<PAGE>
Letter to Stockholders
- -------------------------------------------------------------------------------
We are pleased to submit the financial statements for the three months ended
March 31, 1999. In addition, a schedule of investments and summary financial
information for the Company are provided.
Net assets of the Company at March 31, 1999 were $33.35 per share, as compared
with $32.54 per share at December 31, 1998, on the 51,876,651 shares outstand-
ing on each date. The total return on net assets (with reinvestment of income
and capital gains distributions) for the period was 3.0%. On March 1, 1999, a
distribution of $0.12 per share was paid consisting of $0.06 from 1998 long-
term capital gain, $0.01 from 1998 investment income and $0.05 from 1999 in-
vestment income. All are taxable in 1999. A 1999 investment income dividend of
$0.12 per share has been declared to shareholders of record May 19, 1999, pay-
able June 1, 1999.
Net investment income for the three months ended March 31, 1999 amounted to
$4,955,572, compared with $5,142,683 for the same period in 1998. These earn-
ings 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,
1999 amounted to $41,824,282, the equivalent of $0.81 per share.
Year 2000 Readiness Disclosure: As the countdown continues to the Year 2000,
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 Company's Y2K project team has completed testing of in-house
hardware and software systems and, based on the testing results, anticipates
being Year 2000 ready. The Company's custodian and transfer agent, The Bank of
New York, has confirmed that it will also be Year 2000 ready. The Company has
incurred no significant costs relating to the Year 2000 issue. Despite these
efforts, there is no assurance that any adverse impact on the Company will be
avoided.
The Annual Shareholders Meeting was held on March 30, 1999 in New York City.
Upon conclusion of the formal segment of the meeting, management reviewed the
portfolio's performance in 1998 and discussed the outlook for the future. The
results of the voting at the Annual Meeting are shown on page 10.
Effective April 1, 1999, the Board of Directors elected Mr. Lawrence L. Hoop-
er, Jr. to Vice President and Ms. Barbara L. Rishel to Vice President--Re-
search. Mr. Hooper retains the titles of Secretary and General Counsel of the
Company. Ms. Rishel has been a senior analyst for the Company since 1997.
Current and potential shareholders can find information about the Company, in-
cluding the daily net asset value (NAV) per share and the market price dis-
count to the NAV, at its site on the Internet. The address for the site is
www.adamsexpress.com. Also available at the website are a brief history of the
Company, historical financial information, and more general industry material.
Further information regarding shareholder services is located on page 11 of
this report.
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 opportu-
nity for capital appreciation.
By order of the Board of Directors,
Douglas G. Ober, Joseph M. Truta,
Chairman and Chief President
Executive Officer
April 16, 1999
<PAGE>
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
March 31, 1999 (unaudited)
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $793,640,188) $1,659,014,795
Non-controlled affiliate, Petroleum &
Resources Corporation
(cost $22,153,015) 37,374,221
Short-term investments (cost $32,681,129) 32,681,129 $1,729,070,145
- -----------------------------------------------------------------------------
Cash 109,459
Securities lending collateral 218,685,333
Dividends and interest receivable 1,825,282
Prepaid expenses and other assets 5,270,204
- -----------------------------------------------------------------------------
Total Assets 1,954,960,423
- -----------------------------------------------------------------------------
Liabilities
Investment securities purchased 2,033,293
Open option contracts at value (proceeds
$862,033) 646,875
Obligations to return securities lending
collateral 218,685,333
Accrued expenses 3,288,693
- -----------------------------------------------------------------------------
Total Liabilities 224,654,194
- -----------------------------------------------------------------------------
Net Assets $1,730,306,229
- -----------------------------------------------------------------------------
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 3,767,149
Undistributed net realized gain on investments 42,281,800
Unrealized appreciation on investments 880,810,971
- -----------------------------------------------------------------------------
Net Assets Applicable to Common Stock $1,730,306,229
- -----------------------------------------------------------------------------
Net Asset Value Per Share of Common Stock $33.35
- -----------------------------------------------------------------------------
</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, 1999 (unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 4,424,552
From non-controlled affiliate 114,557
Interest 1,481,795
- --------------------------------------------------------------------------
Total income 6,020,904
- --------------------------------------------------------------------------
Expenses:
Investment research 377,171
Administration and operations 255,143
Directors' fees 50,250
Reports and stockholder communications 81,888
Transfer agent, registrar and custodian expenses 119,024
Auditing services 13,374
Legal services 7,642
