<PAGE>
Templeton Growth Fund
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 chief investment officer
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 former 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.
Mark Holowesko
Chief Investment Officer of Global Equity Research
April 15, 1996
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton Growth Fund
for the period ended February 29, 1996.
During the six months under review, economic stability, low interest rates and
moderate inflation characterized most global economies. Seeking to capitalize on
these favorable investment conditions, individual and institutional investors
rushed to purchase equity securities, which ultimately led to higher stock
prices across a variety of markets in both developed and developing countries.
No market epitomized this demand for equities more than the U.S., where inflows
of capital into mutual funds
<PAGE>
reached record levels. Despite potentially troublesome concerns about the
federal budget and debate over tax reform, news of all-time market highs
appeared nearly every week, further encouraging new investments and pushing U.S.
stock prices and market multiples even higher.
Unlike many bullish U.S. investors, we held firmly to the Templeton approach as
we monitored various factors, particularly leveraged stock purchases that were
approaching historically high levels. Because we were attracted to lower-priced,
less-volatile stocks that offered higher yields, we purchased shares of real
estate investment trusts (REITs) and utility companies. We bought the REIT
shares at relatively low prices, which reflected the poor performance of
residential and commercial real estate markets since 1990. In our opinion, the
real estate market has the potential to recover because economic growth should
lead to increased demand for office space, and lower interest rates and higher
employment rates should cause the value of residential properties to appreciate.
Utilities stocks presented us with attractive yields, while trading at
uncharacteristically low prices due to increased fear of deregulation and
competition.
Although several European equity markets performed well during the period,
political unrest and labor discord
- --------------------------------------------------------------------------------
Templeton Growth Fund
Geographic Distribution on 2/29/96
Based on Total Net Assets
[PIE CHART APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
United States Stocks 26.9%
European Stocks 25.7%
Asian Stocks 9.6%
Australian & New
Zealand Stocks 5.1%
Latin American Stocks 5.6%
Other Stocks 1.9%
Fixed-Income Securities 5.5%
Short-Term Obligations &
Other Net Assets 19.7%
</TABLE>
kept many investors wary of this region. We felt, however, that these concerns
were already reflected in European stock prices and that value opportunities
still existed. Therefore, we increased our exposure to Spain and France even
though labor concerns in each country appeared to be dominating the headlines.
Unlike many other investors, we also purchased European cyclical stocks, which
were out of favor due to their poor performance during last year's recession.
Many companies that survived the recession have been utilizing their free cash
flow to reduce debt and lower operating and labor costs. We believe that, with
restructured balance sheets, these European cyclical companies should be well-
suited to
2
<PAGE>
successfully weather the highs and lows of current and future business cycles.
Latin American equity markets continued to recover from the "Tequila Effect,"
which depressed stock prices following Mexico's December 1994 currency
devaluation. We attempted to take advantage of lower Mexican equity prices in
1995 by establishing new positions and adding to existing ones. We reaped the
rewards of this strategy as Mexico's Bolsa index rose more than 37% in U.S.
dollar terms in the last three months of the reporting period alone. During this
same time, the peso appreciated versus the dollar, which also benefited many of
the Fund's Mexican holdings. While Mexico has not recovered entirely from this
crisis, there is evidence that the government's austerity program has been
successful in restoring investor confidence after significant amounts of capital
fled the country only one year ago.
Our Latin American stock purchases, however, were not limited to Mexico. The
Fund's overall Latin American exposure almost doubled since late February 1995,
which enabled us to participate in stock-price appreciation across a variety of
markets in this region. One example is Brazil, where strong economic growth and
government reform benefited our holdings of large utility and telecom
Templeton Growth Fund
<TABLE>
<CAPTION>
Top 10 Holdings on 2/29/96
Based on Total Net Assets
- --------------------------------------------------------------------------------
% of Total
Name, Industry, Country Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Merrill Lynch & Co. Inc.;
Financial Services, United States 2.0%
- --------------------------------------------------------------------------------
Ford Motor Co.; Automobiles,
United States 1.4%
- --------------------------------------------------------------------------------
Citicorp; Banking, United States 1.4%
- --------------------------------------------------------------------------------
Sony Corp.; Appliances & Household
Durables, Japan 1.4%
- --------------------------------------------------------------------------------
Telmex-Telefonos de Mexico SA;
Telecommunications, Mexico 1.2%
- --------------------------------------------------------------------------------
HSBC Holdings PLC; Banking,
Hong Kong 1.2%
- --------------------------------------------------------------------------------
Volvo AB, B; Automobiles, Sweden 1.1%
- --------------------------------------------------------------------------------
Georgia-Pacific Corp.;
Forest Products & Paper, United States 1.0%
- --------------------------------------------------------------------------------
U.S. Treasury Note, 6.375%, 1/15/00;
Government Bond, United States 1.0%
- --------------------------------------------------------------------------------
U.S. Treasury Note, 6.375%, 7/15/99;
Government Bond, United States 1.0%
- --------------------------------------------------------------------------------
</TABLE>
For a complete list of portfolio holdings, please see page 13 of this report.
munications companies. These companies have huge asset bases and serve a growing
number of customers, but their stocks have been trading at a substantial
discount to book value largely because of the government's involvement within
these industries. As privatization becomes more prevalent, such companies should
become more efficient, enabling them to take better advantage of the region's
growing demand.
3
<PAGE>
Due to the significant growth potential and value opportunities that we believe
exist in Asia, we increased our exposure there from 8.2% to 9.6% of total net
assets. We continued to discover potential bargains as military turmoil in the
straits of Taiwan, and Hong Kong's upcoming reversion to China, depressed equity
valuations to levels we felt were unjustifiably low. With more than 3.1 billion
people experiencing rising standards of living and consumption levels far below
those of many developed countries, we believe that Asia represents a region of
almost unfathomable demand potential.
This discussion reflects the strategies we employed for the Fund during the six-
month period, and includes our opinions as of the close of the period. Since
economic and market conditions are constantly changing, our strategies and our
evaluations, conclusions and decisions regarding portfolio holdings may change
as new circumstances arise. Although past performance of a specific investment
or sector cannot guarantee future performance, such information can be useful in
analyzing securities we purchase or sell for the Fund.
