[LOGO OF ADAMS EXPRESS COMPANY]
Annual Report 2001
building for the future
with solid investments(R)
2001 at a Glance
--------------------------------------------------------------------------------
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 12/31/01................ $14.22
Discount................................... 11.4%
52-Week Range.............................. $22.00-$12.70
Shares Outstanding......................... 85,233,262
Summary Financial Information
Year Ended December 31
2001 2000
--------------------------------------------------------------------------------
Net asset value per share $ 16.05 $ 23.72
Total net assets 1,368,366,316 1,951,562,978
Unrealized appreciation 424,993,559 1,047,469,344
Net investment income 21,091,920 20,941,465
Total realized gain 113,686,714 128,091,337
Total return (based on market value) (24.7)% 1.7%
Total return (based on net asset value) (24.7)% (4.3)%
Expense ratio 0.19% 0.24%
--------------------------------------------------------------------------------
2001 Dividends and Distributions
Amount
Paid (per share) Type
--------------------------------------------------------------------------------
March 1, 2001 $0.04 Long-term capital gain
March 1, 2001 0.04 Investment income
June 1, 2001 0.08 Investment income
September 1, 2001 0.08 Investment income
December 27, 2001 1.27 Long-term capital gain
December 27, 2001 0.08 Short-term capital gain
December 27, 2001 0.06 Investment income
--------------------------------------------------------------------------------
$1.65
================================================================================
2002 Annual Meeting of Stockholders
Location: Royal Palms Hotel, Phoenix, Arizona
Date: March 26, 2002
Time: 11:00 a.m.
Holders of Record: February 15, 2002
1
Portfolio Review
--------------------------------------------------------------------------------
Ten Largest Portfolio Holdings (12/31/01)
Market Value % of Net Assets
------------ ---------------
General Electric Co. $ 64,128,000 4.7
American International Group, Inc. 60,294,376 4.4
Petroleum & Resources Corp.* 44,896,821 3.3
Nokia Corp. ADR 33,851,400 2.5
Minnesota Mining & Manufacturing Co. 33,689,850 2.5
Cisco Systems, Inc. 33,231,850 2.4
AMBAC Financial Group, Inc. 32,945,484 2.4
Investors Financial Services Corp. 32,277,375 2.3
SBC Communications, Inc. 27,419,000 2.0
United Technologies Corp. 25,852,000 1.9
-------------- ----
Total $ 388,586,156 28.4%
____________
*Non-controlled affiliate
Sector Weightings (12/31/01)
[CHART APPEARS HERE]
Basic Materials 1.1%
Capital Goods 11.2%
Communication Services 7.1%
Consumer 7.5%
Energy 5.1%
Financial 19.5%
Health Care 16.4%
Technology 15.2%
Transportation 2.4%
Utilities 7.7%
Cash & Equivalent 6.5%
2
Letter to Stockholders
--------------------------------------------------------------------------------
In this annual report, you will find our financial statements for the year 2001,
the report of independent accountants, our year-end portfolio holdings, and
summary financial information for the Company.
The Year in Review
Following the severe decline in the latter part of 2000, the stock market
rallied briefly in January in response to the action of the Federal Reserve
Board to reduce short-term interest rates and thus stimulate economic growth.
Announcements of layoffs, cuts in capital spending, and warnings of earnings
shortfalls brought the rally to a quick end, despite further rate cuts by the
Fed. The market recorded its worst first-quarter performance in 23 years. The
domestic economy appeared headed for a recession, following ten years of
uninterrupted growth. After years of heavy capital spending on technology and
equipment, businesses found themselves with too much capacity. Orders for
computers, software, and telecommunications equipment fell to fractions of their
former levels.
The moves by the Federal Reserve to lower interest rates continued in the second
quarter and were seen by investors as the medicine needed for the economy to
recover quickly. A broad-based rally in stocks took place in April and May,
including an initial rebound in technology companies. Another round of layoffs
and warnings of shortfalls in earnings, notably in the technology sector,
dampened investor enthusiasm again and the market began a longer slide. Through
the summer and early fall, it became apparent that the domestic slowdown was
impacting the economies of U.S. trading partners and the likelihood of a
worldwide recession or slow growth increased. This, combined with the continued
strength of the dollar, gave investors reason to sell stocks of major
multinational companies such as General Electric and American International
Group, in which Adams Express has long held sizeable positions.
The tragedies of September 11 resulted in a further loss of investor confidence
and stocks plummeted when markets re-opened. With the Federal Reserve easing
interest rates an eighth and ninth time, to 2.5%, investor confidence picked up
and the market turned up in October. Early indicators hinted that there would be
a decent recovery following a short-lived recession. Inventory reductions and
restructuring by corporations appeared sufficient to assure growth in the
economy starting some time in 2002. Enthusiasm for the outlook drove stock
prices up sharply in November from their lows in late September. The market's
fourth quarter performance was led by a 34% recovery in technology stocks and
nearly 25% returns from consumer cyclicals.
The performance of the Company's portfolio in 2001 was very disappointing. As
noted in our third quarter report to shareholders, investors have not followed
the traditional pattern of emphasizing investments in larger capitalization,
multi-national companies which have less sensitivity to economic cycles when a
recession is anticipated. Thus, sectors such as consumer staples, health care,
and communications services provided poor returns for the year.
The electric utility industry, in the process of deregulating, experienced a
number of events that turned investors away. The California energy crisis, the
bankruptcy of one utility and numerous lawsuits, the dramatic collapse of Enron,
and the subsequent liquidity problems of other electricity producers, all served
to demolish the idea of utilities as income-producing safe havens. The sector
was down more than 30% in 2001. With 12% of the Fund invested in utilities and
allied merchant electricity providers, the impact on Adams Express was heavy.
Our Enron position, in particular, was decimated and we decided to dispose of it
prior to its bankruptcy filing.
