LETTER TO STOCKHOLDERS
- --------------------------------------------------------------------------------
We are pleased to submit the financial statements of the Company for the six
months ended June 30, 1996, a schedule of investments and a list of principal
changes in portfolio securities for the second quarter and the report of the
independent accountants.
Net assets of the Company at June 30, 1996 were $22.95 per share as compared
with $21.36 per share at December 31, 1995 on the 46,165,517 shares outstanding
on each date. The total return on net assets (with reinvestment of income and
capital gains distributions) for the period was 8.6%. On March 1, 1996, a
distribution of $0.12 per share was paid consisting of $0.03 from 1995 short-
term capital gain, $0.02 from 1995 investment income and $0.07 from 1996
investment income. All are taxable in 1996. A regular 1996 investment income
dividend of $0.12 per share was paid to shareholders on June 1, 1996, and
another $0.12 investment income dividend has been declared payable September 1,
1996 to shareholders of record August 19, 1996.
Net investment income for the six months ended June 30, 1996 amounted to
$12,140,425 compared with $10,880,597 for the same period in 1995. These
earnings are equal to $0.26 and $0.25 respectively, per share, on the average
number of shares outstanding during each period.
Net capital gain realized on investments for the six months ended June 30, 1996
amounted to $26,945,418, the equivalent of $0.58 per share.
The Company is an internally managed equity fund whose investment policy is
essentially based on the primary objectives of preservation of capital, the
attainment of reasonable income from investments and, in addition, an
opportunity for capital appreciation.
By order of the Board of Directors,
/s/ Douglas G. Ober /s/Joseph M. Truta
Douglas G. Ober, Joseph M. Truta,
Chairman and Chief President
Executive Officer
July 19, 1996
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
June 30, 1996
<TABLE>
<S> <C>
ASSETS
Investments* at value:
Non-controlled affiliate, Petroleum & Resources
Corporation (cost $22,153,015) $ 34,653,493
Common stocks and convertible securities
(cost $574,678,880) 916,552,879
Short-term investments (cost $107,080,419) 107,080,419 $1,058,286,791
- ---------------------------------------------------------------------------------------------------------------------------
Cash 512,320
Receivables:
Investment securities sold 213,373
Dividends and interest 2,433,286
Prepaid expenses and other assets 3,143,289
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets 1,064,589,059
LIABILITIES
Investment securities purchased 1,452,839
Open option contracts at value (proceeds $1,732,668) 1,577,500
Accrued expenses 1,881,792
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities 4,912,131
NET ASSETS $1,059,676,928
===========================================================================================================================
NET ASSETS
Common Stock at par value $1.00 per share, authorized 75,000,000
shares; issued and outstanding 46,165,517 shares $ 46,165,517
Additional capital surplus 627,210,838
Undistributed net investment income 4,292,633
Undistributed net realized gain on investments 27,478,295
Unrealized appreciation on investments 354,529,645
NET ASSETS APPLICABLE TO COMMON STOCK $1,059,676,928
===========================================================================================================================
NET ASSET VALUE PER SHARE OF COMMON STOCK $22.95
</TABLE>
* See Schedule of Investments on pages 6 through 8.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1996
<TABLE>
<S> <C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 8,763,901
From non-controlled affiliate 423,861
Interest 4,937,637
- ---------------------------------------------------------------------------------------------------------------------------
Total income 14,125,399
Expenses:
Investment research 736,745
Administration and operations 375,820
Directors' fees 75,150
Reports and stockholder communications 129,723
Transfer agent, registrar and custodian expenses 208,520
Auditing services 30,490
Legal services 85,500
Occupancy and other office expenses 124,356
Travel, telephone and postage 79,239
Other 139,431
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 1,984,974
Net Investment Income 12,140,425
Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 26,911,051
Net realized gain distributed by regulated investment company (non-controlled affiliate) 34,367
Change in unrealized appreciation on investments 45,439,896
- ---------------------------------------------------------------------------------------------------------------------------
Net Gain on Investments 72,385,314
Change in Net Assets Resulting from Operations $84,525,739
===========================================================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, 1996 Dec. 31, 1995
<S> <C>
From Operations:
Net investment income $ 12,140,425 $ 22,394,045
Net realized gain on investments 26,945,418 50,917,119
Change in unrealized appreciation on investments 45,439,896 155,573,255
- ---------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 84,525,739 228,884,419
Dividends to Stockholders from:
Net investment income (9,694,759) (23,082,795)
Net realized gain from investment transactions (1,384,966) (50,604,589)
- ---------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (11,079,725) (73,687,384)
From Capital Share Transactions:
Value of common shares issued in payment of optional distributions -0- 32,736,279
- ---------------------------------------------------------------------------------------------------------------------------
Total increase in net assets 73,446,014 187,933,314
Net Assets:
Beginning of period 986,230,914 798,297,600
- ---------------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $4,292,633 and $1,846,967, respectively) $1,059,676,928 $986,230,914
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Adams Express Company (the Company) is registered under the Investment
Company Act of 1940 as a diversified investment company. The Company's
investment objectives as well as the nature and risk of its investment
transactions are set forth in the Company's registration statement.
