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 811-02631

Chestnut Street Exchange Fund
---------------------------------------------------------
(Exact name of registrant as specified in charter)

103 Bellevue Parkway
Wilmington, DE 19809
------------------------------------------------
(Address of principal executive offices) (Zip code)

Edward J. Roach
Chestnut Street Exchange Fund
103 Bellevue Parkway
Wilmington, DE 19809
------------------------------------------------
(Name and address of agent for service)

Registrant's telephone number, including area code: (302) 791-1112
---------------

Date of fiscal year end: December 31
------------

Date of reporting period: June 30, 2007
-------------

Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. Section 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Report to Shareholders is attached herewith.

CHESTNUT STREET EXCHANGE FUND

(A CALIFORNIA LIMITED PARTNERSHIP)

David R. Wilmerding, Jr.
Chairman
August 1, 2007

Fellow Partner:

Our Fund earned $3.69 per share of net investment income in the six months
ended June 30, 2007. Earnings in the same period of 2006 were $3.31 per share.
Dividend income increased by $169,354 in the first six months of 2007 compared
to the same period of 2006. Expenses increased by $21,262 due largely to
advisory fees, which are based on the market value of the portfolio.

After providing for the $1.60 per share distributed to partners of record
on June 26, 2007, the net asset value per partnership share on June 30, 2007 was
$398.32. The net asset value on March 31, 2007, our last report date, was
$373.64 and the value at June 30, 2006 was $342.26.

During the second quarter of 2007, Altria Group, Inc. distributed 12,456
shares of Kraft Foods, Inc., Class A and The Walt Disney Co. distributed 9,916
shares of Citadel Broadcasting Corp.

Commentary on market conditions and a comparison of our Fund's performance
to the Standard & Poor's 500(R) Index and the Dow Jones Industrial Average will
be found in the accompanying Investment Adviser's Report.

Your comments or questions concerning Chestnut Street Exchange Fund are
welcome.

Yours sincerely,

-s- David R. Wilmerding, Jr.

David R. Wilmerding, Jr.

INVESTMENT ADVISER'S REPORT

U.S. EQUITY MARKET REVIEW

The U.S. equity markets rebounded in the past few months, following a weak
first quarter. The large-capitalization S&P 500(R) Index gained 6.28% during the
second quarter of 2007 and outpaced both the S&P MidCap 400(R) Index and the S&P
SmallCap 600(R) Index, which rose 5.84% and 5.19%, respectively. Energy,
information technology and industrials were the best-performing sectors within
the S&P 500(R) Index, registering gains of 14.76%, 10.36% and 9.76%,
respectively. Utilities, financials and consumer staples were laggards, posting
returns of -0.38%, 2.12% and 2.69%, respectively.

The Fed left the target federal funds target rate unchanged at 5.25% during
the three-month period. The decision was unanimous at both the May 9 and June 28
meetings -- the latter marked the eighth consecutive pause, following increases
at each of its 17 meetings held between June 2004 and June 2006.

In the June 28 post-meeting statement, the Federal Open Market Committee
(FOMC) upgraded its language about growth relative to its May statement, noting
that "growth appears to have been moderate during the first half of the year."
The language about inflation was changed to note the recent improvement in core
inflation, though the FOMC cautioned that "a sustained moderation in inflation
pressures has yet to be convincingly demonstrated," indicating that capacity
constraints and higher energy and commodity prices leave inflation risks skewed
to the upside.

The U.S. gross domestic product (GDP) grew at an annualized rate of just
0.7% in the first quarter of 2007, the most recent data available. This
represented a sharp deceleration from the 2.5% annualized growth rate reported
for the 2006 fourth quarter and marked the weakest increase since a meager rise
of 0.2% at the end of 2002. According to the Bureau of Economic Analysis of the
U.S. Department of Commerce, the slower pace of GDP growth in the first quarter
reflected a rise in imports, a drop in exports, a decline in federal government
spending and deceleration in personal consumption expenditures (PCE) for
nondurable goods. These factors were partially offset by an upturn in equipment
and software, smaller decreases in private inventory and residential fixed
investments and acceleration in PCE for both durable goods and services.

