<PAGE>
TEMPLETON GROWTH FUND
[PHOTO OF
MARK HOLOWESKO
APPEARS HERE]
Mark Holowesko
Director of Global
Equity Research
- ------------------
Mark G. Holowesko is the president and 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.
- --------------------------------------------------------------------------------
October 16, 1995
Dear Shareholder:
We are pleased to bring you the 41st annual report of the Templeton Growth Fund,
which covers the period ended August 31, 1995.
The past fiscal year was marked by extreme volatility in emerging markets and
unexpected advances in developed markets. Stock markets of most developed
countries posted double-digit returns despite the high degree of uncertainty
prevalent in many overseas markets at the beginning of 1995. Much of this
uncertainty was precipitated by the devaluation of the Mexican peso in December
1994, which led to a decline of more than 70% (in U.S. dollar terms) in the
Mexican equity market. The ensuing negative impact on financial markets, which
was
1
<PAGE>
coyly coined "the Tequila Effect," was not limited to Latin America. Investors
in Asian securities soon discovered that their stocks were declining in value
due to professional money managers' generally poor opinions of most emerging
markets. However, most major developed markets, particularly those in the United
States, the United Kingdom, and Germany, showed surprising strength. One
exception was Japan, which suffered from a deteriorating real estate market and
the resulting impact on its banks.
Cyclical stocks performed very well throughout the reporting period because of
economic growth worldwide. This was especially true of the paper, chemicals and
metals sectors. Other strong performers included financial services and
technology stocks. Although we lacked exposure to the technology sector, our
holdings in these other strong areas helped the performance of the Fund.
Responding to various economic and financial conditions worldwide, we reduced
our holdings in certain developed markets, particularly Germany and the U.S.,
and bought securities in emerging markets, which we felt were better bargains.
The extraordinary potential of emerging markets is often overshadowed by the
sheer size of financial markets in developed countries. Although developed
- --------------------------------------------------------------------------------
Templeton Growth Fund
Geographic Distribution on 8/31/95
Based on Total Net Assets
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
United States Stocks 26.9%
Asian Stocks 8.2%
Australian & New Zealand Stocks 5.3%
European Stocks 25.8%
Latin American Stocks 6.0%
Other Stocks 1.9%
Fixed-Income Securities 6.2%
Short-Term Obligations &
Other Net Assets 19.7%
</TABLE>
countries constitute only a small portion of the world's population, they
consume a majority of goods and services worldwide. Consider also, that Asia's
total Gross National Product (GNP) is amazingly close to the GNP of the U.S.
alone, yet Asia has 3.1 billion people, compared with only 260 million in the
U.S. As the world's developing markets evolve, these countries' per-capita
wealth should increase, which will affect consumption patterns and raise
standards of living. We already see this happening in Asia, where GNP has been
increasing significantly faster than in the U.S.
2
<PAGE>
Looking forward, the world's financial markets should, hopefully, continue to be
volatile. I say "hopefully," because the more volatile the market, the more
share prices tend to fluctuate. The more share prices fluctuate, the less likely
the market will reflect the "true" value of a company, and the easier it becomes
for us to find potential bargain-priced stocks for your Fund. Many investors are
frightened by volatility, but we welcome the opportunity it provides us. There
are, of course, special risks involved with global investing related to market,
currency, economic, political, and other factors. Developing markets involve
similar but heightened risks, in addition to risks associated with the
relatively small size and lesser liquidity of these markets. These risks are
discussed in the Fund's prospectus.
In closing, we would like to mention that although Sir John Templeton has not
been involved in investment management of the Templeton Funds since October
1992, we were saddened by his recent decision to step down as Chairman and
Director of the U.S.-registered Templeton funds. The Fund's Board of Directors
have elected John Wm. Galbraith, former vice chairman of Templeton, Galbraith &
Hansberger, Ltd. to succeed him. The investment manager will continue to use the
investment philosophies and principles established by Sir John.
- --------------------------------------------------------------------------------
TEMPLETON GROWTH FUND
Top 10 Holdings on 8/31/95
Based on Total Net Assets
<TABLE>
<CAPTION>
% of Total
Name, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Merrill Lynch & Co. Inc.;
Financial Services, United States 2.3%
- --------------------------------------------------------------------------------
HSBC Holdings PLC; Banking,
Hong Kong 1.5%
- --------------------------------------------------------------------------------
Telefonos de Mexico SA;
Telecommunications, Mexico 1.5%
- --------------------------------------------------------------------------------
Georgia-Pacific Corp.; Forest
Products & Paper, United States 1.4%
- --------------------------------------------------------------------------------
Citicorp; Banking, United States 1.3%
- --------------------------------------------------------------------------------
Ford Motor Co.; Automobiles,
United States 1.2%
- --------------------------------------------------------------------------------
Telebras-Telecomunicacoes
Brasileiras SA; Telecommunications,
Brazil 1.2%
- --------------------------------------------------------------------------------
U.S. Treasury Note, 6.375%, 1/15/00;
Government Bond, United States 1.1%
- --------------------------------------------------------------------------------
U.S. Treasury Note, 6.375%, 7/15/99;
Government Bond, United States 1.1%
- --------------------------------------------------------------------------------
U.S. Treasury Note, 6.0%, 10/15/99;
Government Bond, United States 1.1%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, please see page 13 of this report.
We thank you for your participation in the Templeton Growth Fund and welcome any
comments or suggestions you may have.
Sincerely,
/s/ Mark Holowesko
Mark Holowesko, CFA
President
Templeton Growth Fund, Inc.
3
<PAGE>
Q & A
THE FOLLOWING IS AN INTERVIEW
WITH MARK HOLOWESKO, PORTFOLIO
MANAGER OF TEMPLETON GROWTH
FUND
Did the Fund's portfolio change dramatically over the course of the year? If so,
what are some of the stocks you bought and sold?
Our portfolios generally do not change dramatically from one year to the next,
which reflects our "value" style of investing. We concentrate on a company's
prospects over a full business cycle, traditionally a three to five year period,
and we tend to hold its shares for about that long. This gives us a relatively
low portfolio turnover rate, typically about 20% per year.