Security Valuation -- Investments in securities traded on a national security
exchange are valued at the last reported sale price on the day of valuation.
Over-the-counter and listed securities for which a sale price is not available
are valued at the last quoted bid price. Short-term investments are stated at
cost which, when combined with accrued interest receivable, approximates value.
Options are valued at the last sale price or last quoted asked price.
Affiliated Companies -- Investments in companies 5% or more of whose outstanding
voting securities are held by the Company are defined as "Affiliated Companies"
in Section 2(a)(3) of the Investment Company Act of 1940.
Security Transactions and Investment Income -- Investment transactions are
accounted for on the trade date. Gain or loss on sales of securities and options
is determined on the basis of identified cost. Dividend income and distributions
to shareholders are recognized on the ex-dividend date, and interest income is
recognized on the accrual basis.
2. Federal Income Taxes
The Company's policy is to distribute all of its taxable income to its
shareholders in compliance with the requirements of the Internal Revenue Code
applicable to regulated investment companies. Therefore, no federal income tax
provision is required. For federal income tax purposes, the identified cost of
securities including options, at June 30, 1996 was $704,999,645, and net
unrealized appreciation aggregated $355,019,814, of which the related gross
unrealized appreciation and depreciation were $363,029,746 and $8,009,932,
respectively.
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Accordingly, periodic
reclassifications are made within the Company's capital accounts to reflect
income and gains available for distribution under income tax regulations.
3. Investment Transactions
Purchases and sales of portfolio securities, other than options and short-term
investments, during the six months ended June 30, 1996 were $109,452,610 and
$102,220,983, respectively. Option transactions comprised an insignificant
portion of operations during the period ended June 30, 1996. All investment
decisions are made by a committee, and no one person is primarily responsible
for making recommendations to that committee.
4. Capital Stock
The Company may purchase shares of its Common Stock from time to time at such
prices and amounts as the Board of Directors may deem advisable. No purchases
were made during the six months ended June 30, 1996.
The Company has 10,000,000 unissued preferred shares without par value.
The Company has an employee incentive stock option and stock appreciation rights
plan which provides for the issuance of options and stock appreciation rights
for the purchase of up to 2,050,000 shares of the Company's common stock at 100%
of the fair market value at date of grant. There were 271,334 stock options and
stock appreciation rights that expired unissued. Options are exercisable
beginning not less than one year after the date of grant and extend over ten
years from the date of grant. Stock appreciation rights are exercisable
beginning not less than two years after the date of grant and extend over the
period during which the option is exercisable. The stock appreciation rights
allow the optionees to surrender their rights to exercise their options and
receive cash or shares in an amount equal to the difference between the option
price and the fair market value of the common stock at the date of surrender.
Under the plan, the exercise price of the options and related stock appreciation
rights is reduced by the per share amount of capital gain paid by the Company
during subsequent years. During the six months ended June 30, 1996, no options
or stock appreciation rights were granted; stock appreciation rights relating to
35,500 stock option shares were exercised at market prices of $18.625-$19.125
per share and the stock options relating to these rights which had exercise
prices of $13.170-$16.455 per share were cancelled. At June 30, 1996, there were
outstanding exercisable options to purchase 162,500 common shares at
$8.740-$16.425 per share and unexercisable options to purchase 319,250 common
shares at $14.4550-$18.4075 per share. At June 30, 1996, there were 943,376
shares available for future option grants.
5. Retirement Plans
The Company provides retirement benefits for its employees under a
non-contributory qualified defined benefit pension plan. The benefits are based
on years of service and compensation during the last 36 months of employment.
