<PAGE>
Letter to Stockholders
-------------------------------------------------------------------------------
We are pleased to submit the financial statements for the six months ended
June 30, 1999. In addition, the report of independent accountants, a schedule
of investments and summary financial information for the Company are provided.
Net assets of the Company at June 30, 1999 were $35.58 per share, compared with
$32.54 per share at December 31, 1998, on the 51,876,651 shares outstanding on
each date. The total return on net assets (with reinvestment of income and
capital gains distributions) for the period was 10.3%. On March 1, 1999, a
distribution of $0.12 per share was paid consisting of $0.06 from 1998 longterm
capital gain, $0.01 from 1998 investment income and $0.05 from 1999 investment
income. All are taxable in 1999. A regular 1999 investment income dividend of
$0.12 per share was paid on June 1, 1999 and another $0.12 investment income
dividend has been declared July 8, 1999 and is payable September 1, 1999 to
shareholders of record August 19, 1999.
Net investment income for the six months ended June 30, 1999 amounted to
$9,574,280, compared with $10,226,154 for the same period in 1998. These
earnings are equal to $0.18 and $0.20 per share, respectively, on the average
number of shares outstanding during each period.
Net capital gain realized on investments for the six months ended June 30,
1999 amounted to $86,580,299, the equivalent of $1.67 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.
Current and potential shareholders can find information about the Company,
including the daily net asset value (NAV) per share, the market price, and the
discount/ premium 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
opportunity for capital appreciation.
By order of the Board of Directors,
Douglas G. Ober,
Chairman and Chief
Executive Officer
Joseph M. Truta,
President
July 16, 1999
<PAGE>
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
June 30, 1999
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $799,601,503) $1,735,240,510
Non-controlled affiliate, Petroleum &
Resources Corporation
(cost $22,153,015) 39,808,558
Short-term investments (cost $64,106,820) 64,106,820 $1,839,155,888
- -----------------------------------------------------------------------------
Cash 1,185,145
Securities lending collateral 238,364,123
Receivables:
Investment securities sold 5,510,772
Dividends and interest 1,254,732
Prepaid expenses and other assets 5,384,063
- -----------------------------------------------------------------------------
Total Assets 2,090,854,723
- -----------------------------------------------------------------------------
Liabilities
Investment securities purchased 2,189,257
Open option contracts at value (proceeds
$812,922) 855,313
Obligations to return securities lending
collateral 238,364,123
Accrued expenses 3,549,085
- -----------------------------------------------------------------------------
Total Liabilities 244,957,778
- -----------------------------------------------------------------------------
Net Assets $1,845,896,945
=============================================================================
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 2,160,660
Undistributed net realized gain on investments 87,037,817
Unrealized appreciation on investments 953,252,159
- -----------------------------------------------------------------------------
Net Assets Applicable to Common Stock $1,845,896,945
=============================================================================
Net Asset Value Per Share of Common Stock $35.58
=============================================================================
</TABLE>
*See Schedule of Investments on pages 6 through 8.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
Statement of Operations
- --------------------------------------------------------------------------------
Six Months Ended June 30, 1999
<TABLE>
<S> <C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 8,696,250
From non-controlled affiliate 343,671
Interest 2,824,556
- ---------------------------------------------------------------------------
Total income 11,864,477
- ---------------------------------------------------------------------------
Expenses:
Investment research 986,447
Administration and operations 478,763
Directors' fees 95,000
Reports and stockholder communications 144,220
Transfer agent, registrar and custodian expenses 201,169
Auditing services 27,002
Legal services 22,992
Occupancy and other office expenses 158,979
Travel, telephone and postage 66,728
Other 108,897
- ---------------------------------------------------------------------------
Total expenses 2,290,197
- ---------------------------------------------------------------------------
Net Investment Income 9,574,280
- ---------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on
Investments
Net realized gain on security transactions 86,465,742
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 114,557
Change in unrealized appreciation on investments 74,112,425
- ---------------------------------------------------------------------------
Net Gain on Investments 160,692,724
- ---------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $170,267,004
===========================================================================
</TABLE>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Ended
Ended June 30, 1999 Dec. 31, 1998
