N-Q 1 nq-tgf113014.htm nq-tgf113014.htm - Generated by SEC Publisher for SEC Filing

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF

REGISTERED MANAGEMENT INVESTMENT COMPANY

 

 

Investment Company Act file number 811-04892

 

Templeton Growth Fund, Inc.

(Exact name of registrant as specified in charter)

 

300 S.E. 2nd Street, Fort Lauderdale, FL 33301-1923

(Address of principal executive offices) (Zip code)

 

Craig S. Tyle, One Franklin Parkway, San Mateo, CA  94403-1906

(Name and address of agent for service)

 

Registrant's telephone number, including area code: (954) 527-7500

 

Date of fiscal year end:   8/31    

 

Date of reporting period:  11/30/14

 

 

Item 1. Schedule of Investments.

 

 


 

Templeton Growth Fund, Inc.        
 
Statement of Investments, November 30, 2014 (unaudited)      
 
 
  Industry Shares   Value
Common Stocks 98.1%        
Canada 1.1%        
Talisman Energy Inc. Oil, Gas & Consumable Fuels 38,020,400 $ 181,239,552
 
China 2.3%        
China Mobile Ltd. Wireless Telecommunication      
  Services 4,859,500   59,843,744
China Shenhua Energy Co. Ltd., H Oil, Gas & Consumable Fuels 45,284,500   128,760,297
China Telecom Corp. Ltd., ADR Diversified Telecommunication      
  Services 735,230   45,091,656
aDongfang Electric Corp. Ltd., H Electrical Equipment 16,395,140   29,767,446
Kunlun Energy Co. Ltd. Oil, Gas & Consumable Fuels 120,656,000   130,381,730
        393,844,873
Denmark 0.5%        
aFLSmidth & Co. AS Construction & Engineering 2,095,190   88,624,870
 
France 9.4%        
AXA SA Insurance 8,817,061   213,037,530
BNP Paribas SA Banks 3,558,980   228,366,993
Cie Generale des Etablissements Michelin, B Auto Components 2,311,009   212,683,938
Credit Agricole SA Banks 14,535,330   204,498,600
Orange SA Diversified Telecommunication      
  Services 4,311,032   75,996,344
Sanofi Pharmaceuticals 2,535,687   245,699,867
Technip SA Energy Equipment & Services 536,640   34,928,474
Total SA, B Oil, Gas & Consumable Fuels 4,668,754   261,403,779
bVivendi SA Diversified Telecommunication      
  Services 4,218,392   107,515,670
        1,584,131,195
Germany 5.8%        
bCommerzbank AG Banks 4,854,510   74,339,887
Deutsche Lufthansa AG Airlines 15,394,331   275,016,591
Merck KGaA Pharmaceuticals 1,987,384   198,061,804
bMetro AG Food & Staples Retailing 5,118,650   173,969,058
Muenchener Rueckversicherungs-Gesellschaft AG Insurance 268,179   55,285,480
SAP SE Software 193,410   13,642,804
Siemens AG Industrial Conglomerates 1,596,669   189,088,103
        979,403,727
Ireland 1.5%        
CRH PLC Construction Materials 11,066,095   261,663,335
 
Israel 2.1%        
Teva Pharmaceutical Industries Ltd., ADR Pharmaceuticals 6,159,610   350,974,578
 
Italy 2.4%        
Eni SpA Oil, Gas & Consumable Fuels 6,671,477   133,423,629
bSaipem SpA Energy Equipment & Services 3,990,478   57,160,382
UniCredit SpA Banks 29,238,098   216,319,591
        406,903,602
Japan 2.9%        
Konica Minolta Inc. Technology Hardware, Storage &      
  Peripherals 11,948,500   139,327,020
Nissan Motor Co. Ltd. Automobiles 20,118,600   187,896,774
Toyota Motor Corp. Automobiles 2,602,310   160,361,406
        487,585,200
Netherlands 4.6%        
Akzo Nobel NV Chemicals 2,972,140   205,506,885
bING Groep NV, IDR Banks 12,108,051   177,506,561
Koninklijke Philips NV Industrial Conglomerates 3,402,481   102,705,066
b,cNN Group NV, 144A Insurance 2,476,200   75,238,014

 

Quarterly Statement of Investments | See Notes to Statement of Investments.


