UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811- 2614
Fidelity Exchange Fund
(Exact name of registrant as specified in charter)
82 Devonshire St., Boston, Massachusetts 02109
(Address of principal executive offices) (Zip code)
Eric D. Roiter, Secretary
82 Devonshire St.
Boston, Massachusetts 02109
(Name and address of agent for service)
Registrant's telephone number, including area code: 617-563-7000
Date of fiscal year end: | December 31 |
| |
Date of reporting period: | June 30, 2004 |
Item 1. Reports to Stockholders
Fidelity®
Exchange
Fund
Semiannual Report
June 30, 2004
(2_fidelity_logos) (Registered_Trademark)
Contents
Chairman's Message | <Click Here> | Ned Johnson's message to shareholders. |
Investment Changes | <Click Here> | A summary of major shifts in the fund's investments over the past six months. |
Investments | <Click Here> | A complete list of the fund's investments with their market values. |
Financial Statements | <Click Here> | Statements of assets and liabilities, operations, and changes in net assets,
as well as financial highlights. |
Notes | <Click Here> | Notes to the financial statements. |
Proxy Voting Results | <Click Here> | |
For a free copy of the fund's proxy voting guidelines visit www.fidelity.com/goto/proxyguidelines, call 1-800-544-8544, or visit the Securities and Exchange Commission (SEC)'s web site at www.sec.gov.
Standard & Poor's, S&P and S&P 500 are registered service marks of The McGraw-Hill Companies, Inc. and have been licensed for use by Fidelity Distributors Corporation.
Other third party marks appearing herein are the property of their respective owners.
All other marks appearing herein are registered or unregistered trademarks or service marks of FMR Corp. or an affiliated company.
(Recycle graphic) This report is printed on recycled paper using soy-based inks.
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 1-800-544-6666 for a free prospectus. Read it carefully before you invest or send money.
Chairman's Message
(photo_of_Edward_C_Johnson_3d)
Dear Shareholder:
Many of you have read or heard news stories recently that were critical of mutual funds and made allegations that the mutual fund industry has been less than forthright. I find these reports unsettling and not necessarily an accurate picture of the overall industry, and I would like you to know where we at Fidelity stand.
With specific regard to allegations that certain mutual fund companies were violating the Securities and Exchange Commission's forward pricing rules or were involved in so-called "market timing" activities, I want to say two things:
First, Fidelity does not have agreements that permit customers who buy fund shares after 4 p.m. to obtain the 4 p.m. price. This is not to say that someone could not deceive the company through fraudulent acts. But I underscore that we have no so-called "agreements" which would permit this illegal practice.
Second, Fidelity has been on record for years opposing predatory short-term trading which adversely affects other shareholders in a mutual fund. In fact, in the 1980s, we began charging a fee - which is returned to the fund and, therefore, to investors - to discourage this activity. What's more, several years ago we took the industry lead in developing a Fair Value Pricing Policy to prevent market timing on foreign securities in our funds. It is reasonable to assume that another structure can be developed that would alter the system to make it much more difficult for predatory traders to operate. This, however, will only be achieved through close cooperation among regulators, legislators and the industry.
Certainly no industry is perfect, and there have been instances of unethical and illegal activity from time to time within the mutual fund industry. When this occurs, confessed or convicted offenders should be dealt with appropriately. Clearly, every system can be improved. We applaud well thought out improvements by regulators, legislators and industry representatives that achieve the common goal of building and protecting the value of investors' holdings. But we remain concerned about the risk of over-regulation and the quick application of simplistic solutions to intricate problems.
For more than 57 years, Fidelity Investments has worked very hard to improve its products and service to justify your trust. When our family founded this company in 1946, we had only a few hundred customers. Many of them were family and friends. Today, we serve more than 18 million customers including individual investors and participants in retirement plans across America.
Let me close by saying that we do not take your trust in us for granted, and we realize that we must always work to improve all aspects of our service to you. In turn, we urge you to continue your active participation with your financial matters, so that your interests can be well served.
