<PAGE> 1
TEMPLETON GROWTH FUND
[PHOTO MARK G. HOLOWESKO]
Chief Investment Officer
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 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.
APRIL 15, 1997
Dear Shareholder:
We are pleased to bring you the semi-annual report of the Templeton Growth Fund,
which covers the six months ended February 28, 1997. General economic conditions
were favorable for most stock markets worldwide, and this period proved to be a
rewarding one for the Fund. Its Class I shares provided a six-month cumulative
total return of 15.15%, as discussed in the Performance Summary on page 6, while
the
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unmanaged Morgan Stanley Capital International(R) (MSCI) World Index delivered a
total return of only 11.43% for the same period.(1)
Many factors were responsible for the Fund's success. During the six months
under review, moderate economic growth, subdued inflation, and increased
liquidity contributed to rising equity prices. And despite a limited ability to
raise product prices, many companies were able to lower operating costs and
reduce their debt burdens, which led to surprisingly strong corporate profits.
The Fund's performance was also impacted by its large weightings in Europe and
emerging markets, and low exposure to a weak Japanese market. Although many of
our U.S. holdings rose in value, the Fund was hindered by its underweighting in
the U.S.
TEMPLETON GROWTH FUND - CLASS I
Total Return Index Comparison
Six-Month Performance (8/31/96-2/28/97)(1,2)
[3D GRAPH CHART]
<TABLE>
<S> <C>
Templeton Growth Fund 15.15%
MSCI World Index 11.43%
</TABLE>
1. FUND PERFORMANCE DOES NOT INCLUDE THE INITIAL SALES CHARGE AND REPRESENTS THE
CHANGE IN VALUE OF AN INVESTMENT DURING THE PERIOD SHOWN. TOTAL RETURN ASSUMES
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS AT NET ASSET VALUE. PAST PERFORMANCE
IS NOT PREDICTIVE OF FUTURE RESULTS.
2. INDEX IS UNMANAGED AND INCLUDES REINVESTED DIVIDENDS.
Most European companies performed well during the final months of 1996. Solid
restructuring efforts by corporate management generated stronger-than-expected
profits and contributed to rising levels of free cash flow for many
corporations. Although European companies continued to restructure in an attempt
to reduce costs to improve competitiveness, many of them led their global
competitors. Because we believed numerous securities in the region to be
undervalued, we maintained an overweighted position in Europe compared with the
MSCI World Index. Some of the firms included in the Fund's portfolio on
February 28, 1997, were Nokia AB, a leading manufacturer in the cellular
telecommunications industry; Sandvik AB, a major supplier of specialty steel and
drill bits; Bayerische Motorenwerke (BMW), a premier
(1) THE MSCI WORLD INDEX INCLUDES APPROXIMATELY 1,500 COMPANIES REPRESENTING THE
STOCK MARKETS OF 22 COUNTRIES, INCLUDING THE U.S., GERMANY, CANADA, AUSTRALIA,
NEW ZEALAND, AND JAPAN. THE INDEX IS NOT MANAGED ACCORDING TO ANY INVESTMENT
STRATEGY, INCLUDES NO SALES CHARGES OR MANAGEMENT EXPENSES, AND DOES NOT CONTAIN
CASH (THE FUND GENERALLY CARRIES A CERTAIN PERCENTAGE OF CASH AT ANY GIVEN
TIME). OF COURSE, ONE CANNOT INVEST DIRECTLY IN AN INDEX, AND THE INDEX IS NOT
REPRESENTATIVE OF THE FUND'S PORTFOLIO. TOTAL RETURN INCLUDES REINVESTED
DIVIDENDS.
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auto manufacturer; and British Telecommunications PLC, which announced a joint
venture during the period with the U.S. firm, MCI Communications Corp.
TEMPLETON GROWTH FUND
Geographic Distribution on 2/28/97
Based on Total Net Assets
[3D PIE CHART]
<TABLE>
<S> <C>
European Stocks 33.4%
United States Stock 29.4%
Asian Stocks 8.1%
Latin American Stocks 6.6%
Australian & New Zealand Stocks 4.0%
Middle East & African Stocks 0.6%
Other 1.0%
Fixed-Income Securities 4.7%
Short-Term Obligations & Other Net Assets 12.2%
</TABLE>
Not all of the Fund's European investments were successful. In general, our
French holdings performed poorly, particularly Peugeot SA and Regie Nationale
des Usines Renault SA. The share price of European Vinyls Corp. EVC
International NV (Netherlands) also declined. We continue to monitor these
companies' investment appeal, and believe that they have the potential to
provide the Fund with attractive returns in the future.
TEMPLETON GROWTH FUND
Top 10 Equity Holdings on 2/28/97
Based on Total Net Assets
% of Total
Name, Industry, Country Net Assets
- --------------------------------------------------------------------------------
General Motors Corp.
Automobiles, United States 2.0%
- --------------------------------------------------------------------------------
International Business Machines Corp.
Data Processing & Reproduction, United States 1.8%
- --------------------------------------------------------------------------------
Ford Motor Co.
Automobiles, United States 1.7%
- --------------------------------------------------------------------------------
Merrill Lynch & Co. Inc.
Financial Services, United States 1.5%
- --------------------------------------------------------------------------------
AT&T Corp.
Telecommunications, United States 1.5%
- --------------------------------------------------------------------------------
Philips Electronics NV
Electrical & Electronics, Netherlands 1.4%
- --------------------------------------------------------------------------------
HSBC Holdings PLC
Banking, Hong Kong 1.4%
- --------------------------------------------------------------------------------
Telecomunicacoes Brasileiras SA (Telebras), pfd.
Telecommunications, Brazil 1.4%
- --------------------------------------------------------------------------------
Bell Atlantic Corp.
Telecommunications, United States 1.4%
- --------------------------------------------------------------------------------
Telefonica de Espana SA
Telecommunications, Spain 1.3%
- --------------------------------------------------------------------------------
FOR A COMPLETE LIST OF PORTFOLIO HOLDINGS, PLEASE SEE PAGE 15 OF THIS REPORT.
Although some emerging markets posted disappointing returns during the reporting
period, most of the markets to which the Fund was exposed performed well. Of
particular note were Brazil and Hong Kong. Hong Kong securities experienced
strong price gains, despite concerns about the
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colony's reversion to Chinese control on June 30, 1997. The real estate sector
is extremely important in Hong Kong, providing a large part of total corporate
profits, and many investors believed that real estate prices and rental income
would drop, hurting overall corporate profits. However, prices were stronger
than expected, boosting profits and stock prices.
TEMPLETON GROWTH FUND
Asset Allocation on 2/28/97
Based on Total Net Assets
[3D PIE CHART]
<TABLE>
<S> <C>
Stocks 83.1%
Fixed-Income Securities 4.7%
Short-Term Obligations
& Other Net Assets 12.2%
</TABLE>
Our low exposure to the Japanese market helped the Fund's performance. Despite
Japan's attempt to absorb the massive speculative excess in its real estate
sector and equity market of more than five years ago, the Nikkei 225 Index fell
16.51%.(2) Although we actively investigate and analyze Japanese corporations,
we do not anticipate increasing our position there unless stock valuations fall
substantially.
TEMPLETON GROWTH FUND
Top 10 Countries Represented in the Fund on 2/28/97
Based on Total Net Assets
% of Total
Country Net Assets
- --------------------------------------------------------------------------------
United States 29.4%
- --------------------------------------------------------------------------------
United Kingdom 6.9%
- --------------------------------------------------------------------------------
Hong Kong 5.3%
- --------------------------------------------------------------------------------
Sweden 5.3%
- --------------------------------------------------------------------------------
France 4.9%
- --------------------------------------------------------------------------------
Spain 4.2%
- --------------------------------------------------------------------------------
Netherlands 3.1%
- --------------------------------------------------------------------------------
Australia 3.0%
- --------------------------------------------------------------------------------
Finland 2.5%
- --------------------------------------------------------------------------------
Mexico 2.3%
- --------------------------------------------------------------------------------
This discussion reflects the strategies we employed for the Fund during the six
months under review, 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
2. SOURCE: BLOOMBERG. PRICE DEPRECIATION IS MEASURED IN U.S. DOLLARS, AND
INCLUDES REINVESTED DIVIDENDS.
