Annual
Report
AUGUST 31, 2000
TEMPLETON GROWTH FUND, INC.
[FRANKLIN TEMPLETON INVESTMENTS LOGO]
<PAGE>
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective and 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.
[PHOTO OF MARK G. HOLOWESKO]
MARK G. HOLOWESKO, CFA
Portfolio Manager
Templeton Growth Fund, Inc.
Mark G. Holowesko is president of Templeton Global Advisors Ltd. He joined the
Templeton organization in 1985 in Nassau, Bahamas, and serves 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.
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<PAGE>
SHAREHOLDER LETTER
Your Fund's Goal: Templeton Growth Fund, Inc. seeks long-term capital growth.
Under normal market conditions, the Fund will invest primarily in the equity
securities of companies located anywhere in the world, including emerging
markets.
Dear Shareholder:
This annual report for Templeton Growth Fund covers the fiscal year ended August
31, 2000. During this time, increased productivity and generally positive
economic conditions in most parts of the world led to the strong performance of
many equity markets. U.S. equity markets in particular advanced at an
unprecedented rate. This demand for American stocks contributed to the U.S.
dollar setting record highs, particularly against the euro. Within this
environment, Templeton Growth Fund - Class A posted a 7.58% one-year cumulative
total return, as shown in the Performance Summary beginning on page 9. The
Fund's benchmark, the Morgan Stanley Capital International(R) World Index, rose
13.46% during the same time.(1)
(1). Source: Standard & Poor's Micropal. The unmanaged MSCI World Index tracks
the performance of approximately 1,450 securities in 22 countries and is
designed to measure world stock market performance. It includes reinvested
dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
The dollar value, number of shares or principal value, and complete legal titles
of all portfolio holdings are listed in the Fund's Statement of Investments
(SOI). The SOI begins on page 18.
CONTENTS
Shareholder Letter ................................................... 1
Performance Summary .................................................. 9
Financial Highlights &
Statement of Investments ............................................. 14
Financial Statements ................................................. 25
Notes to Financial Statements ........................................ 28
Report of Independent
Accountants .......................................................... 33
Tax Designation ...................................................... 34
[FUND CATEGORY PYRAMID GRAPHIC]
<PAGE>
GEOGRAPHIC DISTRIBUTION
Based on Total Net Assets
8/31/00
[BAR CHART]
North American Stocks 42.2%
European Stocks 27.2%
Asian Stocks 20.0%
Latin American Stocks 4.2%
Australian & New Zealand Stocks 3.0%
Mid-East/African Stocks 0.6%
Fixed Income Securities 2.3%
Short-Term Investments & Other Net Assets 0.5%
NORTH AMERICA
As U.S. equity markets became increasingly focused on technology shares, many
solid non-tech companies were neglected by investors. At the end of the
reporting period, the average stock in the Standard & Poor's(R) 500 (S&P 500(R))
Composite Index was trading for nearly 44 times earnings, while the median stock
was trading at a more reasonable 19 times earnings.(2) Thanks to this
development, we were able to uncover what we believed to be exceptional bargains
in U.S. stocks for the first time in a number of years. As a result, our
exposure to the U.S. increased from 23.3% of total net assets to 39.1% during
the year under review. For example, we initiated a position in Bank of America,
the largest consumer bank in the U.S. At period's end, its stock price had
fallen significantly from its 1999 high and was selling at about 9 times
earnings, 1.8 times book value and yielding 3.9%. We purchased it at what we
believed to be a bargain price and, until the market again recognizes the
company's value, we believe we will earn a reasonable yield.
We also purchased shares of Albertsons, one of the largest U.S. food and drug
retailers. In 1999, the food retailing industry experienced one of its worst
share price performances in many years. On August 31, 2000, Albertsons shares
were selling for 10 times earnings and just five times cash flow. In our
opinion, Albertsons share price suffered because of problems involved in
assimilating American Stores, which it acquired in late 1998.
(2) The S&P 500 Composite Index consists of 500 domestic stocks, consisting of
four broad sectors: industrials, utilities, financials and transportation. The
S&P 500 serves as the standard for measuring large-cap U.S. stock market
performance. Since some industries are characterized by companies of relatively
small stock capitalization, the Index is not composed of the 500 largest U.S.,
publicly traded companies. The Index is unmanaged and includes reinvested
dividends. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.
2
<PAGE>
However, we believe Albertsons will be able to use its solid balance sheet to
overcome problems posed by acquisitions and has the potential to deliver solid
long-term performance. During the period, we initiated a significant position in
Heinz, a leading food manufacturer. At the end of the year under review, Heinz
shares were selling for only about 15 times earnings with a dividend yielding
3.9%. Although we increased our U.S. exposure, we are mindful of the high
valuations of the U.S. dollar relative to most foreign currencies and the extent
to which some analysts believe many consumers in America are spending beyond
sustainable levels.
EUROPE
Our European holdings were not a prototypical reflection of the composition of
that region's markets. Although about one-third of the entire market value of
European equities is made up of telecommunications, media and technology
companies, these sectors comprise less than 3% of Templeton Growth Fund's
European holdings. During the year under review, we added to our position in
E.ON. Despite the fact its name sounds like that of an Internet company, E.ON is
actually one of Europe's largest electricity and energy conglomerates. Formed by
the merger of two German companies, its share price when we purchased it was
less than the value of the individual assets owned by these companies. We
believe it likely this company may consider selling off a number of non-core
assets, which could give it more working capital with which to conduct
operations. Along with the Fund's other German holdings, E.ON should benefit
from a reduction in corporate profit taxes and the elimination of the
prohibitive 50% tax on corporate asset sales recently approved by the German
government.
TOP 10 COUNTRIES*
8/31/00
<TABLE>
<CAPTION>
% OF TOTAL
NET ASSETS
--------------------------------------------------------------------------------
<S> <C>
United States 39.1%
United Kingdom 10.0%
Hong Kong 9.7%
Japan 5.6%
Germany 4.0%
South Korea 3.2%
France 2.8%
Australia 2.6%
Netherlands 2.6%
Sweden 2.5%
</TABLE>
* Based on equity securities.
3
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During the 12 months under review, we did not have great success with our U.K.
investments. In some cases, we underestimated the degree to which the pressure
of a strong currency would undermine prices of some of these stocks. When we
lost confidence in a company's ability to generate long-term returns, we sold
shares, sometimes at a loss. But, believing that the U.K. has some of the
world's most undervalued companies, we purchased shares of BAE, the world's
third-largest defense industry company. BAE is a leader in military aircraft
production and defense electronics, two of the fastest-growing aspects of the
defense industry. We expect BAE to benefit if global defense spending increases.
In the U.S., for example, where BAE earns about a quarter of its profits,
defense spending is projected to increase significantly over the next five
years.
A number of positive factors may benefit the Fund's European stocks. During the
latest economic cycle, cash flow has begun to represent a significantly higher
percentage of sales of many European companies. In several cases, this increased
cash flow is being used to purchase other companies, which we believe may unlock
value for some of our holdings. In addition, many European companies have
reduced their workforces by about 15% while improving productivity. The benefits
of this improved efficiency have raised corporate profits, and return on equity
has climbed from below 5% in the mid-1990s to over 12% at the end of August
2000.(3) Although this figure is lower than the 18% return on equity experienced
in the U.S., we believe it may improve for many European corporations.
(3) Source: Morgan Stanley.
4
<PAGE>
ASIA
As in Europe and the U.S., many Asian markets experienced a great divide between
the prices of "new economy" stocks and "old economy" stocks. In Hong Kong, for
example, on August 31, 2000, new economy companies sold for about 41 times
projected 2000 income compared with old economy stocks at just 13 times that
figure.(4) However, the distinction between what is old economy and what is new
economy has become increasingly blurred. Consider, for example, Hutchison
Whampoa, a company with its roots in ports and property. Hutchison's astute
management capitalized on its success in telecommunications in Hong Kong and the
U.K. to become one of the leaders in the emerging field of wireless data.
Templeton Growth Fund's exposure to the company is through holdings in
Hutchison's parent, Cheung Kong Holdings. At the end of the reporting period,
Cheung Kong was valued at less than the value of its holding in Hutchison,
despite the fact that Cheung Kong has substantial additional real estate
holdings. In effect, the market appeared to be attaching a negative value to the
other real estate Cheung Kong owns. This is a situation we believe may be
remedied in the future.
Elsewhere in Asia, we found opportunities in South Korea. During the year under
review, many investors became concerned about the country's prospects in light
of rising U.S. interest rates and the potential for reduced American demand for
overseas goods. Many South Korean stocks were negatively impacted by this
sentiment and sold for less than 10 times earnings, near levels last seen during
the Asian financial crises of
TOP 10 EQUITY HOLDINGS
8/31/00
<TABLE>
<CAPTION>
COMPANY % OF TOTAL
SECTOR, COUNTRY NET ASSETS
--------------------------------------------------------------------------------
<S> <C>
HSBC Holdings PLC
Banks, Hong Kong 2.1%
Cheung Kong Holdings, Ltd.
Real Estate, Hong Kong 2.0%
General Motors Corp.
Automobiles, United States 2.0%
Bank of America Corp.
Banks, United States 1.9%
H.J. Heinz Co.
Food Products, United States 1.9%
Swire Pacific Ltd., A&B
Diversified Financials,
Hong Kong 1.8%
Kroger Co.
Food & Drug Retailing,
United States 1.6%
Abbott Laboratories
Pharmaceuticals,
United States 1.5%
Merrill Lynch & Co. Inc.
Diversified Financials,
United States 1.4%
Ford Motor Co.
Automobiles, United States 1.3%
</TABLE>
(4). Sources: Morgan Stanley Capital International, Factset, Morgan Stanley Dean
Witter Research.
5
<PAGE>
several years ago. However, significant differences exist between the time of
the crises and the period ended August 31, 2000. For example, many Korean
companies have used dollar revenues earned from strong export sales to reduce
the U.S.-dollar debt exposure that exacerbated past problems. Additionally, in
our opinion, decreasing exports to the U.S. may be offset by growing domestic
and inter-regional sales as economies in countries like China show signs of
strength.
The Fund continued to maintain a relatively small exposure to Japan. Hopes of a
sustained economic turnaround in that country, which pushed up stock prices in
1999, began to fade during 2000. However, even though we do not know how Japan's
economy will perform in the near term, we did find a few companies, such as
Fujitsu, one of Japan's largest information technology companies, which we
believe may prosper over the long term. Spending on technology in Japan, as a
percentage of gross domestic product, was roughly half that of the U.S., and an
increase in such spending, combined with restructuring of its overseas
divisions, could help Fujitsu improve its returns.
LATIN AMERICA
During the 12 months under review, the Fund's exposure to Latin American equity
securities was reduced. The main reason for this decline is that three of the
nine companies whose shares we owned were acquired, all at substantial premiums
to the shares' market prices. While these acquisitions benefited the Fund, they
also reduced the availability of liquid stocks in which to invest, particularly
in Argentina. Mexico and Brazil also appeared to have fewer bargains than we
were able to find in previous years.
6
<PAGE>
LOOKING FORWARD
Although we are concerned about the potential instability for global markets and
currencies, we are optimistic about the long-term potential of Templeton Growth
Fund. We realize that stock prices at the end of the reporting period were
stretched beyond reasonable levels, propped up by unsustainable margin debt
growth and American consumers spending at what some economists believe to be an
unsustainable rate. But our enthusiasm for investing is bolstered by the narrow
focus of many investors, which pushed technology and telecommunications
securities to historically extreme price levels while ignoring other sectors.
These two sectors accounted for more than 33% of world equity market
capitalization at the end of the period. In our opinion, this disproportionate
share of market capitalization neglects the value inherent in many
non-technology stocks. We believe the Fund's portfolio includes a collection of
these attractively priced securities. Employing our time-tested strategy of
diversification over a large number of countries and industries, we shall
continue to search the globe for what we believe to be bargain stocks with the
potential to provide our shareholders positive returns over the long term.
Please remember that there are special risks associated with global investing
related to market, currency, economic, social, political and other factors.
Emerging markets involve similar but heightened risks, in addition to those
associated with their relatively small size and lesser liquidity. Investing in
any emerging market security means accepting a certain amount of volatility
7
<PAGE>
and, in some cases, the consequences of severe market corrections. For example,
the MSCI Mexico Free Index has increased 974% in the last 12 years, but has
suffered five declines of more than 15% during that time.(5) While short-term
volatility can be disconcerting, declines in excess of 50% are not unusual in
emerging markets. These special risks and other considerations are discussed in
the Fund's prospectus.
