Edgar Filing: FRANKLIN TEMPLETON LTD DURATION INCOME TRUST

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)

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[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)

FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST
(Name of Registrant as Specified in its Charter)

FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST
(Name of Person(s) Filing Proxy Statement)

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FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST

IMPORTANT SHAREHOLDER INFORMATION

We have enclosed important information about the Annual Shareholders' Meeting
of Franklin Templeton Limited Duration Income Trust (the "Fund") scheduled
for Wednesday, September 26, 2007 at 2:00 p.m., Pacific time. These materials
discuss the proposal to be voted on at the meeting, and contain the Notice of
Meeting, proxy statement and proxy card. A proxy card is, in essence, a
ballot. When you vote your proxy, it tells us how you wish to vote on
important issues relating to the Fund. If you complete, sign and return the
proxy card, we'll vote it as you indicated. If you simply sign, date and
return the proxy card, but do not specify a vote on the proposal listed
thereon, your proxy will be voted FOR the election of the nominees to the
position of Trustee (the "Proposal").

WE URGE YOU TO SPEND A FEW MINUTES REVIEWING THE PROPOSAL IN THE PROXY
STATEMENT. THEN, PLEASE FILL OUT AND SIGN THE PROXY CARD AND RETURN IT TO US
SO THAT WE KNOW HOW YOU WOULD LIKE TO VOTE. WHEN SHAREHOLDERS RETURN THEIR
PROXY CARDS PROMPTLY, THE FUND MAY BE ABLE TO SAVE MONEY BY NOT HAVING TO
CONDUCT ADDITIONAL MAILINGS. RETURNING YOUR PROXY CARD DOES NOT PRECLUDE YOU
FROM ATTENDING THE MEETING OR LATER CHANGING YOUR VOTE PRIOR TO ITS BEING
CAST.

WE WELCOME YOUR COMMENTS. IF YOU HAVE ANY QUESTIONS, CALL FUND INFORMATION AT
1-800/DIAL BEN(R) (1-800/342-5236).

TELEPHONE AND INTERNET VOTING

FOR YOUR CONVENIENCE, YOU MAY BE ABLE TO VOTE BY TELEPHONE OR THROUGH THE
INTERNET, 24 HOURS A DAY. IF YOUR ACCOUNT IS ELIGIBLE, SEPARATE INSTRUCTIONS
ARE ENCLOSED.

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FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST

NOTICE OF 2007 ANNUAL SHAREHOLDERS' MEETING

The Annual Shareholders' Meeting (the "Meeting") of Franklin Templeton
Limited Duration Income Trust (the "Fund") will be held at the Fund's
offices, One Franklin Parkway, San Mateo, California 94403, on Wednesday,
September 26, 2007 at 2:00 p.m., Pacific time.

During the Meeting, shareholders of the Fund will vote on the following
Proposal:

o The election of Harris J. Ashton, Sam Ginn, Edith E. Holiday, Larry D.
Thompson and John B. Wilson as Trustees of the Fund, to hold office for the
terms specified.

The Board of Trustees has fixed July 24, 2007, as the record date for the
determination of shareholders entitled to vote at the Meeting.

By Order of the Board of Trustees,

Karen L. Skidmore
VICE PRESIDENT AND SECRETARY

San Mateo, California
Dated: August 20, 2007

PLEASE SIGN AND PROMPTLY RETURN YOUR PROXY CARD IN THE SELF-ADDRESSED
ENVELOPE REGARDLESS OF THE NUMBER OF SHARES YOU OWN.

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FTLDIT Proxy 2007 2

FTLDIT Proxy 2007 1

FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST

PROXY STATEMENT

? INFORMATION ABOUT VOTING

WHO IS ASKING FOR MY VOTE?

The Trustees of Franklin Templeton Limited Duration Income Trust (the
"Fund"), in connection with the Fund's Annual Meeting of Shareholders (the
"Meeting"), have requested your vote.

WHO IS ELIGIBLE TO VOTE?

Shareholders of record at the close of business on July 24, 2007, are
entitled to be present and to vote at the Meeting or any adjourned Meeting.
Each common share of beneficial interest, without par value (the "Common
Shares") and each Auction Rate Preferred Share, $25,000 liquidation
preference per share (the "Preferred Shares") of record is entitled to one
vote, and each fractional Common Share and Preferred Share is entitled to a
proportional fractional vote, on each nominee presented at the Meeting on
which such shareholder is entitled to vote. The Notice of Meeting, the
proxy card, and the proxy statement were mailed to shareholders of record
on or about August 20, 2007.

ON WHAT ISSUE AM I BEING ASKED TO VOTE?

You are being asked to vote on one Proposal:

o To elect nominees to the position of Trustee for the terms specified. All
of the nominees will be voted on by holders of the outstanding Common
Shares and Preferred Shares voting together as a single class.

HOW DO THE FUND'S TRUSTEES RECOMMEND THAT I VOTE?

The Trustees unanimously recommend that you vote FOR the election of each
of the nominees as Trustees for which you are entitled to vote.

HOW DO I ENSURE THAT MY VOTE IS ACCURATELY RECORDED?

You may attend the Meeting and vote in person or you may complete and
return the enclosed proxy card. If you are eligible to vote by telephone or
through the Internet, separate instructions are enclosed.

Proxy cards that are properly signed, dated and received at or prior to the
Meeting will be voted as specified. If you specify a vote for the Proposal,
your proxy will be voted as you indicate. If you simply sign, date and
return the proxy card, but don't specify a vote on the Proposal, your
shares will be voted FOR the election of the nominees for Trustee.

MAY I REVOKE MY PROXY?

You may revoke your proxy at any time before it is voted by forwarding a
written revocation or a later-dated proxy to the Fund that is received by
the Fund at or prior to the Meeting, or by attending the Meeting and voting
in person.

WHAT IF MY SHARES ARE HELD IN A BROKERAGE ACCOUNT?

If your shares are held by your broker, then in order to vote in person at
the Meeting, you will need to obtain a "Legal Proxy" from your broker and
present it to the Inspector of Election at the Meeting. Also, in order to
revoke your proxy, you may need to forward your written revocation or a
later-dated proxy card to your broker rather than to the Fund.

? THE PROPOSAL: ELECTION OF TRUSTEES

HOW ARE NOMINEES SELECTED?

The Board of Trustees of the Fund (the "Board" or the "Trustees") has a
Nominating Committee consisting of Harris J. Ashton, Robert F. Carlson, Sam
Ginn, Edith E. Holiday, Frank W.T. LaHaye, Frank A. Olson, Larry D.
Thompson, and John B. Wilson, none of whom is an "interested person" of the
Fund as defined by the Investment Company Act of 1940, as amended (the
"1940 Act"). Trustees who are not interested persons of the Fund are
referred to as "Independent Trustees," and Trustees who are interested
persons of the Fund are referred to as "Interested Trustees."

