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: 2/28/10
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ITEM 1. REPORTS TO STOCKHOLDERS.
FEBRUARY 28, 2010
SEMIANNUAL REPORT
AND SHAREHOLDER LETTER
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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 ........................................ 11
Your Fund's Expenses ....................................... 14
Financial Highlights and Statement of Investments .......... 16
Financial Statements ....................................... 26
Notes to Financial Statements .............................. 30
Shareholder Information .................................... 40
SHAREHOLDER LETTER
Dear Shareholder:
During the six months ended February 28, 2010, world economies experienced
a significant recovery driven by one of the most aggressive global policy
responses in financial history. At the end of the period, however, as
investors began to believe the overall financial system was on the mend,
many governments began positioning themselves to curtail their spending
programs and low interest rate policies, and the market began to focus on
the risks associated with this transition.
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.
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
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Not part of the semiannual report | 1
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
changing 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.
CFA(R) and Chartered Financial Analyst(R) are trademarks owned by CFA
Institute.
THIS LETTER REFLECTS OUR ANALYSIS AND OPINIONS AS OF FEBRUARY 28, 2010. 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.
This semiannual report for Templeton Growth Fund covers the period ended
February 28, 2010.
PERFORMANCE OVERVIEW
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.
Templeton Growth Fund - Class A posted a +4.68% cumulative total return for the
six months under review. The Fund underperformed its benchmark, the Morgan
Stanley Capital International (MSCI) World Index, which had a +5.41% total
return for the same period.(1) In line with our long-term investment strategy,
we are pleased with our long-term results, as shown in the Performance Summary
beginning on page 11. For the 10-year period ended February 28, 2010, Templeton
Growth Fund - Class A delivered a +51.83% cumulative total return, compared with
the MSCI World Index's +5.29% 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.
ECONOMIC AND MARKET OVERVIEW
Equity markets broadly advanced and global economic data indicated measured
improvements during the six months under review. Significant problems persisted,
however, and investor anxiety resurfaced in the period's latter half. Global
equity markets began the period having just delivered their best six-month
returns in more than four decades as governments' aggressive monetary
(1.) Source: (C) 2010 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 2/28/10, the Fund's Class A 10-year
average annual total return not including the maximum sales charge was
+4.26%, compared with the +0.52% 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, and an index is not 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 21.
Semiannual Report | 3
and fiscal interventions began to gain traction. Investor sentiment reached its
highest level since the onset of the financial crisis, and most major economies
technically exited recession at the beginning of the period. Market volatility
increased in October, however, as lackluster economic data cast doubt over the
global recovery's sustainability. Strong corporate earnings helped buoy markets
through the final months of 2009, although concerns about Dubai's ability to
meet its debt obligations temporarily rattled markets and foreshadowed the
sovereign solvency issues that would gain attention in the initial months of
2010.
GEOGRAPHIC BREAKDOWN
Based on Total Net Assets as of 2/28/10
(BAR CHART)
Europe 44.2%
North America 42.2%
Asia 11.5%
Latin America & Caribbean 0.8%
Australia & New Zealand 0.6%
Short-Term Investments & Other Net Assets 0.7%
Bank lending restrictions in China and escalating debate about financial sector
reform added to concerns over the sovereign debt woes of Greece and some other
European countries, and the market rally stalled in early 2010. Economic data
remained broadly positive showing U.S. gross domestic product (GDP) growth at a
0.1% rate and Chinese GDP up 10.7% year-over-year in the fourth quarter of 2009.
However, investors received such economic reports with heightened skepticism.
While the market punished stocks of companies that failed to meet investors'
significantly elevated earnings expectations, overall financial results
generally exceeded those expectations, as emerging market demand and official
stimulus bolstered a global economic rebound and cost-reduction initiatives
drove corporate earnings growth. The mix of subsidized and organic demand also
supported commodities, most of which made gains during the period.
Monetary policy remained extraordinarily loose, although many central bankers
began to discuss ways to withdraw stimulus without stifling the fragile
recovery. In developing economies with more capacity for policy normalization,
like India and China, officials increased reserve requirements and tightened
lending standards to forestall asset bubble formation and general price
inflation. Growing concerns surrounding Europe's sovereign debt situation
punished the euro, triggering the common currency's longest losing streak
against the dollar in more than a year. Sovereign bond yields rose in the
world's more fiscally vulnerable regions, and European policymakers considered a
bilateral lending package should Greece require funding assistance. By
period-end, the future direction of financial markets and the global economy was
unclear, and pundits speculated on a wide range of potential outcomes.
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
4 | Semiannual Report
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
Over the past 18 months, investors have witnessed one of the most extraordinary
periods in the history of financial markets. When we wrote the Fund's
shareholder report in March 2009, more than $20 trillion of global equity value
had been destroyed and the financial system was entering uncharted territory.
Moving from one extreme to another, equities enjoyed their greatest rally in a
generation during the next six months (March through September 2009), with
nearly all investible asset classes rising as steeply and indiscriminately as
they had declined. Volatility of this degree is largely caused by investor
psychology. The financial crisis had so severely depressed expectations that the
main goal of policymakers in late 2008 was not growth or even recovery, but
merely avoidance of a complete collapse of the global financial system. Although
this made for a bleak business and economic climate, it also set the stage for
an influx of positive surprises as massive government stimuli began to take
hold. The Fund benefited from the investment opportunities associated with this
shift in investor sentiment, as Fund performance since the market bottom on
March 9, 2009, exceeded that of global equities in general as represented by the
MSCI World Index.(1)
Although this sentiment-driven rally appeared to be losing momentum by the end
of February 2010, investor expectations had been broadly reset at much higher
levels. During the six months under review, investors began to treat economic
and earnings news with heightened scrutiny and skepticism, effectively ending
the "honeymoon phase" of the global equity rally. Although the near-term result
of this shift was the return of moderate equity market volatility, we believe
heightened investor scrutiny could bode well for portfolios like Templeton
Growth Fund's that increased exposure to higher quality investments when the
financial crisis created historically depressed stock valuation levels. Despite
the inherent long-term advantages we saw within these quality enterprises --
fundamental financial strength, valuation support, brand recognition and revenue
diversification -- they were largely swept along with the rest of the stock
market's recent ebbs and flows. In 2010, amid a far more discriminating
investing environment, our assessment is that these higher quality companies
should have the upper hand.
TOP 10 COUNTRIES
Based on Equity Securities
2/28/10
% OF TOTAL
NET ASSETS
----------
U.S. 42.2%
U.K. 13.9%
France 8.3%
Switzerland 6.4%
Germany 5.5%
South Korea 4.3%
Netherlands 2.7%
Italy 2.4%
Singapore 2.2%
Japan 1.9%
Semiannual Report | 5
TOP 10 INDUSTRIES
Based on Equity Securities
2/28/10
% OF TOTAL
NET ASSETS
----------
Pharmaceuticals 11.8%
Media 9.4%
Oil, Gas & Consumable Fuels 7.9%
Software 7.1%
Insurance 5.4%
Diversified Telecommunication Services 5.0%
Industrial Conglomerates 4.8%
Commercial Banks 3.9%
Air Freight & Logistics 3.3%
Wireless Telecommunication Services 3.0%
Investors should remember, though, that substantial impairments remained in the
global financial system and conditions were far from normal at period-end, with
sovereign balance sheets facing the recession-induced strain of lower revenues
and higher expenditures exacerbated by significant fiscal stimulus measures put
in place during the economic downturn. Back in 2008, we contended that the
financial crisis would wind down over three stages: the stabilization stage, the
deleveraging stage, and then the long transition to a lower debt and likely
lower growth environment. Government interventions had stabilized the private
financial system, but absolute leverage levels had not yet declined by
period-end. Much of the excess debt problem has merely been transferred from the
private sector into the public sector. This mounting sovereign debt burden was
one of the major unfolding stories during the six months under review, a
counterweight that seemed to temper the optimism generated by improving economic
data and strong corporate earnings reports.
During the semiannual period, equity regions and sectors with greater exposure
to emerging market demand and a burgeoning global export recovery generally
delivered the best performance, though the environment to us seemed transitional
and without any dominant performance trends. Relative to the benchmark MSCI
World Index, the Fund's overweighted information technology holdings generated
strong absolute and relative performance.(2) In fact, four of the Fund's five
top-contributing stocks were in this sector. After a protracted period of weak
corporate spending on technology, a cyclical recovery appeared to be gathering
momentum, as evidenced by fourth quarter 2009's increase in U.S. equipment and
software investment, the largest uptick since 2000. The recession reemphasized
the importance of lean cost structures, which we view as a positive development
for productivity-enhancing sectors such as technology. We also were attracted to
the significant free cash flow yields and unburdened balance sheets of certain
technology stocks, which can provide companies with financial flexibility and
the means to self-fund growth.
