Edgar Filing: FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST

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

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-21357
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FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST
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(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
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(Name and address of agent for service)

Registrant's telephone number, including area code: 650 312-2000
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Date of fiscal year end: 3/31
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Date of reporting period: 9/30/05
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ITEM 1. REPORTS TO STOCKHOLDERS.

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SEPTEMBER 30, 2005
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SEMIANNUAL REPORT | INCOME
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FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST
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[LOGO](R)
FRANKLIN TEMPLETON
INVESTMENTS

FRANKLIN o Templeton o 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.

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MUTUAL FUNDS | RETIREMENT PLANS | 529 COLLEGE SAVINGS PLANS | SEPARATE ACCOUNTS
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[GRAPHIC OMITTED]

Not part of the semiannual report

CONTENTS

SEMIANNUAL REPORT

Franklin Templeton Limited Duration Income Trust .......................... 1

Performance Summary ....................................................... 6

Annual Shareholders' Meeting .............................................. 7

Dividend Reinvestment Plan ................................................ 8

Financial Highlights and Statement of Investments ......................... 11

Financial Statements ...................................................... 21

Notes to Financial Statements ............................................. 24

Shareholder Information ................................................... 31

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SEMIANNUAL 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 possible, through a portfolio consisting
primarily of high yield corporate bonds, floating rate bank loans and mortgage-
and other asset-backed securities.

Dear Shareholder:

This semiannual report for Franklin Templeton Limited Duration Income Trust
covers the period ended September 30, 2005.

PERFORMANCE OVERVIEW

For the six months under review, Franklin Templeton Limited Duration Income
Trust posted cumulative total returns of +2.84% based on net asset value and
-1.12% based on market price. Share price, as measured by net asset value,
decreased from $14.41 per share on March 31, 2005, to $14.25 at period-end, and
the market price fell from $13.89 to $13.20 over the same period. You can find
the Fund's performance data in the Performance Summary on page 6.

ECONOMIC AND MARKET OVERVIEW

Overall domestic economic growth remained healthy during the reporting period.
More than two-thirds of U.S. gross domestic product (GDP) is generated by
consumer spending and almost one-fifth by business spending. Since consumer

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 12.

Semiannual Report | 1

PORTFOLIO BREAKDOWN
Based on Total Investments as of 9/30/05*

[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]

High Yield Corporate Bonds 35.8%

Floating Rate Loans 30.8%

Mortgage-Backed Securities 21.7%

Other Asset-Backed Securities 6.9%

Foreign Government & Agency Securities 3.1%

Investment Grade Corporate Bonds 0.8%

Short-Term Investments & Other Net Assets 0.9%

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

spending relies on consumers' ability to remain gainfully employed, many
analysts study the employment picture for indications of consumer spending. For
most of the reporting period, nonfarm payroll data, as well as other indexes,
showed growing employment. This along with other factors helped consumer
spending increase 6.7% (not adjusted for inflation) in September 2005 compared
with the same month a year earlier, which supported U.S. economic growth.(1)

Business spending also rose during the reporting period, contributing to
economic growth. Nonresidential investment spending rose 8.8% in the second
quarter of 2005 and 6.2% in the third quarter.(1) Historically low interest
rates continued to allow many companies easy access to capital, and ample cash
also helped some companies to support their spending plans. Productivity
continued to grow, which helped businesses generate more goods and services
without substantially raising inflation.

Oil prices increased substantially during the period amid concerns about
potential long-term supply limitations in the face of expected strong global
demand growth, especially from China and India. Despite rising commodity prices,
inflation remained relatively contained for the 12 months ended September 30,
2005, as measured by the 2.0% rise for the core Consumer Price Index (CPI).(2)
This increase was below the core CPI's 10-year average of 2.2%.(2) However,
acknowledging the economy's strength as well as potential inflationary pressure
from high energy prices, the Federal Reserve Board (Fed) raised the federal
funds target rate to 3.75% from 2.75% during the six-month period and indicated
possible "measured" increases would follow. The Fed also noted in its most
recent statement that there would be some temporary economic effects due to
hurricane impacts, but there was some debate about the long-term effects. During
the period, the yield curve flattened, as short- and intermediate-term Treasury
yields rose and longer-term yields fell.

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

(1) Source: Bureau of Economic Analysis.

(2) Source: Bureau of Labor Statistics. Core CPI excludes food and energy costs.

2 | Semiannual Report

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

During this reporting period, the three core investment categories in which the
Fund invests generated similar returns, although high yield corporate bonds and
bank loans delivered the strongest performance. Both of these asset classes
benefited from improving credit fundamentals, which were in turn driven by the
favorable economic environment. In addition, bank loans experienced increases in
their income streams since their payouts are tied to rising short-term interest
rates. Returns on fixed-rate mortgages and other asset-backed securities
slightly trailed those of the other sectors, as they entered the period offering
a lower yield than high yield corporate bonds and their income distributions did
not increase along with short-term interest rates.

In terms of sector allocation, high yield corporate bonds represented our
largest weighting at period-end, as we believed fundamental credit trends such
as positive corporate earnings growth, low default rates and balance sheet
liquidity could provide support for such issuers. However, the high yield market
did experience some volatility during the first half of the reporting period
with the expected rating downgrades of General Motors' and Ford's corporate
bonds as well as broad equity market weakness weighing on the sector. As a
result, yield spreads over Treasuries, as measured by the CSFB High Yield Index,
widened from 3.7 percentage points at the beginning of the period to 4.6 in
mid-May, before rebounding to end the period at 3.8 percentage points above
Treasuries. Although we remained positive about the fundamental credit trends
for high yield corporate bonds, we reduced our sector exposure during the latter
half of the period as the sector recovered mid-period and valuations again
became richer.

DIVIDEND DISTRIBUTIONS*
4/1/05-9/30/05

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MONTH DIVIDEND PER COMMON SHARE
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April 9.10 cents
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May 9.10 cents
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June 9.10 cents
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July 9.10 cents
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August 9.10 cents
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September 9.10 cents
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TOTAL 54.60 CENTS
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* All Fund distributions will vary depending upon current market conditions,
and past distributions are not indicative of future trends.

Semiannual Report | 3

During the period under review, the bank loan market remained strong, benefiting
from the combination of favorable credit fundamentals and rising interest rates,
and strong demand stemmed from an influx of new institutional investors and
structured investment vehicles participating in this market.

Earnings concerns at General Motors and Ford along with subsequent downgrades by
rating agencies, as noted earlier, created volatility in the high yield
corporate debt markets that eventually spilled over into the loan market and
caused prices to drop slightly in April and May. From June to the end of the
period, however, secondary loan prices rebounded and new-issue spreads
tightened, as investors seemed to take comfort in corporate credit fundamentals
as well as the low default rate environment. In this rising short-term interest
rate environment, we found the floating-rate feature attractive and increased
our exposure to bank loans during the period.

In the mortgage- and other asset-backed securities sector, the to-be-announced
(TBA) mortgage-backed securities (MBS) market became less attractive to us, and
we increased our focus and research on specified MBS pools.(3) By applying our
research expertise within the specified pool marketplace, we sought to improve
this sector's total return potential. Overall, the Fund's allocation to the
mortgage-and asset-backed securities sector remained relatively flat over the
period.

(3) A specified pool consists of previously identified mortgage pools. A TBA
security consists of generic mortgage pools to be determined at the
settlement date.

4 | Semiannual 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 OMITTED] /s/ Christopher J. Molumphy
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Christopher J. Molumphy, CFA

[PHOTO OMITTED] /s/ Richard S. Hsu
---------------
Richard S. Hsu, CFA

[PHOTO OMITTED] /s/ Eric G. Takaha
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Eric G. Takaha, CFA

[PHOTO OMITTED] /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 SEPTEMBER 30, 2005, 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 ADVISER 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.

