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

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number 811-5569
--------

FRANKLIN UNIVERSAL TRUST
------------------------
(Exact name of registrant as specified in charter)

ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
(Address of principal executive offices) (Zip code)

MURRAY L. SIMPSON, ONE FRANKLIN PARKWAY, SAN MATEO, CA 94403-1906
-----------------------------------------------------------------
(Name and address of agent for service)

Registrant's telephone number, including area code: (650) 312-2000
--------------

Date of fiscal year end: 8/31
----

Date of reporting period: 8/31/03
-------

ITEM 1. REPORTS TO STOCKHOLDERS.

[GRAPHIC OMITTED]

ANNUAL REPORT AND SHAREHOLDER INFORMATION

INCOME

FRANKLIN UNIVERSAL TRUST

[LOGO OMITTED]

FRANKLIN(R) TEMPLETON(R)
INVESTMENTS

Franklin o Templeton o Mutual Series

Franklin Templeton Investments

GAIN FROM OUR PERSPECTIVE

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

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

FRANKLIN. Founded in 1947, Franklin is a leader in tax-free investing and a
driving force in fixed income investing around the globe. They also bring
expertise in growth- and value-style U.S. equity investing.

TEMPLETON. Founded in 1940, Templeton pioneered international investing and, in
1954, launched what has become the industry's oldest global fund. Today, with
research offices in over 25 countries, they offer investors the broadest global
reach in the industry.

MUTUAL SERIES. Established in 1949, Mutual Series is dedicated to a unique style
of value investing, searching aggressively for opportunity among undervalued
stocks, arbitrage situations and distressed companies.

Because our management groups work independently and adhere to distinctly
different investment approaches, Franklin, Templeton and Mutual Series funds
typically have a low overlap of securities. That's why our funds can be used to
build truly diversified portfolios covering every major asset class.

At Franklin Templeton Investments, we seek to consistently provide investors
with exceptional risk-adjusted returns over the long term, as well as the
reliable account services that have helped us become one of the most trusted
names in financial services.

SPECIALIZED EXPERTISE

TRUE DIVERSIFICATION

RELIABILITY YOU CAN TRUST

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

[GRAPHIC OMITTED]

Not part of the annual report

Contents

ANNUAL REPORT

Franklin Universal Trust .......... 1

Performance Summary ............... 5

Annual Shareholders' Meeting ...... 6

Dividend Reinvestment and
Cash Purchase Plan ................ 7

Financial Highlights &
Statement of Investments .......... 10

Financial Statements .............. 17

Notes to Financial Statements ..... 21

Independent
Auditors' Report .................. 26

Tax Designation ................... 27

Board Members and Officers ........ 28

Proxy Voting Policies
and Procedures .................... 33

Annual Report

Franklin Universal Trust

YOUR TRUST'S GOAL: Franklin Universal Trust seeks to provide high, current
income consistent with preservation of capital.

Dear Shareholder:

We are pleased to bring you this annual report for Franklin Universal Trust,
which covers the period ended August 31, 2003.

PERFORMANCE OVERVIEW

During the year under review, the Trust's cumulative total return was +21.63%
based on change in net asset value and -10.13% based on change in market price
on the New York Stock Exchange, as shown in the Performance Summary on page 5.
The Credit Suisse First Boston (CSFB) High Yield Index returned 23.10%, while
utilities stocks, as measured by the Standard & Poor's (S&P) Utilities Index,
returned 2.26% for the fiscal year ended August 31, 2003. 1

1. Source: Standard & Poor's Micropal. The CSFB High Yield Index is a
trader-priced portfolio constructed to mirror the high yield debt market and
includes reinvested interest. Treasuries, if held to maturity, offer a fixed
rate of return and fixed principal value, their interest payments and principal
are guaranteed. The S&P Utilities Index is a market capitalization-weighted
index that includes utility stocks in the Standard & Poor's 500 Composite Index.
The S&P 500 consists of 500 stocks chosen for market size, liquidity and
industry group representation. Each stock's weight in the index is proportionate
to its market value. The S&P 500 is one of the most widely used benchmarks of
U.S. equity performance. The indexes are unmanaged and include reinvested
distributions. One cannot invest directly in an index, nor is an index
representative of the Fund's portfolio.

THE DOLLAR VALUE, NUMBER OF SHARES OR PRINCIPAL AMOUNT, AND COMPLETE LEGAL
TITLES OF ALL PORTFOLIO HOLDINGS ARE LISTED IN THE TRUST'S STATEMENT OF
INVESTMENTS (SOI). THE SOI BEGINS ON PAGE 11.

Annual Report | 1

ECONOMIC AND MARKET OVERVIEW

The economy experienced mixed results during the Trust's fiscal year. Energy
prices remained at elevated levels, with crude oil ending the period at $33.75
per barrel compared with $28.22 at the beginning of the period. Natural gas
prices averaged $5.24 per million BTU for the year ended August 31, 2003, nearly
double the $2.78 average of the prior fiscal year. However, overall inflation
remained tame, with the core Consumer Price Index, excluding food and energy, at
just 1.3% annualized in August. Employment remained weak, with unemployment
reaching 6.4% in June 2003 before falling slightly to 6.2% in July and 6.1% in
August. To help jump-start the uneven economic recovery, the Federal Reserve
Board cut the federal funds target rate 75 basis points (0.75%) during the
period and the federal government implemented the biggest tax cuts since the
Reagan administration. Such stimulus appeared to be taking hold, as the
benchmark 10-year Treasury bond's yield declined to 45-year low levels in
mid-June when the economic outlook remained cloudy, but spiked since then to
one-year highs as signs of an economic recovery emerged. Furthermore, the
domestic stock market, as measured by the Standard & Poor's 500 Composite Index,
rose since March on expectations of improving corporate earnings.

High yield bonds were strong performers during the Trust's fiscal year as signs
of an economic recovery, the absence of any major new corporate scandals, and
many investors' appetite for yield contributed to higher bond prices. High yield
bonds began the fiscal year yielding 9.68 percentage points more than comparable
Treasury bonds, which was well above the 5.84 percentage historical average, and
they ended the period at a 5.93 percentage point spread. 1

The S&P Utilities Index's 2.26% return for the year masked tremendous volatility
that occurred during the reporting period. From the beginning of the fiscal year
until mid-February, the S&P Utilities Index declined 16.39%. Then, following the
Treasury bond rally and helped by potential dividend tax rate reductions, the
S&P Utilities Index returned 28.42% from mid-February through mid-June. On June
13, interest rates began to rise, negatively impacting utility stocks, and from
that date through August 31, the index fell 4.77%. 1

INVESTMENT STRATEGY

We invest primarily in two asset classes: high yield bonds and utility stocks.
Within the high yield portion of the portfolio, we use fundamental research to
invest in a diversified portfolio of bonds. Within the utility portion of the
portfolio, we focus on companies with attractive dividend yields and with a
history of increasing their dividends.

[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:

Portfolio Breakdown
Based on Total Market Value as of 8/31/03

Corporate Bonds 67.3%

Utilities Stocks 21.6%

Foreign Government
U.S. Dollar-Denominated Bonds 4.2%

Misc. Equities & Preferred Stocks 4.0%

Convertible Bonds 2.0%

Natural Resources Equities &
Preferred Stocks 0.6%

Foreign Government Agencies 0.3%

2 | Annual Report

MANAGER'S DISCUSSION

During the year under review, the Trust benefited from above-normal exposure
to high yield bonds and from relatively low exposure to utility stocks. High
yield bond returns were driven by fundamental and technical factors. On the
fundamental side, a declining default rate, renewed access to capital markets,
and companies' focus on paying down debt led to an expected improvement in
credit quality for high yield issuers. Technical support, in the form of inflows
into the high yield asset class, came from investors seeking yield in a low
nominal interest rate environment, as well as from those seeking an alternative
investment to equity markets.

HIGH YIELD CORPORATE BONDS

The Trust benefited from its overweighted positions in the wireless
(communications) and cable (consumer services) industries relative to the CSFB
High Yield Index. The wireless industry rebounded from low levels reached at the
end of the prior fiscal year when investors were worried about the industry's
growth prospects and access to capital. The rebound was largely due to several
factors, including renewed access to capital markets, fundamental credit
improvement driven by debt reduction and deferral of capital expenditures, and
subscriber growth. The cable industry benefited as valuations in public equity
markets and private transactions stabilized and in some cases increased,
implying improved support for high yield bonds in the industry.

The Trust's performance in the high yield sector was impeded by relatively
underweighted positions in certain industries that performed strongly during the
period, such as utilities. Given the Trust's utility stock weighting and overall
sector exposure, we kept high yield utility bond exposure fairly low. However,
among high yield bonds utilities were one of the best-performing sectors, so the
Trust's relatively underweighted utility bond exposure hindered performance.
Likewise, the Trust had a relatively underweighted telecommunications
(communications) industry position. Many such bonds produced solid returns as
they rebounded from depressed valuations. However, due to many defaults over the
past several years, there were few non-distressed companies remaining in the
telecommunications industry, and given a lack of sufficient investment
opportunities, the Trust was underweighted relative to the CSFB High Yield Index
during the fiscal year.

UTILITY STOCKS

Although the Trust actively increased utility stock exposure over the course of
the fiscal year, on August 31, 2003, the Trust still held a relatively low 21.6%
of total market value in utilities stocks. This positioning benefited
performance, as utility stocks were up only 2.26%, as measured by the S&P
Utilities Index, for the year under review. 1 Utility stocks generally benefited
from a focus on paying down

TOP 10 HOLDINGS
Based on Total Market Value
8/31/03 vs. 8/31/02

- -------------------------------------
8/31/03
- -------------------------------------
Southern Co. 2.3%
- -------------------------------------
FPL Group Inc. 2.1%
- -------------------------------------
Dominion Resources Inc. 2.0%
- -------------------------------------
United Mexican States 1.8%
- -------------------------------------
Republic of Bulgaria 1.7%
- -------------------------------------
Gulfterra Energy Partners 1.7%
- -------------------------------------
Hollywood Park 1.6%
- -------------------------------------
Nicor Inc. 1.6%
- -------------------------------------
Legrand SA 1.6%
- -------------------------------------
D.R. Horton Inc. 1.5%
- -------------------------------------

- -------------------------------------
8/31/02
- -------------------------------------
Riverwood International 2.8%
- -------------------------------------
EchoStar Broadband 2.5%
- -------------------------------------
FPL Group Inc. 2.5%
- -------------------------------------
Anchor Glass 2.4%
- -------------------------------------
DTE Energy 2.3%
- -------------------------------------
Sinclair Capital 2.3%
- -------------------------------------
Station Casinos Inc. 2.3%
- -------------------------------------
Host Marriott LP 2.2%
- -------------------------------------
Nortek Inc. 2.2%
- -------------------------------------
Southern Co. 2.2%
- -------------------------------------

Annual Report| 3

debt and increasing dividends, as management teams returned to the basics after
poor results with non-regulated assets. There was also a technical boost from
dividend tax rate reductions. However, this benefit was largely offset toward
the end of the fiscal year by the increase in Treasury yields.

