FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number 811-21357
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FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST
(Exact name of registrant as specified in charter)
One Franklin Parkway, San Mateo, CA 94403-1906
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(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: 954/527-7500
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Date of fiscal year end: 03/31
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Date of reporting period: 12/31/08
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ITEM 1. SCHEDULE OF INVESTMENTS.
Franklin Templeton
Limited Duration Income Trust
QUARTERLY STATEMENT OF INVESTMENTS
DECEMBER 31, 2008
CONTENTS
Statement of Investments ................................................. 3
Notes to Statement of Investments ........................................ 14
(FRANKLIN TEMPLETON INVESTMENTS(R) LOGO)
FRANKLIN - Templeton - Mutual Series
Quarterly Statement of Investments | 1
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Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED)
COUNTRY SHARES VALUE
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PREFERRED STOCKS (COST $237,850) 0.1%
DIVERSIFIED FINANCIALS 0.1%
Preferred Blocker Inc., 9.00%, pfd., 144A ................................. United States 670 $ 237,850
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PRINCIPAL
AMOUNT(a)
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CORPORATE BONDS 47.5%
AUTOMOBILES & COMPONENTS 1.8%
Ford Motor Credit Co. LLC,
(b) FRN, 9.203%, 4/15/09 ................................................... United States 1,000,000 966,250
senior note, 5.80%, 1/12/09 ............................................ United States 2,000,000 1,994,342
senior note, 9.875%, 8/10/11 ........................................... United States 2,000,000 1,476,202
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4,436,794
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CAPITAL GOODS 1.3%
RBS Global & Rexnord Corp., senior note, 9.50%, 8/01/14 ................... United States 2,000,000 1,500,000
RSC Equipment Rental Inc., senior note, 9.50%, 12/01/14 ................... United States 2,500,000 1,387,500
TransDigm Inc., senior sub. note, 7.75%, 7/15/14 .......................... United States 400,000 330,000
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3,217,500
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COMMERCIAL & PROFESSIONAL SERVICES 1.3%
(b) ARAMARK Corp., senior note, FRN, 6.693%, 2/01/15 .......................... United States 2,500,000 1,900,000
JohnsonDiversey Holdings Inc., senior disc. note, 10.67%, 5/15/13 ......... United States 2,000,000 1,410,000
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3,310,000
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CONSUMER DURABLES & APPAREL 1.9%
Jarden Corp., senior sub. note, 7.50%, 5/01/17 ............................ United States 2,500,000 1,718,750
Jostens IH Corp., senior sub. note, 7.625%, 10/01/12 ...................... United States 2,000,000 1,650,000
KB Home, senior note, 6.375%, 8/15/11 ..................................... United States 2,000,000 1,550,000
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4,918,750
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CONSUMER SERVICES 3.2%
Host Hotels & Resorts LP, senior note, K, 7.125%, 11/01/13 ................ United States 2,500,000 2,025,000
MGM MIRAGE, senior note, 6.75%, 4/01/13 ................................... United States 3,000,000 2,025,000
Pinnacle Entertainment Inc., senior sub. note, 8.75%, 10/01/13 ............ United States 2,000,000 1,590,000
Royal Caribbean Cruises Ltd., senior note, 8.00%, 5/15/10 ................. United States 3,000,000 2,580,000
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8,220,000
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DIVERSIFIED FINANCIALS 4.9%
American Express Credit Corp., C, 7.30%, 8/20/13 .......................... United States 2,000,000 2,049,174
(c) BAT International Finance PLC, 144A, 8.125%, 11/15/13 ..................... United Kingdom 2,000,000 2,062,088
General Electric Capital Corp., 4.80%, 5/01/13 ............................ United States 2,000,000 1,969,678
(c) GMAC LLC, senior note, 144A,
7.25%, 3/02/11 ......................................................... United States 1,266,000 1,088,507
6.875%, 8/28/12 ........................................................ United States 1,899,000 1,458,736
JPMorgan Chase & Co., sub. note, 5.75%, 1/02/13 ........................... United States 2,000,000 2,030,884
(d) Lehman Brothers Holdings Inc., senior note, 6.20%, 9/26/14 ................ United States 3,000,000 300,000
Merrill Lynch & Co. Inc., 5.45%, 2/05/13 .................................. United States 1,500,000 1,443,163
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12,402,230
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Quarterly Statement of Investments | 3
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
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CORPORATE BONDS (CONTINUED)
ENERGY 5.3%
Chesapeake Energy Corp., senior note, 7.50%, 6/15/14 ...................... United States 4,000,000 $ 3,400,000
Compagnie Generale de Geophysique-Veritas, senior note, 7.50%, 5/15/15 .... France 2,300,000 1,437,500
El Paso Corp., senior note, 12.00%, 12/12/13 .............................. United States 1,600,000 1,604,000
Mariner Energy Inc., senior note, 7.50%, 4/15/13 .......................... United States 2,000,000 1,290,000
(c) Petroplus Finance Ltd., senior note, 144A, 6.75%, 5/01/14 ................. Switzerland 2,500,000 1,600,000
(c) SandRidge Energy Inc., senior note, 144A, 8.00%, 6/01/18 .................. United States 2,000,000 1,120,000
Tesoro Corp., senior note, 6.625%, 11/01/15 ............................... United States 2,000,000 1,170,000
The Williams Co. Inc., 8.125%, 3/15/12 .................................... United States 2,000,000 1,852,500
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13,474,000