Best regards,
/s/Edward C. Johnson 3d
Edward C. Johnson 3d
Semiannual Report
Investment Changes
Top Ten Stocks as of June 30, 2004 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
General Electric Co. | 6.2 | 6.2 |
American Express Co. | 4.8 | 4.7 |
Coach, Inc. | 4.2 | 3.6 |
Exxon Mobil Corp. | 4.1 | 3.9 |
Johnson & Johnson | 3.5 | 3.5 |
Hewlett-Packard Co. | 3.1 | 3.5 |
Parker Hannifin Corp. | 2.9 | 3.2 |
Procter & Gamble Co. | 2.8 | 2.6 |
McGraw-Hill Companies, Inc. | 2.7 | 2.9 |
Pfizer, Inc. | 2.6 | 2.6 |
| 36.9 | |
Top Five Market Sectors as of June 30, 2004 |
| % of fund's
net assets | % of fund's net assets
6 months ago |
Consumer Discretionary | 18.5 | 19.3 |
Health Care | 17.4 | 17.8 |
Industrials | 15.5 | 15.9 |
Financials | 13.6 | 13.2 |
Consumer Staples | 13.4 | 13.0 |
Asset Allocation (% of fund's net assets) |
As of June 30, 2004 * | As of December 31, 2003 ** |
 | Stocks 98.7% | | | Stocks 98.9% | |
 | Short-Term
Investments and
Net Other Assets 1.3% | | | Short-Term
Investments and
Net Other Assets 1.1% | |
* Foreign
investments | 2.2% | | ** Foreign
investments | 2.1% | |
Semiannual Report
Investments June 30, 2004 (Unaudited)
Showing Percentage of Net Assets
Common Stocks - 98.7% |
| Shares | | Value (Note 1) |
CONSUMER DISCRETIONARY - 18.5% |
Auto Components - 0.3% |
Dana Corp. | 22,174 | | $ 434,610 |
Delphi Corp. | 17,880 | | 190,958 |
| | 625,568 |
Automobiles - 0.3% |
General Motors Corp. | 15,890 | | 740,315 |
Hotels, Restaurants & Leisure - 2.3% |
McDonald's Corp. | 210,240 | | 5,466,240 |
Household Durables - 0.5% |
The Stanley Works | 24,448 | | 1,114,340 |
Media - 10.0% |
Cox Communications, Inc. Class A (a) | 25,381 | | 705,338 |
Gannett Co., Inc. | 63,017 | | 5,346,992 |
Knight-Ridder, Inc. | 11,088 | | 798,336 |
McGraw-Hill Companies, Inc. | 80,969 | | 6,199,796 |
News Corp. Ltd. sponsored ADR | 1,806 | | 59,381 |
The DIRECTV Group, Inc. (a) | 16,147 | | 276,114 |
Tribune Co. | 104,315 | | 4,750,505 |
Viacom, Inc. Class B (non-vtg.) | 28,641 | | 1,023,057 |
Walt Disney Co. | 167,137 | | 4,260,322 |
| | 23,419,841 |
Multiline Retail - 0.7% |
Neiman Marcus Group, Inc. Class B | 11,452 | | 594,244 |
The May Department Stores Co. | 34,765 | | 955,690 |
| | 1,549,934 |
Specialty Retail - 0.2% |
Payless ShoeSource, Inc. (a) | 37,320 | | 556,441 |
Textiles Apparel & Luxury Goods - 4.2% |
Coach, Inc. (a) | 214,301 | | 9,684,262 |
TOTAL CONSUMER DISCRETIONARY | | 43,156,941 |
CONSUMER STAPLES - 13.4% |
Beverages - 3.8% |
Anheuser-Busch Companies, Inc. | 95,966 | | 5,182,164 |
The Coca-Cola Co. | 74,198 | | 3,745,515 |
| | 8,927,679 |
Food & Staples Retailing - 0.4% |
SUPERVALU, Inc. | 27,167 | | 831,582 |
Common Stocks - continued |
| Shares | | Value (Note 1) |
CONSUMER STAPLES - continued |
Food Products - 0.8% |
General Mills, Inc. | 4,999 | | $ 237,602 |
Sara Lee Corp. | 72,377 | | 1,663,947 |
| | 1,901,549 |
Household Products - 4.5% |
Colgate-Palmolive Co. | 66,395 | | 3,880,788 |
Procter & Gamble Co. | 120,158 | | 6,541,402 |
| | 10,422,190 |
Personal Products - 2.3% |
Gillette Co. | 126,191 | | 5,350,498 |
Tobacco - 1.6% |
Altria Group, Inc. | 74,964 | | 3,751,948 |
TOTAL CONSUMER STAPLES | | 31,185,446 |
ENERGY - 8.6% |
Energy Equipment & Services - 1.5% |
Schlumberger Ltd. (NY Shares) | 51,398 | | 3,264,287 |
Transocean, Inc. (a) | 9,870 | | 285,638 |
| | 3,549,925 |
Oil & Gas - 7.1% |
Anadarko Petroleum Corp. | 5,725 | | 335,485 |
ChevronTexaco Corp. | 44,170 | | 4,156,839 |
Exxon Mobil Corp. | 214,102 | | 9,508,270 |
Kerr-McGee Corp. | 12,470 | | 670,512 |
Royal Dutch Petroleum Co. (NY Shares) | 36,010 | | 1,860,637 |
| | 16,531,743 |
TOTAL ENERGY | | 20,081,668 |
FINANCIALS - 13.6% |
Capital Markets - 1.5% |
Lehman Brothers Holdings, Inc. | 34,399 | | 2,588,525 |
Waddell & Reed Financial, Inc. Class A | 35,246 | | 779,289 |
| | 3,367,814 |
Commercial Banks - 0.7% |
Bank One Corp. | 33,895 | | 1,728,645 |
Consumer Finance - 4.8% |
American Express Co. | 219,543 | | 11,280,119 |
Common Stocks - continued |
| Shares | | Value (Note 1) |