The consumer discretionary sector was another significantly overweighted Fund
position that supported performance versus the benchmark index during the
period.(3) Sector returns were largely driven by a media industry weighting more
than four times the weight of the index. We built this overweighting over the
past few years, as depressed valuations created what we considered to be
substantial bargain opportunities in the industry. We continued to view certain
media stocks favorably at period-end and believed that
(2.) The information technology sector comprises semiconductors and
semiconductor equipment, software and services, and technology hardware and
equipment in the SOI.
(3.) The consumer discretionary sector comprises automobiles and components;
hotels, restaurants and leisure; Internet and catalog retail; media;
multiline retail; and specialty retail in the SOI.
6 | Semiannual Report
widespread investor concerns about advertising revenue declines and Internet
competition were overdone. Many of the highest quality media companies have been
in business for decades and have proven their ability to evolve and remain
profitable over numerous business cycles. From a fundamental perspective, the
industry's cash flow generation has been strong and some companies' managements
were starting to return that cash to shareholders. The Fund's top-contributing
media holding was U.S.-based News Corp., which posted results during the period
that revealed strong top-line growth and a rebound in advertising revenues, as
well as improved profitability enhanced by the company's cost-cutting
strategies.
Another major contributor to relative Fund performance was a sector we viewed
more skeptically: financials.(4) The Fund's selective underweighting in the
sector aided relative performance as financials stocks came under pressure from
sovereign debt exposures and increasing political headwinds. In aggregate, the
Fund's financials holdings did experience absolute losses, however. Half of the
Fund's 10 biggest detractors were in this sector, and operated within the
troubled euro zone. We have underweighted the Fund's position in financials
since before the credit crisis. At period-end we remained cautious, believing
bailout repayments and lingering bad debt exposures may negatively impact
earnings, while increasing regulatory scrutiny may render untenable some of the
business models employed so profitably over the past decade until excessive
leverage and declining asset prices proved them unsustainable.
In contrast, we viewed certain global health care stocks more favorably, though
these remained generally out of favor during the six months under review as U.S.
politicians continued to heatedly debate the nation's health care reform
initiatives.(5) In this environment, the Fund's stock selection among
pharmaceuticals companies hurt relative performance. We believe historically low
valuations largely reflected consensus fears surrounding patent expirations and
competition from generic brands and failed to acknowledge the compelling
longer-term investment case for select industry stocks. As the global population
ages, demand for health care services will increase, a trend we believe ensures
growth over the long term, particularly in the currently underserved developing
world where 80% of the global population accounts for a mere 30% of global
pharmaceutical revenues. Among pharmaceutical companies, analysts projected
revenue growth from new product launches would offset declines from expiring
patents over the next few years and, according to our analysis, the industry's
bloated cost structures present significant self-help potential as companies
work to realize efficiencies.
(4.) The financials sector comprises capital markets, commercial banks, consumer
finance, diversified financial services, insurance, and real estate
management and development in the SOI.
(5.) The health care sector comprises health care equipment and services; and
pharmaceuticals, biotechnology and life sciences in the SOI.
Semiannual Report | 7
TOP 10 EQUITY HOLDINGS
2/28/10
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- ------------------------ ----------
Microsoft Corp. 3.1%
SOFTWARE, U.S.
Oracle Corp. 3.0%
SOFTWARE, U.S.
Accenture PLC, A 2.9%
IT SERVICES, U.S.
Pfizer Inc. 2.5%
PHARMACEUTICALS, U.S.
Amgen Inc. 2.3%
BIOTECHNOLOGY, U.S.
Sanofi-Aventis 2.1%
PHARMACEUTICALS, FRANCE
News Corp., A 2.0%
MEDIA, U.S.
Vodafone Group PLC 1.9%
WIRELESS TELECOMMUNICATION SERVICES,
U.K.
Novartis AG 1.9%
PHARMACEUTICALS, SWITZERLAND
BP PLC 1.8%
OIL, GAS & CONSUMABLE FUELS, U.K.
Another counter-cyclical sector we like, telecommunication services, was also
out of favor during the semiannual review period.(6) Overall, our stock
selection and a portfolio weighting of nearly double the MSCI World Index's had
a combined detrimental effect on relative performance. The secular decline of
fixed-line communication services (i.e., landline telephones) negatively
impacted several sector companies in recent years, while heightened price
sensitivity in the wireless space lowered user revenues in a period when
wireless service providers were forced to increase capital outlays to support
popular, but data-intensive, smart phones. We also believe that the sector's
lack of operational leverage to an economic recovery has likely hampered recent
performance. However, we feel these difficulties created some attractive
long-term investment opportunities among select stocks we believe have low
valuations, high free cash flow yields, and promising growth prospects in
emerging markets. Global telecommunication companies generally also offer
dividend yields that, on average, have been significantly higher than the
current yields on even the longest-maturity U.S. Treasuries. And, as
telecommunications products and services become increasingly essential
worldwide, we think demand should become less elastic.
A significantly underweighted position in the consumer staples sector also
detracted from performance versus the benchmark index.(7) We believed that over
the longer term, structural headwinds from rising input prices, increasing
fragmentation and lack of innovation are too great to justify many recent
valuations, making it difficult for us to find promising bargains according to
our investment strategy. In the short term, however, the sector's investment
profile -- defensive (or non-cyclical), but exposed to emerging market growth --
was well-suited to a period when anxious investors pinned their recovery hopes
on rising demand from the developing world.
The emerging market demand theme also drove performance in terms of the Fund's
regional and country-specific allocations, with Fund holdings in India and
non-index countries South Korea and Brazil adding solidly to overall returns
this reporting period. The Fund's low exposure to the high-debt, low-growth
Japanese market also contributed to relative returns. Conversely, a significant
overweighting in Europe, where investors feared a sovereign debt crisis could be
unfolding, detracted from performance.
(6.) The telecommunication services sector comprises diversified
telecommunication services and wireless telecommunication services in the
SOI.
(7.) The consumer staples sector comprises food and staples retailing, and food
products in the SOI.
8 | Semiannual Report
It is important to recognize the effect of currency movements on the Fund's
performance. In general, if the value of the U.S. dollar goes up compared with a
foreign currency, an investment traded in that foreign currency will go down in
value because it will be worth fewer U.S. dollars. This can have a negative
effect on Fund performance. Conversely, when the U.S. dollar weakens in relation
to a foreign currency, an investment traded in that foreign currency will
increase in value, which can contribute to Fund performance. For the six months
ended February 28, 2010, the U.S. dollar rose in value relative to several major
currencies. As a result, the Fund's performance was negatively affected by the
portfolio's substantial investment in securities with non-U.S. currency
exposure.
At period-end, many of the problems festering in Europe and elsewhere held the
potential to significantly impact markets; however, Fund exposure to the regions
we considered most vulnerable to a possible debt contagion remained very
limited. Policymakers around the world were mulling difficult fiscal austerity
measures that included some combination of higher taxes and deep spending cuts,
and we think investors must take these potentialities into consideration.
Despite the challenges, we believed the stock market environment at period-end
still offered significant value opportunities for disciplined equity investors
with a long-term view. Even after the market's recovery rally, equities at the
end of February generally were attractively valued relative to most other asset
classes, and quality stocks were the cheapest in years relative to riskier
stocks. The cost and debt reduction initiatives necessitated by the financial
crisis made many companies stronger and more competitive, and the mix of organic
demand and official stimulus in emerging markets was a powerful earnings growth
catalyst for global enterprises. In our assessment, financially disciplined,
globally diversified, high quality companies with modestly valued stocks -- like
those in Templeton Growth Fund's portfolio at period-end -- are well-positioned
to deliver solid long-term performance.
Semiannual Report | 9
Thank you for your continued participation in Templeton Growth Fund. We look
forward to serving your future investment needs.
(PHOTO OF CINDY L. SWEETING)
/s/ Cindy L. Sweeting
Cindy L. Sweeting, CFA
(PHOTO OF LISA F. MYERS)
/s/ Lisa F. Myers
Lisa F. Myers, J.D., CFA
(PHOTO OF TUCKER SCOTT)
/s/ Tucker Scott
Tucker Scott, CFA
Portfolio Management Team
Templeton Growth Fund, Inc.
CFA(R) and Chartered Financial Analyst(R) are trademarks owned by CFA Institute.
THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF FEBRUARY 28, 2010, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT
OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.
