<PAGE> 1
CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
ROBERT R. FORTUNE
Chairman and President
February 5, 1998
Fellow Partner:
Enclosed is the Annual Report of Chestnut Street Exchange Fund for the year
ended December 31, 1997.
Our Fund earned $3.29 per share from net investment income for a share
outstanding throughout 1997, compared to $3.36 per share earned in 1996. The
reduction in net investment income is primarily attributable to the increased
fee of our investment adviser (an increase of $.22 per share in 1997 as compared
to 1996) which is tied to the market value of the portfolio. In this connection,
it should be noted that the value of a Fund share has increased 20.6 percent
since December 1996.
Total distributions from net investment income, applicable to 1997,
amounted to $3.28 per share, including $1.33 per share distributed in January
1998. Additionally, in accordance with Fund policy, approximately thirty percent
of the 1997 realized capital gains (federal income tax basis), or $.16 per
share, was distributed in January 1998. After providing for the January 1998
distribution, the net asset value per partnership share at the end of 1997 was
$293.03, compared to $242.91 at the end of 1996.
Since our last report a stock split of 157,266 shares of Norwest Corp. was
received. The holding in Louisiana Land & Exploration Company is now represented
by Burlington Resources, Inc. stock and the holding in HFS, Inc. is now
represented by Cendant Corp. stock, each arising from a merger.
The results of voting at the Annual Meeting of Partners held on December
18, 1997 are shown on page 9 of this report. Your managing general partners are
grateful for your cooperation in achieving the purposes of the meeting.
Data on the performance of our Fund since inception and comparisons to
leading stock market indices appear in the accompanying Investment Adviser's
Report.
Your questions or comments concerning Chestnut Street Exchange Fund are
welcomed.
Yours sincerely,
/s/ Robert R. Fortune
Robert R. Fortune
<PAGE> 2
INVESTMENT ADVISER'S REPORT
The stock market turned in another banner investment year. For the third
successive year, inflation was low, interest rates fell, productivity increased,
and profit margins expanded, combining to produce excellent results. All market
segments did well, with large capitalization stocks outperforming smaller ones.
Large capitalization equities surged during 1997; the S&P 500 index total
return was 33.4% for the year. According to Lipper Analytical Services, the
average U. S. equity mutual fund last year returned 24.4%, significantly behind
the S&P 500. Chestnut Street Exchange Fund returned 22.1%.
COMPARATIVE DATA
<TABLE>
<CAPTION>
CSEF DJIA S&P 500
-------- --------- -------
<S> <C> <C> <C>
Market Value 12/31/97.............................. $ 293.03 $ 7908.25 $970.43
Market Value 12/31/96.............................. $ 242.91 $ 6448.27 $740.74
% Increase in 1997................................. 20.6% 22.6% 31.0%
1997 Distributions................................. $ 3.44 $ 143.70 $ 17.42
Total Return 1997.................................. 22.1% 24.9% 33.4%
Market Value 12/29/76.............................. $ 25.00 $ 994.93 $106.34
% Increase 1976-1997............................... 1072.1% 548.1% 596.6%
Distributions 1976-1997............................ $ 51.41 $1,705.10 $203.95
Total Return 1976-1997............................. 1277.8% 866.2% 1004.4%
</TABLE>
During 1997, large capitalization stocks significantly outperformed
mid-sized and smaller stocks, topping a weaker relative third quarter with a
strong finish in the fourth quarter. Domestic stocks significantly outperformed
international stocks, with emerging markets actually negative for the year.
Within the various investing styles, value stocks significantly
outperformed growth stocks in all three size categories. The Russell 1000 Value
index gained 35.18% for the year versus 30.49% for the Russell 1000 Growth. The
performance gap for the Russell Mid-cap Value and Growth indices was even wider,
while the Russell 2000 Value and Growth indices showed the widest gap, with
Value returning 31.78% for the year versus 12.95% for Growth.
Chestnut Street Exchange Fund's overweight in healthcare helped the Fund's
performance in 1997 because healthcare was the second best performing sector in
the market. The Fund's overweight in consumer cyclicals, the market's fifth best
performing sector, also helped, as did a significant underweight in utilities,
which lagged the market. However, the Fund's overweight in technology hurt
performance; technology ranked ninth among the market's twelve sectors in 1997.
Overweights in poor-performing capital equipment and basic sectors also hurt, as
did a modest underweight in the market's best performing sector in 1997,
finance.
