(2_FIDELITY_LOGOS)FIDELITY
EXCHANGE
FUND
SEMIANNUAL REPORT
JUNE 30, 1994
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on stock market
strategies.
PERFORMANCE 4 How the fund has done over time.
FUND TALK 6 The manager's review of fund
performance, strategy and outlook.
INVESTMENT CHANGES 8 A summary of major shifts in the
fund's investments over the past six
months.
INVESTMENTS 9 A complete list of the fund's
investments with their market
values.
FINANCIAL STATEMENTS 15 Statements of assets and liabilities,
operations, and changes in net
assets,
as well as financial highlights.
NOTES 19 Notes to the financial statements.
THIS REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED FOR
THE GENERAL
INFORMATION OF THE SHAREHOLDERS OF THE FUND. THIS REPORT IS NOT AUTHORIZED
FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS IN THE FUND UNLESS PRECEDED OR
ACCOMPANIED BY
AN EFFECTIVE PROSPECTUS. MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR
GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE
FDIC, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY,AND ARE SUBJECT TO INVESTMENT
RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. NEITHER THE FUND NOR FIDELITY
DISTRIBUTORS
CORPORATION IS A BANK.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
The first several months of 1994 were an unsettling time for many
investors. After three years of a nearly perfect environment for stock
market investing, stock prices generally fell from February through June.
Investors disagree about whether this decline represents only a short-term
correction or signals the beginning of a longer bear market. One can
collect statistics to support either opinion, but of course, nobody knows
for sure what will happen to stock prices in the months ahead.
We do know, however, that market declines are a normal part of stock market
investing. We have historically seen corrections of 10% or more every two
years. That's why I thought this might be a good time to review three basic
investment principles that have proven helpful to successful stock market
investors in every market cycle.
First, take a long-term approach when investing in stocks and stock funds.
If you can afford to leave your money invested through the market's
inevitable ups and downs, you will greatly reduce your vulnerability to any
single decline. Over time, stock prices have gone up - and have
significantly outperformed other types of investments and stayed ahead of
inflation.
Second, you can further manage risk by diversifying your investments. A
stock mutual fund is already diversified, because it invests in many
different companies. You can increase your diversification by investing in
a number of different stock funds, or in different investment categories,
such as bonds. You should also keep money you'll need in the near future in
a more stable investment.
Finally, it makes good sense to follow a regular investment plan, investing
a set amount of money at the same time each month or quarter. That way, you
can avoid getting caught up in the excitement of a rapidly-rising market -
and won't end up buying all your shares at market highs. This strategy
won't assure a profit or protect you from a loss in a declining market, but
it should help you lower the average cost of your purchases. For this to be
effective, you must continue to buy shares in both up and down markets.
If you have questions, please call us at 1-800-544-8888. We would be happy
to send you a Fidelity FundMatch kit, which can help you determine the mix
of investments that is right for you. You might also find it convenient to
set up a regular investment plan using the Fidelity Automatic Account
Builder.
We look forward to hearing from you.
Best regards,
Edward C. Johnson 3d
PERFORMANCE: THE BOTTOM LINE
There are several ways to evaluate a fund's historical performance. You can
look at the total percentage change in value, the average annual percentage
change, or the growth of a hypothetical $10,000 investment. Each
performance figure includes changes in a fund's share price, plus
reinvestment of any dividends (or income) and capital gains (the profits
the fund earns when it sells stocks that have grown in value).
CUMULATIVE TOTAL RETURNS
PERIODS ENDED JUNE 30, 1994 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Exchange -4.10% -0.25% 56.55% 283.98%
S&P 500(Registered trademark) -3.39% 1.41% 63.53% 308.81%
Average Growth Fund -5.95% 0.97% 60.86% 252.10%
CUMULATIVE TOTAL RETURNS show the fund's performance in percentage terms
over a set period - in this case, six months, one, five, or 10 years. You
can compare these figures to the performance of the Standard & Poor's
500 Composite Stock Price Index - a common proxy for the U.S. stock market.
You can also compare them to the average growth fund, which reflects the
performance of 498 growth funds tracked by Lipper Analytical Services. Both
benchmarks include reinvested dividends and capital gains, if any, and
exclude the effects of sales charges.
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED JUNE 30, 1994 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Exchange -0.25% 9.38% 14.40%
S&P 500(Registered trademark) 1.41% 10.34% 15.12%
Average Growth Fund 0.97% 9.68% 12.95%
AVERAGE ANNUAL TOTAL RETURNS take the fund's actual (or cumulative) return
and show you what would have happened if the fund had performed at a
constant rate each year.
