(2_FIDELITY_LOGOS)FIDELITY
EXCHANGE
FUND
SEMIANNUAL REPORT
JUNE 30, 1996
CONTENTS
PRESIDENT'S MESSAGE 3 Ned Johnson on investing
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.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY,
ANY DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
NEITHER THE FUND NOR FIDELITY DISTRIBUTORS CORPORATION IS A BANK.
FOR MORE INFORMATION ON ANY FIDELITY FUND, INCLUDING CHARGES AND EXPENSES,
CALL
1-800-544-8888 FOR A FREE PROSPECTUS. READ IT CAREFULLY BEFORE YOU INVEST
OR SEND MONEY.
PRESIDENT'S MESSAGE
DEAR SHAREHOLDER:
Although stocks have managed to post solid returns through the first six
months of 1996, signs of strength in the economy have led to inflation
fears, causing some uncertainty in bond markets so far this year. In 1995,
both stock and bond markets posted strong results, while the year before,
stocks posted below-average returns and bonds had one of the worst years in
history.
These market ups and downs are a normal part of investing, and there are
some basic principles that are helpful for investors to remember in
different types of markets.
If you can leave your money invested over the long term, you can avoid the
results of the volatility that generally accompanies the stock market in
the short term. You also can help to manage some of the risks of investing
through diversification. A stock fund is already diversified because it
invests in many issues. You can diversify even further by placing some of
your money in several different types of stock funds or in other investment
categories, such as bonds.
If you have a short investment time horizon, you might want to consider
moving some of your investment into a money market fund, which seeks income
and a stable share price by investing in high-quality, short-term
investments. Of course, there is no assurance that a money market fund will
achieve its goal, and it is important to remember that money market funds
are not insured or guaranteed by any agency of the U.S. government.
Finally, no matter what your investment horizon or portfolio diversity, it
makes good sense to follow a regular investment plan - investing a certain
amount of money at the same time each month or quarter - and to review your
portfolio periodically. A periodic investment plan will not, of course,
assure a profit or protect against a loss.
If you have any questions, please call us at 1-800-544-8888. We stand ready
to provide the information you need to make the investments that are right
for 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. A fund's total
return 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, 1996 PAST 6 PAST 1 PAST 5 PAST 10
MONTHS YEAR YEARS YEARS
Exchange 11.32% 26.84% 105.76% 251.75%
S&P 500(registered trademark) 10.10% 26.00% 107.63% 264.95%
Growth and Income Funds Average 9.24% 22.13% 95.61% 205.50%
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. For
example, if you invested $1,000 in a fund that had a 5% return over the
past year, the value of your investment would be $1,050. You can compare
the fund's returns to the performance of the Standard & Poor's 500 Index -
a widely recognized, unmanaged index of common stock prices. The index
figures assume reinvestment of all dividends paid by stocks included in the
index. They do not, however, include any allowance for the brokerage
commissions or other fees you would pay if you actually invested in those
stocks. To measure how the fund's performance stacked up against its peers,
you can compare it to the growth and income funds average, which reflects
the performance of 527 mutual funds with similar objectives tracked by
Lipper Analytical Services, Inc. over the past six months. 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, 1996 PAST 1 PAST 5 PAST 10
YEAR YEARS YEARS
Exchange 26.84% 15.52% 13.40%
S&P 500 26.00% 15.73% 13.79%
Growth and Income Funds Average 22.13% 14.25% 11.70%
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
IMAHDR PRASUN SHR__CHT 19960630 19960710 115448 S00000000000001
Exchange SP Standard & Poor 500
00033 SP001