Semiannual Report | 5

PERFORMANCE SUMMARY AS OF 9/30/05

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. All
total returns include reinvested distributions according to the terms specified
in the Fund's dividend reinvestment plan and 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 due on Fund dividends, capital
gain distributions, if any, or realized gains on the sale of Fund shares.

PRICE AND DISTRIBUTION INFORMATION

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SYMBOL: FTF CHANGE 9/30/05 3/31/05
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Net Asset Value (NAV) -$0.16 $14.25 $14.41
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Market Price (NYSE) -$0.69 $13.20 $13.89
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DISTRIBUTIONS (4/1/05-9/30/05)
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Dividend Income $0.5460
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PERFORMANCE(1)

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COMMENCEMENT OF
6-MONTH 1-YEAR OPERATIONS (8/27/03)
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Cumulative Total Return(2)
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Based on change in NAV +2.84% +5.68% +16.83%
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Based on change in market price -1.12% -1.66% +3.44%
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Average Annual Total Return(2)
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Based on change in NAV +2.84% +5.68% +7.71%
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Based on change in market price -1.12% -1.66% +1.63%
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Distribution Rate(3) 8.27%
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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.

FOR MORE CURRENT PERFORMANCE, CALL FRANKLIN TEMPLETON INVESTMENTS AT
1-800/342-5236.

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.

(2) Total return calculations represent the cumulative and average annual
changes in value of an investment over the periods indicated. Six-month
return has not been annualized.

(3) Distribution rate is based on an annualization of the Fund's 9.1 cent per
share September dividend and the AMEX closing price of $13.20 on 9/30/05.

6 | Semiannual Report

ANNUAL SHAREHOLDERS' MEETING

SEPTEMBER 22, 2005

At an annual Meeting of Shareholders of Franklin Templeton Limited Duration
Income Trust (the "Fund") held on September 22, 2005, shareholders approved the
following:

Regarding the proposal to elect nominees for Trustees:

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COMMON % OF % OF
SHARES OUTSTANDING % OF WITHHELD OR OUTSTANDING % OF
TRUSTEES FOR SHARES VOTED ABSTAIN SHARES VOTED
----------------------------------------------------------------------------------------------------

Robert F. Carlson 21,363,378.074 79.894% 98.886% 240,590.000 0.900% 1.114%
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S. Joseph Fortunato 21,346,827.074 79.833% 98.810% 257,141.000 0.962% 1.190%
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Edith E. Holiday 21,362,348.074 79.891% 98.882% 241,620.000 0.904% 1.118%
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Frank A. Olson 21,354,239.074 79.860% 98.844% 249,729.000 0.934% 1.156%
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PREFERRED % OF % OF
SHARES OUTSTANDING % OF WITHHELD OR OUTSTANDING % OF
TRUSTEES FOR SHARES VOTED ABSTAIN SHARES VOTED
----------------------------------------------------------------------------------------------------

Robert F. Carlson 5,618.000 73.931% 99.98% 1.000 0.013% 0.02%
----------------------------------------------------------------------------------------------------
S. Joseph Fortunato 5,618.000 73.931% 99.98% 1.000 0.013% 0.02%
----------------------------------------------------------------------------------------------------
Edith E. Holiday 5,618.000 73.931% 99.98% 1.000 0.013% 0.02%
----------------------------------------------------------------------------------------------------
Frank A. Olson 5,618.000 73.931% 99.98% 1.000 0.013% 0.02%
----------------------------------------------------------------------------------------------------
Rupert H. Johnson, Jr. 5,618.000 73.931% 99.98% 1.000 0.013% 0.02%
----------------------------------------------------------------------------------------------------

Semiannual Report | 7

DIVIDEND REINVESTMENT PLAN

The Fund's Dividend Reinvestment Plan (the "Plan") offers you a prompt and
simple way to reinvest dividends and capital gain distributions
("Distributions") in shares of the Fund. PFPC, Inc. (the "Agent"), P.O. Box
43027, 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
rate 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 it 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, may be on such terms as to price, delivery and
otherwise as the Agent shall determine.

8 | Semiannual 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 your 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
acquisition date. Although from time to time you may have an undivided
fractional interest in a share of

Semiannual Report | 9

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 1-800/331-1710. 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.

10 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

FINANCIAL HIGHLIGHTS

-----------------------------------------------
SIX MONTHS ENDED
SEPTEMBER 30, 2005 YEAR ENDED MARCH 31,
(UNAUDITED) 2005 2004(c)
-----------------------------------------------

PER COMMON SHARE OPERATING PERFORMANCE
(for a common share outstanding throughout the period)

Net asset value, beginning of period ................................... $ 14.41 $ 14.75 $ 14.33
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Income from investment operations:

Net investment income(a) ............................................. 0.58 1.10 0.53

Net realized and unrealized gains (losses) ........................... (0.08) (0.12) 0.63

Dividends to preferred shareholders from net investment income(a) .... (0.11) (0.13) (0.03)
-----------------------------------------------

Total from investment operations ....................................... 0.39 0.85 1.13
-----------------------------------------------

Less distributions to common shareholders from net investment income ... (0.55) (1.19) (0.59)
-----------------------------------------------
Offering costs charged to capital:

Common shares ........................................................ -- -- (0.03)

Preferred shares ..................................................... -- -- (0.09)
-----------------------------------------------
Total offering costs ................................................... -- -- (0.12)
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Net asset value, end of period ......................................... $ 14.25 $ 14.41 $ 14.75
===============================================

Market value, end of period(b) ......................................... $ 13.20 $ 13.89 $ 14.87
===============================================

Total return [based on market value per share] ......................... (1.12)%(d) 1.38% 3.16%(d)

RATIOS/SUPPLEMENTAL DATA

Net assets applicable to common shares, end of period (000's) .......... $ 380,905 $ 385,344 $ 393,125

Ratios to average net assets applicable to common shares:

Expenses ............................................................. 1.21%(e) 1.21% 1.11%(e)

Net investment income ................................................ 8.00%(e) 7.50% 6.12%(e)

Portfolio turnover rate ................................................ 25.12% 55.02% 45.08%

Asset coverage per preferred share ..................................... $ 75,119 $ 75,703 $ 76,727

Liquidation preference per preferred share ............................. $ 25,000 $ 25,000 $ 25,000

(a) Based on average daily common shares outstanding.

(b) Based on the last sale on the American Stock Exchange.

(d) Total return is not annualized for periods less than one year.

(e) Annualized.

Semiannual Report | See notes to financial statements. | 11

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED)

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COUNTRY PRINCIPAL AMOUNT(c) VALUE
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BONDS 54.8%
COMMERCIAL SERVICES 0.9%
JohnsonDiversey Holdings Inc., senior disc. note, zero cpn. to
5/17/07, 10.67% thereafter, 5/15/13 ............................... United States $ 4,300,000 $ 3,203,500
------------

COMMUNICATIONS 7.0%
Dobson Cellular Systems Inc., senior secured note, 9.875%,
11/01/12 .......................................................... United States 4,000,000 4,400,000
Inmarsat Finance PLC, senior note, 7.625%, 6/30/12 .................. United Kingdom 1,924,000 1,991,340
(a,b) Intelsat Bermuda Ltd., senior note, 144A, FRN, 8.695%,
1/15/12 ........................................................... Bermuda 4,000,000 4,090,000
MCI Inc., senior note, 7.688%, 5/01/09 .............................. United States 2,000,000 2,080,000
Millicom International Cellular SA, senior note, 10.00%,
12/01/13 .......................................................... Luxembourg 4,000,000 4,150,000
(b) Qwest Communications International Inc., senior note, 144A, 7.50%,
2/15/14 ........................................................... United States 4,000,000 3,820,000
(a) Rogers Wireless Communications Inc., senior secured note, FRN,
6.995%, 12/15/10 .................................................. Canada 3,000,000 3,142,500
Time Warner Telecom Holdings Inc., senior note, 9.25%, 2/15/14 ...... United States 3,000,000 3,052,500
------------
26,726,340
------------