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FOOD, BEVERAGE & TOBACCO 1.3%
Dean Foods Inc., senior note, 7.00%, 6/01/16 .............................. United States 1,600,000 1,368,000
Smithfield Foods Inc., senior note, 8.00%, 10/15/09 ....................... United States 2,000,000 1,910,000
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3,278,000
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HEALTH CARE EQUIPMENT & SERVICES 5.9%
Coventry Health Care Inc., senior note, 5.875%, 1/15/12 ................... United States 3,000,000 2,204,400
DaVita Inc.,
senior note, 6.625%, 3/15/13 ......................................... United States 900,000 859,500
senior sub. note, 7.25%, 3/15/15 ..................................... United States 1,000,000 955,000
FMC Finance III SA, senior note, 6.875%, 7/15/17 .......................... Germany 2,000,000 1,880,000
HCA Inc., senior secured note, 9.125%, 11/15/14 ........................... United States 3,000,000 2,790,000
Tenet Healthcare Corp., senior note, 6.375%, 12/01/11 ..................... United States 2,500,000 1,943,750
(b,e) U.S. Oncology Holdings Inc., senior note, PIK, FRN, 8.334%, 3/15/12 ....... United States 2,149,218 1,375,499
(e) United Surgical Partners International Inc., senior sub. note, PIK, 9.25%,
5/01/17 ................................................................ United States 2,000,000 1,240,000
Vanguard Health Holding Co. II LLC, senior sub. note, 9.00%, 10/01/14 ..... United States 2,000,000 1,680,000
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14,928,149
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INSURANCE 0.6%
(c) Metropolitan Life Global Funding I, senior secured note, 144A, 5.125%,
4/10/13 ................................................................ United States 1,700,000 1,585,471
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MATERIALS 3.9%
Crown Americas Inc., senior note, 7.625%, 11/15/13 ........................ United States 3,000,000 2,985,000
(b) Freeport-McMoRan Copper & Gold Inc., senior note, FRN, 5.883%, 4/01/15 .... United States 3,000,000 2,075,820
Huntsman International LLC, senior sub. note, 7.875%, 11/15/14 ............ United States 1,500,000 810,000
(c) Ineos Group Holdings PLC, senior secured note, 144A, 8.50%, 2/15/16 ....... United Kingdom 3,000,000 285,000
(c) MacDermid Inc., senior sub. note, 144A, 9.50%, 4/15/17 .................... United States 2,000,000 1,050,000
Nalco Co., senior sub. note, 8.875%, 11/15/13 ............................. United States 2,500,000 2,125,000
Smurfit Kappa Funding PLC, senior sub. note, 7.75%, 4/01/15 ............... Ireland 1,200,000 660,000
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9,990,820
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4 | Quarterly Statement of Investments
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
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CORPORATE BONDS (CONTINUED)
MEDIA 5.7%
CanWest Media Inc., senior sub. note, 8.00%, 9/15/12 ...................... Canada 2,000,000 $ 890,000
CCH II LLC, senior note, 10.25%, 9/15/10 .................................. United States 4,000,000 1,860,000
CSC Holdings Inc., senior note, 8.125%, 7/15/09 ........................... United States 1,000,000 997,500
Dex Media West Finance, senior sub. note, 9.875%, 8/15/13 ................. United States 4,000,000 960,000
DIRECTV Holdings LLC, senior note, 8.375%, 3/15/13 ........................ United States 2,500,000 2,500,000
EchoStar DBS Corp., senior note, 6.375%, 10/01/11 ......................... United States 2,000,000 1,865,000
Lamar Media Corp., senior sub. note,
7.25%, 1/01/13 ......................................................... United States 1,000,000 802,500
C, 6.625%, 8/15/15 ..................................................... United States 2,000,000 1,455,000
LIN Television Corp., senior sub. note, 6.50%, 5/15/13 .................... United States 1,000,000 482,500
Quebecor Media Inc., senior note, 7.75%, 3/15/16 .......................... Canada 2,500,000 1,700,000
Radio One Inc., senior sub. note, B, 8.875%, 7/01/11 ...................... United States 2,000,000 995,000
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14,507,500
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REAL ESTATE 0.0%(f)
Forest City Enterprises Inc., senior note, 7.625%, 6/01/15 ................ United States 200,000 71,000
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RETAILING 0.4%
Michaels Stores Inc., senior note, 10.00%, 11/01/14 ....................... United States 2,000,000 920,000
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SOFTWARE & SERVICES 1.4%
SunGard Data Systems Inc., senior note, 9.125%, 8/15/13 ................... United States 4,000,000 3,480,000
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TECHNOLOGY HARDWARE & EQUIPMENT 0.7%
(c) Nortel Networks Ltd., senior note, 144A, 10.75%, 7/15/16 .................. Canada 2,000,000 439,070
(b) Sanmina-SCI Corp.,
(c) senior note, 144A, FRN, 4.746%, 6/15/14 ................................ United States 1,000,000 545,000
senior sub. note, 6.75%, 3/01/13 ....................................... United States 1,700,000 739,500
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1,723,570
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TELECOMMUNICATION SERVICES 4.5%
(c) Digicel Group Ltd., senior note, 144A, 8.875%, 1/15/15 .................... Jamaica 2,000,000 1,310,000
(c) Intelsat Subsidiary Holding Co. Ltd., senior note, 144A, 8.50%, 1/15/13 ... Bermuda 2,500,000 2,325,000
MetroPCS Wireless Inc., senior note, 9.25%, 11/01/14 ...................... United States 2,000,000 1,800,000
Millicom International Cellular SA, senior note, 10.00%, 12/01/13 ......... Luxembourg 2,000,000 1,810,000
Qwest Communications International Inc., senior note, B, 7.50%, 2/15/14 ... United States 2,000,000 1,440,000
(c) Wind Acquisition Finance SA, senior note, 144A, 10.75%, 12/01/15 .......... Italy 3,000,000 2,595,000
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11,280,000
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UTILITIES 3.4%
