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: December 31, 2009

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

January 29, 2010

Fellow Partner:

Enclosed is the Annual Report of Chestnut Street Exchange Fund for the year
ended December 31, 2009.

Our Fund earned $6.28 per share of net investment income for a share outstanding
throughout 2009, compared to $8.06 per share earned in 2008. The principal
reason for the decrease in earnings was the substantial reduction in 2009 in the
large dividends received in 2008 from Bank of America and Wells Fargo & Co.

After providing for the January 2010 distribution, the net asset value per
partnership share at December 31, 2009 was $315.61. The net asset value at
September 30, 2009, the date of our last report, was $295.94.

Additions to the portfolio in the fourth quarter were 30,100 shares of Check
Point Software Technologies, Ltd. Entirely distributed in redemption of Fund
shares were Burlington Northern Santa Fe Corp. and IMS Health, Inc. along with
portions of Abbott Laboratories, Johnson & Johnson and Merck & Co.

Additional information required by Securities and Exchange Commission
regulations is enclosed.

The accompanying Investment Adviser's Report contains interesting information on
the market generally and on our Fund's performance.

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

Yours sincerely,

/s/ David R. Wilmerding, Jr.
----------------------------------
David R. Wilmerding, Jr.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

INVESTMENT ADVISER'S REPORT

MARKET REVIEW

Gains in US stocks continued during the fourth quarter, although advances
were significantly more modest and the market as a whole was prone to a few
short-term selloffs. For the fourth quarter, the Dow Jones Industrial Average
advanced 8.1%, the S&P 500 Index was up 6.0%, the Russell 1000 Index climbed
6.1% and the Nasdaq Composite rose 6.9%. For all of 2009, the indexes advanced
22.7%, 26.5%, 28.4% and 43.9%, respectively. The significant outperformance of
the Nasdaq can be attributed to exceptionally strong performance in the
technology sector. When the rally began in March, smaller cap stocks posted
significant outperformance when compared to their large-cap counterparts, but
that trend began diminishing as the bull market matured. For the fourth quarter,
the Russell 2000 advanced 3.9%, and it closed the year with performance close to
that of large cap stocks, rising 27.2%. From a style perspective, growth stocks
outperformed value for both the fourth quarter and for all of 2009. The Russell
1000 Growth Index advanced 7.9% in the quarter and 37.2% for the year, while the
Russell 1000 Value Index climbed a more modest 4.2% for the quarter and 19.7%
for the year.

From a sector perspective, all areas of the market posted positive returns
for the fourth quarter, with the noticeable exception of financials. Financial
stocks have been one of the most interesting sector stories over the last year.
These stocks were clearly hit the hardest during the brunt of the late-2008 and
early-2009 selloff, and then outperformed all other areas of the market during
the initial stages of the run up. For the year as a whole, financials fell
somewhere in the middle of the pack. The clear winner from a sector perspective
for all of 2009 was technology, with that sector up 61.7%, followed by materials
(up 48.6%) and consumer discretionary (up 41.3%). The lower performing stocks
from a sector perspective were telecommunication services (up 8.9%), followed by
utilities (up 11.9%) and consumer staples (up 14.9%).

As was the case throughout 2009, the future direction of the US markets
will be highly dependent on the extent to which the economy can continue to
recover from recession. From the data that is now available (including
inventories, spending and employment), it looks like real gross domestic product
growth for the fourth quarter of 2009 should be up at least 4% in the United
States, but it is likely that future growth levels will be volatile (as is often
the case during a recovery). Consumers still have a prolonged period of
deleveraging to work through since household debt remains high. This backdrop,
combined with high levels of unemployment, will continue to exert downward
pressure on consumer spending. Ongoing deleveraging and the credit overhang make
it unlikely a rapid expansion could occur in the United States, but at the same
time, continued aggressive support from policymakers should prevent a "lost
decade." On balance, we expect US economic growth will continue to be muted. The
economic recovery does seem to be for real, but we expect that growth will come
in at a pace below that associated with a typical recovery.

In terms of the outlook, we expect the cyclical bull market that began last
March to continue. The economic and earnings backdrop will likely remain uneven,
but should provide enough of a solid base for stocks to make modest gains in
2010. The economy does appear to be transitioning into a self-reinforcing
recovery phase, inflation pressures remain absent and monetary policy still
remains easy--all of which should be conducive to continued outperformance of
risk assets. It is important to note, however, that the current bull market is
in the process of shifting, from one being driven by the influx of liquidity and
P/E improvements into an economic-recovery- and earnings-driven phase. In this
latter type of environment, gains tend to be less robust and markets experience
more setbacks along the way. As a result, we would not be at all surprised to
see some sort of corrective action or a period of consolidation at any point,
particularly given the strong advance in stocks over the past nine months.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

INVESTMENT ADVISER'S REPORT (CONTINUED)

PORTFOLIO REVIEW

SUMMARY

A third consecutive positive quarter led the US equity market to close the
year on a high note, with the S&P 500 Index reaching a new high for the year on
December 28. For the year, the Index returned 26% and notched its best year
since 2003. Third quarter earnings released in October and November continued to
surprise to the upside, and reflected demand and revenue improvements, not just
successful cost cutting measures. All sectors within the S&P 500 appreciated
during the fourth quarter, with the exception of financials. The best-performing
sector during the year, information technology, also fared well in the fourth
quarter, delivering a double-digit return.

During the fourth quarter, the Chestnut Street Exchange Fund appreciated
and outperformed the 6.0% return generated by the S&P 500 Index. Positive stock
selection in financials, health care and industrials accounted for the
outperformance and overshadowed negative contribution from the information
technology sector.