CONSUMER DURABLES 2.6%
D. R. Horton Inc., senior note, 8.00%, 2/01/09 ...................... United States 4,000,000 4,309,500
General Motors Acceptance Corp.,
6.875%, 8/28/12 ................................................. United States 2,000,000 1,792,284
7.25%, 3/02/11 .................................................. United States 2,000,000 1,861,788
Simmons Co., senior sub. note, 7.875%, 1/15/14 ...................... United States 2,000,000 1,850,000
------------
9,813,572
------------

CONSUMER NON-DURABLES 1.9%
Rayovac Corp., senior sub. note, 8.50%, 10/01/13 .................... United States 3,000,000 2,910,000
Smithfield Foods Inc., senior note, 8.00%, 10/15/09 ................. United States 4,000,000 4,250,000
------------
7,160,000
------------

CONSUMER SERVICES 14.9%
Advanstar Communications Inc., senior secured note, 10.75%,
8/15/10 ........................................................... United States 2,000,000 2,245,000
(a) AMC Entertainment Inc., senior note, FRN, 8.040%, 8/15/10 ........... United States 4,000,000 4,040,000
Boyd Gaming Corp., senior sub. note, 8.75%, 4/15/12 ................. United States 4,000,000 4,330,000
Caesars Entertainment Inc., senior sub. note, 9.375%, 2/15/07 ....... United States 2,000,000 2,115,000
Charter Communications Holdings II LLC, senior note, 10.25%,
9/15/10 ........................................................... United States 4,000,000 4,120,000
Clear Channel Communications Inc., senior note, 7.65%, 9/15/10 ...... United States 4,000,000 4,346,304
CSC Holdings Inc., senior note, 8.125%, 7/15/09 ..................... United States 4,000,000 4,050,000
Dex Media West LLC, senior sub. note, 9.875%, 8/15/13 ............... United States 4,000,000 4,435,000
DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 .................. United States 2,577,000 2,825,036
(a) Emmis Communications Corp., senior note, FRN, 9.745%,
6/15/12 ........................................................... United States 3,400,000 3,442,500
Liberty Media Corp., senior note, 7.875%, 7/15/09 ................... United States 4,000,000 4,229,116

12 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)

BONDS (CONT.)
CONSUMER SERVICES (CONT.)
LIN Television Corp., senior sub. note, 6.50%, 5/15/13 .............. United States $ 4,000,000 $ 3,810,000
Pinnacle Entertainment Inc., senior sub. note, 8.75%, 10/01/13 ...... United States 4,000,000 4,140,000
Quebecor Media Inc., senior disc. note, zero cpn. to 7/15/06,
13.75% thereafter, 7/15/11 ........................................ Canada 4,000,000 4,085,000
Royal Caribbean Cruises Ltd., senior note, 8.00%, 5/15/10 ........... United States 4,000,000 4,350,000
------------
56,562,956
------------

ELECTRONIC TECHNOLOGY 2.2%
Flextronics International Ltd., senior sub. note,
6.25%, 11/15/14 ................................................. Singapore 2,300,000 2,300,000
6.50%, 5/15/13 .................................................. Singapore 700,000 717,500
Sanmina-SCI Corp., senior sub. note, 6.75%, 3/01/13 ................. United States 2,000,000 1,910,000
Xerox Corp., senior note, 9.75%, 1/15/09 ............................ United States 3,000,000 3,375,000
------------
8,302,500
------------

ENERGY MINERALS 1.1%
Chesapeake Energy Corp., senior note, 7.50%, 6/15/14 ................ United States 4,000,000 4,290,000
------------

HEALTH SERVICES 4.0%
Davita Inc.,
senior note, 6.625%, 3/15/13 .................................... United States 1,900,000 1,933,250
senior sub. note, 7.25%, 3/15/15 ................................ United States 1,000,000 1,018,750
Fresenius Medical Care Capital Trust II, 7.875%, 2/01/08 ............ Germany 4,000,000 4,162,000
Tenet Healthcare Corp., senior note, 6.375%, 12/01/11 ............... United States 4,000,000 3,750,000
Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%,
10/01/14 .......................................................... United States 4,000,000 4,280,000
------------
15,144,000
------------

INDUSTRIAL SERVICES 1.6%
Allied Waste North America Inc., senior note, B, 8.50%, 12/01/08 .... United States 4,000,000 4,190,000
Hanover Equipment Trust 01, senior secured note, A, 8.50%,
9/01/08 ........................................................... United States 1,693,000 1,769,185
------------
5,959,185
------------

NON-ENERGY MINERALS 1.1%
(a) Ispat Inland ULC, senior secured note, FRN, 10.254%, 4/01/10 ........ United States 4,000,000 4,230,000
------------

PROCESS INDUSTRIES 5.1%
Crown European Holdings SA, senior secured note, 10.875%,
3/01/13 ........................................................... United States 2,000,000 2,330,000
Georgia-Pacific Corp., senior note, 9.375%, 2/01/13 ................. United States 3,000,000 3,360,000
Jefferson Smurfit Corp., senior note, 7.50%, 6/01/13 ................ United States 3,000,000 2,715,000
JSG Funding PLC, senior sub. note, 7.75%, 4/01/15 ................... Ireland 3,000,000 2,565,000
Nalco Co.,
senior note, 7.75%, 11/15/11 .................................... United States 2,000,000 2,055,000
senior sub. note, 8.875%, 11/15/13 .............................. United States 2,000,000 2,062,500

Semiannual Report | 13

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)

BONDS (CONT.)
PROCESS INDUSTRIES (CONT.)
Rhodia SA, senior note, 10.25%, 6/01/10 ............................. France $ 4,000,000 $ 4,250,000
------------
19,337,500
------------

PRODUCER MANUFACTURING 3.2%
Case New Holland Inc., senior note, 9.25%, 8/01/11 .................. United States 4,000,000 4,250,000
(b) Invensys PLC, senior note, 144A, 9.875%, 3/15/11 .................... United Kingdom 3,000,000 2,996,250
Milacron Escrow Corp., senior secured note, 11.50%, 5/15/11 ......... United States 2,000,000 1,900,000
TRW Automotive Inc., senior note, 9.375%, 2/15/13 ................... United States 3,000,000 3,270,000
------------
12,416,250
------------

REAL ESTATE INVESTMENT TRUSTS 1.1%
Host Marriott LP, senior note, 9.25%, 10/01/07 ...................... United States 4,000,000 4,235,000
------------

RETAIL 0.5%
(a,b) GSC Holdings Corp., 144A, FRN, 7.875%, 10/01/11 ..................... United States 2,000,000 2,012,500
------------

TECHNOLOGY SERVICES 0.8%
(a,b) Sungard Data Systems Inc., senior note, 144A, FRN, 8.525%,
8/15/13 ........................................................... United States 3,000,000 3,120,000
------------

TRANSPORTATION 1.1%
CP Ships Ltd., senior note, 10.375%, 7/15/12 ........................ Canada 3,800,000 4,332,000
------------

UTILITIES 5.7%
(b) Calpine Corp., senior secured note, 144A, 8.50%, 7/15/10 ............ United States 5,000,000 3,587,500
(b) Dynegy Holdings Inc., secured note, 144A, 9.875%, 7/15/10 ........... United States 4,000,000 4,380,000
Edison Mission Energy, senior note, 9.875%, 4/15/11 ................. United States 3,000,000 3,570,000
El Paso Natural Gas Co., senior note, A, 7.625%, 8/01/10 ............ United States 4,000,000 4,179,096
TXU Corp., 4.80%, 11/15/09 .......................................... United States 4,000,000 3,874,028
Utilicorp United Inc., senior note, 9.95%, 2/01/11 .................. United States 2,000,000 2,255,000
------------
21,845,624
------------
TOTAL BONDS (COST $207,574,528) ..................................... 208,690,927
------------