$10,000 OVER 10 YEARS
Exchange (033) S&P 500
06/30/84 10000.00 10000.00
07/31/84 9825.72 9876.00
08/31/84 10874.83 10967.30
09/30/84 10682.95 10969.49
10/31/84 10790.10 11012.27
11/30/84 10660.52 10888.94
12/31/84 10943.29 11176.40
01/31/85 11814.70 12047.04
02/28/85 11954.03 12195.22
03/31/85 11994.56 12203.76
04/30/85 11933.76 12192.78
05/31/85 12597.45 12897.52
06/30/85 12789.98 13100.01
07/31/85 12738.27 13080.36
08/31/85 12648.26 12969.18
09/30/85 12283.06 12563.24
10/31/85 12751.13 13143.66
11/30/85 13733.57 14045.32
12/31/85 14355.96 14725.11
01/31/86 14484.55 14807.57
02/28/86 15701.60 15915.18
03/31/86 16614.73 16803.25
04/30/86 16596.09 16613.37
05/31/86 17530.52 17497.20
06/30/86 18007.05 17792.90
07/31/86 16982.11 16798.28
08/31/86 17935.66 18044.71
09/30/86 16232.12 16552.42
10/31/86 17159.36 17507.49
11/30/86 17639.16 17932.92
12/31/86 17330.87 17475.63
01/31/87 19695.43 19829.60
02/28/87 20776.89 20612.87
03/31/87 21131.32 21208.58
04/30/87 20670.77 21019.82
05/31/87 20877.03 21202.70
06/30/87 21993.07 22273.43
07/31/87 23069.55 23402.70
08/31/87 23799.65 24275.62
09/30/87 23245.91 23743.98
10/31/87 18422.04 18629.53
11/30/87 16946.34 17094.45
12/31/87 18209.08 18395.34
01/31/88 18877.09 19169.79
02/29/88 19885.15 20063.10
03/31/88 19249.76 19443.15
04/30/88 19299.77 19658.97
05/31/88 19290.95 19830.00
06/30/88 19966.13 20740.20
07/31/88 19766.53 20661.38
08/31/88 19412.01 19958.90
09/30/88 20150.84 20809.15
10/31/88 21038.62 21387.64
11/30/88 20856.89 21081.80
12/31/88 21193.26 21450.73
01/31/89 22440.28 23020.92
02/28/89 22018.54 22447.70
03/31/89 22545.05 22970.73
04/30/89 23757.80 24162.91
05/31/89 24634.90 25141.51
06/30/89 24526.66 24998.21
07/31/89 26768.58 27255.54
08/31/89 26928.72 27789.75
09/30/89 26749.37 27675.81
10/31/89 26329.81 27033.73
11/30/89 27021.60 27585.22
12/31/89 27452.97 28247.27
01/31/90 25646.04 26351.88
02/28/90 25865.06 26691.82
03/31/90 26556.35 27399.15
04/30/90 26022.48 26714.17
05/31/90 28910.83 29318.80
06/30/90 28966.34 29119.43
07/31/90 28772.37 29026.25
08/31/90 26361.69 26402.28
09/30/90 25135.56 25116.49
10/31/90 24938.14 25008.49
11/30/90 26514.09 26624.04
12/31/90 27318.56 27366.85
01/31/91 28217.67 28560.04
02/28/91 30296.41 30602.08
03/31/91 31112.80 31342.65
04/30/91 31008.51 31417.88
05/31/91 32360.77 32775.13
06/30/91 30782.56 31274.03
07/31/91 32354.25 32731.40
08/31/91 33045.50 33507.13
09/30/91 32416.09 32947.56
10/31/91 33038.22 33389.06
11/30/91 32004.98 32043.48
12/31/91 35901.10 35709.25
01/31/92 35116.64 35045.06
02/29/92 35731.69 35500.65
03/31/92 35046.67 34808.39
04/30/92 35702.23 35831.75
05/31/92 35919.52 36007.33
06/30/92 35013.84 35470.82
07/31/92 36648.01 36921.57
08/31/92 36160.37 36164.68
09/30/92 36309.27 36591.43
10/31/92 36636.85 36719.50
11/30/92 37753.60 37971.63
12/31/92 37582.87 38438.68
01/31/93 37290.33 38761.57
02/28/93 37404.31 39288.72
03/31/93 38262.95 40117.72
04/30/93 37514.49 39146.87
05/31/93 38468.12 40196.00
06/30/93 38493.07 40312.57
07/31/93 37778.60 40151.32
08/31/93 39157.60 41673.06
09/30/93 38831.10 41352.17
10/31/93 39994.99 42208.16
11/30/93 39441.85 41807.19
12/31/93 40040.94 42313.05
01/31/94 40687.39 43751.70
02/28/94 39735.25 42566.03
03/31/94 38108.36 40710.15
04/30/94 38751.28 41231.24
05/31/94 39394.19 41907.43
06/30/94 38397.61 40880.70
$10,000 OVER 10 YEARS: Let's say you invested $10,000 in Fidelity Exchange
Fund on June 30, 1984. As the chart shows, by June 30, 1994, the value of
your investment would have grown to $38,398 - a 283.98% increase on your
initial investment. For comparison, look at how the S&P 500 did over
the same period. With dividends reinvested, the same $10,000 investment
would have grown to $40,881 - a 308.81% increase.