The most recent Consumer Price Index (CPI) data from the U.S. Department of
Labor reflected an upswing in inflation. The CPI rose at a seasonally adjusted
rate of 0.7% in May 2007, following an increase of 0.4% in April. Energy and
medical care costs contributed significantly to the increase, advancing 5.4% and
2.8%, respectively, during the month. The rise in energy costs was fueled by a
notable increase in gasoline prices. However, core inflation -- the CPI
excluding food and energy costs -- was up just 0.1%. The CPI rose at an
unadjusted rate of 2.7% over the previous 12 months.

According to the Bureau of Labor Statistics of the U.S. Department of
Labor, the U.S. unemployment rate (4.5%), the number of unemployed persons (6.8
million) and total employment (145.9 million) were largely unchanged between
March 31, 2007, and June 30, 2007. The jobless rate has remained fairly
stable -- ranging from 4.4% to 4.6% -- since September 2006. Employment gains in
May remained strong among U.S. service sector firms, particularly in the
healthcare and food services industries, while manufacturing continued to shed
jobs, led by declines in the automotive sector.

PORTFOLIO SUMMARY

The Chestnut Street Exchange fund generated solid absolute and relative
performance returning 7.04% during the second quarter. In comparison, the S&P
500(R) Index was up 6.28% for the same period. Overall,

stock selection drove favorable return comparisons during the quarter. Sector
allocation also had a modestly positive effect on performance.

PORTFOLIO REVIEW

On an absolute basis, all ten sectors in the portfolio contributed to
gains. The most significant contributions came from holdings in the information
technology (IT), industrials, energy and health care sectors. At the stock
level, the fund's position in Intel had the largest positive impact on returns.
Shares of Intel rose over 24% during the second quarter, as the IT bellwether
was upgraded by a number of Wall Street Analysts. In the industrials sector, a
position in diversified manufacturer 3M was the top-contributor. 3M posted
strong first quarter earnings, bolstered by the sale of its European drug
business and rising revenues. The stock traded up, as investors rewarded the
company for better-than-expected organic growth both in and outside of the U.S.
Other industrials names that helped returns included Union Pacific Corp. and
Emerson Electric Company. Shares of U.S. railroad operator Union Pacific rose
over 13% during the quarter despite facing a number of headwinds including
rising fuel costs. Pricing power and strong demand for shipment of agricultural
and chemical products offset a slowdown in volumes during the quarter. Other
substantial contributors during the period included diversified oil services
firm Schlumberger, Coca-Cola and drug maker Merck & Co.

Benchmark relative performance was negatively impacted by some of the
fund's positions in financials and health care. Financial stocks have continued
to struggle as that sector has been battling the fallout from the subprime
market and other credit-related problems. Positions in U.S banks such as Bank of
America, Wells Fargo and Wachovia Corp. weighed on returns during the quarter.
Within health care, specific detractors were Johnson & Johnson and Abbot
Laboratories. After trading up in April, shares of Johnson & Johnson retreated
in May & June to post a modest gain for the quarter. In this case, our large
active weight dampened comparative performance. We continue to scale back this
position in the fund. After contributing to relative returns in the first
quarter, our position in Abbot Laboratories detracted from returns during the
second quarter. We remain positive on Abbot's fundamentals and competitive
position as we move into the second half of 2007.

There were no substantial changes to the portfolio over the course of the
quarter. As has been the case in recent quarters, we used positions in Johnson &
Johnson and Intel to meet redemptions in kind. Importantly, we have continued to
reduce our positions in Johnson & Johnson and Intel to further enhance
diversification across the portfolio. As of June 30, 2007, shares of Johnson &
Johnson accounted for approximately 6.5% of the overall portfolio, while shares
of Intel accounted for approximately 7.6% of the fund. Our outlook for these
positions has not changed. We maintain the stance that fundamentals are
challenging and that both firms face difficult headwinds. Elsewhere, two stocks
were added to the portfolio during the quarter as the result of corporate
actions. Altria spun of its Kraft Foods unit in order to focus on its core
tobacco business. Additionally, Citadel Broadcasting Corp was added to the
portfolio after Disney completed the sale of its wholly-owned subsidiary ABC
Radio to Citadel.

At the close of the second quarter the fund's largest overweights were in
the health care, industrials and financials sectors. The largest underweights
were in the consumer discretionary, utilities and energy groups.

