UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-4892
----------
TEMPLETON GROWTH FUND, INC.
------------------------------
(Exact name of registrant as specified in charter)
500 EAST BROWARD BLVD., FORT LAUDERDALE, FL 33394-3091
--------------------------------------------------------
(Address of principal executive offices) (Zip code)
MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-----------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: (954) 527-7500
--------------
Date of fiscal year end: 8/31
----
Date of reporting period: 8/31/03
-------
ITEM 1. REPORTS TO STOCKHOLDERS
AUGUST 31, 2003
[GRAPHIC OMITTED]
ANNUAL REPORT AND SHAREHOLDER LETTER
TEMPLETON GROWTH FUND, INC.
GLOBAL
WANT TO RECEIVE
THIS DOCUMENT
FASTER VIA EMAIL?
Eligible shareholders can
sign up for eDelivery at
franklintempleton.com.
See inside for details.
- --------------------------------------------------------------------------------
[LOGO OMITTED]
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS
Franklin o TEMPLETON o Mutual Series
Franklin Templeton Investments
GAIN FROM OUR PERSPECTIVE
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 leader in tax-free investing and a
driving force in fixed income investing around the globe. They also bring
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
research offices in over 25 countries, they offer investors the broadest global
reach in the industry.
MUTUAL SERIES. Established in 1949, Mutual Series is dedicated to a unique style
of value investing, searching aggressively for opportunity among undervalued
stocks, arbitrage situations and distressed companies.
TRUE DIVERSIFICATION
Because our management groups work independently and adhere to distinctly
different investment approaches, Franklin, Templeton and Mutual Series funds
typically have a low overlap of securities. That's why our funds can be used to
build truly diversified portfolios 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 account services that have helped us become one of the most trusted
names in financial services.
MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
[GRAPHIC OMITTED]
Not part of the annual report
Contents
SHAREHOLDER LETTER ............................. 1
ANNUAL REPORT
Templeton Growth Fund, Inc. .................... 3
Performance Summary ............................ 7
Financial Highlights &
Statement of Investments ....................... 13
Financial Statements ........................... 23
Notes to Financial Statements .................. 26
Independent Auditors' Report ................... 31
Tax Designation ................................ 32
Board Members and Officers ..................... 34
Proxy Voting Policies and Procedures ........... 40
- --------------------------------------------------------------------------------
Annual Report
Templeton Growth Fund, Inc.
YOUR FUND'S GOAL AND PRIMARY INVESTMENTS: Templeton Growth Fund seeks long-term
capital growth. Under normal market conditions, the Fund invests mainly in the
equity securities of companies located anywhere in the world, including emerging
markets.
This annual report for Templeton Growth Fund covers the fiscal year ended August
31, 2003.
PERFORMANCE OVERVIEW
For the 12 months under review, Templeton Growth Fund - Class A posted a 10.90%
cumulative total return, as shown in the Performance Summary beginning on page
7. The Fund underperformed its benchmark, the Morgan Stanley Capital
International (MSCI) World Index, which posted an 11.48% total return for the
same period. 1
ECONOMIC AND MARKET OVERVIEW
In the first half of 2003, gross domestic product growth accelerated in the U.S.
and many emerging market economies; however, it lagged in Japan and the
12-nation euro zone due in part to structural issues, including restrictive
labor practices that have limited the ability of companies to lay off workers to
control costs, and the relative weakening of the U.S. dollar versus the euro,
which has made European imports into the U.S. less competitive. As the year
progressed, investors appeared to downplay weak employment numbers and sluggish
euro-zone growth predictions, and instead seemed to focus on
stronger-than-expected earnings reports and corporate optimism for the second
half of 2003.
Although investor pessimism seemingly prevailed in the first half of the Fund's
fiscal year, investor optimism about a global economic recovery appeared to
dominate the second half. Initially, the main drivers of pessimism were fears of
terrorist attacks, a potential war in Iraq and then the actual war, tensions
with North Korea, disruption in oil production in Venezuela, and the spread of
severe acute
1. Source: Standard & Poor's Micropal. The MSCI World Index is market
capitalization-weighted and measures total returns of equity securities in
developed markets globally. The index is unmanaged and includes reinvested
dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND COMPLETE LEGAL
TITLES OF ALL PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF
INVESTMENTS (SOI). THE SOI BEGINS ON PAGE 18.
Annual Report | 3
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
Europe 45.1%
Australia & New Zealand 25.1%
Asia 16.4%
Latin America 2.0%
Canada 1.5%
Middle East & Africa 0.7%
Short-Term Investments & Other Net Assets 9.2%
respiratory syndrome. As these issues were either resolved or perceived as less
threatening to global economic recovery, investor sentiment improved during the
reporting period.
Global stock markets generally mirrored changes in investor sentiment. Many
global stock markets experienced a sell-off in the first half of the Fund's
fiscal year; however, they rebounded in the second half, with stock market
increases in 2003's second quarter representing the largest quarterly gain in
global equities since fourth quarter 1998. Beginning in March 2003, improving
sentiment appeared to prompt many investors to swap into economically sensitive
and financially leveraged companies, such as cyclicals, technology, small-cap
stocks and emerging markets equities that in preceding quarters had performed
poorly.
For the Fund's fiscal year, most local stock market indexes in Asia, Europe and
the Americas posted double-digit total returns in U.S. dollars. Stock markets
benefited from low inflation and accommodative fiscal and monetary policies in
many countries, including the U.S. In addition, bonds as an investment
alternative appeared less attractive due to higher relative tax rates on
interest income compared with stock dividends.
INVESTMENT STRATEGY
Our investment strategy employs a "bottom-up," value-oriented, long-term
approach. We focus on the market price of a company's securities relative to our
evaluation of the company's long-term earnings, asset value and cash flow
potential. As we look worldwide, we consider specific companies, rather than
sectors or countries, while doing in-depth research to construct a bargain list
from which we buy. Before we make a purchase, we look at the company's potential
for earnings and growth over a five-year horizon.
MANAGER'S DISCUSSION
During the year under review, the Fund's overweighted exposure to Spain relative
to the benchmark MSCI World Index contributed positively to performance.
Individual holdings in Spain, including utilities Iberdrola and Endesa, oil
company
4 | Annual Report
Repsol-YPF, and telecommunications company Telefonica, increased in value during
the period.
At period-end, the Fund had close to double the benchmark's weighting in the
materials sector. During the period, materials prices, particularly in
commodities such as iron ore and copper, benefited from increasing demand from
China. Gold prices increased more than 20% during the year under review. Fund
holdings in Cia Vale do Rio Doce, a Brazilian iron ore producer, Australia's BHP
Billiton, a diversified mining company, Canada's Barrick Gold, one of the
world's largest gold producers, and Stora Enso, a Finnish paper company,
contributed positively to performance. In addition, the Fund's relatively
overweighted wireless telecommunications position also boosted performance, as
Fund holding AT&T Wireless was one of the portfolio's best-performing stocks
during the year under review.
We attempted to take advantage of market volatility in 2003's first quarter by
initiating positions in companies we identified as undervalued relative to our
assessment of their five-year earnings outlook. We purchased shares of Reuters,
a U.K.-listed news and information provider. At the time of purchase, pessimism
was widespread regarding the outlook for financial markets and, consequently,
for Reuters' revenues. There also appeared to be investor uncertainty about
Reuters' ability to cut costs and deliver new products to market. Our investment
strategy allows us to take advantage of such short-term pessimism to buy what we
consider long-term value. Since the time of purchase in early 2003 through
period-end, Reuters' stock outperformed the broader market recovery.
The semiconductor industry performed well during the Fund's fiscal year;
however, our exposure in this sector was limited to South Korea's Samsung
Electronics. The Fund's relatively low exposure reflects the challenge of
identifying bargain stocks in the sector, as semiconductor stocks typically
trade at high premiums to the broader market. The Fund also had a relatively low
weighting in the U.S. versus the benchmark, which hindered relative performance.
Also negatively affecting performance relative to the MSCI World Index was the
Fund's overweighted exposure to the U.K., which underperformed the broader
market, but where we identified several stocks for inclusion on our bargain list
of undervalued stocks.
It is important to note that there are special risks involved with global
investing related to market, currency, economic, social, political and other
factors. Emerging
TOP 10 COUNTRIES
Based on Equity Securities
8/31/03
- -----------------------------------------
% OF TOTAL
NET ASSETS
- -----------------------------------------
U.S. 20.3%
- -----------------------------------------
U.K. 17.0%
- -----------------------------------------
Japan 5.3%
- -----------------------------------------
Hong Kong 4.9%
- -----------------------------------------
Switzerland 4.5%
- -----------------------------------------
South Korea 4.4%
- -----------------------------------------
Germany 3.7%
- -----------------------------------------
Canada 3.3%
- -----------------------------------------
Netherlands 3.2%
- -----------------------------------------
France 2.7%
- -----------------------------------------
TOP 10 EQUITY HOLDINGS
8/31/03
- -----------------------------------------------------
COMPANY % OF TOTAL
SECTOR/INDUSTRY, COUNTRY NET ASSETS
- -----------------------------------------------------
Bristol-Myers Squibb Co. 1.8%
PHARMACEUTICALS, U.S.
- -----------------------------------------------------
Nestle SA 1.6%
FOOD PRODUCTS, SWITZERLAND
- -----------------------------------------------------
E.ON AG 1.6%
ELECTRIC UTILITIES, GERMANY
- -----------------------------------------------------
Cheung Kong Holdings Ltd. 1.6%
REAL ESTATE, HONG KONG
- -----------------------------------------------------
Abbey National PLC 1.5%
COMMERCIAL BANKS, U.K.
- -----------------------------------------------------
BP PLC 1.5%
OIL & GAS, U.K.
- -----------------------------------------------------
AT&T Wireless Services Inc. 1.5%
WIRELESS TELECOMMUNICATION SERVICES, U.S.
- -----------------------------------------------------
Eni SpA 1.5%
OIL & GAS, ITALY
- -----------------------------------------------------
GlaxoSmithKline PLC 1.4%
PHARMACEUTICALS, U.K.
- -----------------------------------------------------
Aventis SA 1.4%
PHARMACEUTICALS, FRANCE
- -----------------------------------------------------
Annual Report | 5
markets involve similar but heightened risks in addition to those associated
with their relatively small size and lesser liquidity. Investing in any emerging
market means accepting a certain amount of volatility and, in some cases, the
consequences of severe market corrections.
Thank you for investing in Templeton Growth Fund. We welcome your comments and
look forward to serving you in the future.
[GRAPHIC OMITTED]
/S/MURDO MURCHISON
Murdo Murchison, CFA
Portfolio Manager
Templeton Growth Fund, Inc.
THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF
AUGUST 31, 2003, THE END OF THE REPORTING PERIOD. OUR STRATEGIES AND THE FUND'S
PORTFOLIO COMPOSITION WILL CHANGE DEPENDING ON MARKET AND ECONOMIC CONDITIONS.
THESE OPINIONS MAY NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A
PARTICULAR SECURITY. THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT
OF ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE
FROM SOURCES CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO
REPRESENTATION OR WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH
HISTORICAL PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY
HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT PHILOSOPHY.
6 | Annual Report
Performance Summary as of 8/31/03
Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses of each
class. Capital gain distributions are net profits realized from the sale of
portfolio securities. The performance table and graphs do not reflect any taxes
due on Fund dividends, capital gain distributions, if any, or any realized gains
on the sale of Fund shares. Total return reflects the Fund's dividend income,
capital gain distributions, if any, and any unrealized gains or losses.