For the year ended December 31, 2009, the Fund's total return was 20.94%
compared to 26.47% for the S&P 500 Index.

PERFORMANCE ATTRIBUTION

The Fund's investment in the financials sector produced the greatest
outperformance relative to the S&P 500 Index during the fourth quarter, after
having underperformed in the third quarter. Despite continued debate over
financial reform, Moody's Corp. rebounded from very poor third quarter
performance to rise by more than 30%. The Fund's position in American Express
Co. also added value as the stock rose significantly despite a negative market
environment for financial stocks.

Stock selection and an overweight position in health care also contributed
to relative outperformance. The significant investment in pharmaceuticals
accounted for much of the gain, with the most notable performer being Merck &
Co. Also in health care, IMS Health surged higher by 37% on the announced
acquisition of the company by TPG Partners. Acquisition news also boosted the
Fund's investment in Burlington Northern Santa Fe Corp, which was targeted by
Berkshire Hathaway during the quarter, and produced outperformance in the
industrials sector.

Throughout the quarter the Fund held an underweight in the information
technology sector, which outperformed all other sectors within the S&P 500
Index. This underweight detracted from relative return comparisons. In addition,
stock selection in the semiconductors and semiconductor equipment industry also
negatively impacted the Fund, with our holdings of Intel Corp. and Cabot
Microelectronics Corp. lagging their peers.

OUTLOOK

The Fund's sector weightings remained stable during the quarter. We used
investor redemptions to remove the soon to be acquired Burlington Northern and
IMS Health positions, and also continued to trim the pharmaceuticals overweight
with redemptions in kind of Merck & Co., Abbot Laboratories, and Johnson

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

INVESTMENT ADVISER'S REPORT (CONTINUED)

& Johnson. During the quarter we took the opportunity to lessen the underweight
in the information technology sector by adding a new investment in Checkpoint
Software Technologies Ltd. The portfolio remains highly diversified, with the
largest weightings in the health care, information technology and industrials
sectors. Relative to the S&P 500, the Funds holds significant overweights in
health care and industrials, and notable underweights in consumer discretionary,
utilities, and information technology.

ANY OPINIONS EXPRESSED ARE THOSE OF BLACKROCK AS OF THE DATE OF THIS REPORT AND
ARE SUBJECT TO CHANGE BASED ON CHANGES IN MARKET OR ECONOMIC CONDITIONS. PAST
PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. THERE IS NO GUARANTEE THAT
FORECASTS MADE HEREIN WILL COME TO PASS. THE COMMENTS SHOULD NOT BE CONSTRUED AS
A RECOMMENDATION FOR ANY INDIVIDUAL HOLDINGS OR MARKET SECTORS. ACTUAL
PORTFOLIOS MAY DIFFER AS A RESULT OF ACCOUNT SIZE, CLIENT IMPOSED INVESTMENT
RESTRICTIONS, THE TIMING OF CLIENT INVESTMENT, AND MARKET, ECONOMIC, AND
INDIVIDUAL COMPANY CONSIDERATIONS, AMONG OTHER THINGS. INFORMATION AND OPINIONS
ARE DERIVED FROM PROPRIETARY AND NON-PROPRIETARY SOURCES DEEMED BY BLACKROCK TO
BE RELIABLE. WE CANNOT GUARANTEE THE ACCURACY OF SUCH INFORMATION, ASSURE ITS
COMPLETENESS, OR WARRANT THAT SUCH INFORMATION WILL NOT BE CHANGED WITHOUT
NOTICE. RELIANCE UPON INFORMATION IN THIS REPORT IS AT THE SOLE DISCRETION OF
THE READER.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

INVESTMENT ADVISER'S REPORT (CONCLUDED)
(UNAUDITED)

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)