1986/06/30 10000.00 10000.00
1986/07/31 9430.81 9441.00
1986/08/31 9960.36 10141.52
1986/09/30 9014.32 9302.82
1986/10/31 9529.25 9839.59
1986/11/30 9795.70 10078.69
1986/12/31 9624.49 9821.69
1987/01/31 10937.62 11144.67
1987/02/28 11538.19 11584.88
1987/03/31 11735.03 11919.68
1987/04/30 11479.27 11813.60
1987/05/31 11593.81 11916.38
1987/06/30 12213.59 12518.16
1987/07/31 12811.40 13152.83
1987/08/31 13216.87 13643.43
1987/09/30 12909.35 13344.63
1987/10/31 10230.47 10470.20
1987/11/30 9410.95 9607.46
1987/12/31 10112.20 10338.58
1988/01/31 10483.17 10773.84
1988/02/29 11042.98 11275.90
1988/03/31 10690.13 10927.47
1988/04/30 10717.90 11048.77
1988/05/31 10713.00 11144.89
1988/06/30 11087.96 11656.44
1988/07/31 10977.12 11612.15
1988/08/31 10780.24 11217.34
1988/09/30 11190.54 11695.19
1988/10/31 11683.56 12020.32
1988/11/30 11582.64 11848.43
1988/12/31 11769.44 12055.78
1989/01/31 12461.95 12938.26
1989/02/28 12227.74 12616.10
1989/03/31 12520.13 12910.05
1989/04/30 13193.62 13580.08
1989/05/31 13680.71 14130.08
1989/06/30 13620.59 14049.54
1989/07/31 14865.61 15318.21
1989/08/31 14954.54 15618.45
1989/09/30 14854.94 15554.41
1989/10/31 14621.94 15193.55
1989/11/30 15006.12 15503.50
1989/12/31 15245.68 15875.58
1990/01/31 14242.22 14810.33
1990/02/28 14363.86 15001.38
1990/03/31 14747.75 15398.92
1990/04/30 14451.28 15013.95
1990/05/31 16055.29 16477.81
1990/06/30 16086.09 16365.76
1990/07/31 15978.38 16313.39
1990/08/31 14639.63 14838.66
1990/09/30 13958.72 14116.01
1990/10/31 13849.08 14055.32
1990/11/30 14724.27 14963.29
1990/12/31 15171.03 15380.76
1991/01/31 15670.34 16051.37
1991/02/28 16824.74 17199.04
1991/03/31 17278.11 17615.25
1991/04/30 17220.19 17657.53
1991/05/31 17971.15 18420.34
1991/06/30 17094.72 17576.69
1991/07/31 17967.54 18395.76
1991/08/31 18351.42 18831.74
1991/09/30 18001.89 18517.25
1991/10/31 18347.38 18765.38
1991/11/30 17773.58 18009.13
1991/12/31 19937.27 20069.38
1992/01/31 19501.63 19696.09
1992/02/29 19843.19 19952.14
1992/03/31 19462.77 19563.07
1992/04/30 19826.83 20138.23
1992/05/31 19947.50 20236.90
1992/06/30 19444.54 19935.37
1992/07/31 20352.06 20750.73
1992/08/31 20081.25 20325.34
1992/09/30 20163.94 20565.18
1992/10/31 20345.86 20637.16
1992/11/30 20966.03 21340.88
1992/12/31 20871.25 21603.38
1993/01/31 20708.79 21784.85
1993/02/28 20772.08 22081.12
1993/03/31 21248.92 22547.03
1993/04/30 20833.27 22001.39
1993/05/31 21362.86 22591.03
1993/06/30 21376.73 22656.54
1993/07/31 20979.96 22565.92
1993/08/31 21745.77 23421.17
1993/09/30 21564.45 23240.82
1993/10/31 22210.81 23721.91
1993/11/30 21903.63 23496.55
1993/12/31 22236.31 23780.86
1994/01/31 22595.31 24589.41
1994/02/28 22066.56 23923.03
1994/03/31 21163.09 22879.99
1994/04/30 21520.12 23172.85
1994/05/31 21877.16 23552.89
1994/06/30 21323.73 22975.84
1994/07/31 21997.25 23729.45
1994/08/31 22945.91 24702.36
1994/09/30 22725.80 24097.15
1994/10/31 23324.49 24639.34
1994/11/30 22910.69 23741.97
1994/12/31 23271.91 24094.07
1995/01/31 24116.97 24718.82
1995/02/28 24943.71 25682.12
1995/03/31 25365.08 26440.00
1995/04/30 26177.88 27218.65
1995/05/31 27156.48 28306.58
1995/06/30 27731.82 28964.15
1995/07/31 28652.88 29924.60
1995/08/31 28334.23 29999.71
1995/09/30 29680.94 31265.70
1995/10/31 29811.19 31154.08
1995/11/30 31048.57 32521.74
1995/12/31 31596.90 33148.11
1996/01/31 32751.94 34276.47
1996/02/29 33266.07 34594.21
1996/03/31 33615.87 34927.36
1996/04/30 34017.31 35442.19
1996/05/31 34963.41 36356.24
1996/06/28 35174.69 36494.76
IMATRL PRASUN SHR__CHT 19960630 19960710 115453 R00000000000123
$10,000 OVER 10 YEARS: Let's say hypothetically that $10,000 was invested
in Fidelity Exchange Fund on June 30, 1986. As the chart shows, by June 30,
1996, the value of the investment would have grown to $35,175 - a 251.75%
increase on the initial investment. For comparison, look at how the S&P 500
did over the same period. With dividends and capital gains, if any,
reinvested, the same $10,000 investment would have grown to $36,495 - a
264.95% 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 Jonathan F. Weed, Portfolio Manager of Fidelity