The Company's current funding policy is to contribute annually to the plan only
those amounts that can be deducted for federal income tax purposes.
The actuarially computed net pension cost credit for the six months ended June
30, 1996 was $217,757 and consisted of service expense of $87,558, interest
expense of $150,274, expected return on plan assets of $352,692, and a net
amortization credit of $102,897.
In determining the actuarial present value of the projected benefit obligation,
the interest rate used for the weighted-average discount rate and the expected
rate of annual salary increases was 7.0% and the expected long-term rate of
return on plan assets was 8.0%.
On January 1, 1996, the accumulated benefit obligation, including vested
benefits, was $3,553,626. The fair value of the plan assets was $8,912,506 and
the projected benefit obligation for service rendered to date was $4,388,767.
This resulted in excess plan assets of $4,523,739 of which $747,869 is the
remaining portion of the unrecognized net asset existing at January 1, 1987
which is being amortized over 15 years. Prepaid pension cost included in other
assets at June 30, 1996 was $2,878,214.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
In addition, the Company has a nonqualified unfunded benefit plan which provides
employees with defined retirement benefits to supplement the qualified plan. The
Company does not provide postretirement medical benefits.
6. Expenses
Aggregate remuneration paid or accrued during the six months ended June 30, 1996
to officers and directors amounted to $1,013,400 of which $75,150 was paid as
fees to directors who were not officers.
Research, accounting and other office services provided to and reimbursed by the
Company's non-controlled affiliate, Petroleum & Resources Corporation, amounted
to $290,720 for the six months ended June 30, 1996.
7. Portfolio Securities Loaned
The Company makes loans of securities to brokers, secured by cash deposits, U.S.
Government securities, or bank letters of credit, the value of which exceeds the
market value of such loaned securities. At June 30, 1996, the value of security
loans outstanding was $13,538,750.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
================================================================================================================================
June 30, June 30, Year Ended December 31
--------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
<S> <C>
Per Share Operating Performance
Net asset value, beginning of period $21.36 $17.98 $17.98 $19.78 $20.48 $20.21 $16.82
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.26 0.25 0.50 0.51 0.48 0.46 0.53
Net realized gains and change in
unrealized appreciation and other
changes 1.57 2.25 4.54 (0.71) 1.18 1.43 4.49
- --------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.83 2.50 5.04 (0.20) 1.66 1.89 5.02
Less distributions
Dividends from net investment
income (0.21) (0.21) (0.52) (0.50) (0.45) (0.46) (0.54)
Distributions from net realized gains (0.03) (0.03) (1.14) (1.10) (1.18) (1.16) (1.09)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.24) (0.24) (1.66) (1.60) (1.63) (1.62) (1.63)
================================================================================================================================
Dilution resulting from the rights
offering -- -- -- -- (0.73) -- --
Net asset value, end of period $22.95 $20.24 $21.36 $17.98 $19.78 $20.48 $20.21
================================================================================================================================
Per share market price, end of period $19.125 $17.25 $18.50 $15.625 $17.875 $20.00 $19.00
Total Investment Return
Based on market price 4.7% 12.0% 29.5% (3.7)% (2.7)% 14.1% 41.0%
Ratios/Supplemental Data
Net assets, end of period
(in 000's) $1,059,677 $898,302 $986,231 $798,298 $840,610 $696,925 $661,896
Ratio of expenses to average
net assets 0.39%(dagger) 0.45%(dagger) 0.46% 0.33% 0.36% 0.49% 0.58%
Ratio of net investment income to
average net assets 2.36%(dagger) 2.57%(dagger) 2.51% 2.65% 2.33% 2.30% 2.74%
Portfolio turnover 22.41%(dagger) 23.25%(dagger) 23.98% 19.23% 21.40% 17.97% 17.64%
Average brokerage commission rate $0.07 -- -- -- -- -- --
Number of shares outstanding at
end of period (in 000's) 46,166 44,390 46,166 44,390 42,498 34,027 32,747
</TABLE>
(dagger) Ratios presented on an annualized basis.
This report, including the financial statements herein, is transmitted to the
stockholders of The Adams Express Company for their information. It is not a
prospectus, circular or representation intended for use in the purchase or sale
of shares of the Company or of any securities mentioned in the report.