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. While short-term
volatility can be disconcerting, declines of as much as 40% to 50% are not
unusual in emerging markets. For example, the Hong Kong equity market has
increased 700% in the last 15 years, but has suffered six declines of more than
20% during that time.* These risks are discussed in the Fund's prospectus.
We thank you for your continued investment in the Fund and would like to
reaffirm our dedication and commitment to searching the world for the best
possible securities for the Fund's portfolio.
Sincerely,
/s/ Mark Holowesko
Mark Holowesko, CFA
President
Templeton Growth Fund, Inc.
*Source: Bloomberg. Based on quarterly percentage change over 15 years ended
March 31, 1996.
4
<PAGE>
The Following is an Interview
with Mark Holowesko, Portfolio
Manager of Templeton Growth
Fund:
Q & A
What is your criteria for choosing stocks?
We use what is commonly called a "bottom-up, value" style of investing. "Bottom-
up" investing means that we do not attempt to guess the future direction of
economies, currencies or stock markets, as many investors try to do. For
instance, investors may believe that U.S. stocks will appreciate, so they
purchase shares of companies they think will benefit from the direction of the
overall market. We, on the other hand, try to determine which companies should
perform well, regardless of the direction of the markets. "Value" investing
describes the process we use as we attempt to determine the true worth of a
company's stock, regardless of its market price. This involves rigorous analysis
of a company's balance sheet, income statement, and the prospects for the
company's goods or services in the marketplace.
5
<PAGE>
How do you think the recent rally in the U.S. stock market will affect foreign
markets?
In the short term, volatility in the U.S. market will probably affect many
markets, particularly those closely tied to the dollar. High returns in the U.S.
market have temporarily directed investor attention away from international
markets, which has led to lower returns in those markets. However, over the long
term, the fundamental value of individual companies is what drives stock
performance, and we believe that these selloffs generally present opportunities
to find good value at low prices.
What effect do you think Hong Kong's upcoming reversion to China will have on
the Hong Kong market?
Although the outcome of this change is uncertain, knowledge of the situation is
widespread, and we believe that any uncertainty surrounding it has already been
reflected in stock prices. Considering the large amounts of money and investment
capital that flow from Hong Kong to China, the sharing of technical expertise
between the two countries, and the magnitude of Chinese investments in Hong
Kong, it is difficult to believe that China would intentionally destroy such a
prized possession.
What is your feeling about Japanese stocks? Are you shying away from them, or is
it possible to find bargain-priced stocks there?
Currently, we are not buying many Japanese stocks. We believe they are
overvalued, and although price/earnings ratios have decreased since 1994, they
continue to be high. Furthermore, returns on Japanese equities in 1995 were 40%
lower than their average return for the prior 15 years.
This market becomes even less attractive when one focuses on the effects of last
year's banking crisis, which forced two of Japan's largest thrifts into
bankruptcy and resulted in more than $700 billion in unrecoverable loans.
Japanese depositors have been withdrawing significant amounts from local banks,
and many citizens are moving their savings from banks to post offices. The
Japanese post office can invest only in Japan's government
6
<PAGE>
bonds, or other related securities, which diminishes the liquidity of the "real"
economy.
Nevertheless, we do own shares of some Japanese companies that we believe are
strong and that remain in the forefront of technological innovation. Among these
is Sony, a company that, despite Japan's troubles, continues to exhibit strength
in new product development and constant evaluation of its operations. Based on
the strengths we see in some companies, as well as our belief in the likelihood
of an eventual bailout of the Japanese banking system, we feel comfortable with
our current Japanese holdings.
7
<PAGE>
Performance Summary
Class I Shares
The Templeton Growth Fund Class I Shares reported a total return of 6.60% for
the six-month period ended February 29, 1996. 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. We have
always maintained a long-term perspective when managing the Fund and encourage
shareholders to view their investments in a similar manner. As you can see from
the table to the right, the Fund delivered a cumulative total return of more
than 262% for the 10-year period ended February 29, 1996.
As measured by net asset value, the price of the Fund's Class I Shares decreased
from $18.96 on August 31, 1995 to $18.03 on February 29, 1996. During this time,
shareholders received distributions of 43.5 cents ($0.435) per share in dividend
income and $1.61 per share in capital gains, of which $1.43 represented long-
term gains and 18 cents ($0.18) 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
sale of securities in the portfolio.
<TABLE>
<CAPTION>
Templeton Growth Fund
Class I Shares
Periods Ended 2/29/96
Since
Inception
One-Year Five-Year Ten-Year (11/29/54)
<S> <C> <C> <C> <C>
Cumulative
Total Return/1/ 21.90% 100.87% 262.06% 28,965.17%
Average Annual
Total Return/2/ 14.91% 13.61% 13.06% 14.58%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the indicated periods, and does not include the maximum 5.75% initial sales
charge.
2. Average annual total return represents the average annual change in value of
an investment over the indicated periods, and includes the maximum 5.75% initial
sales charge.
All total return figures assume reinvestment of dividends and capital gains when
paid. Prior to July 1, 1992, Fund shares were offered at a higher initial
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 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.
8
<PAGE>
Performance Summary
Class II Shares
The Templeton Growth Fund Class II Shares reported a total return of 6.20% for
the six-month period ended February 29, 1996. Total return measures the change
in value of an investment, assuming reinvestment of dividends and capital gains
distributions, and does not include sales charges.
As measured by net asset value, the price of the Fund's Class II Shares
decreased from $18.90 on August 31, 1995 to $17.93 on February 29, 1996. During
this time, shareholders received distributions of 40.28 cents ($0.4028) per
share in dividend income and $1.61 per share in capital gains, of which $1.43
represented long-term gains and 18 cents ($0.18) 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 sale of securities in the portfolio.
Templeton Growth Fund
Class II Shares
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Periods Ended 2/29/96
Since
Inception
Six-Month (5/1/95)
<S> <C> <C>
Cumulative
Total Return/1/ 6.20% 14.90%
Aggregate
Total Return/2/ 4.08% 12.53%
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the indicated periods. It does not include the 1.0% initial sales charge or the
1.0% Contingent Deferred Sales Charge (CDSC), applicable to shares redeemed
within the first 18 months of investment.
2. Aggregate total return represents the change in value of an investment over
the indicated periods. It includes the 1.0% initial sales charge and 1.0% CDSC,
applicable to shares redeemed within the first 18 months of investment. Since
Class II Shares have been in existence for less than one year, average annual
total returns are not provided.