UNDERSTANDING
PERFORMANCE
How a fund did yesterday is
no guarantee of how it will do
tomorrow. The stock market,
for example, has a history of
growth in the long run and
volatility in the short run. In
turn, the share price and
return of a fund that invests in
stocks will vary. That means if
you sell your shares during a
market downturn, you might
lose money. But if you can
ride out the market's ups and
downs, you may have a gain.
(checkmark)
FUND TALK: THE MANAGER'S OVERVIEW
A message from Sandy Cushman, Portfolio Manager of Fidelity Exchange Fund
Dear Exchange Fund Shareholder:
The past six months have been a trying time for stock market investors in
general and for your fund. The fund had a total return of -4.10% for the
six months ended June 30, 1994. That lagged the Standard & Poor's 500
index, which returned -3.39% during the same period. However, the fund's
performance topped that of the average growth fund, which fell 5.95%,
according to Lipper Analytical Services. For the 12 months ended June 30,
the fund returned -0.25%. During the same period, the S&P 500 was up
1.41%, while the average growth fund returned 0.97%.
What happened in the U.S. stock market? Of course, many factors affect
market performance, but rising interest rates were key. The Federal Reserve
Board has walked a delicate tightrope over the past several months. It
raised rates to curb future inflation that might result from the
strengthening economy. But it didn't want to raise rates quickly enough to
stifle that economic growth.
Rising rates generally make stock investors jittery, and 1994 has been no
exception. Investors became concerned that higher rates might slow the
economic growth that had begun to boost corporate profits. Also, when rates
go up, returns on alternative investments such as Certificate of Deposit
(CDs) and savings accounts begin to look more attractive relative to
stocks. The U.S. dollar, another negative influence, reached historic lows
when measured against foreign currencies, especially the Japanese yen.
Investors worried that a weakening dollar would make U.S. stocks less
attractive to foreign investors, and might cause the Fed to boost interest
rates further.
Against this backdrop, most of the fund's big blue-chip stocks finished the
six-month period near, or lower than, where they began. It has been a more
volatile market environment than we saw over the prior two years, and one
in which few broad themes emerged. The success stories were limited;
investors mostly rewarded those companies that showed positive earnings
growth coupled with effective cost-cutting efforts. In this market, solid
earnings growth alone didn't ensure a rising stock price.
The composition of the fund's assets relative to the market both helped and
hurt performance. On the positive side, the fund had a smaller auto-related
stock position than the market during the period. Although these stocks
made significant price gains as the economy strengthened in 1993 and early
1994, most suffered pretty steep corrections over the past few months. In
addition, the fund was under-weighted in telephone utilities. These stocks
turned in lackluster numbers due mainly to increased competition among the
Baby Bells.
On the negative side, the fund was under-weighted relative to the index in
both bank and publishing stocks. Both groups rebounded during the period
after their valuations - stock prices compared to other measures such as
earnings - sank to low levels in 1993.
The fund's largest sector investment - health care - turned in mixed
results. Drug company stocks such as Merck, Eli Lilly and Schering-Plough
continued to suffer from investor worries about their ability to increase
profits under health care reform. However, optimism surrounding industry
mergers and consolidation drove some drug stock prices back up again.
Pfizer's performance boosted the fund's total return over the six-month
period. In addition, American Cyanamid's restructuring efforts resulted in
relatively strong performance.
Consumer nondurables - 16.6% of the fund at the end of June - continued to
provide lackluster results. Despite the improving economy, cost-conscious
consumers continued to make it difficult for many of the larger, brand-name
companies to raise product prices and maintain earnings growth. For
example, General Mills announced that it was slashing the prices of its
cereals during the period. The company's stock suffered as a result. In
addition, companies such as Colgate-Palmolive found that retailers were
lowering inventories of their products, a sign of weak sales. Most of the
fund's larger investments in this sector - companies such as Anheuser
Busch, Coca Cola, and Procter & Gamble - finished the six months with
relatively
flat performance. The exception was Gillette, whose stock price rose strong
earnings reports.
What's on the horizon? History has shown us that the movements of the stock
market are impossible to predict. The recent downturn has created better
value in stocks. Corporate profits appear to be improving, thanks to
cost-cutting efforts and the strengthening economy. On the other hand,
while the economy continues to expand, its growth appears to have
moderated. That, hopefully, will lessen fears of inflation and allow the
market to find its course.
Nevertheless, interest rates have already risen substantially, and it
remains to be seen what effect they'll have on corporate profits in the
coming months. This uncertainty may mean the stock market will remain
volatile for the near future. But keep in mind that the market was
unusually calm in 1992 and 1993. A return to more pronounced peaks and
valleys is merely a return to historic norms of market volatility. As
always, a long-term approach helps us endure the periodic downturns that
are a natural part of stock investing.
