1998 ANNUAL REPORT
- --------------------------------------------------------------------------------
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
(R)
BUILDING FOR THE FUTURE
WITH SOLID INVESTMENTS(R)
<PAGE>
<TABLE>
<CAPTION>
1998 AT A GLANCE
- ------------------------------------------------------------------------------------------------------------------------
THE COMPANY STOCK DATA
<S> <C> <C>
o a closed-end equity investment company NYSE Symbol......................................ADX
o objectives: preservation of capital Market Price as of 12/31/98..................$26 5/8
reasonable income Discount.......................................18.2%
opportunity for capital gain 52-Week Range...................$28 1/4 - $21 13/16
o internally-managed Shares Outstanding........................51,876,651
o low expense ratio
o low turnover
<CAPTION>
SUMMARY FINANCIAL INFORMATION
YEAR ENDED DECEMBER 31
1998 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value per share $ 32.54 $ 28.51
Total net assets 1,688,080,336 1,424,170,425
Unrealized appreciation 879,139,734 665,179,036
Net investment income 22,579,513 20,784,601
Total realized gain 82,933,498 71,696,127
Total return (based on market value) 19.3% 33.1%
Total return (based on net asset value) 23.7% 30.7%
Expense ratio 0.22% 0.39%
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
1998 DIVIDENDS AND DISTRIBUTIONS
AMOUNT
PAID (PER SHARE) TYPE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
March 1, 1998 $0.05 Long-term capital gain
March 1, 1998 0.07 Investment income
June 1, 1998 0.12 Investment income
September 1, 1998 0.12 Investment income
December 28, 1998 1.60 Long-term capital gain
December 28, 1998 0.14 Investment income
- ------------------------------------------------------------------------------------------------------------------------
$2.10
========================================================================================================================
</TABLE>
1999 ANNUAL MEETING OF STOCKHOLDERS
LOCATION: The Pierre, New York, New York
DATE: March 30, 1999
TIME: 10 a.m.
HOLDERS OF RECORD: February 12, 1999
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO REVIEW
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TEN LARGEST PORTFOLIO HOLDINGS (12/31/98)
MARKET VALUE % OF NET ASSETS
------------ ---------------
<S> <C> <C>
General Electric Co. $ 66,810,000 4.0
Solectron Corp. 55,762,500 3.3
Cisco Systems Inc. 43,505,859 2.6
American International Group, Inc. 39,133,125 2.3
Nokia Corp. Pfd. ADR 36,131,250 2.1
Petroleum & Resources Corporation* 35,083,081 2.1
MCI WorldCom, Inc. 30,135,000 1.8
Lilly (Eli) & Co. 27,551,250 1.6
Qwest Communications International, Inc. 26,382,800 1.6
ALZA Corp. 26,125,000 1.5
---------- ---
Total $386,619,865 22.9%
---------------------------
* Non-controlled affiliate
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sector Weightings (12/31/98)
[Bar Graph appears here with the following values]
Basic Industries 2.1%
Capital Goods 8.5%
Consumer 14.2%
Energy 5.4%
Financial 18.1%
Health Care 14.5%
Technology 18.2%
Transportation 2.9%
Utilities 14.3%
Cash & Equivalent 1.9%
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[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
1
<PAGE>
LETTER TO STOCKHOLDERS
- --------------------------------------------------------------------------------
Your Company again provided strong returns from its investments in 1998. In this
annual report, you will find our financial statements for the year, the report
of independent accountants, our year-end portfolio holdings, and summary
financial information for the Company.
THE YEAR IN REVIEW
The strength of the economy in 1998 once again confounded most observers, as
expectations of a marked slowdown went unfulfilled. While 1997 had been a year
of relatively smooth growth, 1998 turned out to be one of wide variation. The
year got off to a very strong start, driven by heavy spending on equipment by
business and a jump in consumer spending. One of the factors affecting equipment
spending during the year was the effort by many companies to resolve their
potential computer problems with the turn of the century (the so-called Y2K
problem). A great many old computers and other equipment using computer controls
were replaced during the year. The Company's own Y2K program is discussed later
in this letter. Consumer spending was broadly based on both durable goods, such
as automobiles and entertainment equipment, and on non-durables, particularly
services. The growth in consumer spending was fueled by a modest increase in
wage income and, more importantly, the creation of many new jobs.
In the second quarter, the reverberations from the economic problems in Asia
were felt strongly, as cheap imports from abroad displaced some domestic sales
and severely limited pricing power in other areas. Domestic companies responded
to this competition by cutting capacity, laying off workers, and generally
bringing costs down. Economic growth slowed dramatically, consumer confidence
declined, and earnings reports for the quarter were disappointing. The stock
market peaked in July and dropped precipitously, correcting by over 19% in short
order. High quality, large-capitalization stocks held up better than most, but
those with any exposure to Southeast Asia were penalized. By the end of August,
investors determined that the situation was not as bad as they had thought and
sought bargains in the markets. The economy did not decelerate, but indeed
showed unexpected strength as consumer spending continued to grow, though not
quite as rapidly as earlier in the year.
The Federal Reserve Board, concerned about the economy, financial market
liquidity, and the situation overseas, cut short-term interest rates three times
in the latter part of the year. The lack of any evidence of incipient inflation
was, of course, critical in the Fed's decisions to reduce rates. Investors
interpreted the action as an indication of the willingness of the government to
do its best to keep the economy growing and stock prices began to recover.
Despite the effect of a protracted labor dispute at General Motors, there was an
acceleration in growth in the third quarter with good follow-through into the
final quarter of the year. Stock prices surpassed their old highs in November
and have continued to set new records in early 1999. The focus continued on the
largest-capitalization companies, which exhibited strong, predictable growth.
Negative earnings surprises were announced by companies in virtually every
industry during the year, so predictability became more and more important.