Dynegy Holdings Inc., senior note, 7.50%, 6/01/15 ......................... United States 2,000,000 1,410,000
Mirant North America LLC, senior note, 7.375%, 12/31/13 ................... United States 2,000,000 1,930,000
NRG Energy Inc., senior note, 7.25%, 2/01/14 .............................. United States 3,000,000 2,812,500
Quarterly Statement of Investments | 5
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
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CORPORATE BONDS (CONTINUED)
UTILITIES (CONTINUED)
PNM Resources Inc., senior note, 9.25%, 5/15/15 ........................... United States 300,000 $ 240,000
(c) Texas Competitive Electric Holdings Co. LLC, senior note, 144A, 10.25%,
11/01/15 ............................................................... United States 3,000,000 2,145,000
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8,537,500
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TOTAL CORPORATE BONDS (COST $160,961,595) ................................. 120,281,284
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MORTGAGE-BACKED SECURITIES 43.9%
(b) FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) ADJUSTABLE RATE 0.4%
FHLMC, 4.452%, 5/01/34 .................................................... United States 1,025,354 1,031,385
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FEDERAL HOME LOAN MORTGAGE CORP. (FHLMC) FIXED RATE 20.2%
FHLMC Gold 15 Year, 4.50%, 6/01/23 ........................................ United States 2,411,455 2,469,804
(g) FHLMC Gold 15 Year, 5.00%, 1/01/22 - 5/01/23 .............................. United States 3,545,914 3,642,880
FHLMC Gold 15 Year, 5.50%, 7/01/19 ........................................ United States 224,532 232,003
FHLMC Gold 15 Year, 6.00%, 7/01/23 ........................................ United States 1,132,779 1,174,717
(g) FHLMC Gold 30 Year, 5.00%, 1/01/34 ........................................ United States 4,000,000 4,088,124
FHLMC Gold 30 Year, 5.00%, 4/01/38 ........................................ United States 2,942,066 3,010,226
FHLMC Gold 30 Year, 5.50%, 1/01/38 - 7/01/38 .............................. United States 3,195,658 3,274,999
(g) FHLMC Gold 30 Year, 5.50%, 1/01/34 ........................................ United States 3,000,000 3,070,782
FHLMC Gold 30 Year, 5.50%, 7/01/38 ........................................ United States 2,462,381 2,523,276
FHLMC Gold 30 Year, 6.00%, 7/01/28 - 1/01/38 .............................. United States 5,915,377 6,112,518
(g) FHLMC Gold 30 Year, 6.00%, 1/15/31 ........................................ United States 8,085,000 8,328,811
FHLMC Gold 30 Year, 6.00%, 8/01/38 ........................................ United States 2,973,259 3,066,301
(g) FHLMC Gold 30 Year, 6.50%, 1/01/31 ........................................ United States 7,211,000 7,489,301
FHLMC Gold 30 Year, 7.00%, 9/01/27 ........................................ United States 742,669 777,119
FHLMC Gold 30 Year, 8.00%, 1/01/31 ........................................ United States 128,042 135,862
FHLMC Gold 30 Year, 8.50%, 7/01/31 United States 1,681,386 1,817,916
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51,214,639
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(b) FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) ADJUSTABLE RATE 0.7%
FNMA, 4.562%, 7/01/34 ..................................................... United States 1,639,755 1,641,235
FNMA, 5.993%, 6/01/32 ..................................................... United States 104,089 108,006
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1,749,241
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FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) FIXED RATE 19.1%
FNMA 15 Year, 5.00%, 6/01/23 .............................................. United States 1,385,733 1,424,676
(g) FNMA 15 Year, 5.50%, 1/15/19 .............................................. United States 145,000 149,327
FNMA 15 Year, 5.50%, 7/01/20 .............................................. United States 3,244,190 3,357,201
FNMA 15 Year, 5.50%, 11/01/23 ............................................. United States 1,992,497 2,055,678
FNMA 15 Year, 6.00%, 10/01/23 ............................................. United States 1,979,987 2,057,003
FNMA 15 Year, 6.50%, 7/01/20 .............................................. United States 251,880 257,286
(g) FNMA 30 Year, 5.00%, 1/01/35 .............................................. United States 1,500,000 1,531,641
FNMA 30 Year, 5.00%, 4/01/38 .............................................. United States 5,770,484 5,898,763
(g) FNMA 30 Year, 5.50%, 1/15/37 .............................................. United States 4,798,000 4,918,698
FNMA 30 Year, 6.00%, 4/01/33 .............................................. United States 952,810 984,711
(g) FNMA 30 Year, 6.00%, 1/01/29 .............................................. United States 8,410,000 8,658,356
FNMA 30 Year, 6.00%, 8/01/38 .............................................. United States 2,942,782 3,033,030
6| Quarterly Statement of Investments
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
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MORTGAGE-BACKED SECURITIES (CONTINUED)
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) FIXED RATE (CONTINUED)
FNMA 30 Year, 6.50%, 8/01/32 .............................................. United States 1,239,364 $ 1,293,393
(g) FNMA 30 Year, 6.50%, 1/01/32 .............................................. United States 11,123,000 11,552,281
FNMA 30 Year, 7.00%, 9/01/18 .............................................. United States 267,643 283,236
FNMA 30 Year, 8.00%, 10/01/29 ............................................. United States 203,680 215,947
FNMA 30 Year, 8.50%, 8/01/26 .............................................. United States 472,666 510,486
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48,181,713
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GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA) FIXED RATE 3.5%
(g) GNMA I SF 30 Year, 5.50%, 1/15/33 ......................................... United States 5,910,000 6,086,378