Exchange Fund
Dear Exchange Fund Shareholder:
During the first six months of 1996, stocks maintained the strong
performance we saw throughout 1995. For the six months ended June 30, 1996,
the fund had a total return of 11.32%. That beat the 10.10% total return of
the Standard & Poor's 500 Index during the same period. The fund also
outperformed the growth and income funds average tracked by Lipper
Analytical Services, which posted a 9.24% return during the six-month
period. For the 12 months ended June 30, 1996, the fund had a total return
of 26.84%, while the S&P 500 returned 26.00%, and the growth and income
funds average returned 22.13%.
No one sector or type of stock proved to be a market leader over the past
six months. Instead, the market was characterized by rapid sector rotation
as investors sought to take advantage of any area or stock that showed
above-average earnings growth. While the fund's exposure to different
sectors helped dictate performance, its gains were more a result of how the
individual stocks in the portfolio performed.
Although statistics through much of the period indicated
stronger-than-expected economic growth, many investors appeared uncertain
about the future of the economy. Cyclical stocks - those that rise and fall
with the economy - did not post the kind of returns one would expect given
the strength indicated by economic data. Instead, returns from cyclical
stocks depended largely on the success of individual companies. Two of the
top contributors to the fund's performance came from this area. First,
General Electric (up 20%) increased revenue from international sales and
benefited from the strong performance of NBC - the TV network that the
company owns - largely due to strong advertising revenues from its
successful prime time programming and upcoming coverage of the Olympics.
Second, Parker Hannifin (up 24%), a manufacturer of motion control
products, made some positive acquisitions. However, not all of the fund's
cyclical holdings fared well. Cabot, a chemical manufacturer, fell 9%,
mainly because of weaker demand for the company's specialty chemicals.
Consumer nondurables and health stocks - which historically have sustained
steady earnings growth in many types of market environments - posted
generally good returns. The fund's overweighting in health stocks relative
to the S&P 500 proved helpful, with American Home Products (up 24%),
Johnson & Johnson (up 16%) and Schering-Plough (up 15%) among the top
contributors. Coca-Cola (up 32%) and Gillette (up 20%) rode the wave of
investor interest in nondurables stocks. However, General Mills (down 6%)
detracted from the fund's performance, falling in price because of cereal
price cuts.
The fund benefited from having less invested in utility stocks than the S&P
500. This sector generally performs in line with bonds, which had a tough
six months due to rising interest rates. Still, the fund had some exposure
here. Edison International (formerly SCECorp) fell 1% and Hawaiian Electric
Industries lost 8%. Rising interest rates also had a negative effect on
some of the fund's financial stocks, with Torchmark (down 3%) and General
Re (down 2%) among its weakest performers. Another stock outside of these
sectors that struggled was Jostens. A service company that designs,
manufactures and sells products to promote and recognize achievement, it
fell 19% after encountering higher costs for publishing yearbooks.
The fund's overweighting in media and leisure stocks was beneficial, with
two holdings from this sector posting strong share price gains. Times
Mirror common stock (up 28%) prospered from a strong advertising revenue
environment, as did Media General (up 23%). At the same time, two media and
leisure stocks dropped markedly in price, proving to be among the leading
detractors from performance. Darden Restaurants (down 9%) suffered from a
shift in consumer spending away from restaurants and more toward durable
items. Viacom's stock dropped 18% because it produced few film hits and
encountered stiff competition for its Blockbuster Video franchise.