All total return figures assume reinvestment of dividends and capital gains when
paid. Investment return and principal value will fluctuate with market
conditions, currencies and the economic and political climates 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 Shares
If you had invested $10,000 in the Templeton Growth Fund at inception, it would
be worth over $2.7 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 29, 1996.*
[MOUNTAIN CHART APPEARS HERE SHOWING AN INITIAL INVESTMENT of $10,000 MADE ON
10/29/54 (INITIAL NET ASSET VALUE OF $9,425) WOULD BE VALUED AT $2,739,415 ON
2/29/96]
*The amount of capital gains distributions accepted in shares was $1,488,327.
The total amount of dividends reinvested was $741,286. 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 8. 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--CLASS I
(For a share outstanding throughout
the period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 29, 1996 ----------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
----------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period $ 18.96 $ 18.95 $ 17.47 $ 15.81 $ 16.14 $ 15.23
---------- ---------- ---------- ---------- ---------- ----------
Income from investment
operations:
Net investment income .19 .39 .29 .32 .41 .45
Net realized and
unrealized gain .93 1.20 2.58 2.97 .92 1.68
---------- ---------- ---------- ---------- ---------- ----------
Total from investment
operations 1.12 1.59 2.87 3.29 1.33 2.13
---------- ---------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net in-
vestment income (.44) (.29) (.27) (.36) (.44) (.54)
Distributions from net
realized gains (1.61) (1.29) (1.12) (1.27) (1.22) (.68)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (2.05) (1.58) (1.39) (1.63) (1.66) (1.22)
---------- ---------- ---------- ---------- ---------- ----------
Change in net asset
value (.93) .01 1.48 1.66 (.33) .91
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $ 18.03 $ 18.96 $ 18.95 $ 17.47 $ 15.81 $ 16.14
========== ========== ========== ========== ========== ==========
TOTAL RETURN* 6.60% 9.51% 17.47% 23.57% 9.22% 15.95%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (000) $7,755,248 $6,964,298 $5,611,560 $4,033,911 $3,268,644 $2,895,684
Ratio of expenses to av-
erage net assets 1.05%** 1.12% 1.10% 1.03% .88% .75%
Ratio of net investment
income to average net
assets 2.25%** 2.40% 1.76% 2.10% 2.62% 3.09%
Portfolio turnover rate 10.93% 35.21% 27.35% 28.89% 24.46% 30.28%
Average commission rate
paid (per share) $ .0172
</TABLE>
*TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS. NOT ANNUALIZED FOR PERIODS
OF LESS THAN ONE YEAR.
**ANNUALIZED.
11
<PAGE>
Templeton Growth Fund, Inc.
Financial Highlights (cont.)
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE--CLASS II
(For a share outstanding throughout
the period)
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED MAY 1, 1995+
FEBRUARY 29, 1996 THROUGH
(UNAUDITED) AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
Net asset value, beginning of period $ 18.90 $ 17.48
-------- -------
Income from investment operations:
Net investment income .26 .04
Net realized and unrealized gain .78 1.38
-------- -------
Total from investment operations 1.04 1.42
-------- -------
Distributions:
Dividends from net investment income (.40) --
Distributions from net realized gains (1.61) --
-------- -------
Total distributions (2.01) --
-------- -------
Change in net asset value (.97) 1.42
-------- -------
Net asset value, end of period $ 17.93 $ 18.90
======== =======
TOTAL RETURN* 6.20% 8.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $149,653 $42,548
Ratio of expenses to average net assets 1.85%** 1.86%**
Ratio of net investment income to average
net assets 1.43%** 1.61%**
Portfolio turnover rate 10.93% 35.21%
Average commission rate paid (per share) $ .0172
</TABLE>
*TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS OR THE CONTINGENT DEFERRED
SALES CHARGE. NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
**ANNUALIZED.
+COMMENCEMENT OF SALES.
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS: 73.3%
- -------------------------------------------------------------------------------
Aerospace & Military Technical Systems:
1.3%
Boeing Co. U.S. 625,500 $ 50,743,688
Celsius AB, B Swe. 692,600 19,033,674
General Motors Corp., H U.S. 641,300 36,714,425
--------------
106,491,787
- -------------------------------------------------------------------------------
Appliances & Household Durables: 2.0%
Electrolux AB, B Swe. 700,000 34,377,778
Email Ltd. Aus. 6,557,700 17,345,097
Sony Corp. Jpn. 1,850,000 108,440,384
--------------
160,163,259
- -------------------------------------------------------------------------------
Automobiles: 5.3%
Bayerische Motorenwerke (BMW) Ger. 44,500 24,949,309
*Ciadea SA Arg. 1,640,173 7,384,101
*Consorcio G Grupo Dina SA de CV Mex. 372,000 136,811
*Consorcio G Grupo Dina SA de
CV, ADR Mex. 18,400 29,900
Ford Motor Co. U.S. 3,516,600 109,893,750
General Motors Corp. U.S. 1,500,000 76,875,000
Peugeot SA Fr. 274,650 41,079,954
Regie Nationale des Usines
Renault SA Fr. 419,450 12,306,296
Volkswagen AG Ger. 160,000 60,964,823
Volvo AB, B Swe. 3,941,000 84,366,593
--------------
417,986,537
- -------------------------------------------------------------------------------
Banking: 11.1%
ABN AMRO NV Neth. 954,400 44,348,904
Argentaria Corporacion Bancaria
de Espana SA Sp. 1,000,000 45,078,160
Australia & New Zealand Banking
Group Ltd. Aus. 14,546,182 71,500,501
Banco Bilbao Vizcaya Sp. 1,350,000 52,566,951
Banco Central Hispano Sp. 1,200,000 26,853,011
Banco Popular Espanol Sp. 200,000 36,434,140
Bank of Ireland Irl. 1,221,000 8,475,399
BankAmerica Corp. U.S. 500,000 35,625,000
Bankinter SA Sp. 200,000 21,488,872
Canadian Imperial Bank of
Commerce Can. 500,000 14,852,207
Chase Manhattan Corp. U.S. 520,800 38,799,600
Chemical Banking Corp. U.S. 600,000 42,975,000
Citicorp U.S. 1,403,000 109,434,000
Den Norske Bank Nor. 1,048,000 3,404,617
HSBC Holdings PLC H.K. 5,844,541 93,743,689
National Australia Bank Ltd. Aus. 7,483,199 71,792,672
National Bank of Canada Can. 2,485,600 20,156,941
National Westminster Bank PLC U.K. 3,607,407 38,196,139
</TABLE>
13
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------
Banking (cont.)