The Nominating Committee is responsible for selecting candidates to serve
as Trustees and recommending such candidates (a) for selection and
nomination as Independent Trustees by the incumbent Independent Trustees
and the full Board; and (b) for selection and nomination as Interested
Trustees by the full Board. In considering a candidate's qualifications,
the Nominating Committee generally considers the potential candidate's
educational background, business or professional experience, and
reputation. In addition, the Nominating Committee has established as
minimum qualifications for Board membership as an Independent Trustee: (1)
that such candidate be independent from relationships with the Fund's
investment manager and other principal service providers both within the
terms and the spirit of the statutory independence requirements specified
under the 1940 Act and the rules thereunder; (2) that such candidate
demonstrate an ability and willingness to make the considerable time
commitment, including personal attendance at Board meetings, believed
necessary to his or her function as an effective Board member; and (3) that
such candidate have no continuing relationship as a director, officer or
board member of any U.S. registered investment company other than those
within the Franklin Templeton Investments fund complex.

When the Board has or expects to have a vacancy, the Nominating Committee
receives and reviews information on individuals qualified to be recommended
to the full Board as nominees for election as Trustees, including any
recommendations by "Qualifying Fund Shareholders" (as defined below). Such
individuals are evaluated based upon the criteria described above. To date,
the Nominating Committee has been able to identify, and expects to continue
to be able to identify, from its own resources an ample number of qualified
candidates. The Nominating Committee will, however, review recommendations
from Qualifying Fund Shareholders to fill vacancies on the Board if these
recommendations are submitted in writing and addressed to the Nominating
Committee at the Fund's offices and are presented with appropriate
background material concerning the candidate that demonstrates his or her
ability to serve as a Trustee, including as an Independent Trustee, of the
Fund. A Qualifying Fund Shareholder is a shareholder who (i) has
continuously owned of record, or beneficially through a financial
intermediary, shares of the Fund having a net asset value of not less than
two hundred and fifty thousand dollars ($250,000) during the twenty-four
month period prior to submitting the recommendation; and (ii) provides a
written notice to the Nominating Committee containing the following
information: (a) the name and address of the Qualifying Fund Shareholder
making the recommendation; (b) the number of shares of the Fund which are
owned of record and beneficially by such Qualifying Fund Shareholder and
the length of time that such shares have been so owned by the Qualifying
Fund Shareholder; (c) a description of all arrangements and understandings
between such Qualifying Fund Shareholder and any other person or persons
(naming such person or persons) pursuant to which the recommendation is
being made; (d) the name, age, date of birth, business address and
residence address of the person or persons being recommended; (e) such
other information regarding each person recommended by such Qualifying Fund
Shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the U.S. Securities and Exchange Commission
("SEC") had the nominee been nominated by the Board; (f) whether the
shareholder making the recommendation believes the person recommended would
or would not be an "interested person" of the Fund, as defined in the 1940
Act; and (g) the written consent of each person recommended to serve as a
Trustee of the Fund if so nominated and elected/appointed.

The Nominating Committee may amend these procedures from time to time,
including the procedures relating to the evaluation of nominees and the
process for submitting recommendations to the Nominating Committee.

The Board has adopted and approved a formal written charter for the
Nominating Committee. A copy of the charter was attached as "Appendix A" to
the proxy statement for the 2005 Annual Shareholders' Meeting.

WHO ARE THE NOMINEES AND CURRENT MEMBERS OF THE BOARD OF TRUSTEES?

The Board is divided into three classes, each class having a term of three
years. Each year the term of office of one class expires. This year, the
terms of three Trustees expire. Harris J. Ashton, Edith E. Holiday, and
John B. Wilson have been nominated for three-year terms, set to expire at
the 2010 Annual Meeting of Shareholders. Additionally, Sam Ginn and Larry
D. Thompson have been nominated for a one-year term, set to expire at the
2008 Annual Meeting of Shareholders. These terms continue, however, until
successors are duly elected and qualified or until a Trustee's resignation,
retirement, death or removal, whichever is earlier. All of the nominees are
currently members of the Board; however, Mr. Ginn, Mr. Thompson and Mr.
Wilson are standing for election by shareholders of the Fund for the first
time. An incumbent Independent Trustee nominated each of Mr. Ginn, Mr.
Thompson and Mr. Wilson for consideration by the Nominating Committee as
Nominee for Trustee. In addition, all of the current nominees and the
Trustees are also directors and/or trustees of other investment companies
in Franklin Templeton Investments.

Pursuant to the Fund's Amended and Restated Agreement and Declaration of
Trust, two of the Trustees are to be elected solely by the holders of the
Preferred Shares, and the remaining Trustees are to be elected by the
holders of the outstanding Common Shares and Preferred Shares voting
together as a single class. This year all of the Nominees have been
nominated to be elected by the holders of the outstanding Common Shares and
Preferred Shares voting together as a single class.

The Interested Trustees of the Fund hold director and/or officer positions
with Franklin Resources, Inc. ("Resources") and its affiliates. Resources
is a publicly owned holding company, the principal shareholders of which
are Charles B. Johnson and Rupert H. Johnson, Jr., who owned approximately
17.6% and 15.3%, respectively, of its outstanding shares as of June 30,
2007. Resources, a global investment management organization operating as
Franklin Templeton Investments, is primarily engaged, through its various
subsidiaries, in providing investment management, share distribution,
transfer agent and administrative services to a family of investment
companies. Resources is a New York Stock Exchange, Inc. ("NYSE") listed
holding company (NYSE: BEN). Charles B. Johnson, Chairman of the Board and
Trustee of the Fund, and Rupert H. Johnson, Jr., Senior Vice President and
Trustee of the Fund, who are brothers, are the father and uncle,
respectively, of Gregory E. Johnson, Vice President of the Fund.

Each nominee is currently available and has consented to serve if elected.
If any of the nominees should become unavailable, the persons named as
proxies in the proxy card will vote in their discretion for another person
or persons who may be nominated as Trustees.

Listed below, for each nominee and Trustee, is his or her name, year of
birth and address, as well as position and length of service with the Fund,
a brief description of recent professional experience, the number of
portfolios in the Franklin Templeton Investments fund complex that he or
she oversees, and other directorships held.

