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Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of Franklin Templeton Limited Duration Income Trust
In planning and performing our audit of the financial statements of Franklin Templeton Limited Duration Income Trust ("the Fund") as of and for the year ended March 31, 2010, in accordance with the standards of the Public Company Accounting Oversight Board (United States), we considered the Fund's internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-SAR, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Fund's internal control over financial reporting.
The management of the Fund is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A fund's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A fund's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the fund; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the fund are being made only in accordance with authorizations of management and trustees of the fund; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a fund's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Fund's annual or interim financial statements will not be prevented or detected on a timely basis.
Our consideration of the Fund's internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control over financial reporting that might be material weaknesses under standards established by the Public Company Accounting Oversight Board (United States). However, we noted no deficiencies in the Fund's internal control over financial reporting and its operation, including controls over safeguarding securities, that we consider to be material weaknesses as defined above as of March 31, 2010.
This report is intended solely for the information and use of management and the Board of Trustees of Franklin Templeton Limited Duration Income Trust and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.
May 19, 2010
NAME OF REGISTRANT
Franklin Templeton Limited Duration Income Trust File No. 811-21357
EXHIBIT ITEM No. 77Q1: Exhibits
FRANKLIN TEMPLETON LIMITED DURATION INCOME TRUST
CERTIFICATE OF SECRETARY
I, Karen L. Skidmore, Vice President and Secretary of Franklin Templeton
Limited Duration Income Trust ("Trust"), hereby certify that the following
is the true and correct amendment to the Bylaws of the Trust as approved by
the Board of Trustees of the Trust and effective on February 23, 2010:
ARTICLE IX
COMPLIANCE WITH FITCH RATING GUIDELINES
Section 1. OVERCOLLATERALIZATION TESTS. For as long as the Trust has outstanding Auction Preferred Shares, Series M, Series W or Series F (collectively, "AP Shares"), as described in that certain Statement of Preferences of Auction Rate Preferred Shares (the "Statement") dated October 20, 2003, and the AP Shares are rated by Fitch, Inc. ("Fitch"), the Trust shall maintain asset coverage ratios with respect to the Fitch Total Overcollateralization Test ("Fitch Total OC Test") and the Fitch Net Overcollateralization Test ("Fitch Net OC Test") consistent with maintaining a Fitch rating of AAA, as described by Fitch in Closed-End Fund Debt and Preferred Stock Rating Criteria dated August 17, 2009, as the same may be amended from time to time and made publicly available by Fitch on its website or such other location as Fitch may designate by reasonable notice (collectively, the "Fitch OC Tests").
Section 2. VALUATION PERIOD. The Trust shall calculate its compliance with the Fitch OC Tests weekly (each such weekly calculation date to be referred to as a "Valuation Date") and will send the calculation to Fitch monthly.
Section 3. CURE PERIOD. If in any weekly valuation the Trust fails to comply with the Fitch OC Tests, the Trust shall have ten (10) business days from such Valuation Date to restore compliance with such coverage ratios (such tenth (10th) business day to be referred to as the "Cure Date"). The Trust may restore compliance through any combination of deleveraging, portfolio rebalancing, suspending dividends or distribution payments on common shares, or such other means as the officers of the Trust deem necessary, desirable or appropriate to restore compliance with the Fitch OC Tests.
Section 4. MANDATORY REDEMPTION. In the event that the Trust fails to comply with the Fitch OC Tests on a Valuation Date and fails to restore compliance by the closed of business on the Cure Date, the Trust shall conduct a mandatory redemption of AP Shares in accordance with Section 9(b) of Part I of the Statement and such other provisions of the Statement as shall be applicable to mandatory redemptions. Such mandatory redemption shall take place within thirty (30) days of the Cure Date (the date on which the redemption takes place to be referred to as the "Redemption Date"). During the period between the Cure Date and the Redemption Date, the Trust shall not issue or incur additional leverage, nor declare or pay dividends or distribution on common shares.
IN WITNESS WHEREOF, the undersigned has caused this certificate to be signed on this 23rd day of March, 2010.
/s/Karen L. Skidmore Karen L. Skidmore Vice President and Secretary Franklin Templeton Limited Duration Income Trust |