FINANCIALS - continued |
Diversified Financial Services - 2.3% |
Citigroup, Inc. | 117,155 | | $ 5,447,708 |
Insurance - 4.3% |
Berkshire Hathaway, Inc. Class B (a) | 1,940 | | 5,732,700 |
St. Paul Travelers Companies, Inc. | 7,061 | | 286,253 |
Torchmark Corp. | 74,492 | | 4,007,670 |
| | 10,026,623 |
TOTAL FINANCIALS | | 31,850,909 |
HEALTH CARE - 17.4% |
Health Care Equipment & Supplies - 4.6% |
Becton, Dickinson & Co. | 85,690 | | 4,438,742 |
Guidant Corp. | 87,093 | | 4,866,757 |
Zimmer Holdings, Inc. (a) | 16,456 | | 1,451,419 |
| | 10,756,918 |
Health Care Providers & Services - 0.1% |
Medco Health Solutions, Inc. (a) | 7,762 | | 291,075 |
Pharmaceuticals - 12.7% |
Bristol-Myers Squibb Co. | 160,604 | | 3,934,798 |
Eli Lilly & Co. | 30,731 | | 2,148,404 |
Johnson & Johnson | 147,569 | | 8,219,593 |
Merck & Co., Inc. | 63,423 | | 3,012,593 |
Pfizer, Inc. | 175,434 | | 6,013,878 |
Schering-Plough Corp. | 133,638 | | 2,469,630 |
Wyeth | 103,854 | | 3,755,361 |
| | 29,554,257 |
TOTAL HEALTH CARE | | 40,602,250 |
INDUSTRIALS - 15.5% |
Aerospace & Defense - 2.5% |
Raytheon Co. | 36,200 | | 1,294,874 |
United Technologies Corp. | 48,864 | | 4,470,079 |
| | 5,764,953 |
Commercial Services & Supplies - 0.4% |
Waste Management, Inc. | 33,925 | | 1,039,801 |
Common Stocks - continued |
| Shares | | Value (Note 1) |
INDUSTRIALS - continued |
Industrial Conglomerates - 8.4% |
3M Co. | 56,160 | | $ 5,054,962 |
General Electric Co. | 449,413 | | 14,560,980 |
| | 19,615,942 |
Machinery - 3.7% |
Parker Hannifin Corp. | 114,006 | | 6,778,797 |
SPX Corp. | 40,841 | | 1,896,656 |
| | 8,675,453 |
Road & Rail - 0.5% |
Union Pacific Corp. | 17,920 | | 1,065,344 |
TOTAL INDUSTRIALS | | 36,161,493 |
INFORMATION TECHNOLOGY - 8.2% |
Communications Equipment - 1.6% |
Motorola, Inc. | 197,848 | | 3,610,726 |
Computers & Peripherals - 4.4% |
Hewlett-Packard Co. | 347,675 | | 7,335,943 |
International Business Machines Corp. | 34,078 | | 3,003,976 |
| | 10,339,919 |
Electronic Equipment & Instruments - 0.9% |
Agilent Technologies, Inc. (a) | 72,273 | | 2,116,153 |
Semiconductors & Semiconductor Equipment - 0.2% |
Cabot Microelectronics Corp. (a) | 11,977 | | 366,616 |
Software - 1.1% |
Microsoft Corp. | 91,930 | | 2,625,521 |
TOTAL INFORMATION TECHNOLOGY | | 19,058,935 |
MATERIALS - 2.6% |
Chemicals - 2.6% |
Air Products & Chemicals, Inc. | 86,303 | | 4,526,592 |
Cabot Corp. | 38,241 | | 1,556,409 |
| | 6,083,001 |
Common Stocks - continued |
| Shares | | Value (Note 1) |
TELECOMMUNICATION SERVICES - 0.9% |
Diversified Telecommunication Services - 0.9% |
ALLTEL Corp. | 1,756 | | $ 88,889 |
Sprint Corp. - FON Group | 119,620 | | 2,105,312 |
| | 2,194,201 |
TOTAL COMMON STOCKS (Cost $24,537,424) | 230,374,844 |
Cash Equivalents - 1.2% |
| Maturity Amount | | |
Investments in repurchase agreements (Collateralized by U.S. Treasury Obligations, in a joint trading account at 1.1%, dated 6/30/04 due 7/1/04)
(Cost $2,712,000) | $ 2,712,083 | | 2,712,000 |
TOTAL INVESTMENT PORTFOLIO - 99.9% (Cost $27,249,424) | | 233,086,844 |
NET OTHER ASSETS - 0.1% | | 226,779 |
NET ASSETS - 100% | $ 233,313,623 |
Legend |
(a) Non-income producing |
Other Information |
Sales of securities, other than short-term securities, aggregated $12,468,152, which represents the current value of securities delivered in redemption of fund shares. The realized gain of $11,723,300 on securities delivered in redemption of fund shares is not taxable to the fund. There were no purchases of securities during the period. |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements
Statement of Assets and Liabilities
June 30, 2004 (Unaudited) |
| | |
Assets | | |
Investment in securities, at value (including repurchase agreements of $2,712,000) (cost $ 27,249,424) - See accompanying schedule | | $ 233,086,844 |
Cash | | 570 |
Dividends receivable | | 381,451 |
Prepaid expenses | | 536 |
Total assets | | 233,469,401 |
| | |
Liabilities | | |
Payable for fund shares redeemed | $ 68 | |
Accrued management fee | 104,636 | |