5
<PAGE>
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
June 30, 1996
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
<S> <C>
Stocks And Convertible
Securities -- 89.8%
Basic Materials -- 3.1%
Air Products & Chemicals, Inc. 160,000 $ 9,220,000
Consolidated Papers, Inc. 100,000 5,200,000
Inco Ltd. 7.75% Conv.
Debs. due 2016 $5,000,000 5,250,000
Kimberly-Clark Corp. 170,000 13,132,500
- --------------------------------------------------------------------------------------
32,802,500
Capital Goods -- 9.8%
Boeing Co. 89,100 7,762,838
Cemex, S.A. de C.V. 4.25%
Conv. Sub. Debs. due
1997(B) $4,000,000 3,720,000
Cooper Industries, Inc. 7.05%
Conv. Sub. Debs.
due 2015 $4,540,000 4,891,850
Deere & Co. 270,000 10,800,000
Emerson Electric Co. 36,500 3,298,688
General Electric Co. 350,000 30,362,500
The BFGoodrich Co. 110,000 4,111,250
Granite Construction Inc. 365,000 8,395,000(dagger)
Masco Corp. 40,000 1,210,000
Minnesota Mining &
Manufacturing Co. 125,000 8,625,000
Pall Corp. 265,000 6,393,125
Rockwell International Corp. 250,000 14,343,750
103,914,001
- --------------------------------------------------------------------------------------
Consumer -- 15.4%
Consumer Distribution -- 2.7%
Borders Group, Inc. (C) 205,000 6,611,250
Dillard Department Stores, Inc. 200,000 7,300,000
Home Depot, Inc. 263,870 14,248,980
- --------------------------------------------------------------------------------------
28,160,230
Consumer Services -- 3.7%
Brinker International, Inc. (C) 300,000 4,500,000
Cracker Barrel Old Country
Store, Inc. 350,000 8,487,500(dagger)
McDonald's Corp. 315,000 14,726,250
Scandinavian Broadcasting
System SA 7.25% Conv. Sub.
Debs. due 2005 $3,000,000 3,240,000(dagger)
Time Warner Inc. 150,000 5,887,500
US WEST Media Group, Inc. (C) 150,000 2,737,500
- --------------------------------------------------------------------------------------
39,578,750
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
<S> <C>
Consumer Staples -- 9.0%
CPC International Inc. 127,500 $ 9,180,000
Campbell Soup Co. 190,000 13,395,000
Coca-Cola Co. 180,000 8,820,000
Crown Cork &
Seal Co., Inc. 180,000 8,100,000
Duracell International Inc. 265,000 11,428,125
Houghton Mifflin Co. 217,900 10,840,525
International Flavors &
Fragrances, Inc. 190,000 9,048,750
Nabisco Holdings Corp. 50,000 1,768,750
PepsiCo, Inc. 320,000 11,360,000
Procter & Gamble Co. 125,000 11,328,125
- --------------------------------------------------------------------------------------
95,269,275
Energy -- 10.0%
======================================================================================
British Petroleum plc ADR 110,577 11,817,917
Consolidated Natural Gas Co. 115,800 6,050,550
Enron Corp. 6.25%
Exch. Notes due 1998 411,900 10,657,913
MCN Corp. 400,000 9,750,000
Mobil Corp. 60,000 6,742,500
Petroleum & Resources
Corporation (D) 1,145,570 34,653,493
Royal Dutch Petroleum Co. 55,000 8,456,250
Schlumberger Ltd. 54,200 4,566,350
Texaco Inc. 89,000 7,464,875
Unocal Corp. $3.50 Conv. Pfd. (B) 100,000 5,600,000
- --------------------------------------------------------------------------------------
105,759,848
Financial -- 11.8%
Banking -- 6.8%
Associates First Capital Corp.