With many stable, large-capitalization stocks in its portfolio, Adams Express
realized an excellent return in 1998. While we did not participate in the
Internet mania directly, since the bulk of the companies in the industry have
speculative valuations, several of the companies we do own are involved in
Internet activities and did exceptionally well. Our holdings in telephone
utility (now called communications services by Standard & Poor), technology, and
health care companies were the greatest contributors to our returns, while basic
materials, energy and consumer distribution holdings lagged the overall return
of the portfolio.
For the year ended December 31, 1998, the return on net assets of Adams Express,
including income and capital gains distributions, was 23.7%, compared to a
return of 18.1% for the Dow Jones Industrials and 28.7% for the Standard &
Poor's 500. Based on market prices, the Company's return was 19.3%, as the
discount of the Company's market price to its net asset value widened from 15.2%
at the beginning of the year to 18.2% at year-end. Our holdings of cash and
short-term investments amounted to 1.7% of net assets at year-end compared to
1.9% a year ago.
INVESTMENT RESULTS
At the end of 1998 our net assets were $1,688,080,336 or $32.54 per share on
51,876,651 shares outstanding as compared with $1,424,170,425 or $28.51 per
share on 49,949,239 shares outstanding a year earlier.
Net investment income for the year 1998 was $22,579,513 compared to $20,784,601
for the year 1997. These earnings are equal to $0.45 and $0.43 per share,
respectively, on the average number of shares outstanding throughout each year.
Net realized gains amounted to $82,933,498 during the year, while the unrealized
appreciation on investments increased from $665,179,036 at December 31, 1997 to
$879,139,734 at year end.
DIVIDENDS AND DISTRIBUTIONS
As announced on November 12, 1998, a year-end distribution consisting of
investment income of $0.14 and capital gains of $1.60 was made on December 28,
1998, both realized and taxable in 1998. On January 14, 1999, an additional
distribution of $0.12 per share was declared payable March 1, 1999, representing
the balance of undistributed net investment income and capital gains earned
during 1998 and an initial distribution from 1999 net investment income, all
taxable to shareholders in 1999.
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
2
<PAGE>
LETTER TO STOCKHOLDERS (CONTINUED)
- --------------------------------------------------------------------------------
OUTLOOK FOR 1999
Our expectations for the U.S. economy in 1999 are modest, as they were a year
ago for 1998. Capital spending is not expected to grow at the double digit rates
of the past two years, as a number of industries are suffering from excess
capacity. In addition, we expect Y2K-associated computer spending to decline
dramatically this year. In the second half of 1998, the consumer was the
principal driver of growth; with little wage growth expected and fewer jobs
created, it is doubtful that the consumer will continue to spend as heavily in
1999. One of the possible stimulants to the economy this year is a gradual
improvement in the Asian situation. Outside of Japan, there are signs that the
worst of the crisis is over and the economies of the developing countries are no
longer deteriorating rapidly. Also, the dollar has weakened against some key
currencies, making the prices of U.S. goods more competitive in the rest of the
world. Europe has entered a new era with a single trading currency, which may
have some interesting ramifications for trade with this country. With trade
simplified within the zone, opportunities for American producers may decline in
Europe. Alternatively, easier trade may enable the region to grow more rapidly,
improving the demand for goods from all sources.
Our general conclusion as to the economic outlook is very much the same as a
year ago, namely that we expect a slowdown in growth to the 2% range. Whereas
last year we were more pessimistic than most, now we seem to be closer to the
consensus. There still does not seem to be evidence of inflationary forces
impacting prices, so the Federal Reserve has room to cut interest rates in order
to stimulate activity if necessary. Our greatest concern at this juncture is the
valuation of stocks, whether relative to book value, earnings, cash flow, or any
other traditional measure. Company fundamentals seem to have little bearing on
what people think stocks are worth. Current Wall Street estimates of 17% growth
in the earnings of the Standard & Poor's 500 stocks seem outlandish compared to
the 2% growth projected for the economy as a whole. Our position continues to be
to invest in companies whose long term outlooks and current balance sheets are
strong and risks of disappointment are small. We are thus confident that the
portfolio will perform well regardless of disruptions in the domestic or the
global economy.
YEAR 2000 READINESS DISCLOSURE
As the millennium approaches, the Company, along with other investment companies
and financial institutions, could be adversely affected if computer systems and
embedded technology do not properly process and calculate date-related
information relating to Year 2000 ("Y2K"). The date problem relates to computer
programs which only use two digits to identify the date. For example, 00 could
be interpreted as 1900. Therefore, all computer programs must process data using
appropriate date coding. The Company has established a Year 2000 project team,
which reports directly to the Chairman of the Board. The project team has been
testing its in-house hardware and software systems for the Y2K issue and has
been monitoring the Year 2000 compliance status of the Company's principal
outside vendors. The Company's custodian bank and transfer agent, The Bank of
New York, has confirmed it will meet all interim and final regulatory deadlines
and will be fully compliant in 1999. Since the Company has investments in
companies that may be materially adversely affected by the Y2K issue, the
Company could also be adversely affected. For this reason, all of the companies
whose securities are held in the Company's portfolio have been sent surveys to
determine their Y2K readiness. The Securities Industry Association (SIA) is
scheduled to perform industry tests in March and April 1999 and the Company,
along with its industry vendors, is planning to participate. The Company has
incurred no significant costs and does not reasonably expect any additional
significant costs relating to the Year 2000 issue. A contingency plan is being
formulated to deal with utility power outages and other Y2K problems, which may
have a direct effect on the Company. Despite these efforts, there is no
assurance that any adverse impact on the Company will be avoided.
----------
Mr. Augustine R. Marusi resigned from the Board of Directors as of October 8,
1998. Mr. Marusi joined the Board in 1971 while he was Chairman of the Board and
President of Borden Inc. His keen insight, warm personality, and extensive
business knowledge have been of great value to the Company. We would like to
take this opportunity to express our sincere appreciation for his 27 years of
service and wish him well in the future.
