UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-04892
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TEMPLETON GROWTH FUND, INC.
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(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091
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(Address of principal executive offices) (Zip code)
CRAIG S. TYLE, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
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(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
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Date of fiscal year end: 8/31
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Date of reporting period: 2/28/09
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ITEM 1. REPORTS TO STOCKHOLDERS.
FEBRUARY 28, 2009
SEMIANNUAL REPORT AND SHAREHOLDER LETTER
(GRAPHIC)
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GLOBAL
TEMPLETON GROWTH FUND, INC.
(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 semiannual report
Contents
SHAREHOLDER LETTER ........................................................ 1
SEMIANNUAL REPORT
Templeton Growth Fund, Inc. ............................................... 3
Performance Summary ....................................................... 12
Your Fund's Expenses ...................................................... 15
Financial Highlights and Statement of Investments ......................... 17
Financial Statements ...................................................... 26
Notes to Financial Statements ............................................. 30
Shareholder Information ................................................... 39
Shareholder Letter
Dear Shareholder:
During the six months ended February 28, 2009, world economies entered into a
significant slowdown spawned by the U.S. housing and credit market crises.
Despite coordinated efforts by many governments to address these problems, the
severe economic conditions and high degree of uncertainty fueled market
volatility. Most major equity indexes suffered double-digit losses for the
reporting period. Although this difficult environment is bound to provoke great
concern, we believe it is important to put short-term market developments in
perspective. Keep in mind that as daunting as current conditions may be, we have
navigated through other periods of high market volatility, including global
stock markets' severe declines of 1987 and the bursting of the technology bubble
in 2000. We remain committed to our long-term perspective and our disciplined
investment philosophy. Therefore, we view recent declines as potential
opportunities to find bargains that we believe may be well positioned to become
eventual winners. Although conditions remain challenging, our experience gives
us reason to be optimistic about the potential for future market stabilization
and recovery.
Templeton Growth Fund's semiannual report goes into greater detail about
prevailing conditions during the period under review. In addition, the portfolio
managers discuss investment management decisions and Fund performance for the
period. You will also find performance data and financial information. Please
remember that all securities markets fluctuate, as do mutual fund share prices.
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Not part of the semiannual report | 1
If you would like more frequent updates, franklintempleton.com provides daily
prices, monthly performance figures, portfolio holdings and other information.
You can also access your account, buy and sell shares, read timely articles, and
find helpful financial planning tools. We hope you will take advantage of these
online services.
Historically, patient investors have achieved rewarding results by evaluating
their goals, diversifying their assets globally and maintaining a disciplined
investment program, all hallmarks of the Templeton investment philosophy
developed more than 50 years ago. We continue to recommend investors consult
their financial advisors and review their portfolios to design a long-term
strategy and portfolio allocation that meet their individual needs, goals and
risk tolerance. We firmly believe that most people benefit from professional
advice, and that advice is invaluable as investors navigate current market
environments.
We thank you for investing with Franklin Templeton, welcome your questions and
comments, and look forward to serving your investment needs in the years ahead.
Sincerely,
/s/ Gary P. Motyl
Gary P. Motyl, CFA
President and Chief Executive Officer - Investment Management
Templeton Growth Fund, Inc.
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF FEBRUARY 28, 2009. 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.
2 | Not part of the semiannual report
Semiannual Report
Templeton Growth Fund, Inc.
YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Growth Fund seeks long-term
capital growth. Under normal market conditions, the Fund invests primarily in
equity securities of companies located anywhere in the world, including emerging
markets.
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 semiannual report for Templeton Growth Fund covers the period ended
February 28, 2009.
PERFORMANCE OVERVIEW
Templeton Growth Fund - Class A had a -44.66% cumulative total return for the
six months under review. The Fund performed comparably to its benchmark, the
Morgan Stanley Capital International (MSCI) World Index, which had a -43.38%
total return for the same period.(1) For the 10-year period ended February 28,
2009, Templeton Growth Fund - Class A delivered a +16.87% cumulative total
return, compared with the MSCI World Index's -19.10% 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 12.
ECONOMIC AND MARKET OVERVIEW
During the six months ended February 28, 2009, global economic conditions
continued to deteriorate. Business capital investment and consumer spending in
the U.S. and abroad showed steep declines, unemployment rose steadily, and
business and consumer confidence fell to new lows. In the U.S., gross domestic
product (GDP) fell 6.3% on an annualized basis in the fourth
(1.) Source: (C) 2009 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 2/28/09, the Fund's Class A 10-year
average annual total return not including the maximum sales charge was
+1.57%, compared with the -2.10% 10-year average annual total return of the
MSCI World Index. The index is unmanaged and includes reinvested dividends.
One cannot invest directly in an index, nor is an index representative of
the Fund's portfolio.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 22.
Semiannual Report | 3
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 2/28/09
(BAR CHART)
Europe 47.3%
North America 37.7%
Asia 11.6%
Latin America & Caribbean 0.1%
Short-Term Investments & Other Net Assets 3.3%
quarter of 2008.(2) GDP in the eurozone fell 1.5% in the final three months of
2008 and is expected to decelerate further in 2009.(3)
The economic slowdown and the seize-up in global credit markets, accompanied by
a decline in inflation indexes, led to easing of monetary policies in the U.S.,
Europe and many other industrialized and emerging countries. The U.S. Federal
Reserve Board cut rates aggressively, as did the European Central Bank and the
Bank of England. As of the end of the reporting period, interest rates in the
U.S. were near zero.
In addition, several countries enacted robust stimulus programs in response to
the global slowdown. In February 2009, the U.S. Congress passed President
Obama's fiscal stimulus package. The package totaled $787 billion and included
tax cuts and government spending of nearly $600 billion in 2009-2010 alone. In
Europe, deteriorating economic conditions led a number of large countries to
also introduce substantial stimulus packages and to continue attempts to revive
basic bank lending.
China announced a fiscal stimulus package during the period, which equaled about
15% of the country's 2008 GDP.(4) Although most observers believed this figure
overstated the actual stimulus effect, the package was significant and reflected
Chinese authorities' desire to avoid the social unrest that might come with
rising joblessness. With 6.8% year-over-year growth in fourth quarter 2008,
China's GDP declined to its slowest growth rate in seven years, although it was
still high relative to any other major economy.(5) Along with making five
successive rate cuts in late 2008, Chinese authorities introduced a series of
measures and public works projects to stimulate internal consumption and help
offset a slowdown in export growth.
Against this challenging economic backdrop, most global equity markets were
volatile, and nearly all local indexes suffered significant losses for the
six-month period. Despite negative economic data and an outlook for decelerating
corporate earnings and profit margins globally, many companies' balance sheets,
primarily outside the banking industry, remained relatively strong.
(2.) Source: Bureau of Economic Analysis.
(3.) Source: European Central Bank.
(4.) Source: International Monetary Fund.
(5.) Source: National Bureau of Statistics, China.
4 | Semiannual Report
INVESTMENT STRATEGY
Our investment strategy employs a bottom-up, value-oriented, long-term approach.
We focus on the market price of a company's securities relative to our
evaluation of the company's long-term earnings, asset value and cash flow
potential. As we look worldwide, we consider specific companies, rather than
sectors or countries, while doing in-depth research to construct a bargain list
from which we buy. Before we make a purchase, we look at the company's
price/earnings ratio, price/cash flow ratio, profit margins and liquidation
value.
MANAGER'S DISCUSSION
During the six months under review, nearly all investible asset classes in the
world's markets dramatically deteriorated. The scale and scope of the downturn
was comprehensive and was highly correlated across asset classes. By period-end,
stock indexes were setting new bear market lows at levels in some cases less
than half their 2007 peaks and, since then, more than $20 trillion have been
lost globally in equity markets. The failure of U.S. investment bank Lehman
Brothers at the beginning of the period seemed to unleash a systemic domino
effect on financial institutions around the world. Subsequently, the global
economy suffered as risk aversion increased, credit markets seized and
large-scale deleveraging occurred. The dramatic downturn we have since
experienced has left many questioning what caused the system to fail so
spectacularly. Disregarding the shortcomings of specific individuals, agencies
or institutions, the financial conventions largely responsible for the current
situation were leverage and securitization. Over the past two decades, the
financial system accrued significantly increased leverage, which was largely
channeled into quantitatively engineered structured assets conceived by bankers
and traders. Issuers and holders of a significant portion of these assets
constituted a "shadow banking system" that operated outside the scope of
regulatory oversight and grew exponentially to dwarf the size of the traditional
banking system and securities markets.