Sincerely,
/s/ Mark G. Holowesko
Mark G. Holowesko, CFA
President
Templeton Growth Fund, Inc.
(5). Source: Morgan Stanley Capital International/MSCI Mexico Free Index. Based
on quarterly percentage price change over 12 years ended 6/30/00. Market return
is measured in U.S. dollars and does not include reinvested dividends. The MSCI
Mexico Free Index reflects actual buyable opportunities for global investors by
taking into account local market restrictions on share ownership by foreigners.
The MSCI Mexico Free Index is a capitalization weighted index of 34 companies as
of 6/30/00.
This discussion reflects our views, opinions and portfolio holdings as of August
31, 2000, the end of the reporting period. The information provided is not a
complete analysis of every aspect of any country, industry, security or the
Fund. Our strategies and the Fund's portfolio composition will change depending
on market and economic conditions. Although historical performance is no
guarantee of future results, these insights may help you understand our
investment and management philosophy.
8
<PAGE>
ONE-YEAR PERFORMANCE
AS OF 8/31/00
One-year cumulative total return represents the change in value of an investment
for the period indicated and does not include sales charges. Distributions will
vary based on earnings of the Fund's portfolio and any profits realized from the
sale of the portfolio's securities, as well as the level of operating expenses
for each class. Past distributions are not indicative of future trends. All
total returns include reinvested distributions at net asset value.
<TABLE>
<S> <C> <C>
CLASS A
One-Year Cumulative Total Return 7.58%
Net Asset Value (NAV) $19.67 (8/31/00) $19.56 (8/31/99)
Change in NAV +$0.11
Distributions (9/1/99 - 8/31/00) Dividend Income $0.5349
Short-Term Capital Gain $0.0290
Long-Term Capital Gain $0.6622
-----------------------------------
TOTAL $1.2261
CLASS B
One-Year Cumulative Total Return 6.81%
Net Asset Value (NAV) $19.45 (8/31/00) $19.46 (8/31/99)
Change in NAV -$0.01
Distributions (9/1/99 - 8/31/00) Dividend Income $0.5055
Short-Term Capital Gain $0.0290
Long-Term Capital Gain $0.6622
-----------------------------------
TOTAL $1.1967
CLASS C
One-Year Cumulative Total Return 6.79%
Net Asset Value (NAV) $19.28 (8/31/00) $19.15 (8/31/99)
Change in NAV +$0.13
Distributions (9/1/99 - 8/31/00) Dividend Income $0.3596
Short-Term Capital Gain $0.0290
Long-Term Capital Gain $0.6622
-----------------------------------
TOTAL $1.0508
ADVISOR CLASS
One-Year Cumulative Total Return 7.87%
Net Asset Value (NAV) $19.71 (8/31/00) $19.61 (8/31/99)
Change in NAV +$0.10
Distributions (9/1/99 - 8/31/00) Dividend Income $0.5965
Short-Term Capital Gain $0.0290
Long-Term Capital Gain $0.6622
-----------------------------------
TOTAL $1.2877
</TABLE>
CLASS A: Subject to the current, maximum 5.75% initial sales charge. Prior to
7/1/92, Fund shares were offered at a higher initial sales charge; thus actual
total returns would have been lower. Effective 1/1/93, the Fund implemented a
Rule 12b-1 plan, which affects subsequent performance.
CLASS B: Subject to no initial sales charge, but subject to a contingent
deferred sales charge (CDSC) declining from 4% to 0% over six years. These
shares have higher annual fees and expenses than Class A shares.
CLASS C: Subject to 1% initial sales charge and 1% CDSC for shares redeemed
within 18 months of investment. These shares have higher annual fees and
expenses than Class A shares.
ADVISOR CLASS: No initial sales charge or Rule 12b-1 fees and are available to a
limited class of investors.
Templeton Growth Fund paid distributions derived from long-term capital gains of
66.22 cents ($0.6622) per share in October and December 1999. The Fund hereby
designates such distributions as capital gain dividends in accordance with
Internal Revenue Code Section 852 (b)(3).
Please see standardized SEC performance as of 8/31/00 and index comparison on
page 11.
Past performance does not guarantee future results.
9
<PAGE>
(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 current,
applicable, maximum sales charge(s) for that class.
(3). These figures represent the value of a hypothetical $10,000 investment in
the Fund over the periods indicated and include the current, applicable, maximum
sales charge(s) for that class.
(4). Effective 1/2/97, the Fund began offering Advisor Class shares, which do
not have sales charges nor Rule 12b-1 plans. Performance quotations for this
class reflect the following methods of calculation: (a) For periods prior to
1/2/97, a restated figure is used based upon the Fund's Class A performance,
excluding the effect of Class A's maximum initial sales charge and including the
effect of the Class A Rule 12b-1 fees; and (b) for periods after 1/1/97, an
actual Advisor Class figure is used reflecting a deduction of all charges and
fees applicable to that class. Since 1/2/97 (commencement of sales), the
cumulative and average annual total returns of Advisor Class shares were 43.84%
and 10.19%.
ADDITIONAL PERFORMANCE
AS OF 9/30/00
<TABLE>
<CAPTION>
INCEPTION
CLASS A 1-YEAR 5-YEAR 10-YEAR (11/29/54)
<S> <C> <C> <C> <C>
Cumulative Total Return(1) 8.22% 70.82% 287.25% 47,531.68%
Average Annual Total Return(2) 2.00% 10.00% 13.83% 14.25%
Value of $10,000 Investment(3) $10,200 $16,102 $36,508 $4,489,323
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS B 1-YEAR (1/1/99)
<S> <C> <C>
Cumulative Total Return(1) 7.43% 23.05%
Average Annual Total Return(2) 3.43% 10.49%
Value of $10,000 Investment(3) $10,343 $11,905
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
CLASS C 1-YEAR 5-YEAR (5/1/95)
<S> <C> <C> <C>
Cumulative Total Return(1) 7.34% 64.42% 81.74%
Average Annual Total Return(2) 5.25% 10.23% 11.44%
Value of $10,000 Investment(3) $10,525 $16,274 $17,988
</TABLE>
<TABLE>
<CAPTION>
INCEPTION
ADVISOR CLASS(4) 1-YEAR 5-YEAR 10-YEAR (11/29/54)
<S> <C> <C> <C> <C>
Cumulative Total Return(1) 8.46% 73.93% 294.31% 48,400.43%
Average Annual Total Return(2) 8.46% 11.71% 14.71% 14.44%
Value of $10,000 Investment(3) $10,846 $17,393 $39,431 $4,850,043
</TABLE>
Since markets can go down as well as up, investment return and principal value
will fluctuate with market conditions, currency volatility and the social,
economic and political climates of countries where the Fund invests. 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.
For updated performance figures, see "Prices and Performance" at
franklintempleton.com, or call Franklin Templeton at 1-800/342-5236.
Past performance does not guarantee future results.
10
<PAGE>
TOTAL RETURN INDEX COMPARISON
FOR HYPOTHETICAL $10,000 INVESTMENT
Average annual total return represents the change in value of an investment over
the periods shown. It includes the current, applicable, maximum sales charge(s),
Fund expenses, account fees and reinvested distributions. The unmanaged index
differs from the Fund in composition, does not pay management fees or expenses
and includes reinvested dividends. One cannot invest directly in an index.
[CLASS A LINE GRAPH]
Templeton Growth Fund
Annual Report
August 31, 2000
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM 304
(a) OF REGULATION S - T)
GRAPHIC MATERIAL (1)
The following line graph compares the performance of Templeton Growth Fund -
Class A shares to that of the Morgan Stanley Capital International World Index
and to the Consumer Price Index, based on a $10,000 investment from 9/1/90 to
8/31/00.
<TABLE>
<CAPTION>
TEMPLETON
GROWTH FUND MSCI WORLD
-CLASS A* INDEX CPI
<S> <C> <C> <C>
09/01/1990 $ 9,425 $10,000 $10,000
09/30/1990 $ 8,558 $ 8,947 $10,084
10/31/1990 $ 8,437 $ 9,785 $10,145
11/30/1990 $ 8,710 $ 9,626 $10,167
12/31/1990 $ 8,869 $ 9,829 $10,167
01/31/1991 $ 9,370 $10,190 $10,228
02/28/1991 $10,068 $11,136 $10,243
03/31/1991 $10,183 $10,809 $10,258
04/30/1991 $10,345 $10,896 $10,273
05/31/1991 $10,785 $11,144 $10,303
06/30/1991 $10,244 $10,458 $10,334
07/31/1991 $10,867 $10,954 $10,349
08/31/1991 $10,921 $10,921 $10,379
09/30/1991 $11,029 $11,209 $10,426
10/31/1991 $11,194 $11,393 $10,441
11/30/1991 $10,913 $10,898 $10,471
12/31/1991 $11,648 $11,694 $10,479
01/31/1992 $11,754 $11,479 $10,494
02/29/1992 $11,980 $11,283 $10,532
03/31/1992 $11,776 $10,753 $10,585
04/30/1992 $12,109 $10,905 $10,600
05/31/1992 $12,562 $11,340 $10,615
06/30/1992 $12,320 $10,962 $10,653
07/31/1992 $12,290 $10,993 $10,676
08/31/1992 $11,935 $11,262 $10,706
09/30/1992 $11,905 $11,161 $10,736
10/31/1992 $11,741 $10,861 $10,774
11/30/1992 $11,883 $11,057 $10,789
12/31/1992 $12,139 $11,149 $10,783
01/31/1993 $12,299 $11,188 $10,836
02/28/1993 $12,569 $11,455 $10,874
03/31/1993 $13,008 $12,122 $10,912
04/30/1993 $13,270 $12,685 $10,942
05/31/1993 $13,658 $12,980 $10,957
06/30/1993 $13,599 $12,872 $10,972
07/31/1993 $13,954 $13,140 $10,972
08/31/1993 $14,739 $13,745 $11,003
09/30/1993 $14,680 $13,493 $11,025
10/31/1993 $15,356 $13,867 $11,072
11/30/1993 $15,068 $13,084 $11,079
12/31/1993 $16,108 $13,727 $11,078
01/31/1994 $17,004 $14,635 $11,109
02/28/1994 $16,574 $14,448 $11,148
03/31/1994 $15,943 $13,828 $11,186
04/30/1994 $16,218 $14,257 $11,201
05/31/1994 $16,373 $14,296 $11,208
06/30/1994 $16,007 $14,259 $11,246
07/31/1994 $16,748 $14,533 $11,276
08/31/1994 $17,324 $14,973 $11,322
09/30/1994 $16,931 $14,582 $11,352
10/31/1994 $17,087 $14,999 $11,361
11/30/1994 $16,384 $14,352 $11,376
12/31/1994 $16,240 $14,493 $11,376
01/31/1995 $16,110 $14,279 $11,420
02/28/1995 $16,590 $14,490 $11,466
03/31/1995 $16,900 $15,191 $11,504
04/30/1995 $17,491 $15,723 $11,542
05/31/1995 $18,011 $15,861 $11,565
06/30/1995 $18,271 $15,859 $11,587
07/31/1995 $19,092 $16,656 $11,587
08/31/1995 $18,971 $16,287 $11,619
09/30/1995 $19,402 $16,765 $11,640
10/31/1995 $18,782 $16,504 $11,679
11/30/1995 $19,210 $17,080 $11,670
12/31/1995 $19,460 $17,583 $11,663
01/31/1996 $20,156 $17,903 $11,731
02/29/1996 $20,223 $18,016 $11,769
03/31/1996 $20,459 $18,319 $11,830
04/30/1996 $20,919 $18,753 $11,875
05/31/1996 $21,165 $18,773 $11,898
06/30/1996 $21,188 $18,871 $11,906
07/31/1996 $20,504 $18,208 $11,928
08/31/1996 $21,031 $18,421 $11,951
09/30/1996 $21,457 $19,146 $11,989
10/31/1996 $21,808 $19,282 $12,027
11/30/1996 $22,993 $20,366 $12,050
12/31/1996 $23,460 $20,044 $12,050
01/31/1997 $24,024 $20,288 $12,088
02/28/1997 $24,216 $20,525 $12,124
03/31/1997 $24,108 $20,123 $12,154
04/30/1997 $24,649 $20,784 $12,169
05/31/1997 $25,873 $22,071 $12,162
06/30/1997 $26,906 $23,175 $12,176
07/31/1997 $27,926 $24,246 $12,191
08/31/1997 $26,978 $22,628 $12,214
09/30/1997 $28,719 $23,860 $12,244
10/31/1997 $26,841 $22,608 $12,275
11/30/1997 $26,923 $23,012 $12,268
12/31/1997 $27,256 $23,296 $12,253
01/31/1998 $27,298 $23,949 $12,275
02/28/1998 $28,802 $25,573 $12,300
03/31/1998 $30,080 $26,657 $12,324
04/30/1998 $30,235 $26,921 $12,346
05/31/1998 $29,321 $26,588 $12,369
06/30/1998 $28,478 $27,222 $12,383
07/31/1998 $27,804 $27,182 $12,398
08/31/1998 $23,575 $23,561 $12,413
09/30/1998 $24,165 $23,982 $12,428
10/31/1998 $26,223 $26,155 $12,458
11/30/1998 $27,165 $27,715 $12,458
12/31/1998 $26,580 $29,073 $12,450
01/31/1999 $26,385 $29,714 $12,481
02/28/1999 $26,191 $28,926 $12,493
03/31/1999 $28,025 $30,135 $12,531
04/30/1999 $31,500 $31,328 $12,622
05/31/1999 $30,364 $30,187 $12,622
06/30/1999 $31,776 $31,599 $12,622
07/31/1999 $31,744 $31,509 $12,655
08/31/1999 $31,760 $31,458 $12,693
09/30/1999 $30,623 $31,157 $12,749
10/31/1999 $30,650 $32,781 $12,774
11/30/1999 $32,010 $33,706 $12,780
12/31/1999 $34,670 $36,440 $12,780
01/31/2000 $32,290 $34,357 $12,815
02/29/2000 $31,196 $34,454 $12,889
03/31/2000 $33,454 $36,839 $12,992
04/30/2000 $33,020 $35,286 $13,003
05/31/2000 $33,628 $34,397 $13,013
06/30/2000 $33,802 $35,560 $13,084
07/31/2000 $33,576 $34,563 $13,112
08/31/2000 $34,184 $35,692 $13,112
</TABLE>
[CLASS B LINE GRAPH]
GRAPHIC MATERIAL (2)
The following line graph compares the performance of Templeton Growth Fund -
Class B shares to that of the Morgan Stanley Capital International World Index
and to the Consumer Price Index, based on a $10,000 investment, from 1/1/99 to
8/31/00.