Occupancy and other office expenses 62,188
Travel, telephone and postage 31,874
Other 66,778
- --------------------------------------------------------------------------
Total expenses 1,065,332
- --------------------------------------------------------------------------
Net Investment Income 4,955,572
- --------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on
Investments
Net realized gain on security transactions 41,709,725
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 114,557
Change in unrealized appreciation on investments 1,671,237
- --------------------------------------------------------------------------
Net Gain on Investments 43,495,519
- --------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $48,451,091
- --------------------------------------------------------------------------
</TABLE>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Year Ended
Ended March 31, 1999 Dec. 31, 1998
-------------------- -------------
(unaudited)
<S> <C> <C>
From Operations:
Net investment income $ 4,955,572 $ 22,579,513
Net realized gain on investments 41,824,282 82,933,498
Change in unrealized appreciation on
investments 1,671,237 213,960,698
- ---------------------------------------------------------------------------------
Change in net assets resulting from
operations 48,451,091 319,473,709
- ---------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (3,112,599) (22,477,158)
Net realized gain from investment
transactions (3,112,599) (82,416,244)
- ---------------------------------------------------------------------------------
Decrease in net assets from distributions (6,225,198) (104,893,402)
- ---------------------------------------------------------------------------------
From Capital Share Transactions:
Value of common shares issued in payment
of optional distributions -0- 49,329,604
- ---------------------------------------------------------------------------------
Total Increase in Net Assets 42,225,893 263,909,911
Net Assets:
Beginning of period 1,688,080,336 1,424,170,425
- ---------------------------------------------------------------------------------
End of period (including undistributed net
investment
income of $3,767,149 and $1,924,176,
respectively) $1,730,306,229 $1,688,080,336
- ---------------------------------------------------------------------------------
</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 invest-
ment 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 outstand-
ing voting securities are held by the Company are defined as "Affiliated Com-
panies" in Section 2(a)(3) of the Investment Company Act of 1940.
Security Transactions and Investment Income -- Investment transactions are ac-
counted 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 distribu-
tions to shareholders are recognized on the ex-dividend date, and interest in-
come is recognized on the accrual basis.
2. Federal Income Taxes
The Company's policy is to distribute all of its taxable income to its share-
holders in compliance with the requirements of the Internal Revenue Code ap-
plicable 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, 1999 was $848,634,043, and net
unrealized appreciation aggregated $881,298,135, of which the related gross
unrealized appreciation and depreciation were $916,109,267 and $34,811,132,
respectively.
Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. Accordingly, peri-
odic reclassifications are made within the Company's capital accounts to re-
flect income and gains available for distribution under income tax regula-
tions.
3. Investment Transactions
Purchases and sales of portfolio securities, other than options and short-term
investments, during the three months ended March 31, 1999 were $108,882,331
and $111,258,955, 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 period ended March 31, 1999. 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, 1999.
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 exercis-
able 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 ex-
ercisable 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 holders 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 sur-
render. 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 1999, 254,301 options
were outstanding, with a weighted average exercise price of $13.2803 per
share. During the three months ended March 31, 1999, the Company granted op-
tions including stock appreciation rights for 25,859 shares of common stock
with a weighted average exercise price of $26.294. Stock appreciation rights
relating to 12,757 stock option shares were exercised at a weighted average
market price of $27.0625 per share and the stock options relating to those
rights, which had a weighted average exercise price of $10.6954 per share,
were cancelled. At March 31, 1999, there were outstanding exercisable options
to purchase 69,416 common shares at $8.740-$23.665 per share (weighted average
price of $12.2406), and unexercisable options to purchase 197,987 common
shares at $10.0550-$26.2525 per share (weighted average price of $15.4315).
The weighted average remaining contractual life of outstanding exercisable and
unexercisable options is 5.5542 years and 6.6041 years, respectively. Total
compensation expense recognized for the three months ended March 31, 1999 re-
lated to the stock options and stock appreciation rights plan was $168,558. At
March 31, 1999, there were 906,219 shares available for future option grants.