NOMINEES FOR INDEPENDENT TRUSTEE TO SERVE UNTIL THE 2010 ANNUAL
SHAREHOLDERS' MEETING:

-------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS
NAME, YEAR OF IN FUND
BIRTH AND ADDRESS LENGTH OF COMPLEX OTHER DIRECTORSHIPS
POSITION TIME SERVED OVERSEEN BY HELD
TRUSTEE*
-------------------------------------------------------------------------------

Harris J. Ashton Trustee Since 2003 139 Director, Bar-S Foods
(1932) (meat packing
One Franklin company).
Parkway
San Mateo, CA
94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank
holding company) (until 2002); and President, Chief Executive Officer and
Chairman of the Board, General Host Corporation (nursery and craft centers)
(until 1998).
-------------------------------------------------------------------------------

Edith E. Holiday Trustee Since 2005 139 Director, Hess
(1952) Corporation
One Franklin (formerly, Amerada
Parkway Hess Corporation)
San Mateo, CA (exploration and
94403-1906 refining of oil and
gas), H.J. Heinz
Company (processed
foods and allied
products), RTI
International Metals,
Inc. (manufacture and
distribution of
titanium), Canadian
National Railway
(railroad) and White
Mountains Insurance
Group, Ltd. (holding
company).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director or Trustee of various companies and trusts; and FORMERLY, Assistant to
the President of the United States and Secretary of the Cabinet (1990-1993);
General Counsel to the United States Treasury Department (1989-1990); and
Counselor to the Secretary and Assistant Secretary for Public Affairs and Public
Liaison-United States Treasury Department (1988-1989).
-------------------------------------------------------------------------------

John B. Wilson Trustee Since 2006 120 None
(1959)
One Franklin
Parkway
San Mateo, CA
94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Founder, Hyannis Port Capital, Inc. (real estate and private
equity investing); serves on private and non-profit boards; and FORMERLY, Chie
Operating Officer and Executive Vice President, Gap, Inc. (retail) (1996-2000);
Chief Financial Officer and Executive Vice President - Finance and Strategy,
Staples, Inc. (office supplies) (1992-1996); Executive Vice President -
Corporate Planning, Northwest Airlines, Inc. (airlines) (1990-1992); Vice
President and Partner, Bain & Company (1986-1990).
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NOMINEES FOR INDEPENDENT TRUSTEE TO SERVE UNTIL THE 2008 ANNUAL
SHAREHOLDERS' MEETING:

Sam Ginn (1937) Trustee Since April 120 Director, Chevron
One Franklin 2007 Corporation (global
Parkway energy company) and
San Mateo, CA ICO Global
94403-1906 Communications
(Holdings) Limited
(satellite company).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Private investor; and FORMERLY, Chairman of the Board, Vodafone AirTouch, PLC;
Chairman of the Board and Chief Executive Officer, AirTouch Communications
(1993-1998) and Pacific Telesis Groups (1988-1994).
-------------------------------------------------------------------------------

Larry D. Trustee Since April 139 None
Thompson 2007
(1945)
One Franklin
Parkway
San Mateo, CA
94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President - Government Affairs, General Counsel and Secretary,
PepsiCo, Inc. (consumer products); and FORMERLY, Director, Delta Airlines
(aviation) (2003-2005) and Providian Financial Corp. (1997-2001); Senior Fellow
of The Brookings Institution (2003-2004); Visiting Professor, University of
Georgia School of Law (2004); and Deputy Attorney General, U.S. Department of
Justice (2001-2003).
-------------------------------------------------------------------------------
INDEPENDENT TRUSTEE SERVING UNTIL THE 2008 ANNUAL SHAREHOLDERS' MEETING:

Robert F. Trustee Since 2003 120 None
Carlson (1928)
One Franklin
Parkway
San Mateo, CA
94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, senior member and past President, Board of Administration,
California Public Employees Retirement Systems (CALPERS); and FORMERLY, member
and Chairman of the Board, Sutter Community Hospitals; member, Corporate Board,
Blue Shield of California; and Chief Counsel, California Department of
Transportation.
-------------------------------------------------------------------------------

INTERESTED TRUSTEE*** SERVING UNTIL THE 2008 ANNUAL
SHAREHOLDERS' MEETING:

**Rupert H. Trustee and Since 2003 55 None
Johnson, Jr. Senior Vice
(1940) President
One Franklin
Parkway
San Mateo, CA
94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources,
Inc.; Director, Franklin Advisers, Inc. and Templeton Worldwide, Inc.; Senior
Vice President, Franklin Advisory Services, LLC; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin
Resources, Inc. and of 44 of the investment companies in Franklin Templeton
Investments.
-------------------------------------------------------------------------------

INDEPENDENT TRUSTEES SERVING UNTIL THE 2009 ANNUAL SHAREHOLDERS' MEETING:

Frank W.T. Trustee Since 2003 120 Director, Center for
LaHaye (1929) Creative Land
One Franklin Recycling (brownfield
Parkway redevelopment).
San Mateo, CA
94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Partner, Las Olas L.P. (Asset Management); and FORMERLY, Chairman,
Peregrine Venture Management Company (venture capital).
-------------------------------------------------------------------------------

Frank A. Olson Trustee Since 2005 139 Director, Hess
(1932) Corporation
One Franklin (formerly, Amerada
Parkway San Hess Corporation)
Mateo, CA (exploration and
94403-1906 refining of oil and
gas) and Sentient Jet
(private jet
service); and
FORMERLY, Director,
Becton Dickinson and
Company (medical
technology), Cooper
Industries, Inc.
(electrical products
and tools and
hardware), Health
Net, Inc. (formerly,
Foundation Health)
(integrated managed
care), The Hertz
Corporation (car
rental), Pacific
Southwest Airlines,
The RCA Corporation,
Unicom (formerly,
Commonwealth Edison),
UAL Corporation
(airlines) and White
Mountains Insurance
Group, Ltd. (holding
company).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman Emeritus, The Hertz Corporation (since 2000) (Chairman of the Board
(1980-2000) and Chief Executive Officer (1977-1999)); and FORMERLY, Chairman of
the Board, President and Chief Executive Officer, UAL Corporation.
-------------------------------------------------------------------------------

INTERESTED TRUSTEE*** SERVING UNTIL THE 2009 ANNUAL SHAREHOLDERS' MEETING:

**Charles B. Trustee and Since 2003 139 None
Johnson (1933) Chairman of the
One Franklin Board
Parkway
San Mateo, CA
94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Member - Office of the Chairman and Director, Franklin
Resources, Inc.; Director, Templeton Worldwide, Inc.; and officer and/or
director or trustee, as the case may be, of some of the other subsidiaries of
Franklin Resources, Inc. and of 41 of the investment companies in Franklin
Templeton Investments.
-------------------------------------------------------------------------------

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

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

***Elected solely by the holders of the Fund's outstanding Preferred Shares.
All other Trustees are elected by the holders of the Fund's outstanding
Common Shares and Preferred Shares voting together as a single class.

