-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AILb278Ygl3E2R5LHCQuHjpTGn7NuQ4jSr4+1VLq6rYe/CsHlz2TAp/NrTMLl00V gJdSKcGgH3dFMAycXwC3bA== 0000805664-08-000014.txt : 20080430 0000805664-08-000014.hdr.sgml : 20080430 20080430154922 ACCESSION NUMBER: 0000805664-08-000014 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20080229 FILED AS OF DATE: 20080430 DATE AS OF CHANGE: 20080430 EFFECTIVENESS DATE: 20080430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TEMPLETON GROWTH FUND INC CENTRAL INDEX KEY: 0000805664 IRS NUMBER: 592745039 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-04892 FILM NUMBER: 08789815 BUSINESS ADDRESS: STREET 1: BROWARD FINANCIAL CENTRE STREET 2: 500 EAST BROWARD BLVD 13TH FLOOR CITY: FORT LAUDERDALE STATE: FL ZIP: 33394-3091 BUSINESS PHONE: 9545277500 MAIL ADDRESS: STREET 1: BROWARD FINANCIAL CENTRE STREET 2: 500 EAST BROWARD BLVD 13TH FLOOR CITY: FORT LAUDERDALE STATE: FL ZIP: 33394-3091 0000805664 S000008759 Templeton Growth Fund, Inc. C000023844 Class A TEPLX C000023845 Class B TMGBX C000023846 Class C TEGTX C000023847 Advisor Class TGADX C000023848 Class R TEGRX N-CSRS 1 tgf_ncsrs022908.txt SEMI-ANNUAL REPORT FOR TGF UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSRS CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-04892 ----------- TEMPLETON GROWTH FUND, INC. -------------------------------------------------- (Exact name of registrant as specified in charter) 500 EAST BROWARD BLVD., SUITE 2100, FORT LAUDERDALE, FL 33394-3091 --------------------------------------------------------------------- (Address of principal executive offices) (Zip code) CRAIG S. TYLE, 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: 2/29/08 -------- ITEM 1. REPORTS TO STOCKHOLDERS. [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- FEBRUARY 29, 2008 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SEMIANNUAL REPORT AND SHAREHOLDER LETTER GLOBAL - -------------------------------------------------------------------------------- WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL? TEMPLETON GROWTH FUND, INC. Eligible shareholders can sign up for eDelivery at franklintempleton.com. See inside for details. - -------------------------------------------------------------------------------- [LOGO](R) FRANKLIN TEMPLETON INVESTMENTS Franklin o TEMPLETON o Mutual Series Franklin Templeton Investments GAIN FROM OUR PERSPECTIVE(R) Franklin Templeton's distinct multi-manager structure combines the specialized expertise of three world-class investment management groups-- Franklin, Templeton and Mutual Series. SPECIALIZED EXPERTISE Each of our portfolio management groups operates autonomously, relying on its own research and staying true to the unique investment disciplines that underlie its success. FRANKLIN. Founded in 1947, Franklin is a recognized leader in fixed income investing and also brings expertise in growth- and value-style U.S. equity investing. TEMPLETON. Founded in 1940, Templeton pioneered international investing and, in 1954, launched what has become the industry's oldest global fund. Today, with offices in over 25 countries, Templeton offers investors a truly global perspective. MUTUAL SERIES. Founded in 1949, Mutual Series is dedicated to a unique style of value investing, searching aggressively for opportunity among what it believes are undervalued stocks, as well as arbitrage situations and distressed securities. TRUE DIVERSIFICATION Because our management groups work independently and adhere to different investment approaches, Franklin, Templeton and Mutual Series funds typically have distinct portfolios. That's why our funds can be used to build truly diversified allocation plans covering every major asset class. RELIABILITY YOU CAN TRUST At Franklin Templeton Investments, we seek to consistently provide investors with exceptional risk-adjusted returns over the long term, as well as the reliable, accurate and personal service that has helped us become one of the most trusted names in financial services. ------------------------------------------------------------------------------- MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS ------------------------------------------------------------------------------- [GRAPHIC OMITTED] Not part of the semiannual report Contents SHAREHOLDER LETTER ........................................................ 1 SEMIANNUAL REPORT Templeton Growth Fund, Inc. ............................................... 3 Performance Summary ....................................................... 9 Your Fund's Expenses ...................................................... 12 Financial Highlights and Statement of Investments ......................... 14 Financial Statements ...................................................... 24 Notes to Financial Statements ............................................. 28 Shareholder Information ................................................... 37 - -------------------------------------------------------------------------------- Semiannual Report Templeton Growth Fund, Inc. YOUR FUND'S GOAL AND MAIN INVESTMENTS: Templeton Growth Fund seeks long-term capital growth. Under normal market conditions, the Fund invests primarily in equity securities of companies located anywhere in the world, including emerging markets. - -------------------------------------------------------------------------------- PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM FIGURES SHOWN. PLEASE VISIT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236 FOR MOST RECENT MONTH-END PERFORMANCE. - -------------------------------------------------------------------------------- This semiannual report for Templeton Growth Fund covers the period ended February 29, 2008. PERFORMANCE OVERVIEW Templeton Growth Fund - Class A posted a - 10.35% cumulative total return for the six months under review. The Fund underperformed its benchmark, the Morgan Stanley Capital International (MSCI) World Index, which posted a -5.95% total return for the same period. 1 For the 10-year period ended February 29, 2008, Templeton Growth Fund - Class A delivered a +108.51% cumulative total return, compared with the MSCI World Index's +71.71% cumulative total return for the same period. 1 Please note that index performance information is provided for reference and that we do not attempt to track the index, but rather undertake investments on the basis of fundamental research. You can find more performance data in the Performance Summary beginning on page 9. ECONOMIC AND MARKET OVERVIEW The U.S. economy experienced significantly slower gross domestic product (GDP) growth in the fourth quarter of 2007 as housing prices declined, consumer demand softened, and a credit crisis originally related to U.S. subprime loan losses spread globally. In capital markets, investors quickly began broad reassessment of risk in the stock, bond and credit markets. Some economists speculated whether the U.S. would enter a recession while others believed one 1. Source: Standard & Poor's Micropal. The MSCI World Index is a free float-adjusted, market capitalization-weighted index designed to measure equity market performance in global developed markets. As of 2/29/08, the Fund's Class A 10-year average annual total return not including the maximum sales charge was +7.62%, compared with the +5.56% 10-year average annual total return of the MSCI World Index. The index is unmanaged and includes reinvested dividends. One cannot invest directly in an index, nor is an index representative of the Fund's portfolio. THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE SOI BEGINS ON PAGE 19. Semiannual Report | 3 GEOGRAPHIC BREAKDOWN Based on Total Net Assets as of 2/29/08 [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] Europe 46.1% North America 39.1% Asia 11.6% Latin America 0.4% Short-Term Investments & Other Net Assets 2.8% was already under way. Many agreed, however, that the slowing U.S. economy -- which is the world's largest and accounts for roughly 30% of global GDP -- could have a meaningfully negative impact on growth prospects around the world. Nevertheless, growth remained robust in certain areas, particularly in Asia ex-Japan, where China's demand for commodities continued to have significant impact on commodity prices and related equities. In the six months under review, prices for oil and agricultural and industrial commodities, as well as precious metals like platinum, silver and gold, increased significantly and contributed to global inflationary pressures. While inflation remained a major concern within the eurozone, the U.S. focused on reigniting its economy through fiscal and monetary policies. Despite possible inflationary pressure from lower interest rates, the Federal Reserve Board (Fed) reduced its federal funds target rate from 5.25% to 3.00% during the period. The Fed's interest rate reductions pressured the U.S. dollar as other countries' central banks generally left rates unchanged, and the dollar's value declined against most of the world's currencies. The U.S. dollar's weakness was another reason for higher commodity prices, as most of these prices are set in U.S. dollars. Against this challenging economic backdrop, global equity markets were volatile, and the MSCI World Index declined 5.95% for the six-month period even though the weaker dollar aided returns. 2 Despite negative economic data and an outlook for decelerating corporate earnings and profit margins globally, many companies' balance sheets remained relatively strong. Although many financial institutions were hurt by their subprime loan exposure, abundant global liquidity sources such as sovereign wealth funds offered some relief with quick recapitalizations during the period. INVESTMENT STRATEGY Our investment strategy employs a bottom-up, value-oriented, long-term approach. We focus on the market price of a company's securities relative to our evaluation of the company's long-term earnings, asset value and cash flow potential. As we look worldwide, we consider specific companies, rather than sectors or countries, while doing in-depth research to construct a bargain list from which we buy. Before we make a purchase, we look at the company's price/earnings ratio, price/cash flow ratio, profit margins and liquidation value. 2. Source: Standard & Poor's Micropal. See footnote 1 for a description of the MSCI World Index. 4 | Semiannual Report MANAGER'S DISCUSSION All our buy and sell decisions are based on our analysis of the long-term (usually five years) prospects for each company. Our bottom-up investment strategy frequently results in a portfolio that has a very different geographic and industry mix than that of the Fund's benchmark, the MSCI World Index. Industrials and financials were the Fund's top contributing sectors to performance relative to the benchmark MSCI World Index during the reporting period. 3 In the industrials sector, stock selection drove relative Fund performance. Sector holdings that performed well included two German companies, express delivery and logistics services provider Deutsche Post and electronics and industrial engineering firm Siemens. Shares of Deutsche Post, Europe's largest postal carrier, gained value during the reporting period as the company raised its dividend, appointed a new chief executive officer and gave credence to its announced restructuring plans by writing down the value of its U.S.-based DHL Express business, a perennial drag on profits. Siemens' shares also rose over the period (in U.S. dollar terms), as upside momentum from successful restructuring initiatives, including new operations in China and Russia, outweighed downside pressure from an ongoing bribery scandal. In the financials sector, an underweighted allocation helped relative performance. Stock selection in the commercial banks, diversified financial services and real estate management and development industries and no exposure to U.S. thrifts and mortgage finance stocks benefited relative Fund performance. Japanese commercial bank Shinsei Bank was a notable contributor; shares surged after private equity investor Christopher Flowers, the man who rescued Shinsei seven years ago, signaled his intention to buy nearly one-third of the firm's stock. By contrast, the materials, energy and consumer discretionary sectors weighed on Fund performance relative to the benchmark for the period under review. 4 TOP 10 COUNTRIES Based on Equity Securities 2/29/08 - -------------------------------------------------------------------------------- % OF TOTAL NET ASSETS - -------------------------------------------------------------------------------- U.S. 39.1% - -------------------------------------------------------------------------------- U.K. 15.7% - -------------------------------------------------------------------------------- France 7.5% - -------------------------------------------------------------------------------- Germany 6.9% - -------------------------------------------------------------------------------- Japan 4.8% - -------------------------------------------------------------------------------- Italy 4.4% - -------------------------------------------------------------------------------- South Korea 4.3% - -------------------------------------------------------------------------------- Netherlands 4.2% - -------------------------------------------------------------------------------- Switzerland 3.8% - -------------------------------------------------------------------------------- Singapore 1.3% - -------------------------------------------------------------------------------- 3. The industrials sector comprises aerospace and defense, air freight and logistics, building products, commercial services and supplies, industrial conglomerates, machinery, and trading companies and distributors in the SOI. The financials sector comprises capital markets, commercial banks, diversified financial services, insurance, and real estate management and development in the SOI. 4. The materials sector comprises paper and forest products in the SOI. The energy sector comprises oil, gas and consumable fuels in the SOI. The consumer discretionary sector comprises auto components; automobiles; hotels, restaurants and leisure; Internet and catalog retail; leisure equipment and products; media; and specialty retail in the SOI. Semiannual Report | 5 TOP 10 EQUITY HOLDINGS 2/29/08 - -------------------------------------------------------------------------------- COMPANY % OF TOTAL SECTOR/INDUSTRY, COUNTRY NET ASSETS - -------------------------------------------------------------------------------- Siemens AG 2.8% INDUSTRIAL CONGLOMERATES, GERMANY - -------------------------------------------------------------------------------- Microsoft Corp. 2.7% SOFTWARE, U.S. - -------------------------------------------------------------------------------- Pfizer Inc. 2.4% PHARMACEUTICALS, U.S. - -------------------------------------------------------------------------------- Oracle Corp. 2.3% SOFTWARE, U.S. - -------------------------------------------------------------------------------- News Corp., A 2.3% MEDIA, U.S. - -------------------------------------------------------------------------------- General Electric Co. 2.3% INDUSTRIAL CONGLOMERATES, U.S. - -------------------------------------------------------------------------------- Vodafone Group PLC 2.0% WIRELESS TELECOMMUNICATION SERVICES, U.K. - -------------------------------------------------------------------------------- Accenture Ltd., A 1.9% IT SERVICES, U.S. - -------------------------------------------------------------------------------- Viacom Inc., B 1.8% MEDIA, U.S. - -------------------------------------------------------------------------------- Time Warner Inc. 1.7% MEDIA, U.S. - -------------------------------------------------------------------------------- Stock selection and an underweighted position in the materials sector hurt relative performance. An overweighting in the underperforming paper and forest products industry negatively impacted Fund performance, as Finnish paper and forest products companies Stora Enso and UPM-Kymmene declined sharply in value. Rising wood costs, falling paper prices and the euro's appreciation created strong cyclical headwinds for the industry, compressing valuations and, in our view, offering favorable opportunities for patient, value-oriented, long-term investors. A lack of exposure to the chemicals industry and metals and mining industry also hurt relative Fund performance. Stock selection and an underweighted allocation in the energy sector, particularly in the oil, gas and consumable fuels industry, dampened relative Fund performance. In the consumer discretionary sector, an overweighted allocation in the underperforming sector hurt the Fund's relative results. Significant detractors included U.S. companies Eastman Kodak, women's apparel retailer Chico's FAS and Time Warner. Kodak disappointed as the firm continued its restructuring process; however, signs of cash flow and revenue stabilization and a renewed focus on its critical digital imaging business were indications of progress. Shares of Chico's fell as the U.S. consumer economy deteriorated and the retailer reported disappointing fourth quarter sales, though the stock rallied toward the end of the period based on news that the company would strengthen its management team. The media conglomerate Time Warner had poor performance as industry headwinds and competition from telecommunication companies pressured its cable television unit. From a geographic perspective, stock selection in Asia, particularly in Japan and Singapore, positively impacted performance relative to the benchmark for the reporting period. On the other hand, stock selection in North America and Europe dragged on relative performance, and investments in the U.S. and the U.K. were significant detractors. It is important to recognize the effect of currency movements on the Fund's performance. In general, if the value of the U.S. dollar goes up compared with a foreign currency, an investment traded in that foreign currency will go down in value because it will be worth fewer U.S. dollars. This can have a negative effect on Fund performance. Conversely, when the U.S. dollar weakens in relation to a foreign currency, an investment traded in that foreign currency will increase in value, which can contribute to Fund performance. For the six months ended February 29, 2008, the U.S. dollar declined in value relative to most non-U.S. currencies. As a result, the Fund's performance was positively affected by the portfolio's substantial investment in securities with non-U.S. currency exposure. However, one cannot expect the same result in future periods. 