MORTGAGE-BACKED SECURITIES 32.6%
FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) FIXED RATE 15.7%
FHLMC Gold 15 Year, 4.50%, 6/01/18 - 9/01/18 ........................ United States 3,806,358 3,735,061
FHLMC Gold 15 Year, 5.00%, 9/01/18 - 11/01/18 ....................... United States 8,180,828 8,167,639
FHLMC Gold 15 Year, 5.50%, 7/01/19 .................................. United States 399,568 405,656
FHLMC Gold 30 Year, 5.00%, 8/01/33 - 6/01/34 ........................ United States 14,373,873 14,099,048
FHLMC Gold 30 Year, 5.50%, 8/01/33 - 2/01/35 ........................ United States 10,077,483 10,089,329
(d) FHLMC Gold 30 Year, 6.00%, 7/01/28 - 10/01/30 ....................... United States 11,338,925 11,542,563
FHLMC Gold 30 Year, 6.50%, 1/01/35 .................................. United States 5,271,708 5,422,938
FHLMC Gold 30 Year, 7.00%, 9/01/27 .................................. United States 1,443,734 1,514,047
FHLMC Gold 30 Year, 8.00%, 1/01/31 .................................. United States 394,707 421,199
FHLMC Gold 30 Year, 8.50%, 7/01/31 .................................. United States 3,897,946 4,249,743
------------
59,647,223
------------

14 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)

MORTGAGE-BACKED SECURITIES (CONT.)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) FIXED RATE 5.7%
GNMA I SF 30 Year, 5.50%, 4/15/33 - 12/15/34 ........................ United States $ 9,268,923 $ 9,363,158
GNMA I SF 30 Year, 6.50%, 6/15/31 - 12/15/33 ........................ United States 3,914,305 4,074,674
GNMA I SF 30 Year, 7.00%, 1/20/24 ................................... United States 239,323 251,679
GNMA II SF 30 Year, 5.00%, 10/20/33 ................................. United States 4,652,310 4,598,048
GNMA II SF 30 Year, 7.00%, 12/20/28 - 12/20/30 ...................... United States 2,330,138 2,440,350
GNMA II SF 30 Year, 8.00%, 1/20/28 - 2/20/32 ........................ United States 939,184 1,001,294
------------
21,729,203
------------

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) ADJUSTABLE RATE 1.1%
(a) FNMA, 4.621%, 7/01/34 ............................................... United States 4,084,967 4,080,550
(a) FNMA, 5.95%, 6/01/32 ................................................ United States 172,821 172,899
------------
4,253,449
------------

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) FIXED RATE 10.1%
FNMA 15 Year, 5.00%, 10/01/17 ....................................... United States 2,273,880 2,271,102
FNMA 15 Year, 5.50%, 10/01/17 - 4/01/18 ............................. United States 4,527,546 4,596,602
FNMA 15 Year, 7.00%, 9/01/18 ........................................ United States 607,358 638,846
FNMA 30 Year, 5.00%, 10/01/35 ....................................... United States 2,230,000 2,184,146
FNMA 30 Year, 5.50%, 8/01/33 - 7/01/35 .............................. United States 15,283,408 15,292,259
(d) FNMA 30 Year, 6.00%, 10/01/28 - 12/01/34 ............................ United States 9,614,206 9,778,842
FNMA 30 Year, 6.50%, 8/01/32 ........................................ United States 2,391,965 2,465,345
FNMA 30 Year, 8.00%, 10/01/29 ....................................... United States 390,931 419,163
FNMA 30 Year, 8.50%, 8/01/26 ........................................ United States 761,827 830,446
------------
38,476,751
------------
TOTAL MORTGAGE-BACKED SECURITIES (COST $124,610,888) ................ 124,106,626
------------

ASSET-BACKED SECURITIES AND COMMERCIAL MORTGAGE-BACKED
SECURITIES 10.3%
CONSUMER SERVICES (COST $1,000,000) 0.3%
(a) Merrill Lynch Mortgage Investors Inc., 2003-OPT1, B2, FRN, 3.87%,
7/25/34 ........................................................... United States 1,000,000 1,035,101
------------

FINANCE 10.0%
(a) Argent Securities Inc., 2003-W5, M4, FRN, 4.85%, 10/25/33 ........... United States 4,000,000 4,176,198
(a) GSR Mortgage Trust, 2003-AHL, B1, FRN, 6.00%, 10/25/33 .............. United States 5,000,000 5,089,397
Morgan Stanley ABS Capital,
(a) 2003-HE3, B1, FRN, 4.42%, 10/25/33 ............................ United States 3,500,000 3,550,392
(a) 2003-NC10, B1, FRN, 5.20%, 10/25/33 ........................... United States 3,000,000 3,063,421
(b) Morgan Stanley Auto Loan Trust, 2003-HB1, D, 144A, 5.50%,
4/15/11 ........................................................... United States 905,614 899,605
(a) Morgan Stanley Dean Witter Capital Trust I, 2003-NC3, B1, FRN,
4.45%, 3/25/33 .................................................... United States 4,508,000 4,573,715
(a) New Century Home Equity Loan Trust, 2003-2, M3, FRN, 4.981%,
1/25/33 ........................................................... United States 5,000,000 5,087,965

Semiannual Report | 15

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)

ASSET-BACKED SECURITIES AND COMMERCIAL MORTGAGE-BACKED
SECURITIES (CONT.)
FINANCE (CONT.)
(a) Option One Mortgage Loan Trust, 2003-6, M5, FRN, 5.233%,
11/25/33 .......................................................... United States $ 3,500,000 $ 3,647,644
(a) Residential Asset Securities Corp., 2003-KS10, MII3, FRN, 3.67%,
12/25/33 .......................................................... United States 1,500,000 1,529,528
(a) Specialty Underwriting and Residential Finance, 2003-BC4, B2,
FRN, 3.80%, 11/25/34 .............................................. United States 1,500,000 1,537,424
Structured Asset Investment Loan Trust,
(a)2003-BC2, M3, FRN, 4.555%, 4/25/33 ............................. United States 1,471,000 1,481,684
(a)2003-BC13, M4, FRN, 3.868%, 11/25/33 ........................... United States 3,340,000 3,426,603
------------
38,063,576
------------

TOTAL ASSET-BACKED SECURITIES AND COMMERCIAL MORTGAGE-BACKED
SECURITIES (COST $37,848,337) ..................................... 39,098,677
------------

(a,e) SENIOR FLOATING RATE INTERESTS 46.2%
COMMUNICATIONS 7.4%
AAT Communications Corp., First Lien Term Loan, 5.61%,
7/27/12 ........................................................... United States 3,000,000 3,043,125
Alaska Communications Systems Holdings Inc.,
Incremental Term Loan, 6.024%, 2/01/12 ........................... United States 100,000 101,552
Term Loan, 5.924%, 2/01/12 ....................................... United States 4,000,000 4,062,084
American Tower Inc., Term Loan C, 4.96%, 8/31/11 .................... United States 1,024,180 1,029,728
Hawaiian Telecom Communications Inc., Term Loan B, 6.28%,
10/31/12 .......................................................... United States 3,370,000 3,412,651
Iowa Telecommunications Services Inc., Term Loan B, 5.29 - 5.77%,
11/30/11 .......................................................... United States 4,000,000 4,058,752
New Skies Satellites B.V., Term Loan, 5.875 - 6.063%, 5/02/11 ....... Netherlands 663,783 673,206
Panamsat Corp., Term Loan B1, 6.046 - 6.107%, 8/01/11 ............... United States 3,969,880 4,028,542
SpectraSite Communications Inc., Term Loan B, 5.27%, 5/18/12 ........ United States 2,726,881 2,746,482
UPC Financing Partnership, Term Loan H2, 6.004%, 9/30/12 ............ Netherlands 4,000,000 4,048,752
Valor Telecommunications LLC, Term Loan, 5.591 - 5.811%,
2/24/12 ........................................................... United States 1,160,000 1,176,572
------------
28,381,446
------------