5. Retirement Plans
The Company provides retirement benefits for its employees under a non-con-
tributory 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, 1999 was $134,971, and consisted of service cost of $47,135, inter-
est cost of $74,270, expected return on plan assets of $213,515, and net amor-
tization credit of $42,861.
In determining the actuarial present value of the projected benefit obliga-
tion, the interest rate used for the weighted average discount rate was 6.75%,
the expected rate of annual salary increases was 7.0%, and the long-term ex-
pected rate of return on plan assets was 8.0%.
On January 1, 1999, the projected benefit obligation for service rendered to
date was $4,501,469. During the three months ended March 31, 1999, the pro-
jected benefit obligation increased due to service cost and interest cost of
$47,135 and $74,270, respectively, and decreased due to benefit payments in
the amount of $50,146. The projected benefit obligation at March 31, 1999 was
$4,572,728.
On January 1, 1999, the actual fair value of plan assets was $10,776,045. Dur-
ing the three months ended March 31, 1999, the fair value of plan assets in-
creased due to the expected return on plan assets of $213,515 and decreased
due to benefit payments in the amount of $50,146. At March 31, 1999, the pro-
jected fair value of plan assets amounted to $10,939,414 which
4
<PAGE>
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
resulted in excess plan assets of $6,366,686. The remaining components of pre-
paid pension cost at March 31, 1999 included $1,996,099 in unrecognized net
gain, $738,881 in unrecognized prior service cost and $263,785 is the remain-
ing portion of the unrecognized net asset existing at January 1, 1987, which
is being amortized over 15 years. Prepaid pension cost included in other as-
sets at March 31, 1999 was $4,845,683.
In addition, the Company has a nonqualified benefit plan which provides em-
ployees 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, 1999 for employees and
former employees of the Company was $3,096,925. Aggregate remuneration paid or
accrued during the three months ended March 31, 1999 to officers and directors
amounted to $523,063.
Research, accounting and other office services provided to and reimbursed by
the Company's non-controlled affiliate,
Petroleum & Resources Corporation, amounted to $109,926 for the three months
ended March 31, 1999.
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 compen-
sation 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 in-
terest or dividends on the securities loaned. The loans are secured by collat-
eral 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 March 31, 1999, the Company had securities on loan of
$209,474,679 and held collateral of $218,685,333.
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
----------------------
(unaudited)
Year Ended December 31
March 31, March 31, --------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of
period $32.54 $28.51 $28.51 $23.71 $21.36 $17.98 $19.78
- ----------------------------------------------------------------------------------------------------------
Net investment income 0.10 0.10 0.45 0.43 0.52 0.50 0.51
Net realized gains and change
in unrealized appreciation and
other changes 0.83 3.78 5.68 6.33 3.55 4.54 (0.71)
- ----------------------------------------------------------------------------------------------------------
Total from investment
operations 0.93 3.88 6.13 6.76 4.07 5.04 (0.20)
- ----------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment
income (0.06) (0.07) (0.45) (0.44) (0.52) (0.52) (0.50)
Distributions from net realized
gains (0.06) (0.05) (1.65) (1.52) (1.20) (1.14) (1.10)
- ----------------------------------------------------------------------------------------------------------
Total distributions (0.12) (0.12) (2.10) (1.96) (1.72) (1.66) (1.60)
- ----------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.35 $32.27 $32.54 $28.51 $23.71 $21.36 $17.98
- ----------------------------------------------------------------------------------------------------------
Per share market price, end of
period $27.125 $27.6875 $26.625 $24.1875 $19.75 $18.50 $15.625
Total Investment Return
Based on market price 2.3% 15.0% 19.3% 33.1% 16.4% 29.5% (3.7)%
Based on net asset value 3.0% 13.7% 23.7% 30.7% 21.0% 29.9% 0.1%
Ratios/Supplemental Data
Net assets, end of period (in
000's) $1,730,306 $1,612,092 $1,688,080 $1,424,170 $1,138,760 $986,231 $798,298
Ratio of expenses to average
net assets 0.25%+ 0.35%+ 0.22% 0.39% 0.34% 0.46% 0.33%
Ratio of net investment income
to average net assets 1.17%+ 1.37%+ 1.48% 1.61% 2.30% 2.51% 2.65%
Portfolio turnover 26.21%+ 14.45%+ 22.65% 17.36% 19.60% 23.98% 19.23%
Number of shares outstanding at
end of period (in 000's) 51,877 49,949 51,877 49,949 48,037 46,166 44,390
</TABLE>
- --------
+ Ratios presented on an annualized basis.
