<PAGE>
Templeton
Growth Fund, Inc.
[PHOTO APPEARS HERE]
Mark Holowesko
Director of Global
Equity Research
- --------------------------------------------------------------------------------
Mark G. Holowesko is the president and primary portfolio manager of Templeton
Growth Fund, as well as several other Templeton funds. He joined the Templeton
organization in 1985 in Nassau, Bahamas, and serves as director of equity
research worldwide, as well as an officer and director of Templeton Worldwide,
Inc. Mr. Holowesko received a B.A. in Economics from Holy Cross College and an
M.B.A. from Babson College. He is a Chartered Financial Analyst, Chartered
Investment Counselor, and a founding member and director of the International
Society of Financial Analysts.
- --------------------------------------------------------------------------------
Your Fund's Objective
The Templeton Growth Fund seeks long-term capital growth through a flexible
policy of investing in stocks and debt obligations of companies and governments
of any nation.
- --------------------------------------------------------------------------------
April 17, 1995
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton Growth Fund
for the period ended February 28, 1995.
International economic and securities market conditions remained volatile during
the six months under review. Most of the economic volatility was centered around
the currency crisis in Mexico, with emerging markets in general experiencing the
majority of the stock price fluctuations.
As we search the world in pursuit of value, we are cognizant that conditions
have deteriorated in certain coun-
1
<PAGE>
tries or industries. For example, land prices in Hong Kong are down sharply, and
Mexico has seen its financial condition hindered by a massive devaluation of its
currency, excessive interest rate levels and added political instability. Even
in the U.S., the once stable utility industry has been challenged by greater
competition. Yet, in most cases, we believe the magnitude of the decline in
stock prices has more than compensated for these concerns.
Our style of investing has always attempted to capitalize on these volatile and
uncertain periods by adding to or initiating positions in securities which we
feel are cheap or undervalued. That means we are buying securities where we
believe the problems are temporary or the reaction of the market is too dramatic
relative to the present environment. As a result, our cash levels today are
declining. Just as we had allowed our cash balances to rise in 1993 and 1994
(taking advantage of the optimism in the markets to sell overvalued securities),
today we are buying. This is particularly true in Hong Kong, China, and Latin
America.
Three significant events have led to the decline of stock prices in Hong Kong
and China. The first is the natural follow-through after a period of excessive
optimism. Any market or class of security tends to experience a period of
"cooling off" after excessive speculation.
A second event, of even greater influence on stock prices, was the increase in
U.S. interest rates. Since the Hong Kong dollar is linked to the U.S. dollar,
the low level of interest rates and rapid economic growth in Hong Kong led to
speculation in most asset classes, particularly in real estate. When interest
rates began to rise, the cost of borrowing money to finance real estate
purchases became more expensive, causing property demand to fall. Weaker demand
put pressure on land prices. Since a large part of Hong Kong equity market
earnings is derived from or associated with real estate, the impact had a
substantial effect on stock prices.
A third significant event is the anticipated death of Deng Xiaoping. Many
investors feel that the political and social transition at Deng's death will
have a greater impact on Hong Kong's future than the Chinese takeover of Hong
Kong in 1997. The attitude that China takes when it assumes control of Hong Kong
in 1997 may well depend on who assumes control in China after Deng's death.
2
<PAGE>
These concerns, as well as others, we feel are reflected in current stock
prices, so we are buying both Hong Kong and Chinese securities for your Fund.
Examples of such purchases are Dairy Farm International Ltd., a Hong Kong-based
food retailer and wholesaler with operations throughout the Pacific Rim, and
Shun Tak Holdings Ltd., a Hong Kong-based conglomerate involved in shipping and
real estate.
- --------------------------------------------------------------------------------
Templeton Growth Fund
Geographic Distribution on 2/28/95
Based on Total Net Assets
[PIE CHART APPEARS HERE SHOWING
GEOGRAPHIC DISTRIBUTION OF THE FUND]
<TABLE>
<CAPTION>
Description Amount
------------------- -------------------
<S> <C>
United States Stocks 32.9%
Latin American Stocks 3.2%
Australian &
New Zealand Stocks 5.3%
Asian Stocks 9.1%
European Stocks 29.6%
Other Stocks 2.0%
Fixed-Income Securities 4.2%
Short-Term Obligations
& Other Net Assets 13.7%
</TABLE>
In Latin America, the deterioration of Mexico's financial condition and the
massive devaluation of its currency have put pressure on prices throughout the
region. There are certainly many negative implications from a currency
devaluation. Few investors realize, however, that there are benefits for
companies that incur costs in local currency but which produce goods that can be
sold overseas generating revenue in foreign currencies. A currency devaluation
for these companies has the effect of lowering the local cost of production
relative to foreign revenue. We feel that several stocks in Mexico and South
America are now selling at attractive prices, and we are buying these securities
for your Fund. We are concentrating our efforts on those companies that are not
overly burdened by the high level of interest rates, and which also benefit from
currency devaluation.
An example of such an attractive security is YPF Sociedad Anonima, a major
integrated oil company in Argentina. Although YPF is financially sound, its
price declined with the Latin American market in part due to its regional
3
<PAGE>
proximity to Mexico and the general uncertainty that has been endemic as of
late. Besides its emerging market locale, YPF also affords us the ability to
gain some commodity exposure. YPF controls half the oil sector in Argentina,
producing oil and natural gas while earning revenues in U.S. dollars.
- --------------------------------------------------------------------------------
Templeton Growth Fund
Top 10 Holdings on 2/28/95
Based on Total Net Assets
<TABLE>
<CAPTION>
% of Total
Company, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Merrill Lynch & Co. Inc.; Financial Services,
United States 2.0%
- --------------------------------------------------------------------------------
Georgia-Pacific Corp.; Forest Products & Paper,
United States 1.2%
- --------------------------------------------------------------------------------
HSBC Holdings PLC; Banking, Hong Kong 1.2%
- --------------------------------------------------------------------------------
Total SA, B; Energy Sources, France 1.1%
- --------------------------------------------------------------------------------
Asea AB; Electrical & Electronics, Sweden 1.0%
- --------------------------------------------------------------------------------
Boeing Co.; Aerospace & Military Technical
Systems, United States 1.0%
- --------------------------------------------------------------------------------
DSM NV; Chemicals, Netherlands 1.0%
- --------------------------------------------------------------------------------
Federal National Mortgage Assn.; Financial
Services, United States 1.0%
- --------------------------------------------------------------------------------
Philips Electronics NV; Electrical & Electronics,
Netherlands 1.0%
- --------------------------------------------------------------------------------
Citicorp; Banking, United States 0.9%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, see page 10 of this report.
