UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM N-CSR

   CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-21357
                                   ----------

                FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST
               -------------------------------------------------
               (Exact name of registrant as specified in charter)

                 ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
               -------------------------------------------------
               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: (650) 312-2000
                                                    ---------------
Date of fiscal year end: 3/31
                        ------

Date of reporting period: 3/31/09
                         ---------

ITEM 1. REPORTS TO STOCKHOLDERS.


MARCH 31, 2009

ANNUAL REPORT

                                                                    FIXED INCOME

                                   (GRAPHIC)

                               FRANKLIN TEMPLETON
                         LIMITED DURATION INCOME TRUST

                    (FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)

                       FRANKLIN - Templeton - Mutual Series




                            Franklin Templeton Investments

                            GAIN FROM OUR PERSPECTIVE(R)

                            Franklin Templeton's distinct multi-manager
                            structure combines the specialized expertise of
                            three world-class investment management
                            groups--Franklin, Templeton and Mutual Series.

SPECIALIZED EXPERTISE       Each of our portfolio management groups operates
                            autonomously, relying on its own research and
                            staying true to the unique investment disciplines
                            that underlie its success.

                            FRANKLIN. Founded in 1947, Franklin is a recognized
                            leader in fixed income investing and also brings
                            expertise in growth- and value-style U.S. equity
                            investing.

                            TEMPLETON. Founded in 1940, Templeton pioneered
                            international investing and, in 1954, launched what
                            has become the industry's oldest global fund. Today,
                            with offices in over 25 countries, Templeton offers
                            investors a truly global perspective.

                            MUTUAL SERIES. Founded in 1949, Mutual Series is
                            dedicated to a unique style of value investing,
                            searching aggressively for opportunity among what it
                            believes are undervalued stocks, as well as
                            arbitrage situations and distressed securities.

TRUE DIVERSIFICATION        Because our management groups work independently and
                            adhere to different investment approaches, Franklin,
                            Templeton and Mutual Series funds typically have
                            distinct portfolios. That's why our funds can be
                            used to build truly diversified allocation plans
                            covering every major asset class.

RELIABILITY YOU CAN TRUST   At Franklin Templeton Investments, we seek to
                            consistently provide investors with exceptional
                            risk-adjusted returns over the long term, as well as
                            the reliable, accurate and personal service that has
                            helped us become one of the most trusted names in
                            financial services.

 MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS

(GRAPHIC)

Not part of the annual report



Contents


                                                                          
ANNUAL REPORT
Franklin Templeton Limited Duration Income Trust .........................    1
Performance Summary ......................................................    8
Annual Shareholders' Meeting .............................................    9
Dividend Reinvestment Plan ...............................................   10
Financial Highlights and Statement of Investments ........................   13
Financial Statements .....................................................   25
Notes to Financial Statements ............................................   28
Report of Independent Registered Public Accounting Firm ..................   38
Tax Designation ..........................................................   39
Board Members and Officers ...............................................   40
Shareholder Information ..................................................   45


Annual Report

Franklin Templeton
Limited Duration Income Trust

YOUR FUND'S GOALS AND MAIN INVESTMENTS: Franklin Templeton Limited Duration
Income Trust seeks to provide high, current income, with a secondary objective
of capital appreciation to the extent it is possible and consistent with the
Fund's primary objective, through a portfolio consisting primarily of high yield
corporate bonds, floating rate bank loans and mortgage- and other asset-backed
securities.

Dear Shareholder:

This annual report for Franklin Templeton Limited Duration Income Trust covers
the fiscal year ended March 31, 2009.

PERFORMANCE OVERVIEW

For the year under review, Franklin Templeton Limited Duration Income Trust had
cumulative total returns of -14.17% based on net asset value and -9.97% based on
market price. Net asset value decreased from $12.85 per share on March 31, 2008,
to $10.15 at period-end, and the market price fell from $10.94 to $8.92 over the
same time. You can find the Fund's performance data in the Performance Summary
on page 8.

ECONOMIC AND MARKET OVERVIEW

For the 12 months ended March 31, 2009, economic conditions deteriorated. The
Conference Board's Consumer Confidence Index fell to an all-time low since

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND NAMES OF ALL
PORTFOLIO HOLDINGS ARE LISTED IN THE FUND'S STATEMENT OF INVESTMENTS (SOI). THE
SOI BEGINS ON PAGE 14.


                               Annual Report | 1


it began in 1967 as the U.S. economy faltered and as stock markets declined. The
government's abrupt conservatorship of Fannie Mae and Freddie Mac and the
failure of several blue-chip banks and financial institutions roiled equity
markets. Despite far-reaching government interventions, the nation's economic
troubles worsened as manufacturing activity weakened at its fastest pace in
nearly 30 years and as home prices fell at an accelerated rate. Jobless claims
mounted and the unemployment rate rose to 8.5% by period-end.(1) Economic
growth, as measured by gross domestic product (GDP), rose at a 2.8% annualized
pace in the second quarter, largely due to strong exports and government
spending. However, in the third and fourth quarters of 2008, GDP fell at
annualized rates of 0.5% and 6.3%, reflecting a broad-based slowdown in consumer
spending, corporate profits and export growth.(2) GDP continued to slow in the
first quarter of 2009 and registered an estimated annualized 6.1% rate of
decline.(2)

Oil prices retreated dramatically from $102 per barrel at the beginning of the
period to $50 by period-end. Many other commodities and industrial metals
followed similar trends. Partially as a result of the steep price corrections,
March's inflation rate was an annualized -0.4%, the first 12-month decline since
August 1955.(1) Core inflation, which excludes food and energy costs, rose at a
1.8% annualized rate, which was within the Federal Reserve Board's (Fed's)
informal target range of 1.5%-2.0%.(1) The core personal consumption
expenditures price index reported a 12-month increase of 1.8%.(2)

A slowing economy and decelerating inflation prompted policymakers to further
lower interest rates and enact stimulus plans. During the year under review, the
Fed lowered the federal funds target rate to a range of 0% to 0.25% from 2.25%
at the start of the reporting period. Congress passed a $787 billion fiscal
stimulus package (American Recovery and Reinvestment Act) that included tax
breaks, money for ailing state governments, aid to the poor and unemployed, and
spending on infrastructure, renewable energy, health care and education. The Fed
and U.S. Treasury Department also introduced new programs designed to shore up
beleaguered banks' capital, enable freer lending to businesses and consumers and
help struggling home buyers avoid foreclosure.

Treasury prices soared for much of the period but began to decline in the latter
half. Investors drove the yield on the three-month Treasury bill to a
multi-decade low, and LIBOR (London Interbank Offered Rate), the rate banks
charge one

(1.) Source: Bureau of Labor Statistics.

(2.) Source: Bureau of Economic Analysis.


                               2 | Annual Report



another for loans, jumped to record highs in September. Fixed income spreads
were generally wide relative to Treasury yields over the period due to
heightened market turbulence and risk aversion. The yield spread between the
two-year and the 10-year Treasury yields rose slightly to 190 basis points (100
basis points equal one percentage point) at the end of March from 183 basis
points at the beginning of the reporting period. The two-year Treasury bill
yield fell from 1.62% to 0.81% over the 12-month period. Over the same period,
the 10-year Treasury note yield fell from 3.45% to 2.71%.

INVESTMENT STRATEGY

We invest in a diversified mix of fixed income securities, primarily high yield
corporate bonds, senior secured floating rate bank loans, and mortgage- and
other asset-backed securities. Our top-down analysis of macroeconomic trends
combined with a bottom-up fundamental analysis of market sectors, industries and
issuers drives our investment process. We seek to maintain a limited duration,
or interest rate sensitivity, to moderate the impact that fluctuating interest
rates might have on the Fund's fixed income portfolio. Within the corporate bond
and bank loan sectors, we seek securities trading at reasonable valuations from
issuers with characteristics such as strong market positions, stable cash flows,
reasonable capital structures, supportive asset values, strong sponsorship and
improving credit fundamentals. In the mortgage- and other asset-backed
securities sector, we look to capture an attractive income stream and total
return through our analysis of security prepayment assumptions, pricing
inefficiencies and underlying collateral characteristics.

MANAGER'S DISCUSSION

The Fund's fiscal year was marked by one of the worst financial crises and
overall economic environments in modern history. The economy remained mired in
recession for the entirety of the Fund's fiscal year, largely the result of a
severe credit crunch that followed the bursting of the housing market bubble.
While high-profile victims of the economic crisis included banks and other
financial firms, problems in nonfinancial sectors also steadily grew as the
recession broadened in scope. The manufacturing sector faced big challenges
against a backdrop of fading domestic and foreign demand, and the Institute for
Supply Management (ISM) Manufacturing Index registered sub-50 readings
throughout the year under review. (A reading below 50 signals a contraction, and
the ISM's gauge has been below that level since February 2008.)

PORTFOLIO BREAKDOWN
Based on Total Investments as of 3/31/09*

                                  (BAR CHART)


                                             
Floating Rate Loans                             32.0%
High Yield Corporate Bonds                      28.2%
Mortgage-Backed Securities                      24.7%
Investment-Grade Corporate Bonds                 6.9%
Other Asset-Backed Securities                    5.6%
Foreign Government & Agency Securities           0.6%
Short-Term Investments & Other Net Assets        2.0%


*    Total investments include long-term and short-term investments and other
     net assets excluding preferred stock issued by the Fund and other financial
     leverage.


                               Annual Report | 3



DIVIDEND DISTRIBUTIONS*
4/1/08-3/31/09



            DIVIDEND PER
MONTH       COMMON SHARE
-----       ------------
         
April         8.4 cents
May           8.4 cents
June          7.6 cents
July          7.6 cents
August        7.6 cents
September     7.6 cents
October       7.6 cents
November      7.6 cents
December      7.6 cents
January       7.6 cents
February      7.6 cents
March         7.6 cents
             ----------
TOTAL        92.8 CENTS


*    All Fund distributions will vary depending upon current market conditions,
     and past distributions are not indicative of future trends.

U.S. stocks fell sharply and endured a deep bear market until early March 2009,
and the Standard & Poor's 500 Index (S&P 500) had a -38.09% total return for the
year under review.(3) Investors flocked to safe-haven U.S. Treasury securities
as they sought alternatives to stocks and riskier debt securities. Treasuries
became the top-performing asset class, and their prices rose, driving yields
sharply lower. In a decelerating economic environment, asset classes exposed to
the deteriorating fortunes of corporate America -- namely high yield corporate
bonds and leveraged loan securities -- suffered heavy losses due to rising
defaults and lowered credit quality. Meanwhile, mortgage-backed securities
benefited somewhat from their higher quality nature, as well as from a wave of
government actions intended to improve the flow of credit between banks and the
real economy.

Within the credit portion of the Fund's portfolio, we reduced our exposure to
bank loans as they rebounded in early 2009 when liquidity and credit market
conditions improved somewhat. We used the proceeds to increase the Fund's
exposure to high yield corporate bonds. We also increased our exposure to
investment-grade corporate bonds, as securities within this higher-quality asset
class appeared cheap by historical standards. Our exposure to mortgage- and
other asset-backed securities also increased slightly, mostly due to their
relative outperformance in the market versus the Fund's other asset types. Below
you will find further details of activity within the Fund's three primary asset
classes: high yield corporate bonds, floating rate bank loan securities, and
mortgage-and other asset-backed securities.

HIGH YIELD CORPORATE BONDS

High yield corporate bonds had a -19.55% total return during the Fund's fiscal
year, according to the Credit Suisse (CS) High Yield Index.(4) The brunt of the
pain was felt during the fall of 2008, as credit markets seized up following
several prominent Wall Street bankruptcies or bailouts, leading to widespread
expectations for a dramatic rise in defaults, especially among the least
credit-worthy entities. Indeed, default rates escalated due to a combination of
the weak economy and lack of available credit to refinance debt. Many companies
were also at risk of violating the covenants of loans that were taken out during

(3.) Source: (C) 2009 Morningstar. All Rights Reserved. The information
     contained herein: (1) is proprietary to Morningstar and/or its content
     providers; (2) may not be copied or distributed; and (3) is not warranted
     to be accurate, complete or timely. Neither Morningstar nor its content
     providers are responsible for any damages or losses arising from any use of
     this information. Past performance is no guarantee of future results. The
     S&P 500 consists of 500 stocks chosen for market size, liquidity and
     industry group representation. Each stock's weight in the index is
     proportionate to its market value. The S&P 500 is one of the most widely
     used benchmarks of U.S. equity performance.

(4.) Source: (C) 2009 Morningstar. The CS High Yield Index is designed to mirror
     the investible universe of the U.S dollar-denominated high yield debt
     market.


                               4 | Annual Report


more prosperous economic times, leading to expectations for even more defaults.
In this difficult environment, high yield debt securities' yield spreads over
Treasuries widened to more than 18 percentage points in November 2008 from
around 8 percentage points at the beginning of the Fund's fiscal year, before
narrowing to about 15 percentage points by period-end as credit conditions eased
slightly.(5) Thus, valuations were cheap compared to the 15-year average spread
of around six percentage points.(5) Given the attractive valuations, we
increased the Fund's exposure to high yield bonds somewhat.

FLOATING RATE BANK LOANS

During the Fund's fiscal year, the bank loan asset class had a -19.00% return as
measured by the CS Leveraged Loan Index.(6) Returns were extremely volatile,
especially in the period's latter half, fluctuating from a record quarterly loss
of 22.93% for fourth quarter 2008 as the credit crunch took hold, to a record
high quarterly gain of 7.17% in first quarter 2009 as much more favorable
technical conditions ignited a strong rally.(6)

As the year progressed, the bank loan market outlook weakened as corporate
earnings declined and loan defaults accelerated. Liquidity remained extremely
tight and the overall credit markets essentially shut down in fourth quarter
2008. As a result, secondary loan prices fell to an all-time low of 63 cents on
the dollar average bid price on December 16, 2008, before rebounding to 75 cents
on the dollar on March 31, 2009.(7) The average discounted spread to maturity
(the interest rate margin over LIBOR, factoring the current trading price and
the loan's maturity) widened to near an all-time high of approximately the LIBOR
rate plus 1,000 basis points at the end of December 2008, as measured by the S&P
Loan Syndications and Trading Association (LSTA) Leveraged Loan Index (LLI).(8)
The loan market was also noticeably bifurcated, with investors gravitating
toward higher quality performing loans. For example, according to the S&P LSTA
LLI, BB-rated loans were mostly stronger while CCC-rated securities steadily
weakened through period-end.(8)

(5.) Source: Credit Suisse.

(6.) Source: (C) 2009 Morningstar. The CS Leveraged Loan Index is designed to
     mirror the investible universe of the U.S. dollar-denominated leveraged
     loan market. Loans must be rated 5B or lower. That is, the highest
     Moody's/S&P ratings are Baa1/BB+ or Ba1/BBB+. If unrated, the initial
     spread level must be LIBOR plus 125 basis points or higher. The tenor must
     be at least one year and only funded term loans are included.

(7.) Source: Standard & Poor's, "LCD Quarterly Review: First Quarter 2009,"
     S&P/Leveraged Commentary & Data (LCD) Flow Name Composite Index. The
     S&P/LCD Flow Name Composite Index is comprised of the 15 most actively
     traded loan facilities, generally drawn from the S&P/LSTA (Loan
     Syndications and Trading Association) Leveraged Loan Index (LLI).

(8.) Source: (C) 2009 Morningstar. The S&P/LSTA LLI covers more than 1,100 U.S.
     loan facilities and reflects the market-weighted performance of
     institutional leveraged loans based upon real-time market weightings,
     spreads and interest payments.


                               Annual Report | 5



During the Fund's fiscal year, the bank loan default rate surged to 4.7% and
8.0% -- by number of loans and principal amount, respectively, according to S&P
Leveraged Commentary and Data.(7) Despite the increase in defaults, the bank
loan market rallied toward period-end, bolstered by higher cash balances from
loan repayments and buybacks, together with modest inflows. However, for their
short to intermediate-term outlook, many bank loan investors remained cautious
as corporate fundamentals declined and loan defaults continued to rise.

MORTGAGE- AND OTHER ASSET-BACKED SECURITIES

The Fund's mortgage-backed securities (MBS) generally outperformed the high
yield corporate and bank loan sectors. Market conditions were supportive for
agency MBS, as the Fed announced it would purchase agency mortgages as part of
its quantitative easing policy. We continued to believe MBS offered relative
value and felt the Fed's MBS buyback program would likely support valuations
over the near term. Toward period-end, the asset-backed securities (ABS) sector
showed some signs of stability relative to U.S. Treasuries, a reversal from the
historic volatility the sector experienced though much of the Fund's fiscal
year. The government's implementation of the Term ABS Lending Facility (TALF)
lent support to consumer-based ABS, and spreads generally tightened as this
program gained momentum.

The decline in Treasury and MBS rates, coupled with the Fed's announcement that
it would be purchasing up to $1.25 trillion in agency MBS, increased prepayment
risk among higher coupon MBS. Since these factors were introduced into the
market, we reduced the Fund's allocation to some higher coupon MBS in favor of
lower coupon MBS. We remained allocated to higher quality securitized sectors
with strong credit fundamentals, specifically those related to commercial real
estate. Furthermore, the Fund's allocations were generally AAA-rated securities
that are high in the capital structure and benefit from high levels of credit
protection.


                               6 | Annual Report




Thank you for your continued participation in Franklin Templeton Limited
Duration Income Trust. We look forward to serving your future investment needs.

Sincerely,

(PHOTO OF CHRISTOPHER J. MOLUMPHY)


/s/ Christopher J. Molumphy

Christopher J. Molumphy, CFA


(PHOTO OF ERIC G. TAKAHA)


/s/ Eric G. Takaha

Eric G. Takaha, CFA


(PHOTO OF GLENN I. VOYLES)


/s/ Glenn I. Voyles

Glenn I. Voyles, CFA


(PHOTO OF RICHARD S. HSU)


/s/ Richard S. Hsu

Richard S. Hsu, CFA


(PHOTO OF ROGER A. BAYSTON)


/s/ Roger A. Bayston

Roger A. Bayston, CFA

Portfolio Management Team
Franklin Templeton Limited Duration Income Trust

THE FOREGOING INFORMATION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS
AS OF MARCH 31, 2009, THE END OF THE REPORTING PERIOD. THE WAY WE IMPLEMENT OUR
MAIN INVESTMENT STRATEGIES AND THE RESULTING PORTFOLIO HOLDINGS MAY CHANGE
DEPENDING ON FACTORS SUCH AS MARKET AND ECONOMIC CONDITIONS. THESE OPINIONS MAY
NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A PARTICULAR SECURITY.
THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT OF ANY MARKET,
COUNTRY, INDUSTRY, SECURITY OR THE FUND. STATEMENTS OF FACT ARE FROM SOURCES
CONSIDERED RELIABLE, BUT THE INVESTMENT MANAGER MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.