Sincerely,
Sandy Cushman
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JUNE 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
McDonald's Corp. 2.8 2.7
Abbott Laboratories 2.7 2.5
Disney (Walt) Co. 2.7 2.6
General Electric Co. 2.6 2.9
Gillette Company 2.5 2.1
Johnson & Johnson 2.5 2.4
Hewlett Packard Co. 2.5 2.5
Coca-Cola Company (The) 2.5 2.7
Schering-Plough Corp. 2.4 2.5
American Home Products Corp. 2.4 2.5
TOP FIVE INDUSTRIES AS OF JUNE 30, 1994
% OF FUND'S % OF FUND'S
INVESTMENTS INVESTMENTS
IN THESE STOCKS
6 MONTHS AGO
Health 17.1 16.6
Nondurables 16.6 16.4
Media & Leisure 13.3 13.9
Energy 9.8 9.2
Utilities 6.9 7.5
ASSET ALLOCATION
AS OF JUNE 30, 1994 AS OF DECEMBER 31, 1993
Row: 1, Col: 1, Value: 5.2
Row: 1, Col: 2, Value: 94.8
Row: 1, Col: 1, Value: 4.7
Row: 1, Col: 2, Value: 95.3
Stocks 94.8%
Short-term
Investments 5.2%
Stocks 95.3%
Short-term
Investments 4.7%
INVESTMENTS JUNE 30, 1994 (UNAUDITED)
Showing Percentage of Total Value of Investments
COMMON STOCKS - 94.8%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.5%
DEFENSE ELECTRONICS - 1.5%
Raytheon Co. 40,000 $ 2,590,000
BASIC INDUSTRIES - 2.7%
CHEMICALS & PLASTICS - 2.7%
Air Products & Chemicals, Inc. 47,634 2,018,491
Cabot Corp. 25,000 1,278,125
Minnesota Mining & Manufacturing Co. 30,000 1,485,000
4,781,616
CONGLOMERATES - 0.5%
United Technologies Corp. 13,686 879,326
DURABLES - 2.6%
AUTOS, TIRES, & ACCESSORIES - 2.2%
Dana Corp. 80,670 2,299,095
General Motors Corp. 30,000 1,507,500
3,806,595
CONSUMER ELECTRONICS - 0.4%
Stanley Works 15,874 638,929
TOTAL DURABLES 4,445,524
ENERGY - 9.8%
ENERGY SERVICES - 2.4%
Dresser Industries, Inc. 40,000 820,000
Halliburton Co. 50,700 1,711,125
Schlumberger Ltd. 26,919 1,591,586
4,122,711
OIL & GAS - 7.4%
Amoco Corp. 40,000 2,280,000
Chevron Corp. 60,000 2,512,500
Exxon Corp. 47,900 2,712,338
Kerr-McGee Corp. 13,600 640,900
Mobil Corp. 40,000 3,265,000
Royal Dutch Petroleum Co. 15,000 1,569,375
12,980,113
TOTAL ENERGY 17,102,824
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - 5.4%
BANKS - 1.4%
Bankers Trust New York Corp. 20,000 $ 1,332,500
CoreStates Financial Corp. 43,800 1,127,850
2,460,350
CREDIT & OTHER FINANCE - 1.4%
American Express Co. 94,788 2,440,791
INSURANCE - 2.4%
General Re Corp. 23,360 2,546,240
Torchmark Corp. 41,616 1,623,024
4,169,264
SECURITIES INDUSTRY - 0.2%
Lehman Brothers Holdings, Inc. 18,957 286,725
TOTAL FINANCE 9,357,130
HEALTH - 17.1%
DRUGS & PHARMACEUTICALS - 10.9%
American Cyanamid Co. 31,500 1,764,000
American Home Products Corp. 73,767 4,186,277
Bristol-Myers Squibb Co. 60,584 3,248,817
Lilly (Eli) & Co. 26,252 1,493,083
Merck & Co., Inc. 33,619 1,000,165
Pfizer, Inc. 50,000 3,156,250
Schering-Plough Corp. 70,020 4,288,725
19,137,317
MEDICAL EQUIPMENT & SUPPLIES - 6.2%
Abbott Laboratories 165,916 4,811,564
Becton, Dickinson & Co. 40,000 1,635,000
Johnson & Johnson 103,670 4,444,851
10,891,415
TOTAL HEALTH 30,028,732
INDUSTRIAL MACHINERY & EQUIPMENT - 6.0%
ELECTRICAL EQUIPMENT - 3.4%
General Electric Co. 98,534 4,594,148
General Signal Corp. 40,000 1,320,000
5,914,148
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 1.8%
Parker-Hannifin Corp. 75,937 $ 3,236,815
POLLUTION CONTROL - 0.8%
WMX Technologies, Inc. 50,000 1,325,000
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 10,475,963
MEDIA & LEISURE - 13.3%
BROADCASTING - 0.8%
Capital Cities/ABC, Inc. 20,000 1,422,500
ENTERTAINMENT - 3.1%
Disney (Walt) Co. 113,454 4,722,523
Paramount Communications, Inc. 16,422 763,623
5,486,146
PUBLISHING - 6.6%
Gannett Co., Inc. 55,214 2,733,093
Harcourt General Inc. 40,000 1,405,000
Knight-Ridder, Inc. 32,200 1,646,225
McGraw-Hill, Inc. 34,756 2,311,274
Media General, Inc. Class A 34,382 915,421
Times Mirror Co., Series A 82,781 2,493,778
11,504,791
RESTAURANTS - 2.8%
McDonald's Corp. 169,480 4,893,735
TOTAL MEDIA & LEISURE 23,307,172
NONDURABLES - 16.6%
BEVERAGES - 4.4%
Anheuser-Busch Companies, Inc. 67,867 3,444,250
Coca-Cola Company (The) 107,031 4,348,134
7,792,384
FOODS - 3.7%
General Mills, Inc. 50,000 2,731,250
Ralston Purina Co. 35,298 1,222,193
Sara Lee Corp. 120,000 2,550,000
6,503,443