Our exposure to the technology sector was primarily in the more conservative
computer software and communications equipment subgroups. The former were hurt
by across-the-board cuts in technology spending, while the latter suffered from
the collapse in demand from Internet-related companies. The Company's other
areas of large investment, in financials and health care, performed about as
poorly as the Standard & Poor's sectors, while our modest exposure in basic
materials and transportation, the most cyclical groups, did considerably better
than the market sectors.
For the year ended December 31, 2001, the return on net assets of the Company,
including income and capital gains, was (24.7)%, compared to a return of (5.6)%
for the Dow Jones Industrials and (11.8)% for the Standard & Poor's 500. The
NASDAQ or over-the-counter market, reflecting mostly technology stocks, recorded
a (21.1)% return. With essentially no change in the discount of the Adams
Express Company's stock price from its net asset value per share, its return
based on market prices was also (24.7)%.
Investment Results
At the end of 2001 our net assets were $1,368,366,316 or $16.05 per share on
85,233,262 shares outstanding as compared with $1,951,562,978 or $23.72 per
share on 82,292,262 shares outstanding a year earlier.
Net investment income for 2001 was $21,091,920 compared to $20,941,465 for 2000.
These earnings are equal to $0.26 and $0.26 per share, respectively, on the
average number of shares outstanding throughout the year. In 2001, our 0.19%
expense ratio (expenses to average net assets) was once again at a very low
level compared to the industry.
Net realized gains amounted to $113,686,714 during the year, while the
unrealized appreciation on investments decreased from $1,047,469,344 at December
31, 2000 to $424,993,559 at year end.
3
Letter to Stockholders (continued)
--------------------------------------------------------------------------------
Dividends and Distributions
The total dividends and distributions paid in 2001 were $1.65 per share compared
to $1.85 in 2000. As announced on November 8, 2001, a year-end distribution
consisting of investment income of $0.06 and capital gains of $1.35 was made on
December 27, 2001, both realized and taxable in 2001. On January 10, 2002, an
additional distribution of $0.08 per share was declared payable March 1, 2002,
representing the balance of undistributed net investment income and capital
gains earned during 2001 and an initial distribution from 2002 net investment
income, all taxable to shareholders in 2002.
Outlook for 2002
With the dramatic reductions in short-term interest rates over the course of
2001, there is little doubt that the U. S. economy will emerge from the
recession fairly quickly; some economists believe it has already done so. The
heavy liquidation of inventories in the final quarter of 2001 may result in
increased production to refill supply pipelines in the first quarter. Following
five of the past six recessions, industrial production was brought on more
quickly than final demand required and cutbacks were necessary a second time to
avoid excess inventory build-ups. It is believed, however, that corporations are
very cautious at this point and will not bring up production too rapidly.
The consumer was the primary support for the economy during most of 2001, as
spending remained healthy despite layoffs, modest wage increases, and some
tightening of credit standards. Offsetting factors included attractive mortgage
refinancing terms, cheap energy prices, and heavy discounting at the retail
level. Confidence was boosted by the implementation of the tax cuts passed by
Congress in mid-2001 and by military successes in Afghanistan. Recently,
however, long-term interest rates have risen, OPEC has cut production to
stabilize oil prices, and states have announced tax increases. Consumers may
well decide that it is time to boost their savings, especially given the
recently effective incentives provided by the federal Tax Code.
A cautious industrial sector and perhaps a more savings-conscious consumer are
expected to temper the growth prospects for the economy once it does emerge from
the recession. The anticipated slow growth in the rest of the world should also
reduce U.S. export demand, further dampening growth. With this economic picture
in mind, we do not anticipate a strong bounce in corporate earnings in 2002. The
restructuring and layoffs made in 2001 have brought better operating leverage to
many companies, but the benefits of that leverage cannot be realized without
greater demand for products and services. We therefore expect profit growth of
only 5% to 10% for the year, bringing the earnings of the Standard & Poor's 500
Composite Index to between $47 and $50 before write-offs. Based on that range of
earnings estimates, the Index was trading at 23 to 24 times anticipated earnings
at the end of 2001. Even in an environment of very mild inflation and low
interest rates, that level of valuation is high relative to historic norms. We
do not see a catalyst other than better earnings performance which would drive
the stock market much higher. In a few industries, capacity has been reduced to
such an extent that companies have some pricing power, but there is still a
significant amount of unused capacity, which will serve to hold down prices. Any
improvement in earnings must therefore be due to a level of demand higher than
we can currently foresee.
We are confident that the companies represented by the stocks in the portfolio
will enjoy reasonable growth as the economy recovers. Their financial condition
remains strong and therefore over time they will be able to take advantage of
strengthening demand to take market share from their weaker competitors. It is
our firm belief that their earnings performance will eventually be reflected in
their stock prices.
Share Repurchase Program
On December 13, 2001, 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 greater than 10%.
From the beginning of 2002 through January 10, a total of 24,200 shares have
been repurchased at a total cost of $347,156 and a weighted average discount
from net asset value of 11.3%.
The proxy statement for the Annual Meeting of Stockholders to be held in
Phoenix, Arizona on March 26, 2002, will be mailed on or about February 22, 2002
to holders of record on February 15, 2002.