                               Annual Report | 7


Performance Summary as of 3/31/09

Your dividend income will vary depending on dividends or interest paid by
securities in the Fund's portfolio, adjusted for operating expenses. Capital
gain distributions are net profits realized from the sale of portfolio
securities. Total return reflects reinvestment of the Fund's dividends and
capital gain distributions, if any, and any unrealized gains or losses. Total
returns do not reflect any sales charges paid at inception or brokerage
commissions paid on secondary market purchases. The performance table does not
reflect any taxes that a shareholder would pay on Fund dividends, capital gain
distributions, if any, or any realized gains on the sale of Fund shares.

PRICE AND DISTRIBUTION INFORMATION



SYMBOL: FTF                                CHANGE   3/31/09   3/31/08
-----------                                ------   -------   -------
                                                  
Net Asset Value (NAV)                      -$2.70    $10.15    $12.85
Market Price (NYSE Amex)                   -$2.02    $ 8.92    $10.94
DISTRIBUTIONS (4/1/08-3/31/09)
Dividend Income                  $0.9280


PERFORMANCE(1)



                                                                    COMMENCEMENT OF
                                                1-YEAR   5-YEAR   OPERATIONS (8/27/03)
                                                ------   ------   --------------------
                                                      
Cumulative Total Return(2)
   Based on change in NAV(3)                    -14.17%   +1.34%         +8.57%
   Based on change in market price(4)            -9.97%   -8.47%         -5.55%
Average Annual Total Return(2)
   Based on change in NAV(3)                    -14.17%   +0.27%         +1.48%
   Based on change in market price(4)            -9.97%   -1.75%         -1.02%
      Distribution Rate(5)              10.22%


PERFORMANCE DATA REPRESENT PAST PERFORMANCE, WHICH DOES NOT GUARANTEE FUTURE
RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE, AND YOU MAY HAVE
A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. CURRENT PERFORMANCE MAY DIFFER FROM
FIGURES SHOWN.

ENDNOTES

INTEREST RATE MOVEMENTS AND MORTGAGE PREPAYMENTS WILL AFFECT THE FUND'S SHARE
PRICE AND YIELD. THE RISKS ASSOCIATED WITH HIGHER-YIELDING, LOWER-RATED
SECURITIES INCLUDE HIGHER RISK OF DEFAULT AND LOSS OF PRINCIPAL.

(1.) Figures are for common shares. As of March 31, 2009, the Trust had leverage
     in the amount of 34.45% of the Trust's total assets. The Trust employs
     leverage through the issuance of Auction Preferred Shares and purchase of
     Mortgage Dollar Rolls. The use of financial leverage creates an opportunity
     for increased income but, at the same time, creates special risks
     (including the likelihood of greater volatility of net asset value and
     market price of common shares). The cost of leverage rises and falls with
     changes in short-term interest rates. Such increases/decreases in the cost
     of the Trust's leverage may be offset by increased/decreased income from
     the Trust's floating rate investments.

(2.) Total return calculations represent the cumulative and average annual
     changes in value of an investment over the periods indicated.

(3.) Assumes reinvestment of distributions at net asset value.

(4.) Assumes reinvestment of distributions based on the dividend reinvestment
     plan.

(5.) Distribution rate is based on an annualization of the Fund's 7.6 cent per
     share March dividend and the NYSE Amex closing price of $8.92 on 3/31/09.


                               8 | Annual Report



Annual Shareholders' Meeting

SEPTEMBER 25, 2008

At an annual Meeting of Shareholders of Franklin Templeton Limited Duration
Income Trust (Fund) held on September 25, 2008, shareholders approved the
following:

Regarding the proposal to elect Trustees:



                        COMMON          % OF                 WITHHELD       % OF
                        SHARES       OUTSTANDING   % OF         OR       OUTSTANDING    % OF
TRUSTEES                 FOR            SHARES     VOTED    ABSTAINED     SHARES       VOTED
--------            --------------   -----------   -----   -----------   -----------   -----
                                                                     
Robert F. Carlson   22,944,704.074      85.70%     97.92%  488,182.729      1.82%      2.08%
Sam Ginn            22,957,103.074      85.74%     97.97%  475,783.729      0.02%      2.03%
Larry D. Thompson   22,972,435.074      85.80%     98.04%  460,451.729      1.72%      1.96%




                         PREFERRED      % OF                  WITHHELD      % OF
                          SHARES     OUTSTANDING     % OF        OR      OUTSTANDING   % OF
TRUSTEES                    FOR         SHARES      VOTED    ABSTAINED      SHARES     VOTED
--------                 ---------   -----------   -------   ---------   -----------   -----
                                                                     
Robert F. Carlson        3,205.000      77.42%      97.71%     75.000       1.81%      2.29%
Sam Ginn                 3,229.000      78.00%      98.45%     51.000       1.23%      1.55%
Larry D. Thompson        3,229.000      78.00%      98.45%     51.000       1.23%      1.55%
Rupert H. Johnson, Jr.   3,226.000      77.92%      98.35%     54.000       1.30%      1.65%



                               Annual Report | 9



Dividend Reinvestment Plan

The Fund's Dividend Reinvestment Plan (Plan) offers you a prompt and simple way
to reinvest dividends and capital gain distributions (Distributions) in shares
of the Fund. PNC Global Investment Servicing (Agent), P.O. Box 6006, Stream
Carol, IL 60197-6006, Providence, RI 02940-3027, will act as your Agent in
administering the Plan. The Agent will open an account for you under the Plan in
the same name as your outstanding shares are registered. The complete Terms and
Conditions of the Dividend Reinvestment Plan are contained in the Fund's
Dividend Reinvestment Plan Brochure. A copy of that Brochure may be obtained
from the Fund at the address on the back cover of this report.

You are automatically enrolled in the Plan unless you elect to receive
Distributions in cash. If you own shares in your own name, you should notify the
Agent, in writing, if you wish to receive Distributions in cash.

If the Fund declares a Distribution, you, as a participant in the Plan, will
automatically receive an equivalent amount of shares of the Fund purchased on
your behalf by the Agent.

If on the payment date for a Distribution, the net asset value per share is
equal to or less than the market price per share plus estimated brokerage
commissions, the Agent shall receive newly issued shares, including fractions,
from the Fund for your account. The number of additional shares to be credited
shall be determined by dividing the dollar amount of the Distribution by the
greater of the net asset value per share on the payment date, or 95% of the then
current market price per share.

If the net asset value per share exceeds the market price plus estimated
brokerage commissions on the payment date for a Distribution, the Agent (or a
broker-dealer selected by the Agent) shall try, for a purchase period of 30
days, to apply the amount of such Distribution on your shares (less your pro
rata share of brokerage commissions incurred) to purchase shares on the open
market. The weighted average price (including brokerage commissions) of all
shares it purchases shall be your allocated price per share. If, before the
Agent has completed its purchases, the market price plus estimated brokerage
commissions exceeds the net asset value of the shares as of the payment date,
the purchase price the Agent paid may exceed the net asset value of the shares,
resulting in the acquisition of fewer shares than if such Distribution had been
paid in shares issued by the Fund. Participants should note that they will not
be able to instruct the Agent to purchase shares at a specific time or at a
specific price. The Agent may make open-market purchases on any securities
exchange where shares are traded, in the over-the-counter market or in
negotiated transactions, and may be on such terms as to price, delivery and
otherwise as the Agent shall determine.


                               10 | Annual Report


The market price of shares on a particular date shall be the last sales price on
the American Stock Exchange, or, if there is no sale on the exchange on that
date, then the mean between the closing bid and asked quotations on the exchange
on such date. The net asset value per share on a particular date shall be the
amount most recently calculated by or on behalf of the Fund as required by law.

The Agent shall at all times act in good faith and agree to use its best efforts
within reasonable limits to ensure the accuracy of all services performed under
this agreement and to comply with applicable law, but assumes no responsibility
and shall not be liable for loss or damage due to errors unless such error is
caused by the Agent's negligence, bad faith, or willful misconduct or that of
its employees. Your uninvested funds held by the Agent will not bear interest.
The Agent shall have no responsibility for the value of shares acquired. For the
purpose of cash investments, the Agent may commingle your funds with those of
other participants in the same Fund.

There is no direct charge to participants for reinvesting Distributions, since
the Agent's fees are paid by the Fund. However, when shares are purchased in the
open market, each participant will pay a pro rata portion of any brokerage
commissions incurred. If you elect by notice to the Agent to have it sell part
or all of your shares and remit the proceeds, the Agent will deduct brokerage
commissions from the proceeds.

The automatic reinvestment of Distributions does not relieve you of any taxes
that may be payable on Distributions. In connection with the reinvestment of
Distributions, shareholders generally will be treated as having received a
Distribution equal to the cash Distribution that would have been paid.

The Agent will forward to you any proxy solicitation material and will vote any
shares so held for you first in accordance with the instructions set forth on
proxies you return to the Fund, and then with respect to any proxies you do not
return to the Fund in the same portion as the Agent votes proxies the
participants return to the Fund.

As long as you participate in the Plan, the Agent will hold the shares it has
acquired for you in safekeeping, in its name or in the name of its nominee. This
convenience provides added protection against loss, theft or inadvertent
destruction of certificates. However, you may request that a certificate
representing your Plan shares be issued to you. Upon your written request, the
Agent will deliver to you, without charge, a certificate or certificates for the
full shares. The Agent will send you a confirmation of each acquisition made for
your account as soon as practicable, but not later than 60 days after the


                               Annual Report | 11




acquisition date. Although from time to time you may have an undivided
fractional interest in a share of the Fund, no certificates for a fractional
share will be issued. Distributions on fractional shares will be credited to
your account. If you terminate your account under the Plan, the Agent will
adjust for any such undivided fractional interest in cash at the market value of
shares at the time of termination.

You may withdraw from the Plan at any time, without penalty, by notifying the
Agent in writing at the address above or by telephone at (800) 331-1710. Such
termination will be effective with respect to a Distribution if the Agent
receives your notice prior to the Distribution record date. The Agent or the
Fund may terminate the Plan upon notice to you in writing mailed at least 30
days prior to any record date for the payment of any Distribution. Upon any
termination, the Agent will issue, without charge, stock certificates for all
full shares you own and will convert any fractional shares you hold at the time
of termination to cash at current market price and send you a check for the
proceeds.

The Fund or the Agent may amend the Plan. You will receive written notice at
least 30 days before the effective date of any amendment.


                               12 | Annual Report



Franklin Templeton
Limited Duration Income Trust

FINANCIAL HIGHLIGHTS



                                                                             YEAR ENDED MARCH 31,
                                                       ----------------------------------------------------------------
                                                         2009           2008           2007       2006           2005
                                                       --------       --------       --------   --------       --------
                                                                                                
PER COMMON SHARE OPERATING PERFORMANCE
   (for a common share outstanding throughout the
   year)
Net asset value, beginning of year .................   $  12.85       $  14.24       $  14.14   $  14.41       $  14.75
                                                       --------       --------       --------   --------       --------
Income from investment operations:
   Net investment income(a) ........................       0.93           1.28           1.32       1.18           1.10
   Net realized and unrealized gains (losses) ......      (2.56)         (1.29)          0.16      (0.10)         (0.12)
   Dividends to preferred shareholders from net
      investment income ............................      (0.14)         (0.37)         (0.35)     (0.26)         (0.13)
                                                       --------       --------       --------   --------       --------
Total from investment operations ...................      (1.77)         (0.38)          1.13       0.82           0.85
                                                       --------       --------       --------   --------       --------
Less distributions to common shareholders from net
   investment income ...............................      (0.93)         (1.01)         (1.03)     (1.09)         (1.19)
                                                       --------       --------       --------   --------       --------
Net asset value, end of year .......................   $  10.15       $  12.85       $  14.24   $  14.14       $  14.41
                                                       ========       ========       ========   ========       ========
Market value, end of year(b) .......................   $   8.92       $  10.94       $  14.27   $  12.87       $  13.89
                                                       ========       ========       ========   ========       ========
Total return (based on market value per share) .....      (9.97)%       (16.64)%        19.66%      0.60%          1.38%

RATIOS TO AVERAGE NET ASSETS APPLICABLE TO COMMON
   SHARES
Expenses before expense reduction ..................       1.33%          1.28%          1.27%      1.26%          1.21%
Expenses net of expense reduction ..................       1.33%(c)       1.28%(c)       1.26%      1.26%(c)       1.21%(c)
Net investment income ..............................       8.16%          9.38%          9.32%      8.24%          7.50%

SUPPLEMENTAL DATA
Net assets applicable to common shares, end of year
   (000's) .........................................   $271,679       $344,010       $380,813   $378,080       $385,344
Portfolio turnover rate ............................     203.31%         47.48%         52.17%     46.55%         55.02%
Portfolio turnover rate excluding mortgage dollar
   rolls(d) ........................................      42.58%         47.48%         52.17%     46.55%         55.02%
Asset coverage per preferred share .................   $115,173       $  0,264       $ 75,107   $ 74,747       $ 75,703
Liquidation preference per preferred share .........   $ 25,000       $ 25,000       $ 25,000   $ 25,000       $ 25,000


(a)  Based on average daily common shares outstanding.

(b)  Based on the last sale on the NYSE Amex.

(c)  Benefit of expense reduction rounds to less than 0.01%.

(d)  See Note 1(e) regarding mortgage dollar rolls.

   The accompanying notes are an integral part of these financial statements.


                               Annual Report | 13


Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009



                                                                                      COUNTRY          SHARES            VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
       PREFERRED STOCKS (COST $237,850) 0.0%(a)
       DIVERSIFIED FINANCIALS 0.0%(a)
(b)    Preferred Blocker Inc., 7.00%, pfd., 144A ...............................   United States              670   $       133,435
                                                                                                                    ---------------




                                                                                                      PRINCIPAL
                                                                                                      AMOUNT(C)
                                                                                                   --------------
                                                                                                           
       CORPORATE BONDS 53.6%
       AUTOMOBILES & COMPONENTS 1.2%
       Ford Motor Credit Co. LLC,
(d)       FRN, 5.544%, 4/15/09 .................................................   United States    1,000,000               988,750
          senior note, 9.75%, 9/15/10 ..........................................   United States    1,000,000               822,898
          senior note, 9.875%, 8/10/11 .........................................   United States    2,000,000             1,514,952
                                                                                                                    ---------------
                                                                                                                          3,326,600
                                                                                                                    ---------------
       CAPITAL GOODS 1.6%
       Case New Holland Inc., senior note, 7.125%, 3/01/14 .....................   United States    2,000,000             1,480,000
       RBS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 .................   United States    2,000,000             1,630,000
       RSC Equipment Rental Inc., senior note, 9.50%, 12/01/14 .................   United States    2,500,000             1,237,500
                                                                                                                    ---------------
                                                                                                                          4,347,500
                                                                                                                    ---------------
       COMMERCIAL & PROFESSIONAL SERVICES 1.4%
(d)    ARAMARK Corp., senior note, FRN, 4.67%, 2/01/15 .........................   United States    2,500,000             1,918,750
       JohnsonDiversey Holdings Inc., senior disc. note, 10.67%, 5/15/13 .......   United States    2,500,000             1,887,500
                                                                                                                    ---------------
                                                                                                                          3,806,250
                                                                                                                    ---------------
       CONSUMER DURABLES & APPAREL 1.8%
       Jarden Corp., senior sub. note, 7.50%, 5/01/17 ..........................   United States    2,500,000             2,025,000
       Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 ....................   United States    2,000,000             1,905,000
       KB Home, senior note, 6.375%, 8/15/11 ...................................   United States    1,000,000               905,000
                                                                                                                    ---------------
                                                                                                                          4,835,000
                                                                                                                    ---------------
       CONSUMER SERVICES 3.2%
       Host Hotels & Resorts LP, senior note, K, 7.125%, 11/01/13 ..............   United States    2,400,000             1,950,000
       MGM MIRAGE, senior note, 6.75%, 4/01/13 .................................   United States    3,000,000             1,065,000
       Pinnacle Entertainment Inc., senior sub. note, 8.75%, 10/01/13 ..........   United States    2,000,000             1,770,000
       Royal Caribbean Cruises Ltd., senior note, 8.00%, 5/15/10 ...............   United States    2,500,000             2,137,500
       Starwood Hotels & Resorts Worldwide Inc., senior note, 6.75%, 5/15/18 ...   United States    2,500,000             1,688,528
                                                                                                                    ---------------
                                                                                                                          8,611,028
                                                                                                                    ---------------
       DIVERSIFIED FINANCIALS 3.5%
       American Express Credit Corp., senior note, C, 7.30%, 8/20/13 ...........   United States    2,000,000             1,858,872
       General Electric Capital Corp., 4.80%, 5/01/13 ..........................   United States    2,000,000             1,876,716
(b)    GMAC LLC, senior note, 144A,
          7.25%, 3/02/11 .......................................................   United States    1,266,000               937,802
          6.875%, 8/28/12 ......................................................   United States    1,899,000             1,276,565
       JPMorgan Chase & Co., sub. note, 5.75%, 1/02/13 .........................   United States    2,000,000             1,912,402
(e)    Lehman Brothers Holdings Inc., senior note, 6.20%, 9/26/14 ..............   United States    3,000,000               397,500
       Merrill Lynch & Co. Inc., 5.45%, 2/05/13 ................................   United States    1,500,000             1,231,056
                                                                                                                    ---------------
                                                                                                                          9,490,913
                                                                                                                    ---------------



