THE ADAMS EXPRESS COMPANY
- ---------------------------------------------------------
BOARD OF DIRECTORS
Enrique R. Arzac(1,3) Augustine R. Marusi(1,3)
Allan Comrie(1,3) W. Perry Neff(3,4)
Daniel E. Emerson(2,4) Douglas G. Ober(1)
Thomas H. Lenagh(2,4) Landon Peters(1,2)
W.D. MacCallan(1,3) John J. Roberts(1,4)
Robert J.M. Wilson(2,4)
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
Richard B. Tumolo VICE PRESIDENT--RESEARCH
Simeon F. Wooten, III VICE PRESIDENT--RESEARCH
Maureen A. Jones VICE PRESIDENT AND TREASURER
Lawrence L. Hooper, Jr. SECRETARY AND
GENERAL COUNSEL
Dana M. Cannon ASSISTANT TREASURER
Geraldine H. Stegner ASSISTANT SECRETARY
----------
STOCK DATA
----------
Price (3/31/98) $27.6875
Net Asset Value (3/31/98) $32.27
Discount: 14.2%
New York Stock Exchange and Pacific Exchange ticker
symbol: ADX
Newspaper stock listings are generally under the abbreviation:
AdaEx
---------------------
DISTRIBUTIONS IN 1998
---------------------
From Investment Income $0.19
(paid or declared)
From Net Realized Gains 0.05
-----
Total $0.24
=====
---------------------------
1998 DIVIDEND PAYMENT DATES
---------------------------
March 1, 1998
June 1, 1998
September 1, 1998*
December 27, 1998*
*Anticipated
[Recycled Logo] Printed on recycled paper
FIRST QUARTER REPORT
- ---------------------------------------------------------
MARCH 31, 1998
[ADAMS EXPRESS COMPANY LOGO](R)
BUILDING FOR THE FUTURE
WITH SOLID INVESTMENTS(R)
<PAGE>
LETTER TO STOCKHOLDERS
- --------------------------------------------------------------------------------
We are pleased to submit the financial statements of the Company for the three
months ended March 31, 1998. In addition, there is a schedule of investments
provided along with other financial information.
Net assets of the Company at March 31, 1998 were $32.27 per share, as compared
with $28.51 per share at December 31, 1997 on the 49,949,239 shares outstanding
on each date. The total return on net assets (with reinvestment of income and
capital gains distributions) for the period was 13.7%. On March 1, 1998, a
distribution of $0.12 per share was paid consisting of $0.05 from 1997 long-term
capital gain, $0.02 from 1997 investment income and $0.05 from 1998 investment
income. All are taxable in 1998. A regular 1998 investment income dividend of
$0.12 per share has been declared to shareholders of record May 20, 1998,
payable June 1, 1998.
Net investment income for the three months ended March 31, 1998 amounted to
$5,142,683, compared with $4,948,637 for the same period in 1997. These earnings
are equal to $0.10 and $0.10, respectively, per share, on the average number of
shares outstanding during each period.
Net capital gain realized on investments for the three months ended March 31,
1998 amounted to $22,878,320, the equivalent of $0.46 per share.
The Annual Shareholders Meeting was held on March 31, 1998 in Houston, Texas.
The results of the voting at the meeting are shown on page 10. Upon conclusion
of the business portion of the meeting, management reviewed the portfolio's
performance in 1997 and discussed the outlook for the future.