This year, we concentrated on capturing some of the value we discovered in
emerging markets, particularly Latin America, after a series of major price
declines. For example, we purchased shares of Telefonos de Mexico SA (Telmex),
Telecomunicacoes Brasileiras SA (Telebras), and YPF Sociedad Anonima. We also
added to several economically sensitive European stocks, such as Volvo AB and
Asea AB. In the U.S., we
4
<PAGE>
took advantage of a strong market by reducing positions that met our price-
target levels, while adding to the automotive, utility, and real estate sectors.
Specific stocks purchased include General Motors Corp. and Centerior Energy. We
also made significant additions to our health care real estate investment trust
holdings.
What were your best performing stocks and sectors?
The commodity sectors, most notably aluminum and paper, performed well and
provided significant gains for the Fund. Increasing economic activity and
growing demand for commodities in emerging markets led to rising prices for
aluminum and paper, which gave a big boost to the stock prices of companies
operating in those industries. The Fund's positions in stocks such as Georgia-
Pacific Corp., James River Corp., International Paper Co., Dow Chemical Co.,
Aluminum Company of America (ALCOA), Alcan Aluminum Ltd., and Comalco Ltd.
benefited from this trend. Other strong performers included Merrill Lynch & Co.
Inc. (the Fund's largest holding), Nike Inc., BMW, and Singapore Airlines Ltd.
Were there any disappointments? In other words, were there any stocks that did
not perform up to your expectations?
Yes, there were. Every year, about one-third of our stock picks do not live up
to our expectations. This is normally due to some unanticipated event at the
company, a major change in the industry that adversely impacts the company, or
less-than-perfect stock selection on our part. If we can continue to keep our
mistakes to roughly one-third of our selections, we should be able to achieve
the type of returns investors have come to expect. Examples of stocks that did
not perform as well as we had hoped include Celsius Industrier AB, Electrolux
AB, Oriental Press Group Ltd., Sun Co. Inc., Peregrine Investments Holdings
Ltd., and USAir Group Inc. Although these stocks declined in price, we did not
sell them because we continued to believe they represented excellent potential
long-term value.
Q & A
5
<PAGE>
The U.S. stock market performed extremely well during the first eight months of
1995. How do you think it will perform in the future?
We cannot be sure how the U.S. market will perform. No one can. Since 1949,
there have been 10 major bull markets in the U.S., lasting on average 41 months
and raising stock prices an average of 100%. Over the same period, there have
been nine major price declines, one about every 5 1/2 years and lasting an
average 15 months, that have lowered share prices on average by roughly 20%.
Most investors are fully aware of a bull market's potential, but probably do not
realize it would be normal if stock prices dropped by 25% sometime over the next
two to five years.
Is this true for foreign markets as well?
Yes, a similar situation holds true overseas. Last winter's 78% decline (in U.S.
dollar terms) of Mexican stocks was viewed by investors as an abnormal
"meltdown" of values. Yet few investors realize that the Mexican stock market
has experienced six declines of 70% or more. Even in Hong Kong, where $1.00
invested 10 years ago would have grown to $4.00 today, there have been eight
corrections of more than 30% and two in excess of 50%.
How should investors deal with market declines?
First, investors should be aware that just as bull markets, or prolonged share
price increases, are a normal part of stock market activity, so are bear
markets, or prolonged stock price declines. Second, investors should not only
expect market declines and use them to their advantage, but they should
concentrate on those stocks that have already declined in price even if the
overall market has not. Our investments in General Motors and several utility
and real estate stocks, which had already experienced 25% price declines from
their recent peaks, reflect this strategy. To a certain extent, by purchasing
shares of companies whose prices have already declined, but whose business
practices are solid, you may be able to protect yourself during market declines.
Q & A
6
<PAGE>
Emerging markets appear to be recovering after a poor showing in 1994. What is
your outlook for these markets in the near future?
As I mentioned earlier, it is difficult for us to predict how specific markets
will perform. I believe, however, that the risk of investing in these markets
may have declined because so many of them have already experienced major price
corrections. We are also excited about the rising standards of living in many of
these countries and the impact this should have on consumption. Today, about 15%
of the world's population live in countries belonging to the Organisation of
Economic Cooperation and Development, but they consume 75% of most goods and
services worldwide. As the remaining 85% of the world's population grows
economically, consumption patterns of certain goods and services will be
significantly affected. We are already beginning to see this happen, and we have
invested assets of the Fund in seeking to benefit from this trend.
Does the overall market look expensive now, or are you finding a number of
bargain stocks?
On August 31, our bargain list contained roughly 140 names. During the 10 years
I have been with Templeton, this list has fluctuated between 80 and 200 names.
Today, we are finding a "normal" number of good ideas, which is in contrast to
the Fund's above-normal cash level. This cash position is a result of our
selling shares of relatively large companies and buying lower-priced shares of
companies that are a bit smaller in size.
Q & A
7
<PAGE>
PERFORMANCE SUMMARY
Templeton Growth Fund Class I shares provided a total return of 9.51% for the
one-year period ended August 31, 1995. Total return measures the change in value
of an investment, assuming reinvestment of dividends and capital gains
distributions, and does not include the current maximum 5.75% initial sales
charge.
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 on page 9, the Fund's Class I shares delivered a cumulative
total return of more than 300% for the 10-year period ended August 31, 1995.
As measured by net asset value, the price of the Fund's Class I shares increased
from $18.95 on August 31, 1994 to $18.96 on August 31, 1995, while the price of
the Fund's Class II shares increased from $17.48 on May 1, 1995 (the inception
date for these shares) to $18.90 on August 31, 1995.
During the reporting period, Class I shareholders received distributions
totalling 29 cents ($0.29) per share 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. Class II shareholders did not
receive distributions because Class II shares were not in existence when
distributions were paid. 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 sale of securities in the portfolio.
The graph on the following page shows how a $10,000 investment in the Fund, over
the past ten years, has kept your purchasing power well-ahead of inflation, as
measured by the Consumer Price Index (CPI). It also compares the Fund's
performance over the same period with the performance of the unmanaged Morgan
Stanley Capital International (MSCI) World Index. Class II shares are not
represented as they have not been available for a sufficient period of time.
