/2001 $15,190 $11,243 $10,814
1/31/2002 $14,853 $10,903 $10,838
2/28/2002 $15,157 $10,811 $10,881
3/31/2002 $15,722 $11,291 $10,942
4/30/2002 $15,815 $10,911 $11,004
5/31/2002 $16,152 $10,937 $11,004
6/30/2002 $15,486 $10,275 $11,010
7/31/2002 $14,431 $ 9,411 $11,022
8/31/2002 $14,448 $ 9,430 $11,059
9/30/2002 $12,871 $ 8,395 $11,077
10/31/2002 $13,538 $ 9,016 $11,095
11/30/2002 $14,416 $ 9,504 $11,095
12/31/2002 $13,781 $ 9,046 $11,071
1/31/2003 $13,504 $ 8,772 $11,120
2/28/2003 $13,054 $ 8,622 $11,206
3/31/2003 $12,760 $ 8,598 $11,273
4/30/2003 $13,963 $ 9,366 $11,248
5/31/2003 $15,070 $ 9,906 $11,230
6/30/2003 $15,347 $10,081 $11,242
7/31/2003 $15,693 $10,288 $11,255
8/31/2003 $16,065 $10,513 $11,297
9/30/2003 $16,125 $10,579 $11,334
10/31/2003 $16,810 $11,209 $11,322
11/30/2003 $17,224 $11,383 $11,291
12/31/2003 $18,349 $12,100 $11,279
1/31/2004 $18,739 $12,296 $11,334
2/29/2004 $19,219 $12,507 $11,395
3/31/2004 $18,926 $12,429 $11,469
4/30/2004 $18,757 $12,181 $11,506
5/31/2004 $18,864 $12,300 $11,573
6/30/2004 $19,210 $12,558 $11,610
7/31/2004 $18,606 $12,152 $11,591
8/31/2004 $18,704 $12,210 $11,597
9/30/2004 $19,157 $12,445 $11,622
10/31/2004 $19,626 $12,752 $11,683
11/30/2004 $20,823 $13,428 $11,689
12/31/2004 $21,519 $13,944 $11,646
1/31/2005 $21,002 $13,633 $11,671
2/28/2005 $21,932 $14,071 $11,738
3/31/2005 $21,603 $13,804 $11,830
4/30/2005 $21,161 $13,513 $11,909
5/31/2005 $21,255 $13,763 $11,897
6/30/2005 $21,538 $13,888 $11,903
7/31/2005 $22,102 $14,377 $11,958
8/31/2005 $22,440 $14,492 $12,020
9/30/2005 $22,891 $14,872 $12,166
10/31/2005 $22,114 $14,514 $12,191
11/30/2005 $22,551 $15,006 $12,093
12/31/2005 $23,337 $15,342 $12,044
1/31/2006 $24,211 $16,030 $12,136
2/28/2006 $24,232 $16,013 $12,160
3/31/2006 $24,649 $16,372 $12,228
4/30/2006 $25,513 $16,878 $12,332
5/31/2006 $24,862 $16,317 $12,393
6/30/2006 $24,862 $16,319 $12,417
7/31/2006 $25,177 $16,424 $12,454
8/31/2006 $25,767 $16,859 $12,479
9/30/2006 $26,296 $17,065 $12,417
10/31/2006 $27,120 $17,694 $12,350
11/30/2006 $27,870 $18,137 $12,332
12/31/2006 $28,499 $18,511 $12,350
1/31/2007 $28,810 $18,733 $12,388
2/28/2007 $28,344 $18,643 $12,454
3/31/2007 $28,721 $18,992 $12,567
4/30/2007 $30,008 $19,841 $12,649
5/31/2007 $30,630 $20,417 $12,726
6/30/2007 $30,508 $20,266 $12,751
7/31/2007 $29,442 $19,822 $12,748
8/31/2007 $29,098 $19,815 $12,724
9/30/2007 $29,975 $20,764 $12,759
10/31/2007 $30,704 $21,406 $12,787
11/30/2007 $29,610 $20,540 $12,863
12/31/2007 $29,195 $20,281 $12,854
1/31/2008 $26,953 $18,736 $12,918
2/29/2008 $26,117 $18,637 $12,956
3/31/2008 $25,765 $18,467 $13,068
4/30/2008 $26,941 $19,453 $13,147
5/31/2008 $27,159 $19,773 $13,258
6/30/2008 $24,759 $18,203 $13,391
7/31/2008 $24,468 $17,763 $13,462
8/31/2008 $24,080 $17,522 $13,408
ENDNOTES
SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
FLUCTUATIONS, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS. INVESTMENTS IN
DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN
ADDITION TO THOSE ASSOCIATED WITH THESE MARKETS' SMALLER SIZE AND LESSER
LIQUIDITY. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN
INVESTMENT RISKS.
CLASS B: These shares have higher annual fees and expenses than Class A
shares.
CLASS C: Prior to 1/1/04, these shares were offered with an initial sales
charge; thus actual total returns would have differed. These
shares have higher annual fees and expenses than Class A shares.
CLASS R: Shares are available to certain eligible investors as described
in the prospectus. These shares have higher annual fees and
expenses than Class A shares.
ADVISOR CLASS: Shares are available to certain eligible investors as described
in the prospectus.
1. Cumulative total return represents the change in value of an investment
over the periods indicated.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated.
3. These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated.
4. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
5. Figures are as stated in the Fund's prospectus current as of the date of
this report.
6. Source: (C) 2008 Morningstar. The MSCI World Index is a free
float-adjusted, market capitalization-weighted index designed to measure
equity market performance in global developed markets. The Consumer Price
Index (CPI), calculated by the U.S. Bureau of Labor Statistics, is a
commonly used measure of the inflation rate.
18 | Annual Report
Your Fund's Expenses
As a Fund shareholder, you can incur two types of costs:
- - Transaction costs, including sales charges (loads) on Fund purchases and
redemption fees; and
- - Ongoing Fund costs, including management fees, distribution and service
(12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs,
sometimes referred to as operating expenses.
The following table shows ongoing costs of investing in the Fund and can help
you understand these costs and compare them with those of other mutual funds.
The table assumes a $1,000 investment held for the six months indicated.
ACTUAL FUND EXPENSES
The first line (Actual) for each share class listed in the table provides actual
account values and expenses. The "Ending Account Value" is derived from the
Fund's actual return, which includes the effect of Fund expenses.
You can estimate the expenses you paid during the period by following these
steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS
ILLUSTRATION:
1. Divide your account value by $1,000.
IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6.
2. Multiply the result by the number under the heading "Expenses Paid During
Period."
IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50.
In this illustration, the estimated expenses paid this period are $64.50.
HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS
Information in the second line (Hypothetical) for each class in the table can
help you compare ongoing costs of investing in the Fund with those of other
mutual funds. This information may not be used to estimate the actual ending
account balance or expenses you paid during the period. The hypothetical "Ending
Account Value" is based on the actual expense ratio for each class and an
assumed 5% annual rate of return before expenses, which does not represent the
Fund's actual return. The figure under the heading "Expenses Paid During Period"
shows the hypothetical expenses your account would have incurred under this
scenario. You can compare this figure with the 5% hypothetical examples that
appear in shareholder reports of other funds.
Annual Report | 19
Your Fund's Expenses (CONTINUED)
PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR
REDEMPTION FEES. Therefore, the second line for each class is useful in
comparing ongoing costs only, and will not help you compare total costs of
owning different funds. In addition, if transaction costs were included, your
total costs would have been higher. Please refer to the Fund prospectus for
additional information on operating expenses.
BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING
VALUE 3/1/08 VALUE 8/31/08 PERIOD* 3/1/08-8/31/08
----------------- -------------- ----------------------
CLASS A
Actual $1,000 $ 921.00 $4.93
Hypothetical (5% return before expenses) $1,000 $1,020.01 $5.18
CLASS B
Actual $1,000 $ 917.00 $8.53
Hypothetical (5% return before expenses) $1,000 $1,016.24 $8.97
CLASS C
Actual $1,000 $ 916.90 $8.53
Hypothetical (5% return before expenses) $1,000 $1,016.24 $8.97
CLASS R
Actual $1,000 $ 919.30 $6.13
Hypothetical (5% return before expenses) $1,000 $1,018.75 $6.44
ADVISOR CLASS
Actual $1,000 $ 922.00 $3.72
Hypothetical (5% return before expenses) $1,000 $1,021.27 $3.91
* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 1.02%; B: 1.77%; C: 1.77%; R: 1.27%; and
Advisor: 0.77%), multiplied by the average account value over the period,
multiplied by 184/366 to reflect the one-half year period.