The securitization and packaging of the cash flows of prime and subprime
mortgages, credit cards, car loans and other assets into derivative securities
became increasingly prevalent. Numerous entities, including hedge funds,
insurance companies, banks, sovereign wealth funds and other special purpose
vehicles, purchased such securities for their extra yield and their purported
risk diversification. Years of accommodative monetary policy and low interest
rates, excessive credit creation, low risk aversion and leveraged buying, as
well as lax regulatory supervision and poor risk management, allowed such
securities to accumulate in the financial system. At its peak, the "shadow
banking system"
Semiannual Report | 5
was estimated to have grown to more than 10 times global GDP.(6) As long as the
asset prices that served as collateral for these structured securities increased
and the underlying cash flows were being collected, the leverage used to finance
them enhanced returns for their holders. But, the liquidity wave receded just as
the housing recession was gathering momentum and broader economic contraction
was in its early stages. The housing market weakness resulted in sustained price
declines for the collateral underlying the structured debt (primarily home
prices), and the general economic weakness resulted in rising default rates on
the original loans. Consequently, the structured securities that were supposed
to diversify risk and smooth out returns instead concentrated risk and pegged
returns to an unstable web of economic relationships.
By originating, distributing and trading these derivative securities, financial
and other institutions searching for yield took on exposure to an increasingly
overvalued housing market. Unwittingly, they also jeopardized the functionality
of credit markets, the lifeblood of the capitalist system. Ultimately, these
securities' severe price declines, exacerbated by their illiquidity when their
undercapitalized holders needed to collectively sell them to repair their
balance sheets, threatened the solvency of the overall financial system.
Holders, including banks, investment banks and insurance companies, began
writing down the value of these unmarketable securities, which eroded their
capital bases and necessitated further sales and capital-raising schemes.
However, traditional credit markets were essentially closed, as banks balked at
lending much-needed cash to entities whose ongoing solvency was uncertain. In
our analysis, we believed beleaguered financial firms, desperate for capital,
had the following options: dilute shareholders through equity rights issues,
issue debt at penurious interest rates, become forced sellers of any remaining
marketable assets, draw on government bailout facilities and accept the
consequences of taxpayer funding, or simply, fail.
The reversal of credit creation (i.e., credit destruction or deleveraging) also
began to weigh heavily on the real economy during the period under review.
Already suffering from investment losses and home-price depreciation, and facing
an increasingly difficult labor market, consumers recoiled and retrenched.
Meanwhile, businesses hurried to cut costs, and the collective belt-tightening
effectively muted the demand side of the global economy. Previously fast-growing
emerging markets, which generally supply the developed world with goods and
services, lost their biggest customers, and their own domestic demand proved
unable to fill the gap, resulting in the first truly global recession since
World War II. As economic conditions around
(6.) Source: THE GLOBE AND MAIL, Canada, 9/27/08.
6 | Semiannual Report
the world deteriorated, demand for commodities plummeted, and, subsequently,
global trade shrank significantly. Valuations for many of the energy and
materials stocks that had rallied earlier in 2008 collapsed along with demand,
and the world's inflationary momentum turned decidedly deflation-ary by
period-end.
No region was immune from the ensuing equity market rout, and many of the Fund's
global equity holdings were affected. In general, Asian markets fared best, and
European markets, which declined every month during the reporting period, fared
worst. Volatile currency swings also impacted the portfolio. The euro's marked
decline versus the U.S. dollar during the period was a detractor from relative
performance, as the Fund's overweighting in Europe relative to the MSCI World
Index negatively impacted euro-denominated investments. Inversely, the Fund's
underweighted exposure to the U.S. curtailed the positive effects of the
dollar's rally.
Industrials stocks were significant laggards during the six months under review,
as the gathering global recession punished stocks considered to have
economically sensitive revenue streams.(7) General Electric (GE) and Siemens,
large engineering firms based in the U.S. and Germany, respectively, were among
the Fund's biggest detractors from absolute performance. We trimmed our GE
position during the period as, in our analysis, the company's balance sheet
became increasingly strained and its cash-flow generating ability deteriorated,
ultimately necessitating participation in the government's Temporary Liquidity
Guarantee Program (TLGP), which permitted GE Capital (the company's financing
arm) to issue debt backed by the Federal Deposit Insurance Corporation (FDIC).
Since we began reducing exposure at the beginning of January, the stock had
fallen almost 50% in value. At period-end levels, we believed the stock was once
again undervalued on a sum-of-the-parts basis, and we retained our reduced
weighting. Siemens, another core holding, became a larger Fund position than GE,
and we remained confident in the new management team's ability to restructure
operations, cut costs, and align its interests with those of the company's
shareholders. Our consumer discretionary stocks, another economically sensitive
sector, also underperformed the overall index in a period when consumer
confidence fell to its lowest level on record.(8) The Fund's media industry
holdings hurt performance largely due to a softening advertising environment.
The sector's automobiles and components and retailing industries, both closely
correlated with credit conditions and the economic cycle, were also notable
detractors.
TOP 10 COUNTRIES
Based on Equity Securities 2/28/09
% OF TOTAL
NET ASSETS
----------
U.S. 37.7%
U.K. 15.5%
France 10.2%
Germany 6.1%
Switzerland 5.3%
South Korea 3.8%
Japan 3.6%
Italy 2.8%
Netherlands 2.5%
Singapore 1.8%
(7.) The industrials sector comprises aerospace and defense, air freight and
logistics, industrial conglomerates, professional services, and trading
companies and distributors in the SOI.
(8.) The consumer discretionary sector comprises auto components; automobiles;
hotels, restaurants and leisure; Internet and catalog retail; media;
multiline retail; and specialty retail in the SOI.
Semiannual Report | 7
TOP 10 EQUITY HOLDINGS
2/28/09
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------ ----------
Oracle Corp. 3.5%
SOFTWARE, U.S.
Accenture Ltd., A 3.3%
IT SERVICES, U.S.
Microsoft Corp. 3.2%
SOFTWARE, U.S.
Amgen Inc. 3.1%
BIOTECHNOLOGY, U.S.
Pfizer Inc. 2.8%
PHARMACEUTICALS, U.S.
Sanofi-Aventis 2.6%
PHARMACEUTICALS, FRANCE
Vodafone Group PLC 2.4%
WIRELESS TELECOMMUNICATION
SERVICES, U.K.
Total SA, B 2.4%
OIL, GAS & CONSUMABLE FUELS, FRANCE
GlaxoSmithKline PLC 2.3%
PHARMACEUTICALS, U.K.
France Telecom SA 2.2%
DIVERSIFIED TELECOMMUNICATION
SERVICES, FRANCE
Defensive stocks declined less severely than more cyclical stocks. Given the
global economic environment, materials and financials were some of the market's
riskiest sectors during the review period and delivered some of the worst
absolute returns. We have been underweighted in the materials sector for some
time, due to what we believed were expensive valuations and an unsustainable
global demand profile.(9) This decision negatively impacted relative performance
prior to last summer when commodities prices were soaring. However, our
below-benchmark weighting was finally vindicated as prices declined
precipitously, and the materials sector was a significant contributor to
relative performance during the period under review. Financials represented
another sector where we have been underweighted since before the credit
crisis.(10) We were concerned by the sector's lack of balance sheet transparency
and the financial services industry's rapid growth over the past decade, which
we believed was driven by leverage and securitization, flimsy catalysts for
sustainable growth in our opinion. Unsurprisingly, financials was the Fund's
worst performing sector in absolute terms during the period under review. For
example, Dutch financial services conglomerate ING Groep was one of the Fund's
biggest absolute detractors. It posted a loss tied to asset write-downs and
required access to the Dutch government's bailout facility. However, our low
relative exposure to the financials sector and our avoidance of the investment
banks at the center of the credit crisis cushioned the portfolio from the full
extent of the sector's collapse. As a result, the financials sector was one of
our best contributors relative to the MSCI World Index.
