SEMI ANNUAL REPORT
FEBRUARY 28, 1998
TEMPLETON
GROWTH FUND, INC.
[FRANKLIN TEMPLETON LOGO]
PAGE
[CELEBRATING OVER 50 YEARS LOGO]
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective, and to expect that mixed in with the good
years can be some bad years. It's important to remember that all securities
markets move both up and down, as do mutual fund share prices. We appreciate
your past support and look forward to serving your investment needs in the years
ahead.
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 the
Templeton funds, which are managed by many of the investment professionals he
selected and trained.
[PHOTO OF MARK G. HOLOWESKO APPEARS HERE]
MARK G. HOLOWESKO
Portfolio Manager
Templeton Growth Fund
Mark G. Holowesko is 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 and a former
director of the International Society of Financial Analysts.
PAGE
SHAREHOLDER LETTER
Your Fund's Objective: Templeton Growth Fund seeks long-term capital growth
through a flexible policy of investing in the equity and debt securities of
companies and governments of any nation.
Dear Shareholder:
We are pleased to bring you this semi-annual report of Templeton Growth Fund,
which covers the period ended February 28, 1998. The six months under review
proved eventful for global investors, as strong returns in the U.S. stock market
and growing investor enthusiasm for European shares were offset by incredibly
volatile price swings in Asian markets. Within this environment, the Fund's
Class I shares provided a six-month cumulative total return of 6.76%, as
discussed in the Performance Summary on page 6.
You may find a complete listing of the Fund's portfolio holdings including the
number of shares and dollar value beginning on page 16 of this report.
CONTENTS
<TABLE>
<S> <C>
Shareholder Letter ......... 1
Performance Summaries
Class I .................. 6
Class II ................. 8
Advisor Class ............ 10
Financial Highlights &
Statement of Investments ... 13
Financial Statements ....... 24
Notes to the Financial
Statements ................. 27
</TABLE>
FUND CATEGORY
[PYRAMID GRAPH]
PAGE
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
2/28/98
[BAR GRAPH]
<TABLE>
<S> <C>
European Stocks 27.6%
North American Stocks 21.6%
Asian Stocks 11.1%
Latin American Stocks 7.1%
Australian &
New Zealand Stocks 3.4%
African Stocks 0.6%
Fixed-Income Securities 6.2%
Short-Term Investments
& Other Net Assets 22.4%
</TABLE>
Consistent with our history of low portfolio turnover, we made no significant
changes to the Fund's weightings during the six months under review. On a
regional basis, most of the Fund's adjustments were subtle. For example, our
exposure to the U.S. decreased from 23.8% to 20.6% of total net assets and to
Europe from 32.1% to 27.6%, while our exposure in Latin America rose from 6.6%
to 7.1%.
Throughout the reporting period, Europe remained our largest geographic
allocation. Potential for corporate improvements increased there, as many
European firms (similar to American companies at the end of the 1980s) announced
plans to cut costs, improve efficiency, reduce debt burdens and buy back shares.
This led to the rise of many European equity markets, and our holdings of
Peugeot SA and Somerfield Plc. appreciated substantially in value.
Asia, however, presented a different picture. Rapid economic expansion in the
region encouraged massive investment, leading to relatively high asset values
and an excessive supply of manufactured goods. To help make these products more
competitive in overseas markets, many Asian countries were forced to devalue
their currencies. Unfortunately, these devaluations contributed to higher
interest expenses, since much of the debt accumulated by corporations was from
foreign bankers. Rather than increasing competitiveness, the devaluations pushed
many companies to the verge of bankruptcy. Fearing that these firms would be
unable to pay back their loans, many investors sold their shares, and stock
markets in the area plummeted.
2
PAGE
Although our exposure to Asia was relatively low, the Fund's performance was
hindered by its holdings there. Our largest Asian weighting was Hong Kong, whose
equity market fell 17.6% during the six months under review.(1) Seeking to take
advantage of these price declines, we added to our existing holdings, including
HSBC Holdings Plc., one of the world's largest banks, and Swire Pacific Ltd., a
conglomerate that possesses the right to sell Coca Cola in China.
In the U.S., price-to-book ratios and dividend yields of many companies reached
unprecedented levels, and the Dow Jones(R) Industrial Average rose 13.1% between
August 31, 1997 and February 28, 1998.(2) Although our U.S. weighting remained
relatively low because we found few stocks meeting our value criteria, we added
to some of our U.S. positions including General Motors Corp.; Titanium Metals;
and Humana Inc., a provider of health care services. In our opinion, these
companies represented good value and could contribute positively to the Fund's
long-term performance.
Looking forward, we are confident about our ability to deal with future
volatility in Asian stock markets. Turbulent markets are not new to us, and
where many people see only risk, we see potential returns. This was the case
when we increased our holdings in Latin America after the Mexican peso crises.
Today, we remain optimistic about the long-term viability of Hong Kong, despite
the Asian currency crisis. At this time, the largest risk to our holdings
appears to be the possible collapse of the Hong Kong dollar's currency peg to
the U.S. dollar. However, we believe that this is unlikely to occur in the near
term. Since 1983, Hong Kong authorities have maintained a link between the Hong
Kong dollar and the U.S. dollar, and have supported the
1. Source: Bloomberg. Market return is measured in U.S. dollars and includes
reinvested dividends.
2. Source: Standard & Poor's(R) Micropal. Market return includes reinvested
dividends. Total return calculated by Wilshire Associates, Inc. An index is an
unmanaged group of securities that is used to measure market performance. One
cannot invest directly in an index.
TOP 10 EQUITY HOLDINGS
2/28/98
<TABLE>
<CAPTION>
NAME, % OF TOTAL
INDUSTRY, COUNTRY NET ASSETS
---------------------------------------------
<S> <C>
General Motors Corp.
Automobiles, U.S. 1.9%
Philips Electronics NV
Electrical & Electronics,
Netherlands 1.6%
HSBC Holdings Plc
Banking, Hong Kong 1.5%
Telecomunicacoes Brasileiras
SA (Telebras), pfd
Telecommunications, Brazil 1.5%
Telefonos de Mexico
SA (Telmex), L
Telecommunications, Mexico 1.3%
Cheung Kong Holdings Ltd.
Multi-Industry, Hong Kong 1.2%
Humana Inc.
Business & Public Services, U.S. 1.2%
Ford Motor Co.