BlackRock Capital Management, Inc.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

PERFORMANCE COMPARISON
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN CHESTNUT STREET
EXCHANGE FUND(1) VS. S&P 500(R) INDEX AND DOW JONES INDUSTRIAL AVERAGE INDEX(2)

(PERFORMANCE GRAPH)

The performance data represent past performance and the principal value and
investment return will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost. Past performance is no
guarantee of future results. Please call (302)791-1112 for the most recent
month-end performance.

In addition, the data does not reflect the deduction of taxes that a
shareholder would pay on distributions or redemption of Fund Shares.

FOR THE SIX MONTHS ENDED JUNE 30, 2007

<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------
6 MONTH 1 YEAR 3 YEAR 5 YEAR 10 YEAR SINCE INCEPTION(3)
------- ------ ------ ------ ------- ------------------

Chestnut Street Exchange Fund.... 6.34% 18.63% 8.67% 8.72% 5.00% 12.42%
S&P 500(R) Index................. 6.96% 20.58% 11.67% 10.71% 7.13% 12.51%
Dow Jones Industrial Average
Index.......................... 8.74% 23.03% 11.24% 10.20% 7.84% 12.73%
</Table>

- --------
(1) The chart assumes a hypothetical $10,000 initial investment in the Fund
made on January 1, 1997 and reflects Fund expenses. Investors should note
that the Fund is a managed fund while the indices are unmanaged, do not
incur expenses and are not available for investment. The Fund's expense
ratio for the fiscal year ended December 31, 2006 and the unaudited six
month period ended June 30, 2007 were 0.44% and 0.42%, respectively.

(2) Results of index performance are presented for general comparative
purposes.

(3) Cumulative since inception total returns were 3,494.84%, 3,544.42% and
3,761.86% for the Chestnut Street Exchange Fund, the S&P 500(R) Index and
the Dow Jones Industrial Average Index, respectively, for the period
December 29, 1976 (inception) to June 30, 2007.

FUND EXPENSE EXAMPLE

(UNAUDITED)

As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, and (2) ongoing costs, including management fees; and other Fund
expenses. The example is intended to help you understand your ongoing costs (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.

The example is based on an investment of $1,000 invested at the beginning
of the six-month period from January 1, 2007 through June 30, 2007, and held for
the entire period.

ACTUAL EXPENSES

The first line of the accompanying table provides information about actual
account values and actual expenses. You may use the information in this line,
together with the amount you invested, to estimate the expenses that you paid
over the period. Simply divide your account value by $1,000 (for example, an
$8,600 account value divided by $1,000 = 8.6), then multiply the result by the
number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.

HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES

The second line of the accompanying table provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not your Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of other funds.

Please note that the expenses shown in the accompanying table are meant to
highlight your ongoing costs only and do not reflect any transactional costs.
Therefore, the second line of the accompanying table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.

CHESTNUT STREET EXCHANGE FUND

<Table>
<Caption>
EXPENSES PAID
BEGINNING ENDING DURING SIX
ACCOUNT VALUE ACCOUNT VALUE MONTHS ENDING
JANUARY 1, 2007 JUNE 30, 2007 JUNE 30, 2007*
--------------- ------------- --------------

Actual.................................. $1,000.00 $1,031.70 $2.15
Hypothetical (5% return before
expenses)............................. $1,000.00 $1,022.69+ $ 2.11
</Table>

- --------

* Expenses are equal to the Fund's annualized six-month expense ratio of
0.42%, multiplied by the average account value over the period,
multiplied by the number of days (181) in the most recent fiscal half-
year, then divided by 365 to reflect the one-half year period. The Fund's
ending account value on the first line of the table is based on the
actual total return of 6.34% for the six month period ending June 30,
2007.

+ Hypothetical expenses are based on the Fund's actual annualized six-month
expense ratio and an assumed rate of return of 5% per year before
expenses.