Looking ahead, I'd sound a note of caution because stock prices have
reached very high levels. An important wild card is the economy which,
while strong at the end of the period, could slow if inflation fears cause
the Federal Reserve Board to raise short-term interest rates. As always,
it's difficult to predict the direction of the market. Over the long term,
however, stocks should remain one of the best ways to provide excellent
growth for investors.
Sincerely,
Jonathan F. Weed
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER
ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER.
THE MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND
OTHER CONDITIONS.
INVESTMENT CHANGES
TOP TEN STOCKS AS OF JUNE 30, 1996
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE STOCKS
6 MONTHS AGO
Hewlett-Packard Co. 4.5 4.1
Johnson & Johnson 3.7 3.8
General Electric Co. 3.4 3.0
Disney (Walt) Co. 3.4 2.9
Gillette Co. 3.4 3.0
American Home Products Corp. 3.2 3.1
Schering-Plough Corp. 3.1 3.3
McDonald's Corp. 3.0 3.1
Coca-Cola Co. (The) 3.0 2.4
Pfizer, Inc. 2.2 2.1
TOP FIVE MARKET SECTORS AS OF JUNE 30, 1996
% OF FUND'S % OF FUND'S INVESTMENT
INVESTMENTS S
IN THESE MARKET SECTORS
6 MONTHS AGO
Health 17.8 19.2
Nondurables 17.6 16.7
Media & Leisure 13.1 13.7
Energy 9.8 9.7
Technology 8.1 7.4
ASSET ALLOCATION
AS OF JUNE 30, 1996 * AS OF DECEMBER 31, 1995 **
Row: 1, Col: 1, Value: 4.4
Row: 1, Col: 2, Value: 45.6
Row: 1, Col: 3, Value: 50.0
Row: 1, Col: 1, Value: 4.7
Row: 1, Col: 2, Value: 45.3
Row: 1, Col: 3, Value: 50.0
Stocks 95.6%
Short-term
investments 4.4%
FOREIGN
INVESTMENTS 1.8%
Stocks 95.3%
Short-term
investments 4.7%
FOREIGN
INVESTMENTS 1.7%
*
**
INVESTMENTS JUNE 30, 1996 (UNAUDITED)
Showing Percentage of Total Value of Investment in Securities
COMMON STOCKS - 95.6%
SHARES VALUE (NOTE 1)
AEROSPACE & DEFENSE - 1.7%
DEFENSE ELECTRONICS - 1.7%
Raytheon Co. 80,000 $ 4,130,000
BASIC INDUSTRIES - 2.0%
CHEMICALS & PLASTICS - 2.0%
Air Products & Chemicals, Inc. 47,634 2,750,857
Cabot Corp. 95,800 2,347,100
5,097,957
CONGLOMERATES - 0.6%
United Technologies Corp. 13,686 1,573,890
DURABLES - 2.5%
AUTOS, TIRES, & ACCESSORIES - 1.7%
Dana Corp. 80,670 2,500,770
General Motors Corp. 30,000 1,571,250
4,072,020
CONSUMER DURABLES - 0.8%
Minnesota Mining & Manufacturing Co. 30,000 2,070,000
TOTAL DURABLES 6,142,020
ENERGY - 9.8%
ENERGY SERVICES - 2.5%
Dresser Industries, Inc. 40,000 1,180,000
Halliburton Co. 50,700 2,813,850
Schlumberger Ltd. 26,919 2,267,926
6,261,776
OIL & GAS - 7.3%
Amoco Corp. 40,000 2,895,000
Chevron Corp. 60,000 3,540,000
Exxon Corp. 47,900 4,161,313
Kerr-McGee Corp. 13,480 820,595
Mobil Corp. 40,000 4,485,000
Royal Dutch Petroleum Co. ADR 15,000 2,306,250
18,208,158
TOTAL ENERGY 24,469,934
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
FINANCE - 4.6%
BANKS - 0.5%
Bankers Trust New York Corp. 17,700 $ 1,307,588
CREDIT & OTHER FINANCE - 1.7%
American Express Co. 94,788 4,229,915
INSURANCE - 2.2%
General Re Corp. 23,360 3,556,560
Highlands Insurance Group, Inc. (a) 5,070 95,063
Torchmark Corp. 41,616 1,820,700
5,472,323
SECURITIES INDUSTRY - 0.2%
Lehman Brothers Holdings, Inc. 18,357 454,336
TOTAL FINANCE 11,464,162