10 | Semiannual Report
Performance Summary as of 2/28/10
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 2/28/10 8/31/09
- ----------------------- ------ ------- -------
Net Asset Value (NAV) +$0.48 $16.03 $15.55
DISTRIBUTIONS (9/1/09-2/28/10)
Dividend Income $0.2571
CLASS B (SYMBOL: TMGBX) CHANGE 2/28/10 8/31/09
- ----------------------- ------ ------- -------
Net Asset Value (NAV) +$0.53 $15.79 $15.26
DISTRIBUTIONS (9/1/09-2/28/10)
Dividend Income $0.1357
CLASS C (SYMBOL: TEGTX) CHANGE 2/28/10 8/31/09
- ----------------------- ------ ------- -------
Net Asset Value (NAV) +$0.51 $15.65 $15.14
DISTRIBUTIONS (9/1/09-2/28/10)
Dividend Income $0.1443
CLASS R (SYMBOL: TEGRX) CHANGE 2/28/10 8/31/09
- ----------------------- ------ ------- -------
Net Asset Value (NAV) +$0.49 $15.89 $15.40
DISTRIBUTIONS (9/1/09-2/28/10)
Dividend Income $0.2198
ADVISOR CLASS (SYMBOL: TGADX) CHANGE 2/28/10 8/31/09
- ----------------------------- ------ ------- -------
Net Asset Value (NAV) +$0.47 $16.03 $15.56
DISTRIBUTIONS (9/1/09-2/28/10)
Dividend Income $0.2938
Semiannual Report | 11
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 CHARGES; 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) +4.68% +54.74% -6.83% +51.83%
Average Annual Total Return(2) -1.34% +45.86% -2.56% +3.65%
Value of $10,000 Investment(3) $9,866 $14,586 $8,783 $14,307
Avg. Ann. Total Return (3/31/10)(4) +43.23% -1.09% +3.54%
Total Annual Operating Expenses(5) 1.12%
CLASS B 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- ------ -------
Cumulative Total Return(1) +4.33% +53.68% -10.19% +43.10%
Average Annual Total Return(2) +0.33% +49.68% -2.43% +3.65%
Value of $10,000 Investment(3) $10,033 $14,968 $8,843 $14,310
Avg. Ann. Total Return (3/31/10)(4) +46.84% -0.96% +3.53%
Total Annual Operating Expenses(5) 1.87%
CLASS C 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------- ------- ------- ------ -------
Cumulative Total Return(1) +4.29% +53.59% -10.21% +41.01%
Average Annual Total Return(2) +3.29% +52.59% -2.13% +3.50%
Value of $10,000 Investment(3) $10,329 $15,259 $8,979 $14,101
Avg. Ann. Total Return (3/31/10)(4) +49.79% -0.66% +3.38%
Total Annual Operating Expenses(5) 1.86%
INCEPTION
CLASS R 6-MONTH 1-YEAR 5-YEAR (1/1/02)
- ------- ------- ------- ------ ---------
Cumulative Total Return(1) +4.56% +54.38% -7.93% +30.45%
Average Annual Total Return(2) +4.56% +54.38% -1.64% +3.31%
Value of $10,000 Investment(3) $10,456 $15,438 $9,207 $13,045
Avg. Ann. Total Return (3/31/10)(4) +51.51% -0.17% +4.02%
Total Annual Operating Expenses(5) 1.37%
ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR 10-YEAR
- ------------- ------- ------- ------ -------
Cumulative Total Return(1) +4.85% +55.08% -5.62% +55.73%
Average Annual Total Return(2) +4.85% +55.08% -1.15% +4.53%
Value of $10,000 Investment(3) $10,485 $15,508 $9,438 $15,573
Avg. Ann. Total Return (3/31/10)(4) +52.26% +0.33% +4.41%
Total Annual Operating Expenses(5) 0.87%
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, GO TO
franklintempleton.com OR CALL (800) 342-5236.
12 | Semiannual Report
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. In periods of market volatility, assets may decline
significantly, causing total annual Fund operating expenses to become
higher than the figures shown.
Semiannual Report | 13
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.
14 | Semiannual Report
Your Fund's Expenses (CONTINUED)
PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING
COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES.
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 9/1/09 VALUE 2/28/10 PERIOD* 9/1/09-2/28/10
----------------- -------------- ----------------------
CLASS A
Actual $1,000 $1,046.80 $5.58
Hypothetical (5% return before expenses) $1,000 $1,019.34 $5.51
CLASS B
Actual $1,000 $1,043.30 $9.32
Hypothetical (5% return before expenses) $1,000 $1,015.67 $9.20
CLASS C
Actual $1,000 $1,042.90 $9.37
Hypothetical (5% return before expenses) $1,000 $1,015.62 $9.25
CLASS R
Actual $1,000 $1,045.60 $6.85
Hypothetical (5% return before expenses) $1,000 $1,018.10 $6.76
ADVISOR CLASS
Actual $1,000 $1,048.50 $4.32
Hypothetical (5% return before expenses) $1,000 $1,020.58 $4.26
* Expenses are calculated using the most recent six-month expense ratio,
annualized for each class (A: 1.10%; B: 1.84%; C: 1.85%; R: 1.35%; and
Advisor: 0.85%), multiplied by the average account value over the period,
multiplied by 181/365 to reflect the one-half year period.
Semiannual Report | 15
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
2010 ---------------------------------------------------------------------------
CLASS A (UNAUDITED) 2009 2008 2007 2006 2005
- ------- ------------ ----------- ----------- ----------- ----------- --------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout
the period)
Net asset value, beginning of
period ........................... $ 15.55 $ 19.82 $ 26.15 $ 25.29 $ 23.86 $ 21.03
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations(a):
Net investment income(b) ......... 0.06 0.27 0.43 0.37 0.43 0.36
Net realized and unrealized gains
(losses) ...................... 0.68 (4.00) (4.58) 2.66 2.73 3.66
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations .... 0.74 (3.73) (4.15) 3.03 3.16 4.02
----------- ----------- ----------- ----------- ----------- -----------
Less distributions from:
Net investment income ............ (0.26) (0.54) (0.37) (0.49) (0.41) (0.41)
Net realized gains ............... -- -- (1.81) (1.68) (1.32) (0.78)
----------- ----------- ----------- ----------- ----------- -----------
Total distributions ................. (0.26) (0.54) (2.18) (2.17) (1.73) (1.19)
----------- ----------- ----------- ----------- ----------- -----------
Redemption fees(c) .................. -- -- --(d) --(d) --(d) --(d)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period ...... $ 16.03 $ 15.55 $ 19.82 $ 26.15 $ 25.29 $ 23.86
=========== =========== =========== =========== =========== ===========
Total return(e) ..................... 4.68% (18.20)% (17.43)% 12.60% 14.52% 19.72%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments
by affiliates(g) ................. 1.11% 1.12%(h) 1.03% 1.01% 1.05% 1.06%
Expenses net of waiver and payments
by affiliates .................... 1.10% 1.12% 1.03% 1.01% 1.05% 1.06%
Net investment income ............... 0.69% 2.01% 1.88% 1.44% 1.82% 1.61%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ... $13,263,063 $13,259,166 $19,726,006 $27,997,564 $23,966,739 $20,786,173
Portfolio turnover rate ............. 5.98% 10.80%(i) 16.82% 20.37% 35.33% 19.95%
(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%.
(h) Benefit of waiver and payment by affiliate rounds to less than 0.01%.
(i) Excludes the value of portfolio securities delivered as a result of
redemptions in-kind.
The accompanying notes are an integral part of these financial statements.
16 | Semiannual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 2010 ---------------------------------------------------------
CLASS B (UNAUDITED) 2009 2008 2007 2006 2005
- ------- ----------------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the
period)
Net asset value, beginning of period .. $ 15.26 $ 19.34 $ 25.55 $ 24.75 $ 23.37 $ 20.64
-------- -------- -------- -------- -------- --------
Income from investment operations(a):
Net investment income (loss)(b) .... --(c) 0.17 0.25 0.17 0.24 0.19
Net realized and unrealized gains
(losses) ........................ 0.67 (3.89) (4.48) 2.61 2.70 3.59
-------- -------- -------- -------- -------- --------
Total from investment operations ...... 0.67 (3.72) (4.23) 2.78 2.94 3.78
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income .............. (0.14) (0.36) (0.17) (0.30) (0.24) (0.27)
Net realized gains ................. -- -- (1.81) (1.68) (1.32) (0.78)
-------- -------- -------- -------- -------- --------
Total distributions ................... (0.14) (0.36) (1.98) (1.98) (1.56) (1.05)
-------- -------- -------- -------- -------- --------
Redemption fees(d) .................... -- -- --(c) --(c) --(c) --(c)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ........ $ 15.79 $ 15.26 $ 19.34 $ 25.55 $ 24.75 $ 23.37
======== ======== ======== ======== ======== ========
Total return(e) ....................... 4.33% (18.79)% (18.07)% 11.78% 13.65% 18.84%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by
affiliates(g) ...................... 1.85% 1.87%(h) 1.78% 1.76% 1.79% 1.81%
Expenses net of waiver and payments by
affiliates ......................... 1.84% 1.87% 1.78% 1.76% 1.79% 1.81%
Net investment income (loss) .......... (0.05)% 1.26% 1.13% 0.69% 1.08% 0.86%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ..... $171,681 $194,379 $347,203 $563,335 $580,530 $557,670
Portfolio turnover rate ............... 5.98% 10.80%(i) 16.82% 20.37% 35.33% 19.95%
(a) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(b) Based on average daily shares outstanding.