------------------- -------------
<S> <C> <C>
From Operations:
Net investment income $ 9,574,280 $ 22,579,513
Net realized gain on investments 86,580,299 82,933,498
Change in unrealized appreciation on
investments 74,112,425 213,960,698
- --------------------------------------------------------------------------------
Change in net assets resulting from
operations 170,267,004 319,473,709
- --------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (9,337,796) (22,477,158)
Net realized gain from investment
transactions (3,112,599) (82,416,244)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (12,450,395) (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 157,816,609 263,909,911
Net Assets:
Beginning of period 1,688,080,336 1,424,170,425
- --------------------------------------------------------------------------------
End of period (including undistributed net
investment
income of $2,160,660 and $1,924,176,
respectively) $1,845,896,945 $1,688,080,336
================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Notes to Financial Statements
- -------------------------------------------------------------------------------
1. Significant Accounting Policies
The Adams Express Company (the Company) is registered under the Investment
Company Act of 1940 as a diversified investment company. The Company's
investment objectives as well as the nature and risk of its investment
transactions are set forth in the Company's registration statement.
Security Valuation -- Investments in securities traded on a national security
exchange are valued at the last reported sale price on the day of valuation.
Over-the-counter and listed securities for which a sale price is not available
are valued at the last quoted bid price. Short-term investments are valued at
amortized cost. Options are valued at the last sale price or last quoted asked
price.
Affiliated Companies -- Investments in companies 5% or more of whose
outstanding voting securities are held by the Company are defined as "Affiliated
Companies" in Section 2(a)(3) of the Investment Company Act of 1940.
Security Transactions and Investment Income -- Investment transactions are
accounted for on the trade date. Gain or loss on sales of securities and
options is determined on the basis of identified cost. Dividend income and
distributions to shareholders are recognized on the ex-dividend date, and
interest income is recognized on the accrual basis.
2. Federal Income Taxes
The Company's policy is to distribute all of its taxable income to its
shareholders in compliance with the requirements of the Internal Revenue Code
applicable to regulated investment companies. Therefore, no federal income tax
provision is required. For federal income tax purposes, the identified cost of
securities, including options, at June 30, 1999 was $886,229,486, and net
unrealized appreciation aggregated $953,739,324 of which the related gross
unrealized appreciation and depreciation were $979,319,178 and $25,579,854,
respectively.
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Accordingly, periodic
reclassifications are made within the Company's capital accounts to reflect
income and gains available for distribution under income tax regulations.
3. Investment Transactions
Purchases and sales of portfolio securities, other than options and short-term
investments, during the six months ended June 30, 1999 were $182,312,201 and
$221,853,750, 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 June 30, 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 six months ended June 30, 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 exercisabeginning 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 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 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 1999, 254,301 options were outstanding, with a
weighted average exercise price of $13.2803 per share. During the six months
ended June 30, 1999, the Company granted options 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 24,110 stock option shares
were exercised at a weighted average market price of $27.5299 per share and the
stock options relating to those rights, which had a weighted average exercise
price of $12.3875 per share, were cancelled. At June 30, 1999, there were
outstanding exercisable options to purchase 58,063 common shares at $8.740-
$23.665 per share (weighted average price of $11.8401), 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 5.1161 years and
6.3541 years, respectively. Total compensation expense recognized for the six
months ended June 30, 1999 related to the stock options and stock appreciation
rights plan was $419,505. At June 30, 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-
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 six months ended June
30, 1999 was $269,942, and consisted of service cost of $94,270, interest cost
of $148,540, expected return on plan assets of $427,031, and net amortization
credit of $85,721.
In determining the actuarial present value of the projected benefit obligation,
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 expected
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 six months ended June 30, 1999, the projected
benefit obligation increased due to service cost and interest cost of $94,270
and $148,540, respectively, and decreased due to benefit payments in the
amount of $100,292. The projected benefit obligation at June 30, 1999 was
$4,643,987.