20 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS
YEAR ENDED AUGUST 31,
--------------------------------------------------------------------
CLASS A 2008 2007 2006 2005 2004
- ------- ----------- ----------- ----------- ----------- -----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 26.15 $ 25.29 $ 23.86 $ 21.03 $ 18.54
----------- ----------- ----------- ----------- -----------
Income from investment operations(a):
Net investment income(b) ..................... 0.43 0.37 0.43 0.36 0.36
Net realized and unrealized gains (losses) ... (4.58) 2.66 2.73 3.66 2.58
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ (4.15) 3.03 3.16 4.02 2.94
----------- ----------- ----------- ----------- -----------
Less distributions from:
Net investment income ........................ (0.37) (0.49) (0.41) (0.41) (0.45)
Net realized gains ........................... (1.81) (1.68) (1.32) (0.78) --
----------- ----------- ----------- ----------- -----------
Total distributions ............................. (2.18) (2.17) (1.73) (1.19) (0.45)
----------- ----------- ----------- ----------- -----------
Redemption fees(c) .............................. -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net asset value, end of year .................... $ 19.82 $ 26.15 $ 25.29 $ 23.86 $ 21.03
=========== =========== =========== =========== ===========
Total return(d) ................................. (17.43)% 12.60% 14.52% 19.72% 16.14%
RATIOS TO AVERAGE NET ASSETS
Expenses(e) ..................................... 1.03% 1.01% 1.05% 1.06% 1.10%
Net investment income ........................... 1.88% 1.44% 1.82% 1.61% 1.75%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $19,726,006 $27,997,564 $23,966,739 $20,786,173 $15,771,174
Portfolio turnover rate ......................... 16.82% 20.37% 35.33% 19.95% 24.58%
(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) Amount rounds to less than $0.01 per share.
(d) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(e) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Annual Report | 21
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED AUGUST 31,
-----------------------------------------------------
CLASS B 2008 2007 2006 2005 2004
- ------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 25.55 $ 24.75 $ 23.37 $ 20.64 $ 18.24
-------- -------- -------- -------- --------
Income from investment operations(a):
Net investment income(b) ..................... 0.25 0.17 0.24 0.19 0.21
Net realized and unrealized gains (losses) ... (4.48) 2.61 2.70 3.59 2.54
-------- -------- -------- -------- --------
Total from investment operations ................ (4.23) 2.78 2.94 3.78 2.75
-------- -------- -------- -------- --------
Less distributions from:
Net investment income ........................ (0.17) (0.30) (0.24) (0.27) (0.35)
Net realized gains ........................... (1.81) (1.68) (1.32) (0.78) --
-------- -------- -------- -------- --------
Total distributions ............................. (1.98) (1.98) (1.56) (1.05) (0.35)
-------- -------- -------- -------- --------
Redemption fees(c) .............................. -- -- -- -- --
-------- -------- -------- -------- --------
Net asset value, end of year .................... $ 19.34 $ 25.55 $ 24.75 $ 23.37 $ 20.64
======== ======== ======== ======== ========
Total return(d) ................................. (18.07)% 11.78% 13.65% 18.84% 15.27%
RATIOS TO AVERAGE NET ASSETS
Expenses(e) ..................................... 1.78% 1.76% 1.79% 1.81% 1.85%
Net investment income ........................... 1.13% 0.69% 1.08% 0.86% 1.00%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $347,203 $563,335 $580,530 $557,670 $433,467
Portfolio turnover rate ......................... 16.82% 20.37% 35.33% 19.95% 24.58%
(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) Amount rounds to less than $0.01 per share.
(d) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(e) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
22 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED AUGUST 31,
---------------------------------------------------------------
CLASS C 2008 2007 2006 2005 2004
- ------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 25.40 $ 24.63 $ 23.28 $ 20.56 $ 18.15
---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income(b) ..................... 0.25 0.17 0.25 0.19 0.20
Net realized and unrealized gains (losses) ... (4.46) 2.60 2.67 3.57 2.54
---------- ---------- ---------- ---------- ----------
Total from investment operations ................ (4.21) 2.77 2.92 3.76 2.74
---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income ........................ (0.18) (0.32) (0.25) (0.26) (0.33)
Net realized gains ........................... (1.81) (1.68) (1.32) (0.78) --
---------- ---------- ---------- ---------- ----------
Total distributions ............................. (1.99) (2.00) (1.57) (1.04) (0.33)
---------- ---------- ---------- ---------- ----------
Redemption fees(c) .............................. -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net asset value, end of year .................... $ 19.20 $ 25.40 $ 24.63 $ 23.28 $ 20.56
========== ========== ========== ========== ==========
Total return(d) ................................. (18.08)% 11.78% 13.71% 18.77% 15.30%
RATIOS TO AVERAGE NET ASSETS
Expenses(e) ..................................... 1.77% 1.76% 1.79% 1.81% 1.85%
Net investment income ........................... 1.14% 0.69% 1.08% 0.86% 1.00%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $1,840,818 $2,759,141 $2,362,844 $1,965,909 $1,394,289
Portfolio turnover rate ......................... 16.82% 20.37% 35.33% 19.95% 24.58%
(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) Amount rounds to less than $0.01 per share.
(d) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(e) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Annual Report | 23
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED AUGUST 31,
---------------------------------------------------
CLASS R 2008 2007 2006 2005 2004
- ------- -------- -------- -------- -------- -------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 25.88 $ 25.06 $ 23.68 $ 20.90 $ 18.44
-------- -------- -------- -------- -------
Income from investment operations(a):
Net investment income(b) ..................... 0.36 0.31 0.45 0.32 0.33
Net realized and unrealized gains (losses) ... (4.52) 2.63 2.62 3.62 2.56
-------- -------- -------- -------- -------
Total from investment operations ................ (4.16) 2.94 3.07 3.94 2.89
-------- -------- -------- -------- -------
Less distributions from:
Net investment income ........................ (0.31) (0.44) (0.37) (0.38) (0.43)
Net realized gains ........................... (1.81) (1.68) (1.32) (0.78) --
-------- -------- -------- -------- -------
Total distributions ............................. (2.12) (2.12) (1.69) (1.16) (0.43)
-------- -------- -------- -------- -------
Redemption fees(c) .............................. -- -- -- -- --
-------- -------- -------- -------- -------
Net asset value, end of year .................... $ 19.60 $ 25.88 $ 25.06 $ 23.68 $ 20.90
======== ======== ======== ======== =======
Total return(d) ................................. (17.64)% 12.33% 14.22% 19.44% 15.85%
RATIOS TO AVERAGE NET ASSETS
Expenses(e) ..................................... 1.28% 1.26% 1.30% 1.31% 1.35%
Net investment income ........................... 1.63% 1.19% 1.57% 1.36% 1.50%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $304,469 $467,391 $403,334 $123,139 $57,951
Portfolio turnover rate ......................... 16.82% 20.37% 35.33% 19.95% 24.58%
(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) Amount rounds to less than $0.01 per share.
(d) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable.
(e) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
24 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
YEAR ENDED AUGUST 31,
-------------------------------------------------------------
ADVISOR CLASS 2008 2007 2006 2005 2004
- ------------- ---------- ---------- ---------- ---------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............. $ 26.22 $ 25.34 $ 23.90 $ 21.07 $ 18.57
---------- ---------- ---------- ---------- --------
Income from investment operations(a):
Net investment income(b) ..................... 0.49 0.45 0.51 0.45 0.48
Net realized and unrealized gains (losses) ... (4.59) 2.66 2.72 3.63 2.52
---------- ---------- ---------- ---------- --------
Total from investment operations ................ (4.10) 3.11 3.23 4.08 3.00
---------- ---------- ---------- ---------- --------
Less distributions from:
Net investment income ........................ (0.44) (0.55) (0.47) (0.47) (0.50)
Net realized gains ........................... (1.81) (1.68) (1.32) (0.78) --
---------- ---------- ---------- ---------- --------
Total distributions ............................. (2.25) (2.23) (1.79) (1.25) (0.50)
---------- ---------- ---------- ---------- --------
Redemption fees(c) .............................. -- -- -- -- --
---------- ---------- ---------- ---------- --------
Net asset value, end of year .................... $ 19.87 $ 26.22 $ 25.34 $ 23.90 $ 21.07
========== ========== ========== ========== ========
Total return .................................... (17.24)% 12.93% 14.83% 19.97% 16.43%
RATIOS TO AVERAGE NET ASSETS
Expenses(d) ..................................... 0.78% 0.76% 0.80% 0.81% 0.85%
Net investment income ........................... 2.13% 1.69% 2.07% 1.86% 2.00%
SUPPLEMENTAL DATA
Net assets, end of year (000's) ................. $5,008,718 $6,458,094 $3,972,615 $2,549,202 $911,764
Portfolio turnover rate ......................... 16.82% 20.37% 35.33% 19.95% 24.58%
(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) Amount rounds to less than $0.01 per share.