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
HOUSEHOLD PRODUCTS - 7.2%
Colgate-Palmolive Co. 60,000 $ 3,120,000
Gillette Company 68,572 4,465,752
International Flavors & Fragrances, Inc. 45,134 1,765,868
Procter & Gamble Co. 60,000 3,202,500
12,554,120
TOBACCO - 1.3%
Philip Morris Companies, Inc. 44,150 2,273,725
TOTAL NONDURABLES 29,123,672
RETAIL & WHOLESALE - 4.4%
APPAREL STORES - 0.5%
Edison Brothers Stores, Inc. 40,000 1,010,000
GENERAL MERCHANDISE STORES - 2.6%
K mart Corp. 80,678 1,250,509
May Department Stores Co. (The) 82,126 3,223,446
4,473,955
GROCERY STORES - 1.3%
Supervalu, Inc. 76,080 2,301,420
TOTAL RETAIL & WHOLESALE 7,785,375
SERVICES - 1.5%
PRINTING - 1.2%
Harland (John H.) Co. 100,000 2,175,000
SERVICES - 0.3%
Jostens, Inc. 33,307 537,075
TOTAL SERVICES 2,712,075
TECHNOLOGY - 5.9%
COMPUTERS & OFFICE EQUIPMENT - 2.8%
Hewlett-Packard Co. 58,289 4,393,533
International Business Machines Corp. 9,097 534,449
4,927,982
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - CONTINUED
ELECTRONICS - 2.1%
Motorola, Inc. 82,136 $ 3,655,052
PHOTOGRAPHIC EQUIPMENT - 1.0%
Eastman Kodak Co. 37,192 1,789,865
TOTAL TECHNOLOGY 10,372,899
TRANSPORTATION - 0.6%
RAILROADS - 0.6%
Union Pacific Corp. 19,090 1,080,968
UTILITIES - 6.9%
ELECTRIC UTILITY - 4.4%
Central Louisiana Electric Co., Inc. 60,000 1,410,000
Duke Power Co. 50,000 1,787,500
Hawaiian Electric Industries, Inc. 40,000 1,240,000
PacifiCorp. 55,400 934,875
Potomac Electric Power Co. 70,000 1,338,750
SCECorp 80,000 1,030,000
7,741,125
GAS - 0.5%
Williams Companies, Inc. 30,680 878,215
TELEPHONE SERVICES - 2.0%
MCI Communications Corp. 80,000 1,770,000
Sprint Corporation 50,000 1,743,750
3,513,750
TOTAL UTILITIES 12,133,090
TOTAL COMMON STOCKS
(Cost $24,254,907) 166,176,366
REPURCHASE AGREEMENTS - 5.2%
MATURITY VALUE (NOTE 1)
AMOUNT
Investments in repurchase agreements,
(U.S. Treasury obligations), in a joint
trading account at 4.29% dated
6/30/1994 due 7/1/1994 $ 9,026,075 $ 9,025,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $33,279,907) $ 175,201,366
INCOME TAX INFORMATION
At June 30,1994, the aggregate cost of investment securities for income tax
purposes was $33,279,907. Gross and net unrealized appreciation amounted to
$141,921,459 related to appreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1994 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 175,201,366
agreements of $9,025,000) (cost $33,279,907) (Notes
1 and 2) - See accompanying schedule
Cash 406
Dividends receivable 387,916
TOTAL ASSETS 175,589,688
LIABILITIES
Accrued management fee $ 81,470
Other payables and accrued expenses 21,935
TOTAL LIABILITIES 103,405
NET ASSETS $ 175,486,283
Net Assets consist of (Note 1):
Paid in capital $ 27,609,876
Undistributed net investment income 22,439
Accumulated undistributed net realized gain (loss) 5,932,509
on investments
Net unrealized appreciation (depreciation) on 141,921,459
investments
NET ASSETS, for 1,811,463 shares outstanding $ 175,486,283
NET ASSET VALUE, offering price and redemption price per $96.88
share ($175,486,283 (divided by) 1,811,463 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1994 (UNAUDITED)
INVESTMENT INCOME $ 2,641,648
Dividends
Interest 151,207
TOTAL INCOME 2,792,855
EXPENSES
Management fee (Note 4) $ 496,696
Transfer agent fees (Note 4) 3,787
Accounting fees and expenses (Note 4) 462
Non-interested trustees' compensation 552
Custodian fees and expenses 8,240
Registration fees 125
Audit 14,739
Legal 477
Miscellaneous 923
TOTAL EXPENSES 526,001
NET INVESTMENT INCOME 2,266,854
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 5,940,610
(NOTES 1 AND 3)
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on (15,821,086)
investment securities
NET GAIN (LOSS) (9,880,476)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM $ (7,613,622)
OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30,1994 1993
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 2,266,854 $ 4,206,381
Net investment income
Net realized gain (loss) 5,940,610 5,630,947
Change in net unrealized appreciation (depreciation) (15,821,086) 2,103,145
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (7,613,622) 11,940,473