PRICE AND DISTRIBUTION INFORMATION
- --------------------------------------------------------------------------------------------------
CLASS A CHANGE 8/31/03 8/31/02
- --------------------------------------------------------------------------------------------------
Net Asset Value (NAV) +$1.44 $18.54 $17.10
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS (9/1/02-8/31/03)
- --------------------------------------------------------------------------------------------------
Dividend Income $0.3577
- --------------------------------------------------------------------------------------------------
CLASS B CHANGE 8/31/03 8/31/02
- --------------------------------------------------------------------------------------------------
Net Asset Value (NAV) +$1.39 $18.24 $16.85
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS (9/1/02-8/31/03)
- --------------------------------------------------------------------------------------------------
Dividend Income $0.2614
- --------------------------------------------------------------------------------------------------
CLASS C CHANGE 8/31/03 8/31/02
- --------------------------------------------------------------------------------------------------
Net Asset Value (NAV) +$1.41 $18.15 $16.74
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS (9/1/02-8/31/03)
- --------------------------------------------------------------------------------------------------
Dividend Income $0.2348
- --------------------------------------------------------------------------------------------------
CLASS R CHANGE 8/31/03 8/31/02
- --------------------------------------------------------------------------------------------------
Net Asset Value (NAV) +$1.37 $18.44 $17.07
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS (9/1/02-8/31/03)
- --------------------------------------------------------------------------------------------------
Dividend Income $0.3681
- --------------------------------------------------------------------------------------------------
ADVISOR CLASS CHANGE 8/31/03 8/31/02
- --------------------------------------------------------------------------------------------------
Net Asset Value (NAV) +$1.44 $18.57 $17.13
- --------------------------------------------------------------------------------------------------
DISTRIBUTIONS (9/1/02-8/31/03)
- --------------------------------------------------------------------------------------------------
Dividend Income $0.4012
- --------------------------------------------------------------------------------------------------
Annual Report | Past performance does not guarantee future results. | 7
Performance Summary (CONTINUED)
PERFORMANCE
- -----------------------------------------------------------------------------------------------------
CLASS A 1-YEAR 5-YEAR 10-YEAR
- -----------------------------------------------------------------------------------------------------
Cumulative Total Return 1 10.90% 58.48% 153.50%
- -----------------------------------------------------------------------------------------------------
Average Annual Total Return 2 4.54% 8.36% 9.10%
- -----------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $10,454 $14,940 $23,886
- -----------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 17.73% 7.89% 9.18%
- -----------------------------------------------------------------------------------------------------
CLASS B 1-YEAR 3-YEAR INCEPTION (1/1/99)
- -----------------------------------------------------------------------------------------------------
Cumulative Total Return 1 10.08% 6.92% 35.75%
- -----------------------------------------------------------------------------------------------------
Average Annual Total Return 2 6.08% 1.35% 6.43%
- -----------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $10,608 $10,410 $13,375
- -----------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 20.00% 2.51% 6.38%
- -----------------------------------------------------------------------------------------------------
CLASS C 1-YEAR 5-YEAR INCEPTION (5/1/95)
- -----------------------------------------------------------------------------------------------------
Cumulative Total Return 1 10.08% 52.65% 100.56%
- -----------------------------------------------------------------------------------------------------
Average Annual Total Return 2 7.98% 8.61% 8.57%
- -----------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $10,798 $15,110 $19,851
- -----------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 21.78% 8.15% 8.52%
- -----------------------------------------------------------------------------------------------------
CLASS R 1-YEAR INCEPTION (1/1/02)
- -----------------------------------------------------------------------------------------------------
Cumulative Total Return 1 10.58% 4.52%
- -----------------------------------------------------------------------------------------------------
Average Annual Total Return 2 9.58% 2.70%
- -----------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $10,958 $10,452
- -----------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 23.59% 2.76%
- -----------------------------------------------------------------------------------------------------
ADVISOR CLASS 5 1-YEAR 5-YEAR 10-YEAR
- -----------------------------------------------------------------------------------------------------
Cumulative Total Return 1 11.19% 60.65% 160.06%
- -----------------------------------------------------------------------------------------------------
Average Annual Total Return 2 11.19% 9.94% 10.03%
- -----------------------------------------------------------------------------------------------------
Value of $10,000 Investment 3 $11,119 $16,065 $26,006
- -----------------------------------------------------------------------------------------------------
Avg. Ann. Total Return (9/30/03) 4 25.28% 9.47% 10.11%
- -----------------------------------------------------------------------------------------------------
ONGOING MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE; MORE
RECENT RETURNS MAY DIFFER FROM THOSE SHOWN. SINCE MARKETS CAN GO DOWN AS WELL AS
UP, INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH MARKET CONDITIONS,
AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES.
FOR MORE CURRENT PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT
FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236.
8 | Past performance does not guarantee future results. | Annual Report
Performance Summary (CONTINUED)
TOTAL RETURN INDEX COMPARISON FOR HYPOTHETICAL $10,000 INVESTMENT
Total return represents the change in value of an investment over the periods
shown. It includes the current, applicable, maximum sales charge(s), Fund
expenses, account fees and reinvested distributions. The unmanaged index
includes reinvested dividends. It differs from the Fund in composition and does
not pay management fees or expenses. One cannot invest directly in an index. The
Consumer Price Index (CPI), calculated by the U.S. Bureau of Labor Statistics,
is a commonly used measure of the inflation rate.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
The following line graph compares the performance of Templeton Growth Fund -
Class A with that of the MSCI World Index 6 and the CPI 6 based on a $10,000
investment from 9/1/93 to 8/31/03.
Period Templeton Growth Fund - Class A MSCI World Index 6 CPI 6
- ------ ------------------------------- ---------------- ---
9/1/93 $9,423 $10,000 $10,000
9/30/93 $9,385 $9,817 $10,021
10/31/93 $9,817 $10,089 $10,062
11/30/93 $9,633 $9,520 $10,069
12/31/93 $10,298 $9,987 $10,069
1/31/94 $10,871 $10,648 $10,097
2/28/94 $10,596 $10,512 $10,131
3/31/94 $10,193 $10,060 $10,166
4/30/94 $10,368 $10,373 $10,180
5/31/94 $10,467 $10,401 $10,186
6/30/94 $10,234 $10,374 $10,221
7/31/94 $10,707 $10,573 $10,249
8/31/94 $11,075 $10,894 $10,290
9/30/94 $10,824 $10,609 $10,318
10/31/94 $10,924 $10,913 $10,325
11/30/94 $10,474 $10,442 $10,338
12/31/94 $10,382 $10,545 $10,338
1/31/95 $10,299 $10,388 $10,380
2/28/95 $10,606 $10,542 $10,421
3/31/95 $10,804 $11,052 $10,456
4/30/95 $11,182 $11,439 $10,490
5/31/95 $11,514 $11,540 $10,511
6/30/95 $11,681 $11,538 $10,532
7/31/95 $12,205 $12,118 $10,532
8/31/95 $12,128 $11,850 $10,559
9/30/95 $12,403 $12,197 $10,580
10/31/95 $12,007 $12,008 $10,615
11/30/95 $12,281 $12,427 $10,608
12/31/95 $12,441 $12,793 $10,601
1/31/96 $12,886 $13,026 $10,663
2/29/96 $12,929 $13,108 $10,698
3/31/96 $13,079 $13,328 $10,753
4/30/96 $13,373 $13,644 $10,794
5/31/96 $13,531 $13,659 $10,815
6/30/96 $13,545 $13,730 $10,822
7/31/96 $13,108 $13,247 $10,843
8/31/96 $13,445 $13,402 $10,863
9/30/96 $13,717 $13,929 $10,898
10/31/96 $13,941 $14,029 $10,932
11/30/96 $14,700 $14,818 $10,953
12/31/96 $14,998 $14,583 $10,953
1/31/97 $15,359 $14,761 $10,988
2/28/97 $15,481 $14,934 $11,022
3/31/97 $15,412 $14,641 $11,050
4/30/97 $15,758 $15,122 $11,064
5/31/97 $16,541 $16,058 $11,057
6/30/97 $17,201 $16,861 $11,070
7/31/97 $17,853 $17,641 $11,084
8/31/97 $17,247 $16,463 $11,105
9/30/97 $18,360 $17,360 $11,133
10/31/97 $17,160 $16,449 $11,160
11/30/97 $17,212 $16,743 $11,153
12/31/97 $17,425 $16,949 $11,140
1/31/98 $17,452 $17,424 $11,160
2/28/98 $18,413 $18,606 $11,181
3/31/98 $19,230 $19,394 $11,202
4/30/98 $19,329 $19,587 $11,222
5/31/98 $18,745 $19,344 $11,243
6/30/98 $18,206 $19,806 $11,257
7/31/98 $17,775 $19,777 $11,271
8/31/98 $15,071 $17,143 $11,285
9/30/98 $15,449 $17,449 $11,298
10/31/98 $16,764 $19,029 $11,326
11/30/98 $17,366 $20,164 $11,326
12/31/98 $16,993 $21,152 $11,319
1/31/99 $16,868 $21,618 $11,347
2/28/99 $16,744 $21,046 $11,360
3/31/99 $17,916 $21,925 $11,395
4/30/99 $20,138 $22,793 $11,478
5/31/99 $19,411 $21,963 $11,478
6/30/99 $20,314 $22,990 $11,478
7/31/99 $20,294 $22,925 $11,512
8/31/99 $20,304 $22,887 $11,540
9/30/99 $19,577 $22,668 $11,595
10/31/99 $19,594 $23,850 $11,616
11/30/99 $20,464 $24,524 $11,623
12/31/99 $22,164 $26,512 $11,623
1/31/00 $20,643 $24,997 $11,657
2/29/00 $19,944 $25,067 $11,727
3/31/00 $21,387 $26,803 $11,823
4/30/00 $21,109 $25,673 $11,830
5/31/00 $21,498 $25,026 $11,844
6/30/00 $21,609 $25,872 $11,906
7/31/00 $21,465 $25,147 $11,934
8/31/00 $21,853 $25,968 $11,934
9/30/00 $21,187 $24,590 $11,996
10/31/00 $21,380 $24,181 $12,017
11/30/00 $21,249 $22,716 $12,023
12/31/00 $22,550 $23,087 $12,017
1/31/01 $22,856 $23,535 $12,093
2/28/01 $22,550 $21,549 $12,141
3/31/01 $21,495 $20,138 $12,169
4/30/01 $22,366 $21,631 $12,217
5/31/01 $22,807 $21,363 $12,272
6/30/01 $22,390 $20,696 $12,293
7/31/01 $22,305 $20,424 $12,258
8/31/01 $22,207 $19,447 $12,258
9/30/01 $20,318 $17,736 $12,314
10/31/01 $20,989 $18,078 $12,272
11/30/01 $22,314 $19,150 $12,251
12/31/01 $22,672 $19,273 $12,203
1/31/02 $22,180 $18,691 $12,231
2/28/02 $22,621 $18,532 $12,279
3/31/02 $23,465 $19,355 $12,348
4/30/02 $23,591 $18,705 $12,417
5/31/02 $24,082 $18,748 $12,417
6/30/02 $23,100 $17,615 $12,424
7/31/02 $21,525 $16,132 $12,438
8/31/02 $21,538 $16,166 $12,479
9/30/02 $19,183 $14,391 $12,500
10/31/02 $20,166 $15,456 $12,521
11/30/02 $21,486 $16,293 $12,521
12/31/02 $20,523 $15,507 $12,493
1/31/03 $20,111 $15,038 $12,548
2/28/03 $19,428 $14,781 $12,645
3/31/03 $18,990 $14,740 $12,721
4/30/03 $20,781 $16,056 $12,693
5/31/03 $22,417 $16,982 $12,673
6/30/03 $22,829 $17,282 $12,686
7/31/03 $23,345 $17,636 $12,700
8/31/03 $23,886 $18,022 $12,749
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
The following line graph compares the performance of Templeton Growth Fund -
Class B with that of the MSCI World Index 6 and the CPI 6 based on a $10,000
investment from 1/1/99 to 8/31/03.
Period Templeton Growth Fund - Class B MSCI World Index 6 CPI 6
- ------ ------------------------------- ---------------- -----
1/1/99 $10,000 $10,000 $10,000
1/31/99 $9,927 $10,220 $10,024
2/28/99 $9,847 $9,950 $10,037
3/31/99 $10,525 $10,366 $10,067
4/30/99 $11,820 $10,776 $10,140
5/31/99 $11,387 $10,383 $10,140
6/30/99 $11,906 $10,869 $10,140
7/31/99 $11,888 $10,838 $10,171
8/31/99 $11,888 $10,820 $10,195
9/30/99 $11,454 $10,717 $10,244
10/31/99 $11,463 $11,275 $10,262
11/30/99 $11,962 $11,594 $10,268
12/31/99 $12,945 $12,534 $10,268
1/31/00 $12,044 $11,818 $10,299
2/29/00 $11,633 $11,851 $10,360
3/31/00 $12,468 $12,672 $10,445
4/30/00 $12,299 $12,137 $10,451
5/31/00 $12,521 $11,831 $10,464
6/30/00 $12,579 $12,231 $10,519
7/31/00 $12,481 $11,889 $10,543
8/31/00 $12,697 $12,277 $10,543
9/30/00 $12,305 $11,626 $10,598
10/31/00 $12,408 $11,432 $10,616
11/30/00 $12,324 $10,740 $10,622
12/31/00 $13,070 $10,915 $10,616
1/31/01 $13,242 $11,127 $10,683
2/28/01 $13,056 $10,188 $10,726
3/31/01 $12,439 $9,520 $10,750
4/30/01 $12,934 $10,227 $10,793
5/31/01 $13,185 $10,100 $10,842
6/30/01 $12,926 $9,785 $10,860
7/31/01 $12,876 $9,656 $10,830
8/31/01 $12,812 $9,194 $10,830
9/30/01 $11,715 $8,385 $10,879
10/31/01 $12,091 $8,547 $10,842
11/30/01 $12,848 $9,054 $10,824
12/31/01 $13,049 $9,112 $10,781
1/31/02 $12,749 $8,837 $10,805
2/28/02 $12,998 $8,761 $10,848
3/31/02 $13,474 $9,151 $10,909
4/30/02 $13,547 $8,843 $10,970
5/31/02 $13,818 $8,864 $10,970
6/30/02 $13,240 $8,328 $10,976
7/31/02 $12,332 $7,627 $10,988
8/31/02 $12,332 $7,643 $11,025
9/30/02 $10,978 $6,804 $11,043
10/31/02 $11,534 $7,307 $11,062
11/30/02 $12,276 $7,703 $11,062
12/31/02 $11,722 $7,331 $11,037
1/31/03 $11,484 $7,110 $11,086
2/28/03 $11,082 $6,988 $11,171
3/31/03 $10,821 $6,969 $11,239
4/30/03 $11,841 $7,591 $11,214
5/31/03 $12,764 $8,029 $11,196
6/30/03 $12,987 $8,170 $11,208
7/31/03 $13,277 $8,338 $11,220
8/31/03 $13,375 $8,520 $11,263
Annual Report | Past performance does not guarantee future results. | 9
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- -----------------------------------
CLASS C 8/31/03
- -----------------------------------
1-Year 7.98%
- -----------------------------------
5-Year 8.61%
- -----------------------------------
Since Inception (5/1/95) 8.57%
- -----------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
The following line graph compares the performance of Templeton Growth Fund -
Class C with that of the MSCI World Index 6 and the CPI 6 based on a $10,000
investment from 5/1/95 to 8/31/03.