Thank you for your participation in Franklin Universal Trust. We look forward to
serving you in the future.

Sincerely,

/S/ CHRISTOPHER J. MOLUMPHY

Christopher J. Molumphy, CFA
Senior Portfolio Manager

/S/ GLENN I. VOYLES

Glenn I. Voyles, CFA
Portfolio Manager

Franklin Universal Trust

THIS DISCUSSION REFLECTS OUR ANALYSIS, OPINIONS AND PORTFOLIO HOLDINGS AS OF
AUGUST 31, 2003, THE END OF THE REPORTING PERIOD. OUR STRATEGIES AND THE TRUST'S
PORTFOLIO COMPOSITION WILL CHANGE DEPENDING ON MARKET AND ECONOMIC CONDITIONS.
THESE OPINIONS MAY NOT BE RELIED UPON AS INVESTMENT ADVICE OR AN OFFER FOR A
PARTICULAR SECURITY. THE INFORMATION IS NOT A COMPLETE ANALYSIS OF EVERY ASPECT
OF ANY MARKET, COUNTRY, INDUSTRY, SECURITY OR THE TRUST. STATEMENTS OF FACT ARE
FROM SOURCES CONSIDERED RELIABLE, BUT THE ADVISOR MAKES NO REPRESENTATION OR
WARRANTY AS TO THEIR COMPLETENESS OR ACCURACY. ALTHOUGH HISTORICAL PERFORMANCE
IS NO GUARANTEE OF FUTURE RESULTS, THESE INSIGHTS MAY HELP YOU UNDERSTAND OUR
INVESTMENT MANAGEMENT PHILOSOPHY.

4 | Annual Report

Performance Summary as of 8/31/03

Your dividend income will vary depending on dividends or interest paid by
securities in the Trust's portfolio, adjusted for operating expenses. Capital
gain distributions are net profits realized from the sale of portfolio
securities. Total return reflects the Trust's dividend income, capital gain
distributions, if any, and any unrealized gains or losses. All total returns
include reinvested distributions according to the terms specified in the Trust's
dividend reinvestment and cash purchase plan and do not reflect any sales
charges paid at inception or brokerage commissions paid on secondary market
purchases.

PRICE AND DISTRIBUTION INFORMATION

- -------------------------------------------------------------------------------------------------
CHANGE 8/31/03 8/31/02
- -------------------------------------------------------------------------------------------------

Net Asset Value (NAV) +$0.54 $5.67 $5.13
- -------------------------------------------------------------------------------------------------
Market Price (NYSE) -$1.17 $5.20 $6.37
- -------------------------------------------------------------------------------------------------
DISTRIBUTIONS (9/1/02-8/31/03)
- -------------------------------------------------------------------------------------------------
Dividend Income $0.4990
- -------------------------------------------------------------------------------------------------

PERFORMANCE

- -------------------------------------------------------------------------------------------------
1-YEAR 5-YEAR 10-YEAR
- -------------------------------------------------------------------------------------------------

Cumulative Total Return 1
- -------------------------------------------------------------------------------------------------
Based on change in NAV +21.63% +2.84% +59.65%
- -------------------------------------------------------------------------------------------------
Based on change in market price -10.13% -5.34% +53.34%
- -------------------------------------------------------------------------------------------------
Average Annual Total Return 1
- -------------------------------------------------------------------------------------------------
Based on change in NAV +21.63% +0.56% +4.79%
- -------------------------------------------------------------------------------------------------
Based on change in market price -10.13% -1.09% +4.37%
- -------------------------------------------------------------------------------------------------
Distribution Rate 2 5.31%
- -------------------------------------------------------------------------------------------------

ONGOING MARKET VOLATILITY CAN SIGNIFICANTLY AFFECT SHORT-TERM PERFORMANCE; MORE
RECENT RETURNS MAY DIFFER FROM THOSE SHOWN. INVESTMENT RETURN AND PRINCIPAL
VALUE WILL FLUCTUATE WITH MARKET CONDITIONS, AND YOU MAY HAVE A GAIN OR LOSS
WHEN YOU SELL YOUR SHARES.

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

ENDNOTES

SPECIAL RISKS ARE ASSOCIATED WITH FOREIGN INVESTING, INCLUDING CURRENCY
VOLATILITY, ECONOMIC INSTABILITY AND POLITICAL DEVELOPMENTS OF COUNTRIES WHERE
THE TRUST INVESTS. EMERGING MARKETS INVOLVE HEIGHTENED RISKS RELATED TO THE SAME
FACTORS, IN ADDITION TO THOSE ASSOCIATED WITH THEIR RELATIVELY SMALL SIZE AND
LESSER LIQUIDITY.

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

2. Distribution rate is based on an annualization of the Trust's 2.3 cent per
share August dividend and the NYSE closing price of $5.20 on 8/31/03.

Annual Report | Past performance does not guarantee future results. | 5

Annual Shareholders' Meeting

FEBRUARY 24, 2003

At an Annual Shareholders' Meeting of Franklin Universal Trust (the "Fund") held
on February 24, 2003, shareholders approved the following:

1. Regarding the election of a Board of Trustees of the Fund.

- ------------------------------------------------------------------------------
TRUSTEES SHARES FOR WITHHELD OR ABSTAIN
- ------------------------------------------------------------------------------
Frank H. Abbott 22,475,085.107 593,638.735
- ------------------------------------------------------------------------------
Harris J. Ashton 22,532,108.141 536,615.701
- ------------------------------------------------------------------------------
Robert F. Carlson 22,488,140.030 580,583.812
- ------------------------------------------------------------------------------
S. Joseph Fortunato 22,537,837.141 530,886.701
- ------------------------------------------------------------------------------
Edward B. Jamieson 22,488,512.030 580,211.812
- ------------------------------------------------------------------------------
Charles B. Johnson 22,524,578.141 544,145.701
- ------------------------------------------------------------------------------
Rupert H. Johnson, Jr. 22,539,282.141 529,441.701
- ------------------------------------------------------------------------------
Frank W.T. LaHaye 22,534,589.141 534,134.701
- ------------------------------------------------------------------------------
Gordon S. Macklin 22,535,403.141 533,320.701
- ------------------------------------------------------------------------------

6 | Annual Report

Dividend Reinvestment and Cash Purchase Plan

The Trust's Dividend Reinvestment and Cash Purchase Plan (the "Plan") offers you
a prompt and simple way to reinvest dividends and capital gain distributions in
shares of the Trust. The Plan also allows you to purchase additional shares of
the Trust by making voluntary cash payments. PFPC Inc. (the "Plan Agent"), P.O.
Box 9223, Chelsea, MA 02150-9223, acts as your Plan Agent in administering the
Plan. The complete Terms and Conditions of the Dividend Reinvestment and Cash
Purchase Plan are contained in the Trust's Dividend Reinvestment and Cash
Purchase Plan Brochure. A copy of that Brochure may be obtained from the Trust
at the address on the back cover of this report.

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

If the Trust declares a dividend or capital gain distribution payable either in
cash or in stock of the Trust and the market price of shares on the valuation
date equals or exceeds the net asset value, the Trust will issue new shares to
you at the higher of net asset value or 95% of the then current market price. If
the market price is lower than net asset value and if dividends or capital gain
distributions are payable only in cash, then you will receive shares purchased
on the New York Stock Exchange or otherwise on the open market. If the price
exceeds the net asset value before the Plan Agent has completed its purchases,
the average purchase price may exceed the net asset value, resulting in fewer
shares being acquired than if the Trust had issued new shares. All reinvestments
are in full and fractional shares, carried to three decimal places. The Trust
will not issue shares under the Plan at a price below net asset value.

The Plan permits you on a voluntary basis to submit in cash payments of not less
than $100 each up to a total of $5,000 per month to purchase additional shares
of the Trust. It is entirely up to you whether you wish to buy additional shares
with voluntary cash payments, and you do not have to send in the same amount
each time if you do. These payments should be made by check or money order
payable to PFPC Inc. and sent to PFPC Inc., Attn: Franklin Universal Trust, P.O.
Box 9223, Chelsea, MA 02150-9223.

Your cash payment will be aggregated with the payments of other participants
and invested on your behalf by the Plan Agent in shares of the Trust which are
purchased in the open market.

The Plan Agent will invest cash payments on approximately the 5th of each month
in which no dividend or distribution is payable and, during each month in which
a dividend or distribution is payable, will invest cash payments beginning on
the dividend payment date. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON YOUR
FUNDS HELD BY THE PLAN AGENT. Accordingly, you should send any voluntary cash

Annual Report | 7

payments which you wish to make shortly before an investment date but in
sufficient time to ensure that your payment will reach the Plan Agent not less
than two business days before an investment date. Payments received less than
two business days before an investment date will be invested during the next
month or, if there are more than 30 days until the next investment date, will be
returned to you. You may obtain a refund of any cash payment by written notice,
if the Plan Agent receives the written notice not less than 48 hours before an
investment date.

There is no direct charge to participants for reinvesting dividends and capital
gain distributions, since the Plan Agent's fees are paid by the Trust. However,
when shares are purchased in the open market, each participant will pay a pro
rata portion of any brokerage commissions incurred. The Plan Agent will deduct a
$5.00 service fee from each of your voluntary cash payments.