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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 associated with global investing related to
market, currency, economic, social, 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. Although
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 market has
increased 857% in the last 15 years, but has suffered five declines of more than
20% during that time.(3) These risks and other considerations 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.
CELEBRATING 50 YEARS
This year marks 50 years of business for Franklin Templeton. Over these years,
we have experienced profound changes in technology, regulations and customer
expectations within the mutual fund industry. As one of the largest mutual fund
families, we're proud to be an innovative industry leader, providing people like
you with an opportunity to invest in companies and governments around the globe.
In addition, we want to stress that all securities markets move both up and
down. Mixed in with the good years can be some bad years. Accordingly, mutual
fund share prices also move up and down. Every investor should expect such
fluctuations, which can be wide. When markets are going down, as well as up, we
encourage investors to maintain a long-term perspective. We thank you for your
past support and look forward to serving your investment needs in the years
ahead.
3. SOURCE: BLOOMBERG. BASED ON QUARTERLY PERCENTAGE PRICE CHANGE OVER 15 YEARS
ENDED DECEMBER 31, 1996.
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PERFORMANCE SUMMARY
CLASS I
The Templeton Growth Fund - Class I produced a cumulative total return of 15.15%
for the six-month period ended February 28, 1997. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains distributions, and does not include the 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 247% for the 10-year period ended February
28, 1997.
The price of the Fund's shares, as measured by net asset value, increased $1.42,
from $18.75 on August 31, 1996, to $20.17 on February 28, 1997. During this
time, shareholders received distributions of 48.5 cents ($0.485) per share in
dividend income and 81 cents ($0.81) per share in capital gains, of which 78.5
cents ($0.785) represented long-term gains and 2.5 cents ($0.025) 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 I
Periods Ended 2/28/97
<TABLE>
<CAPTION>
Since
Inception
One-Year Five-Year Ten-Year (11/29/54)
<S> <C> <C> <C> <C>
Cumulative
Total Return(1) 19.75% 102.14% 247.58% 34,704.28%
Average Annual
Total Return(2) 12.86% 13.76% 12.59% 14.70%
Value of $10,000
Investment(3) $ 11,286 $ 19,049 $ 32,751 $3,280,331
- --------------------------------------------------------------------------------
<CAPTION>
2/28/93 2/28/94 2/28/95 2/29/96 2/28/97
<S> <C> <C> <C> <C> <C>
One-Year
Total Return(1) 4.92% 31.86% 0.10% 21.90% 19.75%
- --------------------------------------------------------------------------------
</TABLE>
1. CUMULATIVE TOTAL RETURN REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER
THE INDICATED PERIODS, AND DOES NOT INCLUDE THE 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 CURRENT MAXIMUM 5.75%
INITIAL SALES CHARGE.
3. THESE FIGURES REPRESENT THE VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THE
FUND OVER THE SPECIFIED PERIODS AND INCLUDE THE MAXIMUM 5.75% INITIAL SALES
CHARGE.
4. ONE-YEAR TOTAL RETURN REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER
THE ONE-YEAR PERIODS ENDED ON THE SPECIFIED DATES AND DOES NOT INCLUDE THE SALES
CHARGE.
ALL CALCULATIONS ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS AT NET ASSET VALUE. 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 LOWER THAN NOTED ABOVE.
ON JANUARY 1, 1993, THE FUND IMPLEMENTED A RULE 12b-1 PLAN, WHICH AFFECTS
SUBSEQUENT PERFORMANCE. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE
WITH MARKET CONDITIONS, CURRENCIES AND THE ECONOMIC AND POLITICAL CLIMATES OF
COUNTRIES WHERE INVESTMENTS ARE MADE. EMERGING MARKETS INVOLVE HEIGHTENED RISKS
RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THE RELATIVELY
SMALL SIZE AND LESSER LIQUIDITY OF THESE MARKETS. YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL YOUR SHARES. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
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PERFORMANCE SUMMARY
CLASS II
The Templeton Growth Fund - Class II provided a cumulative total return of
14.67% for the six-month period ended February 28, 1997. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains distributions, and does not include sales charges.
The price of the Fund's shares, as measured by net asset value, increased $1.41,
from $18.57 on August 31, 1996, to $19.98 on February 28, 1997. During this
time, shareholders received distributions of 39.15 cents ($0.3915) per share in
dividend income and 81 cents ($0.81) per share in capital gains, of which 78.5
cents ($0.785) represented long-term gains and 2.5 cents ($0.025) 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
Periods Ended 2/28/97
<TABLE>
<CAPTION>
Since
Inception
One-Year (5/1/95)
<S> <C> <C>
Cumulative
Total Return(1) 18.77% 36.45%
Average Annual
Total Return(2) 16.60% 17.83%
Value of $10,000
Investment(3) $ 11,660 $ 13,506
</TABLE>
1. CUMULATIVE TOTAL RETURN REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER
THE INDICATED PERIODS AND DOES NOT INCLUDE SALES CHARGES.
2. AVERAGE ANNUAL TOTAL RETURN REPRESENTS THE AVERAGE ANNUAL CHANGE IN VALUE OF
AN INVESTMENT OVER THE INDICATED PERIODS. IT INCLUDES THE 1.0% INITIAL SALES
CHARGE AND THE 1.0% CONTINGENT DEFERRED SALES CHARGE, APPLICABLE TO SHARES
REDEEMED WITHIN THE FIRST 18 MONTHS OF INVESTMENT.
3. THESE FIGURES REPRESENT THE VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN THE
FUND OVER THE SPECIFIED PERIODS AND INCLUDE ALL SALES CHARGES.
ALL CALCULATIONS ASSUME REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS
DISTRIBUTIONS AT NET ASSET VALUE. INVESTMENT RETURN AND PRINCIPAL VALUE WILL
FLUCTUATE WITH MARKET CONDITIONS, CURRENCIES AND THE ECONOMIC AND POLITICAL
CLIMATES OF COUNTRIES WHERE INVESTMENTS ARE MADE. EMERGING MARKETS INVOLVE
HEIGHTENED RISKS RELATED TO THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED
WITH THE RELATIVELY SMALL SIZE AND LESSER LIQUIDITY OF THESE MARKETS. YOU MAY
HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. PAST PERFORMANCE IS NOT
PREDICTIVE OF FUTURE RESULTS.
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PERFORMANCE SUMMARY
ADVISOR CLASS
The Templeton Growth Fund - Advisor Class produced an aggregate total return of
4.13% for the two-month period from inception on January 1, 1997 through
February 28, 1997. The price of the Fund's shares, as measured by net asset
value, increased 80 cents ($0.80), from $19.37 on January 2, 1997 (first day of
commencement of sales), to $20.17 on February 28, 1997. Of course, past
performance is not predictive of future results.
- --------------------------------------------------------------------------------
TEMPLETON GROWTH FUND
ADVISOR CLASS
Periods Ended 2/28/97
Since
Inception
(1/1/97)
Aggregate Total Return* 4.13%
*AGGREGATE TOTAL RETURN REPRESENTS THE CHANGE IN VALUE OF AN INVESTMENT OVER THE
PERIOD INDICATED. SINCE ADVISOR CLASS SHARES HAVE BEEN IN EXISTENCE FOR LESS
THAN ONE YEAR, AVERAGE ANNUAL TOTAL RETURNS ARE NOT PROVIDED.