5
<PAGE>
Schedule of Investments
- --------------------------------------------------------------------------------
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
---------- --------
<S> <C> <C>
Stocks And Convertible Securities --98.0%
Basic Materials -- 1.3%
Consolidated Papers, Inc. 410,000 $ 9,635,000
Mead Corp. 400,000 12,300,000
-----------
21,935,000
-----------
Capital Goods -- 7.8%
Corning, Inc. 460,000 27,600,000
Dover Corp. 260,000 8,547,500
Emerson Electric Co. 73,000 3,864,437
General Electric Co. 655,000 72,459,375
Minnesota Mining &
Manufacturing Co. 170,000 12,027,500
Pall Corp. 600,000 9,937,500
-----------
134,436,312
-----------
Communication Services -- 10.9%
Telecommunications -- Cellular and Wireless -- 2.3%
AirTouch Communications, Inc. (B) 115,000 11,111,875
MediaOne Group, Inc.
6.25% PIES due 2001 85,000 7,033,750
Nextel Communications Inc. (B) 600,000 21,975,000
-----------
40,120,625
-----------
Telecommunications -- Long Distance -- 4.2%
MCI WorldCom, Inc. (B) 410,000 36,310,625
Qwest Communications International, Inc.
5.75% TRENDS Pfd.
due 2003 (D) 125,000 8,000,000
Qwest Communications International, Inc. (B) 396,006 28,549,577
-----------
72,860,202
-----------
Telephone -- 4.4%
Ameritech Corp. 310,000 17,863,750
BellSouth Corp. 440,000 17,627,500
Frontier Corp. 450,000 23,343,750
SBC Communications Inc. 380,000 17,931,250
-----------
76,766,250
-----------
Consumer -- 12.8%
Consumer Cyclical -- 2.5%
American Stores Co. 445,000 14,685,000
Borders Group, Inc. (B) 195,000 2,742,188
Delphi Automotive, Inc. 500,000 8,875,000
Dillard's, Inc. 200,000 5,075,000
Polo Ralph Lauren Corp. (B) 175,000 3,478,125
Tiffany & Co. 127,500 9,530,625
-----------
44,385,938
-----------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
---------- --------
<S> <C> <C>
Consumer Staples -- 10.3%
CRBL Group, Inc. 340,000 $ 6,120,000
Coca-Cola Co. 170,000 10,433,750
Dean Foods Co. 300,000 10,687,500
Fort James Corp. 550,000 17,428,125
Gillette Co. 439,120 26,100,195
Houston Industries Inc.
7.00% conv. DECS due 2000 150,000 18,075,000
Interstate Bakeries Corp. 138,000 2,975,625
Ivex Packaging Corp. (B) 575,000 8,732,812
McDonald's Corp. 560,000 25,375,000
MediaOne Group, Inc. (B) 150,000 9,515,625
PepsiCo, Inc. 295,000 11,560,313
Procter & Gamble Co. 230,000 22,525,625
Ralston Purina
7.00% SAILS due 2000 180,000 8,100,000
-----------
177,629,570
-----------
Energy -- 6.7%
BP Amoco plc ADR 150,000 15,150,000
Enron Corp. 250,000 16,062,500
Mobil Corp. 120,000 10,560,000
Petroleum & Resources
Corporation (C) 1,145,570 37,374,221
Royal Dutch Petroleum Co. 180,000 9,360,000
Schlumberger Ltd. 88,400 5,320,575
Williams Companies, Inc. 500,000 19,750,000
-----------
113,577,296
-----------
Financial -- 17.0%
Banking --10.1%
Associates First Capital Corp.