(d) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Annual Report | 25
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2008
INDUSTRY SHARES VALUE
---------------------------------------- ----------- ---------------
COMMON STOCKS 99.1%
FINLAND 1.2%
Stora Enso OYJ, R .................. Paper & Forest Products 11,800,820 $ 118,758,960
UPM-Kymmene OYJ .................... Paper & Forest Products 12,784,220 219,427,060
---------------
338,186,020
---------------
FRANCE 8.0%
Accor SA ........................... Hotels, Restaurants & Leisure 1,630,328 108,224,019
France Telecom SA .................. Diversified Telecommunication Services 13,767,620 406,668,554
Peugeot SA ......................... Automobiles 3,073,248 146,614,942
Sanofi-Aventis ..................... Pharmaceuticals 7,000,000 499,176,059
Total SA, B ........................ Oil, Gas & Consumable Fuels 7,552,490 543,394,183
Vivendi SA ......................... Media 12,000,000 465,449,732
---------------
2,169,527,489
---------------
GERMANY 6.7%
Bayerische Motoren Werke AG ........ Automobiles 5,908,830 244,878,150
Deutsche Post AG ................... Air Freight & Logistics 11,870,380 278,273,265
(a) Infineon Technologies AG ........... Semiconductors & Semiconductor Equipment 16,524,234 142,052,552
Merck KGaA ......................... Pharmaceuticals 624,879 71,594,070
Muenchener Rueckversicherungs-
Gesellschaft AG ................. Insurance 688,370 107,093,397
SAP AG ............................. Software 4,151,770 232,632,232
Siemens AG ......................... Industrial Conglomerates 6,883,810 750,827,092
---------------
1,827,350,758
---------------
HONG KONG 1.1%
Cheung Kong (Holdings) Ltd. ........ Real Estate Management & Development 13,767,800 197,930,317
Swire Pacific Ltd., A .............. Real Estate Management & Development 9,037,000 90,896,855
---------------
288,827,172
---------------
INDIA 0.3%
ICICI Bank Ltd., ADR ............... Commercial Banks 2,366,030 73,394,251
---------------
IRELAND 0.3%
CRH PLC ............................ Construction Materials 3,122,462 81,535,596
---------------
ITALY 3.7%
Eni SpA ............................ Oil, Gas & Consumable Fuels 10,132,262 330,427,330
Intesa Sanpaolo SpA ................ Commercial Banks 60,870,272 327,942,070
UniCredit SpA ...................... Commercial Banks 65,000,000 351,383,154
---------------
1,009,752,554
---------------
JAPAN 4.5%
FUJIFILM Holdings Corp. ............ Electronic Equipment & Instruments 7,867,100 219,012,431
Konica Minolta Holdings Ltd. ....... Office Electronics 19,667,500 274,484,863
Mitsubishi UFJ Financial Group
Inc. ............................ Commercial Banks 16,137,675 124,398,285
NGK Spark Plug Co. Ltd. ............ Auto Components 3,532,000 39,363,432
NOK Corp. .......................... Auto Components 6,977,100 100,771,786
Shinsei Bank Ltd. .................. Commercial Banks 39,879,000 137,033,683
26 | Annual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (CONTINUED)
INDUSTRY SHARES VALUE
---------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
Sumitomo Mitsui Financial Group
Inc. ............................ Commercial Banks 21,775 $ 134,043,091
Toyota Motor Corp. ................. Automobiles 4,579,510 207,432,785
---------------
1,236,540,356
---------------
NETHERLANDS 4.0%
ING Groep NV ....................... Diversified Financial Services 13,150,190 411,676,930
Koninklijke Philips Electronics
NV .............................. Industrial Conglomerates 9,311,160 303,786,633
Randstad Holding NV ................ Commercial Services & Supplies 2,599,990 80,097,887
Reed Elsevier NV ................... Media 15,106,329 253,300,039
SBM Offshore NV .................... Energy Equipment & Services 2,077,888 50,448,728
---------------
1,099,310,217
---------------
NORWAY 0.4%
Aker Solutions ASA ................. Energy Equipment & Services 4,700,945 108,149,910
---------------
RUSSIA 0.5%
Gazprom, ADR ....................... Oil, Gas & Consumable Fuels 3,650,000 141,437,500
---------------
SINGAPORE 1.5%
(a) Flextronics International Ltd. ..... Electronic Equipment & Instruments 7,663,690 68,360,115
Singapore Telecommunications Ltd. .. Diversified Telecommunication Services 131,816,000 328,215,053
---------------
396,575,168
---------------
SOUTH KOREA 3.9%
Hyundai Motor Co. Ltd. ............. Automobiles 3,000,000 197,475,327
Kookmin Bank ....................... Commercial Banks 4,621,992 254,172,431
KT Corp., ADR ...................... Diversified Telecommunication Services 12,922,490 263,101,896
Samsung Electronics Co. Ltd. ....... Semiconductors & Semiconductor Equipment 749,384 354,998,526
---------------
1,069,748,180
---------------
SPAIN 0.7%
Telefonica SA ...................... Diversified Telecommunication Services 8,108,815 201,155,118
---------------
SWEDEN 1.1%
Telefonaktiebolaget LM Ericsson,
B ............................... Communications Equipment 16,476,380 186,372,837
Svenska Cellulosa AB, B ............ Paper & Forest Products 10,292,707 117,223,559
---------------
303,596,396
---------------
SWITZERLAND 3.7%
Adecco SA .......................... Commercial Services & Supplies 2,672,390 125,950,818
Nestle SA .......................... Food Products 6,808,690 300,492,494
Novartis AG ........................ Pharmaceuticals 7,867,210 439,726,458
(a) UBS AG ............................. Capital Markets 6,672,870 146,279,588
---------------
1,012,449,358
---------------
TAIWAN 0.6%
Taiwan Semiconductor Manufacturing
Co. Ltd. ........................ Semiconductors & Semiconductor Equipment 88,837,002 165,821,563
---------------
Annual Report | 27
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (CONTINUED)
INDUSTRY SHARES VALUE
---------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
TURKEY 0.3%
Turkcell Iletisim Hizmetleri AS,
ADR ............................. Wireless Telecommunication Services 5,294,690 $ 87,627,120
---------------
UNITED KINGDOM 15.5%
Aviva PLC .......................... Insurance 40,000,000 375,245,400
BAE Systems PLC .................... Aerospace & Defense 9,011,320 78,867,787
BP PLC ............................. Oil, Gas & Consumable Fuels 49,232,798 474,651,552
Compass Group PLC .................. Hotels, Restaurants & Leisure 44,676,864 298,556,594
GlaxoSmithKline PLC ................ Pharmaceuticals 21,052,580 497,677,325
HSBC Holdings PLC .................. Commercial Banks 29,333,897 464,185,570
Kingfisher PLC ..................... Specialty Retail 78,517,145 191,124,241
Old Mutual PLC ..................... Insurance 67,233,565 119,648,144
Pearson PLC ........................ Media 16,742,020 207,275,340
Royal Bank of Scotland Group PLC ... Commercial Banks 49,560,000 212,132,351
Royal Dutch Shell PLC, B ........... Oil, Gas & Consumable Fuels 14,851,824 512,354,946
Standard Life PLC .................. Insurance 26,586,490 121,675,947
Tesco PLC .......................... Food & Staples Retailing 3,952,630 27,494,809
Vodafone Group PLC ................. Wireless Telecommunication Services 199,750,469 513,725,241
Wolseley PLC ....................... Trading Companies & Distributors 12,373,734 100,399,325
Yell Group PLC ..................... Media 6,840,478 13,532,754
---------------
4,208,547,326
---------------
UNITED STATES 41.1%
Abbott Laboratories ................ Pharmaceuticals 327,500 18,808,325
Accenture Ltd., A .................. IT Services 17,344,050 717,349,908
ACE Ltd. ........................... Insurance 1,055,370 55,523,016
American Express Co. ............... Consumer Finance 1,114,070 44,206,298
American International Group Inc. .. Insurance 11,000,000 236,390,000
(a) Amgen Inc. ......................... Biotechnology 11,000,000 691,350,000
Bank of America Corp. .............. Diversified Financial Services 1,337,130 41,638,228
(a) Boston Scientific Corp. ............ Health Care Equipment & Supplies 32,452,280 407,600,637
(a) Cisco Systems Inc. ................. Communications Equipment 7,246,930 174,288,666
Comcast Corp., A ................... Media 21,480,140 454,090,160
Covidien Ltd. ...................... Health Care Equipment & Supplies 6,392,110 345,621,388
Eastman Kodak Co. .................. Leisure Equipment & Products 2,789,520 45,162,329
El Paso Corp. ...................... Oil, Gas & Consumable Fuels 25,700,610 430,742,224
(a) Expedia Inc. ....................... Internet & Catalog Retail 6,111,453 107,928,260
FedEx Corp. ........................ Air Freight & Logistics 1,264,130 104,695,247
General Electric Co. ............... Industrial Conglomerates 22,000,000 618,200,000
Harley-Davidson Inc. ............... Automobiles 3,441,900 136,918,782
International Paper Co. ............ Paper & Forest Products 4,917,010 133,005,120
Merck & Co. Inc. ................... Pharmaceuticals 6,883,810 245,545,503
Microsoft Corp. .................... Software 31,468,870 858,785,462
News Corp., A ...................... Media 40,000,000 566,400,000
(a) Oracle Corp. ....................... Software 33,779,900 740,793,207
Pentair Inc. ....................... Machinery 2,849,562 104,721,404
Pfizer Inc. ........................ Pharmaceuticals 34,000,000 649,740,000
Pitney Bowes Inc. .................. Commercial Services & Supplies 3,124,070 106,686,990
Progressive Corp. .................. Insurance 9,756,200 180,197,014
28 | Annual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2008 (CONTINUED)
INDUSTRY SHARES VALUE
---------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
UNITED STATES (CONTINUED)
Raytheon Co. ....................... Aerospace & Defense 1,295,880 $ 77,739,841
Seagate Technology ................. Computers & Peripherals 18,636,450 277,869,469
Sprint Nextel Corp. ................ Wireless Telecommunication Services 33,000,000 287,760,000
Target Corp. ....................... Multiline Retail 578,440 30,668,889
Time Warner Inc. ................... Media 34,419,090 563,440,503
Torchmark Corp. .................... Insurance 2,770,230 165,493,540
Tyco Electronics Ltd. .............. Electronic Equipment & Instruments 9,000,000 296,190,000
Tyco International Ltd. ............ Industrial Conglomerates 6,500,000 278,720,000
United Parcel Service Inc., B ...... Air Freight & Logistics 7,000,000 448,840,000
(a) USG Corp. .......................... Building Products 3,687,654 102,369,275
(a) Viacom Inc., B ..................... Media 14,751,030 434,860,364
---------------
11,180,340,049
---------------
TOTAL COMMON STOCKS
(COST $27,706,653,768) .......... 26,999,872,101
---------------
PRINCIPAL
AMOUNT(b)
-----------
SHORT TERM INVESTMENTS 0.8%
U.S. GOVERNMENT AND AGENCY
SECURITIES 0.8%
(c) FHLB, 9/02/08 ...................... 173,025,000 173,025,000
FHLB, 4.625%, 11/21/08 ............. 40,000,000 40,163,600
---------------
TOTAL U.S. GOVERNMENT AND AGENCY
SECURITIES (COST $213,170,157) .. 213,188,600
---------------
TOTAL INVESTMENTS
(COST $27,919,823,925) 99.9% .... 27,213,060,701
OTHER ASSETS, LESS LIABILITIES
0.1% ............................ 14,154,746
---------------
NET ASSETS 100.0% .................. $27,227,215,447
===============
SELECTED PORTFOLIO ABBREVIATIONS
ADR - American Depository Receipt
FHLB - Federal Home Loan Bank
(a) Non-income producing for the twelve months ended August 31, 2008.