NOTE: INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE WITH MARKET
CONDITIONS, CURRENCIES AND THE ECONOMIC AND POLITICAL CLIMATES OF COUNTRIES
WHERE INVESTMENTS ARE MADE. EMERGING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO
THE SAME FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THE RELATIVELY SMALL SIZE
AND LESSER LIQUIDITY OF THESE MARKETS. YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL
YOUR SHARES. PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
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TEMPLETON GROWTH FUND
CLASS I
If you had invested $10,000 in the Templeton Growth Fund - Class I at inception,
it would be worth more than $3.2 million today. The chart below illustrates the
cumulative total return of a hypothetical $10,000 investment in the Fund on
November 29, 1954 (inception), with income dividends and capital gains
distributions reinvested through February 28, 1997.*
Templeton Growth Fund - Class I*
Growth of $10,000 Investment from Inception (11/29/54 - 2/28/97)
(11/29/54 - 2/28/97)
<TABLE>
<CAPTION>
Date Initial Investment Dividends Initial + Dividends Cap Gains Initial + Cap Gains Total Value
<S> <C> <C> <C> <C> <C> <C>
11/29/54 $9,425 $0 $9,425 $0 $9,425 $9,425
12/31/54 $9,576 $0 $9,576 $0 $9,576 $9,576
12/30/55 $10,250 $0 $10,250 $0 $10,250 $10,250
12/31/56 $10,726 $0 $10,726 $0 $10,726 $10,726
12/31/57 $8,911 $0 $8,911 $0 $ 8,911 $8,911
12/31/58 $13,261 $0 $13,261 $0 $13,261 $13,261
12/31/59 $15,118 $0 $15,118 $0 $15,118 $15,118
12/30/60 $17,210 $0 $17,210 $0 $17,210 $17,210
12/29/61 $20,358 $0 $20,358 $0 $20,358 $20,358
12/31/62 $17,606 $0 $17,606 $0 $17,606 $17,606
12/31/63 $18,511 $0 $18,511 $0 $18,511 $18,511
12/31/64 $23,506 $296 $23,802 $0 $23,506 $23,802
12/31/65 $28,313 $760 $29,073 $0 $28,313 $29,073
12/30/66 $26,485 $1,048 $27,532 $0 $26,485 $27,532
12/29/67 $29,632 $1,682 $31,314 $0 $29,632 $31,314
12/31/68 $40,283 $2,857 $43,140 $0 $40,283 $43,140
12/31/69 $47,446 $4,176 $51,622 $0 $47,446 $51,622
12/31/70 $43,676 $4,622 $48,298 $0 $43,676 $48,298
12/31/71 $51,555 $6,320 $57,875 $1,013 $52,568 $58,888
12/29/72 $84,354 $11,271 $95,625 $3,637 $87,992 $99,262
12/31/73 $69,086 $9,801 $78,886 $10,529 $79,615 $89,415
12/31/74 $58,718 $9,469 $68,188 $10,435 $69,154 $78,623
12/31/75 $79,076 $14,655 $93,732 $14,451 $93,527 $108,183
12/31/76 $113,384 $22,907 $136,290 $22,456 $135,840 $158,747
12/30/77 $126,956 $28,103 $155,058 $36,033 $162,989 $191,092
12/29/78 $149,482 $35,006 $184,487 $43,311 $192,793 $227,799
12/31/79 $184,072 $47,071 $231,142 $57,794 $241,866 $288,936
12/31/80 $214,609 $61,327 $275,936 $87,798 $302,407 $363,734
12/31/81 $210,085 $66,829 $276,914 $85,948 $296,032 $362,862
12/31/82 $213,478 $80,038 $293,516 $108,561 $322,039 $402,077
12/30/83 $278,228 $114,668 $392,896 $141,489 $419,717 $534,385
12/31/84 $269,463 $122,307 $391,769 $154,205 $423,667 $545,974
12/31/85 $321,206 $161,412 $482,619 $215,055 $536,261 $697,673
12/31/86 $363,902 $208,249 $572,151 $273,680 $637,582 $845,831
12/31/87 $331,668 $219,095 $550,763 $321,336 $653,004 $872,099
12/30/88 $388,784 $293,580 $682,365 $395,521 $784,305 $1,077,886
12/29/89 $445,617 $385,960 $831,578 $489,483 $935,100 $1,321,060
12/31/90 $370,405 $367,034 $737,439 $463,998 $834,403 $1,201,437
12/31/91 $436,287 $476,190 $912,476 $665,364 $1,101,650 $1,577,840
12/31/92 $406,598 $482,422 $889,020 $755,314 $1,161,912 $1,644,334
12/31/93 $498,209 $623,674 $1,121,884 $1,060,095 $1,558,305 $2,181,979
12/30/94 $458,907 $610,067 $1,068,974 $1,130,853 $1,589,760 $2,199,827
12/29/95 $490,575 $713,328 $1,203,903 $1,432,194 $1,922,768 $2,636,096
12/31/96 $552,498 $881,788 $1,434,286 $1,743,583 $2,296,081 $3,177,869
2/28/97 $570,311 $910,218 $1,480,529 $1,799,799 $2,370,110 $3,280,331
</TABLE>
*The amount of capital gains distributions accepted in shares was $1,799,799.
The total amount of dividends reinvested was $910,218. The performance
information shown represents past performance and is not predictive of future
results. FOR STANDARDIZED PERFORMANCE FIGURES, PLEASE REFER TO THE PERFORMANCE
SUMMARY ON PAGE 6. The Fund offers other classes of shares, subject to different
fees and expenses, which affect their performance. Please see the prospectus for
more details regarding share classes.
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<PAGE> 10
MANY INVESTORS HAVE ASKED US ABOUT THE ACTIVITIES OF SIR JOHN TEMPLETON, SINCE
HIS RETIREMENT FROM THE FUNDS. WE ASKED PROFESSOR ROBERT HERRMANN TO UPDATE US
ON SIR JOHN'S CURRENT ACTIVITIES AND HIS COMMENTS FOLLOW.
THE NEW CAREER OF
SIR JOHN TEMPLETON
[PHOTO OF SIR JOHN TEMPLETON]
BY PROFESSOR
ROBERT HERRMANN
In 1992, Sir John Templeton retired after a 50-year career of helping investors
manage their money. Currently, he devotes all of his time and efforts to the
John Templeton Foundation. A major portion of his assets remain invested in
Templeton funds, managed by many of the investment professionals he selected and
trained. For sentimental reasons, he allows his name to be associated with the
funds, although he knows no more about their management and holdings than any
other investor.
Sir John Templeton established the Templeton Foundation in 1987, to foster the
acquisition of spiritual information through scientific research. Working with
scientists, theologians and others, he strives toward a new science that uses
empirical and statistical scientific methods to discover and test spiritual
knowledge. A crucial ingredient in his research is what Sir John calls "humility
theology," an attitude of humility toward the Creator, combined with
receptiveness to the theological significance of current scientific discoveries.
Universal spiritual laws, or "laws of life," are among the areas of
investigation. In his recent book, Worldwide Laws of Life, Sir John compiles 200
laws and proverbs from nearly all religions, and deeply embedded in human
history. For example, the Golden Rule taught by Jesus in the Sermon on the
Mount, states "Do unto others as you would have others do unto you," and is
affirmed by all major religions as an acceptable, universal law of life. Other
books which Sir John has authored or co-authored during the past few years
include: The Humble Approach, Is God the Only Reality, Evidence of Purpose,
Who's Who in Theology and Science and The God Who Would Be Known.
With an annual budget of more than $30 million, the Templeton Foundation
sponsors 60 programs focusing on spiritual progress and the benefits of freedom.
Sir John's first sizable investment in the programs was the Templeton Prize for
Progress in Religion. A panel of nine judges gives the annual award which now
exceeds $1.2 million to individuals who have shown extraordinary originality in
furthering the world's understanding of God or spirituality.
Recipients of the prize include Professor Paul Davies, author of The Mind of
God; the Right Honorable Lord Jacobovits, former Chief Rabbi of Great Britain
and The Commonwealth; the Reverend Dr. Billy Graham, world-renowned preacher and
presidential inauguration speaker; Mr. Nikkyo Nimano, founder of the World
Conference on Religion and Peace; and Sir Sarepalli Radhakrishnan, former
President of India, and Oxford professor of Eastern Religions and Ethics.
To encourage young people's and their parents' appreciation of spiritual laws of
life, Sir John established an essay contest for teenagers in his home county of
Franklin, Tennessee. Students submit essays about the spiritual life principles
they plan to follow, and prizes are offered semiannually. In 1996, more than 800
youth participated. Twenty-six similar programs
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<PAGE> 11
have been launched in various locations, with the support of generous local
donors.