(c) Amount rounds to less than $0.01 per share.
(d) Effective September 1, 2008, the redemption fee was eliminated.
(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%.
(h) Benefit of waiver and payment by affiliate rounds to less than 0.01%.
(i) Excludes the value of portfolio securities delivered as a result of
redemptions in-kind.
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, 2010 -------------------------------------------------------------------
CLASS C (UNAUDITED) 2009 2008 2007 2006 2005
- ------- ----------------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the
period)
Net asset value, beginning of period .. $ 15.14 $ 19.20 $ 25.40 $ 24.63 $ 23.28 $ 20.56
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income (loss)(b) .... --(c) 0.17 0.25 0.17 0.25 0.19
Net realized and unrealized gains
(losses) ........................ 0.65 (3.86) (4.46) 2.60 2.67 3.57
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations ...... 0.65 (3.69) (4.21) 2.77 2.92 3.76
---------- ---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income .............. (0.14) (0.37) (0.18) (0.32) (0.25) (0.26)
Net realized gains ................. -- -- (1.81) (1.68) (1.32) (0.78)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions ................... (0.14) (0.37) (1.99) (2.00) (1.57) (1.04)
---------- ---------- ---------- ---------- ---------- ----------
Redemption fees(d) .................... -- -- --(c) --(c) --(c) --(c)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period ........ $ 15.65 $ 15.14 $ 19.20 $ 25.40 $ 24.63 $ 23.28
========== ========== ========== ========== ========== ==========
Total return(e) ....................... 4.29% (18.76)% (18.08)% 11.78% 13.71% 18.77%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by
affiliates(g) ...................... 1.86% 1.86%(h) 1.77% 1.76% 1.79% 1.81%
Expenses net of waiver and payments by
affiliates ......................... 1.85% 1.86% 1.77% 1.76% 1.79% 1.81%
Net investment income (loss) .......... (0.06)% 1.27% 1.14% 0.69% 1.08% 0.86%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ..... $1,035,235 $1,083,587 $1,840,818 $2,759,141 $2,362,844 $1,965,909
Portfolio turnover rate ............... 5.98% 10.80%(i) 16.82% 20.37% 35.33% 19.95%
(a) The amount shown for a share outstanding throughout the period may not
correlate with the Statement of Operations for the period due to the timing
of sales and repurchases of the Fund shares in relation to income earned
and/or fluctuating market value of the investments of the Fund.
(b) Based on average daily shares outstanding.
(c) Amount rounds to less than $0.01 per share.
(d) Effective September 1, 2008, the redemption fee was eliminated.
(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%.
(h) Benefit of waiver and payment by affiliate rounds to less than 0.01%.
(i) Excludes the value of portfolio securities delivered as a result of
redemptions in-kind.
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, 2010 ---------------------------------------------------------
CLASS R (UNAUDITED) 2009 2008 2007 2006 2005
- ------- ----------------- -------- -------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the
period)
Net asset value, beginning of period .. $ 15.40 $ 19.60 $ 25.88 $ 25.06 $ 23.68 $ 20.90
-------- -------- -------- -------- -------- --------
Income from investment operations(a):
Net investment income(b) ........... 0.04 0.23 0.36 0.31 0.45 0.32
Net realized and unrealized gains
(losses) ........................ 0.67 (3.94) (4.52) 2.63 2.62 3.62
-------- -------- -------- -------- -------- --------
Total from investment operations ...... 0.71 (3.71) (4.16) 2.94 3.07 3.94
-------- -------- -------- -------- -------- --------
Less distributions from:
Net investment income .............. (0.22) (0.49) (0.31) (0.44) (0.37) (0.38)
Net realized gains ................. -- -- (1.81) (1.68) (1.32) (0.78)
-------- -------- -------- -------- -------- --------
Total distributions ................... (0.22) (0.49) (2.12) (2.12) (1.69) (1.16)
-------- -------- -------- -------- -------- --------
Redemption fees(c) .................... -- -- --(d) --(d) --(d) --(d)
-------- -------- -------- -------- -------- --------
Net asset value, end of period ........ $ 15.89 $ 15.40 $ 19.60 $ 25.88 $ 25.06 $ 23.68
======== ======== ======== ======== ======== ========
Total return(e) ....................... 4.56% (18.36)% (17.64)% 12.33% 14.22% 19.44%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by
affiliates(g) ...................... 1.36% 1.37%(h) 1.28% 1.26% 1.30% 1.31%
Expenses net of waiver and payments by
affiliates ......................... 1.35% 1.37% 1.28% 1.26% 1.30% 1.31%
Net investment income ................. 0.44% 1.76% 1.63% 1.19% 1.57% 1.36%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ..... $185,509 $187,423 $304,469 $467,391 $403,334 $123,139
Portfolio turnover rate ............... 5.98% 10.80%(i) 16.82% 20.37% 35.33% 19.95%
(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%.
(h) Benefit of waiver and payment by affiliate rounds to less than 0.01%.
(i) Excludes the value of portfolio securities delivered as a result of
redemptions in-kind.
The accompanying notes are an integral part of these financial statements.
Semiannual Report | 19
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 2010 -------------------------------------------------------------------
ADVISOR CLASS (UNAUDITED) 2009 2008 2007 2006 2005
- ------------- ----------------- ---------- ---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the
period)
Net asset value, beginning of period .. $ 15.56 $ 19.87 $ 26.22 $ 25.34 $ 23.90 $ 21.07
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations(a):
Net investment income(b) ........... 0.08 0.31 0.49 0.45 0.51 0.45
Net realized and unrealized gains
(losses) ........................ 0.68 (4.03) (4.59) 2.66 2.72 3.63
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations ...... 0.76 (3.72) (4.10) 3.11 3.23 4.08
---------- ---------- ---------- ---------- ---------- ----------
Less distributions from:
Net investment income .............. (0.29) (0.59) (0.44) (0.55) (0.47) (0.47)
Net realized gains ................. -- -- (1.81) (1.68) (1.32) (0.78)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions ................... (0.29) (0.59) (2.25) (2.23) (1.79) (1.25)
---------- ---------- ---------- ---------- ---------- ----------
Redemption fees(c) .................... -- -- --(d) --(d) --(d) --(d)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period ........ $ 16.03 $ 15.56 $ 19.87 $ 26.22 $ 25.34 $ 23.90
========== ========== ========== ========== ========== ==========
Total return(e) ....................... 4.85% (18.01)% (17.24)% 12.93% 14.83% 19.97%
RATIOS TO AVERAGE NET ASSETS(f)
Expenses before waiver and payments by
affiliates(g) ...................... 0.86% 0.87%(h) 0.78% 0.76% 0.80% 0.81%
Expenses net of waiver and payments by
affiliates ......................... 0.85% 0.87% 0.78% 0.76% 0.80% 0.81%
Net investment income ................. 0.94% 2.26% 2.13% 1.69% 2.07% 1.86%
SUPPLEMENTAL DATA
Net assets, end of period (000's) ..... $3,224,305 $3,314,678 $5,008,718 $6,458,094 $3,972,615 $2,549,202
Portfolio turnover rate ............... 5.98% 10.80%(i) 16.82% 20.37% 35.33% 19.95%
(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%.
(h) Benefit of waiver and payment by affiliate rounds to less than 0.01%.
(i) Excludes the value of portfolio securities delivered as a result of
redemptions in-kind.
The accompanying notes are an integral part of these financial statements.