HEALTH - 17.8%
DRUGS & PHARMACEUTICALS - 12.4%
American Home Products Corp. 131,134 7,884,432
Bristol-Myers Squibb Co. 60,584 5,452,560
Lilly (Eli) & Co. 34,854 2,265,510
Merck & Co., Inc. 33,619 2,172,628
Pfizer, Inc. 76,880 5,487,310
Schering-Plough Corp. 124,340 7,802,335
31,064,775
MEDICAL EQUIPMENT & SUPPLIES - 5.4%
Becton, Dickinson & Co. 32,000 2,568,000
Guidant Corp. 30,799 1,516,851
Johnson & Johnson 187,840 9,298,080
13,382,931
TOTAL HEALTH 44,447,706
INDUSTRIAL MACHINERY & EQUIPMENT - 7.0%
ELECTRICAL EQUIPMENT - 4.0%
General Electric Co. 98,534 8,523,191
General Signal Corp. 40,000 1,515,000
10,038,191
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
INDUSTRIAL MACHINERY & EQUIPMENT - CONTINUED
INDUSTRIAL MACHINERY & EQUIPMENT - 2.3%
Parker-Hannifin Corp. 113,905 $ 4,826,724
Stanley Works 28,748 855,253
5,681,977
POLLUTION CONTROL - 0.7%
WMX Technologies, Inc. 50,000 1,637,500
TOTAL INDUSTRIAL MACHINERY & EQUIPMENT 17,357,668
MEDIA & LEISURE - 13.1%
BROADCASTING - 0.6%
Cox Communications, Inc. Class A (a) 37,488 810,678
Viacom, Inc. Class B (non-vtg.) (a) 15,283 594,127
1,404,805
ENTERTAINMENT - 3.4%
Disney (Walt) Co. 134,440 8,452,915
PUBLISHING - 5.9%
Gannett Co., Inc. 55,214 3,906,391
Harcourt General, Inc. 40,000 2,000,000
Knight-Ridder, Inc. 32,200 2,334,500
McGraw-Hill, Inc. 69,512 3,180,174
Media General, Inc. Class A 24,382 908,230
Times Mirror Co. Class A 55,902 2,431,737
14,761,032
RESTAURANTS - 3.2%
Darden Restaurants, Inc. 50,000 537,500
Dave & Busters, Inc. (a) 4,900 131,075
McDonald's Corp. 159,480 7,455,690
8,124,265
TOTAL MEDIA & LEISURE 32,743,017
NONDURABLES - 17.6%
BEVERAGES - 4.7%
Anheuser-Busch Companies, Inc. 57,067 4,280,025
Coca-Cola Co. (The) 151,178 7,388,825
11,668,850
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
NONDURABLES - CONTINUED
FOODS - 3.5%
Earthgrains Co. 2,282 $ 74,736
General Mills, Inc. 50,000 2,725,000
Ralston Purina Co. 35,298 2,263,484
Sara Lee Corp. 111,000 3,593,625
8,656,845
HOUSEHOLD PRODUCTS - 7.6%
Colgate-Palmolive Co. 54,900 4,652,775
Gillette Co. 134,344 8,379,707
International Flavors & Fragrances, Inc. 22,447 1,069,038
Procter & Gamble Co. 54,900 4,975,313
19,076,833
TOBACCO - 1.8%
Philip Morris Companies, Inc. 44,150 4,591,600
TOTAL NONDURABLES 43,994,128
RETAIL & WHOLESALE - 2.6%
APPAREL STORES - 0.2%
Payless ShoeSource, Inc. (a) 13,140 417,195
GENERAL MERCHANDISE STORES - 1.4%
May Department Stores Co. (The) 82,126 3,593,013
GROCERY STORES - 1.0%
Supervalu, Inc. 76,080 2,396,520
TOTAL RETAIL & WHOLESALE 6,406,728
SERVICES - 1.2%
PRINTING - 1.0%
Harland (John H.) Co. 100,000 2,462,500
SERVICES - 0.2%
Jostens, Inc. 33,307 657,813
TOTAL SERVICES 3,120,313
COMMON STOCKS - CONTINUED
SHARES VALUE (NOTE 1)
TECHNOLOGY - 8.1%
COMPUTERS & OFFICE EQUIPMENT - 4.9%
Hewlett-Packard Co. 113,734 $ 11,330,750
International Business Machines Corp. 9,097 900,603
12,231,353
ELECTRONICS - 2.1%
Motorola, Inc. 81,906 5,149,840
PHOTOGRAPHIC EQUIPMENT - 1.1%
Eastman Kodak Co. 36,242 2,817,816
TOTAL TECHNOLOGY 20,199,009
TRANSPORTATION - 0.5%
RAILROADS - 0.5%
Union Pacific Corp. 19,090 1,333,914
UTILITIES - 6.5%
CELLULAR - 0.2%
360 Degrees Communications Co. (a) 16,666 399,984