CHESTNUT STREET EXCHANGE FUND

(A CALIFORNIA LIMITED PARTNERSHIP)

PORTFOLIO HOLDINGS SUMMARY TABLE

JUNE 30, 2007

(UNAUDITED)

<Table>
<Caption>
% OF NET
SECURITY TYPE/INDUSTRY ASSETS VALUE
- ------------------------- -------- ------------

COMMON STOCKS:
Basics................. 4.6% $ 13,691,769
Capital Equipment...... 8.2 24,245,027
Consumer Cyclicals..... 9.0 26,651,221
Energy................. 8.4 25,110,531
Financial.............. 23.9 71,186,644
Healthcare............. 20.1 59,879,924
Retail................. 1.0 3,031,774
Staples................ 4.7 14,061,135
Technology............. 13.0 38,611,045
Transportation......... 4.7 14,036,238
Utilities.............. 2.0 5,921,481
SHORT-TERM INVESTMENTS... 0.7 2,199,698
LIABILITIES IN EXCESS OF
OTHER ASSETS........... -0.3 (854,451)
----- ------------
Net Assets............. 100.3% $297,772,036
===== ============

</Table>

CHESTNUT STREET EXCHANGE FUND

(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENT OF NET ASSETS

JUNE 30, 2007

(UNAUDITED)

<Table>
<Caption>
SHARES VALUE
- --------- ------------

COMMON STOCKS--99.6%

BASICS--4.6%
100,609 Air Products &
Chemicals, Inc. ..... $ $8,085,945
86,032 Cabot Corp. ............ 4,102,006
42,373 Cabot Microelectronics
Corp.*............... 1,503,818
------------
13,691,769
------------

CAPITAL
EQUIPMENT--8.2%
181,112 Emerson Electric Co. ... 8,476,042
364,049 General Electric Co. ... 13,935,796
39,154 Pitney Bowes, Inc. ..... 1,833,189
------------
24,245,027
------------

CONSUMER CYCLICALS--9.0%
9,916 Citadel Broadcasting
Corp. ............... 63,958
149,743 Comcast Corp., Class
A*................... 4,210,773
129,129 Walt Disney Co. (The)... 4,408,464
7,191 Idearc Inc. ............ 254,058
85,100 Procter & Gamble Co.
(The)................ 5,207,269
144,103 3M Co. ................. 12,506,699
------------
26,651,221
------------

ENERGY--8.4%
41,979 BP PLC ADR.............. 3,028,365
147,227 Exxon Mobil Corp. ...... 12,349,401
114,584 Schlumberger, Ltd. ..... 9,732,765
------------
25,110,531
------------

FINANCIAL--23.9%
111,332 American Express Co. ... 6,811,292
28,441 American International
Group, Inc. ......... 1,991,723
22,266 Ameriprise Financial,
Inc. ................ 1,415,450
394,928 Bank of America Corp. .. 19,308,030
48,853 Fannie Mae.............. 3,191,566
140,310 JP Morgan Chase & Co. .. 6,798,020
96,032 Moody's Corp. .......... 5,973,190
92,150 Wachovia Corp. ......... 4,722,688
596,380 Wells Fargo & Co. ...... 20,974,685
------------
71,186,644
------------

HEALTHCARE--20.1%
231,254 Abbott Laboratories,
Inc. ................ $ 12,383,652
64,986 Baxter International,
Inc. ................ 3,661,311
23,125 Hospira, Inc.*.......... 902,800
75,385 IMS Health, Inc. ....... 2,422,120
316,903 Johnson & Johnson....... 19,527,563
45,931 Medco Health Solutions,
Inc.*................ 3,582,159
349,404 Merck & Company, Inc. .. 17,400,319
------------
59,879,924
------------

RETAIL--1.0%
44,558 Safeway, Inc. .......... 1,516,309
31,500 Wal-Mart Stores, Inc. .. 1,515,465
------------
3,031,774
------------

STAPLES--4.7%
18,000 Altria Group, Inc. ..... 1,262,520
164,147 Coca Cola Co. (The)..... 8,586,530
5,688 Hanesbrands, Inc. ...... 153,747
12,456 Kraft Foods, Inc., Class
A.................... 439,074
43,600 PepsiCo Inc. ........... 2,827,460
45,506 Sara Lee Corp. ......... 791,804
------------
14,061,135
------------

TECHNOLOGY--13.0%
57,923 Hewlett-Packard Co. .... 2,584,524
963,462 Intel Corp. ............ 22,891,857
39,708 International Business
Machines Corp. ...... 4,179,267
139,643 Microsoft Corp. ........ 4,115,279
273,453 Motorola, Inc. ......... 4,840,118
------------
38,611,045
------------

TRANSPORTATION--4.7%
113,572 Burlington Northern
Santa Fe Corp. ...... 9,669,520
37,922 Union Pacific Corp. .... 4,366,718
------------
14,036,238
------------

UTILITIES--2.0%
143,830 Verizon Communications,
Inc. ................ 5,921,481
------------
Total Common Stocks
(Cost:
$44,016,957).... 296,426,789
------------

</Table>

See Accompanying Notes to Financial Statements.