<TABLE>
<CAPTION>
TEMPLETON
GROWTH FUND- MSCI WORLD
CLASS B* INDEX CPI
<S> <C> <C> <C>
01/01/1999 $10,000 $10,000 $10,000
01/31/1999 $ 9,927 $10,191 $10,021
02/28/1999 $ 9,847 $ 9,921 $10,031
03/31/1999 $10,525 $10,336 $10,062
04/30/1999 $11,820 $10,745 $10,135
05/31/1999 $11,387 $10,354 $10,135
06/30/1999 $11,906 $10,838 $10,135
07/31/1999 $11,888 $10,807 $10,161
08/31/1999 $11,888 $10,790 $10,192
09/30/1999 $11,454 $10,686 $10,237
10/31/1999 $11,463 $11,243 $10,257
11/30/1999 $11,962 $11,561 $10,261
12/31/1999 $12,945 $12,498 $10,261
01/31/2000 $12,044 $11,784 $10,290
02/29/2000 $11,633 $11,817 $10,349
03/31/2000 $12,468 $12,635 $10,432
04/30/2000 $12,299 $12,103 $10,440
05/31/2000 $12,521 $11,798 $10,448
06/30/2000 $12,579 $12,197 $10,505
07/31/2000 $12,481 $11,855 $10,528
08/31/2000 $12,297 $12,242 $10,528
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
8/31/00
CLASS A
<TABLE>
<S> <C>
1-Year 1.41%
5-Year 11.17%
10-Year 13.08%
Since Inception (11/29/54) 14.36%
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
8/31/00
CLASS B
<TABLE>
<S> <C>
1-Year 2.81%
Since Inception (1/1/99) 13.22%
</TABLE>
Past performance does not guarantee future results.
11
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
8/31/00
CLASS C
<TABLE>
<S> <C>
1-Year 4.75%
5-Year 11.41%
Since Inception (5/1/95) 12.29%
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
8/31/00
ADVISOR CLASS***
<TABLE>
<S> <C>
1-Year 7.87%
5-Year 12.90%
10-Year 13.96%
Since Inception (11/29/54) 14.55%
</TABLE>
[CLASS C LINE GRAPH]
GRAPHIC MATERIAL (3)
The following line graph compares the performance of Templeton Growth Fund -
Class C shares to that of the Morgan Stanley Capital International World Index
and to the Consumer Price Index, based on a $10,000 investment, from 5/1/95 to
8/31/00.
<TABLE>
<CAPTION>
TEMPLETON
GROWTH FUND- MSCI WORLD
CLASS C* INDEX CPI
<S> <C> <C> <C>
05/01/1995 $ 9,898 $10,000 $10,000
05/31/1995 $10,187 $10,088 $10,020
06/30/1995 $10,329 $10,086 $10,040
07/31/1995 $10,788 $10,593 $10,040
08/31/1995 $10,708 $10,359 $10,067
09/30/1995 $10,941 $10,663 $10,086
10/31/1995 $10,588 $10,497 $10,119
11/30/1995 $10,818 $10,863 $10,112
12/31/1995 $10,960 $11,183 $10,105
01/31/1996 $11,340 $11,387 $10,164
02/29/1996 $11,372 $11,458 $10,197
03/31/1996 $11,493 $11,651 $10,250
04/30/1996 $11,746 $11,927 $10,289
05/31/1996 $11,873 $11,940 $10,309
06/30/1996 $11,880 $12,002 $10,316
07/31/1996 $11,493 $11,581 $10,335
08/31/1996 $11,778 $11,716 $10,355
09/30/1996 $12,006 $12,177 $10,388
10/31/1996 $12,191 $12,264 $10,421
11/30/1996 $12,847 $12,953 $10,441
12/31/1996 $13,107 $12,748 $10,441
01/31/1997 $13,412 $12,904 $10,473
02/28/1997 $13,506 $13,054 $10,505
03/31/1997 $13,439 $12,799 $10,531
04/30/1997 $13,729 $13,219 $10,544
05/31/1997 $14,405 $14,038 $10,537
06/30/1997 $14,973 $14,739 $10,550
07/31/1997 $15,527 $15,421 $10,563
08/31/1997 $14,993 $14,392 $10,583
09/30/1997 $15,947 $15,175 $10,609
10/31/1997 $14,898 $14,379 $10,636
11/30/1997 $14,928 $14,636 $10,629
12/31/1997 $15,108 $14,816 $10,617
01/31/1998 $15,124 $15,232 $10,636
02/28/1998 $15,944 $16,265 $10,657
03/31/1998 $16,637 $16,954 $10,678
04/30/1998 $16,716 $17,122 $10,697
05/31/1998 $16,196 $16,910 $10,717
06/30/1998 $15,723 $17,314 $10,730
07/31/1998 $15,337 $17,288 $10,742
08/31/1998 $13,004 $14,985 $10,755
09/30/1998 $13,319 $15,253 $10,768
10/31/1998 $14,444 $16,635 $10,794
11/30/1998 $14,952 $17,627 $10,794
12/31/1998 $14,625 $18,491 $10,788
01/31/1999 $14,507 $18,898 $10,814
02/28/1999 $14,399 $18,398 $10,825
03/31/1999 $15,388 $19,167 $10,858
04/30/1999 $17,285 $19,925 $10,937
05/31/1999 $16,650 $19,199 $10,937
06/30/1999 $17,413 $20,098 $10,937
07/31/1999 $17,394 $20,040 $10,965
08/31/1999 $17,385 $20,007 $10,998
09/30/1999 $16,759 $19,816 $11,046
10/31/1999 $16,763 $20,849 $11,068
11/30/1999 $17,490 $21,438 $11,073
12/31/1999 $18,932 $23,176 $11,073
01/31/2000 $17,623 $21,851 $11,104
02/29/2000 $17,006 $21,913 $11,167
03/31/2000 $18,239 $23,430 $11,257
04/30/2000 $17,988 $22,442 $11,266
05/31/2000 $18,306 $21,877 $11,275
06/30/2000 $18,393 $22,617 $11,336
07/31/2000 $18,258 $21,982 $11,360
08/31/2000 $18,566 $22,701 $11,360
</TABLE>
[ADVISOR CLASS LINE GRAPH]
GRAPHIC MATERIAL (4)
The following line graph compares the performance of Templeton Growth Fund -
Advisor Class shares to that of the Morgan Stanley Capital International World
Index and to the Consumer Price Index, based on a $10,000 investment, from
9/1/90 to 8/31/00.
<TABLE>
<CAPTION>
TEMPLETON
GROWTH FUND - MSCI WORLD
ADVISOR CLASS INDEX CPI
<S> <C> <C> <C>
09/01/1990 $10,000 $10,000 $10,000
09/30/1990 $ 9,081 $ 8,947 $10,084
10/31/1990 $ 8,953 $ 9,785 $10,145
11/30/1990 $ 9,242 $ 9,626 $10,167
12/31/1990 $ 9,411 $ 9,829 $10,167
01/31/1991 $ 9,943 $10,190 $10,228
02/28/1991 $10,683 $11,136 $10,243
03/31/1991 $10,805 $10,809 $10,258
04/30/1991 $10,977 $10,896 $10,273
05/31/1991 $11,444 $11,144 $10,303
06/30/1991 $10,869 $10,458 $10,334
07/31/1991 $11,530 $10,954 $10,349
08/31/1991 $11,588 $10,921 $10,379
09/30/1991 $11,703 $11,209 $10,426
10/31/1991 $11,878 $11,393 $10,441
11/30/1991 $11,580 $10,898 $10,471
12/31/1991 $12,361 $11,694 $10,479
01/31/1992 $12,473 $11,479 $10,494
02/29/1992 $12,714 $11,283 $10,532
03/31/1992 $12,498 $10,753 $10,585
04/30/1992 $12,850 $10,905 $10,600
05/31/1992 $13,331 $11,340 $10,615
06/30/1992 $13,075 $10,962 $10,653
07/31/1992 $13,042 $10,993 $10,676
08/31/1992 $12,665 $11,262 $10,706
09/30/1992 $12,633 $11,161 $10,736
10/31/1992 $12,459 $10,861 $10,774
11/30/1992 $12,610 $11,057 $10,789
12/31/1992 $12,881 $11,149 $10,783
01/31/1993 $13,051 $11,188 $10,836
02/28/1993 $13,338 $11,455 $10,874
03/31/1993 $13,804 $12,122 $10,912
04/30/1993 $14,081 $12,685 $10,942
05/31/1993 $14,494 $12,980 $10,957
06/30/1993 $14,431 $12,872 $10,972
07/31/1993 $14,808 $13,140 $10,972
08/31/1993 $15,642 $13,745 $11,003
09/30/1993 $15,579 $13,493 $11,025
10/31/1993 $16,297 $13,867 $11,072
11/30/1993 $15,991 $13,084 $11,079
12/31/1993 $17,094 $13,727 $11,078
01/31/1994 $18,045 $14,635 $11,109
02/28/1994 $17,588 $14,448 $11,148
03/31/1994 $16,918 $13,828 $11,186
04/30/1994 $17,209 $14,257 $11,201
05/31/1994 $17,374 $14,296 $11,208
06/30/1994 $16,987 $14,259 $11,246
07/31/1994 $17,773 $14,533 $11,276
08/31/1994 $18,385 $14,973 $11,322
09/30/1994 $17,967 $14,582 $11,352
10/31/1994 $18,133 $14,999 $11,361
11/30/1994 $17,386 $14,352 $11,376
12/31/1994 $17,233 $14,493 $11,376
01/31/1995 $17,095 $14,279 $11,420
02/28/1995 $17,604 $14,490 $11,466
03/31/1995 $17,933 $15,191 $11,504
04/30/1995 $18,559 $15,723 $11,542
05/31/1995 $19,111 $15,861 $11,565
06/30/1995 $19,386 $15,859 $11,587
07/31/1995 $20,256 $16,656 $11,587
08/31/1995 $20,129 $16,287 $11,619
09/30/1995 $20,585 $16,765 $11,640
10/31/1995 $19,927 $16,504 $11,679
11/30/1995 $20,381 $17,080 $11,670
12/31/1995 $20,646 $17,583 $11,663
01/31/1996 $21,383 $17,903 $11,731
02/29/1996 $21,454 $18,016 $11,769
03/31/1996 $21,703 $18,319 $11,830
04/30/1996 $22,191 $18,753 $11,875
05/31/1996 $22,453 $18,773 $11,898
06/30/1996 $22,477 $18,871 $11,906
07/31/1996 $21,751 $18,208 $11,928
08/31/1996 $22,310 $18,421 $11,951
09/30/1996 $22,763 $19,146 $11,989
10/31/1996 $23,134 $19,282 $12,027
11/30/1996 $24,393 $20,366 $12,050
12/31/1996 $24,888 $20,044 $12,050
01/31/1997 $25,709 $20,288 $12,088
02/28/1997 $25,915 $20,525 $12,124
03/31/1997 $25,798 $20,123 $12,154
04/30/1997 $26,376 $20,784 $12,169
05/31/1997 $27,687 $22,071 $12,162
06/30/1997 $28,806 $23,175 $12,176
07/31/1997 $29,897 $24,246 $12,191
08/31/1997 $28,896 $22,628 $12,214
09/30/1997 $30,760 $23,860 $12,244
10/31/1997 $28,776 $22,608 $12,275
11/30/1997 $28,862 $23,012 $12,268
12/31/1997 $29,226 $23,296 $12,253
01/31/1998 $29,287 $23,949 $12,275
02/28/1998 $30,898 $25,573 $12,300
03/31/1998 $32,270 $26,657 $12,324
04/30/1998 $32,450 $26,921 $12,346
05/31/1998 $31,457 $26,588 $12,369
06/30/1998 $30,567 $27,222 $12,383
07/31/1998 $29,843 $27,182 $12,398
08/31/1998 $25,310 $23,561 $12,413
09/30/1998 $25,958 $23,982 $12,428
10/31/1998 $28,174 $26,155 $12,458
11/30/1998 $29,186 $27,715 $12,458
12/31/1998 $28,576 $29,073 $12,450
01/31/1999 $28,384 $29,714 $12,481
02/28/1999 $28,174 $28,926 $12,493
03/31/1999 $30,146 $30,135 $12,531
04/30/1999 $33,897 $31,328 $12,622
05/31/1999 $32,693 $30,187 $12,622
06/30/1999 $34,210 $31,599 $12,622
07/31/1999 $34,193 $31,509 $12,655
08/31/1999 $34,210 $31,458 $12,693
09/30/1999 $33,006 $31,157 $12,749
10/31/1999 $33,029 $32,781 $12,774
11/30/1999 $34,512 $33,706 $12,780
12/31/1999 $37,391 $36,440 $12,780
01/31/2000 $34,826 $34,357 $12,815
02/29/2000 $33,645 $34,454 $12,889
03/31/2000 $36,098 $36,839 $12,992
04/30/2000 $35,628 $35,286 $13,003
05/31/2000 $36,302 $34,397 $13,013
06/30/2000 $36,491 $35,560 $13,084
07/31/2000 $36,246 $34,563 $13,112
08/31/2000 $36,930 $35,692 $13,112
</TABLE>
*Source: Standard and Poor's(R) Micropal. The unmanaged MSCI World Index tracks
the performance of approximately 1,450 securities in 22 countries and is
designed to measure world stock market performance. It includes reinvested
dividends.