Effective January 4, 1999, Ms. Christine M. Griffith was elected by the Board of
Directors as Assistant Treasurer. Ms. Griffith was formerly a Manager at
PricewaterhouseCoopers LLP.
The proxy statement for the Annual Meeting of Stockholders to be held in New
York City on March 30, 1999, will be mailed on or about February 16, 1999 to
holders of record on February 12, 1999.
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
January 22, 1999
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
3
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
<S> <C> <C>
ASSETS
Investments* at value:
Common stocks and convertible securities
(cost $755,117,210) $1,622,457,815
Non-controlled affiliate, Petroleum & Resources Corporation
(cost $22,153,015) 35,083,081
Short-term investments (cost $28,921,430) 28,921,430 $1,686,462,326
- ------------------------------------------------------------------------------------------------------------------------
Cash 211,380
Securities lending collateral 192,627,954
Dividends and interest receivable 1,955,936
Prepaid expenses and other assets 5,107,212
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TOTAL ASSETS 1,886,364,808
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LIABILITIES
Open written option contracts at value (proceeds $956,238) 2,087,175
Obligations to return securities lending collateral 192,627,954
Accrued expenses 3,569,343
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 198,284,472
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,688,080,336
========================================================================================================================
NET ASSETS
Common Stock at par value $1.00 per share, authorized 75,000,000
shares; issued and outstanding 51,876,651 shares $ 51,876,651
Additional capital surplus 751,569,658
Undistributed net investment income 1,924,176
Undistributed net realized gain on investments 3,570,117
Unrealized appreciation on investments 879,139,734
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON STOCK $1,688,080,336
========================================================================================================================
NET ASSET VALUE PER SHARE OF COMMON STOCK $32.54
========================================================================================================================
</TABLE>
*SEE SCHEDULE OF INVESTMENTS ON PAGES 11 THROUGH 14.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
4
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1998
INVESTMENT INCOME
Income:
<S> <C>
Dividends:
From unaffiliated issuers $ 18,818,643
From non-controlled affiliate 939,367
Interest 6,189,364
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 25,947,374
- ------------------------------------------------------------------------------------------------------------------------
Expenses:
Investment research 1,243,741
Administration and operations 516,950
Directors' fees 182,750
Reports and stockholder communications 299,276
Transfer agent, registrar and custodian expenses 365,444
Auditing services 50,955
Legal services 35,981
Occupancy and other office expenses 237,246
Travel, telephone and postage 132,135
Other 303,383
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TOTAL EXPENSES 3,367,861
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 22,579,513
- ------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS
Net realized gain on security transactions 81,249,510
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 1,683,988
Change in unrealized appreciation on investments 213,960,698
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NET GAIN ON INVESTMENTS 296,894,196
- ------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $319,473,709
========================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
5
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
For the Year Ended
----------------------------------------
Dec. 31, 1998 Dec. 31, 1997
- ------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C>
Net investment income $ 22,579,513 $ 20,784,601
Net realized gain on investments 82,933,498 71,696,127
Change in unrealized appreciation on investments 213,960,698 242,729,911
- ------------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 319,473,709 335,210,639
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO STOCKHOLDERS FROM:
Net investment income (22,477,158) (21,136,073)
Net realized gain from investment transactions (82,416,244) (73,015,523)
- ------------------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS (104,893,402) (94,151,596)
- ------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Value of common shares issued in payment of optional distributions 49,329,604 44,350,986
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 263,909,911 285,410,029
NET ASSETS:
Beginning of year 1,424,170,425 1,138,760,396
- ------------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $1,924,176 and $1,821,822, respectively) $1,688,080,336 $1,424,170,425
========================================================================================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
6
<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 valued at
amortized cost. Written 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 December 31, 1998 was $807,791,666, and net
unrealized appreciation aggregated $879,626,898, of which the related gross
unrealized appreciation and depreciation were $898,357,790 and $18,730,892,
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 year ended December 31, 1998 were $264,644,003 and
$296,315,701, respectively. The Company, as writer of an option, bears the
market risk of an unfavorable change in the price of the security underlying the
written option. Option transactions comprised an insignificant portion of
operations during the year ended December 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
On December 28, 1998, the Company issued 1,927,412 shares of its stock at a
price of $25.5937 per share (market value) to stockholders of record November
23, 1998 who elected to take stock in payment of the distribution from 1998
capital gain and investment income.
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 year ended December 31, 1998.
The Company has 10,000,000 authorized and 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 1998, the
Company granted options, including stock appreciation rights, for 28,368
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
shares of common stock with an exercise price of $23.725 per share. During the
year stock appreciation rights relating to 49,226 stock option shares were
exercised at a weighted average market price of $26.1334 per share and the stock
options relating to these rights which had a weighted average exercise price of
$11.9102 per share were cancelled. In addition, stock options and stock
appreciation rights relating to 36,959 shares which had a weighted average
exercise price of $16.1834, were cancelled during the year ended December 31,
1998. At December 31, 1998, there were outstanding exercisable options to
purchase 75,869 common shares at $8.80-17.17 per share (weighted average price
of $11.0814), and unexercisable options to purchase 178,432 common shares at
$10.115-23.725 per share (weighted average price of $14.2152). The weighted
average remaining contractual life of outstanding exercisable and unexercisable
options was 5.494 years and 6.364 years, respectively. Total compensation
expense recognized in 1998 related to the stock options and stock appreciation
rights plan was $654,083. At December 31, 1998, there were 932,078 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 year ended December 31,
1998 was $1,103,137, and consisted of service expense of $186,026, interest
expense of $259,730, expected return on plan assets of $803,073, a net
amortization credit of $212,348, and gain on settlement of $533,472.