 

Templeton Growth Fund, Inc.      
 
Statement of Investments, November 30, 2014 (unaudited) (continued)    
bQIAGEN NV Life Sciences Tools & Services 3,422,165 81,834,458
Randstad Holding NV Professional Services 1,341,726 66,265,137
TNT Express NV Air Freight & Logistics 5,279,489 35,611,154
cTNT Express NV, 144A Air Freight & Logistics 3,825,802 25,805,760
      770,473,035
Portugal 0.9%      
Galp Energia SGPS SA, B Oil, Gas & Consumable Fuels 12,900,340 157,333,828
 
Russia 2.5%      
LUKOIL Holdings, ADR (London Stock Exchange) Oil, Gas & Consumable Fuels 1,740,790 81,016,367
Mining and Metallurgical Co. Norilsk Nickel OJSC, ADR Metals & Mining 11,719,456 208,137,538
Mobile TeleSystems, ADR Wireless Telecommunication    
  Services 10,440,717 127,585,562
      416,739,467
Singapore 2.6%      
DBS Group Holdings Ltd. Banks 8,010,734 121,885,103
bFlextronics International Ltd. Electronic Equipment, Instruments    
  & Components 11,802,010 130,884,291
Singapore Telecommunications Ltd. Diversified Telecommunication    
  Services 63,658,000 190,490,448
      443,259,842
South Korea 4.7%      
KB Financial Group Inc. Banks 4,960,243 173,347,815
POSCO Metals & Mining 575,778 156,475,469
Samsung Electronics Co. Ltd. Technology Hardware, Storage &    
  Peripherals 403,050 466,018,642
      795,841,926
Spain 1.3%      
Telefonica SA Diversified Telecommunication    
  Services 13,999,911 224,406,801
 
Sweden 1.7%      
Ericsson, B Communications Equipment 8,281,470 104,284,684
Getinge AB, B Health Care Equipment & Supplies 7,932,270 183,605,542
      287,890,226
Switzerland 4.6%      
Credit Suisse Group AG Capital Markets 8,543,380 228,413,225
Roche Holding AG Pharmaceuticals 1,057,688 316,950,460
Swiss Re AG Insurance 2,652,800 226,892,343
      772,256,028
Thailand 0.3%      
Bangkok Bank PCL, fgn. Banks 8,099,000 49,786,914
 
Turkey 1.3%      
bTurkcell Iletisim Hizmetleri AS, ADR Wireless Telecommunication    
  Services 14,355,442 227,820,865
 
United Kingdom 11.5%      
Aviva PLC Insurance 28,585,692 227,124,031
BAE Systems PLC Aerospace & Defense 14,860,062 111,816,693
BP PLC Oil, Gas & Consumable Fuels 22,801,450 149,854,290
GlaxoSmithKline PLC Pharmaceuticals 11,376,388 264,229,629
HSBC Holdings PLC Banks 22,977,340 228,146,743
bInternational Consolidated Airlines Group SA Airlines 25,665,651 183,651,318
Kingfisher PLC Specialty Retail 43,494,874 212,247,869
Royal Dutch Shell PLC, B Oil, Gas & Consumable Fuels 5,497,253 191,133,078
Serco Group PLC Commercial Services & Supplies 21,427,779 58,750,253
Sky PLC Media 6,259,790 91,248,628
Tesco PLC Food & Staples Retailing 30,597,529 89,227,641

 


 

Templeton Growth Fund, Inc.      
 