                               14 | Annual Report



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
       CORPORATE BONDS (CONTINUED)
       ENERGY 7.5%
       Chesapeake Energy Corp., senior note, 7.50%, 6/15/14 ....................   United States    4,000,000       $     3,630,000
       Compagnie Generale de Geophysique-Veritas, senior note, 7.50%, 5/15/15 ..       France       2,500,000             2,000,000
       El Paso Corp., senior note, 12.00%, 12/12/13 ............................   United States    1,600,000             1,712,000
       Mariner Energy Inc., senior note, 7.50%, 4/15/13 ........................   United States    2,000,000             1,490,000
       Peabody Energy Corp., senior note, B, 6.875%, 3/15/13 ...................   United States      300,000               294,000
(b)    Petrohawk Energy Corp., senior note, 144A, 10.50%, 8/01/14 ..............   United States    2,000,000             2,000,000
(b)    Petroplus Finance Ltd., senior note, 144A, 6.75%, 5/01/14 ...............    Switzerland     2,500,000             1,862,500
       Plains Exploration & Production Co., senior note, 10.00%, 3/01/16 .......   United States    2,000,000             1,900,000
(b)    SandRidge Energy Inc., senior note, 144A, 8.00%, 6/01/18 ................   United States    2,500,000             1,850,000
       Tesoro Corp., senior note, 6.625%, 11/01/15 .............................   United States    2,000,000             1,590,000
       The Williams Co. Inc., 8.125%, 3/15/12 ..................................   United States    2,000,000             2,040,000
                                                                                                                    ---------------
                                                                                                                         20,368,500
                                                                                                                    ---------------
       FOOD, BEVERAGE & TOBACCO 4.5%
       Altria Group Inc., 7.75%, 2/06/14 .......................................   United States    2,000,000             2,106,824
(b)    Anheuser-Busch InBev NV, senior note, 144A, 7.20%, 1/15/14 ..............   United States    2,000,000             2,098,668
(b)    BAT International Finance PLC, 144A, 8.125%, 11/15/13 ...................   United Kingdom   2,000,000             2,164,246
       Dean Foods Inc., senior note, 7.00%, 6/01/16 ............................   United States    2,000,000             1,910,000
(b)    Dole Food Co. Inc, senior note, 144A, 13.875%, 3/15/14 ..................   United States      900,000               879,750
       Smithfield Foods Inc., senior note, 8.00%, 10/15/09 .....................   United States    2,000,000             2,000,000
(b)    Tyson Foods Inc., senior note, 144A, 10.50%, 3/01/14 ....................   United States    1,000,000             1,025,000
                                                                                                                    ---------------
                                                                                                                         12,184,488
                                                                                                                    ---------------
       HEALTH CARE EQUIPMENT & SERVICES 6.2%
       Coventry Health Care Inc., senior note, 5.875%, 1/15/12 .................   United States    3,000,000             2,368,005
       DaVita Inc.,
          senior note, 6.625%, 3/15/13 .........................................   United States      900,000               877,500
          senior sub. note, 7.25%, 3/15/15 .....................................   United States    1,000,000               966,250
       FMC Finance III SA, senior note, 6.875%, 7/15/17 ........................      Germany       2,000,000             1,965,000
(b)    Fresenius US Finance II, senior note, 144A, 9.00%, 7/15/15 ..............      Germany       1,000,000             1,035,000
       HCA Inc., senior secured note, 9.125%, 11/15/14 .........................   United States    3,000,000             2,827,500
(b)    Tenet Healthcare Corp., senior note, 144A,
          9.00%, 5/01/15 .......................................................   United States    1,250,000             1,212,500
          10.00%, 5/01/18 ......................................................   United States    1,250,000             1,215,625
(d, f) U.S. Oncology Holdings Inc., senior note, PIK, FRN, 6.904%, 3/15/12 .....   United States    2,237,817             1,365,068
(f)    United Surgical Partners International Inc., senior sub. note, PIK,
          9.25%, 5/01/17 .......................................................   United States    2,000,000             1,390,000
       Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 ...   United States    2,000,000             1,775,000
                                                                                                                    ---------------
                                                                                                                         16,997,448
                                                                                                                    ---------------
       INSURANCE 0.6%
(b)    Metropolitan Life Global Funding I, senior secured note, 144A, 5.125%,
          4/10/13 ..............................................................   United States    1,700,000             1,554,514
                                                                                                                    ---------------



                               Annual Report | 15



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
       CORPORATE BONDS (CONTINUED)
       MATERIALS 3.6%
       Crown Americas Inc., senior note, 7.625%, 11/15/13 ......................   United States    3,000,000       $     3,026,250
(d)    Freeport-McMoRan Copper & Gold Inc., senior note, FRN, 7.083%, 4/01/15 ..   United States    3,000,000             2,465,741
       Huntsman International LLC, senior sub. note, 7.875%, 11/15/14 ..........   United States    2,000,000               830,000
(b)    Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 2/15/16 .....   United Kingdom   3,000,000               187,500
(b)    MacDermid Inc., senior sub. note, 144A, 9.50%, 4/15/17 ..................   United States    2,000,000               700,000
       Nalco Co., senior sub. note, 8.875%, 11/15/13 ...........................   United States    2,500,000             2,412,500
       Smurfit Kappa Funding PLC, senior sub. note, 7.75%, 4/01/15 .............      Ireland         200,000               118,500
       Solo Cup Co., senior sub. note, 8.50%, 2/15/14 ..........................   United States      100,000                73,500
                                                                                                                    ---------------
                                                                                                                          9,813,991
                                                                                                                    ---------------
       MEDIA 6.4%
(e)    CanWest Media Inc., senior sub. note, 8.00%, 9/15/12 ....................       Canada       2,000,000               400,000
(e, g) CCH II LLC, senior note, 10.25%, 9/15/10 ................................   United States    4,000,000             3,395,640
(b)    CSC Holdings Inc., senior note, 144A, 8.50%, 4/15/14 ....................   United States      500,000               495,000
       Dex Media West Finance, senior sub. note, 9.875%, 8/15/13 ...............   United States    4,000,000               810,000
       DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 ......................   United States    2,500,000             2,540,625
       EchoStar DBS Corp., senior note, 6.375%, 10/01/11 .......................   United States    2,000,000             1,935,000
       Lamar Media Corp., senior sub. note,
          7.25%, 1/01/13 .......................................................   United States    1,000,000               866,250
          C, 6.625%, 8/15/15 ...................................................   United States    2,000,000             1,450,000
       LIN Television Corp., senior sub. note, 6.50%, 5/15/13 ..................   United States    1,500,000               787,500
       Quebecor Media Inc., senior note, 7.75%, 3/15/16 ........................      Canada        2,500,000             1,912,500
       Radio One Inc., senior sub. note, B, 8.875%, 7/01/11 ....................   United States    2,000,000               640,000
       Time Warner Cable Inc., senior note, 7.50%, 4/01/14 .....................   United States    2,000,000             2,042,204
                                                                                                                    ---------------
                                                                                                                         17,274,719
                                                                                                                    ---------------
       REAL ESTATE 0.0%a
       Forest City Enterprises Inc., senior note, 7.625%, 6/01/15 ..............   United States      200,000                87,000
                                                                                                                    ---------------
       RETAILING 0.3%
       Michaels Stores Inc., senior note, 10.00%, 11/01/14 .....................   United States    2,000,000               952,500
                                                                                                                    ---------------
       SOFTWARE & SERVICES 1.3%
       SunGard Data Systems Inc., senior note, 9.125%, 8/15/13 .................   United States    4,000,000             3,500,000
                                                                                                                    ---------------
       TECHNOLOGY HARDWARE & EQUIPMENT 0.6%
(b, e) Nortel Networks Ltd., senior note, 144A, 10.75%, 7/15/16 ................       Canada       2,000,000               370,000
       Sanmina-SCI Corp.,
(b, d)    senior note, 144A, FRN, 4.07%, 6/15/14 ...............................   United States    1,000,000               555,000
          senior sub. note, 6.75%, 3/01/13 .....................................   United States    1,700,000               671,500
                                                                                                                    ---------------
                                                                                                                          1,596,500
                                                                                                                    ---------------
       TELECOMMUNICATION SERVICES 5.8%
       Crown Castle International Corp., senior note, 9.00%, 1/15/15 ...........   United States    1,500,000             1,511,250
(b)    Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 ..................      Jamaica       2,000,000             1,300,000
(b)    Intelsat Subsidiary Holding Co. Ltd., senior note, 144A,
          8.50%, 1/15/13 .......................................................      Bermuda       2,500,000             2,368,750
          8.875%, 1/15/15 ......................................................      Bermuda         500,000               466,250



                               16 | Annual Report



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
       CORPORATE BONDS (CONTINUED)
       TELECOMMUNICATION SERVICES (CONTINUED)
       MetroPCS Wireless Inc., senior note, 9.25%, 11/01/14 ....................   United States    2,000,000       $     1,950,000
       Millicom International Cellular SA, senior note, 10.00%, 12/01/13 .......     Luxembourg     2,000,000             1,965,000
       Qwest Communications International Inc., senior note, B, 7.50%, 2/15/14..   United States    2,000,000             1,740,000
(b)    Verizon Wireless Capital LLC, 144A, 5.55%, 2/01/14 ......................   United States    2,000,000             2,004,692
(b)    Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 ........       Italy        2,500,000             2,487,500
                                                                                                                    ---------------
                                                                                                                         15,793,442
                                                                                                                    ---------------
       UTILITIES 4.1%
       Duke Energy Corp., senior note, 6.30%, 2/01/14 ..........................   United States    1,500,000             1,537,881
       Dynegy Holdings Inc., senior note, 7.50%, 6/01/15 .......................   United States    2,000,000             1,375,000
       Mirant North America LLC, senior note, 7.375%, 12/31/13 .................   United States    2,000,000             1,820,000
       NRG Energy Inc., senior note, 7.25%, 2/01/14 ............................   United States    3,000,000             2,827,500
       PG&E Corp., senior note, 5.75%, 4/01/14 .................................   United States    2,000,000             2,022,602
       Texas Competitive Electric Holdings Co. LLC, senior note, A, 10.25%,
          11/01/15 .............................................................   United States    3,000,000             1,515,000
                                                                                                                    ---------------
                                                                                                                         11,097,983
                                                                                                                    ---------------
       TOTAL CORPORATE BONDS (COST $180,814,290) ...............................                                        145,638,376
                                                                                                                    ---------------
       MORTGAGE-BACKED SECURITIES 37.7%
(d)    FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) ADJUSTABLE RATE 0.4%
       FHLMC, 4.452%, 5/01/34 ..................................................   United States    1,019,748             1,034,321
                                                                                                                    ---------------
       FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) FIXED RATE 17.0%
       FHLMC Gold 15 Year, 4.50%, 6/01/23 ......................................   United States    2,352,387             2,424,125
(h)    FHLMC Gold 15 Year, 5.00%, 5/01/23 - 4/01/24 ............................   United States    3,472,125             3,602,327
       FHLMC Gold 15 Year, 5.50%, 7/01/19 ......................................   United States      212,406               222,113
       FHLMC Gold 15 Year, 6.00%, 7/01/23 ......................................   United States    1,019,849             1,069,424
       FHLMC Gold 30 Year, 5.00%, 4/01/38 ......................................   United States    2,594,225             2,678,923
       FHLMC Gold 30 Year, 5.00%, 9/01/38 ......................................   United States    3,824,080             3,948,932
       FHLMC Gold 30 Year, 5.50%, 1/01/38 - 7/01/38 ............................   United States    5,158,766             5,359,542
(h)    FHLMC Gold 30 Year, 5.00%, 4/01/39 ......................................   United States    3,000,000             3,112,968
       FHLMC Gold 30 Year, 6.00%, 7/01/28 - 1/01/38 ............................   United States    3,570,949             3,754,348
(h)    FHLMC Gold 30 Year, 6.00%, 4/01/39 ......................................   United States    9,385,000             9,811,727
(h)    FHLMC Gold 30 Year, 6.50%, 4/01/39 ......................................   United States    7,211,000             7,601,973
       FHLMC Gold 30 Year, 7.00%, 9/01/27 ......................................   United States      724,573               783,002
       FHLMC Gold 30 Year, 8.00%, 1/01/31 ......................................   United States      127,569               139,219
       FHLMC Gold 30 Year, 8.50%, 7/01/31 ......................................   United States    1,555,592             1,710,815
                                                                                                                    ---------------
                                                                                                                         46,219,438
                                                                                                                    ---------------
(d)    FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) ADJUSTABLE RATE 0.6%
       FNMA, 4.562%, 7/01/34 ...................................................   United States    1,637,743             1,673,898
       FNMA, 5.911%, 6/01/32 ...................................................   United States       70,341                72,844
                                                                                                                    ---------------
                                                                                                                          1,746,742
                                                                                                                    ---------------
       FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) FIXED RATE 16.4%
       FNMA 15 Year, 5.00%, 6/01/23 ............................................   United States    1,329,860             1,381,012
       FNMA 15 Year, 5.50%, 7/01/20 ............................................   United States    3,096,811             3,248,007



                               Annual Report | 17



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
       MORTGAGE-BACKED SECURITIES (CONTINUED)
       FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) FIXED RATE (CONTINUED)
       FNMA 15 Year, 5.50%, 9/01/22 - 11/01/23 .................................   United States    1,954,688       $     2,040,544
       FNMA 15 Year, 6.00%, 10/01/23 ...........................................   United States    1,758,628             1,843,309
       FNMA 15 Year, 6.50%, 7/01/20 ............................................   United States      204,496               205,504
       FNMA 15 Year, 7.00%, 9/01/18 ............................................   United States      255,128               275,838
(h)    FNMA 30 Year, 4.50%, 4/01/39 ............................................   United States    1,550,000             1,584,391
       FNMA 30 Year, 5.00%, 4/01/38 ............................................   United States    4,550,832             4,701,678
(h)    FNMA 30 Year, 5.00%, 4/01/39 ............................................   United States    8,300,000             8,565,857
(h)    FNMA 30 Year, 5.50%, 4/01/39 ............................................   United States    4,798,000             4,980,175
       FNMA 30 Year, 6.00%, 4/01/33 - 8/01/38 ..................................   United States    3,711,424             3,885,872
(h)    FNMA 30 Year, 6.00%, 4/01/39 ............................................   United States    2,860,000             2,987,359
       FNMA 30 Year, 6.50%, 8/01/32 ............................................   United States    1,175,289             1,247,631
(h)    FNMA 30 Year, 6.50%, 4/01/39 ............................................   United States    6,623,000             6,975,887
       FNMA 30 Year, 8.00%, 10/01/29 ...........................................   United States      200,560               217,965
       FNMA 30 Year, 8.50%, 8/01/26 ............................................   United States      399,112               436,577
                                                                                                                    ---------------
                                                                                                                         44,577,606
                                                                                                                    ---------------
       GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) FIXED RATE 3.3%
(h)    GNMA I SF 30 Year, 5.50%, 4/01/39 .......................................   United States    5,910,000             6,151,016
       GNMA I SF 30 Year, 6.50%, 6/15/31 - 12/15/33 ............................   United States    1,971,980             2,094,830
       GNMA II SF 30 Year, 7.00%, 1/20/24 - 1/20/29 ............................   United States      190,991               204,177
       GNMA II SF 30 Year, 8.00%, 1/20/28 - 2/20/32 ............................   United States      376,621               407,914
                                                                                                                    ---------------
                                                                                                                          8,857,937
                                                                                                                    ---------------
       TOTAL MORTGAGE-BACKED SECURITIES (COST $100,017,469).....................                                        102,436,044
                                                                                                                    ---------------
       ASSET-BACKED SECURITIES AND COMMERCIAL MORTGAGE-BACKED SECURITIES 8.5%
       BANKS 5.7%
       Banc of America Commercial Mortgage Inc., 2005-3, A2, 4.501%, 7/10/43 ...   United States    5,000,000             4,685,090
(d)    Citigroup/Deutsche Bank Commercial Mortgage Trust, 2005-CD1,
          A3, FRN, 5.226%, 7/15/44 .............................................   United States    3,000,000             2,500,713
          A4, FRN, 5.226%, 7/15/44 .............................................   United States      400,000               322,568
       Greenwich Capital Commercial Funding Corp.,
          2004-GG1, A7, 5.317%, 6/10/36 ........................................   United States    1,605,000             1,376,737
          2005-GG5, A5, 5.224%, 4/10/37 ........................................   United States      500,000               390,567
       GS Mortgage Securities Corp. II, 2003-C1, A3, 4.608%, 1/10/40 ...........   United States      400,000               366,902
       LB-UBS Commercial Mortgage Trust,
(d)       2002-C2, A4, FRN, 5.594%, 6/15/31 ....................................   United States    2,000,000             1,936,039
          2005-C1, A2, 4.31%, 2/15/30 ..........................................   United States    1,395,000             1,323,281
          2006-C1, A4, 5.156%, 2/15/31 .........................................   United States    2,800,000             2,144,102
(d)    Merrill Lynch Mortgage Investors Trust, 2003-OPT1, B2, FRN, 3.272%,
          7/25/34 ..............................................................   United States      224,940                20,742
(d)    Morgan Stanley ABS Capital I Inc. Trust,
          2003-HE3, B1, FRN, 3.822%, 10/25/33 ..................................   United States      756,178               150,014
          2003-NC10, B1, FRN, 5.472%, 10/25/33 .................................   United States      605,756                85,053
                                                                                                                    ---------------
                                                                                                                         15,301,808
                                                                                                                    ---------------



                               18 | Annual Report



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
       ASSET-BACKED SECURITIES AND COMMERCIAL MORTGAGE-BACKED
          SECURITIES (CONTINUED)
       DIVERSIFIED FINANCIALS 2.8%
(d)    Argent Securities Inc., 2003-W5, M4, FRN, 4.272%, 10/25/33 ..............   United States    1,204,450       $       448,490
(d)    Chase Funding Mortgage Loan Asset-Backed Certificates, 2004-2, 2A2, FRN,
          0.772%, 2/25/35 ......................................................   United States    1,732,468             1,159,175
(d)    Chase Issuance Trust, 2005-A9, A9, FRN, 0.576%, 11/15/11 ................   United States    1,000,000               988,989
       Citigroup Commercial Mortgage Trust, 2008-C7, A4, 6.095%, 12/10/49 ......   United States      700,000               521,169
(d)    GSAMP Trust, 2003-AHL, B1, FRN, 4.521%, 10/25/33 ........................   United States    1,243,595               465,983
(d)    JPMorgan Chase Commercial Mortgage Securities Corp., 2005-LDP5, A4,
          FRN, 5.179%, 12/15/44 ................................................   United States    1,000,000               773,900
(d)    MBNA Master Credit Card Trust II, 1997-B, A, FRN, 0.716%, 8/15/14 .......   United States    3,000,000             2,682,340
(d)    Morgan Stanley Dean Witter Capital I, 2003-NC3, B1, FRN, 5.022%,
          3/25/33 ..............................................................   United States      656,103                59,004
(d, i) New Century Home Equity Loan Trust, 2003-2, M3, FRN, 6.072%, 1/25/33 ....   United States      822,002                33,903
(d)    Option One Mortgage Loan Trust, 2003-6, M5, FRN, 3.822%, 11/25/33 .......   United States      916,884               219,795
(d)    Specialty Underwriting & Residential Finance, 2003-BC4, B2, FRN,
          3.022%, 11/25/34 .....................................................   United States      324,639               133,305
(d)    Structured Asset Investment Loan Trust,
          2003-BC2, M3, FRN, 5.397%, 4/25/33 ...................................   United States       13,987                   486
          2003-BC13, M4, FRN, 4.647%, 11/25/33 .................................   United States      364,803               185,730
                                                                                                                    ---------------
                                                                                                                          7,672,269
                                                                                                                    ---------------
       TOTAL ASSET-BACKED SECURITIES AND COMMERCIAL MORTGAGE-BACKED SECURITIES
          (COST $30,555,585) ...................................................                                         22,974,077
                                                                                                                    ---------------
(d, j) SENIOR FLOATING RATE INTERESTS 48.8%
       AUTOMOBILES & COMPONENTS 1.8%
       Cooper Standard Automotive Inc., Term Loan D, 3.75%, 12/23/11 ...........   United States      870,750               213,334
       Federal-Mogul Corp., Term Loan B, 2.438% - 2.498%, 12/27/14 .............   United States    4,211,125             2,076,986
       Key Safety Systems Inc., Term Loan B, 2.77% - 3.482%, 3/10/14 ...........   United States    1,979,798               745,724
       TRW Automotive Inc., Tranche B-1 Term Loan, 2.063%, 2/09/14 .............   United States      984,056               525,240
       United Components Inc., Term Loan D, 3.25%, 6/29/12 .....................   United States    2,000,000             1,395,000
                                                                                                                    ---------------
                                                                                                                          4,956,284
                                                                                                                    ---------------
       CAPITAL GOODS 4.6%
       Baldor Electric Co., Term Loan B, 4.00%, 1/31/14 ........................   United States      593,750               536,024
       BE Aerospace Inc., Term Loan B, 5.50%, 7/28/14 ..........................   United States      496,250               476,400
       Goodman Global Holdings Co. Inc., Term Loan B, 6.50%, 2/13/14 ...........   United States    1,084,500               928,332
       Manitowoc Co. Inc., Term Loan B, 6.50%, 11/06/14 ........................   United States    1,795,500             1,290,516
       Oshkosh Truck Corp.,
          Term Loan A, 7.22% - 7.32%, 12/06/11 .................................   United States      571,000               426,822
          Term Loan B, 6.54% - 7.32%, 12/06/13 .................................   United States    3,718,537             2,787,043
       RBS Global Inc. (Rexnord Corp.), Term Loan, 3.063% - 3.625%, 7/22/13 ....   United States    3,000,000             2,450,001
       Spirit Aerosystems Inc. (Onex Wind Finance LP), Term B-1 Loan, 2.91%,
          12/31/11 .............................................................   United States    1,253,805             1,147,231