The automatic reinvestment of dividends and capital gain distributions does not
relieve you of any taxes which may be payable on dividends or distributions. In
connection with the reinvestment of dividends and capital gain distributions, if
the Trust issues new shares, shareholders receiving such shares generally will
be treated as having a distribution equal to the market value of the shares
received, and if shares are purchased on the open market, shareholders generally
will be treated as having received a distribution equal to the cash distribution
that would have been paid.

The Trust does not issue new shares in connection with voluntary cash payments.
All investments are in full and fractional shares, carried to three decimal
places. If the market price exceeds the net asset value at the time the Plan
Agent purchases the additional shares, you will receive shares at a price
greater than the net asset value.

You will receive a monthly account statement from the Plan Agent showing total
dividends and capital gain distributions, date of investment, shares acquired
and price per share, and total shares of record held by you and by the Plan
Agent for you. You are entitled to vote all shares of record, including shares
purchased for you by the Plan Agent, and, if you vote by proxy, your proxy will
include all such shares.

As long as you participate in the Plan, the Plan Agent will hold the shares it
has acquired for you in safekeeping, in its name or in the name of its nominee.
This convenience provides added protection against loss, theft or inadvertent
destruction of certificates. However, you may request that a certificate
representing your Plan shares be issued to you.

8 | Annual Report

You may withdraw from the Plan without penalty at any time by notifying the Plan
Agent, in writing, at the address above. If you withdraw, you will receive,
without charge, stock certificates issued in your name for all full shares. The
Plan Agent will convert any fractional shares you hold at the time of your
withdrawal to cash at current market price and send you a check for the
proceeds.

If you hold shares in your own name, please address all notices, correspondence,
questions, or other communications regarding the Plan to the Plan Agent at the
address noted above. If your shares are not held in your name, you should
contact your brokerage firm, bank, or other nominee for more information and to
determine if your nominee will participate in the Plan on your behalf.

The Trust or the Plan Agent may amend or terminate the Plan. You will receive
written notice at least 90 days before the effective date of termination or of
any amendment. In the case of termination, you will receive written notice at
least 90 days before the record date of any dividend or capital gain
distribution by the Trust.

Annual Report | 9

Franklin Universal Trust

FINANCIAL HIGHLIGHTS

- -----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED AUGUST 31,
2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the year)
Net asset value, beginning of year ................................ $5.13 $ 7.32 $ 8.21 $ 8.91 $ 9.28
--------------------------------------------------------
Income from investment operations:
Net investment income a .......................................... .45 .65 c .73 .81 .82
Net realized and unrealized gains (losses) ....................... .59 (2.05) c (.82) (.65) (.35)
--------------------------------------------------------
Total from investment operations .................................. 1.04 (1.40) (.09) .16 .47
--------------------------------------------------------
Less distributions from:
Net investment income ............................................ (.50) (.79) (.80) (.80) (.84)
Net realized gains ............................................... -- -- -- (.06) --
--------------------------------------------------------
Total distributions ............................................... (.50) (.79) (.80) (.86) (.84)
--------------------------------------------------------
Net asset value, end of year ...................................... $5.67 $ 5.13 $ 7.32 $ 8.21 $ 8.91
--------------------------------------------------------
Market value, end of year b ....................................... $5.20 $6.370 $8.240 $7.688 $8.688

Total return (based on market value per share) .................... (10.13)% (13.68)% 19.01% (.40)% 2.95%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) ................................... $158,364 $141,619 $198,598 $220,742 $239,537
Ratios to average net assets:
Expenses ......................................................... 3.59% 4.05% 3.29% 3.15% 2.92%
Net investment income ............................................ 8.68% 10.04% c 9.38% 9.92% 8.86%
Portfolio turnover rate ........................................... 65.15% 17.38% 31.60% 29.59% 31.62%
Total debt outstanding at end of year (000's) ..................... $ 55,000 $ 60,000 $ 75,000 $ 75,000 $ 75,000
Asset coverage per $1,000 of debt ................................. $ 3,879 $ 3,360 $ 3,648 $ 3,948 $ 4,194
Average amount of Note per share during the year .................. $ 1.87 $ 2.65 $ 2.76 $ 2.79 $ 2.79

aBased on weighted average shares outstanding.
bBased on the last sale on the New York Stock Exchange.
cEffective September 1, 2001, the Fund adopted the provisions of the AICPA Audit
and Accounting Guide of Investment Companies and began amortizing all premium
and discount on fixed-income securities, as required. The effect of this change
was as follows:
Net investment income per share .......................... $(.012)
Net realized and unrealized gains (losses) per share ..... .012
Ratio of net investment income to average net assets ..... (.19)%
Per share data and ratios for prior periods have not been restated to reflect
this change in accounting policy.

10 | See notes to financial statements. | Annual Report

Franklin Universal Trust

STATEMENT OF INVESTMENTS, AUGUST 31, 2003

- ----------------------------------------------------------------------------------------------------------------------------
COUNTRY SHARES/WARRANTS VALUE
- ----------------------------------------------------------------------------------------------------------------------------

COMMON STOCKS AND WARRANTS 32.9%
COMMUNICATIONS 3.1%
BellSouth Corp. ................................................. United States 76,000 $ 1,915,200
a Call-Net Enterprises Inc., B .................................... Canada 41,958 115,385
a Dobson Communications Corp. ..................................... United States 231,710 2,131,732
a Metrocall Holdings Inc. ......................................... United States 3,508 512,168
a,c Poland Telecom Finance, wts., 144A, 12/01/07 .................... Poland 3,000 --
Vodafone Group PLC, ADR ......................................... United Kingdom 10,400 190,320
------------
4,864,805
------------
CONSUMER SERVICES .1%
a Prandium Inc. ................................................... United States 96,659 80,227
------------
ELECTRONIC TECHNOLOGY
a Loral Space & Communications Ltd., wts., 12/27/06 ............... United States 21,638 --
a Loral Space & Communications Ltd., wts., 1/15/07 ................ United States 5,000 50
------------
50
------------
ENERGY MINERALS .1%
Devon Energy Corp. .............................................. United States 3,285 169,999
a McMoRan Exploration Co. ......................................... United States 1,800 21,384
------------
191,383
------------
NON-ENERGY MINERALS .7%
AngloGold Ltd., ADR ............................................. South Africa 30,446 1,143,856
------------
PRODUCER MANUFACTURING .1%
a Harvard Industries Inc. ......................................... United States 109,618 548
a SHC Inc. ........................................................ United States 38,937 --
a VS Holdings ..................................................... United States 181,875 136,406
------------
136,954
------------
TECHNOLOGY SERVICES .4%
a Anacomp Inc., A ................................................. United States 40,300 624,650
------------
TRANSPORTATION
a Continental Airlines Inc., B .................................... United States 2,500 38,150
------------
UTILITIES 28.4%
Alliant Energy Corp. ............................................ United States 125,000 2,616,250
Ameren Corp. .................................................... United States 40,000 1,700,000
American Electric Power Co. Inc. ................................ United States 30,000 849,300
a Aquila Inc. ..................................................... United States 130,203 315,091
Atmos Energy Corp. .............................................. United States 85,000 2,069,750
CenterPoint Energy Inc. ......................................... United States 96,200 816,738
Cinergy Corp. ................................................... United States 55,000 1,882,100
Dominion Resources Inc. ......................................... United States 70,000 4,240,600
DTE Energy Co. .................................................. United States 50,000 1,745,500
Energy East Corp. ............................................... United States 42,000 906,780
Entergy Corp. ................................................... United States 28,000 1,468,600

Annual Report | 11

Franklin Universal Trust

STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)

COMMON STOCKS AND WARRANTS (CONT.)
UTILITIES (CONT.)
Exelon Corp. .................................................... United States 52,000 $3,062,800
FirstEnergy Corp. ............................................... United States 75,000 2,194,500
FPL Group Inc. .................................................. United States 70,000 4,330,200
Nicor Inc. ...................................................... United States 98,000 3,331,020
NiSource Inc. ................................................... United States 36,000 696,240
ONEOK Inc. ...................................................... United States 22,600 474,374
Pepco Holdings Inc. ............................................. United States 68,000 1,181,160
Pinnacle West Capital Corp. ..................................... United States 76,000 2,606,800
Progress Energy Inc. ............................................ United States 70,000 2,834,300
Southern Co. .................................................... United States 170,000 4,824,600
TXU Corp. ....................................................... United States 39,600 871,200
------------
45,017,903
------------
TOTAL COMMON STOCKS AND WARRANTS (COST $53,873,796) ............. 52,097,978
------------
PREFERRED STOCKS
COMMUNICATIONS
a Metrocall Holdings Inc., 15.00%, pfd., A ........................ United States 3,024 34,020
------------
PROCESS INDUSTRIES
a Asia Pulp & Paper Co. Ltd., 12.00%, 2/15/04 ..................... Indonesia 4,000,000 40,000
------------
TOTAL PREFERRED STOCKS (COST $4,006,502) 74,020
------------
CONVERTIBLE PREFERRED STOCKS 1.6%
COMMUNICATIONS .5%
a Dobson Communications Corp., F, cvt. pfd. ....................... United States 3,600 738,000
------------
CONSUMER DURABLES 1.1%
Ford Motor Co. Capital Trust II, 6.50%, cvt. pfd. ............... United States 40,800 1,831,920
------------
TOTAL CONVERTIBLE PREFERRED STOCKS (COST $2,291,203) ............ 2,569,920
------------