**Source: Consumer Price Index, U.S. Bureau of Labor Statistics (8/31/00). The
Consumer Price Index is a commonly used measure of inflation.
***Effective 1/2/97, the Fund began offering Advisor Class shares, which do not
have sales charges nor Rule 12b-1 plans. Performance quotations for this class
reflect the following methods of calculation: (a) For periods prior to 1/2/97, a
restated figure is used based upon the Fund's Class A performance, excluding the
effect of Class A's maximum initial sales charge and including the effect of the
Class A Rule 12b-1 fees; and (b) for periods after 1/1/97, an actual Advisor
Class figure is used reflecting a deduction of all charges and fees applicable
to that class.
Past performance does not guarantee future results.
12
<PAGE>
TEMPLETON GROWTH FUND
CLASS A
If you had invested $10,000 in Templeton Growth Fund - Class A at inception, it
would have been worth more than $4.6 million on August 31, 2000. The chart below
illustrates the cumulative total return of a hypothetical $10,000 investment in
the Fund on November 29, 1954 (inception), reflecting the current, maximum sales
charge and applicable fees and expenses, with income dividends and capital gains
reinvested as shown through August 31, 2000.*
[3D MOUNTAIN CHART]
GRAPHIC MATERIAL (5)
This chart shows in a logarithmic format the growth of a $10,000 investment in
Templeton Growth Fund - Class A from 11/29/54 to 8/31/00.
<TABLE>
<CAPTION>
Principal + Principal +
Date Dividends Cap Gains Total Value CPI Principal Income Cap Gains
<S> <C> <C> <C> <C> <C> <C> <C>
11/29/1954 $ 9,425 $ 9,425 $ 9,425 $10,000 $ 9,425 $ 0 $ 0
12/31/1954 $ 9,576 $ 9,576 $ 9,576 $ 9,963 $ 9,576 $ 0 $ 0
12/30/1955 $ 10,250 $ 10,250 $ 10,250 $10,000 $ 10,250 $ 0 $ 0
12/31/1956 $ 10,726 $ 10,726 $ 10,726 $10,299 $ 10,726 $ 0 $ 0
12/31/1957 $ 8,911 $ 8,911 $ 8,911 $10,598 $ 8,911 $ 0 $ 0
12/31/1958 $ 13,261 $ 13,261 $ 13,261 $10,784 $ 13,261 $ 0 $ 0
12/31/1959 $ 15,118 $ 15,118 $ 15,118 $10,971 $ 15,118 $ 0 $ 0
12/30/1960 $ 17,210 $ 17,210 $ 17,210 $11,120 $ 17,210 $ 0 $ 0
12/29/1961 $ 20,358 $ 20,358 $ 20,358 $11,194 $ 20,358 $ 0 $ 0
12/31/1962 $ 17,606 $ 17,606 $ 17,606 $11,343 $ 17,606 $ 0 $ 0
12/31/1963 $ 18,511 $ 18,511 $ 18,511 $11,529 $ 18,511 $ 0 $ 0
12/31/1964 $ 23,802 $ 23,506 $ 23,802 $11,641 $ 23,506 $ 296 $ 0
12/31/1965 $ 29,073 $ 28,313 $ 29,073 $11,865 $ 28,313 $ 760 $ 0
12/30/1966 $ 27,532 $ 26,484 $ 27,532 $12,275 $ 26,484 $ 1,048 $ 0
12/29/1967 $ 31,314 $ 29,632 $ 31,314 $12,648 $ 29,632 $ 1,682 $ 0
12/31/1968 $ 43,140 $ 40,283 $ 43,140 $13,245 $ 40,283 $ 2,857 $ 0
12/31/1969 $ 51,622 $ 47,446 $ 51,622 $14,066 $ 47,446 $ 4,176 $ 0
12/31/1970 $ 48,298 $ 43,676 $ 48,298 $14,850 $ 43,676 $ 4,622 $ 0
12/31/1971 $ 57,875 $ 52,568 $ 58,888 $15,336 $ 51,555 $ 6,320 $ 1,013
12/29/1972 $ 95,625 $ 87,991 $ 99,262 $15,858 $ 84,354 $ 11,271 $ 3,637
12/31/1973 $ 78,886 $ 79,614 $ 89,415 $17,240 $ 69,085 $ 9,801 $ 10,529
12/31/1974 $ 68,188 $ 69,154 $ 78,623 $19,367 $ 58,719 $ 9,469 $ 10,435
12/31/1975 $ 93,732 $ 93,528 $ 108,183 $20,711 $ 79,077 $ 14,655 $ 14,451
12/31/1976 $ 136,291 $ 135,840 $ 158,747 $21,718 $113,384 $ 22,907 $ 22,456
12/30/1977 $ 155,058 $ 162,988 $ 191,091 $23,173 $126,955 $ 28,103 $ 36,033
12/29/1978 $ 184,488 $ 192,793 $ 227,799 $25,263 $149,482 $ 35,006 $ 43,311
12/31/1979 $ 231,142 $ 241,865 $ 288,936 $28,621 $184,071 $ 47,071 $ 57,794
12/31/1980 $ 275,936 $ 302,407 $ 363,734 $32,204 $214,609 $ 61,327 $ 87,798
12/31/1981 $ 276,915 $ 296,033 $ 362,862 $35,076 $210,086 $ 66,829 $ 85,947
12/31/1982 $ 293,516 $ 322,039 $ 402,077 $36,420 $213,478 $ 80,038 $ 108,561
12/30/1983 $ 392,896 $ 419,717 $ 534,385 $37,800 $278,228 $ 114,668 $ 141,489
12/31/1984 $ 391,770 $ 423,667 $ 545,974 $39,293 $269,463 $ 122,307 $ 154,204
12/31/1985 $ 482,618 $ 536,261 $ 697,673 $40,786 $321,206 $ 161,412 $ 215,055
12/31/1986 $ 572,151 $ 637,582 $ 845,831 $41,235 $363,902 $ 208,249 $ 273,680
12/31/1987 $ 550,763 $ 653,004 $ 872,099 $43,062 $331,668 $ 219,095 $ 321,336
12/30/1988 $ 682,364 $ 784,305 $1,077,885 $44,965 $388,784 $ 293,580 $ 395,521
12/29/1989 $ 831,578 $ 935,100 $1,321,060 $47,056 $445,618 $ 385,960 $ 489,482
12/31/1990 $ 737,439 $ 834,403 $1,201,437 $49,931 $370,405 $ 367,034 $ 463,998
12/31/1991 $ 912,476 $1,101,649 $1,577,839 $51,459 $436,286 $ 476,190 $ 665,363
12/31/1992 $ 889,019 $1,161,911 $1,644,333 $52,951 $406,597 $ 482,422 $ 755,314
12/31/1993 $1,121,883 $1,558,304 $2,181,978 $54,407 $498,209 $ 623,674 $1,060,095
12/30/1994 $1,068,973 $1,589,759 $2,199,826 $55,860 $458,906 $ 610,067 $1,130,853
12/29/1995 $1,203,902 $1,922,768 $2,636,095 $57,279 $490,575 $ 713,327 $1,432,193
12/31/1996 $1,434,285 $2,296,080 $3,177,868 $59,181 $552,497 $ 881,788 $1,743,583
12/31/1997 $1,510,347 $2,730,272 $3,692,079 $60,187 $548,540 $ 961,807 $2,181,732
12/31/1998 $1,354,973 $2,708,431 $3,600,538 $61,156 $462,866 $ 892,107 $2,245,565
12/31/1999 $1,785,696 $3,475,052 $4,696,374 $62,795 $564,374 $1,221,322 $2,910,678
08/31/2000 $1,760,650 $3,426,308 $4,630,497 $64,434 $556,461 $1,204,189 $2,869,847
</TABLE>
*Cumulative total return represents the change in value of an investment over
the indicated period. All cumulative total return figures on this chart have
been restated to reflect the current, 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 A shares implemented a plan
of distribution under Rule 12b-1, which will affect subsequent performance.
Except as noted, all figures assume reinvestment of dividends and capital gains
at net asset value. Since markets can go down as well as up, investment return
and principal value will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares.
The historical data shown above pertain only to Class A shares of the Fund. The
Fund offers three other share classes, subject to different fees and expenses,
which will affect their performance. Please see the prospectus for more details.
Past performance does not guarantee future results.
13
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Highlights
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------
YEAR ENDED AUGUST 31,
----------------------------------------------------------------------
2000 1999 1998 1997 1996
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE+
(For a share outstanding throughout the year)
Net asset value, beginning of year.............. $19.56 $16.78 $22.47 $18.75 $18.96
----------------------------------------------------------------------
Income from investment operations:
Net investment income.......................... .35 .46 .50 .54 .50
Net realized and unrealized gains (losses)..... .99 4.76 (2.76) 4.48 1.34
----------------------------------------------------------------------
Total from investment operations................ 1.34 5.22 (2.26) 5.02 1.84
----------------------------------------------------------------------
Less distributions from:
Net investment income.......................... (.54) (.41) (.55) (.49) (.44)
Net realized gains............................. (.69) (2.03) (2.88) (.81) (1.61)
----------------------------------------------------------------------
Total distributions............................. (1.23) (2.44) (3.43) (1.30) (2.05)
----------------------------------------------------------------------
Net asset value, end of year.................... $19.67 $19.56 $16.78 $22.47 $18.75
======================================================================
Total Return*................................... 7.58% 34.72% (12.61)% 28.28% 10.85%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)................. $13,191,493 $13,368,945 $11,116,564 $12,129,283 $8,450,737
Ratios to average net assets:
Expenses....................................... 1.11% 1.12% 1.08% 1.08% 1.09%
Net investment income.......................... 1.83% 2.60% 2.53% 2.81% 2.87%
Portfolio turnover rate......................... 50.57% 32.01% 48.23% 41.81% 19.63%
</TABLE>
*Total return does not reflect sales commissions.