One particular area where we feel we can capitalize on price volatility and
inefficiencies is in hard assets, or commodities as they are commonly known.
Commodities now account for almost one-quarter of the $3.6 trillion in total
world trade and for just under one-half of all exports from developing
countries. There are huge differences in the values placed on commodity-related
companies in different regions of the world. For example, U.S. cement companies
have a value per unit of production of $144 per ton, which is significantly
larger than the $46 per ton in Eastern Europe and $1 per ton in Russia.
Similarly, the value per unit of oil production ranges from $7.06 per barrel in
North America to $0.04 per barrel in Russia. While the lower valuations in
certain countries reflect the difficult economic environments, political risks
and relative company inefficiencies, a large degree of fundamental growth and
opportunity still remains. Beyond regional differences in market valuations,
general commodity prices have been under pressure for quite some time and,
despite recent uptrends, many prices are still at levels where their production
cost is higher than current mar-
4
<PAGE>
ket prices. Under such an environment, we don't expect many of the producers of
certain commodities to be increasing supply significantly in the near future.
The question then is why might the price levels of these commodities, or hard
assets, change in the future? In order to answer this question, we only have to
look as far as the developing markets of the world. These markets are huge
sources of potential demand with rapid population growth and increasing
standards of living acting as a catalyst for long-term demand. As per capita
income rises, the demand for raw materials increases. People have more money, so
they consume more. Even with strong economic growth, developing economies are
currently at per capita consumption levels far below developed market levels.
For example, China's demand for steel from 1987 to 1992 grew from 40 million
tons per year to 70 million tons per year, yet per capita consumption is still
only 129 pounds per capita versus 1,115 pounds in Korea. If demand for steel in
China continues to grow at 8% per year for 10 years, as it has been, it alone
will account for 25% of the current total gross demand for steel today. Using
energy as a further example, we see that China consumes 0.36 liters of oil per
capita per day. If this were to rise to 4.36 liters per day, equal to the
consumption level of Taiwan, approximately 4 billion extra liters of oil per day
would be required. This extra amount is roughly equal to 29 billion barrels per
day, or 2 million barrels above the 27 million barrels per day produced by OPEC
in 1993. Commodities are thus a key component in global economics and will
continue to play an integral role in the transition of a market from an emerging
economy to the industrialized, developed stage.
Many investors believe that the recent volatility in overseas markets indicates
that the risk of investing overseas has increased. Volatility is often equated
with risk. The greater the price fluctuation of an asset, the more risky that
asset class is often perceived. We believe that the risk of investing overseas
may, in some instances, have actually declined. The main reason for this
argument is that, in general, the price declines experienced in many equity
markets have been greater, or more significant, than the decline in valuations.
In many respects, the market declines and the volatility experienced overseas
are consistent with what we have seen historically, whereas the market
volatility in the U.S. has been abnormally low. Hong Kong, for example, has
experienced eight corrections of more than 30% over the
5
<PAGE>
last 10 years, three of which were more than 40%, yet one dollar invested in
Hong Kong at the beginning of the last 10-year period has grown to over $4.00.
In the U.S., however, we have not experienced a normal price correction for many
years. A "normal" or "average" correction means that stock prices decline 15 to
20% over a 13-month period, and it takes 21 months from the beginning of price
declines until you return to the point at which you started. A "normal" price
correction in an emerging market may be much shorter, normally lasting only six
months but showing a more significant decline in pricing.
While the global markets continue a pattern of volatility, we actually welcome
this environment because volatility creates uncertainty, which rewards us with
opportunity. An investor's first instinct is to shun uncertainty for it is
equated with risk. We try to look beyond the uncertainty and speculation that
easily overshadow a market and instead focus on the core fundamentals that
influence value. Many of the key fundamentals haven't changed significantly, and
instead of finding ourselves in an uncertain and volatile period, we are
actually in a period of opportunity. There are, of course, special risks
involved with global investing related to market, currency, economic, political,
and other factors. These risks are discussed in the Fund's prospectus.
We thank you for your participation in the Templeton Growth Fund and look
forward to serving your investment needs in the months and years to come.
Sincerely,
/s/ Mark Holowesko
Mark Holowesko, CFA
President
Templeton Growth Fund, Inc.
6
<PAGE>
Performance Summary
The Templeton Growth Fund reported a total return of -4.24% for the six-month
period and 0.10% for the one-year period ended February 28, 1995. While these
short-term returns are disappointing, they are reflective of the declines
experienced in global equity markets during this time. According to Lipper
Analytical Services, Inc., a nationally recognized mutual fund research
organization, the average global equity fund reported a total return of -7.26%
for the year ended February 28, 1995. Total return measures the change in value
of an investment, assuming reinvestment of dividends and capital gains
distributions, and does not include the maximum initial sales charge.
Although we expect some short-term volatility, we have always maintained a long-
term perspective when managing the Fund, and we encourage shareholders to view
their investments in a similar manner. As you can see from the chart to the
right, the Fund delivered a cumulative total return of 78.02% for the 5-year
period ended February 28, 1995. This 5-year total return earned the Fund a #2
ranking out of 28 global equity funds, as measured by Lipper Analytical
Services, Inc./1/
The Fund's share price, as measured by net asset value, decreased from $18.95 on
August 31, 1994 to $16.58 on February 28, 1995. During the reporting period,
shareholders received distributions totaling 29 cents ($0.29) in dividend income
and $1.29 per share in capital gains, of which 98 cents ($0.98) represented
long-term gains and 31 cents ($0.31) represented short-term gains. Of course,
past performance is not predictive of future results, and distributions will
vary depending on income earned by the Fund, as well as any profits realized
from the sales of securities in the portfolio.