ELECTRIC UTILITY - 4.0%
Central Louisiana Electric Co., Inc. 60,000 1,597,500
Duke Power Co. 50,000 2,562,500
Edison International 80,000 1,410,000
Hawaiian Electric Industries, Inc. 40,000 1,420,000
PacifiCorp. 55,400 1,232,650
Potomac Electric Power Co. 70,000 1,855,000
10,077,650
GAS - 0.6%
Williams Companies, Inc. 30,680 1,518,660
TELEPHONE SERVICES - 1.7%
MCI Communications Corp. 80,000 2,050,000
Sprint Corp. 50,000 2,100,000
4,150,000
TOTAL UTILITIES 16,146,294
TOTAL COMMON STOCKS
(Cost $23,643,646) 238,626,740
CONVERTIBLE PREFERRED STOCKS - 0.0%
SHARES VALUE (NOTE 1)
MEDIA & LEISURE - 0.0%
PUBLISHING - 0.0%
Times Mirror Co., Series B, $1.374 (Cost $7) 79 $ 2,123
REPURCHASE AGREEMENTS - 4.4%
MATURITY
AMOUNT
Investments in repurchase agreements
(U.S. Treasury obligations), in a joint
trading account at 5.46%, dated
6/28/96 due 7/1/96 $ 11,028,015 11,023,000
TOTAL INVESTMENT IN SECURITIES - 100%
(Cost $34,666,653) $ 249,651,863
LEGEND
1. Non-income producing
INCOME TAX INFORMATION
At June 30, 1996, the aggregate cost of investment securities for income
tax purposes was $34,666,653. Net unrealized appreciation aggregated
$214,985,210, all of which is related to appreciated investment securities.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
<S> <C> <C>
JUNE 30, 1996 (UNAUDITED)
ASSETS
Investment in securities, at value (including repurchase $ 249,651,863
agreements of $11,023,000) (cost $34,666,653) -
See accompanying schedule
Cash 499
Receivable for investments sold 54,374
Dividends receivable 236,776
TOTAL ASSETS 249,943,512
LIABILITIES
Payable for fund shares redeemed $ 53,912
Accrued management fee 112,326
Other payables and accrued expenses 32,534
TOTAL LIABILITIES 198,772
NET ASSETS $ 249,744,740
Net Assets consist of:
Paid in capital $ 26,437,262
Undistributed net investment income 639
Accumulated undistributed net realized gain (loss) 8,321,629
on investments
Net unrealized appreciation (depreciation) on 214,985,210
investments
NET ASSETS, for 1,680,477 shares outstanding $ 249,744,740
NET ASSET VALUE, offering price and redemption price per $148.62
share ($249,744,740 (divided by) 1,680,477 shares)
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
INVESTMENT INCOME $ 2,479,263
Dividends
Interest 289,421
TOTAL INCOME 2,768,684
EXPENSES
Management fee $ 655,254
Transfer agent fees 91,873
Non-interested trustees' compensation 433
Custodian fees and expenses 3,983
Registration fees 125
Audit 9,278
Legal 461
Miscellaneous 1,685
Total expenses before reductions 763,092
Expense reductions (3,543) 759,549
NET INVESTMENT INCOME 2,009,135
REALIZED AND UNREALIZED GAIN (LOSS) 8,321,629
Net realized gain (loss) on investment securities
Change in net unrealized appreciation (depreciation) on 15,411,779
investment securities
NET GAIN (LOSS) 23,733,408
NET INCREASE (DECREASE) IN NET ASSETS RESULTING $ 25,742,543
FROM OPERATIONS
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30,1996 1995
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS
Operations $ 2,009,135 $ 4,285,052
Net investment income
Net realized gain (loss) 8,321,629 9,418,924
Change in net unrealized appreciation (depreciation) 15,411,779 49,618,997