GNMA I SF 30 Year, 6.50%, 6/15/31 - 12/15/33 .............................. United States 1,982,936 2,081,738
GNMA II SF 30 Year, 7.00%, 1/20/24 - 1/20/29 .............................. United States 195,866 206,506
GNMA II SF 30 Year, 8.00%, 1/20/28 - 2/20/32 .............................. United States 393,843 418,950
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8,793,572
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TOTAL MORTGAGE-BACKED SECURITIES (COST $109,013,618) ...................... 110,970,550
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ASSET-BACKED SECURITIES AND COMMERCIAL MORTGAGE-BACKED
SECURITIES 8.8%
BANKS 5.8%
Banc of America Commercial Mortgage Inc., 2005-3, A2, 4.501%,
7/10/43 ................................................................ United States 5,000,000 4,595,098
(b) Citigroup/Deutsche Bank Commercial Mortgage Trust, 2005-CD1,
A3, FRN, 5.225%, 7/15/44 ............................................... United States 3,000,000 2,432,243
A4, FRN, 5.225%, 7/15/44 ............................................... United States 400,000 332,950
Greenwich Capital Commercial Funding Corp., 2004-GG1, A7, 5.317%,
6/10/36 ................................................................ United States 1,605,000 1,339,921
GS Mortgage Securities Corp. II, 2003-C1, A3, 4.608%, 1/10/40 ............. United States 400,000 353,307
LB-UBS Commercial Mortgage Trust,
(b) 2002-C2, A4, FRN, 5.594%, 6/15/31 ......................................... United States 2,000,000 1,872,650
2005-C1, A2, 4.31%, 2/15/30 ............................................ United States 1,395,000 1,295,338
2006-C1, A4, 5.156%, 2/15/31 ........................................... United States 2,800,000 2,231,219
(b) Merrill Lynch Mortgage Investors Trust, 2003-OPT1, B2, FRN, 3.221%,
7/25/34 ................................................................ United States 236,373 23,005
(b) Morgan Stanley ABS Capital I Inc. Trust,
2003-HE3, B1, FRN, 3.771%, 10/25/33 .................................... United States 765,779 179,461
2003-NC10, B1, FRN, 5.421%, 10/25/33 ................................... United States 605,756 96,399
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14,751,591
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DIVERSIFIED FINANCIALS 3.0%
(b) Argent Securities Inc., 2003-W5, M4, FRN, 4.221%, 10/25/33 ................ United States 1,236,648 523,516
(b) Chase Funding Mortgage Loan Asset-Backed Certificates, 2004-2, 2A2,
FRN, 0.721%, 2/25/35 ................................................... United States 1,764,722 918,523
(b) Chase Issuance Trust, 2005-A9, A9, FRN, 1.215%, 11/15/11 .................. United States 1,000,000 964,306
Citigroup Commercial Mortgage Trust, 2008-C7, A4, 6.095%, 12/10/49 ........ United States 700,000 542,688
(b) GSAMP Trust, 2003-AHL, B1, FRN, 4.471%, 10/25/33 .......................... United States 1,243,595 422,049
(b) JPMorgan Chase Commercial Mortgage Securities Corp., 2005-LDP5, A4,
FRN, 5.179%, 12/15/44 .................................................. United States 1,000,000 804,412
Quarterly Statement of Investments | 7
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
-------------- --------- ------------
ASSET-BACKED SECURITIES AND COMMERCIAL MORTGAGE-BACKED
SECURITIES (CONTINUED)
DIVERSIFIED FINANCIALS (CONTINUED)
(b) MBNA Master Credit Card Trust II, 1997-B, A, FRN, 1.355%, 8/15/14 ......... United States 3,000,000 $ 2,504,780
(b) Morgan Stanley Dean Witter Capital I, 2003-NC3, B1, FRN, 4.971%,
3/25/33 ................................................................ United States 656,103 138,160
(b) New Century Home Equity Loan Trust, 2003-2, M3, FRN, 6.021%,
1/25/33 ................................................................ United States 887,606 49,142
(b) Option One Mortgage Loan Trust, 2003-6, M5, FRN, 3.771%,
11/25/33 ............................................................... United States 959,531 245,201
(b) Specialty Underwriting & Residential Finance, 2003-BC4, B2, FRN,
2.971%, 11/25/34 ....................................................... United States 361,174 59,091
(b) Structured Asset Investment Loan Trust,
2003-BC2, M3, FRN, 5.346%, 4/25/33 .................................. United States 13,987 426
2003-BC13, M4, FRN, 4.596%, 11/25/33 ................................ United States 586,583 298,820
------------
7,471,114
------------
TOTAL ASSET-BACKED SECURITIES AND COMMERCIAL
MORTGAGE-BACKED SECURITIES (COST $30,608,398) .......................... 22,222,705
------------
(b) SENIOR FLOATING RATE INTERESTS 50.6%
AUTOMOBILES & COMPONENTS 1.9%
Cooper Standard Automotive Inc., Term Loan D, 4.00%, 12/23/11 ............. United States 873,000 371,025
Federal-Mogul Corp., Term Loan B, 2.518% - 3.878%, 12/27/14 ............... United States 4,221,786 1,883,972
Key Safety Systems Inc., Term Loan B, 2.721% - 6.753%, 3/10/14 ............ United States 1,984,848 1,037,083
TRW Automotive Inc., Tranche B-1 Term Loan, 4.625% - 5.813%,
2/09/14 ................................................................ United States 1,903,272 1,277,096
------------
4,569,176
------------
CAPITAL GOODS 4.4%
BE Aerospace Inc., Term Loan B, 5.75% - 5.91%, 7/28/14 .................... United States 497,500 453,554
Goodman Global Holdings Co. Inc., Term Loan B, 7.708%, 2/13/14 ............ United States 1,084,500 811,567
Manitowoc Co. Inc., Term Loan B, 6.50%, 11/06/14 .......................... United States 1,800,000 1,276,200
Oshkosh Truck Corp.,
Term Loan A, 1.97% - 2.47%, 12/06/11 ................................... United States 775,000 561,875
Term Loan B, 1.97% - 3.70%, 12/06/13 ................................... United States 3,363,700 1,981,781
RBS Global Inc. (Rexnord Corp.), Term Loan, 4.39% - 7.003%,
7/22/13 ................................................................ United States 3,000,000 2,175,000
Spirit Aerosystems Inc. (Onex Wind Finance LP), Term B-1 Loan, 6.50%,
12/31/11 ............................................................... United States 1,257,019 1,062,182
TriMas Co. LLC,
Term Loan B, 4.276% - 5.766%, 8/02/13 .................................. United States 2,386,218 1,360,144