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
April 17, 1998
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1998 (unaudited)
<TABLE>
<S><C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $720,771,908) $1,529,386,964
Non-controlled affiliate, Petroleum & Resources
Corporation (cost $22,153,015) 44,748,828
Short-term investments (cost $35,645,421) 35,645,421 $1,609,781,213
- ----------------------------------------------------------------------------------------------
Cash 120,955
Receivables:
Investment securities sold 2,801,221
Dividends and interest 2,195,768
Prepaid expenses and other assets 3,924,360
- ---------------------------------------------------------------------------------------------------------------
Total Assets 1,618,823,517
- ---------------------------------------------------------------------------------------------------------------
Liabilities
Investment securities purchased 2,035,338
Open option contracts at value (proceeds $1,220,091) 1,357,188
Accrued expenses 3,338,736
- ---------------------------------------------------------------------------------------------------------------
Total Liabilities 6,731,262
- ---------------------------------------------------------------------------------------------------------------
Net Assets $1,612,092,255
===============================================================================================================
Net Assets
Common Stock at par value $1.00 per share, authorized 75,000,000
shares; issued and outstanding 49,949,239 shares $ 49,949,239
Additional capital surplus 704,167,465
Undistributed net investment income 3,468,058
Undistributed net realized gain on investments 23,433,721
Unrealized appreciation on investments 831,073,772
- ---------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Stock $1,612,092,255
===============================================================================================================
Net Asset Value Per Share of Common Stock $32.27
===============================================================================================================
</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
- --------------------------------------------------------------------------------
Three Months Ended March 31, 1998 (unaudited)
<TABLE>
<S><C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 4,993,037
From non-controlled affiliate 137,468
Interest 1,310,455
- ---------------------------------------------------------------------------------------------------------------
Total income 6,440,960
- ---------------------------------------------------------------------------------------------------------------
Expenses:
Investment research 678,644
Administration and operations 265,221
Directors' fees 51,750
Reports and stockholder communications 67,305
Transfer agent, registrar and custodian expenses 52,186
Auditing services 15,291
Legal services 12,061
Occupancy and other office expenses 66,232
Travel, telephone and postage 31,393
Other 58,194
- ---------------------------------------------------------------------------------------------------------------
Total expenses 1,298,277
- ---------------------------------------------------------------------------------------------------------------
Net Investment Income 5,142,683
- ---------------------------------------------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 22,786,674
Net realized gain distributed by regulated investment company (non-controlled affiliate) 91,646
Change in unrealized appreciation on investments 165,894,736
- ---------------------------------------------------------------------------------------------------------------
Net Gain on Investments 188,773,056
- ---------------------------------------------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $193,915,739
===============================================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Year Ended
Ended March 31, 1998 Dec. 31, 1997
-------------------- -------------
(unaudited)
<S><C>
From Operations:
Net investment income $ 5,142,683 $ 20,784,601
Net realized gain on investments 22,878,320 71,696,127
Change in unrealized appreciation on investments 165,894,736 242,729,911
- ---------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 193,915,739 335,210,639
- ---------------------------------------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (3,496,447) (21,136,073)
Net realized gain from investment transactions (2,497,462) (73,015,523)
- ---------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (5,993,909) (94,151,596)
- ---------------------------------------------------------------------------------------------------------------
From Capital Share Transactions:
Value of common shares issued in payment of optional distributions -0- 44,350,986
- ---------------------------------------------------------------------------------------------------------------
Total increase in net assets 187,921,830 285,410,029
Net Assets:
Beginning of period 1,424,170,425 1,138,760,396
- ---------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $3,468,058 and $1,821,822, respectively) $1,612,092,255 $1,424,170,425
===============================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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 valued at
amortized cost. 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 share holders 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 March 31, 1998 was $779,440,368, and net
unrealized appreciation aggregated $831,560,936, of which the related gross
unrealized appreciation and depreciation were $838,078,661 and $6,517,725,
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 three months ended March 31, 1998 were $52,982,813 and
$61,892,040, respectively. Option transactions comprised an insignificant
portion of operations during the period ended March 31, 1998. 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 three months ended March 31, 1998.