Period Templeton Growth Fund - Class C MSCI World Index 6 CPI 6
- ------ ------------------------------- ---------------- -----
5/1/95 $9,898 $10,000 $10,000
5/31/95 $10,187 $10,087 $10,020
6/30/95 $10,329 $10,086 $10,039
7/31/95 $10,788 $10,593 $10,039
8/31/95 $10,708 $10,359 $10,066
9/30/95 $10,941 $10,663 $10,086
10/31/95 $10,588 $10,497 $10,118
11/30/95 $10,818 $10,863 $10,112
12/31/95 $10,960 $11,183 $10,105
1/31/96 $11,340 $11,387 $10,165
2/29/96 $11,372 $11,459 $10,197
3/31/96 $11,493 $11,651 $10,250
4/30/96 $11,746 $11,927 $10,290
5/31/96 $11,873 $11,940 $10,309
6/30/96 $11,880 $12,002 $10,316
7/31/96 $11,493 $11,580 $10,336
8/31/96 $11,778 $11,716 $10,355
9/30/96 $12,006 $12,177 $10,388
10/31/96 $12,191 $12,264 $10,421
11/30/96 $12,847 $12,953 $10,441
12/31/96 $13,107 $12,748 $10,441
1/31/97 $13,412 $12,904 $10,474
2/28/97 $13,506 $13,054 $10,507
3/31/97 $13,439 $12,798 $10,533
4/30/97 $13,729 $13,219 $10,546
5/31/97 $14,405 $14,037 $10,540
6/30/97 $14,973 $14,740 $10,553
7/31/97 $15,527 $15,421 $10,566
8/31/97 $14,993 $14,391 $10,586
9/30/97 $15,947 $15,176 $10,612
10/31/97 $14,898 $14,379 $10,639
11/30/97 $14,928 $14,636 $10,632
12/31/97 $15,108 $14,817 $10,619
1/31/98 $15,124 $15,232 $10,639
2/28/98 $15,944 $16,265 $10,658
3/31/98 $16,637 $16,954 $10,678
4/30/98 $16,716 $17,122 $10,698
5/31/98 $16,196 $16,910 $10,718
6/30/98 $15,723 $17,314 $10,731
7/31/98 $15,337 $17,289 $10,744
8/31/98 $13,004 $14,986 $10,757
9/30/98 $13,319 $15,253 $10,770
10/31/98 $14,444 $16,635 $10,797
11/30/98 $14,952 $17,627 $10,797
12/31/98 $14,625 $18,490 $10,790
1/31/99 $14,507 $18,898 $10,816
2/28/99 $14,399 $18,398 $10,829
3/31/99 $15,388 $19,166 $10,862
4/30/99 $17,285 $19,925 $10,941
5/31/99 $16,650 $19,199 $10,941
6/30/99 $17,413 $20,097 $10,941
7/31/99 $17,394 $20,040 $10,974
8/31/99 $17,385 $20,007 $11,001
9/30/99 $16,759 $19,816 $11,053
10/31/99 $16,763 $20,849 $11,073
11/30/99 $17,490 $21,438 $11,080
12/31/99 $18,932 $23,176 $11,080
1/31/00 $17,623 $21,851 $11,113
2/29/00 $17,006 $21,913 $11,178
3/31/00 $18,239 $23,430 $11,271
4/30/00 $17,988 $22,442 $11,277
5/31/00 $18,306 $21,877 $11,290
6/30/00 $18,393 $22,616 $11,350
7/31/00 $18,258 $21,983 $11,376
8/31/00 $18,566 $22,700 $11,376
9/30/00 $17,988 $21,496 $11,435
10/31/00 $18,150 $21,139 $11,455
11/30/00 $18,027 $19,858 $11,461
12/31/00 $19,113 $20,182 $11,455
1/31/01 $19,367 $20,574 $11,527
2/28/01 $19,092 $18,837 $11,573
3/31/01 $18,194 $17,604 $11,600
4/30/01 $18,913 $18,909 $11,646
5/31/01 $19,282 $18,674 $11,698
6/30/01 $18,913 $18,092 $11,718
7/31/01 $18,828 $17,854 $11,685
8/31/01 $18,733 $17,000 $11,685
9/30/01 $17,127 $15,505 $11,738
10/31/01 $17,681 $15,803 $11,698
11/30/01 $18,797 $16,740 $11,679
12/31/01 $19,079 $16,848 $11,633
1/31/02 $18,648 $16,339 $11,659
2/28/02 $19,015 $16,200 $11,705
3/31/02 $19,704 $16,920 $11,771
4/30/02 $19,812 $16,351 $11,837
5/31/02 $20,210 $16,389 $11,837
6/30/02 $19,359 $15,398 $11,843
7/31/02 $18,034 $14,102 $11,856
8/31/02 $18,034 $14,132 $11,896
9/30/02 $16,052 $12,581 $11,916
10/31/02 $16,866 $13,511 $11,935
11/30/02 $17,957 $14,243 $11,935
12/31/02 $17,139 $13,555 $11,909
1/31/03 $16,789 $13,146 $11,962
2/28/03 $16,209 $12,921 $12,054
3/31/03 $15,826 $12,885 $12,126
4/30/03 $17,314 $14,036 $12,100
5/31/03 $18,670 $14,845 $12,080
6/30/03 $18,998 $15,108 $12,093
7/31/03 $19,414 $15,417 $12,107
8/31/03 $19,851 $15,754 $12,153
- -----------------------------------
AVERAGE ANNUAL TOTAL RETURN
- -----------------------------------
CLASS R 8/31/03
- -----------------------------------
1-Year 9.58%
- -----------------------------------
Since Inception (1/1/02) 2.70%
- -----------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
The following line graph compares the performance of Templeton Growth Fund -
Class R with that of the MSCI World Index 6 and the CPI 6 based on a $10,000
investment from 1/1/02 to 8/31/03.
Period Templeton Growth Fund - R Class MSCI World Index 6 CPI 6
- ------ ------------------------------- ------------------ -----
1/1/02 $10,000 $10,000 $10,000
1/31/02 $9,745 $9,698 $10,023
2/28/02 $9,944 $9,616 $10,062
3/31/02 $10,309 $10,043 $10,119
4/30/02 $10,365 $9,705 $10,175
5/31/02 $10,581 $9,728 $10,175
6/30/02 $10,144 $9,140 $10,181
7/31/02 $9,446 $8,370 $10,192
8/31/02 $9,451 $8,388 $10,226
9/30/02 $8,416 $7,467 $10,243
10/31/02 $8,846 $8,020 $10,260
11/30/02 $9,416 $8,454 $10,260
12/31/02 $8,995 $8,046 $10,238
1/31/03 $8,813 $7,803 $10,283
2/28/03 $8,512 $7,669 $10,362
3/31/03 $8,314 $7,648 $10,424
4/30/03 $9,102 $8,331 $10,402
5/31/03 $9,816 $8,811 $10,385
6/30/03 $9,992 $8,967 $10,396
7/31/03 $10,218 $9,151 $10,407
8/31/03 $10,452 $9,351 $10,447
10 | Past performance does not guarantee future results. | Annual Report
Performance Summary (CONTINUED)
AVERAGE ANNUAL TOTAL RETURN
- -----------------------------------
ADVISOR CLASS 5 8/31/03
- -----------------------------------
1-Year 11.19%
- -----------------------------------
5-Year 9.94%
- -----------------------------------
10-Year 10.03%
- -----------------------------------
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
The following line graph compares the performance of Templeton Growth Fund -
Advisor Class with that of the MSCI World Index 6 and the CPI 6 based on a
$10,000 investment from 9/1/93 to 8/31/03.
Period Templeton Growth Fund - Advisor Class MSCI World Index 6 CPI 6
- ------ ------------------------------------- ----------------- ----
9/1/93 $10,000 $10,000 $10,000
9/30/93 $9,960 $9,817 $10,021
10/31/93 $10,419 $10,089 $10,062
11/30/93 $10,223 $9,520 $10,069
12/31/93 $10,929 $9,987 $10,069
1/31/94 $11,537 $10,648 $10,097
2/28/94 $11,245 $10,512 $10,131
3/31/94 $10,817 $10,060 $10,166
4/30/94 $11,003 $10,373 $10,180
5/31/94 $11,109 $10,401 $10,186
6/30/94 $10,861 $10,374 $10,221
7/31/94 $11,363 $10,573 $10,249
8/31/94 $11,754 $10,894 $10,290
9/30/94 $11,487 $10,609 $10,318
10/31/94 $11,593 $10,913 $10,325
11/30/94 $11,116 $10,442 $10,338
12/31/94 $11,018 $10,545 $10,338
1/31/95 $10,930 $10,388 $10,380
2/28/95 $11,256 $10,542 $10,421
3/31/95 $11,466 $11,052 $10,456
4/30/95 $11,867 $11,439 $10,490
5/31/95 $12,220 $11,540 $10,511
6/30/95 $12,396 $11,538 $10,532
7/31/95 $12,953 $12,118 $10,532
8/31/95 $12,872 $11,850 $10,559
9/30/95 $13,164 $12,197 $10,580
10/31/95 $12,743 $12,008 $10,615
11/30/95 $13,033 $12,427 $10,608
12/31/95 $13,203 $12,793 $10,601
1/31/96 $13,675 $13,026 $10,663
2/29/96 $13,721 $13,108 $10,698
3/31/96 $13,881 $13,328 $10,753
4/30/96 $14,193 $13,644 $10,794
5/31/96 $14,360 $13,659 $10,815
6/30/96 $14,375 $13,730 $10,822
7/31/96 $13,911 $13,247 $10,843
8/31/96 $14,269 $13,402 $10,863
9/30/96 $14,558 $13,929 $10,898
10/31/96 $14,796 $14,029 $10,932
11/30/96 $15,600 $14,818 $10,953
12/31/96 $15,917 $14,583 $10,953
1/31/97 $16,442 $14,761 $10,988
2/28/97 $16,573 $14,934 $11,022
3/31/97 $16,500 $14,641 $11,050
4/30/97 $16,869 $15,122 $11,064
5/31/97 $17,707 $16,058 $11,057
6/30/97 $18,422 $16,861 $11,070
7/31/97 $19,120 $17,641 $11,084
8/31/97 $18,480 $16,463 $11,105
9/30/97 $19,671 $17,360 $11,133
10/31/97 $18,403 $16,449 $11,160
11/30/97 $18,459 $16,743 $11,153
12/31/97 $18,693 $16,949 $11,140
1/31/98 $18,731 $17,424 $11,160
2/28/98 $19,762 $18,606 $11,181
3/31/98 $20,639 $19,394 $11,202
4/30/98 $20,755 $19,587 $11,222
5/31/98 $20,119 $19,344 $11,243
6/30/98 $19,550 $19,806 $11,257
7/31/98 $19,088 $19,777 $11,271
8/31/98 $16,187 $17,143 $11,285
9/30/98 $16,602 $17,449 $11,298
10/31/98 $18,019 $19,029 $11,326
11/30/98 $18,665 $20,164 $11,326
12/31/98 $18,275 $21,152 $11,319
1/31/99 $18,153 $21,618 $11,347
2/28/99 $18,019 $21,046 $11,360
3/31/99 $19,280 $21,925 $11,395
4/30/99 $21,679 $22,793 $11,478
5/31/99 $20,909 $21,963 $11,478
6/30/99 $21,879 $22,990 $11,478
7/31/99 $21,868 $22,925 $11,512
8/31/99 $21,879 $22,887 $11,540
9/30/99 $21,110 $22,668 $11,595
10/31/99 $21,124 $23,850 $11,616
11/30/99 $22,073 $24,524 $11,623
12/31/99 $23,913 $26,512 $11,623
1/31/00 $22,272 $24,997 $11,657
2/29/00 $21,517 $25,067 $11,727
3/31/00 $23,086 $26,803 $11,823
4/30/00 $22,787 $25,673 $11,830
5/31/00 $23,218 $25,026 $11,844
6/30/00 $23,338 $25,872 $11,906
7/31/00 $23,182 $25,147 $11,934
8/31/00 $23,613 $25,968 $11,934
9/30/00 $22,895 $24,590 $11,996
10/31/00 $23,109 $24,181 $12,017
11/30/00 $22,968 $22,716 $12,023
12/31/00 $24,380 $23,087 $12,017
1/31/01 $24,725 $23,535 $12,093
2/28/01 $24,393 $21,549 $12,141
3/31/01 $23,266 $20,138 $12,169
4/30/01 $24,194 $21,631 $12,217
5/31/01 $24,699 $21,363 $12,272
6/30/01 $24,235 $20,696 $12,293
7/31/01 $24,155 $20,424 $12,258
8/31/01 $24,062 $19,447 $12,258
9/30/01 $22,007 $17,736 $12,314
10/31/01 $22,747 $18,078 $12,272
11/30/01 $24,196 $19,150 $12,251
12/31/01 $24,590 $19,273 $12,203
1/31/02 $24,043 $18,691 $12,231
2/28/02 $24,534 $18,532 $12,279
3/31/02 $25,449 $19,355 $12,348
4/30/02 $25,599 $18,705 $12,417
5/31/02 $26,146 $18,748 $12,417
6/30/02 $25,067 $17,615 $12,424
7/31/02 $23,360 $16,132 $12,438
8/31/02 $23,388 $16,166 $12,479
9/30/02 $20,834 $14,391 $12,500
10/31/02 $21,915 $15,456 $12,521
11/30/02 $23,335 $16,293 $12,521
12/31/02 $22,308 $15,507 $12,493
1/31/03 $21,860 $15,038 $12,548
2/28/03 $21,132 $14,781 $12,645
3/31/03 $20,656 $14,740 $12,721
4/30/03 $22,602 $16,056 $12,693
5/31/03 $24,394 $16,982 $12,673
6/30/03 $24,842 $17,282 $12,686
7/31/03 $25,403 $17,636 $12,700
8/31/03 $26,006 $18,022 $12,749
Annual Report | Past performance does not guarantee future results. | 11
Performance Summary (CONTINUED)
ENDNOTES
THE FUND INVESTS IN FOREIGN SECURITIES, WHICH CAN INVOLVE EXPOSURE TO CURRENCY
VOLATILITY AND POLITICAL, ECONOMIC AND REGULATORY UNCERTAINTY. INVESTMENTS IN
DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN
ADDITION TO THOSE ASSOCIATED WITH THEIR SMALL SIZE AND LESSER LIQUIDITY. THESE
AND OTHER RISKS ARE DISCUSSED MORE FULLY IN THE FUND'S PROSPECTUS.