6 | Semiannual Report Thank you for investing in Templeton Growth Fund. We welcome your comments and look forward to serving your future investment needs. [PHOTO OMITTED] /s/ Cynthia L. Sweeting Cynthia L. Sweeting, CFA [PHOTO OMITTED] /s/ Lisa F. Myers Lisa F. Myers, J.D., CFA [PHOTO OMITTED] /s/ Tucker Scott Tucker Scott, CFA Portfolio Management Team Templeton Growth Fund, Inc. THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF FEBRUARY 29, 2008, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY. THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR INVESTMENT MANAGEMENT PHILOSOPHY. Semiannual Report | 7 - -------------------------------------------------------------------------------- CYNTHIA L. SWEETING assumed portfolio manager responsibilities for Templeton Growth Fund in December 2007. She is also president of Templeton Global Advisors Limited and director of portfolio management for the Templeton Global Equity Group and has portfolio management responsibility for other retail funds and institutional separate account relationships with global and international mandates. Ms. Sweeting has 25 years of experience in the investment industry. She joined Franklin Templeton Investments in Templeton's Nassau office in 1997, and most recently served as director of research for the Templeton Global Equity Group, before assuming her current responsibilities. Prior to joining Templeton, she was the senior vice president of investments with McDermott International Investments Co., Inc., in Nassau. At McDermott, she was responsible for the investment department, which encompassed portfolio management and pension administration. Ms. Sweeting graduated summa cum laude from Georgetown University, where she earned her B.S. in business administration with a concentration in finance. She has served as vice president of the board of directors of the International Society of Financial Analysts (ISFA), which has now merged with the CFA Institute. She was a founding member and past president of the Bahamas Chapter of ISFA. Ms. Sweeting is a Chartered Financial Analyst (CFA) Charterholder. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LISA F. MYERS has been portfolio manager of Templeton Growth Fund since 2003. Ms. Myers also manages other Templeton retail funds and institutional separate accounts with international and global mandates. She is the coordinator of the global consumer team and has direct research responsibility for the global retail and textile and apparel industries. Prior to joining Templeton in 1996, Ms. Myers practiced law with Wilkie, Farr & Gallagher in New York City, where she specialized in corporate/real estate law and was involved in initial public offerings, acquisitions, and loan initiation and restructuring, among other securities-related transactions. Ms. Myers earned her B.A. from the University of Pennsylvania and her J.D. from Georgetown University, where she also taught legal research and writing. Ms. Myers is a Chartered Financial Analyst (CFA) Charterholder and is a member of the CFA Institute. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TUCKER SCOTT assumed portfolio manager responsibilities for Templeton Growth Fund in October 2007. In addition to managing other Templeton funds, he has global research responsibility for the commercial services and supplies industry. Prior to joining Templeton in 1996, Mr. Scott worked for Aeltus Investment Management, where his industry coverage included telecommunication equipment and financial services. Mr. Scott earned his B.A. in history from the University of Virginia and an M.B.A. from the Amos Tuck School of Business at Dartmouth College. Mr. Scott is a Chartered Financial Analyst (CFA) Charterholder and member of the CFA Institute. - -------------------------------------------------------------------------------- 8 | Semiannual Report Performance Summary as of 2/29/08 Your dividend income will vary depending on dividends or interest paid by securities in the Fund's portfolio, adjusted for operating expenses of each class. Capital gain distributions are net profits realized from the sale of portfolio securities. The performance table does not reflect any taxes that a shareholder would pay on Fund dividends, capital gain distributions, if any, or any realized gains on the sale of Fund shares. Total return reflects reinvestment of the Fund's dividends and capital gain distributions, if any, and any unrealized gains or losses. PRICE AND DISTRIBUTION INFORMATION
- --------------------------------------------------------------------------------------------------- CLASS A (SYMBOL: TEPLX) CHANGE 2/29/08 8/31/07 - --------------------------------------------------------------------------------------------------- Net Asset Value (NAV) -$4.63 $21.52 $26.15 - --------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/07-2/29/08) - --------------------------------------------------------------------------------------------------- Dividend Income $0.3725 - --------------------------------------------------------------------------------------------------- Short-Term Capital Gain $0.1173 - --------------------------------------------------------------------------------------------------- Long-Term Capital Gain $1.6883 - --------------------------------------------------------------------------------------------------- TOTAL $2.1781 - --------------------------------------------------------------------------------------------------- CLASS B (SYMBOL: TMGBX) CHANGE 2/29/08 8/31/07 - --------------------------------------------------------------------------------------------------- Net Asset Value (NAV) -$4.46 $21.09 $25.55 - --------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/07-2/29/08) - --------------------------------------------------------------------------------------------------- Dividend Income $0.1660 - --------------------------------------------------------------------------------------------------- Short-Term Capital Gain $0.1173 - --------------------------------------------------------------------------------------------------- Long-Term Capital Gain $1.6883 - --------------------------------------------------------------------------------------------------- TOTAL $1.9716 - --------------------------------------------------------------------------------------------------- CLASS C (SYMBOL: TEGTX) CHANGE 2/29/08 8/31/07 - --------------------------------------------------------------------------------------------------- Net Asset Value (NAV) -$4.46 $20.94 $25.40 - --------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/07-2/29/08) - --------------------------------------------------------------------------------------------------- Dividend Income $0.1841 - --------------------------------------------------------------------------------------------------- Short-Term Capital Gain $0.1173 - --------------------------------------------------------------------------------------------------- Long-Term Capital Gain $1.6883 - --------------------------------------------------------------------------------------------------- TOTAL $1.9897 - --------------------------------------------------------------------------------------------------- CLASS R (SYMBOL: TEGRX) CHANGE 2/29/08 8/31/07 - --------------------------------------------------------------------------------------------------- Net Asset Value (NAV) -$4.56 $21.32 $25.88 - --------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/07-2/29/08) - --------------------------------------------------------------------------------------------------- Dividend Income $0.3068 - --------------------------------------------------------------------------------------------------- Short-Term Capital Gain $0.1173 - --------------------------------------------------------------------------------------------------- Long-Term Capital Gain $1.6883 - --------------------------------------------------------------------------------------------------- TOTAL $2.1124 - ---------------------------------------------------------------------------------------------------
Semiannual Report | 9 Performance Summary (CONTINUED) PRICE AND DISTRIBUTION INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------------------------- ADVISOR CLASS (SYMBOL: TGADX) CHANGE 2/29/08 8/31/07 - --------------------------------------------------------------------------------------------------- Net Asset Value (NAV) -$4.67 $21.55 $26.22 - --------------------------------------------------------------------------------------------------- DISTRIBUTIONS (9/1/07-2/29/08) - --------------------------------------------------------------------------------------------------- Dividend Income $0.4382 - --------------------------------------------------------------------------------------------------- Short-Term Capital Gain $0.1173 - --------------------------------------------------------------------------------------------------- Long-Term Capital Gain $1.6883 - --------------------------------------------------------------------------------------------------- TOTAL $2.2438 - ---------------------------------------------------------------------------------------------------
PERFORMANCE CUMULATIVE TOTAL RETURN EXCLUDES SALES CHARGES. AVERAGE ANNUAL TOTAL RETURNS AND VALUE OF $10,000 INVESTMENT INCLUDE MAXIMUM SALES CHARGES. CLASS A: 5.75% MAXIMUM INITIAL SALES CHARGE; CLASS B: CONTINGENT DEFERRED SALES CHARGE (CDSC) DECLINING FROM 4% TO 1% OVER SIX YEARS, AND ELIMINATED THEREAFTER; CLASS C: 1% CDSC IN FIRST YEAR ONLY; CLASS R/ADVISOR CLASS: NO SALES CHARGES. THE FUND MAY CHARGE A 2% FEE ON REDEMPTIONS MADE WITHIN SEVEN DAYS OF PURCHASE.
- ------------------------------------------------------------------------------------------------------------ CLASS A 6-MONTH 1-YEAR 5-YEAR 10-YEAR - ------------------------------------------------------------------------------------------------------------ Cumulative Total Return 1 -10.35% -8.10% +97.61% +108.51% - ------------------------------------------------------------------------------------------------------------ Average Annual Total Return 2 -15.52% -13.40% +13.25% +6.99% - ------------------------------------------------------------------------------------------------------------ Value of $10,000 Investment 3 $8,448 $8,660 $18,625 $19,653 - ------------------------------------------------------------------------------------------------------------ Avg. Ann. Total Return (3/31/08) 4 -15.66% +13.45% +6.38% - ------------------------------------------------------------------------------------------------------------ Total Annual Operating Expenses 5 1.01% - ------------------------------------------------------------------------------------------------------------ CLASS B 6-MONTH 1-YEAR 5-YEAR INCEPTION (1/1/99) - ------------------------------------------------------------------------------------------------------------ Cumulative Total Return 1 -10.66% -8.77% +90.46% +112.88% - ------------------------------------------------------------------------------------------------------------ Average Annual Total Return 2 -13.96% -12.14% +13.51% +8.60% - ------------------------------------------------------------------------------------------------------------ Value of $10,000 Investment 3 $8,604 $8,786 $18,846 $21,288 - ------------------------------------------------------------------------------------------------------------ Avg. Ann. Total Return (3/31/08) 4 -14.49% +13.72% +8.36% - ------------------------------------------------------------------------------------------------------------ Total Annual Operating Expenses 5 1.76% - ------------------------------------------------------------------------------------------------------------ CLASS C 6-MONTH 1-YEAR 5-YEAR 10-YEAR - ------------------------------------------------------------------------------------------------------------ Cumulative Total Return 1 -10.66% -8.75% +90.45% +93.62% - ------------------------------------------------------------------------------------------------------------ Average Annual Total Return 2 -11.48% -9.60% +13.75% +6.83% - ------------------------------------------------------------------------------------------------------------ Value of $10,000 Investment 3 $8,852 $9,040 $19,045 $19,362 - ------------------------------------------------------------------------------------------------------------ Avg. Ann. Total Return (3/31/08) 4 -11.99% +13.97% +6.22% - ------------------------------------------------------------------------------------------------------------ Total Annual Operating Expenses 5 1.76% - ------------------------------------------------------------------------------------------------------------
10 | Semiannual Report Performance Summary (CONTINUED) PERFORMANCE (CONTINUED)
- ------------------------------------------------------------------------------------------------------------ CLASS R 6-MONTH 1-YEAR 5-YEAR INCEPTION (1/1/02) - ------------------------------------------------------------------------------------------------------------ Cumulative Total Return 1 -10.42% -8.29% +95.26% +66.23% - ------------------------------------------------------------------------------------------------------------ Average Annual Total Return 2 -10.42% -8.29% +14.32% +8.61% - ------------------------------------------------------------------------------------------------------------ Value of $10,000 Investment 3 $8,958 $9,171 $19,526 $16,623 - ------------------------------------------------------------------------------------------------------------ Avg. Ann. Total Return (3/31/08) 4 -10.71% +14.54% +8.24% - ------------------------------------------------------------------------------------------------------------ Total Annual Operating Expenses 5 1.26% - ------------------------------------------------------------------------------------------------------------ ADVISOR CLASS 6-MONTH 1-YEAR 5-YEAR 10-YEAR - ------------------------------------------------------------------------------------------------------------ Cumulative Total Return 1 -10.25% -7.86% +100.06% +113.92% - ------------------------------------------------------------------------------------------------------------ Average Annual Total Return 2 -10.25% -7.86% +14.88% +7.90% - ------------------------------------------------------------------------------------------------------------ Value of $10,000 Investment 3 $8,975 $9,214 $20,006 $21,392 - ------------------------------------------------------------------------------------------------------------ Avg. Ann. Total Return (3/31/08) 4 -10.29% +15.09% +7.29% - ------------------------------------------------------------------------------------------------------------ Total Annual Operating Expenses 5 0.76% - ------------------------------------------------------------------------------------------------------------
PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM FIGURES SHOWN. FOR MOST RECENT MONTH-END PERFORMANCE, SEE "FUNDS AND PERFORMANCE" AT FRANKLINTEMPLETON.COM OR CALL 1-800/342-5236. ENDNOTES SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY FLUCTUATIONS, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS. INVESTMENTS IN DEVELOPING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THESE MARKETS' SMALLER SIZE AND LESSER LIQUIDITY. THE FUND'S PROSPECTUS ALSO INCLUDES A DESCRIPTION OF THE MAIN INVESTMENT RISKS. CLASS B: These shares have higher annual fees and expenses than Class A shares. CLASS C: Prior to 1/1/04, these shares were offered with an initial sales charge; thus actual total returns would have differed. These shares have higher annual fees and expenses than Class A shares. CLASS R: Shares are available to certain eligible investors as described in the prospectus. These shares have higher annual fees and expenses than Class A shares. ADVISOR CLASS: Shares are available to certain eligible investors as described in the prospectus. 1. Cumulative total return represents the change in value of an investment over the periods indicated. 2. Average annual total return represents the average annual change in value of an investment over the periods indicated. Six-month return has not been annualized. 3. These figures represent the value of a hypothetical $10,000 investment in the Fund over the periods indicated. 4. In accordance with SEC rules, we provide standardized average annual total return information through the latest calendar quarter. 5. Figures are as stated in the Fund's prospectus current as of the date of this report. Semiannual Report | 11 Your Fund's Expenses As a Fund shareholder, you can incur two types of costs: o Transaction costs, including sales charges (loads) on Fund purchases and redemption fees; and o Ongoing Fund costs, including management fees, distribution and service (12b-1) fees, and other Fund expenses. All mutual funds have ongoing costs, sometimes referred to as operating expenses. The following table shows ongoing costs of investing in the Fund and can help you understand these costs and compare them with those of other mutual funds. The table assumes a $1,000 investment held for the six months indicated. ACTUAL FUND EXPENSES The first line (Actual) for each share class listed in the table provides actual account values and expenses. The "Ending Account Value" is derived from the Fund's actual return, which includes the effect of Fund expenses. You can estimate the expenses you paid during the period by following these steps. OF COURSE, YOUR ACCOUNT VALUE AND EXPENSES WILL DIFFER FROM THOSE IN THIS ILLUSTRATION: 1. Divide your account value by $1,000. IF AN ACCOUNT HAD AN $8,600 VALUE, THEN $8,600 / $1,000 = 8.6. 2. Multiply the result by the number under the heading "Expenses Paid During Period." IF EXPENSES PAID DURING PERIOD WERE $7.50, THEN 8.6 X $7.50 = $64.50. In this illustration, the estimated expenses paid this period are $64.50. HYPOTHETICAL EXAMPLE FOR COMPARISON WITH OTHER FUNDS Information in the second line (Hypothetical) for each class in the table can help you compare ongoing costs of investing in the Fund with those of other mutual funds. This information may not be used to estimate the actual ending account balance or expenses you paid during the period. The hypothetical "Ending Account Value" is based on the actual expense ratio for each class and an assumed 5% annual rate of return before expenses, which does not represent the Fund's actual return. The figure under the heading "Expenses Paid During Period" shows the hypothetical expenses your account would have incurred under this scenario. You can compare this figure with the 5% hypothetical examples that appear in shareholder reports of other funds. 12 | Semiannual Report Your Fund's Expenses (CONTINUED) PLEASE NOTE THAT EXPENSES SHOWN IN THE TABLE ARE MEANT TO HIGHLIGHT ONGOING COSTS AND DO NOT REFLECT ANY TRANSACTION COSTS, SUCH AS SALES CHARGES OR REDEMPTION FEES. Therefore, the second line for each class is useful in comparing ongoing costs only, and will not help you compare total costs of owning different funds. In addition, if transaction costs were included, your total costs would have been higher. Please refer to the Fund prospectus for additional information on operating expenses.