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

Board members historically have followed a policy of having substantial
investments in one or more of the funds in Franklin Templeton Investments,
as is consistent with their individual financial goals. In February 1998,
this policy was formalized through adoption of a requirement that each
board member invest one-third of the fees received for serving as a
director or trustee of a Franklin fund (excluding Committee fees) in shares
of one or more Franklin funds until the value of such investments equals or
exceeds five times the annual retainer and regular Board meeting fees paid
to such

board member. Investments in the name of family members
or entities controlled by a board member constitute fund holdings of such
board member for purposes of this policy, and a three-year phase-in period
applies to such investment requirements for newly elected board members. In
implementing such policy, a board member's holdings existing on February
27, 1998 were valued as of such date with subsequent investments valued at
cost.

The following tables provide the dollar range of equity securities of the
Fund and of all U.S. registered funds in the Franklin Templeton Investments
fund complex overseen by the Trustees that were beneficially owned by the
Trustees as of June 30, 2007.

INDEPENDENT TRUSTEES
--------------------

AGGREGATE DOLLAR RANGE OF
EQUITY SECURITIES IN ALL
FUNDS OVERSEEN BY THE
DOLLAR RANGE OF EQUITY TRUSTEE IN THE FRANKLIN
NAME OF TRUSTEE SECURITIES IN THE FUND TEMPLETON FUND COMPLEX
---------------------------------------------------------------------------
Harris J. Ashton None Over $100,000
Robert F. Carlson None Over $100,000
Sam Ginn None Over $100,000
Edith E. Holiday None Over $100,000
Frank W.T. LaHaye None Over $100,000
Frank A. Olson None Over $100,000
Larry D. Thompson None Over $100,000
John B. Wilson None Over $100,000

INTERESTED TRUSTEES
--------------------

HOW OFTEN DO THE TRUSTEES MEET AND WHAT ARE THEY PAID?

The role of the Trustees is to provide general oversight of the Fund's
business, and to ensure that the Fund is operated for the benefit of all
shareholders. The Trustees anticipate meeting at least nine times during
the current fiscal year to review the operations of the Fund and the Fund's
investment performance. The Trustees also oversee the services furnished to
the Fund by Franklin Advisers, Inc., the Fund's investment manager (the
"Investment Manager"), and various other service providers. The Fund's
Independent Trustees constitute the sole Independent Trustees of 28 funds
in the Franklin Templeton Investments fund complex, for which each
Independent Trustee currently is paid a $232,000 annual retainer, together
with a $7,000 per meeting fee for attendance at board meetings, a portion
of which is allocated to the Fund. Trustees who serve on the Audit
Committee of the Fund and such other funds receive a flat fee of $3,000 per
Committee meeting attended in person and $2,000 per telephonic meeting, a
portion of which is allocated to the Fund. John B. Wilson, who serves as
chairman of the Audit Committee of the Fund and such other funds, receives
an additional fee of $40,000 per year, a portion of which is allocated to
the Fund. Members of a committee are not separately compensated for any
committee meeting held on the day of a Board meeting. Independent Trustees
are also reimbursed for expenses incurred in connection with attending
Board meetings. The foregoing fee arrangements went into effect June 1,
2007, and the table below reflects fees paid prior to such date under
arrangements then in effect.

During the fiscal year ended March 31, 2007, there were nine meetings of
the Board, four meetings of the Audit Committee, and six meetings of the
Nominating Committee. Each Trustee then in office attended at least 75% of
the total number of meetings of the Board and the total number of meetings
held by all committees of the Board on which the Trustee served.

The Fund does not currently have a formal policy regarding Trustees'
attendance at the annual shareholders' meeting. None of the Trustees
attended the Fund's last annual meeting held on September 21, 2006.

Certain Interested Trustees and officers of the Fund are shareholders of
Resources and may receive indirect remuneration due to their participation
in the management fees and other fees received by the Investment Manager
and its affiliates from the funds in Franklin Templeton Investments. The
Investment Manager or its affiliates pay the salaries and expenses of the
officers. No pension or retirement benefits are accrued as part of Fund
expenses.

The table below indicates the total fees paid to the Independent Trustees
by the Fund individually and by all of the funds in Franklin Templeton
Investments. These Trustees also serve or have served as directors or
trustees of other funds in Franklin Templeton Investments, many of which
hold meetings at different
dates and times. The Trustees and the Fund's management
believe that having the same individuals serving on the boards of many of
the funds in Franklin Templeton Investments enhances the ability of each
fund to obtain, at a relatively modest cost to each separate fund, the
services of high caliber, experienced and knowledgeable Independent
Trustees who can bring their experience and talents to, and effectively
oversee the management of, several funds.

Total Fees Number of Boards
Aggregate Received from within Franklin
Compensation Franklin Templeton Investments
From the Templeton on which Each
Name of Trustee Fund(1) Investments(2) Trustee Serves(3)
-----------------------------------------------------------------------------

Harris J. Ashton $ 6,295.96 $409,510 42
Robert F. Carlson $10,278.96 $132,523 28
S. Joseph Fortunato(4) $ 3,099.14 $292,948 N/A
Sam Ginn(5) N/A N/A 28
Edith E. Holiday $ 6,149.60 $422,501 42
Frank W.T. LaHaye $ 8,116.62 $225,560 28
Gordon S. Macklin(6) $ 3,601.43 $302,820 N/A
Frank A. Olson $ 8,309.62 $373,818 42
Larry D. Thompson(5) N/A $147,950 42
John B. Wilson(7) $10,286.30 $117,917 28

(1) For the fiscal year ended March 31, 2007.
(2) For the calendar year ended December 31, 2006.
(3) We base the number of boards on the number of U.S. registered
investment companies in the Franklin Templeton Investments fund complex.
This number does not include the total number of series or funds within
each investment company for which the Board members are responsible.
(4) Mr. Fortunato retired effective September 5, 2006.
(5) Trustee since April 2007.
(6) Mr. Macklin retired effective September 12, 2006.
(7) Trustee since February 2006.

WHO ARE THE EXECUTIVE OFFICERS OF THE FUND?