- --------------------------------------------------------------------------------
TEMPLETON GROWTH FUND
Periods ended 2/28/95
<TABLE>
<CAPTION>
Since
Inception
One-Year Five-Year Ten-Year (11/29/54)
<S> <C> <C> <C> <C>
Average Annual
Total Return/2/ -5.68% 10.90% 13.80% 14.40%
Cumulative
Total Return/3/ 0.10% 78.02% 286.46% 23,743.34%
</TABLE>
1. The Fund ranked #10 out of 100 funds for the one-year period ended February
28, 1995, and #5 out of 12 for the 10-year period ended December 31, 1994.
Lipper rankings do not include sales charges, and may have been different if
these charges had been considered.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods, assuming reinvestment of dividends and
capital gains, and includes the maximum 5.75% initial sales charge.
3. Cumulative total return represents the change in value of an investment over
the specified periods, assuming reinvestment of dividends and capital gains. It
does not include the maximum 5.75% initial sales charge.
Prior to July 1, 1992, Fund shares were offered at a higher sales charge. Thus,
actual total return to purchasers of shares during that period would have been
somewhat lower than noted above. Investment return and principal value will
fluctuate with market conditions, currencies and the economic and political
climates of the countries where investments are made, so that your shares, when
redeemed, may be worth more or less than their initial cost. Past performance is
not indicative of future results.
7
<PAGE>
Templeton Growth Fund
If you had invested $10,000 in the Templeton Growth Fund at its inception, it
would be worth over $2 million today. The chart below illustrates the cumulative
total return of an assumed $10,000 investment in the Fund on November 29, 1954,
with income dividends and capital gains distributions reinvested through
February 28, 1995*
[MOUNTAIN CHART APPEARS HERE SHOWING AN INITIAL INVESTMENT OF $10,000 MADE ON
11/29/54 (INITIAL NET ASSET VALUE OF $9,425) WOULD BE VALUED AT $2,247,251 ON
2/28/95]
*The amount of capital gains distributions accepted in shares was $850,479. The
total amount of dividends reinvested was $409,846. The performance information
shown represents past performance and is not an indication of future results.
For standardized performance figures, please refer to the Performance Summary on
page 7.
8
<PAGE>
Templeton Growth Fund, Inc.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE (For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 28, 1995 ----------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
----------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.95 $ 17.47 $ 15.81 $ 16.14 $ 15.23 $ 16.62
---------- ---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .12 .29 .32 .41 .45 .57
Net realized and unrealized gain
(loss) (.91) 2.58 2.97 .92 1.68 (.87)
---------- ---------- ---------- ---------- ---------- ----------
Total from investment operations (.79) 2.87 3.29 1.33 2.13 (.30)
---------- ---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net investment
income (.29) (.27) (.36) (.44) (.54) (.62)
Distributions from net realized
gains (1.29) (1.12) (1.27) (1.22) (.68) (.47)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (1.58) (1.39) (1.63) (1.66) (1.22) (1.09)
---------- ---------- ---------- ---------- ---------- ----------
Change in net asset value (2.37) 1.48 1.66 (.33) .91 (1.39)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 16.58 $ 18.95 $ 17.47 $ 15.81 $ 16.14 $ 15.23
========== ========== ========== ========== ========== ==========
TOTAL RETURN * (4.24)% 17.47% 23.57% 9.22% 15.95% (2.01)%
RATIO/SUPPLEMENTAL DATA
Net assets, end of period (000) $5,727,738 $5,611,560 $4,033,911 $3,268,644 $2,895,684 $2,466,684
Ratio of expenses to average net as-
sets 1.10%** 1.10% 1.03% 0.88% 0.75% 0.67%
Ratio of net investment income to
average net assets 1.56%** 1.76% 2.10% 2.62% 3.09% 3.70%
Portfolio turnover rate 12.05% 27.35% 28.89% 24.46% 30.28% 18.47%
</TABLE>
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS. NOT ANNUALIZED IN PERIODS
OF LESS THAN ONE YEAR.
** ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS: 80.6%
- ------------------------------------------------------------------------------
Aerospace & Military Technical Systems:
2.2%
Boeing Co. U.S. 1,250,000 $ 57,656,250
British Aerospace PLC U.K. 6,153,164 45,899,499
Celsius Industrier AB, B Swe. 692,600 15,358,451
Rolls-Royce PLC U.K. 2,689,492 6,346,658
--------------
125,260,858
- ------------------------------------------------------------------------------
Appliances & Household Durables: 1.3%
Electrolux AB, B Swe. 400,000 20,169,076
Email Ltd. Aus. 3,200,173 8,435,374
Sony Corp. Jpn. 1,000,000 43,489,516
Tomei International
Holdings Ltd. H.K. 1,000 78
--------------
72,094,044
- ------------------------------------------------------------------------------
Automobiles: 3.2%
Bayerische Motorenwerke AG
(BMW) Ger. 64,500 33,843,686
Ciadea SA Arg. 1,000,000 5,499,725
Consorcio G Grupo Dina SA
de CV Mex. 407,000 350,122
Consorcio G Grupo Dina SA
de CV, ADR Mex. 28,400 92,300
Ford Motor Co. U.S. 1,616,600 42,233,675
General Motors Corp. U.S. 241,000 10,272,625
*Peugeot SA Fr. 236,650 32,300,868
Regie Nationale des Usines
Renault SA Fr. 119,450 3,973,515
Volvo AB, B Swe. 2,641,000 52,978,214
--------------
181,544,730
- ------------------------------------------------------------------------------
Banking: 12.5%
ABN AMRO Holding NV Neth. 954,400 34,768,138
Argentaria Corporacion
Bancaria de Espana SA Sp. 500,000 16,174,457
Australia & New Zealand
Banking Group Ltd. Aus. 14,546,182 51,123,272
Banco Bilbao Vizcaya Sp. 1,350,000 36,014,082
Banco Central Hispano Sp. 900,000 20,946,607
Banco Popular Espanol Sp. 200,000 25,425,386
Banco Portugues de
Investimento SA Port. 382,790 6,400,917
Bank of Ireland Irl. 1,724,000 8,409,623
BankAmerica Corp. U.S. 500,000 24,062,500
Bankinter SA Sp. 200,000 16,397,418
Barclays Bank PLC U.K. 3,729,700 35,796,047
C.S. Holdings, br. Swtz. 61,030 25,371,467
Canadian Imperial Bank of
Commerce Can. 500,000 12,199,935
Chase Manhattan Corp. U.S. 500,000 17,937,500
Chemical Banking Corp. U.S. 600,000 24,075,000
Citicorp U.S. 1,200,000 54,000,000
</TABLE>
10
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Banking (cont.)