Chestnut
S&P Value DJIA Value Street
--------- ---------- --------

12/31/1999 10000 10000 10000
Jan 31 2000 9498 9519 10112
Feb 29 2000 9318.49 8828.87 9790
March 31 2000 10229.8 9531.65 10868
April 30 2000 9921.92 9373.43 10811
May 31 2000 9718.52 9206.58 10944
June 30 2000 9958.57 9152.26 11126
July 31 2000 9803.21 9222.73 11119
August 31 2000 10412 9852.64 11757
Sept. 30 2000 9862.24 9368.88 10057
Oct. 31 2000 9820.82 9656.5 10537
Nov. 30 2000 9046.94 9180.44 9992
Dec. 31 2000 9091.27 9515.52 9903
Jan. 31 2001 9414.01 9612.58 10106
Feb. 28 2001 8555.45 9287.68 9346
Mar. 31 2001 8013.03 8749.92 8761
Apr. 30 2001 8635.65 9516.41 9431
May 31 2001 8693.51 9697.23 9342
Jun. 30 2001 8482.25 9339.4 9204
Jul. 31 2001 8398.72 9368.35 9299
Aug. 31 2001 7872.96 8882.13 9024
Sept. 30 2001 7236.82 7904.21 8358
Oct. 31 2001 7375.05 8116.83 8603
Nov. 30 2001 7940.71 8835.99 9426
Dec. 31 2001 8010.59 8997.68 9403
Jan. 31 2002 7893.64 8915.8 9391
Feb. 28 2002 7741.29 9103.93 9136
Mar. 31 2002 8032.36 9380.69 9520
Apr. 30 2002 7545.36 8976.38 9108
May 31 2002 7489.53 8982.66 9096
Jun. 30 2002 6956.27 8375.44 7947
Jul. 31 2002 6414.38 7926.51 7746
Aug. 31 2002 6456.71 7879.75 7661
Sept. 30 2002 5754.87 6914.48 6904
Oct. 31 2002 6261.3 7664.01 7565
Nov. 30 2002 6630.09 8143.01 8020
Dec. 31 2002 6240.24 7647.1 7405
Jan. 31 2003 6076.74 7392.45 7267
Feb. 28 2003 5985.59 7264.56 7229
Mar. 31 2003 6043.65 7368.44 7315
Apr. 30 2003 6541.65 7829.71 7796
May 31 2003 6886.39 8199.27 8089
Jun. 30 2003 6974.54 8336.2 8123
Jul. 31 2003 7097.29 8579.61 8361
Aug. 31 2003 7235.69 8770.08 8542
Sep. 30 2003 7158.99 8650.81 8461
Oct. 31 2003 7564.19 9158.61 8893
Nov. 30 2003 7630.75 9165.94 8895
Dec. 31 2003 8030.61 9809.39 9264
Jan. 31 2004 8178 9854.51 9330
Feb. 29 2004 8291.67 9966.85 9341
March 31 2004 8166.47 9767.51 9000
April 30 2004 8038.26 9656.16 9049
May 31 2004 8148.38 9642.65 9311
June 30 2004 8306.88 9888.53 9406
July 31 2004 8031.93 9622.53 9067
August 31 2004 8064.05 9679.3 9088
September 30 2004 8151.14 9601.87 8848
October 31 2004 8275.86 9567.3 9008
November 30 2004 8611.03 9977.74 9249
December 31 2004 8903.8 10331 9578
Jan. 31 2005 8686.55 10063.4 9440
Feb. 28 2005 8868.97 10357.2 9680
March 31 2005 8711.99 10118 9570
April 30 2005 8546.46 9833.66 9571
May 31 2005 8818.24 10125.7 9816
June 30 2005 8830.58 9954.6 9626
July 31 2005 9159.08 10324.9 9833
August 31 2005 9075.73 10202 9660
September 30 2005 9149.25 10297.9 9592
October 31 2005 8996.45 10185.7 9632
November 30 2005 9336.52 10585 10049
December 31 2005 9339.32 10510.9 9875
Jan. 31 2006 9586.81 10668.5 9993
Feb. 28 2006 9612.7 10826.4 10057
March 31 2006 9732.86 10961.8 10123
April 30 2006 9863.28 11233.6 10366
May 31 2006 9579.21 11069.6 10105
June 30 2006 9592.63 11065.2 10133
July 31 2006 9652.1 11115 10391
August 31 2006 9881.82 11347.3 10640
September 30 2006 10136.8 11658.2 10970
October 31 2006 10467.2 12074.4 11252
November 30 2006 10666.1 12261.5 11284
December 31 2006 10815.4 12520.3 11350
January 31 2007 10979 12695.5 11537
February 28 2007 10764.2 12375.6 11230
March 31 2007 10884.6 12479.6 11277
April 30 2007 11366.7 13210.9 11926
May 31 2007 11763.4 13821.2 12257
June 30 2007 11568 13615.3 12070
July 31 2007 11209.4 13431.5 11902
August 31 2007 11377.5 13619.5 12250
September 30 2007 11803 14184.7 12653
October 31 2007 11990.8 14238.6 12706
November 30 2007 11489.4 13720.3 12458
December 31 2007 11409.7 13629.8 12177
January 31 2008 10725.3 13019.2 11487
February 29 2008 10376.9 12661.2 11060
March 31 2008 10332 12675.1 11141
April 30 2008 10835.2 13270.8 11531
May 31 2008 10975.5 13124.8 11581
June 30 2008 10050.3 11808.4 10582
July 31 2008 9965.78 11859.2 10956
August 31 2008 10109.9 12073.8 11078
September 30 2008 9208.99 11369.9 10522
October 31 2008 7662.34 9791.78 9126
November 30 2008 7112.57 9315.9 8450
December 31 2008 7188.25 9278.64 8394
January 31 2009 6582.35 8477.89 7562
February 28 2009 5881.46 7528.37 6637
March 31 2009 6396.68 8124.61 7182
April 30 2009 7008.9 8738.02 7761
May 31 2009 7400.91 9132.11 8192
June 30 2009 7415.57 9095.58 8242
July 31 2009 7976.48 9890.53 8879
August 31 2009 8264.43 10282.2 9222
September 30 2009 8572.86 10532 9469
October 31 2009 8413.57 10546.8 9369
November 30 2009 8918.22 11276.6 10006
December 31 2009 9090.52 11383.8 10151

The performance data represents 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 YEAR ENDED DECEMBER 31, 2009

AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------
SINCE
1 YEAR 5 YEAR 10 YEAR INCEPTION(3)
------ ------ ------- ------------

Chestnut Street Exchange Fund 20.94% 1.17% 0.15% 10.88%
S&P 500(R) Index 26.47% 0.42% (0.95)% 10.70%
Dow Jones Industrial Average Index 22.70% 1.96% 1.30% 11.08%

- ----------
(1) The chart assumes a hypothetical $10,000 initial investment in the Fund
made on January 1, 2000 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 gross
expense ratio for the fiscal year ended December 31, 2009 was 0.51%.

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

(3) Cumulative since inception total returns were 2,923.26%, 2,765.04% and
3,104.41% 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 December 31, 2009.