In a period that rewarded defensive stock selection, the Fund's overweighted
telecommunication services sector position aided relative results as investors
sought the stable revenue streams and high dividend yields associated with
telecommunication services companies.(11) Despite a loss in absolute terms, a
newly initiated position in AT&T, the U.S.'s second-largest wireless provider
and largest fixed-line provider, was among the period's better performing
holdings. Turkcell Iletisim Hizmetleri (not an index component), Turkey's
incumbent wireless operator, also fared better than the index. The traditionally
defensive health care sector also declined less than the broader market, and our
overweighting helped relative Fund performance.(12) We continued to favor health
care stocks for their high free cash-flow yields and seemingly attractive
valuations. In addition, we believe an aging global population will
(9.) The materials sector comprises construction materials, metals and mining,
and paper and forest products in the SOI.
(10.) The financials sector comprises capital markets, commercial banks,
consumer finance, diversified financial services, insurance, and real
estate management and development in the SOI.
(11.) The telecommunication services sector comprises diversified
telecommunication services and wireless telecommunication services in the
SOI.
(12.) The health care sector comprises biotechnology, health care equipment and
supplies, health care providers and services, and pharmaceuticals in the
SOI.
8 | Semiannual Report
increasingly require the products and services provided by such companies. The
Fund's largest new acquisition during the period was German pharmaceutical and
diagnostics company Roche, which owns 55% of the U.S. biotechnology giant
Genentech and has an outstanding offer for the balance. Roche's stock price fell
as uncertainty over long-term prospects for the company's cancer franchise and a
tough research and development environment for drug makers dampened investor
enthusiasm. Our analysis indicated that the stock's decline, which has been
broadly in line with the sector, appeared unwarranted given what we believe is
the company's interesting drug pipeline and the prospects for growth from its
already approved products. Roche is free of material patent expirations, which
is a major uncertainty clouding the outlook for many of the industry's biggest
companies. Additionally, its stock traded at a steep discount to its historical
average valuation when we purchased it during the period, which in our opinion
was an attractive entry point into a strong brand name with a world-class drug
portfolio. Although Roche detracted from performance since we initiated our
position, we continued to hold it. The consumer staples sector was another
defensive stalwart during the period.(13) Consumer staples stocks are often
favored by investors in recessionary periods due to the nondiscretionary nature
of their products. The Fund's sector holdings, despite a decline in value,
sustained the smallest absolute losses; however, we considered the sector
expensive overall and unable to generate strong secular earnings growth, and
therefore held a significantly below-benchmark weighting, a decision that
negatively impacted performance relative to the index.
The period under review was one of the most trying times in our investment
careers. We also believe it could prove to be one of the most promising as, in
our opinion, valuations of some of the market's highest quality stocks have
rarely been so compelling, which gives us solid conviction for our investment
portfolios' future returns. However, an absence of buyers in the market and the
intense selling pressure experienced globally skewed momentum dramatically to
the downside, severely impairing recent investment performance. Although Fund
performance has been comparable in relative terms, generally tracking the MSCI
World Index over the period, absolute losses were substantial and painful. These
losses are indicative of the sweeping nature of the recent equity market
downturn. Templeton Growth Fund has been significantly underweighted in the
market's most precarious and artificially inflated sectors -- primarily
materials and financial services -- since well before the credit crisis began.
Yet, we were unable to sufficiently avoid the worst of the
(13.) The consumer staples sector comprises food and staples retailing, and food
products in the SOI.
Semiannual Report | 9
recent market sell-off, as the global financial crisis struck indiscriminately.
We remain optimistic that the Fund could ultimately benefit from this broad
market decline, which in our opinion has created significant disparities between
the prices and values of what we believe are some of the market's highest
quality stocks.
A timeline for recovery is impossible to predict, though we believe that
credible evidence of financial system stabilization is a prerequisite for an
eventual upturn. This systemic stabilization still hinges largely on the housing
market that collateralizes the system and the credit markets that capitalize it.
These markets need not recover overnight, but rather need to show consistent
evidence of an ongoing stabilization and transition process. We believe the
unprecedented global stimulus measures recently enacted could help accelerate
this process. This, in turn, could buoy equity markets, which recently seemed
more concerned with investor psychology than with discounted future earnings
expectations, the metric that has typically driven markets in the past. Key
measures of volatility, risk appetite and consumer confidence hit historical
extremes during the review period, revealing a bear market not only in stocks
but also in sentiment. Importantly, this created conditions often associated
with points of maximum pessimism, which have historically been advantageous
periods to buy stocks.
In times like these it is important to remind our shareholders that we have been
in difficult investment environments before and have dealt with adversity.
Templeton Growth Fund is now 55 years old and has weathered numerous economic
cycles. The Fund's contrarian, value investment philosophy has often put us on
the wrong side of momentum markets, as experienced during the recent commodities
and credit bubbles, and before that, the technology and
10 | Semiannual Report
Japanese market bubbles. Historically, though, the Fund has performed well in
the aftermath of these bubbles. We are supported by vast organizational strength
and a proven investment process. The foundation for future performance of equity
portfolios is being laid in today's market environment, and we remain optimistic
about the long-term investment implications of the market's current value
disparities. We thank you for your loyalty and trust in a difficult period.
(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 FEBRUARY 28, 2009, 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
Semiannual Report | 11
Performance Summary as of 2/28/09
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table does not reflect any taxes that a
shareholder would pay on Fund dividends, capital gain distributions, if any, or
any realized gains on the sale of Fund shares. Total return reflects
reinvestment of the Fund's dividends and capital gain distributions, if any, and
any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
CLASS A (SYMBOL: TEPLX) CHANGE 2/28/09 8/31/08
- ----------------------- ------ ------- -------
Net Asset Value (NAV) -$9.30 $10.52 $19.82
DISTRIBUTIONS (9/1/08-2/28/09)
Dividend Income $0.5363
CLASS B (SYMBOL: TMGBX) CHANGE 2/28/09 8/31/08
- ----------------------- ------ ------- -------
Net Asset Value (NAV) -$8.98 $10.36 $19.34
DISTRIBUTIONS (9/1/08-2/28/09)
Dividend Income $0.3626
CLASS C (SYMBOL: TEGTX) CHANGE 2/28/09 8/31/08
- ----------------------- ------ ------- -------
Net Asset Value (NAV) -$8.92 $10.28 $19.20
DISTRIBUTIONS (9/1/08-2/28/09)
Dividend Income $0.3715
CLASS R (SYMBOL: TEGRX) CHANGE 2/28/09 8/31/08
- ----------------------- ------ ------- -------
Net Asset Value (NAV) -$9.17 $10.43 $19.60
DISTRIBUTIONS (9/1/08-2/28/09)
Dividend Income $0.4864
ADVISOR CLASS (SYMBOL: TGADX) CHANGE 2/28/09 8/31/08
- ----------------------------- ------ ------- -------
Net Asset Value (NAV) -$9.35 $10.52 $19.87
DISTRIBUTIONS (9/1/08-2/28/09)
Dividend Income $0.5906
12 | Semiannual Report
Performance Summary (CONTINUED)
PERFORMANCE
CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND
VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. CLASS A: 5.75%
MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES CHARGE (CDSC)
DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER; CLASS C: 1%
CDSC IN FIRST YEAR ONLY; CLASS R/ADVISOR CLASS: NO SALES CHARGES.
CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- ------- ---------
Cumulative Total Return(1) -44.66% -49.03% -31.41% +16.87%
Average Annual Total Return(2) -47.84% -51.95% -8.36% +0.97%
Value of $10,000 Investment(3) $ 5,216 $ 4,805 $ 6,464 $11,018
Avg. Ann. Total Return (3/31/09)(4) -47.38% -6.63% +1.07%
Total Annual Operating Expenses(5) 1.03%
CLASS B 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- ------- ---------
Cumulative Total Return(1) -44.87% -49.44% -33.95% +10.05%
Average Annual Total Return(2) -47.01% -51.41% -8.23% +0.96%
Value of $10,000 Investment(3) $ 5,299 $ 4,859 $ 6,508 $11,005
Avg. Ann. Total Return (3/31/09)(4) -46.73% -6.51% +1.07%
Total Annual Operating Expenses(5) 1.78%
CLASS C 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- ------- ---------
Cumulative Total Return(1) -44.84% -49.42% -33.94% +8.44%
Average Annual Total Return(2) -45.38% -49.92% -7.96% +0.81%
Value of $10,000 Investment(3) $ 5,462 $ 5,008 $ 6,606 $10,844
Avg. Ann. Total Return (3/31/09)(4) -45.13% -6.23% +0.92%
Total Annual Operating Expenses(5) 1.77%
INCEPTION
CLASS R 6-MONTH 1-YEAR 5-YEAR (1/1/02)
- ------- ------- ------- ------- ---------
Cumulative Total Return(1) -44.71% -49.17% -32.26% -15.51%
Average Annual Total Return(2) -44.71% -49.17% -7.49% -2.33%
Value of $10,000 Investment(3) $ 5,529 $ 5,083 $ 6,774 $ 8,449
Avg. Ann. Total Return (3/31/09)(4) -44.29% -5.76% +1.41%
Total Annual Operating Expenses(5) 1.28%
ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------------- ------- ------- ------- ---------
Cumulative Total Return(1) -44.57% -48.89% -30.54% +19.92%
Average Annual Total Return(2) -44.57% -48.89% -7.03% +1.83%
Value of $10,000 Investment(3) $ 5,543 $ 5,111 $ 6,946 $11,992
Avg. Ann. Total Return (3/31/09)(4) -44.00% -5.28% +1.94%
Total Annual Operating Expenses(5) 0.78%
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.