Tranche B-1 L/C, 4.92%, 8/02/11 ........................................ United States 563,341 321,104
URS Corp., Term Loan B, 5.726%, 5/15/13 ................................... United States 1,272,877 1,107,403
------------
11,110,810
------------
COMMERCIAL & PROFESSIONAL SERVICES 2.8%
ARAMARK Corp.,
Synthetic L/C, 2.427%, 1/26/14 ......................................... United States 271,357 224,803
Term Loan B, 3.334%, 1/26/14 ........................................... United States 4,271,345 3,538,544
8 | Quarterly Statement of Investments
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
-------------- --------- ------------
(b) SENIOR FLOATING RATE INTERESTS (CONTINUED)
COMMERCIAL & PROFESSIONAL SERVICES (CONTINUED)
Nielsen Finance LLC (VNU Inc.), Dollar Term Loan, 3.825% - 4.388%,
8/09/13 ................................................................ United States 4,015,911 $ 2,733,330
West Corp., Term Loan B-2, 2.836% - 4.265%, 10/24/13 ...................... United States 869,659 542,605
------------
7,039,282
------------
CONSUMER DURABLES & APPAREL 1.3%
Jarden Corp., Term Loan B2, 3.209%, 1/24/12 ............................... United States 2,897,252 2,178,734
Jostens IH Corp. (Visant Holding Corp.), Term Loan C, 5.171%,
12/21/11 ............................................................... United States 1,350,000 1,134,000
------------
3,312,734
------------
CONSUMER SERVICES 4.3%
Affinion Group Inc., Term Loan B, 3.959% - 4.673%, 10/17/12 ............... United States 3,000,000 2,092,500
Education Management LLC, Term Loan C, 3.25%, 6/01/13 ..................... United States 2,440,193 1,551,963
Laureate Education Inc.,
Closing Date Term Loan, 3.75%, 8/18/14 ................................. United States 1,888,399 1,044,913
Delayed Draw Term Loan, 3.75%, 8/18/14 ................................. United States 282,596 156,370
OSI Restaurant Partners LLC (Outback),
Pre-Funded Revolving Credit, 1.816%, 6/14/13 ........................... United States 296,204 134,896
Term Loan B, 2.813%, 6/14/14 ........................................... United States 3,510,013 1,598,519
Penn National Gaming Inc., Term Loan B, 2.21% - 5.89%, 10/03/12 ........... United States 2,707,198 2,200,351
VML U.S. Finance LLC (Venetian Macau),
Delayed Draw, 2.72%, 5/25/12 ........................................... Macau 1,166,667 566,563
New Project Term Loans, 2.72%, 5/25/13 ................................. Macau 1,477,778 717,646
Term Loan B, 2.72%, 5/25/13 ............................................ Macau 1,703,704 827,361
------------
10,891,082
------------
DIVERSIFIED FINANCIALS 0.2%
Nuveen Investments Inc., Term Loan B, 3.461% - 4.466%, 11/13/14 ........... United States 1,549,431 613,962
------------
ENERGY 0.4%
Dresser Inc., Term Loan B, 2.711% - 4.486%, 5/04/14 ....................... United States 1,552,923 984,165
------------
FOOD, BEVERAGE & TOBACCO 0.9%
Dean Foods Co., Term Loan B, 1.97% - 2.96%, 4/02/14 ....................... United States 1,752,838 1,481,774
Wm. Wrigley Jr. Co., Term Loan B, 5.75%, 10/06/14 ......................... United States 900,000 863,250
------------
2,345,024
------------
HEALTH CARE EQUIPMENT & SERVICES 6.0%
Bausch and Lomb Inc.,
Delayed Draw Term Loan, 3.25% - 4.709%, 4/28/15 .... ................. United States 84,000 57,600
Parent Term Loan B, 4.709%, 4/28/15 ................ ................. United States 554,400 380,160
Community Health Systems Inc.,
Delayed Draw Term Loan, 3.404%, 7/25/14 ................ ............. United States 41,763 32,721
Term Loan, 4.439% - 4.446%, 7/25/14 .................... ............. United States 2,448,964 1,918,764
DaVita Inc., Term Loan B-1, 1.97% - 6.32%, 10/05/12 ....................... United States 2,717,434 2,388,431
DJO Finance LLC, Term Loan B, 3.461% - 4.459%, 5/20/14 .................... United States 2,722,500 1,932,975
Fresenius Medical Care Holdings Inc., Term Loan B, 2.841% - 6.125%,
3/31/13 ................................................................ Germany 1,496,769 1,302,189
Quarterly Statement of Investments | 9
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
-------------- --------- ------------
(b) SENIOR FLOATING RATE INTERESTS (CONTINUED)
HEALTH CARE EQUIPMENT & SERVICES (CONTINUED)
Fresenius SE (New Finco1), Term Loan B1, 6.75%, 8/20/14 ................... Germany 519,916 $ 474,423
Fresenius SE (APP), Term Loan B2, 6.75%, 8/20/14 .......................... Germany 280,084 255,577
HCA Inc., Term Loan B-1, 3.709%, 11/18/13 ................................. United States 4,070,004 3,217,846
Health Management Associates Inc., Term Loan B, 3.209%, 2/28/14 ........... United States 997,342 619,064
Iasis Healthcare LLC,
Delayed Draw Term Loan, 2.461%, 3/14/14 ................................ United States 477,776 343,700
Initial Term Loan, 2.461%, 3/14/14 ..................................... United States 1,380,723 993,258
Synthetic L/C, 4.54%, 3/14/14 .......................................... United States 128,047 92,114
Vanguard Health Holding Co. II LLC, Replacement Term Loan,
2.721% - 3.709%, 9/23/11 ............................................... United States 1,576,150 1,296,383
------------
15,305,205
------------
HOUSEHOLD & PERSONAL PRODUCTS 0.2%
FTD Group Inc., Term Loan B, 6.526% - 8.035%, 8/04/14 ..................... United States 600,000 525,000
------------
INSURANCE 0.6%
Conseco Inc., Term Loan, 3.825%, 10/10/13 ................................. United States 2,163,853 1,401,095
------------
MATERIALS 6.2%
Anchor Glass Container Corp., Term Loan, 6.75% - 7.958%, 6/20/14 .......... United States 1,593,535 1,314,666
Celanese U.S. Holdings LLC, Dollar Term Loan, 5.553%, 4/02/14 ............. United States 2,969,773 2,041,719
Domtar Corp., Term Loan, 3.251%, 3/07/14 .................................. United States 996,743 679,654
Georgia-Pacific LLC,
Additional Term Loan, 2.581% - 4.189%, 12/20/12 ........................ United States 1,490,130 1,224,391
Term Loan B, 2.081% - 4.189%, 12/20/12 ................................. United States 1,427,267 1,172,738