*Philippine National Bank Phil. 1 $ 12
Royal Bank of Canada Can. 474,920 10,861,694
Shinhan Bank Co. Ltd. Kor. 932,628 22,824,984
Svenska Handelsbanken, A Swe. 1,250,000 24,074,074
Westpac Banking Corp. Aus. 8,534,063 40,317,483
--------------
873,804,050
- ------------------------------------------------------------------------------
Broadcasting & Publishing: 0.8%
News Corp. Ltd. Aus. 2,434,497 12,282,938
News International PLC Aus. 6,529,600 30,516,357
Oriental Press Group Limited H.K. 17,999,000 7,974,049
Sing Tao Holdings Ltd. H.K. 3,561,800 1,854,408
South China Morning Post
(Holdings) Ltd. H.K. 19,997,100 14,097,220
--------------
66,724,972
- ------------------------------------------------------------------------------
Building Materials & Components: 0.9%
*Owens Corning U.S. 1,607,900 65,320,938
Pioneer International Ltd. Aus. 2,863,049 8,491,992
--------------
73,812,930
- ------------------------------------------------------------------------------
Business & Public Services: 0.1%
Wheelabrator Technologies Inc. U.S. 43,400 688,979
WMX Technologies Inc. U.S. 334,600 9,536,100
--------------
10,225,079
- ------------------------------------------------------------------------------
Chemicals: 2.3%
Akzo Nobel NV Neth. 395,942 44,036,312
DSM NV Neth. 700,000 65,437,648
European Vinyls Corp. EVC
International NV Neth. 460,271 14,901,564
Kemira OY, 144A Fin. 404,600 3,649,616
Lyondell Petrochemical Co. U.S. 768,600 20,656,125
Rhone-Poulenc SA, A Fr. 1,258,500 31,381,052
--------------
180,062,317
- ------------------------------------------------------------------------------
Construction & Housing: 0.1%
Kaufman & Broad Home Corp. U.S. 760,100 11,686,538
- ------------------------------------------------------------------------------
Data Processing & Reproduction: 0.7%
International Business Machines
Corp. U.S. 300,000 36,787,500
*Quantum Corp. U.S. 1,200,000 20,550,000
--------------
57,337,500
- ------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------
Electrical & Electronics: 3.9%
Alcatel Alsthom SA Fr. 600,000 $ 53,215,104
Asea AB, A Swe. 770,000 77,342,222
G.P. Batteries International
Ltd. Sing. 261,000 644,670
Gold Peak Industries (Holdings)
Ltd. H.K. 7,080,000 3,640,326
Hitachi Ltd. Jpn. 6,000,000 60,519,555
Motorola Inc. U.S. 1,167,600 63,342,300
Philips Electronics NV Neth. 1,100,000 45,769,301
--------------
304,473,478
- ------------------------------------------------------------------------------
Energy Equipment & Services: 0.3%
Koninklijke Pakhoed NV Neth. 150,100 3,865,784
Sun Co. Inc. U.S. 600,000 17,475,000
--------------
21,340,784
- ------------------------------------------------------------------------------
Energy Sources: 5.2%
Norsk Hydro AS Nor. 182,100 7,764,549
Repsol SA Sp. 1,029,700 37,599,418
Saga Petroleum AS, A Nor. 142,800 1,739,668
Saga Petroleum AS, B Nor. 1,557,110 17,388,774
Shell Transport & Trading Co.
PLC U.K. 83,700 6,570,450
Shell Transport & Trading Co.
PLC U.K. 687,000 8,884,755
Societe Elf Aquitane SA Fr. 955,000 65,888,853
Texaco Inc. U.S. 835,600 66,639,100
Total SA, B Fr. 1,125,300 74,267,724
Transportadora de Gas del Sur
SA, ADR B Arg. 1,400,000 17,325,000
USX-Marathon Group Inc. U.S. 1,051,000 19,443,500
Valero Energy Corp. U.S. 1,811,700 42,801,413
YPF Sociedad Anonima Arg. 1,400,000 27,312,291
YPF Sociedad Anonima, ADR Arg. 1,100,000 21,312,500
--------------
414,937,995
- ------------------------------------------------------------------------------
Financial Services: 3.5%
Axa SA Fr. 409,371 26,449,278
Dean Witter Discover & Co. U.S. 265,410 14,265,788
Federal National Mortgage Assn. U.S. 1,855,600 58,683,350
Merrill Lynch & Co. Inc. U.S. 2,792,800 160,935,100
Peregrine Investments Holdings
Ltd. H.K. 10,000,000 17,074,338
--------------
277,407,854
- ------------------------------------------------------------------------------
Food & Household Products: 2.0%
Archer Daniels Midland Co. U.S. 984,500 18,951,625
Burns Philp & Co. Ltd. Aus. 8,238,900 18,390,824
C.P. Pokphand Co. Ltd. H.K. 12,203,000 6,432,269
</TABLE>
15
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Food & Household Products (cont.)