On January 1, 1999, the actual fair value of plan assets was $10,776,045. During
the six months ended June 30, 1999, the fair value of plan assets increased due
to the expected return on plan assets of $427,031 and decreased due to benefit
payments in the amount of $100,292. At June 30, 1999, the projected fair value
of plan assets amounted to $11,102,784 which
4
<PAGE>
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
resulted in excess plan assets of $6,458,797. The remaining components of pre
paid pension cost at June 30, 1999 included $1,948,798 in unrecognized net gain,
$710,460 in unrecognized prior service cost and $239,805 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 as sets at
June 30, 1999 was $4,980,654.
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 June 30, 1999 for employees and
former employees of the Company was $3,437,877. Aggregate remuneration paid or
accrued during the six months ended June 30, 1999 to officers and directors
amounted to $1,117,700.
Research, accounting and other office services provided to and reimbursed by
the Company's non-controlled affiliate, Petroleum & Resources Corporation,
amounted to $205,880 for the six months ended June 30, 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 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 collatral 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
June 30, 1999, the Company had securities on loan of $231,302,660 and held
collateral of $238,364,123.
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
------------------------
Year Ended December 31
June 30, June 30, --------------------------------------------------------
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 0.18 0.20 0.45 0.43 0.52 0.50 0.51
Net realized gains and change in
unrealized appreciation and other
changes 3.10 3.40 5.68 6.33 3.55 4.54 (0.71)
- -----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.28 3.60 6.13 6.76 4.07 5.04 (0.20)
Less
distributions
Dividends from net investment income (0.18) (0.19) (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 (0.24) (0.24) (2.10) (1.96) (1.72) (1.66) (1.60)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $35.58 $31.87 $32.54 $28.51 $23.71 $21.36 $17.98
- -----------------------------------------------------------------------------------------------------------------------------
Per share market price, end of period $29.125 $26.875 $26.625 $24.1875 $19.75 $18.50 $15.625
Total Investment Return
Based on market
price 10.4% 12.1% 19.3% 33.1% 16.4% 29.5% (3.7)%
Based on net
asset value 10.3% 12.8% 23.7% 30.7% 21.0% 29.9% 0.1%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $1,845,897 $1,591,813 $1,688,080 $1,424,170 $1,138,760 $986,231 $798,298
Ratio of expenses to average net assets 0.26%+ 0.30%+ 0.22% 0.39% 0.34% 0.46% 0.33%
Ratio of net investment income to average
net assets 1.10%+ 1.33%+ 1.48% 1.61% 2.30% 2.51% 2.65%
Portfolio
turnover 21.56%+ 19.91%+ 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
- --------------------------------------------------------------------------------
June 30, 1999
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
---------- --------
<S> <C> <C>
Stocks And Convertible Securities --96.2%
Basic Materials --1.8%
Avery Dennison Corp. 90,000 $ 5,433,750
Consolidated Papers, Inc. 410,000 10,967,500
Mead Corp. 400,000 16,700,000
------------
33,101,250
------------
Capital Goods -- 7.7%
Black & Decker Corp. 205,100 12,946,938
Corning, Inc. 460,000 32,257,500
Dover Corp. 260,000 9,100,000
General Electric Co. 655,000 74,015,000
Pall Corp. 600,000 13,312,500
------------
141,631,938
------------
Communication Services -- 11.7%
Telecommunications -- Cellular and Wireless --2.7%
MediaOne Group, Inc.
6.25% PIES due 2001 85,000 7,692,500
Nextel Communications Inc. (B) 600,000 30,112,500
Vodafone AirTouch plc ADS 57,500 11,327,500
------------
49,132,500
------------
Telecommunications -- Long Distance -- 3.7%
MCI WorldCom, Inc. (B) 410,000 35,285,625
Qwest Communications International, Inc.