January 27, 1998 PNC INSTITUTIONAL MANAGEMENT CORPORATION
2
<PAGE> 3
CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENT OF NET ASSETS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------
<C> <S> <C>
AUTO & AUTO PARTS--0.6 %
61,949 Genuine Parts Company...... $ 2,102,360
------------
BANKS--10.4 %
24,952 Barnett Banks, Inc. ....... 1,793,425
60,000 CoreStates Financial Corp. ... 4,803,750
30,757 First Chicago NBD Corp. ... 2,568,210
40,000 Morgan (J.P.) & Co.,
Inc. .................... 4,515,000
178,656 NationsBank Corp. ......... 10,864,518
314,532 Norwest Corp. ............. 12,148,798
------------
36,693,701
------------
BUILDING MATERIALS & FOREST
PRODUCTS--1.6 %
45,130 Armstrong World Industries,
Inc. .................... 3,373,468
45,830 Weyerhaeuser Company....... 2,248,534
------------
5,622,002
------------
BUSINESS PRODUCTS &
SERVICES--2.8 %
16,882* ACNielsen Corporation...... 411,499
50,647 Cognizant Corporation...... 2,256,957
50,647 Dun & Bradstreet
Corporation.............. 1,566,891
68,416 Harland (John H.) Co. ..... 1,436,736
52,000 Minnesota Mining &
Manufacturing Company.... 4,267,250
------------
9,939,333
------------
CAPITAL GOODS--0.0%
4,800 Newport News Shipbuilding,
Inc. .................... 122,100
------------
CHEMICALS--4.8 %
96,700 Air Products & Chemicals,
Inc. .................... 7,953,575
52,100 BetzDearborn, Inc. ........ 3,181,356
208,000 Cabot Corporation.......... 5,746,000
------------
16,880,931
------------
CONSUMER NON-DURABLES &
SERVICES--6.5 %
118,953* Cendant Corp. ............. 4,089,025
283,411 Coca-Cola (The) Company.... 18,882,258
------------
22,971,283
------------
CONTAINERS--1.0 %
67,148 Crown Cork & Seal Company,
Inc. .................... 3,365,794
------------
DIVERSIFIED
COMPANIES--1.6 %
157,190 Ikon Office
Solutions, Inc. ......... $ 4,420,969
78,595 Unisource Worldwide, Inc. ... 1,119,979
------------
5,540,948
------------
DRUGS & MEDICAL--18.5 %
121,964 Abbott Laboratories,
Inc. .................... 7,996,265
7,835 Allegiance Corp. .......... 277,653
39,177 Baxter International,
Inc. .................... 1,975,990
403,668 Johnson & Johnson, Inc. ... 26,591,629
203,995 Merck & Company, Inc. ..... 21,674,469
124,000 SmithKline Beecham p.l.c.
ADR...................... 6,378,250
------------
64,894,256
------------
ELECTRICAL EQUIPMENT--5.9 %
203,134 Emerson Electric Company... 11,464,375
128,000 General Electric Company... 9,392,000
------------
20,856,375
------------
ELECTRONICS--17.6 %
105,538 AMP, Inc. ................. 4,432,596
44,596 Hewlett-Packard Company.... 2,787,250
5,200* Imation Co. ............... 83,200
539,676 Intel Corp. ............... 37,912,239
21,065 Lucent Technologies, Inc. ... 1,682,567
119,118 Motorola, Incorporated..... 6,797,171
159,207 Raytheon Company........... 8,039,953
------------
61,734,976
------------
ENTERTAINMENT--1.9 %
68,000 Walt Disney Company........ 6,736,250
------------
FOOD PROCESSING &
DISTRIBUTION--4.0 %
97,500 Hershey Foods Corp. ....... 6,038,906
174,000 Philip Morris Cos.,
Inc. .................... 7,884,375
------------
13,923,281
------------
INSURANCE &
FINANCIAL--4.5 %
44,000 Aetna, Inc. ............... 3,104,750
43,930 American Express Company... 3,920,752
12,028 CIGNA Corp. ............... 2,081,596
70,000 Fannie Mae................. 3,994,375
38,784 Marsh & McLennan Companies,
Inc. .................... 2,891,832
------------
15,993,305
------------
</TABLE>
See Accompanying Notes to Financial Statements.
