THE ADAMS EXPRESS COMPANY
150/TH/ ANNIVERSARY
[Annual Report 2003]
building for the future with solid investments(R)
2003 AT A GLANCE
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The Company
.. a closed-end equity investment company
.. objectives: preservation of capital
reasonable income
opportunity for capital gain
.. internally-managed
.. low expense ratio
.. low turnover
Stock Data
NYSE Symbol................... ADX
Market Price as of 12/31/03 $12.41
52-Week Range........ $12.75-$9.71
Discount as of 12/31/03......13.6%
Shares Outstanding......84,886,412
Summary Financial Information
Year Ended December 31
2003 2002
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Net asset value per share $ 14.36 $ 12.12
Total net assets 1,218,862,456 1,024,810,092
Unrealized appreciation 282,112,491 94,587,538
Net investment income 15,613,355 16,738,360
Total realized gain 49,120,443 44,530,335
Total return (based on market value) 25.2% (20.6)%
Total return (based on net asset value) 26.3% (19.4)%
Expense ratio 0.47% 0.34%
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2003 Dividends and Distributions
Amount
Paid (per share) Type
-----------------------------------------------------
March 1, 2003 $0.03 Long-term capital gain
March 1, 2003 0.02 Investment income
June 1, 2003 0.05 Investment income
September 1, 2003 0.05 Investment income
December 27, 2003 0.54 Long-term capital gain
December 27, 2003 0.04 Short-term capital gain
December 27, 2003 0.05 Investment income
-----------------------------------------------------
$0.78
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2004 Annual Meeting of Stockholders
Location: The Center Club, 100 Light Street, 16/th/ Floor, Baltimore, Maryland
21202
Date: March 30, 2004
Time: 9:30 a.m.
Holders of Record: February 13, 2004
PORTFOLIO REVIEW
--------------------------------------------------------------------------------
Ten Largest Portfolio Holdings (12/31/03)
Market Value % of Net Assets
---------------------------------------------------------------
American International Group, Inc. $ 48,959,380 4.0
Petroleum & Resources Corporation* 47,147,557 3.9
Pfizer Inc. 38,863,000 3.2
General Electric Co. 34,471,447 2.8
United Technologies Corp. 32,695,650 2.7
Cisco Systems, Inc. 29,148,000 2.4
AMBAC Financial Group, Inc. 27,756,000 2.3
Philadelphia Suburban Corp. 24,171,875 2.0
Wells Fargo & Co. 23,556,000 1.9
Microsoft Corp. 22,032,000 1.8
------------ ----
Total $328,800,909 27.0%
---------------------------------------------------------------
*Non-controlled affiliate
Sector Weightings (12/31/03)
[CHART]
Consumer 12.9%
Energy 7.3%
Financial 17.6%
Health Care 14.6%
Industrials 13.8%
Information
Technology 14.0%
Materials 2.6%
Telecom Services 4.6%
Utilities 8.6%
Cash & Equivalent 3.9%
1
THE ADAMS EXPRESS COMPANY
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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
--------------------------------------------------------------
1989 $10,542 $ 950 $ 467 $11,959 $14,040
1990 9,951 1,720 925 12,596 14,364
1991 12,819 3,217 1,672 17,708 18,831
1992 13,493 4,498 2,195 20,186 20,671
1993 12,060 5,219 2,360 19,639 21,732
1994 10,542 5,778 2,566 18,886 21,738
1995 12,478 8,251 3,697 24,426 28,209
1996 13,325 10,447 4,642 28,414 34,096
1997 16,319 15,023 6,456 37,798 44,559
1998 17,963 19,243 7,844 45,050 55,049
1999 22,644 27,988 10,653 61,285 73,542
2000 21,252 30,554 10,522 62,328 70,401
2001 14,391 24,791 7,773 46,955 52,997
2002 10,697 20,260 6,313 37,270 42,735
2003 12,559 26,039 8,039 46,637 53,965
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 1989-2003. Fees for the
reinvestment of dividends are assumed as $2.50 per reinvestment and commissions
of $0.05 per share. No adjustment has been made for any income taxes payable by
stockholders on income dividends or on capital gains distributions, or the sale
of any shares. These results should not be considered representative of the
dividend income or capital gain or loss which may be realized in the future.
[CHART]
Cumulative Market Cumulative Market
Market Value of Value of Capital Value of Total Market Total Net
Original Shares Gains Distributions Income Dividends Value Asset Value
--------------- ------------------- ---------------- ------------ -----------
1989 $10,542 $ 950 $ 467 $11,959 $14,040
1990 9,951 1,720 925 12,596 14,364
1991 12,819 3,217 1,672 17,708 18,831
1992 13,493 4,498 2,195 20,186 20,671
1993 12,060 5,219 2,360 19,639 21,732
1994 10,542 5,778 2,566 18,886 21,738
1995 12,478 8,251 3,697 24,426 28,209
1996 13,325 10,447 4,642 28,414 34,096
1997 16,319 15,023 6,456 37,798 44,559
1998 17,963 19,243 7,844 45,050 55,049
1999 22,644 27,988 10,653 61,285 73,542
2000 21,252 30,554 10,522 62,328 70,401
2001 14,391 24,791 7,773 46,955 52,997
2002 10,697 20,260 6,313 37,270 42,735
2003 12,559 26,039 8,039 46,637 53,965
2
LETTER TO STOCKHOLDERS
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Each year at this time we share with you our perspective on the past year. In
addition, we discuss what the new year might hold for the economy, equity
markets in general, and your fund.
This year, as noted on the cover of this report, we are celebrating the 150/th/
anniversary of the incorporation of The Adams Express Company. We have included
with the mailing of this report a brief history of the Company that we hope you
will find of interest. At the Annual Meeting of Stockholders, we will have on
display some items of interest from the Company's past and anticipate including
a restored Adams Express delivery wagon. On July 1, the actual date of
incorporation, we expect to ring the bell to open the session of the New York
Stock Exchange.
The Year in Review
Your fund generated a total return on net asset value of 26.3% for the year,
compared to the 28.7% return of the S&P 500 Index and the 28.3% return of the
Dow Industrials. As can be seen from the Schedule of Investments beginning on
page 13 of this report, the majority of our holdings are in
large-capitalization companies, historically the most conservatively-funded and
stable companies available for investment. As it turned out these were the
poorest-performing stocks in the market in 2003. Our belief is that investors
quickly gravitated to smaller companies as the economy picked up since they
would experience rapid growth sooner.
The year began auspiciously, with a strong market rally following the rather
subdued final weeks of 2002. The optimism did not last long, however, as
preliminary earnings reports for the final quarter of 2002 were released and
companies announced their initial expectations for revenues and earnings for
2003. By
January 15, investors had taken a more serious look at the economic and
political situations in the United States and abroad and began unloading
stocks. The fiscal stimulus package proposed by the Bush Administration seemed
to lack support, which meant that despite very low interest rates the economy
was unlikely to grow vigorously. Conditions in the Middle East appeared to be
deteriorating and war in Iraq became increasingly unavoidable.
By mid-March, the stock market had declined almost steadily to near its low
point of 2002. New corporate scandals were exposed, serving to further reduce
investor confidence. The commencement of military action in Iraq and initial
successes there helped to turn the markets around. By mid-April, with the war
seemingly all but over, the dictator in hiding, and U.S. troops in control of
the country, the market rally was in full swing. Though there were still
concerns about the domestic economy, corporate earnings reports were better
than expected and by the middle of May the stock market recovered to where it
began the year.
The economic outlook improved dramatically with the passage by Congress of a
$350 billion fiscal stimulus package. There was an almost immediate increase in
consumer spending, which in turn stimulated inventory investment by businesses.
Third quarter growth in real gross domestic product amounted to 8.2%, a level
not seen in two decades, and corporate profits grew 30% over the prior year,
the most in 19 years. Stock valuations were reappraised by investors and prices
pushed higher to reflect the better profit picture. The economies of Europe and
Asia also showed improvement as the U. S. dollar slid to new lows against the
euro and other currencies. An improved holiday selling season and the capture
of Saddam Hussein served to keep investor confidence high through the end of
the year and to extend the market rally.
After three down years ending in 2002, in which the dot-com and
telecommunications bubbles burst, the performance of smaller-capitalization and
technology stocks in 2003 was extraordinary. The smallest 100 stocks in the S&P
500 provided returns of more than 60%, two times the returns of the largest 100
stocks in the Index. Technology stocks provided the best sector return for the
year, at 47.2%, while telecom services, with a 7.1% return, had the worst.