- ------------------------------------------------------------------------------------------------------------- BEGINNING ACCOUNT ENDING ACCOUNT EXPENSES PAID DURING CLASS A VALUE 9/1/07 VALUE 2/29/08 PERIOD* 9/1/07-2/29/08 - ------------------------------------------------------------------------------------------------------------- Actual $ 1,000 $ 896.50 $ 4.86 - ------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $ 1,000 $ 1,019.74 $ 5.17 - ------------------------------------------------------------------------------------------------------------- CLASS B - ------------------------------------------------------------------------------------------------------------- Actual $ 1,000 $ 893.40 $ 8.38 - ------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $ 1,000 $ 1,016.01 $ 8.92 - ------------------------------------------------------------------------------------------------------------- CLASS C - ------------------------------------------------------------------------------------------------------------- Actual $ 1,000 $ 893.40 $ 8.33 - ------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $ 1,000 $ 1,016.06 $ 8.87 - ------------------------------------------------------------------------------------------------------------- CLASS R - ------------------------------------------------------------------------------------------------------------- Actual $ 1,000 $ 895.80 $ 6.03 - ------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $ 1,000 $ 1,018.50 $ 6.42 - ------------------------------------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------------------------------------- Actual $ 1,000 $ 897.50 $ 3.68 - ------------------------------------------------------------------------------------------------------------- Hypothetical (5% return before expenses) $ 1,000 $ 1,020.98 $ 3.92 - -------------------------------------------------------------------------------------------------------------
* Expenses are calculated using the most recent six-month expense ratio, annualized for each class (A: 1.03%; B: 1.78%; C: 1.77%; R: 1.28%; and Advisor: 0.78%), multiplied by the average account value over the period, multiplied by 182/366 to reflect the one-half year period. Semiannual Report | 13 Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------- SIX MONTHS ENDED FEBRUARY 29, 2008 YEAR ENDED AUGUST 31, CLASS A (UNAUDITED) 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ................... $ 26.15 $ 25.29 $ 23.86 $ 21.03 $ 18.54 $ 17.10 ------------------------------------------------------------------------------------------------- Income from investment operations a: Net investment income b ..... 0.12 0.37 0.43 0.36 0.36 0.34 Net realized and unrealized gains (losses) ................. (2.57) 2.66 2.73 3.66 2.58 1.46 ------------------------------------------------------------------------------------------------- Total from investment operations .................. (2.45) 3.03 3.16 4.02 2.94 1.80 ------------------------------------------------------------------------------------------------- Less distributions from: Net investment income ....... (0.37) (0.49) (0.41) (0.41) (0.45) (0.36) Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- -- ------------------------------------------------------------------------------------------------- Total distributions ............ (2.18) (2.17) (1.73) (1.19) (0.45) (0.36) ------------------------------------------------------------------------------------------------- Redemption fees ................ -- e -- e -- e -- e -- e -- e ------------------------------------------------------------------------------------------------- Net asset value, end of period ...................... $ 21.52 $ 26.15 $ 25.29 $ 23.86 $ 21.03 $ 18.54 ================================================================================================= Total return c ................. (10.35)% 12.60% 14.52% 19.72% 16.14% 10.90% RATIOS TO AVERAGE NET ASSETS d Expenses ....................... 1.03% f 1.01% f 1.05% f 1.06% f 1.10% f 1.13% Net investment income .......... 1.03% 1.44% 1.82% 1.61% 1.75% 2.05% SUPPLEMENTAL DATA Net assets, end of period (000's) .............. $ 23,078,913 $ 27,997,564 $23,966,739 $20,786,173 $15,771,174 $13,021,261 Portfolio turnover rate ........ 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not correlate with the statement of operations for the period due to the timing of sales and repurchases of the fund shares in relation to income earned and/or fluctuating market value of the investments of the fund. b Based on average daily shares outstanding. c Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. d Ratios are annualized for periods less than one year. e Amount rounds to less than $0.01 per share. f Benefit of expense reduction rounds to less than 0.01%. 14 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS (CONTINUED)
------------------------------------------------------------------------------------------------- SIX MONTHS ENDED FEBRUARY 29, 2008 YEAR ENDED AUGUST 31, CLASS B (UNAUDITED) 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ................... $ 25.55 $ 24.75 $ 23.37 $ 20.64 $ 18.24 $ 16.85 ------------------------------------------------------------------------------------------------- Income from investment operations a: Net investment income b...... 0.03 0.17 0.24 0.19 0.21 0.22 Net realized and unrealized gains (losses) ........... (2.51) 2.61 2.70 3.59 2.54 1.43 ------------------------------------------------------------------------------------------------- Total from investment operations .................. (2.48) 2.78 2.94 3.78 2.75 1.65 ------------------------------------------------------------------------------------------------- Less distributions from: Net investment income .................... (0.17) (0.30) (0.24) (0.27) (0.35) (0.26) Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- -- ------------------------------------------------------------------------------------------------- Total distributions ............ (1.98) (1.98) (1.56) (1.05) (0.35) (0.26) ------------------------------------------------------------------------------------------------- Redemption fees ................ -- e -- e -- e -- e -- e -- e ------------------------------------------------------------------------------------------------- Net asset value, end of period ...................... $ 21.09 $ 25.55 $ 24.75 $ 23.37 $ 20.64 $ 18.24 ================================================================================================= Total return c ................. (10.66)% 11.78% 13.65% 18.84% 15.27% 10.08% RATIOS TO AVERAGE NET ASSETS d Expenses ....................... 1.78% f 1.76% f 1.79% f 1.81% f 1.85% f 1.88% Net investment income .......... 0.28% 0.69% 1.08% 0.86% 1.00% 1.30% SUPPLEMENTAL DATA Net assets, end of period (000's) ..................... $ 436,935 $ 563,335 $ 580,530 $ 557,670 $ 433,467 $ 278,340 Portfolio turnover rate ........ 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not correlate with the statement of operations for the period due to the timing of sales and repurchases of the fund shares in relation to income earned and/or fluctuating market value of the investments of the fund. b Based on average daily shares outstanding. c Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. d Ratios are annualized for periods less than one year. e Amount rounds to less than $0.01 per share. f Benefit of expense reduction rounds to less than 0.01%. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 15 Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS (CONTINUED)
------------------------------------------------------------------------------------------------- SIX MONTHS ENDED FEBRUARY 29, 2008 YEAR ENDED AUGUST 31, CLASS C (UNAUDITED) 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ...................... $ 25.40 $ 24.63 $ 23.28 $ 20.56 $ 18.15 $ 16.74 ------------------------------------------------------------------------------------------------- Income from investment operations a: Net investment income b...... 0.04 0.17 0.25 0.19 0.20 0.21 Net realized and unrealized gains (losses) ........... (2.51) 2.60 2.67 3.57 2.54 1.44 ------------------------------------------------------------------------------------------------- Total from investment operations .................. (2.47) 2.77 2.92 3.76 2.74 1.65 ------------------------------------------------------------------------------------------------- Less distributions from: Net investment income ....... (0.18) (0.32) (0.25) (0.26) (0.33) (0.24) Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- -- ------------------------------------------------------------------------------------------------- Total distributions ............ (1.99) (2.00) (1.57) (1.04) (0.33) (0.24) ------------------------------------------------------------------------------------------------- Redemption fees ................ -- e -- e -- e -- e -- e -- e ------------------------------------------------------------------------------------------------- Net asset value, end of period ...................... $ 20.94 $ 25.40 $ 24.63 $ 23.28 $ 20.56 $ 18.15 ================================================================================================= Total return c ................. (10.66)% 11.78% 13.71% 18.77% 15.30% 10.08% RATIOS TO AVERAGE NET ASSETS d Expenses ....................... 1.77% f 1.76% f 1.79% f 1.81% f 1.85% f 1.88% Net investment income .......... 0.29% 0.69% 1.08% 0.86% 1.00% 1.30% SUPPLEMENTAL DATA Net assets, end of period (000's) ..................... $ 2,269,605 $ 2,759,141 $ 2,362,844 $ 1,965,909 $ 1,394,289 $ 1,064,405 Portfolio turnover rate ........ 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not correlate with the statement of operations for the period due to the timing of sales and repurchases of the fund shares in relation to income earned and/or fluctuating market value of the investments of the fund. b Based on average daily shares outstanding. c Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. d Ratios are annualized for periods less than one year. e Amount rounds to less than $0.01 per share. f Benefit of expense reduction rounds to less than 0.01%. 16 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS (CONTINUED)
------------------------------------------------------------------------------------------------- SIX MONTHS ENDED FEBRUARY 29, 2008 YEAR ENDED AUGUST 31, CLASS R (UNAUDITED) 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ................... $ 25.88 $ 25.06 $ 23.68 $ 20.90 $ 18.44 $ 17.07 ------------------------------------------------------------------------------------------------- Income from investment operations a: Net investment income b...... 0.09 0.31 0.45 0.32 0.33 0.32 Net realized and unrealized gains (losses) ........... (2.53) 2.63 2.62 3.62 2.56 1.42 ------------------------------------------------------------------------------------------------- Total from investment operations .................. (2.44) 2.94 3.07 3.94 2.89 1.74 ------------------------------------------------------------------------------------------------- Less distributions from: Net investment income ....... (0.31) (0.44) (0.37) (0.38) (0.43) (0.37) Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- -- ------------------------------------------------------------------------------------------------- Total distributions ............ (2.12) (2.12) (1.69) (1.16) (0.43) (0.37) ------------------------------------------------------------------------------------------------- Redemption fees ................ -- e -- e -- e -- e -- e -- e ------------------------------------------------------------------------------------------------- Net asset value, end of period ...................... $ 21.32 $ 25.88 $ 25.06 $ 23.68 $ 20.90 $ 18.44 ================================================================================================= Total return c ................. (10.42)% 12.33% 14.22% 19.44% 15.85% 10.58% RATIOS TO AVERAGE NET ASSETS d Expenses ....................... 1.28% f 1.26% f 1.30% f 1.31% f 1.35% f 1.39% Net investment income .......... 0.78% 1.19% 1.57% 1.36% 1.50% 1.79% SUPPLEMENTAL DATA Net assets, end of period (000's) ..................... $ 353,512 $ 467,391 $ 403,334 $ 123,139 $ 57,951 $ 28,584 Portfolio turnover rate ........ 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not correlate with the statement of operations for the period due to the timing of sales and repurchases of the fund shares in relation to income earned and/or fluctuating market value of the investments of the fund. b Based on average daily shares outstanding. c Total return does not reflect sales commissions or contingent deferred sales charges, if applicable, and is not annualized for periods less than one year. d Ratios are annualized for periods less than one year. e Amount rounds to less than $0.01 per share. f Benefit of expense reduction rounds to less than 0.01%. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 17 Templeton Growth Fund, Inc. FINANCIAL HIGHLIGHTS (CONTINUED)
------------------------------------------------------------------------------------------------- SIX MONTHS ENDED FEBRUARY 29, 2008 YEAR ENDED AUGUST 31, ADVISOR CLASS (UNAUDITED) 2007 2006 2005 2004 2003 ------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net asset value, beginning of period ...................... $ 26.22 $ 25.34 $ 23.90 $ 21.07 $ 18.57 $ 17.13 ------------------------------------------------------------------------------------------------- Income from investment operations a: Net investment income b...... 0.16 0.45 0.51 0.45 0.48 0.38 Net realized and unrealized gains (losses) ........... (2.58) 2.66 2.72 3.63 2.52 1.46 ------------------------------------------------------------------------------------------------- Total from investment operations .................. (2.42) 3.11 3.23 4.08 3.00 1.84 ------------------------------------------------------------------------------------------------- Less distributions from: Net investment income ....... (0.44) (0.55) (0.47) (0.47) (0.50) (0.40) Net realized gains .......... (1.81) (1.68) (1.32) (0.78) -- -- ------------------------------------------------------------------------------------------------- Total distributions ............ (2.25) (2.23) (1.79) (1.25) (0.50) (0.40) ------------------------------------------------------------------------------------------------- Redemption fees ................ -- e -- e -- e -- e -- e -- e ------------------------------------------------------------------------------------------------- Net asset value, end of period ...................... $ 21.55 $ 26.22 $ 25.34 $ 23.90 $ 21.07 $ 18.57 ================================================================================================= Total return c ................. (10.25)% 12.93% 14.83% 19.97% 16.43% 11.19% RATIOS TO AVERAGE NET ASSETS d Expenses ....................... 0.78% f 0.76% f 0.80% f 0.81% f 0.85% f 0.88% Net investment income .......... 1.28% 1.69% 2.07% 1.86% 2.00% 2.30% SUPPLEMENTAL DATA Net assets, end of period (000's) ..................... $ 5,824,464 $ 6,458,094 $ 3,972,615 $ 2,549,202 $ 911,764 $ 137,776 Portfolio turnover rate ...... 9.98% 20.37% 35.33% 19.95% 24.58% 32.12%
a The amount shown for a share outstanding throughout the period may not correlate with the statement of operations for the period due to the timing of sales and repurchases of the fund shares in relation to income earned and/or fluctuating market value of the investments of the fund. b Based on average daily shares outstanding. c Total return is not annualized for periods less than one year. d Ratios are annualized for periods less than one year. e Amount rounds to less than $0.01 per share. f Benefit of expense reduction rounds to less than 0.01%. 18 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED)