Automobiles, U.S. 1.2%
Deutsche Bank AG
Banking, Germany 1.1%
YPF Sociedad Anonima
Energy Sources, Argentina 1.0%
</TABLE>
3
PAGE
TOP 10 COUNTRIES
REPRESENTED IN THE FUND*
Equity Investments
(71.4% of Total Net Assets)
2/28/98
<TABLE>
<CAPTION>
% OF TOTAL
COUNTRY NET ASSETS
- ------------------------------
<S> <C>
United States 20.6%
United Kingdom 9.9%
Hong Kong 7.1%
Sweden 3.7%
France 3.1%
Netherlands 3.1%
Brazil 3.0%
Australia 2.7%
Argentina 2.0%
South Korea 2.0%
</TABLE>
*Does not include fixed-income securities and short-term investments and other
net assets.
peg with U.S. dollars on deposit there. Although the peg helped fuel speculation
in Hong Kong's property sector, it has provided a sense of stability missing in
other Asian countries. The peg's importance in maintaining economic stability
and confidence, the size of the foreign exchange reserves in Hong Kong (which
exceed the level of U.S. foreign exchange reserves), and the support of the
mainland Chinese government, all contribute to our belief that the peg should
weather devaluation crises in the region.
The economic outlook for Europe appears bright. If interest rates there fall due
to government attempts to meet European Monetary Union requirements, and taxes
drop, European corporations could deliver positive earnings surprises. In our
opinion, the Fund's high exposure in the region has the potential to be
well-rewarded over time.
Please remember that there are 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 those
risks associated with their relatively small size and lesser liquidity. 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 equity market
has increased 1,268% in the last 15 years, but has suffered five quarterly
declines of more than 20% during that time.(3) These risks and other
considerations are discussed in the Fund's prospectus.
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.
Because economic and market conditions are constantly changing, our strategies
and our evaluations, conclusions
3. Source: Bloomberg. Based on quarterly percentage price change over 15 years
ended December 31, 1997.
4
PAGE
and decisions regarding portfolio holdings may change as new circumstances
arise. All figures shown are as of February 28, 1998, and the Fund's holdings
can be expected to change with market developments and management of the
portfolio. Although past performance of specific investment or sector cannot
guarantee future performance, such information can be useful in analyzing the
securities we purchase or sell for the Fund.
Thank you for investing in the Templeton Growth Fund. We welcome any comments or
suggestions you may have.
Sincerely,
/s/ Mark G. Holowesko
- -------------------------------
Mark G. Holowesko, CFA
President
Templeton Growth Fund, Inc.
5
PAGE
PERFORMANCE SUMMARY
CLASS I
Templeton Growth Fund - Class I produced a 6.76% cumulative total return for the
six-month period ended February 28, 1998. Cumulative total return measures the
change in value of an investment, assuming reinvestment of dividends and capital
gains, if any, and does not include the initial sales charge. We have always
maintained a long-term perspective when managing the Fund, and we encourage
shareholders to view their investments in a similar manner. As you can see from
the table on page 7, the Fund's Class I shares delivered a cumulative total
return of more than 315% for the 10-year period ended February 28, 1998.
The Fund's share price, as measured by net asset value, decreased $1.97, from
$22.47 on August 31, 1997, to $20.50 on February 28, 1998. During the reporting
period, shareholders received per-share distributions of 54.5 cents ($0.545) in
income dividends, 33 cents ($0.33) in short-term capital gains, and $2.55 in
long-term capital gains. Distributions will vary depending on income earned by
the Fund and any profits realized from the sale of securities in the portfolio,
as well as the level of the Fund's operating expenses.
Past performance is not predictive of future results.
6
PAGE
CLASS I
Periods ended 2/28/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR 5-YEAR 10-YEAR (11/29/54)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) 18.93% 129.14% 315.48% 41,294.11%
Average Annual Total Return(2) 12.10% 16.65% 14.63% 14.79%
Value of $10,000 Investment(3) $ 11,210 $ 21,594 $ 39,161 $3,901,428
</TABLE>
<TABLE>
<CAPTION>
2/28/94 2/28/95 2/28/96 2/28/97 2/28/98
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(4) 31.86% 0.10% 21.90% 19.75% 18.93%
</TABLE>
1. Cumulative total return represents the change in value of an investment
over the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value
of an investment over the periods indicated and includes the current, maximum
5.75% initial sales charge. See Note below.
3. These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated and include the current, maximum 5.75%
initial sales charge. See Note below.
4. One-year total return represents the change in value of an investment over
the one-year periods ended on the dates indicated and does not include the sales
charge.
Note: Total returns have been restated to reflect the current, maximum 5.75%
initial sales charge. Prior to July 1, 1992, Fund shares were offered at a
higher initial sales charge. Thus, actual total returns would have been lower.
On January 1, 1993, the Fund's Class I shares implemented a Rule 12b-1 plan,
which affects subsequent performance.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Investment return and principal value will fluctuate with market
conditions, currency volatility and the social, 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 their
relatively small size and lesser liquidity. You may have a gain or loss when you
sell your shares.
Past performance is not predictive of future results.
7
PAGE
CLASS II
Templeton Growth Fund - Class II produced a 6.34% cumulative total return for
the six-month period ended February 28, 1998. Cumulative total return measures
the change in value of an investment, assuming reinvestment of dividends and
capital gains, if any, and does not include sales charges.
The Fund's share price, as measured by net asset value, decreased $1.95, from
$22.18 on August 31, 1997, to $20.23 on February 28, 1998. During the reporting
period, shareholders received per-share distributions of 42.51 cents ($0.4251)
in income dividends, 33 cents ($0.33) in short-term capital gains, and $2.55 in
long-term capital gains. Distributions will vary depending on income earned by
the Fund and any profits realized from the sale of securities in the portfolio,
as well as the level of the Fund's operating expenses.
Past performance is not predictive of future results.
8
PAGE
CLASS II
Periods ended 2/28/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR (5/1/95)
- --------------------------------------------------------------
<S> <C> <C>
Cumulative Total Return(1) 18.05% 61.08%
Average Annual Total Return(2) 15.89% 17.91%
Value of $10,000 Investment(3) $11,589 $15,944
</TABLE>
1. Cumulative total return represents the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1.0% initial sales
charge and the 1.0% contingent deferred sales charge applicable to shares
redeemed within 18 months of investment.
3. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated and include all sales charges.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Investment return and principal value will fluctuate with market
conditions, currency volatility and the social, 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 their
relatively small size and lesser liquidity. You may have a gain or loss when you
sell your shares.
Past performance is not predictive of future results.
9
PAGE
ADVISOR CLASS
Templeton Growth Fund - Advisor Class produced a 6.94% cumulative total return
for the six-month period ended February 28, 1998. Cumulative total return
measures the change in value of an investment, assuming reinvestment of
dividends and capital gains, if any.
The Fund's share price, as measured by net asset value, decreased $1.98, from
$22.49 on August 31, 1997, to $20.51 on February 28, 1998. During the reporting
period, shareholders received per-share distributions of 59.13 cents ($0.5913)
in income dividends, 33 cents ($0.33) in short-term capital gains, and $2.55 in
long-term capital gains. Distributions will vary depending on income earned by
the Fund and any profits realized from the sale of securities in the portfolio,
as well as the level of the Fund's operating expenses.
Past performance is not predictive of future results.