CLASS A: Subject to the current, maximum 5.75% initial sales charge.
Prior to 7/1/92, Fund shares were offered at a higher initial
sales charge. Thus actual total returns would have been lower.
Effective 1/1/93, the Fund implemented a Rule 12b-1 plan,
which affects subsequent performance.
CLASS B: Subject to no initial sales charge, but subject to a
contingent deferred sales charge (CDSC) declining from 4% to
0% over six years. These shares have higher annual fees and
expenses than Class A shares.
CLASS C: Subject to 1% initial sales charge and 1% CDSC for shares
redeemed within 18 months of investment. These shares have
higher annual fees and expenses than Class A shares.
CLASS R: No initial sales charge, but subject to 1% CDSC for shares
redeemed within 18 months of investment; 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: No initial sales charge or Rule 12b-1 fees; are available to a
limited class of investors.
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes any current, applicable,
maximum sales charge(s).
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include any current, applicable, maximum
sales charge(s).
4. In accordance with SEC rules, we provide standardized average annual total
return information through the latest calendar quarter.
5. Effective 1/2/97, the Fund began offering Advisor Class shares, which do not
have sales charges or a Rule 12b-1 plan. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 1/2/97, a
restated figure is used based upon the Fund's Class A performance, excluding the
effect of Class A's maximum initial sales charge, but reflecting the effect of
the Class A Rule 12b-1 fees; and (b) for periods after 1/1/97, actual Advisor
Class performance is used reflecting all charges and fees applicable to that
class. Since 1/2/97 (commencement of sales), the cumulative and average annual
total returns of Advisor Class shares were 63.38% and 7.64%.
6. Source: Standard & Poor's Micropal. The MSCI World Index is market
capitalization-weighted and measures total returns of equity securities in
developed markets globally.
12 | Past performance does not guarantee future results. | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS
---------------------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS A 2003 2002 2001 2000 1999
---------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .................... $17.10 $18.11 $19.67 $19.56 $16.78
---------------------------------------------------------------------
Income from investment operations:
Net investment income a .............................. .34 .33 .39 .35 .46
Net realized and unrealized gains (losses) ........... 1.46 (.88) (.16) .99 4.76
---------------------------------------------------------------------
Total from investment operations ...................... 1.80 (.55) .23 1.34 5.22
---------------------------------------------------------------------
Less distributions from:
Net investment income ................................ (.36) (.40) (.37) (.54) (.41)
Net realized gains ................................... -- (.06) (1.42) (.69) (2.03)
---------------------------------------------------------------------
Total distributions ................................... (.36) (.46) (1.79) (1.23) (2.44)
---------------------------------------------------------------------
Redemption fees ....................................... -- c -- -- -- --
---------------------------------------------------------------------
Net asset value, end of year .......................... $18.54 $17.10 $18.11 $19.67 $19.56
=====================================================================
Total return b ........................................ 10.90% (3.01)% 1.62% 7.58% 34.72%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ....................... $13,021,261 $11,689,389 $12,092,917 $13,191,493 $13,368,945
Ratios to average net assets:
Expenses ............................................. 1.13% 1.10% 1.15% 1.11% 1.12%
Net investment income ................................ 2.05% 1.85% 2.11% 1.83% 2.60%
Portfolio turnover rate ............................... 32.12% 55.63% 24.29% 50.57% 32.01%
aBased on average weighted shares outstanding.
bTotal return does not reflect the sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
cAmount is less than $0.01 per share.
Annual Report | 13
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
------------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS B 2003 2002 2001 2000 1999 d
------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............................. $16.85 $17.87 $19.45 $19.46 $16.37
------------------------------------------------------------
Income from investment operations:
Net investment income a ........................................ .22 .20 .25 .22 .24
Net realized and unrealized gains (losses) ..................... 1.43 (.87) (.16) .97 2.85
------------------------------------------------------------
Total from investment operations ................................ 1.65 (.67) .09 1.19 3.09
------------------------------------------------------------
Less distributions from:
Net investment income .......................................... (.26) (.29) (.25) (.51) --
Net realized gains ............................................. -- (.06) (1.42) (.69) --
------------------------------------------------------------
Total distributions ............................................. (.26) (.35) (1.67) (1.20) --
------------------------------------------------------------
Redemption fees ................................................. -- c -- -- -- --
------------------------------------------------------------
Net asset value, end of year .................................... $18.24 $16.85 $17.87 $19.45 $19.46
============================================================
Total return b .................................................. 10.08% (3.74)% .91% 6.81% 18.88%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................. $278,340 $166,015 $93,301 $69,297 $27,573
Ratios to average net assets:
Expenses ....................................................... 1.88% 1.85% 1.89% 1.86% 1.88% e
Net investment income .......................................... 1.30% 1.10% 1.40% 1.16% 1.91% e
Portfolio turnover rate ......................................... 32.12% 55.63% 24.29% 50.57% 32.01%
aBased on average weighted shares outstanding.
bTotal return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
cAmount is less than $0.01 per share.
dFor the period January 1, 1999 (effective date) to August 31, 1999.
eAnnualized.
14 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
-----------------------------------------------------------
YEAR ENDED AUGUST 31,
CLASS C 2003 2002 2001 2000 1999
-----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ............................. $16.74 $17.73 $19.28 $19.15 $16.49
-----------------------------------------------------------
Income from investment operations:
Net investment income a ....................................... .21 .20 .25 .20 .32
Net realized and unrealized gains (losses) .................... 1.44 (.86) (.16) .98 4.68
-----------------------------------------------------------
Total from investment operations ............................... 1.65 (.66) .09 1.18 5.00
-----------------------------------------------------------
Less distributions from:
Net investment income ......................................... (.24) (.27) (.22) (.36) (.31)
Net realized gains ............................................ -- (.06) (1.42) (.69) (2.03)
-----------------------------------------------------------
Total distributions ............................................ (.24) (.33) (1.64) (1.05) (2.34)
-----------------------------------------------------------
Redemption fees ................................................ -- c -- -- -- --
-----------------------------------------------------------
Net asset value, end of year ................................... $18.15 $16.74 $17.73 $19.28 $19.15
===========================================================
Total return b ................................................. 10.08% (3.73)% .90% 6.79% 33.77%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................ $1,064,405 $897,064 $906,390 $995,687 $1,021,159
Ratios to average net assets:
Expenses ...................................................... 1.88% 1.84% 1.89% 1.85% 1.86%
Net investment income ......................................... 1.30% 1.11% 1.37% 1.08% 1.84%
Portfolio turnover rate ........................................ 32.12% 55.63% 24.29% 50.57% 32.01%
aBased on average weighted shares outstanding.
bTotal return does not reflect the sales commissions or the contingent deferred
sales charge, and is not annualized for periods less than one year.
cAmount is less than $0.01 per share.
Annual Report | 15
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------
YEAR ENDED PERIOD ENDED
CLASS R AUGUST 31, 2003 AUGUST 31, 2002 d
--------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ....................................... $17.07 $18.06
--------------------------------------
Income from investment operations:
Net investment income (loss) a .......................................... .32 .32
Net realized and unrealized gains (losses) .............................. 1.42 (1.31)
--------------------------------------
Total from investment operations ......................................... 1.74 (.99)
--------------------------------------
Less distributions from net investment income ............................ (.37) --
--------------------------------------
Total distributions ...................................................... (.37) --
--------------------------------------
Redemption fees .......................................................... -- c --
--------------------------------------
Net asset value, end of year ............................................. $18.44 $17.07
======================================
Total return b ........................................................... 10.58% (5.48)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) .......................................... $28,584 $5,394
Ratios to average net assets:
Expenses ................................................................ 1.39% 1.35% e
Net investment income ................................................... 1.79% 1.60% e
Portfolio turnover rate .................................................. 32.12% 55.63%
aBased on average weighted shares outstanding.
bTotal return does not reflect the contingent deferred sales charge, and is not
annualized for periods less than one year.
cAmount is less than $0.01 per share.
dFor the period January 2, 2002 (effective date) to August 31, 2002.
eAnnualized.
16 | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
----------------------------------------------------------
YEAR ENDED AUGUST 31,
ADVISOR CLASS 2003 2002 2001 2000 1999
----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year .............................. $17.13 $18.15 $19.71 $19.61 $16.80
----------------------------------------------------------
Income from investment operations:
Net investment income a ........................................ .38 .37 .43 .40 .51
Net realized and unrealized gains (losses) ..................... 1.46 (.88) (.15) .99 4.77
----------------------------------------------------------
Total from investment operations ................................ 1.84 (.51) .28 1.39 5.28
----------------------------------------------------------
Less distributions from:
Net investment income .......................................... (.40) (.45) (.42) (.60) (.44)
Net realized gains ............................................. -- (.06) (1.42) (.69) (2.03)
----------------------------------------------------------
Total distributions ............................................. (.40) (.51) (1.84) (1.29) (2.47)
----------------------------------------------------------
Redemption fees ................................................. -- c -- -- -- --
----------------------------------------------------------
Net asset value, end of year .................................... $18.57 $17.13 $18.15 $19.71 $19.61
==========================================================
Total return b .................................................. 11.19% (2.80)% 1.90% 7.87% 35.16%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................. $137,776 $98,999 $84,975 $118,679 $50,751
Ratios to average net assets:
Expenses ....................................................... .88% .85% .90% .86% .87%
Net investment income .......................................... 2.30% 2.10% 2.36% 2.10% 2.85%
Portfolio turnover rate ......................................... 32.12% 55.63% 24.29% 50.57% 32.01%
aBased on average weighted shares outstanding.
bTotal return is not annualized for periods less than one year.
cAmount is less than $0.01 per share.