+Based on average weighted shares outstanding effective year ended August 31,
1999.
14
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS B
--------------------------------------
YEAR ENDED PERIOD ENDED
AUGUST 31, 2000 AUGUST 31, 1999+
--------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $19.46 $16.37
--------------------------------------
Income from investment operations:
Net investment income...................................... .22 .24
Net realized and unrealized gains.......................... .97 2.85
--------------------------------------
Total from investment operations............................ 1.19 3.09
--------------------------------------
Less distributions from:
Net investment income...................................... (.51) --
Net realized gains......................................... (.69) --
--------------------------------------
Total distributions......................................... (1.20) --
--------------------------------------
Net asset value, end of year................................ $19.45 $19.46
======================================
Total Return*............................................... 6.81% 18.88%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $69,297 $27,573
Ratios to average net assets:
Expenses................................................... 1.86% 1.88%**
Net investment income...................................... 1.16% 1.91%**
Portfolio turnover rate..................................... 50.57% 32.01%
</TABLE>
*Total return does not reflect the contingent deferred sales charge and is not
annualized.
**Annualized.
+Effective date of Class B shares was January 1, 1999.
++Based on average weighted shares outstanding.
15
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Highlights (continued)
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------
YEAR ENDED AUGUST 31,
-----------------------------------------------------------
2000 1999 1998 1997 1996
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE+
(For a share outstanding throughout the year)
Net asset value, beginning of year....................... $19.15 $16.49 $22.18 $18.57 $18.90
-----------------------------------------------------------
Income from investment operations:
Net investment income................................... .20 .32 .38 .42 .49
Net realized and unrealized gains (losses).............. .98 4.68 (2.77) 4.39 1.19
-----------------------------------------------------------
Total from investment operations......................... 1.18 5.00 (2.39) 4.81 1.68
-----------------------------------------------------------
Less distributions from:
Net investment income................................... (.36) (.31) (.42) (.39) (.40)
Net realized gains...................................... (.69) (2.03) (2.88) (.81) (1.61)
-----------------------------------------------------------
Total distributions...................................... (1.05) (2.34) (3.30) (1.20) (2.01)
-----------------------------------------------------------
Net asset value, end of year............................. $19.28 $19.15 $16.49 $22.18 $18.57
===========================================================
Total Return*............................................ 6.79% 33.77% (13.32)% 27.30% 9.99%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's).......................... $995,687 $1,021,159 $872,219 $755,184 $280,087
Ratios to average net assets:
Expenses................................................ 1.85% 1.86% 1.83% 1.84% 1.87%
Net investment income................................... 1.08% 1.84% 1.79% 2.14% 2.25%
Portfolio turnover rate.................................. 50.57% 32.01% 48.23% 41.81% 19.63%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge.
+Based on average weighted shares outstanding effective year ended August 31,
1999.
16
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Highlights (continued)
<TABLE>
<CAPTION>
ADVISOR CLASS
----------------------------------------------------
YEAR ENDED AUGUST 31,
----------------------------------------------------
2000 1999 1998 1997+
-------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE++
(For a share outstanding throughout the year)
Net asset value, beginning of year.......................... $19.61 $16.80 $22.49 $19.37
----------------------------------------------------
Income from investment operations:
Net investment income...................................... .40 .51 .56 .37
Net realized and unrealized gains (losses)................. .99 4.77 (2.78) 2.75
----------------------------------------------------
Total from investment operations............................ 1.39 5.28 (2.22) 3.12
----------------------------------------------------
Less distributions from:
Net investment income...................................... (.60) (.44) (.59) --
Net realized gains......................................... (.69) (2.03) (2.88) --
----------------------------------------------------
Total distributions......................................... (1.29) (2.47) (3.47) --
----------------------------------------------------
Net asset value, end of year................................ $19.71 $19.61 $16.80 $22.49
====================================================
Total Return*............................................... 7.87% 35.16% (12.41)% 16.11%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's)............................. $118,679 $50,751 $36,301 $29,531
Ratios to average net assets:
Expenses................................................... .86% .87% .83% .83%**
Net investment income...................................... 2.10% 2.85% 2.81% 3.68%**
Portfolio turnover rate..................................... 50.57% 32.01% 48.23% 41.81%
</TABLE>
*Total return is not annualized.
**Annualized.
+For the period January 2, 1997 (effective date) to August 31, 1997.
++Based on average weighted shares outstanding effective year ended August 31,
1999.
See Notes to Financial Statements.
17
<PAGE>
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS 94.8%
AEROSPACE & DEFENSE 3.8%
BAE Systems PLC............................................. United Kingdom 23,694,349 $ 143,067,245
Lockheed Martin Corp. ...................................... United States 5,179,200 146,959,800
Raytheon Co., A............................................. United States 5,247,015 139,373,836
Rolls-Royce PLC............................................. United Kingdom 39,940,489 110,411,502
---------------
539,812,383
---------------
AIR FREIGHT & COURIERS .4%
+Airborne Freight Corp. .................................... United States 3,422,100 51,117,619
---------------
AIRLINES 1.1%
British Airways PLC......................................... United Kingdom 2,531,515 12,375,624
Singapore Airlines Ltd. .................................... Singapore 14,741,100 142,161,308
---------------
154,536,932
---------------
AUTO COMPONENTS 1.1%
Goodyear Tire & Rubber Co. ................................. United States 3,222,600 75,328,275
Michelin SA, B.............................................. France 1,970,000 57,796,942
Visteon Corp. .............................................. United States 1,591,371 24,964,633
---------------
158,089,850
---------------
AUTOMOBILES 4.7%
Bayerische Motorenwerke AG BMW.............................. Germany 3,386,100 108,434,675
Ford Motor Co. ............................................. United States 7,895,807 190,979,832
General Motors Corp. ....................................... United States 3,914,400 282,570,750
Regie Nationale des Usines Renault SA....................... France 2,000,000 87,055,477
---------------
669,040,734
---------------
BANKS 8.5%
Australia & New Zealand Banking Group Ltd. ................. Australia 19,553,003 147,209,585
Banco Popular Espanol SA.................................... Spain 511,000 15,196,435
Bank of America Corp. ...................................... United States 5,038,600 269,880,013
Deutsche Bank AG............................................ Germany 1,555,200 133,425,320
Foreningssparbanken AB, A................................... Sweden 3,850,000 57,322,630
Guoco Group Ltd. ........................................... Hong Kong 19,030,700 48,801,046
HSBC Holdings PLC........................................... Hong Kong 20,747,630 295,281,234
National Australia Bank Ltd. ............................... Australia 10,812,865 158,691,149
U.S. Bancorp................................................ United States 4,600,000 100,050,000
---------------
1,225,857,412
---------------
BEVERAGES .4%
PanAmerican Beverages Inc., A............................... Mexico 3,059,300 56,788,256
---------------
</TABLE>
18
<PAGE>
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
BUILDING PRODUCTS .7%
Caradon PLC................................................. United Kingdom 5,154,667 $ 13,462,087
+Hepworth PLC............................................... United Kingdom 16,767,410 50,865,039
Pilkington PLC.............................................. United Kingdom 30,078,996 39,824,659
---------------
104,151,785
---------------
CHEMICALS 4.2%
+Agrium Inc. ............................................... Canada 5,782,100 56,375,475
Akzo Nobel NV............................................... Netherlands 3,570,000 158,091,839
BASF AG..................................................... Germany 2,871,000 108,989,776
DSM NV, Br. ................................................ Netherlands 3,616,251 110,596,572
Eastman Chemical Co. ....................................... United States 1,375,000 59,296,875
Elementis PLC............................................... United Kingdom 20,177,882 22,752,264
+Lyondell Chemical Co. ..................................... United States 7,068,600 92,333,588
---------------
608,436,389
---------------
COMMERCIAL SERVICES & SUPPLIES 1.2%
Waste Management Inc. ...................................... United States 8,977,300 170,007,619
---------------
COMMUNICATIONS EQUIPMENT .6%
Marconi PLC................................................. United Kingdom 3,156,084 55,654,273
Motorola Inc. .............................................. United States 602,800 21,738,475
---------------
77,392,748
---------------
COMPUTERS & PERIPHERALS 2.4%
Compaq Computer Corp. ...................................... United States 4,800,000 163,500,000
Fujitsu Ltd. ............................................... Japan 5,000,000 144,879,970
Hewlett-Packard Co. ........................................ United States 200,000 24,150,000
Lexmark International Inc., A............................... United States 101,200 6,862,625
---------------
339,392,595
---------------
CONSTRUCTION MATERIALS .4%
Cemex SA, ADR............................................... Mexico 1,050,270 24,615,703
Cheung Kong Infrastructure Holdings Ltd. ................... Hong Kong 13,990,900 23,948,113
---------------
48,563,816
---------------
CONTAINERS & PACKAGING .1%
Assidoman AB................................................ Sweden 1,198,100 18,092,434
---------------
DIVERSIFIED FINANCIALS 5.0%
ING Groep NV................................................ Netherlands 925,055 62,010,266
Jardine Strategic Holdings Ltd. ............................ Hong Kong 14,237,132 40,575,826
Merrill Lynch & Co. Inc. ................................... United States 1,380,300 200,143,500
Nomura Securities Co. Ltd. ................................. Japan 7,000,000 163,775,319
Swire Pacific Ltd., A....................................... Hong Kong 30,482,000 209,094,021
Swire Pacific Ltd., B....................................... Hong Kong 55,679,500 49,616,315
---------------
725,215,247
---------------
</TABLE>
19
<PAGE>
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
DIVERSIFIED TELECOMMUNICATION SERVICES 4.6%
AT&T Corp. ................................................. United States 3,750,000 $ 118,125,000
Nippon Telegraph & Telephone Corp. ......................... Japan 13,126 156,320,518
SBC Communications Inc. .................................... United States 1,400,000 58,450,000
Telecom Argentina Stet-France Telecom SA, B, ADR............ Argentina 2,734,700 64,265,450
Telecom Corp. of New Zealand Ltd. .......................... New Zealand 20,000,000 55,745,131
*Telefonica SA, ADR......................................... Spain 2,236 128,151
Telefonos de Mexico SA de CV (Telmex), ADR.................. Mexico 2,760,450 150,271,997
*Worldcom Inc. ............................................. United States 1,500,000 54,750,000
---------------
658,056,247
---------------
ELECTRIC UTILITIES 7.5%
CLP Holdings Ltd. .......................................... Hong Kong 21,639,500 97,109,035
E.ON AG..................................................... Germany 2,563,400 126,027,756
Endesa SA................................................... Spain 3,598,900 70,231,023
Entergy Corp. .............................................. United States 3,600,000 109,575,000
Gener SA, ADR............................................... Chile 754,200 9,616,050
Hong Kong Electric Holdings Ltd. ........................... Hong Kong 39,528,200 125,183,868
Iberdrola SA, Br. .......................................... Spain 10,253,800 118,053,618
Korea Electric Power Corp. ................................. South Korea 3,946,460 116,035,712
National Grid Group PLC..................................... United Kingdom 2,066,100 16,879,067
National Power PLC.......................................... United Kingdom 10,800,000 74,010,272
Potomac Electric Power Co. ................................. United States 5,252,727 132,303,061
Powergen PLC................................................ United Kingdom 10,000,000 84,532,453
---------------
1,079,556,915
---------------
ELECTRICAL EQUIPMENT .4%
ABB Ltd. ................................................... Switzerland 569,497 63,367,970
---------------
ELECTRONIC EQUIPMENT & INSTRUMENTS 1.0%
Hitachi Ltd. ............................................... Japan 12,000,000 142,123,031
---------------
FOOD & DRUG RETAILING 3.7%
Albertson's Inc. ........................................... United States 5,084,708 109,321,222
Dairy Farm International Holdings Ltd. ..................... Hong Kong 27,286,377 12,551,733
Jardine Matheson Holdings Ltd. ............................. Hong Kong 9,839,599 48,214,035
*Kroger Co. ................................................ United States 10,000,000 226,875,000
Safeway PLC................................................. United Kingdom 35,748,027 136,920,285
---------------
533,882,275
---------------
FOOD PRODUCTS 4.2%
Archer-Daniels Midland Co. ................................. United States 4,905 43,225
H.J. Heinz Co. ............................................. United States 7,000,000 266,875,000
Kikkoman Corp. ............................................. Japan 1,014,000 7,473,781
Nabisco Group Holdings Corp. ............................... United States 6,491,900 182,178,944
Northern Foods PLC.......................................... United Kingdom 10,687,600 16,677,265
</TABLE>
20
<PAGE>
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
FOOD PRODUCTS (CONT.)