10
PAGE
ADVISOR CLASS
Period ended 2/28/98
<TABLE>
<CAPTION>
SINCE
INCEPTION
1-YEAR* 5-YEAR* 10-YEAR* (11/29/54)*
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return(1) 19.24% 129.73% 316.55% 41,400.31%
Average Annual Total Return(1) 19.24% 18.10% 15.34% 14.96%
Value of $10,000 Investment(2) $11,924 $22,973 $ 41,655 $ 4,150,031
</TABLE>
<TABLE>
<CAPTION>
2/28/94 2/28/95 2/28/96 2/28/97 2/28/98
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
One-Year Total Return(3),* 31.86% 0.10% 21.90% 19.75% 19.24%
</TABLE>
*On January 2, 1997, the Fund began selling Advisor Class shares to certain
eligible investors as described in the prospectus. This share class does not
have sales charges or a Rule 12b-1 plan. Performance quotations have been
calculated as follows: (a) For periods prior to January 2, 1997, figures reflect
the Fund's Class I performance, excluding the effect of the Class I sales
charge, but including the effect of Class I expenses, including Rule 12b-1 fees;
and (b) for periods after January 1, 1997, figures reflect actual Advisor Class
performance, including the deduction of all fees and expenses applicable only to
that class. Since January 2, 1997 (commencement of sales), the cumulative total
return of Advisor Class shares was 24.16%.
1. Cumulative total return represents the change in value of an investment over
the periods indicated. Average annual total return represents the average annual
change in value of an investment over the periods indicated.
2. These figures represent the value of a hypothetical $10,000 investment in the
Fund over the periods indicated.
3. One-year total return represents the change in value of an investment over
the one-year periods ended on the dates indicated.
All calculations assume reinvestment of dividends and capital gains at net asset
value. Investment return and principal value will fluctuate with market
conditions, currency volatility and the social, 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 their
relatively small size and lesser liquidity. You may have a gain or loss when you
sell your shares.
Past performance is not predictive of future results.
11
PAGE
TEMPLETON GROWTH FUND
CLASS I
If you had invested $10,000 in Templeton Growth Fund - Class I at inception, it
would be worth more than $3.9 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
reinvested through February 28, 1998.*
<TABLE>
<CAPTION>
DATE INITIAL INCOME INITIAL + CAP GAINS INITIAL + TOTAL VALUE
DIVIDENDS CAP GAINS
<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
12/31/97 $548,539 $961,808 $1,510,347 $2,181,733 $2,730,272 $3,692,080
2/27/98 $579,642 $1,016,343 $1,595,985 $2,305,439 $2,885,081 $3,901,428
</TABLE>
*Cumulative total return represents the change in value of an investment over
the indicated period. All figures have been restated to reflect the maximum
5.75% initial sales charge; thus actual total return for purchasers of shares
during the periods shown may differ. Prior to July 1, 1992, these shares were
offered at a higher initial sales charge. On January 1, 1993, the Fund's Class I
shares implemented a plan of distribution under Rule 12b-1, which will affect
subsequent performance.
All figures assume reinvestment of dividends and capital gains at net asset
value. Investment return and principal value will fluctuate with market
conditions, and you may have a gain or loss when you sell your shares. This was
a period of generally rising securities prices.
The historical data shown above pertain only to Class I shares of the Fund. The
Fund offers other share classes, subject to different fees and expenses, which
will affect their performance. Please see the prospectus for more details.
Past performance is not predictive of future results.
12
PAGE
TEMPLETON GROWTH FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE - CLASS
I
(For a share outstanding throughout the
period)
Net asset value, beginning of period.... $22.47 $18.75 $18.96 $18.95 $17.47 $15.81
-----------------------------------------------------------------------------------
Income from investment operations:
Net investment income.................. .19 .54 .50 .39 .29 .32
Net realized and unrealized gain....... 1.27 4.48 1.34 1.20 2.58 2.97
-----------------------------------------------------------------------------------
Total from investment operations........ 1.46 5.02 1.84 1.59 2.87 3.29
-----------------------------------------------------------------------------------
Less distributions from:
Net investment income.................. (.55) (.49) (.44) (.29) (.27) (.36)
Net realized gains..................... (2.88) (.81) (1.61) (1.29) (1.12) (1.27)
-----------------------------------------------------------------------------------
Total distributions..................... (3.43) (1.30) (2.05) (1.58) (1.39) (1.63)
-----------------------------------------------------------------------------------
Net asset value, end of period.......... $20.50 $22.47 $18.75 $18.96 $18.95 $17.47
===================================================================================
Total Return*........................... 6.76% 28.28% 10.85% 9.51% 17.47% 23.57%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)....... $13,540,036 $12,129,283 $8,450,737 $6,964,298 $5,611,560 $4,033,911
Ratios to average net assets:
Expenses............................... 1.08%** 1.08% 1.09% 1.12% 1.10% 1.03%
Net investment income.................. 2.03%** 2.81% 2.87% 2.40% 1.76% 2.10%
Portfolio turnover rate................. 25.66% 41.81% 19.63% 35.21% 27.35% 28.89%
Average commission rate paid***......... $.0116 $.0007 $.0146 -- -- --
</TABLE>
*Total return does not reflect sales commissions and is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities. Prior to fiscal year
1996 disclosure of average commission rate was not required.
13
PAGE
TEMPLETON GROWTH FUND, INC.
Financial Highlights (continued)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1998 -----------------------------------
(UNAUDITED) 1997 1996 1995+
--------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE - CLASS II
(For a share outstanding throughout the period)
Net asset value, beginning of period........................ $22.18 $18.57 $18.90 $17.48
--------------------------------------------------------
Income from investment operations:
Net investment income...................................... .15 .42 .49 .04
Net realized and unrealized gain........................... 1.20 4.39 1.19 1.38
--------------------------------------------------------
Total from investment operations............................ 1.35 4.81 1.68 1.42
--------------------------------------------------------
Less distributions from:
Net investment income...................................... (.42) (.39) (.40) --
Net realized gains......................................... (2.88) (.81) (1.61) --
--------------------------------------------------------
Total distributions......................................... (3.30) (1.20) (2.01) --
--------------------------------------------------------
Net asset value, end of period.............................. $20.23 $22.18 $18.57 $18.90
========================================================
Total Return*............................................... 6.34% 27.30% 9.99% 8.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)........................... $966,167 $755,184 $280,087 $42,548
Ratios to average net assets:
Expenses................................................... 1.83%** 1.84% 1.87% 1.86%**
Net investment income...................................... 1.27%** 2.14% 2.25% 1.61%**
Portfolio turnover rate..................................... 25.66% 41.81% 19.63% 35.21%
Average commission rate paid***............................. $.0116 $.0007 $.0146 --
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge and is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities. Prior to fiscal year
1996 disclosure of average commission rate was not required.
+For the period May 1, 1995 (effective date) to August 31, 1995.
14
PAGE
TEMPLETON GROWTH FUND, INC.