Semiannual Report | 13
Performance Summary (CONTINUED)
ENDNOTES
SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
FLUCTUATIONS, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS. INVESTMENTS IN
DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN
ADDITION TO THOSE ASSOCIATED WITH THESE MARKETS' SMALLER SIZE AND LESSER
LIQUIDITY. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN
INVESTMENT RISKS.
CLASS B: These shares have higher annual fees and expenses than Class A
shares.
CLASS C: Prior to 1/1/04, these shares were offered with an initial sales
charge; thus actual total returns would have differed. These
shares have higher annual fees and expenses than Class A shares.
CLASS R: Shares are available to certain eligible investors as described
in the prospectus. These shares have higher annual fees and
expenses than Class A shares.
ADVISOR CLASS: Shares are available to certain eligible investors as described
in the prospectus.
(1.) Cumulative total return represents the change in value of an investment
over the periods indicated.
(2.) Average annual total return represents the average annual change in value
of an investment over the periods indicated. Six-month return has not been
annualized.
(3.) These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated.
(4.) In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
(5.) Figures are as stated in the Fund's prospectus current as of the date of
this report.
14 | Semiannual 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
- - 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.
Semiannual Report | 15
Your Fund's Expenses (CONTINUED)
Please note that expenses shown in the table are meant to highlight ongoing
costs and do not reflect any transaction costs, such as sales charges.
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 9/1/08 VALUE 2/28/09 PERIOD* 9/1/08-2/28/09
----------------- -------------- ----------------------
CLASS A
Actual $1,000 $ 553.40 $4.31
Hypothetical (5% return before expenses) $1,000 $1,019.24 $5.61
CLASS B
Actual $1,000 $ 551.30 $7.15
Hypothetical (5% return before expenses) $1,000 $1,015.57 $9.30
CLASS C
Actual $1,000 $ 551.60 $7.12
Hypothetical (5% return before expenses) $1,000 $1,015.62 $9.25
CLASS R
Actual $1,000 $ 552.90 $5.27
Hypothetical (5% return before expenses) $1,000 $1,018.00 $6.85
ADVISOR CLASS
Actual $1,000 $ 554.30 $3.35
Hypothetical (5% return before expenses) $1,000 $1,020.48 $4.36
* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 1.12%; B: 1.86%; C: 1.85%; R: 1.37%; and
Advisor: 0.87%), multiplied by the average account value over the period,
multiplied by 181/365 to reflect the one-half year period.
16 | Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED
FEBRUARY YEAR ENDED AUGUST 31,
28, 2009 -------------------------------------------------------------------------
CLASS A (UNAUDITED) 2008 2007 2006 2005 2004
- ------- ----------- ----------- ----------- ----------- ----------- -----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of period .. $ 19.82 $ 26.15 $ 25.29 $ 23.86 $ 21.03 $ 18.54
---------- ----------- ----------- ----------- ----------- -----------
Income from investment operations(a):
Net investment income(b) ........... 0.10 0.43 0.37 0.43 0.36 0.36
Net realized and unrealized gains
(losses) ........................ (8.86) (4.58) 2.66 2.73 3.66 2.58
---------- ----------- ----------- ----------- ----------- -----------
Total from investment operations ...... (8.76) (4.15) 3.03 3.16 4.02 2.94
---------- ----------- ----------- ----------- ----------- -----------
Less distributions from:
Net investment income .............. (0.54) (0.37) (0.49) (0.41) (0.41) (0.45)
Net realized gains ................. -- (1.81) (1.68) (1.32) (0.78) --
---------- ----------- ----------- ----------- ----------- -----------
Total distributions ................... (0.54) (2.18) (2.17) (1.73) (1.19) (0.45)
---------- ----------- ----------- ----------- ----------- -----------
Redemption fees(c) .................... -- --(d) --(d) --(d) --(d) --(d)
---------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ........ $ 10.52 $ 19.82 $ 26.15 $ 25.29 $ 23.86 $ 21.03
========== =========== =========== =========== =========== ===========
Total return(e) ....................... (44.66)% (17.43)% 12.60% 14.52% 19.72% 16.14%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses(g) ........................... 1.12% 1.03% 1.01% 1.05% 1.06% 1.10%
Net investment income ................. 1.47% 1.88% 1.44% 1.82% 1.61% 1.75%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ..... $9,451,856 $19,726,006 $27,997,564 $23,966,739 $20,786,173 $15,771,174
Portfolio turnover rate ............... 5.07% 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 17
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 2009 --------------------------------------------------------
CLASS B (UNAUDITED) 2008 2007 2006 2005 2004
- ------- ----------------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of period .. $ 19.34 $ 25.55 $ 24.75 $ 23.37 $ 20.64 $ 18.24
-------- -------- -------- -------- -------- --------
Income from investment operations(a):
Net investment income(b) ........... 0.05 0.25 0.17 0.24 0.19 0.21
Net realized and unrealized gains
(losses) ........................ (8.67) (4.48) 2.61 2.70 3.59 2.54
-------- -------- -------- -------- -------- --------
Total from investment operations ...... (8.62) (4.23) 2.78 2.94 3.78 2.75
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income .............. (0.36) (0.17) (0.30) (0.24) (0.27) (0.35)
Net realized gains ................. -- (1.81) (1.68) (1.32) (0.78) --
-------- -------- -------- -------- -------- --------
Total distributions ................... (0.36) (1.98) (1.98) (1.56) (1.05) (0.35)
-------- -------- -------- -------- -------- --------
Redemption fees(c) .................... -- --(d) --(d) --(d) --(d) --(d)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ........ $ 10.36 $ 19.34 $ 25.55 $ 24.75 $ 23.37 $ 20.64
======== ======== ======== ======== ======== ========
Total return(e) ....................... (44.87)% (18.07)% 11.78% 13.65% 18.84% 15.27%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses(g) ........................... 1.86% 1.78% 1.76% 1.79% 1.81% 1.85%
Net investment income ................. 0.73% 1.13% 0.69% 1.08% 0.86% 1.00%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ..... $154,198 $347,203 $563,335 $580,530 $557,670 $433,467
Portfolio turnover rate ............... 5.07% 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
18 | Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 2009 ------------------------------------------------------------------
CLASS C (UNAUDITED) 2008 2007 2006 2005 2004
- ------- ----------------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of period .. $ 19.20 $ 25.40 $ 24.63 $ 23.28 $ 20.56 $ 18.15
-------- ---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income(b) ........... 0.05 0.25 0.17 0.25 0.19 0.20
Net realized and unrealized gains
(losses) ........................ (8.60) (4.46) 2.60 2.67 3.57 2.54
-------- ---------- ---------- ---------- ---------- ----------
Total from investment operations ...... (8.55) (4.21) 2.77 2.92 3.76 2.74
-------- ---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income .............. (0.37) (0.18) (0.32) (0.25) (0.26) (0.33)
Net realized gains ................. -- (1.81) (1.68) (1.32) (0.78) --
-------- ---------- ---------- ---------- ---------- ----------
Total distributions ................... (0.37) (1.99) (2.00) (1.57) (1.04) (0.33)
-------- ---------- ---------- ---------- ---------- ----------
Redemption fees(c) .................... -- --(d) --(d) --(d) --(d) --(d)
-------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period ........ $ 10.28 $ 19.20 $ 25.40 $ 24.63 $ 23.28 $ 20.56
======== ========== ========== ========== ========== ==========
Total return(e) ....................... (44.84)% (18.08)% 11.78% 13.71% 18.77% 15.30%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses(g) ........................... 1.85% 1.77% 1.76% 1.79% 1.81% 1.85%
Net investment income ................. 0.74% 1.14% 0.69% 1.08% 0.86% 1.00%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ..... $824,983 $1,840,818 $2,759,141 $2,362,844 $1,965,909 $1,394,289