Sara Lee Corp. ............................................. United States 4,000,000 $ 74,500,000
Unilever PLC................................................ United Kingdom 9,350,000 58,836,260
---------------
606,584,475
---------------
GAS UTILITIES .7%
TransCanada PipeLines Ltd. ................................. Canada 11,031,764 106,977,402
TransCanada PipeLines Ltd., fgn. ........................... Canada 43,500 426,844
---------------
107,404,246
---------------
HEALTH CARE PROVIDERS & SERVICES .7%
Aetna Inc. ................................................. United States 1,750,000 97,890,625
---------------
HOTELS RESTAURANTS & LEISURE .3%
Shangri-La Asia Ltd. ....................................... Hong Kong 46,173,000 46,769,159
---------------
HOUSEHOLD DURABLES 1.3%
Koninklijke Philips Electronics NV.......................... Netherlands 899,591 43,827,869
LG Electronics Inc. ........................................ South Korea 1,800,000 45,781,285
Newell Rubbermaid Inc. ..................................... United States 2,382,100 61,785,719
Sony Corp. ................................................. Japan 261,205 29,147,970
---------------
180,542,843
---------------
HOUSEHOLD PRODUCTS .8%
Procter & Gamble Co. ....................................... United States 1,750,000 108,171,875
---------------
INDUSTRIAL CONGLOMERATES .8%
Cookson Group PLC........................................... United Kingdom 19,014,284 64,873,923
DESC SA de CV DESC, B....................................... Mexico 9,613,000 5,952,322
Norsk Hydro ASA............................................. Norway 1,009,819 43,400,050
---------------
114,226,295
---------------
INSURANCE 4.4%
Ace Ltd. ................................................... Bermuda 2,021,800 71,015,725
Allied Zurich PLC........................................... United Kingdom 11,000,000 135,317,397
Allstate Corp. ............................................. United States 4,917,100 142,903,219
American General Corp. ..................................... United States 1,100,000 80,093,750
Torchmark Corp. ............................................ United States 1,818,500 51,031,656
+W. R. Berkley Corp. ....................................... United States 1,680,650 44,537,225
XL Capital Ltd., A.......................................... Bermuda 1,660,700 114,484,506
Zurich Allied AG............................................ Switzerland 520 267,677
---------------
639,651,155
---------------
LEISURE EQUIPMENT & PRODUCTS 1.7%
Eastman Kodak Co. .......................................... United States 1,250,000 77,812,500
Fuji Photo Film Co. Ltd. ................................... Japan 4,700,000 168,360,840
---------------
246,173,340
---------------
</TABLE>
21
<PAGE>
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
MACHINERY 1.7%
METSO OYJ................................................... Finland 1,940,300 $ 23,460,242
Sandvik AB.................................................. Sweden 4,626,750 101,002,543
SKF AB, A................................................... Sweden 822,617 11,158,266
SKF AB, B................................................... Sweden 346,031 5,023,711
Volvo AB, B................................................. Sweden 6,578,300 109,098,071
---------------
249,742,833
---------------
MEDIA .2%
*General Motors Corp., H.................................... United States 273,000 9,043,125
South China Morning Post Holdings Ltd. ..................... Hong Kong 21,357,000 16,019,188
South China Morning Post Holdings Ltd., 144A................ Hong Kong 8,976,000 6,732,604
---------------
31,794,917
---------------
METALS & MINING 3.7%
+AK Steel Holding Corp. .................................... United States 8,629,900 93,850,163
Barrick Gold Corp. ......................................... Canada 5,900,000 93,622,215
Broken Hill Proprietary Co. Ltd. ........................... Australia 5,054,048 55,388,068
Companhia Siderurgica Nacional CSN, ADR..................... Brazil 1,177,905 42,699,056
Consol Energy............................................... United States 694,400 14,452,200
De Beers Consolidated Miners AG, ADR........................ South Africa 2,950,000 81,862,500
Grupo Mexico SA de CV, B.................................... Mexico 197,000 879,550
Pohang Iron & Steel Co. Ltd. ............................... South Korea 1,255,273 95,969,654
USX-U. S. Steel Group....................................... United States 3,300,000 57,337,500
---------------
536,060,906
---------------
MULTILINE RETAIL 2.4%
J.C. Penney Co. Inc. ....................................... United States 5,509,800 77,137,200
*Kmart Corp. ............................................... United States 12,900,000 90,300,000
Marks & Spencer PLC......................................... United Kingdom 26,860,000 82,165,471
Sears Roebuck & Co. ........................................ United States 3,000,000 93,562,500
---------------
343,165,171
---------------
OIL & GAS 7.3%
Amerada Hess Corp. ......................................... United States 923,300 63,188,344
Burlington Resources Inc. .................................. United States 2,200,000 86,487,500
Eni SpA..................................................... Italy 14,000,000 81,276,671
Occidental Petroleum Corp. ................................. United States 6,279,000 135,783,375
*PetroChina Co. Ltd., H..................................... China 316,499,000 75,479,612
Repsol YPF SA............................................... Spain 6,500,000 128,867,354
Shell Transport & Trading Co. PLC........................... United Kingdom 19,784,000 169,110,009
Societe Elf Aquitaine SA, Br. .............................. France 569,322 112,771,057
Texaco Inc. ................................................ United States 2,000,000 103,000,000
+Valero Energy Corp. ....................................... United States 3,183,700 95,908,963
---------------
1,051,872,885
---------------
</TABLE>
22
<PAGE>
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
PAPER & FOREST PRODUCTS 4.1%
Aracruz Celulose SA, ADR.................................... Brazil 60,600 $ 1,174,125
Bowater Inc. ............................................... United States 2,454,800 126,115,350
Georgia-Pacific Timber Co. ................................. United States 3,000,000 87,937,500
Holmen Aktiebolag AB, B..................................... Sweden 2,515,150 57,971,189
International Paper Co. .................................... United States 3,273,140 104,331,338
Metsa Serla OY, B........................................... Finland 2,656,000 19,244,666
Norske Skogindustrier ASA, A................................ Norway 709,200 24,931,103
Stora Enso OYJ, A (EUR Traded).............................. Finland 718,823 6,390,674
Stora Enso OYJ, R (EUR Traded).............................. Finland 4,361,145 38,772,626
Stora Enso OYJ, R (EUR/FIM Traded).......................... Finland 2,266,181 20,751,835
Stora Enso OYJ, R (SEK Traded).............................. Finland 44,994 414,823
UPM-Kymmene Corp. .......................................... Finland 4,001,840 101,220,082
---------------
589,255,311
---------------
PHARMACEUTICALS 2.5%
Abbott Laboratories......................................... United States 5,000,000 218,750,000
Aventis SA.................................................. France 1,854,383 139,309,534
---------------
358,059,534
---------------
REAL ESTATE 3.6%
Amoy Properties Ltd. ....................................... Hong Kong 30,428,100 28,480,137
Cheung Kong Holdings Ltd. .................................. Hong Kong 21,823,800 284,014,681
Lend Lease Corp. Ltd. ...................................... Australia 1,567,172 18,518,654
New World Development Co. Ltd. ............................. Hong Kong 21,276,244 34,781,597
+Rouse Co. ................................................. United States 3,782,500 91,252,813
St. Joe Co. ................................................ United States 2,036,700 59,700,769
---------------
516,748,651
---------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS .4%
*Hyundai Electronics Industries Co. ........................ South Korea 2,800,000 51,264,938
---------------
SPECIALTY RETAIL .4%
W.H. Smith PLC.............................................. United Kingdom 10,874,968 57,198,367
---------------
TEXTILES & APPAREL
Adidas-Salomon AG........................................... Germany 127,904 6,788,646
---------------
TRADING COMPANIES & DISTRIBUTORS .4%
Samsung Corp. .............................................. South Korea 6,000,000 54,385,569
---------------
WATER UTILITIES .6%
Thames Water Group PLC...................................... United Kingdom 7,746,085 91,569,948
---------------
</TABLE>
23
<PAGE>
TEMPLETON GROWTH FUND, INC.
STATEMENT OF INVESTMENTS, AUGUST 31, 2000 (CONT.)
<TABLE>
<CAPTION>
COUNTRY SHARES VALUE
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS (CONT.)
WIRELESS TELECOMMUNICATION SERVICES .8%
SK Telecom Co. Ltd., ADR.................................... South Korea 3,485,579 $ 89,317,962
Smartone Telecommunications Holdings Ltd. .................. Hong Kong 11,775,100 22,721,944
---------------
112,039,906
---------------
TOTAL COMMON STOCKS (COST $12,544,097,042).................. 13,620,843,852
---------------
PREFERRED STOCKS 2.4%
Cia Vale do Rio Doce, A, ADR, pfd. ......................... Brazil 1,230,400 33,451,500
Cia Vale do Rio Doce, A, pfd. .............................. Brazil 949,560 25,676,478
Petroleo Brasileiro SA, pfd. ............................... Brazil 4,750,000 143,844,463
*Telecomunicacoes Brasileiras SA (Telebras), pfd. .......... Brazil 375,550,000 34,778,882
Telecomunicacoes de Sao Paulo SA, ADR, pfd. ................ Brazil 375,550 6,689,484
Tele Sudeste Celular Participacoes SA, ADR, pfd. ........... Brazil 75,110 1,840,195
*Telesp Celular Participacoes SA, pfd., rts., 10/09/00...... Brazil 37,555,000 22,655
Volkswagen AG, pfd. ........................................ Germany 3,765,960 96,760,530
---------------
TOTAL PREFERRED STOCKS (COST $350,616,618).................. 343,064,187
---------------
<CAPTION>
PRINCIPAL
AMOUNT**
-----------
<S> <C> <C> <C>
BONDS 2.3%
U.S. Treasury Bond
8.75%, 8/15/20............................................ United States $50,000,000 66,140,650
7.50%, 11/15/24........................................... United States 60,000,000 72,131,280
6.75%, 8/15/26............................................ United States 60,000,000 66,806,280
6.625%, 2/15/27........................................... United States 65,000,000 71,398,470
Inflation Index, 3.625%, 4/15/28.......................... United States 31,952,700 30,464,916
Inflation Index, 3.875%, 4/15/29.......................... United States 31,437,000 31,348,599
---------------
TOTAL BONDS (COST $319,592,389)............................. 338,290,195
---------------
SHORT TERM INVESTMENTS (COST $172,370,812) 1.2%
U.S. Treasury Bills, 6.03% to 6.31%, with maturities to
11/24/00.................................................. United States 173,693,000 172,397,099
---------------
TOTAL INVESTMENTS (COST $13,386,676,861) 100.7%............. 14,474,595,333
OTHER ASSETS, LESS LIABILITIES (.7%)........................ (99,439,507)
---------------
TOTAL NET ASSETS 100.0%..................................... $14,375,155,826
===============
</TABLE>
CURRENCY ABBREVIATIONS:
<TABLE>
<S> <C> <C>
EUR -- European Unit
FIM -- Finnish Markka
SEK -- Swedish Krona
</TABLE>
*Non-income producing.
**Securities denominated in U.S. dollars.
+The Investment Company Act of 1940 defines "affiliated person" to include any
persons, such as the Fund, that owns 5% or more of the outstanding voting
securities of another person. Investments in "affiliated persons" at August 31,
2000, were $576,240,885.
See Notes to Financial Statements.