Financial Highlights (continued)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1998 YEAR ENDED
(UNAUDITED) AUGUST 31, 1997+
-------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE - ADVISOR CLASS
(For a share outstanding throughout the period)
Net asset value, beginning of period........................ $22.49 $19.37
-------------------------------------
Income from investment operations:
Net investment income...................................... .23 .37
Net realized and unrealized gain........................... 1.26 2.75
-------------------------------------
Total from investment operations............................ 1.49 3.12
-------------------------------------
Less distributions from:
Net investment income...................................... (.59) --
Net realized gains......................................... (2.88) --
-------------------------------------
Total distributions......................................... (3.47) --
-------------------------------------
Net asset value, end of period.............................. $20.51 $22.49
=====================================
Total Return*............................................... 6.94% 16.11%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's)........................... $43,282 $29,531
Ratios to average net assets:
Expenses................................................... .83%** .83%**
Net investment income...................................... 2.25%** 3.68%**
Portfolio turnover rate..................................... 25.66% 41.81%
Average commission rate paid***............................. $.0116 $.0007
</TABLE>
*Total return is not annualized.
**Annualized.
***Relates to purchases and sales of equity securities.
+For the period January 2, 1997 (effective date) to August 31, 1997.
See Notes to Financial Statements.
15
PAGE
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 67.6%
AEROSPACE & MILITARY TECHNOLOGY 1.3%
Boeing Co. ................................................. United States 1,011,000 $ 54,846,750
General Motors Corp., H..................................... United States 1,631,300 67,596,994
Hong Kong Aircraft Engineering Co. Ltd. .................... Hong Kong 1,446,400 3,091,756
Raytheon Co., A............................................. United States 1,147,015 66,526,870
---------------
192,062,370
---------------
APPLIANCES & HOUSEHOLD DURABLES .7%
Sony Corp. ................................................. Japan 956,700 86,489,929
Toro Co. ................................................... United States 331,800 13,313,475
---------------
99,803,404
---------------
AUTOMOBILES 4.2%
Fiat SpA, di Risp........................................... Italy 3,589,960 7,505,486
Ford Motor Co. ............................................. United States 3,016,600 170,626,438
General Motors Corp. ....................................... United States 3,956,700 272,765,006
Peugeot SA.................................................. France 401,650 57,260,635
Volvo AB, B................................................. Sweden 3,941,000 106,673,314
---------------
614,830,879
---------------
BANKING 5.6%
Bangkok Bank Public Co. Ltd., fgn. ......................... Thailand 10,838,100 37,008,146
*Cho Hung Bank Co. Ltd. .................................... South Korea 2,449,429 3,824,889
Citicorp.................................................... United States 103,000 13,647,500
Deutsche Bank AG............................................ Germany 2,300,000 157,986,714
Guoco Group Ltd. ........................................... Hong Kong 15,151,000 38,550,171
HSBC Holdings Plc. ......................................... Hong Kong 7,789,341 225,355,167
*Kookmin Bank............................................... South Korea 1,258,753 8,758,084
Krung Thai Bank Public Co. Ltd., fgn. ...................... Thailand 10,000,000 3,542,393
National Australia Bank Ltd. ............................... Australia 9,062,801 124,891,289
National Australia Cap Sec Plc. ............................ Australia 710,553 20,161,941
National Westminster Bank Plc. ............................. United Kingdom 5,828,834 107,505,678
*Shinhan Bank Co. Ltd. ..................................... South Korea 1,675,840 7,973,837
Thai Farmers Bank Public Co. Ltd., fgn. .................... Thailand 10,840,600 32,484,028
Unibanco Uniao de Bancos Brasileiros SA, GDR................ Brazil 773,440 26,490,320
Union Bank of Norway, Primary Capital Cert. ................ Norway 385,000 12,855,012
---------------
821,035,169
---------------
BROADCASTING & PUBLISHING .1%
Sing Tao Holdings Ltd. ..................................... Hong Kong 408,400 84,397
South China Morning Post Ltd. .............................. Hong Kong 22,993,000 16,630,391
---------------
16,714,788
---------------
BUILDING MATERIALS & COMPONENTS 1.2%
+Hepworth Plc. ............................................. United Kingdom 16,767,410 62,154,721
+Owens Corning Capital LLC.................................. United States 2,965,000 91,544,375
</TABLE>
16
PAGE
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
BUILDING MATERIALS & COMPONENTS (CONT.)
Siam Cement Public Co. Ltd., fgn. .......................... Thailand 1,296,630 $ 18,432,928
Siam City Cement Public Co. Ltd., fgn. ..................... Thailand 1,892,307 5,494,503
---------------
177,626,527
---------------
BUSINESS & PUBLIC SERVICES 1.5%
Columbia HCA Healthcare Corp. .............................. United States 1,155,200 31,334,800
*Humana Inc. ............................................... United States 6,795,400 172,857,988
Wheelabrator Technologies Inc. ............................. United States 1,021,900 16,669,744
---------------
220,862,532
---------------
CHEMICALS 2.3%
Courtaulds Plc. ............................................ United Kingdom 14,482,100 83,865,336
DSM NV...................................................... Netherlands 900,000 90,248,734
Eastman Chemical Co. ....................................... United States 1,100,000 72,050,000
European Vinyls Corporation Evc International NV............ Netherlands 388,971 7,192,068
Lyondell Petrochemical Co. ................................. United States 868,600 23,669,350
Rhone-Poulenc SA, A......................................... France 1,258,500 58,067,105
---------------
335,092,593
---------------
CONSTRUCTION & HOUSING .2%
Fletcher Challenge Building Ltd. ........................... New Zealand 5,267,917 12,535,106
Hollandsche Beton Groep NV.................................. Netherlands 561,785 11,431,632
---------------
23,966,738
---------------
ELECTRICAL & ELECTRONICS 4.7%
ABB AB, A................................................... Sweden 10,700,000 134,443,958
General Electric Co. Plc. .................................. United Kingdom 17,736,690 116,446,522
Gold Peak Industries (Holdings) Ltd. ....................... Hong Kong 4,307,000 1,724,469
*Gold Peak Industries (Holdings) Ltd., wts. ................ Hong Kong 463,400 35,312
Hitachi Ltd. ............................................... Japan 9,734,500 73,182,443
Motorola Inc. .............................................. United States 2,167,600 120,843,700
Philips Electronics NV...................................... Netherlands 3,057,400 237,790,300
---------------
684,466,704
---------------
ELECTRONIC COMPONENTS & INSTRUMENTS .1%
BICC Plc. .................................................. United Kingdom 9,427,200 20,268,371
---------------
ENERGY EQUIPMENT & SERVICES .1%
Sun Co. Inc. ............................................... United States 329,900 13,175,381
---------------
ENERGY SOURCES 4.7%
*Barrett Resources Corp. ................................... United States 1,100,000 33,343,750
Fletcher Challenge Energy Ltd. ............................. New Zealand 3,056,267 11,167,758
Norsk Hydro AS.............................................. Norway 1,751,577 76,515,334
Occidental Petroleum Corp. ................................. United States 3,500,000 89,468,750
Petron Corporation.......................................... Philippines 8,766,612 1,300,390
*Ranger Oil Ltd. ........................................... Canada 1,535,100 9,882,206
</TABLE>
17
PAGE
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
ENERGY SOURCES (CONT.)