Annual Report | See notes to financial statements. | 17
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2003
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 84.0%
AUSTRALIA .9%
BHP Billiton PLC ................ Metals & Mining 20,000,000 $ 131,443,666
------------------
BELGIUM 1.0%
Electrabel SA ................... Electric Utilities 600,000 150,456,177
------------------
BERMUDA 1.5%
Ace Ltd. ........................ Insurance 4,000,000 128,800,000
XL Capital Ltd., A .............. Insurance 1,200,000 90,900,000
------------------
219,700,000
------------------
CANADA 3.3%
Barrick Gold Corp. .............. Metals & Mining 10,000,000 203,727,066
BCE Inc. ........................ Diversified Telecommunication Services 7,155,671 154,911,005
Transcanada Corp. ............... Gas Utilities 6,500,000 117,100,278
------------------
475,738,349
------------------
CHINA .8%
China Mobile
(Hong Kong) Ltd. ............... Wireless Telecommunication Services 43,000,000 110,540,160
------------------
DENMARK 1.2%
TDC AS .......................... Diversified Telecommunication Services 6,000,000 181,416,023
------------------
FINLAND 2.0%
Stora Enso OYJ, R
(EUR/FIM Traded) ............... Paper & Forest Products 10,782,750 140,403,165
UPM-Kymmene Corp. ............... Paper & Forest Products 8,000,000 144,922,763
------------------
285,325,928
------------------
FRANCE 2.7%
Accor SA ........................ Hotels Restaurants & Leisure 2,714,650 105,774,874
Aventis SA ...................... Pharmaceuticals 4,300,000 208,855,659
Michelin SA, B .................. Auto Components 2,100,017 85,261,387
------------------
399,891,920
------------------
GERMANY 2.7%
Bayer AG, Br. ................... Chemicals 7,500,000 160,732,519
E.ON AG ......................... Electric Utilities 4,500,000 232,205,790
------------------
392,938,309
------------------
HONG KONG 4.9%
Cheung Kong
Holdings Ltd. .................. Real Estate 29,060,800 225,427,391
Hang Lung
Properties Ltd. ................ Real Estate 30,428,100 35,111,102
Hong Kong Electric
Holdings Ltd. .................. Electric Utilities 33,000,000 130,316,860
HSBC Holdings PLC ............... Commercial Banks 6,000,000 78,083,430
Shangri-La Asia Ltd. ............ Hotels Restaurants & Leisure 44,728,584 37,276,926
Swire Pacific Ltd., A ........... Diversified Financial Services 27,590,500 154,945,596
Swire Pacific Ltd., B ........... Diversified Financial Services 55,679,500 47,828,393
------------------
708,989,698
------------------
ISRAEL .7%
a Check Point Software
Technologies Ltd. ............... Software 5,500,000 96,085,000
------------------
18 | Annual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
ITALY 1.8%
Eni SpA ................................ Oil & Gas 14,000,000 $ 211,499,402
San Paolo-IMI SpA ...................... Commercial Banks 4,500,000 43,229,801
------------------
254,729,203
------------------
JAPAN 5.3%
Hitachi Ltd. ........................... Electronic Equipment & Instruments 34,999,600 190,775,806
Nintendo Co. Ltd. ...................... Software 1,859,700 154,762,560
Nippon Telegraph & Telephone Corp. ..... Diversified Telecommunication Services 40,000 176,208,432
Nomura Holdings Inc. ................... Capital Markets 12,000,000 174,631,203
Sony Corp. ............................. Household Durables 2,086,000 68,651,302
------------------
765,029,303
------------------
MEXICO .7%
Telefonos de Mexico SA de CV (Telmex),
L, ADR ................................ Diversified Telecommunication Services 3,150,000 95,476,500
------------------
NETHERLANDS 3.2%
Akzo Nobel NV .......................... Chemicals 6,000,000 196,699,714
Koninklijke Philips Electronics NV ..... Household Durables 4,000,000 97,493,495
Unilever NV ............................ Food Products 3,000,000 166,990,547
------------------
461,183,756
------------------
NORWAY .5%
Norsk Hydro ASA ........................ Oil & Gas 1,500,000 78,840,451
------------------
SINGAPORE 1.1%
DBS Group Holdings Ltd. ................ Commercial Banks 4,163,000 29,924,012
Singapore Airlines Ltd. ................ Airlines 19,999,770 127,786,767
------------------
157,710,779
------------------
SOUTH KOREA 4.4%
Kookmin Bank ........................... Commercial Banks 3,799,993 138,518,865
KT Corp., ADR .......................... Diversified Telecommunication Services 8,500,000 160,225,000
POSCO .................................. Metals & Mining 500,000 58,985,800
Samsung Electronics
Co. Ltd. ..............................Semiconductors & Semiconductor Equipment 400,000 147,676,639
SK Telecom Co. Ltd. .................... Wireless Telecommunication Services 186,080 31,743,759
SK Telecom Co. Ltd., ADR ............... Wireless Telecommunication Services 5,162,200 98,391,532
------------------
635,541,595
------------------
SPAIN 2.1%
Endesa SA .............................. Electric Utilities 7,000,000 108,977,526
Iberdrola SA, Br. ...................... Electric Utilities 2,000,000 33,990,975
Repsol YPF SA .......................... Oil & Gas 5,000,000 84,428,488
Telefonica SA .......................... Diversified Telecommunication Services 7,200,000 84,740,292
------------------
312,137,281
------------------
SWEDEN 1.4%
Nordea AB .............................. Commercial Banks 17,000,000 86,411,042
Nordea AB, 144A ........................ Commercial Banks 4,267,000 21,689,171
Volvo AB, B ............................ Machinery 4,096,580 98,970,094
------------------
207,070,307
------------------
Annual Report | 19
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
SWITZERLAND 4.5%
Nestle SA ........................... Food Products 1,100,000 $ 239,548,749
Swiss Reinsurance Co. ............... Insurance 2,500,000 153,510,942
Syngenta AG ......................... Chemicals 1,921,600 105,646,496
UBS AG .............................. Capital Markets 3,000,000 161,829,281
------------------
660,535,468
------------------
UNITED KINGDOM 17.0%
Abbey National PLC .................. Commercial Banks 26,127,762 217,796,785
BAE Systems PLC ..................... Aerospace & Defense 70,310,000 189,896,277
BP PLC .............................. Oil & Gas 32,000,000 217,143,038
Brambles Industries PLC ............. Commercial Services & Supplies 35,000,035 103,249,024
Cadbury Schweppes PLC ............... Food Products 25,553,282 154,400,496
GlaxoSmithKline PLC ................. Pharmaceuticals 11,000,000 210,009,332
J.Sainsbury PLC ..................... Food & Staples Retailing 46,000,000 200,637,446
Lloyds TSB Group PLC ................ Commercial Banks 23,000,000 150,978,314
National Grid
Transco PLC ........................ Multi-Utilities & Unregulated Power 24,000,000 148,146,977
Reuters Group PLC ................... Media 52,375,000 205,039,663
a Rolls-Royce Group PLC ............... Aerospace & Defense 44,783,587 120,245,075
Shell Transport &
Trading Co. PLC .................... Oil & Gas 33,000,000 206,964,458
a Shire Pharmaceuticals
Group PLC .......................... Pharmaceuticals 11,000,000 83,168,567
Smiths Group PLC .................... Industrial Conglomerates 10,000,000 111,355,404
Standard Chartered PLC .............. Commercial Banks 10,000,000 133,816,295
WPP Group PLC ....................... Media 1,991,710 18,166,805
------------------
2,471,013,956
------------------
UNITED STATES 20.3%
Abbott Laboratories ................. Pharmaceuticals 4,000,000 161,200,000
a,bAK Steel Holding Corp. .............. Metals & Mining 6,445,700 17,016,648
Albertson's Inc. .................... Food & Staples Retailing 6,000,000 126,120,000
a AOL Time Warner Inc. ................ Media 4,000,000 65,440,000
a AT&T Wireless
Services Inc. ...................... Wireless Telecommunication Services 25,000,000 215,500,000
Boeing Co. .......................... Aerospace & Defense 4,020,000 150,307,800
Bowater Inc. ........................ Paper & Forest Products 2,500,000 108,275,000
Bristol-Myers Squibb Co. ............ Pharmaceuticals 10,582,000 268,465,340
Carnival Corp. ...................... Hotels Restaurants & Leisure 2,400,000 83,016,000
CIGNA Corp. ......................... Health Care Providers & Services 1,200,000 57,216,000
Electronic Data Systems Corp. ....... IT Services 6,000,000 130,980,000
Florida East Coast
Industries Inc., B ................. Road & Rail 470,546 14,488,112
General Mills Inc. .................. Food Products 2,585,000 119,840,600
H.J. Heinz Co. ...................... Food Products 5,200,000 168,272,000
Hewlett-Packard Co. ................. Computers & Peripherals 2,000,000 39,840,000
International Paper Co. ............. Paper & Forest Products 3,472,840 140,823,662
Interpublic Group of Cos. Inc. ...... Media 2,856,900 43,282,035
Kraft Foods Inc., A ................. Food Products 974,300 28,936,710
a Kroger Co. .......................... Food & Staples Retailing 9,545,000 183,359,450
a Noble Corp. ......................... Energy Equipment & Services 3,500,000 126,630,000
Pepco Holdings Inc. ................. Electric Utilities 3,718,727 64,594,288
Pfizer Inc. ......................... Pharmaceuticals 5,320,000 159,174,400
20 | Annual Report
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
UNITED STATES (CONT.)
Sara Lee Corp. ..................... Food Products 5,092,937 $ 96,663,944
SBC Communications Inc. ............ Diversified Telecommunication Services 4,400,000 98,956,000
St. Joe Co. ........................ Real Estate 1,415,700 48,147,957
Temple-Inland Inc. ................. Containers & Packaging 605,600 30,146,768
a Toys R Us Inc. ..................... Specialty Retail 4,000,000 54,480,000
U.S. Bancorp ....................... Commercial Banks 2,000,000 47,800,000
a VeriSign Inc. ...................... Internet Software & Services 823,200 12,323,304
Waste Management Inc. .............. Commercial Services & Supplies 3,583,500 95,356,935
------------------
2,956,652,953
------------------
TOTAL COMMON STOCKS
(COST $11,360,421,912) ............ 12,208,446,782
------------------
PREFERRED STOCKS 1.9%
BRAZIL .9%
Cia Vale do Rio Doce, A,
ADR, pfd. ......................... Metals & Mining 1,190,168 40,620,434
Petroleo Brasileiro SA, ADR, pfd. .. Oil & Gas 4,000,000 81,600,000
------------------
122,220,434
------------------
GERMANY 1.0%
Volkswagen AG, pfd. ................ Automobiles 4,499,990 149,204,240
------------------
TOTAL PREFERRED STOCKS
(COST $271,369,872) ............... 271,424,674
------------------
----------------------------------------
PRINCIPAL AMOUNT C VALUE
----------------------------------------
BONDS & NOTES 4.9%
AUSTRALIA .7%
New South Wales Treasury Corp.,
6.50%, 5/01/06 .................... 149,000,000 AUD 99,555,049
------------------
GERMANY 3.8%
Bundesrepublik Deutschland,
3.75%, 9/12/03 .................... 135,000,000 EUR 148,268,337
Federal Republic of Germany,
4.50%, 8/18/06 .................... 350,000,000 EUR 400,615,373
------------------
548,883,710
------------------
NEW ZEALAND .4%
Government of New Zealand,
6.50%, 2/15/06 ................... 55,900,000 NZD 33,048,682
7.00%, 7/15/09 ................... 54,000,000 NZD 33,053,497
------------------
66,102,179
------------------
TOTAL BONDS & NOTES (COST $573,726,301) 714,540,938
------------------
Annual Report | 21
Templeton Growth Fund, Inc.
STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)
---------------------------------------
PRINCIPAL AMOUNT C VALUE
---------------------------------------
SHORT TERM INVESTMENTS 8.7%
BELGIUM .4%
Belgium Treasury Bill,
2.18%, 9/18/03 ................................. 20,000,000 EUR 21,931,513
Strip, 2.78% 11/13/03 .......................... 30,000,000 EUR 32,786,107
--------------
54,717,620
--------------
FRANCE 1.1%
French Treasury Bills, 1.85% to 2.50%,
with maturities to 6/24/04 ...................... 153,000,000 EUR 165,472,745
--------------
GERMANY .5%
Deutsche Bank AG,
2.02%, 9/02/03 .................................. 73,485,000 EUR 80,679,161
--------------
NETHERLANDS .4%
Dutch Treasury Bill,
2.10%, 3/31/04 .................................. 50,000,000 EUR 54,167,133
--------------
UNITED STATES 6.3%
U.S. Treasury Bills, 0.751% to 1.018%,
with maturities to 11/28/03 ..................... 911,652,000 910,563,676
--------------
TOTAL SHORT TERM INVESTMENTS
(COST $1,270,497,966) ........................... 1,265,600,335
--------------
TOTAL INVESTMENTS (COST $13,476,016,051)
99.5% ........................................... 14,460,012,729
OTHER ASSETS, LESS LIABILITIES .5% ................ 70,354,159
--------------
NET ASSETS 100.0% ................................. $ 14,530,366,888
--------------
CURRENCY ABBREVIATIONS | AUD - Australian Dollar | EUR - Euro | FIM - Finnish
Markka NZD - New Zealand Dollar
aNon-income producing.
bSee Note 6 regarding Holdings of 5% Voting Securities.
cThe principal amount is stated in U.S. dollars unless otherwise indicated.