Transfer agent fee payable | 18,575 | |
Other affiliated payables | 1,573 | |
Other payables and accrued expenses | 30,926 | |
Total liabilities | | 155,778 |
| | |
Net Assets | | $ 233,313,623 |
Net Assets consist of: | | |
Paid in capital | | $ 27,337,108 |
Undistributed net investment income | | 139,095 |
Net unrealized appreciation (depreciation) on investments | | 205,837,420 |
Net Assets, for 927,755 shares outstanding | | $ 233,313,623 |
Net Asset Value, offering price and redemption price per share ($233,313,623 ÷ 927,755 shares) | | $ 251.48 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Statements - continued
Statement of Operations
Six months ended June 30, 2004 (Unaudited) |
| | |
Investment Income | | |
Dividends | | $ 1,917,271 |
Interest | | 14,213 |
Total income | | 1,931,484 |
| | |
Expenses | | |
Management fee | $ 638,913 | |
Transfer agent fees | 113,422 | |
Non-interested trustees' compensation | 758 | |
Custodian fees and expenses | 8,513 | |
Audit | 20,183 | |
Legal | 1,228 | |
Miscellaneous | 11,886 | |
Total expenses before reductions | 794,903 | |
Expense reductions | (380) | 794,523 |
Net investment income (loss) | | 1,136,961 |
Realized and Unrealized Gain (Loss) Net realized gain (loss) on investment securities | | 11,723,300 |
Change in net unrealized appreciation (depreciation) on investment securities | | (4,277,900) |
Net gain (loss) | | 7,445,400 |
Net increase (decrease) in net assets resulting from operations | | $ 8,582,361 |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Statement of Changes in Net Assets
| Six months ended
June 30, 2004
(Unaudited) | Year ended
December 31, 2003 |
Increase (Decrease) in Net Assets | | |
Operations | | |
Net investment income (loss) | $ 1,136,961 | $ 2,586,461 |
Net realized gain (loss) | 11,723,300 | 18,100,274 |
Change in net unrealized appreciation (depreciation) | (4,277,900) | 31,300,604 |
Net increase (decrease) in net assets resulting
from operations | 8,582,361 | 51,987,339 |
Distributions to shareholders from net investment income | (1,020,214) | (2,594,139) |
Reinvestment of distributions | 216,083 | 564,728 |
Cost of shares redeemed | (12,559,674) | (19,350,930) |
Net increase (decrease) in net assets resulting
from share transactions | (12,343,591) | (18,786,202) |
Total increase (decrease) in net assets | (4,781,444) | 30,606,998 |
| | |
Net Assets | | |
Beginning of period | 238,095,067 | 207,488,069 |
End of period (including undistributed net investment income of $139,095 and undistributed net investment income of $22,348, respectively) | $ 233,313,623 | $ 238,095,067 |
Other Information | | |
Shares | | |
Issued in reinvestment of distributions | 862 | 2,431 |
Redeemed | (50,316) | (89,986) |
Net increase (decrease) | (49,454) | (87,555) |
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Financial Highlights
| Six months ended
June 30, 2004 | Years ended December 31, |
| (Unaudited) | 2003 | 2002 | 2001 | 2000 | 1999 |
Selected Per-Share Data | | | | | | |
Net asset value, beginning of period | $ 243.65 | $ 194.87 | $ 237.91 | $ 266.90 | $ 272.16 | $ 248.62 |
Income from Investment Operations | | | | | | |
Net investment income (loss) D | 1.20 | 2.54 | 2.28 | 2.24 | 2.15 | 2.21 |
Net realized and unrealized gain (loss) | 7.73 | 48.86 | (42.97) | (28.98) | (5.21) | 23.58 |
Total from investment operations | 8.93 | 51.40 | (40.69) | (26.74) | (3.06) | 25.79 |
Distributions from net investment income | (1.10) | (2.62) | (2.35) | (2.25) | (2.20) | (2.25) |
Net asset value, end of period | $ 251.48 | $ 243.65 | $ 194.87 | $ 237.91 | $ 266.90 | $ 272.16 |
Total ReturnB,C | 3.67% | 26.46% | (17.15)% | (10.05)% | (1.13)% | 10.41% |
Ratios to Average Net AssetsE | | | | | |
Expenses before expense reductions | .67%A | .64% | .64% | .63% | .62% | .62% |
Expenses net of voluntary waivers, if any | .67%A | .64% | .64% | .63% | .62% | .62% |
Expenses net of all reductions | .67%A | .64% | .64% | .62% | .62% | .62% |
Net investment income (loss) | .96%A | 1.20% | 1.05% | .92% | .81% | .84% |