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, 1998, the projected benefit obligation for service rendered to
date was $3,809,875. During 1998, the projected benefit obligation increased due
to service cost and interest cost of $186,026 and $259,730 respectively, and
decreased due to benefits paid in the amount of $198,886. The projected benefit
obligation at December 31, 1998 was $4,056,745.
On January 1, 1998, the fair value of plan assets was $10,137,850. During 1998,
the fair value of plan assets increased due to the expected return on plan
assets of $803,073 and decreased due to benefits paid in the amount of $198,886.
At December 31, 1998, the projected fair value of plan assets amounted to
$10,742,037, which resulted in excess plan assets of $6,685,292. The remaining
components of prepaid pension cost on December 31, 1998 included $2,043,080 in
unrecognized gain, $356,266 in unrecognized prior service cost and $287,766 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 December 31, 1998 was $4,710,712.
In addition, the Company has a nonqualified 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 December 31, 1998 for employees and
former employees of the Company was $3,386,055. Aggregate remuneration paid or
accrued during the year ended December 31, 1998 to officers and directors
amounted to $2,029,935.
Research, accounting and other office services provided to and reimbursed by the
Company's non-controlled affiliate, Petroleum & Resources Corporation, amounted
to $478,379 for the year ended December 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 Company accounts for
securities lending transactions as secured financing and receives compensation
in the form of fees or retains a portion of interest on the investment of any
cash received as collateral. The Company also continues to receive interest or
dividends on the securities loaned. The loans are secured by collateral of at
least 102%, at all times, of the fair value of the securities loaned plus
accrued interest. Gain or loss in the fair value of the securities loaned that
may occur during the term of the loan will be for the account of the Company. At
December 31, 1998, the Company had securities on loan of $188,608,479 and held
collateral of $192,627,954.
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
8
<PAGE>
THE ADAMS EXPRESS COMPANY
- --------------------------------------------------------------------------------
ILLUSTRATION OF AN ASSUMED 15 YEAR
INVESTMENT OF $10,000 (UNAUDITED)
Investment income dividends and capital gains distributions are taken in
additional shares. This chart covers the years 1984-1998. These results should
not be considered representative of the dividend income or capital gain or loss
which may be realized in the future. No adjustment has been made for any income
taxes payable by stockholders on income dividends or on capital gains
distributions.
<TABLE>
<CAPTION>
Calendar Market Cumulative Cumulative Total Total net
Years value market value market value market asset
of of capital of income value value
original gains dividends
shares distributions taken in
taken in shares
shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1984 $ 9,061 $ 733 $ 431 $10,225 $11,045
1985 10,559 1,718 994 13,271 14,070
1986 10,423 4,400 1,452 16,275 16,603
1987 8,107 5,678 1,655 15,440 16,525
1988 8,039 6,998 2,103 17,140 18,720
1989 8,516 9,025 3,006 20,547 24,130
1990 8,039 9,913 3,627 21,579 24,608
1991 10,355 14,478 5,472 30,305 32,235
1992 10,900 17,103 6,477 34,480 35,308
1993 9,742 17,319 6,437 33,498 37,068
1994 8,516 17,208 6,448 32,172 37,021
1995 10,083 22,782 8,687 41,552 47,975
1996 10,764 27,092 10,414 48,270 57,947
1997 13,182 36,960 14,003 64,145 75,609
1998 14,511 45,287 16,590 76,388 93,357
- --------------------------------------------------------------------------------
</TABLE>
9
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------------------
Year Ended December 31
---------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $28.51 $23.71 $21.36 $17.98 $19.78
- ------------------------------------------------------------------------------------------------------------------------
Net investment income 0.45 0.43 0.52 0.50 0.51
Net realized gains and change in unrealized
appreciation and other changes 5.68 6.33 3.55 4.54 (0.71)
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 6.13 6.76 4.07 5.04 (0.20)
- ------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment income (0.45) (0.44) (0.52) (0.52) (0.50)
Distributions from net realized gains (1.65) (1.52) (1.20) (1.14) (1.10)
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (2.10) (1.96) (1.72) (1.66) (1.60)
- ------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $32.54 $28.51 $23.71 $21.36 $17.98
========================================================================================================================
Per share market price, end of year $26.625 $24.1875 $19.75 $18.50 $15.625
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN
Based on market price 19.3% 33.1% 16.4% 29.5% (3.7)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000's) $1,688,080 $1,424,170 $1,138,760 $986,231 $798,298
Ratio of expenses to average net assets 0.22% 0.39% 0.34% 0.46% 0.33%
Ratio of net investment income to
average net assets 1.48% 1.61% 2.30% 2.51% 2.65%
Portfolio turnover 22.65% 17.36% 19.60% 23.98% 19.23%
Average brokerage commission rate $0.06 $0.06 $0.07 -- --
Number of shares outstanding at
end of year (in 000's) 51,877 49,949 48,037 46,166 44,390
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
10
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
- ----------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
Prin. Amt.