(b) The principal amount is stated in U.S. dollars unless otherwise indicated.
(c) The security is traded on a discount basis with no stated coupon rate.
The accompanying notes are an integral part of these financial statements.
Annual Report | 29
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2008
Assets:
Investments in securities:
Cost .................................................. $27,919,823,925
---------------
Value ................................................. $27,213,060,701
Cash ..................................................... 2,155,872
Foreign currency, at value (cost $10,838,755) ............ 10,774,774
Receivables:
Investment securities sold ............................ 31,230,091
Capital shares sold ................................... 20,933,930
Dividends and interest ................................ 60,525,241
---------------
Total assets ....................................... 27,338,680,609
---------------
Liabilities:
Payables:
Investment securities purchased ....................... 31,665,368
Capital shares redeemed ............................... 50,518,502
Affiliates ............................................ 23,177,091
Accrued expenses and other liabilities ................... 6,104,201
---------------
Total liabilities .................................. 111,465,162
---------------
Net assets, at value ............................ $27,227,215,447
===============
Net assets consist of:
Paid-in capital .......................................... $27,355,758,081
Undistributed net investment income ...................... 576,631,310
Net unrealized appreciation (depreciation) ............... (708,189,120)
Accumulated net realized gain (loss) ..................... 3,015,176
---------------
Net assets, at value ............................ $27,227,215,447
===============
The accompanying notes are an integral part of these financial statements.
30 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
August 31, 2008
CLASS A:
Net assets, at value ..................................... $19,726,006,180
---------------
Shares outstanding ....................................... 995,401,171
---------------
Net asset value per share(a) ............................. $ 19.82
---------------
Maximum offering price per share (net asset value per
share / 94.25%) ....................................... $ 21.03
---------------
CLASS B:
Net assets, at value ..................................... $ 347,203,141
---------------
Shares outstanding ....................................... 17,951,758
---------------
Net asset value and maximum offering price per share(a) .. $ 19.34
---------------
CLASS C:
Net assets, at value ..................................... $ 1,840,818,474
---------------
Shares outstanding ....................................... 95,857,207
---------------
Net asset value and maximum offering price per share(a) .. $ 19.20
---------------
CLASS R:
Net assets, at value ..................................... $ 304,469,426
---------------
Shares outstanding ....................................... 15,532,154
---------------
Net asset value and maximum offering price per share(a) .. $ 19.60
---------------
ADVISOR CLASS:
Net assets, at value ..................................... $ 5,008,718,226
---------------
Shares outstanding ....................................... 252,108,575
---------------
Net asset value and maximum offering price per share(a) .. $ 19.87
---------------
(a) Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable, and redemption fees retained by the Fund.
The accompanying notes are an integral part of these financial statements.
Annual Report | 31
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended August 31, 2008
Investment income:
Dividends: (net of foreign taxes of $82,467,268)
Unaffiliated issuers .................................. $ 913,011,177
Non-controlled affiliated issuers (Note 8) ............ 20,922,815
Interest ................................................. 37,805,434
---------------
Total investment income ......................... 971,739,426
---------------
Expenses:
Management fees (Note 3a) ................................ 189,103,709
Administrative fees (Note 3b) ............................ 25,649,883
Distribution fees: (Note 3c)
Class A ............................................... 60,592,524
Class B ............................................... 4,601,990
Class C ............................................... 23,411,996
Class R ............................................... 1,920,809
Transfer agent fees (Note 3e) ............................ 36,152,650
Custodian fees (Note 4) .................................. 4,462,639
Reports to shareholders .................................. 1,747,906
Registration and filing fees ............................. 528,006
Professional fees ........................................ 594,632
Directors' fees and expenses ............................. 343,407
Other .................................................... 816,623
---------------
Total expenses .................................. 349,926,774
Expense reductions (Note 4) ..................... (112,032)
---------------
Net expenses ................................. 349,814,742
---------------
Net investment income ..................... 621,924,684
---------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments:
Unaffiliated issuers ............................... 1,282,074,519
Non-controlled affiliated issuers (Note 8) ......... (662,925,558)
Foreign currency transactions ......................... 21,839,867
---------------
Net realized gain (loss) ..................... 640,988,828
---------------
Net change in unrealized appreciation (depreciation) on:
Investments ........................................... (7,427,555,180)
Translation of other assets and liabilities denominated
in foreign currencies .............................. (1,976,607)
---------------
Net change in unrealized appreciation
(depreciation) ............................. (7,429,531,787)
---------------
Net realized and unrealized gain (loss) ..................... (6,788,542,959)
---------------
Net increase (decrease) in net assets resulting from
operations ............................................... $(6,166,618,275)
===============
The accompanying notes are an integral part of these financial statements.
32 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED AUGUST 31,
----------------------------------
2008 2007
---------------- ---------------
Increase (decrease) in net assets:
Operations:
Net investment income ................................. $ 621,924,684 $ 513,096,325
Net realized gain (loss) from investments and foreign
currency transactions .............................. 640,988,828 2,248,586,838
Net change in unrealized appreciation (depreciation) on
investments and translation of assets and
liabilities denominated in foreign currencies ...... (7,429,531,787) 1,231,732,347
---------------- ---------------
Net increase (decrease) in net assets resulting
from operations .............................. (6,166,618,275) 3,993,415,510
---------------- ---------------
Distributions to shareholders from:
Net investment income:
Class A ............................................ (398,180,382) (472,698,663)
Class B ............................................ (3,557,189) (7,025,647)
Class C ............................................ (19,831,619) (30,736,178)
Class R ............................................ (5,485,538) (7,235,471)
Advisor Class ...................................... (111,288,787) (91,885,469)
Net realized gains:
Class A ............................................ (1,932,682,568) (1,615,535,935)
Class B ............................................ (38,875,982) (39,138,180)
Class C ............................................ (196,075,375) (163,775,141)
Class R ............................................ (32,361,661) (27,527,557)
Advisor Class ...................................... (459,228,781) (277,255,005)
---------------- ---------------
Total distributions to shareholders ...................... (3,197,567,882) (2,732,813,246)
---------------- ---------------
Capital share transactions: (Note 2)
Class A ............................................ (1,493,923,114) 3,063,601,833
Class B ............................................ (86,812,017) (39,451,658)
Class C ............................................ (250,773,274) 310,700,465
Class R ............................................ (56,111,994) 48,144,040
Advisor Class ...................................... 233,428,067 2,315,763,985
---------------- ---------------
Total capital share transactions ......................... (1,654,192,332) 5,698,758,665
---------------- ---------------
Redemption fees .......................................... 70,012 102,551
---------------- ---------------
Net increase (decrease) in net assets ........... (11,018,308,477) 6,959,463,480
Net assets:
Beginning of year ........................................ 38,245,523,924 31,286,060,444
---------------- ---------------
End of year .............................................. $ 27,227,215,447 $38,245,523,924
================ ===============
Undistributed net investment income included in net assets:
End of year .............................................. $ 576,631,310 $ 446,594,400
================ ===============
The accompanying notes are an integral part of these financial statements.