The Foundation also sponsors a worldwide program that awards college-level
faculty who teach courses integrating science and religion. During the program's
first two years, more than 200 courses were created. The Foundation maintains an
extensive program of research and education on the health benefits of
spirituality, including prizes for medical schools providing courses on
spirituality in medicine. Lastly, the Foundation publishes a newsletter with
over 2,000 subscribers. Free subscriptions are available to Templeton
shareholders by writing to the Foundation.
To contact Sir John Templeton or receive the free newsletter subscription,
please write to:
The John Templeton Foundation
2 Radnor Corporate Center #320
100 Matsonford Road
Radnor, PA 19087
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TEMPLETON GROWTH FUND, INC.
Financial Highlights
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE--CLASS I
(For a share outstanding throughout the period)
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31
FEBRUARY 28, 1997 -------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993
----------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 18.75 $ 18.96 $ 18.95 $ 17.47 $ 15.81
----------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income .15 .50 .39 .29 .32
Net realized and unrealized gain 2.57 1.34 1.20 2.58 2.97
----------- ---------- ---------- ---------- ----------
Total from investment operations 2.72 1.84 1.59 2.87 3.29
----------- ---------- ---------- ---------- ----------
Distributions:
Dividends from net investment income (.49) (.44) (.29) (.27) (.36)
Distributions from net realized gains (.81) (1.61) (1.29) (1.12) (1.27)
----------- ---------- ---------- ---------- ----------
Total distributions (1.30) (2.05) (1.58) (1.39) (1.63)
----------- ---------- ---------- ---------- ----------
Change in net asset value 1.42 (.21) .01 1.48 1.66
----------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 20.17 $ 18.75 $ 18.96 $ 18.95 $ 17.47
=========== ========== ========== ========== ==========
TOTAL RETURN* 15.15% 10.85% 9.51% 17.47% 23.57%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of period (000) $10,097,697 $8,450,737 $6,964,298 $5,611,560 $4,033,911
Ratio of expenses to average net assets 1.08%** 1.09% 1.12% 1.10% 1.03%
Ratio of net investment income to average
net assets 1.64%** 2.87% 2.40% 1.76% 2.10%
Portfolio turnover rate 16.52% 19.63% 35.21% 27.35% 28.89%
Average commission rate paid (per share) $ .0093 $ .0146
<CAPTION>
YEAR ENDED AUGUST 31
1992
--------------------
<S> <C>
Net asset value, beginning of period $ 16.14
----------
Income from investment operations:
Net investment income .41
Net realized and unrealized gain .92
----------
Total from investment operations 1.33
----------
Distributions:
Dividends from net investment income (.44)
Distributions from net realized gains (1.22)
----------
Total distributions (1.66)
----------
Change in net asset value (.33)
----------
Net asset value, end of period $ 15.81
==========
TOTAL RETURN* 9.22%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of period (000) $3,268,644
Ratio of expenses to average net assets .88%
Ratio of net investment income to average
net assets 2.62%
Portfolio turnover rate 24.46%
Average commission rate paid (per share)
</TABLE>
* TOTAL RETURN DOES NOT REFLECT SALES COMMISSIONS. NOT ANNUALIZED FOR PERIODS
OF LESS THAN ONE YEAR.
** ANNUALIZED.
12
<PAGE> 13
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 28, 1997 YEAR ENDED THROUGH
(UNAUDITED) AUGUST 31, 1996 AUGUST 31, 1995
----------------- --------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 18.57 $ 18.90 $ 17.48
-------- -------- -------
Income from investment operations:
Net investment income .12 .49 .04
Net realized and unrealized gain 2.49 1.19 1.38
-------- -------- -------
Total from investment operations 2.61 1.68 1.42
-------- -------- -------
Distributions:
Dividends from net investment income (.39) (.40) --
Distributions from net realized gains (.81) (1.61) --
-------- -------- -------
Total distributions (1.20) (2.01) --
-------- -------- -------
Change in net asset value 1.41 (.33) 1.42
-------- -------- -------
Net asset value, end of period $ 19.98 $ 18.57 $ 18.90
======== ======== =======
TOTAL RETURN* 14.67% 9.99% 8.12%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of period (000) $ 467,581 $ 280,087 $42,548
Ratio of expenses to average net assets 1.84%** 1.87% 1.86%**
Ratio of net investment income to average net assets .87%** 2.25% 1.61%**
Portfolio turnover rate 16.52% 19.63% 35.21%
Average commission rate paid (per share) $ .0093 $ .0146
</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.
13
<PAGE> 14
TEMPLETON GROWTH FUND, INC.
Financial Highlights (cont.)
- --------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE--ADVISOR CLASS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
FOR THE PERIOD
JANUARY 2, 1997+
THROUGH
FEBRUARY 28, 1997
(UNAUDITED)
-----------------
<S> <C>
Net asset value, beginning of period $ 19.37
-------
Income from investment operations:
Net investment income .01
Net realized and unrealized gain .79
-------
Total from investment operations .80
-------
Change in net asset value .80
-------
Net asset value, end of period $ 20.17
=======
TOTAL RETURN* 4.13%
RATIOS /SUPPLEMENTAL DATA
Net assets, end of period (000) $18,528
Ratio of expenses to average net assets .82%**
Ratio of net investment income to average net assets 1.24%**
Portfolio turnover rate 16.52%
Average commission rate paid (per share) $ .0093
</TABLE>
* NOT ANNUALIZED FOR PERIODS OF LESS THAN ONE YEAR.
** ANNUALIZED.
+ COMMENCEMENT OF OFFERING OF SALES.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE> 15
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS: 81.3%
- -------------------------------------------------------------------------------------------------------------------------
AEROSPACE & MILITARY TECHNICAL SYSTEMS: 0.4%
Boeing Co. U.S. 5,500 $ 559,625
General Motors Corp., H U.S. 641,300 37,836,700
Hong Kong Aircraft Engineering Co. Ltd. H.K. 311,200 986,603
---------------
39,382,928
- -------------------------------------------------------------------------------------------------------------------------
APPLIANCES & HOUSEHOLD DURABLES: 1.3%
Electrolux AB, B Swe. 700,000 43,799,905
Email Ltd. Aus. 8,015,942 25,341,290
Sony Corp. Jpn. 956,700 69,077,816
---------------
138,219,011
- -------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES: 6.5%
Bayerische Motorenwerke (BMW) Ger. 44,501 29,949,011
Fiat SPA, di Risp Itl. 3,263,600 5,568,118
Ford Motor Co. U.S. 5,516,600 181,358,225
General Motors Corp. U.S. 3,600,000 208,350,000
Peugeot SA Fr. 301,650 33,369,535
Regie Nationale des Usines Renault SA Fr. 1,219,450 31,455,172
Volkswagen AG Ger. 164,000 79,838,714
Volkswagen AG, prf. Ger. 42,000 16,125,589
Volvo AB, B Swe. 3,941,000 98,847,701
---------------
684,862,065
- -------------------------------------------------------------------------------------------------------------------------
BANKING: 7.0%
Argentaria Corporacion Bancaria de Espana SA Sp. 1,350,462 54,076,891
Australia & New Zealand Banking Group Ltd. Aus. 6,688,477 41,769,861