By order of the Board of Directors,
/s/ Douglas G. Ober /s/ Joseph M. Truta
Douglas G. Ober, Joseph M. Truta
Chairman and Chief President
Executive Officer
January 18, 2002
4
Statement of Assets and Liabilities
--------------------------------------------------------------------------------
December 31, 2001
Assets
Investments* at value:
Common stocks and convertible securities
(cost $823,354,088) $1,229,992,495
Non-controlled affiliate, Petroleum & Resources Corporation
(cost $26,585,260) 44,896,821
Short-term investments (cost $89,442,033) 89,442,033 $1,364,331,349
------------------------------------------------------------------------------------------------------------------------------------
Cash 80,855
Securities lending collateral 116,116,964
Dividends and interest receivable 952,670
Prepaid expenses and other assets 7,150,274
------------------------------------------------------------------------------------------------------------------------------------
Total Assets 1,488,632,112
------------------------------------------------------------------------------------------------------------------------------------
Liabilities
Open written option contracts at value (proceeds $268,341) 224,750
Obligations to return securities lending collateral 116,116,964
Accrued expenses and other liabilities 3,924,082
------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 120,265,796
------------------------------------------------------------------------------------------------------------------------------------
Net Assets $1,368,366,316
------------------------------------------------------------------------------------------------------------------------------------
Net Assets
Common Stock at par value $1.00 per share, authorized 150,000,000 shares; issued and
outstanding 85,233,262 shares $ 85,233,262
Additional capital surplus 848,786,335
Undistributed net investment income 3,788,120
Undistributed net realized gain on investments 5,565,040
Unrealized appreciation on investments 424,993,559
------------------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Stock $1,368,366,316
====================================================================================================================================
Net Asset Value Per Share of Common Stock $ 16.05
====================================================================================================================================
*See schedule of investments on pages 13 through 16.
The accompanying notes are an integral part of the financial statements.
5
Statement of Operations
--------------------------------------------------------------------------------
Year Ended December 31, 2001
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 20,156,521
From non-controlled affiliate 1,014,293
Interest 2,577,839
Securities lending 412,807
------------------------------------------------------------------------------------------------
Total income 24,161,460
------------------------------------------------------------------------------------------------
Expenses:
Investment research 649,325
Administration and operations 620,638
Directors' fees 203,500
Reports and stockholder communications 355,321
Transfer agent, registrar and custodian expenses 459,761
Auditing and accounting services 99,792
Legal services 37,578
Occupancy and other office expenses 232,995
Travel, telephone and postage 125,631
Other 284,999
------------------------------------------------------------------------------------------------
Total expenses 3,069,540
------------------------------------------------------------------------------------------------
Net Investment Income 21,091,920
------------------------------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 111,830,367
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 1,856,347
Change in unrealized appreciation on investments (622,475,783)
------------------------------------------------------------------------------------------------
Net Loss on Investments (508,789,069)
------------------------------------------------------------------------------------------------
Change in Net Assets Resulting From Operations $(487,697,149)
================================================================================================
The accompanying notes are an integral part of the financial statements.
6
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
For the Year Ended
----------------------------------
Dec. 31, 2001 Dec. 31, 2000
--------------------------------------------------------------------------------------------------------------------
From Operations:
Net investment income $ 21,091,920 $ 20,941,465
Net realized gain on investments 113,686,714 128,091,337
Change in unrealized appreciation on investments (622,475,783) (251,193,342)
--------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations (487,697,149) (102,160,540)
--------------------------------------------------------------------------------------------------------------------
Distributions to Stockholders From:
Net investment income (21,153,837) (17,702,862)
Net realized gain from investment transactions (111,923,436) (128,205,341)
--------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (133,077,273) (145,908,203)
--------------------------------------------------------------------------------------------------------------------
From Capital Share Transactions:
Value of shares issued in payment of exercised options and distributions 68,287,544 77,508,318
Cash in lieu of fractional shares issued in payment of 3-for-2 stock split -- (123,043)
Cost of shares purchased (note 4) (30,709,784) (48,555,429)
--------------------------------------------------------------------------------------------------------------------
Change in net assets from capital share transactions 37,577,760 28,829,846
--------------------------------------------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (583,196,662) (219,238,897)
Net Assets:
Beginning of year 1,951,562,978 2,170,801,875
--------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $3,788,120 and $3,767,539, respectively) $1,368,366,316 $1,951,562,978
====================================================================================================================
The accompanying notes are an integral part of the financial statements.
7
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 (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, 2001 was $939,118,880, and net
unrealized appreciation aggregated $425,480,810, of which the related gross
unrealized appreciation and depreciation were $565,138,939 and $139,658,129,
respectively. The undistributed ordinary income was $3,611,897 and undistributed
long-term capital gain was $2,382,982.
Distributions paid by the Company during the year ended December 31, 2001 were
classified as ordinary income of $27,592,066, and long-term capital gain of
$105,485,207. The distributions are determined in accordance with in- come tax
regulations which may differ from generally accepted accounting principles.
Accordingly, periodic reclassifications are made within the Company's capital
accounts to reflect income and gains available for distribution under income tax
regulations.
3. Investment Transactions
Purchases and sales of portfolio securities, other than options and short-term
investments, during the year ended December 31, 2001 were $296,492,022 and
$410,430,542, 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. The risk associated with purchasing options is limited to the
premium originally paid. Option transactions comprised an insignificant portion
of operations during the year ended December 31, 2001. All investment decisions
are made by a committee, and no one person is primarily responsible for making
recommendations to that committee.
4. Capital Stock
On March 28, 2000, stockholders approved an increase in the number of authorized
shares of Common Stock from 75,000,000 to 150,000,000. The Company has
10,000,000 authorized and unissued preferred shares without par value.
On October 19, 2000 the Company effected a 3-for-2 stock split. All references
to the number of outstanding shares and per share amounts have been adjusted
retroactively to reflect the stock split.
On December 27, 2000, the Company issued 3,517,794 shares of its Common Stock at
a price of $22.00 per share (the average market price on December 11, 2000) to
stockholders of record November 20, 2000 who elected to take stock in payment of
the distribution from 2000 capital gain and investment income.
On December 27, 2001, the Company issued 4,755,400 shares of its Common Stock at
a price of $14.36 per share (the average market price on December 10, 2001) to
stockholders of record November 19, 2001 who elected to take stock in payment of
the distribution from 2001 capital gain and investment income.