BLACKROCK CAPITAL MANAGEMENT, INC.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

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 July 1, 2009 through December 31, 2009, 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 Six
Months Ending December 31, 2009" 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

EXPENSES PAID
BEGINNING ENDING DURING SIX
ACCOUNT VALUE ACCOUNT VALUE MONTHS ENDING
JULY 1, 2009 DECEMBER 31, 2009 DECEMBER 31, 2009*
------------- ----------------- ------------------

Actual........................... $1,000.00 $1,231.80 $2.76
Hypothetical
(5% return before expenses)... $1,000.00 $1,022.70+ $2.50

- ----------
* Expenses are equal to the Fund's annualized six-month expense ratio of
0.49%, multiplied by the average account value over the period, multiplied
by the number of days (184) 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 23.18% for the six-month period ending December 31, 2009.

+ 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
DECEMBER 31, 2009
(UNAUDITED)

% OF NET
SECURITY TYPE/INDUSTRY ASSETS VALUE
- ---------------------- -------- ------------

COMMON STOCKS:
Health Care .......... 20.0% $ 38,874,302
Technology ........... 16.1 31,131,096
Consumer Cyclicals ... 12.7 24,606,090
Financial ............ 12.6 24,340,623
Energy ............... 10.3 19,931,205
Staples .............. 7.3 14,257,974
Capital Equipment .... 7.3 14,114,577
Basics ............... 6.1 11,808,599
Transportation ....... 2.5 4,846,432
Utilities ............ 2.5 4,765,088
Retail ............... 2.1 4,129,013
Other Assets in Excess
of Liabilities ....... 0.5 1,044,097
----- ------------
Net Assets .............. 100.0% $193,849,096
===== ============

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

SCHEDULE OF INVESTMENTS
DECEMBER 31, 2009

Shares Value
------- -------------

COMMON STOCKS--99.5%
BASICS--6.1%
Air Products & Chemicals, Inc. ....................... 100,609 $ 8,155,366
Cabot Corp. .......................................... 86,032 2,256,619
Cabot Microelectronics Corp.* ........................ 42,373 1,396,614
------------
11,808,599
------------
CAPITAL EQUIPMENT--7.3%
Emerson Electric Co. ................................. 181,112 7,715,371
General Electric Co. ................................. 364,049 5,508,061
Pitney Bowes, Inc. ................................... 39,154 891,145
------------
14,114,577
------------
CONSUMER CYCLICALS--12.7%
3M Co. ............................................... 144,103 11,912,995
CBS Corp., - Class B ................................. 60,100 844,405
Comcast Corp., - Class A ............................. 149,743 2,524,667
Procter & Gamble Co. ................................. 85,100 5,159,613
Walt Disney Co. (The) ................................ 129,129 4,164,410
------------
24,606,090
------------
ENERGY--10.3%
BP PLC ADR ........................................... 41,979 2,433,523
Exxon Mobil Corp. .................................... 147,227 10,039,409
Schlumberger, Ltd. ................................... 114,584 7,458,273
------------
19,931,205
------------
FINANCIAL--12.6%
American Express Co. ................................. 98,525 3,992,233
Ameriprise Financial, Inc. ........................... 22,266 864,366
Bank of America Corp. ................................ 56,084 844,625
JPMorgan Chase & Co. ................................. 140,310 5,846,718
Moody's Corp. ........................................ 82,738 2,217,378
Wells Fargo & Co. .................................... 391,823 10,575,303
------------
24,340,623
------------
HEALTH CARE--20.0%
Abbott Laboratories .................................. 167,916 9,065,785
Baxter International, Inc. ........................... 64,986 3,813,378
Hospira, Inc.* ....................................... 23,125 1,179,375
Johnson & Johnson .................................... 133,406 8,592,680
Medco Health Solutions, Inc.* ........................ 91,862 5,870,900
Merck & Co., Inc. .................................... 283,311 10,352,184
------------
38,874,302
------------

Shares Value
------- ------------

RETAIL--2.1%
Home Depot, Inc. ..................................... 23,400 $ 676,962
Kohl's Corp.* ........................................ 15,200 819,736
Safeway, Inc. ........................................ 44,558 948,640
Wal-Mart Stores, Inc. ................................ 31,500 1,683,675
------------
4,129,013
------------
STAPLES--7.3%
Altria Group, Inc. ................................... 18,000 353,340
Coca-Cola Co. (The) .................................. 164,147 9,356,379
Hanesbrands, Inc.* ................................... 5,688 137,138
Kraft Foods, Inc., - Class A ......................... 12,456 338,554
PepsiCo, Inc. ........................................ 43,600 2,650,880
Philip Morris International, Inc. .................... 18,000 867,420
Sara Lee Corp. ....................................... 45,506 554,263
------------
14,257,974
------------
TECHNOLOGY--16.1%
Check Point Software
Technologies Ltd.* ................................ 30,100 1,019,788
Cisco Systems, Inc.* ................................. 32,700 782,838
Hewlett-Packard Co. .................................. 57,923 2,983,614
Intel Corp. .......................................... 776,785 15,846,414
International Business Machines
Corp. ................................................ 39,708 5,197,777
Microsoft Corp. ...................................... 139,643 4,257,715
Oracle Corp. ......................................... 42,500 1,042,950
------------
31,131,096
------------
TRANSPORTATION--2.5%
Union Pacific Corp. .................................. 75,844 4,846,432
------------
UTILITIES--2.5%
Verizon Communications, Inc. ......................... 143,830 4,765,088
------------
Total Common Stocks
(Cost: $39,370,606) ............................... 192,804,999
------------
TOTAL INVESTMENTS IN SECURITIES
(Cost: $39,370,606) ............................... 99.5% $192,804,999
Other assets in excess of liabilities ................ 0.5% 1,044,097
------- ------------
NET ASSETS ........................................... 100.0% $193,849,096
======= ============

- ----------
* Non-Income Producing

PLC--Public Limited Company.