Repsol SA................................................... Spain 2,429,700 $ 108,415,129
Saga Petroleum AS, A........................................ Norway 1,052,250 17,914,302
Saga Petroleum AS, B........................................ Norway 1,927,910 28,751,231
Societe Elf Aquitaine SA.................................... France 1,205,000 137,312,341
Transportadora de Gas del Sur SA, ADR, B.................... Argentina 1,400,000 16,450,000
Valero Energy Corp., new.................................... United States 70,800 2,513,400
YPF Sociedad Anonima........................................ Argentina 1,400,000 44,542,717
YPF Sociedad Anonima, ADR................................... Argentina 3,282,800 103,818,550
---------------
681,395,858
---------------
FINANCIAL SERVICES 1.7%
Axa-UAP..................................................... France 1,326,671 128,489,553
Merrill Lynch & Co. Inc. ................................... United States 1,580,300 113,090,219
---------------
241,579,772
---------------
FOOD & HOUSEHOLD PRODUCTS 2.8%
Archer-Daniels Midland Co. ................................. United States 5,881,937 131,975,961
*Boston Chicken Inc. ....................................... United States 259,600 1,800,975
*Burns Philp & Co. Ltd. .................................... Australia 7,258,577 1,182,596
Embotelladora Andina SA, ADR, B............................. Chile 511,500 9,079,125
Hillsdown Holdings Plc. .................................... United Kingdom 20,423,076 53,498,782
IBP Inc..................................................... United States 3,750,000 83,671,875
Panamerican Beverages Inc., A............................... Mexico 735,000 26,781,563
Tate & Lyle Plc. ........................................... United Kingdom 9,000,000 77,918,548
Vitro SA.................................................... Mexico 6,090,720 23,006,767
Vitro SA, ADR............................................... Mexico 492,840 5,575,253
---------------
414,491,445
---------------
FOREST PRODUCTS & PAPER 4.5%
Aracruz Celulose SA, ADR.................................... Brazil 2,338,900 32,013,694
Assidomaen AB............................................... Sweden 1,198,100 29,508,745
Boise Cascade Corp. ........................................ United States 1,582,600 52,720,363
Bowater Inc................................................. United States 721,000 35,689,500
Carter Holt Harvey Ltd. .................................... New Zealand 21,175,553 32,312,456
Enso OY, A.................................................. Finland 98,700 887,372
Enso OY, R.................................................. Finland 4,973,575 44,986,430
Fletcher Challenge Ltd. Forestry Division................... New Zealand 18,349,509 13,624,572
Fletcher Challenge Ltd. Forestry Division, AUD.............. New Zealand 228,421 172,121
Fletcher Challenge Paper Ltd. .............................. New Zealand 16,178,835 21,755,535
Metsa Serla OY, B........................................... Finland 2,611,000 23,332,189
Mo Och Domsjoe AB, B........................................ Sweden 2,095,200 61,034,144
Norske Skogindustrier AS, A................................. Norway 994,000 30,303,278
PT Tjiwi Kimia TBK.......................................... Indonesia 22,081,714 4,132,611
*Sappi Ltd. ................................................ South Africa 3,000,000 13,325,913
St. Joe Paper Corp. ........................................ United States 1,687,800 57,596,175
Stora Kopparbergs Bergslags AB, A........................... Sweden 1,414,200 20,598,150
</TABLE>
18
PAGE
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
FOREST PRODUCTS & PAPER (CONT.)
Stora Kopparbergs Bergslags AB, B........................... Sweden 2,085,800 $ 30,119,385
Svenska Cellulosa AB, B..................................... Sweden 1,642,844 37,381,710
UPM-Kymmene Corp............................................ Finland 4,301,840 111,731,030
---------------
653,225,373
---------------
HEALTH & PERSONAL CARE .1%
Aetna Inc. ................................................. United States 117,500 10,266,563
---------------
INDUSTRIAL COMPONENTS 2.0%
BTR Plc. ................................................... United Kingdom 22,500,000 59,588,042
Goodyear Tire & Rubber Co. ................................. United States 1,682,600 116,309,725
Sandvik AB, A............................................... Sweden 265,000 7,487,654
Sandvik AB, B............................................... Sweden 2,156,000 60,379,321
SKF AB, B................................................... Sweden 2,478,974 51,293,392
---------------
295,058,134
---------------
INSURANCE .8%
American General Corp. ..................................... United States 1,100,000 63,937,500
American International Group Inc. .......................... United States 91,875 11,042,227
W R Berkley Corp. .......................................... United States 940,650 42,917,156
---------------
117,896,883
---------------
LEISURE & TOURISM .2%
*Shangri-La Asia Ltd. ...................................... Hong Kong 8,330,000 7,477,365
Thistle Hotels Plc. ........................................ United Kingdom 6,735,000 20,638,407
---------------
28,115,772
---------------
MACHINERY & ENGINEERING 1.1%
+Agco Corp. ................................................ United States 4,139,500 116,423,438
Makita Corp. ............................................... Japan 269,000 3,114,512
New Holland NV.............................................. Netherlands 1,600,000 39,600,000
Valmet (OY)................................................. Finland 139,200 2,090,876
---------------
161,228,826
---------------
MERCHANDISING 2.2%
American Stores Co. ........................................ United States 2,405,000 60,575,938
Best Denki Co. Ltd. ........................................ Japan 72,000 436,796
Dairy Farm International Holdings Ltd. ..................... Hong Kong 36,629,531 43,955,437
*Gucci Group NV............................................. Netherlands 1,300,000 54,518,750
Kwik Save Group Plc. ....................................... United Kingdom 1,974,267 11,254,018
Safeway Plc. ............................................... United Kingdom 4,309,883 25,561,928
Somerfield Plc. ............................................ United Kingdom 14,000,000 69,541,006
W.H. Smith Group............................................ United Kingdom 6,378,100 51,751,528
---------------
317,595,401
---------------
</TABLE>
19
PAGE
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
METALS & MINING 4.1%
Alcan Aluminum Ltd. ........................................ Canada 2,463,360 $ 76,241,706
Anglo American Platinum Corp. Ltd. ......................... South Africa 3,000,000 42,740,059
British Steel Plc. ......................................... United Kingdom 56,500,000 135,902,336
Cia Vale do Rio Doce, ADR................................... Brazil 1,300,000 28,297,129