                               Annual Report | 19



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
(d, j) SENIOR FLOATING RATE INTERESTS (CONTINUED)
       CAPITAL GOODS (CONTINUED)
       TriMas Co. LLC,
          Term Loan B, 2.773% - 3.434%, 8/02/13 ................................   United States    1,546,981       $     1,082,887
          Tranche B-1 L/C, 4.50%, 8/02/11 ......................................   United States      366,149               256,305
       URS Corp., Term Loan B, 3.685%, 5/15/13 .................................   United States    1,238,319             1,168,147
                                                                                                                    ---------------
                                                                                                                         12,549,708
                                                                                                                    ---------------
       COMMERCIAL & PROFESSIONAL SERVICES 2.8%
       ARAMARK Corp.,
          Synthetic L/C, 2.427%, 1/26/14 .......................................   United States      271,357               236,420
          Term Loan B, 3.095%, 1/26/14 .........................................   United States    4,271,345             3,721,409
       JohnsonDiversey Inc.,
          Delay Draw, 4.75%, 12/16/10 ..........................................   United States      136,493               124,209
          Term Loan B, 4.75%, 12/16/11 .........................................   United States      863,507               785,791
       Nielsen Finance LLC (VNU Inc.), Dollar Term Loan, 2.533%, 8/09/13 .......   United States    3,107,947             2,432,833
       West Corp., Term Loan B-2, 2.883% - 2.897%, 10/24/13 ....................   United States      444,795               333,914
                                                                                                                    ---------------
                                                                                                                          7,634,576
                                                                                                                    ---------------
       CONSUMER DURABLES & APPAREL 1.4%
       Jarden Corp., Term Loan B2, 2.97% - 4.00%, 1/24/12 ......................   United States    2,889,746             2,593,547
       Jostens IH Corp. (Visant Holding Corp.), Term Loan C, 2.497%, 12/21/11 ..   United States    1,350,000             1,198,126
                                                                                                                    ---------------
                                                                                                                          3,791,673
                                                                                                                    ---------------
       CONSUMER SERVICES 4.5%
       Affinion Group Inc., Term Loan B, 3.018% - 3.751%, 10/17/12 .............   United States    3,000,000             2,422,950
       Education Management LLC, Term Loan C, 3.00%, 6/01/13 ...................   United States    2,433,811             2,096,120
       Laureate Education Inc.,
          Closing Date Term Loan, 4.409%, 8/18/14 ..............................   United States    1,883,618             1,270,657
          Delayed Draw Term Loan, 4.409%, 8/18/14 ..............................   United States      281,889               190,158
       Penn National Gaming Inc., Term Loan B, 2.27% - 2.99%, 10/03/12 .........   United States    2,700,203             2,432,945
       VML U.S. Finance LLC (Venetian Macau),
          Delayed Draw, 2.77%, 5/25/12 .........................................       Macau        1,166,667               766,792
          New Project Term Loans, 2.77%, 5/25/13 ...............................       Macau        2,977,778             1,957,144
          Term Loan B, 2.77%, 5/25/13 ..........................................       Macau        1,703,704             1,119,759
                                                                                                                    ---------------
                                                                                                                         12,256,525
                                                                                                                    ---------------
       ENERGY 0.4%
       Dresser Inc., Term Loan B, 2.768% - 3.488%, 5/04/14 .....................   United States    1,552,923             1,172,457
                                                                                                                    ---------------
       FOOD, BEVERAGE & TOBACCO 0.9%
       Dean Foods Co., Term Loan B, 2.02% - 2.72%, 4/02/14 .....................   United States    1,748,377             1,580,643
       Wm. Wrigley Jr. Co., Term Loan B, 6.50%, 10/06/14 .......................   United States      888,750               880,141
                                                                                                                    ---------------
                                                                                                                          2,460,784
                                                                                                                    ---------------
       HEALTH CARE EQUIPMENT & SERVICES 7.2%
       Bausch and Lomb Inc.,
(k)       Delayed Draw Term Loan, 3.768% - 4.47%, 4/28/15 ......................   United States      407,419               349,871
          Parent Term Loan B, 4.47%, 4/28/15 ...................................   United States    2,145,742             1,842,656



                               20 | Annual Report



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
(d, j) SENIOR FLOATING RATE INTERESTS (CONTINUED)
       HEALTH CARE EQUIPMENT & SERVICES (CONTINUED)
       Community Health Systems Inc.,
          Delayed Draw Term Loan, 2.768%, 7/25/14 ..............................   United States      124,977       $       108,324
          Term Loan, 2.768% - 3.506%, 7/25/14 ..................................   United States    2,448,964             2,122,640
       DaVita Inc., Term Loan B-1, 2.02% - 2.94%, 10/05/12 .....................   United States    2,717,434             2,527,213
       DJO Finance LLC, Term Loan B, 3.518% - 4.22%, 5/20/14 ...................   United States    2,715,625             2,319,144
       Fresenius Medical Care Holdings Inc., Term Loan B, 2.535% - 2.674%,
          3/31/13 ..............................................................      Germany       1,492,921             1,386,550
       Fresenius SE (APP), Term Loan B2, 6.75%, 9/10/14 ........................      Germany         280,084               277,984
       Fresenius SE (New Finco1), Term Loan B, 6.75%, 9/10/14 ..................      Germany         519,916               516,016
       HCA Inc., Term Loan B-1, 3.47%, 11/18/13 ................................   United States    3,970,374             3,387,722
       Iasis Healthcare LLC,
          Delayed Draw Term Loan, 2.518%, 3/14/14 ..............................   United States      476,575               406,042
          Initial Term Loan, 2.518%, 3/14/14 ...................................   United States    1,377,210             1,173,383
          Synthetic L/C, 4.54%, 3/14/14 ........................................   United States      128,047               109,096
       Team Finance LLC, Term Loan B, 3.222% - 3.251%, 11/23/12 ................   United States    1,994,845             1,416,340
       Vanguard Health Holding Co. II LLC, Replacement Term Loan,
          2.768% - 2.773%, 9/23/11 .............................................   United States    1,572,209             1,441,519
                                                                                                                    ---------------
                                                                                                                         19,384,500
                                                                                                                    ---------------
       INSURANCE 0.2%
       Conseco Inc., Term Loan, 2.564%, 10/10/13 ...............................   United States    2,155,170               595,905
                                                                                                                    ---------------
       MATERIALS 6.8%
       Anchor Glass Container Corp., Term Loan, 6.75%, 6/20/14 .................   United States    1,543,737             1,339,191
       Celanese U.S. Holdings LLC, Dollar Term Loan, 2.935%, 4/02/14 ...........   United States    2,962,236             2,545,503
       Domtar Corp., Term Loan, 1.908%, 3/07/14 ................................   United States      993,485               856,053
       Georgia-Pacific LLC,
          Additional Term Loan, 2.518% - 3.293%, 12/20/12 ......................   United States    1,486,395             1,314,763
          Term Loan B, 2.518% - 3.293%, 12/20/12 ...............................   United States    1,423,690             1,259,298
       Hexion Specialty Chemicals BV, Term Loan C-2, 3.50%, 5/03/13 ............    Netherlands       696,121               244,388
       Hexion Specialty Chemicals Inc., Term Loan C-1, 3.688%, 5/03/13 .........   United States    3,212,796             1,127,919
       Huntsman International LLC, Term Loan B, 2.268%, 4/21/14 ................   United States    2,683,616             1,789,822
       NewPage Corp., Term Loan, 4.313% - 5.00%, 12/22/14 ......................   United States    2,802,095             1,927,842
       Oxbow Carbon LLC,
          Delayed Draw Term Loan, 2.518%, 5/08/14 ..............................   United States      278,363               193,346
          Term Loan B, 2.518% - 3.22%, 5/08/14 .................................   United States    2,915,326             2,024,936
       Univar Inc., OPCO Tranche Term Loan B, 4.22%, 10/10/14 ..................   United States    4,388,889             2,361,222
       Verso Paper Holdings LLC, Term Loan B, 3.25%, 8/01/13 ...................   United States    1,888,336             1,371,404
                                                                                                                    ---------------
                                                                                                                         18,355,687
                                                                                                                    ---------------
       MEDIA 7.6%
       Canwest Mediaworks LP, Credit D, 3.256%, 7/10/14 ........................       Canada         937,501               358,594
       CSC Holdings Inc. (Cablevision), Incremental Term Loan, 2.306%,
          3/29/13 ..............................................................   United States      776,000               705,837
       Dex Media East LLC, Term Loan B, 3.18% - 3.25%, 10/24/14 ................   United States    2,099,450               774,172
       Dex Media West LLC, Term Loan B, 7.00%, 10/24/14 ........................   United States    2,033,333               933,640
       Entravision Communications Corp., Term Loan B, 6.69%, 3/29/13 ...........   United States    1,254,810               938,598



                               Annual Report | 21



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
(d, j) SENIOR FLOATING RATE INTERESTS (CONTINUED)
       MEDIA (CONTINUED)
       Gray Television Inc., Term Loan B, 4.01% - 4.93%, 12/31/14 ..............   United States    1,555,725       $       671,555
       Insight Midwest Holdings, Term Loan B, 2.50%, 4/02/14 ...................   United States    2,160,000             1,900,029
       MCC Iowa,
          Term Loan E, 6.50%, 1/03/16 ..........................................   United States      893,250               829,383
          Tranche D-1 Term Loan, 2.22%, 1/31/15 ................................   United States      495,983               422,577
          Tranche D-2 Term Loan, 2.22%, 1/31/15 ................................   United States       57,673                49,137
       Mission Broadcasting Inc., Term Loan B, 2.97%, 10/01/12 .................   United States      880,444               462,233
       Newsday LLC, 6.594%, 8/01/13 ............................................   United States    2,400,000             2,172,000
       Nexstar Broadcasting Inc., Term Loan B, 2.268%, 10/01/12 ................   United States      832,852               437,247
       R.H. Donnelley Inc., Term Loan D-2, 6.75%, 6/30/11 ......................   United States      397,927               178,570
       Regal Cinemas Corp., Term Loan, 4.97%, 10/27/13 .........................   United States    2,072,974             1,922,683
(e)    Tribune Co.,
          Term Loan B, 5.25%, 5/16/14 ..........................................   United States    3,950,000             1,044,633
          Term Loan X, 5.00%, 5/18/09 ..........................................   United States    1,375,714               356,998
       Univision Communications Inc., Initial Term Loan, 2.768%, 9/29/14 .......   United States    5,000,000             2,621,875
       UPC Financing Partnership, Term Loan N, 2.247%, 12/31/14 ................    Netherlands     4,470,000             3,884,430
                                                                                                                    ---------------
                                                                                                                         20,664,191
                                                                                                                    ---------------
       PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES 1.0%
       Life Technologies Corp., Term Loan B, 5.25%, 11/21/15 ...................   United States      796,000               789,698
       Mylan Inc., Term Loan B, 3.813% - 4.50%, 10/02/14 .......................   United States    2,134,000             1,987,287
                                                                                                                    ---------------
                                                                                                                          2,776,985
                                                                                                                    ---------------
       REAL ESTATE 0.2%
       CB Richard Ellis Services Inc., Term Loan B, 6.00%, 12/20/13 ............   United States      806,375               569,502
                                                                                                                    ---------------
       SOFTWARE & SERVICES 3.4%
       Affiliated Computer Services Inc.,
          Additional Term Loan, 2.508% - 2.564%, 3/20/13 .......................   United States    1,754,154             1,640,573
          Term Loan B, 2.52%, 3/20/13 ..........................................   United States      485,000               453,596
       Emdeon Business Services LLC, First Lien Term Loan, 2.518% - 3.22%,
          11/16/13 .............................................................   United States    2,035,752             1,773,649
       First Data Corp., Term Loan B-2, 3.268% - 3.272%, 9/24/14 ...............   United States    2,458,778             1,664,133
       Macrovision Solutions Corp., Term Loan B, 6.00%, 5/02/13 ................   United States      698,291               686,071
       SunGard Data Systems Inc., New U.S. Term Loan, 2.283% - 2.991%, 2/28/14..   United States    3,499,072             2,982,959
                                                                                                                    ---------------
                                                                                                                          9,200,981
                                                                                                                    ---------------
       TECHNOLOGY HARDWARE & EQUIPMENT 1.4%
       CommScope Inc., Term Loan B, 3.023% - 3.72%, 12/26/14 ...................   United States    1,303,461             1,123,420
       Flextronics International USA Inc.,
          Term Loan A, 3.344% - 3.685%, 10/01/14 ...............................   United States    1,836,321             1,200,167
          Term Loan A-1, 3.344%, 10/01/14 ......................................   United States      527,679               344,875
       Sensus Metering Systems Inc., Term Loan B1, 2.545% - 3.256%, 12/17/10 ...   United States    1,064,215               963,115
                                                                                                                    ---------------
                                                                                                                          3,631,577
                                                                                                                    ---------------



                               22 | Annual Report



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)



                                                                                                      PRINCIPAL
                                                                                      COUNTRY         AMOUNT(C)          VALUE
                                                                                   -------------   --------------   ---------------
                                                                                                           
(d, j) SENIOR FLOATING RATE INTERESTS (CONTINUED)
       TELECOMMUNICATION SERVICES 2.7%
       GCI Holdings Inc., Add-On Term Loan, 4.77%, 8/31/12 .....................   United States    2,375,753       $     2,161,936
       Intelsat Corp. (Panamsat),
          Tranche B-2-A, 3.925%, 1/03/14 .......................................   United States    1,281,517             1,117,483
          Tranche B-2-B, 3.925%, 1/03/14 .......................................   United States    1,281,129             1,117,144
          Tranche B-2-C, 3.925%, 1/03/14 .......................................   United States    1,281,129             1,117,144
       Windstream Corp., Tranche B-1, 2.59%, 7/17/13 ...........................   United States    2,012,714             1,860,503
                                                                                                                    ---------------
                                                                                                                          7,374,210
                                                                                                                    ---------------
       UTILITIES 1.9%
       Dynegy Holdings Inc., Term L/C Facility, 2.02%, 4/02/13 .................   United States    1,499,049             1,312,605
       NRG Energy Inc.,
          Credit Link, 1.12%, 2/01/13 ..........................................   United States      819,782               740,024
          Term Loan, 2.72%, 2/01/13 ............................................   United States    1,534,314             1,385,038
       Texas Competitive Electric Holdings Co. LLC, Term Loan B-2,
          4.018% - 4.033%, 10/10/14 ............................................   United States    2,457,525             1,630,415
                                                                                                                    ---------------
                                                                                                                          5,068,082
                                                                                                                    ---------------
       TOTAL SENIOR FLOATING RATE INTERESTS (COST $166,976,718) ................                                        132,443,627
                                                                                                                    ---------------
       FOREIGN GOVERNMENT AND AGENCY SECURITIES 1.0%
(d, l) Government of Argentina, senior bond, FRN, 1.683%, 8/03/12 ..............     Argentina      3,950,000               942,824
       Government of Malaysia, 3.756%, 4/28/11 .................................      Malaysia      5,860,000 MYR         1,644,748
                                                                                                                    ---------------
       TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES (COST $3,579,936) ........                                          2,587,572
                                                                                                                    ---------------
       TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS (COST $482,181,848) .....                                        406,213,131
                                                                                                                    ---------------




                                                                                                       SHARES
                                                                                                   --------------
                                                                                                           
       SHORT TERM INVESTMENTS (COST $2,566,148) 0.9%
       MONEY MARKET FUNDS 0.9%
(m)    Franklin Institutional Fiduciary Trust Money Market Portfolio, 0.13% ....   United States    2,566,148             2,566,148
                                                                                                                    ---------------
       TOTAL INVESTMENTS (COST $484,747,996) 150.5% ............................                                        408,779,279
       PREFERRED SHARES (33.1)% ................................................                                        (90,000,000)
       NET UNREALIZED APPRECIATION ON FORWARD EXCHANGE CONTRACTS 0.4% ..........                                          1,149,657
       OTHER ASSETS, LESS LIABILITIES (17.8)% ..................................                                        (48,250,433)
                                                                                                                    ---------------
       NET ASSETS APPLICABLE TO COMMON SHARES 100.0% ...........................                                    $   271,678,503
                                                                                                                    ---------------



                               Annual Report | 23



Franklin Templeton
Limited Duration Income Trust

STATEMENT OF INVESTMENTS, MARCH 31, 2009 (CONTINUED)

See Abbreviations on page 37.

(a)  Rounds to less than 0.1% of net assets.

(b)  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 Trustees. At March 31, 2009, the
     aggregate value of these securities was $30,180,297, representing 11.11% of
     net assets.

(c)  The principal amount is stated in U.S. dollars unless otherwise indicated.

(d)  The coupon rate shown represents the rate at period end.

(e)  See Note 10 regarding defaulted securities.

(f)  Income may be received in additional securities and/or cash.

(g)  See Note 12 regarding other considerations.

(h)  A portion or all of the security purchased on a to-be-announced basis. See
     Note 1(c).

(i)  The bond pays interest and/or principal based upon the issuer's ability to
     pay, which may be less than the stated interest rate or principal paydown.

(j)  See Note 1(f) regarding senior floating rate interests.

(k)  See Note 11 regarding unfunded loan commitments.

(l)  The principal amount is stated in original face, and scheduled paydowns are
     reflected in the market price on ex-date.

(m)  See Note 8 regarding investments in the Franklin Institutional Fiduciary
     Trust Money Market Portfolio. The rate shown is the annualized seven-day
     yield at period end.

   The accompanying notes are an integral part of these financial statements.