FROM OPERATIONS
Distributions to shareholders (1,985,443) (4,206,381)
From net investment income
In excess of net investment income - (159,460)
From net realized gain (110,633) (1,424,592)
TOTAL DISTRIBUTIONS (2,096,076) (5,790,433)
Share transactions 447,238 1,315,811
Reinvestment of distributions
Cost of shares redeemed (4,609,092) (4,994,161)
Net increase (decrease) in net assets resulting from (4,161,854) (3,678,350)
share transactions
TOTAL INCREASE (DECREASE) IN NET ASSETS (13,871,552) 2,471,690
NET ASSETS
Beginning of period 189,357,835 186,886,145
End of period (including under (over) distribution of net $ 175,486,283 $ 189,357,835
investment income of $22,439 and $(258,972),
respectively)
OTHER INFORMATION
Shares
Issued in reinvestment of distributions 4,477 13,062
Redeemed (45,901) (49,384)
Net increase (decrease) (41,424) (36,322)
</TABLE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1994
(UNAUDITED) 1993 1992 1991 1990 1989
</TABLE>
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Net asset value, $ 102.20 $ 98.92 $ 97.48 $ 75.96 $ 80.22 $ 69.85
beginning of period
Income from
Investment
Operations
Net investment 1.25 2.26 2.19 2.13 2.16 2.23
income
Net realized and (5.41) 4.14 2.34 21.49 (2.52) 17.56
unrealized gain
(loss)
Total from (4.16) 6.40 4.53 23.62 (.36) 19.79
investment
operations
Less Distributions (1.10) (2.26) (2.23) (2.10) (2.20) (2.30)
From net investment
income
In excess of net - (.09) - - - -
investment income
From net realized (.06) (.77) (.86) - (1.70) (7.12)
gain
Total distributions (1.16) (3.12) (3.09) (2.10) (3.90) (9.42)
Net asset value, end $ 96.88 $ 102.20 $ 98.92 $ 97.48 $ 75.96 $ 80.22
of period
TOTAL RETURNB (4.10)% 6.54% 4.68% 31.42% (.49) 29.54%
%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 175,486 $ 189,358 $ 186,886 $ 187,876 $ 150,050 $ 163,312
period (000 omitted)
Ratio of expenses to .58%A .57% .58% .58% .56% .58%
average net assets
Ratio of net 2.49%A 2.24% 2.23% 2.42% 2.72% 2.78%
investment income
to average net
assets
Portfolio turnover rate 0%A 0% 0% 0% 0% 6%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1994 (Unaudited)
1. SIGNIFICANT ACCOUNTING
POLICIES.
Fidelity Exchange Fund (the fund) is registered under the Investment
Company Act of 1940, as amended (the 1940 Act), as an open-end management
investment company organized as a Massachusetts business trust and is
authorized to issue 10 million shares. The following summarizes the
significant accounting policies of the fund:
SECURITY VALUATION. Securities for which exchange quotations are readily
available are valued at the last sale price, or if no sale price, at the
closing bid price. Securities for which exchange quotations are not readily
available (and in certain cases debt securities which trade on an
exchange), are valued primarily using dealer-supplied valuations or at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Board of Trustees.
Short-term securities maturing within sixty days are valued at amortized
cost or original cost plus accrued interest, both of which approximate
current value.
INCOME TAXES. As a qualified regulated investment company under Subchapter
M of the Internal Revenue Code, the fund is not subject to income taxes to
the extent that it distributes all of its taxable income for its fiscal
year. The schedule of investments includes information regarding income
taxes under the caption "Income Tax Information."
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date,
except certain dividends from foreign securities where the ex-dividend date
may have passed, are recorded as soon as the fund is informed of the
ex-dividend date. Interest income is accrued as earned. Dividend and
interest income is recorded net of foreign taxes where recovery of such
taxes is not assured.
DISTRIBUTIONS TO SHAREHOLDERS. Distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
redemptions in kind and will result in reclassifications to paid in
capital.
SECURITY TRANSACTIONS. Security transactions are accounted for as of trade
date. Gains and losses on securities sold are determined on the basis of
identified cost.