Supplemental Data | | | | | | |
Net assets, end of period (000 omitted) | $ 233,314 | $ 238,095 | $ 207,488 | $ 279,823 | $ 328,529 | $ 354,249 |
Portfolio turnover rate | 0% | 0% | 0% | 3% | 0% | 1% |
A Annualized
B Total returns for periods of less than one year are not annualized.
C Total returns would have been lower had certain expenses not been reduced during the periods shown.
D Calculated based on average shares outstanding during the period.
E Expense ratios reflect operating expenses of the fund. Expenses before reductions do not reflect amounts reimbursed by the investment adviser or reductions from brokerage service arrangements or other expense offset arrangements and do not represent the amount paid by the fund during periods when reimbursements or reductions occur. Expenses net of any voluntary waivers reflect expenses after reimbursement by the investment adviser but prior to reductions from brokerage service arrangements or other expense offset arrangements. Expenses net of all reductions represent the net expenses paid by the fund.
See accompanying notes which are an integral part of the financial statements.
Semiannual Report
Notes to Financial Statements
For the period ended June 30, 2004 (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. Shares of the fund are not currently available for purchase. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which require 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. Net asset value per share (NAV calculation) is calculated as of the close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern time. Equity securities, including restricted securities, for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade. If prices are not readily available or do not accurately reflect fair value for a security, or if a security's value has been materially affected by events occurring after the close of the exchange or market on which the security is principally traded, that security may be valued by another method that the Board of Trustees believes accurately reflects fair value. A security's valuation may differ depending on the method used for determining value. Price movements in futures contracts and ADRs, market and trading trends, the bid/ask quotes of brokers and off-exchange institutional trading may be reviewed in the course of making a good faith determination of a security's fair value. Short-term securities with remaining maturities of sixty days or less for which quotations are not readily available are valued on the basis of amortized cost. Investments in open-end investment companies are valued at their net asset value each business day.
Investment Transactions and Income. Security transactions are accounted for as of trade date. Gains and losses on securities sold are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities where the ex-dividend date may have passed, which are recorded as soon as the fund is informed of the ex-dividend date. Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income is accrued as earned. Interest income includes coupon interest and amortization of premium and accretion of discount on debt securities.
Income Tax Information and Distributions to Shareholders. Each year, the fund intends to qualify as a regulated investment company by distributing all of its taxable income and realized gains under Subchapter M of the Internal Revenue Code. As a result, no provision for income taxes is required in the accompanying financial statements.
Semiannual Report
Notes to Financial Statements - continued
1. Significant Accounting Policies - continued
Income Tax Information and Distributions to Shareholders - continued
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.
Capital accounts within the financial statements are adjusted for permanent book-tax differences. These adjustments have no impact on net assets or the results of operations. Temporary book-tax differences will reverse in a subsequent period.
Book-tax differences are primarily due to redemptions in kind.