-------------------------------------------------
COUNTRY PRINCIPAL AMOUNT E VALUE
-------------------------------------------------
BONDS 94.1%
COMMERCIAL SERVICES .1%
b Key3Media Group Inc., senior sub. note, 11.25%, 6/15/11 ......... United States $5,000,000 $ 75,000
------------
COMMUNICATIONS 8.5%
Dobson/Sygnet Communications Co., senior note, 12.25%, 12/15/08 . United States 2,000,000 2,150,000
Millicom International Cellular SA, 144A, 11.00%, 6/01/06 ....... Luxembourg 2,880,000 2,930,400
Nextel Communications Inc., senior note, 7.375%, 8/01/15 ........ United States 3,000,000 3,022,500
Nextel Partners Inc., senior note, 144A, 8.125%, 7/01/11 ........ United States 1,600,000 1,552,000
b Nextlink Communications Inc., senior note, 9.625%, 10/01/07 ..... United States 2,000,000 12,500
b Nextlink Communications Inc., senior note, 9.00%, 3/15/08 ....... United States 2,000,000 12,500
b Poland Telecom Finance B, 14.00%, 12/01/07 ...................... Poland 3,000,000 300
Triton PCS Inc., senior note, 144A, 8.50%, 6/01/13 .............. United States 1,300,000 1,397,500
US West Communications Inc., 6.875%, 9/15/33 .................... United States 2,800,000 2,380,000
------------
13,457,700
------------

12 | Annual Report

Franklin Universal Trust

STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)

- ----------------------------------------------------------------------------------------------------------------------------
COUNTRY PRINCIPAL AMOUNT E VALUE
- ----------------------------------------------------------------------------------------------------------------------------

BONDS (CONT.)
CONSUMER DURABLES 3.2%
D.R. Horton Inc., senior note, 8.50%, 4/15/12 ................... United States $ 3,000,000 $ 3,210,000
General Motors, 8.25%, 7/15/23 .................................. United States 1,800,000 1,798,688
b,c Spalding Inc., 144A, PIK, 9.50%, 5/01/08 ........................ United States 918,410 --
------------
5,008,688
------------
CONSUMER NON-DURABLES 1.9%
Revlon Consumer Products Corp., 8.125%, 2/01/06 ................. United States 1,700,000 1,096,500
Revlon Consumer Products Corp., senior note, 9.00%, 11/01/06 .... United States 400,000 258,000
Revlon Consumer Products Corp., senior sub. note, 8.625%, 2/01/08 United States 1,400,000 644,000
Smithfield Foods Inc., senior note, 144A, 7.75%, 5/15/13 ........ United States 1,000,000 1,035,000
------------
3,033,500
------------
CONSUMER SERVICES 22.6%
b,c Atherton Franchise Capital, LP, 13.073%, 12/01/08 ............... United States 765,361 420,949
CanWest Media Inc., senior sub. note, 10.625%, 5/15/11 .......... Canada 2,100,000 2,341,500
b Century Communications Corp., senior disc. note, B, zero cpn.,
1/15/08 ....................................................... United States 5,000,000 2,018,750
Charter Communications Holdings LLC, senior disc. note,
zero cpn. to 4/01/04, 9.92% thereafter, 4/01/11 ............... United States 3,000,000 2,100,000
Corrections Corp of America, senior note, 7.50%, 5/01/11 ........ United States 2,300,000 2,346,000
Dex Media West, senior sub. note, 144A, 9.875%, 8/15/13 ......... United States 2,400,000 2,688,000
Diamond Holdings PLC, senior note, 9.125%, 2/01/08 .............. United Kingdom 2,000,000 1,950,000
DIRECTV Holdings/Finance, senior note, 144A, 8.375%, 3/15/13 .... United States 2,000,000 2,195,000
Echostar DBS Corp., senior note, 10.375%, 10/01/07 .............. United States 2,500,000 2,778,125
Hollywood Park, senior sub. note, B, 9.25%, 2/15/07 ............. United States 3,300,000 3,349,500
Host Marriott LP, senior note, 9.50%, 1/15/07 ................... United States 2,500,000 2,662,500
Park Place Entertainment Corp., senior sub. note, 7.875%, 3/15/10 United States 2,400,000 2,574,000
Royal Caribbean Cruises, senior note, 8.00%, 5/15/10 ............ United States 1,200,000 1,254,000
Six Flags Inc., senior note, 9.50%, 2/01/09 ..................... United States 3,000,000 2,835,000
Station Casinos Inc., senior note, 8.375%, 2/15/08 .............. United States 2,400,000 2,562,000
Telewest Communications PLC, senior disc. note, zero cpn. to
4/15/04, 9.25% thereafter, 4/15/09 ............................ United Kingdom 1,500,000 521,250
Telewest Communications PLC, senior disc. note, zero cpn. to
2/01/05, 11.375% thereafter, 2/01/10 .......................... United Kingdom 3,500,000 1,172,500
------------
35,769,074
------------
DISTRIBUTION SERVICES
b Ameriserve Food Distribution Inc., senior note, 8.875%, 10/15/06 United States 1,000,000 500
b Ameriserve Food Distribution Inc., 10.125%, 7/15/07 ............. United States 2,700,000 --
------------
500
------------
ELECTRONIC TECHNOLOGY 2.0%
Flextronics International Ltd., 144A, 6.50%, 5/15/13 ............ United States 2,500,000 2,406,250
Vought Aircraft Industries Inc., senior note, 144A, 8.00%, 7/15/11 United States 800,000 816,000
------------
3,222,250
------------

Annual Report | 13

Franklin Universal Trust

STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)

BONDS (CONT.)
ENERGY MINERALS 3.2%
Arch Western Finance, senior note, 144A, 6.75%, 7/01/13 ......... United States $2,000,000 $ 1,985,000
Vintage Petroleum, senior sub. note, 7.875%, 5/15/11 ............ United States 3,000,000 3,045,000
------------
5,030,000
------------
FINANCE 1.1%
Ventas Realty LP/Capital Corp., 9.00%, 5/01/12 .................. United States 1,700,000 1,823,250
------------
GOVERNMENT BONDS 5.8%
Eskom, E168, utility deb., 11.00%, 6/01/08 ...................... South Africa 4,350,000 ZAR 614,222
Federation of Russia, 3.00%, 5/14/06 ............................ Russia 1,300,000 1,243,125
Republic of Bulgaria, FRN, 1.9375%, 7/28/11 ..................... Bulgaria 3,800,000 3,610,000
United Mexican States, 11.375%, 9/15/16 ......................... Mexico 2,750,000 3,768,875
------------
9,236,222
------------
HEALTH SERVICES 2.5%
b Magellan Health Services Inc., senior sub. note, 9.00%, 2/15/08 . United States 4,000,000 1,980,000
Tenet Healthcare Corp., 7.375%, 2/01/13 ......................... United States 2,000,000 1,975,000
------------
3,955,000
------------
INDUSTRIAL SERVICES 6.7%
Allied Waste North America Inc., senior sub. note, B, 10.00%,
8/01/09 ....................................................... United States 2,000,000 2,175,000
Grant Prideco Escrow, 9.00%, 12/15/09 ........................... United States 1,000,000 1,057,500
Gulfterra Energy Partners, 10.625%, 12/01/12 .................... United States 3,000,000 3,468,750
Universal Compression Inc., senior note, 144A, 7.25%, 5/15/10 ... United States 800,000 812,000
URS Corp., senior sub. note, 12.25%, 5/01/09 .................... United States 3,000,000 3,045,000
------------
10,558,250
------------
NON-ENERGY MINERALS 1.1%
Louisiana Pacific Corp., senior sub. note, 10.875%, 11/15/08 .... United States 700,000 806,750
b Ormet Corp., senior secured note, 144A, 11.00%, 8/15/08 ......... United States 4,000,000 980,000
------------
1,786,750
------------
PROCESS INDUSTRIES 14.7%
Applied Extrusion Technologies Inc., senior note, 10.75%, 7/01/11 United States 900,000 603,000
Avecia Group PLC, senior note, 11.00%, 7/01/09 .................. United Kingdom 3,000,000 2,565,000
Consolidated Container Co. LLC, senior disc. note, 10.125%, 7/15/09 United States 4,500,000 2,497,500
Equistar Chemicals, senior note, 144A, 10.625%, 5/01/11 ......... United States 1,700,000 1,700,000
FiberMark Inc., senior note, 10.75%, 4/15/11 .................... United States 3,000,000 2,220,000
Graham Packaging Co., senior sub. note, B, 8.75%, 1/15/08 ....... United States 600,000 594,000
Graham Packaging Co., senior sub. note, 144A, 8.75%, 1/15/08 .... United States 2,100,000 2,079,000
Graphic Packaging International, senior note, 144A, 8.50%, 8/15/11 United States 2,700,000 2,835,000
Huntsman ICI Chemicals, senior disc. note, zero cpn., 12/31/09 .. United States 7,500,000 2,925,000
IMC Global Inc., senior note, 144A, 10.875%, 8/01/13 ............ United States 3,000,000 3,090,000

14 | Annual Report

Franklin Universal Trust

STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)