Hexion Specialty Chemicals BV, Term Loan C-2, 3.75%, 5/03/13 .............. Netherlands 697,911 293,820
Hexion Specialty Chemicals Inc., Term Loan C-1, 6.188%, 5/03/13 ........... United States 3,221,034 1,356,055
Huntsman International LLC, Term Loan B, 2.221%, 4/21/14 .................. United States 2,711,000 1,687,598
Ineos U.S. Finance LLC,
Term Loan B2, 8.202%, 12/16/13 ......................................... United States 372,806 165,433
Term Loan C2, 8.702%, 12/23/14 ......................................... United States 372,806 165,277
Lyondell Chemical Co.,
Tranche B-1, 7.00%, 12/20/14 ........................................... United States 744,370 335,607
Tranche B-2, 7.00%, 12/20/14 ........................................... United States 1,984,987 878,357
NewPage Corp., Term Loan, 5.313%, 12/22/14 ................................ United States 835,891 536,015
Oxbow Carbon LLC,
Delayed Draw Term Loan, 2.461%, 5/08/14 ................................ United States 237,987 150,725
Term Loan B, 2.461% - 3.459%, 5/08/14 .................................. United States 2,653,854 1,680,774
PQ Corp., Term Loan, 4.71% - 6.72%, 7/30/14 ............................... United States 1,192,504 700,596
Verso Paper Holdings LLC, Term Loan B, 3.25%, 8/01/13 ..................... United States 1,893,657 1,341,339
------------
15,724,764
------------
MEDIA 9.0%
Canwest Mediaworks LP, Credit D, 4.196%, 7/10/14 .......................... Canada 939,886 488,741
Charter Communications Operating LLC, Term Loan, 4.16% - 5.47%,
3/06/14 ................................................................ United States 2,338,934 1,730,812
Citadel Broadcasting Corp., Term Loan B, 2.22% - 3.65%, 6/12/14 ........... United States 4,000,000 1,640,000
10 | Quarterly Statement of Investments
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
-------------- --------- ------------
(b) SENIOR FLOATING RATE INTERESTS (CONTINUED)
MEDIA (CONTINUED)
CSC Holdings Inc. (Cablevision), Incremental Term Loan, 2.945%,
3/29/13 ................................................................ United States 778,000 $ 667,460
Dex Media East LLC, Term Loan B, 3.46% - 5.42%, 10/24/14 .................. United States 2,104,725 836,628
Dex Media West LLC, Term Loan B, 7.00% - 7.42%, 10/24/14 .................. United States 2,033,333 889,583
Entravision Communications Corp., Term Loan B, 6.38%, 3/29/13 ............. United States 1,392,883 992,429
Gray Television Inc., Term Loan B, 3.37% - 5.65%, 12/31/14 ................ United States 1,594,740 637,896
(g) Idearc Inc., Term Loan B, 2.47% - 3.46%, 11/17/14 ......................... United States 6,015,304 1,899,116
Insight Midwest Holdings, Term Loan B, 3.91%, 4/02/14 ..................... United States 2,160,000 1,627,199
MCC Iowa,
Term Loan E, 6.50%, 1/03/16 ............................................ United States 895,500 752,220
Tranche D-1 Term Loan, 2.20%, 1/31/15 .................................. United States 497,251 328,683
Tranche D-2 Term Loan, 2.20%, 1/31/15 .................................. United States 57,820 38,219
Mission Broadcasting Inc., Term Loan B, 3.209%, 10/01/12 .................. United States 882,725 485,499
Newsday LLC, 9.008%, Floating Rate Term Loan, 8/01/13 ..................... United States 2,400,000 1,920,000
Nexstar Broadcasting Inc., Term Loan B, 3.209%, 10/01/12 .................. United States 835,174 459,346
R.H. Donnelley Inc., Term Loan D-2, 6.75% - 7.17%, 6/30/11 ................ United States 398,964 229,404
Regal Cinemas Corp., Term Loan, 3.209%, 10/27/13 .......................... United States 2,078,289 1,528,698
(d) Tribune Co.,
Term Loan B, 5.25%, 5/16/14 ............................................ United States 3,950,000 1,128,570
(g) Term Loan X, 4.75%, 5/16/09 ............................................ United States 1,375,714 387,951
Univision Communications Inc., Initial Term Loan, 2.711%, 9/29/14 ......... United States 5,000,000 2,055,555
UPC Financing Partnership, Term Loan N, 3.181%, 12/31/14 .................. Netherlands 2,970,000 2,004,750
------------
22,728,759
------------
PHARMACEUTICALS, BIOTECHNOLOGY & LIFE SCIENCES 1.0%
Life Technologies Corp., Term Loan B, 5.25%, 11/21/15 ..................... United States 800,000 752,000
Mylan Inc., Term Loan B, 3.75% - 6.75%, 10/02/14 .......................... United States 2,156,000 1,850,566
------------
2,602,566
------------
REAL ESTATE 0.3%
CB Richard Ellis Services Inc., Term Loan B, 2.081%, 12/20/13 ............. United States 1,716,034 846,005
------------
SOFTWARE & SERVICES 3.1%
Affiliated Computer Services Inc.,
Additional Term Loan, 2.471% - 3.899%, 3/20/13 ......................... United States 1,759,500 1,504,372
Term Loan B, 2.471%, 3/20/13 ........................................... United States 486,250 415,744
Dealer Computer Services Inc. (Reynolds & Reynolds), First Lien Term
Loan, 2.461%, 10/26/12 ................................................. United States 490,894 236,856
Emdeon Business Services LLC, First Lien Term Loan, 3.459%,
11/16/13 ............................................................... United States 2,088,373 1,482,745
First Data Corp., Term Loan B-2, 3.211%, 9/24/14 .......................... United States 2,465,019 1,597,860
Macrovision Solutions Corp., Term Loan B, 6.00%, 5/02/13 .................. United States 1,246,875 1,134,656
SunGard Data Systems Inc., New U.S. Term Loan, 3.575% - 4.138%,
2/28/14 ................................................................ United States 1,999,072 1,381,359
------------
7,753,592
------------
Quarterly Statement of Investments | 11
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
PRINCIPAL
COUNTRY AMOUNT(a) VALUE
-------------- --------- ------------
(b) SENIOR FLOATING RATE INTERESTS (CONTINUED)
TECHNOLOGY HARDWARE & EQUIPMENT 1.7%
CommScope Inc., Term Loan B, 2.961% - 4.75%, 12/26/14 ..................... United States 1,442,911 $ 1,064,147
Flextronics International USA Inc.,
Term Loan A, 6.133% - 7.069%, 10/01/14 ................................. United States 1,840,982 1,184,364
Term Loan A-1, 7.069%, 10/01/14 ........................................ United States 529,018 340,335