- ----------------------------------------------------------------------------------------------------------------------------------- INDUSTRY SHARES VALUE - ----------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS 97.2% FINLAND 1.2% Stora Enso OYJ, R ................................ Paper & Forest Products 11,800,820 $ 148,683,258 UPM-Kymmene OYJ .................................. Paper & Forest Products 12,784,220 222,980,073 --------------- 371,663,331 --------------- FRANCE 7.5% Accor SA ......................................... Hotels, Restaurants & Leisure 1,214,988 87,127,182 France Telecom SA ................................ Diversified Telecommunication Services 13,767,620 465,635,247 Peugeot SA ....................................... Automobiles 4,500,000 345,375,375 Sanofi-Aventis ................................... Pharmaceuticals 7,000,000 518,442,562 Total SA, B ...................................... Oil, Gas & Consumable Fuels 6,400,000 485,662,869 Vivendi SA ....................................... Media 12,000,000 477,623,540 --------------- 2,379,866,775 --------------- GERMANY 6.9% Bayerische Motoren Werke AG ...................... Automobiles 7,072,930 390,494,077 Deutsche Post AG ................................. Air Freight & Logistics 14,751,030 490,162,292 a Infineon Technologies AG ......................... Semiconductors & Semiconductor Equipment 19,668,050 160,028,702 Muenchener Rueckversicherungs- Gesellschaft AG ... Insurance 688,370 121,422,691 SAP AG ........................................... Software 3,530,820 167,225,292 Siemens AG ....................................... Industrial Conglomerates 6,883,810 884,038,193 --------------- 2,213,371,247 --------------- HONG KONG 1.0% Cheung Kong (Holdings) Ltd. ...................... Real Estate Management & Development 13,767,800 210,558,755 Swire Pacific Ltd., A ............................ Real Estate Management & Development 9,037,000 104,817,377 --------------- 315,376,132 --------------- ITALY 4.4% Eni SpA .......................................... Oil, Gas & Consumable Fuels 8,850,624 307,935,880 Intesa Sanpaolo SpA .............................. Commercial Banks 68,115,200 460,125,007 Mediaset SpA ..................................... Media 18,090,872 164,085,120 UniCredit SpA .................................... Commercial Banks 65,000,000 482,002,971 --------------- 1,414,148,978 --------------- JAPAN 4.8% FUJIFILM Holdings Corp. .......................... Electronic Equipment & Instruments 7,867,100 300,658,327 Konica Minolta Holdings Ltd. ..................... Office Electronics 19,667,500 284,182,879 Mitsubishi UFJ Financial Group Inc. .............. Commercial Banks 30,279,975 275,749,484 NGK Spark Plug Co. Ltd. .......................... Auto Components 5,079,000 80,673,373 NOK Corp. ........................................ Auto Components 4,011,600 84,765,710 Shinsei Bank Ltd. ................................ Commercial Banks 39,879,000 163,923,113 Sumitomo Mitsui Financial Group Inc. ............. Commercial Banks 39,335 292,324,028 Toyota Motor Corp. ............................... Automobiles 1,154,200 63,887,659 --------------- 1,546,164,573 ---------------
Semiannual Report | 19 Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------- INDUSTRY SHARES VALUE - ----------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) MEXICO 0.4% Telefonos de Mexico SAB de CV, L, ADR ............ Diversified Telecommunication Services 4,182,580 $ 138,861,656 --------------- NETHERLANDS 4.2% ING Groep NV ..................................... Diversified Financial Services 13,974,480 471,995,069 Koninklijke Philips Electronics NV ............... Industrial Conglomerates 11,800,820 465,396,511 Randstad Holding NV .............................. Commercial Services & Supplies 1,801,390 69,073,726 Reed Elsevier NV ................................. Media 18,381,449 345,160,615 --------------- 1,351,625,921 --------------- RUSSIA 0.6% Gazprom, ADR ..................................... Oil, Gas & Consumable Fuels 3,650,000 183,138,750 --------------- SINGAPORE 1.3% a Flextronics International Ltd. ................... Electronic Equipment & Instruments 4,580,000 46,441,200 Singapore Telecommunications Ltd. ................ Diversified Telecommunication Services 131,816,000 363,793,261 --------------- 410,234,461 --------------- SOUTH KOREA 4.3% Hyundai Motor Co. Ltd. ........................... Automobiles 3,000,000 213,407,167 Kookmin Bank ..................................... Commercial Banks 4,621,992 289,905,041 a KT Corp., ADR .................................... Diversified Telecommunication Services 12,922,490 313,887,282 Samsung Electronics Co. Ltd. ..................... Semiconductors & Semiconductor Equipment 844,974 503,898,025 SK Telecom Co. Ltd., ADR ......................... Wireless Telecommunication Services 1,834,410 41,090,784 --------------- 1,362,188,299 --------------- SPAIN 0.7% Telefonica SA .................................... Diversified Telecommunication Services 8,108,815 236,828,656 --------------- SWEDEN 1.1% Telefonaktiebolaget LM Ericsson, B ............... Communications Equipment 78,573,450 170,860,357 Svenska Cellulosa AB, B .......................... Paper & Forest Products 10,292,707 170,368,958 --------------- 341,229,315 --------------- SWITZERLAND 3.8% Adecco SA ........................................ Commercial Services & Supplies 2,672,390 140,929,073 Nestle SA ........................................ Food Products 983,400 471,839,297 Novartis AG ...................................... Pharmaceuticals 7,867,210 388,807,410 UBS AG ........................................... Capital Markets 6,672,870 220,239,002 --------------- 1,221,814,782 --------------- TAIWAN 0.2% Taiwan Semiconductor Manufacturing Co. Ltd. ...... Semiconductors & Semiconductor Equipment 27,155,000 54,107,974 --------------- UNITED KINGDOM 15.7% Aviva PLC ........................................ Insurance 40,000,000 486,007,997 BAE Systems PLC .................................. Aerospace & Defense 3,749,014 35,960,549 BP PLC ........................................... Oil, Gas & Consumable Fuels 49,232,798 534,114,199 Compass Group PLC ................................ Hotels, Restaurants & Leisure 62,486,294 405,373,091
20 | Semiannual Report Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------- INDUSTRY SHARES VALUE - ----------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) UNITED KINGDOM (CONTINUED) GlaxoSmithKline PLC .............................. Pharmaceuticals 21,052,580 $ 460,971,296 HSBC Holdings PLC ................................ Commercial Banks 31,999,897 496,383,852 Kingfisher PLC ................................... Specialty Retail 61,440,000 160,044,539 Old Mutual PLC ................................... Insurance 80,000,000 199,171,879 Pearson PLC ...................................... Media 19,142,410 253,313,191 a Rolls-Royce Group PLC ............................ Aerospace & Defense 15,734,430 135,840,026 Royal Bank of Scotland Group PLC ................. Commercial Banks 49,560,000 379,122,003 Royal Dutch Shell PLC, B ......................... Oil, Gas & Consumable Fuels 14,712,040 520,623,514 b Standard Life PLC, 144A .......................... Insurance 26,586,490 115,689,004 Vodafone Group PLC ............................... Wireless Telecommunication Services 199,750,469 645,746,890 Wolseley PLC ..................................... Trading Companies & Distributors 6,707,810 82,834,041 Yell Group PLC ................................... Media 24,918,200 108,553,350 --------------- 5,019,749,421 --------------- UNITED STATES 39.1% Accenture Ltd., A ................................ IT Services 17,508,500 617,174,625 American International Group Inc. ................ Insurance 11,000,000 515,460,000 a Amgen Inc. ....................................... Biotechnology 11,000,000 500,720,000 a Boston Scientific Corp. .......................... Health Care Equipment & Supplies 32,452,280 408,574,205 a Cadence Design Systems Inc. ...................... Software 9,834,020 104,437,292 a,c Chico's FAS Inc. ................................. Specialty Retail 13,767,620 128,176,542 a Cisco Systems Inc. ............................... Communications Equipment 1,021,570 24,895,661 a Comcast Corp., A ................................. Media 21,480,140 415,640,709 Covidien Ltd. .................................... Health Care Equipment & Supplies 6,392,110 273,518,387 c Eastman Kodak Co. ................................ Leisure Equipment & Products 16,717,830 283,868,753 El Paso Corp. .................................... Oil, Gas & Consumable Fuels 26,922,660 438,839,358 Electronic Data Systems Corp. .................... IT Services 15,263,735 264,367,890 a Expedia Inc. ..................................... Internet & Catalog Retail 6,073,040 139,254,807 General Electric Co. ............................. Industrial Conglomerates 22,000,000 729,080,000 Harley-Davidson Inc. ............................. Automobiles 3,441,900 127,901,004 International Paper Co. .......................... Paper & Forest Products 4,917,010 155,869,217 a The Interpublic Group of Cos. Inc. ............... Media 19,093,160 164,583,039 Merck & Co. Inc. ................................. Pharmaceuticals 6,883,810 304,952,783 Microsoft Corp. .................................. Software 31,468,870 856,582,642 News Corp., A .................................... Media 40,000,000 736,400,000 a Oracle Corp. ..................................... Software 39,336,100 739,518,680 Pentair Inc. ..................................... Machinery 2,626,600 85,679,692 Pfizer Inc. ...................................... Pharmaceuticals 34,000,000 757,520,000 Pitney Bowes Inc. ................................ Commercial Services & Supplies 3,124,070 111,779,225 Progressive Corp. ................................ Insurance 9,756,200 178,831,146 Raytheon Co. ..................................... Aerospace & Defense 1,966,800 127,527,312 Seagate Technology ............................... Computers & Peripherals 22,901,490 493,985,139 Sprint Nextel Corp. .............................. Wireless Telecommunication Services 33,000,000 234,630,000 Time Warner Inc. ................................. Media 34,419,090 537,281,995 Torchmark Corp. .................................. Insurance 2,770,230 166,934,060 Tyco Electronics Ltd. ............................ Electronic Equipment & Instruments 9,000,000 296,100,000 Tyco International Ltd. .......................... Industrial Conglomerates 6,500,000 260,390,000 United Parcel Service Inc., B .................... Air Freight & Logistics 7,000,000 491,680,000
Semiannual Report | 21 Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------- INDUSTRY SHARES VALUE - ----------------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS (CONTINUED) UNITED STATES (CONTINNUED) a USG Corp. .................................................... Building Products 2,067,480 $ 70,356,344 a Viacom Inc., B ............................................... Media 14,751,030 586,353,443 Willis Group Holdings Ltd. ................................... Insurance 4,962,093 163,004,755 --------------- 12,491,868,705 --------------- TOTAL COMMON STOCKS (COST $29,000,254,192) ..................................... 31,052,238,976 --------------- ------------------ PRINCIPAL AMOUNT d VALUE ------------------ SHORT TERM INVESTMENTS 2.5% TIME DEPOSIT (COST $169,666,443) 0.5% IRELAND 0.5% Bank of Scotland, 4.04%, 3/03/08 ............................. 111,630,000 EUR 169,454,347 --------------- U.S. GOVERNMENT AND AGENCY SECURITIES 2.0% e FFCB, 10/24/08 ............................................... 30,000,000 29,577,990 e FHLB, 3/03/08 - 9/15/08 ...................................... 229,522,000 228,200,499 FHLB, 4.00%, 3/10/08 ......................................... 75,000,000 75,017,550 f FHLB, 2.60%, 8/06/08 - 09/04/08 .............................. 98,660,000 98,633,778 FHLB, 4.625%, 11/21/08 ....................................... 40,000,000 40,617,120 e FHLMC, 4/07/08 - 9/25/08 ..................................... 165,195,000 163,312,700 --------------- TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES (COST $634,695,158) ....................................... 635,359,637 --------------- TOTAL SHORT TERM INVESTMENTS (COST $804,361,601) ....................................... 804,813,984 --------------- TOTAL INVESTMENTS (COST $29,804,615,793) 99.7% ..................................................... 31,857,052,960 OTHER ASSETS, LESS LIABILITIES 0.3% .......................... 106,376,202 --------------- NET ASSETS 100.0% ............................................ $31,963,429,162 ===============
CURRENCY ABBREVIATION EUR - Euro SELECTED PORTFOLIO ABBREVIATIONS ADR - American Depository Receipt FFCB - Federal Farm Credit Bank FHLB - Federal Home Loan Bank FHLMC - Federal Home Loan Mortgage Corp. 22 | Semiannual Report Templeton Growth Fund, Inc. STATEMENT OF INVESTMENTS, FEBRUARY 29, 2008 (UNAUDITED) (CONTINUED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- a Non-income producing for the twelve months ended February 29, 2008. b Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Trust's Board of Directors. At February 29, 2008, the value of this security was $115,689,004, representing 0.36% of net assets. c See Note 8 regarding holdings of 5% voting securities. d The principal amount is stated in U.S. dollars unless otherwise indicated. e The security is traded on a discount basis with no stated coupon rate. f A portion or all of the security purchased on a when-issued or delayed delivery basis. See Note 1(c). Semiannual Report | The accompanying notes are an integral part of these financial statements. | 23 Templeton Growth Fund, Inc. FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES February 29, 2008 (unaudited) Assets: Investments in securities: Cost - Unaffiliated issuers .......................................... $29,049,983,338 Cost - Non-controlled affiliated issuers (Note 8) .................... 754,632,455 --------------- Total cost of investments ............................................ $29,804,615,793 =============== Value - Unaffiliated issuers ......................................... $31,445,007,665 Value - Controlled affiliated issuers (Note 8) ....................... 412,045,295 --------------- Total value of investments ........................................... 31,857,052,960 Cash .................................................................... 17,089,180 Foreign currency, at value (cost $38,341) ............................... 39,038 Receivables: Investment securities sold ........................................... 79,535,923 Capital shares sold .................................................. 31,633,137 Dividends and interest ............................................... 94,502,783 --------------- Total assets ...................................................... 32,079,853,021 --------------- Liabilities: Payables: Investment securities purchased ...................................... 33,016,728 Capital shares redeemed .............................................. 50,943,807 Affiliates ........................................................... 30,068,729 Accrued expenses and other liabilities .................................. 2,394,595 --------------- Total liabilities ................................................. 116,423,859 --------------- Net assets, at value ........................................... $31,963,429,162 =============== Net assets consist of: Paid-in capital ......................................................... $29,678,319,986 Undistributed net investment income ..................................... 90,802,310 Net unrealized appreciation (depreciation) .............................. 2,054,045,990 Accumulated net realized gain (loss) .................................... 140,260,876 --------------- Net assets, at value ........................................... $31,963,429,162 ===============
24 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Templeton Growth Fund, Inc. FINANCIAL STATEMENTS (CONTINUED) STATEMENT OF ASSETS AND LIABILITIES (CONTINUED) February 29, 2008 (unaudited) CLASS A: Net assets, at value .................................................... $23,078,913,057 =============== Shares outstanding ...................................................... 1,072,218,518 =============== Net asset value per share a ............................................. $ 21.52 =============== Maximum offering price per share (net asset value per share / 94.25%) ... $ 22.83 =============== CLASS B: Net assets, at value .................................................... $ 436,935,091 =============== Shares outstanding ...................................................... 20,720,881 =============== Net asset value and maximum offering price per share a .................. $ 21.09 =============== CLASS C: Net assets, at value .................................................... $ 2,269,604,735 =============== Shares outstanding ...................................................... 108,403,213 =============== Net asset value and maximum offering price per share a .................. $ 20.94 =============== CLASS R: Net assets, at value .................................................... $ 353,512,137 =============== Shares outstanding ...................................................... 16,584,184 =============== Net asset value and maximum offering price per share a .................. $ 21.32 =============== ADVISOR CLASS: Net assets, at value .................................................... $ 5,824,464,142 =============== Shares outstanding ...................................................... 270,252,736 =============== Net asset value and maximum offering price per share a .................. $ 21.55 ===============