BONDS (CONT.)
PROCESS INDUSTRIES (CONT.)
b Pindo Deli Finance Mauritius Ltd., senior note, 11.75%, 10/01/17 Indonesia $3,000,000 $ 795,000
United Industries Corp., senior sub. note, 9.875%, 4/01/09 ...... United States 1,300,000 1,332,500
------------
23,236,000
------------
PRODUCER MANUFACTURING 10.7%
Case New Holland Inc., senior note, 144A, 9.25%, 8/01/11 ........ Netherlands 3,000,000 3,176,250
Cummins Inc., senior note, 144A, 9.50%, 12/01/10 ................ United States 700,000 791,000
Legrand SA, senior note, 144A, 10.50%, 2/15/13 .................. France 3,000,000 3,315,000
NMHG Holding Co., senior note, 10.00%, 5/15/09 .................. United States 1,800,000 1,953,000
Nortek Inc., senior note, B, 9.125%, 9/01/07 .................... United States 3,000,000 3,075,000
Rexnord Corp., 10.125%, 12/15/12 ................................ United States 500,000 540,000
TRW Automotive Inc., senior note, 144A, 9.375%, 2/15/13 ......... United States 1,700,000 1,895,500
TRW Automotive Inc., senior note, 144A, 11.00%, 2/15/13 ......... United States 500,000 575,000
Westinghouse Air Brake, senior note, 144A, 6.875%, 7/31/13 ...... United States 1,700,000 1,691,500
------------
17,012,250
------------
RETAIL TRADE 1.7%
Rite Aid Corp., 144A, 6.125%, 12/15/08 .......................... United States 3,000,000 2,685,000
------------
TECHNOLOGY SERVICES .1%
b PSINet Inc., 10.50%, 12/01/06 ................................... United States 700,000 40,250
b PSINet Inc., 11.00%, 8/01/09 .................................... United States 3,250,000 186,875
------------
227,125
------------
TRANSPORTATION 3.2%
Great Lakes Dredge & Dock Corp., senior sub. note, 11.25%, 8/15/08 United States 1,800,000 1,899,000
Laidlaw International Inc., senior note, 144A, 10.75%, 6/15/11 .. United States 3,000,000 3,157,500
------------
5,056,500
------------
UTILITIES 5.0%
AES Corp., senior note, 9.375%, 9/15/10 ......................... United States 2,600,000 2,509,000
Calpine Corp., senior sub. note, 8.75%, 7/15/13 ................. United States 2,500,000 2,362,500
Dynegy Holdings Inc., senior note, 8.75%, 2/15/12 ............... United States 2,600,000 2,223,000
PG&E Corp., senior secured note, 144A, 6.875%, 7/15/08 .......... United States 800,000 816,000
------------
7,910,500
------------
TOTAL BONDS (COST $177,640,688) ................................. 149,083,559
------------
CONVERTIBLE BONDS 2.6%
Millicom International Cellular SA, 144A, PIK, cvt., 2.00%,
6/01/06 ....................................................... Luxembourg 326,000 1,209,053
Nortel Networks Corp., cvt., 4.25%, 9/01/08 ..................... Canada 2,100,000 1,769,250
Trizec Hahn Corp., cvt., senior deb., 3.00%, 1/29/21 ............ Canada 1,500,000 1,080,000
------------
TOTAL CONVERTIBLE BONDS (COST $3,043,176) ....................... 4,058,303
------------
TOTAL LONG TERM INVESTMENTS (COST $240,855,365) ................. 207,883,780
------------

Annual Report | 15

Franklin Universal Trust

STATEMENT OF INVESTMENTS, AUGUST 31, 2003 (CONTINUED)

- ----------------------------------------------------------------------------------------------------------------------------
COUNTRY SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------

SHORT TERM INVESTMENT (COST $4,370,039) 2.8%

d Franklin Institutional Fiduciary Trust Money Market Portfolio ... United States 4,370,039 $ 4,370,039
------------
TOTAL INVESTMENTS (COST $245,225,404) 134.0% .................... 212,253,819
OTHER ASSETS, LESS LIABILITIES (34.0)% .......................... (53,889,987)
------------

NET ASSETS 100.0% ............................................... $ 158,363,832
------------

CURRENCY ABBREVIATIONS | ZAR - South African Rand

aNon-income producing
bThe fund discontinues accruing income on defaulted securities. See Note 8.
cSee Note 9 regarding restricted securities.
dSee Note 7 regarding investments in the Franklin Institutional Fiduciary Trust
Money Market Portfolio.
eThe principal amount is stated in U.S. dollars unless otherwise indicated.

16 | See notes to financial statements. | Annual Report

Franklin Universal Trust

FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
August 31, 2003

Assets:

Investments in securities:
Cost ...................................................................................................... $245,225,404
------------
Value ..................................................................................................... 212,253,819
Receivables:
Dividends and interest .................................................................................... 3,033,260
Note issuance costs (Note 3) ............................................................................... 200,000
------------
Total assets .......................................................................................... 215,487,079
------------
Liabilities:
Payables:
Affiliates ................................................................................................ 128,293
Note (Note 3) ............................................................................................. 55,000,000
Funds advanced by custodian ............................................................................... 1,282,871
Distributions to shareholders .............................................................................. 642,259
Other liabilities .......................................................................................... 69,824
------------
Total liabilities ..................................................................................... 57,123,247
Net assets, at value ................................................................................. $158,363,832
------------
Net assets consist of:
Undistributed net investment income ........................................................................ $ (1,669,032)
Net unrealized appreciation (depreciation) ................................................................. (32,971,026)
Accumulated net realized gain (loss) ....................................................................... (61,811,535)
Capital shares ............................................................................................. 254,815,425
------------
Net assets, at value ................................................................................. $158,363,832
------------
Net asset value per share ($158,363,832 (DIVIDE) 27,924,294 shares outstanding) ............................. $5.67
------------

Annual Report | See notes to financial statements. | 17

Franklin Universal Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF OPERATIONS
for the year ended August 31, 2003

Investment income:

Dividends ................................................................................................. $ 2,756,704
Interest .................................................................................................. 14,904,902
------------
Total investment income .............................................................................. 17,661,606
------------
Expenses:
Management fees (Note 4) .................................................................................. 1,459,614
Transfer agent fees ....................................................................................... 87,378
Custodian fees ............................................................................................ 10,463
Reports to shareholders ................................................................................... 29,497
Professional fees ......................................................................................... 66,465
Trustees' fees and expenses ............................................................................... 19,835
Amortization of note issuance costs (Note 3) .............................................................. 39,915
Note prepayment fee (Note 3) .............................................................................. 313,467
Other ..................................................................................................... 47,424
------------
Expenses before interest expense ..................................................................... 2,074,058
Interest expense (Note 3) ............................................................................ 3,096,720
------------
Total expenses ...................................................................................... 5,170,778
------------
Net investment income .............................................................................. 12,490,828
------------
Realized and unrealized gains (losses):
Net realized gain (loss) from:
Investments .............................................................................................. (21,443,831)
Foreign currency transactions ............................................................................ 2,963
------------
Net realized gain (loss) (21,440,868)
Net unrealized appreciation (depreciation) on:
Investments .............................................................................................. 37,996,015
Translation of assets and liabilities denominated in foreign currencies .................................. 846
------------
Net unrealized appreciation (depreciation) ........................................................... 37,996,861
------------
Net realized and unrealized gain (loss) .................................................................... 16,555,993
------------
Net increase (decrease) in net assets resulting from operations ............................................ $ 29,046,821
------------

18 | See notes to financial statements. | Annual Report

Franklin Universal Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENTS OF CHANGES IN NET ASSETS
for the years ended August 31, 2003 and 2002

2003 2002
-----------------------------
Increase (decrease) in net assets:

Operations:
Net investment income .................................................................... $ 12,490,828 $ 17,785,714
Net realized gain (loss) from investments and foreign currency transactions .............. (21,440,868) (30,694,923)
Net unrealized appreciation (depreciation) on investments and translation of assets
and liabilities denominated in foreign currencies ....................................... 37,996,861 (25,828,050)
-----------------------------
Net increase (decrease) in net assets resulting from operations ...................... 29,046,821 (38,737,259)
Distributions to shareholders from net investment income .................................. (13,869,575) (21,551,095)
Capital share transactions (Note 2) ....................................................... 1,567,138 3,309,340
-----------------------------
Net increase (decrease) in net assets ................................................ 16,744,384 (56,979,014)
Net assets:
Beginning of year ......................................................................... 141,619,448 198,598,462
-----------------------------
End of year ............................................................................... $158,363,832 $141,619,448
-----------------------------
Undistributed net investment income included in net assets:
End of year ............................................................................... $ (1,669,032) $ (709,967)
-----------------------------

Annual Report | See notes to financial statements. | 19

Franklin Universal Trust

FINANCIAL STATEMENTS (CONTINUED)

STATEMENT OF CASH FLOWS
for the year ended August 31, 2003

Cash flow from operating activities:

Dividends and interest received .......................................................................... $ 15,904,854
Operating expenses paid .................................................................................. (1,676,273)
Interest expense paid .................................................................................... (3,096,720)
--------------
Cash provided - operations .............................................................................. 11,131,861
--------------
Cash flow from investing activities:
Investment purchases ..................................................................................... (316,791,929)
Investment sales and maturities .......................................................................... 321,271,235
--------------
Cash provided - investments ............................................................................. 4,479,306
--------------
Cash flow from financing activities:
Prepayment of Note ....................................................................................... (8,313,467)
Proceeds from Note maturity .............................................................................. (52,000,000)
Note issuance ............................................................................................ 55,000,000
Payment of Note issuance costs ........................................................................... (172,729)
Distributions to shareholders ............................................................................ (11,660,178)
--------------
Cash used - financing ................................................................................... (17,146,374)
--------------
Net change in cash ........................................................................................ (1,535,207)
Cash at beginning of year ................................................................................. 252,336
--------------
Cash at end of year ....................................................................................... $ (1,282,871)
--------------

RECONCILIATION OF NET INVESTMENT INCOME TO NET CASH PROVIDED BY OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2003

Net investment income ..................................................................................... $ 12,490,828
Amortization income ...................................................................................... (2,365,637)
Amortization of note issuance costs ...................................................................... 39,915
Decrease in dividends and interest receivable ............................................................ 608,885
Note issuance cost liability ............................................................................. 27,271
Decrease in liabilities .................................................................................. 17,132
Note prepayment fee ...................................................................................... 313,467
--------------
Cash provided - operations ................................................................................ $ 11,131,861
--------------

20 | See notes to financial statements. | Annual Report

Franklin Universal Trust

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Franklin Universal Trust (the Fund) is registered under the Investment Company
Act of 1940 as a diversified, closed-end investment company. The Fund has two
classes of securities: senior fixed-rate note (the Note) and shares of
beneficial interest (the Shares). The Fund seeks high current income consistent
with preservation of capital. The following summarizes the Fund's significant
accounting policies.

A. SECURITY VALUATION

Securities listed or traded on a recognized national exchange or NASDAQ are
valued at the last reported sales price. Over-the-counter securities and listed
securities for which no sale is reported are valued within the range of the
latest quoted bid and asked prices. Restricted securities and securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Trustees.

B. FOREIGN CURRENCY TRANSLATION

Portfolio securities and other assets and liabilities denominated in foreign
currencies are translated into U.S. dollars based on the exchange rate of such
currencies against U.S. dollars on the date of valuation. Purchases and sales of
securities and income items denominated in foreign currencies are translated
into U.S. dollars at the exchange rate in effect on the transaction date.

The Fund does not separately report the effect of changes in foreign exchange
rates from changes in market prices on securities held. Such changes are
included in net realized and unrealized gain or loss from investments.

Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and settlement
dates on securities transactions and the difference between the recorded amounts
of dividends, interest, and foreign withholding taxes and the U.S. dollars
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in foreign exchange rates on
foreign denominated assets and liabilities other than investments in securities
held at the end of the reporting period.

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

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

D. INCOME TAXES

No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and to
distribute substantially all of its tax-able income.

Annual Report | 21

Franklin Universal Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

E. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS

Security transactions are accounted for on trade date. Realized gains and losses
on security transactions are determined on a specific identification basis.
Certain income from foreign securities is recorded as soon as information is
available to the Fund. Interest income and estimated expenses are accrued daily.
Discounts and premiums on securities purchased are amortized over the lives of
the respective securities. Dividend income and distributions to shareholders are
recorded on the ex-dividend date.

F. ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expense during the reporting period. Actual results could differ from those
estimates.

G. GUARANTEES AND INDEMNIFICATIONS

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

2. SHARES OF BENEFICIAL INTEREST

At August 31, 2003, there were unlimited number of shares authorized ($0.01 par
value). Transactions in the Fund's shares were as follows:

-------------------------------------------------
AUGUST 31, 2003 AUGUST 31, 2002
SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------

Shares issued in reinvestment of distributions 309,686 $1,567,138 465,453 $3,309,340

3. SENIOR FIXED-RATE NOTES

During the year ended August 31, 2003, the Fund had a $52,000,000 senior note
outstanding, bearing interest at 5.94% per year. On September 6, 2002, the Fund
retired $8,000,000 of the principal amount and paid a prepayment fee of
$313,467, as is disclosed in the accompanying financial statements. On August
29, 2003, this Note matured and was paid in full.

22 | Annual Report

Franklin Universal Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. SENIOR FIXED-RATE NOTES (CONTINUED)

On August 29, 2003, the Fund issued $55 million principal amount of a new class
of five-year senior note (the Note). The Note is a general unsecured obligation
of the Fund and ranks senior to Trust shares and all existing or future
unsecured indebtedness of the Fund.

The Note bears interest, payable semi-annually, at the rate of 4.14% per year,
to maturity on August 29, 2008. The Note was issued in a private placement, and
is not available for resale; therefore, no market value can be obtained for the
Note. The Fund is required to maintain on a monthly basis a specified discounted
asset value for its portfolio in compliance with guidelines established by
Standard & Poor's Corporation, and is required to maintain asset coverage for
the Note of at least 300%. The Fund has met these requirements during the year
ended August 31, 2003.

The issuance costs of $200,000 incurred by the Fund are deferred and amortized
on an interest method basis over the term of the Note.

4. TRANSACTIONS WITH AFFILIATES

Certain officers and trustees of the Fund are also officers or directors of the
following entities:

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

The Fund pays an investment management fee to Advisers of .75% per year of the
average weekly net assets of the Fund excluding the principal amount of the
Note.

Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.

5. INCOME TAXES

At August 31, 2003, the Fund has tax basis capital losses of $47,455,063, which
may be carried over to offset future capital gains. Such losses expire as
follows:

Capital loss carryovers expiring in:
2008 ............................................. $ 5,088,195
2009 ............................................. 1,167,255
2010 ............................................. 6,827,086
2011 ............................................. 34,372,527
-----------
$47,455,063
-----------

Annual Report | 23

Franklin Universal Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES (CONTINUED)

At August 31, 2003, the Fund has deferred capital losses occurring subsequent to
October 31, 2002 of $14,356,472. For tax purposes, such losses will be reflected
in the year ending August 31, 2004.

Tax character of distributions paid during the years ended August 31, 2003 and
2002, was as follows:

--------------------------
2003 2002
--------------------------
Distributions paid from:
Ordinary income .......................... $13,869,575 $21,551,095
Long-term capital gain ................... -- --
--------------------------
$13,869,575 $21,551,095
--------------------------

At August 31, 2003, the cost of investments, net unrealized appreciation
(depreciation), undistributed ordinary income and undistributed long-term
capital gains for income tax purposes were as follows:

Cost of investments ...................................... $245,383,200
-------------
Unrealized appreciation .................................. $ 19,836,811
Unrealized depreciation .................................. (52,966,192)
-------------
Net unrealized appreciation (depreciation) ............... $(33,129,381)
-------------

Undistributed ordinary income ............................ $ 437,605
Undistributed capital gains .............................. --
-------------
Distributable earnings ................................... $ 437,605
-------------

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

Net realized capital losses differ for financial statement and tax purposes
primarily due to differing treatment of foreign currency transactions, and bond
discounts and premiums.

6. INVESTMENT TRANSACTIONS

Purchases and sales of securities (excluding short-term securities) for the year
ended August 31, 2003 aggregated $125,124,836 and $129,254,799 respectively.

7. SWEEP MONEY FUND

The Fund may invest in the Franklin Institutional Fiduciary Trust Money Market
Portfolio (the Sweep Money Fund), an open-end investment company managed by
Advisers. Management fees paid by the Fund are reduced on assets invested in the
Sweep Money Fund, in an amount not to exceed the management fees paid by the
Sweep Money Fund. The Fund earned $30,732 of dividend income from investment in
the Sweep Money Fund for the year ended August 31, 2003.

24 | Annual Report

Franklin Universal Trust

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. CREDIT RISK AND DEFAULTED SECURITIES

The Fund has 70.5% of its portfolio invested in below investment grade and
comparable quality unrated high yield securities, which tend to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.

The Fund held defaulted securities and other securities for which the income has
been deemed uncollectible. The Fund discontinues accruing income on these
securities and provides an estimate for losses on interest receivable. At August
31, 2003, the value of these securities was $6,522,624 representing 4.1% of the
Fund's net assets. For information as to specific securities, see the
accompanying Statement of Investments.

9. RESTRICTED SECURITIES

At August 31, 2003, investments in securities included issues that are
restricted or illiquid. Restricted securities are often purchased in private
placement transactions, are not registered under the Securities Act of 1933, may
have contractual restrictions on resale, and are valued under methods approved
by the Board of Trustees as reflecting fair value. A security may also be
considered illiquid if it lacks a readily available market or if its valuation
has not changed for a certain period of time. At August 31, 2003, the Fund held
investments in restricted and illiquid securities that were valued under
approved methods by the Trustees, as follows:

- -----------------------------------------------------------------------------------------------------
PRINCIPAL ACQUISITION
AMOUNT/SHARES ISSUER DATE COST VALUE
- -----------------------------------------------------------------------------------------------------

$765,361 Atherton Franchise Capital, LP,
13.073%, 12/01/08 ........................... 4/28/94 $765,361 $420,949
3,000 Poland Telecom Finance, wts., 144A,
12/01/07 .................................... 11/24/97 18,000 --
918,410 Spalding Inc., 144A, PIK, 9.50%,
5/01/08 ..................................... 4/29/02 345,591 --
--------
TOTAL RESTRICTED SECURITIES (.27% of Net Assets) $420,949
--------

10. OTHER CONSIDERATIONS

Advisers, as the Fund's manager, may serve as a member of various bondholders'
steering committees, on credit committees or may represent the Funds in certain
corporate restructuring negotiations. Currently the manager serves in one or
more of these capacities for Century Communications, Magellan Health Services
and Ormet Corp. As a result of this involvement, Advisers may be in possession
of certain material non-public information. If the Fund's Manager, while in
possession of such information, seeks to sell any of its holdings in these
securities it will comply with all applicable federal securities laws.

Annual Report | 25

Franklin Universal Trust

INDEPENDENT AUDITORS' REPORT

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FRANKLIN UNIVERSAL TRUST

In our opinion, the accompanying statement of assets and liabilities, including
the statement of investments, and the related statement of operations, of
changes in net assets, and of cash flows and the financial highlights present
fairly, in all material respects, the financial position of Franklin Universal
Trust (the "Fund") at August 31, 2003, the results of its operations and its
cash flows for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the periods presented, in conformity with accounting principles generally
accepted in the United States of America. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 2003 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.

PricewaterhouseCoopers LLP

San Francisco, California
October 6, 2003

26 | Annual Report

Franklin Universal Trust

TAX DESIGNATION (UNAUDITED)

Under Section 854(b)(2) of the Internal Revenue Code (Code), the Fund hereby
designates up to a maximum of $1,901,531 as qualified dividends for purposes of
the maximum rate under Section 1(h)(11) of the Code for the fiscal year ended
August 31, 2003. In January 2004, shareholders will receive Form 1099-DIV which
will include their share of qualified dividends distributed during the calendar
year 2003. Shareholders are advised to check with their tax advisors for
information on the treatment of these amounts on their individual income tax
returns.

Under Section 854(b)(2) of the Internal Revenue Code, the Fund hereby designates
15.28% of the ordinary income dividends as income qualifying for the dividends
received deduction for the fiscal year ended August 31, 2003.

Annual Report | 27

Board Members and Officers

The name, age and address of the officers and board members, as well as their
affiliations, positions held with the Trust, principal occupations during the
past five years and number of portfolios overseen in the Franklin Templeton
Investments fund complex are shown below. Each board member will serve until
that person's successor is elected and qualified.

INDEPENDENT BOARD MEMBERS

FRANK H. ABBOTT, III (82) Trustee Since 1988 115 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President and Director, Abbott Corporation (an investment company); and FORMERLY, Director, MotherLode Gold Mines Consolidated
(gold mining) (until 1996) and Vacu-Dry Co. (food processing) (until 1996).
- -----------------------------------------------------------------------------------------------------------------------------------
HARRIS J. ASHTON (71) Trustee Since 1988 142 Director, Bar-S Foods (meat packing
One Franklin Parkway company).
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Director of various companies; and FORMERLY, Director, RBC Holdings, Inc. (bank holding company) (until 2002); and President,
Chief Executive Officer and Chairman of the Board, General Host Corporation (nursery and craft centers) (until 1998).
- -----------------------------------------------------------------------------------------------------------------------------------
ROBERT F. CARLSON (75) Trustee Since 2000 52 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President 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.
- -----------------------------------------------------------------------------------------------------------------------------------
S. JOSEPH FORTUNATO (71) Trustee Since 1989 143 None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Attorney; and FORMERLY, member of the law firm of Pitney, Hardin, Kipp & Szuch.
- -----------------------------------------------------------------------------------------------------------------------------------
FRANK W.T. LAHAYE (74) Trustee Since 1988 115 Director, The California Center for Land
One Franklin Parkway Recycling (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).
- -----------------------------------------------------------------------------------------------------------------------------------

28 | Annual Report

GORDON S. MACKLIN (75) Trustee Since 1993 142 Director, White Mountains
One Franklin Parkway Insurance Group, Ltd. (holding
San Mateo, CA 94403-1906 company); Martek Biosciences
Corporation; MedImmune, Inc.
(biotechnology); Overstock.com
(Internet services); and
Spacehab, Inc. (aerospace
services); and FORMERLY,
Director, MCI Communication
Corporation (subsequently
known as MCI WorldCom, Inc.
and WorldCom, Inc.)
(communications services)
(1988-2002).