20 | Semiannual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED)
INDUSTRY SHARES VALUE
-------------------------------------- ----------- ---------------
COMMON STOCKS 98.6%
AUSTRALIA 0.6%
Brambles Ltd. ........................... Commercial Services & Supplies 16,608,722 $ 103,248,204
---------------
BRAZIL 0.1%
Embraer-Empresa Brasileira de
Aeronautica SA, ADR .................. Aerospace & Defense 948,990 20,839,820
---------------
FRANCE 8.3%
Accor SA ................................ Hotels, Restaurants & Leisure 1,708,057 86,384,592
AXA SA .................................. Insurance 3,829,498 77,089,769
Compagnie Generale des Etablissements
Michelin, B .......................... Auto Components 1,423,854 99,316,952
France Telecom SA ....................... Diversified Telecommunication Services 11,856,587 278,068,945
Sanofi-Aventis .......................... Pharmaceuticals 5,160,552 377,455,475
Total SA, B ............................. Oil, Gas & Consumable Fuels 5,538,464 309,025,884
Vivendi SA .............................. Media 10,571,730 266,287,854
---------------
1,493,629,471
---------------
GERMANY 5.5%
Bayerische Motoren Werke AG ............. Automobiles 3,012,676 122,154,842
Deutsche Post AG ........................ Air Freight & Logistics 10,006,793 162,406,998
Merck KGaA .............................. Pharmaceuticals 839,005 66,027,667
Muenchener Rueckversicherungs-
Gesellschaft AG ...................... Insurance 882,397 136,121,742
SAP AG .................................. Software 4,055,058 180,652,482
Siemens AG .............................. Industrial Conglomerates 3,686,784 317,046,806
---------------
984,410,537
---------------
HONG KONG 1.4%
Cheung Kong (Holdings) Ltd. ............. Real Estate Management & Development 12,568,800 153,664,095
Swire Pacific Ltd., A ................... Real Estate Management & Development 8,784,000 98,168,959
---------------
251,833,054
---------------
INDIA 0.6%
ICICI Bank Ltd., ADR .................... Commercial Banks 2,723,620 104,178,465
---------------
IRELAND 0.7%
CRH PLC ................................. Construction Materials 5,447,818 124,101,793
---------------
ITALY 2.4%
Eni SpA ................................. Oil, Gas & Consumable Fuels 8,241,659 185,939,097
(a) Intesa Sanpaolo SpA ..................... Commercial Banks 37,877,204 133,183,925
(a) UniCredit SpA ........................... Commercial Banks 43,014,996 108,759,038
---------------
427,882,060
---------------
JAPAN 1.9%
FUJIFILM Holdings Corp. ................. Electronic Equipment, Instruments &
Components 2,257,200 71,781,322
Konica Minolta Holdings Ltd. ............ Office Electronics 13,076,500 135,231,008
Toyota Motor Corp. ...................... Automobiles 3,329,610 124,769,046
---------------
331,781,376
---------------
Semiannual Report | 21
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED)
INDUSTRY SHARES VALUE
-------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
NETHERLANDS 2.7%
(a) ING Groep NV ............................ Diversified Financial Services 17,971,389 $ 160,638,611
Koninklijke Philips
Electronics NV .......................... Industrial Conglomerates 5,300,631 154,950,572
(a) Randstad Holding NV ..................... Professional Services 2,268,400 94,957,157
SBM Offshore NV ......................... Energy Equipment & Services 4,235,426 75,140,673
---------------
485,687,013
---------------
NORWAY 0.5%
Aker Solutions ASA ...................... Energy Equipment & Services 1,132,775 14,998,248
Statoil ASA ............................. Oil, Gas & Consumable Fuels 3,696,620 82,876,844
---------------
97,875,092
---------------
RUSSIA 0.4%
Gazprom, ADR ............................ Oil, Gas & Consumable Fuels 3,574,200 79,704,660
---------------
SINGAPORE 2.2%
DBS Group Holdings Ltd. ................. Commercial Banks 4,053,734 40,370,092
(a) Flextronics International ............... Electronic Equipment, Instruments &
Ltd. ................................. Components 12,361,680 86,037,293
Singapore Telecommunications Ltd. ....... Diversified Telecommunication Services 125,530,000 272,347,774
---------------
398,755,159
---------------
SOUTH KOREA 4.3%
Hyundai Motor Co. Ltd. .................. Automobiles 2,148,811 213,028,677
KB Financial Group Inc. ................. Commercial Banks 3,039,434 127,734,834
(a) KT Corp., ADR ........................... Diversified Telecommunication Services 6,920,850 132,741,903
Samsung Electronics Co. Ltd. ............ Semiconductors & Semiconductor
Equipment 467,163 299,628,683
---------------
773,134,097
---------------
SPAIN 1.5%
Inditex SA .............................. Specialty Retail 1,281,362 75,560,286
Telefonica SA ........................... Diversified Telecommunication Services 7,861,559 184,588,841
---------------
260,149,127
---------------
SWEDEN 1.4%
Svenska Cellulosa AB, B ................. Paper & Forest Products 8,056,150 119,209,621
Telefonaktiebolaget LM Ericsson, B ...... Communications Equipment 12,404,587 124,169,517
---------------
243,379,138
---------------
SWITZERLAND 6.4%
Adecco SA ............................... Professional Services 2,416,575 120,092,229
Lonza Group AG .......................... Life Sciences Tools & Services 1,320,980 104,001,590
Nestle SA ............................... Food Products 4,280,613 212,925,192
Novartis AG ............................. Pharmaceuticals 6,003,460 333,820,423
Roche Holding AG ........................ Pharmaceuticals 1,267,081 211,543,745
Swiss Reinsurance Co. ................... Insurance 2,072,230 93,106,197
(a) UBS AG ................................ Capital Markets 4,852,326 66,877,249
---------------
1,142,366,625
---------------
22 | Semiannual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED)
INDUSTRY SHARES VALUE
-------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
TAIWAN 1.1%
Taiwan Semiconductor Manufacturing Co.
Ltd. ................................. Semiconductors & Semiconductor
Equipment 103,243,358 $ 188,942,093
---------------
TURKEY 0.5%
Turkcell Iletisim Hizmetleri AS, ADR .... Wireless Telecommunication Services 6,222,080 92,149,005
---------------
UNITED KINGDOM 13.9%
Aviva PLC ............................... Insurance 34,068,498 202,758,313
BAE Systems PLC ......................... Aerospace & Defense 16,559,620 94,539,508
BG Group PLC ............................ Oil, Gas & Consumable Fuels 4,374,960 76,384,757
BP PLC .................................. Oil, Gas & Consumable Fuels 37,402,396 330,050,228
Compass Group PLC ....................... Hotels, Restaurants & Leisure 17,990,457 133,816,948
GlaxoSmithKline PLC ..................... Pharmaceuticals 17,758,488 328,874,830
HSBC Holdings PLC ....................... Commercial Banks 16,665,897 184,323,780
Kingfisher PLC .......................... Specialty Retail 43,123,392 141,376,916
Pearson PLC ............................. Media 12,756,489 177,497,059
Royal Dutch Shell PLC, B ................ Oil, Gas & Consumable Fuels 10,045,152 262,922,317
Standard Life PLC ....................... Insurance 16,336,125 48,699,325
Tesco PLC ............................... Food & Staples Retailing 11,184,662 71,588,078
Vodafone Group PLC ...................... Wireless Telecommunication Services 158,460,971 341,905,339
(a) Wolseley PLC ............................ Trading Companies & Distributors 3,863,241 91,308,379
---------------
2,486,045,777
---------------
UNITED STATES 42.2%
Accenture PLC, A ........................ IT Services 12,753,850 509,771,384
ACE Ltd. ................................ Insurance 2,087,310 104,344,627
Alcoa Inc. .............................. Metals & Mining 7,927,220 105,432,026
American Express Co. .................... Consumer Finance 3,605,720 137,702,447
(a) Amgen Inc. .............................. Biotechnology 7,350,610 416,118,032
AT&T Inc. ............................... Diversified Telecommunication Services 1,434,140 35,581,013
Baker Hughes Inc. ....................... Energy Equipment & Services 765,560 36,685,635
The Bank of New York Mellon Corp. ....... Capital Markets 836,769 23,864,652
(a) Biogen Idec Inc. ........................ Biotechnology 974,600 53,612,746
(a) Boston Scientific Corp. ................. Health Care Equipment & Supplies 4,418,480 34,199,035
Bristol-Myers Squibb Co. ................ Pharmaceuticals 4,043,210 99,099,077
Chevron Corp. ........................... Oil, Gas & Consumable Fuels 1,172,010 84,736,323
(a) Cisco Systems Inc. ...................... Communications Equipment 9,240,210 224,814,309
Comcast Corp., A ........................ Media 20,512,850 317,744,046
Covidien PLC ............................ Health Care Equipment & Supplies 6,121,410 300,683,659
CVS Caremark Corp. ...................... Food & Staples Retailing 2,671,550 90,164,813
(a) Dell Inc. ............................... Computers & Peripherals 4,967,050 65,714,072
(a) Expedia Inc. ............................ Internet & Catalog Retail 3,709,690 82,503,506
FedEx Corp. ............................. Air Freight & Logistics 1,233,440 104,546,374
General Electric Co. .................... Industrial Conglomerates 9,507,510 152,690,611
Halliburton Co. ......................... Energy Equipment & Services 3,881,520 117,027,828
Harley-Davidson Inc. .................... Automobiles 1,327,660 32,673,713
The Home Depot Inc. ..................... Specialty Retail 2,271,290 70,864,248
JPMorgan Chase & Co. .................... Diversified Financial Services 1,144,570 48,037,603
Semiannual Report | 23
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED)
INDUSTRY SHARES VALUE
-------------------------------------- ----------- ---------------
COMMON STOCKS (CONTINUED)
UNITED STATES (CONTINUED)
Medtronic Inc. .......................... Health Care Equipment & Supplies 2,734,400 $ 118,672,960
Merck & Co. Inc. ........................ Pharmaceuticals 6,723,510 247,963,049
Microsoft Corp. ......................... Software 19,498,380 558,823,571
News Corp., A ........................... Media 26,405,540 353,042,070
Oracle Corp. ............................ Software 21,718,980 535,372,857
Pfizer Inc. ............................. Pharmaceuticals 25,079,500 440,145,225
Progressive Corp. ....................... Insurance 9,458,750 162,217,563
Quest Diagnostics Inc. .................. Health Care Providers & Services 1,146,960 65,089,980
RenaissanceRe Holdings Ltd. ............. Insurance 1,681,200 93,071,232
(a) Seagate Technology ...................... Computers & Peripherals 7,661,810 152,546,637
(a) Sprint Nextel Corp. ..................... Wireless Telecommunication Services 32,197,080 107,216,276
Target Corp. ............................ Multiline Retail 1,881,930 96,957,034
Time Warner Cable Inc. .................. Media 1,493,166 69,715,921
Time Warner Inc. ........................ Media 4,299,360 124,853,414
Torchmark Corp. ......................... Insurance 1,066,530 49,593,645