ADR--American Depositary Receipt.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

SCHEDULE OF INVESTMENTS (CONCLUDED)
DECEMBER 31, 2009

FAIR VALUE MEASUREMENTS. The inputs and valuation techniques used to measure
fair value of the Fund's investments are summarized into three levels as
described below:

- - Level 1 -- quoted prices in active markets for identical securities

- - Level 2 -- other significant observable inputs (including quoted prices for
similar securities, interest rates, prepayment speeds, credit risk, etc.)

- - Level 3 -- significant unobservable inputs (including the Fund's own
assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities.

The following is a summary of inputs used, as of December 31, 2009, in valuing
the Fund's investments carried at value:

Level 2 Level 3
Total Level 1 Significant Significant
Value at Quoted Observable Unobservable
Fund 12/31/09 Prices Inputs Inputs
- ---- ------------ ------------ ----------- ------------

CHESTNUT STREET EXCHANGE FUND
Assets Investments in Securities* .. $192,804,999 $192,804,999 $-- $--

* See details of industry breakout.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2009

ASSETS
Investments in securities, at value (cost $39,370,606) ............. $192,804,999
Cash ............................................................... 1,660,218
Dividends receivable ............................................... 375,069
Interest receivable ................................................ 64
Prepaid expenses ................................................... 17,235
------------
Total assets .................................................... 194,857,585
------------
LIABILITIES
Payables for:
Distributions ................................................... 889,671
Advisory fees ................................................... 58,558
Managing general partners ....................................... 8,736
Custodian fees .................................................. 7,033
Transfer agent fees ............................................. 1,674
Accrued expenses and other liabilities ............................. 42,817
------------
Total liabilities ............................................ 1,008,489
------------
NET ASSETS ......................................................... $193,849,096
============
NET ASSETS CONSISTED OF:

Other capital -- paid-in or reinvested .......................... $ 42,595,785
Accumulated net realized losses on securities ................... (2,181,082)
Net unrealized appreciation on investments ...................... 153,434,393
------------
Net Assets (Applicable to 614,206 partnership shares outstanding) .. $193,849,096
============
NET ASSET VALUE PER SHARE ($193,849,096 / 614,206 SHARES) .......... $ 315.61
============
NET ASSETS APPLICABLE TO SHARES OWNED BY:

Limited partners (614,113 shares) .................................. $193,819,744
Managing general partners (93 shares) .............................. 29,352
------------
Total net assets (614,206 shares) .................................. $193,849,096
============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2009

INVESTMENT INCOME
Dividends .................................................... $ 4,997,146
Interest ..................................................... 1,301
------------
Total investment income ................................... 4,998,447
------------
EXPENSES
Investment advisory services ................................. 630,361
Managing general partners' compensation,
officer's salary and expenses ............................. 95,695
Legal fees ................................................... 63,746
Printing ..................................................... 31,116
Insurance .................................................... 23,146
Custodian fees ............................................... 21,518
Audit fees ................................................... 18,000
Transfer agent fees .......................................... 9,642
Miscellaneous ................................................ 13,736
------------
Total expenses ............................................ 906,960
------------
Net investment income .................................. 4,091,487
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS
Realized gain on sale of
investment securities ..................................... 607,009
Realized gain from
securities transactions:
distributed on redemption of
partnership shares ........................................ 20,001,156
Unrealized appreciation on
investments
Beginning of year ....................... $143,757,189
End of year ............................. 153,434,393
------------
Net change in unrealized appreciation ........................... 9,677,204
------------
Net realized and unrealized gain from
investments .................................................. 30,285,369
------------
Net increase in net assets resulting
from operations .............................................. $ 34,376,856
============

STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31,

2009 2008
------------ -------------

INCREASE /(DECREASE) IN
NET ASSETS
OPERATIONS:
Net investment
income ................................ $ 4,091,487 $ 5,706,714
Net realized gain/(loss)
from securities
transactions, for
federal income tax
purposes net gain/(loss)
is $1,415,829
and $(3,100,083) ...................... 607,009 (3,118,303)
Excess of market value
over book value of
securities distributed
upon redemption of
partnership shares .................... 20,001,156 14,991,707
Net change in unrealized
appreciation/(depreciation)
on investments ........................ 9,677,204 (107,335,252)
------------ -------------
Increase/(decrease) in net
assets resulting
from operations ....................... 34,376,856 (89,755,134)
------------ -------------
DISTRIBUTIONS TO PARTNERS FROM:
Net investment income .................... (4,092,954) (5,708,668)
------------ -------------
CAPITAL SHARE TRANSACTIONS:
Net asset value of 1,644
and 2,328 shares
issued in lieu of cash
distributions ......................... 440,144 782,761
Cost of 79,240 and
50,569 shares
repurchased ........................... (21,673,172) (16,797,525)
------------ -------------
Decrease in net assets
from capital share
transactions .......................... (21,233,028) (16,014,764)
------------ -------------
Total increase/(decrease)
in net assets ......................... 9,050,874 (111,478,566)
NET ASSETS:
Beginning of year ........................ 184,798,222 296,276,788
------------ -------------
End of year * ............................ $193,849,096 $ 184,798,222
============ =============

- ----------
* Includes undistributed net investment income of $0 and $1,467,
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 YEAR)

YEARS ENDED DECEMBER 31,
----------------------------------------------------
2009 2008 2007 2006 2005
-------- -------- -------- -------- --------