Officers of the Fund are appointed by the Trustees and serve at the
pleasure of the Board. Listed below, for each Executive Officer, are his or
her name, year of birth, address, a brief description of his or her recent
professional experience, and his or her position and length of service with
the Fund:

------------------------------------------------------------------------------
NAME, YEAR OF BIRTH AND POSITION LENGTH OF TIME SERVED
ADDRESS
------------------------------------------------------------------------------
Charles B. Johnson (1933) Trustee and Chairman Since 2003
One Franklin Parkway of the Board
San Mateo, CA 94403-1906

Please refer to the table "Interested Trustee to serve until the 2009 Annual
Shareholders' Meeting" for additional information about Mr. Charles B.
Johnson.
------------------------------------------------------------------------------

Rupert H. Johnson, Jr. (1940) Trustee and Senior Since 2003
One Franklin Parkway Vice President
San Mateo, CA 94403-1906

Please refer to the table "Interested Trustee serving until the 2008 Annual
Shareholders' Meeting" for additional information about Mr. Rupert H.
Johnson, Jr.
------------------------------------------------------------------------------

James M. Davis Chief Compliance Since 2004
(1952) Officer
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, Global Compliance, Franklin Resources, Inc.; officer of some of
the other subsidiaries of Franklin Resources, Inc. and of 46 of the
investment companies in Franklin Templeton Investments; and FORMERLY,
Director of Compliance, Franklin Resources, Inc. (1994-2001).
------------------------------------------------------------------------------

Laura Fergerson (1962) Treasurer Since 2004
One Franklin Parkway
San Mateo,
CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President, Franklin Templeton Services, LLC; officer of 30 of the
investment companies in Franklin Templeton Investments; and FORMERLY,
Director and member of Audit and Valuation Committees, Runkel Funds, Inc.
(2003-2004); Assistant Treasurer of most of the investment companies in
Franklin Templeton Investments (1997-2003); and Vice President, Franklin
Templeton Services, LLC (1997-2003).
------------------------------------------------------------------------------

Jimmy D. Gambill (1947) Senior Vice President Since 2003
500 East Broward Blvd. and Chief Executive
Suite 2100 Fort Lauderdale, Officer -Finance and
FL 33394-3091 Administration

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Templeton Services, LLC; Senior Vice President,
Templeton Worldwide, Inc.; and officer of some of the other subsidiaries of
Franklin Resources, Inc. and of 46 of the investment companies in Franklin
Templeton Investments.
------------------------------------------------------------------------------

David P. Goss (1947) Vice President Since 2003
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; officer
and director of one of the subsidiaries of Franklin Resources, Inc.; and
officer of 46 of the investment companies in Franklin Templeton Investments.
------------------------------------------------------------------------------

Gregory E. Johnson (1961) Vice President Since 2003
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director, President and Chief Executive Officer, Franklin Resources, Inc.;
President, Templeton Worldwide, Inc.; Vice President and Director, Franklin
Advisers, Inc.; and officer and/or director or trustee, as the case may be,
of some of the other subsidiaries of Franklin Resources, Inc. and of 33 of
the investment companies in Franklin Templeton Investments.
------------------------------------------------------------------------------

Christopher J. Molumphy President and Chief Since 2003
(1962) Executive Officer -
One Franklin Parkway Investment Management
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President, Franklin Advisers, Inc.; and officer of six of the
investment companies in Franklin Templeton Investments.
------------------------------------------------------------------------------

Karen L. Skidmore (1952) Vice President and Vice President since
One Franklin Parkway Secretary March 2006 and
San Mateo, CA 94403-1906 Secretary since April
2006

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Associate General Counsel, Franklin Templeton Investments; and
officer of 30 of the investment companies in Franklin Templeton Investments.
-----------------------------------------------------------------------------

Craig S. Tyle (1960) Vice President Since October 2005
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
General Counsel and Executive Vice President, Franklin Resources, Inc.;
officer of some of the other subsidiaries of Franklin Resources, Inc. and
of 46 of the investment companies in Franklin Templeton Investments; and
FORMERLY, Partner, Shearman & Sterling, LLP (2004-2005); and General
Counsel, Investment Company Institute (ICI) (1997-2004).
-----------------------------------------------------------------------------

Galen G. Vetter (1951) Chief Financial Since 2004
500 East Broward Blvd. Officer and Chief
Suite 2100 Fort Lauderdale, Accounting Officer
FL 33394-3091

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; officer of 46 of
the investment companies in Franklin Templeton Investments; and FORMERLY,
Managing Director, RSM McGladrey, Inc. (1999-2004); and Partner, McGladrey
& Pullen, LLP (1979-1987 and 1991-2004).
-----------------------------------------------------------------------------

? ADDITIONAL INFORMATION ABOUT THE FUND

THE INVESTMENT MANAGER. The Investment Manager is Franklin Advisers, Inc.,
a California corporation, whose principal address is One Franklin Parkway,
San Mateo, CA 94403. The Investment Manager is a wholly-owned subsidiary of
Resources.

THE ADMINISTRATOR. The administrator of the Fund is Franklin Templeton
Services, LLC ("FT Services"), whose principal address is also One Franklin
Parkway, San Mateo, CA 94403. Under an agreement with the Fund, FT Services
performs certain administrative functions, such as portfolio recordkeeping,
for the Fund. FT Services is an indirect wholly-owned subsidiary of
Resources.

THE TRANSFER AGENT AND CUSTODIAN. The transfer agent, registrar and
dividend disbursement agent for the Common

Shares, and shareholder servicing agent for the
Preferred Shares, is PFPC, Inc., 4400 Computer Drive, Westborough, MA
01850.

Bank of New York Mellon, Mutual Funds Division, 100 Colonial Center
Parkway, Suite 300, Lake Mary, FL 32746, acts as custodian of the Fund's
securities and other assets and serves as auction agent, transfer agent,
registrar, dividend paying agent and redemption agent for the Preferred
Shares.

REPORTS TO SHAREHOLDERS AND FINANCIAL STATEMENTS. The Fund's last audited
financial statements and annual report for the fiscal year ended March 31,
2007, are available free of charge. To obtain a copy, please call
1-800/DIAL BEN(R) or forward a written request to Franklin Templeton Investor
Services, LLC, P.O. Box 997151, Sacramento, CA 95899-9983.