The Company may purchase shares of its Common Stock from time to time at such
prices and amounts as the Board of Directors may deem advisable. Transactions in
Common Stock for 2001 and 2000 were as follows:
Shares Amount
------------------------------ ----------------------------------
2001 2000 2001 2000
---- ---- ---- ----
Shares issued in payment of dividends 4,755,400 3,517,794 $ 68,287,544 $ 77,391,468
Shares issued in payment of stock option exercise 3,068 116,850
Shares issued for 3-for-2 stock split 26,262,073
Cash in lieu of fractional shares issued in payment
of 3-for-2 stock split (123,043)
-----------------------------------------------------------------------------------------------------------------------
Total increase 4,755,400 29,782,935 $ 68,287,544 $ 77,385,275
-----------------------------------------------------------------------------------------------------------------------
Shares purchased (at a weighted average discount
from net asset value of 10.0% and 13.9%,
respectively) (1,814,400) (1,385,500) (30,709,784) (48,555,429)
-----------------------------------------------------------------------------------------------------------------------
Total decrease (1,814,400) (1,385,500) $(30,709,784) $(48,555,429)
-----------------------------------------------------------------------------------------------------------------------
Net change 2,941,000 28,397,435 $ 37,577,760 $ 28,829,846
=======================================================================================================================
8
Notes To Financial Statements (continued)
-------------------------------------------------------------------------------
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 2001, there were 339,403 options
outstanding with a weighted average exercise price of $8.1169 per share. During
2001, the Company granted options, including stock appreciation rights, for
44,214 shares of common stock with a weighted average exercise price of $20.5776
per share. During the year stock options or stock appreciation rights relating
to 38,050 stock option shares were exercised at a weighted average market price
of $16.8985 per share and the stock options relating to these rights which had a
weighted average exercise price of $4.4995 per share were cancelled. At December
31, 2001, there were outstanding exercisable options to purchase 104,090 common
shares at $2.3533-$19.1917 per share (weighted average price of $5.9143), and
unexercisable options to purchase 241,477 common shares at $2.3533-$19.6100 per
share (weighted average price of $9.9644). The weighted average remaining
contractual life of outstanding exercisable and unexercisable options was 3.2283
years and 5.5261 years, respectively. Total compensation expense recognized in
2001 related to the stock option and stock appreciation rights plan was a credit
of $1,010,184. At December 31, 2001, there were 1,266,371 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. The plan
assets consist primarily of investments in individual stocks, bonds, and mutual
funds.
The actuarially computed net pension cost credit for the year ended December 31,
2001 was $416,875, and consisted of service expense of $204,411, interest
expense of $362,246, expected return on plan assets of $897,113, and net
amortization credit of $86,419.
In determining the actuarial present value of the projected benefit obligation,
the interest rate used for the weighted average discount rate was 7.5%, 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, 2001, the projected benefit obligation for service rendered to
date was $4,932,613. During 2001, the projected benefit obligation increased due
to service cost and interest cost of $204,411 and $362,246 respectively, and
decreased due to benefits paid in the amount of $205,337. The projected benefit
obligation at December 31, 2001 was $5,293,933.
On January 1, 2001, the fair value of plan assets was $11,316,574. During 2001,
the fair value of plan assets increased due to the expected return on plan
assets of $897,113 and decreased due to benefits paid in the amount of $205,337.
At December 31, 2001, the projected fair value of plan assets amounted to
$12,008,350, which resulted in excess plan assets of $6,714,417. The remaining
components of prepaid pension cost on December 31, 2001 included $908,031 in
unrecognized gain and $427,930 in unrecognized prior service cost. Prepaid
pension cost included in other assets at December 31, 2001 was $6,234,316.
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.
9
Notes To Financial Statements(continued)
-------------------------------------------------------------------------------
6. Expenses
The cumulative amount of accrued expenses at December 31, 2001 for employees and
former employees of the Company was $3,724,599. Aggregate remuneration paid or
accrued during the year ended December 31, 2001 to officers and directors
amounted to $1,038,867, which is reduced by $1,010,184 for stock options and
stock appreciation rights.
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, 2001, the Company had securities on loan of $108,279,411, and
held cash collateral of $116,116,964.
_____________________
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.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
10
The Adams Express Company
--------------------------------------------------------------------------------
--------------------------------------------------------------------
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
--------------------------------------------------------------------
1987 $ 7,745 $ 1,405 $ 340 $ 9,490 $10,157
1988 7,680 2,240 651 10,571 11,546
1989 8,135 3,377 1,195 12,707 14,921
1990 7,680 4,063 1,650 13,393 15,273
1991 9,893 6,312 2,643 18,848 20,043
1992 10,413 7,828 3,225 21,466 21,982
1993 9,307 8,264 3,307 20,878 23,103
1994 8,135 8,522 3,436 20,093 23,129
1995 9,630 11,594 4,768 25,992 30,018
1996 10,283 14,111 5,836 30,230 36,277
1997 12,594 19,659 7,963 40,216 47,411
1998 13,863 24,532 9,548 47,943 58,585
1999 17,475 34,892 12,857 65,224 78,268
2000 16,401 37,322 12,616 66,339 74,931
2001 11,106 29,669 9,208 49,983 56,416
--------------------------------------------------------------------
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 1987-2001. Assumes commissions of
$0.05 per share on the initial shares invested. Fees for the reinvestment of
dividends are assumed as outlined on page 20. 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.