2. OPERATING POLICIES.
REPURCHASE AGREEMENTS. The fund, through its custodian, receives delivery
of the underlying securities, whose market value is required to be at least
102% of the resale price at the time of purchase. The fund's investment
adviser, Fidelity Management & Research Company (FMR), is responsible
for determining that the value of these underlying securities remains at
least equal to the resale price.
2. OPERATING POLICIES -
CONTINUED
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management contracts with FMR, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by
U.S. Treasury or Federal Agency obligations.
3. PURCHASES AND SALES OF
INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $58,500 and $6,964,765, respectively.
4. FEES AND OTHER
TRANSACTIONS WITH AFFILIATES.
MANAGEMENT FEE. As the fund's investment adviser, FMR receives a fee at a
rate of 1/20 of 1% per month (which is equivalent to an annual rate of 6/10
of 1%) of the fund's average net assets determined as of the close of
business on each business day throughout the month. In addition, under the
Management Contract, FMR provides portfolio accounting and bookkeeping
services to the fund and determines the net asset value per share of the
fund. The management fee is subject to a reduction to the extent that the
monthly average net assets of all mutual funds advised by FMR exceed $4
billion in any month. The management fee payable by the fund on its portion
of the excess is reduced by 10%. For the period, the management fee was
reduced by $54,213. For the period, the management fee was equivalent to an
annualized rate of .55% of average net assets after the fee reduction.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives fees based on the type, size, number of accounts and the
number of transactions made by shareholders. FSC pays for typesetting,
printing and mailing of all shareholder reports, except proxy statements.
ACCOUNTING FEES. FSC maintains the fund's accounting records. The fee is
based on the level of average net assets for the month plus out-of-pocket
expenses.
BROKERAGE COMMISSIONS. The fund placed a portion of its portfolio
transactions with brokerage firms which are affiliates of FMR. The
commissions paid to these affiliated firms were $712 for the period.
TO CALL FIDELITY
FOR FUND INFORMATION AND QUOTES
The Fidelity Telephone Connection offers you special automated telephone
services for quotes and balances. The services are easy to use,
confidential and quick. All you need is a Touch Tone telephone.
YOUR PERSONAL IDENTIFICATION NUMBER
(PIN)
The first time you call one of our automated telephone services, we'll ask
you
to set up your Personal Identification
Number (PIN). The PIN assures that
only you have automated telephone
access to your account information.
Please have your Customer Number
(T-account #) handy when you call --
you'll need it to establish your PIN. If
you would ever like to change your PIN, just choose the "Change your
Personal
Identification Number" option when
you call. If you forget your PIN, please
call a Fidelity representative at 1-800-
544-6666 for assistance.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND QUOTES*
1-800-544-8544
Just make a selection from this record-ed menu:
PRESS
For quotes on funds you own.
1.
For an individual fund quote.
2.
For the ten most frequently
requested Fidelity fund quotes.
3.
For quotes on Fidelity Select
Portfolios(registered trademark).
4.
To change your Personal
Identification Number (PIN).
5.
To speak with a Fidelity
representative.
6.
(PHONE_GRAPHIC)(PHONE_GRAPHIC)MUTUAL FUND ACCOUNT
BALANCES 1-800-544-7544
Just make a selection from this record-
ed menu:
PRESS
For balances on funds you own.
1.
For your most recent fund activity
(purchases, redemptions, and
dividends).
2.
To change your Personal
Identification Number (PIN).
3.
To speak with a Fidelity
representative.
4.
* WHEN YOU CALL THE QUOTES LINE, PLEASE REMEMBER THAT A FUND'S YIELD AND
RETURN WILL
VARY AND, EXCEPT FOR MONEY MARKET FUNDS, SHARE PRICE WILL ALSO VARY. THIS
MEANS THAT
YOU MAY HAVE A GAIN OR LOSS WHEN YOU SELL YOUR SHARES. THERE IS NO
ASSURANCE THAT
MONEY MARKET FUNDS WILL BE ABLE TO MAINTAIN A STABLE $1 SHARE PRICE; AN
INVESTMENT IN
A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
TOTAL
RETURNS ARE HISTORICAL AND INCLUDE CHANGES IN SHARE PRICE, REINVESTMENT OF
DIVIDENDS
AND CAPITAL GAINS, AND THE EFFECTS OF ANY SALES CHARGES. FOR MORE
INFORMATION ON ANY
FIDELITY FUND INCLUDING MANAGEMENT FEES AND CHARGES, CALL 1-800-544-8888
FOR A FREE
PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
TO VISIT FIDELITY
For directions and hours,
please call 1-800-544-9797.