Annual Report | 33
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS
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.
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 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.
34 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Fund's Board of Directors.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments on the
Statement of Operations.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.
C. FOREIGN CURRENCY CONTRACTS
When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate 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.
D. 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.
The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of August 31, 2008, and has
determined that no provision for income tax is required in the Fund's financial
statements.
Annual Report | 35
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME TAXES (CONTINUED)
Foreign securities held by the Fund may be subject to foreign taxation on
dividend and interest income received. Foreign taxes, if any, are recorded based
on the tax regulations and rates that exist in the foreign markets in which the
Fund invests.
E. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Interest income and estimated expenses are accrued daily. Amortization of
premium and accretion of discount on debt securities are included in interest
income. Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recognized as soon as the Fund is notified
of the ex-dividend date. Distributions to shareholders are recorded on the
ex-dividend date and are determined according to income tax regulations (tax
basis). Distributable earnings determined on a tax basis may differ from
earnings recorded in accordance with accounting principles generally accepted in
the United States 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.
F. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expenses during the reporting period. Actual results could differ from those
estimates.
G. REDEMPTION FEES
A short term trading redemption fee will be imposed, with some exceptions, on
any fund shares that are redeemed or exchanged within seven calendar days
following their purchase date. 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. Effective September 1, 2008, the redemption fee will be eliminated.
36 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified by the Fund against certain liabilities arising out of the
performance of their duties to the Fund. Additionally, in the normal course of
business, the Fund enters into contracts with service providers that contain
general indemnification clauses. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that have not yet occurred. Currently, the Fund expects the
risk of loss to be remote.
2. CAPITAL STOCK
At August 31, 2008, there were 2.4 billion shares authorized ($0.01 par value).
Transactions in the Fund's shares were as follows:
YEAR ENDED AUGUST 31,
---------------------------------------------------------------
2008 2007
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
CLASS A SHARES:
Shares sold .............................................. 126,468,089 $ 2,928,878,098 225,710,785 $ 5,875,431,840
Shares issued in reinvestment of distributions ........... 81,526,423 2,015,496,803 73,223,640 1,796,575,224
Shares redeemed .......................................... (283,228,141) (6,438,298,015) (175,958,675) (4,608,405,231)
------------ --------------- ------------ ---------------
Net increase (decrease) .................................. (75,233,629) $(1,493,923,114) 122,975,750 $ 3,063,601,833
============ =============== ============ ===============
CLASS B SHARES:
Shares sold .............................................. 357,372 $ 8,136,111 604,753 $ 15,300,419
Shares issued in reinvestment of distributions ........... 1,598,248 38,753,026 1,750,128 42,085,963
Shares redeemed .......................................... (6,053,074) (133,701,154) (3,759,954) (96,838,040)
------------ --------------- ------------ ---------------
Net increase (decrease) .................................. (4,097,454) $ (86,812,017) (1,405,073) $ (39,451,658)
============ =============== ============ ===============
CLASS C SHARES:
Shares sold .............................................. 8,904,679 $ 202,266,942 18,577,793 $ 471,011,227
Shares issued in reinvestment of distributions ........... 7,786,538 187,468,064 7,017,519 167,782,505
Shares redeemed .......................................... (29,475,200) (640,508,280) (12,894,022) (328,093,267)
------------ --------------- ------------ ---------------
Net increase (decrease) .................................. (12,783,983) $ (250,773,274) 12,701,290 $ 310,700,465
============ =============== ============ ===============
CLASS R SHARES:
Shares sold .............................................. 4,093,419 $ 92,473,831 6,284,962 $ 162,082,026
Shares issued in reinvestment of distributions ........... 1,527,062 37,405,095 1,416,323 34,427,697
Shares redeemed .......................................... (8,146,329) (185,990,920) (5,736,892) (148,365,683)
------------ --------------- ------------ ---------------
Net increase (decrease) .................................. (2,525,848) $ (56,111,994) 1,964,393 $ 48,144,040
============ =============== ============ ===============
Annual Report | 37
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. CAPITAL STOCK (CONTINUED)
YEAR ENDED AUGUST 31,
---------------------------------------------------------
2008 2007
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- --------------
ADVISOR CLASS SHARES:
Shares sold ................. 14,115,788 $ 345,387,849 81,193,552 $2,119,863,197
Shares issued in reinvestment
of distributions ......... 22,277,647 551,125,894 14,307,566 351,653,615
Shares redeemed ............. (30,632,913) (663,085,676) (5,907,430) (155,752,827)
----------- ------------- ---------- --------------
Net increase (decrease) ..... 5,760,522 $ 233,428,067 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
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
38 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the average daily
net assets 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.
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 year:
Sales charges retained net of commissions paid to unaffiliated
broker/dealers ............................................ $4,199,688
Contingent deferred sales charges retained ................... $ 809,132
E. TRANSFER AGENT FEES
For the year ended August 31, 2008, the Fund paid transfer agent fees of
$36,152,650, of which $20,684,523 was retained by Investor Services.
Annual Report | 39
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended August 31, 2008, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
For tax purposes, realized capital losses occurring subsequent to October 31,
may be deferred and treated as occurring on the first day of the following
fiscal year. At August 31, 2008, the Fund deferred realized capital losses of
$2,023,875.
The tax character of distributions paid during the years ended August 31, 2008
and 2007, was as follows:
2008 2007
-------------- --------------
Distributions paid from:
Ordinary income .......... $ 709,809,057 $ 817,884,957
Long term capital gain ... 2,487,758,825 1,914,928,289
-------------- --------------
$3,197,567,882 $2,732,813,246
============== ==============
At August 31, 2008, the cost of investments, net unrealized appreciation
(depreciation) and undistributed ordinary income for income tax purposes were as
follows:
Cost of investments .......................... $27,921,298,423
===============
Unrealized appreciation ...................... $ 3,087,871,114
Unrealized depreciation ...................... (3,796,108,836)
---------------
Net unrealized appreciation (depreciation) ... $ (708,237,722)
===============
Distributable earnings - undistributed
ordinary income ........................... $ 583,144,858
===============
Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions, and bond discounts
and premiums.
Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions, and bond discounts and premiums.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
year ended August 31, 2008, aggregated $5,490,516,904 and $8,738,747,937,
respectively.
40 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. CONCENTRATION OF RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.
8. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The 1940 Act defines "affiliated companies" to include investments in portfolio
companies in which a fund owns 5% or more of the outstanding voting securities.
Investments in "affiliated companies" for the period ended August 31, 2008, were
as shown below.
NUMBER OF NUMBER OF
SHARES HELD SHARES HELD VALUE
AT BEGINNING GROSS GROSS AT END AT END INVESTMENT REALIZED CAPITAL
NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS OF YEAR OF YEAR INCOME GAIN (LOSS)
- -------------- ------------ --------- ---------- ----------- ------- ----------- ----------------
NON-CONTROLLED AFFILIATES
Chico's FAS, Inc. ............. 13,897,527 102,473 14,000,000 -- $--(a) $ -- $(246,852,574)
Eastman Kodak Co. ............. 17,000,000 -- 14,210,480 2,789,520 --(a) 6,037,333 (155,157,399)
The Interpublic Group of
Cos. Inc. .................. 33,000,000 -- 33,000,000 -- --(a) -- (67,771,597)
Seagate Technology ............ 33,000,000 -- 14,363,550 18,636,450 --(a) 10,768,240 (6,499,888)
Tenet Healthcare Corp. ........ 35,000,000 -- 35,000,000 -- --(a) -- (194,896,563)
Willis Group Holdings Ltd. .... 6,475,588 -- 6,475,588 -- --(a) 4,117,242 8,252,463
--- ----------- -------------
TOTAL AFFILIATED SECURITIES
(0.00% of Net Assets) ... $-- $20,922,815 $(662,925,558)
=== =========== =============
(a) As of 8/31/08, no longer an affiliate.
9. NEW ACCOUNTING PRONOUNCEMENTS
In September 2006, the Financial Accounting Standards Board (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.
In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161), which expands disclosures about derivative investments and hedging
activities. SFAS 161 is effective for fiscal years and interim periods beginning
after November 15, 2008. The Fund is currently evaluating the impact, if any, of
applying the various provisions of SFAS 161.