5.75% TRENDS Pfd.
due 2003 (C) 125,000 7,000,000
Qwest Communications International, Inc. (B) 792,012 26,185,897
------------
68,471,522
------------
Telephone -- 5.3%
Ameritech Corp. 310,000 22,785,000
BellSouth Corp. 440,000 20,295,000
Frontier Corp. 450,000 26,381,250
SBC Communications Inc. 380,000 22,040,000
Time Warner Telcom Inc. (B) 220,000 6,380,000
------------
97,881,250
------------
Consumer -- 11.9%
Consumer Cyclical -- 2.4%
Albertson's Inc. 308,700 15,917,344
Delphi Automotive, Inc. 625,000 11,562,500
Dillard's, Inc. 120,000 4,215,000
Polo Ralph Lauren Corp. (B) 175,000 3,325,000
Tiffany & Co. 105,000 10,132,500
------------
45,152,344
------------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
---------- --------
<S> <C> <C>
Consumer Staples -- 9.5%
CRBL Group, Inc. 340,000 $ 5,886,250
Coca-Cola Co. 170,000 10,540,000
Dean Foods Co. 300,000 12,468,750
Fort James Corp. 575,000 21,778,125
Gillette Co. 439,120 18,003,920
Houston Industries Inc.
7.00% conv. DECS due 2000 150,000 17,887,500
Interstate Bakeries Corp. 138,000 3,096,375
Ivex Packaging Corp. (B) 600,000 13,200,000
McDonald's Corp. 560,000 23,030,000
MediaOne Group, Inc. (B) 150,000 11,156,250
Owens-Illinois, Inc. (B) 300,000 9,806,250
PepsiCo, Inc. 295,000 11,412,813
Procter & Gamble Co. 100,000 8,925,000
Ralston Purina
7.00% SAILS due 2000 180,000 8,370,000
------------
175,561,233
------------
Energy -- 6.8%
BP Amoco plc ADR 150,000 16,275,000
Enron Corp. 250,000 20,437,500
Mobil Corp. 120,000 11,850,000
Petroleum & Resources
Corporation (D) 1,145,570 39,808,558
Royal Dutch Petroleum Co. 180,000 10,845,000
Schlumberger Ltd. 88,400 5,629,975
Williams Companies, Inc. 500,000 21,281,250
------------
126,127,283
------------
Financial -- 16.4%
Banking -- 10.1%
Associates First Capital Corp.
Ser. A 546,800 24,127,550
Bank One Corp. 330,000 19,655,625
Federal Home Loan Mortgage Corp. 360,000 20,880,000
Greenpoint Financial Corp. 425,000 13,945,312
Investors Financial Services Corp. 480,000 19,200,000
Mellon Bank Corp. 420,000 15,277,500
National City Corp. 80,000 5,240,000
Peoples Heritage Financial Group 474,000 8,917,125
Provident Bankshares Corp. 303,875 7,065,104
Wachovia Corp. 190,000 16,256,875
Wells Fargo & Co. 550,000 23,512,500
Wilmington Trust Corp. 210,000 12,048,750
------------
186,126,341
------------
</TABLE>
6
<PAGE>
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
June 30, 1999
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
---------- --------
<S> <C> <C>
Insurance -- 6.3%
AMBAC Financial Group, Inc. 379,600 $21,684,650
American International Group, Inc. 405,000 47,486,250
Annuity & Life Re (Holdings), Ltd. 700,000 15,706,250
Financial Security Assurance Holdings Ltd. 307,387 15,984,124
Reinsurance Group of America, Inc. 449,775 15,854,569
-----------
116,715,843
-----------
Health Care -- 12.2%
Drugs -- 9.8%
ALZA Corp. (B) 340,000 17,297,500
American Home Products Corp. 530,000 30,408,750
Baxter International 255,000 15,459,375
Chiron Corp. (B) 750,000 15,562,500
Elan Corp., plc ADR (B) 870,000 24,142,500
Lilly (Eli) & Co. 290,000 20,771,250
Merck & Co., Inc. 300,000 22,087,500
Pharmacia & Upjohn Inc. 300,000 17,043,750
SmithKline Beecham plc ADR 260,000 17,176,250
-----------
179,949,375
-----------
Medical Supplies and Services -- 2.4%
Abbott Laboratories 430,000 19,511,250
American Retirement Corp.. 5.75% Conv. Sub. Debs. due
2002 $4,000,000 3,040,000
American Retirement Corp. (B) 151,100 1,888,750
Integrated Health Services, Inc. 5.75% Conv. Sub.