Ser. A(C) 75,000 2,868,750
Federal Home Loan Mortgage Corp. 90,000 7,695,000
Great Western Financial Corp. 425,000 10,146,875
Mellon Bank Corp. 165,000 9,405,000
National City Corp. 80,000 2,810,000
Norwest Corp. 290,000 10,113,750
Peoples Heritage Financial
Group 237,000 4,828,875(dagger)
Provident Bankshares Corp. 131,250 4,331,250(dagger)
Wachovia Corp. 210,000 9,187,500
Wells Fargo & Co. 20,000 4,782,500
Wilmington Trust Corp. 185,000 6,000,938(dagger)
- --------------------------------------------------------------------------------------
72,170,438
</TABLE>
6
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1996
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
<S> <C>
Insurance -- 5.0%
AMBAC Inc. 199,800 $10,414,575
American International
Group, Inc. 180,000 17,752,500
Lincoln National Corp. 140,000 6,475,000
Reinsurance Group of America,
Inc. 199,900 7,546,225
Salomon Inc. 7.625% Exch. Notes
due 1999 340,000 9,435,000
Security-Connecticut Corp. 35,000 953,750
52,577,050
- --------------------------------------------------------------------------------------
Health Care -- 9.3%
Drugs -- 4.3%
Elan Corp., plc ADR (C) 230,000 13,167,500
Lilly (Eli) & Co. 169,200 10,998,000
Merck & Co., Inc. 190,000 12,278,750
SmithKline Beecham plc ADR 180,000 9,765,000
- --------------------------------------------------------------------------------------
46,209,250
Medical Supplies and Services -- 5.0%
Abbott Laboratories 290,000 12,615,000
Allergan, Inc. 161,300 6,371,350
Beckman Instruments, Inc. 175,000 6,606,250
Caremark International Inc. 300,000 7,575,000
Integrated Health Services, Inc.
5.75% Conv. Sub. Debs.
due 2001 $6,675,000 6,474,750
Integrated Health Services, Inc.
6% Conv. Sub. Debs.
due 2003 $500,000 476,250
Life Technologies, Inc. 205,000 6,457,500(dagger)
ONCOR, Inc. (C) 864,300 4,753,650
OPTION Care, Inc. (C) 160,000 1,180,000(dagger)
- --------------------------------------------------------------------------------------
52,509,750
Technology -- 13.1%
Communication Equipment -- 3.8%
Ericsson (L.M.) Telephone Co. 4.25%
Conv. Sub. Debs. due 2000 $120,000 356,250(dagger)
Ericsson (L.M.) Telephone
Co. ADR 440,000 9,460,000(dagger)
Motorola, Inc. LYONs
due 2009 $650,000 750,750
Motorola, Inc. 160,000 10,040,000
Nokia Corp. Pfd. ADR 150,000 5,550,000
Northern Telecom Ltd. 250,000 13,593,750
- --------------------------------------------------------------------------------------
39,750,750
Computer Related -- 7.4%
American Express Co. 6.25%
DECS due 1996 210,000 13,781,250
Computer Sciences Corp.(C) 136,000 10,183,000
DST Systems Inc. (C) 175,000 5,600,000
Electronic Data Systems Corp. 168,936 9,080,310
Keane, Inc. (C) 400,000 14,750,000
QuickResponse Services,
Inc. (C) 218,000 6,267,500(dagger)
Sterling Software, Inc. (C) 245,000 18,865,000
- --------------------------------------------------------------------------------------
78,527,060
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
<S> <C>
Electronics -- 1.9%
AMP Inc. 100,000 $ 4,012,500
Intel Corp. 50,000 3,671,875(dagger)
Verifone, Inc. (C) 292,500 12,358,125
- --------------------------------------------------------------------------------------
20,042,500
Transportation -- 4.1%
AMR Corp. (C) 57,000 5,187,000
Delta Air Lines, Inc. $3.50
Ser. C Conv. Pfd. 143,000 9,009,000
Delta Air Lines, Inc. 31,320 2,599,560
Illinois Central Corp. 210,000 5,958,750
Ryder System, Inc. 400,000 11,250,000
Union Pacific Corp. 130,000 9,083,750
- --------------------------------------------------------------------------------------
43,088,060
Utilities -- 13.1%
Electric And Gas Utilities-- 5.5%
Black Hills Corp. 258,200 6,422,725
CINergy Corp. 300,000 9,600,000
DPL Inc. 400,000 9,750,000
Empresa Nacional de
Electricidad, S.A. ADR 150,000 9,393,750
LG&E Energy Corp. 250,000 5,718,750
TECO Energy, Inc. 300,000 7,575,000
Washington Gas Light Co. 300,000 6,600,000