Sensus Metering Systems Inc., Term Loan B1, 4.09% - 4.25%,
12/17/10 ............................................................... United States 2,084,295 1,823,758
------------
4,412,604
------------
TELECOMMUNICATION SERVICES 3.9%
Alltel Communications Inc.,
Term Loan B-1, 3.939%, 6/30/15 ......................................... United States 265,993 261,813
(g) Term Loan B-2, 4.371%, 6/30/15 ......................................... United States 332,492 327,421
Term Loan B-3, 3.939%, 5/18/15 ......................................... United States 2,468,750 2,434,420
GCI Holdings Inc., Add-On Term Loan, 4.72%, 8/31/12 .................... United States 2,381,802 2,107,895
Intelsat Corp. (Panamsat),
Tranche B-2-A, 6.65%, 1/03/14 .......................................... United States 1,284,794 981,031
Tranche B-2-B, 6.65%, 1/03/14 .......................................... United States 1,284,406 980,735
Tranche B-2-C, 6.65%, 1/03/14 .......................................... United States 1,284,406 980,735
Windstream Corp., Tranche B-1, 6.05%, 7/17/13 ............................. United States 2,017,836 1,731,136
------------
9,805,186
------------
UTILITIES 2.4%
Dynegy Holdings Inc.,
Term L/C Facility, 1.97%, 4/02/13 ...................................... United States 2,923,913 2,214,864
Term Loan B, 1.97%, 4/02/13 ............................................ United States 75,136 56,916
NRG Energy Inc.,
Credit Link, 1.359%, 2/01/13 ........................................... United States 819,782 715,055
Term Loan, 1.961% - 2.959%, 2/01/13 .................................... United States 1,663,693 1,451,156
Texas Competitive Electric Holdings Co. LLC, Term Loan B-2,
3.961% - 5.888%, 10/10/14 .............................................. United States 2,463,763 1,719,502
------------
6,157,493
------------
TOTAL SENIOR FLOATING RATE INTERESTS (COST $187,724,810) .................. 128,128,504
------------
FOREIGN GOVERNMENT AND AGENCY S ECURITIES 1.4%
(b,h) Government of Argentina, senior bond, FRN, 3.127%, 8/03/12 ................ Argentina 3,950,000 1,048,766
Government of Malaysia,
7.00%, 3/15/09 ......................................................... Malaysia 2,735,000 MYR 798,426
3.756%, 4/28/11 ........................................................ Malaysia 5,860,000 MYR 1,726,442
------------
TOTAL FOREIGN GOVERNMENT AND AGENCY SECURITIES
(COST $4,382,206) ...................................................... 3,573,634
. ------------
TOTAL INVESTMENTS BEFORE SHORT TERM INVESTMENTS
(COST $492,928,477) .................................................... 385,414,527
------------
12 | Quarterly Statement of Investments
Franklin Templeton
Limited Duration Income Trust
STATEMENT OF INVESTMENTS, DECEMBER 31, 2008 (UNAUDITED) (CONTINUED)
COUNTRY SHARES VALUE
-------------- --------- ------------
SHORT TERM INVESTMENTS (COST $7,874,395) 3.1%
MONEY MARKET FUNDS 3.1%
(i) Franklin Institutional Fiduciary Trust Money Market Portfolio, 0.55% ...... United States 7,874,395 $ 7,874,395
------------
TOTAL INVESTMENTS (COST $500,802,872) 155.4% .............................. 393,288,922
PREFERRED SHARES (35.5)% .................................................. (90,000,000)
NET UNREALIZED APPRECIATION ON FORWARD EXCHANGE
CONTRACTS 1.0% ............................................................ 2,623,927
OTHER ASSETS, LESS LIABILITIES (20.9)% .................................... (52,863,535)
------------
NET ASSETS APPLICABLE TO COMMON SHARES 100.0% ............................. $253,049,314
============
See Abbreviations on page 17.
(a) The principal amount is stated in U.S. dollars unless otherwise indicated.
(b) The coupon rate shown represents the rate at period end.
(c) Security was purchased pursuant to Rule 144A under the Securities Act of
1933 and may be sold in transactions exempt from registration only to
qualified institutional buyers or in a public offering registered under the
Securities Act of 1933. These securities have been deemed liquid under
guidelines approved by the Fund's Board of Trustees. At December 31, 2008,
the aggregate value of these securities was $19,846,722, representing 7.84%
of net assets.
(d) Defaulted security.
(e) Income may be received in additional securities and/or cash.
(f) Rounds to less than 0.1% of net assets.
(g) A portion or all of the security purchased on a delayed delivery or
to-be-announced basis.
(h) The principal amount is stated in original face, and scheduled paydowns are
reflected in the market price on ex-date.
(i) The Franklin Institutional Fiduciary Trust Money Market Portfolio is
managed by the Fund's investment manager. The rate shown is the annualized
seven-day yield at period end.
See Notes to Statement of Investments.
Quarterly Statement of Investments | 13
Franklin Templeton
Limited Duration Income Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED)
1. ORGANIZATION
Franklin Templeton Limited Duration Income Trust (Fund) is registered under the
Investment Company Act of 1940, as amended, (1940 Act) as a diversified,
closed-end investment company.
2. SECURITY VALUATION
Securities listed on a securities exchange or on the NASDAQ National Market
System are valued at the last quoted sale price or the official closing price of
the day, respectively. Over-the-counter securities and listed securities for
which there is no reported sale are valued within the range of the most recent
quoted bid and ask prices. Securities that trade in multiple markets or on
multiple exchanges are valued according to the broadest and most representative
market. Investments in open-end mutual funds are valued at the closing net asset
value.
Corporate debt securities, government securities, mortgage pass-through
securities, other mortgage-backed securities, 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.
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
14 | Quarterly Statement of Investments
Franklin Templeton
Limited Duration Income Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
2. SECURITY VALUATION (CONTINUED)
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.