Ser. A 546,800 24,606,000
Bank One Corp. 330,000 18,170,625
Federal Home Loan Mortgage Corp. 360,000 20,632,500
Greenpoint Financial Corp. 425,000 14,768,750
Investors Financial Services Corp. 480,000 13,800,000
Mellon Bank Corp. 210,000 14,778,750
National City Corp. 80,000 5,310,000
Peoples Heritage Financial Group 474,000 8,532,000
Provident Bankshares Corp. 289,405 7,560,711
Wachovia Corp. 190,000 15,425,625
Wells Fargo & Co. 550,000 19,284,375
Wilmington Trust Corp. 210,000 11,996,250
-----------
174,865,586
-----------
</TABLE>
6
<PAGE>
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
---------- --------
<S> <C> <C>
Insurance -- 6.9%
AMBAC Financial Group, Inc. 379,600 $ 20,498,400
American International Group, Inc. 405,000 48,853,125
Annuity & Life Re (Holdings), Ltd. 700,000 16,012,500
Reinsurance Group of America, Inc. 449,775 19,143,548
Salomon Smith Barney Holdings, Inc. 7.625% Exch.
Notes due 1999 (D) 375,000 15,142,500
------------
119,650,073
------------
Health Care -- 14.9%
Drugs -- 11.8%
ALZA Corp. (B) 340,000 13,005,000
American Home Products Corp. 635,000 41,433,750
Baxter International 250,000 16,500,000
Chiron Corp. (B) 750,000 16,453,125
Elan Corp., plc ADR (B) 435,000 30,341,250
Forest Laboratories, Inc. (B) 330,000 18,603,750
Lilly (Eli) & Co. 310,000 26,311,250
Merck & Co., Inc. 300,000 24,037,500
SmithKline Beecham plc ADR 260,000 18,590,000
------------
205,275,625
------------
Medical Supplies and Services -- 3.1%
Abbott Laboratories 480,000 22,470,000
American Retirement Corp. 5.75% Conv. Sub. Debs. due
2002 $4,000,000 3,280,000
American Retirement Corp. (B) 151,100 2,172,063
Integrated Health Services, Inc. 5.75% Conv. Sub.
Debs. due 2001 $6,675,000 4,338,750
Integrated Health Services, Inc. 180,564 993,102
Sunrise Assisted Living, Inc. (B) 440,000 20,047,500
------------
53,301,415
------------
Technology -- 19.4%
Communication Equipment -- 6.1%
Ericsson (L.M.) Telephone Co. 4.25% Conv. Sub. Debs.
due 2000 $120,000 761,250
Ericsson (L.M.) Telephone Co. ADR 750,000 17,859,375
Lucent Technologies Inc. 95,000 10,260,000
Motorola, Inc. LYONs due 2009 $650,000 880,750
Motorola, Inc. 150,000 10,987,500
Nokia Corp. Pfd. ADR 270,000 42,052,500
Northern Telecom Ltd. 380,000 23,607,500
------------
106,408,875
------------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
---------- --------
<S> <C> <C> <C>
Computer Related -- 8.8%
Affiliated Computer
Services, Inc. (B) 43,500 $ 1,990,125
Cisco Systems, Inc. (B) 458,750 50,261,797
DST Systems Inc. (B) 360,000 21,622,500
First Data Corp. 343,980 14,705,145
Hewlett-Packard Co. 275,000 18,648,437
QRS Corp. (B) 425,000 26,589,063
Sterling Commerce, Inc. (B) 575,000 17,681,250
-------------
151,498,317
-------------
Electronics -- 4.5%
Intel Corp. 170,000 20,208,750
Solectron Corp. (B) 1,190,000 57,789,375
-------------
77,998,125
-------------
Transportation -- 2.8%
Delta Air Lines, Inc. 300,142 20,859,869
FDX Corp. (B) 130,000 12,090,000
Ryder System, Inc. 570,000 15,746,250
-------------
48,696,119
-------------
Utilities -- 4.4%
Black Hills Corp. 555,000 11,828,438
CINergy Corp. 300,000 8,250,000
ENDESA, S.A. ADR 450,000 11,193,750
New Century Energies, Inc. 250,000 8,515,625
Northwestern Corp. 500,000 12,968,750
TECO Energy, Inc. 300,000 5,962,500
United Water Resources Inc. 600,000 12,450,000
Washington Gas Light Co. 257,000 5,814,625
-------------
76,983,688
-------------
Total Stocks and Convertible Securities
(Cost $815,793,203)(E) 1,696,389,016
-------------
</TABLE>
7
<PAGE>
Schedule of Investments (continued)
- -------------------------------------------------------------------------------
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt. Value(A)