Wisconsin Energy Corp. 129,000 3,724,875
- --------------------------------------------------------------------------------------
58,785,100
- --------------------------------------------------------------------------------------
Telephone Utilities -- 7.6%
AT&T Co. 200,000 12,400,000
AirTouch Communications (C) 200,000 5,650,000
Ameritech Corp. 140,000 8,312,500
Bell Atlantic Corp. 100,000 6,375,000
BellSouth Corp. 220,000 9,240,000
First Chicago Corp. 5.50%
DECS due 1997 120,000 2,460,000
GTE Corp. 250,000 11,187,500
LCI International, Inc. (C) 269,500 8,455,563
SBC Communications Inc. 200,000 9,850,000
Tele Danmark A/S ADS 260,000 6,597,500
- --------------------------------------------------------------------------------------
80,528,063
- --------------------------------------------------------------------------------------
Other -- 0.1%
Stocks under accumulation 1,533,750
- --------------------------------------------------------------------------------------
Total Stocks and Convertible
Securities
(Cost $596,831,895)(E) 951,206,372
- --------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1996
<TABLE>
<CAPTION>
Prin. Amt. Value(A)
<S> <C>
Short-Term Investments -- 10.1%
Certificates of Deposit -- 6.0%
Fifth Third Bank, Cincinnati,
5.30%, due 8/1/96 $ 8,900,000 $ 8,900,000
First Alabama Bank, Birmingham,
5.35%, due 7/25/96 5,000,000 5,000,000
Mercantile-Safe Deposit &
Trust Co., 5.30-5.35%,
due 7/3/96-7/11/96 10,000,000 10,000,000
NationsBank N.A., (Carolinas),
5.30%, due 7/18/96 10,000,000 10,000,000
Northern Trust Co., Chicago,
5.26%, due 7/3/96 10,000,000 10,000,000
SouthTrust Bank of Alabama,
5.25%, due 7/11/96 5,000,000 5,000,000
U.S. Bank of Washington, NA.,
5.32%, due 7/3/96 5,000,000 5,000,000
Wachovia Bank of Georgia N.A.,
5.32%, due 7/25/96 9,900,000 9,900,000
- --------------------------------------------------------------------------------------
63,800,000
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt. Value(A)
<S> <C>
Commercial Paper -- 4.1%
Chevron Oil Finance Co.,
5.33%, due 7/31/96 $ 2,810,000 $ 2,797,129
Coca-Cola Co.,
5.23%, due 7/11/96 5,610,000 5,601,850
Ford Motor Credit Corp.,
5.31%, due 7/11/96 10,000,000 9,985,250
General Electric Capital Corp.,
5.31%, due 7/25/96 10,000,000 9,964,600
Penney (J.C.) Funding Corp.,
5.33%, due 7/18/96 10,555,000 10,528,434
USAA Capital Corp.,
5.29%, due 7/30/96 4,422,000 4,403,156
- --------------------------------------------------------------------------------------
43,280,419
Total Short-Term Investments
(Cost $107,080,419) 107,080,419
- --------------------------------------------------------------------------------------
Total Investments
(Cost $703,912,314) 1,058,286,791
Cash, receivables and other
assets, less liabilities 1,390,137
- --------------------------------------------------------------------------------------
Net Assets-- 100.0% $1,059,676,928
- --------------------------------------------------------------------------------------
======================================================================================
</TABLE>
Notes:
(A) See note 1 to financial statements. Securities are listed on the New York
Stock Exchange, the American Stock Exchange or the Toronto Stock Exchange
except restricted securities and also those marked ((dagger)), which are
traded "Over-the-Counter."
(B) Restricted securities (Cemex, S.A. de C.V. 4.25% Conv. Sub. Debs. due 1997,
acquired 9/28/94, cost $4,053,999, Unocal Corp. $3.50 Conv. Pfd. acquired
7/21/92, cost $5,000,000).
(C) Presently non-dividend paying.
(D) Non-controlled affiliate.
(E) The aggregate market value of stocks held in escrow at June 30, 1996
covering open call contracts written was $23,545,000. In addition, the
required aggregate market value of securities segregated by the custodian to
collateralize open put option contracts written was $24,225,000.