CONSUMER DURABLES 2.4%
LandSource Communities Development LLC, Term Loan B, 6.25%,
3/31/10 ........................................................... United States 1,000,000 1,009,020
Sealy Mattress Co., Term Loan D, 5.539 - 5.62%, 4/06/12 ............. United States 3,616,468 3,661,110
Solo Cup Co., Term Loan B, 5.86 - 6.02%, 2/27/11 .................... United States 1,974,937 1,983,084
Stile Acquisition Corp. (Masonite), CAD Term Loan, 5.66 - 6.02%,
4/05/13 ........................................................... Canada 1,342,107 1,347,825
Stile U.S. Acquisition Corp. (Masonite), U.S. Term Loan,
5.66 - 6.02%, 4/05/13 ............................................. United States 1,344,393 1,350,122
------------
9,351,161
------------

16 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)

(a,e) SENIOR FLOATING RATE INTERESTS (CONT.)
CONSUMER NON-DURABLES 1.8%
Acco Brands Corp., Term Loan B, 5.539 - 5.636%, 8/05/12 ............. United States $ 1,142,000 $ 1,158,845
Constellation Brands Inc., Term Loan B, 5.688 - 6.00%,
12/22/11 .......................................................... United States 1,565,556 1,589,529
Dole Food Co. Inc., Term Loan B, 5.188 - 7.25%, 12/31/12 ............ Bermuda 1,080,819 1,093,822
Meow Mix Co., Term Loan B, 7.04 - 7.09%, 7/13/11 .................... United States 654,857 664,136
Michael Foods Inc., Term Loan B, 5.09 - 6.069%, 11/21/10 ............ United States 638,926 650,107
Southern Wine & Spirits of America Inc., Term Loan B, 5.53%,
5/31/12 ........................................................... United States 1,661,650 1,686,708
------------
6,843,147
------------

CONSUMER SERVICES 12.7%
Alderwoods Group Inc., Term Loan B2, 5.48 - 6.058%, 9/29/09 ......... United States 729,057 739,301
Arby's Restaurant Holdings LLC, Term Loan B, 6.091 - 6.27%,
7/25/12 ........................................................... United States 1,745,625 1,761,262
Canwest Media Inc., Term Loan E, 6.018%, 5/15/09 .................... Canada 859,906 863,982
Charter Communications Operating LLC, Term Loan B, 6.93%,
4/27/11 ........................................................... United States 1,972,548 1,984,219
Cinram International Inc., Term Loan D, 6.12%, 9/30/09 .............. Canada 2,791,539 2,825,736
Dex Media West LLC, Term Loan B, 5.32 - 5.60%, 3/09/10 .............. United States 3,008,148 3,031,127
DIRECTV Holdings LLC/Financing Co., Term Loan B, 5.289 - 5.386%,
4/12/13 ........................................................... United States 1,133,333 1,147,618
Emmis Operating Co., Term Loan B, 5.518%, 11/10/11 .................. United States 992,500 1,000,812
(d) Entravision Communications Corp., Term Loan B, 7.25%, 2/28/13 ....... United States 1,100,000 1,111,688
Insight Midwest Holdings LLC,
Term Loan A, 5.313%, 6/30/09 ..................................... United States 1,126,522 1,126,522
Term Loan C, 6.063%, 12/31/09 .................................... United States 1,994,475 2,026,885
Intelsat (Bermuda) Ltd., Senior Term Loan Facility, 5.813%,
7/28/11 ........................................................... Bermuda 2,412,845 2,445,015
Mediacom Broadband (MCC Iowa), Term Loan C, 5.85 - 6.03%,
1/31/14 ........................................................... United States 1,990,000 2,020,628
MediaNews Group Inc., Term Loan C, 5.09%, 12/30/10 .................. United States 2,289,262 2,290,087
Metro-Goldwyn-Mayer Inc., Term Loan B, 6.27%, 4/06/12 ............... United States 2,900,000 2,938,062
Mission Broadcasting Inc., Term Loan B, 5.77%, 10/01/12 ............. United States 1,702,676 1,716,510
Nexstar Broadcasting Group Inc., Term Loan B, 5.77%, 10/01/12 ....... United States 1,733,239 1,747,322
(d) Penn National Gaming Inc., Term Loan B, 7.75%, 10/03/11 ............. United States 1,800,000 1,824,890
R.H. Donnelley Inc., Term Loan D, 5.27 - 5.78%, 6/30/11 ............. United States 3,964,962 4,000,036
Rainbow National Services LLC, Term Loan B, 6.625%, 3/31/12 ......... United States 2,487,500 2,513,154
Regal Cinemas Inc., Term Loan B, 6.02%, 11/10/10 .................... United States 4,396,621 4,447,460
WMG Acquisition Corp. (Warner Music), Term Loan B, 5.52 - 5.86%,
3/01/11 ........................................................... United States 4,920,946 4,983,481
------------
48,545,797
------------

Semiannual Report | 17

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)

(a,e) SENIOR FLOATING RATE INTERESTS (CONT.)
ENERGY MINERALS 1.2%
Kerr-Mcgee Corp.,
Term Loan B, 6.31%, 5/24/11 ...................................... United States $ 1,296,750 $ 1,304,774
Term Loan X, 6.11%, 5/24/07 ...................................... United States 2,380,000 2,389,987
(d) Walter Industries Inc., Term Loan B, 7.50% 10/03/12 ................. United States 800,000 812,500
------------
4,507,261
------------

FINANCE 4.1%
Conseco Inc., Term Loan, 5.768%, 6/22/10 ............................ United States 1,109,424 1,123,639
Fidelity National Information Services Inc., Term Loan B, 5.478%,
3/09/13 ........................................................... United States 4,443,412 4,464,834
General Growth Properties Inc., Term Loan B, 5.85%, 11/12/08 ........ United States 3,974,363 4,028,681
Kyle Acquisition Group,
Term Loan B, 6.75%, 7/08/10 ...................................... United States 311,573 316,052
Term Loan C, 6.75%, 7/20/10 ...................................... United States 288,427 292,573
(d) Lion Gables Realty LP, Term Loan B, 7.50%, 9/30/06 .................. United States 562,421 566,112
Macerich Co., Interim Loan Facility, 5.475%, 3/31/06 ................ United States 1,300,000 1,302,437
Maguire Properties Inc., Term Loan B, 5.466%, 3/15/10 ............... United States 1,844,444 1,857,595
Newkirk Master LP, Term Loan B, 5.693%, 7/31/08 ..................... United States 865,531 880,137
(d) Yellowstone Club, Term Loan, 8.125%, 9/29/10 ........................ United States 700,000 708,750
------------
15,540,810
------------

ELECTRONIC TECHNOLOGY 0.2%
Onex Wind Finance LP, Term Loan B, 5.961%, 12/31/11 ................. United States 598,500 606,505
------------

HEALTH SERVICES 2.2%
(d) DaVita Inc., Term Loan B, 8.00%, 7/31/12 ............................ United States 2,882,353 2,928,592
LifePoint Hospitals Inc., Term Loan B, 5.435%, 4/15/12 .............. United States 3,018,502 3,053,269
PacifiCare Health Systems Inc., Term Loan B, 5.125 - 5.375%,
12/13/10 .......................................................... United States 1,985,000 1,992,857
Quintiles Transnational Corp., Term Loan B, 5.59%, 9/25/09 .......... United States 496,129 497,369
------------
8,472,087
------------

INDUSTRIAL SERVICES 1.3%
Allied Waste North America Inc.,
Credit Link, 3.568%, 1/15/12 ..................................... United States 802,703 809,635
Term Loan B, 5.52 - 6.09%, 1/15/12 ............................... United States 2,124,273 2,142,860
Epco Holding Inc., Term Loan B, 6.039%, 8/15/10 ..................... United States 1,100,000 1,119,336
Washington Group International Inc., Synthetic Term Loan, 3.30%,
6/14/10 ........................................................... United States 900,000 904,446
------------
4,976,277
------------