CHESTNUT STREET EXCHANGE FUND

(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENT OF NET ASSETS (CONCLUDED)

<Table>
<Caption>
PAR VALUE
- ---------- -----------

SHORT-TERM OBLIGATIONS--0.7%
$2,200,000 Federal Home Loan Bank
07/02/07, 4.95%
(Cost: $2,199,698)...... $ 2,199,698
-----------

</Table>

<Table>

TOTAL INVESTMENT IN SECURITIES
(Cost: $46,216,655)...... 100.3% 298,626,487
Other assets in excess of
other liabilities........ 0.1% 436,344
Distributions payable...... (0.4)% (1,196,144)
Payable to:
Investment Adviser (Note
C).................... (0.0)% (82,549)
Managing General Partners
(Note C).............. (0.0)% (5,698)
Custodian (Note C)....... (0.0)% (2,061)
Transfer Agent (Note C).. (0.0)% (4,343)
------------
NET ASSETS (Applicable to
747,576 partnership
shares outstanding)...... 100.0% $297,772,036
============
NET ASSET VALUE PER SHARE.. $ 398.32
============

NET ASSETS APPLICABLE TO
SHARES OWNED BY:
Limited partners
(747,483 shares)......... $297,734,852
Managing general partners
(93 shares).............. 37,184
------------
Total net assets
(747,576 shares)......... $297,772,036
============

</Table>

- --------

* Non-Income Producing

ADR-American Depositary Receipt

See Accompanying Notes to Financial Statements.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2007
(UNAUDITED)

<Table>

INVESTMENT INCOME
Dividends............................. $ 3,342,025
Interest.............................. 43,291
-----------
Total investment income....... 3,385,316
-----------
Expenses
Investment advisory fees.............. 485,995
Managing general partners'
compensation and officer's salary.. 44,254
Legal fees............................ 28,723
Custodian fees........................ 12,949
Insurance expense..................... 11,081
Audit fees............................ 10,294
Printing expense...................... 8,887
Transfer agent fees................... 7,635
Miscellaneous......................... 4,591
-----------
Total expenses................... 614,409
-----------
Net investment income......... 2,770,907
-----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Realized gain on sale of investment
securities (for federal tax
purposes net gain is $2,001,281)... 1,964,787
Realized gain from security
transactions: distributed upon
redemption of partnership shares... 8,430,712
Unrealized appreciation of investments
Beginning of
period............ $247,526,760
End of period....... 252,409,832
------------
Net change in unrealized
appreciation................ 4,883,072
-----------
Net realized and unrealized
gain on investments......... 15,278,571
-----------
Net increase in net assets
resulting from operations........ $18,049,478
===========

</Table>

STATEMENTS OF CHANGES IN NET ASSETS

<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
2007 2006
------------ ------------
(UNAUDITED)

INCREASE/(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment
income........... $ 2,770,907 $ 5,364,563
Net realized gain
from security
transactions, for
federal income
tax purposes net
gain is
$2,001,281 and
$2,787,979....... 1,964,787 2,725,832
Excess of market
value over book
value of
securities
distributed upon
redemption of
partnership
shares........... 8,430,712 11,490,446
Increase in
unrealized
appreciation of
investments...... 4,883,072 17,361,486
------------ ------------
Increase in net
assets resulting
from operations.. 18,049,478 36,942,327
------------ ------------
DISTRIBUTIONS TO
PARTNERS FROM:
Net investment
income........... (2,403,634) (5,368,169)
------------ ------------
CAPITAL SHARE
TRANSACTIONS:
Net asset value of
0 and 10 shares
subscribed....... -- 3,546
Net asset value of
312 and 1,974
shares issued in
lieu of cash
distributions.... 116,464 702,719
Cost of 22,109 and
37,261 shares
repurchased...... (8,570,706) (13,089,756)
------------ ------------
Decrease in net
assets from
capital share
transactions..... (8,454,242) (12,383,491)
------------ ------------
Total
increase/(decrease)
in net assets...... 7,191,602 19,190,667
NET ASSETS:
Beginning of
period........... 290,580,434 271,389,767
------------ ------------
End of period*..... $297,772,036 $290,580,434
============ ============

</Table>

- --------
* Includes undistributed net investment income of $371,503 and $4,230,
respectively.