Electronic Equipment, Instruments &
Tyco Electronics Ltd. ................... Components 7,672,470 196,645,406
Tyco International Ltd. ................. Industrial Conglomerates 6,536,720 235,714,123
United Parcel Service Inc., B ........... Air Freight & Logistics 5,361,760 314,949,782
(a) Viacom Inc., B .......................... Media 7,445,540 220,760,261
The Walt Disney Co. ..................... Media 4,800,796 149,976,867
---------------
7,541,939,652
---------------
TOTAL COMMON STOCKS
(COST $18,508,386,525) ............... 17,632,032,218
---------------
PREFERRED STOCKS (COST $52,909,112) 0.5%
BRAZIL 0.5%
Vale SA, ADR, pfd., A ................... Metals & Mining 3,601,840 88,605,264
---------------
NON-REGISTERED MUTUAL FUNDS
(COST $33,495,500) 0.2%
CAYMAN ISLANDS 0.2%
(a,b,c,d,e) Templeton China
Opportunities Fund Ltd., Reg D ....... Diversified Financial Services 3,351,436 33,480,842
---------------
TOTAL INVESTMENTS BEFORE SHORT
TERM INVESTMENTS
(COST $18,594,791,137) ............ 17,754,118,324
---------------
PRINCIPAL
AMOUNT(f)
-----------
SHORT TERM INVESTMENTS
(COST $126,950,000) 0.7%
TIME DEPOSITS 0.7%
UNITED STATES 0.7%
Paribas Corp., 0.12%, 3/01/10 ........... 126,950,000 126,950,000
---------------
24 | Semiannual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 2010 (UNAUDITED) (CONTINUED)
VALUE
---------------
TOTAL INVESTMENTS
(COST $18,721,741,137)
100.0% ............................... $17,881,068,324
OTHER ASSETS, LESS LIABILITIES
0.0%(g) .............................. (1,274,704)
---------------
NET ASSETS 100.0% ....................... $17,879,793,620
===============
See Abbreviations on page 39.
(a) Non-income producing.
(b) See Note 8 regarding restricted securities.
(c) Security was purchased pursuant to Regulation D under the Securities Act of
1933. Such a security cannot be sold in the United States without either an
effective registration statement filed pursuant to the Securities Act of
1933, or pursuant to an exemption from registration. This security has been
deemed illiquid under guidelines approved by the Fund's Board of Directors.
At February 28, 2010, value of this security was $33,480,842, representing
0.19% of net assets.
(d) See Note 9 regarding other considerations.
(e) The Templeton China Opportunities Fund, Ltd. is managed by an affiliate of
the Fund's investment manager.
(f) The principal amount is stated in U.S. dollars unless otherwise indicated.
(g) 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, 2010 (unuadited)
Assets:
Investments in securities:
Cost .................................................. $18,721,741,137
===============
Value ................................................. $17,881,068,324
Cash ..................................................... 22,810
Receivables:
Investment securities sold ............................ 4,003,755
Capital shares sold ................................... 14,509,496
Dividends and interest ................................ 48,964,061
Other assets ............................................. 51,424
---------------
Total assets ....................................... 17,948,619,870
---------------
Liabilities:
Payables:
Investment securities purchased ....................... 21,731,559
Capital shares redeemed ............................... 27,437,295
Affiliates ............................................ 14,051,565
Allocator Funds (Note 10) ............................. 413,009
Accrued expenses and other liabilities ................... 5,192,822
---------------
Total liabilities .................................. 68,826,250
---------------
Net assets, at value ............................ $17,879,793,620
===============
Net assets consist of:
Paid-in capital .......................................... $23,644,986,797
Undistributed net investment income ...................... 19,340,688
Net unrealized appreciation (depreciation) ............... (841,114,922)
Accumulated net realized gain (loss) ..................... (4,943,418,943)
---------------
Net assets, at value ............................ $17,879,793,620
===============
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, 2010 (unuadited)
CLASS A:
Net assets, at value ..................................... $13,263,063,155
===============
Shares outstanding ....................................... 827,299,043
===============
Net asset value per share(a) ............................. $ 16.03
===============
Maximum offering price per share (net asset value per
share / 94.25%) ....................................... $ 17.01
===============
CLASS B:
Net assets, at value ..................................... $ 171,681,060
===============
Shares outstanding ....................................... 10,875,648
===============
Net asset value and maximum offering price per share(a) .. $ 15.79
===============
CLASS C:
Net assets, at value ..................................... $ 1,035,235,236
===============
Shares outstanding ....................................... 66,142,460
===============
Net asset value and maximum offering price per share(a) .. $ 15.65
===============
CLASS R:
Net assets, at value ..................................... $ 185,509,486
===============
Shares outstanding ....................................... 11,675,589
===============
Net asset value and maximum offering price per share ..... $ 15.89
===============
ADVISOR CLASS:
Net assets, at value ..................................... $ 3,224,304,683
===============
Shares outstanding ....................................... 201,124,877
===============
Net asset value and maximum offering price per share ..... $ 16.03
===============
(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, 2010 (unuadited)
Investment income:
Dividends (net of foreign taxes of $5,871,014) ........... $ 166,218,852
Interest ................................................. 232,995
--------------
Total investment income ............................ 166,451,847
--------------
Expenses:
Management fees (Note 3a) ................................ 54,854,445
Administrative fees (Note 3b) ............................ 7,239,872
Distribution fees: (Note 3c)
Class A ............................................... 17,169,823
Class B ............................................... 941,865
Class C ............................................... 5,480,129
Class R ............................................... 486,924
Transfer agent fees (Note 3e) ............................ 12,121,632
Special servicing agreement fees (Note 10) ............... 2,438,861
Custodian fees (Note 4) .................................. 1,362,128
Reports to shareholders .................................. 794,748
Registration and filing fees ............................. 89,798
Professional fees ........................................ 164,357
Directors' fees and expenses ............................. 171,757
Other .................................................... 484,575
--------------
Total expenses ..................................... 103,800,914
Expense reductions (Note 4) ........................ (39)
Expenses waived/paid by affiliates (Note 3f) ....... (565,207
--------------)
Net expenses .................................... 103,235,668
--------------
Net investment income ........................ 63,216,179
--------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ........................................... (287,268,485)
Foreign currency transactions ......................... (1,131,068)
--------------
Net realized gain (loss) ..................... (288,399,553)
--------------
Net change in unrealized appreciation (depreciation) on:
Investments ........................................... 1,095,438,573
Translation of other assets and liabilities denominated
in foreign currencies .............................. (530,218)
--------------
Net change in unrealized appreciation
(depreciation) ............................ 1,094,908,355
--------------
Net realized and unrealized gain (loss) ..................... 806,508,802
--------------
Net increase (decrease) in net assets resulting from
operations ............................................... $ 869,724,981
==============
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, 2010 YEAR ENDED
(UNAUDITED) AUGUST 31, 2009
--------------- ---------------
Increase (decrease) in net assets:
Operations:
Net investment income .......................................... $ 63,216,179 $ 337,604,451
Net realized gain (loss) from investments and foreign
currency transactions ....................................... (288,399,553) (4,664,304,639)
Net change in unrealized appreciation (depreciation) on
investments and translation of assets and liabilities
denominated in foreign currencies ........................... 1,094,908,355 (1,227,834,157)
--------------- ---------------
Net increase (decrease) in net assets resulting from
operations ............................................ 869,724,981 (5,554,534,345)
--------------- ---------------
Distributions to shareholders from:
Net investment income:
Class A ..................................................... (214,534,244) (486,233,817)
Class B ..................................................... (1,586,804) (5,699,628)
Class C ..................................................... (9,835,538) (31,391,893)
Class R ..................................................... (2,623,278) (7,072,818)
Advisor Class ............................................... (58,932,625) (139,524,635)
--------------- ---------------
Total distributions to shareholders ............................... (287,512,489) (669,922,791)
--------------- ---------------
Capital share transactions: (Note 2)
Class A ..................................................... (419,260,192) (2,003,704,787)
Class B ..................................................... (30,158,836) (69,416,118)
Class C ..................................................... (87,030,949) (316,507,302)
Class R ..................................................... (8,074,387) (41,796,050)
Advisor Class ............................................... (197,127,110) (532,101,452)
--------------- ---------------
Total capital share transactions .................................. (741,651,474) (2,963,525,709)
--------------- ---------------
Net increase (decrease) in net assets .................... (159,438,982) (9,187,982,845)
Net assets:
Beginning of period ............................................... 18,039,232,602 27,227,215,447
--------------- ---------------
End of period ..................................................... $17,879,793,620 $18,039,232,602
=============== ===============
Undistributed net investment income included in net assets:
End of period ..................................................... $ 19,340,688 $ 243,636,998
=============== ===============
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 Fund's significant accounting policies.