NON-ENERGY MINERALS 1.8%
Escanaba Timber LLC, Timber Term Facility, 6.43%, 5/02/08 ........... United States 1,300,000 1,317,875
Novelis Corp., U.S. Term Loan, 5.46%, 1/09/12 ....................... United States 1,486,465 1,503,484
Novelis Inc., CAD Term Loan, 5.46%, 1/09/12 ......................... Canada 855,843 865,643
St. Marys Cement Inc., Term Loan B, 6.02%, 12/04/09 ................. Canada 2,959,862 3,013,509
------------
6,700,511
------------

18 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)

(a,e) SENIOR FLOATING RATE INTERESTS (CONT.)
PROCESS INDUSTRIES 3.2%
Berry Plastics Corp., Term Loan, 6.105%, 12/02/11 ................... United States $ 897,750 $ 911,328
Boise Cascade LLC, Term Loan D, 5.594 - 5.781%, 10/28/11 ............ United States 817,808 831,404
Graham Packaging Co., First Lien Term Loan, 6.063 - 6.563%,
10/07/11 .......................................................... United States 1,691,075 1,712,417
Hexion Specialty Chemicals Inc.,
Tranche B-1, 6.375%, 5/31/12 ..................................... United States 457,036 463,001
Tranche B-3 CL, 3.588%, 5/31/12 .................................. United States 109,091 110,515
Nalco Co., Term Loan B, 5.66 - 5.96%, 11/04/10 ...................... United States 3,329,426 3,384,571
NewPage Corp., Term Loan, 6.493 - 6.68%, 5/02/11 .................... United States 3,000,000 3,045,000
Resolution Europe B.V. (Hexion), Tranche B-2, 6.563%, 5/31/12 ....... Netherlands 631,145 639,382
Rockwood Specialties Group Inc., Term Loan D, 5.93%, 7/30/12 ........ United States 995,000 1,012,102
------------
12,109,720
------------

PRODUCER MANUFACTURING 3.5%
Day International Group Inc., Term Loan D, 7.35 - 7.53%,
9/16/09 ........................................................... United States 760,986 763,086
Euramax International Inc., Term Loan B, 6.625%, 6/29/12 ............ United States 1,220,940 1,230,969
Headwaters Inc., Term Loan B, 5.87 - 8.00%, 4/30/11 ................. United States 1,037,514 1,051,995
Itron Inc., Term Loan C, 5.563 - 7.50%, 7/01/11 ..................... United States 151,159 152,954
Nortek Inc., Term Loan, 5.91 - 8.00%, 8/25/11 ....................... United States 1,984,962 2,012,504
Sensus Metering Systems Inc., Term Loan, 6.23 - 6.54%,
12/17/10 .......................................................... United States 2,788,709 2,827,667
TriMas Corp., Term Loan B, 7.15%, 12/06/09 .......................... United States 2,279,389 2,305,983
TRW Automotive Inc., Term Loan B, 5.25%, 10/31/10 ................... United States 2,977,500 3,012,548
------------
13,357,706
------------

RETAIL TRADE 2.3%
Jean Coutu Group (PJC) Inc., Term Loan B, 5.938%, 7/30/11 ........... Canada 3,960,000 4,028,373
Pantry Inc., Term Loan, 6.10%, 3/12/11 .............................. United States 1,122,064 1,138,165
Travelcenters of America Inc., Term Loan, 5.62 - 5.77%,
12/01/11 .......................................................... United States 2,500,000 2,530,078
William Carter Co., Term Loan B, 5.65 - 5.811%, 9/30/12 ............. United States 937,500 952,734
------------
8,649,350
------------

TECHNOLOGY SERVICES 0.8%
Sungard Data Systems Inc., Term Loan, 6.28%, 2/11/13 ................ United States 2,876,790 2,918,742
------------

UTILITIES 1.3%
AES Corp., Term Loan B, 5.07 - 5.69%, 4/30/08 ....................... United States 571,431 577,910
(d) Coleto Creek WLE LP, Term Loan C, 6.997%, 6/30/12 ................... United States 800,000 817,250
Texas Genco LLC,
Delay Draw, 5.768 - 5.87%, 12/14/11 .............................. United States 1,032,236 1,040,784
First Lien Term Loan, 5.768 - 6.02%, 12/14/11 .................... United States 2,495,338 2,516,002
------------
4,951,946
------------
TOTAL SENIOR FLOATING RATE INTERESTS (COST $174,488,589) ............ 175,912,466
------------

Semiannual Report | 19

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

STATEMENT OF INVESTMENTS, SEPTEMBER 30, 2005 (UNAUDITED) (CONTINUED)

FOREIGN GOVERNMENT AND AGENCY SECURITIES 4.6%
(a) Government of Argentina, FRN, 3.01%, 8/03/12 ........................ Argentina 3,950,000 $ 3,173,888
Government of Korea, 6.90%, 1/16/07 ................................. South Korea 3,600,000,000 KRW 3,553,909
Government of New Zealand, 8.00%, 11/15/06 .......................... New Zealand 1,100,000 NZD 776,219
Government of Norway, 6.75%, 1/15/07 ................................ Norway 8,300,000 NOK 1,333,448
Government of Poland, 8.50%, 11/12/06 ............................... Poland 8,750,000 PLN 2,815,989
Government of Singapore, 5.625%, 7/01/08 ............................ Singapore 2,150,000 SGD 1,379,588
Government of Sweden, 8.00%, 8/15/07 ................................ Sweden 8,300,000 SEK 1,183,893
Government of Thailand, 8.50%, 10/14/05 ............................. Thailand 120,000,000 THB 2,928,298
New South Wales Treasury Corp., 6.50%, 5/01/06 ...................... Australia 800,000 AUD 613,455
------------
TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES
(COST $17,066,213) ................................................ 17,758,687
------------
TOTAL LONG TERM INVESTMENTS (COST $561,588,555) ..................... 565,567,383
------------

----------
SHARES
----------

SHORT TERM INVESTMENT (COST $13,044,727) 3.4%
MONEY FUND 3.4%
(f) Franklin Institutional Fiduciary Trust Money Market Portfolio ....... United States 13,044,727 13,044,727
-------------
TOTAL INVESTMENTS (COST $574,633,282) 151.9% ........................ 578,612,110
PREFERRED SHARES (49.9)% ............................................ (190,000,000)
OTHER ASSETS, LESS LIABILITIES (2.0)% ............................... (7,707,381)
-------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0% ....................... $ 380,904,729
=============

CURRENCY ABBREVIATIONS

AUD - Australian Dollar
KRW - South Korean Won
NOK - Norwegian Krone
NZD - New Zealand Dollar
PLN - Polish Zloty
SEK - Swedish Krona
SGD - Singapore Dollar
THB - Thai Baht

SELECTED PORTFOLIO ABBREVIATIONS

FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
FRN - Floating Rate Note
GNMA - Government National Mortgage Association
SF - Single Family

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

(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 September 30, 2005
the value of these securities was $24,905,855, representing 6.54% of net
assets.

(d) See Note 1(c) regarding securities purchased on a when-issued, delayed
delivery or to-be-announced basis.

(e) See Note 1(e) regarding senior floating rate interests.

(f) See Note 8 regarding investments in the Franklin Institutional Fiduciary
Trust Money Market Portfolio.