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. Options are exercisable beginning not
less than one year after the date of grant and extend and vest 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. At the beginning of 1998, 312,118 options were outstanding,
with a weighted average exercise price of $13.6549 per share. During the three
months ended March 31, 1998, the Company granted options including stock
appreciation rights for 28,368 shares of common stock with an exercise price of
$25.375; stock appreciation rights relating to 22,749 stock option shares were
exercised at a weighted average market price of $24.1480 per share and the stock
options relating to those rights, which had a weighted average exercise price of
$13.0479 per share, were cancelled. At March 31, 1998, there were outstanding
exercisable options to purchase 68,744 common shares at $6.4350-$15.6675 per
share (weighted average price of $11.1900), and unexercisable options to
purchase 248,993 common shares at $11.715-$25.325 per share (weighted average
price of $15.6728). The weighted average remaining contractual life of
outstanding exercisable and unexercisable options is 5.5166 years and 7.1264
years, respectively. Total compensation expense recognized for the three months
ended March 31, 1998 related to the stock options and stock appreciation rights
plan was $497,743. At March 31, 1998, there were 895,119 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 plan
assets consist primarily of investments in mutual funds.
The actuarially computed net pension cost credit for the three months ended
March 31, 1998 was $126,501, and consisted of service expense of $45,369,
interest expense of $82,293, expected return on plan assets of $191,836, and a
net amortization credit of $62,327.
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 compensation increases were 7.0%, and the expected long-term rate
of return on plan assets was 8.0%.
On January 1, 1998, the accumulated benefit obligation, including vested
benefits, was $2,956,682. The fair value of the plan assets was $10,137,850 and
the projected benefit obligation for service rendered to date was $3,809,875,
which resulted in excess plan assets of $6,327,975. The remaining components of
prepaid pension cost at January 1, 1998 included $2,235,823 in unrecognized net
gain, $432,583 in unrecognized prior service cost and $383,688 is the remaining
portion of the unrecognized net asset existing at January 1, 1988, which is
being amortized
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
over 15 years. Prepaid pension cost included in other assets at March 31, 1998
was $3,734,076.
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
The cumulative amount of accrued expenses at March 31, 1998 for employees and
former employees of the Company was $3,206,234. Aggregate remuneration paid or
accrued during the three months ended March 31, 1998 to officers and directors
amounted to $849,814.
Research, accounting and other office services provided to and reimbursed by the
Company's non-controlled affiliate, Petroleum & Resources Corporation, amounted
to $116,627 for the three months ended March 31, 1998.
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. The Company receives
compensation for lending securities in the form of fees. The Company continues
to receive dividends on the securities loaned. At March 31, 1998, the value of
security loans outstanding was $52,824,525.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
(unaudited)
March 31, March 31, Year Ended December 31
---------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S><C>
Per Share Operating Performance
Net asset value, beginning of period $28.51 $23.71 $23.71 $21.36 $17.98 $19.78 $20.48
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 0.10 0.10 0.43 0.52 0.50 0.51 0.48
Net realized gains and change in
unrealized appreciation and other
changes 3.78 0.11 6.33 3.55 4.54 (0.71) 1.18
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.88 0.21 6.76 4.07 5.04 (0.20) 1.66
Less distributions
Dividends from net investment
income (0.07) (0.03) (0.44) (0.52) (0.52) (0.50) (0.45)
Distributions from net realized gains (0.05) (0.09) (1.52) (1.20) (1.14) (1.10) (1.18)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (0.12) (0.12) (1.96) (1.72) (1.66) (1.60) (1.63)
Dilution resulting from the rights
offering -- -- -- -- -- -- (0.73)
Net asset value, end of period $32.27 $23.80 $28.51 $23.71 $21.36 $17.98 $19.78
===========================================================================================================================
Per share market price, end of period $27.6875 $20.25 $24.1875 $19.75 $18.50 $15.625 $17.875
Total Investment Return
Based on market price 15.0% 3.1% 33.1% 16.4% 29.5% (3.7)% (2.7)%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $1,612,092 $1,143,211 $1,424,170 $1,138,760 $986,231 $798,298 $840,610
Ratio of expenses to average
net assets 0.35%+ 0.40%+ 0.39% 0.34% 0.46% 0.33% 0.36%
Ratio of net investment income to
average net assets 1.37%+ 1.70%+ 1.61% 2.30% 2.51% 2.65% 2.33%
Portfolio turnover 14.45%+ 22.01%+ 17.36% 19.60% 23.98% 19.23% 21.40%
Average brokerage commission rate $0.06 $0.06 $0.06 $0.07 -- -- --
Number of shares outstanding at
end of period (in 000's) 49,949 48,037 49,949 48,037 46,166 44,390 42,498
</TABLE>
- ---------
+ 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
- --------------------------------------------------------------------------------
March 31, 1998 (unaudited)
Prin. Amt.
or Shares Value(A)
--------- --------
Stocks And Convertible
Securities -- 97.7%
Basic Materials -- 2.8%
Consolidated Papers, Inc. 100,000 $ 6,400,000
du Pont (E.I.) de
Nemours & Co. 250,000 17,000,000
Inco Ltd. 5.75% Conv.