[GRAPH]
10000 10000 10000 10,161
87 7,745 9,150 9,490 10,157
88 7,680 9,920 10,571 11,546
89 8,135 11,512 12,707 14,921
90 7,680 11,743 13,393 15,273
91 9,893 16,205 18,848 20,043
92 10,413 18,241 21,466 21,982
93 9,307 17,571 20,878 23,103
94 8,135 16,657 20,093 23,129
95 9,630 21,224 25,992 30,018
96 10,283 24,394 30,230 36,277
97 12,594 32,253 40,216 47,411
98 13,863 38,395 47,943 58,585
99 17,475 52,367 65,224 78,268
00 16,401 53,723 66,339 74,931
01 11,106 40,775 49,983 56,416
11
Financial Highlights
--------------------------------------------------------------------------------
Year Ended December 31
------------------------------------------------------------------
2001 2000 1999 1998 1997
-------------------------------------------------------------------------------------------------------------------------
Per Share Operating Performance*
Net asset value, beginning of year $ 23.72 $ 26.85 $ 21.69 $ 19.01 $ 15.80
-------------------------------------------------------------------------------------------------------------------------
Net investment income 0.26 0.26 0.25 0.30 0.29
Net realized gains and change
in unrealized appreciation and
other changes (6.32) (1.63) 6.54 3.78 4.22
-------------------------------------------------------------------------------------------------------------------------
Total from investment operations (6.06) (1.37) 6.79 4.08 4.51
-------------------------------------------------------------------------------------------------------------------------
Capital share repurchases 0.04 0.09 -- -- --
-------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment income (0.26) (0.22) (0.26) (0.30) (0.29)
Distributions from net realized gains (1.39) (1.63) (1.37) (1.10) (1.01)
-------------------------------------------------------------------------------------------------------------------------
Total distributions (1.65) (1.85) (1.63) (1.40) (1.30)
-------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 16.05 $ 23.72 $ 26.85 $ 21.69 $ 19.01
=========================================================================================================================
Per share market price, end of year $ 14.22 $ 21.00 $ 22.38 $ 17.75 $ 16.13
-------------------------------------------------------------------------------------------------------------------------
Total Investment Return
Based on market price (24.7)% 1.7% 36.1% 19.3% 33.1%
Based on net asset value (24.7)% (4.3)% 33.6% 23.7% 30.7%
Ratios/Supplemental Data
Net assets, end of year (in 000's) $1,368,366 $1,951,563 $2,170,802 $1,688,080 $1,424,170
Ratio of expenses to average net assets 0.19% 0.24% 0.32% 0.22% 0.39%
Ratio of net investment income to
average net assets 1.33% 0.97% 1.06% 1.48% 1.61%
Portfolio turnover 19.15% 12.74% 15.94% 22.65% 17.36%
Number of shares outstanding at
end of year (in 000's)* 85,233 82,292 80,842 77,815 74,924
-------------------------------------------------------------------------------------------------------------------------
*Adjusted to reflect the 3-for-2 stock split effected in October, 2000.
12
Schedule of Investments
--------------------------------------------------------------------------------
December 31, 2001
Prin. Amt.
or Shares Value (A)
------------------------------------------------------------------------------------------------------
Stocks and Convertible Securities -- 93.2%
Basic Materials -- 1.1%
Engelhard Corp............................................................ 530,000 $ 14,670,400
------------
Capital Goods -- 11.2%
Black & Decker Corp....................................................... 300,000 11,319,000
General Electric Co....................................................... 1,600,000 64,128,000
ITT Industries............................................................ 355,000 17,927,500
Minnesota Mining & Manufacturing Co....................................... 285,000 33,689,850
United Technologies Corp.................................................. 400,000 25,852,000
------------
152,916,350
------------
Communication Services -- 7.1%
Telecommunications -- Cellular and Wireless -- 2.2%
Nextel Communications Inc. 5.25% Conv. Notes due 2010 (B)................. $10,000,000 6,050,000
Nextel Communications Inc. (C) (D)........................................ 1,040,000 11,398,400
Vodafone Group plc ADS (D)................................................ 492,614 12,650,315
------------
30,098,715
------------
Telephone -- 4.9%
BellSouth Corp............................................................ 440,000 16,786,000
Qwest Communications International, Inc. 5.75% TRENDS Pfd. due 2003 (B).... 538,000 15,736,500
RCN Corp. (D)............................................................. 94,000 275,420
SBC Communications, Inc................................................... 700,000 27,419,000
Time Warner Telecom Inc. (C) (D).......................................... 404,500 7,155,605
------------
67,372,525
------------
Consumer -- 7.5%
BJ's Wholesale Club, Inc. (C)............................................. 337,500 14,883,750
Brinker International Inc................................................. 25,000 744,000
Coca-Cola Co.............................................................. 170,000 8,015,500
Dean Foods Co. (D)........................................................ 128,700 8,777,340
Hershey Foods Corp........................................................ 255,000 17,263,500
Ivex Packaging Corp. (C).................................................. 520,000 9,880,000
PepsiCo, Inc.............................................................. 335,000 16,311,150
Proctor & Gamble Co....................................................... 170,000 13,452,100
Safeway, Inc. (C)......................................................... 70,000 2,922,500
Tiffany & Co. (D)......................................................... 350,000 11,014,500
------------
103,264,340
------------
Energy -- 5.1%
BP plc ADR................................................................ 270,000 12,557,701
Exxon Mobil Corp.......................................................... 316,836 12,451,655
Petroleum & Resources Corporation (E)..................................... 1,913,761 44,896,821
------------
69,906,177
------------
13
Schedule of Investments (continued)
--------------------------------------------------------------------------------
December 31, 2001
Prin. Amt.