Companhia Siderurgica Nacional CSN, ADR..................... Brazil 1,177,905 30,036,578
Grupo Mexico SA de CV, B.................................... Mexico 4,810,700 16,591,540
*Industrias Penoles SA...................................... Mexico 631,000 2,664,790
Maanshan Iron & Steel Co. Ltd., H........................... China 17,129,000 1,836,238
*Minorco SA, ADR............................................ Luxembourg 953,974 16,694,545
Outokumpu OY, A............................................. Finland 666,200 8,712,056
Pechiney SA, A.............................................. France 1,518,775 67,428,965
*Pohang Iron & Steel Co. Ltd. .............................. South Korea 630,603 39,531,336
Reynolds Metals Co. ........................................ United States 643,208 40,079,899
South African Iron & Steel Industrial Corp. Ltd. ........... South Africa 30,000,000 10,017,201
+*Titanium Metals........................................... United States 2,322,000 69,950,250
*Union Miniere NPV.......................................... Belgium 79,802 5,905,732
---------------
592,630,360
---------------
MISCELLANEOUS MATERIALS & COMMODITIES .5%
Agrium Inc. ................................................ Canada 4,208,400 56,024,325
De Beers Centenary Linked Units, Reg. ...................... South Africa 870,850 17,270,728
---------------
73,295,053
---------------
MULTI-INDUSTRY 4.9%
Alfa SA de CV, A............................................ Mexico 239,100 1,360,355
Amoy Properties Ltd. ....................................... Hong Kong 28,556,000 24,157,804
Broken Hill Proprietary Co. Ltd. ........................... Australia 11,500,000 113,198,197
Cheung Kong Holdings Ltd. .................................. Hong Kong 25,000,000 175,169,519
Elementis Plc. ............................................. United Kingdom 19,800,000 42,243,567
First Pacific Co. .......................................... Hong Kong 43,739,000 22,314,375
Hicom Holdings Bhd. ........................................ Malaysia 1,957,800 1,155,076
Inchcape Plc. .............................................. United Kingdom 22,139,966 68,756,526
Jardine Matheson Holdings Ltd. ............................. Hong Kong 8,968,178 41,971,073
Jardine Strategic Holdings Ltd. ............................ Hong Kong 14,245,732 40,600,336
Pilkington Plc. ............................................ United Kingdom 35,000,000 66,311,905
Swire Pacific Ltd., A....................................... Hong Kong 15,259,000 91,839,768
Swire Pacific Ltd., B....................................... Hong Kong 19,638,300 19,784,145
---------------
708,862,646
---------------
REAL ESTATE .7%
Hang Lung Development Co. Ltd. ............................. Hong Kong 8,287,000 12,148,201
New World Development Co. Ltd. ............................. Hong Kong 9,000,000 33,186,955
Rouse Co. .................................................. United States 1,200,000 39,900,000
Union du Credit Bail Immobilier Unibail..................... France 73,622 8,038,314
Wereldhave NV............................................... Netherlands 160,000 9,673,490
---------------
102,946,960
---------------
</TABLE>
20
PAGE
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
RECREATION & OTHER CONSUMER GOODS .1%
Fila Holding SpA, ADR....................................... Italy 316,600 $ 6,925,625
Yue Yuen Industrial (Holdings) Ltd. ........................ Hong Kong 1,677,000 3,227,291
---------------
10,152,916
---------------
TELECOMMUNICATIONS 7.9%
AT&T Corp. ................................................. United States 1,400,000 85,225,000
Bell Atlantic Corp. ........................................ United States 1,550,000 139,112,500
British Telecommunications Plc. ............................ United Kingdom 10,000,000 100,827,045
Hong Kong Telecommunications Ltd. .......................... Hong Kong 30,328,600 63,849,684
PT Indosat TBK, ADR......................................... Indonesia 544,700 8,170,500
SK Telecom Co. Ltd., ADR.................................... South Korea 6,905,698 59,561,645
Smartone Telecommunications Holdings Ltd. .................. Hong Kong 1,290,000 3,340,588
Tele Danmark AS, B.......................................... Denmark 1,004,800 65,110,854
Telecom Argentina Stet-France SA, ADR....................... Argentina 2,816,400 103,326,675
Telecom Italia SpA, di Risp................................. Italy 18,496,550 89,593,068
Telefonica de Argentina SA, B, ADR.......................... Argentina 566,000 20,376,000
Telefonica de Espana SA..................................... Spain 2,389,200 82,209,366
Telefonica del Peru SA, B................................... Peru 8,459,874 15,761,685
Telefonica del Peru SA, B, ADR.............................. Peru 1,083,200 20,513,100
Telefonos de Mexico SA (Telmex), L.......................... Mexico 14,118,470 35,443,165
Telefonos de Mexico SA (Telmex), L, ADR..................... Mexico 2,900,000 146,993,750
U.S. West Communications Group.............................. United States 2,000,000 104,125,000
---------------
1,143,539,625
---------------
TEXTILES & APPAREL .5%
*Daehan Synthetic Fiber Co. Ltd. ........................... South Korea 18,550 662,257
*Fruit of the Loom Inc., A.................................. United States 2,050,000 65,856,250
---------------
66,518,507
---------------
TRANSPORTATION 1.4%
Air New Zealand Ltd., B..................................... New Zealand 3,709,000 5,529,574
Cathay Pacific Airways Ltd. ................................ Hong Kong 30,603,000 26,284,785
Hitachi Zosen Corp. ........................................ Japan 2,289,000 5,227,851
IMC Holdings Ltd. .......................................... Hong Kong 6,860,000 1,594,834
*Korean Air................................................. South Korea 134,138 765,564
Malaysian International Shipping Corp., fgn. ............... Malaysia 4,000,000 7,361,299
Peninsular & Oriental Steam Navigation Co. ................. United Kingdom 4,621,630 59,390,283
Shun Tak Holdings........................................... Hong Kong 28,906,000 7,018,829
Singapore Airlines Ltd., fgn. .............................. Singapore 10,324,000 76,450,478
Stolt Nielsen SA............................................ Norway 463,500 8,400,938
Stolt Nielsen SA, ADR....................................... Norway 459,000 8,319,375
---------------
206,343,810
---------------
UTILITIES ELECTRICAL & GAS 5.4%
BG Plc. .................................................... United Kingdom 9,034,000 45,283,115
*CEZ AS..................................................... Czech Republic 213,761 6,126,747
CLP Holdings Ltd. .......................................... Hong Kong 9,000,000 46,729,093
</TABLE>
21
PAGE
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
--------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
UTILITIES ELECTRICAL & GAS (CONT.)