Stocks in the materials, consumer discretionary, industrial, and financial
sectors all had returns in excess of 30%, while the health care and consumer
staples sectors had returns of 15.1% and 11.6%, respectively.
A greater surprise in 2003 was the relative performance of non-dividend-paying
stocks in the S&P 500. The fiscal stimulus package passed by Congress included
a provision whereby dividend income would be taxed at the more-favorable
capital gains rate rather than at the ordinary income rate, which should make
dividend-paying stocks more attractive to investors. Yet the 100 stocks in the
Index with the lowest yields or that paid no dividends provided a return of
more than 40% for the year compared to the 27% return of the highest-yielding
stocks. Again, as we have historically placed some emphasis on the generation
of dividend income for our shareholders, this was not beneficial to our returns
for the year.
Despite the weaker relative performance of larger-capitalization and
dividend-paying stocks in general, Adams Express still provided an excellent
26.3% total return for the year. The discount of the market price from the net
asset value per share widened to 13.6% at year-end from 12.8% a year ago,
resulting in a total return on the fund's market price of 25.2%.
Investment Results
At the end of 2003 our net assets were $1,218,862,456 or $14.36 per share on
84,886,412 shares outstanding.
3
LETTER TO STOCKHOLDERS (CONTINUED)
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This compares with $1,024,810,092 or $12.12 per share on 84,536,250 shares
outstanding a year earlier.
Net investment income for 2003 was $15,613,355 compared to $16,738,360 for
2002. These earnings are equal to $0.19 and $0.20 per share, respectively, on
the average number of shares outstanding throughout the year. In 2003, our
0.47% expense ratio (expenses to average net assets) was once again at a very
low level compared to the industry.
Net realized gains amounted to $49,120,443 during the year, while the
unrealized appreciation on investments increased from $94,587,538 at December
31, 2002 to $282,112,491 at year end, a 198% increase.
Dividends and Distributions
The total dividends and distributions paid in 2003 were $0.78 per share
compared to $0.76 in 2002. As announced on November 13, 2003, a year-end
distribution consisting of investment income of $0.05 and capital gains of
$0.58 was made on December 27, 2003, both realized and taxable in 2003. On
January 8, 2004, an additional distribution of $0.05 per share was declared
payable March 1, 2004, representing the balance of undistributed net investment
income and capital gains earned during 2003, all taxable to shareholders in
2004.
Outlook for 2004
Economic information from government and private organizations gives every
indication that the domestic economy will continue to grow at a "higher than
equilibrium" pace for the first two to three quarters of 2004. A growth rate of
approximately 3 1/2% is generally agreed upon as a level that neither increases
nor decreases inflationary pressures and provides a stable employment rate. A
growth rate higher than 3 1/2% is expected to generate some inflationary
pressure and additional jobs, causing a reduction in the unemployment rate. The
Federal Reserve has given indications that it would be unlikely to raise the
federal funds rate (triggering an increase in most short-term interest rates)
unless the inflation rate were to head higher than about 2% or the unemployment
rate to head below 5%. In our opinion, neither of these is likely to occur in
the first nine months of the year, and we do not expect any tightening until
late in the year or early 2005.
There are a number of countervailing forces at play in the economy which could
cause an acceleration in growth or, which we believe is more likely, a
deceleration. Two of these are interrelated, namely high energy prices and the
relatively low value of the dollar compared to other currencies. Should oil
prices continue in the $30-$33 per barrel range, the cost of operations for
many companies will be adversely impacted and earnings will not grow as fast as
expected. Natural gas prices are also currently at a very high level due to
declining domestic production and colder weather in the Northeast. This has an
impact on electricity prices and the energy costs of many processing companies,
both important factors in the economy.
One of the reasons oil prices have stayed as high as they have is the decline
in the value of the U.S. dollar. As worldwide transactions in oil continue to
be priced in dollars, producers outside the United States must charge more
dollars per barrel in order to receive the same value. Goods produced in the
United States could be less expensive overseas, thus stimulating exports from
this country, while higher-priced imports should decline. The net effect on the
current account balance is not likely to be great, but any reduction in the
large negative monthly balance of trade would be beneficial.
Another mounting concern is the size of the expected budget deficit in 2004,
currently put at about $500 billion. This would be the largest absolute amount
and the largest percentage of the gross domestic product that the deficit has
ever been. Government borrowing will be heavy throughout the year in order to
fund this deficit and is likely to cause intermediate and long-term interest
rates to move up. This in turn could deter the financing of capital
expenditures by businesses, dampening economic growth.
On the basis of these expectations, we believe growth in 2004 will be between
3 1/2% and 4%, a level which will not strain any sectors while producing good
profits. In our opinion, though, this outlook is already well-reflected in the
valuations of many companies. With the market indices currently trading at
about 19 times expected 2004 earnings, there is not much room for earnings
disappointments, market scandals, terrorist acts, or new political turmoil
overseas. As indicated, we do not expect action from the Fed sooner than late
2004, so that should not be a factor. Over the course of the year, we would
expect that investors would gradually rotate out of the most cyclical sectors
of the economy and look for less cyclical and late-cycle stocks that would not
be seriously impacted by rate increases anticipated in 2005.
The Adams Express portfolio, as can be seen from the chart on page 1 of this
report, is well-balanced among important industry sectors, and we have elected
to place more or less weight on several sectors than the S&P 500. The level of
cash and short-term investments, at 3.9% of net assets, is down substantially
from the 15.8% at year-end 2002, as a large number of new investment ideas have
been generated by our research staff. This is more a function of our
conservative, long-term outlook than an effort to time economic cycles. The
portfolio, as currently structured, should perform solidly regardless of where
in the cycle we might be.
4
LETTER TO STOCKHOLDERS (CONTINUED)
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Corporate Governance
There has been a great deal of attention recently paid to illegal and unethical
activities in the mutual fund industry. We feel it is important to remind our
shareholders that we condemn the activities that have been uncovered and assure
you that we have not engaged in them. Since your fund's shares are publicly
traded, trading arrangements that benefit some shareholders over others are not
possible. Thus, should they wish to do so, all of our shareholders are able to
make after-hours trades, to engage in rapid trading of our shares, and to
attempt to time trades, and no shareholders are given special privileges in
this regard. While we maintain relationships with many brokerage houses and
encourage them to recommend Adams Express as an investment, we do not make
"soft dollar" payments to brokers for this purpose. All commissions paid on
buying or selling stocks for the portfolio are reviewed by the Board of
Directors quarterly. Our use of commission dollars to pay for important
research to better enable our analysts to make their stock selections is
conducted in strict accordance with applicable SEC rules.
Two new Directors were elected to the Board, effective November 13, 2003,
bringing the total number to thirteen. Ms. Phyllis O. Bonanno, President of
International Trade Solutions, Inc., brings wide experience in global trade to
the Board, while Ms. Kathleen T. McGahran, Principal and Director of Pelham
Associates, adds a wealth of specialized knowledge in accounting to our range
of skills. All of the Directors except Mr. Ober qualify as independent
directors by SEC definition, and thus more than 90% of the Board consists of
directors who are independent of management. In addition to monthly meetings of
the full Board of Directors, the independent Directors meet separately every
other month.
Share Repurchase Program
On December 11, 2003, the Board of Directors authorized the repurchase by
management of an additional 5% of the outstanding shares of the Company over
the ensuing year. The repurchase program is subject to the same restriction as
in the past, namely that shares can only be repurchased as long as the discount
of the market price of the shares from the net asset value is 10% or greater.
From the beginning of 2004 through February 12, 2004, a total of 256,900 shares
have been repurchased at a total cost of $3,287,032 and a weighted average
discount from net asset value of 12.6%.
----------
The proxy statement for the Annual Meeting of Stockholders to be held in
Baltimore, Maryland on March 30, 2004, will be mailed on or about February 20,
2004 to holders of record on February 13, 2004.