HISTORICAL FINANCIAL STATISTICS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Dividends Distributions
Asset from from
Common Value Net Investment Net Realized
Value of Shares per Income Gains
Dec. 31 Net Assets Outstanding Share per Share per Share
<S> <C>
1986........................... $ 468,344,507 24,004,882 $19.51 $.71 $3.74
1987........................... 427,225,965 26,833,998 15.92 .78 2.66
1988........................... 455,825,580 28,295,508 16.11 .50 1.32
1989........................... 550,091,129 29,982,939 18.35 .70 1.36
1990........................... 529,482,769 31,479,340 16.82 .66 1.06
1991........................... 661,895,779 32,747,497 20.21 .54 1.09
1992........................... 696,924,779 34,026,625 20.48 .46 1.16
1993........................... 840,610,252 42,497,665 19.78 .45 1.18
1994........................... 798,297,600 44,389,990 17.98 .50 1.10
1995........................... 986,230,914 46,165,517 21.36 .52 1.14
June 30, 1996 ................. 1,059,676,928 46,165,517 22.95 .33* .03
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Paid or declared.
8
<PAGE>
PRINCIPAL CHANGES IN PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------
During the Three Months Ended June 30, 1996
<TABLE>
<CAPTION>
Shares or Principal Amount
- ---------------------------------------------------------------------------------------------------------------------------
Held
Additions Reductions June 30, 1996
<S> <C>
AMR Corp. 57,000 57,000
Abbott Laboratories 90,000 290,000
Associates First Capital Corp. Ser. A 75,000 75,000
Coca-Cola Co. 90,000(1) 180,000
Crown Cork & Seal Co., Inc. 35,000 180,000
Delta Air Lines, Inc. $3.50 Ser. C Conv. Pfd. 43,000 143,000
Delta Air Lines, Inc. 31,320 31,320
Duracell International Inc. 196,900 265,000
Electronic Data Systems Corp. 168,936(2) 168,936
Enron Corp. 6.25% Exch. Notes due 1998 301,900 411,900
The BFGoodrich Co. 55,000(1) 110,000
Granite Construction Inc. 140,000(3) 365,000
Intel Corp. 50,000 50,000
Kimberly-Clark Corp. 20,000 170,000
LCI International Inc. 269,500 269,500
LG&E Energy Corp. 125,000(1) 250,000
Lilly (Eli)& Co. 53,200 169,200
National City Corp. 80,000(4) 80,000
Norwest Corp. 189,500 290,000
Peoples Heritage Financial Group 237,000(5) 237,000
PepsiCo, Inc. 160,000(1) 320,000
Provident Bankshares Corp. 6,250(1) 131,250
Salomon Inc. 7.625% Exch. Notes due 1999 340,000 340,000
Wells Fargo & Co. 20,000(6) 20,000
AMRCorp. 6.125% Conv. Sub. Debs. due 2024 $4,500,000 --
American Greetings Corp. 200,000 --
Chiron Corp. 77,049 --
Financial Security Assurance Holdings, Ltd. 235,060 --
Home Depot, Inc. 30,000 263,870
Horizon/CMS Healthcare Corp. 215,880 --
International Paper Co. 140,000 --
Masco Corp. 160,000 40,000
PartnerRe Ltd. 245,000 --
PowerGen plc ADS 138,000 --
Security-Connecticut Corp. 95,000 35,000
Weyerhaeuser Co. 190,000 --
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) By stock dividend or stock split.
(2) Received 1 share for each share of General Motors Corp. Ser. E.
(3) Includes 112,500 shares from stock split.
(4) Received 2 shares for each share of Integra Financial Corp.
(5) Received 2 shares for each share of Bank of New Hampshire Corp.
(6) Received .666 shares for each share of First Interstate Bancorp.
9
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
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To the Board of Directors and Stockholders of
THE ADAMS EXPRESS COMPANY:
We have audited the accompanying statement of assets and liabilities of The
Adams Express Company, including the schedule of investments, as of June 30,
1996, and the related statement of operations for the six months then ended, the
statement of changes in net assets for the six months ended June 30, 1996 and
the year ended December 31, 1995, and the financial highlights for the six
months ended June 30, 1996 and 1995 and for each of the five years in the period
ended December 31, 1995. These financial statements and financial highlights are
the responsibility of the Company'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 generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 investments owned as of June
30, 1996, by correspondence with the custodian and brokers. 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 The
Adams Express Company as of June 30, 1996, the results of its operations, the
changes in its net assets, and financial highlights for each of the respective
periods stated in the first paragraph, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Baltimore, Maryland
July 10, 1996
10
<PAGE>
DIVIDEND PAYMENT SCHEDULE AND THE
AUTOMATIC DIVIDEND REINVESTMENT PLAN
- --------------------------------------------------------------------------------
The Company presently pays dividends four times a year, as follows: (a) Three
interim investment income dividends on or about March, June and September 1st.