Debs. due 2004 $4,000,000 3,930,000
Mead Corp. 155,000 5,550,937
Olin Corp. 250,000 11,734,375
------------
44,615,312
------------
Capital Goods -- 10.1%
Boeing Co. 198,400 10,341,600
Caterpillar Inc. 270,000 14,866,875
Corning, Inc. 110,000 4,867,500
Deere & Co. 260,000 16,103,750
Dover Corp. 260,000 9,880,000
Emerson Electric Co. 73,000 4,758,687
General Electric Co. 655,000 56,452,813
The BFGoodrich Co. 110,000 5,616,875
Minnesota Mining &
Manufacturing Co. 200,000 18,200,000
Pall Corp. 450,000 9,675,000
Rockwell International Corp. 215,000 12,335,625
------------
163,098,725
------------
Consumer -- 15.9%
Consumer Distribution -- 2.9%
American Stores Co. 257,000 6,682,000
Borders Group, Inc. (B) 195,000 6,642,187
Dillard Department Stores, Inc. 200,000 7,387,500
Penney (J.C.) Co., Inc. 200,000 15,137,500
Polo Ralph Lauren Corp. (B) 125,000 3,757,812
Tiffany & Co. 150,000 7,303,125
------------
46,910,124
------------
Consumer Services -- 3.1%
Cracker Barrel Old Country
Store, Inc. 320,000 12,800,000+
McDonald's Corp. 315,000 18,900,000
Scandinavian Broadcasting
System SA 7.25% Conv. Sub.
Debs. due 2005 $3,000,000 3,495,000+
Time Warner Inc. 135,000 9,720,000
US WEST Media Group, Inc. (B) 150,000 5,212,500
------------
50,127,500
------------
Prin. Amt.
or Shares Value(A)
--------- --------
Consumer Staples -- 9.9%
Best Foods Inc. 127,500 $ 14,901,563
Campbell Soup Co. 380,000 21,565,000
Coca-Cola Co. 170,000 13,164,375
Corn Products International, Inc. (B) 31,875 1,143,516
Fort James Corp. 350,000 16,143,750
Gillette Co. 219,560 26,059,027
Interstate Bakeries Corp. 138,000 4,502,250
Kimberly-Clark Corp. 340,000 17,042,500
PepsiCo, Inc. 320,000 13,660,000
Procter & Gamble Co. 230,000 19,406,250
Ralston Purina
7.00% SAILS due 2000 180,000 11,362,500
------------
158,950,731
------------
Energy -- 7.8%
British Petroleum plc ADR 150,000 12,909,375
Enron Corp. 6.25%
Exch. Notes due 1998 411,900 9,113,287
Enron Corp. 100,000 4,637,500
MCN Energy Group Inc. 400,000 14,950,000
Mobil Corp. 120,000 9,195,000
Petroleum & Resources
Corporation (C) 1,145,570 44,748,828
Royal Dutch Petroleum Co. 180,000 10,226,250
Schlumberger Ltd. 88,400 6,696,300
Union Pacific Resources Group Inc. 275,102 6,568,060
Unocal Capital Trust
$3.125 Conv. Pfd. 111,600 6,193,800+
------------
125,238,400
------------
Financial -- 18.0%
Banking -- 12.5%
Associates First Capital Corp.