Please remember that the Fund's performance differs from that of the index
because the index does not contain cash (the Fund generally carries a certain
percentage of cash at any given time) and includes no sales charges or
management expenses. Of course, one cannot invest directly in an index.
8
<PAGE>
- --------------------------------------------------------------------------------
TEMPLETON GROWTH FUND -- CLASS I
Total Return Index Comparison
$10,000 Investment (8/31/85 -- 8/31/95)
[Graph appears here showing comparison between
Templeton Growth Fund, MSCI Worldwide Index
and the CPI]
<TABLE>
<CAPTION>
8/85 8/95
<S> <C> <C>
Templeton Growth Fund/1/ $10,000 $37,800
MSCI World Index/2/ $10,000 $39,400
CPI/3/ $10,000 $14,184
</TABLE>
/1/ Includes all sales charges and represents the change in value of an
investment over the period shown. Total return assumes reinvestment of
dividends and capital gains. Past performance is not predictive of future
results.
/2/ Index is unmanaged and includes reinvested dividends.
/3/ Source: U.S. Bureau of Labor Statistics.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TEMPLETON GROWTH FUND
Periods ended August 31, 1995
<TABLE>
<CAPTION>
Since Since
Inception Inception
One-Year Five-Year Ten-Year (11/29/54) (05/01/95)
<S> <C> <C> <C> <C> <C>
Average Annual
Total Return/1/
Class I Shares 3.21% 13.67% 14.22% 14.59% --
Aggregate
Total Return/2/
Class II Shares -- -- -- -- 6.04%
Cumulative
Total Return/3/
Class I Shares 9.51% 101.30% 301.20% 27,166.05% --
Class II Shares -- -- -- -- 8.12%
</TABLE>
1. Average annual total return represents the average annual change in value of
an investment over the specified periods. The figures have been restated to
reflect the current maximum 5.75% initial sales charge for Class I Shares.
See note below.
2. Aggregate total return represents the change in value of an investment over
the period indicated and reflects the deduction of the maximum 1.00% initial
sales charge and 1.00% contingent deferred sales charge (CDSC) for Class II
Shares, applicable to shares redeemed within the first 18 months of investment.
Since Class II shares have existed for less than one year, average annual total
returns are not provided. See note below.
3. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the maximum 5.75% initial sales
charge for Class I Shares, or the maximum 1.00% initial sales charge and 1.00%
CDSC for Class II Shares, applicable to shares redeemed within the first 18
months of investment. See note below.
Note: Prior to July 1, 1992, Class I shares were offered at a higher sales
charge. Thus, actual total returns to purchasers of shares during that period
would have been different than noted above. Class II shares, which the Fund
began offering on May 1, 1995, are subject to different fees and expenses, which
will affect their performance. Please see the prospectus for more details
regarding Class I and Class II shares.
All total return calculations reflect the deduction of a proportional share of
Fund expenses on an annual basis and assume that all dividends and capital gains
distributions were reinvested when paid. Investment return and principal value
will fluctuate with market conditions, currencies and the economic and political
climates of 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 predictive of future results.
- --------------------------------------------------------------------------------
9
<PAGE>
TEMPLETON GROWTH FUND -- CLASS I
If you had invested $10,000 in the Templeton Growth Fund at its inception, it
would be worth over $2.5 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 August 31, 1995.*
[Mountain Chart appears here showing on initial Investment of $10,000 made on
11/29/54 (initial net asset value of $9,425) would be valued at $2,569,855 on
8/31/95]
*The amount of capital gains distributions accepted in shares was $1,321,071.
The total amount of dividends reinvested was $712,685. 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 9. Class II shares, which the fund began offering on May 1,
1995, are subject to different fees and expenses, which will affect their
performance. Please see the prospectus for more details regarding Class I and
Class II shares.
10
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Highlights
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the year)
<TABLE>
<CAPTION>
CLASS I
----------------------------------------------------------
YEAR ENDED AUGUST 31
----------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of year $ 18.95 $ 17.47 $ 15.81 $ 16.14 $ 15.23
---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income .39 .29 .32 .41 .45
Net realized and
unrealized gain 1.20 2.58 2.97 .92 1.68
---------- ---------- ---------- ---------- ----------
Total from investment
operations 1.59 2.87 3.29 1.33 2.13
---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net in-
vestment income (.29) (.27) (.36) (.44) (.54)
Distributions from net
realized gains (1.29) (1.12) (1.27) (1.22) (.68)
---------- ---------- ---------- ---------- ----------
Total distributions (1.58) (1.39) (1.63) (1.66) (1.22)
---------- ---------- ---------- ---------- ----------
Change in net asset
value .01 1.48 1.66 (.33) .91
---------- ---------- ---------- ---------- ----------
Net asset value, end of
year $ 18.96 $ 18.95 $ 17.47 $ 15.81 $ 16.14
========== ========== ========== ========== ==========
TOTAL RETURN * 9.51% 17.47% 23.57% 9.22% 15.95%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(000) $6,964,298 $5,611,560 $4,033,911 $3,268,644 $2,895,684
Ratio of expenses to av-
erage net assets 1.12% 1.10% 1.03% .88% .75%
Ratio of net investment
income to average net
assets 2.40% 1.76% 2.10% 2.62% 3.09%
Portfolio turnover rate 35.21% 27.35% 28.89% 24.46% 30.28%
</TABLE>
*TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS.
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Highlights (cont.)
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
CLASS II
---------------
FOR THE PERIOD
MAY 1, 1995+
THROUGH
AUGUST 31, 1995
---------------
<S> <C>
Net asset value, beginning of period $ 17.48
-------
Income from investment operations:
Net investment income .04
Net realized and unrealized gain 1.38
-------
Total from investment operations 1.42
-------
Net asset value, end of period $ 18.90
=======
TOTAL RETURN * 8.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $42,548
Ratio of expenses to average net assets 1.86%**
Ratio of net investment income to average net assets 1.61%**
</TABLE>
*TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS OR THE DEFERRED CONTINGENT
SALES CHARGE. NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED.