20 | See notes to financial statements. | Semiannual Report

FRANKLIN TEMPLETON

LIMITED DURATION INCOME TRUST
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
September 30, 2005 (unaudited)

Assets:

Investments in securities:
Cost - Unaffiliated issuers .................................................................. $ 561,588,555
Cost - Sweep Money Fund (Note 8) ............................................................. 13,044,727
-------------
Total cost of investments .................................................................... 574,633,282
=============
Value - Unaffiliated issuers ................................................................. 565,567,383
Value - Sweep Money Fund (Note 8) ............................................................ 13,044,727
-------------
Total value of investments ................................................................... 578,612,110
-------------
Cash .......................................................................................... 2,434,095
Receivables:
Investment securities sold ................................................................... 1,237,926
Interest ..................................................................................... 5,913,284
-------------
Total assets ........................................................................... 588,197,415
-------------
Liabilities:
Payables:
Investment securities purchased .............................................................. 14,480,907
Affiliates ................................................................................... 326,929
Distributions to shareholders ................................................................ 2,433,295
Accrued expenses and other liabilities ........................................................ 51,555
-------------
Total liabilities ...................................................................... 17,292,686
-------------
Preferred shares at redemption value [$25,000 liquidation preference per share (7,600 shares
outstanding)] ................................................................................. 190,000,000
-------------
Net assets applicable to common shares ............................................... $ 380,904,729
=============
Net assets applicable to common shares consist of:
Paid-in capital ............................................................................... $ 380,014,364
Distributions in excess of net investment income .............................................. (4,133,166)
Net unrealized appreciation (depreciation) .................................................... 3,975,709
Accumulated net realized gain (loss) .......................................................... 1,047,822
-------------
Net assets applicable to common shares ............................................... $ 380,904,729
=============
Common shares outstanding ....................................................................... 26,739,511
=============
Net asset value per common share ................................................................ $ 14.25
=============

Semiannual Report | See notes to financial statements. | 21

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the six months ended September 30, 2005 (unaudited)

Investment income:

Dividends - Sweep Money Fund (Note 8) ......................................................... $ 180,969
Interest ...................................................................................... 17,593,583
-------------
Total investment income ................................................................ 17,774,552
-------------
Expenses:
Management fees (Note 4) ...................................................................... 1,418,633
Administrative fees (Note 4) .................................................................. 576,288
Transfer agent fees ........................................................................... 32,595
Custodian fees (Note 5) ....................................................................... 11,763
Reports to shareholders ....................................................................... 14,729
Professional fees ............................................................................. 23,675
Trustees' fees and expenses ................................................................... 20,065
Auction agent fees and expenses ............................................................... 252,445
-------------
Total expenses ......................................................................... 2,350,193
Expense reductions (Note 5) ............................................................ (7,155)
-------------
Net expenses ......................................................................... 2,343,038
-------------
Net investment income .............................................................. 15,431,514
-------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments .................................................................................. 1,700,212
Foreign currency transactions ................................................................ (5,076)
-------------
Net realized gain (loss) ........................................................... 1,695,136
-------------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................................................. (3,887,833)
Translation of assets and liabilities denominated in foreign currencies ...................... (3,047)
-------------
Net change in unrealized appreciation (depreciation) ............................... (3,890,880)
-------------
Net realized and unrealized gain (loss) ......................................................... (2,195,744)
-------------
Net increase (decrease) in net assets resulting from operations ................................. 13,235,770
Distributions to preferred shareholders from net investment income .............................. (3,074,905)
-------------
Net increase (decrease) in net assets applicable to common shares resulting from operations ..... $ 10,160,865
=============

22 | See notes to financial statements. | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS

-----------------------------------
SIX MONTHS ENDED
SEPTEMBER 30, 2005 YEAR ENDED
(UNAUDITED) MARCH 31, 2005
-----------------------------------

Increase (decrease) in net assets:
Operations:
Net investment income ................................................................ $ 15,431,514 $ 29,243,836
Net realized gain (loss) from investments and foreign currency transactions .......... 1,695,136 3,873,734
Net change in unrealized appreciation (depreciation) on investments and translation of
assets and liabilities denominated in foreign currencies ........................... (3,890,880) (6,977,032)
Distribution to preferred shareholders from net investment income .................... (3,074,905) (3,540,329)
-----------------------------------
Net increase (decrease) in net assets applicable to common shares resulting
from operations ............................................................. 10,160,865 22,600,209
Distribution to common shareholders from net investment income ........................ (14,599,773) (31,639,542)
Capital share transactions:
Reinvestment of distributions (Note 2) ............................................... -- 1,258,261
-----------------------------------
Net increase (decrease) in net assets .......................................... (4,438,908) (7,781,072)
Net assets applicable to common shares:
Beginning of period ................................................................... 385,343,637 393,124,709
-----------------------------------
End of period ......................................................................... $ 380,904,729 $ 385,343,637
===================================
Distributions in excess of net investment income included in net assets:
End of period ......................................................................... $ (4,133,166) $ (1,890,002)
===================================

Semiannual Report | See notes to financial statements. | 23

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Templeton Limited Duration Income Trust (the Fund) is registered under
the Investment Company Act of 1940 as a diversified, 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, mortgage pass-through securities, other
mortgage-backed securities, 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.

24 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (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.

C. SECURITIES PURCHASED ON A WHEN-ISSUED, DELAYED DELIVERY, OR TBA BASIS

The Fund may purchase securities on a when-issued, delayed delivery, or
to-be-announced (TBA) basis, with payment and delivery scheduled for a future
date. These transactions are subject to

Semiannual Report | 25

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

C. SECURITIES PURCHASED ON A WHEN-ISSUED, DELAYED DELIVERY, OR TBA BASIS
(CONTINUED)

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 on a specified date. 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. 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.

F. INCOME TAXES

No provision has been made for U.S. income taxes because the Fund's policy is to
continue 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.

G. 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

26 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

G. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
(CONTINUED)

loan. Dividend income is recorded on the ex-dividend date. Distributions to
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 generally
accepted accounting principles. 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 will
reverse in subsequent periods.

H. OFFERING COSTS

Offering costs are charged to paid-in-capital upon the initial sale of Fund
shares.

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. However, based on experience, the
Fund expects the risk of loss to be remote.

2. SHARES OF BENEFICIAL INTEREST

At September 30, 2005, there were 28,290,900 shares authorized (no par value).
During the period ended September 30, 2005, there were no share transactions;
all reinvested distributions were satisfied with previously issued shares
purchased in the open market.

-----------------------------------------
PERIOD ENDED YEAR ENDED
SEPTEMBER 30, 2005 MARCH 31, 2005
-----------------------------------------
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------

Shares issued in reinvestment of distributions .. -- $ -- 85,573 $1,258,261
=========================================

Semiannual Report | 27

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

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. Dividends to
preferred shareholders are cumulative and are declared weekly, at rates
established through an auction process. During the period ended September 30,
2005, the dividends on Preferred Shares ranged from 2.75% to 3.70%.

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 period ended September 30, 2005, 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 the Fund are also officers and trustees of the Fund and of the
following subsidiaries:

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

A. MANAGEMENT FEES

The Fund pays an investment management fee to Advisors of 0.50% per year of the
average daily net assets plus the liquidation value of the preferred shares.

B. ADMINISTRATIVE FEES

The Fund pays an administrative fee to FT Services of 0.20% per year of the
average daily net assets plus the liquidation of the preferred shares.

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 period ended September 30, 2005, the
custodian fees were reduced as noted in the Statement of Operations.

28 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

6. INCOME TAXES

At September 30, 2005, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:

Cost of investments .......................... $ 577,056,247
=============

Unrealized appreciation ...................... $ 7,738,664
Unrealized depreciation ...................... (6,182,801)
-------------
Net unrealized appreciation (depreciation) ... $ 1,555,863
=============

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, 2005, the Fund deferred realized capital losses of
$640,417.

Net investment income differs for financial statement and tax purposes primarily
due to differing treatments of foreign currency transactions, paydown losses,
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 roll, paydown losses, and bond discounts and
premiums.

7. INVESTMENT TRANSACTIONS

Purchases and sales of investments (excluding short term securities) for the
period ended September 30, 2005, aggregated $143,993,478 and $142,258,119,
respectively.

8. INVESTMENTS IN FRANKLIN INSTITUTIONAL FIDUCIARY TRUST MONEY MARKET
PORTFOLIO

The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (the 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 fees paid by the
Sweep Money Fund.