NET INCREASE (DECREASE) IN NET ASSETS RESULTING 25,742,543 63,322,973
FROM OPERATIONS
Distributions to shareholders (2,013,636) (4,271,960)
From net investment income
From net realized gain - (3,033,709)
TOTAL DISTRIBUTIONS (2,013,636) (7,305,669)
Share transactions
Reinvestment of distributions 526,572 2,033,251
Cost of shares redeemed (7,279,236) (10,880,904)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING (6,752,664) (8,847,653)
FROM SHARE TRANSACTIONS
TOTAL INCREASE (DECREASE) IN NET ASSETS 16,976,243 47,169,651
NET ASSETS
Beginning of period 232,768,497 185,598,846
End of period (including undistributed net investment $ 249,744,740 $ 232,768,497
income of $639 and $5,140, respectively)
OTHER INFORMATION
Shares
Issued in reinvestment of distributions 3,572 17,703
Redeemed (52,498) (95,116)
Net increase (decrease) (48,926) (77,413)
</TABLE>
FINANCIAL HIGHLIGHTS
SIX MONTHS YEARS ENDED DECEMBER 31,
ENDED JUNE 30,
1996
(UNAUDITED) 1995 1994 1993 C 1992 1991
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER-SHARE DATA
Net asset value, $ 134.59 $ 102.72 $ 102.20 $ 98.92 $ 97.48 $ 75.96
beginning of period
Income from
Investment
Operations
Net investment 1.20 2.45 2.56 2.26 2.19 2.13
income
Net realized and 14.03 33.59 2.12 4.14 2.34 21.49
unrealized gain
(loss)
Total from 15.23 36.04 4.68 6.40 4.53 23.62
investment
operations
Less Distributions (1.20) (2.45) (2.42) (2.26) (2.23) (2.10)
From net investment
income
In excess of net - - - (.09) - -
investment income
From net realized - (1.72) (1.74) (.77) (.86) -
gain
Total distributions (1.20) (4.17) (4.16) (3.12) (3.09) (2.10)
Net asset value, end $ 148.62 $ 134.59 $ 102.72 $ 102.20 $ 98.92 $ 97.48
of period
TOTAL RETURN B 11.32% 35.77% 4.66% 6.54% 4.68% 31.42%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of $ 249,745 $ 232,768 $ 185,599 $ 189,358 $ 186,886 $ 187,876
period (000 omitted)
Ratio of expenses to .63% A .63% .58% .57% .58% .58%
average net assets
Ratio of net 1.67% A 2.05% 2.50% 2.24% 2.23% 2.42%
investment income
to average net
assets
Portfolio turnover rate 0% 0% 0% 0% 0% 0%
</TABLE>
A ANNUALIZED
B TOTAL RETURNS FOR PERIODS OF LESS THAN ONE YEAR ARE NOT ANNUALIZED.
C EFFECTIVE JANUARY 1, 1993, THE FUND ADOPTED STATEMENT OF POSITION 93-2,
"DETERMINATION, DISCLOSURE, AND FINANCIAL STATEMENT PRESENTATION OF INCOME,
CAPITAL GAIN, AND RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES."
AS A RESULT, NET INVESTMENT INCOME PER SHARE MAY REFLECT CERTAIN
RECLASSIFICATIONS RELATED TO BOOK TO TAX DIFFERENCES.
NOTES TO FINANCIAL STATEMENTS
For the period ended June 30, 1996 (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 financial statements have been
prepared in conformity with generally accepted accounting principles which
permit management to make certain estimates and assumptions at the date of
the financial statements. 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 of their purchase date 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 substantially 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. Investment income
is recorded net of foreign taxes withheld where recovery of such taxes is
uncertain.