+COMMENCEMENT OF OFFERING OF SALES.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS: 72.4%
- --------------------------------------------------------------------------------
Aerospace & Military Tech: 1.5%
Boeing Co. U.S. 600,000 $ 38,250,000
British Aerospace PLC U.K. 5,781,764 59,209,971
Celsius Industrier AB, B Swe. 692,600 9,912,172
--------------
107,372,143
- --------------------------------------------------------------------------------
Appliances & Household Durables: 1.4%
Electrolux AB, B Swe. 650,000 28,352,598
Email Ltd. Aus. 6,557,700 17,498,241
Sony Corp. Jpn. 1,000,000 54,615,188
--------------
100,466,027
- --------------------------------------------------------------------------------
Automobiles: 4.5%
Bayerische Motorenwerke
(BMW) Ger. 44,500 24,705,381
Ciadea SA Arg. 1,640,173 6,728,410
Consorcio G Grupo Dina
SA de CV Mex. 407,000 311,979
Consorcio G Grupo Dina
SA de CV, ADR Mex. 28,400 95,850
Ford Motor Co. U.S. 2,666,600 81,664,625
General Motors Corp. U.S. 1,100,000 51,700,000
Peugeot SA Fr. 236,650 31,266,141
Regie Nationale des
Usines Renault SA Fr. 119,450 3,378,752
Volkswagen AG Ger. 160,000 48,937,330
Volvo AB, B Swe. 3,398,400 67,485,825
--------------
316,274,293
- --------------------------------------------------------------------------------
Banking: 12.1%
ABN AMRO NV Neth. 954,400 36,714,385
ABN Amro NV, trading
cpn. Neth. 954,400 957,010
Argentaria Corporacion
Bancaria de Espana SA Sp. 861,491 32,901,785
Australia & New Zealand
Banking Group Ltd. Aus. 14,546,182 59,041,486
Banco Bilbao Vizcaya Sp. 1,350,000 40,848,748
Banco Central Hispano Sp. 928,000 19,348,748
Banco Popular Espanol Sp. 200,000 30,776,591
Banco Portugues de
Investimento SA Port. 378,790 5,590,538
Bank of Ireland Irl. 2,174,000 12,548,535
BankAmerica Corp. U.S. 500,000 28,250,000
Bankinter SA Sp. 200,000 17,381,598
Barclays PLC U.K. 3,729,700 41,667,453
Canadian Imperial Bank
of Commerce Can. 500,000 12,288,214
Chase Manhattan Corp. U.S. 800,000 46,000,000
Chemical Banking Corp. U.S. 600,000 34,950,000
Citicorp U.S. 1,403,000 93,124,125
CS Holding, reg. Swtz. 305,150 25,008,143
</TABLE>
13
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- --------------------------------------------------------------------------------
Banking (cont.)
Ergo Bank SA Gr. 128,880 $ 5,924,701
HSBC Holdings PLC H.K. 7,617,741 102,344,021
National Australia Bank
Ltd. Aus. 5,614,209 48,191,360
National Bank of Canada Can. 2,485,600 20,593,781
National Westminster
Bank PLC U.K. 3,607,407 32,940,650
Philippine National Bank Phil. 28,993 307,602
Royal Bank of Canada Can. 474,920 10,566,550
Shinhan Bank Co. Ltd. Kor. 817,850 18,849,052
*Shinhan Bank Co. Ltd.,
new Kor. 863 19,332
Standard Chartered PLC U.K. 3,353,200 22,476,763
Svenska Handelsbanken, A Swe. 1,250,000 19,515,736
Westpac Banking Corp. Aus. 8,534,063 32,073,056
--------------
851,199,963
- --------------------------------------------------------------------------------
Broadcasting & Publishing: 0.9%
News Corp. Ltd. Aus. 1,573,980 8,115,921
News International PLC Aus. 6,529,600 33,130,263
Oriental Press Group
Limited H.K. 17,999,000 7,266,099
Sing Tao Holdings Ltd. H.K. 3,561,800 2,116,559
South China Morning Post
(Holdings) Ltd. H.K. 19,997,100 11,043,483
--------------
61,672,325
- --------------------------------------------------------------------------------
Building Materials & Components: 1.1%
*Owens Corning Fiberglas
Corp. U.S. 1,607,900 63,110,075
Pioneer International
Ltd. Aus. 5,021,749 13,060,073
--------------
76,170,148
- --------------------------------------------------------------------------------
Business & Public Services: 0.1%
Horizon/CMS Healthcare
Corp. U.S. 1 4
Wheelabrator
Technologies Inc. U.S. 43,400 678,125
--------------
678,129
- --------------------------------------------------------------------------------
Chemicals: 2.7%
Akzo Nobel NV Neth. 395,942 46,680,491
Bayer AG Ger. 108,800 28,111,608
DSM NV Neth. 700,000 57,897,296
European Vinyls Corp.
