ANNUAL REPORT - Franklin Templeton Investments

Templeton Growth Fund, Ltd.
NOTES TO FINANCIAL STATEMENTS
For the periods ended April 30, 2013 and 2012 (Continued)
10. Financial Risk Management (Continued)
There is no significant impact to the net assets of the Fund if changes are made to one or more of the significant assumptions in the
current valuation model for the level 3 investment to reasonably possible alternative assumptions. A reconciliation of investments
measured at fair value using unobservable inputs (Level 3) for the applicable fund is presented as follows:
April 30, 2013 April 30, 2012
Investments in
Investments in
underlying fund Total underlying fund Total
($000s) ($000s) ($000s) ($000s)
Opening .................................................................... 10,485 10,485 11,635 11,635
Sales ...................................................................... — — — —
Purchases ................................................................. — — 33 33
Net transfers ................................................................ — — — —
Net realized gains (losses) ..................................................... — — — —
Net change in unrealized appreciation (depreciation) ................................ 258 258 (1,183) (1,183)
Ending ..................................................................... 10,743 10,743 10,485 10,485
Total change in unrealized appreciation (depreciation) on investments held at April 30 ...... 258 258 (1,183) (1,183)
In accordance with the Fund’s valuation policy, the Fund may apply fair value adjustment factors when quoted market prices are
deemed to have been affected by significant market events which exceed pre-determined thresholds. During the year, market level
fair valuation was applied to the Fund where the pre-determined tolerances were exceeded, at which time the securities were classified
as Level 2 and subsequently reclassified to Level 1, when the fair value adjustment factors were no longer required.
As at April 30, 2013 and 2012, there were no significant market events to cause the pre-determined tolerances to be breached;
hence there were no significant transfers between Level 1 and Level 2 as at that date.
11. Broker Commissions
Commissions paid to brokers for portfolio transactions during the years ended April 30, 2013 and 2012 amounted to $1.0 million and
$0.4 million, respectively. A portion of commissions paid may include payment for goods and services that are used to assist with
investment or trading decisions such as investment research, analysis and reports (“research services”). Where ascertainable, the
value of the research services included in the commission paid for the years ended April 30, 2013 and 2012 amounted to
$0.4 million and $0.3 million, respectively.
12. Taxes
(a)
Capital and non-capital losses
The Fund has accumulated $539 million of unused capital losses and no unused non-capital losses for income tax purposes as of
April 30, 2013. Capital losses can be carried forward indefinitely and applied against future years’ capital gains.
Temporary differences between the carrying value of assets and liabilities for accounting and income tax purposes give rise to future
tax assets and liabilities. The most significant temporary difference is that between the reported fair market value of the investment
portfolio of the Fund and its adjusted cost base (“ACB”) for income tax purposes. To the extent that the fair market value of a portfolio
exceeds its ACB, a future tax liability is fully offset by the future refundable taxes available to the Fund as a mutual fund corporation.
Conversely, when the ACB exceeds the portfolio’s market value, a future tax asset is generated. In such cases, a full valuation allowance
is taken to offset this asset given the uncertainty that such future tax assets will ultimately be realized. Unused capital and noncapital
losses disclosed above represent future tax assets to the Fund for which no benefit has been recorded in these financial
statements as there is no certainty that the losses are more likely than not to be utilized in future periods.
Templeton Growth Fund, Ltd. 17