                               24 | Annual Report


Franklin Templeton
Limited Duration Income Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
March 31, 2009


                                                                  
Assets:
   Investments in securities:
      Cost - Unaffiliated issuers ................................   $ 482,181,848
      Cost - Sweep Money Fund (Note 8) ...........................       2,566,148
                                                                     -------------
      Total cost of investments ..................................   $ 484,747,996
                                                                     -------------
      Value - Unaffiliated issuers ...............................   $ 406,213,131
      Value - Sweep Money Fund (Note 8) ..........................       2,566,148
                                                                     -------------
      Total value of investments .................................     408,779,279
   Cash ..........................................................       1,043,406
   Receivables:
      Investment securities sold .................................      12,022,906
      Interest ...................................................       4,567,689
   Unrealized appreciation on forward exchange contracts
      (Note 9) ...................................................       1,540,827
   Unrealized appreciation on unfunded loan commitments
      (Note 11) ..................................................           2,553
                                                                     -------------
         Total assets ............................................     427,956,660
                                                                     -------------
Liabilities:
   Payables:
      Investment securities purchased ............................      63,411,126
      Affiliates .................................................         247,788
      Distributions to common shareholders .......................       2,034,807
   Unrealized depreciation on forward exchange contracts
      (Note 9) ...................................................         391,170
   Accrued expenses and other liabilities ........................         193,266
                                                                     -------------
         Total liabilities .......................................      66,278,157
                                                                     -------------
   Preferred shares at redemption value [$25,000 liquidation
      preference per share (3,600 shares outstanding)] ...........      90,000,000
                                                                     -------------
         Net assets applicable to common shares ..................   $ 271,678,503
                                                                     =============
Net assets applicable to common shares consist of:
   Paid-in capital ...............................................   $ 380,500,793
   Distributions in excess of net investment income ..............      (2,769,367)
   Net unrealized appreciation (depreciation) ....................     (74,816,888)
   Accumulated net realized gain (loss) ..........................     (31,236,035)
                                                                     -------------
           Net assets applicable to common shares ................   $ 271,678,503
                                                                     =============
   Common shares outstanding .....................................      26,773,772
                                                                     =============
   Net asset value per common share ..............................   $       10.15
                                                                     =============


   The accompanying notes are an integral part of these financial statements.


                               Annual Report | 25



Franklin Templeton
Limited Duration Income Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended March 31, 2009


                                                                  
Investment income:
   Dividends - Sweep Money Fund (Note 8) .........................   $     99,748
   Interest ......................................................     28,905,869
                                                                     ------------
         Total investment income .................................     29,005,617
                                                                     ------------
Expenses:
   Management fees (Note 4) ......................................      2,360,360
   Administrative fees (Note 4) ..................................        952,822
   Transfer agent fees ...........................................         79,016
   Custodian fees (Note 5) .......................................         24,406
   Reports to shareholders .......................................         81,162
   Professional fees .............................................        142,230
   Trustees' fees and expenses ...................................         26,617
   Auction agent fees and expenses ...............................        291,748
   Other .........................................................        104,482
                                                                     ------------
         Total expenses ..........................................      4,062,843
         Expense reductions (Note 5) .............................         (8,587)
                                                                     ------------
            Net expenses .........................................      4,054,256
                                                                     ------------
               Net investment income .............................     24,951,361
                                                                     ------------
   Realized and unrealized gains (losses):
      Net realized gain (loss) from:
      Investments ................................................    (23,029,270)
      Foreign currency transactions ..............................      1,946,143
                                                                     ------------
               Net realized gain (loss) ..........................    (21,083,127)
                                                                     ------------
   Net change in unrealized appreciation (depreciation) on:
      Investments ................................................    (48,663,257)
      Translation of other assets and liabilities denominated in
         foreign currencies ......................................        958,817
                                                                     ------------
               Net change in unrealized appreciation
                  (depreciation) .................................    (47,704,440)
                                                                     ------------
   Net realized and unrealized gain (loss) .......................    (68,787,567)
                                                                     ------------
   Net increase (decrease) in net assets resulting from
      operations .................................................    (43,836,206)
   Distributions to preferred shareholders from net investment
      income .....................................................     (3,649,273)
                                                                     ------------
   Net increase (decrease) in net assets applicable to common
      shares resulting from operations ...........................   $(47,485,479)
                                                                     ============


   The accompanying notes are an integral part of these financial statements.


                               26 | Annual Report



Franklin Templeton
Limited Duration Income Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS



                                                                         YEAR ENDED MARCH 31,
                                                                     ---------------------------
                                                                         2009           2008
                                                                     ------------   ------------
                                                                              
Increase (decrease) in net assets:
   Operations:
      Net investment income ......................................   $ 24,951,361   $ 34,298,334
      Net realized gain (loss) from investments and foreign
         currency transactions ...................................    (21,083,127)    (2,103,092)
      Net change in unrealized appreciation (depreciation) on
         investments and translation of other assets and
         liabilities denominated in foreign currencies ...........    (47,704,440)   (32,720,507)
      Distributions to preferred shareholders from net
         investment income .......................................     (3,649,273)    (9,781,438)
                                                                     ------------   ------------
         Net increase (decrease) in net assets applicable to
            common shares resulting from operations ..............    (47,485,479)   (10,306,703)
                                                                     ------------   ------------
   Distributions to common shareholders from net investment
      income .....................................................    (24,846,060)   (26,986,555)
   Capital share transactions from reinvestment of
      distributions (Note 2) .....................................             --        490,071
         Net increase (decrease) in net assets ...................    (72,331,539)   (36,803,187)
Net assets applicable to common shares:
   Beginning of year .............................................    344,010,042    380,813,229
                                                                     ------------   ------------
   End of year ...................................................   $271,678,503   $344,010,042
                                                                     ------------   ------------
Distributions in excess of net investment income included in
   net assets:
   End of year ...................................................   $ (2,769,367)  $ (2,788,434)
                                                                     ============   ============


   The accompanying notes are an integral part of these financial statements.


                               Annual Report | 27



Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Templeton Limited Duration Income Trust (Fund) is registered under the
Investment Company Act of 1940, as amended, (1940 Act) as a closed-end
investment company.

The following summarizes the Fund's significant accounting policies.

A. SECURITY VALUATION

Securities listed on a securities 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. Over-the-counter securities and listed securities for
which there is no reported sale 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. Investments in open-end mutual funds are valued at the closing net asset
value.

Corporate debt securities, government securities, mortgage pass-through
securities, other mortgage-backed securities, collateralized mortgage
obligations and asset-backed securities generally trade in the over-the-counter
market rather than on a securities exchange. The Fund may utilize independent
pricing services, quotations from bond dealers, and information with respect to
bond and note transactions, to assist in determining a current market value for
each security. The Fund's pricing services may use valuation models or matrix
pricing which considers information with respect to comparable bond and note
transactions, quotations from bond dealers, or by reference to other securities
that are considered comparable in such characteristics as rating, interest rate
and maturity date, option adjusted spread models, prepayment projections,
interest rate spreads and yield curves, to determine current value.

Senior secured corporate loans with floating or variable interest rates
generally trade in the over-the-counter market rather than on a securities
exchange. The Fund may utilize independent pricing services, quotations from
loan dealers and other financial institutions, and information with respect to
bond and note transactions, to assist in determining a current market value for
each security. The Fund's pricing services use independent market quotations
from loan dealers or financial institutions and may incorporate valuation
methodologies that consider multiple bond characteristics such as dealer quotes,
issuer type, coupon, maturity, weighted average maturity, interest rate spreads
and yield curves, cash flow and credit risk/quality analysis, to determine
current value.

Foreign securities are valued as of the close of trading on the foreign stock
exchange on which the security is primarily traded, or the NYSE, whichever is
earlier. If no sale is reported at that time, the foreign security will be
valued within the range of the most recent quoted bid and ask prices. The value
is then converted into its U.S. dollar equivalent at the foreign exchange rate
in effect at the close of the NYSE on the day that the value of the foreign
security is determined.


                               28 | Annual Report



Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

A. SECURITY VALUATION (CONTINUED)

The Fund has procedures to determine the fair value of individual securities and
other assets for which market prices are not readily available or which may not
be reliably priced. Methods for valuing these securities may include:
fundamental analysis, matrix pricing, discounts from market prices of similar
securities, or discounts applied due to the nature and duration of restrictions
on the disposition of the securities. Due to the inherent uncertainty of
valuations of such securities, the fair values may differ significantly from the
values that would have been used had a ready market for such investments
existed. Occasionally, events occur between the time at which trading in a
security is completed and the close of the NYSE that might call into question
the availability (including the reliability) of the value of a portfolio
security 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. All security valuation procedures are approved by the Fund's Board of
Trustees.

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, income and expense items denominated in foreign currencies are
translated into U.S. dollars at the exchange rate in effect on the transaction
date. Occasionally, events may impact the availability or reliability of foreign
exchange rates used to convert the U.S. dollar equivalent value. If such an
event occurs, the foreign exchange rate will be valued at fair value using
procedures established and approved by the Fund's Board of Trustees.

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 on the
Statement of Operations.

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 denominated assets and liabilities other than investments in securities
held at the end of the reporting period.


                               Annual Report | 29



Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. SECURITIES PURCHASED ON A TBA BASIS

The Fund may purchase securities on a to-be-announced (TBA) basis, with payment
and delivery scheduled for a future date. These transactions are subject to
market fluctuations and are subject to the risk that the value at delivery may
be more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of holding the
securities, it may sell the securities before the settlement date. Sufficient
assets have been segregated for these securities.

D. FOREIGN CURRENCY CONTRACTS

When the Fund purchases or sells foreign securities it may enter into foreign
exchange contracts to minimize foreign exchange risk from the trade date to the
settlement date of the transactions. A foreign exchange contract is an agreement
between two parties to exchange different currencies at an agreed upon exchange
rate at a future date. Realized and unrealized gains and losses on these
contracts are included in the Statement of Operations.

The Fund may also enter into forward exchange contracts to hedge against
fluctuations in foreign exchange rates or to gain exposure to certain foreign
currencies. These contracts are valued daily by the Fund and the unrealized
appreciation or depreciation on the contracts, as measured by the difference
between the contractual forward foreign exchange rates and the forward rates at
the reporting date, are included in the Statement of Assets and Liabilities.
Realized and unrealized gains and losses on these contracts are included in the
Statement of Operations.

The risks of these contracts include movement in the values of the foreign
currencies relative to the U.S. dollar and the possible inability of the
counterparties to fulfill their obligations under the contracts, which may be in
excess of the amount reflected in the Statement of Assets and Liabilities.

E. MORTGAGE DOLLAR ROLLS

The Fund may enter into mortgage dollar rolls, typically on a TBA basis.
Mortgage dollar rolls are agreements between the Fund and a financial
institution to simultaneously sell and repurchase mortgage-backed securities at
a future date. Gains or losses are realized on the initial sale, and the
difference between the repurchase price and the sale price is recorded as an
unrealized gain or loss to the Fund upon entering into the mortgage dollar roll.
In addition, the Fund may invest the cash proceeds that are received from the
initial sale. During the period between the sale and repurchase, the Fund is not
entitled to principal and interest paid on the mortgage-backed securities. The
risks of mortgage dollar roll transactions include the potential inability of
the counterparty to fulfill its obligations.

The Fund is investing in mortgage dollar rolls as an alternate form of leverage.
As a result, the mortgage dollar rolls are considered indebtedness or a "senior
security" for purposes of the asset coverage requirements under the 1940 Act.


                               30 | Annual Report


Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

F. SENIOR FLOATING RATE INTERESTS

Senior secured corporate loans pay interest at rates which are periodically
reset by reference to a base lending rate plus a spread. These base lending
rates are generally the prime rate offered by a designated U.S. bank or the
London InterBank Offered Rate (LIBOR). Senior secured corporate loans often
require prepayment of principal from excess cash flows or at the discretion of
the borrower. As a result, actual maturity may be substantially less than the
stated maturity.

Senior secured corporate loans in which the Fund invests are generally readily
marketable, but may be subject to some restrictions on resale.

G. INCOME TAXES

No provision has been made for U.S. income taxes because it is the Fund's policy
to qualify as a regulated investment company under the Internal Revenue Code and
to distribute to shareholders substantially all of its taxable income and net
realized gains.

The Fund has reviewed the tax positions, taken on federal income tax returns,
for each of the three open tax years and as of March 31, 2009, and has
determined that no provision for income tax is required in the Fund's financial
statements.

Foreign securities held by the Fund may be subject to foreign taxation on
dividend and interest income received. Foreign taxes, if any, are recorded based
on the tax regulations and rates that exist in the foreign markets in which the
Fund invests.

H. 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.
Interest income and estimated expenses are accrued daily. Amortization of
premium and accretion of discount on debt securities are included in interest
income. Facility fees are recognized as income over the expected term of the
loan. Dividend income is recorded on the ex-dividend date. Distributions to
common shareholders are recorded on the ex-dividend date and are determined
according to income tax regulations (tax basis). Distributable earnings
determined on a tax basis may differ from earnings recorded in accordance with
accounting principles generally accepted in the United States of America. These
differences may be permanent or temporary. Permanent differences are
reclassified among capital accounts to reflect their tax character. These
reclassifications have no impact on net assets or the results of operations.
Temporary differences are not reclassified, as they may reverse in subsequent
periods.


                               Annual Report | 31



Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

I. ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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 expenses during the reporting period. Actual results could differ from those
estimates.

J. GUARANTEES AND INDEMNIFICATIONS

Under the Fund's organizational documents, its officers and trustees are
indemnified by the Fund against certain liabilities arising out of the
performance of their duties to the Fund. Additionally, in the normal course of
business, the Fund enters into contracts with service providers that contain
general indemnification clauses. The Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against the Fund that have not yet occurred. Currently, the Fund expects the
risk of loss to be remote.

2. SHARES OF BENEFICIAL INTEREST

At March 31, 2009, there were 28,290,000 common shares authorized (without par
value). During the year ended March 31, 2009, there were no shares issued; all
reinvested distributions were satisfied with previously issued shares purchased
in the open market. During the year ended March 31, 2008, there were 34,261
shares issued for $490,071 from reinvested distributions.

3. AUCTION RATE PREFERRED SHARES

On November 7, 2003 the Fund issued 2,534 Preferred Shares Series M, 2,533
Preferred Shares Series W and 2,533 Preferred Shares Series F, each with a
$25,000 liquidation preference per share totaling $190,000,000. During the year
ended March 31, 2009, there was a pro rata preferred redemption of each series
totaling 4,000 shares and $100,000,000 leaving 1,200 Preferred Shares Series M,
1,200 Preferred Shares Series W and 1,200 Preferred Shares Series F, each with a
$25,000 liquidation preference totaling $90,000,000. Dividends to preferred
shareholders are cumulative and are declared weekly, at rates established
through an auction process. The weekly auctions for Series M, W and F have all
failed during the fiscal year 2009; consequently, the dividend rate paid on the
Preferred Shares has moved to the maximum rate as defined in the prospectus.
During the year ended March 31, 2009, the dividends on Preferred Shares ranged
from 1.48% to 5.94%.


                               32 | Annual Report



Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. AUCTION RATE PREFERRED SHARES (CONTINUED)

The Fund is required to maintain, on a weekly basis, a specified discounted
value of its portfolio in compliance with guidelines established by Fitch
Ratings and Moody's Investor Services Inc., and is required to maintain asset
coverage for the Preferred Shares of at least 200%.

The Preferred Shares are redeemable by the Fund at any time and are subject to
mandatory redemption if the asset coverage or discounted value requirements are
not met. During the year ended March 31, 2009, all requirements were met.

4. TRANSACTIONS WITH AFFILIATES

Franklin Resources, Inc. is the holding company for various subsidiaries that
together are referred to as Franklin Templeton Investments. Certain officers and
trustees of the Fund are also officers and/or directors of the following
subsidiaries:



SUBSIDIARY                                             AFFILIATION
----------                                       ----------------------
                                              
Franklin Advisers, Inc. (Advisers)               Investment manager
Franklin Templeton Services, LLC (FT Services)   Administrative manager


The Fund pays an investment management fee and administrative fee to Advisers
and FT Services of 0.50% and 0.20%, respectively, per year of the average daily
managed assets. Managed assets are defined as the Fund's gross asset value minus
the sum of accrued liabilities, other than the liquidation value of the
Preferred Shares and other financial leverage.

5. EXPENSE OFFSET ARRANGEMENT

The Fund has entered into an arrangement with its custodian whereby credits
realized as a result of uninvested cash balances are used to reduce a portion of
the Fund's custodian expenses. During the year ended March 31, 2009, the
custodian fees were reduced as noted in the Statement of Operations.

6. INCOME TAXES

For tax purposes, capital losses may be carried over to offset future capital
gains, if any. At March 31, 2009, the capital loss carryforwards were as
follows:

Capital loss carryforwards expiring in:


                      
2014 .................   $   682,502
2015 .................       895,575
2016 .................       726,440
2017 .................    11,687,026
                         -----------
                         $13,991,543
                         ===========



                               Annual Report | 33


Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. INCOME TAXES (CONTINUED)

For tax purposes, realized capital losses occurring subsequent to October 31,
may be deferred and treated as occurring on the first day of the following
fiscal year. At March 31, 2009, the Fund deferred realized capital losses of
$17,185,747.

The tax character of distributions paid during the years ended March 31, 2009
and 2008, was as follows:



                                                    2009          2008
                                                -----------   -----------
                                                        
Distributions paid from ordinary income .....   $28,495,333   $36,767,993


At March 31, 2009, the cost of investments, net unrealized appreciation
(depreciation) and undistributed ordinary income for income tax purposes were as
follows:


                                
Cost of investments ............   $486,220,990
                                   ============
Unrealized appreciation ........   $  4,729,876
Unrealized depreciation ........    (82,171,587)
                                   ------------
Net unrealized appreciation
   (depreciation) ..............   $(77,441,711)
                                   ============
Distributable earnings -
   undistributed ordinary
   income ......................   $  1,986,685
                                   ============


Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of defaulted securities, foreign currency
transactions, mortgage dollar rolls, paydown losses, payments-in-kind, and bond
discounts and premiums.

Net realized gains (losses) differ for financial statement and tax purposes
primarily due to differing treatments of wash sales, foreign currency
transactions, mortgage dollar rolls, paydown losses, and bond discounts and
premiums.

7. INVESTMENT TRANSACTIONS

Purchases and sales of investments (excluding short term securities) for the
year ended March 31, 2009, aggregated $948,675,545 and $958,804,737,
respectively.

8. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET PORTFOLIO

The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (Sweep Money Fund), an open-end investment company managed by
Advisers. Management fees paid by the Fund are reduced on assets invested in the
Sweep Money Fund, in an amount not to exceed the management and administrative
fees paid by the Sweep Money Fund.


                               34 | Annual Report



Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. FORWARD EXCHANGE CONTRACTS

At March 31, 2009, net unrealized appreciation (depreciation) on offsetting
forward exchange contracts was as follows:


                                                
Unrealized appreciation ........................   $1,540,827
Unrealized depreciation ........................     (391,170)
                                                   ----------
Net unrealized appreciation (depreciation) .....   $1,149,657
                                                   ==========


10. CREDIT RISK AND DEFAULTED SECURITIES

The Fund has 59.36% of its portfolio invested in high yield, senior secured
floating rate notes, or other securities rated below investment grade. These
securities may be more sensitive to economic conditions causing greater price
volatility and are potentially subject to a greater risk of loss due to default
than higher rated securities.

The Fund held defaulted securities and/or other securities for which the income
has been deemed uncollectible. At March 31, 2009, the aggregate value of these
securities was $5,964,771, representing 1.46% of the Fund's portfolio. The Fund
discontinues accruing income on securities for which income has been deemed
uncollectible and provides an estimate for losses on interest receivable. The
securities have been identified on the accompanying Statement of Investments.