EVC International NV Neth. 460,271 19,552,077
Lyondell Petrochemical
Co. U.S. 768,600 21,136,500
Rhone-Poulenc SA, A Fr. 958,500 19,650,536
--------------
193,028,508
- --------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- --------------------------------------------------------------------------------
Construction & Housing: 0.1%
Kaufman & Broad Home
Corp. U.S. 760,100 $ 10,166,338
- --------------------------------------------------------------------------------
Data Processing & Reproduction: 0.4%
*Quantum Corp. U.S. 1,200,000 28,800,000
- --------------------------------------------------------------------------------
Electrical & Electronics: 2.2%
Alcatel Alsthom SA Fr. 400,000 40,091,513
Asea AB, A Swe. 770,000 68,544,742
G.P. Batteries
International Ltd. Sing. 261,000 704,700
Gold Peak Industries
(Holdings) Ltd. H.K. 7,080,000 3,269,733
Hitachi Ltd. Jpn. 364,000 3,983,431
Philips Electronics NV Neth. 850,000 38,122,151
--------------
154,716,270
- --------------------------------------------------------------------------------
Energy Equipment & Services: 0.3%
Koninklijke Pakhoed NV Neth. 150,100 4,506,193
Sun Co. Inc. U.S. 600,000 15,975,000
--------------
20,481,193
- --------------------------------------------------------------------------------
Energy Sources: 4.9%
Repsol SA Sp. 1,029,700 32,306,406
Saga Petroleum AS, A Nor. 142,800 1,801,963
Saga Petroleum AS, B Nor. 1,557,110 18,921,106
Shell Transport &
Trading Co. PLC U.K. 83,700 5,806,688
Shell Transport &
Trading Co. PLC U.K. 687,000 7,840,251
Societe Elf Aquitane SA Fr. 805,000 58,918,579
Texaco Inc. U.S. 800,000 51,800,000
Total SA, B Fr. 1,125,300 66,067,589
Transportadora de Gas
del Sur SA, ADR B Arg. 387,900 4,024,463
USX-Marathon Group Inc. U.S. 1,051,000 21,676,875
Valero Energy Corp. U.S. 1,811,700 41,442,638
YPF Sociedad Anonima Arg. 1,400,000 24,933,714
YPF Sociedad Anonima,
ADR Arg. 700,000 12,337,500
--------------
347,877,772
- --------------------------------------------------------------------------------
Financial Services: 4.0%
Axa SA Fr. 358,200 19,831,216
Dean Witter Discover &
Co. U.S. 265,410 13,535,910
Federal National
Mortgage Assn. U.S. 730,000 69,623,750
Merrill Lynch & Co. Inc. U.S. 2,792,800 160,935,100
Peregrine Investments
Holdings Ltd. H.K. 10,000,000 14,274,642
--------------
278,200,618
- --------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- --------------------------------------------------------------------------------
Food & Household Products: 1.7%
Burns Philp & Co. Ltd. Aus. 236,700 $ 503,500
C.P. Pokphand Co. Ltd. H.K. 12,203,000 4,808,055
Cafe de Coral Holdings
Ltd. H.K. 762,000 181,124
Embotelladora Andina SA,
ADR Chil. 546,900 18,936,413
Goodman Fielder Ltd. Aus. 9,490,444 8,631,502
*Grupo Embotellador de
Mexico SA de CV, GDR Mex. 1,684,750 20,638,188
Grupo Embotellador de
Mexico SA, B Mex. 187,200 1,178,390
Hillsdown Holdings PLC U.K. 13,423,076 39,781,025
Vitro SA Mex. 6,090,720 18,344,957
Vitro SA, ADR Mex. 492,840 4,558,770
--------------
117,561,924
- --------------------------------------------------------------------------------
Forest Products & Paper: 4.9%
Assidomaen AB Swe. 500,000 10,476,869
Boise Cascade Corp. U.S. 708,000 30,355,500
Carter Holt Harvey Ltd. N.Z. 1,379,500 3,141,735
Crown Vantage Inc. U.S. 64,510 1,564,368
Enso Gutzeit OY, R Fin. 852,300 7,379,977
Fletcher Challenge Ltd. N.Z. 16,707,271 45,442,438
Fletcher Challenge Ltd. Aus. 223,875 277,654
Fletcher Challenge Ltd. N.Z. 9,926,817 12,272,794
Georgia-Pacific Corp. U.S. 1,092,200 98,298,000
International Paper Co. U.S. 377,400 30,899,625
James River Corp. U.S. 468,200 16,269,950
Metsa Serla OY, B Fin. 472,300 18,618,427
PT Pabrik Kertas Tjiwi
Kimia, fgn. Indo. 2,217,500 4,891,904
Repola OY Fin. 1,242,900 23,761,678
St. Joe Paper Co. U.S. 600,000 36,750,000
--------------
340,400,919
- --------------------------------------------------------------------------------
Health & Personal Care: 0.7%
Ciba-Geigy AG Swtz. 65,000 46,014,357
Windmere Corp. U.S. 227,200 1,760,800
--------------
47,775,157
- --------------------------------------------------------------------------------
Industrial Components: 0.7%
Goodyear Tire & Rubber
Co. U.S. 1,189,000 47,560,000
- --------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------
Insurance: 4.8%
Ace Ltd. Bmu. 1,100,000 $ 33,825,000
Aetna Life & Casualty
Co. U.S. 48,700 3,323,775
Allstate Corp. U.S. 695,276 23,552,475
American International
Group Inc. U.S. 461,250 37,188,281
Baloise-Holding Swtz. 17,777 35,555,475
Cigna Corp. U.S. 445,172 43,070,391
International
Nederlanden Group Neth. 510,000 28,328,168
International
Nederlanden Group,
trading cpn. Neth. 510,000 595,077
Kemper Corp. U.S. 651,697 31,281,456
London Insurance Group
Inc. Can. 300,000 5,892,757
National Mutual Asia
Ltd. H.K. 7,324,000 5,251,027
Reliastar Financial
Corp. U.S. 552,200 20,983,600
Travelers Inc. U.S. 662,961 31,822,128
W.R. Berkley Corp. U.S. 700,000 30,012,500
*Zurich Reinsurance
Centre Holdings, Inc. U.S. 153,900 4,540,050
--------------
335,222,160
- ------------------------------------------------------------------------------
Leisure & Tourism: 0.1%
Grand Hotel Holdings
Ltd. H.K. 1,272,000 435,448
- ------------------------------------------------------------------------------
Machinery & Engineering: 0.1%
Saurer AG Swtz. 700 226,565
- ------------------------------------------------------------------------------
Merchandising: 1.8%
Argyll Group PLC U.K. 5,079,983 27,745,687
Cifra SA, B Mex. 15,000,000 19,123,506
K Mart Corp. U.S. 1,800,000 24,525,000
Limited Inc. U.S. 1,800,000 33,300,000
Sears Roebuck & Co. U.S. 750,000 24,281,250
--------------
128,975,443
- ------------------------------------------------------------------------------
Metals & Mining: 3.6%
Alcan Aluminum Ltd. Can. 1,016,850 33,226,061
Alcan Australia Ltd. Aus. 384,600 968,431
*Alumax Inc. U.S. 1,088,000 37,128,000
*Arbed SA Lux. 86,725 11,733,957
*Asturiana del Zinc SA Sp. 875,000 9,278,823
Elkem AS Nor. 164,200 1,995,264
Goldfields Ltd. Aus. 204,428 510,144
Maanshan Iron & Steel
Co. Ltd., H Chn. 17,230,000 2,871,296
</TABLE>
17
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- --------------------------------------------------------------------------------
Metals & Mining (cont.)