Cafe de Coral Holdings Ltd. H.K. 762,000 $ 226,701
Embotelladora Andina SA, ADR Chil. 511,500 18,414,000
Goodman Fielder Ltd. Aus. 8,438,123 8,966,227
*Grupo Embotellador de Mexico SA
de CV, GDR Mex. 1,684,750 14,530,969
*Grupo Embotellador de Mexico
SA, B Mex. 561,600 829,109
Hillsdown Holdings PLC U.K. 18,052,476 47,440,273
Panamerican Beverages Inc., A Pan. 317,500 12,858,750
Vitro SA Mex. 6,090,720 10,780,742
Vitro SA, ADR Mex. 492,840 2,587,410
--------------
160,408,899
- -------------------------------------------------------------------------------
Forest Products & Paper: 4.9%
Aracruz Celulose SA, ADR Braz. 2,020,700 14,650,075
Assidomaen AB Swe. 687,390 15,428,087
Boise Cascade Corp. U.S. 432,600 15,249,150
Carter Holt Harvey Ltd. N.Z. 1,994,700 4,269,897
*Crown Vantage Inc. U.S. 64,510 967,650
Enso Gutzeit OY, R Fin. 2,335,300 16,595,206
Fletcher Challenge Ltd. N.Z. 16,707,271 38,350,641
Fletcher Challenge Ltd. Forestry
Division Aus. 223,875 309,766
Fletcher Challenge Ltd. Forestry
Division N.Z. 12,297,349 17,135,413
Georgia-Pacific Corp. U.S. 1,275,000 80,484,375
International Paper Co. U.S. 754,800 26,889,750
Kymmene Corp. Fin. 286,000 7,991,112
Metsa Serla OY, B Fin. 522,200 16,199,195
Mo Och Domsjoe AB, B Swe. 371,504 18,327,531
Norske Skogindustrier AS, A Nor. 44,600 1,344,423
+PT Pabrik Kertas Tjiwi Kimia,
fgn. Indo. 18,249,351 18,513,263
Repola OY Fin. 1,754,000 35,077,685
St. Joe Paper Co. U.S. 562,600 34,318,600
Stora Kopparbergs Bergslags AB,
B Swe. 1,500,000 19,333,333
Svenska Cellulosa AB, B Swe. 563,900 9,523,644
--------------
390,958,796
- -------------------------------------------------------------------------------
Health & Personal Care: 0.8%
Ciba-Geigy AG Swtz. 65,000 58,060,884
Windmere Corp. U.S. 227,200 2,272,000
--------------
60,332,884
- -------------------------------------------------------------------------------
Industrial Components: 0.9%
Goodyear Tire & Rubber Co. U.S. 1,532,600 72,798,500
- -------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- ------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- ------------------------------------------------------------------------------
Insurance: 4.6%
Ace Ltd. Bmu. 1,100,000 $ 51,425,000
Allstate Corp. U.S. 695,276 29,809,959
American International Group
Inc. U.S. 461,250 44,568,281
Baloise-Holding Swtz. 19,844 38,397,064
Cigna Corp. U.S. 445,172 52,752,882
Ing Groep NV Neth. 510,000 33,859,564
London Insurance Group Inc. Can. 300,000 6,123,118
National Mutual Asia Ltd. H.K. 8,822,000 8,558,512
Reliastar Financial Corp. U.S. 552,200 26,505,600
*Transport Holdings Inc., A U.S. 3,314 146,645
Travelers Inc. U.S. 662,961 44,335,517
W.R. Berkley Corp. U.S. 627,100 28,376,275
Zurich Reinsurance Centre
Holdings, Inc. U.S. 18,400 584,200
--------------
365,442,617
- ------------------------------------------------------------------------------
Machinery & Engineering: 0.1%
*Saurer AG Swtz. 700 294,829
- ------------------------------------------------------------------------------
Merchandising: 2.1%
Argyll Group PLC U.K. 4,309,883 19,482,010
*Cifra SA, B Mex. 17,206,000 20,303,396
Dairy Farm International
Holdings Ltd. H.K. 32,924,715 32,101,597
K Mart Corp. U.S. 1,800,000 12,600,000
Limited Inc. U.S. 2,750,000 48,125,000
W.H. Smith Group U.K. 4,788,500 30,743,959
--------------
163,355,962
- ------------------------------------------------------------------------------
Metals & Mining: 3.9%
Alcan Aluminum Ltd. Can. 1,016,850 31,038,812
*Alumax Inc. U.S. 1,088,000 39,304,000
*Arbed SA Lux. 86,725 9,667,987
*Asturiana del Zinc SA Sp. 1,300,000 12,549,986
Elkem AS Nor. 164,200 1,974,729
Maanshan Iron & Steel Co. Ltd.,
H Chn. 17,230,000 3,075,632
Outokumpu OY, A Fin. 2,259,804 36,293,686
*Outokumpu OY, wts. expire
6/28/96 Fin. 705,750 33,383
*Pechiney SA, A Fr. 1,518,775 61,612,062
Pohang Iron & Steel Co. Ltd. Kor. 394,933 30,310,748
Reynolds Metals Co. U.S. 724,908 37,423,376
RGC Ltd. Aus. 2,401,000 12,260,769
*Union Miniere NPV Bel. 400,000 29,440,953
--------------
304,986,123
- ------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Miscellaneous Materials & Commodities:
0.2%
De Beers Consolidated Mines Ltd. S.AF. 580,150 $ 18,426,972
- -------------------------------------------------------------------------------
Multi-Industry: 2.4%
Cheung Kong Holdings Ltd. H.K. 8,000,000 55,620,950
*DESC SA, B Mex. 2,480,100 9,625,142
*Fotex First Hungarian-American
Photo-Service Hun. 110,594 94,118
Jardine Matheson Holdings Ltd.
(Singapore) H.K. 3,979,340 31,834,720
Jardine Strategic Holdings Ltd.
(Singapore) H.K. 11,280,152 38,352,517
Pacific Dunlop Ltd. Aus. 15,000,000 35,546,926
Swire Pacific Ltd., A H.K. 1,259,000 10,992,575
Swire Pacific Ltd., B H.K. 3,169,000 4,570,535
--------------
186,637,483
- -------------------------------------------------------------------------------
Real Estate: 2.8%
American Health Properties Inc. U.S. 320,700 7,456,275
Beacon Properties Corp U.S. 416,000 10,920,000
Carr Realty Corp. U.S. 200,000 4,925,000
Credit Foncier de France SA Fr. 6,000 87,244
Federal Realty Investment Trust U.S. 300,000 6,750,000
General Growth Properties U.S. 905,300 20,821,900
Hang Lung Development Co. Ltd. H.K. 15,803,000 29,537,745
*Hang Lung Development Co. Ltd.,
wts. expire 10/31/97 H.K. 840,000 228,175
Highwood Properties Inc., REIT U.S. 463,700 13,911,000
Hong Kong Land H.K. 8,843,000 19,189,310
IRT Property Co. U.S. 592,300 5,404,738
Meditrust Inc. U.S. 1,000,000 33,250,000
National Health Investors Inc. U.S. 500,000 16,312,500
Nationwide Health Properties
Inc. U.S. 400,000 16,800,000
Rouse Co. U.S. 1,200,000 24,150,000
Summit Properties Inc., REIT U.S. 160,800 3,256,200
Tai Cheung Holdings Ltd. H.K. 1,317,412 1,175,819
*Trans Tasman Properties Ltd. N.Z. 279,038 144,633
Universal Health Realty Income
Trust U.S. 200,000 3,825,000
--------------
218,145,539
- -------------------------------------------------------------------------------
Telecommunications: 3.7%
Alcatel Cable SA Fr. 23,615 1,917,382
STET (Sta Finanziaria Telefonica
Torino) SPA Itl. 6,276,000 19,173,116
STET (Sta Finanziaria Telefonica
Torino) SPA, di Risp Itl. 5,608,232 12,647,140
Telecom Argentina Stet France
SA, ADR Arg. 583,200 25,223,400
Telecom Italia Spa, di Risp Itl. 19,283,461 26,599,672
Telefonica de Argentina SA, B,
ADR Arg. 1,200,000 31,350,000
Telefonica de Espana SA Sp. 4,768,300 78,389,874
</TABLE>
18
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Telecommunications (cont.)