See Accompanying Notes to Financial Statements.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

FINANCIAL HIGHLIGHTS

(FOR A SHARE OF THE FUND OUTSTANDING THROUGHOUT EACH PERIOD)

<Table>
<Caption>
SIX MONTHS
ENDED YEARS ENDED DECEMBER 31
JUNE 30, ----------------------------------------------------
2007 2006 2005 2004 2003 2002
----------- -------- -------- -------- -------- --------
(UNAUDITED)

Net Asset Value, Beginning of
Period........................ $ 377.68 $ 337.28 $ 333.18 $ 327.39 $ 264.29 $ 340.39
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income......... 3.69 6.88 6.19 5.65 4.61 3.99
Net gain (loss) on securities
(both realized and
unrealized)................ 20.15 40.40 4.10 5.80 63.09 (76.09)
-------- -------- -------- -------- -------- --------
Total from investment
operations............ 23.84 47.28 10.29 11.45 67.70 (72.10)
-------- -------- -------- -------- -------- --------
Less Distributions:
From net investment income.... (3.20) (6.88) (6.19) (5.66) (4.60) (4.00)
From realized gains........... -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total distributions...... (3.20) (6.88) (6.19) (5.66) (4.60) (4.00)
-------- -------- -------- -------- -------- --------
Net Asset Value, End of Period.. $ 398.32 $ 377.68 $ 337.28 $ 333.18 $ 327.39 $ 264.29
======== ======== ======== ======== ======== ========
Total Return.................... 6.34% 14.13% 3.12% 3.56% 25.78% (21.25)%
======== ======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net Assets, End of Period
(000's).................... $297,772 $290,580 $271,390 $298,159 $299,583 $267,987
Ratios to average net assets:
Operating expenses......... 0.42% 0.44% 0.43% 0.42% 0.43% 0.41%
Net investment income...... 1.90% 1.93% 1.82% 1.75% 1.57% 1.31%

Portfolio Turnover Rate....... 0.69% 0.99% 0.82% 0.47% 1.18% 0.98%
</Table>

See Accompanying Notes to Financial Statements.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

(A) ORGANIZATION

Chestnut Street Exchange Fund (the "Fund"), a California Limited
Partnership, is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end investment management company. The Fund's
investment objective is to seek long-term growth of capital and,
secondarily, current income. Effective January 1, 1998, the Fund changed its
status for tax purposes from a partnership to a corporation. The change
resulted from the enactment of the "Publicly Traded Partnership" rules to
the Internal Revenue Code in 1987, which first applied to the Fund after
1997.

(B) SIGNIFICANT ACCOUNTING PRINCIPLES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Fund in the
preparation of its financial statements.

SECURITY VALUATIONS

Securities listed or traded on an exchange are valued generally at the
last sales price as of the close of the customary trading session on
the exchange where the security is principally traded, or lacking any
sales on a particular day, valued at the closing bid price on that
day. Each security reported on the NASDAQ Stock Market, Inc. is valued
at the NASDAQ Official Close Price. Securities for which market
quotations are not readily available or are believed to be unreliable
are valued at fair value as determined in good faith using methods
approved by the Managing General Partners. Short-term obligations
having 60 days or less to maturity are valued at amortized cost which
approximates market value.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME

Securities transactions are accounted for on a trade date basis.
Realized gains and losses on sales and redemptions in kind are
computed on the basis of specific identification for both financial
reporting and income tax purposes. For securities exchanged into the
Fund at the Fund's inception in 1976, the cost for financial reporting
purposes is the value of those securities as used in the Exchange. The
cost, for income tax purposes, of securities exchanged into the Fund
is the tax basis of the individual investor. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-
dividend date.

DISTRIBUTIONS

Distributions from net investment income are paid quarterly and
recorded on the ex-dividend date. Distributions of capital gains, if
any, are paid annually and recorded on the ex-dividend date.