CoreStates Financial Corp. U.S. 370,000 $ 11,146,250
Ergo Bank SA Gr. 147,640 5,718,786
HSBC Holdings PLC H.K. 6,617,741 69,545,555
Industrial Finance Corp. of
Thailand, fgn. Thai. 17,000 35,786
National Australia Bank
Ltd. Aus. 5,264,209 42,444,208
National Bank of Canada Can. 2,485,600 17,391,797
National Bank of Greece SA Gr. 89,235 4,216,915
National Westminster Bank
PLC U.K. 3,607,407 27,480,762
Philippine National Bank Phil. 480,533 5,328,866
Royal Bank of Canada Can. 474,920 9,798,665
Royal Bank of Scotland
Group PLC U.K. 428,500 2,680,627
Shinhan Bank Co. Ltd. Kor. 4,700 91,661
*Shinhan Bank Co. Ltd., new Kor. 863 16,284
Standard Chartered PLC U.K. 7,400,000 29,533,900
Svenska Handelsbanken, A Swe. 1,250,000 15,863,702
Toronto Dominion Bank Can. 827,486 12,470,635
Wells Fargo & Co. U.S. 151,500 24,334,688
Westpac Banking Corp. Aus. 8,534,063 31,568,667
--------------
718,770,103
- -------------------------------------------------------------------------------
Broadcasting & Publishing: 1.1%
News Corp. Ltd. Aus. 4,227,961 18,855,176
News International PLC Aus. 6,529,600 25,336,184
Oriental Press Group
Limited H.K. 14,649,000 7,247,290
Sing Tao Holdings Ltd. H.K. 3,561,800 2,303,434
South China Morning Post
Holdings Ltd. H.K. 19,997,100 11,057,053
--------------
64,799,137
- -------------------------------------------------------------------------------
Building Materials & Components: 0.9%
*Owens Corning Fiberglas
Corp. U.S. 1,157,900 38,934,388
Pioneer International Ltd. Aus. 5,285,149 12,721,476
--------------
51,655,864
- -------------------------------------------------------------------------------
Business & Public Services: 0.1%
*Continental Medical
Systems Inc. U.S. 800,000 5,000,000
Laidlaw Inc., B Can. 131,000 1,069,378
--------------
6,069,378
- -------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Chemicals: 3.7%
AKZO NV Neth. 395,942 $ 46,423,127
Arco Chemical Co. U.S. 504,400 21,437,000
Bayer AG Ger. 114,300 28,202,368
DSM NV Neth. 700,000 57,001,163
Lyondell Petrochemical Co. U.S. 668,600 16,129,975
Rhone-Poulenc SA, A Fr. 958,500 22,894,852
Vigoro Corp. U.S. 577,300 20,349,825
--------------
212,438,310
- -------------------------------------------------------------------------------
Construction & Housing: 1.1%
Kaufman & Broad Home Corp. U.S. 500,000 7,312,500
*National Gypsum Co. U.S. 800,000 39,400,000
Sirti SPA Itl. 1,245,500 8,416,651
*U.S. Home Corp. U.S. 436,300 7,962,475
--------------
63,091,626
- -------------------------------------------------------------------------------
Data Processing & Reproduction: 0.5%
*Conner Peripherals Inc. U.S. 750,000 7,406,250
*Data General Corp. U.S. 225,200 1,773,450
*Electronics for Imaging
Inc. U.S. 70,000 2,747,500
*Quantum Corp. U.S. 1,200,000 17,700,000
--------------
29,627,200
- -------------------------------------------------------------------------------
Electrical & Electronics: 2.0%
Asea AB, A Swe. 770,000 58,001,788
G.P. Batteries International
Ltd. Sing. 276,000 797,640
Gold Peak Industries
Holdings Ltd. H.K. 7,080,000 2,586,949
Philips Electronics NV Neth. 1,650,000 54,754,179
--------------
116,140,556
- -------------------------------------------------------------------------------
Energy Equipment & Services: 0.3%
Koninklijke Pakhoed NV Neth. 150,100 4,273,342
Sun Co. Inc. U.S. 378,800 11,032,550
--------------
15,305,892
- -------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------
Energy Sources: 5.8%
Norsk Hydro AS Nor. 500,000 $ 18,984,742
Repsol SA Sp. 929,700 26,401,807
Royal Dutch Petroleum Co.,
N.Y. shs. Neth. 135,000 15,136,875
Royal Dutch Petroleum Co.