By order of the Board of Directors,
/s/ Douglas G.Ober /s/ Joseph M. Truta
Douglas G. Ober, Joseph M. Truta,
Chairman and President
Chief Executive Officer
February 12, 2004
5
STATEMENT OF ASSETS AND LIABILITIES
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December 31, 2003
Assets
Investments* at value:
Common stocks and convertible securities
(cost $859,717,708) $1,123,233,243
Non-controlled affiliate, Petroleum & Resources Corporation
(cost $27,963,162) 47,147,557
Short-term investments (cost $47,772,127) 47,772,127
Securities lending collateral (cost $117,594,815) 117,594,815 $1,335,747,742
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Cash 318,385
Receivables:
Investment securities sold 20,999
Dividends and interest 1,024,767
Prepaid expenses and other assets 7,042,685
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Total Assets 1,344,154,578
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Liabilities
Investment securities purchased 3,091,310
Open written option contracts at value (proceeds $614,311) 1,201,750
Obligations to return securities lending collateral 117,594,815
Accrued expenses and other liabilities 3,404,247
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Total Liabilities 125,292,122
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Net Assets $1,218,862,456
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Net Assets
Common Stock at par value $1.00 per share, authorized 150,000,000 shares;
issued and outstanding 84,886,412 shares $ 84,886,412
Additional capital surplus 843,752,081
Undistributed net investment income 6,386,461
Undistributed net realized gain on investments 1,725,011
Unrealized appreciation on investments 282,112,491
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Net Assets Applicable to Common Stock $1,218,862,456
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Net Asset Value Per Share of Common Stock $14.36
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*See schedule of investments on pages 13 through 16.
The accompanying notes are an integral part of the financial statements.
6
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 18,180,105
From non-controlled affiliate 774,539
Interest and other income 1,736,467
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Total income 20,691,111
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Expenses:
Investment research 2,138,942
Administration and operations 1,179,497
Directors' fees 215,334
Reports and stockholder communications 420,894
Transfer agent, registrar and custodian expenses 383,992
Auditing and accounting services 98,956
Legal services 46,760
Occupancy and other office expenses 314,835
Travel, telephone and postage 98,253
Other 180,293
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Total expenses 5,077,756
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Net Investment Income 15,613,355
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Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 47,531,646
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 1,588,797
Change in unrealized appreciation on investments 187,524,953
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Net Gain on Investments 236,645,396
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Change in Net Assets Resulting from Operations $252,258,751
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The accompanying notes are an integral part of the financial statements.
7
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
For the Year Ended
------------------------------
Dec. 31, 2003 Dec. 31, 2002
--------------------------------------------------------------------------------------------------
From Operations:
Net investment income $ 15,613,355 $ 16,738,360
Net realized gain on investments 49,120,443 44,530,335
Change in unrealized appreciation on investments 187,524,953 (330,406,021)
--------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 252,258,751 (269,137,326)
--------------------------------------------------------------------------------------------------
Distributions to Stockholders From:
Net investment income (14,099,163) (15,955,830)
Net realized gain from investment transactions (50,229,205) (47,121,926)
--------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (64,328,368) (63,077,756)
--------------------------------------------------------------------------------------------------
From Capital Share Transactions:
Value of shares issued in payment of distributions 32,667,930 26,003,033
Cost of shares purchased (note 4) (26,545,949) (37,344,175)
--------------------------------------------------------------------------------------------------
Change in net assets from capital share transactions 6,121,981 (11,341,142)
--------------------------------------------------------------------------------------------------
Total Change in Net Assets 194,052,364 (343,556,224)
Net Assets:
Beginning of year 1,024,810,092 1,368,366,316
--------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $6,386,461 and $4,872,269, respectively) $1,218,862,456 $1,024,810,092
--------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
8
NOTES TO FINANCIAL STATEMENTS
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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 (excluding
purchased options) are valued at amortized cost. Purchased and written options
are valued at the 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, 2003 was $1,053,762,311, and net
unrealized appreciation aggregated $282,599,742, of which the related gross
unrealized appreciation and depreciation were $420,203,272 and $137,603,530,
respectively. As of December 31, 2003, the tax basis of distributable earnings
was $3,031,867 of undistributed ordinary income and $313,583 of undistributed
long-term capital gain.
Distributions paid by the Company during the year ended December 31, 2003 were
classified as ordinary income of $17,389,281, and long-term capital gain of
$46,939,087. The 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
The Company's investment decisions are made by a committee, and no one person
is primarily responsible for making recommendations to that committee.
Purchases and sales of portfolio securities, other than options and short-term
investments, during the year ended December 31, 2003 were $196,517,049 and
$122,469,078, respectively. Options may be written (sold) or purchased by the
Company. 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.
The risk associated with purchasing an option is limited to the premium
originally paid. A schedule of outstanding option contracts as of December 31,
2003 can be found on page 17.
Transactions in written covered call and collateralized put options during the
year ended December 31, 2003 were as follows:
Covered Calls Collateralized Puts
------------------- ---------------------
Contracts Premiums Contracts Premiums
--------- --------- --------- -----------
Options outstanding,
December 31, 2002 6,047 $ 564,056 6,195 $ 663,944
Options written 6,645 838,748 17,850 1,973,018
Options terminated in
closing purchase
transactions (2,595) (259,291) (1,450) (170,477)
Options expired (6,147) (612,333) (18,515) (1,975,790)
Options exercised (2,100) (301,891) (980) (105,673)
-----------------------------------------------------------------
Options outstanding,
December 31, 2003 1,850 $ 229,289 3,100 $ 385,022
-----------------------------------------------------------------
4. Capital Stock
The Company has 10,000,000 authorized and unissued preferred shares without par
value.
On December 27, 2002, the Company issued 2,426,788 shares of its Common Stock
at a price of $10.715 per share (the average market price on December 9, 2002)
to stockholders of record November 25, 2002 who elected to take stock in
payment of the distribution from 2002 capital gain and investment income.
On December 27, 2003, the Company issued 2,702,062 shares of its Common Stock
at a price of $12.09 per share (the average market price on December 8, 2003)
to stockholders of record November 24, 2003 who elected to take stock in
payment of the distribution from 2003 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
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
Board of Directors may deem advisable. Transactions in Common Stock for 2003
and 2002 were as follows:
Shares Amount
---------------------- --------------------------
2003 2002 2003 2002
---------- ---------- ------------ ------------
Shares issued in
payment of
distributions 2,702,062 2,426,788 $ 32,667,930 $ 26,003,033
Shares purchased (at a
weighted average
discount from net
asset value of 11.2%
and 10.0%,
respectively) (2,351,900) (3,123,800) (26,545,949) (37,344,175)
--------------------------------------------------------------------------
Net change 350,162 (697,012) $ 6,121,981 $(11,341,142)
--------------------------------------------------------------------------
The cost of the 346,850 shares of Common Stock held by the Company at December
31, 2003 and the 697,012 shares of Common Stock held at December 31, 2002
amounted to $4,287,238 and $7,554,426, respectively.
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 2,610,146 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 2003, there were
259,023 options outstanding with a weighted average exercise price of $11.19
per share. During 2003, the Company granted options, including stock
appreciation rights, for 57,398 shares of common stock with a weighted average
exercise price of $10.98 per share. During the year, stock appreciation rights
relating to 43,438 stock option shares were exercised at a weighted average
market price of $11.75 per share and the stock options relating to these rights
which had a weighted average exercise price of $3.02 per share were cancelled.
In addition, stock options and stock appreciation rights relating to 43,619
shares, and having a weighted average exercise price of $11.16, were cancelled.
At December 31, 2003, there were outstanding exercisable options to purchase
77,111 common shares at $10.25-$18.43 per share (weighted average price of
$14.40), and unexercisable options to purchase 152,253 common shares at
$3.81-$18.43 per share (weighted average price of $10.89). The weighted average
remaining contractual life of outstanding exercisable and unexercisable options
was 6.85 years and 6.47 years, respectively. Total compensation expense
recognized in 2003 related to the stock option and stock appreciation rights
plan was $131,219. At December 31, 2003, there were 1,242,752 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 five years 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. As of
December 31, 2003, the plan assets consisted of investments in Company stock
(6%), other individual stocks (60%), and mutual funds (34%).
The actuarially computed net pension cost for the year ended December 31, 2003
was $481,724, and consisted of service expense of $197,602, interest expense of
$386,493, expected return on plan assets of $720,212, net amortization expense
of $356,955, and loss on settlement of $260,886, due to lump-sum distributions.
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 expected long-term
rate of return on plan assets was 8.0%.
On January 1, 2003, the projected benefit obligation for service rendered to
date was $6,250,515. During 2003, the projected benefit obligation increased
due to service cost and interest cost of $197,602 and $386,493 respectively,
and decreased due to benefits paid in the amount of $237,896 and the effect of
a settlement of $555,874. The projected benefit obligation at December 31, 2003
was $6,040,840.