A. SECURITY VALUATION
Equity and other 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. Certain equity securities are valued based upon
fundamental characteristics or relationships to similar securities. Investments
in open-end mutual funds are valued at the closing net asset value. Time
deposits are valued at cost.
Foreign equity 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 equity 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 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 based upon the underlying investment book value,
anticipated future cash flows, market changes in comparable or similar
securities, 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. The Fund may enter
into foreign currency exchange contracts to facilitate transactions denominated
in a foreign currency. 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. 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, 2010, and has
determined that no provision for income tax is required in the Fund's financial
statements.
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.
D. 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
Semiannual Report | 31
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
(CONTINUED)
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.
E. 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.
F. 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, 2010, 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, 2010 AUGUST 31, 2009
----------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ------------ ---------------
CLASS A SHARES:
Shares sold ..................... 36,148,448 $ 594,415,009 97,826,671 $ 1,305,375,608
Shares issued in reinvestment
of distributions ............. 10,260,713 170,226,101 30,720,404 386,155,554
Shares redeemed in-kind
(Note 12) .................... -- -- (2,210,064) (27,161,681)
Shares redeemed ................. (71,811,975) (1,183,901,302) (269,036,325) (3,668,074,268)
----------- --------------- ------------ ---------------
Net increase (decrease) ......... (25,402,814) $ (419,260,192) (142,699,314) $(2,003,704,787)
=========== =============== ============ ===============
32 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
2. CAPITAL STOCK (CONTINUED)
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2010 AUGUST 31, 2009
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
CLASS B SHARES:
Shares sold .................... 79,532 $ 1,291,812 311,338 $ 4,097,625
Shares issued in reinvestment
of distributions ............ 89,832 1,469,657 420,778 5,217,652
Shares redeemed ................ (2,032,782) (32,920,305) (5,944,808) (78,731,395)
----------- ------------- ----------- -------------
Net increase (decrease) ........ (1,863,418) $ (30,158,836) (5,212,692) $ (69,416,118)
=========== ============= =========== =============
CLASS C SHARES:
Shares sold .................... 1,821,060 $ 29,319,382 5,589,476 $ 72,393,613
Shares issued in reinvestment
of distributions ............ 534,118 8,668,741 2,212,975 27,219,261
Shares redeemed ................ (7,792,026) (125,019,072) (32,080,350) (416,120,176)
----------- ------------- ----------- -------------
Net increase (decrease) ........ (5,436,848) $ (87,030,949) (24,277,899) $(316,507,302)
=========== ============= =========== =============
CLASS R SHARES:
Shares sold .................... 851,890 $ 13,842,906 3,932,881 $ 51,628,260
Shares issued in reinvestment
of distributions ............ 157,608 2,592,644 559,987 6,983,042
Shares redeemed ................ (1,506,099) (24,509,937) (7,852,832) (100,407,352)
----------- ------------- ----------- -------------
Net increase (decrease) ........ (496,601) $ (8,074,387) (3,359,964) $ (41,796,050)
=========== ============= =========== =============
ADVISOR CLASS SHARES:
Shares sold .................... 1,666,319 $ 27,396,190 8,861,636 $ 121,152,381
Shares issued in reinvestment
of distributions ............ 3,510,431 58,202,951 10,926,929 137,242,233
Shares redeemed ................ (17,020,712) (282,726,251) (58,928,301) (790,496,066)
----------- ------------- ----------- -------------
Net increase (decrease) ........ (11,843,962) $(197,127,110) (39,139,736) $(532,101,452)
=========== ============= =========== =============
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
Semiannual Report | 33
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
A. MANAGEMENT FEES
The Fund pays an investment management fee to TGAL based on the average daily
net assets of the Fund as follows:
ANNUALIZED FEE RATE NET ASSETS
- ------------------- -------------------------------------------------
0.630% Up to and including $1 billion
0.615% Over $1 billion, up to and including $5 billion
0.600% Over $5 billion, up to and including $10 billion
0.580% Over $10 billion, up to and including $15 billion
0.560% Over $15 billion, up to and including $20 billion
0.540% Over $20 billion, up to and including $25 billion
0.530% Over $25 billion, up to and including $30 billion
0.520% Over $30 billion, up to and including $35 billion
0.510% Over $35 billion, up to and including $40 billion
0.500% Over $40 billion, up to and including $45 billion
0.490% In excess of $45 billion
B. ADMINISTRATIVE FEES
The Fund pays an administrative fee to FT Services based on the 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.
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%
34 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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 ............................................ $787,574
Contingent deferred sales charges retained ................... $ 63,134
E. TRANSFER AGENT FEES
For the period ended February 28, 2010, the Fund paid transfer agent fees of
$12,121,632, of which $7,957,071 was retained by Investor Services.
F. WAIVER AND EXPENSE REIMBURSEMENTS
TGAL and FT Services have voluntarily agreed to limit the increase in the Fund's
net annual operating expense ratio that results from the implementation of the
Special Servicing Agreement (SSA) at 0.02% through April 30, 2010. See Note 10
regarding the SSA.
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, 2010, the
custodian fees were reduced as noted in the Statement of Operations.
5. INCOME TAXES
For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At August 31, 2009, the Fund had tax basis capital losses of
$1,349,337,321 expiring in 2017.
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, 2009, the Fund deferred realized capital losses of
$3,300,905,423.
At February 28, 2010, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ......................... $18,742,079,356
===============
Unrealized appreciation ..................... $ 2,430,986,645
Unrealized depreciation ..................... (3,291,997,677)
---------------
Net unrealized appreciation (depreciation) .. $ (861,011,032)
===============
Semiannual Report | 35
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
5. INCOME TAXES (CONTINUED)
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, bond discounts and premiums, and losses realized on in-kind
shareholder redemptions.
6. INVESTMENT TRANSACTIONS
Purchases and sales of investments (excluding short term securities) for the
period ended February 28, 2010, aggregated $1,087,780,890 and $1,855,297,473,
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. RESTRICTED SECURITIES
The Fund may invest in securities that are restricted under the Securities Act
of 1933 (1933 Act) or which are subject to legal, contractual, or other agreed
upon restrictions on resale. Restricted securities are often purchased in
private placement transactions, and cannot be sold without prior registration
unless the sale is pursuant to an exemption under the 1933 Act. Disposal of
these securities may require greater effort and expense, and prompt sale at an
acceptable price may be difficult. The Fund may have registration rights for
restricted securities. The issuer generally incurs all registration costs.