24
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Statements
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
<TABLE>
<S> <C>
Assets:
Investments in securities, at value (cost
$13,386,676,861).......................................... $14,474,595,333
Cash....................................................... 478,941
Receivables:
Investment securities sold................................ 9,187,198
Capital shares sold....................................... 137,525,392
Dividends and interest.................................... 43,892,216
---------------
Total assets.......................................... 14,665,679,080
---------------
Liabilities:
Payables:
Investment securities purchased........................... 238,406,198
Capital shares redeemed................................... 38,527,299
To affiliates............................................. 11,881,848
Accrued expenses........................................... 1,707,909
---------------
Total liabilities..................................... 290,523,254
---------------
Net assets, at value........................................ $14,375,155,826
===============
Net assets consist of:
Undistributed net investment income........................ $ 195,718,848
Net unrealized appreciation................................ 1,087,918,472
Accumulated net realized gain.............................. 970,428,819
Capital shares............................................. 12,121,089,687
---------------
Net assets, at value........................................ $14,375,155,826
===============
CLASS A:
Net asset value per share ($13,191,493,393 / 670,519,440
shares outstanding)...................................... $19.67
===============
Maximum offering price per share ($19.67 / 94.25%)......... $20.87
===============
CLASS B:
Net asset value and maximum offering price per share
($69,296,837 / 3,562,674 shares outstanding)*............. $19.45
===============
CLASS C:
Net asset value per share ($995,687,051 / 51,638,108 shares
outstanding)*............................................. $19.28
===============
Maximum offering price per share ($19.28 / 99.00%)......... $19.47
===============
ADVISOR CLASS:
Net asset value and maximum offering price per share
($118,678,545 / 6,020,174 shares outstanding)............. $19.71
===============
</TABLE>
*Redemption price per share is equal to net asset value less any applicable
sales charge.
See Notes to Financial Statements.
25
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Statements (continued)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
<TABLE>
<S> <C> <C>
Investment Income:
(net of foreign taxes of $19,327,202)
Dividends.................................................. $ 372,476,882
Interest................................................... 54,570,747
--------------
Total investment income............................... $ 427,047,629
Expenses:
Management fees (Note 4)................................... 88,361,829
Administrative fees (Note 4)............................... 11,479,604
Distribution fees (Note 4)
Class A................................................... 33,437,218
Class B................................................... 516,144
Class C................................................... 10,219,245
Transfer agent fees (Note 4)............................... 17,838,000
Custodian fees............................................. 4,529,000
Reports to shareholders.................................... 1,404,000
Registration and filing fees............................... 58,000
Professional fees.......................................... 335,800
Directors' fees and expenses............................... 151,000
Other...................................................... 285,582
--------------
Total expenses........................................ 168,615,422
--------------
Net investment income........................... 258,432,207
--------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments............................................... 1,056,238,987
Foreign currency transactions............................. (10,708,905)
--------------
Net realized gain..................................... 1,045,530,082
Net unrealized depreciation on investments............ (235,037,426)
--------------
Net realized and unrealized gain............................ 810,492,656
--------------
Net increase in net assets resulting from operations........ $1,068,924,863
==============
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
TEMPLETON GROWTH FUND, INC.
Financial Statements (continued)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED AUGUST 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
-------------------------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 258,432,207 $ 347,151,029
Net realized gain from investments and foreign currency
transactions............................................. 1,045,530,082 441,151,946
Net unrealized appreciation (depreciation) on
investments.............................................. (235,037,426) 3,187,700,802
-------------------------------------
Net increase in net assets resulting from operations.... 1,068,924,863 3,976,003,777
Distributions to shareholders from:
Net investment income:
Class A.................................................. (368,756,633) (266,948,419)
Class B.................................................. (945,809) --
Class C.................................................. (19,446,911) (16,090,109)
Advisor Class............................................ (1,869,386) (974,268)
Net realized gains:
Class A.................................................. (476,257,437) (1,337,678,480)
Class B.................................................. (1,309,993) --
Class C.................................................. (37,445,157) (105,487,917)
Advisor Class............................................ (2,100,786) (4,508,052)
-------------------------------------
Total distributions to shareholders........................ (908,132,112) (1,731,687,245)
Capital share transactions (Note 3):
Class A.................................................. (318,047,628) 165,182,221
Class B.................................................. 40,373,987 26,627,554
Class C.................................................. (36,360,292) 269,118
Advisor Class............................................ 59,969,089 6,948,870
-------------------------------------
Total capital share transactions........................... (254,064,844) 199,027,763
Net increase (decrease) in net assets................... (93,272,093) 2,443,344,295
Net assets:
Beginning of year.......................................... 14,468,427,919 12,025,083,624
-------------------------------------
End of year................................................ $14,375,155,826 $14,468,427,919
=====================================
Undistributed net investment income included in net assets:
End of year................................................ $ 195,718,848 $ 329,302,184
=====================================
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements
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. Under normal market conditions, the Fund invests
primarily in the equity securities of companies located anywhere in the world,
including emerging markets. 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. 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 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.
28
<PAGE>
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (continued)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONT.)
d. 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. MERGER WITH TEMPLETON INSTITUTIONAL FUNDS INC. -- GROWTH SERIES
On October 28, 1999, the Fund acquired all of the net assets of the Templeton
Institutional Funds Inc. -- Growth Series pursuant to a plan of reorganization
approved by the Growth Series Fund's shareholders. The merger was accomplished
by a tax-free exchange of 3,509,662 Advisor shares (valued at $17.54 per share)
for the net assets of the Growth Series Fund which aggregated $61,559,476,
including $8,429,288 of unrealized appreciation. The combined net assets of the
Fund immediately after the merger were $13,841,506,977.
3. CAPITAL STOCK
The Fund offers four classes of shares: Class A, Class B, Class C, and Advisor
Class shares. Effective January 1, 1999, Class I and Class II shares were
renamed Class A and Class C respectively, and a fourth class of shares, Class B,
was established. 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 August 31, 2000, there were 1.8 billion shares authorized ($0.01 par value)
of which 1.2 billion, 100 million, 400 million and 100 million were designated
Class A shares, Class B shares, Class C shares and Advisor Class shares,
respectively. Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS A SHARES:
Shares sold....................................... 384,359,781 $ 7,342,964,091 240,450,684 $ 4,294,680,279
Shares issued on reinvestment of distributions.... 42,254,953 748,711,669 91,924,630 1,440,499,083
Shares redeemed................................... (439,646,782) (8,409,723,388) (311,355,509) (5,569,997,141)
-----------------------------------------------------------------------
Net increase (decrease)........................... (13,032,048) $ (318,047,628) 21,019,805 $ 165,182,221
=======================================================================
</TABLE>
29
<PAGE>
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (continued)
3. CAPITAL STOCK (CONT.)
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
AUGUST 31, 2000 AUGUST 31, 1999*
-----------------------------------------------------------------------
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS B SHARES:
Shares sold....................................... 2,408,275 $ 45,492,583 1,444,372 $ 27,145,001
Shares issued on reinvestment of distributions.... 113,319 1,992,059 -- --
Shares redeemed................................... (376,009) (7,110,655) (27,283) (517,447)
-----------------------------------------------------------------------
Net increase...................................... 2,145,585 $ 40,373,987 1,417,089 $ 26,627,554
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS C SHARES:
Shares sold....................................... 16,928,748 $ 315,681,812 19,198,655 $ 331,903,925
Shares issued on reinvestment of distributions.... 2,899,700 50,486,057 6,947,652 107,274,041
Shares redeemed................................... (21,517,842) (402,528,161) (25,697,020) (438,908,848)
-----------------------------------------------------------------------
Net increase (decrease)........................... (1,689,394) $ (36,360,292) 449,287 $ 269,118
=======================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------------
<S> <C> <C> <C> <C>
ADVISOR CLASS SHARES:
Shares sold....................................... 2,153,132 $ 41,161,712 1,605,201 $ 29,335,282
Shares issued on reinvestment of distributions.... 212,187 3,806,300 334,899 5,247,867
Shares issued on merger (Note 2).................. 3,509,662 61,559,476 -- --
Shares redeemed................................... (2,442,841) (46,558,399) (1,512,522) (27,634,279)
-----------------------------------------------------------------------
Net increase...................................... 3,432,140 $ 59,969,089 427,578 $ 6,948,870
=======================================================================
</TABLE>
*Effective date of Class B shares was January 1, 1999.
4. 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.
30
<PAGE>
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (continued)
4. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONT.)
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>
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 for costs incurred in marketing the Fund's
shares up to 0.25%, 1.00% and 1.00% per year of the average daily net assets of
Class A, Class B and Class C shares, respectively. Under the Class A
distribution plan, costs exceeding the maximum may be reimbursed in subsequent
periods. At August 31, 2000, unreimbursed costs were $4,285,833. Distributors
received net commissions from sales of the Fund's shares and received contingent
deferred sales charges for the period of $2,061,385 and $364,296, respectively.
5. 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.
At August 31, 2000, the net unrealized appreciation based on the cost of
investments for income tax purposes of $13,390,321,632 was as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................... $ 2,191,192,277
Unrealized depreciation.................................... (1,106,918,576)
---------------
Net unrealized appreciation................................ $ 1,084,273,701
===============
</TABLE>
Net investment income and net realized gains differ for financial statement and
tax purposes primarily due to differing treatments of wash sales and losses
realized subsequent to October 31, on the sale of foreign currencies.
At August 31, 2000, the Fund had deferred currency losses occurring subsequent
to October 31, 1999 of $8,916,897. For tax purposes, such losses will be
reflected in the year ending August 31, 2001.
31
<PAGE>
TEMPLETON GROWTH FUND, INC.
Notes to Financial Statements (continued)
6. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended August 31, 2000 aggregated $7,228,407,686 and $7,119,125,199,
respectively.
32
<PAGE>
TEMPLETON GROWTH FUND, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Templeton Growth Fund, Inc.
(the "Fund") at August 31, 2000, the results of its operations for the year then
ended, the changes in its net assets and the financial highlights for each of
the two years in the period then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at August 31,
2000 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above. The financial highlights for each of the
three years ending August 31, 1998 were audited by other independent accountants
whose report dated September 29, 1998 expressed an unqualified opinion on those
financial statements.
PricewaterhouseCoopers LLP
Ft. Lauderdale, Florida
September 29, 2000
33
<PAGE>
TEMPLETON GROWTH FUND, INC.
Tax Designation
Under Section 852(b)(3)(C) of the Internal Revenue Code, the Fund hereby
designates $758,593,031 as a capital gain dividend for the fiscal year ended
August 31, 2000.
Under Section 854(b)(2) of the Internal Revenue Code, the Fund hereby designates
28.09% of the ordinary income dividends as income qualifying for the dividends
received deduction for the fiscal year ended August 31, 2000.
At August 31, 2000, more than 50% of the Fund's total assets were invested in
securities of foreign issuers. In most instances, foreign taxes were withheld
from dividends paid to the fund on these investments. The Fund intends to make
an election under Section 853 of the Internal Revenue Code. This election will
allow shareholders to treat their proportionate share of foreign taxes paid by
the Fund as having been paid directly by them.
The following table provides a breakdown by country of foreign source income and
foreign taxes paid, as designated by the Fund, to Class A, Class B, Class C, and
Advisor Class shareholders of record on October 19, 2000.
<TABLE>
<CAPTION>
CLASS A CLASS B
------------------------------------------------------------------------
FOREIGN TAX FOREIGN SOURCE FOREIGN TAX FOREIGN SOURCE
COUNTRY PAID PER SHARE INCOME PER SHARE PAID PER SHARE INCOME PER SHARE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Argentina.............................................. $0.0000 $0.0064 $0.0000 $0.0056
Australia.............................................. 0.0004 0.0188 0.0004 0.0166
Bermuda................................................ 0.0000 0.0045 0.0000 0.0040
Brazil................................................. 0.0019 0.0143 0.0019 0.0126
Canada................................................. 0.0010 0.0053 0.0010 0.0047
Chile.................................................. 0.0000 0.0002 0.0000 0.0002
Finland................................................ 0.0009 0.0051 0.0009 0.0045
France................................................. 0.0011 0.0075 0.0011 0.0066
Germany................................................ 0.0012 0.0091 0.0012 0.0080
Hong Kong.............................................. 0.0000 0.0509 0.0000 0.0450
Italy.................................................. 0.0002 0.0011 0.0002 0.0010
Japan.................................................. 0.0007 0.0034 0.0007 0.0030
Mexico................................................. 0.0006 0.0064 0.0006 0.0057
Netherlands............................................ 0.0025 0.0142 0.0025 0.0126
New Zealand............................................ 0.0006 0.0031 0.0006 0.0028
Norway................................................. 0.0006 0.0033 0.0006 0.0029
Peru................................................... 0.0000 0.0004 0.0000 0.0004
Singapore.............................................. 0.0016 0.0116 0.0016 0.0103
South Africa........................................... 0.0000 0.0076 0.0000 0.0068
South Korea............................................ 0.0007 0.0034 0.0007 0.0030
Spain.................................................. 0.0015 0.0075 0.0015 0.0067
Sweden................................................. 0.0003 0.0016 0.0003 0.0014
Switzerland............................................ 0.0004 0.0018 0.0004 0.0016
United Kingdom......................................... 0.0101 0.0793 0.0101 0.0701
------------------------------------------------------------------------
TOTAL.................................................. $0.0263 $0.2668 $0.0263 $0.2361
========================================================================
</TABLE>
34
<PAGE>
TEMPLETON GROWTH FUND, INC.