Banco Popular Espanol SA Sp. 210,029 38,168,443
Banque Nationale de Paris Fr. 598,852 27,182,308
Cho Hung Bank Kor. 529,189 2,992,781
Citicorp U.S. 1,003,000 117,100,250
Den Norske Bank Nor. 6,693,800 29,867,924
HSBC Holdings PLC H.K. 6,228,541 152,019,609
Kookmin Bank Kor. 15,669 265,385
National Australia Bank Ltd. Aus. 7,483,199 94,279,635
National Bank of Canada Can. 2,485,600 28,730,005
National Westminster Bank PLC U.K. 7,193,072 88,863,383
Shinhan Bank Co. Ltd. Kor. 953,538 14,354,803
Svenska Handelsbanken, A Swe. 1,250,000 35,021,246
Thai Farmers Bank Public Co. Ltd., fgn. Thai. 268,000 1,583,472
Union Bank of Norway, Primary Capital Cert. Nor. 306,250 9,474,373
Westpac Banking Corp. Aus. 934,332 5,297,901
---------------
741,048,270
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 16
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
BROADCASTING & PUBLISHING: 0.8%
Marieberg Tidnings AB, A Swe. 9,000 $ 249,752
News Corp. Ltd. Aus. 14,258,348 64,457,275
Sing Tao Holdings Ltd. H.K. 3,561,800 1,552,368
South Chn. Morning Post (Holdings) Ltd. H.K. 13,503,100 12,206,271
---------------
78,465,666
- -------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS & COMPONENTS: 0.7%
*Hepworth PLC U.K. 1,644,000 6,948,516
Owens Corning U.S. 1,265,000 53,604,375
Pioneer International Ltd. Aus. 2,863,049 8,517,405
Siam City Cement, fgn. Thai. 800,900 4,391,883
---------------
73,462,179
- -------------------------------------------------------------------------------------------------------------------------
BUSINESS & PUBLIC SERVICES: 1.2%
*Healthsource Inc. U.S. 1,300,000 27,137,500
Horizon Group Inc. U.S. 1,879,600 24,669,750
*Humana Inc. U.S. 2,859,400 56,115,725
Lex Service PLC U.K. 1,600,000 9,081,877
Wheelabrator Technologies Inc. U.S. 843,400 12,018,450
---------------
129,023,302
- -------------------------------------------------------------------------------------------------------------------------
CHEMICALS: 2.4%
Akzo Nobel NV Neth. 492,942 71,036,217
Courtaulds PLC U.K. 4,500,000 26,788,768
DSM NV Neth. 750,000 75,082,986
European Vinyls Corp. EVC International NV Neth. 460,271 12,974,603
Kemira OY, 144A Fin. 257,500 2,918,892
Lyondell Petrochemical Co. U.S. 868,600 20,520,675
Rhone-Poulenc SA, A Fr. 1,258,500 44,196,664
Shanghai Pechemical Co. Ltd., H Chn. 10,356,000 2,942,159
---------------
256,460,964
- -------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION & HOUSING: 0.6%
Dragados y Construcciones SA Sp. 1,212,494 18,355,101
Fletcher Challenge Building Ltd. N.Z. 5,267,917 15,838,201
*Hollandsche Beton Groep NV Neth. 1,000 220,138
Kaufman & Broad Home Corp. U.S. 1,586,600 22,410,725
*U.S. Home Corp. U.S. 40,500 1,098,563
---------------
57,922,728
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE> 17
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
DATA PROCESSING & REPRODUCTION: 2.3%
International Business Machines Corp. U.S. 1,320,000 $ 189,750,000
*NCR Corp. U.S. 121,875 4,021,875
*Quantum Corp. U.S. 1,300,000 51,675,000
---------------
245,446,875
- -------------------------------------------------------------------------------------------------------------------------
ELECTRICAL & ELECTRONICS: 4.6%
Alcatel Alsthom SA Fr. 587,075 60,305,334
Asea AB, A Swe. 770,000 86,805,996
G.P. Batteries International Ltd. Sing. 261,000 777,780
Gold Peak Industries (Holdings) Ltd. H.K. 5,077,000 3,310,930
Hitachi Ltd. Jpn. 8,134,500 70,130,813
Motorola Inc. U.S. 1,967,600 109,939,650
Philips Electronics NV Neth. 3,375,100 152,403,219
---------------
483,673,722
- -------------------------------------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS & INSTRUMENTS: 0.2%
BICC U.K. 4,423,700 19,994,084
- -------------------------------------------------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES: 0.8%
*Koninklijke Pakhoed NV Neth. 150,100 4,705,701
Sun Co. Inc. U.S. 2,844,200 76,793,400
---------------
81,499,101
- -------------------------------------------------------------------------------------------------------------------------
ENERGY SOURCES: 5.1%
Fletcher Challenge Energy Ltd. N.Z. 5,336,917 13,716,445
Norsk Hydro AS Nor. 883,665 44,358,054
*Rao Gazprom, ADR, 144A Russ. 122,000 2,116,700
Repsol SA Sp. 2,429,700 92,377,586
Saga Petroleum AS, A Nor. 142,800 2,410,655
Saga Petroleum AS, B Nor. 1,557,110 23,970,147
Societe Elf Aquitane SA Fr. 1,205,000 115,316,067
Total SA, B Fr. 1,125,300 89,806,646
Transportadora de Gas del Sur SA, ADR B Arg. 1,400,000 17,675,000
Valero Energy Corp. U.S. 1,938,300 61,056,450
YPF Sociedad Anonima Arg. 1,400,000 37,466,485
YPF Sociedad Anonima, ADR Arg. 1,532,800 41,002,400
---------------
541,272,635
- -------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES: 3.9%
A.G. Edwards Inc. U.S. 700,000 24,850,000
Axa-UAP SA Fr. 509,371 33,925,271
Dean Witter Discover & Co. U.S. 2,247,620 86,252,418
Federal National Mortgage Assn. U.S. 2,155,600 86,224,000
</TABLE>
17
<PAGE> 18
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES (cont.)
Merrill Lynch & Co. Inc. U.S. 1,685,800 $ 161,836,800
Peregrine Investments Holdings Ltd. H.K. 10,000,000 18,272,919
---------------
411,361,408
- -------------------------------------------------------------------------------------------------------------------------
FOOD & HOUSEHOLD PRODUCTS: 2.6%
Archer Daniels Midland Co. U.S. 2,518,140 46,585,590
Burns Philp & Co. Ltd. Aus. 8,478,577 13,171,423
C.P. Pokphand Co. Ltd. H.K. 17,096,500 6,181,825
Embotelladora Andina SA, ADR Chil. 511,500 18,669,750
*Grupo Embotellador de Mexico SA de CV, GDR Mex. 1,684,750 16,847,500
*Grupo Embotellador de Mexico SA, B Mex. 561,600 950,216
Hillsdown Holdings PLC U.K. 20,423,076 63,367,851
IBP Inc. U.S. 2,000,000 46,500,000
Northern Foods PLC U.K. 3,358,000 11,759,044
Panamerican Beverages Inc., A Mex. 617,500 34,811,563
Vitro SA Mex. 6,090,720 16,895,307
Vitro SA, ADR Mex. 492,840 4,065,930
---------------
279,805,999
- -------------------------------------------------------------------------------------------------------------------------
FOREST PRODUCTS & PAPER: 7.1%
Aracruz Celulose SA, ADR Braz. 4,000,000 37,000,000
Assidomaen AB Swe. 1,200,000 31,138,891
Boise Cascade Corp. U.S. 1,032,600 33,946,725
Bowater Inc. U.S. 1,078,300 45,692,963
Carter Holt Harvey Ltd. N.Z. 11,449,300 25,936,053
Champion International Corp. U.S. 138,500 6,111,313
*Enso OY, R Fin. 2,554,800 22,101,005
Fletcher Challenge Ltd. Forestry Division Aus. 223,875 311,271
Fletcher Challenge Ltd. Forestry Division N.Z. 17,297,348 24,684,477
Fletcher Challenge Paper Ltd. N.Z. 11,315,635 22,340,916
Georgia-Pacific Corp. U.S. 1,425,000 111,150,000
International Paper Co. U.S. 754,800 31,512,900
Metsa Serla OY, B Fin. 2,611,000 21,808,311
Mo Och Domsjoe AB, B Swe. 1,800,000 57,154,674
Norske Skogindustrier AS, A Nor. 994,000 30,603,266
PT Pabrik Kertas Tjiwi Kimia, fgn. Indo. 22,081,714 24,867,832
Sappi Ltd. S.AF. 3,000,000 24,439,237
St. Joe Paper Corp. U.S. 562,600 43,671,825
Stora Kopparbergs Bergslags AB, A Swe. 1,414,200 19,339,132
Stora Kopparbergs Bergslags AB, B Swe. 2,085,800 28,244,962
Svenska Cellulosa AB, B Swe. 1,250,000 27,766,845