a Redemption price is equal to net asset value less contingent deferred sales charges, if applicable, and redemption fees retained by the Fund. Semiannual Report | The accompanying notes are an integral part of these financial statements. | 25 Templeton Growth Fund, Inc. FINANCIAL STATEMENTS (CONTINUED) STATEMENT OF OPERATIONS for the period ended February 29, 2008 (unaudited) Investment income: Dividends (net of foreign taxes of $25,635,958) Unaffiliated issuers ..................................................... $ 332,343,720 Non-controlled affiliated issuers (Note 8) ............................... 10,362,560 Interest .................................................................... 31,386,616 --------------- Total investment income ............................................... 374,092,896 --------------- Expenses: Management fees (Note 3a) ................................................... 102,349,076 Administrative fees (Note 3b) ............................................... 13,959,255 Distribution fees (Note 3c) Class A .................................................................. 33,148,610 Class B .................................................................. 2,595,376 Class C .................................................................. 12,913,621 Class R .................................................................. 1,069,642 Transfer agent fees (Note 3e) ............................................... 20,630,117 Custodian fees (Note 4) ..................................................... 2,788,394 Reports to shareholders ..................................................... 896,204 Registration and filing fees ................................................ 393,394 Professional fees ........................................................... 222,842 Directors' fees and expenses ................................................ 172,942 Other ....................................................................... 416,115 --------------- Total expenses ........................................................ 191,555,588 Expense reductions (Note 4) ........................................... (47,007) --------------- Net expenses ....................................................... 191,508,581 --------------- Net investment income ........................................... 182,584,315 --------------- Realized and unrealized gains (losses): Net realized gain (loss) from: Investments Unaffiliated issuers ............................................... 972,932,236 Non-controlled affiliated issuers (Note 8) ......................... (258,211,595) Foreign currency transactions ............................................ 17,029,020 --------------- Net realized gain (loss) ........................................... 731,749,661 --------------- Net change in unrealized appreciation (depreciation) on: Investments .............................................................. (4,668,354,788) Translation of assets and liabilities denominated in foreign currencies ................................................. 1,058,111 --------------- Net change in unrealized depreciation .............................. (4,667,296,677) --------------- Net realized and unrealized gain (loss) ........................................ (3,935,547,016) --------------- Net increase (decrease) in net assets resulting from operations ................ $(3,752,962,701) ===============
26 | The accompanying notes are an integral part of these financial statements. | Semiannual Report Templeton Growth Fund, Inc. FINANCIAL STATEMENTS (CONTINUED) STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------ SIX MONTHS ENDED FEBRUARY 29, 2008 YEAR ENDED (UNAUDITED) AUGUST 31, 2007 ------------------------------------ Increase (decrease) in net assets:: Operations: Net investment income ................................................................. $ 182,584,315 $ 513,096,325 Net realized gain (loss) from investments and foreign currency transactions ........... 731,749,661 2,248,586,838 Net change in unrealized appreciation (depreciation) on investments and translation of assets and liabilities denominated in foreign currencies ........ (4,667,296,677) 1,231,732,347 ------------------------------------ Net increase (decrease) in net assets resulting from operations .................. (3,752,962,701) 3,993,415,510 ------------------------------------ Distributions to shareholders from: Net investment income: Class A ............................................................................. (398,181,228) (472,698,663) Class B ............................................................................. (3,557,189) (7,025,647) Class C ............................................................................. (19,830,197) (30,736,178) Class R ............................................................................. (5,511,926) (7,235,471) Advisor Class ....................................................................... (111,295,865) (91,885,469) Net realized gains: Class A ............................................................................. (1,932,682,568) (1,615,535,935) Class B ............................................................................. (38,875,981) (39,138,180) Class C ............................................................................. (196,079,727) (163,775,141) Class R ............................................................................. (32,335,262) (27,527,557) Advisor Class ....................................................................... (459,221,703) (277,255,005) ------------------------------------ Total distributions to shareholders ...................................................... (3,197,571,646) (2,732,813,246) ------------------------------------ Capital share transactions: (Note 2) Class A ............................................................................. 117,952,913 3,063,601,833 Class B ............................................................................. (29,796,731) (39,451,658) Class C ............................................................................. 4,938,654 310,700,465 Class R ............................................................................. (34,721,422) 48,144,040 Advisor Class ....................................................................... 610,022,253 2,315,763,985 ------------------------------------ Total capital share transactions ......................................................... 668,395,667 5,698,758,665 ------------------------------------ Redemption fees .......................................................................... 43,918 102,551 ------------------------------------ Net increase (decrease) in net assets ............................................ (6,282,094,762) 6,959,463,480 Net assets: Beginning of period ...................................................................... 38,245,523,924 31,286,060,444 ------------------------------------ End of period ............................................................................ $ 31,963,429,162 $38,245,523,924 ------------------------------------ Undistributed net investment income included in net assets: End of period ............................................................................ $ 90,802,310 $ 446,594,400 ====================================
Semiannual Report | The accompanying notes are an integral part of these financial statements. | 27 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Templeton Growth Fund, Inc. (Fund) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as a diversified, open-end investment company. The Fund offers five classes of shares: Class A, Class B, Class C, Class R, and Advisor Class. Each class of shares differs by its initial sales load, contingent deferred sales charges, distribution fees, voting rights on matters affecting a single class and its exchange privilege. The following summarizes the Fund's significant accounting policies. A. SECURITY VALUATION Securities listed on a securities exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Over-the-counter securities and listed securities for which there is no reported sale are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Time deposits are valued at cost. Government securities generally trade in the over-the-counter market rather than on a securities exchange. The Fund may utilize independent pricing services, quotations from bond dealers, and information with respect to bond and note transactions, to assist in determining a current market value for each security. The Fund's pricing services may use valuation models or matrix pricing which considers information with respect to comparable bond and note transactions, quotations from bond dealers, or by reference to other securities that are considered comparable in such characteristics as rating, interest rate and maturity date, option adjusted spread models, prepayment projections, interest rate spreads and yield curves, to determine current value. Foreign securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded, or the NYSE, whichever is earlier. If no sale is reported at that time, the foreign security will be valued within the range of the most recent quoted bid and ask prices. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the close of the NYSE on the day that the value of the foreign security is determined. The Fund has procedures to determine the fair value of individual securities and other assets for which market prices are not readily available or which may not be reliably priced. Methods for valuing these securities may include: fundamental analysis, matrix pricing, discounts from market prices of similar securities, or discounts applied due to the nature and duration of restrictions on the disposition of the securities. Due to the inherent uncertainty of valuations of such securities, the fair values may differ significantly from the values that would have been used had a ready market for such investments existed. Occasionally, events occur between the time at which trading in a security is completed and the close of the NYSE that might call into question the availability (including the reliability) of the value of a portfolio security held by the Fund. The investment 28 | Semiannual Report Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. SECURITY VALUATION (CONTINUED) manager monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depository Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services. All security valuation procedures are approved by the Fund's Board of Directors. B. FOREIGN CURRENCY TRANSLATION Portfolio securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the exchange rate of such currencies against U.S. dollars on the date of valuation. Purchases and sales of securities, income and expense items denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date. Occasionally, events may impact the availability or reliability of foreign exchange rates used to convert the U.S. dollar equivalent value. If such an event occurs, the foreign exchange rate will be valued at fair value using procedures established and approved by the Fund's Board of Directors. The Fund does not separately report the effect of changes in foreign exchange rates from changes in market prices on securities held. Such changes are included in net realized and unrealized gain or loss from investments on the Statement of Operations. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. C. SECURITIES PURCHASED ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS The Fund may purchase securities on a when-issued or delayed delivery basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Fund will generally purchase these securities with the intention of holding the securities, it may sell the securities before the settlement date. Sufficient assets have been segregated for these securities. Semiannual Report | 29 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. FOREIGN CURRENCY CONTRACTS When the Fund purchases or sells foreign securities it may enter into foreign exchange contracts to minimize foreign exchange risk from the trade date to the settlement date of the transactions. A foreign exchange contract is an agreement between two parties to exchange different currencies at an agreed upon exchange rate at a future date. Realized and unrealized gains and losses on these contracts are included in the Statement of Operations. The risks of these contracts include movement in the values of the foreign currencies relative to the U.S. dollar and the possible inability of the counterparties to fulfill their obligations under the contracts, which may be in excess of the amount reflected in the Statement of Assets and Liabilities. E. INCOME TAXES No provision has been made for U.S. income taxes because it is the Fund's policy to qualify as a regulated investment company under the Internal Revenue Code and to distribute to shareholders substantially all of its taxable income and net realized gains. Foreign securities held by the Fund may be subject to foreign taxation on dividend and interest income received. Foreign taxes, if any, are recorded based on the tax regulations and rates that exist in the foreign markets in which the Fund invests. F. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis. Interest income and estimated expenses are accrued daily. Amortization of premium and accretion of discount on debt securities are included in interest income. Dividend income is recorded on the ex-dividend date except that certain dividends from foreign securities are recognized as soon as the Fund is notified of the ex-dividend date. Distributions to shareholders are recorded on the ex-dividend date and are determined according to income tax regulations (tax basis). Distributable earnings determined on a tax basis may differ from earnings recorded in accordance with accounting principles generally accepted in the United States of America. These differences may be permanent or temporary. Permanent differences are reclassified among capital accounts to reflect their tax character. These reclassifications have no impact on net assets or the results of operations. Temporary differences are not reclassified, as they may reverse in subsequent periods. Realized and unrealized gains and losses and net investment income, other than class specific expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class. Differences in per share distributions, by class, are generally due to differences in class specific expenses. 30 | Semiannual Report Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. ACCOUNTING ESTIMATES The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the amounts of income and expenses during the reporting period. Actual results could differ from those estimates. H. REDEMPTION FEES A short term trading redemption fee will be imposed, with some exceptions, on any Fund shares that are redeemed or exchanged within seven calendar days following their purchase date. The redemption fee is 2% of the amount redeemed. Such fees are retained by the Fund and accounted for as an addition to paid-in capital. I. GUARANTEES AND INDEMNIFICATIONS Under the Fund's organizational documents, its officers and directors are indemnified by the Fund against certain liabilities arising out of the performance of their duties to the Fund. Additionally, in the normal course of business, the Fund enters into contracts with service providers that contain general indemnification clauses. The Fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. Currently, the Fund expects the risk of loss to be remote. 2. CAPITAL STOCK At February 29, 2008, there were 2.4 billion shares authorized ($0.01 par value). Transactions in the Fund's shares were as follows:
---------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2008 AUGUST 31, 2007 ---------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------- CLASS A SHARES: Shares sold ......................... 76,421,231 $ 1,867,901,952 225,710,785 $ 5,875,431,840 Shares issued in reinvestment of distributions ................. 81,526,449 2,015,497,465 73,223,640 1,796,575,224 Shares redeemed ..................... (156,363,962) (3,765,446,504) (175,958,675) (4,608,405,231) ---------------------------------------------------------------- Net increase (decrease) ............. 1,583,718 $ 117,952,913 122,975,750 $ 3,063,601,833 ================================================================ CLASS B SHARES: Shares sold ......................... 229,527 $ 5,484,649 604,753 $ 15,300,419 Shares issued in reinvestment of distributions ................. 1,598,248 38,753,026 1,750,128 42,085,963 Shares redeemed ..................... (3,156,106) (74,034,406) (3,759,954) (96,838,040) ---------------------------------------------------------------- Net increase (decrease) ............. (1,328,331) $ (29,796,731) (1,405,073) $ (39,451,658) ================================================================
Semiannual Report | 31 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 2. CAPITAL STOCK (CONTINUED)