Telefonica de Peru, B Per. 183,960 $ 389,627
Telmex-Telefonos de Mexico SA, L Mex. 14,118,470 21,509,981
Telmex-Telefonos de Mexico SA,
L, ADR Mex. 2,400,000 73,200,000
--------------
290,400,192
- -------------------------------------------------------------------------------
Textiles & Apparel: 0.3%
Daehan Synthetic Fiber Co. Ltd. Kor. 18,550 1,803,917
*Fruit of the Loom Inc., A U.S. 700,000 17,762,500
Winsor Industrial Corp. Ltd. H.K. 6,716,000 6,385,104
--------------
25,951,521
- -------------------------------------------------------------------------------
Transportation: 3.0%
American President Cos. Ltd. U.S. 892,200 18,736,200
Anangel-American Shipholdings
Ltd., ADR Gr. 39,100 449,650
*Bremer Vulkan Verbund AG Ger. 400,000 6,069,266
British Airways PLC U.K. 2,000,000 15,598,903
Cathay Pacific Airways Ltd. H.K. 23,244,000 42,543,895
IMC Holdings Ltd. H.K. 6,860,000 3,549,393
Koninklijke Nedlloyd NV Neth. 300,000 6,541,943
Malaysian International Shipping
Corp. Bhd., fgn. Mal. 2,745,333 7,648,367
Malaysian International Shipping
Corp. Bhd., fgn. Mal. 4,000,000 11,358,165
*OMI Corp. U.S. 640,100 4,960,775
Peninsular & Oriental Steam
Navigation Co. U.K. 1,400,000 11,219,565
Qantas Airways Ltd., ADR, 144A Aus. 481,700 8,760,919
Shun Tak Holdings H.K. 28,906,000 21,312,422
Singapore Airlines Ltd., fgn. Sing. 2,878,000 28,938,960
Stolt Nielsen SA U.S. 463,500 8,169,188
*Stolt Nielsen SA, ADR U.S. 231,750 4,171,500
*Swissair Schweizerische
Luftverkehr AG Swtz. 33,350 32,126,147
*Transportacion Maritima
Mexicana SA de CV, L, ADR Mex. 209,900 1,705,438
--------------
233,860,696
- -------------------------------------------------------------------------------
Utilities Electrical & Gas: 4.0%
American Electric Power Co. Inc. U.S. 1,089,600 46,716,600
British Gas PLC U.K. 4,915,000 17,849,175
Centerior Energy Corp. U.S. 2,026,000 16,967,750
*CEZ CSK. 39,532 1,419,973
Cia Energetica de Minas Gerais,
ADR Braz. 7,000 177,710
Compania Sevillana de
Electricidad Sp. 3,534,492 27,097,249
Electricidad de Caracas Venz. 10,851,045 6,831,076
Entergy Corp. U.S. 1,350,000 38,306,250
Iberdrola SA Sp. 6,754,448 66,570,478
Long Island Lighting Co. U.S. 1,650,000 28,875,000
</TABLE>
19
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
<C> <S> <C> <C> <C>
- -------------------------------------------------------------------------------
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------
Utilities Electrical & Gas (cont.)
New York State Electric & Gas
Corp. U.S. 500,000 $ 11,812,500
Niagara Mohawk Power Corp. Com
USD1 U.S. 3,540,600 26,554,500
Shandong Huaneng Power Chn. 900,000 8,662,500
Texas Utilities Electric Co. U.S. 61,100 2,466,913
VEBA AG Ger. 400,000 18,860,992
--------------
319,168,666
- -------------------------------------------------------------------------------
Wholesale & International Trade: 0.1%
Sime Darby Hongkong Ltd. H.K. 6,660,000 6,891,824
--------------
TOTAL COMMON STOCKS (cost $4,609,548,833) 5,794,516,583
- -------------------------------------------------------------------------------
PREFERRED STOCKS: 1.5%
- -------------------------------------------------------------------------------
ABN Amro NV, conv., pfd. Neth. 46,000 2,039,725
American Health Properties
Psychiatric Group, pfd. U.S. 24,330 371,033
Bayerische Motorenwerke (BMW),
pfd. Ger. 15,000 5,919,575
Cemig-Cia Energetica de Minas
Gerais, pfd. Braz. 419,099,884 10,639,753
*Everen Capital Corp., pfd. A U.S. 22,301 568,687
Petrobras-Petroleo Brasileiro
SA, pfd. Braz. 110,288,000 12,263,555
Reynolds Metals Co., conv., pfd. U.S. 45,715 2,217,178
Telebras-Telecomunicacoes
Brasileiras SA, pfd. Braz. 875,600,000 45,702,808
Telebras-Telecomunicacoes
Brasileiras SA, pfd., ADR Braz. 500,000 26,250,000
Telesp-Telecomunicacoes de Sao
Paulo SA, pfd. Braz. 80,000,000 13,241,940
--------------
TOTAL PREFERRED STOCKS (cost $81,260,425) 119,214,254
- -------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
Templeton Growth Fund, Inc.