At February 28, 2010, the Fund held investments in restricted securities,
excluding 144A securities deemed to be liquid, valued in accordance with
procedures approved by the Fund's Board of Directors as reflecting fair value,
as follows:
ACQUISITION
SHARES ISSUER DATES COST VALUE
- --------- ------------------------------------------- ----------------- ----------- ----------
3,351,436 Templeton China Opportunities Fund Ltd.,
Reg D
TOTAL RESTRICTED SECURITIES
(0.19% of Net Assets) ............... 1/27/10 - 2/24/10 $33,495,500 $33,480,842
===========
36 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
9. OTHER CONSIDERATIONS
Officers, directors or employees of the Fund's Investment Manager, may serve
from time to time as members of boards of directors of companies in which the
Fund invests. Such participation may result in the possession by the Investment
Manager of material non-public information which, pursuant to the Fund's
policies and the requirements of applicable securities laws, could prevent the
Fund from trading in the securities of such companies for limited or extended
periods of time.
10. SPECIAL SERVICING AGREEMENT
The Fund, which is an eligible underlying investment of one or more of the
Franklin Templeton Fund Allocator Series Funds (Allocator Funds), participates
in a SSA with the Allocator Funds and certain service providers of the Fund and
the Allocator Funds. Under the SSA, the Fund may pay a portion of the Allocator
Funds' expenses (other than any asset allocation, administrative, and
distribution fees) to the extent such payments are less than the amount of the
benefits realized or expected to be realized by the Fund (e.g., due to reduced
costs associated with servicing accounts) from the investment in the Fund by the
Allocator Funds. The Allocator Funds and the Fund are either managed by Franklin
Advisers, Inc. or administered by FT Services, affiliates of TGAL. For the
period ended February 28, 2010, the Fund was held by one or more of the
Allocator Funds and was allocated expenses as noted in the Statement of
Operations. At February 28, 2010, 15.64% of the Fund's outstanding shares was
held by one or more of the Allocator Funds.
11. CREDIT FACILITY
The Fund, together with other U.S. registered and foreign investment funds
(collectively "Borrowers"), managed by Franklin Templeton Investments, are
borrowers in a 364-day joint syndicated senior unsecured credit facility
totaling $750 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. On January 22,
2010, the Fund renewed the Global Credit Facility for a total of $750 million,
maturing January 21, 2011.
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 of 0.10% based upon the unused portion of the Global
Credit Facility, which is reflected in other expenses on the Statement of
Operations. During the period ended February 28, 2010, the Fund did not utilize
the Global Credit Facility.
Semiannual Report | 37
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
12. REDEMPTIONS IN-KIND
During the year ended August 31, 2009, the Fund realized $11,628,312 of net
losses resulting from a redemption in-kind in which a shareholder redeemed fund
shares for securities held by the Fund rather than for cash. Because such losses
are not taxable to the Fund, and are not netted with capital gains that are
distributed to remaining shareholders, they have been reclassified from
accumulated net realized losses to paid-in capital.
13. FAIR VALUE MEASUREMENTS
The Fund follows 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, 2010, in
valuing the Fund's assets carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
--------------- ------------ ----------- ---------------
ASSETS:
Investments in Securities:
Equity Investments(a) ... $17,720,637,482 $ -- $ -- $17,720,637,482
Non-Registered Mutual
Funds ................ -- -- 33,480,842 33,480,842
Short Term Investments .. -- 126,950,000 -- 126,950,000
--------------- ------------ ----------- ---------------
Total Investments in
Securities ........... $17,720,637,482 $126,950,000 $33,480,842 $17,881,068,324
=============== ============ =========== ===============
(a) Includes common and preferred stock. For detailed industry descriptions,
see the accompanying Statement of Investments.
38 | Semiannual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
13. FAIR VALUE MEASUREMENTS (CONTINUED)
At February 28, 2010, the reconciliation of assets in which significant
unobservable inputs (Level 3) were used in determining fair value, is as
follows:
NET CHANGE
IN
UNREALIZED
APPRECIATION
NET CHANGE (DEPRECIATION)
IN ON ASSETS
BALANCE AT NET UNREALIZED NET TRANSFER BALANCE AT HELD
BEGINNING REALIZED APPRECIATION PURCHASES IN (OUT OF) END OF AT PERIOD
OF PERIOD GAIN (LOSS) (DEPRECIATION) (SALES) LEVEL 3 PERIOD END
---------- ----------- -------------- ----------- ----------- ----------- --------------
ASSETS:
Investments in Securities:
Non-Registered Mutual
Funds .............. $-- $-- $(14,658) $33,495,500 $-- $33,480,842 $(14,658)
--- --- -------- ----------- --- ----------- --------
14. NEW ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2010-6, FAIR VALUE MEASUREMENTS AND
DISCLOSURES (TOPIC 820): IMPROVING DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS,
which enhances and clarifies existing fair value measurement disclosure
requirements and is effective for interim and annual periods beginning after
December 15, 2009. The Fund is currently evaluating the impact, if any, of
applying this provision.
In March 2010, the FASB issued ASU No. 2010-11, DERIVATIVES AND HEDGING (TOPIC
815): SCOPE EXCEPTION RELATED TO EMBEDDED CREDIT DERIVATIVES, which clarifies
existing derivatives and hedging disclosure requirements and is effective for
fiscal quarters beginning after June 15, 2010. The Fund is currently evaluating
the impact, if any, of applying this provision.
15. SUBSEQUENT EVENTS
The Fund has evaluated subsequent events through the issuance of the financial
statements and determined that no events have occurred that require disclosure.
ABBREVIATIONS
SELECTED PORTFOLIO
ADR - American Depository Receipt
Semiannual Report | 39
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.
40 | Semiannual Report
Franklin Templeton Funds
LITERATURE REQUEST. TO RECEIVE A 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.
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 Quest Fund(2)
Mutual Recovery Fund(3)
Mutual Shares Fund
BLEND
Franklin Focused Core Equity Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund
GROWTH
Franklin DynaTech Fund
Franklin Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund
Franklin Small Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
SECTOR
Franklin Biotechnology Discovery Fund
Franklin Global Real Estate Fund
Franklin Gold & Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services Fund
GLOBAL
Mutual Global Discovery Fund(4)
Templeton Global Long-Short Fund(5)
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
Mutual International 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 Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund
FIXED INCOME
Franklin Adjustable U.S. Government Securities Fund(6)
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Limited Maturity U.S. Government
Securities Fund(6)
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(6)
Templeton Global Bond Fund
Templeton Global Total Return Fund
Templeton International Bond Fund
TAX-FREE INCOME(7)
NATIONAL
Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(8)
LIMITED-/INTERMEDIATE-TERM
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(9)
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(10)
Michigan(10)
Minnesota(10)
Missouri
New Jersey
New York(9)
North Carolina
Ohio(10)
Oregon
Pennsylvania
Tennessee
Virginia
INSURANCE FUNDS
Franklin Templeton Variable
Insurance Products Trust(11)
(1.) The fund is closed to new investors. Existing shareholders and select
retirement plans can continue adding to their accounts.
(2.) Effective 5/1/09, Mutual Qualified Fund changed its name to Mutual Quest
Fund. The fund's investment goal and strategy remained unchanged.
(3.) The fund is a continuously offered, closed-end fund. Shares may be
purchased daily; there is no daily redemption. However, each quarter,
pending board approval, the fund will authorize the repurchase of 5%-25% of
the outstanding number of shares. Investors may tender all or a portion of
their shares during the tender period.
(4.) Effective 5/1/09, Mutual Discovery Fund changed its name to Mutual Global
Discovery Fund. The fund's investment goal and strategy remained unchanged.
(5.) Effective 12/18/09, this fund is closed to new investors, pending a
proposal to merge the fund into Templeton World Fund. Existing shareholders
may continue to make additional investments until shortly before the
completion of the transaction, expected in April 2010.
(6.) An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
(7.) For investors subject to the alternative minimum tax, a small portion of
fund dividends may be taxable. Distributions of capital gains are generally
taxable.
(8.) The fund invests primarily in insured municipal securities.
(9.) These funds are available in three or more variations, including long-term
portfolios, intermediate-term portfolios, portfolios of insured securities,
a high-yield portfolio (CA only) and a money market portfolio (CA only).
(10.) The Board of Trustees approved the elimination of the non-fundamental
policy requiring the fund to invest at least 80% of net assets in insured
municipal securities and the removal of the word "Insured" from the fund
name. The changes became effective 2/15/09.
(11.) The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.
02/10 Not part of the semiannual report
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO) One Franklin Parkway
San Mateo, CA 94403-1906
SIGN UP FOR ELECTRONIC DELIVERY
on franklintempleton.com
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 summary
prospectus and/or 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. A 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 S 04/10
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, 2010
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, 2010
By /s/MARK H. OTANI
- -------------------------------
Mark H. Otani
Chief Financial Officer and
Chief Accounting Officer
Date: April 27, 2010