Debs. due 2001 $6,675,000 4,605,750
Sunrise Assisted Living, Inc. (B) 440,000 15,345,000
-----------
44,390,750
-----------
Technology -- 22.2%
Communication Equipment -- 7.4%
Ericsson (L.M.) Telephone Co. 4.25% Conv. Sub. Debs.
due 2000 $120,000 1,042,500
Ericsson (L.M.) Telephone Co. ADR 750,000 24,703,125
Lucent Technologies Inc. 190,000 12,813,125
Motorola, Inc. LYONs due 2009 $650,000 1,105,000
Motorola, Inc. 150,000 14,212,500
Nokia Corp. ADR 540,000 49,443,750
Nortel Networks Corp. 380,000 32,988,750
-----------
136,308,750
-----------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value(A)
---------- --------
<S> <C> <C>
Computer Related -- 10.0%
Cisco Systems, Inc. (B) 917,500 $ 59,121,406
DST Systems Inc. (B) 360,000 22,635,000
First Data Corp. 343,980 16,833,521
Hewlett-Packard Co. 200,000 20,100,000
International Network Services (B) 400,000 16,150,000
QRS Corp. (B) 357,500 27,885,000
Sterling Commerce, Inc. (B) 575,000 21,131,250
-------------
183,856,177
-------------
Electronics -- 4.8%
Intel Corp. 340,000 20,230,000
Solectron Corp. (B) 1,040,000 69,355,000
-------------
89,585,000
-------------
Transportation -- 2.1%
Canadian National Railway Co. 5.25% Conv. Pfd. QUIDS
due 2029 15,000 802,500
Canadian National Railway Co. 30,000 2,010,000
Delta Air Lines, Inc. 109,100 6,286,887
FDX Corp. (B) 260,000 14,105,000
Ryder System, Inc. 600,000 15,450,000
-------------
38,654,387
-------------
Utilities -- 3.4%
Black Hills Corp. 555,000 12,834,375
CINergy Corp. 300,000 9,600,000
ENDESA, S.A. ADR 350,000 7,437,500
Northwestern Corp. 500,000 12,093,750
TECO Energy, Inc. 300,000 6,825,000
United Water Resources Inc. 600,000 13,612,500
-------------
62,403,125
-------------
Total Stocks and Convertible Securities
(Cost $821,754,518)(E) 1,775,049,068
-------------
</TABLE>
7
<PAGE>
Schedule of Investments (continued)
- -------------------------------------------------------------------------------
June 30, 1999
<TABLE>
<CAPTION>
Prin. Amt. Value(A)
---------- --------
<S> <C> <C>
Short-Term Investments --3.5%
U.S. Government Obligations -- 0.9%
U.S. Treasury Bills,
4.49%, due 8/26/99 $16,000,000 $15,888,148
--------------
Certificates of Deposit -- 0.5%
SouthTrust Bank of Alabama, 4.85-4.98%, due 7/8/99-
7/27/99 10,000,000 10,000,000
--------------
Commercial Paper -- 2.1%
Chevron UK Investments plc, 4.87%, due 7/15/99 1,875,000 1,871,449
Chevron USA, 5.01-5.07%, due 7/29/99-8/10/99 6,981,000 6,948,351
Coca-Cola Co.,
5.11%, due 7/30/99 4,550,000 4,531,270
Ford Motor Credit Corp., 4.98%, due 7/20/99 6,875,000 6,856,930
General Electric Capital Corp., 4.93-4.98%,
due 7/13/99-7/22/99 $10,025,000 $10,001,807
Deere (John) Capital Corp., 4.90%, due 8/3/99 8,045,000 8,008,865
--------------
38,218,672
--------------
Total Short-Term Investments
(Cost $64,106,820) 64,106,820
--------------
Total Investments
(Cost $885,861,338) 1,839,155,888
Cash, receivables and other assets, less
liabilities 6,741,057
--------------
Net Assets -- 100.0% $1,845,896,945
==============
</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) Restricted security (Qwest Communications International, Inc. 5.75% TRENDS
Pfd. due 2003, acquired 12/4/98, cost $5,218,750).