or Shares Value (A)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Stocks and Convertible Securities -- 98.2%
BASIC INDUSTRIES -- 2.1%
Consolidated Papers, Inc...........................................................375,000 $ 10,312,500
E.I. du Pont de Nemours & Co.......................................................250,000 13,265,625
Mead Corp..........................................................................400,000 11,725,000
------------
35,303,125
------------
CAPITAL GOODS-- 8.5%
Boeing Co...........................................................................50,000 1,631,250
Corning, Inc.......................................................................460,000 20,700,000
Deere & Co.........................................................................280,000 9,205,000
Dover Corp.........................................................................260,000 9,522,500
Emerson Electric Co.................................................................73,000 4,416,500
General Electric Co................................................................655,000 66,810,000
The BFGoodrich Co..................................................................110,000 3,946,250
Minnesota Mining & Manufacturing Co................................................170,000 12,091,250
Pall Corp..........................................................................600,000 15,187,500
------------
143,510,250
------------
CONSUMER -- 14.2%
CONSUMER DISTRIBUTION-- 1.8%
American Stores Co.................................................................224,500 8,292,469
Borders Group, Inc. (B)............................................................195,000 4,862,813
Dillard Department Stores, Inc.....................................................200,000 5,675,000
Polo Ralph Lauren Corp. (B)........................................................175,000 3,357,813
Tiffany & Co.......................................................................170,000 8,818,750
------------
31,006,845
------------
CONSUMER SERVICES-- 3.2%
CBRL Group, Inc....................................................................340,000 7,926,250
Houston Industries Inc. 7.00% Conv. DECS due 2000..................................150,000 15,956,250
McDonald's Corp....................................................................305,000 23,427,813
MediaOne Group, Inc. (B)...........................................................150,000 7,050,000
------------
54,360,313
------------
CONSUMER STAPLES-- 9.2%
Best Foods Inc.....................................................................255,000 13,578,750
Campbell Soup Co...................................................................380,000 20,900,000
Coca-Cola Co.......................................................................170,000 11,390,000
Dean Foods Co......................................................................270,000 11,019,375
Fort James Corp....................................................................450,000 18,000,000
Gillette Co........................................................................439,120 20,995,425
Interstate Bakeries Corp...........................................................138,000 3,648,375
Ivex Packaging Corp. (B)...........................................................550,000 12,787,500
PepsiCo, Inc.......................................................................295,000 12,058,125
Procter & Gamble Co................................................................230,000 21,001,875
Ralston Purina 7.00% SAILS due 2000................................................180,000 9,405,000
------------
154,784,425
------------
</TABLE>
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
11
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
Prin. Amt.
or Shares Value (A)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY -- 5.4%
British Petroleum plc ADR..........................................................150,000 $ 13,612,500
Enron Corp.........................................................................100,000 5,706,250
Mobil Corp.........................................................................120,000 10,455,000
Petroleum & Resources Corporation (C)............................................1,145,570 35,083,081
Royal Dutch Petroleum Co...........................................................180,000 8,617,500
Schlumberger Ltd....................................................................88,400 4,099,550
Unocal Capital Trust $3.125 Conv. Pfd..............................................111,600 5,433,525
Williams Companies, Inc............................................................243,000 7,578,563
-----------
90,585,969
-----------
FINANCIAL -- 18.1%
BANKING -- 11.1%
Associates First Capital Corp. Ser. A.............................................546,800 23,170,650
Banc One Corp......................................................................330,000 16,850,625
Federal Home Loan Mortgage Corp....................................................360,000 23,197,500
Greenpoint Financial Corp..........................................................425,000 14,928,125
Investors Financial Services Corp..................................................240,000 14,310,000
Mellon Bank Corp...................................................................210,000 14,437,500
National City Corp..................................................................80,000 5,800,000
Peoples Heritage Financial Group...................................................474,000 9,480,000
Provident Bankshares Corp..........................................................289,405 7,198,954
Southwest Bancorp. of Texas, Inc. (B)..............................................350,000 6,256,250
Wachovia Corp......................................................................190,000 16,613,125
Wells Fargo & Co...................................................................550,000 21,965,625
Wilmington Trust Corp..............................................................210,000 12,941,250
-----------
187,149,604
-----------
INSURANCE -- 7.0%
AMBAC Financial Group, Inc.........................................................379,600 22,847,175
American International Group, Inc..................................................405,000 39,133,125
Annuity & Life Re (Holdings), Ltd..................................................700,000 18,900,000
Reinsurance Group of America, Inc..................................................299,850 20,989,500
Salomon Inc. 7.625% Exch. Notes due 1999 (D).......................................375,000 16,382,813
-----------
118,252,613
-----------
HEALTH CARE -- 14.5%
DRUGS -- 10.9%
ALZA Corp. (B).....................................................................500,000 26,125,000
American Home Products Corp........................................................325,000 18,321,875
Baxter International...............................................................245,000 15,756,562
Chiron Corp. (B)...................................................................435,000 11,391,562
Elan Corp., plc ADR (B)............................................................350,000 24,478,125
Forest Laboratories, Inc. (B)......................................................330,000 17,551,875
Lilly (Eli) & Co...................................................................310,000 27,551,250
Merck & Co., Inc...................................................................170,000 25,075,000
SmithKline Beecham plc ADR.........................................................260,000 18,070,000
-----------
184,321,249
-----------
</TABLE>
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
12
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
Prin. Amt.