ARIZONA
7373 N. Scottsdale Road
Scottsdale, AZ
CALIFORNIA
851 Hamilton Avenue
Campbell, CA
527 North Brand Boulevard
Glendale, CA
19100 Von Karman Avenue
Irvine, CA
10100 Santa Monica Blvd.
Los Angeles, CA
811 Wilshire Boulevard
Los Angeles, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
455 Market Street
San Francisco, CA
1400 Civic Drive
Walnut Creek, CA
COLORADO
1625 Broadway
Denver, CO
CONNECTICUT
185 Asylum Street
Hartford, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
DELAWARE
222 Delaware Avenue
Wilmington, DE
FLORIDA
4400 N. Federal Highway
Boca Raton, FL
2249 Galiano Street
Coral Gables, FL
4090 N. Ocean Boulevard
Ft. Lauderdale, FL
4001 Tamiami Trail, North
Naples, FL
1907 West State Road 434
Orlando, FL
2401 PGA Boulevard
Palm Beach Gardens, FL
8065 Beneva Road
Sarasota, FL
2000 66th Street, North
St. Petersburg, FL
GEORGIA
3525 Piedmont Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
HAWAII
700 Bishop Street
Honolulu, HI
ILLINOIS
215 East Erie Street
Chicago, IL
One North Franklin
Chicago, IL
540 Lake Cook Road
Deerfield, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
LOUISIANA
201 St. Charles Avenue
New Orleans, LA
MAINE
3 Canal Plaza
Portland, ME
MARYLAND
1 West Pennsylvania Ave.
Towson, MD
7401 Wisconsin Avenue
Bethesda, MD
MASSACHUSETTS
470 Boylston Street
Boston, MA
21 Congress Street
Boston, MA
25 State Street
Boston, MA
300 Granite Street
Braintree, MA
101 Cambridge Street
Burlington, MA
416 Belmont Street
Worcester, MA
MICHIGAN
280 North Woodward Ave.
Birmingham, MI
26955 Northwestern Hwy.
Southfield, MI
MINNESOTA
38 South Sixth Street
Minneapolis, MN
MISSOURI
700 West 47th Street
Kansas City, MO
200 North Broadway
St. Louis, MO
NEW JERSEY
60B South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
505 Millburn Avenue
Short Hills, NJ
NEW YORK
1050 Franklin Avenue
Garden City, NY
999 Walt Whitman Road
Melville, L.I., NY
71 Broadway
New York, NY
350 Park Avenue
New York, NY
10 Bank Street
White Plains, NY
NORTH CAROLINA
2200 West Main Street
Durham, NC
OHIO
600 Vine Street
Cincinnati, OH
1903 East Ninth Street
Cleveland, OH
28699 Chagrin Boulevard
Woodmere Village, OH
OREGON
121 S.W. Morrison Street
Portland, OR
PENNSYLVANIA
1735 Market Street
Philadelphia, PA
439 Fifth Avenue
Pittsburgh, PA
TENNESSEE
5100 Poplar Avenue
Memphis, TN
TEXAS
10000 Research Boulevard
Austin, TX
7001 Preston Road
Dallas, TX
1155 Dairy Ashford
Houston, TX
1010 Lamar Street
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
UTAH
175 East 400 South Street
Salt Lake City, UT
VERMONT
199 Main Street
Burlington, VT
VIRGINIA
8180 Greensboro Drive
McLean, VA
WASHINGTON
411 108th Avenue, N.E.
Bellevue, WA
1001 Fourth Avenue
Seattle, WA
WASHINGTON, DC
1775 K Street, N.W.
Washington, DC
WISCONSIN
222 East Wisconsin Avenue
Milwaukee, WI
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
Rufus C. Cushman, Jr., Vice President
William J. Hayes, Vice President
Gary L. French, Treasurer
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
Arthur S. Loring, Secretary
BOARD OF TRUSTEES
J. Gary Burkhead
Ralph F. Cox *
Phyllis Burke Davis *
Richard J. Flynn *
Edward C. Johnson 3d
E. Bradley Jones *
Donald J. Kirk *
Peter S. Lynch
Edward H. Malone *
Marvin L. Mann *
Gerald C. McDonough *
Thomas R. Williams *
GENERAL DISTRIBUTOR
Fidelity Distributors Corporation
Boston, MA
TRANSFER AND SHAREHOLDER
SERVICING AGENT
Fidelity Service Co.
Boston, MA
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, MA
FIDELITY GROWTH FUNDS
Blue Chip Growth Fund
Capital Appreciation Fund
Contrafund
Disciplined Equity Fund
Dividend Growth Fund
Emerging Growth Fund
Exchange Fund
Fidelity Fifty
Growth Company Fund
Low-Priced Stock Fund
Magellan(Registered trademark) Fund
New Millennium(trademark) Fund
OTC Portfolio
Retirement Growth Fund
Small Cap Stock Fund
Stock Selector
Trend Fund
Value Fund
THE FIDELITY TELEPHONE CONNECTION
MUTUAL FUND 24-HOUR SERVICE
Account Balances 1-800-544-7544
Exchanges/Redemptions 1-800-544-7777
Mutual Fund Quotes 1-800-544-8544
Account Assistance 1-800-544-6666
Product Information 1-800-544-8888
Retirement Accounts 1-800-544-4774
(8 a.m. - 9 p.m.)
TDD Service 1-800-544-0118
for the deaf and hearing impaired
(9 a.m. - 9 p.m. Eastern time)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