or Shares Value (A)
-----------------------------------------------------------------------------------------
Financial -- 19.5%
Banking -- 12.7%
BankNorth Group, Inc........................................... 474,000 $ 10,674,480
Citigroup Inc.................................................. 401,023 20,243,647
Federal Home Loan Mortgage Corp................................ 345,000 22,563,000
Greenpoint Financial Corp. (D)................................. 435,000 15,551,250
Investors Financial Services Corp.............................. 487,500 32,277,375
Mellon Financial Corp.......................................... 420,000 15,800,400
Provident Bankshares Corp...................................... 335,021 8,141,022
Wachovia Corp.................................................. 380,000 11,916,800
Wells Fargo & Co............................................... 550,000 23,897,500
Wilmington Trust Corp.......................................... 210,000 13,295,100
------------
174,360,574
------------
Insurance -- 6.8%
AMBAC Financial Group, Inc..................................... 569,400 32,945,484
American International Group, Inc.............................. 759,375 60,294,376
------------
93,239,860
------------
Health Care -- 16.4%
Abbott Laboratories............................................ 350,000 19,512,500
Affymetrix Inc. (C)............................................ 210,000 7,927,500
American Home Products Corp.................................... 300,000 18,408,000
Applera Corp. - Applied Biosystems Group....................... 210,000 8,246,700
Bristol-Myers Squibb Co........................................ 280,000 14,280,000
Caliper Technologies (C) (D)................................... 225,000 3,512,250
Elan Corp., plc ADR (C) (D).................................... 200,000 9,012,000
Enzon, Inc. (C)................................................ 100,000 5,628,000
Genentech, Inc. (C)............................................ 350,000 18,987,500
GlaxoSmithKline plc ADR (D).................................... 250,360 12,472,935
HCA Inc. (D)................................................... 390,000 15,030,600
Human Genome Sciences Inc. (C) (D)............................. 200,000 6,744,000
Johnson & Johnson.............................................. 360,000 21,276,000
Lilly (Eli) &Co................................................ 190,000 14,922,600
Merck & Co., Inc............................................... 250,000 14,700,000
Pfizer Inc..................................................... 300,000 11,955,000
Pharmacia Corp................................................. 368,900 15,733,585
Vertex Pharmaceuticals Inc. (C)................................ 248,016 6,098,713
------------
224,447,883
------------
14
Schedule of Investments (continued)
--------------------------------------------------------------------------------
December 31, 2001
Prin. Amt.
or Shares Value (A)
----------------------------------------------------------------------------------------------------
Technology -- 15.2%
Communication Equipment -- 4.7%
Corning Inc. (C) (D)................................................. 1,170,000 $ 10,436,400
Ericsson (L.M.) Telephone Co. ADR.................................... 2,000,000 10,440,000
Lucent Technologies Inc. (C) (D)..................................... 400,000 2,516,000
Motorola, Inc........................................................ 495,622 7,444,242
Nokia Corp. ADR...................................................... 1,380,000 33,851,400
--------------
64,688,042
--------------
Computer Related -- 7.2%
BEA Systems Inc. (C) (D)............................................. 370,000 5,701,700
BMC Software Inc. (C)................................................ 310,000 5,074,700
Cisco Systems, Inc. (C).............................................. 1,835,000 33,231,850
Diamondcluster International Inc. (C) (D)............................ 497,500 6,517,250
Oracle Corp. (C)..................................................... 1,180,000 16,295,800
Sapient Corp. (C).................................................... 1,150,000 8,878,000
Siebel Sytems Inc. (C) (D)........................................... 195,000 5,456,100
Sun Microsystems, Inc. (C)........................................... 515,000 6,355,100
Symantec Corp. 3.00% Conv. Sub. Notes due 2006....................... 500,000 608,750
Symantec Corp. (C) (D)............................................... 155,000 10,281,150
--------------
98,400,400
--------------
Electronics -- 3.3%
Intel Corp........................................................... 690,000 21,700,500
Solectron Corp. (C).................................................. 2,000,000 22,560,000
--------------
44,260,500
--------------
Transportation -- 2.4%
Canadian National Railway Co. 5.25% Conv. Pfd. QUIDS due 2029........ 170,000 11,135,000
Canadian National Railway Co. (D).................................... 85,000 4,103,800
United Parcel Service, Inc. (D)...................................... 315,000 17,167,500
--------------
32,406,300
--------------
Utilities -- 7.7%
Black Hills Corp..................................................... 555,000 18,781,200
CINergy Corp......................................................... 300,000 10,029,000
Duke Energy Corp. 8.25% Conv. Pfd. due 2004 (D)...................... 400,000 10,540,000
Duke Energy Corp..................................................... 355,000 13,937,300
Keyspan Corp......................................................... 400,000 13,860,000
Mirant Corp. (C) (D)................................................. 400,000 6,408,000
Northwestern Corp.................................................... 500,000 10,525,000
Philadelphia Suburban Corp........................................... 165,000 3,720,750
TECO Energy, Inc..................................................... 650,000 17,056,000
--------------
104,857,250
--------------
Total Stocks and Convertible Securities
(Cost $849,939,348) (F).............................................. 1,274,889,316
--------------
15
Schedule of Investments (continued)
--------------------------------------------------------------------------------
December 31, 2001
Prin. Amt. Value (A)
-----------------------------------------------------------------------------------------------------------
Short-Term Investments -- 6.5%
U.S. Government Obligations -- 0.7%
U.S. Treasury Bills, 1.82%, due 2/21/02..................................... $10,000,000 $ 9,974,217
--------------
Commercial Paper -- 5.8%
ChevronTexaco Corp., 1.86%, due 1/8/02...................................... 20,000,000 19,992,767
Deere (John) Capital Corp., 1.82-1.84%, due 1/15/02......................... 18,900,000 18,886,593
General Electric Capital Corp., 1.87%, due 1/8/02-1/10/02................... 11,250,000 11,245,187
IBM Corp. 1.92%, due 1/8/02................................................. 15,000,000 14,994,400
Wells Fargo Financial, Inc., 1.85%, due 1/10/02............................. 14,350,000 14,348,869
--------------
79,467,816
--------------
Total Short-Term Investments
(Cost $89,442,033).......................................................... 89,442,033
--------------
Total Investments
(Cost $939,381,381)......................................................... 1,364,331,349
Cash, receivables and other assets, less liabilities....................... 4,034,967
--------------
Net Assets -- 100.0%......................................................... $1,368,366,316
================================================================================
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) Restricted securities (Nextel Communications Inc. 5.25% Conv. Notes due
2010, acquired 1/21/00, cost $10,000,000 and Qwest Communications
International, Inc. 5.75% TRENDS Pfd. due 2003, acquired 12/4/98-2/21/01,
cost $32,969,481).
(C) Presently non-dividend paying.
(D) All or a portion of these securities are on loan. See Note 7 to Financial
Statements.
(E) Non-controlled affiliate, a closed-end sector fund, registered as an
investment company under the 1940 Act.
(F) The aggregate market value of stocks held in escrow at December 31, 2001
covering open call option contracts written was $6,172,600. In addition, the
required aggregate market value of securities segregated by the custodian to
collateralize open put option contracts written was $3,337,500.