Investment Portfolio, February 29, 1996 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY** VALUE
- ------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
BONDS: 5.5%
- ------------------------------------------------------------------------------
Arbed SA, 2.50%, conv.,
7/15/03 Ger. 3,250,000 $ 1,879,635
Government of Australia:
7.00%, 8/15/98 Aus. 40,000,000 29,954,515
6.25%, 3/15/99 Aus. 40,000,000 29,167,132
7.00%, 4/15/00 Aus. 40,000,000 29,386,682
Jardine Strategic Holdings
Ltd.,
7.50%, conv., 5/07/49 U.S. 9,050,000 10,701,625
Softe SA, 4.25%, conv.,
7/30/98, 144A Itl. 2,880,000,000 2,303,674
U.S. Treasury Notes:
7.75%, 3/31/96 U.S. 10,000,000 10,018,700
7.375%, 5/15/96 U.S. 10,000,000 10,043,700
7.25%, 8/31/96 U.S. 10,000,000 10,096,900
8.50%, 7/15/97 U.S. 50,000,000 52,039,000
7.875%, 1/15/98 U.S. 10,000,000 10,428,100
6.375%, 7/15/99 U.S. 78,000,000 79,815,840
6.00%, 10/15/99 U.S. 78,000,000 78,828,360
6.375%, 1/15/00 U.S. 78,000,000 79,828,320
--------------
TOTAL BONDS (cost $425,029,463) 434,492,183
- ------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 15.2% (cost
$1,203,956,547)
- ------------------------------------------------------------------------------
U.S. Treasury Bills, 4.53%
to 4.98% with
maturities to 5/02/96 U.S. 1,208,674,000 1,203,922,310
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS: 95.5% (cost
$6,319,795,268) 7,552,145,330
OTHER ASSETS, LESS LIABILITIES: 4.5% 352,755,426
--------------
TOTAL NET ASSETS: 100.0% $7,904,900,756
==============
</TABLE>
*NON-INCOME PRODUCING.
**CURRENCY OF COUNTRIES INDICATED.
+SEE NOTE 5.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
Templeton Growth Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 29, 1996 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (identified cost
$6,319,795,268) $7,552,145,330
Cash 828,889
Receivables:
Investment securities sold 367,403,309
Capital shares sold 20,141,679
Dividends and interest 22,819,128
--------------
Total assets 7,963,338,335
--------------
Liabilities:
Payables:
Investment securities purchased 47,392,396
Fund shares redeemed 4,313,210
Accrued expenses 6,731,973
--------------
Total liabilities 58,437,579
--------------
Net assets, at value $7,904,900,756
==============
Net assets consist of:
Undistributed net investment income $ 32,167,923
Net unrealized appreciation 1,232,350,062
Accumulated net realized gain 150,387,037
Net capital paid in on shares of capital stock 6,489,995,734
--------------
Net assets, at value $7,904,900,756
==============
Class I
Net asset value per share ($7,755,247,872 / 430,077,969 shares
outstanding) $ 18.03
==============
Maximum offering price ($18.03 / 94.25%) $ 19.13
==============
Class II
Net asset value per share ($149,652,884 / 8,347,455 shares
outstanding) $ 17.93
==============
Maximum offering price ($17.93 / 99.00%) $ 18.11
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
STATEMENT OF OPERATIONS
for the six months ended February 29, 1996 (unaudited)
<TABLE>
<S> <C> <C>
Investment income:
(net of $3,465,020 foreign taxes withheld)
Dividends $ 66,690,763
Interest 54,160,313
------------
Total income $120,851,076
Expenses:
Management fees (Note 3) 22,491,107
Administrative fees
(Note 3) 3,027,474
Distribution Fees (Note 3)
Class I 7,572,063
Class II 430,923
Transfer agent fees
(Note 3) 3,140,000
Custodian fees 941,762
Reports to shareholders 890,000
Audit fees 30,000
Legal fees (Note 3) 33,000
Registration and filing fees 135,884
Directors' fees and expenses 40,000
Other 52,429
------------
Total expenses 38,784,642
------------
Net investment income 82,066,434
Realized and unrealized
gain (loss):
Net realized gain (loss) on:
Investments 260,886,068
Foreign currency transactions (1,890,948)
------------
258,995,120
Net unrealized appreciation on investments 137,402,694
------------
Net realized and unrealized gain 396,397,814
------------
Net increase in net assets resulting from
operations $478,464,248
============
</TABLE>
22
<PAGE>
Templeton Growth Fund, Inc.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 29, 1996 YEAR ENDED
(UNAUDITED) AUGUST 31, 1995
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 82,066,434 $ 143,824,713
Net realized gain on investment and for-
eign currency transactions 258,995,120 536,276,781
Net unrealized appreciation (deprecia-
tion) 137,402,694 (70,834,341)
-------------- --------------
Net increase in net assets resulting
from operations 478,464,248 609,267,153
Distributions to shareholders:
From net investment income
Class I (166,519,275) (89,841,133)
Class II (1,509,106) --
From net realized gain
Class I (607,976,206) (391,713,252)
Class II (5,825,427) --
Capital share transactions (Note 2)
Class I 1,092,947,165 1,225,661,539
Class II 108,472,783 41,911,887
-------------- --------------
Net increase in net assets 898,054,182 1,395,286,194
Net assets:
Beginning of period 7,006,846,574 5,611,560,380
-------------- --------------
End of period $7,904,900,756 $7,006,846,574
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<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
Fund seeks long term capital growth through a flexible policy of investing in
stocks and debt obligations of companies and governments of any nation. 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 and listed se-
curities 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 ap-
proved 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 of 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.
e. Accounting Estimates:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
24
<PAGE>
Templeton Growth Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
The Fund offers two classes of shares: Class I shares and Class II shares.
Shares of each class are identical except for their initial sales load, a con-
tingent deferred sales charge on Class II shares, distribution fees, and voting
rights on matters affecting a single class. At February 29, 1996, there were
800 million Class I shares and 600 million Class II shares of capital stock au-
thorized ($0.01 par value). Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
CLASS I
--------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29, 1996 AUGUST 31, 1995
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares sold 42,998,825 $ 770,693,933 79,757,433 $1,395,342,956
Shares issued on
reinvestment
of distributions 40,242,084 692,247,519 25,222,610 425,065,372
Shares redeemed (20,559,789) (369,994,287) (33,772,952) (594,746,789)
----------- -------------- ----------- --------------
Net increase 62,681,120 $1,092,947,165 71,207,091 $1,225,661,539
=========== ============== =========== ==============
<CAPTION>
CLASS II
--------------------------------------------------------
FOR THE PERIOD
SIX MONTHS ENDED MAY 1, 1995 THROUGH
FEBRUARY 29, 1996 AUGUST 31, 1995
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares sold 5,902,918 $ 105,256,322 2,265,948 $ 42,184,648
Shares issued on
reinvestment
of
distributions 369,782 6,327,847 -- --
Shares redeemed (176,644) (3,111,386) (14,549) (272,761)
----------- -------------- ----------- --------------
Net increase 6,096,056 $ 108,472,783 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 Global
Advisors Ltd. (TGAL), Templeton Global Investors, Inc. (TGII), Franklin Temple-
ton Distributors, Inc. (FTD) and Franklin Templeton Investor Services, Inc.