3. INCOME TAXES
At December 31, 2008, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
Cost of investments ........................................... $ 502,213,842
-------------
Unrealized appreciation ....................................... $ 2,798,188
Unrealized depreciation ....................................... (111,723,108)
-------------
Net unrealized appreciation (depreciation) .................... $(108,924,920)
-------------
4. FORWARD EXCHANGE CONTRACTS
At December 31, 2008, the Fund had the following forward exchange contracts
outstanding:
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
AMOUNT(a) DATE APPRECIATION DEPRECIATION
----------- ---------- ------------ ------------
CONTRACTS TO BUY
382,000 Euro .......... 593,361 3/04/09 $ -- $(60,396)
1,598,000 Euro .......... 2,050,074 3/04/09 179,449 --
455,000 Euro .......... 701,050 3/16/09 -- (66,415)
520,000 Euro .......... 668,720 3/16/09 56,578 --
1,000,000 Euro .......... 1,438,800 6/03/09 -- (46,316)
140,000 Euro .......... 179,634 6/03/09 15,314 --
CONTRACTS TO SELL
1,980,000 Euro .......... 2,964,515 3/04/09 202,027 --
990,000 Euro .......... 150,663,150 JPY 3/05/09 281,615 --
990,000 Euro .......... 152,260,020 JPY 3/09/09 299,536 --
975,000 Euro .......... 1,487,509 3/16/09 127,575 --
320,000 Euro .......... 49,532,800 JPY 4/06/09 100,991 --
1,140,000 Euro .......... 1,736,961 6/03/09 149,529 --
391,937 Euro .......... 1,955,883 MYR 6/12/09 20,114 --
514,044 Euro .......... 2,552,999 MYR 6/15/09 22,903 --
Quarterly Statement of Investments | 15
Franklin Templeton
Limited Duration Income Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
4. FORWARD EXCHANGE CONTRACTS (CONTINUED)
CONTRACT SETTLEMENT UNREALIZED UNREALIZED
AMOUNT(a) DATE APPRECIATION DEPRECIATION
--------- ---------- ------------ ------------
CONTRACTS TO SELL (CONTINUED)
1,019,036 Euro .................... 5,044,228 MYR 6/16/09 $ 40,580 $ --
540,000 Euro .................... 2,646,108 MYR 9/03/09 16,354 --
Unrealized appreciation (depreciation) on offsetting forward
exchange contracts ......................................... 1,550,861 (266,372)
---------- ---------
Unrealized appreciation (depreciation) on forward exchange
contracts ............................................... 3,063,426 (439,499)
========== =========
Net unrealized appreciation (depreciation) on forward
exchange contracts ................................... $2,623,927
==========
(a) In U.S. dollars unless otherwise indicated.
See Abbreviations on page 17.
5. FAIR VALUE MEASUREMENTS
The Fund adopted Financial Accounting Standards Board (FASB) Statement No. 157,
"Fair Value Measurement" (SFAS 157), on April 1, 2008. SFAS 157 defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. The Fund has determined that the implementation
of SFAS 157 did not have a material impact on the Fund's financial statements.
SFAS 157 establishes a fair value hierarchy that distinguishes between market
data obtained from independent sources (observable inputs) and the Fund's own
market assumptions (unobservable inputs). These inputs are used in determining
the value of the Fund's investments and are summarized in the following fair
value hierarchy:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speed, credit risk,
etc.)
- Level 3 - significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not an indication of
the risk associated with investing in those securities.
16 | Quarterly Statement of Investments
Franklin Templeton
Limited Duration Income Trust
NOTES TO STATEMENT OF INVESTMENTS (UNAUDITED) (CONTINUED)
5. FAIR VALUE MEASUREMENTS (CONTINUED)
The following is a summary of the inputs used as of December 31, 2008, in
valuing the Fund's assets and liabilities carried at fair value:
LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
---------- ------------ ------- ------------
ASSETS:
Investments in Securities $7,874,395 $385,414,527 $-- $393,288,922
Other Financial Instruments(a) -- 3,063,426 -- 3,063,426
LIABILITIES:
Other Financial Instruments(a) -- 475,057 -- 475,057
(a) Other financial instruments includes net unrealized appreciation
(depreciation) of forward exchange contracts and unfunded loan commitments.
6. NEW ACCOUNTING PRONOUNCEMENT
In March 2008, FASB issued FASB Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161), which expands disclosures about derivative investments and hedging
activities. SFAS 161 is effective for fiscal years and interim periods beginning
after November 15, 2008. The Fund is currently evaluating the impact, if any, of
applying the various provisions of SFAS 161.
ABBREVIATIONS
CURRENCY
JPY - Japanese Yen
MYR - Malaysian Ringgit
SELECTED PORTFOLIO
FRN - Floating Rate Note
L/C - Letter of Credit
PIK - Payment-In-Kind
SF - Single Family
For information on the Fund's policy regarding other significant accounting
policies, please refer to the Fund's most recent semiannual or annual
shareholder report.
Quarterly Statement of Investments | 17
ITEM 2. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.
Within 90 days prior to the filing date of this Quarterly Schedule of Portfolio
Holdings on Form N-Q, the Registrant had carried out an evaluation, under the
supervision and with the participation of the Registrant's management, including
the Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.
(b) Changes in Internal Controls. There have been no 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 Quarterly Schedule of Portfolio Holdings
on Form N-Q.
ITEM 3. EXHIBITS.
(a) Certification pursuant to Section 30a-2 under the Investment Company Act of
1940 of Jennifer J. Bolt, Chief Executive Officer - Finance and Administration,
and Laura F. Fergerson, Chief Financial Officer and Chief Accounting Officer.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST
By /s/JENNIFER J. BOLT
-------------------------
Jennifer J. Bolt
Chief Executive Officer -
Finance and Administration
Date February 25, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/JENNIFER J. BOLT
-------------------------
Jennifer J. Bolt
Chief Executive Officer -
Finance and Administration
Date February 25, 2009
By /s/LAURA F. FERGERSON
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Laura F. Fergerson
Chief Financial Officer and
Chief Accounting Officer
Date February 25, 2009