---------- --------
<S> <C> <C>
Short-Term Investments -- 1.9%
U.S. Government Obligations -- 0.9%
U.S. Treasury Bills,
4.53%, due 5/27/99 $15,000,000 $14,894,308
-----------
Commercial Paper -- 1.0%
Chevron USA, 4.83%, due 4/6/99 6,750,000 6,745,472
Ford Motor Credit Corp., 4.84-4.86%, due 4/5/99-
4/20/99 7,675,000 7,665,819
General Electric Capital Corp., 4.87-4.92%,
due 4/8/99-4/13/99 3,379,500 3,375,530
-----------
17,786,821
-----------
</TABLE>
<TABLE>
<CAPTION>
Value(A)
--------
<S> <C> <C>
Total Short-Term Investments
(Cost $32,681,129) $ 32,681,129
--------------
Total Investments
(Cost $848,474,332) 1,729,070,145
Cash, receivables and other assets, less liabilities 1,236,084
--------------
Net Assets -- 100.0% $1,730,306,229
==============
</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 re-
stricted securities.
(B) Presently non-dividend paying.
(C) Non-controlled affiliate.
(D) Restricted securities (Salomon Smith Barney Holdings, 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 March 31, 1999 cov-
ering open call option contracts written was $9,350,000. In addition, the
aggregate market value of securities segregated by the custodian required
to collateralize open put option contracts written was $10,025,000.
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> <C> <C> <C> <C>
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
March 31, 1999
(unaudited)............ 1,730,306,229 51,876,651 33.35 .18* .06
</TABLE>
- --------
* Paid or declared.
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 pur-
chase or sale of shares of the Company or of any securities mentioned in the
report.
8
<PAGE>
Principal Changes in Portfolio Securities
- --------------------------------------------------------------------------------
During the Three Months Ended March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Shares
----------------------------------------
Held
Additions Reductions March 31, 1999
--------- ---------- --------------
<S> <C> <C> <C>
American Home Products Corp.......... 310,000 635,000
American Stores Co. ................. 220,500 445,000
Chiron Corp. ........................ 315,000 750,000
Delphi Automotive, Inc. ............. 500,000 500,000
Elan Corp., plc ADR.................. 85,000 435,000
Enron Corp. ......................... 150,000 250,000
Fort James Corp. .................... 100,000 550,000
Frontier Corp. ...................... 349,000 450,000
Investors Financial Services Corp. .. 240,000 (/1/) 480,000
McDonald's Corp. .................... 280,000 (/1/) 25,000 560,000
Merck & Co., Inc. ................... 170,000 (/1/) 40,000 300,000
Nextel Communications Inc. .......... 505,000 600,000
Reinsurance Group of America, Inc. .. 149,925 (/1/) 449,775
Ryder System, Inc. .................. 170,000 570,000
Solectron Corp. ..................... 595,000 (/1/) 5,000 1,190,000
Sterling Commerce, Inc. ............. 155,000 575,000
Williams Companies, Inc. ............ 257,000 500,000
ALZA Corp. .......................... 160,000 340,000
Best Foods Inc. ..................... 255,000 --
Campbell Soup Co. ................... 380,000 --
Deere & Co. ......................... 280,000 --
E. I. du Pont de Nemours & Co. ...... 250,000 --
FDX Corp. ........................... 130,000 130,000
The BFGoodrich Co. .................. 110,000 --
LG&E Energy Corp. ................... 400,000 --
Nokia Corp. Pfd. ADR................. 30,000 270,000
Southwest Bancorp. of Texas, Inc. ... 350,000 --
Tiffany & Co. ....................... 42,500 127,500
Unocal Capital Trust $3.125 Conv.
Pfd. ............................... 111,600 --
</TABLE>
- --------
(1) By stock split.