22 | See notes to financial statements. | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
August 31, 2003
Assets:
Investments in securities:
Cost - Unaffiliated issuers .......................................................................... $13,410,141,357
Cost - Non-controlled affiliated issuers ............................................................. 65,874,694
----------------
Value - Unaffiliated issuers ......................................................................... 14,442,996,081
Value - Non-controlled affiliated issuers ............................................................ 17,016,648
Cash .................................................................................................. 2,723,414
Foreign currency, at value (cost $8,935,540) .......................................................... 10,555,242
Receivables:
Investment securities sold ........................................................................... 12,915,959
Capital shares sold .................................................................................. 15,675,321
Dividends and interest ............................................................................... 50,489,009
----------------
Total assets ..................................................................................... 14,552,371,674
----------------
Liabilities:
Payables:
Investment securities purchased ...................................................................... 956,775
Capital shares redeemed .............................................................................. 4,870,545
Affiliates ........................................................................................... 14,410,699
Other Liabilities ..................................................................................... 1,766,767
----------------
Total liabilities ................................................................................ 22,004,786
----------------
Net assets, at value ........................................................................... $14,530,366,888
----------------
Net assets consist of:
Undistributed net investment income ................................................................... $ 259,846,653
Net unrealized appreciation (depreciation) ............................................................ 985,613,394
Accumulated net realized gain (loss) .................................................................. (91,656,395)
Capital shares ........................................................................................ 13,376,563,236
----------------
Net assets, at value ........................................................................... $14,530,366,888
----------------
CLASS A:
Net asset value per share ($13,021,261,245 / 702,323,731 shares outstanding) .......................... $18.54
----------------
Maximum offering price per share ($18.54 / 94.25%) .................................................... $19.67
----------------
CLASS B:
Net asset value and maximum offering price per share ($278,340,459 /
15,260,393 shares outstanding) a ...................................................................... $18.24
----------------
CLASS C:
Net asset value per share ($1,064,404,957 / 58,640,146 shares outstanding)a ........................... $18.15
----------------
Maximum offering price per share ($18.15 / 99.00%) .................................................... $18.33
----------------
CLASS R:
Net asset value and maximum offering price per share ($28,584,038 / 1,549,833
shares outstanding) a ................................................................................. $18.44
----------------
ADVISOR CLASS:
Net asset value and maximum offering price per share ($137,776,189 / 7,419,469
shares outstanding) ................................................................................... $18.57
----------------
aRedemption price is equal to net asset value less any applicable contingent
deferred sales charge and redemption fees retained by the Fund.
Annual Report | See notes to financial statements. | 23
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENT OF OPERATIONS
for the year ended August 31, 2003
Investment Income:
(net of foreign taxes of $20,992,738)
Dividends ............................................................................... $ 348,052,553
Interest ................................................................................ 52,845,023
---------------
Total investment income ............................................................ $ 400,897,576
---------------
Expenses:
Management fees (Note 3) ................................................................ 76,673,450
Administrative fees (Note 3) ............................................................ 10,018,554
Distribution fees (Note 3)
Class A ................................................................................ 28,430,966
Class B ................................................................................ 1,995,642
Class C ................................................................................ 8,974,067
Class R ................................................................................ 80,524
Transfer agent fees (Note 3) ............................................................ 19,632,300
Custodian fees .......................................................................... 2,738,100
Reports to shareholders ................................................................. 1,128,200
Registration and filing fees ............................................................ 214,885
Professional fees ....................................................................... 307,200
Directors' fees and expenses ............................................................ 259,800
Other ................................................................................... 307,500
---------------
Total expenses ..................................................................... 150,761,188
---------------
Net investment income ............................................................ 250,136,388
---------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments ............................................................................ 152,284,999
Foreign currency transactions .......................................................... (308,106)
---------------
Net realized gain (loss) ........................................................... 151,976,893
Net unrealized appreciation (depreciation) on:
Investments ............................................................................ 984,936,105
Translation of assets and liabilities denominated in foreign currencies ................ 990,394
---------------
Net unrealized appreciation (depreciation) ......................................... 985,926,499
---------------
Net realized and unrealized gain (loss) .................................................. 1,137,903,392
---------------
Net increase (decrease) in net assets resulting from operations .......................... $1,388,039,780
---------------
24 | See notes to financial statements. | Annual Report
Templeton Growth Fund, Inc.
FINANCIAL STATEMENTS (CONTINUED)
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended August 31, 2003 and 2002
----------------------------------------
2003 2002
----------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income ........................................................ $ 250,136,388 $ 237,228,017
Net realized gain (loss) from investments and foreign
currency transactions ....................................................... 151,976,893 (109,446,075)
Net unrealized appreciation (depreciation) on investments and
translation of assets and liabilities denominated in foreign currencies ..... 985,926,499 (568,265,005)
----------------------------------------
Net increase (decrease) in net assets resulting from operations .......... 1,388,039,780 (440,483,063)
Distributions to shareholders from:
Net investment income:
Class A ...................................................................... (244,598,042) (267,413,716)
Class B ...................................................................... (2,724,439) (1,599,251)
Class C ...................................................................... (12,624,079) (13,578,104)
Class R ...................................................................... (204,811) --
Advisor Class ................................................................ (2,379,816) (2,112,918)
Net realized gains:
Class A ...................................................................... -- (39,250,863)
Class B ...................................................................... -- (339,475)
Class C ...................................................................... -- (2,988,914)
Advisor Class ................................................................ -- (277,369)
----------------------------------------
Total distributions to shareholders ............................................ (262,531,187) (327,560,610)
Capital share transactions (Note 2):
Class A ...................................................................... 326,612,716 294,302,248
Class B ...................................................................... 88,939,787 82,340,036
Class C ...................................................................... 84,919,852 45,131,752
Class R ...................................................................... 20,310,323 5,677,815
Advisor Class ................................................................ 27,200,279 19,868,902
----------------------------------------
Total capital share transactions ............................................... 547,982,957 447,320,753
Redemption fees (Note 1g) ...................................................... 14,830 --
Net increase (decrease) in net assets ................................... 1,673,506,380 (320,722,920)
Net assets:
Beginning of year ............................................................. 12,856,860,508 13,177,583,428
----------------------------------------
End of year ................................................................... $14,530,366,888 $12,856,860,508
----------------------------------------
Undistributed net investment income included in net assets:
End of year ................................................................... $ 259,846,653 $ 201,873,537
----------------------------------------
Annual Report | See notes to financial statements. | 25
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Growth Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company. The Fund
seeks long-term capital growth. Under normal market conditions, the Fund invests
primarily in the equity securities of companies located anywhere in the world,
including emerging markets. The following summarizes the Fund's significant
accounting policies.
A. SECURITY VALUATION
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the last reported sales price. Over-the-counter securities and listed
securities for which no sale is reported are valued within the range of the
latest quoted bid and asked prices. Securities for which market quotations are
not readily available are valued at fair value as determined by management in
accordance with procedures established by the Board of Directors.
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date.
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.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions, and the difference between the recorded
amounts of dividends, interest, and foreign withholding taxes and the U.S.
dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in foreign exchange rates
on foreign denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
C. FOREIGN CURRENCY CONTRACTS
When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate on a specified date. Realized and unrealized gains and losses are included
in the Statement of Operations.
The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts.
26 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its taxable income.
E. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Discounts and premiums on securities purchased are amortized over the lives of
the respective securities. Dividend income and distributions to shareholders are
recorded on the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
F. ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expense during the reporting year. Actual results could differ from those
estimates.
G. REDEMPTION FEES
The Fund charges a 2% redemption fee to market timers who redeem shares held for
less than 90 days. Such fees are retained by the Fund and accounted for as
additional paid in capital.
H. GUARANTEES AND INDEMNIFICATIONS
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liability arising out of the performance of their
duties to the Fund. Additionally, in the normal course of business, the Fund
enters into contracts with service providers that contain general
indemnification clauses. The Fund's maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Fund
that have not yet occurred. However, based on experience, the Fund expects the
risk of loss to be remote.
2. CAPITAL STOCK
The Fund offers five classes of shares: Class A, Class B, Class C, Class R and
Advisor Class shares. Each class of shares differs by its initial sales load,
contingent deferred sales charges, distribution fees, voting rights on matters
affecting a single class of shares and its exchange privilege.
Annual Report | 27
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. CAPITAL STOCK (CONTINUED)
At August 31, 2003, there were 1.9 billion shares authorized ($0.01 par value)
of which 1.2 billion, 100 million, 400 million, 100 million and 100 million were
designated Class A shares, Class B shares, Class C shares, Class R shares and
Advisor Class shares, respectively. Transactions in the Fund's shares were as
follows:
- ------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
2003 2002
- ------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------------------
CLASS A SHARES:
Shares sold .................... 111,354,884 $ 1,837,694,341 106,703,587 $ 1,909,897,925
Shares issued on reinvestment
of distributions .............. 13,138,355 206,272,476 15,465,289 263,858,493
Shares redeemed ................(105,632,985) (1,717,354,101) (106,440,783) (1,879,454,170)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) ........ 18,860,254 $ 326,612,716 15,728,093 $ 294,302,248
- ------------------------------------------------------------------------------------------------------
CLASS B SHARES:
Shares sold .................... 6,805,348 $ 111,090,081 5,455,387 $ 96,815,207
Shares issued on reinvestment
of distributions .............. 161,304 2,499,842 103,321 1,741,838
Shares redeemed ................ (1,557,186) (24,650,136) (929,604) (16,217,009)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) ........ 5,409,466 $ 88,939,787 4,629,104 $ 82,340,036
- ------------------------------------------------------------------------------------------------------
CLASS C SHARES:
Shares sold .................... 12,806,211 $ 208,138,873 9,802,539 $ 172,757,229
Shares issued on reinvestment
of distributions .............. 720,715 11,118,293 873,409 14,631,242
Shares redeemed ................ (8,459,122) (134,337,314) (8,220,708) (142,256,719)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) ........ 5,067,804 $ 84,919,852 2,455,240 $ 45,131,752
- ------------------------------------------------------------------------------------------------------
ACLASS R SHARES:
Shares sold .................... 1,420,208 $ 23,373,682 328,292 $ 5,899,863
Shares issued on reinvestment
of distributions .............. 13,043 204,221 -- --
Shares redeemed ................ (199,354) (3,267,580) (12,356) (222,048)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) ........ 1,233,897 $ 20,310,323 315,936 $ 5,677,815
- ------------------------------------------------------------------------------------------------------
ADVISOR CLASS SHARES:
Shares sold .................... 3,336,075 $ 55,404,834 2,330,236 $ 42,131,669
Shares issued on reinvestment
of distributions .............. 114,622 1,799,763 126,215 2,152,842
Shares redeemed ................ (1,809,363) (30,004,318) (1,361,370) (24,415,609)
- ------------------------------------------------------------------------------------------------------
Net increase (decrease) ........ 1,641,334 $ 27,200,279 1,095,081 $ 19,868,902
- ------------------------------------------------------------------------------------------------------
aEffective date of Class R shares was January 2, 2002.
28 | Annual Report
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also officers or directors of Templeton Global
Advisors Ltd. (TGAL), Franklin Templeton Services, LLC (FT Services),
Franklin/Templeton Distributors, Inc. (Distributors), and Franklin/Templeton
Investor Services, LLC (Investor Services), the Fund's investment manager,
administrative manager, principal underwriter, and transfer agent, respectively.
The Fund pays an investment management fee to TGAL based on the average daily
net assets of the Fund as follows:
- ---------------------------------------------------------------------------
ANNUALIZED FEE RATE AVERAGE DAILY NET ASSETS
- ---------------------------------------------------------------------------
0.75% First $200 million
0.675% Over $200 million, up to and including $1.3 billion
0.60% Over $1.3 billion
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets as follows:
- ----------------------------------------------------------------------------
ANNUALIZED FEE RATE AVERAGE DAILY NET ASSETS
- ----------------------------------------------------------------------------
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
The Fund reimburses Distributors for costs incurred in marketing the Fund's
shares up to 0.25%, 1.00%, 1.00% and 0.50% per year of the average daily net
assets of Class A, Class B, Class C, and Class R shares, respectively. Under the
Class A distribution plan, costs exceeding the maximum may be reimbursed in
subsequent periods. At August 31, 2003, Distributors advised the Fund that
unreimbursed costs were $15,575,049. Distributors received net commissions from
sales of the Fund's shares and received contingent deferred sales charges for
the year of $2,032,930 and $175,127, respectively.
4. INCOME TAXES
At August 31, 2003, the cost of investments, net unrealized appreciation
(depreciation), and undistributed ordinary income for income tax purposes were
as follows:
Cost of investments ...................................... $13,483,314,689
----------------
Unrealized appreciation .................................. 1,897,642,442
Unrealized depreciation .................................. (920,944,402)
----------------
Net unrealized appreciation (depreciation) ............... $ 976,698,040
----------------
Distributable earnings - ordinary income ................. $ 263,266,591
----------------
Annual Report | 29
Templeton Growth Fund, Inc.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INCOME TAXES (CONTINUED)
The tax character of distributions paid during the years ended August 31, 2003
and 2002, was as follows:
----------------------------
2003 2002
----------------------------
Distributions paid from:
Ordinary income ........................ $262,531,187 $289,337,929
Long term capital gain ................. -- 38,222,681
----------------------------
$262,531,187 $327,560,610
----------------------------
At August 31, 2003, the Fund had tax basis capital losses of $87,777,851 which
may be carried over to offset future captial gains. Such losses expire in 2011.