Portfolio turnover rate ............... 5.07% 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 19
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SIX MONTHS
ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
2009 -----------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
------------ -------- -------- -------- -------- -------
CLASS R
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period ............. $ 19.60 $ 25.88 $ 25.06 $ 23.68 $ 20.90 $ 18.44
-------- -------- -------- -------- -------- -------
Income from investment operations(a):
Net investment income(b) ...................... 0.08 0.36 0.31 0.45 0.32 0.33
Net realized and unrealized gains (losses) .... (8.76) (4.52) 2.63 2.62 3.62 2.56
-------- -------- -------- -------- -------- -------
Total from investment operations ................. (8.68) (4.16) 2.94 3.07 3.94 2.89
-------- -------- -------- -------- -------- -------
Less distributions from:
Net investment income ......................... (0.49) (0.31) (0.44) (0.37) (0.38) (0.43)
Net realized gains ............................ -- (1.81) (1.68) (1.32) (0.78) --
-------- -------- -------- -------- -------- -------
Total distributions .............................. (0.49) (2.12) (2.12) (1.69) (1.16) (0.43)
-------- -------- -------- -------- -------- -------
Redemption fees(c) ............................... -- --(d) --(d) --(d) --(d) --(d)
-------- -------- -------- -------- -------- -------
Net asset value, end of period ................... $ 10.43 $ 19.60 $ 25.88 $ 25.06 $ 23.68 $ 20.90
======== ======== ======== ======== ======== =======
Total return(e) .................................. (44.71)% (17.64)% 12.33% 14.22% 19.44% 15.85%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses(g) ...................................... 1.37% 1.28% 1.26% 1.30% 1.31% 1.35%
Net investment income ............................ 1.22% 1.63% 1.19% 1.57% 1.36% 1.50%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ................ $136,629 $304,469 $467,391 $403,334 $123,139 $57,951
Portfolio turnover rate .......................... 5.07% 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return does not reflect sales commissions or contingent deferred
sales charges, if applicable, and is not annualized for periods less than
one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
20 | Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SIX MONTHS
ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
2009 --------------------------------------------------------------------
(UNAUDITED) 2008 2007 2006 2005 2004
------------ ---------- ---------- ---------- ---------- --------
ADVISOR CLASS
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the
period)
Net asset value, beginning of period ...... $ 19.87 $ 26.22 $ 25.34 $ 23.90 $ 21.07 $ 18.57
---------- ---------- ---------- ---------- ---------- --------
Income from investment operations(a):
Net investment income(b) ............... 0.12 0.49 0.45 0.51 0.45 0.48
Net realized and unrealized gains
(losses) ............................ (8.88) (4.59) 2.66 2.72 3.63 2.52
---------- ---------- ---------- ---------- ---------- --------
Total from investment operations .......... (8.76) (4.10) 3.11 3.23 4.08 3.00
---------- ---------- ---------- ---------- ---------- --------
Less distributions from:
Net investment income .................. (0.59) (0.44) (0.55) (0.47) (0.47) (0.50)
Net realized gains ..................... -- (1.81) (1.68) (1.32) (0.78) --
---------- ---------- ---------- ---------- ---------- --------
Total distributions ....................... (0.59) (2.25) (2.23) (1.79) (1.25) (0.50)
---------- ---------- ---------- ---------- ---------- --------
Redemption fees(c) ........................ -- --(d) --(d) --(d) --(d) --(d)
---------- ---------- ---------- ---------- ---------- --------
Net asset value, end of period ............ $ 10.52 $ 19.87 $ 26.22 $ 25.34 $ 23.90 $ 21.07
========== ========== ========== ========== ========== ========
Total return(e) ........................... (44.57)% (17.24)% 12.93% 14.83% 19.97% 16.43%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses(g) ............................... 0.87% 0.78% 0.76% 0.80% 0.81% 0.85%
Net investment income ..................... 1.72% 2.13% 1.69% 2.07% 1.86% 2.00%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ......... $2,535,771 $5,008,718 $6,458,094 $3,972,615 $2,549,202 $911,764
Portfolio turnover rate ................... 5.07% 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) Effective September 1, 2008, the redemption fee was eliminated.
(d) Amount rounds to less than $0.01 per share.
(e) Total return is not annualized for periods less than one year.
(f) Ratios are annualized for periods less than one year.
(g) Benefit of expense reduction rounds to less than 0.01%.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 21
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED)
INDUSTRY SHARES VALUE
---------------------------------------------- ----------- ---------------
COMMON STOCKS 96.7%
BRAZIL 0.1%
Embraer-Empresa Brasileira de
Aeronautica SA, ADR.................. Aerospace & Defense 962,910 $ 10,409,057
---------------
FINLAND 0.7%
UPM-Kymmene OYJ......................... Paper & Forest Products 12,657,560 89,939,892
---------------
FRANCE 10.2%
Accor SA................................ Hotels, Restaurants & Leisure 1,614,178 58,125,645
Compagnie Generale des Etablissements
Michelin, B.......................... Auto Components 1,454,060 47,599,059
France Telecom SA....................... Diversified Telecommunication Services 12,658,620 285,555,012
Sanofi-Aventis.......................... Pharmaceuticals 6,658,920 345,084,822
Total SA, B............................. Oil, Gas & Consumable Fuels 6,681,300 317,175,811
Vivendi SA.............................. Media 11,881,070 285,396,016
---------------
1,338,936,365
---------------
GERMANY 6.1%
Bayerische Motoren Werke AG............. Automobiles 5,351,770 133,978,084
Deutsche Post AG........................ Air Freight & Logistics 11,752,760 114,324,837
Merck KGaA.............................. Pharmaceuticals 845,130 63,680,577
Muenchener Rueckversicherungs-
Gesellschaft AG...................... Insurance 681,550 83,864,861
SAP AG.................................. Software 4,110,620 133,390,826
Siemens AG.............................. Industrial Conglomerates 5,149,280 264,796,382
---------------
794,035,567
---------------
HONG KONG 1.2%
Cheung Kong (Holdings) Ltd. ............ Real Estate Management & Development 12,835,800 105,680,204
Swire Pacific Ltd., A................... Real Estate Management & Development 8,947,500 55,610,723
---------------
161,290,927
---------------
INDIA 0.2%
ICICI Bank Ltd., ADR.................... Commercial Banks 2,366,030 29,480,734
---------------
IRELAND 0.7%
CRH PLC................................. Construction Materials 4,327,162 86,075,707
---------------
ITALY 2.8%
Eni SpA................................. Oil, Gas & Consumable Fuels 10,031,875 201,523,083
Intesa Sanpaolo SpA..................... Commercial Banks 46,239,843 113,386,463
UniCredit SpA........................... Commercial Banks 41,210,783 52,719,556
---------------
367,629,102
---------------
JAPAN 3.6%
FUJIFILM Holdings Corp. ................ Electronic Equipment, Instruments & Components 4,157,100 79,227,481
Konica Minolta Holdings Ltd. ........... Office Electronics 14,162,000 110,428,629
Mitsubishi UFJ Financial Group Inc. .... Commercial Banks 11,264,675 52,401,890
Olympus Corp. .......................... Health Care Equipment & Supplies 2,826,700 38,173,990
22 | Semiannual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED) (CONTINUED)
INDUSTRY SHARES VALUE
---------------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
JAPAN (CONTINUED)
Sumitomo Mitsui Financial Group
Inc................................. Commercial Banks 1,160,900 $ 37,707,393
Toyota Motor Corp...................... Automobiles 4,579,510 149,217,089
---------------
467,156,472
---------------
NETHERLANDS 2.5%
ING Groep NV........................... Diversified Financial Services 9,819,960 45,597,568