The federal tax cost of investments and unrealized appreciation (depreciation) as of period end were as follows:
Unrealized appreciation | $ 207,996,301 | |
Unrealized depreciation | (2,158,881) | |
Net unrealized appreciation (depreciation) | $ 205,837,420 | |
Cost for federal income tax purposes | $ 27,249,424 | |
2. Operating Policies.
Repurchase Agreements. Fidelity Management & Research Company (FMR) has received an Exemptive Order from the Securities and Exchange Commission (the SEC) which permits the fund and other affiliated entities of FMR to transfer uninvested cash balances into joint trading accounts. These accounts are then invested in repurchase agreements that are collateralized by U.S. Treasury or Government obligations. The fund may also invest directly with institutions, in repurchase agreements that are collateralized by commercial paper obligations and corporate obligations. Collateral is held in segregated accounts with custodian banks and may be obtained in the event of a default of the counterparty. Collateral is marked-to-market daily and maintained at a value at least equal to the principal amount of the repurchase agreement (including accrued interest).
3. Purchases and Sales of Investments.
Information regarding purchases and sales of securities is included under the caption "Other Information" at the end of the fund's Schedule of Investments.
Semiannual Report
4. Fees and Other Transactions with Affiliates.
Management Fee. FMR and its affiliates provide the fund with investment management related services for which the fund pays a monthly management fee equal to an annual rate of 6/10 of 1%of the fund's average net assets. In addition, 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 fund's annualized management fee rate was .54% of average net assets.
Transfer Agent Fees. Fidelity Service Company, Inc. (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 shareholder reports, except proxy statements. For the period, the transfer agent fees were equivalent to an annualized rate of .10% of average net assets.
5. Expense Reductions.
Through arrangements with the fund's custodian and transfer agent, credits realized as a result of uninvested cash balances were used to reduce the fund's expenses. During the period, these credits reduced the fund's custody and transfer agent expenses by $3 and $377, respectively.
Semiannual Report
Proxy Voting Results
A special meeting of the fund's shareholders was held on June 16, 2004. The results of votes taken among shareholders on proposals before them are reported below. Each vote reported represents one dollar of net asset value held on the record date for the meeting.
PROPOSAL 1 |
To amend the Declaration of Trust to allow the Board of Trustees, if permitted by applicable law, to authorize fund mergers without shareholder approval.* |
| # of
Votes | % of
Votes |
Affirmative | 100,119,783.36 | 69.009 |
Against | 43,375,721.70 | 29.898 |
Abstain | 1,307,723.02 | .901 |
Broker
Non-Votes | 278,473.64 | .192 |
TOTAL | 145,081,701.72 | 100.000 |
PROPOSAL 2 |
To elect a Board of Trustees.* |
| # of
Votes | % of
Votes |
J. Michael Cook |
Affirmative | 142,558,184.65 | 98.261 |
Withheld | 2,523,517.07 | 1.739 |
TOTAL | 145,081,701.72 | 100.000 |
Ralph F. Cox |
Affirmative | 137,180,476.64 | 94.554 |
Withheld | 7,901,225.08 | 5.446 |
TOTAL | 145,081,701.72 | 100.000 |
Laura B. Cronin |
Affirmative | 139,802,398.20 | 96.361 |
Withheld | 5,279,303.52 | 3.639 |
TOTAL | 145,081,701.72 | 100.000 |
Robert M. Gates |
Affirmative | 142,558,184.65 | 98.261 |
Withheld | 2,523,517.07 | 1.739 |
TOTAL | 145,081,701.72 | 100.000 |
George H. Heilmeier |
Affirmative | 142,445,086.15 | 98.183 |
Withheld | 2,636,615.57 | 1.817 |
TOTAL | 145,081,701.72 | 100.000 |
Abigail P. Johnson |
Affirmative | 139,802,398.20 | 96.361 |
Withheld | 5,279,303.52 | 3.639 |
TOTAL | 145,081,701.72 | 100.000 |
Edward C. Johnson 3d |
Affirmative | 134,537,788.69 | 92.732 |
Withheld | 10,543,913.03 | 7.268 |
TOTAL | 145,081,701.72 | 100.000 |
Donald J. Kirk |
Affirmative | 137,180,476.64 | 94.554 |
Withheld | 7,901,225.08 | 5.446 |
TOTAL | 145,081,701.72 | 100.000 |
Marie L. Knowles |
Affirmative | 142,558,184.65 | 98.261 |
Withheld | 2,523,517.07 | 1.739 |
TOTAL | 145,081,701.72 | 100.000 |
Ned C. Lautenbach |
Affirmative | 142,558,184.65 | 98.261 |
Withheld | 2,523,517.07 | 1.739 |
TOTAL | 145,081,701.72 | 100.000 |
Marvin L. Mann |
Affirmative | 137,180,476.64 | 94.554 |
Withheld | 7,901,225.08 | 5.446 |
TOTAL | 145,081,701.72 | 100.000 |
William O. McCoy |
Affirmative | 137,180,476.64 | 94.554 |
Withheld | 7,901,225.08 | 5.446 |
TOTAL | 145,081,701.72 | 100.000 |
Robert L. Reynolds |
Affirmative | 139,802,398.20 | 96.361 |
Withheld | 5,279,303.52 | 3.639 |
TOTAL | 145,081,701.72 | 100.000 |
William S. Stavropoulos |
Affirmative | 142,558,184.65 | 98.261 |
Withheld | 2,523,517.07 | 1.739 |
TOTAL | 145,081,701.72 | 100.000 |
* Denotes trust-wide proposals and voting results. |
Semiannual Report
Managing Your Investments
Fidelity offers several ways to conveniently manage your personal investments via your telephone or PC. You can access your account information, conduct trades and research your investments 24 hours a day.