3
<PAGE> 4
STATEMENT OF NET ASSETS (CONCLUDED)
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
LODGING & RESTAURANT--1.4 %
101,234 McDonald's Corporation..... $ 4,833,923
------------
NATURAL GAS
TRANSMISSION--0.3 %
24,000 Tenneco, Inc. ............. 948,000
------------
OFFICE EQUIPMENT--0.7 %
20,942 International Business
Machines Corporation..... 2,189,748
4,062* NCR Corp. ................. 112,974
------------
2,302,722
------------
PAPER--0.9 %
24,819 Consolidated Papers, Inc. ... 1,324,714
55,432 Westvaco Corp. ............ 1,742,643
------------
3,067,357
------------
PETROLEUM--3.0 %
27,000 Atlantic Richfield Co. .... 2,163,375
61,549 Burlington Resources, Inc. ... 2,758,165
80,000 Exxon Corp. ............... 4,895,000
33,877 Union Pacific Resources
Group, Inc. ............. 821,517
------------
10,638,057
------------
PETROLEUM EQUIPMENT &
SERVICES--1.4 %
2,232 El Paso Natural Gas Co. ... 148,428
60,432 Schlumberger, Ltd. ........ 4,864,776
------------
5,013,204
------------
POLLUTION CONTROL--1.6 %
114,556 Browning Ferris Industries,
Inc. .................... 4,238,572
48,736 WMX Technologies, Inc. .... 1,340,240
------------
5,578,812
------------
RETAIL--GENERAL &
SPECIALTY--3.8%
116,772 Albertson's, Inc. ......... 5,532,074
58,600 CVS Corp. ................. 3,754,063
16,870* Footstar, Inc. ............ 453,381
60,000 Penney (J.C.) Company,
Inc. .................... 3,618,750
------------
13,358,268
------------
TELEPHONE UTILITIES--2.1 %
144,523 GTE Corp. ................. $ 7,551,327
------------
TRANSPORTATION--1.8%
39,932 Burlington Northern,
Inc. .................... 3,711,180
40,000 Union Pacific Corp. ....... 2,497,500
------------
6,208,680
------------
Total Common Stocks
(Cost $52,307,134)....... 346,877,245
------------
PAR
- ----------
SHORT-TERM
OBLIGATIONS--1.7 %
$ 500,000 Ford Motor Credit Corp.,
Commercial Paper, 5.89%,
01/05/98................. 500,000
5,500,000 Ford Motor Credit Corp.,
Commercial Paper, 5.62%,
01/05/98................. 5,500,000
------------
Total Short-Term
Obligations
(Cost $6,000,000)........ 6,000,000
------------
TOTAL INVESTMENT IN SECURITIES
(Cost $58,307,134)....... 100.4% 352,877,245
Distributions payable...... (0.5) (1,787,856)
Other assets in excess of
other liabilities........ 0.1 493,023
----- ------------
NET ASSETS (Applicable to
1,199,810 partnership
shares outstanding)...... 100.0% $351,582,412
===== ============
NET ASSET VALUE PER
SHARE.................... $ 293.03
=============
NET ASSETS APPLICABLE TO
SHARES OWNED BY:
Limited partners
(1,148,298 shares)....... $336,487,761
Managing general partners
(5,354 shares)........... $ 1,568,892
Non-managing general
partner (46,158
shares).................. 13,525,759 15,094,651
----------- ------------
Total net assets
(1,199,810 shares)....... $351,582,412
=============
</TABLE>
- ---------------
* Non-Income Producing
See Accompanying Notes to Financial Statements.
4
<PAGE> 5
CHESTNUT STREET EXCHANGE FUND
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............................. $ 5,427,263
Interest............................... 269,456
-----------
Total Income....................... 5,696,719
-----------
Expenses:
Investment advisory fee................ 1,463,053
Managing general partners' compensation
and officer's salary................. 43,466
Legal.................................. 66,322
Custodian.............................. 25,851
Audit.................................. 27,877
Transfer Agent......................... 14,961
Insurance.............................. 4,392
Printing............................... 32,506
Miscellaneous.......................... 19,361
-----------
Total Expenses..................... 1,697,789
-----------
Net Investment Income............ 3,998,930
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Realized gain from security
transactions:
Sold, or distributed upon redemption
of partnership shares................ 11,992,357
Unrealized appreciation of investments:
Beginning of year...... $244,161,508
End of year............ 294,570,111
------------
50,408,603
-----------
Net realized and unrealized gain
on investments................. 62,400,960
-----------
Net increase in net assets resulting
from operations.................... $66,399,890
===========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment
income.............. $ 3,998,930 $ 4,224,768
Net realized gain from
security
transactions (for
federal income tax
purposes net gain is
$635,794 and
$10,543,851)........ 635,807 9,750,471
Excess of market value
over book value of
securities
distributed upon
redemption of
partnership
shares.............. 11,356,550 9,766,008
Increase in unrealized
appreciation of
investments......... 50,408,603 45,050,792
------------ ------------
Increase in net assets
resulting from
operations.......... 66,399,890 68,792,039
------------ ------------
DISTRIBUTIONS TO
PARTNERS FROM:
Net investment
income.............. (3,987,287) (4,229,985)
Net realized gains
(federal income tax
basis).............. (191,984) (3,158,084)
------------ ------------
Total distributions to
partners............ (4,179,271) (7,388,069)
------------ ------------
CAPITAL SHARE
TRANSACTIONS:
Net asset value of