11. UNFUNDED LOAN COMMITMENTS

The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. The Fund is obligated to fund these loan commitments at the
borrowers' discretion. Funded portions of credit agreements are presented on the
Statement of Investments.

At March 31, 2009, unfunded commitments were as follows:



                                                       UNFUNDED
BORROWER                                              COMMITMENT
--------                                              ----------
                                                   
Bausch and Lomb Inc., Delayed Draw Term Loan .....     $135,806
                                                       ========


Unfunded loan commitments and funded portions of credit agreements are marked to
market daily and any unrealized appreciation or depreciation is included in the
Statement of Assets and Liabilities and Statement of Operations.


                               Annual Report | 35



Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

12. OTHER CONSIDERATIONS

Officers, directors or employees of the Fund's Investment Manager, may serve
from time to time as members of bondholders' steering committees or official
creditors' committees. Such participation may result in the possession by the
Investment Manager of material non-public information which, pursuant to the
Fund's policies and the requirements of applicable securities laws, could
prevent the Fund from trading in the securities of such companies for limited or
extended periods of time.

13. FAIR VALUE MEASUREMENTS

The Fund adopted Financial Accounting Standards Board (FASB) Statement No. 157,
"Fair Value Measurement" (SFAS 157), on April 1, 2008. SFAS 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. The Fund has determined that the implementation
of SFAS 157 did not have a material impact on the Fund's financial statements.

SFAS 157 establishes 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 investments and are summarized in the following fair
value hierarchy:

     -    Level 1 - quoted prices in active markets for identical securities

     -    Level 2 - other significant observable inputs (including quoted prices
          for similar securities, interest rates, prepayment speed, credit risk,
          etc.)

     -    Level 3 - significant unobservable inputs (including the Fund's own
          assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.



                                      LEVEL 1       LEVEL 2     LEVEL 3       TOTAL
                                    ----------   ------------   -------   ------------
                                                              
ASSETS:
   Investments in Securities        $2,566,148   $406,213,131     $--     $408,779,279
   Other Financial Instruments(a)           --      1,543,380      --        1,543,380
LIABILITIES:
   Other Financial Instruments(a)           --        391,170      --          391,170


(a)  Other financial instruments includes net unrealized appreciation
     (depreciation) on forward exchange contracts and unfunded loan commitments.


                               36 | Annual Report



Franklin Templeton
Limited Duration Income Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

14. NEW ACCOUNTING PRONOUNCEMENTS

In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161), which expands disclosures about derivative investments and hedging
activities. SFAS 161 is effective for fiscal years and interim periods beginning
after November 15, 2008. The Fund believes applying the various provisions of
SFAS 161 will not have a material impact on its financial statements.

In April 2009, FASB issued FASB Staff Position FSP FAS 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (FSP
FAS 157-4), which provides additional guidance when the volume and level of
activity for the asset or liability measured at fair value have significantly
decreased. Additionally, FSP FAS 157-4 amends FASB Statement No. 157, Fair Value
Measurements, expanding disclosure requirements by reporting entities
surrounding the major categories of assets and liabilities carried at fair
value. FSP FAS 157-4 is effective for interim and annual periods ending after
June 15, 2009. The Fund is currently evaluating the impact, if any, of applying
FSP FAS 157-4.

ABBREVIATIONS

CURRENCY

MYR - Malaysian Ringgit

SELECTED PORTFOLIO

FRN - Floating Rate Note
L/C - Letter of Credit
PIK - Payment-In-Kind
SF  - Single Family


                               Annual Report | 37



Franklin Templeton
Limited Duration Income Trust

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the statement 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 Franklin Templeton Limited Duration
Income Trust (the "Fund") at March 31, 2009, the results of its operations for
the year then ended, the changes in its net assets for each of the two years in
the period then ended and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America. 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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
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 March 31, 2009 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP

San Francisco, California
May 20, 2009


                               38 | Annual Report



Franklin Templeton
Limited Duration Income Trust

TAX DESIGNATION (UNAUDITED)

Under Section 871(k)(1)(C) of the Internal Revenue Code (Code), the Fund
designates the maximum amount allowable but no less than $23,087,206 as interest
related dividends for purposes of the tax imposed under Section 871(a)(1)(A) of
the Code for the fiscal year ended March 31, 2009.


                               Annual Report | 39


Franklin Templeton
Limited Duration Income Trust

BOARD MEMBERS AND OFFICERS

The name, year of birth and address of the officers and board members, as well
as their affiliations, positions held with the Trust, principal occupations
during the past five years and number of portfolios overseen in the Franklin
Templeton Investments fund complex are shown below. Generally, each board member
serves a three-year term until that person's successor is elected and qualified.

INDEPENDENT BOARD MEMBERS



                                                                    NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                                   LENGTH OF      FUND COMPLEX OVERSEEN
AND ADDRESS                           POSITION       TIME SERVED        BY BOARD MEMBER*            OTHER DIRECTORSHIPS HELD
-------------------               ---------------   -------------   -----------------------   -------------------------------------
                                                                                  
HARRIS J. ASHTON (1932)           Trustee           Since 2003      136                       Bar-S Foods (meat packing company).
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President, Chief
Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).

ROBERT F. CARLSON (1928)          Trustee           Since 2003      113                       None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Retired; and FORMERLY, Vice President, senior member and President, Board of Administration, California Public Employees Retirement
Systems (CALPERS) (1971-2008); member and Chairman of the Board, Sutter Community Hospitals; member, Corporate Board, Blue Shield
of California; and Chief Counsel, California Department of Transportation.

SAM GINN (1937)                   Trustee           Since 2007      113                       Chevron Corporation (global energy
One Franklin Parkway                                                                          company) and ICO Global
San Mateo, CA 94403-1906                                                                      Communications (Holdings) Limited
                                                                                              (satellite company).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Private investor; and FORMERLY, Chairman of the Board, Vodafone AirTouch, PLC (wireless company); Chairman of the Board and Chief
Executive Officer, AirTouch Communications (cellular communications) (1993-1998) and Pacific Telesis Groups (telephone holding
company) (1988-1994).

EDITH E. HOLIDAY (1952)           Trustee           Since 2005      136                       Hess Corporation (exploration and
One Franklin Parkway                                                                          refining of oil and gas), H.J. Heinz
San Mateo, CA 94403-1906                                                                      Company (processed foods and allied
                                                                                              products), RTI International Metals,
                                                                                              Inc. (manufacture and distribution
                                                                                              of titanium), Canadian National
                                                                                              Railway (railroad) and White
                                                                                              Mountains Insurance Group, Ltd.
                                                                                              (holding company).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director or Trustee of various companies and trusts; and FORMERLY, Assistant to the President of the United States and Secretary of
the Cabinet (1990-1993); General Counsel to the United States Treasury Department (1989-1990); and Counselor to the Secretary and
Assistant Secretary for Public Affairs and Public Liaison-United States Treasury Department (1988-1989).



                               40 | Annual Report





                                                                    NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                                   LENGTH OF      FUND COMPLEX OVERSEEN
AND ADDRESS                          POSITION        TIME SERVED       BY BOARD MEMBER*             OTHER DIRECTORSHIPS HELD
-------------------               ---------------   -------------   -----------------------   -------------------------------------
                                                                                  
FRANK W.T. LAHAYE (1929)          Trustee           Since 2003      113                       Center for Creative Land Recycling
One Franklin Parkway                                                                          (brownfield redevelopment).
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman, Peregrine Venture Management Company (venture capital).

FRANK A. OLSON (1932)             Trustee           Since 2005      136                       Hess Corporation (exploration and
One Franklin Parkway                                                                          refining of oil and gas) and Sentient
San Mateo, CA 94403-1906                                                                      Jet (private jet service).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Chairman Emeritus, The Hertz Corporation (car rental) (since 2000) (Chairman of the Board (1980-2000) and Chief Executive Officer
(1977-1999)); and FORMERLY, Chairman of the Board, President and Chief Executive Officer, UAL Corporation (airlines).

LARRY D. THOMPSON (1945)          Trustee           Since 2007      143                       None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Vice President - Government Affairs, General Counsel and Secretary, PepsiCo, Inc. (consumer products); and FORMERLY,
Director, Delta Airlines (aviation) (2003-2005) and Providian Financial Corp. (credit card provider) (1997-2001); Senior Fellow of
The Brookings Institution (2003-2004); Visiting Professor, University of Georgia School of Law (2004); and Deputy Attorney General,
U.S. Department of Justice (2001-2003).

JOHN B. WILSON (1959)             Lead              Trustee since   113                       None
One Franklin Parkway              Independent       2006 and Lead
San Mateo, CA 94403-1906          Trustee           Independent
                                                    Trustee since
                                                    2008

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

President and Founder, Hyannis Port Capital, Inc. (real estate and private equity investing); serves on private and non-profit
boards; and FORMERLY, Chief Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000); Chief Financial Officer
and Executive Vice President - Finance and Strategy, Staples, Inc. (office supplies) (1992-1996); Senior Vice President - Corporate
Planning, Northwest Airlines, Inc. (airlines) (1990-1992); and Vice President and Partner, Bain & Company (1986-1990).


INTERESTED BOARD MEMBERS AND OFFICERS



                                                                    NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                                   LENGTH OF      FUND COMPLEX OVERSEEN
AND ADDRESS                          POSITION        TIME SERVED       BY BOARD MEMBER*             OTHER DIRECTORSHIPS HELD
-------------------               ---------------   -------------   -----------------------   -------------------------------------
                                                                                  
**CHARLES B. JOHNSON (1933)       Trustee and       Since 2003      136                       None
One Franklin Parkway              Chairman of
San Mateo, CA 94403-1906          the Board

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Chairman of the Board, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Templeton Worldwide, Inc.;
and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 42
of the investment companies in Franklin Templeton Investments.



                               Annual Report | 41





                                                                    NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                                   LENGTH OF      FUND COMPLEX OVERSEEN
AND ADDRESS                          POSITION        TIME SERVED       BY BOARD MEMBER*             OTHER DIRECTORSHIPS HELD
-------------------               ---------------   -------------   -----------------------   -------------------------------------
                                                                                  
**RUPERT H. JOHNSON, JR. (1940)   Trustee and       Since 2003      53                        None
One Franklin Parkway              Senior Vice
San Mateo, CA 94403-1906          President

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Director, Franklin Advisers, Inc. and
Templeton Worldwide, Inc.; Senior Vice President, Franklin Advisory Services, LLC; and officer and/or director or trustee, as the
case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 44 of the investment companies in Franklin
Templeton Investments.

JAMES M. DAVIS (1952)             Chief             Since 2004      Not Applicable            Not Applicable
One Franklin Parkway              Compliance
San Mateo, CA 94403-1906          Officer

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director, Global Compliance, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin Resources, Inc. and of
46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Director of Compliance, Franklin Resources, Inc.
(1994-2001).

LAURA F. FERGERSON (1962)         Chief             Since           Not Applicable            Not Applicable
One Franklin Parkway              Executive         March 2009
San Mateo, CA 94403-1906          Officer -
                                  Finance and
                                  Administration

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Vice President, Franklin Templeton Services, LLC; officer of 46 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Director and member of Audit and Valuation Committees, Runkel Funds, Inc. (2003-2004); Assistant Treasurer of most of the
investment companies in Franklin Templeton Investments (1997-2003); and Vice President, Franklin Templeton Services, LLC
(1997-2003).

GASTON GARDEY (1967)              Treasurer,        Since March     Not Applicable            Not Applicable
One Franklin Parkway              Chief Financial   2009
San Mateo, CA 94403-1906          Officer and
                                  Chief
                                  Accounting
                                  Officer

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director, Fund Accounting, Franklin Templeton Investments; and officer of 28 of the investment companies in Franklin Templeton
Investments.

EDWARD L. GEARY (1962)            Vice President    Since           Not Applicable            Not Applicable
500 East Broward Blvd.                              March 2009
Suite 2100
Fort Lauderdale, FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Vice President, Franklin Templeton Services, LLC; director of some of the other subsidiaries of Franklin Resources, Inc.;
and officer of 46 of the investment companies in Franklin Templeton Investments.



                               42 | Annual Report





                                                                    NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                                   LENGTH OF      FUND COMPLEX OVERSEEN
AND ADDRESS                          POSITION        TIME SERVED       BY BOARD MEMBER*             OTHER DIRECTORSHIPS HELD
-------------------               ---------------   -------------   -----------------------   -------------------------------------
                                                                                  
ALIYA S. GORDON (1973)            Vice President    Since March     Not Applicable            Not Applicable
One Franklin Parkway                                2009
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Associate General Counsel, Franklin Templeton Investments; officer of 46 of the investment companies in Franklin Templeton
Investments; and FORMERLY, Litigation Associate, Steefel, Levitt & Weiss, LLP (2000-2004).

DAVID P. GOSS (1947)              Vice President    Since 2003      Not Applicable            Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Associate General Counsel, Franklin Templeton Investments; officer and director of one of the subsidiaries of Franklin
Resources, Inc.; and officer of 46 of the investment companies in Franklin Templeton Investments.

GREGORY E. JOHNSON (1961)         Vice President    Since 2003      Not Applicable            Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director, President and Chief Executive Officer, Franklin Resources, Inc.; President, Templeton Worldwide, Inc.; Director,
Templeton Asset Management Ltd.; and officer and/or director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 33 of the investment companies in Franklin Templeton Investments.

CHRISTOPHER J. MOLUMPHY (1962)    President and     Since 2003      Not Applicable            Not Applicable
One Franklin Parkway              Chief
San Mateo, CA 94403-1906          Executive
                                  Officer -
                                  Investment
                                  Management

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Director and Executive Vice President, Franklin Advisers, Inc.; Executive Vice President, Franklin Templeton Institutional, LLC;
and officer of some of the other subsidiaries of Franklin Resources, Inc. and of six of the investment companies in Franklin
Templeton Investments.

KAREN L. SKIDMORE (1952)          Vice President    Since 2006      Not Applicable            Not Applicable
One Franklin Parkway              and Secretary
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

Senior Associate General Counsel, Franklin Templeton Investments; and officer of 30 of the investment companies in Franklin
Templeton Investments.



                               Annual Report | 43





                                                                    NUMBER OF PORTFOLIOS IN
NAME, YEAR OF BIRTH                                   LENGTH OF      FUND COMPLEX OVERSEEN
AND ADDRESS                          POSITION        TIME SERVED        BY BOARD MEMBER*            OTHER DIRECTORSHIPS HELD
-------------------               ---------------   -------------   -----------------------   -------------------------------------
                                                                                  
CRAIG S. TYLE (1960)              Vice President    Since 2005      Not Applicable            Not Applicable
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:

General Counsel and Executive Vice President, Franklin Resources, Inc.; officer of some of the other subsidiaries of Franklin
Resources, Inc. and of 46 of the investment companies in Franklin Templeton Investments; and FORMERLY, Partner, Shearman &
Sterling, LLP (2004-2005); and General Counsel, Investment Company Institute (ICI) (1997-2004).


*    We base the number of portfolios on each separate series of the U.S.
     registered investment companies within the Franklin Templeton Investments
     fund complex. These portfolios have a common investment manager or
     affiliated investment managers.

**   Charles B. Johnson and Rupert H. Johnson, Jr. are considered to be
     interested persons of the Trust under the federal securities laws due to
     their positions as officers and directors and major shareholders of
     Franklin Resources, Inc. (Resources), which is the parent company of the
     Fund's investment manager and distributor.

Note 1: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers and the
     father and uncle, respectively, of Gregory E. Johnson.

Note 2: Officer information is current as of the date of this report. It is
     possible that after this date, information about officers may change.

THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE FUND TO DISCLOSE WHETHER THE FUND'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD HAS DETERMINED THAT THERE IS
AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS DESIGNATED
JOHN B. WILSON AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD BELIEVES THAT
MR. WILSON QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE BUSINESS
BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS CHIEF FINANCIAL OFFICER OF
STAPLES, INC. FROM 1992 TO 1996. MR. WILSON HAS BEEN A MEMBER AND CHAIRMAN OF
THE FUND'S AUDIT COMMITTEE SINCE 2006. AS A RESULT OF SUCH BACKGROUND AND
EXPERIENCE, THE BOARD BELIEVES THAT MR. WILSON HAS ACQUIRED AN UNDERSTANDING OF
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND FINANCIAL STATEMENTS, THE GENERAL
APPLICATION OF SUCH PRINCIPLES IN CONNECTION WITH THE ACCOUNTING ESTIMATES,
ACCRUALS AND RESERVES, AND ANALYZING AND EVALUATING FINANCIAL STATEMENTS THAT
PRESENT A BREADTH AND LEVEL OF COMPLEXITY OF ACCOUNTING ISSUES GENERALLY
COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN UNDERSTANDING OF INTERNAL
CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN UNDERSTANDING OF AUDIT
COMMITTEE FUNCTIONS. MR. WILSON IS AN INDEPENDENT BOARD MEMBER AS THAT TERM IS
DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION RULES AND RELEASES
OR THE LISTING STANDARDS APPLICABLE TO THE FUND.


                               44 | Annual Report


Franklin Templeton
Limited Duration Income Trust

SHAREHOLDER INFORMATION

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT

At a meeting held February 24, 2009, the Board of Trustees (Board), including a
majority of non-interested or independent Trustees, approved renewal of the
investment management agreement for Franklin Templeton Limited Duration Income
Trust (Fund). In reaching this decision, the Board took into account information
furnished throughout the year at regular Board meetings, as well as information
prepared specifically in connection with the annual renewal review process.
Information furnished and discussed throughout the year included investment
performance reports on the Fund, information on its share price discount to net
asset value, and other related financial information, as well as periodic
reports on legal, compliance, pricing, brokerage commissions and execution and
other services provided by the Investment Manager (Manager) and its affiliates.
Information furnished specifically in connection with the renewal process
included a report prepared by Lipper, Inc. (Lipper), an independent
organization, as well as additional material, including a Fund profitability
analysis report prepared by management. The Lipper reports compared the Fund's
investment performance and expenses with those of other funds deemed comparable
to the Fund as selected by Lipper. The Fund profitability analysis report
discussed the profitability to Franklin Templeton Investments from its overall
U.S. fund operations, as well as on an individual fund-by-fund basis. Included
with such profitability analysis report was information on a fund-by-fund basis
listing portfolio managers and other accounts they manage, as well as
information on management fees charged by the Manager and its affiliates
including management's explanation of differences where relevant, and a
three-year expense analysis with an explanation for any increase in expense
ratios. Additional material accompanying such report was a memorandum prepared
by management describing project initiatives and capital investments relating to
the services provided to the Fund by the Franklin Templeton Investments
organization, as well as a memorandum relating to economies of scale. Such
material also discussed some of the actions taken by management in coping with
problems arising out of the past year's financial upheaval.

In considering such materials, the independent Trustees received assistance and
advice from and met separately with independent counsel. In approving
continuance of the investment management agreement for the Fund, the Board,
including a majority of independent Trustees, determined that the existing
management fee structure was fair and reasonable and that continuance of the
investment management agreement was in the best interests of the Fund and its
shareholders. While attention was given to all information furnished, the
following discusses some primary factors relevant to the Board's decision.