By Phone
Fidelity Automated Service Telephone provides a single toll-free number to access account balances, positions, quotes and trading. It's easy to navigate the service, and on your first call, the system will help you create a personal identification number (PIN) for security.
(phone_graphic)Fidelity Automated
Service Telephone (FAST®)
1-800-544-5555
Press
1 For mutual fund and brokerage trading.
2 For quotes.*
3 For account balances and holdings.
4 To review orders and mutual
fund activity.
5 To change your PIN.
*0 To speak to a Fidelity representative.
By PC
Fidelity's web site on the Internet provides a wide range of information, including daily financial news, fund performance, interactive planning tools and news about Fidelity products and services.
(computer_graphic)Fidelity's Web Site
www.fidelity.com
* 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.
Semiannual Report
To Visit Fidelity
For directions and hours,
please call 1-800-544-9797.
Arizona
7001 West Ray Road
Chandler, AZ
7373 N. Scottsdale Road
Scottsdale, AZ
California
815 East Birch Street
Brea, CA
1411 Chapin Avenue
Burlingame, CA
851 East Hamilton Avenue
Campbell, CA
123 South Lake Avenue
Pasadena, CA
19200 Von Karman Avenue
Irvine, CA
601 Larkspur Landing Circle
Larkspur, CA
10100 Santa Monica Blvd.
Los Angeles, CA
27101 Puerta Real
Mission Viejo, CA
73-575 El Paseo
Palm Desert, CA
251 University Avenue
Palo Alto, CA
1760 Challenge Way
Sacramento, CA
7676 Hazard Center Drive
San Diego, CA
8 Montgomery Street
San Francisco, CA
21701 Hawthorne Boulevard
Torrance, CA
2001 North Main Street
Walnut Creek, CA
6300 Canoga Avenue
Woodland Hills, CA
Colorado
1625 Broadway
Denver, CO
9185 East Westview Road
Littleton, CO
Connecticut
48 West Putnam Avenue
Greenwich, CT
265 Church Street
New Haven, CT
300 Atlantic Street
Stamford, CT
29 South Main Street
West Hartford, CT
Delaware
222 Delaware Avenue
Wilmington, DE
Florida
4400 N. Federal Highway
Boca Raton, FL
121 Alhambra Plaza
Coral Gables, FL
2948 N. Federal Highway
Ft. Lauderdale, FL
1907 West State Road 434
Longwood, FL
8880 Tamiami Trail, North
Naples, FL
3501 PGA Boulevard
West Palm Beach, FL
8065 Beneva Road
Sarasota, FL
1502 N. Westshore Blvd.
Tampa, FL
Georgia
3445 Peachtree Road, N.E.
Atlanta, GA
1000 Abernathy Road
Atlanta, GA
Illinois
One North LaSalle Street
Chicago, IL
1415 West 22nd Street
Oak Brook, IL
1700 East Golf Road
Schaumburg, IL
3232 Lake Avenue
Wilmette, IL
Indiana
4729 East 82nd Street
Indianapolis, IN
Kansas
5400 College Boulevard
Overland Park, KS
Maine
Three Canal Plaza
Portland, ME
Maryland
7401 Wisconsin Avenue
Bethesda, MD
One W. Pennsylvania Ave.