Statement of Investments, November 30, 2014 (unaudited) (continued)    
Vodafone Group PLC Wireless Telecommunication    
  Services 38,800,571 141,974,985
      1,949,405,158
United States 34.1%      
bActavis PLC Pharmaceuticals 681,039 184,295,964
American International Group Inc. Insurance 5,094,260 279,165,448
Amgen Inc. Biotechnology 2,245,320 371,173,849
Baker Hughes Inc. Energy Equipment & Services 1,300,364 74,120,748
Best Buy Co. Inc. Specialty Retail 2,414,460 95,153,869
Chevron Corp. Oil, Gas & Consumable Fuels 1,528,510 166,408,884
Cisco Systems Inc. Communications Equipment 9,535,010 263,547,676
Citigroup Inc. Banks 6,890,580 371,884,602
Comcast Corp., Special A Media 6,353,820 360,960,514
CVS Health Corp. Food & Staples Retailing 1,603,330 146,480,229
Hewlett-Packard Co. Technology Hardware, Storage &    
  Peripherals 8,504,900 332,201,394
JPMorgan Chase & Co. Banks 3,542,510 213,117,402
Medtronic Inc. Health Care Equipment & Supplies 4,272,880 315,637,646
Merck & Co. Inc. Pharmaceuticals 3,064,050 185,068,620
Microsoft Corp. Software 10,439,430 499,109,148
Morgan Stanley Capital Markets 7,102,520 249,866,654
     b,dNavistar International Corp. Machinery 5,754,190 206,000,002
bNews Corp., A Media 2,728,302 42,343,247
Noble Corp. PLC Energy Equipment & Services 8,144,090 146,512,179
aParagon Offshore PLC Energy Equipment & Services 2,037,330 7,395,508
Pfizer Inc. Pharmaceuticals 10,415,680 324,448,432
SunTrust Banks Inc. Banks 4,098,280 161,021,421
Target Corp. Multiline Retail 1,822,100 134,835,400
Twenty-First Century Fox Inc., A Media 5,686,150 209,250,320
United Parcel Service Inc., B Air Freight & Logistics 2,154,350 236,806,152
Verizon Communications Inc. Diversified Telecommunication    
  Services 1,870,841 94,645,846
The Walt Disney Co. Media 1,074,416 99,394,224
      5,770,845,378
Total Common Stocks (Cost $13,724,547,335)     16,600,430,400
Preferred Stocks (Cost $162,979,320) 0.7%      
Brazil 0.7%      
Petroleo Brasileiro SA, ADR, pfd. Oil, Gas & Consumable Fuels 11,904,181 121,541,688
 
Total Investments before Short Term Investments (Cost $13,887,526,655)   16,721,972,088
 
 
Short Term Investments 1.7%      
    Principal Amount*  
Time Deposits 1.1%      
Canada 0.8%      
Bank of Montreal, 0.05%, 12/01/14 $ 69,000,000 69,000,000
Royal Bank of Canada, 0.05%, 12/01/14   62,000,000 62,000,000
      131,000,000
United States 0.3%      
Scotia Capital Markets, 12/01/14   60,000,000 60,000,000
 
Total Time Deposits (Cost $191,000,000)     191,000,000
Total Investments before Money Market Funds (Cost $14,078,526,655)     16,912,972,088
    Shares  
Investments from Cash Collateral Received for Loaned Securities (Cost      
$100,831,803) 0.6%      
Money Market Funds 0.6%      
United States 0.6%      
eBNY Mellon Overnight Government Fund, 0.079%   100,831,803 100,831,803

 


 

Templeton Growth Fund, Inc.      
 
Statement of Investments, November 30, 2014 (unaudited) (continued)      
Total Investments (Cost $14,179,358,458) 100.5%   17,013,803,891  
Other Assets, less Liabilities (0.5)%   (89,260,868 )
Net Assets 100.0% $ 16,924,543,023  

 

* The principal amount is stated in U.S. dollars unless otherwise indicated.
a A portion or all of the security is on loan at November 30, 2014.
b Non-income producing.
c Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration only to qualified institutional buyers
or in a public offering registered under the Securities Act of 1933. These securities have been deemed liquid under guidelines approved by the Fund's Board of Directors. At
November 30, 2014, the aggregate value of these securities was $101,043,774 representing 0.60% of net assets
d See Note 5 regarding holdings of 5% voting securities.
e The rate shown is the annualized seven-day yield at period end.

ABBREVIATIONS
Selected Portfolio

ADR - American Depositary Receipt
IDR - International Depositary Receipt


 

Templeton Growth Fund, Inc.

Notes to Statement of Investments (unaudited)

1. ORGANIZATION

Templeton Growth Fund, Inc. (Fund) is registered under the Investment Company Act of 1940, as amended, (1940 Act) as an open-end management investment company and applies the specialized accounting and reporting guidance in U.S. Generally Accepted Accounting Principles.