NATURE, EXTENT AND QUALITY OF SERVICE. The Board was satisfied with the nature
and quality of the overall services provided by the Manager and its affiliates
to the Fund and its shareholders. In addition to investment performance and
expenses discussed later, the Board's opinion was based, in part, upon periodic
reports furnished it showing that the investment policies and restrictions for
the Fund were consistently complied with as well as other reports periodically


                               Annual Report | 45



Franklin Templeton
Limited Duration Income Trust

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

furnished the Board covering matters such as the compliance of portfolio
managers and other management personnel with the code of ethics adopted
throughout the Franklin Templeton fund complex, the adherence to fair value
pricing procedures established by the Board, and the accuracy of net asset value
calculations. Favorable consideration was given to management's efforts and
expenditures in establishing back-up systems and recovery procedures to function
in the event of a natural disaster, it being noted by the Board that such
systems and procedures had functioned smoothly during the Florida hurricanes and
blackouts experienced in recent years. Among other factors taken into account by
the Board were the Manager's best execution trading policies, including a
favorable report by an independent portfolio trading analytical firm.
Consideration was also given to the experience of the Fund's portfolio
management team, the number of accounts managed and general method of
compensation. In this latter respect, the Board noted that a primary factor in
management's determination of the level of a portfolio manager's bonus
compensation was the relative investment performance of the funds he or she
managed and that a portion of such bonus was required to be invested in a
predesignated list of funds within such person's fund management area so as to
be aligned with the interests of Fund shareholders. Particular attention was
given to the overall performance and actions taken by the Manager and its
affiliates in response to problems arising out of the market turmoil and
financial crisis experienced during the past year. In this respect, the Board
noted that management's independent credit analysis and diligent risk management
procedures had prevented any structured investment products or other volatile
instruments from being held in the portfolios of any of the money market funds
within the Franklin Templeton complex, including the sweep money fund utilized
by the Fund as part of its cash management. The Board also took into account,
among other things, the strong financial position of the Manager's parent
company and its commitment to the fund business. The Board also noted that
during the past year Franklin Templeton Investments, like many other fund
managers, had announced a hiring freeze and implemented employee reductions, and
the Board discussed with management the nature of such reductions and steps
being taken to minimize any negative impact on the nature and quality of
services being provided the Fund.

INVESTMENT PERFORMANCE. The Board placed significant emphasis on the investment
performance of the Fund in view of its importance to shareholders. While
consideration was given to performance reports and discussions with portfolio
managers at Board meetings during the year, particular attention in assessing
performance was given to the Lipper reports furnished for the agreement renewal.
The Lipper report prepared for the Fund showed its investment performance in
comparison with a performance universe consisting of the Fund and all leveraged
closed-end BBB-rated corporate debt funds as selected by Lipper during 2008 and
the five-year period ended December 31, 2008. Such report considers both income
return and total return on a net asset value basis without regard to market
discounts or premiums to accurately reflect investment performance. The Lipper
report showed the Fund's income return for 2008 to be in the second-highest
quintile of


                               46 | Annual Report



Franklin Templeton
Limited Duration Income Trust

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

such performance universe and its income return on an annualized basis to also
be in the highest or second-highest quintile of such universe for the previous
three- and five-year periods. The Lipper report showed the Fund's 2008 total
return was the second lowest in such performance universe, and on an annualized
basis was also in the second-lowest quintile of such universe for the previous
three- and five-year periods. The Fund invests in three primary asset classes
consisting of high yield corporate bonds, leveraged bank loans, and mortgage and
other asset-backed securities, and in explaining its total return
underperformance, management pointed out the significant negative returns
generated by high yield bonds and bank loans during the market conditions
existing in 2008. It was also noted with respect to asset-backed securities that
the Fund had limited exposure to securities backed by subprime mortgages, which
amounted to less than 1.5% of assets at December 31, 2008. While intending to
continuously monitor this Fund, the Board believed its total return
underperfor-mance as shown in the Lipper reports primarily reflected its stated
investment strategy.

COMPARATIVE EXPENSES. Consideration was given to a comparative analysis of the
management fees and total expense ratios of the Fund compared with a Lipper
expense group consisting of the Fund and four other leveraged closed-end
BBB-rated corporate debt funds as selected by Lipper. Lipper expense data is
based upon historical information taken from the Fund's most recent annual
report and, as a result of the severe decline in fund industry assets during the
last quarter of 2008, is based on asset levels that are higher than the level
currently existing for most funds. While recognizing the limitations inherent in
Lipper's methodology and recognizing that current expense ratios may increase as
assets decline, the Board believed that the independent analysis conducted by
Lipper remained an appropriate measure of comparative expenses. In reviewing
comparative costs, Lipper provides information on the Fund's contractual
investment management fee rate in comparison with the contractual investment
management fee that would have been charged by other funds within its Lipper
expense group assuming they were similar in size to the Fund, as well as the
actual total expense ratio of the Fund in comparison with those of its Lipper
expense group. The Lipper contractual investment management fee analysis
includes administrative charges as being part of contractual investment
management fees. The results of such expense comparisons showed that the Fund's
contractual investment management fee rate was the second highest in its Lipper
expense group, but within 10 basis points of its Lipper expense group median,
while its actual total expense ratio, including investment related expenses and
taxes, was at the median of such expense group. The Board found such expenses to
be acceptable.

MANAGEMENT PROFITABILITY. The Board also considered the level of profits
realized by the Manager and its affiliates in connection with the operation of
the Fund. In this respect, the Board reviewed the Fund profitability analysis
that addresses the overall profitability of Franklin Templeton's U.S. fund
business, as well as its profits in providing management and other services to
the Fund during the 12-month period ended September 30, 2008, being the most
recent fiscal


                               Annual Report | 47



Franklin Templeton
Limited Duration Income Trust

SHAREHOLDER INFORMATION (CONTINUED)

BOARD REVIEW OF INVESTMENT MANAGEMENT AGREEMENT (CONTINUED)

year end for Franklin Resources, Inc., the Manager's parent. During such period,
the assets of the Franklin Templeton U.S. fund business were significantly
higher than currently existing, and to such extent the profitability analysis
does not reflect current Fund operations. While taking this into account in
assessing the significance of the Fund profitability analysis, the Board
recognized such analysis was made at a given point in time and that the decline
in assets and effect on profitability would be reflected in the profitability
analysis covering Franklin Resources' 2009 fiscal year period. In reviewing the
analysis, attention was given to the methodology followed in allocating costs to
the Fund, it being recognized that allocation methodologies are inherently
subjective and various allocation methodologies may each be reasonable while
producing different results. In this respect, the Board noted that, while being
continuously refined and reflecting changes in the Manager's own cost
accounting, such cost allocation methodology was consistent with that followed
in profitability report presentations made in prior years and that the Fund's
independent registered public accounting firm had been engaged by the Manager to
perform certain procedures on a biennial basis, specified and approved by the
Manager and the Fund's Board solely for their purposes and use in reference to
the profitability analysis. In reviewing and discussing such analysis,
management discussed with the Board its belief that costs incurred in
establishing the infrastructure necessary for the type of mutual fund operations
conducted by the Manager and its affiliates may not be fully reflected in the
expenses allocated to each Fund in determining its profitability, as well as the
fact that the level of profits, to a certain extent, reflected operational cost
savings and efficiencies initiated by management. In addition, the Board
considered a third-party study comparing the profitability of the Manager's
parent on an overall basis as compared to other publicly held managers broken
down to show profitability from management operations exclusive of distribution
expenses, as well as profitability including distribution expenses. The Board
also considered the extent to which the Manager and its affiliates might derive
ancillary benefits from fund operations, as well as potential benefits resulting
from allocation of fund brokerage and the use of commission dollars to pay for
research. Based upon its consideration of all these factors, the Board
determined that the level of profits realized by the Manager and its affiliates
from providing services to the Fund was not excessive in view of the nature,
quality and extent of services provided.

ECONOMIES OF SCALE. The Board also considered whether the manager realizes
economies of scale as the Fund grows larger and the extent to which any such
benefit is shared with the Fund and its shareholders. The Board believed that a
manager's ability to realize economies of scale and the sharing of such benefit
is a more relevant consideration in the case of an open-end fund whose size
increases as a result of the continuous sale of its shares. A closed-end
investment company such as the Fund does not continuously offer shares and
growth following its initial public offering will primarily result from market
appreciation, which benefits its shareholders. While believing economies of
scale to be less of a factor in the context of a closed-end fund, the Board
believes at some point an increase in size may lead to economies of scale that
should be shared with the Fund and its shareholders and intends to monitor
future growth of the Fund accordingly.


                               48 | Annual Report



Franklin Templeton
Limited Duration Income Trust

SHAREHOLDER INFORMATION (CONTINUED)

PROXY VOTING POLICIES AND PROCEDURES

The Fund's investment manager has established Proxy Voting Policies and
Procedures (Policies) that the Fund uses to determine how to vote proxies
relating to portfolio securities. Shareholders may view the Fund's complete
Policies online at franklintempleton.com. Alternatively, shareholders may
request copies of the Policies free of charge by calling the Proxy Group collect
at (954) 527-7678 or by sending a written request to: Franklin Templeton
Companies, LLC, 500 East Broward Boulevard, Suite 1500, Fort Lauderdale, FL
33394, Attention: Proxy Group. Copies of the Fund's proxy voting records are
also made available online at franklintempleton.com and posted on the U.S.
Securities and Exchange Commission's website at sec.gov and reflect the most
recent 12-month period ended June 30.

QUARTERLY STATEMENT OF INVESTMENTS

The Fund files a complete statement of investments with the U.S. Securities and
Exchange Commission for the first and third quarters for each fiscal year on
Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission's
website at sec.gov. The filed form may also be viewed and copied at the
Commission's Public Reference Room in Washington, DC. Information regarding the
operations of the Public Reference Room may be obtained by calling (800)
SEC-0330.


                               Annual Report | 49



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Franklin Templeton Funds

LITERATURE REQUEST. TO RECEIVE A PROSPECTUS, PLEASE CALL US AT (800) DIAL
BEN/(800) 342-5236 OR VISIT FRANKLINTEMPLETON.COM. INVESTORS SHOULD CAREFULLY
CONSIDER A FUND'S INVESTMENT GOALS, RISKS, CHARGES AND EXPENSES BEFORE
INVESTING. THE PROSPECTUS CONTAINS THIS AND OTHER INFORMATION. PLEASE CAREFULLY
READ THE PROSPECTUS BEFORE INVESTING. TO ENSURE THE HIGHEST QUALITY OF SERVICE,
WE MAY MONITOR, RECORD AND ACCESS TELEPHONE CALLS TO OR FROM OUR SERVICE
DEPARTMENTS. THESE CALLS CAN BE IDENTIFIED BY THE PRESENCE OF A REGULAR BEEPING
TONE.

VALUE

Franklin All Cap Value Fund
Franklin Balance Sheet Investment Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(1)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Quest Fund
Mutual Recovery Fund(2)
Mutual Shares Fund

BLEND

Franklin Focused Core Equity Fund
Franklin Large Cap Equity Fund
Franklin Rising Dividends Fund

GROWTH

Franklin Flex Cap Growth Fund
Franklin Growth Fund
Franklin Growth Opportunities Fund
Franklin Small Cap Growth Fund
Franklin Small-Mid Cap Growth Fund

SECTOR

Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Real Estate Fund
Franklin Gold & Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Utilities Fund
Mutual Financial Services Fund

GLOBAL

Mutual Global Discovery Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund

INTERNATIONAL

Franklin India Growth Fund
Franklin International Growth Fund
Franklin International Small Cap Growth Fund
Mutual European Fund
Mutual International Fund
Templeton BRIC Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Emerging Markets Small Cap Fund
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton Frontier Markets Fund

HYBRID

Franklin Balanced Fund
Franklin Convertible Securities Fund
Franklin Equity Income Fund
Franklin Income Fund
Templeton Income Fund

ASSET ALLOCATION

Franklin Templeton Corefolio(R) Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton 2015 Retirement Target Fund
Franklin Templeton 2025 Retirement Target Fund
Franklin Templeton 2035 Retirement Target Fund
Franklin Templeton 2045 Retirement Target Fund

FIXED INCOME

Franklin Adjustable U.S. Government Securities Fund(3)
Franklin Floating Rate Daily Access Fund
Franklin High Income Fund
Franklin Limited Maturity U.S. Government Securities Fund(3)
Franklin Low Duration Total Return Fund
Franklin Real Return Fund
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund
Franklin U.S. Government Securities Fund(3)
Templeton Global Bond Fund
Templeton Global Total Return Fund
Templeton International Bond Fund

TAX-FREE INCOME(4)

NATIONAL

Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(5)

LIMITED-/INTERMEDIATE-TERM

California Intermediate-Term Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
New York Intermediate-Term Tax-Free Income Fund

STATE-SPECIFIC

Alabama
Arizona
California(6)
Colorado
Connecticut
Florida
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(7)
Michigan(7)
Minnesota(7)
Missouri
New Jersey
New York(6)
North Carolina
Ohio(7)
Oregon
Pennsylvania
Tennessee
Virginia

INSURANCE FUNDS

Franklin Templeton Variable Insurance
Products Trust(8)

(1.) The fund is closed to new investors. Existing shareholders and select
     retirement plans can continue adding to their accounts.

(2.) The fund is a continuously offered, closed-end fund. Shares may be
     purchased daily; there is no daily redemption. However, each quarter,
     pending board approval, the fund will authorize the repurchase of 5%-25% of
     the outstanding number of shares. Investors may tender all or a portion of
     their shares during the tender period.

(3.) An investment in the fund is neither insured nor guaranteed by the U.S.
     government or by any other entity or institution.

(4.) For investors subject to the alternative minimum tax, a small portion of
     fund dividends may be taxable. Distributions of capital gains are generally
     taxable.

(5.) The fund invests primarily in insured municipal securities.

(6.) These funds are available in four or more variations, including long-term
     portfolios, intermediate-term portfolios, portfolios of insured securities,
     a high-yield portfolio (CA only) and money market portfolios.

(7.) The Board of Trustees approved the elimination of the non-fundamental
     policy requiring the fund to invest at least 80% of net assets in insured
     municipal securities and the removal of the word "Insured" from the fund
     name. The changes became effective 2/17/09.

(8.) The funds of the Franklin Templeton Variable Insurance Products Trust are
     generally available only through insurance company variable contracts.

04/09

                                                   Not part of the annual report



(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)   One Franklin Parkway
                                           San Mateo, CA 94403-1906

ANNUAL REPORT
FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

INVESTMENT MANAGER
Franklin Advisers, Inc.
(800) DIAL BEN(R)

TRANSFER AGENT
PNC Global Investment Services
P.O. Box 43027
Providence, RI 02940-3027

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
identified by the presence of a regular beeping tone.

FTF A2009 05/09


ITEM 2. CODE OF ETHICS.

(a) The Registrant has adopted a code of ethics that applies to its principal
executive officers and principal financial and accounting officer.

(c) N/A

(d) N/A

(f) Pursuant to Item 12(a)(1), the Registrant is attaching as an exhibit a copy
of its code of ethics that applies to its principal executive officers and
principal financial and accounting officer.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

(a)(1) The Registrant has an audit committee financial expert serving on its
audit committee.

(2) The audit committee financial expert is John B. Wilson and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a)  Audit Fees

The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant for the audit of the registrant's annual
financial statements or for services that are normally provided by the principal
accountant in connection with statutory and regulatory filings or engagements
were $43,629 for the fiscal year ended March 31, 2009 and $43,615 for the fiscal
year ended March 31, 2008.

(b)  Audit-Related Fees

The aggregate fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant that are
reasonably related to the performance of the audit of the registrant's financial
statements and are not reported under paragraph (a) of Item 4 were $12,600 for
the fiscal year ended March 31, 2009 and $11,903 for the fiscal year ended March
31, 2008. The services for which fees were paid included attestation services.

There were no fees paid to the principal accountant for assurance and related
services rendered by the principal accountant to the registrant's investment
adviser and any entity controlling, controlled by or under common control with
the investment adviser that provides ongoing services to the registrant that are
reasonably related to the performance of the audit of their financial
statements.

(c)  Tax Fees

There were no fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant for tax compliance, tax
advice and tax planning.

The aggregate fees paid to the principal accountant for professional services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant for tax
compliance, tax advice and tax planning were $4,000 for the fiscal year ended
March 31, 2009 and $0 for the fiscal year ended March 31, 2008. The services for
which these fees were paid included tax compliance and advice.

(d)  All Other Fees

The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant not reported in
paragraphs (a)-(c) of Item 4 were $265 for the fiscal year ended March 31, 2009
and $0 for the fiscal year ended March 31, 2008. The services for which these
fees were paid included review of materials provided to the fund Board in
connection with the investment management contract renewal process.

The aggregate fees paid to the principal accountant for products and services
rendered by the principal accountant to the registrant's investment adviser and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the registrant other than
services reported in paragraphs (a)-(c) of Item 4 were $283,812 for the fiscal
year ended March 31, 2009 and $0 for the fiscal year ended March 31, 2008. The
services for which these fees were paid included review of materials provided to
the fund Board in connection with the investment management contract renewal
process.

(e) (1) The registrant's audit committee is directly responsible for approving
the services to be provided by the auditors, including:

         (i) pre-approval of all audit and audit related services;

         (ii) pre-approval of all non-audit related services to be provided to
the Fund by the auditors;

         (iii) pre-approval of all non-audit related services to be provided to
the registrant by the auditors to the registrant's investment adviser or to any
entity that controls, is controlled by or is under common control with the
registrant's investment adviser and that provides ongoing services to the
registrant where the non-audit services relate directly to the operations or
financial reporting of the registrant; and

         (iv) establishment by the audit committee, if deemed necessary or
appropriate, as an alternative to committee pre-approval of services to be
provided by the auditors, as required by paragraphs (ii) and (iii) above, of
policies and procedures to permit such services to be pre-approved by other
means, such as through establishment of guidelines or by action of a designated
member or members of the committee; provided the policies and procedures are
detailed as to the particular service and the committee is informed of each
service and such policies and procedures do not include delegation of audit
committee responsibilities, as contemplated under the Securities Exchange Act of
1934, to management; subject, in the case of (ii) through (iv), to any waivers,
exceptions or exemptions that may be available under applicable law or rules.

(e) (2) None of the services provided to the registrant described in paragraphs
(b)-(d) of Item 4 were approved by the audit committee pursuant to paragraph
(c)(7)(i)(C) of Rule 2-01 of regulation S-X.

(f) No disclosures are required by this Item 4(f).

(g) The aggregate non-audit fees paid to the principal accountant for services
rendered by the principal accountant to the registrant and the registrant's
investment adviser and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant were $300,677 for the fiscal year ended March 31, 2009 and $11,903
for the fiscal year ended March 31, 2008.

(h) The registrant's audit committee of the board has considered whether the
provision of non-audit services that were rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another investment
adviser), and any entity controlling, controlled by, or under common control
with the investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of
Regulation S-X is compatible with maintaining the principal accountant's
independence

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Members of the Audit Committee are: Robert F. Carlson,  Frank W.T. LaHaye, Frank
A. Olson and John B. Wilson.