PRINCIPAL SHAREHOLDERS. As of July 24, 2007, the Fund had 26,773,771.733
Common Shares outstanding, 2,534 Preferred Shares Series M, 2,533 Preferred
Shares Series W and 2,533 Preferred Shares Series F outstanding, and total
net assets of $370,300,925. The Fund's Common Shares are listed on the
American Stock Exchange ("AMEX") (symbol: FTF). From time to time, the
number of shares held in "street name" accounts of various securities
dealers for the benefit of their clients may exceed 5% of the total shares
outstanding. To the knowledge of the Fund's management, as of July 24,
2007, there were no other entities holding beneficially or of record more
than 5% of the Fund's outstanding Common Shares or Preferred Shares, except
as shown in the following tables:

PREFERRED SHARES:

----------------------------------------------------------------------------
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF OUTSTANDING
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PREFERRED SHARES
----------------------------------------------------------------------------

Citigroup Global Markets, 3,940 51.8%
Inc.
390 Greenwich Street
5th Floor
New York, NY 10013

UBS Securities LLC 1,178 15.5%
1285 Avenue of the Americas
New York, NY 10019

Wachovia Securities, Inc. 1,176 15.5%
Riverfront Plaza
3rd Floor
901 East Byrd Street
Richmond, VA 23219

Oppenheimer & Co. Inc. 812 10.7%
125 Broad Street
New York, NY 10004

Merrill Lynch, Pierce, 494 6.5%
Fenner & Smith Inc.
250 Vesey Street
7th Floor
New York, NY 10281-1205

(1) Combined holdings of Series M, Series W and Series F Preferred Shares.
The nature of beneficial ownership is shared voting and dispositive
power.

COMMON SHARES:

---------------------------------------------------------------------------
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF OUTSTANDING
BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON SHARES
----------------------------------------------------------------------------

First Trust Portfolios L.P. 2,726,640(1) 10.2%(2)
First Trust Advisors L.P.
The Charger Corporation
1001 Warrenville Road
Lisle, IL 60532

Morgan Stanley 1,898,825(3) 7.1%(4)
1585 Broadway
New York, NY 10036
Van Kampen Funds Inc.
Harborside Financial Center
II
Floor 2
Jersey City, NJ 07311

(1) The nature of beneficial ownership is shared voting and dispositive
power, as reported on Schedule 13G, filed with the U.S. Securities and
Exchange Commission as of June 29, 2007.
(2) The nature of beneficial ownership is shared voting and dispositive
power, as reported on Schedule 13G, filed with the U.S. Securities and
Exchange Commission as of June 29, 2007.
(3) The nature of beneficial ownership is sole voting and dispositive power
by each of Morgan Stanley (parent holding company) and Van Kampen Funds
Inc. (broker-dealer and wholly-owned subsidiary), as reported on
Schedule 13G, jointly filed with the Securities and Exchange Commission
as of December 31, 2006.
(4) As reported on Schedule 13G, filed with the U.S. Securities and
Exchange Commission as of December 31, 2006.

In addition, to the knowledge of the Fund's management, as of July 24,
2007, no Trustee of the Fund owned 1% or more of the outstanding Common
Shares or Preferred Shares of the Fund, and the Officers and Trustees of
the Fund owned, as a group, less than 1% of the outstanding Common Shares
or Preferred Shares of the Fund.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. U.S. securities
laws require that the Fund's Trustees, officers and shareholders owning
more than 10% of outstanding Common Shares and Preferred Shares, as well as
affiliated persons of its Investment Manager, report their ownership of the
Fund's Common Shares and Preferred Shares and any changes in that
ownership. Specific due dates for these reports have been established and
the Fund is required to report in this proxy statement any failure to file
by these dates during the fiscal year ended March 31, 2007. Based solely on
its review of copies of such reports or written representations from such
Trustees, officers, and 10% shareholders, the Fund believes that all
Section 16(a) filing requirements applicable to its Trustees, officers, and
10% shareholders were complied with during the fiscal year ended March 31,
2007.

CONTACTING THE BOARD OF TRUSTEES.If a shareholder wishes to send a
communication to the Board, such correspondence should be in writing and
addressed to the Board of Trustees at the Fund's offices, One Franklin
Parkway, San Mateo, California 94403. The correspondence will then be
given to the Board for its review and consideration.

? AUDIT COMMITTEE

The Board has a standing Audit Committee currently consisting of Messrs.
LaHaye, Carlson, Olson and Wilson (Chairman), all of whom are Independent
Trustees and also are considered to be "independent" as that term is
defined by the AMEX's listing standards. The Fund's Audit Committee is
responsible for the appointment, compensation and retention of the Fund's
independent registered public accounting firm ("auditors"), including
evaluating their independence, recommending the selection of the Fund's
auditors to the full Board, and meeting with such auditors to consider and
review matters relating to the Fund's financial reports and internal
auditing.

SELECTION OF AUDITORS. The Audit Committee and the Board have selected the
firm of PricewaterhouseCoopers LLP ("PwC") as auditors of the Fund for the
current fiscal year. Representatives of PwC are not expected to be present
at the Meeting, but will have the opportunity to make a statement if they
wish, and will be available should any matter arise requiring their
presence.

AUDIT FEES. The aggregate fees paid to PwC for professional services
rendered by PwC for the audit of the Fund's annual financial statements or
for services that are normally provided by PwC in connection with statutory
and regulatory filings or engagements were $31,437 for the fiscal year
ended March 31, 2007 and $28,091 for the fiscal year ended March 31, 2006.

AUDIT-RELATED FEES. The aggregate fees paid to PwC for assurance and
related services rendered by PwC to the Fund that are reasonably related to
the performance of the audit of the Fund's financial statements and are not
reported under "Audit Fees" above were $10,920 for
the fiscal year ended March 31, 2007 and $10,500 for the fiscal year ended
March 31, 2006. The services for which these fees were paid included
attestation services.

In addition, the Audit Committee pre-approves PwC's engagement for
audit-related services to be provided
to the Investment Manager and certain entities controlling, controlled by
or under common control with the Investment Manager that provides ongoing
services to the Fund, which engagements relate directly to operations and
financial reporting of the Fund. There were no fees paid to PwC for these
services.

TAX FEES. There were no fees paid to PwC for professional services rendered
by PwC to the Fund for tax compliance, tax advice and tax planning ("tax
services") for the fiscal years ended March 31, 2007 and March 31, 2006.

In addition, the Audit Committee pre-approves PwC's engagement to the
Investment Manager and certain entities controlling, controlled by, or
under common control with the Investment Manager that provide ongoing
services to the Fund, which engagements relate directly to the operations
and financial reporting of the Fund. The fees for these tax services were
$46,000 for the fiscal year ended March 31, 2007 and $0 for the fiscal year
ended March 31, 2006.

ALL OTHER FEES. The aggregate fees paid to PwC for products and services
rendered by PwC to the Fund not reported in previous paragraphs were $213
for the fiscal year ended March 31, 2007 and $0 for the fiscal year ended
March 31, 2006.

In addition, the Audit Committee pre-approves PwC's engagement for other
services with the Investment Manager and certain entities controlling,
controlled by, or under common control with the Investment Manager that
provide ongoing services to the Fund, which engagements relate directly to
the operations and financial reporting of the Fund. The fees for these
other services not reported in previous paragraphs, were $176,074 for the
fiscal year ended March 31, 2007 and $0 for the fiscal year ended March 31,
2006.