Electrabel SA............................................... Belgium 154,364 $ 37,487,811
Entergy Corp. .............................................. United States 3,600,000 104,175,000
Hong Kong Electric Holdings Ltd. ........................... Hong Kong 23,999,600 85,242,364
Iberdrola SA................................................ Spain 4,704,448 68,085,058
Illinova Corp. ............................................. United States 2,200,000 61,050,000
*Korea Electric Power Corp. ................................ South Korea 6,273,800 83,753,117
Mosenergo................................................... Russia 10,000,000 13,080,000
National Grid Group Plc. ................................... United Kingdom 11,900,000 67,246,038
New York State Electric & Gas Corp. ........................ United States 500,000 18,781,250
Public Service Co. of New Mexico............................ United States 423,200 9,865,850
Shandong Huaneng Power Development Co. Ltd., ADR............ China 900,000 7,593,750
Thames Water Group Plc. .................................... United Kingdom 6,443,874 94,219,549
Utilicorp United Inc. ...................................... United States 999,300 35,974,800
---------------
784,693,542
---------------
WHOLESALE & INTERNATIONAL TRADE
Sime Darby Hongkong Ltd. ................................... Hong Kong 6,660,000 3,311,721
---------------
TOTAL COMMON STOCKS (COST $8,429,570,688)................... 9,833,054,623
---------------
PREFERRED STOCKS 3.8%
Ballast Nedam NV, ctf., conv., pfd. ........................ Netherlands 104,359 5,411,037
Banco Bradesco SA, pfd. .................................... Brazil 3,171,500,000 26,940,141
Centrais Eletricas Brasileiras SA (Electrobras), ADR,
pfd. ..................................................... Brazil 1,072,200 25,141,176
Fiat SpA, pfd. ............................................. Italy 30,914,350 60,360,335
News Corp. Ltd., pfd. ...................................... Australia 25,399,405 138,801,158
Petroleo Brasileiro SA, pfd. ............................... Brazil 150,000,000 33,977,791
Telecomunicacoes Brasileiras SA (Telebras), pfd. ........... Brazil 875,600,000 106,917,489
Telecomunicacoes Brasileiras SA (Telebras), pfd., ADR....... Brazil 900,000 110,193,750
Usinas Siderurgicas De Minas Gerais SA, pfd. ............... Brazil 2,116,220 14,324,721
Volkswagen AG, pfd. ........................................ Germany 82,676 40,290,848
---------------
TOTAL PREFERRED STOCKS (COST $422,924,534).................. 562,358,446
---------------
<CAPTION>
PRINCIPAL
AMOUNT**
--------
<S> <C> <C> <C>
BONDS 6.2%
U.S. Treasury Bonds:
14.00%, 11/15/11.......................................... United States $ 97,000,000 150,925,977
7.875%, 2/15/21........................................... United States 128,500,000 158,175,533
6.25%, 8/15/23............................................ United States 155,303,000 160,544,632
U.S. Treasury Notes:
6.125%, 3/31/98........................................... United States 200,000,000 200,187,600
6.375%, 7/15/99........................................... United States 78,000,000 78,877,578
6.00%, 10/15/99........................................... United States 78,000,000 78,536,329
6.375%, 1/15/00........................................... United States 78,000,000 79,096,914
---------------
TOTAL BONDS (COST $876,823,143)............................. 906,344,563
---------------
</TABLE>
22
PAGE
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, FEBRUARY 28, 1998 (UNAUDITED) (CONT.)
<TABLE>
<CAPTION>
PRINCIPAL
COUNTRY AMOUNT** VALUE
------- --------- -----
<S> <C> <C> <C>
SHORT TERM INVESTMENTS 21.8%
U.S. Treasury Bills, 4.96% to 5.365%, with maturities to
5/28/98................................................... United States $2,886,263,000 $ 2,864,375,204
U.S. Treasury Notes, 6.00% to 9.00%, with maturities to
5/31/98................................................... United States 300,000,000 301,031,475
---------------
TOTAL SHORT TERM INVESTMENTS (COST $3,167,101,015).......... 3,165,406,679
---------------
TOTAL INVESTMENTS (COST $12,896,419,380) 99.4%.............. 14,467,164,311
OTHER ASSETS, LESS LIABILITIES .6%.......................... 82,321,161
---------------
TOTAL NET ASSETS 100.0%..................................... $14,549,485,472
===============
</TABLE>
*Non-income producing.
**Securities traded in U.S. dollars.
+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, 1998, were $340,072,784.
See Notes to Financial Statements.
23
PAGE
TEMPLETON GROWTH FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$12,896,419,380).......................................... $14,467,164,311
Cash....................................................... 2,440,656
Receivables:
Investment securities sold................................ 82,599,065
Capital shares sold....................................... 35,812,406
Dividends and interest.................................... 43,300,628
Other assets............................................... 48,773
---------------
Total assets.......................................... 14,631,365,839
---------------
Liabilities:
Payables:
Investment securities purchased........................... 51,624,910
Capital shares redeemed................................... 14,138,802
To affiliates............................................. 11,679,941
Distributions to shareholders.............................. 106,392
Other liabilities.......................................... 4,330,322
---------------
Total liabilities..................................... 81,880,367
---------------
Net assets, at value........................................ $14,549,485,472
===============
Net assets consist of:
Undistributed net investment income........................ $ 50,148,653
Net unrealized appreciation................................ 1,570,744,931
Accumulated net realized gain.............................. 926,627,929
Capital shares............................................. 12,001,963,959
---------------
Net assets, at value........................................ $14,549,485,472
===============
CLASS I:
Net asset value per share ($13,540,036,010 / 660,395,071
shares outstanding)....................................... $20.50
===============
Maximum offering price per share ($20.50 / 94.25%)......... $21.75
===============
CLASS II:
Net asset value per share ($966,167,020 / 47,754,077 shares
outstanding)*............................................. $20.23
===============
Maximum offering price per share ($20.23 / 99.00%)......... $20.43
===============
ADVISOR CLASS:
Net asset value and maximum offering price per share
($43,282,442 / 2,110,353 shares outstanding)............. $20.51
===============
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
24
PAGE
TEMPLETON GROWTH FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $8,067,939)
Dividends.................................................. $ 110,451,010
Interest................................................... 98,446,163
--------------
Total investment income............................... $ 208,897,173
Expenses:
Management fees (Note 3)................................... 40,911,369
Administrative fees (Note 3)............................... 5,329,323
Distribution fees (Note 3)
Class I.............................................. 15,272,042
Class II............................................. 4,242,725
Transfer agent fees (Note 3)............................... 6,144,513
Custodian fees............................................. 1,503,928
Reports to shareholders.................................... 1,390,000
Registration and filing fees............................... 562,500
Professional fees.......................................... 50,307
Directors' fees and expenses............................... 75,000
Other...................................................... 141,728
--------------
Total expenses........................................ 75,623,435
--------------
Net investment income........................... 133,273,738
--------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 1,280,048,877
Foreign currency transactions............................. (4,703,049)
--------------
Net realized gain...................................... 1,275,345,828
Net unrealized depreciation on investments............. (505,002,411)
--------------
Net realized and unrealized gain............................ 770,343,417
--------------
Net increase in net assets resulting from operations........ $ 903,617,155
==============
</TABLE>
See Notes to Financial Statements.