(D) Non-controlled affiliate.
(E) The aggregate market value of stocks held in escrow at June 30, 1999
covering open call option contracts written was $6,840,938. In addition, the
aggregate market value of securities segregated by the custodian required
to collateralize open put option contracts written was $13,012,500.
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
June 30, 1999... 1,845,896,945 51,876,651 35.58 .30* .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 purchase
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 June 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Shares
------------------------------------------
Held
Additions Reductions June 30, 1999
--------- ---------- -------------
<S> <C> <C> <C>
Albertson's Inc.................... 308,700(/1/) 308,700
Avery Dennison Corp................ 90,000 90,000
Black & Decker Corp................ 205,100 205,100
Canadian National Railway Co....... 30,000 30,000
Delphi Automotive, Inc............. 125,000 625,000
Elan Corp., plc ADR................ 435,000(/2/) 870,000
International Network Services..... 400,000 400,000
Intel Corp......................... 170,000(/2/) 340,000
Lucent Technologies Inc............ 95,000(/2/) 190,000
Mellon Bank Corp................... 210,000(/2/) 420,000
Nokia Corp. ADR.................... 270,000(/2/) 540,000
Owens-Illinois, Inc................ 300,000 300,000
Pharmacia & Upjohn Inc............. 300,000 300,000
Qwest Communications International,
Inc............................... 396,006(/2/) 792,012
Vodafone AirTouch plc ADS.......... 57,500(/3/) 57,500
AirTouch Communications, Inc....... 115,000(/3/) --
Abbott Laboratories................ 50,000 430,000
American Home Products Corp........ 105,000 530,000
American Stores Co................. 490,000(/1/) --
Borders Group, Inc................. 195,000 --
Delta Air Lines, Inc............... 191,042 109,100
Dillard's, Inc..................... 80,000 120,000
ENDESA, S.A. ADR................... 100,000 350,000
Emerson Electric Co................ 73,000 --
Forest Laboratories, Inc........... 330,000 --
Hewlett-Packard Co................. 75,000 200,000
Minnesota Mining & Manufacturing
Co................................ 170,000 --
New Century Energies, Inc.......... 250,000 --
Procter & Gamble Co................ 130,000 100,000
QRS Corp........................... 67,500 357,500
Solectron Corp..................... 150,000 1,040,000
Washington Gas Light Co............ 257,000 --
</TABLE>
- --------
(1) Received .63 share of Albertson's Inc. for each share of American Stores
Co. held. Purchased 45,000 separately.
(2) By stock split
(3) Received $9 in cash and .50 share of Vodafone AirTouch plc ADS for each
share of AirTouch Communications, Inc. 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]
9
<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 statements 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 June 30, 1999, and the results of
its operations, the changes in its net assets and the financial highlights for
each of the periods presented, 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 June 30, 1999, by correspondence with custodians
and brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
July 6, 1999
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 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 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 Shareowner-svcs@ bankofny.com
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 gain 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
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
----------
Stock Data
----------
<TABLE>
<S> <C>
Price (6/30/99) $29.125
Net Asset Value (6/30/99) $35.58
Discount: 18.1%
</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 $0.30
(paid or declared)
From Net Realized Gains 0.06
-----
Total $0.36
=====
</TABLE>
---------------------------
1999 Dividend Payment Dates
---------------------------
March 1, 1999
June 1, 1999
September 1, 1999
December 27, 1999*
*Anticipated