FEDERAL INCOME TAXES

The Fund intends to comply with the requirements of the Internal
Revenue Code necessary to qualify as a regulated investment company
and, as such, will not be subject to federal income taxes on otherwise
taxable income which is distributed to shareholders. The Fund may
elect not to distribute long-term capital gains to shareholders, but
retain these gains and pay the income tax at the applicable corporate
income tax rate. If the Fund elects to pay the tax on long-term
capital gains, on the last day of the year the tax is paid, the
partners are entitled to a proportionate credit for the tax payment
and the tax basis of their shares is increased by the amount of
undistributed gains less the tax paid by the Fund. At December 31,
2006, the Fund had a capital loss carryforward of $2,498,103, of which
$2,276,902 expires December 31, 2011 and $221,201 expires December 31,
2012. Therefore, no provision for federal income taxes is recorded in
the financial statements.

Prior to the Meeting of Partners on September 29, 2006, the Investment
Advisers to the Fund were BlackRock Financial Management, Inc. and BlackRock
Institutional Management Corporation ("BIMC") pursuant to an advisory
agreement dated January 1, 1998, ("Prior Advisory Agreement"). At the
September 29, 2006 meeting a new advisory agreement ("Advisory Agreement")
providing for the same advisory, accounting and administrative services and
the same fee as in the prior agreement was entered into with BlackRock
Capital Management, Inc. ("BCM"), a wholly owned subsidiary of BIMC. All
BlackRock entities named are subsidiaries of BlackRock, Inc. in which PNC
Bank now holds a minority interest.

The Advisory Agreement provides for a fee at the annual rate of 4/10ths of
1% of the first $100,000,000 of the Fund's average daily net assets plus
3/10ths of 1% of net assets exceeding $100,000,000.

PFPC Inc., an affiliate of PNC Bank, serves as the Fund's transfer and
dividend disbursing agent. As compensation for these services, PFPC Inc. is
entitled to a fee of $12,500 per year plus related out-of-pocket expense.

PFPC Trust Company, a subsidiary of PFPC Inc, serves as the Fund's
custodian. As compensation for its services as custodian, PFPC Trust Company
is entitled to a fee computed at an annual rate of 0.0065% of the Fund's
average gross assets plus additional fees based on the number and type of
transactions.

The managing general partners each receive a fixed fee as compensation for
their services. In addition, the President, Treasurer and Chief Compliance
Officer receives additional payments for overseeing the Fund's activities
including compliance with federal securities laws, plus reimbursements of
related expenses. Total payments to or for the managing general partners
amounted to $44,254.

Legal fees amounting to $28,723 were paid to Drinker, Biddle & Reath LLP.
Michael P. Malloy, Esq., Secretary of the Fund, is a partner of that firm.

(D) INVESTMENT TRANSACTIONS

Purchases and sales of investment securities (excluding short-term
obligations and redemptions in kind) were $3,026,364 and $1,999,702,
respectively, for the six months ended June 30, 2007.

(E) NET ASSETS

At June 30, 2007, net assets consisted of:

<Table>

Undistributed net investment income.......................... $ 371,503
Accumulated net realized losses on securities................ (533,316)
Net unrealized appreciation of investments (book basis)...... 252,409,832
Other capital -- paid-in or reinvested....................... 45,524,017
------------
$297,772,036
============

</Table>

(F) IN-KIND DISTRIBUTION OF SECURITIES

During the six months ended June 30, 2007, the Fund distributed portfolio
securities in lieu of cash for most shareholder redemptions. The value of
these redemptions was as follows:

<Table>
<Caption>
NET REALIZED FUND
VALUE OF THE GAIN INCLUDED SHARES
REDEMPTIONS IN REDEMPTIONS REDEEMED
- ------------ -------------- --------

$8,559,625 $8,430,712 22,080
</Table>

Net realized gains from these transactions are not taxable to the Fund. Such
gains are not distributed to shareholders and will be reclassified to paid-
in capital at the Fund's fiscal year end. These transactions were completed
following guidelines approved by the Managing General Partners.

(G) INDEMNIFICATIONS

In the ordinary course of business, the Fund enters into contracts that
contain a variety of indemnifications. The Fund's maximum exposure under
these arrangements is immaterial. The Fund has not had prior claims or
losses pursuant to the contracts and expects the risk of loss to be remote.