or Shares Value (A)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL SUPPLIES AND SERVICES -- 3.6%
Abbott Laboratories................................................................480,000 $ 23,520,000
American Retirement Corp. 5.75% Conv. Sub. Debs. due 2002.......................$4,000,000 3,360,000
American Retirement Corp. (B)......................................................151,100 2,370,381
Integrated Health Services, Inc. 5.75% Conv. Sub. Debs. due 2001................$6,675,000 5,940,750
Integrated Health Services, Inc. (B)...............................................180,564 2,550,466
Sunrise Assisted Living, Inc. (B)..................................................440,000 22,825,000
-----------
60,566,597
-----------
TECHNOLOGY -- 18.2%
COMMUNICATION EQUIPMENT -- 5.6%
Ericsson (L.M.) Telephone Co. 4.25% Conv. Sub. Debs. due 2000.....................$120,000 765,000
Ericsson (L.M.) Telephone Co. ADR (B)..............................................750,000 17,953,125
Lucent Technologies Inc............................................................105,000 11,543,438
Motorola, Inc. LYONs due 2009.....................................................$650,000 721,500
Motorola, Inc......................................................................150,000 9,159,375
Nokia Corp. Pfd. ADR...............................................................300,000 36,131,250
Northern Telecom Ltd...............................................................380,000 19,000,000
-----------
95,273,688
-----------
COMPUTER RELATED -- 8.1%
Affiliated Computer Services, Inc. (B)..............................................63,500 2,857,500
Cisco Systems, Inc. (B)............................................................468,750 43,505,859
DST Systems Inc. (B)...............................................................360,000 20,542,500
First Data Corp....................................................................343,980 10,964,362
Hewlett-Packard Co.................................................................275,000 18,785,938
QRS Corp. (B)......................................................................425,000 20,400,000
Sterling Commerce, Inc. (B)........................................................420,000 18,900,000
-----------
135,956,159
-----------
ELECTRONICS -- 4.5%
Intel Corp.........................................................................170,000 20,155,625
Solectron Corp. (B)................................................................600,000 55,762,500
-----------
75,918,125
-----------
TRANSPORTATION -- 2.9%
Delta Air Lines, Inc...............................................................300,142 15,607,384
FDX Corp. (B)......................................................................260,000 23,188,750
Ryder System, Inc..................................................................400,000 10,400,000
-----------
49,196,134
-----------
UTILITIES -- 14.3%
ELECTRIC AND GAS UTILITIES -- 6.1%
Black Hills Corp...................................................................555,000 14,638,125
CINergy Corp.......................................................................300,000 10,312,500
ENDESA, S.A. ADR...................................................................450,000 12,150,000
LG&E Energy Corp...................................................................400,000 11,325,000
New Century Energies, Inc..........................................................250,000 12,187,500
Northwestern Corp..................................................................445,000 11,764,688
TECO Energy, Inc...................................................................300,000 8,456,250
United Water Resources Inc.........................................................600,000 14,362,500
Washington Gas Light Co............................................................257,000 6,939,000
-----------
102,135,563
-----------
</TABLE>
13
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1998
Prin. Amt.
or Shares Value (A)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELEPHONE UTILITIES -- 8.2%
AirTouch Communications (B)............................................... 115,000 $ 8,330,312
Ameritech Corp............................................................ 310,000 19,646,250
BellSouth Corp............................................................ 440,000 21,945,000
Frontier Corp............................................................. 101,000 3,434,000
MCI WorldCom, Inc. (B).................................................... 420,000 30,135,000
MediaOne Group, Inc. 6.25% PIES due 2001.................................. 85,000 5,652,500
NEXTEL Communications, Inc. (B)........................................... 95,000 2,244,375
Qwest Communications International, Inc. 5.75% TRENDS Pfd. due 2003 (D)... 125,000 5,812,500
Qwest Communications International, Inc. (B).............................. 411,406 20,570,300
SBC Communications Inc.................................................... 400,000 21,450,000
--------------
139,220,237
--------------
TOTAL STOCKS AND CONVERTIBLE SECURITIES
(Cost $777,270,225)(E).................................................... 1,657,540,896
--------------
SHORT-TERM INVESTMENTS -- 1.7%
U.S. GOVERNMENT OBLIGATIONS -- 1.2%.......................................
U.S. Treasury Bills, 4.45%, due 2/25/99................................... $20,000,000 19,864,089
--------------
COMMERCIAL PAPER -- 0.5%
Ford Motor Credit Corp., 5.65%, due 1/7/99................................ $4,135,000 4,131,106
General Electric Capital Corp., 5.95-6.08%, due 1/5/99-1/6/99............. $4,930,000 4,926,235
--------------
9,057,341
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $28,921,430)........................................................ 28,921,430
--------------
TOTAL INVESTMENTS
(Cost $806,191,655) 1,686,462,326
Cash, receivables and other assets, less liabilities................... 1,618,010
--------------
Net Assets-- 100.0%.......................................................... $1,688,080,336
================================================================================================================
</TABLE>
Notes:
(A) See note 1 to financial statements. Securities are listed on the New York
Stock Exchange, the American Stock Exchange, or the NASDAQ, except
restricted securities.
(B) Presently non-dividend paying. (C) Non-controlled affiliate.
(D) Restricted securities (Salomon Inc. 7.625% Exch. Notes due 1999, acquired
5/8/96, cost $10,017,100 and Qwest Communications International, Inc. 5.75%
TRENDS Pfd. due 2003, acquired 12/4/98, cost $5,218,750).
(E) The aggregate market value of stocks held in escrow at December 31, 1998
covering open call option contracts written was $20,631,250. In addition,
the required aggregate market value of securities segregated by the
custodian to collateralize open put option contracts written was $9,720,906.
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
14
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL CHANGES IN PORTFOLIO SECURITIES
- -------------------------------------------------------------------------------------------------------------------
DURING THE THREE MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
Shares
---------------------------------------------
Held
Additions Reductions Dec. 31, 1998
--------- ---------- -------------
<S> <C> <C> <C>
Associates First Capital Corp. Ser. A................................ 273,400(1) 546,800
American Stores Co................................................... 124,500 224,500
Baxter International................................................. 245,000 245,000
BellSouth Corp....................................................... 220,000(1) 440,000
Consolidated Papers, Inc............................................. 150,000 375,000
Delta Air Lines, Inc................................................. 150,071(1) 300,142
Enron Oil &Gas Co.................................................... 208,000(2) 208,000 --
Frontier Corp........................................................ 101,000 101,000
Northwestern Corp.................................................... 445,000 445,000
NEXTEL Communications Inc............................................ 75,000 120,000 95,000
Pall Corp............................................................ 150,000 600,000
Qwest Communications
International, Inc. 5.75% TRENDS Pfd. due 2003................... 125,000 125,000
Williams Companies, Inc.............................................. 106,000 243,000
Boeing Co............................................................ 148,400 50,000
Caterpillar Inc...................................................... 270,000 --
Enron Corp. 6.25% Exch. Notes due 1998 .............................. 411,900(2) --
Penney (J.C.) Co., Inc............................................... 180,000 --
Qwest Communications International, Inc.............................. 125,000 411,406
- ----------
</TABLE>
(1) By stock split.