NV Neth. 100,000 11,290,026
Saga Petroleum SA, A Nor. 42,800 553,859
Saga Petroleum SA, B Nor. 1,257,110 15,585,900
Shell Transport & Trading
Co. PLC U.K. 641,000 7,131,697
Societe Elf Aquitane SA Fr. 730,000 52,424,491
Texaco Inc. U.S. 700,000 44,625,000
Total SA, B Fr. 1,125,300 62,249,705
USX-Marathon Group Inc. U.S. 1,051,000 17,078,750
Valero Energy Corp. U.S. 1,411,700 25,234,138
YPF Sociedad Anonima Arg. 1,400,000 26,108,695
YPF Sociedad Anonima, ADR Arg. 350,000 6,650,000
--------------
329,455,685
- ------------------------------------------------------------------------------
Financial Services: 3.6%
Alex Brown Inc. U.S. 122,400 4,651,200
Axa SA Fr. 234,900 10,145,335
Dean Witter Discover & Co. U.S. 265,410 10,715,929
Federal National Mortgage
Assn. U.S. 730,000 56,301,250
Merrill Lynch & Co. Inc. U.S. 2,792,800 114,504,800
Peregrine Investments
Holdings Ltd. H.K. 10,000,000 12,222,725
--------------
208,541,239
- ------------------------------------------------------------------------------
Food & Household Products: 2.1%
C.P. Pokphand Co. Ltd. H.K. 12,203,000 3,014,645
Dairy Farm International
Holdings Ltd. H.K. 27,258,340 32,788,277
Embotelladora Andina SA,
ADR Chil. 572,500 13,740,000
Goodman Fielder Ltd. Aus. 9,490,444 8,689,022
*Grupo Embotellador de
Mexico SA de CV, GDR Mex. 835,750 5,641,313
Grupo Embotellador de
Mexico SA, B Mex. 187,200 617,212
Hillsdown Holdings PLC U.K. 13,423,076 37,840,825
Vitro SA Mex. 4,548,400 14,448,307
Vitro SA, ADR Mex. 179,800 1,595,725
--------------
118,375,326
- ------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Forest Products & Paper: 5.2%
*Assidomaen AB Swe. 500,000 $ 11,292,226
Boise Cascade Corp. U.S. 1,109,900 35,655,538
Bowater Inc. U.S. 1,100,000 36,575,000
Fletcher Challenge Ltd.,
Aus. N.Z. 895,500 2,241,444
Fletcher Challenge Ltd.,
N.Z. N.Z. 11,707,271 29,158,555
Fletcher Forestry, Aus. N.Z. 223,875 274,395
Fletcher Forestry, N.Z. N.Z. 9,926,817 12,582,235
Georgia-Pacific Corp. U.S. 950,000 71,131,250
International Paper Co. U.S. 377,400 28,823,925
James River Corp. U.S. 1,432,900 35,285,163
St. Joe Paper Co. U.S. 600,000 35,850,000
--------------
298,869,731
- -------------------------------------------------------------------------------
Health & Personal Care: 2.1%
Ciba-Geigy AG Swtz. 65,000 41,243,922
Medeva PLC U.K. 1,095,300 3,087,746
*Pharmacia AB, A Swe. 668,300 12,311,665
*Pharmacia AB, B Swe. 231,700 4,252,652
Rhone-Poulenc Rorer U.S. 659,000 26,854,250
Wellcome PLC U.K. 2,000,000 32,102,754
Windmere Corp. U.S. 227,200 1,959,600
--------------
121,812,589
- -------------------------------------------------------------------------------
Industrial Components: 0.4%
Goodyear Tire & Rubber Co. U.S. 650,000 23,968,750
- -------------------------------------------------------------------------------
Insurance: 7.5%
Ace Limited Bmu. 1,100,000 27,225,000
Aetna Life & Casualty Co. U.S. 782,000 42,032,500
Aflac Inc. U.S. 950,000 35,862,500
Allstate Corp. U.S. 854,100 23,487,750
American International
Group Inc. U.S. 464,500 48,191,875
Baloise Holding Swtz. 17,777 33,133,793
Chubb Corp. U.S. 195,000 15,331,875
CIGNA Corp. U.S. 705,272 53,424,354
International Nederlanden
Group Neth. 510,000 25,011,327
Kemper Corp. U.S. 651,697 26,230,804
London Insurance Group Inc. Can. 300,000 5,274,678
National Mutual Asia Ltd. H.K. 7,324,000 4,736,468
Reliastar Financial Corp. U.S. 552,200 18,843,825
Swiss Reinsurance Co. Swtz. 23,130 13,889,246
Travelers Inc. U.S. 662,961 25,772,609
</TABLE>
14
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -----------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -----------------------------------------------------------------------------
Insurance (cont.)
W.R. Berkley Corp. U.S. 700,000 $ 25,025,000
*Zurich Reinsurance Centre
Holdings, Inc. U.S. 193,600 5,856,400
--------------
429,330,004
- -----------------------------------------------------------------------------
Leisure & Tourism: 0.1%
Grand Hotel Holdings Ltd. H.K. 1,272,000 427,757
*Queens Moat Houses PLC U.K. 4,000,000 0
--------------
427,757
- -----------------------------------------------------------------------------
Machinery & Engineering: 0.1%
Saurer Group Holding Inc.,
br. Swtz. 700 224,352
- -----------------------------------------------------------------------------
Merchandising: 2.0%
Argyll Group PLC U.K. 5,079,983 21,682,511
K Mart Corp. U.S. 1,800,000 22,950,000
Limited Inc. U.S. 1,800,000 31,500,000
Sears Roebuck & Co. U.S. 750,000 36,937,500
--------------
113,070,011
- -----------------------------------------------------------------------------
Metals & Mining: 5.0%
Alcan Aluminium Ltd. Can. 200,000 4,850,000
Alcan Aluminum Ltd., fgn. Can. 1,016,850 24,719,792
*Alcan Australia Ltd. Aus. 400,000 753,118
Alumax Inc. U.S. 938,000 26,850,250
Aluminum Co. of America U.S. 1,250,000 48,750,000
ARBED SA Lux. 86,725 13,574,473
British Steel PLC U.K. 9,000,000 22,734,832
Comalco Ltd. Aus. 2,074,460 7,198,891
*Elkem AS, A Nor. 164,200 2,061,232
Maanshan Iron & Steel Co.