3,501 and 1,596
shares subscribed or
issued in lieu of
cash
distributions....... 872,908 326,922
Cost of 51,856 and
50,630 shares
repurchased......... (14,706,454) (10,530,804)
------------ ------------
Decrease in net assets
from capital share
transactions........ (13,833,546) (10,203,882)
------------ ------------
Total increase in net
assets.............. 48,387,073 51,200,088
NET ASSETS:
Beginning of year..... 303,195,339 251,995,251
------------ ------------
End of year........... $351,582,412 $303,195,339
============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE> 6
CHESTNUT STREET EXCHANGE FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OF THE FUND OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year...... $ 242.91 $ 194.26 $ 144.43 $ 142.79 $ 134.44
-------- -------- -------- -------- --------
Income From Investment Operations:
Net investment income................. 3.29 3.36 3.22 3.07 2.62
Net gains on securities (both realized
and unrealized).................... 50.27 51.18 49.82 4.27 8.35
-------- -------- -------- -------- --------
Total from investment
operations.................... 53.56 54.54 53.04 7.34 10.97
-------- -------- -------- -------- --------
Less Distributions:
Distributions from net investment
income............................. (3.28) (3.36) (3.21) (3.07) (2.62)
Distributions from realized gains
(federal income tax basis)......... (0.16) (2.53) 0.00 (2.63) 0.00
-------- -------- -------- -------- --------
Total distributions.............. (3.44) (5.89) (3.21) (5.70) (2.62)
-------- -------- -------- -------- --------
Net Asset Value, End of Year............ $ 293.03 $ 242.91 $ 194.26 $ 144.43 $ 142.79
======== ======== ======== ======== ========
Total Return............................ 22.11% 28.09% 36.88% 5.19% 8.19%
Ratios/Supplemental Data:
Net Assets, End of Year (000's)....... $351,582 $303,195 $251,995 $191,348 $196,748
Ratios to average net assets:
Operating expenses................. 0.50% 0.51% 0.52% 0.54% 0.54%
Net investment income.............. 1.17% 1.55% 1.84% 2.11% 1.87%
Portfolio Turnover Rate............... 1.26% 3.92% 0.00% 3.88% 0.00%
(1)Average Commission Rate............. $ 0.0600 $ 0.0600 N/A N/A N/A
</TABLE>
- ---------------
(1)Computed by dividing the total amount of commission paid by the total number
of shares purchased and sold during the period for which there was a
commission. This disclosure is required by the S.E.C. for all financial
statements with fiscal years beginning after September 1, 1995.
See Accompanying Notes to Financial Statements.
6
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS
(A) Chestnut Street Exchange Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a diversified open-end
management company. Significant accounting policies are as follows:
Investments are stated at value in the accompanying financial statements.
Securities listed on a securities exchange are valued at the last reported
sales price on December 31, 1997 for each security. Securities not so listed
or not traded on that date are valued at the latest bid price. Short-term
obligations are valued at amortized cost which approximates market. Security
transactions are accounted for on the trade date. The cost of investments
sold or redeemed in kind is determined by the use of the specific
identification method for both financial reporting and income tax purposes.
For securities received in the Exchange at inception of the Fund in 1976,
cost for financial reporting purposes is the value of the securities as used
in the Exchange and for income tax purposes, the tax basis of the individual
investor. Interest income is recorded on an accrual basis; dividend income
is recorded on the ex-dividend date. No provision is made for federal income
taxes inasmuch as the Fund is a partnership and net income is taxable to the
individual partners on a pro-rata basis. The Fund distributes investment
income quarterly and approximately 30 percent of its net realized capital
gain (federal income tax basis) annually.
The preparation of financial statements in conformity with generally
accepted principles 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 reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
(B) Under agreements among the Fund, PNC Bank, National Association, (PNC Bank)
and PNC Institutional Management Corporation (PIMC), a wholly-owned
subsidiary of PNC Bank, PIMC manages the Fund's portfolio and maintains the
Fund's financial accounts. PFPC, an affiliate of PNC Bank, is the Fund's
transfer agent. PNC Bank is obligated to provide a non-managing general
partner who will own at all times at least 1% of the Fund's outstanding
shares. PNC Bank pays the non-managing general partner a fee, computed daily
and payable monthly, at the annual rate of 1/10th of 1% of the Fund's
average daily net assets as consideration for acting in that capacity. The
Fund pays PIMC a fee, as investment adviser, computed daily and payable
monthly, at an annual rate of 5/10ths of 1% of the first $100,000,000 of the
Fund's average daily net assets plus 4/10ths of 1% of net assets exceeding
$100,000,000. The managing general partners each receive a fixed fee as
compensation for their services.