(FTIS), the Fund's investment manager, administrative manager, principal under-
writer, and transfer agent, respectively.
The Fund pays monthly an investment management fee to TGAL 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 Fund'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 six months ended February
29, 1996, FTD received net commissions of $2,801,262 from the sale of the
Fund's shares and FTIS received fees of $3,140,000.
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
February 29, 1996, there were no unreimbursed expenses. Class II shares re-
deemed within 18 months are subject to a contingent deferred sales charge. Con-
tingent deferred sales charges of $19,499 were paid to FTD for the six months
ended February 29, 1996.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel
for the Fund, which firm received fees of $33,000 for the six months ended Feb-
ruary 29, 1996.
25
<PAGE>
Templeton Growth Fund, Inc.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 29, 1996 aggregated $945,107,647 and $617,305,577, re-
spectively. The cost of securities for federal income tax purposes is
$6,321,759,524. Realized gains and losses are reported on an identified cost
basis.
At February 29, 1996, the aggregate gross unrealized appreciation and deprecia-
tion of portfolio securities, based on cost for federal income tax purposes,
was as follows:
<TABLE>
<CAPTION>
Unrealized appreciation $1,453,077,376
<S> <C>
Unrealized depreciation (222,691,570)
--------------
Net unrealized appreciation $1,230,385,806
==============
</TABLE>
5. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" as invest-
ments in portfolio companies in which the Fund owns 5% or more of the outstand-
ing voting securities. Investments in "affiliated companies" at February 29,
1996 amounted to $18,513,263. For the six months ended February 29, 1996, divi-
dends and interest income from "affiliated companies" was $530,667.
26
<PAGE>
THE FRANKLIN TEMPLETON GROUP
Literature Request - Call today for a free descriptive brochure and prospectus
on any of the funds listed below. The prospectus contains more complete
information, including fees, charges and expenses, and should be read carefully
before investing or sending money.
Templeton Funds
Americas Government
Securities Fund
Developing Markets Trust
Foreign Fund
Global Infrastructure Fund
Global Opportunities Trust
Greater European Fund
Growth Fund
Growth and Income Fund
Income Fund
Latin America Fund
Real Estate
Securities Fund
Smaller Companies
Growth Fund
World Fund
Franklin Funds Seeking
Tax-Free Income
Federal Tax-Free
Income Fund
Federal Intermediate-Term
Tax-Free Income Fund
High Yield Tax-Free
Income Fund
Insured Tax-Free
Income Fund***
Puerto Rico Tax-Free
Income Fund
Franklin State-Specific
Funds Seeking Tax-Free
Income
Alabama
Arizona*
Arkansas**
California*
Colorado
Connecticut
Florida*
Georgia
Hawaii**
Indiana
Kentucky
Louisiana
Maryland
Massachusetts***
Michigan***
Minnesota***
Missouri
New Jersey
New York*
North Carolina
Ohio***
Oregon
Pennsylvania
Tennessee
Texas
Virginia
Washington**
Franklin Funds
Seeking Capital Growth
California Growth Fund
DynaTech Fund
Equity Fund
Global Health
Care Fund
Gold Fund
Growth Fund
International
Equity Fund
Japan Fund
Pacific Growth Fund
Small Cap Growth Fund
Franklin Funds Seeking
Growth and Income
Balance Sheet
Investment Fund
Convertible Securities Fund
Equity Income Fund
Global Utilities Fund
Income Fund
Natural Resources Fund
Premier Return Fund
Real Estate Securities Fund
Rising Dividends Fund
Strategic Income Fund
Utilities Fund
Franklin Funds Seeking
High Current Income
AGE High Income Fund
Global Government
Income Fund
Investment Grade
Income Fund
U.S. Government
Securities Fund
Franklin Funds Seeking
High Current Income and
Stability of Principal
Adjustable Rate
Securities Fund
Adjustable U.S. Government
Securities Fund
Short-Intermediate U.S.
Government
Securities Fund
Franklin Funds for
Non-U.S. Investors
Tax-Advantaged High Yield
Securities Fund
Tax-Advantaged International
Bond Fund
Tax-Advantaged U.S.
Government Securities Fund
Franklin Templeton Global
Currency Funds
German Government
Bond Fund
Global Currency Fund
High Income Currency Fund
Hard Currency Fund
Franklin Money
Market Funds
Money Fund
Federal Money Fund
Tax-Exempt Money
Fund
California Tax-Exempt
Money Fund
New York Tax-Exempt
Money Fund
IFT U.S. Treasury Money
Market Portfolio
Franklin Fund for
Corporations
Corporate Qualified
Dividend Fund
Franklin Tax-Deferred
Annuity
Franklin Valuemark
Franklin Templeton
Valuemark Income Plus
(an immediate annuity)
Fund Information: 1-800/342-5236
Shareholder Services: 1-800/632-2301
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.
*Two or more fund options available: long-term portfolio, intermediate-term
portfolio, a portfolio of insured municipal securities, and a high yield
portfolio (CA).
**The fund may invest up to 100% of its assets in bonds that pay interest
subject to the federal alternative minimum tax.
***Portfolio of insured municipal securities.
<PAGE>
TEMPLETON GROWTH
FUND, INC.
PRINCIPAL UNDERWRITER:
Franklin Templeton
Distributors, Inc.
700 Central Avenue
St. Petersburg,
Florida 33701-3628
Shareholder Services
1-800-632-2301
Fund Information
1-800-342-5236
This report must be preceded or accompanied by the 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.
TL101 S96 04/96
TEMPLETON
GROWTH
FUND, INC.
Semi-Annual Report
February 29, 1996
[LOGO OF FRANKLIN TEMPLETON APPEARS HERE]
[LOGO OF RECYCLED PAPER APPEARS HERE]