*UPM-Kymmene Corp. Fin. 3,843,840 80,034,613
---------------
749,857,211
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE> 19
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL COMPONENTS: 1.6%
Goodyear Tire & Rubber Co. U.S. 1,682,600 $ 88,757,150
Sandvik AB, A Swe. 265,000 6,452,248
Sandvik AB, B Swe. 2,156,000 52,782,155
SKF AB, B Swe. 1,078,100 25,746,273
---------------
173,737,826
- -------------------------------------------------------------------------------------------------------------------------
INSURANCE: 2.3%
American International Group Inc. U.S. 461,250 55,811,250
Baloise-Holding Swtz. 23,338 45,912,896
Cigna Corp. U.S. 445,172 68,055,670
London Insurance Group Inc. Can. 600,000 8,668,934
National Mutual Asia Ltd. H.K. 513,000 559,791
Reliastar Financial Corp. U.S. 552,200 34,236,400
W.R. Berkley Corp. U.S. 627,100 32,217,263
---------------
245,462,204
- -------------------------------------------------------------------------------------------------------------------------
MERCHANDISING: 2.2%
Coles Myer Ltd., A Aus. 4,250,484 18,719,800
Dairy Farm International Holdings Ltd. H.K. 34,561,543 26,785,196
Hudsons Bay Co. Can. 1,188,200 23,773,562
*K Mart Corp. U.S. 1,800,000 22,500,000
Kwik Save Group PLC U.K. 1,974,267 9,855,739
Limited Inc. U.S. 2,811,000 53,409,000
Safeway PLC U.K. 4,309,883 25,481,498
Somerfield PLC U.K. 4,481,800 12,628,490
W.H. Smith Group U.K. 5,040,500 37,477,210
---------------
230,630,495
- -------------------------------------------------------------------------------------------------------------------------
METALS & MINING: 3.9%
Alcan Aluminum Ltd. Can. 1,016,850 36,450,236
Arbed SA Lux. 86,725 9,467,251
*Asturiana del Zinc SA Sp. 1,300,000 16,868,394
Boehler Uddeholm AG Aust. 8,200 566,648
Companhia Siderurgica Nacional ADR Braz. 777,205 28,616,939
Elkem AS Nor. 164,200 2,637,594
Eramet SA Fr. 102,938 5,149,611
*Grupo Mexico SA de CV, B Mex. 3,347,600 11,008,801
Maanshan Iron & Steel Co. Ltd., H Chn. 19,463,000 4,574,384
Outokumpu OY, A Fin. 2,281,804 40,386,313
Pechiney SA, A Fr. 1,518,775 64,244,583
Pohang Iron & Steel Co. Ltd. Kor. 463,893 30,561,770
Reynolds Metals Co. U.S. 1,284,908 80,627,977
RGC Ltd. Aus. 1,233,986 4,907,496
South African Iron & Steel Industrial Corp. Ltd. S.AF. 10,154,400 7,705,604
</TABLE>
19
<PAGE> 20
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
METALS & MINING (cont.)
Trelleborg AB, B Swe. 2,800,000 $ 43,893,295
*Union Miniere NPV Bel. 400,000 29,589,199
---------------
417,256,095
- -------------------------------------------------------------------------------------------------------------------------
MISC MATERIALS & COMMODITIES: 0.3%
De Beers Consolidated Mines Ltd. S.AF. 870,850 30,223,675
- -------------------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY: 3.1%
Alfa SA de CV, A Mex. 3,377,200 19,160,216
*Alfa SA de CV, A 144A Mex. 2,534,000 14,376,403
BTR PLC U.K. 17,078,000 66,340,424
Cheung Kong Holdings Ltd. H.K. 8,000,000 76,449,243
Harrisons & Crosfield PLC U.K. 10,794,370 23,031,459
Jardine Matheson Holdings Ltd. (Singapore) H.K. 6,506,078 39,361,772
Jardine Strategic Holdings Ltd. (Singapore) H.K. 11,280,152 36,998,899
Pacific Dunlop Ltd. Aus. 15,000,000 36,118,749
Swire Pacific Ltd., A H.K. 1,259,000 10,811,821
Swire Pacific Ltd., B H.K. 6,629,300 9,031,744
---------------
331,680,730
- -------------------------------------------------------------------------------------------------------------------------
REAL ESTATE: 2.3%
American Health Properties Inc. U.S. 420,700 10,780,438
Beacon Properties Corp U.S. 488,700 17,409,938
Federal Realty Investment Trust U.S. 348,400 9,363,250
General Growth Properties U.S. 369,600 11,319,000
Hang Lung Development Co. Ltd. H.K. 15,803,000 31,835,789
*Hang Lung Development Co. Ltd., wts. H.K. 840,000 150,781
Highwood Properties Inc., REIT U.S. 500,000 17,250,000
IRT Property Co. U.S. 592,300 6,663,375
Meditrust Inc. U.S. 1,000,000 38,500,000
National Health Investors Inc. U.S. 500,000 19,812,500
Nationwide Health Properties Inc. U.S. 800,000 17,600,000
Rouse Co. U.S. 1,200,000 35,100,000
Summit Properties Inc., REIT U.S. 461,700 9,349,425
Union du Credit Bail Immobilier Unibail Fr. 90,000 8,644,425
Universal Health Realty Income Trust U.S. 200,000 4,175,000
Wereldhave NV Neth. 51,679 3,338,345
*Winsor Properties Holdings Ltd. H.K. 3,358,000 6,222,775
---------------
247,515,041
- -------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS: 11.3%
A T & T Corp. U.S. 3,901,100 155,556,363
Bell Atlantic Corp. U.S. 2,082,100 143,925,163
British Telecommunications PLC U.K. 15,000,000 103,954,591
</TABLE>
20
<PAGE> 21
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
- -------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (cont.)
Cpt-Telefonica del Peru SA, ADR B Per. 396,200 $ 8,716,400
Cpt-Telefonica del Peru SA, B Per. 8,459,874 18,803,273
Nokia AB, A Fin. 1,625,400 97,618,710
*Seat SPA Itl. 1,648,000 595,172
*Seat SPA, di Risp Itl. 14,782,000 3,406,357
*SPT Telecom AS CSK. 26,000 3,375,116
STET (Sta Finanziaria Telefonica Torino) SPA, di
Risp Itl. 14,782,000 52,126,529
Telecom Argentina Stet France SA, ADR Arg. 1,208,200 58,144,625
Telecom Italia Spa, di Risp Itl. 32,189,050 64,794,842
Teledanmark AS, B Den. 1,157,400 60,272,816
Telefonica de Argentina SA, B, ADR Arg. 1,500,000 47,437,500
Telefonica de Espana SA Sp. 5,989,200 137,879,661
Telmex-Telefonos de Mexico SA, L Mex. 14,118,470 27,396,946
Telmex-Telefonos de Mexico SA, L, ADR Mex. 2,487,000 96,682,125
U.S. West Communications Group U.S. 3,200,000 115,200,000
---------------
1,195,886,189
- -------------------------------------------------------------------------------------------------------------------------
TEXTILES & APPAREL: 0.0%
Daehan Synthetic Fiber Co. Ltd. Kor. 18,550 1,481,424
Winsor Industrial Corp. Ltd. H.K. 6,716,000 1,639,170
---------------
3,120,594
- -------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION: 2.0%
Anangel-American Shipholdings Ltd., ADR Gr. 39,100 303,025
APL Ltd. U.S. 892,200 20,520,600
Caliber Systems Inc. U.S. 502,400 11,429,600
Cathay Pacific Airways Ltd. H.K. 30,603,000 47,621,441
IMC Holdings Ltd. H.K. 6,860,000 3,189,173
Korean Air Kor. 84,643 1,538,759
Malaysian International Shipping Corp. Bhd., fgn. Mal. 4,000,000 10,382,322
Peninsular & Oriental Steam Navigation Co. U.K. 1,400,000 15,209,212
Qantas Airways Ltd., ADR, 144A Aus. 481,700 8,821,131
Shun Tak Holdings H.K. 28,906,000 20,343,983
Singapore Airlines Ltd., fgn. Sing. 4,278,000 37,813,259
Stolt Nielsen SA Nor. 463,500 8,922,375
Stolt Nielsen SA, ADR Nor. 231,750 4,432,219
*Swissair Schweizerische Luftverkehr AG Swtz. 18,053 15,394,221
---------------
205,921,320
- -------------------------------------------------------------------------------------------------------------------------
UTILITIES ELECTRICAL & GAS: 4.7%
BG PLC U.K. 25,415,000 70,577,675
British Energy Ltd. U.K. 4,118,360 9,525,011
British Energy Ltd., 144A U.K. 9,681,640 22,391,858
*Centrica PLC U.K. 25,415,000 27,216,904
</TABLE>
21
<PAGE> 22
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDUSTRY ISSUE COUNTRY SHARES VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS (CONT.)