Tax Designation (continued)
<TABLE>
<CAPTION>
CLASS C ADVISOR CLASS
------------------------------------------------------------------------
FOREIGN TAX FOREIGN SOURCE FOREIGN TAX FOREIGN SOURCE
COUNTRY PAID PER SHARE INCOME PER SHARE PAID PER SHARE INCOME PER SHARE
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Argentina.............................................. $0.0000 $0.0051 $0.0000 $0.0068
Australia.............................................. 0.0004 0.0151 0.0004 0.0201
Bermuda................................................ 0.0000 0.0036 0.0000 0.0048
Brazil................................................. 0.0019 0.0115 0.0019 0.0152
Canada................................................. 0.0010 0.0043 0.0010 0.0057
Chile.................................................. 0.0000 0.0001 0.0001 0.0002
Finland................................................ 0.0009 0.0041 0.0009 0.0054
France................................................. 0.0011 0.0060 0.0011 0.0080
Germany................................................ 0.0012 0.0073 0.0012 0.0097
Hong Kong.............................................. 0.0000 0.0409 0.0000 0.0543
Italy.................................................. 0.0002 0.0009 0.0002 0.0012
Japan.................................................. 0.0007 0.0027 0.0007 0.0037
Mexico................................................. 0.0006 0.0051 0.0006 0.0068
Netherlands............................................ 0.0025 0.0114 0.0025 0.0152
New Zealand............................................ 0.0006 0.0025 0.0006 0.0033
Norway................................................. 0.0006 0.0027 0.0006 0.0035
Peru................................................... 0.0000 0.0003 0.0000 0.0004
Singapore.............................................. 0.0016 0.0093 0.0016 0.0124
South Africa........................................... 0.0000 0.0061 0.0000 0.0082
South Korea............................................ 0.0007 0.0027 0.0007 0.0036
Spain.................................................. 0.0015 0.0061 0.0015 0.0080
Sweden................................................. 0.0003 0.0013 0.0003 0.0017
Switzerland............................................ 0.0004 0.0015 0.0004 0.0020
United Kingdom......................................... 0.0101 0.0637 0.0101 0.0847
------------------------------------------------------------------------
TOTAL.................................................. $0.0263 $0.2143 $0.0263 $0.2849
========================================================================
</TABLE>
In January 2001, shareholders will receive Form 1099-DIV which will include
their share of taxes withheld and foreign source income distributed during the
calendar year 2000. Shareholders are advised to check with their tax advisors
for information on the treatment of these amounts on their individual income tax
returns.
35
<PAGE>
TEMPLETON GROWTH FUND, INC.
Special Meeting of Shareholders, June 15, 2000 and July 5, 2000
A Special Meeting of Shareholders of the Fund was held at the Hyatt Regency Pier
66, Panorama Ballroom, 2301 S. E. 17th Street Causeway, Fort Lauderdale, Florida
and the Fund's offices, 500 E. Broward Blvd., Fort Lauderdale, Florida, on June
15, 2000 and July 5, 2000, respectively. The purpose of the meeting was to elect
12 Directors of the Fund; ratify the selection of PricewaterhouseCoopers LLP as
the Fund's independent auditors; approve the amendment of certain of the Fund's
fundamental investment restrictions (including five Sub-Proposals); approve the
reclassification of the Fund's fundamental investment policies and certain
fundamental investment restrictions to non-fundamental policies and restrictions
(including ten Sub-Proposals); approve the elimination of one of the Fund's
fundamental investment restrictions; approve the amendment and restatement of
the Fund's articles of incorporation; and in their discretion, to authorize the
proxyholders to vote upon such other matters that may properly come before the
meeting or any adjournments of the meeting. At the meeting, the following
persons were elected by the shareholders to serve as Directors of the Fund:
Harris J. Ashton, Nicholas F. Brady, Frank J. Crothers, S. Joseph Fortunato,
John Wm. Galbraith, Andrew H. Hines, Jr., Edith E. Holiday, Charles B. Johnson,
Betty P. Krahmer, Gordon S. Macklin, Fred R. Millsaps and Constantine D.
Tseretopoulos. Shareholders ratified the selection of PricewaterhouseCoopers LLP
to serve as the Fund's independent auditors, approved the amendment of certain
of the Fund's fundamental investment restrictions (including five
Sub-Proposals), approved the reclassification of the Fund's fundamental
investment policies and certain fundamental investment restrictions to
non-fundamental policies and restrictions (including ten Sub-Proposals),
approved the elimination of one of the Fund's fundamental investment
restrictions and approved the amendment and restatement of the Fund's articles
of incorporation. No other business was transacted at the meeting.
The results of the voting at the Special Meeting are as follows:
1. The election of twelve (12) Directors:
<TABLE>
<CAPTION>
SHARES % OF % OF SHARES % OF % OF
TERM EXPIRING 2003: FOR OUTSTANDING SHARES VOTED SHARES WITHHELD OUTSTANDING SHARES VOTED SHARES
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Harris J. Ashton......... 463,763,549 60.79% 96.87% 14,962,721 1.96% 3.13%
Nicholas F. Brady........ 463,842,998 60.80% 96.89% 14,883,272 1.95% 3.11%
Frank J. Crothers........ 463,895,084 60.81% 96.90% 14,831,187 1.94% 3.10%
S. Joseph Fortunato...... 463,782,588 60.79% 96.88% 14,943,682 1.96% 3.12%
John Wm. Galbraith....... 463,179,246 60.71% 96.75% 15,547,024 2.04% 3.25%
Andrew H. Hines, Jr...... 463,375,238 60.74% 96.79% 15,351,033 2.01% 3.21%
Edith E. Holiday......... 463,921,982 60.81% 96.91% 14,804,289 1.94% 3.09%
Charles B. Johnson....... 463,890,613 60.81% 96.90% 14,835,657 1.94% 3.10%
Betty P. Krahmer......... 463,675,456 60.78% 96.86% 15,050,814 1.97% 3.14%
Gordon S. Macklin........ 463,596,417 60.77% 96.84% 15,129,853 1.98% 3.16%
Fred R. Millsaps......... 463,700,157 60.78% 96.86% 15,026,113 1.97% 3.14%
Constantine D
Tseretopoulos.......... 463,731,350 60.78% 96.87% 14,994,920 1.97% 3.13%
</TABLE>
36
<PAGE>
2. The ratification or rejection of the selection of PricewaterhouseCoopers LLP
as independent auditors of the Fund:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 457,150,852 59.92% 95.49%
Against.................. 2,886,451 0.38% 0.60%
Abstain.................. 18,688,966 2.45% 3.91%
</TABLE>
3. The amendment of certain of the Fund's fundamental investment restrictions
(includes five Sub-proposals):
a. Amendment of the Fund's fundamental investment restriction regarding
borrowing:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 336,486,149 44.11% 88.66%
Against.................. 17,554,242 2.30% 4.63%
Abstain.................. 25,454,429 3.33% 6.71%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
b. Amendment of the Fund's fundamental investment restriction regarding
underwriting:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 342,198,123 44.85% 90.17%
Against.................. 12,015,527 1.58% 3.17%
Abstain.................. 25,281,170 3.31% 6.66%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
c. Amendment of the Fund's fundamental investment restriction regarding lending:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 338,870,662 44.42% 89.30%
Against.................. 15,340,256 2.01% 4.04%
Abstain.................. 25,283,902 3.31% 6.66%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
d. Amendment of the Fund's fundamental investment restriction regarding industry
concentration:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 340,883,823 44.68% 89.83%
Against.................. 13,060,299 1.71% 3.44%
Abstain.................. 25,550,698 3.35% 6.73%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
e. Amendment of the Fund's fundamental investment restriction regarding
investment in other investment companies:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 341,597,334 44.77% 90.01%
Against.................. 12,969,736 1.70% 3.42%
Abstain.................. 24,927,750 3.27% 6.57%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
37
<PAGE>
4. The reclassification of the Fund's fundamental investment policies and
certain fundamental investment restrictions to non-fundamental policies and
restrictions (includes 10 Sub-Proposals):
a. Reclassify policy on investments in stocks and debt obligations:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 342,761,084 44.93% 90.32%
Against.................. 11,288,042 1.48% 2.97%
Abstain.................. 25,445,694 3.33% 6.71%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
b. Reclassify policy on investments in preferred stocks and certain debt
securities:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 343,210,759 44.99% 90.44%
Against.................. 10,909,089 1.43% 2.87%
Abstain.................. 25,374,972 3.32% 6.69%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
c. Reclassify policy on investments in temporary defensive instruments:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 342,961,112 44.95% 90.37%
Against.................. 10,733,277 1.41% 2.83%
Abstain.................. 25,800,431 3.38% 6.80%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
d. Reclassify policy on investments in a single issuer:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 337,501,011 44.24% 88.93%
Against.................. 14,988,324 1.96% 3.95%
Abstain.................. 27,005,485 3.54% 7.12%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
e. Reclassify policy on investments in securities with a limited trading market:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 336,320,944 44.08% 88.62%
Against.................. 16,843,376 2.21% 4.44%
Abstain.................. 26,330,500 3.45% 6.94%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
38
<PAGE>
f. Reclassify restriction on investments in companies whose securities the
Fund's Directors and Officers own:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 334,381,258 43.83% 88.11%
Against.................. 18,640,215 2.44% 4.91%
Abstain.................. 26,473,347 3.47% 6.98%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
g. Reclassify restriction on investments in a single class of securities, voting
securities or securities of a company for the purpose of controlling or managing
the company:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 337,495,029 44.24% 88.93%
Against.................. 15,537,323 2.03% 4.10%
Abstain.................. 26,462,468 3.47% 6.97%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
h. Reclassify restriction on investments in unseasoned issuers:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 333,482,339 43.71% 87.88%
Against.................. 18,795,681 2.46% 4.95%
Abstain.................. 27,216,800 3.57% 7.17%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
i. Reclassify restriction on investments in warrants:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 338,411,489 44.36% 89.17%
Against.................. 13,962,285 1.83% 3.68%
Abstain.................. 27,121,046 3.55% 7.15%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
j. Reclassify restriction on investments in unlisted securities and securities
with a limited trading market:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 332,507,151 43.58% 87.61%
Against.................. 20,212,574 2.65% 5.33%
Abstain.................. 26,775,095 3.51% 7.06%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
5. The elimination of one of the Fund's fundamental investment restrictions:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 337,503,871 44.24% 88.94%
Against.................. 15,640,706 2.05% 4.12%
Abstain.................. 26,350,243 3.45% 6.94%
Broker Non-Votes......... 99,231,451 13.01% --
</TABLE>
39
<PAGE>
6. The amendment and restatement of the Fund's articles of incorporation:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 385,499,581 50.53% 90.19%
Against.................. 11,746,810 1.54% 2.75%
Abstain.................. 30,195,990 3.96% 7.06%
Broker Non-Votes......... 87,297,160 11.44% --
</TABLE>
7. Grant the proxyholders authority to vote upon any other business that may
properly come before the meeting or any adjournments thereof:
<TABLE>
<CAPTION>
% OF % OF
SHARES OUTSTANDING SHARES VOTED SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C>
For...................... 438,588,382 57.49% 91.62%
Against.................. 14,861,782 1.95% 3.10%
Abstain.................. 25,276,107 3.31% 5.28%
</TABLE>
40
<PAGE>
[FRANKLIN TEMPLETON INVESTMENTS LOGO]
Templeton Growth Fund, Inc.
777 Mariners Island Blvd., P.O. Box 7777
San Mateo, CA 94403-7777
ANNUAL REPORT
AUDITORS
PricewaterhouseCoopers L.L.P.
333 Market Street
San Francisco, CA 94105
PRINCIPAL UNDERWRITER
Franklin/Templeton Distributors, Inc.
1-800/DIAL BEN(R)
franklintempleton.com
SHAREHOLDER SERVICES
1-800/632-2301
This report must be preceded or accompanied by the current Templeton Growth
Fund, Inc. prospectus, 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. 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 A00 10/00 [RECYCLE LOGO] Printed on recycled paper