Ltd. Chn. 8,016,000 1,607,036
*Outokumpu OY Fin. 1,591,584 25,848,122
*Outokumpu OY, wts. Fin. 705,750 461,914
Pechiney SA Fr. 600,000 14,682,656
Pechiney SA, invt. ctf. Fr. 450,000 30,272,009
Renison Goldfields
Consolidated Ltd. Aus. 1,045,300 3,210,680
Reynolds Metals Co. U.S. 837,808 41,890,400
*Union Miniere NPV Bel. 220,250 14,413,163
--------------
283,878,568
- -----------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Multi-Industry: 3.2%
BTR Nylex Ltd. Aus. 10,886,870 $ 19,774,286
Cheung Kong Holdings Ltd. H.K. 7,000,000 30,511,544
DESC Sociedad de Fomento
Industrial SA, B Mex. 3,271,600 6,384,411
Fotex First Hungarian-
American Photo-Service Hun. 192,000 307,618
Jardine Matheson Holdings
Ltd. H.K. 3,979,340 36,609,928
Jardine Strategic Holdings
Ltd. H.K. 9,101,952 33,859,261
Pacific Dunlop Ltd. Aus. 7,000,000 15,453,680
Swire Pacific Ltd., A H.K. 5,287,500 37,101,064
Swire Pacific Ltd., B H.K. 3,660,500 3,977,003
-------------
183,978,795
- -------------------------------------------------------------------------------
Real Estate: 2.2%
American Health Properties
Inc. U.S. 243,300 5,291,775
Federal Realty Investment
Trust U.S. 217,700 4,598,913
General Growth Properties U.S. 142,200 2,950,650
Hang Lung Development Co.
Ltd. H.K. 15,000,000 22,214,318
*Hang Lung Development Co.
Ltd., wts. H.K. 840,000 147,759
IRT Property Co. U.S. 592,300 5,923,000
Meditrust Inc. U.S. 700,000 22,400,000
National Health Investors
Inc. U.S. 380,000 9,500,000
Nationwide Health Properties
Inc. U.S. 300,000 10,800,000
New World Development Co.
Ltd. H.K. 6,000,000 16,374,572
Rouse Co. U.S. 1,096,800 21,661,800
Tai Cheung Holdings Ltd. H.K. 582,412 553,674
*Tasman Properties Ltd. N.Z. 8,000,000 126,750
Universal Health Realty
Income Trust U.S. 200,000 3,350,000
-------------
125,893,211
- -------------------------------------------------------------------------------
Recreation, Other Consumer Goods: 0.2%
Gibson Greetings Inc. U.S. 155,600 1,458,750
Nintendo Co. Ltd. Jpn. 255,500 13,280,973
-------------
14,739,723
- -------------------------------------------------------------------------------
Telecommunications: 3.5%
Alcatel Alsthom SA Fr. 250,000 20,132,592
Compania de Telefonos de
Chile SA, ADR Chil. 90,100 5,496,100
SIP (Sta Italiana per
I'Esercizio delle
Telecommunicazione) Spa Itl. 7,480,847 18,067,121
SIP (Sta Italiana per
I'Esercizio delle
Telecommunicazione) Spa, di
Risp Itl. 8,178,050 15,855,703
STET (Sta Finanziaria
Telefonica Torino) SPA Itl. 6,276,000 17,446,301
STET (Sta Finanziaria
Telefonica Torino) SPA, di
Risp Itl. 2,782,000 6,368,394
</TABLE>
16
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Telecommunications (cont.)
Telefonica de Argentina SA,
B, ADR Arg. 1,000,000 $ 18,625,000
Telecom Argentina Stet
France SA, ADR Arg. 300,000 10,725,000
Telefonica de Espana SA Sp. 4,210,000 52,532,368
Telefonos de Mexico SA, L Mex. 14,118,470 19,659,526
Telefonos de Mexico SA, L,
ADR Mex. 600,000 16,575,000
-------------
201,483,105
- -------------------------------------------------------------------------------
Textiles & Apparel: 1.2%
Daehan Synthetic Fiber Co.
Ltd. Kor. 18,550 2,936,428
*Fruit of the Loom Inc., A U.S. 700,000 16,362,500
Liz Claiborne Inc. U.S. 315,500 5,087,438
Nike Inc., B U.S. 600,000 43,125,000
Winsor Industrial Corp. Ltd. H.K. 2,640,500 3,261,563
-------------
70,772,929
- -------------------------------------------------------------------------------
Transportation: 4.7%
Airborne Freight Corp. U.S. 214,900 5,130,738
American President Cos. Ltd. U.S. 792,200 18,022,550
*AMR Corp. U.S. 267,300 16,338,713
Anangel-American
Shipholdings Ltd., ADR Gr. 91,100 1,343,725
Atlantic Southeast Airlines
Inc. U.S. 186,100 3,745,263
*Bremer Vulkan Verbund AG Ger. 400,000 24,104,324
British Airways PLC U.K. 7,000,000 43,236,566
Cathay Pacific Airways Ltd. H.K. 17,604,000 28,461,489
IMC Holdings Ltd. H.K. 6,860,000 5,501,132
Malaysian International
Shipping Corp. Bhd., fgn. Mal. 6,745,333 18,488,109
Nedlloyd Groep Neth. 27,300 849,103
OMI Corp. U.S. 591,200 3,103,800
Peninsular & Oriental Steam
Navigation Co. U.K. 1,400,000 12,505,345
Shun Tak Holdings Ltd. H.K. 20,906,000 12,438,414
Singapore Airlines Ltd.,
fgn. Sing. 3,779,000 37,816,080
*Stolt Nielsen SA U.S. 463,500 8,922,375
*Swissair Schweizerische
Luftverkehr AG Swtz. 33,350 20,269,449
Transportacion Maritima
Mexicana SA de CV, L, ADR Mex. 41,500 176,375
*USAir Group Inc. U.S. 1,800,000 10,575,000
-------------
271,028,550
- -------------------------------------------------------------------------------
Utilities-Electrical & Gas: 2.7%
British Gas PLC U.K. 3,860,000 17,789,709
Centerior Energy Corp. U.S. 289,350 2,821,163
Compania Sevillana de
Electricidad Sp. 2,433,102 10,469,048
Cukurova Elektrik AS Tur. 2,917,000 625,875
</TABLE>
17
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ----------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ----------------------------------------------------------------------------------
Utilities-Electrical & Gas (cont.)