On January 1, 2003, the fair value of plan assets was $9,649,491. During 2003,
the fair value of plan assets increased due to the expected return on plan
assets of $720,212 and decreased due to benefits paid in the amount of $237,896
and the effect of a settlement of $703,849. At December 31, 2003, the fair
value of plan assets amounted to $9,427,958, which resulted in excess plan
assets of $3,387,118. The remaining components of prepaid pension cost on
December 31, 2003 included $1,972,643 in unrecognized loss and $397,284 in
unrecognized prior service cost. Prepaid pension cost included in other assets
at December 31, 2003 was $5,757,045.
10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
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, 2003 for employees
and former employees of the Company was $2,655,912. Aggregate remuneration paid
or accrued during the year ended December 31, 2003 to key employees and
directors amounted to $1,764,128.
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, 2003, the Company had securities on loan of $113,916,056, and
held collateral of $117,594,815, consisting of repurchase agreements, a
certificate of deposit, and commercial paper.
-------------------------
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.
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if sold, may be worth more or less than their original
cost. Past performance is not indicative of future investment results.
11
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Year Ended December 31
------------------------------------------------------
2003 2002 2001 2000 1999
--------------------------------------------------------------------------------------------------
Per Share Operating Performance*
Net asset value, beginning of year $12.12 $16.05 $23.72 $26.85 $21.69
--------------------------------------------------------------------------------------------------
Net investment income 0.19 0.20 0.26 0.26 0.25
Net realized gains and change
in unrealized appreciation 2.85 (3.38) (6.21) (1.51) 6.71
--------------------------------------------------------------------------------------------------
Total from investment operations 3.04 (3.18) (5.95) (1.25) 6.96
--------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment income (0.17) (0.19) (0.26) (0.22) (0.26)
Distributions from net realized gains (0.61) (0.57) (1.39) (1.63) (1.37)
--------------------------------------------------------------------------------------------------
Total distributions (0.78) (0.76) (1.65) (1.85) (1.63)
--------------------------------------------------------------------------------------------------
Capital share repurchases 0.04 0.05 0.04 0.10 --
Reinvestment of distributions (0.06) (0.04) (0.11) (0.13) (0.17)
--------------------------------------------------------------------------------------------------
Total capital share transactions (0.02) 0.01 (0.07) (0.03) (0.17)
--------------------------------------------------------------------------------------------------
Net asset value, end of year $14.36 $12.12 $16.05 $23.72 $26.85
--------------------------------------------------------------------------------------------------
Per share market price, end of year $12.41 $10.57 $14.22 $21.00 $22.38
--------------------------------------------------------------------------------------------------
Total Investment Return
Based on market price 25.2% (20.6)% (24.7)% 1.7% 36.1%
Based on net asset value 26.3% (19.4)% (24.7)% (4.3)% 33.6%
Ratios/Supplemental Data
Net assets, end of year (in 000's) $1,218,862 $1,024,810 $1,368,366 $1,951,563 $2,170,802
Ratio of expenses to average net assets 0.47% 0.34% 0.19% 0.24% 0.32%
Ratio of net investment income to
average net assets 1.45% 1.42% 1.33% 0.97% 1.06%
Portfolio turnover 12.74% 17.93% 19.15% 12.74% 15.94%
Number of shares outstanding at
end of year (in 000's)* 84,886 84,536 85,233 82,292 80,842
--------------------------------------------------------------------------------------------------
* Adjusted to reflect the 3-for-2 stock split effected in October 2000. Certain
prior year amounts have been reclassified to conform to current year
presentation.
12
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
December 31, 2003
Prin. Amt.
or Shares Value (A)
--------------------------------------------------------------------
Stocks and Convertible Securities -- 96.0%
Consumer -- 12.9%
Consumer Discretionary -- 6.3%
BJ's Wholesale Club, Inc. (B) (C)....... 500,000 $ 11,480,000
Brinker International Inc. (B).......... 515,000 17,077,400
Gannett Co., Inc........................ 87,500 7,801,500
Mattel, Inc............................. 575,000 11,080,250
Newell Rubbermaid Inc. (C).............. 515,000 11,726,550
Target Corp............................. 460,000 17,664,000
------------
76,829,700
------------
Consumer Staples -- 6.6%
Coca-Cola Co............................ 200,000 10,150,000
Dean Foods Co. (B)...................... 562,500 18,489,375
Hershey Foods Corp...................... 70,000 5,389,300
PepsiCo, Inc............................ 440,000 20,512,800
Procter & Gamble Co..................... 170,000 16,979,600
Safeway, Inc. (B)....................... 423,000 9,267,930
------------
80,789,005
------------
Energy -- 7.3%
BP plc ADR (C).......................... 270,000 13,324,501
ConocoPhillips.......................... 200,000 13,114,000
Exxon Mobil Corp........................ 130,000 5,330,000
Petroleum & Resources Corporation (D)... 1,985,996 47,147,557
Schlumberger Ltd. (C)................... 190,000 10,396,800
------------
89,312,858
------------
Financial -- 17.6%
Banking -- 11.3%
Bank of America Corp.................... 200,000 16,086,000
BankNorth Group, Inc.................... 474,000 15,419,220
Compass Bancshares Inc.................. 300,000 11,793,000
Fifth Third Bancorp..................... 155,000 9,160,500
Investors Financial Services Corp. (C).. 520,000 19,973,200
Provident Bankshares Corp............... 335,021 9,863,032
Wachovia Corp........................... 370,000 17,238,300
Wells Fargo & Co........................ 400,000 23,556,000
Wilmington Trust Corp................... 420,000 15,120,000
------------
138,209,252
------------
Insurance -- 6.3%
AMBAC Financial Group, Inc.............. 400,000 27,756,000
American International Group, Inc....... 738,675 48,959,380
------------
76,715,380
------------
13
SCHEDULE OF INVESTMENTS (CONTINUED)
--------------------------------------------------------------------------------
December 31, 2003
Prin. Amt.
or Shares Value (A)
--------------------------------------------------------------------------------
Health Care -- 14.6%
Abbott Laboratories................................. 350,000 $ 16,310,000
Affymetrix Inc. (B)(C).............................. 210,000 5,168,100
Bristol-Myers Squibb Co............................. 345,000 9,867,000
Enzon Pharmaceuticals, Inc. (B)(C).................. 100,000 1,200,000
Genentech, Inc. (B)(C).............................. 145,000 13,567,650
HCA Inc............................................. 450,000 19,332,000
Johnson & Johnson................................... 360,000 18,597,600
Laboratory Corp. of America Holdings (B)(C)......... 420,000 15,519,000
MedImmune, Inc...................................... 225,000 5,715,000
Medtronic Inc....................................... 310,000 15,069,100
Pfizer Inc.......................................... 1,100,000 38,863,000
Wyeth Co............................................ 300,000 12,735,000
Zimmer Holdings Inc. (B)............................ 90,000 6,336,000
------------
178,279,450
------------
Industrials -- 13.8%
Black & Decker Corp................................. 300,000 14,796,000
Canadian National Railway Co........................ 170,000 10,757,600
Donnelley (R.R.) & Sons Co. (C)..................... 400,000 12,060,000
General Electric Co................................. 1,112,700 34,471,447
Illinois Tool Works Inc............................. 92,300 7,744,893
Ingersoll-Rand Co. Ltd.............................. 250,000 16,970,000
Parker-Hannifin Corp................................ 275,000 16,362,500
3M Co............................................... 185,000 15,730,550
United Parcel Service, Inc.......................... 80,000 5,964,000
United Technologies Corp............................ 345,000 32,695,650
------------
167,552,640
------------
Information Technology -- 14.0%
Communication Equipment -- 2.1%
Corning Inc. (B)(C)................................. 1,170,000 12,203,100
Lucent Technologies Inc. (B)(C)..................... 2,100,000 5,964,000
Nokia Corp. ADR (C)................................. 400,000 6,800,000
------------
24,967,100
------------
Computer Related -- 10.1%
BEA Systems Inc. (B)(C)............................. 800,000 9,840,000
BMC Software Inc. (B)............................... 310,000 5,781,500
Cisco Systems, Inc. (B)............................. 1,200,000 29,148,000
Dell Inc. (B)....................................... 215,000 7,301,400
Diamondcluster International Inc. (B)............... 497,500 5,074,500
Microsoft Corp...................................... 800,000 22,032,000
Oracle Corp. (B).................................... 880,000 11,616,000
Sapient Corp. (B)................................... 1,150,000 6,440,000
Siebel Systems Inc. (B)............................. 800,000 11,096,000
Sun Microsystems, Inc. (B).......................... 515,000 2,312,350
Symantec Corp. 3.00% Conv. Sub. Notes due 2006 (E).. $500,000 1,025,625
Symantec Corp. (B)(C)............................... 310,000 10,741,500
------------
122,408,875
------------
14
SCHEDULE OF INVESTMENTS (CONTINUED)
--------------------------------------------------------------------------------
December 31, 2003
Prin. Amt.