(b) A "year-end" payment consisting of the estimated balance of the net
investment income for the year and the net realized capital gain earned through
October 31st, payable in late December. Stockholders may elect to receive this
payment in stock or cash. In connection with this payment, all stockholders of
record are sent a dividend announcement notice and an election card in
mid-November. The following options are available:
(1) Full shares of stock for the combined income dividend and capital gain
distribution to the extent possible.
(2) Full shares of stock for the capital gain distribution to the extent
possible. Fractional shares and the income dividend are paid in cash. Without a
timely response, stockholders will be paid in accordance with this option.
(3) Both the income dividend and capital gain distribution in cash.
Stockholders holding shares in "street" or brokerage accounts may make one of
the above elections by notifying their brokerage house representative.
Stockholders of record of Adams stock have two additional ways to increase their
investment in the Company.
The Bank of New York's Automatic Dividend Reinvestment Plan provides that its
participants' four distributions are automatically invested in additional shares
of Adams common stock. New shares acquired are held on a book basis by the Bank.
Additionally, after the participants' first dividend is reinvested, they are
eligible to make cash payments in any amount from $25.00.
The Bank provides participants with reinvestment confirmations after each
dividend or cash payment. The Bank's fee for this service is 10% of the amount
received up to a maximum of $2.50 for the interim dividend payments and cash
payments. There is no charge for the "year-end" distribution.
The Bank's plan also provides for the deposit of certificate shares into the
participant's "book share" account for a one-time charge of $5.00.
A brochure and enrollment card may be obtained by calling the Bank at (800)
432-8224 or by writing to:
The Bank of New York
Dividend Reinvestment
P.O. Box 11258
Church Street Station
New York, NY 10277
------------------------
Common Stock
Listed on the New York Stock Exchange
and the Pacific Stock Exchange
Transfer Agent, Registrar & Custodian of Securities
The Bank of New York
101 Barclay Street, 11E
New York, NY 10007
The Bank's Shareholder Relations Department: (800) 432-8224
The Company Office Address: Seven St. Paul Street,
Suite 1140, Baltimore, MD 21202
The Company Office Telephone: (410) 752-5900 or (800) 638-2479
Counsel: Chadbourne & Parke L.L.P.
Independent Accountants: Coopers & Lybrand L.L.P.
11
<PAGE>
THE ADAMS EXPRESS COMPANY
Board of Directors
Enrique R. Arzac(3,4) Augustine R. Marusi(1,3)
Leigh Carter(1,3) W. Perry Neff(1,4)
Allan Comrie(2,4) Douglas G. Ober(1)
Daniel E. Emerson(1,3) Landon Peters(1,3)
Thomas H. Lenagh(2,4) John J. Roberts
W.D. MacCallan(2,4) Robert J.M. Wilson(1,2)
1. Member of Executive Committee
2. Member of Audit Committee
3. Member of Compensation Committee
4. Member of Retirement Committee
Officers
Douglas G. Ober Chairman and
Chief Executive Officer
Joseph M. Truta President
Richard F. Koloski Executive Vice President
Joan E. Sinclair Vice President--Research
Richard B. Tumolo Vice President--Research
Simeon F. Wooten, III Vice President--Research
J. G. Whitney Vice President and Secretary
Maureen A. Jones Treasurer
R. M. Carlsson Assistant Treasurer
Geraldine H. Stegner Assistant Secretary
----------
Stock Data
----------
Price (6/30/96) $19.125
Net Asset Value (6/30/96) $22.95
Discount: 16.7%
New York Stock Exchange and Pacific Stock Exchange ticker symbol: ADX
Newspaper stock listings are generally under the abbreviation: AdaEx
---------------------
Distributions in 1996
---------------------
From Investment Income $0.33
(paid or declared)
From Net Realized Gains 0.03
Total $0.36
---------------------------
1996 Dividend Payment Dates
---------------------------
March 1, 1996
June 1, 1996
September 1, 1996
December 27, 1996*
* Anticipated
[Recycled logo] Printed on recycled paper
SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
June 30, 1996
[Adams Express logo]
BUILDING FOR THE FUTURE
WITH SOLID INVESTMENTS