- ---------------------------------------------------------------------------------------------------------------------
UTILITIES ELECTRICAL & GAS (cont.)
* CEZ CSK. 213,761 $ 8,845,840
Compania Sevillana de Electricidad Sp. 1,694,051 15,363,398
Electrabel SA Bel. 100,000 23,068,084
Electricidad de Caracas Venz. 1,304,141 1,432,957
Entergy Corp. U.S. 2,350,000 61,981,250
Guangdong Electric Power Development Co Ltd, B,
144A Chn. 35,300 31,910
Hong Kong Electric Holdings Ltd. H.K. 9,999,600 34,607,394
Iberdrola SA Sp. 6,830,448 74,572,891
Korea Electric Power Corp. Kor. 543,012 15,586,456
Mosenergo Russ. 4,703,000 6,551,279
New York State Electric & Gas Corp. U.S. 500,000 11,625,000
Shandong Huaneng Power Chn. 900,000 9,337,500
Thames Water Group PLC U.K. 7,050,000 79,000,603
VEBA AG Ger. 400,000 23,078,063
---------------
494,794,073
- ---------------------------------------------------------------------------------------------------------------------
WHOLESALE & INTERNATIONAL TRADE: 0.1%
Sime Darby Hongkong Ltd. H.K. 6,660,000 7,697,483
---------------
TOTAL COMMON STOCK (cost $6,713,257,487) 8,595,683,873
- ---------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS: 1.8%
- ---------------------------------------------------------------------------------------------------------------------
American Health Properties Inc., dep. shs., pfd. U.S. 24,330 437,940
Ballast Nedam NV, ctf., conv., pfd. Neth. 104,359 5,377,686
Fiat Spa, pfd. Itl. 18,228,500 30,324,258
Jardine Strategic Holdings Ltd., 7.50%, conv.,
5/7/49 H.K. 9,050,000 10,000,250
Telebras-Telecomunicacoes Brasileiras SA, pfd.,
ADR Braz. 650,000 63,050,000
Telecomunicacoes Brasileiras SA (Telebras), pfd. Braz. 875,600,000 85,473,155
---------------
TOTAL PREFERRED STOCKS (cost $95,668,200) 194,663,289
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 23
TEMPLETON GROWTH FUND, INC.
Investment Portfolio, February 28, 1997 (unaudited) (cont.)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL IN
INDUSTRY ISSUE COUNTRY LOCAL CURRENCY** VALUE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BONDS: 4.7%
- ---------------------------------------------------------------------------------------------------------------------
Arbed SA, 2.50%, conv., 7/15/03 Lux. 3,250,000 $ 1,695,870
U.S. Treasury Notes:
8.50%, 7/15/97 U.S. 50,000,000 50,593,750
7.875%, 1/15/98 U.S. 10,000,000 10,181,250
6.125%, 3/31/98 U.S. 200,000,000 200,687,400
6.375%, 7/15/99 U.S. 78,000,000 78,414,336
6.00%, 10/15/99 U.S. 78,000,000 77,780,586
6.375%, 1/15/00 U.S. 78,000,000 78,463,086
---------------
TOTAL BONDS (cost $500,424,977) 497,816,278
- ---------------------------------------------------------------------------------------------------------------------
SHORT TERM OBLIGATIONS: 12.1% (cost $1,284,773,256)
- ---------------------------------------------------------------------------------------------------------------------
U. S. Treasury Bill, 4.82% to 5.02% with
maturities to 5/22/97 U.S. 1,291,869,000 1,285,349,594
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS: 99.9% (cost $8,594,123,920) 10,573,513,034
OTHER ASSETS, LESS LIABILITIES: 0.1% 10,293,133
---------------
TOTAL NET ASSETS: 100.0% $10,583,806,167
===============
</TABLE>
* NON-INCOME PRODUCING.
** CURRENCY OF COUNTRIES INDICATED.
+ SEE NOTE 5.
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE> 24
TEMPLETON GROWTH FUND, INC.
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1997 (unaudited)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value
(identified cost $8,594,123,920) $10,573,513,034
Cash 1,741,462
Receivables:
Investment securities sold 11,128,800
Capital shares sold 30,199,534
Dividends and interest 23,761,227
---------------
Total assets 10,640,344,057
---------------
Liabilities:
Payables:
Investment securities purchased 37,806,281
Capital shares redeemed 8,333,185
Accrued expenses 10,398,424
---------------
Total liabilities 56,537,890
---------------
Net assets, at value $10,583,806,167
===============
Net assets consist of:
Undistributed net investment income $ 21,091,608
Net unrealized appreciation 1,979,389,114
Accumulated net realized gain 466,239,851
Net capital paid in on shares of
capital stock 8,117,085,594
---------------
Net assets, at value $10,583,806,167
===============
Class I
Net asset value per share
($10,097,696,693 / 500,573,236
shares outstanding) $ 20.17
===============
Maximum offering price ($20.17 /
94.25%) $ 21.40
===============
Class II
Net asset value per share
($467,581,108 / 23,397,660 shares
outstanding) $ 19.98
===============
Maximum offering price ($19.98 /
99.00%) $ 20.18
===============
Advisor Class
Net asset value per share
($18,528,366 / 918,750 shares
outstanding) $ 20.17
===============
</TABLE>
STATEMENT OF OPERATIONS
for the six months ended
February 28, 1997 (unaudited)
<TABLE>
<S> <C> <C>
Investment income:
(net of $4,729,158
foreign taxes
withheld)
Dividends $ 81,042,607
Interest 49,244,500
------------
Total income $ 130,287,107
Expenses:
Management fees (Note 3) 29,324,564
Administrative fees (Note
3) 3,880,973
Distribution Fees (Note
3)
Class I 10,600,383
Class II 1,816,667
Transfer agent fees (Note
3) 4,280,000
Custodian fees 1,395,000
Reports to shareholders 1,165,000
Audit fees 32,000
Legal fees 10,000
Registration and filing
fees 370,000
Directors' fees and
expenses 72,000
Other 76,104
------------
Total expenses 53,022,691
-------------
Net investment
income 77,264,416
Realized and unrealized gain
(loss):
Net realized gain (loss)
on:
Investments 533,652,611
Foreign currency
transactions (2,125,843)
------------
531,526,768
Net unrealized
appreciation on
investments 738,765,561
------------
Net realized and
unrealized gain 1,270,292,329
-------------
Net increase in net assets
resulting from operations $1,347,556,745
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE> 25
TEMPLETON GROWTH FUND, INC.
Financial Statements (cont.)
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1997 YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 77,264,416 $ 224,841,513
Net realized gain on investment and foreign currency transactions 531,526,768 428,620,792
Net unrealized appreciation 738,765,561 145,676,185
--------------- --------------
Net increase in net assets resulting from operations 1,347,556,745 799,138,490
Distributions to shareholders:
From net investment income
Class I (224,259,675) (166,533,266)
Class II (6,787,909) (1,511,634)
From net realized gain
Class I (372,774,314) (608,010,954)
Class II (13,998,148) (5,832,380)
Capital share transactions (Note 2)
Class I 945,444,566 1,474,318,953
Class II 159,327,960 232,408,151
Advisor Class 18,473,008 --
--------------- --------------
Net increase in net assets 1,852,982,233 1,723,977,360
Net assets:
Beginning of period 8,730,823,934 7,006,846,574
--------------- --------------
End of period $10,583,806,167 $8,730,823,934
=============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE> 26
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
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 in good faith by
management and approved 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 currencies
are translated into U.S. dollar amounts on the respective dates of such
transactions. When the Fund purchases or sells foreign securities it customarily
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
foreign currencies, currency gains or losses realized between the trade and
settlement 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
securities is recorded as soon as information is available to the Fund. Interest
income and estimated expenses are accrued daily. Distributions to shareholders,
which are determined in accordance with income tax regulations, are recorded on
the ex-dividend date.