9. CREDIT RISK

The Fund has 65.43% of its portfolio invested in below investment grade and
comparable quality unrated high yield securities, which tend to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.

Semiannual Report | 29

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

10. REGULATORY MATTERS

As part of various investigations by a number of federal, state, and foreign
regulators and governmental entities, relating to certain practices in the
mutual fund industry, including late trading, market timing and marketing
support payments to securities dealers who sell fund shares, Franklin Resources,
Inc. and certain of its subsidiaries (collectively, the "Company"), entered into
settlements with certain of those regulators.

Specifically, the Company entered into settlements with the Securities and
Exchange Commission ("SEC") concerning market timing (the "August 2, 2004 SEC
Order") and marketing support payments to securities dealers who sell fund
shares (the "December 13, 2004 SEC Order") and with the California Attorney
General's Office ("CAGO") concerning marketing support payments to securities
dealers who sell fund shares (the "CAGO Settlement"). Under the terms of the
settlements with the SEC and the CAGO, the Company retained an Independent
Distribution Consultant ("IDC") to develop a plan for distribution of the
respective settlement monies. The CAGO approved the distribution plan under the
CAGO Settlement and, in accordance with the terms and conditions of that
settlement, the monies were disbursed to the relevant funds. The Fund did not
participate in the CAGO Settlement. The SEC has not yet approved the
distribution plan pertaining to the December 13, 2004 SEC Order. When approved,
disbursements of settlement monies will be made promptly to the relevant funds,
in accordance with the terms and conditions of that order. The IDC continues to
develop the plan of distribution under the August 2, 2004 SEC Order that
resolved the SEC's market timing investigation.

In addition, the Company, as well as most of the mutual funds within Franklin
Templeton Investments and certain current or former officers, directors, and/or
employees, have been named in private lawsuits (styled as shareholder class
actions, or as derivative actions on behalf of either the named funds or
Franklin Resources, Inc.) relating to the industry practices described above.
The lawsuits were filed in different courts throughout the country. Many of
those suits are now pending in a multi-district litigation in the United States
District Court for the District of Maryland.

The Company and fund management strongly believe that the claims made in each of
the private lawsuits referenced above are without merit and intends to defend
against them vigorously. The Company cannot predict with certainty the eventual
outcome of these lawsuits, nor whether they will have a material negative impact
on the Company. If it is determined that the Company bears responsibility for
any unlawful or inappropriate conduct that caused losses to the Fund, it is
committed to making the Fund or its shareholders whole, as appropriate.

30 | Semiannual Report

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

SHAREHOLDER INFORMATION

PROXY VOTING POLICIES AND PROCEDURES

The Fund 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 1-954/847-2268 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
1-800/SEC-0330.

CERTIFICATIONS

The Fund's Chief Executive Officer - Finance and Administration is required by
the New York Stock Exchange's Listing Standards to file annually with the
Exchange a certification that he is not aware of any violation by the Fund of
the Exchange's Corporate Governance Standards applicable to the Fund. The Fund
has filed such certification.

In addition, the Fund's Chief Executive Officer - Finance and Administration and
Chief Financial Officer and Chief Accounting Officer are required by the rules
of the SEC to provide certain certifications with respect to the Fund's Form
N-CSR and Form N-CSRS (which include the Fund's annual and semiannual reports to
shareholders) that are filed semiannually with the SEC. The Fund has filed such
certifications with its Form N-CSR for the fiscal year ended March 31, 2005.
Additionally, the Fund expects to file, on or about November 30, 2005, such
certifications with its Form N-CSRS for the six months ended September 30, 2005.

Semiannual Report | 31

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LITERATURE REQUEST

LITERATURE REQUEST. TO RECEIVE A BROCHURE AND PROSPECTUS, PLEASE CALL US AT
1-800/DIAL BEN(R) (1-800/342-5236) 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.

FRANKLIN TEMPLETON INVESTMENTS

INTERNATIONAL

Mutual European Fund
Templeton China World Fund
Templeton Developing Markets Trust
Templeton Foreign Fund
Templeton Foreign Smaller Companies Fund
Templeton International (Ex EM) Fund

GLOBAL

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

GROWTH

Franklin Aggressive Growth Fund
Franklin Capital Growth Fund
Franklin Flex Cap Growth Fund
Franklin Small-Mid Cap Growth Fund
Franklin Small Cap Growth Fund II(1)

VALUE

Franklin Balance Sheet Investment Fund(2)
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund(2)
Franklin MidCap Value Fund
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Recovery Fund(3)
Mutual Shares Fund

BLEND

Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund

SECTOR

Franklin Biotechnology Discovery Fund
Franklin DynaTech Fund
Franklin Global Communications Fund
Franklin Global Health Care Fund
Franklin Gold and Precious Metals Fund
Franklin Natural Resources Fund
Franklin Real Estate Securities Fund
Franklin Technology Fund
Franklin Utilities Fund
Mutual Financial Services Fund

ASSET ALLOCATION

Franklin Templeton Corefolio Allocation Fund
Franklin Templeton Founding Funds Allocation Fund
Franklin Templeton Perspectives Allocation Fund

TARGET FUNDS

Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund

INCOME

Franklin Adjustable U.S. Government Securities Fund(4)
Franklin's AGE High Income Fund
Franklin Floating Rate Daily Access Fund
Franklin Income Fund
Franklin Limited Maturity U.S. Government Securities Fund(4)
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(4)
Templeton Global Bond Fund
Templeton Income Fund

TAX-FREE INCOME(5)

NATIONAL FUNDS

Double Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund(6)

LIMITED-TERM FUNDS

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

INTERMEDIATE-TERM FUNDS

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

STATE-SPECIFIC

Alabama
Arizona
California(7)
Colorado
Connecticut
Florida(7)
Georgia
Kentucky
Louisiana
Maryland
Massachusetts(6)
Michigan(6)
Minnesota(6)
Missouri
New Jersey
New York(7)
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 can continue
adding to their accounts.

(2) The fund is only open to existing shareholders and select retirement
plans.

(3) 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.

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

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

(6) Portfolio of insured municipal securities.

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

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

09/05 Not part of the semiannual report

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

SEMI ANNUAL REPORT

FRANKLIN TEMPLETON
LIMITED DURATION INCOME TRUST

INVESTMENT MANAGER

Franklin Advisers, Inc.
1-800/DIAL BEN(R)

TRANSFER AGENT

PFPC Inc.
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 S2005 11/05

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.

(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 Frank W. T. LaHaye and he is
"independent" as defined under the relevant Securities and Exchange Commission
Rules and Releases.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

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

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 Trust 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 Institutional
Shareholder Services (ISS), 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 ISS' and/or Glass Lewis' analyses are thoroughly reviewed and
considered in making a final voting decision, the manager does not consider
recommendations from ISS, 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. All conflicts are resolved
in the interests of the manager's clients. In situations where the manager
perceives a material conflict of interest, the manager may: disclose the
conflict to the Fund's board of trustees; defer to the voting recommendation of
the Fund's board of trustees, ISS, Glass Lewis or those of another independent
third party provider of proxy services; or take such other action in good faith
(in consultation with counsel) which would protect the interests of the Fund and
its shareholders. 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
evaluates plans on a case-by-case basis by considering several factors to
determine whether the plan is fair and reasonable, including the ISS
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 proxies. 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. 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 1-954/847-2268 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 and reflect the twelve-month period beginning
July 1, 2004, and ending June 30, 2005..

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

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 Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial Officer

(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
Jimmy D. Gambill, Chief Executive Officer - Finance and Administration, and
Galen G. Vetter, Chief Financial 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 TEMPLETON LIMITED DURATION INCOME TRUST

By /s/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date November 21, 2005

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/JIMMY D. GAMBILL
-------------------
Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date November 21, 2005

By /s/GALEN G. VETTER
------------------
Galen G. Vetter
Chief Financial Officer
Date November 21, 2005