Net Asset Value, Beginning of Year ...... $ 267.13 $ 400.30 $ 377.68 $ 337.28 $ 333.18
-------- -------- -------- -------- --------
Income/(Loss) From Investment
Operations:
Net investment income ................... 6.28 8.06 7.62 6.88 6.19
Net gain/(loss) on securities (both
realized and unrealized) ............. 48.48 (133.17) 22.62 40.40 4.10
-------- -------- -------- -------- --------
Total from investment operations .. 54.76 (125.11) 30.24 47.28 10.29
Less Distributions:
From net investment income ........... (6.28) (8.06) (7.62) (6.88) (6.19)
-------- -------- -------- -------- --------
Net Asset Value, End of Year ............ $ 315.61 $ 267.13 $ 400.30 $ 377.68 $ 337.28
-------- -------- -------- -------- --------
Total Return ............................ 20.94% (31.56)% 8.05% 14.13% 3.12%
======== ======== ======== ======== ========
Ratios/Supplemental Data:
Net Assets, End of Year (000's) ...... $193,849 $184,798 $296,277 $290,580 $271,390
Ratios to average net assets:
Operating expenses ................ 0.51% 0.46% 0.44% 0.44% 0.43%
Net investment income ............. 2.31% 2.33% 1.91% 1.93% 1.82%
Portfolio Turnover Rate ................. 1.06% 0.29% 0.68% 0.99% 0.82%

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009

(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 regulated investment
company. 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 and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of increases and decreases in net assets from operations 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 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, 2009, the Fund had a capital loss
carryforward of $2,181,082, which expires December 31, 2016.
Therefore, no provision for federal income taxes is recorded in the
financial statements.

Management has analyzed the Fund's tax positions taken on federal
income tax returns for all open tax years (December 31, 2006 - 2009)
and has concluded that no provision for federal income tax is required
in the Fund's financial statements. The Fund's federal and state
income and federal excise tax returns for tax years for which the
applicable statutes of limitations have not expired are subject to
examination by the Internal Revenue Service and state departments of
revenue.

At December 31, 2009, the federal tax cost, aggregate gross unrealized
appreciation and depreciation of securities held by the Fund were as
follows:

Federal tax cost $ 36,962,464
------------
Gross unrealized appreciation 157,316,825
Gross unrealized depreciation (1,474,290)
------------
Net unrealized appreciation $155,842,535
============

The difference between book basis and tax basis of investments is
attributable to the use of the individual partners' tax basis for those
securities contributed to the Fund at its inception as required by law.

BlackRock Capital Management, Inc. ("BCM" or the "Adviser"), a wholly owned
subsidiary of BlackRock Institutional Management, Inc., serves as
Investment Adviser to the Fund pursuant to an advisory agreement dated
September 29, 2006 ("Advisory Agreement"). BCM provides advisory,
accounting and administrative services to the Fund. All BlackRock entities
named are subsidiaries of BlackRock, Inc. in which PNC Bank 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.

PNC Global Investment Servicing (U.S.) Inc., a member of the PNC Financial
Services Group, Inc. ("PNC"), serves as the Fund's transfer and dividend
disbursing agent.

PFPC Trust Company serves as the Fund's custodian.

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 $95,695.

Legal fees amounting to $63,746 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 $2,232,909 and $1,840,516,
respectively, for the year ended December 31, 2009.

(E) DISTRIBUTIONS TO SHAREHOLDERS

Net investment income and capital gain distributions are determined in
accordance with federal income tax regulations, which may differ from
accounting principles generally accepted in the United States of America.
The primary difference applicable to the Fund's distributions is the
requirement to pass through 40% of its aggregate expenses to the partners
of the Fund. This is required because the Fund has fewer than 500 partners
and does not continuously offer shares. The partners treat this
pass-through of expenses as a distribution of net investment income and a
corresponding miscellaneous itemized deduction of investment expense.

The tax character of distributions paid during 2009 and 2008 was as
follows:

2009 2008
---------- ----------

Ordinary income ..... $4,455,738 $6,162,873
Investment expense .. (362,784) (454,205)
---------- ----------
$4,092,954 $5,708,668
========== ==========

For federal income tax purposes, distributions of net investment income and
short-term capital gains are treated as ordinary income dividends.

(F) IN-KIND DISTRIBUTION OF SECURITIES

During the year ended December 31, 2009, the Fund distributed portfolio
securities in lieu of cash for most shareholder redemptions. The value of
these redemptions was as follows:

NET REALIZED FUND
VALUE OF THE GAIN INCLUDED SHARES
REDEMPTIONS IN REDEMPTIONS REDEEMED
- ------------ -------------- --------

$21,669,439 $20,001,156 79,227

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) TAX MATTERS

At December 31, 2009, the components of distributable earnings on a tax
basis were as follows:

Capital loss carryover ...................... $ (2,181,082)
Net unrealized appreciation of investments .. 155,842,535
------------
$153,661,453
============

On December 31, 2009, undistributed net realized gain/accumulated realized
loss on securities was decreased by $19,192,336 and additional paid-in
capital was increased by $19,192,336 due to permanent differing book and
tax treatment of realized gains and losses attributable to the differences
in the book and tax cost of securities described in Note B. Net assets of
the Fund were unaffected by this change.

(I) NEW ACCOUNTING PRONOUNCEMENT

In January 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures
about Fair Value Measurements." ASU No. 2010-06 amends FASB Accounting
Standards Codification Topic 820, Fair Value Measurements and Disclosures,
to require additional disclosures regarding fair value measurements.
Certain disclosures required by ASU No. 2010-06 are effective for interim
and annual reporting periods beginning after December 15, 2009, and other
required disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years.
Management is currently evaluating the impact ASU No. 2010-06 will have on
its financial statement disclosures.