AGGREGATE NON-AUDIT FEES. The aggregate fees paid to PwC for non-audit
services to the Fund, to the Investment Manager or to any entity
controlling, controlled by, or under common control with the Investment
Manager that provides ongoing services to the Fund were $233,207 for the
fiscal year ended March 31, 2007 and $10,500 for the fiscal year ended
March 31, 2006.

The Audit Committee has determined that the provision of the non-audit
services that were rendered to the Investment Manager and certain entities
controlling, controlled by, or under common control with the Investment
Manager that provide ongoing services to the Fund is compatible with
maintaining PwC's independence.

AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES. As of the date of
this proxy statement, the Audit Committee has not adopted pre-approval
policies and procedures. As a result, all such services described above and
provided by PwC must be directly pre-approved by the Audit Committee.

AUDIT COMMITTEE REPORT. The Board has adopted and approved a revised formal
written charter for the Audit Committee, which sets forth the Audit
Committee's responsibilities. A copy of the charter was attached to the
proxy statement for the 2005 Annual Shareholders' Meeting.

As required by the charter, the Audit Committee reviewed the Fund's audited
financial statements and met with management, as well as with PwC, the
Fund's auditors, to discuss the financial statements.

The Audit Committee received the written disclosures and the letter from
PwC required by Independence Standards Board Standard No. 1. The Audit
Committee also received the report of PwC regarding the results of their
audit. In connection with their review of the financial statements and the
auditors' report, the members of the Audit Committee discussed with a
representative of PwC, the independence of PwC, as well as the following:
the auditors' responsibilities in accordance with generally accepted
auditing standards; the auditors' responsibilities for information prepared
by management that accompanies the Fund's audited financial statements and
any procedures performed and the results; the initial selection of, and
whether there were any changes in, significant accounting policies or their
application; management's judgments and accounting estimates; whether there
were any significant audit adjustments; whether there were any
disagreements with management; whether there was any consultation with
other accountants; whether there were any major issues discussed with
management prior to the auditors' retention; whether the
auditors encountered any difficulties in dealing with
management in performing the audit; and the auditors' judgments about the
quality of the Fund's accounting principles.

Based on its review and discussions with management and the Fund's
auditors, the Audit Committee did not become aware of any material
misstatements or omissions in the financial statements.

Accordingly, the Audit Committee recommended to the Board that the audited
financial statements be
included in the Fund's Annual Report to Shareholders for
the fiscal year ended March 31, 2007 for filing with the U.S. Securities
and Exchange Commission.

AUDIT COMMITTEE
Frank W.T. LaHaye
Robert F. Carlson
Frank A. Olson
John B. Wilson (Chairman)

FURTHER INFORMATION ABOUT VOTING AND THE MEETING

SOLICITATION OF PROXIES. Your vote is being solicited by the Board. The
cost of soliciting these proxies, including the fees of any proxy
soliciting agent, is borne by the Fund. The Fund reimburses brokerage firms
and others for their expenses in forwarding proxy material to the
beneficial owners and soliciting them to execute their proxies. In
addition, the Fund may retain a professional proxy solicitation firm to
assist with any necessary solicitation of proxies. The Fund expects that
the solicitation would be primarily by mail, but may also include
telephone, telecopy, electronic or oral solicitations. If the Fund does not
receive your proxy by a certain time you may receive a telephone call from
a proxy soliciting agent asking you to vote. If professional proxy
solicitors are retained, it is expected that soliciting fees would be
approximately $5,000, plus expenses. The Fund does not reimburse Trustees
and officers of the Fund, or regular employees and agents of the Investment
Manager, involved in the solicitation of proxies. The Fund intends to pay
all costs associated with the solicitation and the Meeting.

VOTING BY BROKER-DEALERS. The Fund expects that, before the Meeting,
broker-dealer firms holding shares of the Fund in "street name" for their
customers will request voting instructions from their customers and
beneficial owners. If these instructions are not received by the date
specified in the broker-dealer firms' proxy solicitation materials, the
Fund understands that the broker-dealers are permitted to vote on the
Proposal to be considered at the Meeting on behalf of their customers and
beneficial owners. Certain broker-dealers may exercise discretion over
shares held in their name for which no instructions are received by voting
those shares in the same proportion as they vote shares for which they
received instructions.

QUORUM. A majority of the shares entitled to vote - present in person or
represented by proxy - constitutes a quorum at the Meeting. The shares over
which broker-dealers have discretionary voting power, the shares that
represent "broker non-votes" (i.e., shares held by brokers or nominees as
to which (i) instructions have not been received from the beneficial owners
or persons entitled to vote and (ii) the broker or nominee does not have
discretionary voting power on a particular matter), and the shares whose
proxies reflect an abstention or withhold authority on any item are all
counted as shares present and entitled to vote for purposes of determining
whether the required quorum of shares exists. However, because the Proposal
is the only matter currently expected to be presented at the Meeting, the
Fund does not anticipate that there will be any broker non-votes or
abstentions.

REQUIRED VOTE. Provided that a quorum is present, Trustees must be elected
by not less than a plurality of the votes cast of the shares entitled to
vote thereon. All voting rights are non-cumulative, which means that the
holders of more than 50% of the shares voting for the election of Trustees
can elect 100% of such Trustees standing for election if they choose to do
so.

Abstentions and broker non-votes will be treated as votes present at the
meeting, but will not be treated as votes cast. Abstentions and broker
non-votes, therefore, will not be counted for purposes of obtaining
approval of the Proposal. As discussed above, the Fund does not anticipate
there will be any broker non-votes or abstentions.

ADJOURNMENT. Whether or not a quorum is present at the Meeting, the Meeting
may be adjourned from time to time for any reason whatsoever by vote of the
holders of shares entitled to vote holding not less than a majority of the
shares present in person or by proxy at the Meeting, or by the Chairman of
the Board, the president of the Fund in the absence of the Chairman or
certain other authorized officers. The persons named as proxies will vote
in their discretion on questions of adjournment those shares for which
proxies have been received.

SHAREHOLDER PROPOSALS. The Fund anticipates that its next annual meeting
will be held on or about September 25, 2008. Shareholder proposals to be
presented at the next annual meeting must be received at the Fund's
offices, One Franklin Parkway, San Mateo, California 94403, Attention:
Secretary no later than April 22, 2008, in order to be considered for
inclusion in the Fund's proxy statement and proxy card relating to that
meeting and presented at that meeting.