Net investment income and net realized gains differ for financial statement and
tax purposes primarily due to differing treatments of wash sales, foreign
currency transactions, and bond discounts and premiums.
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended August 31, 2003 aggregated $4,034,300,675 and $3,687,200,064,
respectively.
6. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" to include
investments in portfolio companies in which the Fund owns 5% or more of the
outstanding voting securities. Investments in "affiliated companies" for the
Fund at August 31, 2003 were as shown below.
- --------------------------------------------------------------------------------------------------------------
REALIZED
CAPITAL
INVESTMENT GAINS/
NUMBER OF NUMBER OF INCOME LOSSES
SHARES HELD GROSS GROSS SHARES HELD VALUE 9/01/02- 9/01/02-
NAME OF ISSUER AUG. 31, 2002 ADDITIONS REDUCTIONS AUG. 31, 2003 AUG. 31, 2003 8/31/03 8/31/03
- --------------------------------------------------------------------------------------------------------------
NON-CONTROLLED AFFILIATES
AK Steel Holding
Corp. ................. 6,445,700 -- -- 6,445,700 $17,016,648 $-- $--
--------------------------------
Total Non-Controlled
Affiliates $17,016,648 $-- $--
--------------------------------
30 | Annual Report
Templeton Growth Fund, Inc.
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF TEMPLETON GROWTH FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Templeton Growth Fund, Inc.
(the "Fund") at August 31, 2003, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
October 3, 2003
Annual Report | 31
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED)
Under Section 854(b)(2) of the Internal Revenue Code (Code), the Fund hereby
designates up to a maximum of $181,317,414 as qualified dividends for purposes
of the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
August 31, 2003. In January 2004, shareholders will receive Form 1099-DIV which
will include their share of qualified dividends distributed during the calendar
year 2003. Shareholders are advised to check with their tax advisors for
information on the treatment of these amounts on their individual income tax
returns.
Under Section 854(b)(2) of the Internal Revenue Code, the Fund hereby designates
26.77% of the ordinary income dividends as income qualifying for the dividends
received deduction for the fiscal year ended August 31, 2003.
At August 31, 2003, more than 50% of the Fund's total assets were invested in
securities of foreign issuers. In most instances, foreign taxes were withheld
from dividends paid to the Fund on these investments. As shown in the table
below, the Fund hereby designates to shareholders the foreign source income and
foreign taxes paid, pursuant to Section 853 of the Internal Revenue Code. This
designation will allow shareholders of record on October 23, 2003, to treat
their proportionate share of foreign taxes paid by the Fund as having been paid
directly by them. The shareholder shall consider these amounts as foreign taxes
paid in the tax year in which they receive the Fund distribution.
The following table provides a breakdown by country of taxes paid and foreign
source income, as designated by the Fund, to Class A, Class B, Class C, Class R,
and Advisor Class shareholders.
- ---------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
FOREIGN TAX FOREIGN SOURCE FOREIGN TAX FOREIGN SOURCE FOREIGN TAX FOREIGN SOURCE
COUNTRY PAID PER SHARE INCOME PER SHARE PAID PER SHARE INCOME PER SHARE PAID PER SHARE INCOME PER SHARE
- ---------------------------------------------------------------------------------------------------------------------------------
Australia ........ 0.0000 0.0047 0.0000 0.0038 0.0000 0.0035
Belgium .......... 0.0000 0.0102 0.0000 0.0082 0.0000 0.0076
Bermuda .......... 0.0000 0.0042 0.0000 0.0034 0.0000 0.0032
Brazil ........... 0.0013 0.0079 0.0013 0.0064 0.0013 0.0059
Canada ........... 0.0015 0.0125 0.0015 0.0101 0.0015 0.0094
China ............ 0.0000 0.0021 0.0000 0.0017 0.0000 0.0016
Denmark .......... 0.0000 0.0086 0.0000 0.0070 0.0000 0.0065
Finland .......... 0.0000 0.0102 0.0000 0.0082 0.0000 0.0076
France ........... 0.0016 0.0104 0.0016 0.0084 0.0016 0.0078
Germany .......... 0.0001 0.0407 0.0001 0.0329 0.0001 0.0304
Hong Kong ........ 0.0000 0.0217 0.0000 0.0176 0.0000 0.0163
Italy ............ 0.0000 0.0158 0.0000 0.0128 0.0000 0.0119
Japan ............ 0.0007 0.0043 0.0007 0.0035 0.0007 0.0032
Mexico ........... 0.0000 0.0031 0.0000 0.0025 0.0000 0.0023
Netherlands ...... 0.0016 0.0079 0.0016 0.0064 0.0016 0.0059
New Zealand ...... 0.0000 0.0027 0.0000 0.0022 0.0000 0.0020
Norway ........... 0.0006 0.0027 0.0006 0.0022 0.0006 0.0020
Singapore ........ 0.0003 0.0021 0.0003 0.0017 0.0003 0.0016
South Korea ...... 0.0023 0.0097 0.0023 0.0078 0.0023 0.0073
Spain ............ 0.0025 0.0130 0.0025 0.0105 0.0025 0.0097
Sweden ........... 0.0000 0.0096 0.0000 0.0078 0.0000 0.0072
Switzerland ...... 0.0022 0.0104 0.0022 0.0084 0.0022 0.0078
United Kingdom ... 0.0118 0.0858 0.0118 0.0693 0.0118 0.0642
-----------------------------------------------------------------------------------------------------------
TOTAL $0.0265 $0.3003 $0.0265 $0.2428 $0.0265 $0.2249
-----------------------------------------------------------------------------------------------------------
32 | Annual Report
Templeton Growth Fund, Inc.
TAX DESIGNATION (UNAUDITED) (CONTINUED)
- -------------------------------------------------------------------------------------------------
CLASS R ADVISOR CLASS
FOREIGN TAX FOREIGN SOURCE FOREIGN TAX FOREIGN SOURCE
COUNTRY PAID PER SHARE INCOME PER SHARE PAID PER SHARE INCOME PER SHARE
- -------------------------------------------------------------------------------------------------
Australia ....... 0.0000 0.0046 0.0000 0.0051
Belgium ......... 0.0000 0.0100 0.0000 0.0111
Bermuda ......... 0.0000 0.0041 0.0000 0.0046
Brazil .......... 0.0013 0.0077 0.0013 0.0086
Canada .......... 0.0015 0.0123 0.0015 0.0137
China ........... 0.0000 0.0021 0.0000 0.0023
Denmark ......... 0.0000 0.0085 0.0000 0.0094
Finland ......... 0.0000 0.0100 0.0000 0.0111
France .......... 0.0016 0.0102 0.0016 0.0113
Germany ......... 0.0001 0.0400 0.0001 0.0444
Hong Kong ....... 0.0000 0.0214 0.0000 0.0237
Italy ........... 0.0000 0.0156 0.0000 0.0173
Japan ........... 0.0007 0.0043 0.0007 0.0047
Mexico .......... 0.0000 0.0030 0.0000 0.0034
Netherlands ..... 0.0016 0.0077 0.0016 0.0086
New Zealand ..... 0.0000 0.0026 0.0000 0.0029
Norway .......... 0.0006 0.0027 0.0006 0.0030
Singapore ....... 0.0003 0.0021 0.0003 0.0023
South Korea ..... 0.0023 0.0095 0.0023 0.0106
Spain ........... 0.0025 0.0128 0.0025 0.0142
Sweden .......... 0.0000 0.0094 0.0000 0.0105
Switzerland ..... 0.0022 0.0102 0.0022 0.0113
United Kingdom .. 0.0118 0.0843 0.0118 0.0937
--------------------------------------------------------------------------
TOTAL $0.0265 $0.2951 $0.0265 $0.3278
--------------------------------------------------------------------------
In January 2004, shareholders will receive Form 1099-DIV which will include
their share of taxes paid and foreign source income distributed during the
calendar year 2003. Shareholders are advised to check with their tax advisors
for information on the treatment of these amounts on their 2003 individual
income tax returns.
Annual Report | 33
Board Members and Officers
The name, age and address of the officers and board members, as well as their
affiliations, positions held with the Fund, principal occupations during the
past five years and number of U.S. registered portfolios overseen in the
Franklin Templeton Investments fund complex are shown below. Each board member
will serve until that person's successor is elected and qualified.
INDEPENDENT BOARD MEMBERS
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (71) Director Since 1992 142 Director, Bar-S Foods
500 East Broward Blvd. (meat packing company).
Suite 2100
Fort Lauderdale, FL 33394-3091
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief
Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers)(until 1998).
- ---------------------------------------------------------------------------------------------------------------------------
FRANK J. CROTHERS (59) Director Since 2000 17 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Atlantic Equipment & Power Ltd.; Chairman, Ventures Resources Corporation (Vice Chairman 1996-2003); Vice Chairman,
Caribbean Utilities Co. Ltd.; Director and President, Provo Power Company Ltd.; Director, Caribbean Electric Utility Services
Corporation (Chairman until 2002); and director of various other business and nonprofit organizations.
- ---------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (71) Director Since 1992 143 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch.
- ---------------------------------------------------------------------------------------------------------------------------
ANDREW H. HINES, JR. (80) Director Since 1992 28 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Consultant, Triangle Consulting Group; and FORMERLY, Executive-in-Residence, Eckerd College (1991-2002); Chairman and Director,
Precise Power Corporation (1990-1997); Director, Checkers Drive-In Restaurants, Inc. (1994-1997); and Chairman of the Board and
Chief Executive Officer, Florida Progress Corporation (holding company in the energy area) (1982-1990) and director of various of
its subsidiaries.
- ---------------------------------------------------------------------------------------------------------------------------
34 | Annual Report
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------------------------------------------------------
EDITH E. HOLIDAY (51) Director Since 2000 92 Director, Amerada Hess Corporation
500 East Broward Blvd. (exploration and refining of oil
Suite 2100 and gas); Hercules Incorporated
Fort Lauderdale, FL 33394-3091 (chemicals, fibers and resins); Beverly
Enterprises, Inc. (health care);
H.J. Heinz Company (processed food
and allied products); RTI
International Metals, Inc.
(manufacture and distribution of
titanium); and Canadian National
Railway (railroad).
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and Secretary of
the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and
Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).
- ---------------------------------------------------------------------------------------------------------------------------------
BETTY P. KRAHMER (74) Director Since 1990 21 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various civic associations; and FORMERLY, Economic Analyst, U.S. government.
- ---------------------------------------------------------------------------------------------------------------------------------
GORDON S. MACKLIN (75) Director Since 1993 142 Director, White Mountains Insurance
500 East Broward Blvd. Group, Ltd. (holding company);
Suite 2100 Martek Biosciences Corporation;
Fort Lauderdale, FL 33394-3091 MedImmune, Inc. (biotechnology);
Overstock.com (Internet services);
and Spacehab, Inc. (aerospace
services); and FORMERLY, Director,
MCI Communication Corporation
(subsequently known as MCI WorldCom,
Inc. and WorldCom, Inc.)
(communications services) (1988-2002).
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company); and FORMERLY, Chairman, White River Corporation
(financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992); and President, National Association
of Securities Dealers, Inc. (1970-1987).
- ---------------------------------------------------------------------------------------------------------------------------------
Annual Report | 35
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------------------------------------------------------
FRED R. MILLSAPS (74) Director Since 1990 28 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various business and nonprofit organizations; manager of personal investments (1978-present); and FORMERLY, Chairman
and Chief Executive Officer, Landmark Banking Corporation (1969-1978); Financial Vice President, Florida Power and Light
(1965-1969); and Vice President, Federal Reserve Bank of Atlanta (1958-1965).
- ---------------------------------------------------------------------------------------------------------------------------------
FRANK A. OLSON (71) Director Since May 2003 17 Director, Becton, Dickinson and Co.
500 East Broward Blvd. (medical technology); White
Suite 2100 Mountains Insurance Group Ltd.
Fort Lauderdale, FL 33394-3091 (holding company); and Amerada Hess
Corporation (exploration and
refining of oil and gas).
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, The Hertz Corporation (car rental) (since 1980) (Chief Executive Officer 1977-1999); and FORMERLY, Chairman
of the Board, President and Chief Executive Officer, UAL Corporation (airlines).
- ---------------------------------------------------------------------------------------------------------------------------------
CONSTANTINE D. TSERETOPOULOS (49) Director Since 2000 17 None
500 East Broward Blvd.
Suite 2100
Fort Lauderdale, FL 33394-3091
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Physician, Lyford Cay Hospital (1987-present); and director of various nonprofit organizations; and FORMERLY, Cardiology Fellow,
University of Maryland (1985-1987) and Internal Medicine Resident, Greater Baltimore Medical Center (1982-1985).