16
Principal Changes in Portfolio Securities
--------------------------------------------------------------------------------
During the Three Months Ended December 31, 2001
(unaudited)
Principal Amount or Shares
----------------------------------------------
Held
Additions Reductions Dec. 31, 2001
--------- ---------- -------------
Bristol-Myers Squibb Co............................... 175,000 280,000
Enzon, Inc............................................ 100,000 100,000
Hershey Foods Corp.................................... 145,000 255,000
Pfizer Inc............................................ 135,000 300,000
Safeway Inc........................................... 70,000 70,000
Suiza Foods Corp...................................... 128,700/(1)/ --
American Tower Corp. 5.00% Conv. Notes due 2010....... $10,000,000 --
Annuity & Life Re (Holdings), Ltd..................... 500,000 --
Baxter International Inc.............................. 510,000 --
Calpine Capital Trust 5.75% Conv. Pfd. HIGH TIDES..... 182,250 --
Dean Foods Co......................................... 300,000/(1)/ 128,700/(1)/
Elan Corp., plc ADR................................... 350,000 200,000
Genentech, Inc........................................ 50,000 350,000
Mead Corp............................................. 400,000 --
Nokia Corp. ADR....................................... 460,000 1,380,000
Orion Power Holdings, Inc............................. 712,000 --
QRS Corp.............................................. 417,500 --
Williams Companies, Inc............................... 500,000 --
__________________
(1) Received .429 shares of Suiza Foods Corp. and $21.00 for each share of Dean
Foods Co. held. Suiza Foods Corp. and Dean Foods Co. merged into one company
named Dean Foods Co.
17
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 December 31, 2001, 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, 2001 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 10, 2002
____________________
Common Stock
New York Stock Exchange and Pacific Exchange ticker symbol: ADX
NASDAQMutual Fund Quotation Symbol:XADEX
Newspaper stock listings are generally under the abbreviation: AdaEx
The Adams Express Company
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
Website: www.adamsexpress.com
E-mail: contact@adamsexpress.com
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: (877) 260-8188
E-mail: Shareowner-svcs@bankofny.com
18
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 the Bank
of New York's BuyDIRECT Purchase and Sale Plan (see page 20).
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' daily trading is shown in the stock tables of most daily newspapers,
usually with the abbreviated form "AdaEx." Local newspapers determine, usually
by volume of traded shares, which securities to list. If your paper does not
carry our listing, please telephone the Company at (800) 638-2479 or visit our
website.
How do I replace a lost certificate(s) or how do I correct a spelling error on
my certificate?
Your Adams Express stock certificates are valuable documents and should be kept
in a safe place. For tax purposes, keep a record of each certificate, including
the cost or market value of the shares it covers at the time acquired. If a
certificate is lost, destroyed or stolen, notify the Transfer Agent immediately
so a "stop transfer" order can be placed on the records to prevent an
unauthorized transfer of your certificate. The necessary forms and requirements
to permit the issuance of a replacement certificate will then be sent to you. A
certificate can be replaced only after the receipt of an affidavit regarding the
loss accompanied by an open penalty bond, for which a small premium is paid by
the stockholder.
In the event a certificate is issued with the holder's name incorrectly spelled,
a correction can only be made if the certificate is returned to the Transfer
Agent with instructions for correcting the error. Transferring shares to another
name also requires that the certificate be forwarded to the Transfer Agent with
the appropriate assignment forms completed and the signature of the registered
owner Medallion guaranteed by a bank or member firm of The New York Stock
Exchange, Inc.
Can you send my dividend checks directly to my bank?
Yes, provide the Transfer Agent with your bank's name, your branch's mailing
address and your account number at your bank. (Sorry, electronic transfer of
funds is not offered at this time.)
Who do I notify of a change of address?
The Transfer Agent.
We go to Florida (Arizona) every winter. How do we get our mail from Adams
Express?
The Transfer Agent can program a seasonal address into its system; simply send
the temporary address and the dates you plan to be there to The Bank of New
York.
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 Agent will
send you the instructions and forms necessary to effect your transfer.
19
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.
BuyDIRECT(SM)*
BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvestment
plan, sponsored and administered by our transfer agent, The Bank of New York.
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 $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
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 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 Company The Bank of New York
Lawrence L. Hooper, Jr., Shareholder Relations
Vice President, Secretary and Dept.-8W
General Counsel P.O. Box 11258
Seven St. Paul Street, Church Street Station
Suite 1140 New York, NY 10286
Baltimore, MD 21202 (877) 260-8188
(800) 638-2479 Website:
Website: http://stock.bankofny.com
www.adamsexpress.com E-mail:
E-mail: Shareowner-svcs@
contact@adamsexpress.com bankofny.com
*BuyDIRECT is a service mark of The Bank of New York.
**The year-end dividend and capital gain distribution will usually be made in
newly issued shares of common stock. There would be no fees or commissions in
connection with this dividend and capital gain distribution when made in newly
issued shares.
20
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*
--------------------------------------------------------------------------------------------------------
1987 $ 427,225,965 40,250,997 $10.61 $.52 $1.77
1988 455,825,580 42,443,262 10.74 .33 .88
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
_______________
*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.
21
Board of Directors
--------------------------------------------------------------------------------
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
Enrique R. Arzac Director One Since Professor of Two Director of Petroleum &
7 St. Paul Street Year 1983 Finance and Resources Corporation
Suite 1140 Economics, formerly and Credit Suisse Asset
Baltimore, MD 21202 Vice Dean of Management (8 funds)
Age 60 Academic Affairs (investments companies).
of the
Graduate School
of Business
Columbia University.
------------------------------------------------------------------------------------------------------------------------------------
Daniel E. Emerson Director One Since Chairman, The Two Director of Petroleum &
7 St. Paul Street Year 1982 National YMCA Resources Corporation
Suite 1140 Fund Inc. (investment company).