(H) ACCOUNTING PRONOUNCEMENTS

On July 13, 2006 the Financial Accounting Standards Board ("FASB") released
FASB Interpretation No. 48 "Accounting for the Uncertainty of Income Taxes"
("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should
be recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or
expected to be taken in the course of preparing the Fund's tax returns to
determine whether the tax positions are "more-likely-than-not" of being
sustained by the applicable tax authority. Tax positions not deemed to meet
the more-likely-than-not threshold would be recorded as a tax benefit or
expense in the current year and recognized as: a liability for unrecognized
tax benefits; a reduction of an income tax refund receivable; a reduction of
deferred tax assets; an increase in deferred tax liability; or a combination
thereof. Funds are required to implement FIN 48 no later than its last NAV
calculation in the first required financial statement reporting period for
its fiscal year beginning after December 15, 2006. At this time, management
has evaluated the impact of FIN 48 and has determined it will have no impact
on the financial statements.

In September 2006, the FASB issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" ("SFAS No. 157"). This standard
establishes a single authoritative definition of fair value, sets out a
framework for measuring fair value and requires additional disclosures about
fair value measurements. SFAS No. 157 applies to fair value measurements
already required or permitted by

existing standards. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. The changes to current accounting
principles generally accepted in the United States of America from the
application of this Statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. As of June 30, 2007, the Fund does not believe the
adoption of SFAS No. 157 will impact the financial statement amounts;
however, additional disclosures may be required about the inputs used to
develop the measurements and the effect of certain of the measurements on
changes in net assets for the period.

ADDITIONAL INFORMATION (UNAUDITED)

PROXY VOTING

Policies and procedures that the Fund uses to determine how to vote proxies
relating to portfolio securities as well as information regarding how the Fund
voted proxies relating to portfolio securities for the most recent 12-month
period ended June 30 are available without charge, upon request, by calling
(888) 261-4073 and on the Securities and Exchange Commission's ("SEC") website
at http://www.sec.gov.

QUARTERLY PORTFOLIO SCHEDULE

The Fund files a complete schedule of portfolio holdings with the SEC for the
first and third fiscal quarters of each fiscal year (quarters ended March 31 and
September 30) on Form N-Q. The Fund's Form N-Q is available on the SEC website
at http://www.sec.gov and may be reviewed and copied at the SEC Public Reference
Room in Washington, D.C. Information on the operation of the SEC Public
Reference Room may be obtained by calling 1-800-SEC-0330.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

MANAGING GENERAL PARTNERS
Richard C. Caldwell
Gordon L. Keen, Jr.
Edward J. Roach
Langhorne B. Smith
David R. Wilmerding, Jr.

INVESTMENT ADVISER
BlackRock Capital Management, Inc.
100 Bellevue Parkway
Wilmington, Delaware 19809

TRANSFER AGENT
PFPC Inc.
P.O. Box 8950
Wilmington, Delaware 19899
(800) 852-4750

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

/CHESTNUT STREET EXCHANGE FUND LOGO/

SEMI-ANNUAL REPORT
JUNE 30, 2007
(UNAUDITED)

CHESTNUT STREET EXCHANGE FUND

103 Bellevue Parkway
Wilmington, Delaware 19809
(302) 791-1112
Edward J. Roach, President & Treasurer

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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.

Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of managing general partners.

ITEM 11. CONTROLS AND PROCEDURES.

(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act")) were effective, based on the evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act and Rule
15d-15(b) under the Securities Exchange Act of 1934, as amended as of
the date within 90 days of the filing date of this report.

(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act,
that occurred during the second fiscal quarter of the period covered by
this report that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.

ITEM 12. EXHIBITS.

(a)(1) Not applicable.

(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

(a)(3) Not applicable.

(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.

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.

(registrant) Chestnut Street Exchange Fund
--------------------------------------------------------------------

By (Signature and Title)* /s/ Edward J. Roach
-------------------------------------------------------
Edward J. Roach, President & Treasurer
(Principal Executive Officer & Principal Financial
Officer)

Date August 22, 2007
----------------------------------------------------------------------------

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.

Date August 22, 2007
----------------------------------------------------------------------------

* Print the name and title of each signing officer under his or her signature.