ITEM 6. SCHEDULE OF INVESTMENTS.            N/A

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

The board of trustees of the Fund has delegated the authority to vote proxies
related to the portfolio securities held by the Fund to the Fund's manager
Franklin Advisers, Inc. in accordance with the Proxy Voting Policies and
Procedures (Policies) adopted by the manager.

The manager has delegated its administrative duties with respect to the voting
of proxies to the Proxy Group within Franklin Templeton Companies, LLC (Proxy
Group), an affiliate and wholly owned subsidiary of Franklin Resources, Inc. All
proxies received by the Proxy Group will be voted based upon the manager's
instructions and/or policies.

To assist it in analyzing proxies, the manager subscribes to RiskMetrics Group
(RiskMetrics), an unaffiliated third party corporate governance research service
that provides in-depth analyses of shareholder meeting agendas, vote
recommendations, recordkeeping and vote disclosure services. In addition, the
manager subscribes to Glass, Lewis & Co., LLC (Glass Lewis), an unaffiliated
third party analytical research firm, to receive analyses and vote
recommendations on the shareholder meetings of publicly held U.S. companies.
Although RiskMetrics' and/or Glass Lewis' analyses are thoroughly reviewed and
considered in making a final voting decision, the manager does not consider
recommendations from RiskMetrics, Glass Lewis or any other third party to be
determinative of the manager's ultimate decision. The manager votes proxies
solely in the interests of the Fund and its shareholders. As a matter of policy,
the officers, directors/trustees and employees of the Fund, the manager and the
Proxy Group will not be influenced by outside sources whose interests conflict
with the interests of the Fund and its shareholders. Efforts are made to resolve
all conflicts in the interests of the manager's clients. Material conflicts of
interest are identified by the Proxy Group based upon analyses of client, broker
and vendor lists, information periodically gathered from directors and officers,
and information derived from other sources, including public filings. In
situations where a material conflict of interest is identified, the Proxy Group
may defer to the voting recommendation of RiskMetrics, Glass Lewis or those of
another independent third party provider of proxy services; or send the proxy
directly to the Fund with a recommendation regarding the vote for approval. If
the conflict is not resolved by the Fund, the Proxy Group may refer the matter,
along with the recommended course of action by the manager to an
interdepartmental Proxy Review Committee (which may include portfolio managers
and/or research analysts employed by the manager), for evaluation and voting
instructions. The Proxy Review Committee may defer to the voting recommendation
of RiskMetrics, Glass Lewis or those of another independent third party provider
of proxy services; or send the proxy directly to the Fund. Where the Proxy Group
or the Proxy Review Committee refers a matter to the Fund, it may rely upon the
instructions of a representative of the Fund, such as the board of trustees or a
committee of the board.

Where a material conflict of interest has been identified, but the items on
which the manager's vote recommendations differ from Glass Lewis, RiskMetrics,
or another independent third party provider of proxy services relate
specifically to (1) shareholder proposals regarding social or environmental
issues or political contributions, (2) "Other Business" without describing the
matters that might be considered, or (3) items the manager wishes to vote in
opposition to the recommendations of an issuer's management, the Proxy Group may
defer to the vote recommendations of the manager rather than sending the proxy
directly to the Fund for approval.

To avoid certain potential conflicts of interest, the manager will employ echo
voting, if possible, in the following instances: (1) when the Fund invests in an
underlying fund in reliance on Sections 12(d)(1) of the 1940 Act, or pursuant to
an SEC exemptive order; (2) when the Fund invests uninvested cash in affiliated
money market funds pursuant to an SEC exemptive order ("cash sweep
arrangement"); or (3) when required pursuant to the Fund's governing documents
or applicable law. Echo voting means that the Investment Manager will vote the
shares in the same proportion as the vote of all of the other holders of the
fund's shares.

The recommendation of management on any issue is a factor which the manager
considers in determining how proxies should be voted, but is not determinative
of the manager's ultimate decision. As a matter of practice, the votes with
respect to most issues are cast in accordance with the position of the company's
management. Each issue, however, is considered on its own merits, and the
manager will not support the position of the company's management in any
situation where it deems that the ratification of management's position would
adversely affect the investment merits of owning that company's shares.

MANAGER'S PROXY VOTING POLICIES AND PRINCIPLES The manager has adopted general
proxy voting guidelines, which are summarized below. These guidelines are not an
exhaustive list of all the issues that may arise and the manager cannot
anticipate all future situations. In all cases, each proxy will be considered
based on the relevant facts and circumstances.

BOARD OF DIRECTORS. The manager supports an independent board of directors, and
prefers that key committees such as audit, nominating, and compensation
committees be comprised of independent directors. The manager will generally
vote against management efforts to classify a board and will generally support
proposals to declassify the board of directors. The manager may withhold votes
from directors who have attended less than 75% of meetings without a valid
reason. While generally in favor of separating Chairman and CEO positions, the
manager will review this issue as well as proposals to restore or provide for
cumulative voting on a case-by-case basis, taking into consideration factors
such as the company's corporate governance guidelines or provisions and
performance.

RATIFICATION OF AUDITORS OF PORTFOLIO COMPANIES. In light of several high
profile accounting scandals, the manager will closely scrutinize the role and
performance of auditors. On a case-by-case basis, the manager will examine
proposals relating to non-audit relationships and non-audit fees. The manager
will also consider, on a case-by-case basis, proposals to rotate auditors, and
will vote against the ratification of auditors when there is clear and
compelling evidence of accounting irregularities or negligence.

MANAGEMENT AND DIRECTOR COMPENSATION. A company's equity-based compensation plan
should be in alignment with its shareholders' long-term interests. The manager
believes that executive compensation should be directly linked to the
performance of the company. The manager evaluates plans on a case-by-case basis
by considering several factors to determine whether the plan is fair and
reasonable, including the RiskMetrics quantitative model utilized to assess such
plans and/or the Glass Lewis evaluation of the plans. The manager will generally
oppose plans that have the potential to be excessively dilutive, and will almost
always oppose plans that are structured to allow the repricing of underwater
options, or plans that have an automatic share replenishment "evergreen"
feature. The manager will generally support employee stock option plans in which
the purchase price is at least 85% of fair market value, and when potential
dilution is 10% or less.

Severance compensation arrangements will be reviewed on a case-by-case basis,
although the manager will generally oppose "golden parachutes" that are
considered to be excessive. The manager will normally support proposals that
require a percentage of directors' compensation to be in the form of common
stock, as it aligns their interests with those of shareholders. The manager will
review on a case-by-case basis any shareholder proposals to adopt policies on
expensing stock option plans.

ANTI-TAKEOVER MECHANISMS AND RELATED ISSUES. The manager generally opposes
anti-takeover measures since they tend to reduce shareholder rights. On
occasion, the manager may vote with management when the research analyst has
concluded that the proposal is not onerous and would not harm the Fund or its
shareholders' interests. The manager generally supports proposals that require
shareholder rights' plans ("poison pills") to be subject to a shareholder vote
and will closely evaluate such plans on a case-by-case basis to determine
whether or not they warrant support. The manager will generally vote against any
proposal to issue stock that has unequal or subordinate voting rights. The
manager generally opposes any supermajority voting requirements as well as the
payment of "greenmail." The manager generally supports "fair price" provisions
and confidential voting.

CHANGES TO CAPITAL STRUCTURE. The manager will review, on a case-by-case basis,
proposals by companies to increase authorized shares and the purpose for the
increase and proposals seeking preemptive rights. The manager will generally not
vote in favor of dual-class capital structures to increase the number of
authorized shares where that class of stock would have superior voting rights.
The manager will generally vote in favor of the issuance of preferred stock in
cases where the company specifies the voting, dividend, conversion and other
rights of such stock and the terms of the preferred stock issuance are deemed
reasonable.

MERGERS AND CORPORATE RESTRUCTURING. Mergers and acquisitions will be subject to
careful review by the research analyst to determine whether each will be
beneficial to shareholders. The manager will analyze various economic and
strategic factors in making the final decision on a merger or acquisition.
Corporate restructuring and reincorporation proposals are also subject to a
thorough examination on a case-by-case basis.

SOCIAL AND CORPORATE POLICY ISSUES. The manager will generally give management
discretion with regard to social, environmental and ethical issues, although the
manager may vote in favor of those that are believed to have significant
economic benefits or implications for the Fund and its shareholders.

GLOBAL CORPORATE GOVERNANCE. Many of the tenets discussed above are applied to
proxy voting decisions for international companies. However, the manager must be
more flexible in these instances and must be mindful of the varied market
practices of each region.

The manager will attempt to process every proxy it receives for all domestic and
foreign issuers. However, there may be situations in which the manager cannot
process proxies, for example, where a meeting notice was received too late, or
sell orders preclude the ability to vote. If a security is on loan, the manager
may determine that it is not in the best interests of the Fund to recall the
security for voting purposes. Also, the manager may abstain from voting under
certain circumstances or vote against items such as "Other Business" when the
manager is not given adequate information from the company.

Shareholders may view the complete Policies online at franklintempleton.com.
Alternatively, shareholders may request copies of the Policies free of charge by
calling the Proxy Group collect at 1-954/527-7678 or by sending a written
request to: Franklin Templeton Companies, LLC, 500 East Broward Boulevard, Suite
1500, Fort Lauderdale, FL 33394, Attention: Proxy Group. Copies of the Fund's
proxy voting records are available online at franklintempleton.com and posted on
the SEC website at WWW.SEC.GOV. The proxy voting records are updated each year
by August 31 to reflect the most recent 12-month period ended June 30.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

(a)(1) As of May 29, 2009 the portfolio managers of the Fund are as follows:

Roger Bayston, CFA, Richard Hsu, Christopher Molumphy, CFA and Eric G. Takaha,
CFA, serve as the portfolio management team responsible for managing the Fund's
portfolio investment. Each of them has experience managing Franklin mutual funds
and private accounts.

Mr. Bayston has been a portfolio manager of the Fund since inception. He joined
Franklin Templeton Investments in 1991.

Mr. Hsu has been a portfolio manager of the Fund since 2006. He joined Franklin
Templeton Investments in 1996.

Mr. Molumphy has been a portfolio manager of the Fund since inception. He joined
Franklin Templeton Investments in 1988.

Mr. Takaha has been a portfolio manager of the Fund since inception. He joined
Franklin Templeton Investments in 1989.

(a)(2) This section reflects information about the portfolio managers as of the
fiscal year ended March 31, 2009.

The following table shows the number of other accounts managed by each portfolio
manager and the total assets in the accounts managed within each category:





-------------------------------------------------------------------------------------------------------------
                                   ASSETS                           ASSETS OF
                   NUMBER          OF OTHER                         OTHER POOLED                    ASSETS OF
                  OF OTHER        REGISTERED        NUMBER OF       INVESTMENTS                     OTHER
                 REGISTERED       INVESTMENT       OTHER POOLED     VEHICLES       NUMBER OF        ACCOUNTS
                 INVESTMENT       COMPANIES        INVESTMENT       MANAGED        OTHERS          MANAGED
                 COMPANIES        MANAGED          VEHICLES        (X $1           ACCOUNTS         (X $1
NAME             MANAGED        (x $1 MILLION)      MANAGED/1      MILLION)/1      MANAGED/1       MILLION)/1
--------------------------------------------------------------------------------------------------------------
                                                                         

Roger Bayston      6             10,271.4             4             3,790.7            0              0
--------------------------------------------------------------------------------------------------------------
Richard Hsu        2              1,034.1             2              330.7             0              0
----------------------------------------------------------------------------------------------------------------
Christopher        8              8,636.5             5              994.7             2            328.3
Molumphy
----------------------------------------------------------------------------------------------------------------
Eric G. Takaha     5              6,221.1             5              776.2             2            26.3
----------------------------------------------------------------------------------------------------------------



1. The various pooled investment vehicles and accounts listed are managed by a
team of investment professionals. Accordingly, the individual manager listed
would not be solely responsible for managing such listed amounts.

Portfolio managers that provide investment services to the Fund may also provide
services to a variety of other investment products, including other funds,
institutional accounts and private accounts. The advisory fees for some of such
other products and accounts may be different than that charged to the Fund and
may include performance based compensation. This may result in fees that are
higher (or lower) than the advisory fees paid by the Fund. As a matter of
policy, each fund or account is managed solely for the benefit of the beneficial
owners thereof. As discussed below, the separation of the trading execution
function from the portfolio management function and the application of
objectively based trade allocation procedures help to mitigate potential
conflicts of interest that may arise as a result of the portfolio managers
managing accounts with different advisory fees.

CONFLICTS. The management of multiple funds, including the Fund, and accounts
may also give rise to potential conflicts of interest if the funds and other
accounts have different objectives, benchmarks, time horizons, and fees as the
portfolio manager must allocate his or her time and investment ideas across
multiple funds and accounts. The manager seeks to manage such competing
interests for the time and attention of portfolio managers by having portfolio
managers focus on a particular investment discipline. Most other accounts
managed by a portfolio manager are managed using the same investment strategies
that are used in connection with the management of the Fund. Accordingly,
portfolio holdings, position sizes, and industry and sector exposures tend to be
similar across similar portfolios, which may minimize the potential for
conflicts of interest. The separate management of the trade execution and
valuation functions from the portfolio management process also helps to reduce
potential conflicts of interest. However, securities selected for funds or
accounts other than the Fund may outperform the securities selected for the
Fund. Moreover, if a portfolio manager identifies a limited investment
opportunity that may be suitable for more than one fund or other account, the
Fund may not be able to take full advantage of that opportunity due to an
allocation of that opportunity across all eligible funds and other accounts. The
manager seeks to manage such potential conflicts by using procedures intended to
provide a fair allocation of buy and sell opportunities among funds and other
accounts.

The structure of a portfolio manager's compensation may give rise to potential
conflicts of interest. A portfolio manager's base pay and bonus tend to increase
with additional and more complex responsibilities that include increased assets
under management. As such, there may be an indirect relationship between a
portfolio manager's marketing or sales efforts and his or her bonus.

Finally, the management of personal accounts by a portfolio manager may give
rise to potential conflicts of interest. While the funds and the manager have
adopted a code of ethics which they believe contains provisions reasonably
necessary to prevent a wide range of prohibited activities by portfolio managers
and others with respect to their personal trading activities, there can be no
assurance that the code of ethics addresses all individual conduct that could
result in conflicts of interest.

The manager and the Fund have adopted certain compliance procedures that are
designed to address these, and other, types of conflicts. However, there is no
guarantee that such procedures will detect each and every situation where a
conflict arises.

COMPENSATION. The manager seeks to maintain a compensation program that is
competitively positioned to attract, retain and motivate top-quality investment
professionals. Portfolio managers receive a base salary, a cash incentive bonus
opportunity, an equity compensation opportunity, and a benefits package.
Portfolio manager compensation is reviewed annually and the level of
compensation is based on individual performance, the salary range for a
portfolio manager's level of responsibility and Franklin Templeton guidelines.
Portfolio managers are provided no financial incentive to favor one fund or
account over another. Each portfolio manager's compensation consists of the
following three elements:

         BASE SALARY Each portfolio manager is paid a base salary.

         ANNUAL BONUS Annual bonuses are structured to align the interests of
         the portfolio manager with those of the Fund's shareholders. Each
         portfolio manager is eligible to receive an annual bonus. Bonuses
         generally are split between cash (50% to 65%) and restricted shares of
         Resources stock (17.5% to 25%) and mutual fund shares (17.5% to 25%).
         The deferred equity-based compensation is intended to build a vested
         interest of the portfolio manager in the financial performance of both
         Resources and mutual funds advised by the manager. The bonus plan is
         intended to provide a competitive level of annual bonus compensation
         that is tied to the portfolio manager achieving consistently strong
         investment performance, which aligns the financial incentives of the
         portfolio manager and Fund shareholders. The Chief Investment Officer
         of the manager and/or other officers of the manager, with
         responsibility for the Fund, have discretion in the granting of annual
         bonuses to portfolio managers in accordance with Franklin Templeton
         guidelines. The following factors are generally used in determining
         bonuses under the plan:

o    INVESTMENT  PERFORMANCE.  Primary  consideration  is given to the  historic
     investment  performance over the 1, 3 and 5 preceding years of all accounts
     managed by the  portfolio  manager.  The pre-tax  performance  of each fund
     managed is measured  relative to a relevant  peer group  and/or  applicable
     benchmark as appropriate.

o    NON-INVESTMENT  PERFORMANCE.   The  more  qualitative  contributions  of  a
     portfolio manager to the manager's  business and the investment  management
     team, including  professional  knowledge,  productivity,  responsiveness to
     client needs and communication,  are evaluated in determining the amount of
     any bonus award.

o    RESPONSIBILITIES.  The  characteristics  and complexity of funds managed by
     the portfolio manager are factored in the manager's appraisal.

         ADDITIONAL LONG-TERM EQUITY-BASED COMPENSATION Portfolio managers may
         also be awarded restricted shares or units of Resources stock or
         restricted shares or units of one or more mutual funds, and options to
         purchase common shares of Resources stock. Awards of such deferred
         equity-based compensation typically vest over time, so as to create
         incentives to retain key talent.

Portfolio managers also participate in benefit plans and programs available
generally to all employees of the manager.

OWNERSHIP OF FUND SHARES. The manager has a policy of encouraging portfolio
managers to invest in the funds they manage. Exceptions arise when, for example,
a fund is closed to new investors or when tax considerations or jurisdictional
constraints cause such an investment to be inappropriate for the portfolio
manager. The following is the dollar range of Fund shares beneficially owned by
each portfolio manager (such amounts may change from time to time):

    ----------------------------------------------------------------------
          PORTFOLIO MANAGER                  DOLLAR RANGE OF FUND SHARES
                                                   BENEFICIALLY OWNED
      ----------------------------------------------------------------------
          Roger Bayston                                    None
      ----------------------------------------------------------------------
         Richard Hsu                                       None
      ----------------------------------------------------------------------
         Christopher Molumphy                              None
      ----------------------------------------------------------------------
         Eric G. Takaha                                    None
       ---------------------------------------------------------------------


ITEM 9.  PURCHASES OF EQUITY  SECURITIES  BY  CLOSED-END  MANAGEMENT  INVESTMENT
COMPANY AND AFFILIATED PURCHASERS. N/A

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no changes to the procedures by which shareholders may recommend
nominees to the Registrant's Board of Trustees that would require disclosure
herein.

ITEM 11. 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 Shareholder Report on Form
N-CSR, 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 significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.

ITEM 12. EXHIBITS.

(A) (1) Code of Ethics

(A)(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, Chief Financial Officer and Chief Accounting Officer

(B) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Laura F. Fergerson, Chief Executive Officer - Finance and Administration, and
Gaston Gardey, 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.

FRANKLIN TEMPLTON LIMITED DURATION INCOME TRUST



By /s/LAURA F. FERGERSON
  ----------------------------------------
     Laura F. Fergerson
     Chief Executive Officer - Finance and
     Administration
     Date May 27, 2009

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 May 27, 2009

By /s/GASTON GARDEY
 -----------------------------------------
     Gaston Gardey
     Chief Financial Officer and
     Chief Accounting Officer
     Date May 27, 2009