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, which may result in distribution
reclassifications, are primarily due to differing treatments for
redemptions in kind.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital and may
affect the per-share allocation between net investment income and realized
and unrealized gain (loss). Undistributed net investment income and
accumulated undistributed net realized gain (loss) on investments may
include temporary book and tax basis differences which will reverse in a
subsequent period. Any taxable income or gain remaining at fiscal year end
is distributed in the following year.
1. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
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.
JOINT TRADING ACCOUNT. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the funds, along with other affiliated
entities of Fidelity Management & Research Company (FMR), may transfer
uninvested cash balances into one or more joint trading accounts. These
balances are invested in one or more repurchase agreements that mature in
60 days or less from the date of purchase for U.S. Treasury or Federal
Agency obligations.
REPURCHASE AGREEMENTS. The underlying U.S. Treasury or Federal Agency
Securities are transferred to an account of the fund, or to the Joint
Trading Account, at a bank custodian. The securities are marked-to-market
daily and maintained at a value at least equal to the principal amount of
the repurchase agreement (including accrued interest). FMR, the fund's
investment adviser, is responsible for determining that the value of the
underlying securities remains in accordance with the market value
requirements stated above.
3. PURCHASES AND SALES OF INVESTMENTS.
Purchases and sales of securities, other than short-term securities,
aggregated $2,078 and $8,377,066, respectively. Sales of securities include
the current value of securities delivered in redemption of fund shares.
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 $71,987. For the period, the management fee was equivalent to an
annualized rate of .54% of average net assets.
TRANSFER AGENT FEES. Fidelity Service Co. (FSC), an affiliate of FMR, is
the fund's transfer, dividend disbursing and shareholder servicing agent.
FSC receives account fees and asset-based fees that vary according to
account size and type of account. FSC pays for typesetting, printing and
mailing of all shareholder reports, except proxy statements. For the
period, the transfer agent fees were equivalent to an annualized rate of
.08% of average net assets.
5. EXPENSE REDUCTIONS.
The fund has entered into arrangements with its custodian and transfer
agent whereby interest earned on uninvested cash balances was used to
offset a portion of the fund's expenses. During the period, the fund's
custodian and transfer agent fees were reduced by $189 and $3,354,
respectively, under these arrangements.
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.
TO WRITE FIDELITY
If more than one address is listed, please locate the address that is
closest to you. We'll give your correspondence immediate attention and send
you written confirmation upon completion of your request.
(LETTER_GRAPHIC)MAKING CHANGES
TO YOUR ACCOUNT
(such as changing name, address, bank, etc.)
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0002
(LETTER_GRAPHIC)FOR NON-RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
OVERNIGHT EXPRESS
Fidelity Investments
100 Crosby Parkway - KP2C
Covington, KY 41015-4399
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6I
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 193
Boston, MA 02210-0193
(LETTER_GRAPHIC)FOR RETIREMENT
ACCOUNTS
BUYING SHARES
Fidelity Investments
P.O. Box 770001
Cincinnati, OH 45277-0003
SELLING SHARES
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
OVERNIGHT EXPRESS
Fidelity Investments
Attn: Redemptions - CP6R
400 East Las Colinas Blvd.
Irving, TX 75309-5517
GENERAL CORRESPONDENCE
Fidelity Investments
P.O. Box 660602
Dallas, TX 75266-0602
INVESTMENT ADVISER
Fidelity Management & Research Company
Boston, MA
OFFICERS
Edward C. Johnson 3d, President
J. Gary Burkhead, Senior Vice President
William J. Hayes, Vice President
Arthur S. Loring, Secretary
Kenneth A. Rathgeber, Treasurer
Robert H. Morrison, Manager,
Security Transactions
John H. Costello, Assistant Treasurer
Leonard M. Rush, Assistant Treasurer
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 *
ADVISORY BOARD
William O. McCoy
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'S GROWTH AND INCOME FUNDS
Balanced Fund
Congress Street Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Exchange Fund
Fidelity Fund
Global Balanced Fund
Growth & Income Portfolio
Market Index Fund
Puritan Fund(registered trademark)
Real Estate Investment Portfolio
Utilities Income 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)
(registered trademark)
* INDEPENDENT TRUSTEES
AUTOMATED LINES FOR QUICKEST SERVICE