Ser. A 273,400 22,213,750
Banc One Corp. 330,000 20,872,500
Federal Home Loan Mortgage Corp. 360,000 17,077,500
Investors Financial Services Corp. 274,700 15,108,500+
Mellon Bank Corp. 330,000 20,955,000
National City Corp. 80,000 5,865,000
NationsBank Corp. 200,000 14,587,500
Norwest Corp. 660,000 27,431,250
Peoples Heritage Financial Group 237,000 11,435,250+
Provident Bankshares Corp. 275,624 9,750,199+
Southwest Bancorp. of Texas, Inc. (B) 175,000 6,934,375
Wachovia Corp. 190,000 16,114,375
Wilmington Trust Corp. 210,000 13,938,750+
------------
202,283,949
------------
6
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
March 31, 1998 (unaudited)
Prin. Amt.
or Shares Value(A)
--------- --------
Insurance -- 5.5%
AMBAC Inc. 379,600 $ 22,182,875
American International Group, Inc. 270,000 34,003,125
Reinsurance Group of America, Inc. 299,850 14,992,500
Salomon Smith Barney Holdings, Inc.
7.625% Exch. Notes due 1999 (D) 375,000 16,968,750
------------
88,147,250
------------
Health Care -- 11.8%
Drugs -- 7.8%
ALZA Corp. (B) 500,000 22,406,250
Elan Corp., plc ADR (B) 460,000 29,727,500
Forest Laboratories, Inc. (B) 330,000 12,375,000
Lilly (Eli) & Co. 300,000 17,887,500
Merck & Co., Inc. 210,000 26,919,375
SmithKline Beecham plc ADR 260,000 16,266,250
------------
125,581,875
------------
Medical Supplies and Services -- 4.0%
Abbott Laboratories 240,000 18,075,000
American Retirement Corp.
5.75% Conv. Sub. Debs.
due 2002 $4,000,000 4,390,000
American Retirement Corp. (B) 151,000 3,437,525
Integrated Health Services, Inc.
5.75% Conv. Sub. Debs. due 2001 $6,675,000 8,035,031
Integrated Health Services, Inc.
6% Conv. Sub. Debs. due 2003 $500,000 608,125
Integrated Health Services, Inc. 165,000 6,486,563
Life Technologies, Inc. 307,500 11,838,750+
ONCOR, Inc. (B) 650,000 1,300,000
Sunrise Assisted Living, Inc. (B) 250,000 11,187,500
------------
65,358,494
------------
Technology -- 15.8%
Communication Equipment -- 5.0%
Ericsson (L.M.) Telephone Co. 4.25%
Conv. Sub. Debs. due 2000 $120,000 795,000+
Ericsson (L.M.) Telephone Co. ADR 440,000 20,927,500+
Lucent Technologies Inc. 64,816 8,288,346
Motorola, Inc. LYONs due 2009 $650,000 721,500
Motorola, Inc. 150,000 9,112,500
Nokia Corp. Pfd. ADR 150,000 16,190,625
Northern Telecom Ltd. 380,000 24,557,500
------------
80,592,971
------------
Computer Related -- 8.4%
Affiliated Computer Services, Inc. (B) 63,500 2,111,375
Cisco Systems, Inc. (B) 322,500 22,050,938
DST Systems Inc. (B) 400,000 21,025,000
First Data Corp. 343,980 11,179,350
Hewlett-Packard Co. 380,000 24,082,500
IKON Office Solutions, Inc. 185,000 6,394,062
QuickResponse Services, Inc. (B) 350,000 18,725,000+
Sabre Group Holdings, Inc. (B) 300,000 10,762,500
Sterling Commerce, Inc. (B) 400,000 18,550,000
------------
134,880,725
------------
Prin. Amt.