------------------
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]
9
<PAGE>
Annual Meeting of Stockholders
- --------------------------------------------------------------------------------
The Annual Meeting of Stockholders was held on March 30, 1999. For those nomi-
nated, the following votes were cast for directors:
<TABLE>
<CAPTION>
votes for votes withheld
---------- --------------
<S> <C> <C>
(A) Enrique R. Arzac: 43,377,372 528,423
(B) Allan Comrie: 43,159,198 746,597
(C) Daniel E. Emerson: 43,306,599 599,196
(D) Thomas H. Lenagh: 43,085,388 820,407
(E) W.D. MacCallan: 43,312,145 593,650
(F) W. Perry Neff: 43,303,103 602,692
(G) Douglas G. Ober: 43,413,292 492,503
(H) Landon Peters: 43,378,055 527,740
(I) John J. Roberts: 43,202,868 702,927
(J) Robert J.M. Wilson: 43,232,360 673,435
</TABLE>
A proposal to approve and ratify the selection of PricewaterhouseCoopers LLP as
the firm of independent accountants of the Company for 1999 was approved with
43,338,360 votes for, 258,543 votes against and 308,892 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 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 brokerage house representative.
BuyDIRECTSM*
BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvest-
ment plan, sponsored and administered by our transfer agent, The Bank of New
York. On September 1, 1998, the Automatic Dividend Reinvestment Plan was re-
placed 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 bro-
ker. 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 commis-
sions 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.
<TABLE>
<S> <C>
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
</TABLE>
<TABLE>
<S> <C>
Reinvestment of Dividends**
Service Fee 10% of amount invested
(maximum of $2.50 per investment)
</TABLE>
<TABLE>
<S> <C>
Brokerage Commission $0.05 per share
</TABLE>
<TABLE>
<S> <C>
Sale of Shares
Service Fee $10.00
Brokerage Commission $0.05 per share
</TABLE>
<TABLE>
<S> <C>
Deposit of Certificates for safekeeping Included
</TABLE>
<TABLE>
<S> <C>
Book to Book Transfers Included
</TABLE>
To transfer shares to another participant or to a new participant
Fees are subject to change at any time.
<TABLE>
<S> <C>
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
</TABLE>
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 regis-
tered 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 Transfer Agent
The Adams Express The Bank of New York
Company Shareholder Relations Dept.-8W
Lawrence L. P.O. Box 11258
Hooper, Jr., Church Street Station
Vice President, New York, NY 10286
Secretary and (800) 432-8224
General Counsel Website:
Seven St. Paul http://stock.bankofny.com
Street, E-mail:
Suite 1140 [email protected]
Baltimore, MD
21202
(800) 638-2479
Website:
www.adamsexpress.com
E-mail:
[email protected]
*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.
11
<PAGE>
The Adams Express Company
- --------------------------------------------------------------------------------
Board of Directors
Enrique R. Arzac/1/,/3/
W. Perry Neff/1/,/3/
Allan Comrie/1/,/2/
Douglas G. Ober/1/
Daniel E. Emerson/2/,/4/
Landon Peters/2/,/4/
Thomas H. Lenagh/3/,/4/
John J. Roberts/1/,/4/
W.D. MacCallan/1/,/3/
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
<TABLE>
<S> <C>
Douglas G. Ober Chairman and Chief Executive
Officer
Joseph M. Truta President
Richard F. Koloski Executive Vice President
Barbara L. Rishel Vice President--Research
Richard B. Tumolo Vice President--Research
Lawrence L. Hooper, Jr. Vice President, Secretary
and General Counsel
Maureen A. Jones Vice President and Treasurer
Christine M. Griffith Assistant Treasurer
Geraldine H. Stegner Assistant Secretary
</TABLE>
-------
Stock Data
-------
<TABLE>
<S> <C>
Price (3/31/99) $27.125
Net Asset Value (3/31/99) $33.35
Discount: 18.7%
</TABLE>
New York Stock Exchange and Pacific Exchange ticker symbol: ADX
Newspaper stock listings are generally under the abbreviation: AdaEx
-------------
Distributions in 1999
-------------
<TABLE>
<S> <C>
From Investment Income $0.18
(paid or declared)
From Net Realized Gains 0.06
-----
Total $0.24
=====
</TABLE>
-------------------
1999 Dividend Payment Dates
-------------------
March 1, 1999
June 1, 1999
September 1, 1999*
December 27, 1999*
*Anticipated