Electricidad de Caracas Venz. 7,767,313 $ 6,774,498
Entergy Corp. U.S. 1,100,000 24,612,500
Iberdrola SA Sp. 3,694,805 23,124,146
Long Island Lighting Co. U.S. 1,550,000 24,800,000
Shandong Huaneng Power Chn. 79,960 729,635
Texas Utilties Co. U.S. 900,000 29,587,500
VEBA AG Ger. 40,000 14,495,539
--------------
155,829,613
- ----------------------------------------------------------------------------------
Wholesale & International Trade: 0.1%
Sime Darby Hongkong Ltd. H.K. 6,660,000 7,321,994
--------------
TOTAL COMMON STOCKS (cost $3,866,312,165) 4,615,799,630
- ----------------------------------------------------------------------------------
PREFERRED STOCKS: 1.5%
- ----------------------------------------------------------------------------------
ABN Amro Holdings NV,
conv., pfd. Neth. 46,000 1,625,054
AMR Corp., A, ADR,
conv., pfd. U.S. 106,500 4,739,250
Bayerische Motorenwerke
AG (BMW), pfd. Ger. 15,000 5,806,452
Bear Stearns Companies
Inc., A, pfd. U.S. 99,400 4,125,100
Jardine Strategic
Holdings Ltd., 7.50%,
conv., pfd. U.S. 9,050,000 11,312,500
News Corp. Ltd. Aus. 3,113,980 12,369,746
Reynolds Metals Co.,
conv., pfd. U.S. 179,415 8,567,066
*Telebras-
Telecomunicacoes
Brasileiras SA, pfd. Braz. 875,600,000 25,840,752
Telebras-
Telecomunicacoes
Brasileiras SA,
ADR, pfd. Braz. 200,000 5,837,500
USAir Group Inc., B,
conv., pfd. U.S. 200,000 5,450,000
Wells Fargo & Co., B,
pfd. U.S. 50,000 2,125,000
--------------
TOTAL PREFERRED STOCKS (cost $73,930,194) 87,798,420
- ----------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL IN
LOCAL CURRENCY**
- ----------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BONDS: 4.2%
- ----------------------------------------------------------------------------------
ARBED SA, 2.50%, conv.,
7/15/03 Ger. 3,250,000 2,185,999
C.S. Holdings Finance
BV, 4.875%, conv.,
11/19/02 U.S. 4,615,000 5,872,588
Government of Australia:
7.00%, 8/15/98 Aud. 20,000,000 13,722,247
6.25%, 3/15/99 Aud. 20,000,000 13,163,316
7.00%, 4/15/00 Aud. 20,000,000 13,211,309
Softe SA, 4.25%, conv.,
7/30/98 Itl. 2,880,000,000 1,775,165
</TABLE>
18
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 28, 1995 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY** VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
BONDS (CONT.)
- -------------------------------------------------------------------------------
U.S. Treasury Notes:
7.75%, 3/31/96 U.S. 10,000,000 $ 10,123,400
7.37%, 5/15/96 U.S. 10,000,000 10,084,400
7.25%, 8/31/96 U.S. 10,000,000 10,089,100
8.50%, 7/15/97 U.S. 10,000,000 10,357,800
7.87%, 1/15/98 U.S. 10,000,000 10,248,400
6.37%, 7/15/99 U.S. 48,000,000 46,829,760
6.00%, 10/15/99 U.S. 48,000,000 46,049,760
6.37%, 1/15/00 U.S. 48,000,000 46,649,760
--------------
TOTAL BONDS (cost $247,230,403) 240,363,004
- -------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 12.7% (cost $727,812,487)
- -------------------------------------------------------------------------------
U.S. Treasury Bills,
5.15% to 5.70% with
maturities to
4/20/95 U.S. 731,540,000 727,985,658
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.0% (cost $4,915,285,249) 5,671,946,712
OTHER ASSETS, LESS LIABILITIES: 1.0% 55,791,068
--------------
TOTAL NET ASSETS: 100.0% $5,727,737,780
==============
</TABLE>
* NON-INCOME PRODUCING.
** CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
Templeton Growth Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1995 (unaudited)
<TABLE>
<S> <C>
Assets:
Investment in securities, at value (identified cost
$4,915,285,249) $5,671,946,712
Cash 794
Receivables:
Investment securities sold 107,921,246
Capital shares sold 17,438,190
Dividends and interest 19,354,336
--------------
Total assets 5,816,661,278
--------------
Liabilities:
Payables:
Investment securities purchased 76,651,736
Capital shares redeemed 6,361,402
Accrued expenses 5,910,360
--------------
Total liabilities 88,923,498
--------------
Net assets, at value $5,727,737,780
==============
Net assets consists of:
Undistributed net investment income $ 17,961,488
Net unrealized appreciation 756,661,463
Accumulated net realized gain 99,230,755
Net capital paid in on shares of capital stock 4,853,884,074
--------------
Net assets, at value $5,727,737,780
==============
Shares outstanding 345,453,342
==============
Net asset value per share ($5,727,737,780 / 345,453,342) $ 16.58
==============
Maximum offering price ($16.58 / 94.25%) $ 17.59
==============
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended February 28, 1995 (unaudited)
<TABLE>
<S> <C> <C>
Investment income: (net of $2,343,123 foreign taxes
withheld)
Dividends $ 48,666,013
Interest 25,442,208
-------------
Total income $ 74,108,221
Expenses:
Management fees (Note 3) 17,044,936
Administrative fees (Note 3) 2,345,860
Distribution fees (Note 3) 6,284,975
Transfer agent fees (Note 3) 2,580,000
Custodian fees 1,270,000
Reports to shareholders 870,000
Audit fees 29,000
Legal fees 15,000
Registration and filing fees 215,000
Directors' fees and expenses 32,000
Other 65,800
-------------
Total expenses 30,752,571
-------------
Net investment income 43,355,650
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments 130,957,583
Foreign currency transactions (2,142,421)
-------------
128,815,162
Net unrealized depreciation
on investments (409,120,246)
-------------
Net realized and unrealized loss (280,305,084)
-------------
Net decrease in net assets resulting from
operations $(236,949,434)
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
Templeton Growth Fund, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 43,355,650 $ 83,751,095
Net realized gain from security and for-
eign currency transactions 128,815,162 421,625,512
Net unrealized appreciation (depreciation) (409,120,246) 257,341,592
-------------- --------------
Net increase (decrease) in net assets re-
sulting from operations (236,949,434) 762,718,199
Distributions to shareholders:
From net investment income (89,841,133) (65,003,617)
From net realized gain (391,713,253) (267,596,888)
Capital share transactions (Note 2) 834,681,220 1,147,531,339
-------------- --------------
Net increase in net assets 116,177,400 1,577,649,033
Net assets:
Beginning of period 5,611,560,380 4,033,911,347
-------------- --------------
End of period $5,727,737,780 $5,611,560,380
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
Templeton Growth Fund, Inc.