or Shares Value(A)
--------- --------
Electronics -- 2.4%
Intel Corp. 170,000 $ 13,270,625+
Solectron Corp. (B) 600,000 25,350,000
--------------
38,620,625
--------------
Transportation -- 3.2%
Delta Air Lines, Inc. 150,071 17,745,896
FDX Corp. (B) 260,000 18,492,500
Illinois Central Corp. 3,666 144,120
Ryder System, Inc. 400,000 15,200,000
--------------
51,582,516
--------------
Utilities -- 12.1%
Electric And Gas Utilities -- 5.2%
Black Hills Corp. 555,000 12,869,063
CINergy Corp. 300,000 11,062,500
Endesa, S.A. ADR 450,000 10,912,500
LG&E Energy Corp. 400,000 10,325,000
New Century Energy 250,000 12,593,750
TECO Energy, Inc. 300,000 8,475,000
United Water Resources Inc. 563,500 10,178,219
Washington Gas Light Co. 257,000 7,035,375
--------------
83,451,407
--------------
Telephone Utilities -- 6.9%
AirTouch Communications, Inc. (B) 200,000 9,787,500
Ameritech Corp. 310,000 15,325,625
BellSouth Corp. 220,000 14,836,250
GTE Corp. 250,000 14,968,750
LCIInternational, Inc. (B) 460,000 17,710,000
Nextel Communications Inc. (B) 120,000 4,050,000
SBC Communications Inc. 400,000 17,348,438
WorldCom, Inc. (B) 420,000 18,086,250
--------------
112,112,813
--------------
Other -- 0.2%
Stocks under accumulation 2,582,375
--------------
Total Stocks and Convertible
Securities
(Cost $742,924,924)(E) 1,574,135,792
--------------
7
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
March 31, 1998 (unaudited)
Prin. Amt. Value(A)
---------- --------
Short-Term Investments -- 2.2%
U.S. Government Obligations -- 1.2%
U.S. Treasury Bills,
5.14%,
due 5/28/98 $20,000,000 $19,837,268
--------------
Commercial Paper -- 1.0%
Chevron USA,
5.54%, due 4/9/98 5,000,000 4,993,844
Ford Motor Credit Corp.,
5.55%, due 4/16/98 1,800,000 1,795,838
Prin. Amt. Value(A)
---------- --------
General Electric Capital Corp.,
5.53-5.56%,
due 4/2/98-4/16/98 $ 9,031,000 $ 9,018,471
--------------
15,808,153
--------------
Total Short-Term Investments
(Cost $35,645,421) 35,645,421
--------------
Total Investments
(Cost $778,570,345) 1,609,781,213
Cash, receivables and other
assets, less liabilities 2,311,042
--------------
Net Assets-- 100.0% $1,612,092,255
==============
================================================================================
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 (+), which are traded
"Over-the-Counter."
(B) Presently non-dividend paying.
(C) Non-controlled affiliate.
(D) Restricted security (Salomon Smith Barney Holdings, Inc. 7.625% Exch. Notes
due 1999, acquired 5/8/96, cost $10,017,100).
(E) The aggregate market value of stocks held in escrow at March 31, 1998
covering open call contracts written was $28,700,938. In addition, the
required aggregate market value of securities segregated by the custodian to
collateralize open put option contracts written was $17,375,000.
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>
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
1996........................... 1,138,760,396 48,036,528 23.71 .52 1.20
1997........................... 1,424,170,425 49,949,239 28.51 .44 1.52
March 31, 1998 (unaudited)..... 1,612,092,255 49,949,239 32.27 .19* .05
</TABLE>
- ------------
*paid or declared.
8
<PAGE>
PRINCIPAL CHANGES IN PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------
During the Three Months Ended March 31, 1998 (unaudited)
<TABLE>
<CAPTION>
Shares
------------------------------------------------
Held
Additions Reductions March 31, 1998
--------- ---------- --------------
<S><C>
Affiliated Computer Services, Inc. ....................... 63,500(1) 63,500
Ameritech Corp. .......................................... 155,000(2) 310,000
Black Hills Corp. ........................................ 185,000(2) 555,000
Corning, Inc. ............................................ 110,000 110,000
Forest Laboratories, Inc. ................................ 165,000(2) 330,000
Fort James Corp. ......................................... 350,000 350,000
IKON Office Solutions, Inc. .............................. 185,000 185,000
Merck & Co., Inc. ........................................ 70,000 210,000
NationsBank Corp. ........................................ 200,000 200,000
Northern Telecom Ltd. .................................... 190,000(2) 380,000
Provident Bankshares Corp. ............................... 137,812(2) 275,624
Tiffany & Co. ............................................ 55,000 150,000
Beckman Instruments, Inc. ................................ 80,000 --
Computer Sciences Corp. .................................. 136,000 --
Crown Cork & Seal Co., Inc.