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.
26
<PAGE> 27
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
2. TRANSACTIONS IN SHARES OF CAPITAL STOCK
Effective January 2, 1997, the Fund offers three classes of shares: Class I,
Class II and Advisor Class shares. Prior to this date, only Class I and Class II
shares were offered. Shares of each class are identical except for their initial
sales load, a contingent deferred sales charge on Class II shares, distribution
fees, and voting rights on matters affecting a single class. At February 28,
1997, there were 800 million Class I shares, 400 million Class II shares and 200
million Advisor Class shares of capital stock authorized ($0.01 par value).
Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
CLASS I
--------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 48,749,725 $ 947,420,748 87,361,685 $1,592,605,239
Shares issued on reinvestment of
distributions 28,724,839 533,817,788 40,241,914 692,244,640
Shares redeemed (27,499,522) (535,793,970) (44,402,254) (810,530,926)
----------- ------------- ----------- --------------
Net increase 49,975,042 $ 945,444,566 83,201,345 $1,474,318,953
=========== ============= =========== ==============
</TABLE>
<TABLE>
<CAPTION>
CLASS II
--------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996
------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold 8,035,720 $ 154,762,989 13,048,416 $ 236,745,973
Shares issued on reinvestment of
distributions 977,259 18,005,655 369,922 6,330,234
Shares redeemed (696,534) (13,440,684) (588,522) (10,668,056)
--------- ------------ ---------- ------------
Net increase 8,316,445 $ 159,327,960 12,829,816 $ 232,408,151
========= ============ ========== ============
</TABLE>
<TABLE>
<CAPTION>
ADVISOR CLASS
-------------------------
FOR THE PERIOD
JANUARY 2, 1997 THROUGH
FEBRUARY 28, 1997
-------------------------
SHARES AMOUNT
---------- -------------
<S> <C> <C> <C> <C>
Shares sold 922,645 $ 18,551,986
Shares redeemed (3,895) (78,978)
------- -----------
Net increase 918,750 $ 18,473,008
======= ===========
</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), Franklin Templeton Services, Inc. (FTSI), 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 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 FTSI monthly an administrative fee of
27
<PAGE> 28
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (unaudited) (cont.)
- --------------------------------------------------------------------------------
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 28, 1997, FTD received net commissions of $2,434,371
from the sale of the Fund's shares and FTIS received fees of $4,280,000.
Under the distribution plans for Class I and Class II shares, the Fund
reimburses FTD quarterly for FTD's costs and expenses in connection with any
activity 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 28, 1997, unreimbursed expenses amounted to $207,674. Class
II shares redeemed within 18 months are subject to a contingent deferred sales
charge. Contingent deferred sales charges of $91,182 were paid to FTD for the
six months ended February 28, 1997.
An officer of the Fund is a partner of Dechert Price & Rhoads, legal counsel for
the Fund, which firm received fees for the six months ended February 28, 1997.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 28, 1997 aggregated $1,965,969,722 and $1,433,051,985
respectively. The cost of securities for federal income tax purposes is
$8,595,694,171. Realized gains and losses are reported on an identified cost
basis.
At February 28, 1997, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<S> <C>
Unrealized appreciation $2,139,103,010
Unrealized depreciation (161,284,147)
--------------
Net unrealized appreciation $1,977,818,863
==============
</TABLE>
5. HOLDING OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES
The Investment Company Act of 1940 defines "affiliated companies" as investments
in portfolio companies in which the Fund owns 5% or more of the outstanding
voting securities. Investments in "affiliated companies" at February 28, 1997
amounted to $24,669,750. For the six months ended February 28, 1997, dividend
income from "affiliated companies" was $1,126,653.
28
<PAGE> 29
NOTES
--------
<PAGE> 30
NOTES
--------
<PAGE> 31
FRANKLIN TEMPLETON GROUP OF FUNDS
LITERATURE REQUEST - Call 1-800/DIAL BEN (1-800/342-5236) 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.
GLOBAL GROWTH
Franklin Global Health Care Fund
Franklin Templeton Japan Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton Global Infrastructure Fund
Templeton Global Opportunities Trust
Templeton Global Real Estate Fund
Templeton Global Smaller Companies Fund
Templeton Greater European Fund
Templeton Growth Fund
Templeton Latin America Fund
Templeton Pacific Growth Fund
Templeton World Fund
GLOBAL GROWTH AND INCOME
Franklin Global Utilities Fund
Franklin Templeton German Government Bond Fund
Franklin Templeton Global Currency Fund
Mutual European Fund
Templeton Global Bond Fund
Templeton Growth and Income Fund
GLOBAL INCOME
Franklin Global Government Income Fund
Franklin Templeton Hard Currency Fund
Franklin Templeton High Income Currency Fund
Templeton Americas Government Securities Fund
GROWTH
Franklin Blue Chip Fund
Franklin California Growth Fund
Franklin DynaTech Fund
Franklin Equity Fund
Franklin Gold Fund
Franklin Growth Fund
Franklin MidCap Growth Fund
Franklin Small Cap Growth Fund
Mutual Discovery Fund
GROWTH AND INCOME
Franklin Asset Allocation Fund
Franklin Balance Sheet Investment Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Franklin MicroCap Value Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Rising Dividends Fund
Franklin Strategic Income Fund
Franklin Utilities Fund
Franklin Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Shares Fund
Templeton American Trust, Inc.
FUND ALLOCATOR SERIES:
Franklin Templeton Conservative Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Growth Target Fund
INCOME
Franklin Adjustable Rate Securities Fund
Franklin Adjustable U.S. Government Securities Fund
Franklin's AGE High Income Fund
Franklin Investment Grade Income Fund
Franklin Short-Intermediate U.S. Government Securities Fund
Franklin U.S. Government Securities Fund
Franklin Money Fund
Franklin Federal Money Fund
FOR NON-U.S. INVESTORS:
Franklin Tax-Advantaged High Yield Securities Fund
Franklin Tax-Advantaged International Bond Fund
Franklin Tax-Advantaged U.S. Government Securities Fund
FOR CORPORATIONS:
Franklin Corporate Qualified Dividend Fund
FRANKLIN FUNDS SEEKING TAX-FREE INCOME
Federal Intermediate-Term Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund
Puerto Rico Tax-Free Income Fund
Tax-Exempt Money 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**
VARIABLE ANNUITIES+
Franklin Valuemark(R)
Franklin Templeton Valuemark Income Plus (an immediate annuity)
*TWO OR MORE FUND OPTIONS AVAILABLE: LONG-TERM PORTFOLIO, INTERMEDIATE-TERM
PORTFOLIO, A PORTFOLIO OF INSURED MUNICIPAL SECURITIES,
AND/OR A HIGH YIELD PORTFOLIO (CA) AND A MONEY MARKET PORTFOLIO (CA AND NY).
**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.
+FRANKLIN VALUEMARK AND FRANKLIN TEMPLETON VALUEMARK INCOME PLUS ARE ISSUED BY
ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA OR BY ITS WHOLLY OWNED
SUBSIDIARY, PREFERRED LIFE INSURANCE COMPANY OF NEW YORK, AND DISTRIBUTED BY
NALAC FINANCIAL PLANS, LLC.
FGF 02/97
<PAGE> 32
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
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.
[GRAPHIC]
TEMPLETON
GROWTH
FUND, INC.
SEMI-ANNUAL REPORT
FEBRUARY 28, 1997
[FRANKLIN TEMPLETON LOGO]