or Shares Value (A)
-------------------------------------------------------------------------------
Electronics -- 1.8%
Intel Corp....................................... 325,000 $ 10,465,000
Solectron Corp. (B)(C)........................... 2,000,000 11,820,000
--------------
22,285,000
--------------
Materials -- 2.6%
Air Products and Chemicals, Inc.................. 150,000 7,924,500
Albemarle Corp................................... 225,400 6,755,238
Rohm & Haas Co................................... 400,000 17,084,000
--------------
31,763,738
--------------
Telecom Services -- 4.6%
Alltel Corp...................................... 350,000 16,303,000
BellSouth Corp................................... 415,000 11,744,500
SBC Communications Inc........................... 595,000 15,511,650
Vodafone Group plc ADS (C)....................... 492,613 12,335,042
--------------
55,894,192
--------------
Utilities -- 8.6%
Black Hills Corp................................. 374,500 11,171,335
CINergy Corp..................................... 440,000 17,076,400
Duke Energy Corp. 8.25% Conv. Pfd. due 2004 (C).. 400,000 5,536,000
Duke Energy Corp. (C)............................ 355,000 7,259,750
Keyspan Corp..................................... 400,000 14,720,000
MDU Resources Group, Inc......................... 675,000 16,071,750
Philadelphia Suburban Corp....................... 1,093,750 24,171,875
TECO Energy, Inc. (C)............................ 650,000 9,366,500
--------------
105,373,610
--------------
Total Stocks and Convertible Securities
(Cost $887,680,870) (F).......................... $1,170,380,800
--------------
15
SCHEDULE OF INVESTMENTS (CONTINUED)
--------------------------------------------------------------------------------
December 31, 2003
Prin. Amt. Value (A)
----------------------------------------------------------------------------------------------------
Short-Term Investments -- 3.9%
U.S. Government Obligations -- 2.9%
U.S. Treasury Bills, 0.91%, due 2/19/04............................. $35,000,000 $ 34,957,125
--------------
Commercial Paper -- 1.0%
American General Finance, Inc., 1.06%, due 1/8/04................... 1,750,000 1,749,639
General Electric Capital Services, Inc., 1.04%, due 1/13/04......... 6,900,000 6,897,608
Toyota Motor Credit Corp., 1.02%, due 1/20/04....................... 4,170,000 4,167,755
--------------
12,815,002
--------------
Total Short-Term Investments
(Cost $47,772,127).................................................. 47,772,127
--------------
Securities Lending Collateral -- 9.6%
Repurchase Agreements
CS First Boston, 1.03%, due 1/2/04.................................. 37,446,234
Countrywide Securities Corp., 1.08%, due 1/2/04..................... 6,986,629
Deutsche Bank Securities, Inc., 1.03%, due 1/2/04................... 56,458,278
Certificates of Deposit
Toronto Dominion Yankee, 1.12%, due 1/5/04.......................... 702,592
Commercial Paper
Atlantic Asset Securitization, 1.10%, due 1/14/04................... 4,997,860
Starbird Funding, 1.10%, due 1/16/04................................ 4,997,620
Miscellaneous
Wachovia Credit Card Master Trust, ABS, 1.17%, due 3/15/04.......... 6,005,602
--------------
Total Securities Lending Collateral
(Cost $117,594,815)................................................. 117,594,815
--------------
Total Investments -- 109.5%
(Cost $1,053,047,812)............................................... 1,335,747,742
Cash, receivables and other assets, less liabilities -- (9.5)%.... (116,885,286)
--------------
Net Assets -- 100.0%.................................................. $1,218,862,456
--------------------------------------------------------------------------------
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) All or a portion of these securities are on loan. See Note 7 to Financial
Statements.
(D) Non-controlled affiliate, a closed-end sector fund, registered as an
investment company under the Investment Company Act of 1940.
(E) Restricted security (Symantec Corp. 3.00% Conv. Sub. Notes due 2006,
acquired 10/18/01, cost $500,000).
(F) The aggregate market value of stocks held in escrow at December 31, 2003
covering open call option contracts written was $11,279,450. In addition,
the required aggregate market value of securities segregated by the
custodian to collateralize open put option contracts written was
$14,375,000.
16
SCHEDULE OF OUTSTANDING OPTION CONTRACTS
--------------------------------------------------------------------------------
December 31, 2003
Contracts Contract
(100 shares Strike Expiration Appreciation/
each) Security Price Date (Depreciation)
----------- ---------------------------------- ------ ---------- --------------
COVERED CALLS
250 American International Group, Inc. $ 100 Jan 04 $ 26,249
150 Ingersoll-Rand Co. Ltd............ 65 Jan 04 (37,951)
150 Intel Corp........................ 25 Jan 04 (92,101)
150 Investors Financial Services Corp. 40 Feb 04 (1,501)
100 Genentech, Inc.................... 100 Mar 04 (16,801)
250 Nokia Corp........................ 20 Jan 04 25,624
200 Symantec Corp..................... 30 Jan 04 (81,800)
200 3M Co............................. 75 Jan 04 (188,000)
100 United Technologies Corp.......... 75 Jan 04 (168,502)
150 United Technologies Corp.......... 80 Jan 04 (199,501)
150 United Technologies Corp.......... 85 Feb 04 (136,426)
----- ---------
1,850 (870,710)
----- ---------
COLLATERALIZED PUTS
250 Air Products and Chemicals, Inc... 50 Mar 04 404
100 Bank of America Corp.............. 65 Jan 04 10,699
100 Bank of America Corp.............. 70 Jan 04 16,549
100 Bank of America Corp.............. 75 Jan 04 20,099
150 Dell Inc.......................... 32.50 Jan 04 18,299
150 Dell Inc.......................... 30 Feb 04 10,049
150 Fifth Third Bancorp............... 45 Jan 04 11,324
100 Fifth Third Bancorp............... 50 Jan 04 18,574
250 Gannett Co., Inc.................. 65 Jan 04 32,748
250 Illinois Tool Works Inc........... 70 Mar 04 22,599
250 Johnson & Johnson................. 45 Jan 04 31,873
150 Johnson & Johnson................. 45 Apr 04 8,099
100 MedImmune, Inc.................... 22.50 Jan 04 7,855
250 MedImmune, Inc.................... 22.50 Mar 04 4,229
250 Medtronic Inc..................... 45 Jan 04 27,498
250 Parker-Hannifin Corp.............. 40 Feb 04 26,124
150 Wyeth Co.......................... 35 Apr 04 10,049
100 Wyeth Co.......................... 30 Jul 04 6,200
----- ---------
3,100 283,271
----- ---------
$(587,439)
=========
-------------------------
Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934. By their
nature, all forward-looking statements involve risks and uncertainties, and
actual results could differ materially from those contemplated by the
forward-looking statements. Several factors that could materially affect the
Company's actual results are the performance of the portfolio of stocks held by
the Company, the conditions in the U.S. and international financial markets,
the price at which shares of the Company will trade in the public markets, and
other factors discussed in the Company's periodic filings with the Securities
and Exchange Commission.