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Deputy Chairman, White Mountains Insurance Group, Ltd. (holding company); and FORMERLY, Chairman, White River Corporation
(financial services) (1993-1998) and Hambrecht & Quist Group (investment banking) (1987-1992); and President, National
Association of Securities Dealers, Inc. (1970-1987).
- -----------------------------------------------------------------------------------------------------------------------------------

INTERESTED BOARD MEMBERS AND OFFICERS

- -----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF PORTFOLIOS IN
LENGTH OF FUND COMPLEX OVERSEEN
NAME, AGE AND ADDRESS POSITION TIME SERVED BY BOARD MEMBER* OTHER DIRECTORSHIPS HELD
- -----------------------------------------------------------------------------------------------------------------------------------
**EDWARD B. JAMIESON (55) Trustee, Trustee and 8 None
One Franklin Parkway President and President since
San Mateo, CA 94403-1906 Chief 1993 and Chief
Executive Executive
Officer- Officer-
Investment Investment
Management Management since
2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and Portfolio Manager, Franklin Advisers, Inc.; and officer and/or trustee, as the case may be, of other
subsidiaries of Franklin Resources, Inc. and of five of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
**CHARLES B. JOHNSON (70) Trustee and Trustee since 142 None
One Franklin Parkway Chairman of 1988 and
San Mateo, CA 94403-1906 the Board Chairman of the
Board since 1993

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Chairman of the Board, Chief Executive Officer, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice
President, Franklin Templeton Distributors, Inc.; Director, Fiduciary Trust Company International; and officer and/or director or
trustee, as the case may be, of some of the other subsidiaries of Franklin Resources, Inc. and of 46 of the investment companies
in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------

Annual Report | 29

**RUPERT H. JOHNSON, JR. (63) Trustee and Trustee and 125 None
One Franklin Parkway Senior Vice Senior Vice
San Mateo, CA 94403-1906 President President since
1988

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice Chairman, Member - Office of the Chairman and Director, Franklin Resources, Inc.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Director, Franklin Advisers, Inc. and Franklin Investment Advisory Services, 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 49 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
HARMON E. BURNS (58) Vice President Since 1988 Not Applicable None
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.; Vice President and Director, Franklin
Templeton Distributors, Inc.; Executive Vice President, Franklin Advisers, Inc.; Director, Franklin Investment Advisory Services,
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 49 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
MARTIN L. FLANAGAN (43) Vice President Since 1995 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
President, Franklin Resources, Inc.; Senior Vice President and Chief Financial Officer, Franklin Mutual Advisers, LLC; Executive
Vice President, Chief Financial Officer and Director, Templeton Worldwide, Inc.; Executive Vice President and Chief Operating
Officer, Templeton Investment Counsel, LLC; President and Director, Franklin Advisers, Inc.; Executive Vice President, Franklin
Investment Advisory Services, Inc. and Franklin Templeton Investor Services, LLC; Chief Financial Officer, Franklin Advisory
Services, LLC; Chairman, Franklin Templeton 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 49 of the investment companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------

30 | Annual Report

JIMMY D. GAMBILL (56) Senior Vice Since 2002 Not Applicable None
500 East Broward Blvd. President and
Suite 2100 Chief Executive
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 51 of the investment
companies in Franklin Templeton Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
DAVID P. GOSS (56) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Associate General Counsel, Franklin Resources, Inc.; officer and director of one of the subsidiaries of Franklin Resources, Inc.;
officer of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY, President, Chief Executive Officer and
Director, Property Resources Equity Trust (until 1999) and Franklin Select Realty Trust (until 2000).
- -----------------------------------------------------------------------------------------------------------------------------------
BARBARA J. GREEN (55) Vice President Since 2000 Not Applicable None
One Franklin Parkway
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Vice President and Deputy General Counsel, Franklin Resources, Inc.; Secretary and Senior Vice President, Templeton Worldwide,
Inc.; Secretary, Franklin Mutual Advisers, LLC; and officer of some of the other subsidiaries of Franklin Resources, Inc. and of
51 of the investment companies in Franklin Templeton Investments; and FORMERLY, Deputy Director, Division of Investment
Management, Executive Assistant and Senior Advisor to the Chairman, Counselor to the Chairman, Special Counsel and Attorney
Fellow, U.S. Securities and Exchange Commission (1986-1995); Attorney, Rogers & Wells (until 1986); and Judicial Clerk, U.S.
District Court (District of Massachusetts) (until 1979).
- -----------------------------------------------------------------------------------------------------------------------------------

Annual Report | 31

KIMBERLEY H. MONASTERIO (39) Treasurer and Treasurer since Not Applicable None
One Franklin Parkway Chief 2000 and Chief
San Mateo, CA 94403-1906 Financial Financial Officer
Officer since 2002

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Senior Vice President, Franklin Templeton Services, LLC; and officer of 51 of the investment companies in Franklin Templeton
Investments.
- -----------------------------------------------------------------------------------------------------------------------------------
MURRAY L. SIMPSON (66) Vice President Since 2000 Not Applicable None
One Franklin Parkway and Secretary
San Mateo, CA 94403-1906

PRINCIPAL OCCUPATION DURING PAST 5 YEARS:
Executive Vice President and General Counsel, Franklin Resources, Inc.; officer and/or director, as the case be, of some of the
subsidiaries of Franklin Resources, Inc. and of 51 of the investment companies in Franklin Templeton Investments; and FORMERLY,
Chief Executive Officer and Managing Director, Templeton Franklin Investment Services (Asia) Limited (until 2000); and Director,
Templeton Asset Management Ltd. (until 1999).
- -----------------------------------------------------------------------------------------------------------------------------------

*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 adviser or affiliated investment
advisers.
**Charles B. Johnson and Rupert H. Johnson, Jr. are considered interested
persons of the Trust under the federal securities laws due to their positions as
officers and directors and major shareholders of Franklin Resources, Inc.
(Resources), which is the parent company of the Trust's adviser and distributor.
Edward B. Jamieson is considered an interested person of the Trust under the
federal securities laws due to his position as an officer of Franklin Advisers,
Inc., which is the Trust's adviser.
Note: Charles B. Johnson and Rupert H. Johnson, Jr. are brothers.

THE SARBANES-OXLEY ACT OF 2002 AND RULES ADOPTED BY THE SECURITIES AND EXCHANGE
COMMISSION REQUIRE THE TRUST TO DISCLOSE WHETHER THE TRUST'S AUDIT COMMITTEE
INCLUDES AT LEAST ONE MEMBER WHO IS AN AUDIT COMMITTEE FINANCIAL EXPERT WITHIN
THE MEANING OF SUCH ACT AND RULES. THE FUND'S BOARD OF TRUSTEES HAVE DETERMINED
THAT THERE IS AT LEAST ONE SUCH FINANCIAL EXPERT ON THE AUDIT COMMITTEE AND HAS
DESIGNATED FRANK W.T. LAHAYE AS ITS AUDIT COMMITTEE FINANCIAL EXPERT. THE BOARD
BELIEVES THAT MR. LAHAYE QUALIFIES AS SUCH AN EXPERT IN VIEW OF HIS EXTENSIVE
BUSINESS BACKGROUND AND EXPERIENCE, INCLUDING SERVICE AS PRESIDENT AND DIRECTOR
OF MCCORMICK SELPH ASSOCIATES FROM 1954 THROUGH 1965; DIRECTOR AND CHAIRMAN OF
TELEDYNE CANADA LTD. FROM 1966 THROUGH 1971; DIRECTOR AND CHAIRMAN OF
QUARTERDECK CORPORATION FROM 1982 THROUGH 1998; AND SERVICES AS A DIRECTOR OF
VARIOUS OTHER PUBLIC COMPANIES INCLUDING U.S. TELEPHONE INC. (1981-1984), FISHER
IMAGING INC. (1991-1998) AND DIGITAL TRANSMISSIONS SYSTEMS (1995-1999). IN
ADDITION, MR. LAHAYE SERVED FROM 1981 TO 2000 AS A DIRECTOR AND CHAIRMAN OF
PEREGRINE VENTURE MANAGEMENT CO., A VENTURE CAPITAL FIRM, AND HAS BEEN A MEMBER
AND CHAIRMAN OF THE FUND'S AUDIT COMMITTEE SINCE ITS INCEPTION. AS A RESULT OF
SUCH BACKGROUND AND EXPERIENCE, THE BOARD OF TRUSTEES BELIEVES THAT MR. LAHAYE
HAS ACQUIRED AN UNDERSTANDING OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
FINANCIAL STATEMENTS, THE GENERAL APPLICATION OF SUCH PRINCIPLES IN CONNECTION
WITH THE ACCOUNTING ESTIMATES, ACCRUALS AND RESERVES, AND ANALYZING AND
EVALUATING FINANCIAL STATEMENTS THAT PRESENT A BREADTH AND LEVEL OF COMPLEXITY
OF ACCOUNTING ISSUES GENERALLY COMPARABLE TO THOSE OF THE FUND, AS WELL AS AN
UNDERSTANDING OF INTERNAL CONTROLS AND PROCEDURES FOR FINANCIAL REPORTING AND AN
UNDERSTANDING OF AUDIT COMMITTEE FUNCTIONS. MR. LAHAYE IS AN INDEPENDENT
DIRECTOR AS THAT TERM IS DEFINED UNDER THE RELEVANT STOCK EXCHANGE RULES AND
SECURITIES AND EXCHANGE COMMISSION RULES AND RELEASES.