4.50% Conv. Pfd. ....................................... 285,000 --
Illinois Central Corp. ................................... 206,334(3) 3,666
MedPartners Inc. ......................................... 273,000 --
Olin Corp. ............................................... 100,000 250,000
SmithKline Beecham plc ADR ............................... 100,000 260,000
</TABLE>
- ----------------
(1) Includes shares previously listed under "Stock under accumulation" in the
Schedule of Investments.
(2) By stock split.
(3) Tender offer of 98% of Illinois Central Corp.
------------------------
COMMON STOCK
Listed on the New York Stock Exchange
and the Pacific Exchange
TRANSFER AGENT, REGISTRAR & CUSTODIAN OF SECURITIES
The Bank of New York
101 Barclay Street
New York, NY 10286
The Bank's Shareholder Relations Department: (800) 432-8224
E-mail Address: [email protected]
THE COMPANY OFFICE ADDRESS:
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
THE COMPANY WEBSITE ADDRESS: www.adams-express.com
THE COMPANY E-MAIL ADDRESS: [email protected]
THE COMPANY OFFICE TELEPHONE: (410) 752-5900 or (800) 638-2479
COUNSEL: Chadbourne & Parke L.L.P.
INDEPENDENT ACCOUNTANTS: Coopers & Lybrand L.L.P.
9
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
The Annual Meeting of Stockholders was held on March 31, 1998. For those
nominated, the following votes were cast for directors:
votes for votes withheld
--------- --------------
(A) Enrique R. Arzac: 42,449,003 488,392
(B) Allan Comrie: 42,233,827 703,568
(C) Daniel E. Emerson: 42,348,074 589,321
(D) Thomas H. Lenagh: 42,083,010 854,385
(E) W. D. MacCallan: 42,386,870 550,525
(F) Augustine R. Marusi: 42,116,375 821,020
(G) W. Perry Neff: 42,387,283 550,112
(H) Douglas G. Ober: 42,449,453 487,942
(I) Landon Peters: 42,427,620 509,775
(J) John J. Roberts: 42,293,083 644,312
(K) Robert J.M. Wilson: 42,250,852 686,543
A proposal to approve and ratify the selection of Coopers & Lybrand L.L.P. as
the firm of independent accountants of the Company for 1998 was approved with
42,255,905 votes for, 286,997 votes against and 394,493 votes abstaining.
10
<PAGE>
SHAREHOLDER INFO AND SERVICES
- --------------------------------------------------------------------------------
DIVIDEND PAYMENT SCHEDULE
The Company presently pays dividends four times a year, as follows: (a) Three
interim distributions 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.
AUTOMATIC DIVIDEND REINVESTMENT PLAN
FOR REGISTERED STOCKHOLDERS
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 enrolling in the plan, participants 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
participants' "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 address below.
WHAT'S NEW IN 1998?
For shareholders whose stock is held by a broker in "street" name, The Bank of
New York's Automatic Dividend Reinvestment Plan is now available through many
registered investment security dealers. If your shares are currently held in a
"street" name or brokerage account, please contact your broker for details about
how you can participate in this Plan.
-----------------
THE COMPANY THE TRANSFER AGENT
The Adams Express Company The Bank of New York
Lawrence L. Hooper, Jr., Shareholder Relations
Secretary and General Counsel Dept.-11E
Seven St. Paul Street, P.O. Box 11258
Suite 1140 Church Street Station
Baltimore, MD 21202 New York, NY 10286
(800) 638-2479 (800) 432-8224
Website: Website:
www.adams-express.com http://stock.bankofny.com
E-mail: E-mail:
contact @adams-express.com Shareowner-svcs@
bankofny.com
11