(2) Received a share of Enron Oil & Gas Co. in exchange for each share of Enron
Corp. 6.25% Exch. Notes held.
---------------
COMMON STOCK
Listed on the New York Stock Exchange
and the Pacific Exchange
THE ADAMS EXPRESS COMPANY
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
WEBSITE: www.adamsexpress.com
E-MAIL: [email protected]
TELEPHONE: (410) 752-5900 or (800) 638-2479
COUNSEL: Chadbourne & Parke L.L.P.
INDEPENDENT ACCOUNTANTS: PricewaterhouseCoopers LLP
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: [email protected]
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
THE ADAMS EXPRESS COMPANY:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statement of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Adams Express Company,
hereafter referred to as the "Company", at December 31, 1998, and 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 generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998, by correspondence with
custodians and brokers, provide a reasonable basis for the opinion expressed
above.
PRICEWATERHOUSECOOPERS LLP
Baltimore, Maryland
January 12, 1999
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
16
<PAGE>
SHAREHOLDER INFO AND SERVICES
- --------------------------------------------------------------------------------
WE ARE OFTEN ASKED --
HOW DO I INVEST IN ADAMS EXPRESS?
Adams Express common stock is listed on the New York Stock Exchange and the
Pacific Exchange. The stock's ticker symbol is "ADX" and may be bought and sold
through registered investment security dealers. Your broker will be able to
assist you in this regard. In addition, stock may be purchased through the Bank
of New York's BuyDIRECT Purchase and Sale Plan (see page 18).
WHERE DO I GET INFORMATION ON THE STOCK'S PRICE, TRADING AND/OR NET ASSET VALUE?
The DAILY net asset value (NAV) per share and closing market price may be
obtained from our website at www.adamsexpress.com. The WEEK-ENDING NAV is
published on Saturdays in various newspapers and on Mondays in The Wall Street
Journal in a table titled "Closed-End Funds." The table compares the net asset
value at the close of the week's last business day to the market price of the
shares, and shows the amount of the discount or premium.
Adams' daily trading is shown in the stock tables of most daily newspapers,
usually with the abbreviated form "AdaEx." Local newspapers determine, usually
by volume of traded shares, which securities to list. If your paper does not
carry our listing, please telephone the Company at (800) 638-2479 or visit our
website.
HOW DO I REPLACE A LOST CERTIFICATE(S) OR HOW DO I CORRECT A SPELLING ERROR ON
MY CERTIFICATE?
Your Adams Express stock certificates are valuable documents and should be kept
in a safe place. For tax purposes, keep a record of each certificate, including
the cost or market value of the shares it covers at the time acquired. If a
certificate is lost, destroyed or stolen, notify the transfer agent immediately
so a "stop transfer" order can be placed on the records to prevent an
unauthorized transfer of your certificate. The necessary forms and requirements
to permit the issuance of a replacement certificate will then be sent to you. A
certificate can be replaced only after the receipt of an affidavit regarding the
loss accompanied by an open penalty bond, for which a small premium is paid by
the stockholder.
In the event a certificate is issued with the holder's name incorrectly spelled,
a correction can only be made if the certificate is returned to the Transfer
Agent with instructions for correcting the error. Transferring shares to another
name also requires that the certificate be forwarded to the transfer agent with
the appropriate assignment forms completed and the signature of the registered
owner Medallion guaranteed by a bank or member firm of The New York Stock
Exchange, Inc.
CAN YOU SEND MY DIVIDEND CHECKS DIRECTLY TO MY BANK?
Yes, provide the Transfer Agent with your bank's name, your branch's mailing
address and your account number at your bank. (Sorry, the Bank cannot
electronically transfer funds at this time.)
WHO DO I NOTIFY OF A CHANGE OF ADDRESS?
The Transfer Agent.
WE GO TO FLORIDA (ARIZONA) EVERY WINTER. HOW DO WE GET OUR MAIL FROM ADAMS
EXPRESS?
The Transfer Agent can program a seasonal address into its system; simply send
the temporary address and the dates you plan to be there to the Bank.
I WANT TO GIVE SHARES TO MY CHILDREN, GRANDCHILDREN, ETC. AS A GIFT. HOW DO I GO
ABOUT IT?
Giving shares of Adams Express is simple and is handled through our Transfer
Agent. The stock transfer rules, designed to protect you, the investor, are
clear and precise for most forms of transfer. They will vary slightly depending
on each transfer, so write to the Transfer Agent stating the exact intent of
your gift plans and the Agent will send you the instructions and forms necessary
to effect your transfer.
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
17
<PAGE>
SHAREHOLDER INFO AND SERVICES (CONTINUED)
- --------------------------------------------------------------------------------
DIVIDEND PAYMENT SCHEDULE
The Company presently pays dividends four times a year, as follows: (a) three
interim distributions on or about March 1, June 1 and September 1, and (b) a
"year-end" distribution, payable in late December, consisting of the estimated
balance of the net investment income for the year and the net realized capital
gain earned through October 31. Stockholders may elect to receive the year-end
distribution in stock or cash. In connection with this distribution, all
STOCKHOLDERS OF RECORD are sent a dividend announcement notice and an election
card in mid-November.
STOCKHOLDERS HOLDING SHARES IN "STREET" OR BROKERAGE ACCOUNTS MAY MAKE THEIR
ELECTION BY NOTIFYING THEIR BROKER REPRESENTATIVE.
BUYDIRECT(SM)*
BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvestment
plan, sponsored and administered by our Transfer Agent, The Bank of New York. On
September 1, 1998, the Automatic Dividend Reinvestment Plan was replaced and
enhanced by BuyDIRECT. The Plan provides registered stockholders and interested
first time investors an affordable alternative for buying, selling, and
reinvesting in Adams Express shares without going through a broker. Direct
purchase plans are growing in popularity and Adams Express is pleased to be one
of the first closed-end funds to participate in such a plan.