Outokumpu OY, A Fin. 1,891,584 $ 35,258,017
*Outokumpu OY, wts. Fin. 705,750 184,939
Pechiney SA, invt. ctf. Fr. 475,900 30,825,164
Pohang Iron & Steel Co.
Ltd. Kor. 191,155 18,138,958
Renison Goldfields
Consolidated Ltd. Aus. 2,500,000 10,429,116
Reynolds Metals Co. U.S. 537,808 32,134,028
*Union Miniere NPV Bel. 400,000 26,165,872
--------------
250,848,070
- --------------------------------------------------------------------------------
Misc Materials & Commodities: 0.4%
De Beers Consolidated
Mines Ltd. S.AF. 580,150 14,875,641
Pechiney International
SA Fr. 600,000 14,392,536
--------------
29,268,177
- --------------------------------------------------------------------------------
Multi-Industry: 3.4%
BTR Nylex Ltd. Aus. 13,000,000 34,493,126
Cheung Kong Holdings
Ltd. H.K. 8,000,000 39,684,795
Dairy Farm International
Holdings Ltd. H.K. 32,315,340 30,053,266
DESC SA, B Mex. 2,480,100 10,118,018
Fotex First Hungarian-
American Photo-Service Hun. 157,944 198,874
Jardine Matheson
Holdings Ltd.
(Singapore) H.K. 3,979,340 28,651,248
Jardine Strategic
Holdings Ltd.
(Singapore) H.K. 10,101,952 31,720,129
Pacific Dunlop Ltd. Aus. 14,000,000 33,042,446
Swire Pacific Ltd., A H.K. 3,941,000 29,528,226
Swire Pacific Ltd., B H.K. 3,660,500 4,350,420
--------------
241,840,548
- --------------------------------------------------------------------------------
Real Estate: 2.0%
American Health
Properties Inc. U.S. 243,300 5,291,775
Beacon Properties Corp U.S. 200,000 4,300,000
Carr Realty Corp. U.S. 158,900 3,058,825
Federal Realty
Investment Trust U.S. 300,000 6,562,500
General Growth
Properties U.S. 500,000 10,062,500
Hang Lung Development
Co. Ltd. H.K. 15,374,000 23,832,580
*Hang Lung Development
Co. Ltd., wts. H.K. 840,000 130,216
IRT Property Co. U.S. 592,300 5,700,888
Meditrust Inc. U.S. 700,000 23,012,500
National Health
Investors Inc. U.S. 500,000 14,437,500
Nationwide Health
Properties Inc. U.S. 400,000 15,650,000
Rouse Co. U.S. 1,200,000 25,350,000
</TABLE>
18
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- --------------------------------------------------------------------------------
Real Estate (cont.)
Tai Cheung Holdings Ltd. H.K. 1,317,412 $ 1,140,248
*Tasman Properties Ltd. N.Z. 8,000,000 119,729
Universal Health Realty
Income Trust U.S. 200,000 3,275,000
--------------
141,924,261
- --------------------------------------------------------------------------------
Recreation, Other Consumer Goods: 0.1%
Gibson Greetings Inc. U.S. 137,200 1,972,250
- --------------------------------------------------------------------------------
Telecommunications: 3.7%
Compania de
Telecomunicaciones de
Chile SA, ADR Chil. 54,600 3,985,800
STET (Sta Finanziaria
Telefonica Torino) SPA Itl. 6,276,000 19,184,794
STET (Sta Finanziaria
Telefonica Torino) SPA,
di Risp Itl. 2,782,000 6,814,284
Telecom Argentina Stet
France SA, ADR Arg. 583,200 25,369,200
Telecom Italia Mobile,
di risp Itl. 8,178,050 8,208,877
Telecom Italia Spa, di
Risp Itl. 8,178,050 10,493,874
Telefonica de Argentina
SA, B, ADR Arg. 1,200,000 29,700,000
Telefonica de Espana SA Sp. 4,210,000 57,064,264
Telefonos de Mexico SA,
L Mex. 14,118,470 23,039,543
Telefonos de Mexico SA,
L, ADR Mex. 2,400,000 78,600,000
--------------
262,460,636
- --------------------------------------------------------------------------------
Textiles & Apparel: 0.4%
Daehan Synthetic Fiber
Co. Ltd. Kor. 18,550 2,375,129
*Fruit of the Loom Inc.,
A U.S. 700,000 16,450,000
Winsor Industrial Corp.
Ltd. H.K. 6,585,000 7,230,655
--------------
26,055,784
- --------------------------------------------------------------------------------
Transportation: 3.6%
American President Cos.
Ltd. U.S. 892,200 26,208,375
Anangel-American
Shipholdings Ltd., ADR Grd. 39,100 591,387
*Bremer Vulkan Verbund
AG Ger. 400,000 22,125,341
British Airways PLC U.K. 3,987,100 26,354,652
Cathay Pacific Airways
Ltd. H.K. 19,604,000 29,503,501
IMC Holdings Ltd. H.K. 6,860,000 4,891,771
Koninklijke Nedlloyd NV Neth. 300,000 10,428,441
Malaysian International
Shipping Corp. Bhd.,
fgn. Mal. 2,745,333 7,867,387
Malaysian International
Shipping Corp. Bhd.,
fgn. Mal. 4,000,000 11,484,870
OMI Corp. U.S. 680,100 5,270,775
Peninsular & Oriental
Steam Navigation Co. U.K. 1,400,000 12,056,231
*Qantas Airways Ltd.,
ADR, 144a Aus. 481,700 7,887,838
Shun Tak Holdings H.K. 28,906,000 24,271,929
</TABLE>
19
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- --------------------------------------------------------------------------------
Transportation (cont.)