---------------------------------------------------------------- SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2008 AUGUST 31, 2007 ---------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------------- CLASS C SHARES: Shares sold ......................... 5,871,877 $ 139,837,450 18,577,793 $ 471,011,227 Shares issued in reinvestment of distributions .................... 7,786,656 187,470,905 7,017,519 167,782,505 Shares redeemed ..................... (13,896,511) (322,369,701) (12,894,022) (328,093,267) ---------------------------------------------------------------- Net increase (decrease) ............. (237,977) $ 4,938,654 12,701,290 $ 310,700,465 ================================================================ CLASS R SHARES: Shares sold ......................... 2,117,435 $ 51,026,969 6,284,962 $ 162,082,026 Shares issued in reinvestment of distributions .................... 1,527,061 37,405,084 1,416,323 34,427,697 Shares redeemed ..................... (5,118,314) (123,153,475) (5,736,892) (148,365,683) ---------------------------------------------------------------- Net increase (decrease) ............. (1,473,818) $ (34,721,422) 1,964,393 $ 48,144,040 ================================================================ ADVISOR CLASS SHARES: Shares sold ......................... 11,665,161 $ 293,030,165 81,193,552 $ 2,119,863,197 Shares issued in reinvestment of distributions .................... 22,277,646 551,125,894 14,307,566 351,653,615 Shares redeemed ..................... (10,038,124) (234,133,806) (5,907,430) (155,752,827) ---------------------------------------------------------------- Net increase (decrease) ............. 23,904,683 $ 610,022,253 89,593,688 $ 2,315,763,985 ================================================================
3. TRANSACTIONS WITH AFFILIATES Franklin Resources, Inc. is the holding company for various subsidiaries that together are referred to as Franklin Templeton Investments. Certain officers and directors of the Fund are also officers and/or directors of the following subsidiaries:
- ------------------------------------------------------------------------------------------ SUBSIDIARY AFFILIATION - ------------------------------------------------------------------------------------------ Templeton Global Advisors Limited (TGAL) Investment manager Franklin Templeton Services, LLC (FT Services) Administrative manager Franklin Templeton Distributors, Inc. (Distributors) Principal underwriter Franklin Templeton Investor Services, LLC (Investor Services) Transfer agent
32 | Semiannual Report Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 3. TRANSACTIONS WITH AFFILIATES (CONTINUED) A. MANAGEMENT FEES The Fund pays an investment management fee to TGAL based on the average daily net assets of the Fund as follows: - -------------------------------------------------------------------------------- ANNUALIZED FEE RATE NET ASSETS - -------------------------------------------------------------------------------- 0.630% Up to and including $1 billion 0.615% Over $1 billion, up to and including $5 billion 0.600% Over $5 billion, up to and including $10 billion 0.580% Over $10 billion, up to and including $15 billion 0.560% Over $15 billion, up to and including $20 billion 0.540% Over $20 billion, up to and including $25 billion 0.530% Over $25 billion, up to and including $30 billion 0.520% Over $30 billion, up to and including $35 billion 0.510% Over $35 billion, up to and including $40 billion 0.500% Over $40 billion, up to and including $45 billion 0.490% In excess of $45 billion B. ADMINISTRATIVE FEES The Fund pays an administrative fee to FT Services based on the average daily net assets of the Fund as follows: - -------------------------------------------------------------------------------- ANNUALIZED FEE RATE NET ASSETS - -------------------------------------------------------------------------------- 0.150% Up to and including $200 million 0.135% Over $200 million, up to and including $700 million 0.100% Over $700 million, up to and including $1.2 billion 0.075% In excess of $1.2 billion C. DISTRIBUTION FEES The Fund's Board of Directors has adopted distribution plans for each share class, with the exception of Advisor Class shares, pursuant to Rule 12b-1 under the 1940 Act. Under the Fund's Class A reimbursement distribution plan, the Fund reimburses Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund's shares up to the maximum annual plan rate. Under the Class A reimbursement distribution plan, costs exceeding the maximum for the current plan year cannot be reimbursed in subsequent periods. In addition, under the Fund's Class B, C, and R compensation distribution plans, the Fund pays Distributors for costs incurred in connection with the servicing, sale and distribution of the Fund's shares up to the maximum annual plan rate for each class. Semiannual Report | 33 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 3. TRANSACTIONS WITH AFFILIATES (CONTINUED) The maximum annual plan rates, based on the average daily net assets, for each class, are as follows: Class A ............................................................... 0.25% Class B ............................................................... 1.00% Class C ............................................................... 1.00% Class R ............................................................... 0.50% D. SALES CHARGES/UNDERWRITING AGREEMENTS Distributors has advised the Fund of the following commission transactions related to the sales and redemptions of the Fund's shares for the period: Sales charges retained net of commissions paid to unaffiliated broker/dealers ............................................... $ 2,604,549 Contingent deferred sales charges retained ...................... $ 477,699 E. TRANSFER AGENT FEES For the period ended February 29, 2008, the Fund paid transfer agent fees of $20,630,117, of which $10,611,398 was retained by Investor Services. 4. EXPENSE OFFSET ARRANGEMENT The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances are used to reduce a portion of the Fund's custodian expenses. During the period ended February 29, 2008, the custodian fees were reduced as noted in the Statement of Operations. 5. INCOME TAXES At February 29, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows: Cost of investments ........................................ $ 29,821,947,069 ================ Unrealized appreciation .................................... $ 4,629,721,800 Unrealized depreciation .................................... (2,594,615,909) ---------------- Net unrealized appreciation (depreciation) ................. $ 2,035,105,891 ================ Net investment income (loss) differs for financial statement and tax purposes primarily due to differing treatments of foreign currency transactions, and bond discounts and premiums. Net realized gains (losses) differ for financial statement and tax purposes primarily due to differing treatments of wash sales, foreign currency transactions, and bond discounts and premiums. 34 | Semiannual Report Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 6. INVESTMENT TRANSACTIONS Purchases and sales of investments (excluding short term securities) for the period ended February 29, 2008, aggregated $3,533,397,890 and $5,504,084,107, respectively. 7. CONCENTRATION OF RISK Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities. 8. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES The 1940 Act defines "affiliated companies" to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. Investments in "affiliated companies" for the period ended February 29, 2008, were as shown below.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF NUMBER OF SHARES HELD SHARES HELD VALUE REALIZED AT BEGINNING GROSS GROSS AT END AT END INVESTMENT CAPITAL NAME OF ISSUER OF YEAR ADDITIONS REDUCTIONS OF PERIOD OF PERIOD INCOME GAIN (LOSS) - ------------------------------------------------------------------------------------------------------------------------------------ NON-CONTROLLED AFFILIATES Chico's FAS, Inc. ............ 13,897,527 102,473 232,380 13,767,620 $128,176,542 $ -- $ (3,788,899) Eastman Kodak Co. ............ 17,000,000 -- 282,170 16,717,830 283,868,753 4,250,000 (3,037,813) The Interpublic Group of Cos. Inc. ................. 33,000,000 -- 13,906,840 19,093,160 -- a -- (46,171,952) Seagate Technology ........... 33,000,000 -- 10,098,510 22,901,490 -- a 6,112,560 (10,316,368) Tenet Healthcare Corp. ....... 35,000,000 -- 35,000,000 -- -- a -- (194,896,563) --------------------------------------------- TOTAL AFFILIATED SECURITIES (1.29% of Net Assets) ............................ $412,045,295 $10,362,560 $(258,211,595) =============================================
a As of 2/29/08, no longer an affiliate. 9. REGULATORY AND LITIGATION MATTERS As part of various investigations by a number of federal, state, and foreign regulators and governmental entities, including the Securities and Exchange Commission ("SEC"), relating to certain practices in the mutual fund industry, including late trading, market timing and marketing support payments to securities dealers who sell fund shares ("marketing support"), Franklin Resources, Inc. and certain of its subsidiaries (collectively, the "Company"), entered into settlements with certain of those regulators and governmental entities. Specifically, the Company entered into settlements with the SEC, among others, concerning market timing and marketing support. Semiannual Report | 35 Templeton Growth Fund, Inc. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 9. REGULATORY AND LITIGATION MATTERS (CONTINUED) On June 6, 2007, the SEC posted for public comment the proposed plan of distribution for the market timing settlement. Once the SEC approves the final plan of distribution, disbursements of settlement monies will be made promptly to individuals who were shareholders of the designated funds during the relevant period, in accordance with the terms and conditions of the settlement and plan. In addition, the Company, as well as most of the mutual funds within Franklin Templeton Investments and certain current or former officers, Company directors, fund directors, and employees, have been named in private lawsuits (styled as shareholder class actions, or as derivative actions on behalf of either the named funds or Franklin Resources, Inc.). The lawsuits relate to the industry practices referenced above. The Company and fund management believe that the claims made in each of the private lawsuits referenced above are without merit and intend to defend against them vigorously. The Company cannot predict with certainty the eventual outcome of these lawsuits, nor whether they will have a material negative impact on the Company. If it is determined that the Company bears responsibility for any unlawful or inappropriate conduct that caused losses to the Fund, it is committed to making the Fund or its shareholders whole, as appropriate. 10. NEW ACCOUNTING PRONOUNCEMENTS The Fund adopted Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an Interpretation of FASB Statement No. 109" (FIN 48), as required, on February 29, 2008. FIN 48 clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return. FIN 48 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. The Fund has reviewed the tax positions for each of the three open tax years as of August 31, 2007 and has determined that the implementation of FIN 48 did not have a material impact on the Fund's financial statements. In September 2006, the FASB issued FASB Statement No. 157, "Fair Value Measurement" (SFAS 157), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Fund believes the adoption of SFAS 157 will have no material impact on its financial statements. 36 | Semiannual Report Templeton Growth Fund, Inc. SHAREHOLDER INFORMATION PROXY VOTING POLICIES AND PROCEDURES The Fund has established Proxy Voting Policies and Procedures (Policies) that the Fund uses to determine how to vote proxies relating to portfolio securities. Shareholders may view the Fund's complete Policies online at franklintempleton.com. Alternatively, shareholders may request copies of the Policies free of charge by calling the Proxy Group collect at 1-954/527-7678 or by sending a written request to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy Group. Copies of the Fund's proxy voting records are also made available online at franklintempleton.com and posted on the U.S. Securities and Exchange Commission's website at sec.gov and reflect the most recent 12-month period ended June 30. QUARTERLY STATEMENT OF INVESTMENTS The Fund files a complete statement of investments with the U.S. Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's website at sec.gov. The filed form may also be viewed and copied at the Commission's Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800/SEC-0330. Semiannual Report | 37 GOF P-5 SUPPLEMENT DATED MARCH 1, 2008 TO THE CURRENTLY EFFECTIVE PROSPECTUS OF EACH OF THE LISTED FUNDS FRANKLIN CALIFORNIA TAX-FREE INCOME FUND FRANKLIN CALIFORNIA TAX-FREE TRUST Franklin California Insured Tax-Free Income Fund Franklin California Intermediate-Term Tax-Free Income Fund Franklin California Limited-Term Tax-Free Income Fund Franklin California Tax-Exempt Money Fund FRANKLIN CAPITAL GROWTH FUND FRANKLIN CUSTODIAN FUNDS Franklin DynaTech Fund Franklin Growth Fund Franklin Income Fund Franklin U.S. Government Securities Fund Franklin Utilities Fund FRANKLIN FEDERAL TAX-FREE INCOME FUND FRANKLIN GLOBAL TRUST Franklin Global Real Estate Fund FRANKLIN GOLD AND PRECIOUS METALS FUND FRANKLIN HIGH INCOME TRUST Franklin High Income Fund FRANKLIN INVESTORS SECURITIES TRUST Franklin Adjustable U.S. Government Securities Fund Franklin Balanced Fund Franklin Convertible Securities Fund Franklin Equity Income Fund Franklin Floating Rate Daily Access Fund Franklin Limited Maturity U.S. Government Securities Fund Franklin Low Duration Total Return Fund Franklin Real Return Fund Franklin Total Return Fund FRANKLIN MANAGED TRUST Franklin Rising Dividends Fund FRANKLIN MUNICIPAL SECURITIES TRUST Franklin California High Yield Municipal Fund Franklin Tennessee Municipal Bond Fund FRANKLIN MUTUAL SERIES FUND INC. Mutual Beacon Fund Mutual Discovery Fund Mutual European Fund Mutual Financial Services Fund Mutual Qualified Fund Mutual Shares Fund FRANKLIN NEW YORK TAX-FREE INCOME FUND FRANKLIN NEW YORK TAX-FREE TRUST Franklin New York Insured Tax-Free Income Fund Franklin New York Intermediate-Term Tax-Free Income Fund Franklin New York Limited-Term Tax-Free Income Fund Franklin New York Tax-Exempt Money Fund FRANKLIN REAL ESTATE SECURITIES TRUST Franklin Real Estate Securities Fund FRANKLIN STRATEGIC MORTGAGE PORTFOLIO FRANKLIN STRATEGIC SERIES Franklin Biotechnology Discovery Fund Franklin Flex Cap Growth Fund Franklin Focused Core Equity Fund Franklin Global Communications Fund Franklin Global Health Care Fund Franklin Growth Opportunities Fund Franklin Natural Resources Fund Franklin Small-Mid Cap Growth Fund Franklin Small Cap Growth Fund Franklin Strategic Income Fund Franklin Technology Fund FRANKLIN TAX-FREE TRUST Franklin Alabama Tax-Free Income Fund Franklin Arizona Tax-Free Income Fund Franklin Colorado Tax-Free Income Fund Franklin Connecticut Tax-Free Income Fund Franklin Double Tax-Free Income Fund Franklin Federal Intermediate-Term Tax-Free Income Fund Franklin Federal Limited-Term Tax-Free Income Fund Franklin Florida Insured Tax-Free Income Fund Franklin Florida Tax-Free Income Fund Franklin Georgia Tax-Free Income Fund Franklin High Yield Tax-Free Income Fund Franklin Insured Tax-Free Income Fund Franklin Kentucky Tax-Free Income Fund Franklin Louisiana Tax-Free Income Fund Franklin Maryland Tax-Free Income Fund Franklin Massachusetts Insured Tax-Free Income Fund Franklin Michigan Insured Tax-Free Income Fund Franklin Minnesota Insured Tax-Free Income Fund Franklin Missouri Tax-Free Income Fund Franklin New Jersey Tax-Free Income Fund Franklin North Carolina Tax-Free Income Fund Franklin Ohio Insured Tax-Free Income Fund Franklin Oregon Tax-Free Income Fund Franklin Pennsylvania Tax-Free Income Fund Franklin Virginia Tax-Free Income Fund FRANKLIN TEMPLETON FUND ALLOCATOR SERIES Franklin Templeton 2015 Retirement Target Fund Franklin Templeton 2025 Retirement Target Fund Franklin Templeton 2035 Retirement Target Fund Franklin Templeton 2045 Retirement Target Fund Franklin Templeton Conservative Target Fund Franklin Templeton Corefolio Allocation Fund Franklin Templeton Founding Funds Allocation Fund Franklin Templeton Growth Target Fund Franklin Templeton Moderate Target Fund Franklin Templeton Perspectives Allocation Fund FRANKLIN TEMPLETON GLOBAL TRUST Franklin Templeton Hard Currency Fund FRANKLIN TEMPLETON INTERNATIONAL TRUST Franklin India Growth Fund Templeton Foreign Smaller Companies Fund Templeton Global Long-Short Fund FRANKLIN VALUE INVESTORS TRUST Franklin All Cap Value Fund Franklin Balance Sheet Investment Fund Franklin Large Cap Value Fund Franklin MicroCap Value Fund Franklin MidCap Value Fund Franklin Small Cap Value Fund TEMPLETON CHINA WORLD FUND TEMPLETON DEVELOPING MARKETS TRUST TEMPLETON FUNDS Templeton Foreign Fund Templeton World Fund TEMPLETON GLOBAL INVESTMENT TRUST Templeton BRIC Fund Templeton Emerging Markets Small Cap Fund Templeton Income Fund TEMPLETON GLOBAL OPPORTUNITIES TRUST TEMPLETON GLOBAL SMALLER COMPANIES FUND TEMPLETON GROWTH FUND, INC. TEMPLETON INCOME TRUST Templeton