The costs to participants in administrative service fees and brokerage
commissions for each type of transaction are listed below. Please note that the
fees for the reinvestment of dividends as well as the $0.05 per share commission
for each share purchased under the Plan have not increased since 1973.
Initial Enrollment $7.50
A ONE-TIME FEE FOR NEW ACCOUNTS WHO ARE NOT CURRENTLY
REGISTERED HOLDERS.
Optional Cash Investments
Service Fee $2.50 per investment
Brokerage Commission $0.05 per share
Reinvestment of Dividends**
Service Fee 10% of amount invested
(maximum of $2.50 per investment)
Brokerage Commission $0.05 per share
Sale of Shares
Service Fee $10.00
Brokerage Commission $0.05 per share
Deposit of Certificates for safekeeping Included
Book to Book Transfers Included
TO TRANSFER SHARES TO ANOTHER PARTICIPANT OR TO A NEW PARTICIPANT
FEES ARE SUBJECT TO CHANGE AT ANY TIME.
MINIMUM AND MAXIMUM CASH INVESTMENTS
Initial minimum investment (non-holders) $500.00
Minimum optional investment
(existing holders) $50.00
Maximum per transaction $25,000.00
Maximum per year NONE
A brochure which further details the benefits and features of BuyDIRECT as well
as an enrollment form may be obtained by contacting The Bank of New York.
FOR NON-REGISTERED SHAREHOLDERS
For shareholders whose stock is held by a broker in "street" name, The Bank of
New York's Dividend Reinvestment Plan remains 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 or contact The Bank of New York about the BuyDIRECT
Plan.
----------
THE COMPANY
The Adams Express Company
Lawrence L. Hooper, Jr.,
Secretary and General Counsel
Seven St. Paul Street,
Suite 1140
Baltimore, MD 21202
(800) 638-2479
Website:
www.adamsexpress.com
E-mail:
contact @adamsexpress.com
THE TRANSFER AGENT
The Bank of New York
Shareholder Relations
Dept.-8W
P.O. Box 11258
Church Street Station
New York, NY 10286
(800) 432-8224
Website:
http://stock.bankofny.com
E-mail:
Shareowner-svcs@
bankofny.com
*BuyDIRECT IS A SERVICE MARK OF THE BANK OF NEW YORK.
**THE YEAR-END DIVIDEND AND CAPITAL GAIN DISTRIBUTION WILL USUALLY BE MADE IN
NEWLY ISSUED SHARES OF COMMON STOCK. THERE WILL BE NO FEES OR COMMISSIONS IN
CONNECTION WITH THIS DIVIDEND AND CAPITAL GAINS DISTRIBUTION WHEN MADE IN NEWLY
ISSUED SHARES.
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
18
<PAGE>
<TABLE>
<CAPTION>
HISTORICAL FINANCIAL STATISTICS
- ------------------------------------------------------------------------------------------------------------------------
Dividends Distributions
From Net From Net
Common Net Asset Investment Realized
Value Of Shares Value Income Gains
Dec. 31 Net Assets Outstanding Per Share Per Share Per Share
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1984 $ 364,880,744 20,320,139 $17.96 $.78 $1.33
1985 437,819,395 21,313,202 20.54 .72 1.20
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
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
1998 1,688,080,336 51,876,651 32.54 .45 1.65
</TABLE>
----------
Stock Data
----------
Price (12/31/98) $26 5/8
Net Asset Value (12/31/98) $32.54
Discount: 18.2%
New York Stock Exchange and Pacific Exchange ticker symbol: ADX
Newspaper stock listings are generally under the abbreviation: AdaEx
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
19
<PAGE>
THE ADAMS EXPRESS COMPANY
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BOARD OF DIRECTORS (with their principal affiliations)
Enrique R. Arzac(1,3)
PROFESSOR OF FINANCE
AND ECONOMICS
COLUMBIA UNIVERSITY
Allan Comrie(1,3)
RETIRED PRESIDENT OF
U.S. & FOREIGN
SECURITIES CORPORATION
Daniel E. Emerson(2,4)
RETIRED EXECUTIVE VICE PRESIDENT
NYNEX CORPORATION
Thomas H. Lenagh(2,4)
FINANCIAL ADVISOR
W.D. MacCallan(1,3)
RETIRED CHAIRMAN OF THE COMPANY AND PETROLEUM & RESOURCES CORPORATION
W. Perry Neff(3,4)
RETIRED EXECUTIVE VICE PRESIDENT
CHEMICAL BANK
Douglas G. Ober(1)
CHAIRMAN OF THE COMPANY
Landon Peters(1,2)
PRIVATE INVESTOR
John J. Roberts(1,4)
SENIOR ADVISOR, AMERICAN
INTERNATIONAL GROUP, INC.
Robert J.M. Wilson(2,4)
RETIRED PRESIDENT OF THE COMPANY AND PETROLEUM & RESOURCES CORPORATION
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
Maureen A. Jones
VICE PRESIDENT AND TREASURER
Lawrence L. Hooper, Jr.
SECRETARY AND GENERAL COUNSEL
Christine M. Griffith
ASSISTANT TREASURER
Geraldine H. Stegner
ASSISTANT SECRETARY
1. MEMBER OF EXECUTIVE COMMITTEE
2. MEMBER OF AUDIT COMMITTEE
3. MEMBER OF COMPENSATION COMMITTEE
4. MEMBER OF RETIREMENT BENEFITS COMMITTEE
[ADAMS EXPRESS COMPANY'S LOGO APPEARS HERE]
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THE ADAMS EXPRESS COMPANY
Seven St. Paul Street, Suite 1140
Baltimore, MD 21202
(410) 752-5900 or (800) 638-2479
Contact us on the Web at:
www.adamsexpress.com
[GRAPHIC APPEARS HERE]
Printed On Recycled Paper