(C) The aggregate cost of investments for federal income tax purposes at
December 31, 1997 was $46,184,368. The aggregate gross unrealized
appreciation for all securities is as follows: excess of value over tax cost
$306,692,877.
(D) For the period ended December 31, 1997 purchases and sales of investment
securities (excluding short-term obligations) were $4,408,661 and
$4,189,569, respectively.
(E) At December 31, 1997, net assets consisted of:
<TABLE>
<S> <C>
Undistributed net investment income.................................... $ 18,311
Unrealized gain on investments......................................... 294,570,111
Other capital--paid-in or reinvested................................... 56,993,990
------------
$ 351,582,412
============
</TABLE>
7
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(F) Effective January 1, 1998, Chestnut Street Exchange Fund changed its tax
status from a partnership to a regulated investment company. The change
results from the enactment of the "Publicly Traded Partnership" rules to the
Internal Revenue Code in 1987, which would first apply to the Fund after
1997. In connection with the change in tax status, effective January 1,
1998, PNC Bank is no longer obligated to provide a non-managing general
partner. A new Advisory Agreement, approved by the partners on December 18,
1997, effective January 1, 1998, provides for an advisory fee at the annual
rate of 4/10ths of 1% of the first $100,000,000 of the Fund's average daily
net assets plus 3/10ths of 1% of net assets exceeding $100,000,000.
8
<PAGE> 9
UNAUDITED SUPPLEMENTAL INFORMATION
DECEMBER 31, 1997
The results of voting at the Annual Meeting of Partners held on December
18, 1997 are as follows:
1. Proposal to approve an Amended and Restated Certificate and
Agreement of Limited Partnership:
<TABLE>
<S> <C>
Shares For............................................... 746,406.252
Shares Against........................................... 0
Shares Abstaining........................................ 92,906.186
</TABLE>
2. Election of General Partners:
<TABLE>
<CAPTION>
SHARES WITHHOLD
SHARES FOR AGAINST AUTHORITY
----------- ------- ---------
<S> <C> <C> <C>
Richard C. Caldwell............... 833,543.527 0 5,768.911
Robert R. Fortune................. 833,543.527 0 5,768.911
G. Willing Pepper................. 829,583.142 0 9,729.296
David R. Wilmerding, Jr........... 833,543.527 0 5,768.911
Langhorne B. Smith................ 833,543.527 0 5,768.911
</TABLE>
3. Proposal to approve a New Investment Advisory Agreement:
<TABLE>
<S> <C>
Shares For............................................... 779,573.327
Shares Against........................................... 0
Shares Abstaining........................................ 59,739.111
</TABLE>
4. Proposal to ratify selection of Coopers & Lybrand L.L.P. as
independent auditors for the Fund for its fiscal year ending December 31,
1997:
<TABLE>
<S> <C>
Shares For............................................... 833,673.998
Shares Against........................................... 2,983.563
Shares Abstaining........................................ 2,654.877
</TABLE>
9
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Chestnut Street Exchange Fund:
We have audited the accompanying statement of net assets of Chestnut Street
Exchange Fund (the "Fund") as of December 31, 1997 and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Chestnut Street Exchange Fund as of December 31, 1997, the results of its
operations for the year then ended, the changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
January 30, 1998
10
<PAGE> 11
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 12
===================================================
MANAGING GENERAL PARTNERS
Richard C. Caldwell
Robert R. Fortune
G. Willing Pepper
Langhorne B. Smith
David R. Wilmerding, Jr.
INVESTMENT ADVISERS
PNC Bank, National Association
and
PNC Institutional
Management Corporation
400 Bellevue Parkway
Wilmington, Delaware 19809
TRANSFER AGENT
PFPC Inc.
P.O. Box 8950
Wilmington, Delaware 19899
(800) 852-4750
(302) 791-1043 (Delaware)
===================================================
===================================================
CHESTNUT STREET EXCHANGE FUND
Annual Report
December 31, 1997
Chestnut Street Exchange
Fund
400 Bellevue Parkway
Wilmington, Delaware 19809
(302) 792-2555
Edward J. Roach, Treasurer
===================================================