Global Bond Fund Templeton International Bond Fund The prospectus is revised as follows: 1. Effective October 1, 2008, for all funds that are offered with an initial sales charge, the cumulative quantity discount and letter of intent portion of the "Sales Charge Reductions and Waivers" section is amended to read: 1. CUMULATIVE QUANTITY DISCOUNT - lets you combine certain existing holdings of Franklin Templeton fund shares - referred to as "cumulative quantity discount eligible shares" - with your current purchase of Class A shares to determine if you qualify for a sales charge breakpoint. Cumulative quantity discount eligible shares are Franklin Templeton Fund shares registered to (or held by a financial intermediary for): o You, individually; o Your spouse or domestic partner, as recognized by applicable state law, and your children under the age of 21 (each a "Family Member"); Not part of the semiannual report o You jointly with one or more Family Members; o You jointly with another person(s) who is(are) not Family Members if that other person has not included the value of the shares as cumulative quantity discount eligible shares for purposes of that person's separate investments in Franklin Templeton fund shares; o A trustee/custodian of a Coverdell Education Savings account for which you or a Family Member is the identified responsible person; o A trustee/custodian of an IRA (which includes a Roth IRA and an employer sponsored IRA such as a SIMPLE IRA) or your non-ERISA covered 403(b), if the shares are registered/recorded under yours or a Family Member's Social Security number o A 529 college savings plan over which you or a Family Member has investment discretion and control; o Any entity over which you or a Family Member has (have) individual or shared authority, as principal, has investment discretion and control (for example, an UGMA/UTMA account for a child on which you or a Family Member is the custodian, a trust on which you or a Family Member is the trustee, a business account [not to include retirement plans] for your solely owned business [or the solely owned business of a Family Member] on which you or a Family Member is the authorized signer); o A trust established by you or a Family Member as grantor. Franklin Templeton fund shares held through an administrator or trustee/custodian of an Employer Sponsored Retirement plan such as a 401(k) plan (see definition below) do not qualify for a cumulative quantity discount. If you believe there are cumulative quantity discount eligible shares that can be combined with your current purchase to achieve a sales charge breakpoint (for example, shares held in a different broker-dealer's brokerage account or with a bank or an investment advisor), it is your responsibility to specifically identify those shares to your financial adviser at the time of your purchase (including at the time of any future purchase). If you have not designated a financial adviser associated with your Franklin Templeton Fund shares, it is your responsibility to specifically identify any cumulative quantity discount eligible shares to the Fund's transfer agent at the time of any purchase. If there are cumulative quantity discount eligible shares that would qualify for combining with your current purchase and you do not tell your financial adviser or the Franklin Templeton Funds' transfer agent at the time of any purchase, you may not receive the benefit of a reduced sales charge that might otherwise be available since your financial adviser and the Fund generally will not have that information. The value of cumulative quantity discount eligible shares equals the cost or current value of those shares, whichever is higher. The current value of shares is determined by multiplying the number of shares by their highest current public offering price. It is your responsibility to retain any records necessary to substantiate historical share costs because neither your current financial adviser nor the Franklin Templeton Funds may have or maintain this information. An "Employer Sponsored Retirement Plan" is a Qualified Retirement Plan, ERISA covered 403(b) and certain non-qualified deferred compensation arrangements that operate in a similar manner to a Qualified Retirement Plan, such as 457 plans and executive deferred compensation arrangements, but not including employer sponsored IRAs. A "Qualified Retirement Plan" is an employer sponsored pension or profit sharing plan that qualifies under section 401(a) of the Internal Revenue Code, including 401(k), money purchase pension, profit sharing and defined benefit plans. 2. LETTER OF INTENT (LOI) - expresses your intent to buy a stated dollar amount of "cumulative quantity discount eligible shares" (as defined in the "Cumulative Quantity Discount" section above) over a 13-month period and lets you receive the same sales charge as if all shares had been purchased at one time. We will reserve 5% of your total intended purchase in Class A shares registered in your name until you fulfill your LOI to cover any additional sales charge that may apply if you do not buy the amount stated in your LOI. It is your responsibility to tell your financial adviser when you believe you have fulfilled your LOI with sufficient cumulative quantity discount eligible shares. If you have not designated a financial adviser associated with your Franklin Templeton Fund shares, it is your responsibility to tell the Funds' transfer agent when you believe you have fulfilled your LOI with sufficient cumulative quantity discount eligible shares. Please refer to the Statement of Additional Information for more LOI details. To sign up for these programs, complete the appropriate section of your account application. 2. Effective October 1, 2008, the second sentence of the section "Investments of $1 Million or More" is amended as follows: However, there is a 1% Contingent Deferred Sales Charge ("CDSC") for funds that have a maximum initial sales charge of 5.75%; for all other funds, the maximum CDSC will be 0.75%. The CDSC is assessed on any shares you redeem within 18 months of purchase. 3. The "Qualified Investors - Advisor Class" (and "Qualified Investors - Class Z" for Mutual Series funds) section is revised to include the following category of investor: o Unaffiliated U.S. registered mutual funds, including those that operate as "fund of funds." Minimum initial investment: $1 million in Advisor Class or Class Z shares of any Franklin Templeton fund. PLEASE KEEP THIS SUPPLEMENT FOR FUTURE REFERENCE. Not part of the semiannual report This page intentionally left blank. Literature Request LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT 1-800/DIAL BEN(R) (1-800/342-5236) OR VISIT FRANKLINTEMPLETON.COM. INVESTORS SHOULD CAREFULLY CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES BEFORE INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE CAREFULLY READ THE PROSPECTUS BEFORE INVESTING. TO ENSURE THE HIGHEST QUALITY OF SERVICE, WE MAY MONITOR, RECORD AND ACCESS TELEPHONE CALLS TO OR FROM OUR SERVICE DEPARTMENTS. THESE CALLS CAN BE IDENTIFIED BY THE PRESENCE OF A REGULAR BEEPING TONE. FRANKLIN TEMPLETON FUNDS INTERNATIONAL Franklin India Growth Fund Mutual European Fund Templeton BRIC Fund Templeton China World Fund Templeton Developing Markets Trust Templeton Emerging Markets Small Cap Fund Templeton Foreign Fund Templeton Foreign Smaller Companies Fund 1 GLOBAL Mutual Discovery Fund Templeton Global Long-Short Fund Templeton Global Opportunities Trust Templeton Global Smaller Companies Fund 1 Templeton Growth Fund Templeton World Fund GROWTH Franklin Capital Growth Fund Franklin Flex Cap Growth Fund Franklin Growth Opportunities Fund 2 Franklin Small Cap Growth Fund 3 Franklin Small-Mid Cap Growth Fund VALUE Franklin All Cap Value Fund Franklin Balance Sheet Investment Fund Franklin Equity Income Fund Franklin Large Cap Value Fund Franklin MicroCap Value Fund 1 Franklin MidCap Value Fund Franklin Small Cap Value Fund Mutual Beacon Fund Mutual Qualified Fund Mutual Recovery Fund 4 Mutual Shares Fund BLEND Franklin Balanced Fund Franklin Convertible Securities Fund Franklin Focused Core Equity Fund Franklin Growth Fund Franklin Rising Dividends Fund SECTOR Franklin Biotechnology Discovery Fund Franklin DynaTech Fund Franklin Global Communications Fund Franklin Global Health Care Fund Franklin Global Real Estate Fund Franklin Gold and Precious Metals Fund Franklin Natural Resources Fund Franklin Real Estate Securities Fund Franklin Technology Fund Franklin Utilities Fund Mutual Financial Services Fund ASSET ALLOCATION Franklin Templeton Corefolio(R) Allocation Fund Franklin Templeton Founding Funds Allocation Fund Franklin Templeton Perspectives Allocation Fund Franklin Templeton Conservative Target Fund Franklin Templeton Growth Target Fund Franklin Templeton Moderate Target Fund Franklin Templeton 2015 Retirement Target Fund Franklin Templeton 2025 Retirement Target Fund Franklin Templeton 2035 Retirement Target Fund Franklin Templeton 2045 Retirement Target Fund INCOME Franklin Adjustable U.S. Government Securities Fund 5 Franklin Floating Rate Daily Access Fund Franklin High Income Fund Franklin Income Fund Franklin Limited Maturity U.S. Government Securities Fund 5 Franklin Low Duration Total Return Fund Franklin Real Return Fund Franklin Strategic Income Fund Franklin Strategic Mortgage Portfolio Franklin Templeton Hard Currency Fund Franklin Total Return Fund Franklin U.S. Government Securities Fund 5 Templeton Global Bond Fund Templeton Income Fund Templeton International Bond Fund TAX-FREE INCOME 6 NATIONAL FUNDS Double Tax-Free Income Fund Federal Tax-Free Income Fund High Yield Tax-Free Income Fund Insured Tax-Free Income Fund 7 LIMITED-TERM FUNDS California Limited-Term Tax-Free Income Fund Federal Limited-Term Tax-Free Income Fund New York Limited-Term Tax-Free Income Fund INTERMEDIATE-TERM FUNDS California Intermediate-Term Tax-Free Income Fund Federal Intermediate-Term Tax-Free Income Fund New York Intermediate-Term Tax-Free Income Fund STATE-SPECIFIC Alabama Arizona California 8 Colorado Connecticut Florida Georgia Kentucky Louisiana Maryland Massachusetts 7 Michigan 7 Minnesota 7 Missouri New Jersey New York 8 North Carolina Ohio 7 Oregon Pennsylvania Tennessee Virginia INSURANCE FUNDS Franklin Templeton Variable Insurance Products Trust 9 1. The fund is closed to new investors. Existing shareholders and select retirement plans can continue adding to their accounts. 2. Effective 11/1/07, Franklin Aggressive Growth Fund changed its name to Franklin Growth Opportunities Fund. The fund's investment goal and strategy remained the same. 3. Effective 3/31/08, Franklin Small Cap Growth Fund II changed its name to Franklin Small Cap Growth Fund. The fund's investment goal and strategy remained the same. 4. The fund is a continuously offered, closed-end fund. Shares may be purchased daily; there is no daily redemption. However, each quarter, pending board approval, the fund will authorize the repurchase of 5%-25% of the outstanding number of shares. Investors may tender all or a portion of their shares during the tender period. 5. An investment in the fund is neither insured nor guaranteed by the U.S. government or by any other entity or institution. 6. For investors subject to the alternative minimum tax, a small portion of fund dividends may be taxable. Distributions of capital gains are generally taxable. 7. The fund invests primarily in insured municipal securities. 8. These funds are available in two or more variations, including long-term portfolios, portfolios of insured securities, a high-yield portfolio (CA) and limited-term, intermediate-term and money market portfolios (CA and NY). 9. The funds of the Franklin Templeton Variable Insurance Products Trust are generally available only through insurance company variable contracts. 04/08 Not part of the semiannual report [LOGO](R) FRANKLIN TEMPLETON One Franklin Parkway INVESTMENTS San Mateo, CA 94403-1906 o WANT TO RECEIVE THIS DOCUMENT FASTER VIA EMAIL? Eligible shareholders can sign up for eDelivery at franklintempleton.com. See inside for details. SEMIANNUAL REPORT AND SHAREHOLDER LETTER TEMPLETON GROWTH FUND, INC. INVESTMENT MANAGER Templeton Global Advisors Limited PRINCIPAL UNDERWRITER Franklin Templeton Distributors, Inc. 1-800/DIAL BEN(R) franklintempleton.com SHAREHOLDER SERVICES 1-800/632-2301 Authorized for distribution only when accompanied or preceded by a prospectus. Investors should carefully consider a fund's investment goals, risks, charges and expenses before investing. Like any investment in securities, the value of the Fund's portfolio will be subject to the risk of loss from market, currency, economic, political and other factors. The Fund and its investors are not protected from such losses by the investment manager. Therefore, investors who cannot accept this risk should not invest in shares of the Fund. The prospectus contains this and other information; please read it carefully before investing. To ensure the highest quality of service, telephone calls to or from our service departments may be monitored, recorded and accessed. These calls can be identified by the presence of a regular beeping tone. 101 S2008 04/08 ITEM 2. CODE OF ETHICS. (a) The Registrant has adopted a code of ethics that applies to its principal executive officers and principal financial and accounting officer. (c) N/A (d) N/A (f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy of its code of ethics that applies to its principal executive officers and principal financial and accounting officer. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The Registrant has an audit committee financial expert serving on its audit committee. (2) The audit committee financial expert is David W. Niemiec and he is "independent" as defined under the relevant Securities and Exchange Commission Rules and Releases. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A ITEM 6. SCHEDULE OF INVESTMENTS. N/A ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. N/A ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. N/A ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant's Board of Directors that would require disclosure herein. ITEM 11. CONTROLS AND PROCEDURES. (A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant's filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to the Registrant's management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The Registrant's management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Within 90 days prior to the filing date of this Shareholder Report on Form N-CSR, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant's management, including the Registrant's principal executive officer and the Registrant's principal financial officer, of the effectiveness of the design and operation of the Registrant's disclosure controls and procedures. Based on such evaluation, the Registrant's principal executive officer and principal financial officer concluded that the Registrant's disclosure controls and procedures are effective. (B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the Registrant's internal controls or in other factors that could significantly affect the internal controls subsequent to the date of their evaluation in connection with the preparation of this Shareholder Report on Form N-CSR. ITEM 12. EXHIBITS. (a)(1) Code of Ethics (a)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Galen G. Vetter, Chief Executive Officer - Finance and Administration, and Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TEMPLETON GROWTH FUND, INC. By /s/GALEN G. VETTER --------------------------- Galen G. Vetter Chief Executive Officer - Finance and Administration Date: April 28, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By /s/GALEN G. VETTER ------------------------- Galen G. Vetter Chief Executive Officer - Finance and Administration Date: April 28, 2008 By /s/LAURA F. FERGERSON --------------------------- Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer Date: April 28, 2008 EX-99.CODE ETH 2 ncsr-code1205.txt CODE OF ETHICS Exhibit 12(a)(1) CODE OF ETHICS FOR PRINCIPAL EXECUTIVES & SENIOR FINANCIAL OFFICERS - ------------------------------------------------------------------------------ PROCEDURES Revised December 2005 - ------------------------------------------------------------------------------- FRANKLIN TEMPLETON FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS I. Covered Officers and Purpose of the Code This code of ethics (the "Code") applies to the Principal Executive Officers, Principal Financial Officer and Principal Accounting Officer (the "Covered Officers," each of whom is set forth in Exhibit A) of each investment company advised by a Franklin Resources subsidiary and that is registered with the United States Securities & Exchange Commission ("SEC") (collectively, "FT Funds") for the purpose of promoting: o Honest and ethical conduct, including the ethical resolution of actual or apparent conflicts of interest between personal and professional relationships; o Full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by or on behalf of the FT Funds; o Compliance with applicable laws and governmental rules and regulations; o The prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o Accountability for adherence to the Code. Each Covered Officer will be expected to adhere to a high standard of business ethics and must be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Franklin Resources, Inc. has separately adopted the CODE OF ETHICS AND BUSINESS CONDUCT ("Business Conduct"), which is applicable to all officers, directors and employees of Franklin Resources, Inc., including Covered Officers. It summarizes the values, principles and business practices that guide the employee's business conduct and also provides a set of basic principles to guide officers, directors and employees regarding the minimum ethical requirements expected of them. It supplements the values, principles and business conduct identified in the Code and other existing employee policies. Additionally, the Franklin Templeton Funds have separately adopted the CODE OF ETHICS AND POLICY STATEMENT ON INSIDER TRADING governing personal securities trading and other related matters. The Code for Insider Trading provides for separate requirements that apply to the Covered Officers and others, and therefore is not part of this Code. Insofar as other policies or procedures of Franklin Resources, Inc., the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superceded by this Code to the extent that they overlap or conflict with the provisions of this Code. Please review these other documents or consult with the Legal Department if have questions regarding the applicability of these policies to you. III. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his or her service to, the FT Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of apposition with the FT Funds. Certain conflicts of interest arise out of the relationships between Covered Officers and the FT Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the FT Funds because of their status as "affiliated persons" of the FT Funds. The FT Funds' and the investment advisers' compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the FT Funds, the investment advisers and the fund administrator of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the FT Funds, for the adviser, the administrator, or for all three), be involved in establishing policies and implementing decisions that will have different effects on the adviser, administrator and the FT Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the FT Funds, the adviser, and the administrator and is consistent with the performance by the Covered Officers of their duties as officers of the FT Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the FT Funds' Boards of Directors ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the FT Funds. Each Covered Officer must: o Not use his or her personal influence or personal relationships improperly to influence investment decisions orfinancial reporting by the FT Funds whereby the Covered Officer would benefit personally to the detriment of the FT Funds; o Not cause the FT Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the FT Funds; o Not retaliate against any other Covered Officer or any employee of the FT Funds or their affiliated persons for reports of potential violations that are made in good faith; o Report at least annually the following affiliations or other relationships:/ 1 o all directorships for public companies and all companies that are required to file reports with the SEC; o any direct or indirect business relationship with any independent directors of the FT Funds; o any direct or indirect business relationship with any independent public accounting firm (which are not related to the routine issues related to the firm's service as the Covered Persons accountant); and o any direct or indirect interest in any transaction with any FT Fund that will benefit the officer (not including benefits derived from the advisory, sub-advisory, distribution or service agreements with affiliates of Franklin Resources). These reports will be reviewed by the Legal Department for compliance with the Code. There are some conflict of interest situations that should always be approved in writing by Franklin Resources General Counsel or Deputy General Counsel, if material. Examples of these include/2: o Service as a director on the board of any public or private Company; o The receipt of any gifts in excess of $100 from any person, from any corporation or association o The receipt of any entertainment from any Company with which the FT Funds has current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety. Notwithstanding the foregoing, the Covered Officers must obtain prior approval from the Franklin Resources General Counsel for any entertainment with a value in excess of $1000. o Any ownership interest in, or any consulting or employment relationship with, any of the FT Fund's service providers, other than an investment adviser, principal underwriter, administrator or any affiliated person thereof; o A direct or indirect financial interest in commissions, transaction charges or spreads paid by the FT Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. Franklin Resources General Counsel or Deputy General Counsel will provide a report to the FT Funds Audit Committee of any approvals granted at the next regularly scheduled meeting. IV. Disclosure and Compliance o Each Covered Officer should familiarize himself with the disclosure requirements generally applicable to the FT Funds; o Each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the FT Funds to others, whether within or outside the FT Funds, including to the FT Funds' directors and auditors, and to governmental regulators and self-regulatory organizations; o Each Covered Officer should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the FT Funds, the FT Fund's adviser and the administrator with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the FT Funds file with, or submit to, the SEC and in other public communications made by the FT Funds; and o It is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. V. Reporting and Accountability Each Covered Officer must: o Upon becoming a covered officer affirm in writing to the Board that he or she has received, read, and understands the Code (see Exhibit B); o Annually thereafter affirm to the Board that he has complied with the requirements of the Code; and o Notify Franklin Resources' General Counsel or Deputy General Counsel promptly if he or she knows of any violation of this Code. Failure to do so is itself is a violation of this Code. Franklin Resources' General Counsel and Deputy General Counsel are responsible for applying this Code to specific situations in which questions are presented under it and have the authority to interpret this Code in any particular situation./3 However, the Independent Directors of the respective FT Funds will consider any approvals or waivers/4 sought by any Chief Executive Officers of the Funds. The FT Funds will follow these procedures in investigating and enforcing this Code: o Franklin Resources General Counsel or Deputy General Counsel will take all appropriate action to investigate any potential violations reported to the Legal Department; o If, after such investigation, the General Counsel or Deputy General Counsel believes that no violation has occurred, The General Counsel is not required to take any further action; o Any matter that the General Counsel or Deputy General Counsel believes is a violation will be reported to the Independent Directors of the appropriate FT Fund; o If the Independent Directors concur that a violation has occurred, it will inform and make a recommendation to the Board of the appropriate FT Fund or Funds, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; o The Independent Directors will be responsible for granting waivers, as appropriate; and o Any changes to or waivers of this Code will, to the extent required, are disclosed as provided by SEC rules./5 VI. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the FT Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the FT Funds, the FT Funds' advisers, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The FT Code of Ethics and Policy Statement On Insider Trading, adopted by the FT Funds, FT investment advisers and FT Fund's principal underwriter pursuant to Rule 17j-1 under the Investment Company Act, the Code of Ethics and Business Conduct and more detailed policies and procedures set forth in FT's Employee Handbook are separate requirements applying to the Covered Officers and others, and are not part of this Code. VII. Amendments Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the FT Funds' Board including a majority of independent directors. VIII. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the FT Funds' Board and their counsel. IX. Internal Use The Code is intended solely for the internal use by the FT Funds and does not constitute an admission, by or on behalf of any FT Funds, as to any fact, circumstance, or legal conclusion. X. Disclosure on Form N-CSR Item 2 of Form N-CSR requires a registered management investment company to disclose annually whether, as of the end of the period covered by the report, it has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these officers are employed by the registrant or a third party. If the registrant has not adopted such a code of ethics, it must explain why it has not done so. The registrant must also: (1) file with the SEC a copy of the code as an exhibit to its annual report; (2) post the text of the code on its Internet website and disclose, in its most recent report on Form N-CSR, its Internet address and the fact that it has posted the code on its Internet website; or (3) undertake in its most recent report on Form N-CSR to provide to any person without charge, upon request, a copy of the code and explain the manner in which such request may be made. Disclosure is also required of amendments to, or waivers (including implicit waivers) from, a provision of the code in the registrant's annual report on Form N-CSR or on its website. If the registrant intends to satisfy the requirement to disclose amendments and waivers by posting such information on its website, it will be required to disclose its Internet address and this intention. The Legal Department shall be responsible for ensuring that: o a copy of the Code is filed with the SEC as an exhibit to each Fund's annual report; and o any amendments to, or waivers (including implicit waivers) from, a provision of the Code is disclosed in the registrant's annual report on Form N-CSR. In the event that the foregoing disclosure is omitted or is determined to be incorrect, the Legal Department shall promptly file such information with the SEC as an amendment to Form N-CSR. In such an event, the Fund Chief Compliance Officer shall review the Code and propose such changes to the Code as are necessary or appropriate to prevent reoccurrences. EXHIBIT A Persons Covered by the Franklin Templeton Funds Code of Ethics December 2005 FRANKLIN GROUP OF FUNDS Edward B. Jamieson, President and Chief Executive Officer - Investment Management Charles B. Johnson, President and Chief Executive Officer - Investment Management Rupert H. Johnson, Jr. President and Chief Executive Officer - Investment Management William J. Lippman, President and Chief Executive Officer - Investment Management Christopher Molumphy President and Chief Executive Officer - Investment Management Jimmy D. Gambill, Senior Vice President and Chief Executive Officer - Finance and Administration Galen G. Vetter Chief Financial Officer and Chief Accounting Officer FRANKLIN MUTUAL SERIES FUNDS Peter Langerman Chief Executive Officer-Investment Management Jimmy D. Gambill Senior Vice President and Chief Executive Officer- Finance and Administration Galen G. Vetter Chief Financial Officer TEMPLETON GROUP OF FUNDS Jeffrey A. Everett President and Chief Executive Officer - Investment Management Mark Mobius President and Chief Executive Officer - Investment Management Christopher J. Molumphy President and Chief Executive Officer - Investment Management Gary P. Motyl President and Chief Executive Officer - Investment Management Donald F. Reed President and Chief Executive Officer - Investment Management Jimmy D. Gambill, Senior Vice President and Chief Executive Officer - Finance and Administration Galen G. Vetter Chief Financial Officer EXHIBIT B ACKNOWLEDGMENT FORM DECEMBER 2005 FRANKLIN TEMPLETON FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS. INSTRUCTIONS: 1. Complete all sections of this form. 2. Print the completed form, sign, and date. 3. Submit completed form to FT's General Counsel c/o Maria Abbott within 10 days of becoming a Covered Officer and by January 30th of each subsequent year. INTER-OFFICE MAIL: Maria Abbott, Manager, Code of Ethics, Global Compliance SM-920/2 TELEPHONE: (650) 312-5698 Fax: (650) 312-5646 E-MAIL: Abbott, Maria (internal address); mabbott@frk.com (external address) - ---------------------------------------------------------------------------- COVERED OFFICER'S NAME: - ---------------------------------------------------------------------------- TITLE: - ---------------------------------------------------------------------------- DEPARTMENT: - ---------------------------------------------------------------------------- LOCATION: - ---------------------------------------------------------------------------- CERTIFICATION FOR YEAR ENDING: - ---------------------------------------------------------------------------- TO: Franklin Resources General Counsel, Legal Department I hereby acknowledge receipt of a copy of Franklin Templeton Fund's code of ethics for Principal Executive Officers and Senior Financial Officers (the "Code") that I have read and understand. I will comply fully with all provisions of the Code to the extent they apply to me during the period of my employment. I further understand and acknowledge that any violation of the Code may subject me to disciplinary action, including termination of employment. - ---------------------------- ---------------------- Signature Date signed - ----------------------------- 1 Reporting of these affiliations or other relationships shall be made by completing the annual Directors and Officers Questionnaire and returning the questionnaire to Franklin Resources Inc, General Counsel or Deputy General Counsel. 2 Any activity or relationship that would present a conflict for a Covered Officer may also present a conflict for the Covered Officer if a member of the Covered Officer's immediate family engages in such an activity or has such a relationship. The Cover Person should also obtain written approval by FT's General Counsel in such situations. 3 Franklin Resources General Counsel and Deputy General Counsel are authorized to consult, as appropriate, with members of the Audit Committee, counsel to the FT Funds and counsel to the Independent Directors, and are encouraged to do so. 4 Item 2 of Form N-CSR defines "waiver" as "the approval by the registrant of a material departure from a provision of the code of ethics" and "implicit waiver," which must also be disclosed, as "the registrant's failure to take action within a reasonable period of time regarding a material departure from a provision of the code of ethics that has been made known to an executive officer" of the registrant. See Part X. 5 See Part X. EX-99.CERT 3 tgf302cert0208.txt 302 CERTS FOR TGF Exhibit 12 (a)(2) I, Galen G. Vetter, certify that: 1. I have reviewed this report on Form N-CSR of TEMPLETON GROWTH FUND, INC.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 4/25/2008 /s/ GALEN G. VETTER Galen G. Vetter Chief Executive Officer - Finance and Administration I, Laura F. Fergerson, certify that: 1. I have reviewed this report on Form N-CSR of TEMPLETON GROWTH FUND, INC.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 4/25/2008 /s/ LAURA F. FERGERSON Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer EX-99.906CERT 4 tgf906cert0208.txt 906 CERTS FOR TGF Exhibit 12(b) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Galen G. Vetter, Chief Executive Officer of the TEMPLETON GROWTH FUND, INC. (the "Registrant"), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The periodic report on Form N-CSR of the Registrant for the period ended 2/29/2008 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: 4/25/2008 /s/ GALEN G. VETTER Galen G. Vetter Chief Executive Officer - Finance and Administration CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Laura F. Fergerson, Chief Financial Officer of the TEMPLETON GROWTH FUND, INC. (the "Registrant"), certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: 1. The periodic report on Form N-CSR of the Registrant for the period ended 2/29/2008 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: 4/25/2008 /s/ LAURA F. FERGERSON Laura F. Fergerson Chief Financial Officer and Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----