(J) SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Fund
through February 16, 2010, the date the financial statements were issued,
and has determined that there was the following subsequent event:

On February 2, 2010, PNC entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement") with The Bank of New York Mellon Corporation
("BNY Mellon"). Upon the terms and subject to the conditions set forth in
the Stock Purchase Agreement, which has been approved by the board of
directors of each company, PNC will sell to BNY Mellon (the "Stock Sale")
100% of the issued and outstanding shares of PNC Global Investment
Servicing (U.S.) Inc., an indirect, wholly-owned subsidiary of PNC.

The Stock Sale includes PNC Global Investment Servicing (U.S.) Inc. and
PFPC Trust Company and is expected to close in the third quarter of 2010.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE PARTNERS OF
CHESTNUT STREET EXCHANGE FUND

We have audited the accompanying statement of assets and liabilities,
including the schedule of investments of Chestnut Street Exchange Fund (the
"FUND"), as of December 31, 2009, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of
the two years in the period then ended and the financial highlights for
each of the five years in the period then ended. These financial statements
and financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements
and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements and financial highlights are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 2009 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of Chestnut Street Exchange Fund as of December 31, 2009, the results of
its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended and the financial highlights
for each of the five years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America.

(BBD, LLP)
BBD, LLP

PHILADELPHIA, PENNSYLVANIA
FEBRUARY 16, 2010

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

ADDITIONAL INFORMATION (UNAUDITED)

ANNUAL APPROVAL OF INVESTMENT ADVISORY AGREEMENT.

At a meeting held on July 29, 2009, the Managing General Partners of the Fund,
including the Independent Managing General Partners, approved the continuation
of the investment advisory agreement with BlackRock Capital Management, Inc.
("BCM") with respect to the Fund for an additional one-year period. In
connection with their approval, the Managing General Partners considered, with
the assistance of independent counsel, their legal responsibilities and reviewed
the nature and quality of services provided to the Fund and BCM's experience and
qualifications. Among other items, the Managing General Partners considered a
report that included, among other things, (1) a comparison of the assets,
advisory fee and total expense ratio of shares of the Fund to those of the
BlackRock Funds Exchange Portfolio (the "BlackRock Portfolio"), the other
exchange fund managed by BCM; (2) a comparison of the performance of the Fund to
its benchmark (S&P 500) as well as the Dow Jones Industrial Average and its
Lipper peer group; (3) compensation or possible benefits to BCM and its
affiliates, including PNC Global Investment Servicing, arising from its
relationship with the Fund; (4) a discussion of the current business activities
of BCM's parent, BlackRock Inc. ("BlackRock"); (5) information about the
services provided to the Fund, the personnel involved in the management of the
Fund and how they are compensated; (6) a description of the procedures for
determining that the Fund receives best execution and for allocating portfolio
opportunities among the Fund and other advisory clients of BCM; (7) the nature
of BCM's internal controls to monitor portfolio compliance; and (8) the costs of
the services to be provided and the Adviser's profits with respect to the Fund.
The Board determined that economies of scale was not relevant since the Fund was
closed to new investors.

After discussion, the Managing General Partners concluded that BCM had the
capabilities, resources and personnel necessary to manage the Fund's Portfolio.
The Managing General Partners also concluded that, based on the services that
BCM would provide to the Fund under the investment advisory agreement, the fee
was fair and equitable with respect to the Fund. The Managing General Partners
considered the fees paid by the Fund in relation to BlackRock Portfolio's fees,
as well as the Fund's performance. After evaluating the above information, the
Managing General Partners concluded that the advisory fee paid by the Fund is
fair and equitable. The Managing General Partners determined that the services
provided by BCM were adequate.

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.

TAX INFORMATION

As required by the Internal Revenue Code, 100% of ordinary income dividends paid
for the year ended December 31, 2009 have been designated as: 1) qualified for
the reduced tax rate under The Job and Growth Tax Relief Reconciliation Act of
2003, and 2) eligible for the dividend received deduction for corporate
shareholders.

CHESTNUT STREET EXCHANGE FUND
(A CALIFORNIA LIMITED PARTNERSHIP)

INFORMATION ON THE MANAGING GENERAL
PARTNERS AND OFFICERS OF THE FUND

The list below provides certain information about the identity and business
experience of the Managing General Partners and officers of the Fund. The Fund's
Statement of Additional Information includes additional information about the
Fund's Managing General Partners, which may be obtained from the Fund free of
charge by calling 1-800-852-4750.

TERM OF OFFICE: The Fund's partnership agreement provides that each Managing
General Partner holds officer until the earliest of (a) the election of his or
her successor; or (b) the date a Managing General Partner dies, resigns, becomes
insane, is adjudicated as bankrupt or is removed by a majority of the partners.
The officers of the Fund are elected by the Managing General Partners and each
officer holds office for one year or until he or she shall resign or be removed
or until his or her successor is elected and qualified.