25
PAGE
TEMPLETON GROWTH FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 28, 1998 YEAR ENDED
(UNAUDITED) AUGUST 31, 1997
---------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 133,273,738 $ 299,645,065
Net realized gain from investments and foreign currency
transactions............................................ 1,275,345,828 1,454,846,690
Net unrealized appreciation (depreciation) on
investments.............................................. (505,002,411) 835,123,789
---------------------------------------
Net increase in net assets resulting from operations.... 903,617,155 2,589,615,544
Distributions to shareholders from:
Net investment income:
Class I.................................................. (309,650,504) (224,233,853)
Class II................................................. (16,117,106) (6,799,222)
Advisor Class............................................ (844,241) --
Net realized gains:
Class I.................................................. (1,624,139,512) (372,774,314)
Class II................................................. (109,111,661) (13,998,148)
Advisor Class............................................ (4,067,274) --
Capital share transactions (Note 2):
Class I.................................................. 2,497,860,959 1,795,361,405
Class II................................................. 282,026,136 388,966,140
Advisor Class............................................ 15,913,234 27,036,800
---------------------------------------
Net increase in net assets.............................. 1,635,487,186 4,183,174,352
Net assets:
Beginning of period........................................ 12,913,998,286 8,730,823,934
---------------------------------------
End of period.............................................. $14,549,485,472 $12,913,998,286
=======================================
Undistributed net investment income included in net assets:
End of period.............................................. $ 50,148,653 $ 243,486,766
=======================================
</TABLE>
See Notes to Financial Statements.
26
PAGE
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Templeton Growth Fund, Inc. (the Fund) is registered under the Investment
Company Act of 1940 as a diversified, open-end investment company. 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. SECURITY VALUATION:
Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the latest reported sales price. Over-the-counter securities and
listed securities for which no sale is reported are valued within the range of
the latest quoted bid and asked prices. Securities for which market quotations
are not readily available are valued at fair value as determined by management
in accordance with procedures established by the Board of Directors.
b. FOREIGN CURRENCY TRANSLATION:
Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date. When
the Fund purchases or sells foreign securities it will customarily enter into a
foreign exchange contract to minimize foreign exchange risk from the trade date
to the settlement date of such transactions.
The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign currency denominated assets and liabilities other than investments in
securities held at the end of the reporting period.
c. INCOME TAXES:
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute all of its taxable income.
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS:
Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as
27
PAGE
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (unaudited) (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS (CONT.)
information is available to the Fund. Interest income and estimated expenses are
accrued daily. Dividend income and distributions to shareholders are recorded on
the ex-dividend date.
Realized and unrealized gains and losses and net investment income, other than
class specific expenses, are allocated daily to each class of shares based upon
the relative proportion of net assets of each class.
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.
2. CAPITAL STOCK
The Fund offers three classes of shares: Class I, Class II and Advisor Class
shares. The shares differ by their initial sales load, distribution fees, voting
rights on matters affecting a single class of shares and the exchange privilege
of each class.
At February 28, 1998, there were 1.8 billion shares authorized ($0.01 par value)
of which 1.2 billion, 400 million, and 200 million were designated Class I
shares, Class II shares and Advisor Class shares, respectively. Transactions in
the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
--------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I SHARES:
Shares sold........................................ 78,629,180 $1,616,496,806 116,375,056 $ 2,413,664,953
Shares issued on reinvestment of distributions..... 84,308,265 1,737,852,771 28,725,892 533,837,608
Shares redeemed.................................... (42,262,105) (856,488,618) (55,979,411) (1,152,141,156)
--------------------------------------------------------------------
Net increase....................................... 120,675,340 $2,497,860,959 89,121,537 $ 1,795,361,405
====================================================================
</TABLE>
28
PAGE
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (unaudited) (continued)
2. CAPITAL STOCK (CONT.)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS II SHARES:
Shares sold........................................... 11,398,851 $233,526,879 19,727,633 $406,674,814
Shares issued on reinvestment of distributions........ 5,371,227 109,385,419 977,215 18,004,847
Shares redeemed....................................... (3,065,449) (60,886,162) (1,736,615) (35,713,521)
---------------------------------------------------------------
Net increase.......................................... 13,704,629 $282,026,136 18,968,233 $388,966,140
===============================================================
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997*
---------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Shares sold........................................... 753,954 $ 14,866,785 1,386,033 $ 28,617,159
Shares issued on reinvestment of distributions........ 235,360 4,847,728 -- --
Shares redeemed....................................... (192,034) (3,801,279) (72,960) (1,580,359)
---------------------------------------------------------------
Net increase.......................................... 797,280 $ 15,913,234 1,313,073 $ 27,036,800
===============================================================
</TABLE>
*Effective date of Advisor Class shares was January 2, 1997.
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Certain officers of the Fund are also officers or directors of Templeton Global
Advisors Ltd. (TGAL), Franklin Templeton Services, Inc. (FT Services),
Franklin/Templeton Distributors, Inc. (Distributors) and Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund's investment manager,
administrative manager, principal underwriter, and transfer agent, respectively.
The Fund pays an investment management fee to TGAL based on the average daily
net assets of the Fund as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- -----------------------------------------------------------------
<S> <C>
0.75% First $200 million
0.675% Over $200 million, up to and including $1.3 billion
0.60% Over $1.3 billion
</TABLE>
29
PAGE
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (unaudited) (continued)
3. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
The Fund pays an administrative fee to FT Services based on the Fund's average
daily net assets as follows:
<TABLE>
<CAPTION>
ANNUALIZED
FEE RATE AVERAGE DAILY NET ASSETS
- -----------------------------------------------------------------
<S> <C>
0.15% First $200 million
0.135% Over $200 million, up to and including $700 million
0.10% Over $700 million, up to and including $1.2 billion
0.075% Over $1.2 billion
</TABLE>
The Fund reimburses Distributors up to 0.25% and 1.00% per year of the average
daily net assets of Class I and Class II shares, respectively, for costs
incurred in marketing the Fund's Class I and Class II shares. Under the Class I
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At February 28, 1998, unreimbursed costs were $100,857. Distributors
received net commissions from sales of Fund shares, and received contingent
deferred sales charges for the period of $2,629,222 and $147,097, respectively.
4. INCOME TAXES
At February 28, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes of $12,897,224,403 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $2,201,363,920
Unrealized depreciation..................................... (631,424,012)
--------------
Net unrealized appreciation................................. $1,569,939,908
==============
</TABLE>
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the six
months ended February 28, 1998 aggregated $2,904,973,242 and $3,119,396,539,
respectively.
30
PAGE
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PAGE
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PAGE
LITERATURE REQUEST
For a free brochure and prospectus, which contain more complete information,
including charges and expenses, call Franklin Fund Information, toll free, at
1-800/DIAL BEN (1-800/342-5236). Please read the prospectus carefully before you
invest or send money. 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.
FRANKLIN TEMPLETON GROUP
GLOBAL GROWTH
Franklin Global Health Care 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 Biotechnology
Discovery Fund
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 Financial Services 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 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)
*These funds are now closed to new accounts, with the exception of retirement
accounts.
**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.
10/97.1
PAGE
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
777 Mariners Island Blvd.
San Mateo, California 94404-1585
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
risk factors, 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.
101 S98 04/98 [LOGO] Printed on recycled paper