32 | Annual Report

Franklin Universal Trust

PROXY VOTING POLICIES AND PROCEDURES

The Fund has established Proxy Voting Policies and Procedures ("Policies") that
the Fund uses to determine how to vote proxies relating to portfolio securities.
Shareholders may view the Fund's complete Policies online at
franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954/847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group.

Annual Report | 33

This page intentionally left blank.

Literature Request

For a brochure and prospectus, which contains more complete information,
including charges and expenses, call Franklin Templeton Investments at
1-800/DIAL BEN(R) (1-800/342-5236). Please read the prospectus carefully before
investing or sending money. To ensure the highest quality of service, telephone
calls to or from our service departments may be monitored, recorded and
accessed. These calls can be identified by the presence of a regular beeping
tone.

FRANKLIN TEMPLETON INVESTMENTS

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

GLOBAL
Franklin Global Aggressive Growth Fund
Franklin Global Growth Fund
Mutual Discovery Fund
Templeton Capital Accumulator Fund
Templeton Global Long-Short Fund
Templeton Global Opportunities Trust
Templeton Global Smaller Companies Fund
Templeton Growth Fund
Templeton World Fund

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

VALUE
Franklin Balance Sheet Investment Fund 2
Franklin Equity Income Fund
Franklin Large Cap Value Fund
Franklin MicroCap Value Fund 3
Franklin Small Cap Value Fund
Mutual Beacon Fund
Mutual Qualified Fund
Mutual Shares Fund

BLEND
Franklin Blue Chip Fund
Franklin Convertible Securities Fund
Franklin Growth Fund
Franklin Rising Dividends Fund
Franklin U.S. Long-Short Fund 4

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

ASSET ALLOCATION
Franklin Templeton Conservative Target Fund
Franklin Templeton Growth Target Fund
Franklin Templeton Moderate Target Fund
Franklin Templeton Corefolio
Allocation Fund
Franklin Templeton Founding Funds Allocation Fund

INCOME
Franklin Adjustable U.S. Government
Securities Fund 5
Franklin's AGE High Income Fund
Franklin Federal Money Fund 5, 6
Franklin Floating Rate Daily Access Fund
Franklin Floating Rate Trust 7
Franklin Income Fund
Franklin Money Fund 5, 6
Franklin Short-Intermediate
U.S. Government Securities Fund 5
Franklin Strategic Income Fund
Franklin Strategic Mortgage Portfolio
Franklin Templeton Hard Currency Fund
Franklin Total Return Fund

Franklin U.S. Government Securities Fund 5
Templeton Global Bond Fund

TAX-FREE INCOME 8
Double Tax-Free Income Fund
Federal Intermediate-Term Tax-Free Income Fund
Federal Limited-Term Tax-Free Income Fund
Federal Tax-Free Income Fund
High Yield Tax-Free Income Fund
Insured Tax-Free Income Fund 9
Tax-Exempt Money Fund 5, 6

STATE-SPECIFIC TAX-FREE INCOME 8
Alabama
Arizona
California 10
Colorado
Connecticut
Florida 10
Georgia
Kentucky
Louisiana
Maryland
Massachusetts 9
Michigan 9
Minnesota 9
Missouri
New Jersey
New York 10
North Carolina
Ohio 9
Oregon
Pennsylvania
Tennessee
Virginia

VARIABLE INSURANCE PRODUCTS FUNDS
Franklin Templeton Variable Insurance
Products Trust 11

1. The fund is closed to new investors. Existing shareholders can continue
adding to their accounts.
2. The fund is only open to existing shareholders as well as select retirement
plans.
3. Effective June 30, 2003, the fund reopened to all new investors.
4. Upon reaching approximately $350 million in assets, the fund will close to
all investors.
5. An investment in the fund is neither insured nor guaranteed by the U.S.
government or by any other entity or institution.
6. No assurance exists that the fund's $1.00 per share price will be maintained.
It is possible to lose money by investing in the fund.
7. The fund is a continuously offered, closed-end fund. Shares may be purchased
daily; there is no daily redemption. However, each quarter, pending board
approval, the fund will authorize the repurchase of 5%-25% of the outstanding
number of shares. Investors may tender all or a portion of their shares during
the tender period.
8. For investors subject to the alternative minimum tax, a small portion of
these dividends may be taxable. Distributions of capital gains are generally
taxable.
9. Portfolio of insured municipal securities.
10. These funds are available in two or more variations, including long-term
portfolios, portfolios of insured securities, a high-yield portfolio (CA) and
limited-term, intermediate-term and money market portfolios (CA and NY).
11. The funds of the Franklin Templeton Variable Insurance Products Trust are
generally available only through insurance company variable contracts.

09/03 Not part of the annual report

[LOGO OMITTED]
FRANKLIN(R) TEMPLETON(R)
INVESTMENTS

One Franklin Parkway
San Mateo, CA 94403-1906

ANNUAL REPORT AND SHAREHOLDER INFORMATION
FRANKLIN UNIVERSAL TRUST

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

TRANSFER AGENT
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027

To ensure the highest quality of service, telephone calls to or from our service
departments may be monitored, recorded and accessed. These calls can be
identified by the presence of a regular beeping tone.

FUT A2003 10/03

ITEM 2. CODE OF ETHICS.

(A) THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL
EXECUTIVE OFFICERS AND PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER.

(D) N/A

(F) PURSUANT TO ITEM 10(A), THE REGISTRANT IS ATTACHING AS AN EXHIBIT A COPY OF
ITS CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE OFFICERS FINANCIAL
AND ACCOUNTING OFFICER.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

(A)(1) THE REGISTRANT HAS AN AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS
AUDIT COMMITTEE.

(2) THE AUDIT COMMITTEE FINANCIAL EXPERT IF FRANK W.T. LAHAYE AND HE IS
"INDEPENDENT" AS DEFINED UNDER THE RELEVANT SECURITIES AND EXCHANGE COMMISSION
RULES AND RELEASES.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. N/A
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. N/A
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

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

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

To assist it in analyzing proxies, the manager subscribes to Institutional
Shareholder Services (ISS), an unaffiliated third party corporate governance
research service that provides in-depth analyses of shareholder meeting agendas,
vote recommendations, recordkeeping and vote disclosure services. Although ISS'
analyses are thoroughly reviewed and considered in making a final voting
decision, the manager does not consider recommendations from ISS or any other
third party to be determinative of the manager's ultimate decision. The manager
votes proxies solely in the interests of the Fund and its shareholders. As a
matter of policy, the officers, directors and employees of the Fund, the manager
and the Proxy Group will not be influenced by outside sources whose interests
conflict with the interests of the Fund and its shareholders. All conflicts are
resolved in the interests of the manager's clients. In situations where the
manager perceives a material conflict of interest, the manager may: disclose the
conflict to the Fund's Board of Directors; defer to the voting recommendation of
the Fund's Board of Directors, ISS or those of another independent third party
provider of proxy services; or take such other action in good faith (in
consultation with counsel) which would protect the interests of the Fund and its
shareholders.

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

ADVISER'S PROXY VOTING POLICIES AND PRINCIPLES

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

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

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

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

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

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

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

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

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

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

Shareholders may view the complete Policies on-line at
www.franklintempleton.com. Alternatively, shareholders may request copies of the
Policies free of charge by calling the Proxy Group collect at 1-954-847-2268 or
by sending a written request to: Franklin Templeton Companies, LLC, 500 East
Broward Boulevard, Suite 1500, Fort Lauderdale, FL 33394, Attention: Proxy
Group. Copies of the Fund's proxy voting records will also be made available
on-line at www.franklintempleton.com and posted on the SEC website at
www.sec.gov no later than August 31, 2004 and will reflect the twelve-month
period beginning July 1, 2003, and ending June 30, 2004

ITEM 9. CONTROLS AND PROCEDURES.
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Registrant maintains
disclosure controls and procedures that are designed to ensure that information
required to be disclosed in the Registrant's filings under the Securities
Exchange Act of 1934 and the Investment Company Act of 1940 is recorded,
processed, summarized and reported within the periods specified in the rules and
forms of the Securities and Exchange Commission. Such information is accumulated
and communicated to the Registrant's management, including its principal
executive officer and principal financial officer, as appropriate, to allow
timely decisions regarding required disclosure. The Registrant's management,
including the principal executive officer and the principal financial officer,
recognizes that any set of controls and procedures, no matter how well designed
and operated, can provide only reasonable assurance of achieving the desired
control objectives.

Within 90 days prior to the filing date of this Shareholder Report on Form
N-CSR, the Registrant had carried out an evaluation, under the supervision and
with the participation of the Registrant's management, including the
Registrant's principal executive officer and the Registrant's principal
financial officer, of the effectiveness of the design and operation of the
Registrant's disclosure controls and procedures. Based on such evaluation, the
Registrant's principal executive officer and principal financial officer
concluded that the Registrant's disclosure controls and procedures are
effective.

(B) CHANGES IN INTERNAL CONTROLS. There have been no significant changes in the
Registrant's internal controls or in other factors that could significantly
affect the internal controls subsequent to the date of their evaluation in
connection with the preparation of this Shareholder Report on Form N-CSR.

ITEM 10. EXHIBITS.

(A) CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS.

(B)(1) CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
OF JIMMY D. GAMBILL, CHIEF EXECUTIVE OFFICER - FINANCE AND ADMINISTRATION, AND
KIMBERLEY H. MONASTERIO, CHIEF FINANCIAL OFFICER

(B(2) CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
OF JIMMY D. GAMBILL, CHIEF EXECUTIVE OFFICER - FINANCE AND ADMINISTRATION, AND
KIMBERLEY H. MONASTERIO, CHIEF FINANCIAL OFFICER

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

FRANKLIN UNIVERSAL TRUST

By /s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date October 31, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

By /s/Jimmy D. Gambill
Chief Executive Officer - Finance and Administration
Date October 31, 2003

By /s/Kimberley H. Monasterio
Chief Financial Officer
Date October 31, 2003