Koninklijke Philips Electronics NV..... Industrial Conglomerates 6,824,200 110,075,382
Randstad Holding NV.................... Professional Services 2,775,160 40,756,632
Reed Elsevier NV....................... Media 8,929,899 100,257,252
SBM Offshore NV........................ Energy Equipment & Services 2,077,888 27,516,024
---------------
324,202,858
---------------
NORWAY 0.2%
Aker Solutions ASA..................... Energy Equipment & Services 5,346,385 28,855,049
---------------
RUSSIA 0.4%
Gazprom, ADR........................... Oil, Gas & Consumable Fuels 3,650,000 46,464,500
---------------
SINGAPORE 1.8%
(a) Flextronics International Ltd. ........ Electronic Equipment, Instruments & Components 12,531,050 25,813,963
Singapore Telecommunications Ltd. ..... Diversified Telecommunication Services 130,938,000 208,019,297
---------------
233,833,260
---------------
SOUTH KOREA 3.8%
Hyundai Motor Co. Ltd. ................ Automobiles 2,970,277 94,331,403
(a) KB Financial Group Inc. ............... Commercial Banks 2,856,392 54,764,045
KT Corp., ADR.......................... Diversified Telecommunication Services 10,773,240 129,494,345
Samsung Electronics Co. Ltd. .......... Semiconductors & Semiconductor Equipment 696,886 216,775,651
---------------
495,365,444
---------------
SPAIN 1.5%
Inditex................................ Specialty Retail 1,308,567 49,606,911
Telefonica SA.......................... Diversified Telecommunication Services 8,028,479 149,584,107
---------------
199,191,018
---------------
SWEDEN 0.8%
Svenska Cellulosa AB, B................ Paper & Forest Products 8,227,197 53,618,036
Telefonaktiebolaget LM Ericsson, B..... Communications Equipment 6,916,340 57,542,500
---------------
111,160,536
---------------
SWITZERLAND 5.3%
Adecco SA.............................. Professional Services 2,645,920 80,971,255
Nestle SA.............................. Food Products 4,949,960 162,137,092
Novartis AG............................ Pharmaceuticals 7,077,840 258,079,634
Roche Holding AG....................... Pharmaceuticals 1,217,050 138,289,321
(a) UBS AG................................. Capital Markets 5,592,680 52,844,973
---------------
692,322,275
---------------
Semiannual Report | 23
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED) (CONTINUED)
INDUSTRY SHARES VALUE
---------------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
TAIWAN 1.0%
Taiwan Semiconductor Manufacturing
Co. Ltd. ............................ Semiconductors & Semiconductor Equipment 103,275,002 $ 132,653,560
---------------
TURKEY 0.6%
Turkcell Iletisim Hizmetleri AS, ADR.... Wireless Telecommunication Services 6,314,010 77,788,603
---------------
UNITED KINGDOM 15.5%
Aviva PLC............................... Insurance 34,791,870 143,839,671
BAE Systems PLC......................... Aerospace & Defense 8,922,040 47,416,124
BP PLC.................................. Oil, Gas & Consumable Fuels 43,024,572 275,892,519
Compass Group PLC....................... Hotels, Restaurants & Leisure 35,861,321 158,777,882
GlaxoSmithKline PLC..................... Pharmaceuticals 19,330,683 295,616,024
HSBC Holdings PLC....................... Commercial Banks 18,966,697 139,282,076
Kingfisher PLC.......................... Specialty Retail 63,454,655 114,830,454
Pearson PLC............................. Media 16,886,750 159,317,668
Royal Dutch Shell PLC, B................ Oil, Gas & Consumable Fuels 12,670,814 269,174,575
Standard Life PLC....................... Insurance 16,682,980 41,598,156
Tesco PLC............................... Food & Staples Retailing 7,257,720 34,594,597
Vodafone Group PLC...................... Wireless Telecommunication Services 178,696,219 320,053,631
Wolseley PLC............................ Trading Companies & Distributors 12,251,094 31,301,085
---------------
2,031,694,462
---------------
UNITED STATES 37.7%
Accenture Ltd., A....................... IT Services 14,659,680 427,916,059
ACE Ltd. ............................... Insurance 1,044,910 38,149,664
American Express Co. ................... Consumer Finance 4,720,580 56,930,195
(a) Amgen Inc. ............................. Biotechnology 8,360,540 409,081,222
AT&T Inc. .............................. Diversified Telecommunication Services 1,455,270 34,591,768
Bank of America Corp. .................. Diversified Financial Services 2,414,970 9,539,132
The Bank of New York Mellon Corp. ...... Capital Markets 849,059 18,823,638
(a) Boston Scientific Corp. ................ Health Care Equipment & Supplies 17,214,590 120,846,422
(a) Cisco Systems Inc. ..................... Communications Equipment 7,175,120 104,541,498
Comcast Corp., A........................ Media 20,793,810 252,644,791
Covidien Ltd. .......................... Health Care Equipment & Supplies 6,328,770 200,432,146
El Paso Corp. .......................... Oil, Gas & Consumable Fuels 21,819,720 147,283,110
(a) Expedia Inc. ........................... Internet & Catalog Retail 7,358,470 58,647,006
FedEx Corp. ............................ Air Freight & Logistics 1,251,600 54,081,636
General Electric Co. ................... Industrial Conglomerates 9,756,980 83,031,900
Harley-Davidson Inc. ................... Automobiles 3,407,790 34,418,679
The Home Depot Inc. .................... Specialty Retail 2,304,820 48,147,690
JPMorgan Chase & Co. ................... Diversified Financial Services 1,161,400 26,537,990
Merck & Co. Inc. ....................... Pharmaceuticals 6,815,600 164,937,520
Microsoft Corp. ........................ Software 26,227,710 423,577,516
News Corp., A........................... Media 33,888,630 188,420,783
(a) Oracle Corp. ........................... Software 29,566,600 459,464,964
Pfizer Inc. ............................ Pharmaceuticals 30,209,960 371,884,608
(a) Progressive Corp. ...................... Insurance 9,659,540 111,760,878
Quest Diagnostics Inc. ................. Health Care Providers & Services 624,960 28,641,917
24 | Semiannual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2009 (UNAUDITED) (CONTINUED)
INDUSTRY SHARES VALUE
---------------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
UNITED STATES (CONTINUED)
Seagate Technology...................... Computers & Peripherals 16,475,930 $ 70,846,499
(a) Sprint Nextel Corp...................... Wireless Telecommunication Services 32,673,060 107,494,367
Target Corp............................. Multiline Retail 1,909,680 54,063,041
Time Warner Inc......................... Media 17,975,340 137,151,844
Torchmark Corp.......................... Insurance 1,572,150 32,386,290
Tyco Electronics Ltd.................... Electronic Equipment, Instruments & Components 8,910,830 84,474,668
Tyco International Ltd.................. Industrial Conglomerates 6,435,590 129,033,580
United Parcel Service Inc., B........... Air Freight & Logistics 6,016,910 247,776,354
(a) Viacom Inc., B.......................... Media 9,812,070 151,007,757
The Walt Disney Co...................... Media 3,407,686 57,146,894
---------------
4,945,714,026
---------------
TOTAL COMMON STOCKS
(COST $21,158,503,384)............... 12,664,199,414
---------------
PRINCIPAL
AMOUNT (b)
-----------
SHORT TERM INVESTMENTS 3.3%
TIME DEPOSITS 2.4%
UNITED STATES 2.4%
Dresdner Bank AG, 0.30%, 3/02/09........ 174,330,000 174,330,000
Paribas Corp., 0.313%, 3/02/09.......... 140,000,000 140,000,000
---------------
TOTAL TIME DEPOSITS
(COST $314,330,000).................. 314,330,000
---------------
U.S. GOVERNMENT AND AGENCY
SECURITIES 0.9%
(c) FHLB, 3/02/09 - 5/18/09................. 97,590,000 97,548,680
(c) U.S. Treasury Bill, 3/26/09............. 25,000,000 24,997,675
---------------
TOTAL U.S. GOVERNMENT AND AGENCY
SECURITIES (COST $122,521,563)....... 122,546,355
---------------
TOTAL SHORT TERM INVESTMENTS
(COST $436,851,563).................. 436,876,355
---------------
TOTAL INVESTMENTS
(COST $21,595,354,947) 100.0%........ 13,101,075,769
OTHER ASSETS, LESS LIABILITIES
0.0% (d)............................. 2,362,045
---------------
NET ASSETS 100.0%....................... $13,103,437,814
===============
See Abbreviations on page 38.
(a) Non-income producing for the twelve months ended February 28, 2009.
(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.