A shareholder of the Fund who has not submitted a written proposal for
inclusion in the Fund's proxy statement by April 22, 2008, as described
above, may nonetheless present a proposal at the Fund's 2008 Annual Meeting
of Shareholders if such shareholder notifies the Fund of such proposal in
writing at the Fund's offices not earlier than April 28, 2008 and not later
than
May 28, 2008. If a shareholder fails to give notice within these dates,
then the matter shall not be eligible for consideration at the
shareholders' meeting. If, notwithstanding the effect of the foregoing
notice provisions, a shareholder proposal is acted upon at the 2008 Annual
Meeting of Shareholders, the persons designated as proxy holders for
proxies solicited by the Board for the 2008 Annual Meeting of Shareholders
may exercise discretionary voting power with respect to any shareholder
proposal not received by the Fund at the Fund's offices by July 6, 2008. A
shareholder proposal may be presented at the 2008 Annual Meeting of
Shareholders only if such proposal concerns a matter that may be properly
brought before the meeting under applicable federal proxy rules and state
law.

In addition to the requirements set forth above, a shareholder must comply
with the following:

1. A shareholder intending to present a proposal must (i) be entitled
to vote at the meeting; (ii) comply with the notice procedures set forth in
this proxy statement; and (iii) have been a shareholder of record at the
time the shareholder's notice was received by the Fund.

2. Each notice regarding nominations for the election of Trustees
shall set forth (i) the name, age, business address and, if known,
residence address of each nominee proposed in such notice; (ii) the
principal occupation or employment of each such nominee; (iii) the number
of shares of the Fund which are beneficially owned by each such nominee;
(iv) whether such shareholder believes each such nominee is or will be an
"interested person" of the Fund (as defined in the 1940 Act); (v) the
written and signed consent of each such person to be nominated, to be named
as a nominee and to serve as a trustee if elected; and (vi) all such other
information regarding each such nominee as would have been required to be
included in a proxy statement filed pursuant to the proxy rules of the SEC
had each such nominee been nominated by the Trustees of the Fund. In
addition, the shareholder making such nomination shall promptly provide any
other information reasonably requested by the Fund.

3. Each notice regarding business proposals shall set forth as to each
matter: (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the
meeting; (ii) the name and address, as they appear on the Fund's books, of
the shareholder proposing such business; (iii) the number of shares of the
Fund which are beneficially owned by the shareholder; (iv) any material
interest of the shareholder in such business; and (v) all such other
information regarding each such matter that would have been required to be
included in a proxy statement filed pursuant to the proxy rules of the SEC,
had each such matter been proposed by the Board of Trustees of the Fund.

Submission of a proposal by a shareholder does not guarantee that the
proposal will be included in the Fund's proxy statement or presented at the
meeting.

No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or
postponement of the
Meeting, the persons named on the enclosed proxy card

will vote on such matters in accordance with the views of management.

By order of the Board of Trustees,

Karen L. Skidmore
VICE PRESIDENT AND SECRETARY

Dated: August 20, 2007
San Mateo, California

PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN
THE ENCLOSED ENVELOPE.
-------------------------------------------------------------------------------
PROXY -- FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST
-------------------------------------------------------------------------------

ANNUAL SHAREHOLDERS' MEETING - SEPTEMBER 26, 2007

The undersigned hereby revokes all previous proxies for his or
her shares of Franklin Templeton Limited Duration Income Trust
(the "Fund") and appoints Craig S. Tyle, David P. Goss and Karen
L. Skidmore, and each of them, proxies of the undersigned with
full power of substitution to vote all shares of the Fund that
the undersigned is entitled to vote at the Fund's Annual
Shareholders' Meeting (the "Meeting") to be held at One Franklin
Parkway, Building 920, San Mateo, CA 94403-1906 at 2:00 p.m.,
Pacific time, on September 26, 2007, including any postponements
or adjournments thereof, upon the matter set forth on the
reverse side, and instructs them to vote upon any other matters
that may properly be acted upon at the Meeting.

THE BOARD OF TRUSTEES OF THE FUND SOLICITS THIS PROXY. IT WILL
BE VOTED AS SPECIFIED ON THE REVERSE. IF NO SPECIFICATION IS
MADE, THIS PROXY SHALL BE VOTED FOR THE ELECTION OF NOMINEES FOR
TRUSTEE FOR THE TERMS SPECIFIED IN THE PROXY STATEMENT. IF ANY
OTHER MATTERS PROPERLY COME BEFORE THE MEETING TO BE VOTED ON,
THE PROXY HOLDERS WILL VOTE, ACT AND CONSENT ON THOSE MATTERS IN
ACCORDANCE WITH THE VIEWS OF MANAGEMENT. MANAGEMENT IS NOT
AWARE OF ANY SUCH MATTER.

IMPORTANT: PLEASE SEND IN YOUR PROXY TODAY.

YOU ARE URGED TO DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. THIS
WILL SAVE THE EXPENSE OF FOLLOW-UP LETTERS TO SHAREHOLDERS WHO
HAVE NOT RESPONDED.

SEE REVERSE SIDE CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
SEE REVERSE SIDE

FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST

Using a BLACK INK pen, mark your votes with an X as
shown in this example. Please do not write outside [X]
the designated areas.

-------------------------------------------------------------------------------------------------------------------------------
ANNUAL MEETING PROXY CARD
-------------------------------------------------------------------------------------------------------------------------------

PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
-------------------------------------------------------------------------------------------------------------------------------

[GRAPHIC OMITTED]
A ELECTION OF TRUSTEES -- THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR ALL THE NOMINEES LISTED.
---

1. Nominees: FOR WITHHOLD FOR WITHHOLD FOR WITHHOLD
01 - Harris J. Ashton [ ] [ ] 02 - Sam Ginn [ ] [ ] 03 - Edith E. Holiday [ ] [ ] +

04 - Larry D. Thompson [ ] [ ] 05 - John B. Wilson [ ] [ ]

[GRAPHIC OMITTED]
B NON-VOTING ITEMS
CHANGE OF ADDRESS -- Please print new address below. MEETING ATTENDANCE [ ]
---------------------------------------------------------------------------------------------------- Mark box to the right
if you plan to attend
---------------------------------------------------------------------------------------------------- the Annual Meeting.

[GRAPHIC OMITTED]
C AUTHORIZED SIGNATURES -- THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO BE COUNTED. -- DATE AND SIGN BELOW
Note: Please sign exactly as your name appears on the proxy. If signing for estates, trusts or corporations,
your title or capacity should be stated. If shares are held jointly, any one holder must sign.

Date (mm/dd/yyyy) -- Please print date below. Signature 1 -- Please keep signature Signature 2 -- Please keep signature
within the box. within the box.
------------------------------- ------------------------------------ ------------------------------------
/ /
------------------------------- ------------------------------------ ------------------------------------