Annual Report | 41
Templeton Growth Fund, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF TEMPLETON GROWTH FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Templeton Growth Fund, Inc. (the
"Fund") at August 31, 2008, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 2008 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 21, 2008
42 | Annual Report
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED)
Under Section 852(b)(3)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $570,020,960 as a long
term capital gain dividend for the fiscal year ended August 31, 2008.
Under Section 871(k)(2)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $11,304,011 as a short term capital gain dividend for
purposes of the tax imposed under Section 871(a)(1)(A) of the Code for the
fiscal year ended August 31, 2008.
Under Section 854(b)(2) of the Code, the Fund designates 23.91% of the ordinary
income dividends as income qualifying for the dividends received deduction for
the fiscal year ended August 31, 2008.
Under Section 854(b)(2) of the Code, the Fund designates the maximum amount
allowable but no less than $939,570,160 as qualified dividends for purposes of
the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
August 31, 2008. Distributions, including qualified dividend income, paid during
calendar year 2008 will be reported to shareholders on Form 1099-DIV in January
2009. Shareholders are advised to check with their tax advisors for information
on the treatment of these amounts on their individual income tax returns.
Under Section 871(k)(1)(C) of the Code, the Fund designates the maximum amount
allowable but no less than $17,721,147 as interest related dividends for
purposes of the tax imposed under Section 871(a)(1)(A) of the Code for the
fiscal year ended August 31, 2008.
At August 31, 2008, more than 50% of the Templeton Growth Fund's total assets
were invested in securities of foreign issuers. In most instances, foreign taxes
were withheld from income paid to the Fund on these investments. The Fund elects
to treat foreign taxes paid as allowed under Section 853 of the Code. This
designation will allow shareholders of record on December 18, 2008, to treat
their proportionate share of foreign taxes paid by the Fund as having been paid
directly by them. The shareholder shall consider these amounts as foreign taxes
paid in the tax year in which they receive the Fund distribution.
In addition, in January 2009, shareholders will received Form 1099-DIV which
will include their share of taxes withheld and foreign source income distributed
during the calendar year 2008.
Annual Report | 43
Templeton Growth Fund, Inc.
BOARD MEMBERS AND OFFICERS
The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Fund, principal occupations
during the past five years and number of U.S. registered portfolios overseen in
the Franklin Templeton Investments fund complex are shown below. Generally, each
board member serves until that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------ ----------------------- ----------------------------------
HARRIS J. ASHTON (1932) Director Since 1992 143 Bar-S Foods (meat packing
500 East Broward Blvd. company).
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief
Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
ANN TORRE BATES (1958) Director Since 28 SLM Corporation (Sallie Mae) and
500 East Broward Blvd. January 2008 Allied Capital Corporation
Suite 2100 (financial services).
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Independent strategic and financial consultant; and FORMERLY, Executive Vice President and Chief Financial Officer, NHP Incorporated
(manager of multifamily housing) (1995-1997); and Vice President and Treasurer, US Airways, Inc. (until 1995).
FRANK J. CROTHERS (1944) Director Since 2000 21 Fortis, Inc. (utility holding
500 East Broward Blvd. company), Nuinsco Resources
Suite 2100 Limited (mineral exploration),
Fort Lauderdale, FL 33394-3091 Royal Fidelity Merchant Bank &
Trust Limited (financial
services), C.A. Bancorp Inc.
(financial services), Victory
Nickel Inc. (mineral exploration),
ABACO Markets Limited (retail
distributors) and Belize
Electricity Limited (electric
utility).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Island Corporate Holdings Ltd.; Director and Vice Chairman, Caribbean Utilities Company, Ltd.; Director, Provo Power
Company Ltd.; director of various other business and nonprofit organizations; and FORMERLY, Chairman, Atlantic Equipment & Power
Ltd. (1977-2003).
EDITH E. HOLIDAY (1952) Lead Director 143 Hess Corporation (exploration and
500 East Broward Blvd. Independent since 2000 refining of oil and gas), H.J.
Suite 2100 Director and Lead Heinz Company (processed foods and
Fort Lauderdale, FL 33394-3091 Independent allied products), RTI
Director International Metals, Inc.
since 2007 (manufacture and distribution of
titanium), Canadian National
Railway (rail-road) and White
Mountains Insurance Group, Ltd.
(holding company).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and Secretary of
the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and
Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
44 | Annual Report
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------ ----------------------- ----------------------------------
DAVID W. NIEMIEC (1949) Director Since 2005 21 Emeritus Corporation (assisted
500 East Broward Blvd. living) and OSI Pharmaceuticals,
Suite 2100 Inc. (pharmaceutical products).
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Advisor, Saratoga Partners (private equity fund); and FORMERLY, Managing Director, Saratoga Partners (1998-2001) and SBC Warburg
Dillon Read (investment banking) (1997-1998); Vice Chairman, Dillon, Read & Co. Inc. (investment banking) (1991-1997); and Chief
Financial Officer, Dillon, Read & Co. Inc. (1982-1997).
FRANK A. OLSON (1932) Director Since 2003 143 Hess Corporation (exploration and
500 East Broward Blvd. refining of oil and gas) and
Suite 2100 Sentient Jet (private jet
Fort Lauderdale, FL 33394-3091 service).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and Chief Executive Officer
(1977-1999)); and FORMERLY, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
LARRY D. THOMPSON (1945) Director Since 2005 143 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products); and FORMERLY,
Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp. (credit card provider) (1997-2001); Senior Fellow of
The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General,
U.S. Department of Justice (2001-2003).
CONSTANTINE D. TSERETOPOULOS Director Since 2000 21 None
(1954)
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Physician, Lyford Cay Hospital (1987-present); director of various nonprofit organizations; and FORMERLY, Cardiology Fellow,
University of Maryland (1985-1987) and Internal Medicine Resident, Greater Baltimore Medical Center (1982-1985).
ROBERT E. WADE (1946) Director Since 2006 35 El Oro and Exploration Co., p.l.c.
500 East Broward Blvd. (investments) and ARC Wireless
Suite 2100 Solutions, Inc. (wireless
Fort Lauderdale, FL 33394-3091 components and network products).
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Practicing attorney.
Annual Report | 45
INTERESTED BOARD MEMBERS AND OFFICERS
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------ ----------------------- ----------------------------------
**CHARLES B. JOHNSON (1933) Director, Director, Chairman 143 None
One Franklin Parkway Chairman of of the Board
San Mateo, CA 94403-1906 the Board and since 1995 and
Vice President Vice President
since 1992
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Templeton Worldwide, Inc.;
and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 42
of the investment companies in Franklin Templeton Investments.
**GREGORY E. JOHNSON (1961) Director Since 2007 94 None
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, President and Chief Executive Officer, Franklin Resources, Inc.; President, Templeton Worldwide, Inc.; Director, Templeton
Asset Management Ltd.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 33 of the investment companies in Franklin Templeton Investments.
JAMES M. DAVIS (1952) Chief Chief Compliance Not Applicable Not Applicable
One Franklin Parkway Compliance Officer since 2004
San Mateo, CA 94403-1906 Officer and and Vice President
Vice President - AML Compliance
- AML since 2006
Compliance
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin Resources, Inc. and of
46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director of Compliance, Franklin Resources, Inc.
(1994-2001).
LAURA F. FERGERSON (1962) Chief Financial Since Not Applicable Not Applicable
One Franklin Parkway Officer and February 2008
San Mateo, CA 94403-1906 Chief
Accounting
Officer
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 46 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Director and member of Audit and Valuation Committees, Runkel Funds, Inc. (2003-2004); Assistant Treasurer of most of the
investment companies in Franklin Templeton Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC
(1997-2003).
JIMMY D. GAMBILL (1947) Vice President Since Not Applicable Not Applicable
500 East Broward Blvd. February 2008
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of some of the other
subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments.
46 | Annual Report
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------ ----------------------- ----------------------------------
DAVID P. GOSS (1947) Vice President Since 2000 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; officer and director of one of the subsidiaries of Franklin
Resources, Inc.; and officer of 46 of the investment companies in Franklin Templeton Investments.
RUPERT H. JOHNSON, JR. (1940) Vice President Since 1996 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc. and
Templeton Worldwide, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the
case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin
Templeton Investments.
JOHN R. KAY (1940) Vice President Since 1994 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Templeton Worldwide, Inc.; Senior Vice President, Franklin Templeton Services, LLC; and officer of some of the other
subsidiaries of Franklin Resources, Inc. and of 32 of the investment companies in Franklin Templeton Investments; and FORMERLY, Vice
President and Controller, Keystone Group, Inc.
GARY P. MOTYL (1952) President Since 2007 Not Applicable Not Applicable
500 East Broward Blvd. and Chief
Suite 2100 Executive
Fort Lauderdale, FL 33394-3091 Officer -
Investment
Management
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Templeton Investment Counsel, LLC; and officer and/or director of some of the other subsidiaries of Franklin Resources,
Inc. and of six of the investment companies in Franklin Templeton Investments.