NUMBER OF
PORTFOLIOS
IN FUND OTHER
POSITION WITH PRINCIPAL COMPLEX(1) DIRECTORSHIP(2)
THE FUND AND OCCUPATIONS DURING OVERSEEN BY HELD BY
LENGTH OF PAST 5 YEARS AND MANAGING MANAGING
NAME, ADDRESS, AND AGE TIME SERVED CURRENT AFFILIATIONS GENERAL PARTNERS GENERAL PARTNER
- ------------------------ ----------------- ----------------------------------- ---------------- ----------------

INTERESTED MANAGING
GENERAL PARTNERS

Richard C. Caldwell* Managing Advisory Director, PNC Florida, 1 None
c/o Edward J. Roach General Partner FSB; Advisory Director in
103 Bellevue Parkway since 1997 Philadelphia and Southern New
Wilmington, DE 19809 Jersey region for PNC Bank;
Age: 65 Consultant for PNC Florida;
Chairman, Florida Advisory Council;
formerly, President and Chief
Executive Officer, PNC Bank FSB
from May 1998 until July 1999;
Director, JSC, Inc.
since February 1996 (investment
holding company); Director, DR Inc.
and Dingess-Rum Properties Inc.
since April 1994 (investment
holding company).

Edward J. Roach* Managing Certified Public Accountant; 1 None
103 Bellevue Parkway General Partner President and/or Treasurer of 1
Wilmington, DE 19809 since 2000, Chief other investment company
Age: 85 Compliance advised by BCM, 1988-2009.
Officer since
2004, President
since 2002,
Treasurer since
1981

DISINTERESTED MANAGING
GENERAL PARTNERS

Gordon L. Keen, Jr. Managing Senior Vice President, Law & 1 None
c/o Edward J. Roach General Partner Corporate Department, Airgas,
103 Bellevue Parkway since 2006 Inc. (Radnor, PA-based distributor
Wilmington, DE 19809 of industrial, medical and special-
Age: 65 ty gases, and welding and safety
equipment and supplies) from
January 1992 to January 2006.

Langhorne B. Smith Managing Retired. President and Director, 1 None
c/o Edward J. Roach General Partner The Sandridge Corporation
103 Bellevue Parkway since 1997 (private investment company);
Wilmington, DE 19809 Director, Claneil Enterprises, Inc.
Age: 73 (private investment company).

David R. Wilmerding, Jr. Managing Retired. Chairman, Wilmerding & 1 Director, Beaver
c/o Edward J. Roach General Partner Associates (investment advisers) Management
103 Bellevue Parkway since 1976; from February 1989 to 2006. Corporation
Wilmington, DE 19809 Chairman of the
Age: 74 Managing General
Partners since
2006

OFFICERS

Michael P. Malloy Secretary Secretary of the Chestnut Street N/A N/A
Drinker Biddle & Reath since 2001 Exchange Fund; Partner in the
One Logan Square law firm of Drinker Biddle &
18th and Cherry Streets Reath LLP.
Philadelphia, PA 19103
Age: 50

James G. Shaw Assistant Vice President since 1995 and N/A N/A
103 Bellevue Parkway Treasurer Since Director since 2005; PNC Global
Wilmington, DE 19809 2009 Investment Services (U.S.), Inc.
Age: 49

- ----------
* Messrs. Caldwell and Roach are "interested persons" of the Fund as that
term is defined in the Investment Company Act of 1940 ("1940 Act"). Mr.
Caldwell owns stock of an affiliate of the adviser and Mr. Roach is an
employee of the Fund.

(1) The Fund Complex includes all registered investment companies that are
advised by BlackRock Capital Management, Inc. or one of its affiliates.

(2) Directorships of companies required to report to the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended
(i.e., "public companies") or other investment companies registered under
the 1940 Act.

[THIS PAGE INTENTIONALLY LEFT BLANK]

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

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

TRANSFER AGENT
PNC Global Investment
Servicing (U.S.) Inc.
P.O. Box 8950
Wilmington, Delaware 19899
(800) 852-4750

[CHESTNUT STREET EXCHANGE FUND LOGO]

Annual Report
December 31, 2009

Chestnut Street Exchange
Fund

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

ITEM 2. CODE OF ETHICS.

(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.

(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics description.

(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, that relates to one or
more of the items set forth in paragraph (b) of this item's
instructions.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The registrant's board of managing general partners has determined that the
registrant has at least one "audit committee financial expert" (as defined in
Item 3 of Form N-CSR) serving on its audit committee. Langhorne B. Smith is the
"audit committee financial expert" and is "independent" (as each item is defined
in Item 3 of Form N-CSR).

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES

(a) The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that
are normally provided by the accountant in connection with statutory
and regulatory filings or engagements for those fiscal years are
$19,000 for 2008 and $19,000 for 2009.

AUDIT-RELATED FEES

(b) The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are
reasonably related to the performance of the audit of the

registrant's financial statements and are not reported under paragraph
(a) of this Item are $0 for 2008 and $0 for 2009.

TAX FEES

(c) The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax
compliance, tax advice, and tax planning are $0 for 2008 and $0 for
2009.

ALL OTHER FEES

(d) The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than
the services reported in paragraphs (a) through (c) of this Item are
$0 for 2008 and $0 for 2009.

(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

The Audit Committee does not have pre-approved policies and
procedures. Instead, the Audit Committee approves on a case-by-case
basis each audit or non-audit service before the accountant is engaged
by the Registrant.

(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are
as follows:

(b) N/A

(d) N/A

(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was 0%.

(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant was $0 for 2008 and $0 for 2009.

(h) Not applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. INVESTMENTS.

(a) 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.

(b) Not applicable.

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") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report, based on the evaluation of
these controls and procedures required by Rule 30a-3(b) under the 1940
Act (17 CFR 270.30a-3(b)) and Rule 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.15d-15(b)).

(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
(17 CFR 270.30a-3(d))), 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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.

(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 February 26, 2010
-----------------

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

Date February 26, 2010
-----------------

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