2. FINANCIAL INSTRUMENT VALUATION

The Fund's investments in financial instruments are carried at fair value daily. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Fund calculates the net asset value (NAV) per share at the close of the New York Stock Exchange (NYSE), generally at 4 p.m. Eastern time (NYSE close) on each day the NYSE is open for trading. Under compliance policies and procedures approved by the Fund’s Board of Directors (the Board), the Fund’s administrator has responsibility for oversight of valuation, including leading the cross-functional Valuation and Liquidity Oversight Committee (VLOC). The VLOC provides administration and oversight of the Fund's valuation policies and procedures, which are approved annually by the Board. Among other things, these procedures allow the Fund to utilize independent pricing services, quotations from securities and financial instrument dealers, and other market sources to determine fair value.

Equity securities listed on an exchange or on the NASDAQ National Market System are valued at the last quoted sale price or the official closing price of the day, respectively. Foreign equity securities are valued as of the close of trading on the foreign stock exchange on which the security is primarily traded or as of the NYSE close, whichever is earlier. The value is then converted into its U.S. dollar equivalent at the foreign exchange rate in effect at the NYSE close on the day that the value of the security is determined. Over-the-counter (OTC) securities are valued within the range of the most recent quoted bid and ask prices. Securities that trade in multiple markets or on multiple exchanges are valued according to the broadest and most representative market. Certain equity securities are valued based upon fundamental characteristics or relationships to similar securities. Investments in non-registered money market funds are valued at the closing NAV. Time deposits are valued at cost, which approximates fair value.

The Fund has procedures to determine the fair value of financial instruments for which market prices are not reliable or readily available. Under these procedures, the VLOC convenes on a regular basis to review such financial instruments and considers a number of factors, including significant unobservable valuation inputs, when arriving at fair value. The VLOC primarily employs a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the investment to determine the fair value of the investment. An income-based valuation approach may also be used in which the anticipated future cash flows of the investment are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the investments. Due to the inherent uncertainty of valuations of such investments, the fair values may differ significantly from the values that would have been used had an active market existed. The VLOC employs various methods for calibrating these valuation approaches including a regular review of key inputs and assumptions, transactional back-testing or disposition analysis, and reviews of any related market activity.


 

Trading in securities on foreign securities stock exchanges and OTC markets may be completed before the daily NYSE close. In addition, trading in certain foreign markets may not take place on every NYSE business day. Occasionally, events occur between the time at which trading in a foreign security is completed and the close of the NYSE that might call into question the reliability of the value of a portfolio security held by the Fund. As a result, differences may arise between the value of the Fund’s portfolio securities as determined at the foreign market close and the latest indications of value at the close of the NYSE. In order to minimize the potential for these differences, the VLOC monitors price movements following the close of trading in foreign stock markets through a series of country specific market proxies (such as baskets of American Depositary Receipts, futures contracts and exchange traded funds). These price movements are measured against established trigger thresholds for each specific market proxy to assist in determining if an event has occurred that may call into question the reliability of the values of the foreign securities held by the Fund. If such an event occurs, the securities may be valued using fair value procedures, which may include the use of independent pricing services.

Also, when the last day of the reporting period is a non-business day, certain foreign markets may be open on those days that the NYSE is closed, which could result in differences between the value of the Fund’s portfolio securities on the last business day and the last calendar day of the reporting period. Any significant security valuation changes due to an open foreign market are adjusted and reflected by the Fund for financial reporting purposes.

3. INCOME TAXES

At November 30, 2014, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

Cost of investments $ 14,111,069,466  
 
Unrealized appreciation $ 4,352,521,822  
Unrealized depreciation   (1,449,787,397 )
Net unrealized appreciation (depreciation) $ 2,902,734,425  
 
4. CONCENTRATION OF RISK      

 

Investing in foreign securities may include certain risks and considerations not typically associated with investing in U.S. securities, such as fluctuating currency values and changing local and regional economic, political and social conditions, which may result in greater market volatility. In addition, certain foreign securities may not be as liquid as U.S. securities.

5. HOLDINGS OF 5% VOTING SECURITIES OF PORTFOLIO COMPANIES

The 1940 Act defines "affiliated companies" to include investments in portfolio companies in which a fund owns 5% or more of the outstanding voting securities. Investments in "affiliated companies" for the Fund for the three months ended November 30, 2014, were as shown below.