ROBERT C. ROSSELOT (1960) Secretary Since 2004 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; Assistant Secretary, Franklin Resources, Inc.; Vice President and
Secretary, Templeton Investment Counsel, LLC; Vice President, Secretary and Trust Officer, Fiduciary Trust International of the
South; and officer of 14 of the investment companies in Franklin Templeton Investments.
Annual Report | 47
NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH LENGTH OF FUND COMPLEX OVERSEEN
AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ------------------------------ --------------- ------------------ ----------------------- ----------------------------------
GREGORY R. SEWARD (1956) Treasurer Since 2004 Not Applicable Not Applicable
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 18 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Vice President, JPMorgan Chase (2000-2004) and American General Financial Group (1991-2000).
CRAIG S. TYLE (1960) Vice President Since 2005 Not Applicable Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Partner, Shearman & Sterling,
LLP (2004-2005); and General Counsel, Investment Company Institute (ICI) (1997-2004).
GALEN VETTER (1951) Senior Vice Since Not Applicable Not Applicable
500 East Broward Blvd. President and February 2008
Suite 2100 Chief Executive
Fort Lauderdale, FL 33394-3091 Officer -
Finance and
Administration
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of some of the other subsidiaries of Franklin Resources, Inc. and
of 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Managing Director, RSM McGladrey, Inc.
(1999-2004); and Partner, McGladrey & Pullen, LLP (1979-1987 and 1991-2004).
* We base the number of portfolios on each separate series of the U.S.
registered investment companies within the Franklin Templeton Investments
fund complex. These portfolios have a common investment manager or
affiliated investment managers.
** Charles B. Johnson is considered to be interested person of the Fund under
the federal securities laws due to his position as officer and director and
major shareholder of Franklin Resources, Inc. (Resources), which is the
parent company of the Fund's investment manager and distributor. Gregory E.
Johnson is considered to be interested person of the Fund under the federal
securities laws due to his position as officer and director Resources.
Note 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
father and uncle, respectively, of Gregory E. Johnson.
Note 2: Officer information is current as of the date of this report. It is
possible that after this date, information about officers may change.
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT
COMMITTEE INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL
EXPERT WITHIN THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED EACH OF ANN TORRE BATES AND DAVID W. NIEMIEC AS AN AUDIT COMMITTEE
FINANCIAL EXPERT. THE BOARD BELIEVES THAT MS. BATES AND MR. NIEMIEC QUALIFY AS
SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND AND EXPERIENCE.
MS. BATES HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE SINCE JANUARY 2008.
SHE CURRENTLY SERVES AS A DIRECTOR OF SLM CORPORATION AND ALLIED CAPITAL
CORPORATION AND WAS FORMERLY THE EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER OF NHP INCORPORATED AND VICE PRESIDENT AND TREASURER OF US AIRWAYS, INC.
MR. NIEMIEC HAS SERVED AS A MEMBER OF THE FUND AUDIT COMMITTEE SINCE 2005,
CURRENTLY SERVES AS AN ADVISOR TO SARATOGA PARTNERS AND WAS FORMERLY ITS
MANAGING DIRECTOR FROM 1998 TO 2001. MR. NIEMIEC IS A DIRECTOR OF EMERITUS
CORPORATION AND OSI PHARMACEUTICALS, INC. AND VARIOUS PRIVATE COMPANIES, AND WAS
FORMERLY MANAGING DIRECTOR OF SBC WARBURG DILLON READ FROM 1997 TO 1998, AND WAS
VICE CHAIRMAN FROM 1991 TO 1997 AND CHIEF FINANCIAL OFFICER FROM 1982 TO 1997 OF
DILLON, READ & CO. INC. AS A RESULT OF SUCH BACKGROUND AND EXPERIENCE, THE BOARD
BELIEVES THAT MS. BATES AND MR. NIEMIEC HAVE EACH ACQUIRED AN UNDERSTANDING OF
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENTS, THE GENERAL
APPLICATION OF SUCH PRINCIPLES IN CONNECTION WITH THE ACCOUNTING ESTIMATES,
ACCRUALS AND RESERVES, AND ANALYZING AND EVALUATING FINANCIAL STATEMENTS THAT
PRESENT A BREADTH AND LEVEL OF COMPLEXITY OF ACCOUNTING ISSUES GENERALLY
COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN UNDERSTANDING OF INTERNAL
CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN UNDERSTANDING OF AUDIT
COMMITTEE FUNCTIONS. MS. BATES AND MR. NIEMIEC ARE INDEPENDENT BOARD MEMBERS AS
THAT TERM IS DEFINED UNDER THE APPLICABLE U.S. SECURITIES AND EXCHANGE
COMMISSION RULES AND RELEASES.
THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL (800) DIAL BEN/(800) 342-5236 TO REQUEST THE SAI.
48 | Annual Report
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT
At a meeting held May 20, 2008, the Board of Directors (Board), including a
majority of non-interested or independent Directors, approved renewal of the
investment management agreement for the Fund. In reaching this decision, the
Board took into account information furnished throughout the year at regular
Board meetings, as well as information prepared specifically in connection with
the annual renewal review process. Information furnished and discussed
throughout the year included investment performance reports and related
financial information for the Fund, as well as periodic reports on shareholder
services, legal, compliance, pricing, brokerage commissions and execution and
other services provided by the Investment Manager (Manager) and its affiliates.
Information furnished specifically in connection with the renewal process
included a report for the Fund prepared by Lipper, Inc. (Lipper), an independent
organization, as well as a Fund profitability analysis report prepared by
management. The Lipper report compared the Fund's investment performance and
expenses with those of other mutual funds deemed comparable to the Fund as
selected by Lipper. The Fund profitability analysis report discussed the
profitability to Franklin Templeton Investments from its overall U.S. fund
operations, as well as on an individual fund-by-fund basis. Included with such
profitability analysis report was information on a fund-by-fund basis listing
portfolio managers and other accounts they manage, as well as information on
management fees charged by the Manager and its affiliates including management's
explanation of differences where relevant and a three-year expense analysis with
an explanation for any increase in expense ratios. Additional material
accompanying such report was a memorandum prepared by management describing
project initiatives and capital investments relating to the services provided to
the Fund by the Franklin Templeton Investments organization, as well as a
memorandum relating to economies of scale and a comparative analysis concerning
transfer agent fees charged the Fund.
In considering such materials, the independent Directors received assistance and
advice from and met separately with independent counsel. In approving
continuance of the investment management agreement for the Fund, the Board,
including a majority of independent Directors, determined that the existing
management fee structure was fair and reasonable and that continuance of the
investment management agreement was in the best interests of the Fund and its
shareholders. While attention was given to all information furnished, the
following discusses some primary factors relevant to the Board's decision.
NATURE, EXTENT AND QUALITY OF SERVICES. The Board was satisfied with the nature
and quality of the overall services provided by the Manager and its affiliates
to the Fund and its shareholders. In addition to investment performance and
expenses discussed later, the Board's opinion was based, in part, upon periodic
reports furnished them showing that the investment policies and restrictions for
the Fund were consistently complied with as well as other reports periodically
furnished the Board covering matters such as the compliance of portfolio
managers and other management personnel with the code of ethics adopted
throughout the Franklin Templeton fund complex, the adherence to fair value
pricing procedures established by the Board, and the accuracy of net asset value
calculations. The Board also noted the extent of benefits provided Fund
Annual Report | 49
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
shareholders from being part of the Franklin Templeton family of funds,
including the right to exchange investments between the same class of funds
without a sales charge, the ability to reinvest Fund dividends into other funds
and the right to combine holdings in other funds to obtain a reduced sales
charge. Favorable consideration was given to management's continuous efforts and
expenditures in establishing back-up systems and recovery procedures to function
in the event of a natural disaster, it being noted that such systems and
procedures had functioned smoothly during the Florida hurricanes and blackouts
experienced in recent years. Among other factors taken into account by the Board
were the Manager's best execution trading policies, including a favorable report
by an independent portfolio trading analytical firm. Consideration was also
given to the experience of the Fund's portfolio management team, the number of
accounts managed and general method of compensation. In this latter respect, the
Board noted that a primary factor in management's determination of a portfolio
manager's bonus compensation was the relative investment performance of the
funds he or she managed and that a portion of such bonus was required to be
invested in a predesignated list of funds within such person's fund management
area so as to be aligned with the interests of Fund shareholders. The Board also
took into account the quality of transfer agent and shareholder services
provided Fund shareholders by an affiliate of the Manager, noting continuing
expenditures by management to increase and improve the scope of such services,
periodic favorable reports on such service conducted by third parties, the high
industry ranking given to the Franklin Templeton website, and the firsthand
experience of individual Board members who deal with the shareholder services
department in their capacities as shareholders in one or more of the various
Franklin Templeton funds.
INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment
performance of the Fund in view of its importance to shareholders. While
consideration was given to performance reports and discussions with portfolio
managers at Board meetings during the year, particular attention in assessing
performance was given to the Lipper report furnished for the agreement renewal.