(d) Rounds to less than 0.1% of net assets.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 25
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
February 28, 2009 (unaudited)
Assets:
Investments in securities:
Cost ....................................... $ 21,595,354,947
================
Value ...................................... $ 13,101,075,769
Receivables:
Capital shares sold ........................ 16,774,195
Dividends and interest ..................... 54,644,926
Other assets .................................. 266,680
----------------
Total assets ............................ 13,172,761,570
----------------
Liabilities:
Payables:
Investment securities purchased ............ 3,580,422
Capital shares redeemed .................... 47,067,693
Affiliates ................................. 11,957,900
Unaffiliated transfer agent fees ........... 3,592,380
Funds advanced by custodian ................... 837,653
Accrued expenses and other liabilities ........ 2,287,708
----------------
Total liabilities ....................... 69,323,756
----------------
Net assets, at value ................. $ 13,103,437,814
================
Net assets consist of:
Paid-in capital ............................... $ 25,496,435,504
Undistributed net investment income ........... 36,748,619
Net unrealized appreciation (depreciation) .... (8,495,604,504)
Accumulated net realized gain (loss) .......... (3,934,141,805)
----------------
Net assets, at value ................. $ 13,103,437,814
================
The accompanying notes are an integral part of these financial statements.
26 | Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (continued)
STATEMENT OF ASSETS AND LIABILITIES (continued)
February 28, 2009 (unaudited)
CLASS A:
Net assets, at value ........................................................... $9,451,856,337
--------------
Shares outstanding ............................................................. 898,259,694
--------------
Net asset value per share(a) ................................................... $ 10.52
--------------
Maximum offering price per share (net asset value per share / 94.25%) .......... $ 11.16
--------------
CLASS B:
Net assets, at value ........................................................... $ 154,198,407
--------------
Shares outstanding ............................................................. 14,877,789
--------------
Net asset value and maximum offering price per share(a) ........................ $ 10.36
--------------
CLASS C:
Net assets, at value ........................................................... $ 824,983,033
--------------
Shares outstanding ............................................................. 80,229,217
--------------
Net asset value and maximum offering price per share(a) ........................ $ 10.28
--------------
CLASS R:
Net assets, at value ........................................................... $ 136,628,734
--------------
Shares outstanding ............................................................. 13,096,251
--------------
Net asset value and maximum offering price per share ........................... $ 10.43
--------------
ADVISOR CLASS:
Net assets, at value ........................................................... $2,535,771,303
--------------
Shares outstanding ............................................................. 241,068,128
--------------
Net asset value and maximum offering price per share ........................... $ 10.52
--------------
(a) Redemption price is equal to net asset value less contingent deferred sales
charges, if applicable.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 27
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (continued)
STATEMENT OF OPERATIONS
for the six months ended February 28, 2009 (unaudited)
Investment income:
Dividends (net of foreign taxes of $10,804,676) .................................... $ 229,841,790
Interest ........................................................................... 601,432
----------------
Total investment income ...................................................... 230,443,222
----------------
Expenses:
Management fees (Note 3a) .......................................................... 52,834,225
Administrative fees (Note 3b) ...................................................... 6,984,643
Distribution fees: (Note 3c)
Class A ......................................................................... 16,003,308
Class B ......................................................................... 1,089,986
Class C ......................................................................... 5,743,484
Class R ......................................................................... 503,710
Transfer agent fees (Note 3e) ...................................................... 14,127,000
Custodian fees (Note 4) ............................................................ 1,522,630
Reports to shareholders ............................................................ 741,350
Registration and filing fees ....................................................... 241,089
Professional fees .................................................................. 167,182
Directors' fees and expenses ....................................................... 149,907
Other .............................................................................. 308,959
----------------
Total expenses ............................................................... 100,417,473
Expense reductions (Note 4) .................................................. (17,168)
----------------
Net expenses .............................................................. 100,400,305
----------------
Net investment income .................................................. 130,042,917
----------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ..................................................................... (3,935,123,012)
Foreign currency transactions ................................................... (2,033,969)
----------------
Net realized gain (loss) ............................................... (3,937,156,981)
----------------
Net change in unrealized appreciation (depreciation) on:
Investments ..................................................................... (7,787,515,954)
Translation of other assets and liabilities denominated in foreign currencies ... 100,570
----------------
Net change in unrealized appreciation (depreciation) ................... (7,787,415,384)
----------------
Net realized and unrealized gain (loss) ............................................... (11,724,572,365)
----------------
Net increase (decrease) in net assets resulting from operations ....................... $(11,594,529,448)
================
The accompanying notes are an integral part of these financial statements.
28 | Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
FEBRUARY 28, 2009 YEAR ENDED
(UNAUDITED) AUGUST 31, 2008
----------------- ----------------
Increase (decrease) in net assets:
Operations:
Net investment income ............................... $ 130,042,917 $ 621,924,684
Net realized gain (loss) from investments and foreign
currency transactions ............................ (3,937,156,981) 640,988,828
Net change in unrealized appreciation (depreciation)
on investments and translation of assets and
liabilities denominated in foreign currencies .... (7,787,415,384) (7,429,531,787)
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations ............................ (11,594,529,448) (6,166,618,275)
---------------- ----------------
Distributions to shareholders from:
Net investment income:
Class A .......................................... (486,236,283) (398,180,382)
Class B .......................................... (5,699,628) (3,557,189)
Class C .......................................... (31,392,239) (19,831,619)
Class R .......................................... (7,072,823) (5,485,538)
Advisor Class .................................... (139,524,635) (111,288,787)
Net realized gains:
Class A .......................................... -- (1,932,682,568)
Class B .......................................... -- (38,875,982)
Class C .......................................... -- (196,075,375)
Class R .......................................... -- (32,361,661)
Advisor Class .................................... -- (459,228,781)
---------------- ----------------
Total distributions to shareholders .................... (669,925,608) (3,197,567,882)
---------------- ----------------
Capital share transactions: (Note 2)
Class A .......................................... (1,400,762,716) (1,493,923,114)
Class B .......................................... (42,600,907) (86,812,017)
Class C .......................................... (211,893,260) (250,773,274)
Class R .......................................... (30,275,061) (56,111,994)
Advisor Class .................................... (173,790,633) 233,428,067
---------------- ----------------
Total capital share transactions ....................... (1,859,322,577) (1,654,192,332)
---------------- ----------------
Redemption fees ........................................ -- 70,012
---------------- ----------------
Net increase (decrease) in net assets ......... (14,123,777,633) (11,018,308,477)
Net assets:
Beginning of period .................................... 27,227,215,447 38,245,523,924
---------------- ----------------
End of period .......................................... $ 13,103,437,814 $ 27,227,215,447
================ ================
Undistributed net investment income included in net assets:
End of period .......................................... $ 36,748,619 $ 576,631,310
================ ================
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 29
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Growth Fund, Inc. (Fund) is registered under the Investment Company
Act of 1940, as amended, (1940 Act) as an 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 Funds' significant accounting policies.
A. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market. Time deposits are valued at cost.
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.
30 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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 February 28, 2009, and has
determined that no provision for income tax is required in the Fund's financial
statements.
Semiannual Report | 31
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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, not
including 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 was imposed, with some exceptions, on any
Fund shares that were redeemed or exchanged within seven calendar days following
their purchase date. The redemption fee was 2% of the amount redeemed. Such fees
were retained by the Fund and accounted for as an addition to paid-in capital.
Effective September 1, 2008, the redemption fee was eliminated.