17
CHANGES IN PORTFOLIO SECURITIES
--------------------------------------------------------------------------------
During the Three Months Ended December 31, 2003
(unaudited)
Shares
---------------------------------------
Held
Additions Reductions Dec. 31, 2003
------------------------------------------------------------------------
Air Products and Chemicals, Inc. 150,000 150,000
Bank of America Corp............ 25,000 200,000
BEA Systems Inc................. 60,000 800,000
Compass Bancshares Inc.......... 20,000 300,000
Dell Inc........................ 135,000 215,000
Illinois Tool Works Inc......... 92,300 92,300
Lucent Technologies Inc......... 1,700,000 2,100,000
Mattel, Inc..................... 575,000 575,000
MDU Resources Group, Inc........ 225,000/(1)/ 675,000
MedImmune, Inc.................. 225,000 225,000
Medtronic Inc................... 85,000 310,000
Newell Rubbermaid Inc........... 515,000 515,000
Philadelphia Suburban Corp...... 218,750/(1)/ 1,093,750
Siebel Systems Inc.............. 30,000 800,000
Symantec Corp................... 155,000/(1)/ 20,000 310,000
Cisco Systems, Inc.............. 225,000 1,200,000
Donnelley (R.R.) & Sons Co...... 100,000 400,000
Intel Corp...................... 60,000 325,000
Lilly (Eli) & Co................ 30,000 --
Nokia Corp. ADR................. 200,000 400,000
3M Co........................... 15,000 185,000
United Technologies Corp........ 10,000 345,000
Wachovia Corp................... 10,000 370,000
--------
/(1)/ By stock split.
-------------------------
Proxy Voting Policies
A description of the policies and procedures that the Company uses to determine
how to vote proxies relating to portfolio securities owned by the Company is
available to stockholders (i) without charge, upon request, by calling the
Company's toll-free number at (800) 638-2479; (ii) on the Company's website by
clicking on "Proxy Voting Guidelines" at the bottom of any page on the website;
and (iii) on the Securities and Exchange Commission's website at
http://www.sec.gov.
18
REPORT OF INDEPENDENT AUDITORS
--------------------------------------------------------------------------------
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 December 31, 2003, and the results
of its operations, the changes in its net assets and the financial highlights
for each of the fiscal periods presented, in conformity with accounting
principles generally accepted in the United States of America. 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 audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
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, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 8, 2004
-------------------------
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
(410) 752-5900 or (800) 638-2479
Website: www.adamsexpress.com
E-mail: contact@adamsexpress.com
Counsel: Chadbourne & Parke L.L.P.
Independent Auditors: PricewaterhouseCoopers LLP
Transfer Agent & Registrar: American Stock Transfer & Trust Co.
Custodian of Securities: The Bank of New York
19
SHAREHOLDER INFORMATION 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 our
transfer agent, American Stock Transfer & Trust Company's INVESTORS CHOICE Plan
(see page 21).
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 daily NAV is also
available on the NASDAQ Mutual Fund Quotation System under the symbol XADEX.
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 Express 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 surety 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.
Is direct deposit of my dividend checks available?
Yes, our transfer agent offers direct deposit of your dividend and capital gain
distribution checks. You can request direct deposit with American Stock
Transfer either on-line or by calling them at the phone number provided on page
21.
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 transfer agent.
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 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 transfer
agent will send you the instructions and forms necessary to effect your
transfer.
20
SHAREHOLDER INFORMATION 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 brokerage house representative.
INVESTORS CHOICE
INVESTORS CHOICE is a direct stock purchase and sale plan, as well as a
dividend reinvestment plan, sponsored and administered by our transfer agent,
American Stock Transfer & Trust Company (AST). The Plan provides registered
stockholders and interested first time investors an affordable alternative for
buying, selling, and reinvesting in Adams Express shares.
The costs to participants in administrative service fees and brokerage
commissions for each type of transaction are listed below.
Initial Enrollment and
Optional Cash Investments
Service Fee $2.50 per investment
Brokerage Commission $0.05 per share
Reinvestment of Dividends*
Service Fee 2% 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 $7.50
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
Electronic Funds Transfer
(monthly minimum) $50.00
Maximum per transaction $25,000.00
Maximum per year NONE
A brochure which further details the benefits and features of INVESTORS CHOICE
as well as an enrollment form may be obtained by contacting AST.
For Non-registered Shareholders
For shareholders whose stock is held by a broker in "street" name, the AST
INVESTORS CHOICE Direct Stock Purchase and Sale 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 AST's Plan or contact AST.
----------
The Company
The Adams Express Company
Lawrence L. Hooper, Jr.
Vice President, General Counsel and Secretary
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
(800) 638-2479
Website: www.adamsexpress.com
E-mail: contact@adamsexpress.com
The Transfer Agent
American Stock Transfer & Trust Company
Address Shareholder Inquiries to:
Shareholder Relations Department
59 Maiden Lane
New York, NY 10038
(877) 260-8188
Website: www.amstock.com
E-mail: info@amstock.com
Investors Choice Mailing Address:
Attention: Dividend Reinvestment
P.O. Box 922
Wall Street Station
New York, NY 10269
Website: www.InvestPower.com
E-mail: info@InvestPower.com
*The year-end dividend and capital gain distribution will usually be made in
newly issued shares of common stock. There would be no fees or commissions in
connection with this dividend and capital gain distribution when made in newly
issued shares.
21
HISTORICAL FINANCIAL STATISTICS
--------------------------------------------------------------------------------
Dividends Distributions
From Net From Net
Net Asset Investment Realized
Value Of Shares Value Income Gains
Dec. 31 Net Assets Outstanding* Per Share* Per Share* Per Share*
-----------------------------------------------------------------------
1989 $ 550,091,129 44,974,408 $12.23 $.47 $ .91
1990 529,482,769 47,219,010 11.21 .44 .71
1991 661,895,779 49,121,246 13.47 .36 .73
1992 696,924,779 51,039,938 13.65 .31 .77
1993 840,610,252 63,746,498 13.19 .30 .79
1994 798,297,600 66,584,985 11.99 .33 .73
1995 986,230,914 69,248,276 14.24 .35 .76
1996 1,138,760,396 72,054,792 15.80 .35 .80
1997 1,424,170,425 74,923,859 19.01 .29 1.01
1998 1,688,080,336 77,814,977 21.69 .30 1.10
1999 2,170,801,875 80,842,241 26.85 .26 1.37
2000 1,951,562,978 82,292,262 23.72 .22 1.63
2001 1,368,366,316 85,233,262 16.05 .26 1.39
2002 1,024,810,092 84,536,250 12.12 .19 .57
2003 1,218,862,456 84,886,412 14.36 .17 .61
--------
*Adjusted to reflect the 3-for-2 stock split effected in October 2000.
-------------------------
THE ADAMS EXPRESS COMPANY
PRIVACY POLICY
In order to conduct its business, The Adams Express Company collects and
maintains certain nonpublic personal information about our stockholders of
record with respect to their transactions in shares of our securities. This
information includes the stockholder's address, tax identification or Social
Security number, share balances, and dividend elections. We do not collect or
maintain personal information about stockholders whose shares of our securities
are held in "street name" by a financial institution such as a bank or broker.
We do not disclose any nonpublic personal information about you, our other
stockholders or our former stockholders to third parties unless necessary to
process a transaction, service an account or as otherwise permitted by law.
To protect your personal information internally, we restrict access to
nonpublic personal information about our stockholders to those employees who
need to know that information to provide services to our stockholders. We also
maintain certain other safeguards to protect your nonpublic personal
information.
22
BOARD OF DIRECTORS
--------------------------------------------------------------------------------
Number of
Portfolios
in Fund
Position Term Length Complex
Personal Held with of of Time Principal Occupations Overseen
Information the Fund Office Served During the Last 5 Years by Director
-----------------------------------------------------------------------------------------------------
Independent Directors
Enrique R. Arzac, Ph.D. Director One Since Professor of Finance and Two
7 St. Paul Street, Year 1983 Economics, formerly Vice Dean
Suite 1140 of Academic Affairs of the
Baltimore, MD 21202 Graduate School of Business,
Age 62 Columbia University.
-----------------------------------------------------------------------------------------------------
Phyllis O. Bonanno Director One Since President & CEO of International Two
7 St. Paul Street, Year Nov. Trade Solutions, Inc.
Suite 1140 2003 (consultants). Formerly, President
Baltimore, MD 21202 of Columbia College, Columbia,
Age 60 South Carolina, and Vice
President of Warnaco Inc.
(apparel).
-----------------------------------------------------------------------------------------------------
Daniel E. Emerson Director One Since Chairman, The National YMCA Two
7 St. Paul Street, Year 1982 Fund Inc. Retired Executive Vice
Suite 1140 President of NYNEX Corp.,
Baltimore, MD 21202 (communications), Retired
Age 79 Chairman of The Board of both
NYNEX Information Resources
Co. and NYNEX Mobile
Communications Co. Previously
Executive Vice President and
Director of New York Telephone
Company.