Singapore Airlines Ltd.,
fgn. Sing. 2,378,000 $ 20,081,633
Stolt Nielsen SA U.S. 463,500 13,267,688
*Swissair Schweizerische
Luftverkehr AG Swtz. 33,350 21,034,898
Transportacion Maritima
Mexicana SA de CV, L,
ADR Mex. 366,500 3,161,063
*USAir Group Inc. U.S. 380,300 3,089,938
--------------
249,577,718
- --------------------------------------------------------------------------------
Utilities Electrical & Gas: 4.1%
American Electric Power
Co. Inc. U.S. 900,000 30,712,500
British Gas PLC U.K. 3,860,000 16,590,429
Centerior Energy Corp. U.S. 2,000,000 21,500,000
Cia Energetica de Minas
Gerais, ADR Braz. 7,000 157,726
Compania Sevillana de
Electricidad Sp. 3,534,492 22,404,091
Electricidad de Caracas Venz. 9,693,606 7,470,636
Entergy Corp. U.S. 1,350,000 32,400,000
Iberdrola SA Sp. 4,754,448 36,505,609
Long Island Lighting Co. U.S. 1,650,000 28,050,000
Niagara Mohawk Power
Corp. U.S. 2,000,000 24,000,000
Shandong Huaneng Power Chn. 900,000 7,537,500
Texas Utilties Electric
Co. U.S. 1,300,000 45,175,000
VEBA AG Ger. 400,000 15,286,104
--------------
287,789,595
- --------------------------------------------------------------------------------
Wholesale & International Trade: 0.1%
Sime Darby Hongkong Ltd. H.K. 6,660,000 8,087,327
--------------
TOTAL COMMON STOCKS (cost $4,000,191,812 ) 5,065,085,709
- --------------------------------------------------------------------------------
PREFERRED STOCKS: 1.7%
- --------------------------------------------------------------------------------
ABN Amro NV, conv., pfd. Neth. 46,000 1,680,097
American Health
Properties Psychiatric
Group, pfd. U.S. 24,330 395,363
Bayerische Motorenwerke
(BMW), pfd. Ger. 15,000 5,885,559
Cemig-Cia Energetica de
Minas Gerais, pfd. Braz. 400,000,000 9,012,898
Petrobras-Petroleo
Brasileiro SA, pfd. Braz. 67,583,000 6,418,517
Reynolds Metals Co.,
conv., pfd. U.S. 45,715 2,451,467
Telebras-
Telecomunicacoes
Brasileiras SA, pfd. Braz. 875,600,000 37,845,096
Telebras-
Telecomunicacoes
Brasileiras SA, pfd.,
ADR Braz. 1,000,000 43,500,000
Telesp-Telecomunicacoes
de Sao Paulo SA, pfd. Braz. 71,334,000 11,716,877
USAir Group Inc., B,
conv., pfd. U.S. 101,000 3,030,000
--------------
TOTAL PREFERRED STOCKS (cost $95,867,947 ) 121,935,874
- --------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, August 31, 1995 (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY** VALUE
<C> <S> <C> <C> <C>
- ----------------------------------------------------------------------------------
BONDS: 6.2%
- ----------------------------------------------------------------------------------
Arbed SA, 2.50%, conv.,
7/15/03 Ger. 3,250,000 $ 1,926,090
C.S. Holding Finance BV,
4.875%, conv., 11/19/02 U.S. 4,615,000 5,803,363
Government of Australia:
7.00%, 8/15/98 Aus. 40,000,000 29,319,683
6.25%, 3/15/99 Aus. 40,000,000 28,361,483
7.0%, 4/15/00 Aus. 40,000,000 28,491,367
Jardine Strategic
Holdings Ltd., 7.50%,
conv., pfd. U.S. 9,050,000 9,728,750
Softe SA, 4.25%, conv.,
7/30/98, 144a Itl. 2,880,000,000 1,998,431
U.S. Treasury Notes:
7.75%, 3/31/96 U.S. 10,000,000 10,114,100
7.375%, 5/15/96 U.S. 10,000,000 10,110,900
7.25%, 8/31/96 U.S. 10,000,000 10,140,600
8.50%, 7/15/97 U.S. 50,000,000 52,304,500
7.875%, 1/15/98 U.S. 10,000,000 10,432,800
6.375%, 7/15/99 U.S. 78,000,000 78,950,820
6.0%, 10/15/99 U.S. 78,000,000 77,890,020
6.375%, 1/15/00 U.S. 78,000,000 78,987,480
--------------
TOTAL BONDS (cost $430,872,857 ) 434,560,387
- ----------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 19.5% (cost $1,367,803,139 )
- ----------------------------------------------------------------------------------
U.S. Treasury Bills,
5.25% to 5.41% with
maturities to 11/2/95 U.S. 1,375,779,000 1,368,101,153
- ----------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.8% (cost $5,894,735,755 ) 6,989,683,123
OTHER ASSETS, LESS LIABILITIES: 0.2% 17,163,451
--------------
TOTAL NET ASSETS: 100.0% $7,006,846,574
==============
</TABLE>
*NON-INCOME PRODUCING.