- ---------------------------------------------------------------------------------------------------------------------------------
INTERESTED BOARD MEMBERS AND OFFICERS
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------------------------------------------------------
**NICHOLAS F. BRADY (73) Director Since 1993 21 Director, Amerada Hess
500 East Broward Blvd. Corporation (exploration and
Suite 2100 refining of oil and gas);
Fort Lauderdale, FL 33394-3091 and C2, Inc. (operating and
investment business); and
FORMERLY, Director, H.J.
Heinz Company (processed
foods and allied products)
(1987-1988; 1993-2003).
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman, Templeton Emerging Markets Investment Trust PLC, Darby Overseas Investments, Ltd., Darby Emerging Markets Investments LDC
and Darby Technology Ventures Group, LLC (investment firms) (1994-present); Director, Templeton Capital Advisors Ltd. and Franklin
Templeton Investment Fund; and FORMERLY, Secretary of the United States Department of the Treasury (1988-1993); Chairman of the
Board, Dillon, Read & Co., Inc. (investment banking) (until 1988); and U.S. Senator, New Jersey (April 1982-December 1982).
- ---------------------------------------------------------------------------------------------------------------------------------
36 | Annual Report
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (70) Director, Director and 142 None
One Franklin Parkway Chairman of Vice President
San Mateo, CA 94403-1906 the Board and since 1992
Vice President and Chairman
of the Board
since 1995
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Chief Executive Officer, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice
President, Franklin Templeton Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies
in Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (58) Vice Since 1996 Not Applicable None
One Franklin Parkway President
San Mateo, CA 94403-1906
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Director, Franklin Investment Advisory Services,
Inc.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and
of 49 of the investment companies in Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------------------
JEFFERY A. EVERETT (39) President President since Not Applicable None
PO Box N-7759 and Chief 2001 and Chief
Lyford Cay, Nassau, Bahamas Executive Executive
Officer - Officer -
Investment Investment
Management Management
since 2002
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Templeton Global Advisors Limited; officer of 15 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Investment Officer, First Pennsylvania Investment Research (until 1989).
- ---------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (43) Vice Since 1990 Not Applicable None
One Franklin Parkway President
San Mateo, CA 94403-1906
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer, Franklin Mutual Advisers, LLC; Executive
Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.; Executive Vice President and Chief Operating
Officer, Templeton Investment Counsel, LLC; President and Director, Franklin Advisers, Inc.; Executive Vice President, Franklin
Investment Advisory Services, Inc. and Franklin Templeton Investor Services, LLC; Chief Financial Officer, Franklin Advisory
Services, LLC; Chairman, Franklin Templeton Services, LLC; and officer and/or director or trustee, as the case may be, of some of
the other subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------------------
Annual Report | 37
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------------------------------------------------------
JIMMY D. GAMBILL (56) Senior Vice Since 2002 Not Applicable None
500 East Broward Blvd. President
Suite 2100 and Chief
Fort Lauderdale, FL 33394-3091 Executive
Officer -
Finance and
Administration
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President, Templeton Worldwide, Inc.; and officer of 51 of the investment
companies in Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (56) Vice Since 2000 Not Applicable None
One Franklin Parkway President
San Mateo, CA 94403-1906
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources, Inc.;
officer of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief Executive Officer and
Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- ---------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (55) Vice President Vice President Not Applicable None
One Franklin Parkway and Secretary since 2000 and
San Mateo, CA 94403-1906 Secretary since
1996
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President and Deputy General Counsel, Franklin Resources, Inc.; Secretary and Senior Vice President, Templeton Worldwide, Inc.;
Secretary, Franklin Mutual Advisers, LLC; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of 51 of
the investment companies in Franklin Templeton Investments; and FORMERLY, Deputy Director, Division of Investment Management,
Executive Assistant and Senior Advisor to the Chairman, Counselor to the Chairman, Special Counsel and Attorney Fellow, U.S.
Securities and Exchange Commission (1986-1995); Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S. District Court
(District of Massachusetts) (until 1979).
- ---------------------------------------------------------------------------------------------------------------------------------
RUPERT H. JOHNSON, JR. (63) Vice Since 1996 Not Applicable None
One Franklin Parkway President
San Mateo, CA 94403-1906
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc. and Franklin Investment Advisory Services, Inc.; Senior Vice
President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the case may be, of some of the other
subsidiaries of Franklin Resources, Inc. and of 49 of the investment companies in Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------------------
JOHN R. KAY (63) Vice Since 1994 Not Applicable None
500 East Broward Blvd. President
Suite 2100
Fort Lauderdale, FL 33394-3091
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Templeton Worldwide, Inc.; Assistant Vice President, Franklin Templeton Distributors, Inc.; Senior Vice President,
Franklin Templeton Services, LLC; and officer of one of the other subsidiaries of Franklin Resources, Inc. and of 32 of the
investment companies in Franklin Templeton Investments; and FORMERLY, Vice President and Controller, Keystone Group, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
38 | Annual Report
- ---------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- ---------------------------------------------------------------------------------------------------------------------------------
MICHAEL O. MAGDOL (66) Vice President Since 2002 Not Applicable Director, FTI Banque, Arch
600 Fifth Avenue - AML Chemicals, Inc. and Lingnan
Rockefeller Center Compliance Foundation
New York, NY 10048-0772
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Chief Banking Officer and Director, Fiduciary Trust Company International; and officer and/or director, as the case
may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 47 of the investment companies in Franklin Templeton
Investments.
- ---------------------------------------------------------------------------------------------------------------------------------
BRUCE S. ROSENBERG (41) Treasurer and Treasurer since Not Applicable None
500 East Broward Blvd. Chief 2000 and Chief
Suite 2100 Financial Financial Officer
Fort Lauderdale, FL 33394-3091 Officer since 2002
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of
41 of the investment companies in Franklin Templeton Investments.
- ---------------------------------------------------------------------------------------------------------------------------------
MURRAY L. SIMPSON (66) Vice Since 2000 Not Applicable None
One Franklin Parkway President
San Mateo, CA 94403-1906
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case may be, of some of the
subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY,
Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia) Limited (until 2000); and Director,
Templeton Asset Management Ltd. (until 1999).
- ---------------------------------------------------------------------------------------------------------------------------------
*We base the number of portfolios on each separate series of the U.S. registered
investment companies within the Franklin Templeton Investments fund complex.
These portfolios have a common investment adviser or affiliated investment
advisers.
**Charles B. Johnson is considered an interested person of the Fund
under the federal securities laws due to his position as an officer and director
and major shareholder of Franklin Resources, Inc. (Resources), which is the
parent company of the Fund's adviser and distributor. Nicholas F. Brady is
considered an interested person of the Fund under the federal securities laws
due to his business affiliations with Resources and Templeton Global Advisors
Limited. On August 4, 2003, Resources announced that it had signed a definitive
agreement under which it will acquire all of Darby Overseas Investments, Ltd.
(Darby Investments) and the remaining portion not currently owned by Resources
of Darby Overseas Partners, L.P. (Darby Partners). Mr. Brady will continue as
Chairman of Darby Investments, which is the corporate general partner
of Darby Partners. In addition, Darby Partners and Templeton Global Advisors
Limited are limited partners of Darby Emerging Markets Fund, L.P. (DEMF).
Mr. Brady will also continue to serve as Chairman of the corporate
general partner of DEMF, and Darby Partners and Darby Investments own 100% of
the stock of the general partner of DEMF. Resources also is an investor in Darby
Technology Ventures Group, LLC (DTV) in which Darby Partners is a significant
investor and for which Darby Partners has the right to appoint a majority of the
directors. Templeton Global Advisors Limited also is a limited partner in
Darby--BBVA Latin America Private Equity Fund, L.P. (DBVA), a private equity
fund in which Darby Partners is a significant investor, and the general partner
of which Darby Partners controls jointly with an unaffiliated third party. Mr.
Brady is also a director of Templeton Capital Advisors Ltd. (TCAL), which serves
as investment manager to certain unregistered funds. TCAL and Templeton Global
Advisors Limited are both indirect subsidiaries of Resources.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.
THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD OF DIRECTORS HAS DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED EACH OF FRED R. MILLSAPS AND FRANK A. OLSON AS AN AUDIT COMMITTEE
FINANCIAL EXPERT. THE BOARD BELIEVES THAT MESSRS. MILLSAPS AND OLSON QUALIFY AS
SUCH AN EXPERT IN VIEW OF THEIR EXTENSIVE BUSINESS BACKGROUND AND EXPERIENCE.
MR. MILLSAPS, WHO IS CURRENTLY A DIRECTOR OF VARIOUS BUSINESS AND NONPROFIT
ORGANIZATIONS, HAS SERVED AS A MEMBER AND CHAIRMAN OF THE FUND AUDIT COMMITTEE
SINCE 1991, AND WAS FORMERLY CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF LANDMARK
BANKING CORPORATION AND FINANCIAL VICE PRESIDENT OF FLORIDA POWER AND LIGHT. MR.
OLSON, WHO CURRENTLY SERVES AS CHAIRMAN OF THE BOARD OF THE HERTZ CORPORATION
AND WAS ITS CHIEF EXECUTIVE OFFICER FROM 1977 TO 1999, IS A DIRECTOR AND AUDIT
COMMITTEE MEMBER OF AMERADA HESS CORPORATION AND WHITE MOUNTAINS INSURANCE
GROUP, LTD. AND A FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER OF UNITED
AIRLINES. AS A RESULT OF SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF DIRECTORS
BELIEVES THAT MR. MILLSAPS AND MR. OLSON HAVE EACH ACQUIRED AN UNDERSTANDING OF
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENTS, THE GENERAL
APPLICATION OF SUCH PRINCIPLES IN CONNECTION WITH THE ACCOUNTING ESTIMATES,
ACCRUALS AND RESERVES, AND ANALYZING AND EVALUATING FINANCIAL STATEMENTS THAT
PRESENT A BREADTH AND LEVEL OF COMPLEXITY OF ACCOUNTING ISSUES GENERALLY
COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN UNDERSTANDING OF INTERNAL
CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN UNDERSTANDING OF AUDIT
COMMITTEE FUNCTIONS. MESSRS. MILLSAPS AND OLSON ARE INDEPENDENT DIRECTORS AS
THAT TERM IS DEFINED UNDER THE APPLICABLE SECURITIES AND EXCHANGE COMMISSION
RULES AND RELEASES.
THE STATEMENT OF ADDITIONAL INFORMATION (SAI) INCLUDES ADDITIONAL INFORMATION
ABOUT THE BOARD MEMBERS AND IS AVAILABLE, WITHOUT CHARGE, UPON REQUEST.
SHAREHOLDERS MAY CALL 1-800/DIAL BEN (1-800/342-5236) TO REQUEST THE SAI.
Annual Report | 39
Templeton Growth Fund, Inc.
PROXY VOTING POLICIES AND PROCEDURES
The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies on-line at
www.franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group.
40 | Annual Report
[LOGO OMITTED]
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS
One Franklin Parkway
San Mateo, CA 94403-1906
WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL?
Eligible shareholders can sign up for eDelivery at franklintempleton.com. See
inside for details.
ANNUAL REPORT AND SHAREHOLDER LETTER
TEMPLETON GROWTH FUND, INC.
AUDITORS
PricewaterhouseCoopers LLP
333 Market Street
San Francisco, CA 94105
PRINCIPAL UNDERWRITER
Franklin Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
This report must be preceded or accompanied by the current Templeton Growth
Fund, Inc., prospectus, which contains more complete information including risk
factors, charges and expenses. 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.
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 A2003 10/03
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 10(A), THE REGISTRANT IS ATTACHING AS AN EXHIBIT A COPY OF
ITS CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE OFFICERS FINANCIAL
AND ACCOUNTING OFFICER.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(A)(1) THE REGISTRANT HAS AN AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS
AUDIT COMMITTEE.
(2) THE AUDIT COMMITTEE FINANCIAL EXPERTS ARE FRED R. MILLSAPS AND FRANK A.
OLSON, WHO ARE "INDEPENDENT" AS DEFINED UNDER THE RELEVANT SECURITIES AND
EXCHANGE COMMISSION RULES AND RELEASES.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. N/A
ITEM 9. 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 10. EXHIBITS
(A) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS.
(B)(1) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
OF JIMMY D. GAMBILL, CHIEF EXECUTIVE OFFICER - FINANCE AND ADMINISTRATION, AND
BRUCE S. ROSENBERG, CHIEF FINANCIAL OFFICER
(B)(2) CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
OF JIMMY D. GAMBILL, CHIEF EXECUTIVE OFFICER - FINANCE AND ADMINISTRATION, AND
BRUCE S. ROSENBERG, CHIEF FINANCIAL OFFICER
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TEMPLETON GROWTH FUND, INC.
By /s/JIMMY D. GAMBILL
Chief Executive Officer - Finance and Administration
Date October 31, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/JIMMY D. GAMBILL
Chief Executive Officer - Finance and Administration
Date October 31, 2003
By /s/BRUCE S. ROSENBERG
Chief Financial Officer
Date October 31, 2003