  Number of Shares     Number of Shares   Value at        
  Held at Beginning Gross Gross Held at End of   End of   Investment Realized  
Name of Issuer of Period Additions Reductions Period   Period   Income Gain (Loss)  
Non-Controlled Affiliates                    
Navistar International Corp. 5,754,190 - - 5,754,190 $ 206,000,002 $ - $ -
Total Affiliated Securities (Value is 1.22% of Net Assets)       $ 206,000,002 $   - $ -

 


 

6. FAIR VALUE MEASUREMENTS

The Fund follows a fair value hierarchy that distinguishes between market data obtained from independent sources (observable inputs) and the Fund’s own market assumptions (unobservable inputs). These inputs are used in determining the value of the Fund’s financial instruments and are summarized in the following fair value hierarchy:

  • Level 1 – quoted prices in active markets for identical financial instruments
  • Level 2 – other significant observable inputs (including quoted prices for similar financial instruments, interest rates, prepayment speed, credit risk, etc.)
  • Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of financial instruments)

The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

For movements between the levels within the fair value hierarchy, the Fund has adopted a policy of recognizing the transfers as of the date of the underlying event which caused the movement.

A summary of inputs used as of November 30, 2014, in valuing the Fund’s assets carried at fair value, is as follows:

    Level 1   Level 2 Level 3   Total
Assets:              
Investments in Securities:              
Equity Investmentsa,b $ 16,721,972,088 $ - $ - $ 16,721,972,088
Short Term Investments   -   291,831,803   - 291,831,803
Total Investments in Securities $ 16,721,972,088 $ 291,831,803 $ - $ 17,013,803,891

 

aIncludes common and preferred stocks.
bFor detailed categories, see the accompanying Statement of Investments.

7. NEW ACCOUNTING PRONOUNCEMENTS

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-11, Transfers and Servicing (Topic 860), Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The ASU changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The ASU is effective for interim and annual reporting periods beginning after December 15, 2014. Management is currently evaluating the impact, if any, of applying this provision.

8. SUBSEQUENT EVENTS

The Fund has evaluated subsequent events through the issuance of the Statement of Investments and determined that no events have occurred that require disclosure.

For additional information on the Fund's significant accounting policies, please refer to the most recent semiannual or annual shareholder report.


 

 

Item 2. Controls and Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures.  The Registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Registrant’s filings under the Securities Exchange Act of 1934 and the Investment Company Act of 1940 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission.  Such information is accumulated and communicated to the Registrant’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.  The Registrant’s management, including the principal executive officer and the principal financial officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

 

Within 90 days prior to the filing date of this Quarterly Schedule of Portfolio Holdings on Form N-Q, the Registrant had carried out an evaluation, under the supervision and with the participation of the Registrant’s management, including the Registrant’s principal executive officer and the Registrant’s principal financial officer, of the effectiveness of the design and operation of the Registrant’s disclosure controls and procedures.  Based on such evaluation, the Registrant’s principal executive officer and principal financial officer concluded that the Registrant’s disclosure controls and procedures are effective.

 

(b) Changes in Internal Controls.  There have been no changes in the Registrant’s internal controls or in other factors that could materially affect the internal controls over financial reporting subsequent to the date of their evaluation in connection with the preparation of this Quarterly Schedule of Portfolio Holdings on Form N-Q.

 

 

Item 3. Exhibits.

 

(a) Certification pursuant to Section 30a-2 under the Investment Company Act of 1940 of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and Mark H. Otani, Chief Financial Officer and Chief Accounting Officer.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Templeton Growth Fund, Inc.

 

 

 

By /s/LAURA F. FERGERSON

    Laura F. Fergerson

    Chief Executive Officer –

    Finance and Administration

Date January 27, 2015

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

 

 

By /s/LAURA F. FERGERSON

    Laura F. Fergerson

    Chief Executive Officer –

    Finance and Administration

Date January 27, 2015

 

 

 

 

By /s/MARK H. OTANI

   Mark H. Otani

   Chief Financial Officer and

   Chief Accounting Officer

Date January 27, 2015