**CURRENCY OF COUNTRIES INDICATED.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1995
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (identified cost
$5,894,735,755) $6,989,683,123
Cash 295,605
Receivables:
Investment securities sold 41,606,562
Capital shares sold 18,247,823
Dividends and interest 22,111,079
--------------
Total assets 7,071,944,192
--------------
Liabilities:
Payables:
Investment securities purchased 51,732,643
Capital shares redeemed 5,768,211
Accrued expenses 7,596,764
--------------
Total liabilities 65,097,618
--------------
Net assets, at value $7,006,846,574
==============
Net assets consist of:
Undistributed net investment income $ 118,129,870
Net unrealized appreciation 1,094,947,368
Accumulated net realized gain 505,193,550
Net capital paid in on shares of capital stock 5,288,575,786
--------------
Net assets, at value $7,006,846,574
==============
Class I:
Net asset value per share ($6,964,298,306 / 367,396,849 shares
outstanding) $ 18.96
==============
Maximum offering price ($18.96 / 94.25%) $ 20.12
==============
Class II:
Net asset value per share ($42,548,268 / 2,251,399
shares outstanding) $ 18.90
==============
Maximum offering price ($18.90 / 99.00%) $ 19.09
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
for the year ended August 31, 1995
<TABLE>
<S> <C> <C>
Investment income:
(net of $11,241,200 foreign taxes withheld)
Dividends $148,342,810
Interest 62,606,383
------------
Total income $210,949,193
Expenses:
Management fees (Note 3) 37,081,820
Administrative fees (Note 3) 5,069,519
Distribution fees (Note 3)
Class I 14,111,534
Class II 59,025
Transfer agent fees (Note 3) 5,903,000
Custodian fees 2,151,652
Reports to shareholders 1,905,000
Audit fees 64,000
Legal fees (Note 3) 95,000
Registration and filing fees 442,000
Directors' fees and expenses 122,000
Other 119,930
------------
Total expenses 67,124,480
------------
Net investment income 143,824,713
Realized and unrealized gain (loss):
Net realized gain (loss) on:
Investments 540,308,331
Foreign currency transactions (4,031,550)
------------
536,276,781
Net unrealized depreciation on investments (70,834,341)
------------
Net realized and unrealized gain 465,442,440
------------
Net increase in net assets resulting from
operations $609,267,153
============
</TABLE>
22
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
for the years ended August 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 143,824,713 $ 83,751,095
Net realized gain on investments and for-
eign currency transactions 536,276,781 421,625,512
Net unrealized appreciation (depreciation) (70,834,341) 257,341,592
-------------- --------------
Net increase in net assets resulting from
operations 609,267,153 762,718,199
Distributions to shareholders:
From net investment income
Class I (89,841,133) (65,003,617)
From net realized gain
Class I (391,713,252) (267,596,888)
Capital share transactions (Note 2)
Class I 1,225,661,539 1,147,531,339
Class II 41,911,887 --
-------------- --------------
Net increase in net assets 1,395,286,194 1,577,649,033
Net assets:
Beginning of year 5,611,560,380 4,033,911,347
-------------- --------------
End of year $7,006,846,574 $5,611,560,380
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 exchange or
NASDAQ are valued at the last reported sales prices on the principal exchange
on which the securities are traded. Over-the-counter 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 foreign securities it customar-
ily enters into a foreign exchange contract 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 of assets and liabilities other than investments in securities at the end
of the fiscal period, resulting from changes in the exchange rates.
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 a trade date basis. Dividend income
is recorded on the ex-dividend date. Certain dividend income on foreign securi-
ties is recorded as soon as information is available to the Fund. Interest in-
come 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.
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
Effective May 1, 1995, the Fund offered two classes of shares: Class I shares
and Class II shares. Shares of each class are identical except for their ini-
tial sales load, a contingent deferred sales charge on Class II shares, distri-
bution fees, and voting rights on matters affecting a single class. All Fund
shares outstanding before May 1, 1995 were designated as Class I shares. At
24
<PAGE>
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
August 31, 1995, there were, for each class, 600 million shares of capital
stock authorized ($0.01 par value). Transactions in the Fund's shares were as
follows:
<TABLE>
<CAPTION>
CLASS I
--------------------------------------------------------
YEAR ENDED YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1994
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares sold 79,757,433 $1,395,342,956 77,882,578 $1,386,166,876
Shares issued on
reinvestment
of distributions 25,222,610 425,065,372 17,120,603 290,562,169
Shares redeemed (33,772,952) (594,746,789) (29,766,676) (529,197,706)
----------- -------------- ----------- --------------
Net increase 71,207,091 $1,225,661,539 65,236,505 $1,147,531,339
=========== ============== =========== ==============
</TABLE>
<TABLE>
<CAPTION>
CLASS II
----------------------
FOR THE PERIOD
MAY 1, 1995 THROUGH
AUGUST 31, 1995
----------------------
SHARES AMOUNT
--------- -----------
<S> <C> <C>
Shares sold 2,265,948 $42,184,648
Shares redeemed (14,549) (272,761)
--------- -----------
Net increase 2,251,399 $41,911,887
========= ===========
</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 Fund pays TGII monthly
an administrative fee of 0.15% per annum on the first $200 million of the
Company's aggregate 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 year ended August 31, 1995, FTD received net
commissions of $5,685,601 from the sale of the Fund's shares and FTIS received
fees of $5,903,000.
Under the distribution plans for Class I and Class II shares, the Fund reim-
burses FTD quarterly for FTD's costs and expenses in connection with any activ-
ity that is primarily intended to result in a sale of Fund shares, subject to a
maximum of 0.25% and 1.00% per annum of the average daily net assets of Class I
and Class II shares, respectively. Under the Class I distribution plan, costs
and expenses exceeding the maximum may be reimbursed in subsequent periods. At
August 31, 1995, there were no unreimbursed expenses. Class II shares redeemed
within 18 months are subject to a contingent deferred sales charge. Contingent
deferred sales charges of $7,640 were paid to FTD for the year ended August 31,
1995.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $95,000 for the year ended August 31,
1995.
25
<PAGE>
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (cont.)
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the
year ended August 31, 1995 aggregated $2,139,453,077 and $1,810,919,396, re-
spectively. The cost of securities for federal income tax purposes is
$5,894,729,813. Realized gains and losses are reported on an identified cost
basis.
At August 31, 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 $1,243,020,307
Unrealized depreciation (148,066,997)
--------------
Net unrealized appreciation $1,094,953,310
==============
</TABLE>
26
<PAGE>
TEMPLETON GROWTH FUND, INC.
Independent Auditor's Report
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders
Templeton Growth Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the investment portfolio of Templeton Growth Fund, Inc. as of August 31, 1995,
and the related statement of operations for the year then ended, the statement
of changes in net assets for each of the two years in the period then ended,
and the financial highlights for the periods indicated in the accompanying fi-
nancial statements. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our au-
dits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of Au-
gust 31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Tem-
pleton Growth Fund, Inc. as of August 31, 1995, the results of its operations,
the changes in its net assets and the financial highlights for the periods in-
dicated, in conformity with generally accepted accounting principles.
/s/ McGladrey & Pullen, LLP
New York, New York
September 29, 1995
27
<PAGE>
TEMPLETON GROWTH FUND, INC.
Auditors
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, New York 10017-2416
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 a current prospectus of the
Templeton Growth Fund, Inc, which contains more complete information including
charges and expenses. Like any investment in securities, the value of the
Fund's portfolio will be subject to the risk of loss from market, currency,
economic, political, and other factors, 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.
[RECYCLING LOGO APPEARS HERE] TL101 A95 10/95
TEMPLETON
GROWTH
FUND, INC.
Annual Report
August 31, 1995
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