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Templeton Growth Fund, Inc. (the Fund) is an open-end, diversified management
investment company registered under the Investment Company Act of 1940. The
following summarizes the Fund's significant accounting policies.
A. Securities Valuations:
Securities listed or traded on a recognized national or foreign stock exchange
or NASDAQ are valued at the last reported sales prices on the principal ex-
change on which the securities are traded. Over-the-counter securities and
listed securities for which no sale is reported are valued at the mean between
the last current bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
and approved in good faith by the Board of Directors.
B. Foreign Currency Transactions:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases and
sales of portfolio securities and income items denominated in foreign curren-
cies are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells a foreign security it customar-
ily enters into foreign exchange contracts to minimize foreign exchange risk
between the trade date and the settlement date of such transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales of for-
eign currencies, currency gains or losses realized between the trade and set-
tlement dates on securities transactions, the differences between the amounts
of dividends, interest, and foreign withholding taxes recorded on the Fund's
books, and the U.S. dollar equivalent of the amounts actually received or paid.
Net unrealized foreign exchange gains and losses arise from changes in the
value assets and liabilities other than investments in securities at the end of
the fiscal period, resulting from changes in the exchange rate.
C. Income Taxes:
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all its
taxable income to its shareholders. Therefore, no provision has been made for
income taxes.
D. Security Transactions, Investment Income, Distributions and Expenses:
Security transactions are accounted for on trade date. Dividend income is re-
corded on the ex-dividend date. Certain dividend income on foreign securities
is recorded as soon as information is available to the Fund. Interest income
and estimated expenses are accrued daily. Distributions to shareholders, which
are determined in accordance with income tax regulations, are recorded on the
ex-dividend date.
22
<PAGE>
Templeton Growth Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
At February 28, 1995 there were 600 million shares of $.01 par value capital
stock authorized. Transactions in the Funds shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994
-------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares sold 39,804,067 $ 680,808,770 77,882,578 $1,386,166,876
Shares issued on
reinvestment
of
distributions 25,222,123 425,057,516 17,120,603 290,562,169
Shares redeemed (15,762,606) (271,185,066) (29,766,676) (529,197,706)
----------- ------------- ----------- --------------
Net increase 49,263,584 $ 834,681,220 65,236,505 $1,147,531,339
=========== ============= =========== ==============
</TABLE>
3. INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Certain officers of the Fund are also directors or officers of Templeton,
Galbraith & Hansberger Ltd. (TGH), Templeton Global Investors, Inc. (TGII),
Franklin Templeton Distributors, Inc. (FTD) and Franklin Templeton Investor
Services, Inc. (FTIS), the Fund's investment manager, administrative manager,
principal underwriter, and transfer agent, respectively. The fund pays monthly
an investment management fee to TGH equal, on an annual basis, to 0.75% of the
average daily net assets of the Fund up to $200 million, reduced to 0.675% of
such average daily net assets in excess of $200 million, and further reduced to
0.60% of such net assets in excess of $1.3 billion. The fee is subject to re-
duction in any year to the extent that expenses (exclusive of certain expenses)
of the Fund exceed 2 1/2% of the first $30 million of net assets, 2% of the
next $70 million of net assets and 1 1/2% of the remainder. During the six
months ended February 28, 1995, no reduction in fee was required as a result of
this limitation. The Fund pays TGII monthly an administrative fee of 0.15% per
annum on the first $200 million of the Fund's average daily net assets, 0.135%
of the next $500 million, 0.10% of the next $500 million, and 0.075% per annum
of such average net assets in excess of $1.2 billion. For the six months ended
February 28, 1995, FTD received net commissions of $2,967,987 from the sale of
the Fund's shares and FTIS received fees of $2,580,000.
Pursuant to a distribution plan, the Fund reimburses FTD monthly (subject to a
limit of 0.25% per annum of the Fund's average daily net assets) for FTD's
costs and expenses in connection with any activity which is primarily intended
to result in a sale of Fund shares. Such distribution fees are set forth in the
Statement of Operations.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $15,000 for the six months ended Feb-
ruary 28, 1995.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended February 28, 1995, the cost of purchases and sales
of securities (excluding short-term securities) were $1,015,585,023 and
$586,181,759, respectively. The cost of securities for federal income tax pur-
poses was $4,917,586,543. Realized gains and losses are reported on an identi-
fied cost basis.
At February 28, 1995, the aggregate gross unrealized appreciation and deprecia-
tion of portfolio securities, based on cost for federal income tax purposes,
was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $ 979,609,655
Unrealized depreciation (225,249,486)
-------------
Net unrealized appreciation $ 754,360,169
=============
</TABLE>
23
<PAGE>
- --------------------------
TEMPLETON GROWTH
FUND, INC.
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Account Services
1-800-354-9191
Sales Information
1-800-292-9293
This report must be
preceded or accompanied
by the prospectus of
Templeton Growth
Fund, Inc.
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, as well
as investment decisions
by the investment
manager which will not
always be profitable
or wise. The Fund and
its investors are not
protected from such
losses by the
investment manager.
Therefore, investors
who cannot accept this
risk should not invest
in shares of the Fund.
To ensure the highest
quality of service,
telephone calls to or
from our service
departments may be
monitored, recorded
and accessed. These
calls can be determined
by the presence of a
regular beeping tone.
- --------------------------
[RECLYCING LOGO APPEARS HERE] TL01 S95 04/95
TEMPLETON
GROWTH
FUND, INC.
Semi-Annual Report
February 28, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