32 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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 February 28, 2009, there were 2.4 billion shares authorized ($0.01 par
value). Transactions in the Fund's shares were as follows:
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2009 AUGUST 31, 2008
------------------------------ ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
CLASS A SHARES:
Shares sold .................... 54,728,704 $ 745,695,684 126,468,089 $ 2,928,878,098
Shares issued in reinvestment
of distributions ............ 30,720,375 386,155,192 81,526,423 2,015,496,803
Shares redeemed ................ (182,590,556) (2,532,613,592) (283,228,141) (6,438,298,015)
------------ --------------- ------------ ---------------
Net increase (decrease) ........ (97,141,477) $(1,400,762,716) (75,233,629) $(1,493,923,114)
============ =============== ============ ===============
CLASS B SHARES:
Shares sold .................... 205,559 $ 2,724,571 357,372 $ 8,136,111
Shares issued in reinvestment
of distributions ............ 420,778 5,217,652 1,598,248 38,753,026
Shares redeemed ................ (3,700,306) (50,543,130) (6,053,074) (133,701,154)
------------ --------------- ------------ ---------------
Net increase (decrease) ........ (3,073,969) $ (42,600,907) (4,097,454) $ (86,812,017)
============ =============== ============ ===============
CLASS C SHARES:
Shares sold .................... 3,674,079 $ 48,107,707 8,904,679 $ 202,266,942
Shares issued in reinvestment
of distributions ............ 2,213,003 27,219,607 7,786,538 187,468,064
Shares redeemed ................ (21,515,072) (287,220,574) (29,475,200) (640,508,280)
------------ --------------- ------------ ---------------
Net increase (decrease) ........ (15,627,990) $ (211,893,260) (12,783,983) $ (250,773,274)
============ =============== ============ ===============
CLASS R SHARES:
Shares sold .................... 2,219,929 $ 30,024,425 4,093,419 $ 92,473,831
Shares issued in reinvestment
of distributions ............ 559,988 6,983,047 1,527,062 37,405,095
Shares redeemed ................ (5,215,820) (67,282,533) (8,146,329) (185,990,920)
------------ --------------- ------------ ---------------
Net increase (decrease) ........ (2,435,903) $ (30,275,061) (2,525,848) $ (56,111,994)
============ =============== ============ ===============
ADVISOR CLASS SHARES:
Shares sold .................... 4,895,402 $ 66,992,927 14,115,788 $ 345,387,849
Shares issued in reinvestment
of distributions ............ 10,926,929 137,242,233 22,277,647 551,125,894
Shares redeemed ................ (26,862,778) (378,025,793) (30,632,913) (663,085,676)
------------ --------------- ------------ ---------------
Net increase (decrease) ........ (11,040,447) $ (173,790,633) 5,760,522 $ 233,428,067
============ =============== ============ ===============
Semiannual Report | 33
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets as follows:
ANNUALIZED FEE RATE NET ASSETS
- ------------------- ---------------------------------------------------
0.150% Up to and including $200 million
0.135% Over $200 million, up to and including $700 million
0.100% Over $700 million, up to and including $1.2 billion
0.075% In excess of $1.2 billion
C. DISTRIBUTION FEES
The Fund's Board of Directors has adopted distribution plans for each share
class, with the exception of Advisor Class shares, pursuant to Rule 12b-1 under
the 1940 Act. Under the Fund's Class A reimbursement distribution plan, the Fund
reimburses Distributors 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.
34 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
C. DISTRIBUTION FEES (CONTINUED)
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 period:
Sales charges retained net of commissions paid to unaffiliated
broker/dealers .................................................. $778,210
Contingent deferred sales charges retained ......................... $107,708
E. TRANSFER AGENT FEES
For the period ended February 28, 2009, the Fund paid transfer agent fees of
$14,127,000, of which $9,232,748 was retained by Investor Services.
4. EXPENSE OFFSET ARRANGEMENT
The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the period ended February 28, 2009, 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.
Semiannual Report | 35
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. INCOME TAXES (CONTINUED)
At February 28, 2009, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ............................ $21,600,176,775
===============
Unrealized appreciation ........................ $ 267,221,981
Unrealized depreciation ........................ (8,766,322,987)
---------------
Net unrealized appreciation (depreciation) ..... $(8,499,101,006)
===============
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.
The Fund utilized a tax accounting practice to treat a portion of the proceeds
from capital shares redeemed as a distribution from realized capital gains.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
period ended February 28, 2009, aggregated $931,746,690 and $3,544,774,062,
respectively.
7. CONCENTRATION OF RISK
Investing in foreign securities may include certain risks and considerations not
typically associated with investing in U.S. securities, such as fluctuating
currency values and changing local and regional economic, political and social
conditions, which may result in greater market volatility. In addition, certain
foreign securities may not be as liquid as U.S. securities.
8. CREDIT FACILITY
Effective January 23, 2009, the Fund, together with other U.S. registered and
foreign investment funds managed by Franklin Templeton Investments
(individually, "Borrower"; collectively "Borrowers"), entered into a joint
syndicated senior unsecured credit facility totaling $725 million (Global Credit
Facility) to provide a source of funds to the Borrowers for temporary and
emergency purposes, including the ability to meet future unanticipated or
unusually large redemption requests.
36 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
8. CREDIT FACILITY (CONTINUED)
Under the terms of the Global Credit Facility, the Fund shall, in addition to
interest charged on any borrowings made by the Fund and other costs incurred by
the Fund, pay its share of fees and expenses incurred in connection with the
implementation and maintenance of the Global Credit Facility, based upon its
relative share of the aggregate net assets of all of the Borrowers, including an
annual commitment fee based upon the unused portion of the Global Credit
Facility. During the period, the Fund incurred commitment fees of $4,156 of its
pro rata portion of the Global Credit Facility, which is reflected in Other
expenses on the Statement of Operations. During the period ended February 28,
2009, the Fund did not utilize the Global Credit Facility.
9. FAIR VALUE MEASUREMENTS
The Fund adopted Financial Accounting Standards Board (FASB) Statement No. 157,
"Fair Value Measurement" (SFAS 157), on September 1, 2008. SFAS 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. The Fund has determined that the implementation
of SFAS 157 did not have a material impact on the Fund's financial statements.
SFAS 157 establishes a fair value hierarchy that distinguishes between market
data obtained from independent sources (observable inputs) and the Fund's own
market assumptions (unobservable inputs). These inputs are used in determining
the value of the Fund's investments and are summarized in the following fair
value hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
The following is a summary of the inputs used as of February 28, 2009, in
valuing the Fund's assets carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
--------------- ------------ ------- ---------------
ASSETS:
Investments in Securities .... $12,689,197,089 $411,878,680 $-- $13,101,075,769
Semiannual Report | 37
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
10. NEW ACCOUNTING PRONOUNCEMENT
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 believes applying the various provisions of
SFAS 161 will not have a material impact on its financial statements.
ABBREVIATIONS
SELECTED PORTFOLIO
ADR - American Depository Receipt
FHLB - Federal Home Loan Bank
38 | Semiannual Report
Templeton Growth Fund, Inc.
SHAREHOLDER INFORMATION
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.
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.
Semiannual Report | 39
This page intentionally left blank.
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
VALUE
Franklin All Cap Value Fund
Franklin Balance Sheet Investment 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(2)
Mutual Shares Fund
BLEND
Franklin Focused Core Equity Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund
GROWTH
Franklin Capital Growth Fund(1)
Franklin Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund(3)
Franklin Small Cap Growth Fund(4)
Franklin Small-Mid Cap Growth 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
GLOBAL
Mutual Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund
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
Templeton Frontier Markets Fund
HYBRID
Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Templeton Income Fund
ASSET ALLOCATION
Franklin Templeton Corefolio(R) Allocation Fund
Franklin Templeton Founding Allocation Funds
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
FIXED INCOME
Franklin Adjustable U.S. Government Securities Fund(5)
Franklin Floating Rate Daily Access Fund
Franklin High 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 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
Arizona
California(8)
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(7)
Michigan(7)
Minnesota(7)
Missouri
New Jersey
New York(8)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable Insurance Products Trust(9)
(1.) The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
(2.) 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.
(3.) 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.
(4.) 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.
(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.
12/08 Not part of the semiannual report
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) One Franklin Parkway
San Mateo, CA 94403-1906
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SEMIANNUAL 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 S2009 04/09
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.
(c) N/A
(d) N/A
(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a
copy of its code of ethics that applies to its principal executive
officers and principal financial and accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.
(2) The audit committee financial expert is David W. Niemiec and he is
"independent" as defined under the relevant Securities and Exchange
Commission Rules and Releases.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 6. SCHEDULE OF INVESTMENTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no changes to the procedures by which shareholders may recommend
nominees to the Registrant's Board of Directors that would require disclosure
herein.
ITEM 11. CONTROLS AND PROCEDURES.
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.
ITEM 12. EXHIBITS.
(a)(1) Code of Ethics
(a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, Chief Financial Officer and Chief Accounting Officer
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Mark H. Otani, 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/LAURA F. FERGERSON
--------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance and
Administration
Date: April 27, 2009
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/LAURA F. FERGERSON
--------------------------------------
Laura F. Fergerson
Chief Executive Officer - Finance and
Administration
Date: April 27, 2009
By /s/MARK H. OTANI
-------------------------------------
Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date: April 27, 2009