-----------------------------------------------------------------------------------------------------
Edward J. Kelly, III, J.D. Director One Since President and Chief Executive Two
7 St. Paul Street, Year 2001 Officer of Mercantile Bankshares
Suite 1140 Corporation. Formerly Managing
Baltimore, MD 21202 Director with J.P. Morgan Chase
Age 50 & Co. (investment bank and
global financial institution).
-----------------------------------------------------------------------------------------------------
Thomas H. Lenagh Director One Since Financial Advisor, Chairman of Two
7 St. Paul Street, Year 1968 the Board, Photonics Product
Suite 1140 Group (crystals). Formerly
Baltimore, MD 21202 Chairman of the Board and CEO
Age 85 of Greiner Engineering Inc.
(formerly Systems Planning
Corp.) (consultants). Formerly
Treasurer and Chief Investment
Officer of the Ford Foundation
(charitable foundation).
-----------------------------------------------------------------------------------------------------
W. D. MacCallan Director One Since Retired Chairman of the Board Two
7 St. Paul Street, Year 1971 and CEO of the Company (since
Suite 1140 1991) and Petroleum &
Baltimore, MD 21202 Resources Corporation (since
Age 76 1991). Formerly consultant to the
Company and Petroleum &
Resources Corporation.
-----------------------------------------------------------------------------------------------------
Personal Other
Information Directorships
-----------------------------------------------------------
Independent Directors
Enrique R. Arzac, Ph.D. Director of Petroleum &
7 St. Paul Street, Resources Corporation and
Suite 1140 Credit Suisse Asset
Baltimore, MD 21202 Management Funds (8 funds)
Age 62 (investment companies).
-----------------------------------------------------------
Phyllis O. Bonanno Director of Petroleum &
7 St. Paul Street, Resources Corporation
Suite 1140 (investment company), Borg-
Baltimore, MD 21202 Warner Inc. (industrial), The
Age 60 Canadian-American Business
Council, and Board of
Advisors for APTE, Inc.
(software).
-----------------------------------------------------------
Daniel E. Emerson Director of Petroleum &
7 St. Paul Street, Resources Corporation
Suite 1140 (investment company).
Baltimore, MD 21202
Age 79
-----------------------------------------------------------
Edward J. Kelly, III, J.D. Director of Petroleum &
7 St. Paul Street, Resources Corporation
Suite 1140 (investment company), AXIS
Baltimore, MD 21202 Specialty Limited (insurance),
Age 50 Hartford Financial Services
Group, Constellation Energy
Group, CIT Group
(commercial finance), and
CSX Corp. (transportation);
and member of Board of
Trustees of Johns Hopkins
University.
-----------------------------------------------------------
Thomas H. Lenagh Director of Cornerstone
7 St. Paul Street, Funds, Inc. (3 funds),
Suite 1140 Investors First Fund, and
Baltimore, MD 21202 Petroleum & Resources
Age 85 Corporation (investment
companies).
-----------------------------------------------------------
W. D. MacCallan Director of Petroleum &
7 St. Paul Street, Resources Corporation
Suite 1140 (investment company).
Baltimore, MD 21202
Age 76
-----------------------------------------------------------
23
BOARD OF DIRECTORS (CONTINUED)
--------------------------------------------------------------------------------
Number of
Portfolios
in Fund
Position Term Length Complex
Personal Held with of of Time Principal Occupations Overseen Other
Information the Fund Office Served During the Last 5 Years by Director Directorships
-----------------------------------------------------------------------------------------------------------------------------
Independent Directors (continued)
Kathleen T. McGahran, Director One Since Principal & Director of Pelham Two Director of Petroleum &
Ph.D., J.D., C.P.A. Year Nov. Associates, Inc. (executive Resources Corporation
7 St. Paul Street, 2003 education). Adjunct Associate (investment company).
Suite 1140 Professor, Columbia Executive
Baltimore, MD 21202 Education, Graduate School of
Age 53 Business, Columbia University.
Formerly Associate Dean and
Director of Executive Education,
and Associate Professor,
Columbia University.
-----------------------------------------------------------------------------------------------------------------------------
W. Perry Neff, J.D. Director One Since Private Financial Consultant. Two Director of Petroleum &
7 St. Paul Street, Year 1987 Retired Executive Vice President Resources Corporation
Suite 1140 of Chemical Bank. (investment company).
Baltimore, MD 21202
Age 76
-----------------------------------------------------------------------------------------------------------------------------
Landon Peters Director One Since Private Investor. Former Two Director of Petroleum &
7 St. Paul Street, Year 1974 Investment Manager, YMCA Resources Corporation
Suite 1140 Retirement Fund. Formerly (investment company).
Baltimore, MD 21202 Executive Vice President and
Age 73 Treasurer and prior thereto Senior
Vice President and Treasurer of
The Bank of New York.
-----------------------------------------------------------------------------------------------------------------------------
John J. Roberts Director One Since Senior Advisor, formerly Vice- Two Honorary Director of
7 St. Paul Street, Year 1976 Chairman External Affairs, American International
Suite 1140 American International Group, Group, Inc. and Director of
Baltimore, MD 21202 Inc. (insurance). Formerly Petroleum & Resources
Age 81 Chairman and CEO of American Corporation (investment
International Underwriters company).
Corporation. Previously President
of American International
Underwriters Corporation-U.S./
Overseas Operations.
-----------------------------------------------------------------------------------------------------------------------------
Susan C. Schwab, Ph.D. Director One Since Professor, School of Public Two Director of Petroleum &
7 St. Paul Street, Year 2000 Affairs at the University of Resources Corporation
Suite 1140 Maryland, College Park. Formerly (investment company) and
Baltimore, MD 21202 Director of Corporate Business Calpine Corp. (energy).
Age 48 Development at Motorola, Inc.
(electronics).
-----------------------------------------------------------------------------------------------------------------------------
Robert J. M. Wilson Director One Since Retired President of the Company Two Director of Petroleum &
7 St. Paul Street, Year 1975 (since 1986) and retired President Resources Corporation
Suite 1140 of Petroleum & Resources (investment company).
Baltimore, MD 21202 Corporation (since 1986).
Age 83
-----------------------------------------------------------------------------------------------------------------------------
Interested Director
Douglas G. Ober Director, One Director Chairman & CEO of the Two Director of Petroleum &
7 St. Paul Street, Chairman Year since Company and Petroleum & Resources Corporation
Suite 1140 and CEO 1989; Resources Corporation. (investment company).
Baltimore, MD 21202 Chairman
Age 57 of the
Board
since
1991
-----------------------------------------------------------------------------------------------------------------------------
24
THE ADAMS EXPRESS COMPANY
--------------------------------------------------------------------------------
Board Of Directors
Enrique R. Arzac/(2),(4)/
Phyllis O. Bonanno/(1)/
Daniel E. Emerson/(1),(3)/
Edward J. Kelly, III/(1),(4)/
Thomas H. Lenagh/(1),(4)/
W.D. MacCallan/(3),(4)/
Kathleen T. McGahran/(2)/
W. Perry Neff/(2),(4)/
Douglas G. Ober/(1)/
Landon Peters/(2),(3)/
John J. Roberts/(1),(2)/
Susan C. Schwab/(1),(3)/
Robert J.M. Wilson/(1),(3)/
--------
/(1)/ Member of Executive Committee
/(2)/ Member of Audit Committee
/(3)/ Member of Compensation Committee
/(4)/ Member of Retirement Benefits Committee
Officers
Douglas G. Ober Chairman and Chief
Executive Officer
Joseph M. Truta President
Stephen E. Kohler Vice President - Research
Lawrence L. Hooper, Jr. Vice President, General
Counsel and Secretary
Maureen A. Jones Vice President and
Chief Financial Officer
Christine M. Sloan Assistant Treasurer
Geraldine H. Pare Assistant Secretary
ADAMS
EXPRESS
COMPANY
The Adams Express Company
Seven St. Paul Street, Suite 1140
Baltimore, MD 21202
(410) 752-5900 or (800) 638-2479
www.adamsexpress.com
ADX
Listed
NYSE
THE NEW YORK STOCK EXCHANGE
Item 2. Code of Ethics.
On June 12, 2003, the Board of Directors adopted a code of
ethics that applies to registrants principal executive
officer and principal financial officer. The code of ethics
is available on registrants website at:
www.adamsexpress.com. Since the code of ethics was adopted
there have been no amendments to it nor have any waivers
from any of its provisions been granted.