Towson, MD
Massachusetts
801 Boylston Street
Boston, MA
155 Congress Street
Boston, MA
300 Granite Street
Braintree, MA
44 Mall Road
Burlington, MA
405 Cochituate Road
Framingham, MA
416 Belmont Street
Worcester, MA
Semiannual Report
Fidelity Brokerage Services, Inc., 100 Summer St., Boston, MA 02110 Member NYSE/SIPC
Michigan
280 Old N. Woodward Ave.
Birmingham, MI
43420 Grand River Avenue
Novi, MI
29155 Northwestern Hwy.
Southfield, MI
Minnesota
7600 France Avenue South
Edina, MN
Missouri
8885 Ladue Road
Ladue, MO
New Jersey
150 Essex Street
Millburn, NJ
56 South Street
Morristown, NJ
501 Route 17, South
Paramus, NJ
3518 Route 1 North
Princeton, NJ
New York
1055 Franklin Avenue
Garden City, NY
37 West Jericho Turnpike
Huntington Station, NY
1271 Avenue of the Americas
New York, NY
61 Broadway
New York, NY
350 Park Avenue
New York, NY
North Carolina
4611 Sharon Road
Charlotte, NC
Ohio
3805 Edwards Road
Cincinnati, OH
28699 Chagrin Boulevard
Woodmere Village, OH
1324 Polaris Parkway
Columbus, OH
Oregon
16850 SW 72nd Avenue
Tigard, OR
Pennsylvania
600 West DeKalb Pike
King of Prussia, PA
1735 Market Street
Philadelphia, PA
12001 Perry Highway
Wexford, PA
Rhode Island
47 Providence Place
Providence, RI
Tennessee
6150 Poplar Avenue
Memphis, TN
Texas
10000 Research Boulevard
Austin, TX
4017 Northwest Parkway
Dallas, TX
12532 Memorial Drive
Houston, TX
2701 Drexel Drive
Houston, TX
400 East Las Colinas Blvd.
Irving, TX
14100 San Pedro
San Antonio, TX
19740 IH 45 North
Spring, TX
6005 West Park Boulevard
Plano, TX
Utah
215 South State Street
Salt Lake City, UT
Virginia
1861 International Drive
McLean, VA
Washington
411 108th Avenue, N.E.
Bellevue, WA
1518 6th Avenue
Seattle, WA
Washington, DC
1900 K Street, N.W.
Washington, DC
Wisconsin
595 North Barker Road
Brookfield, WI
Semiannual Report
Investment Adviser
Fidelity Management &
Research Company
Boston, MA
Investment Sub-Advisers
FMR Co., Inc.
Transfer and Shareholder
Servicing Agent
Fidelity Service Company, Inc.
Boston, MA
Custodian
Brown Brothers Harriman & Co.
Boston, MA
Fidelity's Growth and Income Funds
Balanced Fund
Convertible Securities Fund
Equity-Income Fund
Equity-Income II Fund
Fidelity ® Fund
Global Balanced Fund
Growth & Income Portfolio
Growth & Income II Portfolio
Puritan® Fund
Real Estate Income Fund
Real Estate Investment Portfolio
Utilities Fund
The Fidelity Telephone Connection
Mutual Fund 24-Hour Service
Exchanges/Redemptions
and Account Assistance 1-800-544-6666
Product Information 1-800-544-6666
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)
Fidelity Automated Service
Telephone (FAST®) (automated graphic) 1-800-544-5555
(automated graphic) Automated line for quickest service
(Fidelity Investment logo)(registered trademark)
Corporate Headquarters
82 Devonshire St., Boston, MA 02109
www.fidelity.com
EXC-USAN-0804
1.788746.101
Item 2. Code of Ethics
Not applicable.
Item 3. Audit Committee Financial Expert
Not applicable.
Item 4. Principal Accountant Fees and Services
Not applicable.
Item 5. Audit Committee of Listed Registrants
Not applicable.
Item 6. Schedule of Investments
Not applicable.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable.
Item 8. Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders
There were no material changes to the procedures by which shareholders may recommend nominees to the Fidelity Exchange Fund's Board of Trustees.
Item 10. Controls and Procedures
(a)(i) The President and Treasurer and the Chief Financial Officer have concluded that the Fidelity Exchange Fund's (the "Trust") disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act) provide reasonable assurances that material information relating to the Trust is made known to them by the appropriate persons, based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(a)(ii) There was no change in the Trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act) that occurred during the Trust's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.
Item 11. Exhibits
(a) | (1) | Not applicable. |
(a) | (2) | Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT. |
(a) | (3) | Not applicable. |
(b) | | Certification pursuant to Rule 30a-2(b) under the Investment Company Act of 1940 (17 CFR 270.30a-2(b)) is furnished and attached hereto as Exhibit 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Fidelity Exchange Fund
By: | /s/Christine Reynolds |
| Christine Reynolds |
| President and Treasurer |
| |
Date: | August 12, 2004 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/Christine Reynolds |
| Christine Reynolds |
| President and Treasurer |
| |
Date: | August 12, 2004 |
By: | /s/Timothy F. Hayes |
| Timothy F. Hayes |
| Chief Financial Officer |
| |
Date: | August 12, 2004 |