The Lipper report prepared for the Fund showed the investment performance of its
Class A shares for the one-year period ended February 29, 2008, as well as
during the previous 10 years ended that date in comparison to a performance
universe consisting of all retail and institutional global large-cap value funds
as selected by Lipper. The Board noted that while its annualized total return
for the 10-year period was in the highest quintile of the Lipper performance
universe, its total return for the one-year period was in the second-lowest
quintile of its Lipper performance universe and its total return on an
annualized basis placed it in the lowest quintile and second-lowest quintile of
such universe for the previous three- and five-year periods, respectively. The
Board noted that changes had been made in the Fund's lead portfolio manager
during the past year and the independent Directors met separately with the lead
portfolio manager and other management representatives to discuss steps being
taken to improve such performance. While intending to continue monitoring the
Fund, the Board was satisfied with management's response and the efforts being
made to improve performance, including a recent addition to its portfolio
management team.
50 | Annual Report
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fees and total expense ratios of the Fund compared with a group of
other funds selected by Lipper as constituting its appropriate Lipper expense
group. Prior to making such comparison, the Board relied upon a survey showing
that the scope of management advisory services covered under the Fund's
investment management agreement was similar to those provided by fund managers
to other mutual fund groups. In reviewing comparative costs, emphasis was given
to the Fund's contractual investment management fee in comparison with the
contractual investment management fee that would have been charged by other
funds within its Lipper expense group assuming they were similar in size to the
Fund, as well as the actual total expenses of the Fund in comparison with those
of its Lipper expense group. The Lipper contractual investment management fee
analysis includes administrative charges as being part of a management fee, and
actual total expenses, for comparative consistency, are shown by Lipper for Fund
Class A shares. The results of such expense comparisons showed that the
contractual investment fee rate for the Fund was in the middle quintile of its
Lipper expense group and that its actual total expenses were in the least
expensive quintile of such group. The Board was satisfied with the management
fees and total expenses of the Fund in comparison to its Lipper expense group.
MANAGEMENT PROFITABILITY. The Board also considered the level of profits
realized by the Manager and its affiliates in connection with the operation of
the Fund. In this respect, the Board reviewed the Fund profitability analysis
that addresses the overall profitability of Franklin Templeton's U.S. fund
business, as well as its profits in providing management and other services to
the Fund. Specific attention was given to the methodology followed in allocating
costs to the Fund, it being recognized that allocation methodologies are
inherently subjective and various allocation methodologies may each be
reasonable while producing different results. In this respect, the Board noted
that, while being continuously refined and reflecting changes in the Manager's
own cost accounting, the allocation methodology was consistent with that
followed in profitability report presentations for the Fund made in prior years
and that the Fund's independent registered public accounting firm had been
engaged by the Manager to perform certain procedures on a biennial basis,
specified and approved by the Manager and the Fund's Board solely for their
purposes and use in reference to the profitability analysis. In reviewing and
discussing such analysis, management discussed with the Board its belief that
costs incurred in establishing the infrastructure necessary for the type of
mutual fund operations conducted by the Manager and its affiliates may not be
fully reflected in the expenses allocated to the Fund in determining its
profitability, as well as the fact that the level of profits, to a certain
extent, reflected operational cost savings and efficiencies initiated by
management. The Board also took into account management's expenditures in
improving shareholder services provided the Fund, as well as the need to meet
additional regulatory and compliance requirements resulting from the
Sarbanes-Oxley Act and recent SEC and other regulatory requirements. In
addition, the Board considered a third-party study comparing the profitability
of the Manager's parent on an overall basis as compared to other publicly held
managers broken down to show profitability from management operations exclusive
of distribution
Annual Report | 51
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION (CONTINUED)
BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)
expenses, as well as profitability including distribution expenses. The Board
also considered the extent to which the Manager and its affiliates might derive
ancillary benefits from fund operations, including its interest in a joint
venture entity that financed up-front commissions paid to brokers/dealers who
sold fund Class B shares prior to February 2005 when the offering of such shares
was discontinued, as well as potential benefits resulting from allocation of
fund brokerage and the use of "soft" commission dollars to pay for research.
Based upon its consideration of all these factors, the Board determined that the
level of profits realized by the Manager and its affiliates from providing
services to the Fund was not excessive in view of the nature, quality and extent
of services provided.
ECONOMIES OF SCALE. The Board also considered whether economies of scale are
realized by the Manager and its affiliates as the Fund grows larger and the
extent to which this is reflected in the level of management fees charged. While
recognizing that any precise determination is inherently subjective, the Board
noted that based upon the Fund profitability analysis, it appears that as some
funds get larger, at some point economies of scale do result in the Manager
realizing a larger profit margin on management services provided such a fund.
The Board also noted that economies of scale are shared with a fund and its
shareholders through management fee breakpoints so that as a fund grows in size,
its effective management fee rate declines. The Fund's investment management
agreement provides a fee at the rate of 0.63% on the first $1 billion of Fund
net assets declining in graduated stages thereafter to a fee of 0.49% on assets
in excess of $45 billion. The Fund is also charged a separate fee for
administrative services that starts at 0.15% on the first $200 million of Fund
net assets and declines through breakpoints to a fixed rate of 0.075% after net
assets reach the $1.2 billion level. At the end of 2007, the Fund's net assets
were approximately $37 billion, and the Board believed that to the extent
economies of scale may be realized by the Manager and its affiliates, the
schedules of fees under the investment management agreement provide a sharing of
benefits with the Fund and its shareholders.
PROXY VOTING POLICIES AND PROCEDURES
The Fund's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Fund uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Fund's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 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.
52 | Annual Report
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION (CONTINUED)
QUARTERLY STATEMENT OF INVESTMENTS
The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling (800)
SEC-0330.
Annual Report | 53
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Literature Request
LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
(800) DIAL BEN/(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
Franklin International Growth Fund
Franklin International Small Cap 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 Large Cap Equity Fund
Franklin Rising Dividends Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Real Estate Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities 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 Global Total Return 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-/INTERMEDIATE-TERM FUNDS
California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund
STATE-SPECIFIC
Alabama Michigan(7)
Arizona Minnesota(7)
California(8) Missouri
Colorado New Jersey
Connecticut New York(8)
Florida North Carolina
Georgia Ohio(7)
Kentucky Oregon
Louisiana Pennsylvania
Maryland Tennessee
Massachusetts(7) 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 four or more variations, including long-term
portfolios, intermediate-term portfolios, portfolios of insured securities,
a high-yield portfolio (CA only) and money market portfolios.
(9.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
10/08 Not part of the annual report
(FRANKLIN TEMPLETON One Franklin Parkway
INVESTMENTS (R) LOGO) San Mateo, CA 94403-1906
WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at franklintempleton.com. See
inside for details.
ANNUAL REPORT AND SHAREHOLDER LETTER
TEMPLETON GROWTH FUND, INC.
INVESTMENT MANAGER
Templeton Global Advisors Limited
PRINCIPAL UNDERWRITER
Franklin Templeton Distributors, Inc.
(800) DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
(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 A2008 10/08
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 he is "independent"
as defined under the relevant Securities and Exchange Commission Rules and
Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $156,215 for the fiscal year ended August 31, 2008 and $164,713 for the
fiscal year ended August 31, 2007.
(b) Audit-Related Fees
The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4 were $30,250 for
the fiscal year ended August 31, 2008 and $4,534 for the fiscal year ended
August 31, 2007. The services for which these fees were paid included
attestation services.
There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial
statements.
(c) Tax Fees
There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.
The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $0 for the fiscal year ended August
31, 2008 and $46,000 for the fiscal year ended August 31, 2007. The services for
which these fees were paid included tax compliance and advice.
(d) All Other Fees
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $23,963 for the fiscal year ended August 31,
2008 and $0 for the fiscal year ended August 31, 2007. The services for which
these fees were paid include review of materials provided to the fund Board in
connection with the investment management contract renewal process.
The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant not reported
in paragraphs (a)-(c) of Item 4 were $260,114 for the fiscal year ended August
31, 2008 and $0 for the fiscal year ended August 31, 2007. The services for
which these fees were paid include review of materials provided to the fund
Board in connection with the investment management contract renewal process.
(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:
(i) pre-approval of all audit and audit related services;
(ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;
(iii) pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and
(iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.
(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.
(f) No disclosures are required by this Item 4(f).
(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $314,327 for the fiscal year ended August 31, 2008 and $50,534
for the fiscal year ended August 31, 2007.
(h) The registrant's audit committee of the board has considered whether the
provision of non-audit services that were rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
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: October 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
-----------------------------------
Galen G. Vetter
Chief Executive Officer - Finance and
Administration
Date: October 28, 2008
By /s/LAURA F. FERGERSON
------------------------------------
Laura F. Fergerson
Chief Financial Officer and
Chief Accounting Officer
Date: October 28, 2008