Item 3. Audit Committee Financial Expert.
The board of directors has determined that at least one of
the members of registrants audit committee meets the
definition of audit committee financial expert as that
term is defined by the Securities and Exchange Commission.
The two directors on the registrants audit committee whom
the board of directors has determined meet such definition
are Enrique R. Arzac and Kathleen T. McGahran, both of whom
are independent pursuant to paragraph (a)(2) of this Item.
Item 4. Principal Accountant Fees and Services.
(a) Audit Fees. The aggregate fees billed for professional
services rendered by its independent auditors,
PricewaterhouseCoopers LLP, for the audits of the Companys
annual and semi-annual financial statements for 2003 and
2002 were $54,007 and $40,596, respectively.
(b) Audit Related Fees. There were no audit-related fees in
2003 and 2002.
(c) Tax Fees. The aggregate fees billed to registrant for
professional services rendered by PricewaterhouseCoopers LLP
for the review of registrants excise tax calculations and
preparations of federal, state and excise tax returns for
2003 and 2002 were $8,255 and $8,012, respectively.
(d) All Other Fees. The aggregate fees billed to registrant
by PricewaterhouseCoopers LLP other than for the services
referenced above for 2003 was $0 and for 2002 was $2,250,
which related to tax research for option purchasing.
(e) (1) Audit Committee Pre-Approval Policy. As of 2003,
all services to be performed for registrant by
PricewaterhouseCoopers LLP must be pre-approved by the audit
committee. All services performed in 2003 were pre-approved
by the committee.
(2) Not applicable.
(f) Not applicable.
(g) The aggregate fees billed by PricewaterhouseCoopers LLP
for non-audit professional services rendered to registrant
for 2003 and 2002 were $8,255 and $10,262, respectively.
(h) The Registrants audit committee has considered the
provision by PricewaterhouseCoopers LLP of the non-audit
services described above and found that they are compatible
with maintaining PricewaterhouseCoopers LLPs independence.
Item 5. Audit Committee of Listed Registrants.
(a) The registrant has a standing audit committee
established in accordance with Section 3(a)(58)(A) of the
Securities Exchange Act of 1934. The members of the audit
committee are: Enrique R. Arzac, chairman, W. Perry Neff,
Landon Peters, John J. Roberts, and Kathleen T. McGahran.
(B) Not applicable.
Item 6. [Reserved by SEC for future use].
Item 7. Disclosure of Proxy Voting Policies and Procedures
for Closed-End Management Investment Companies.
PROXY VOTING POLICIES & PROCEDURES
The Adams Express Company (Adams) follows long-standing
general guidelines for the voting of portfolio company
proxies and takes very seriously its responsibility to vote
all such proxies. The portfolio company proxies are
evaluated by our research staff and voted by our portfolio
management team, and we annually provide the Board of
Directors with a report on how proxies were voted during the
previous year. We do not use an outside service to assist us
in voting our proxies.
As an internally-managed investment company, Adams uses its
own staff of research analysts and portfolio managers. In
making the decision to invest in a company for the
portfolio, among the factors the research team analyzes is
the integrity and competency of the companys management. We
must be satisfied that the companies we invest in are run by
managers with integrity. Therefore, having evaluated this
aspect of our portfolio companies managements, we give
significant weight to the recommendations of the companys
management in voting on proxy issues.
We vote proxies on a case-by-case basis according to what we
deem to be the best long-term interests of our shareholders.
The key over-riding principle in any proxy vote is that
stockholders be treated fairly and equitably by the
portfolio companys management. In general, on the election
of directors and on routine issues that we do not believe
present the possibility of an adverse impact upon our
investment, after reviewing whether applicable corporate
governance requirements as to board and committee
composition have been met, we will vote in accordance with
the recommendations of the companys management. When we
believe that the managements recommendation is not in the
best interests of our stockholders, we will vote against
that recommendation.
Our general guidelines for when we will vote contrary to the
recommendation of the portfolio company managements
recommendation are:
Stock Options
Our general guideline is to vote against stock option plans
that we believe are unduly dilutive of our stock holdings in
the company. We use a general guideline that we will vote
against any stock option plan that results in dilution in
shares outstanding exceeding 4%. Most stock option plans are
established to motivate and retain key employees and to
reward them for their achievement. An analysis of a stock
option plan can not be made in a vacuum but must be made in
the context of the companys overall compensation scheme. In
voting on stock option plans, we give consideration to
whether the stock option plan is broad-based in the number
of employees who are eligible to receive grants under the
plan. We generally vote against plans that permit re-pricing
of grants or the issuance of options with exercise prices
below the grant date value of the companys stock.
Corporate Control/ Governance Issues
Unless we conclude that the proposal is favorable to our
interests as a long-term shareholder in the company, we have
a long-standing policy of voting against proposals to create
a staggered board of directors. Staggered boards are used to
help create a roadblock to a possible takeover of a company
or to entrench incumbent management and board. In
conformance with that policy, we will generally vote in
favor of shareholder proposals to eliminate the staggered
election of directors.
Unless we conclude that the proposal is favorable to our
interests as a long-term shareholder in the company, our
general policy is to vote against amendments to a companys
charter that can be characterized as anti-takeover
provisions. For example, we generally vote in favor of
stockholder proposals to rescind or require a stockholder
vote on anti-takeover provisions such as poison pills and
the like.
With respect to so-called golden parachutes and other
severance packages, it is our general policy to vote against
proposals relating to future employment contracts that
provide that compensation will be paid to any director,
officer or employee that is contingent upon a merger or
acquisition of the company.
We generally vote for proposals to require that the majority
of a board of directors consist of independent directors and
vote against proposals to establish a retirement plan for
non-employee directors.
We have found that most stockholder proposals relating to
social issues focus on very narrow issues that either fall
within the authority of the companys management, under the
oversight of its board of directors, to manage the day-to-
day operations of the company or concern matters that are
more appropriate for global solutions rather than company-
specific ones. We consider these proposals on a case-by-case
basis but usually are persuaded managements position is
reasonable and vote in accordance with managements
recommendation on these types of proposals.
Item 8. Purchases of Equity Securities by Closed-End
Management Investment Company and Affiliated Purchasers.
Form N-CSR disclosure requirement not yet effective with
respect to registrant.
Item 9. Submission of Matters to a Vote of Security Holders.
Form N-CSR disclosure requirement not yet effective with
respect to registrant.
Item 10. Controls and Procedures.
Conclusions of principal officers concerning controls and
procedures.
(a) As of February 26, 2004, an evaluation was performed
under the supervision and with the participation of the
officers of registrant, including the principal executive
officer (PEO) and principal financial officer (PFO), of
the effectiveness of registrants disclosure controls and
procedures. Based on that evaluation, the registrants
officers, including the PEO and PFO, concluded that, as of
February 26, 2004, the registrants disclosure controls and
procedures were reasonably designed so as to ensure that
material information relating to the registrant is made
known to the PEO and PFO.
(b) There have been no significant changes in the
registrants internal control over financial reporting (as
defined in Rule 30a-3(d) under the Investment Company Act of
1940 (17 CFR 270.30a-3(d)) that occurred during the
registrants last fiscal half-year that has materially
affected, or is reasonably likely to materially affect, the
registrants internal control over financial reporting.
Item 11. Exhibits.
(a)(1) As indicated in Item 2, the code of ethics is
posted on the registrants website.
(2) The certifications of the PEO and PFO pursuant to
Rule 30a-2(a) under the Investment Company Act of 1940 are
attached hereto as Exhibit 99 CERT.
(c) The certifications of the PEO and PFO pursuant to Rule
30a-2(b) under the Investment Company Act of 1940 are
attached hereto as Exhibit 99.906 CERT.
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934 and the Investment Company Act of 1940, the
registrant has duly caused this report to be signed on its
behalf by the undersigned, having been duly authorized to do
so.
The Adams Express Company
BY: /s/ Douglas G. Ober
-----------------------
Douglas G. Ober
Chief Executive Officer
(Principal Executive Officer)
Date: : February 27, 2004
Pursuant to the requirements of the Securities Exchange
Act of 1934 and the Investment Company Act of 1940, this
report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the
dates indicated.
BY: /s/ Douglas G. Ober
-----------------------
Douglas G. Ober
Chief Executive Officer
(Principal Executive Officer)
Date: : February 27, 2004
BY: /s/ Maureen A. Jones
-----------------------
Maureen A. Jones
Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: : February 27, 2004