Baltimore, MD 21202 Retired
Age 77 Executive
Vice President
of NYNEX Corp.,
Retired Chairman
of the Board of
both NYNEX
Information
Resources Co.
and NYNEX Mobile
Communnications Co.
Previously
Executive Vice
President and
Director of New
York Telephone Company.
-----------------------------------------------------------------------------------------------------------------------------------
Edward J. Kelly, III Director One Since President and Two Director of Petroleum &
7 St. Paul Street Year October Chief Resources Corporation
Suite 1140 2001 Executive (investment company)
Baltimore, MD 21202 Officer of and Hartford Financial
Age 48 Mercantile Services Group; and
Bankshares member of Board
Corporation. of Trustees of Johns
Formerly Hopkins University.
Managing
Director with J.P.
Morgan Chase
(investment
bank and
global finan-
cial
institution)
and prior
thereto a
partner with the New
York City law
firm of Davis
Polk &
Wardell.
------------------------------------------------------------------------------------------------------------------------------------
Thomas H. Lenagh Director One Since Financial Two Director of Gintel Fund,
7 St. Paul Street Year 1968 Advisor, Clemente Strategic
Suite 1140 Chairman of Fund and Petroleum &
Baltimore, MD 21202 the Board, Resources Corporation
Age 83 Inrad Corp. (investment companies);
(crystals). and ICN Pharmaceuticals
Formerly Inc., ASD Group
Chairman of (electronic contract
the Board manufacturing), and
and CEO of Greiner China Light Industry Fund.
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 Two Director of Petroleum &
7 St. Paul Street Year 1971 Chairman of Resources Corporation
Suite 1140 the Board (investment company).
Baltimore, MD 21202 and CEO of
Age 74 the Company
and
Petroleum
& Resources
Corporation. Formerly
consultant
to the
Company and
Petroleum & Resources
Corporation.
------------------------------------------------------------------------------------------------------------------------------------
W. Perry Neff Director One Since Private Two Director of Petroleum &
7 St. Paul Street Year 1987 Financial Resources Corporation
Suite 1140 Consultant. (investment company).
Baltimore, MD 21202 Retired
Age 74 Executive
Vice President
of Chemical
Bank.
------------------------------------------------------------------------------------------------------------------------------------
22
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)
Landon Peters Director One Since Private Two Director of Petroleum &
7 St. Paul Street Year 1974 Investor. Resources Corporation
Suite 1140 Former (investment company).
Baltimore, MD 21202 Investment
Age 71 Manager, YMCA
Retirement Fund.
Formerly Executive
Vice President and
Treasurer and prior
thereto Senior Vice
President and
Treasurer of The
Bank of New York.
------------------------------------------------------------------------------------------------------------------------------------
John J. Roberts Director One Since Senior Two Honorary Director of
7 St. Paul Street Year 1976 Advisor, American International
Suite 1140 formerly Group, Inc. and Director
Baltimore, MD 21202 Vice- of Petroleum & Resources
Age 79 Chairman Corporation (investment
External company).
Affairs,
American
International Group, Inc.
(insurance). Formerly
Chairman
and CEO of
American
International
Underwriters
Corporation.
Previously
President of
American
International
Underwriters
Corporation-U.S.
/ Overseas
Operations.
------------------------------------------------------------------------------------------------------------------------------------
Susan C. Schwab Director One Since Dean of the Two Director of Petroleum &
7 St. Paul Street Year 2000 School of Resources Corporation
Suite 1140 Public (investment company)
Baltimore, MD 21202 Affairs and Calpine Corp. energy
Age 46 at the
University
of Maryland,
College
Park.
Formerly
Director of
Corporate Business
Development at
Motorola, Inc.
(energy).
Inc.
------------------------------------------------------------------------------------------------------------------------------------
Robert J. M. Wilson Director One Since Retired Two Director of Petroleum &
7 St. Paul Street, Year 1975 President of Resources Corporation
Suite 1140 the Company (investment company).
Baltimore, MD 21202 and retired
Age 81 President of
Petroleum &
Resources
Corporation.
------------------------------------------------------------------------------------------------------------------------------------
Interested Director
Douglas G. Ober Director, One Director Chairman & Two Director of Petroleum &
7 St. Paul Street, Chairman Year Since CEO of the Resources Corporation
Suite 1140 and CEO 1989; Company and (investment company).
Baltimore, MD 21202 Chairman Petroleum &
Age 55 of the Resources
Board Corporation.
Since
1991
------------------------------------------------------------------------------------------------------------------------------------
23
The Adams Express Company
--------------------------------------------------------------------------------
Board Of Directors (with their principal affiliations)
Enrique R. Arzac/2/,/4/
Professor of Finance and Economics
Columbia University
Daniel E. Emerson/1/,/4/
Retired Executive Vice President
NYNEX Corporation
Edward J. Kelly, III
President and Chief Executive Officer Mercantile Bankshares Corporation
Thomas H. Lenagh/2/,/3/
Financial Advisor
W.D. MacCallan/1/,/4/
Retired Chairman of the Company and Petroleum & Resources Corporation
W. Perry Neff/1/,/2/
Retired Executive Vice President
Chase Bank
Douglas G. Ober/1/
Chairman of the Company
Landon Peters/3/,/4/
Private Investor
John J. Roberts/2/,/4/
Senior Advisor, American
International Group, Inc.
Susan C. Schwab/1/,/3/
Dean of the School of Public Affairs
University of Maryland
Robert J.M. Wilson/1/,/3/
Retired President of the Company and Petroleum & Resources Corporation
Officers
Douglas G. Ober
Chairman and Chief Executive Officer
Joseph M. Truta
President
Richard F. Koloski
Executive Vice President
Richard B. Tumolo
Vice President -- Research
Lawrence L. Hooper, Jr.
Vice President, Secretary and General Counsel
Maureen A. Jones
Vice President and Treasurer
Christine M. Sloan
Assistant Treasurer
Geraldine H. Stegner
Assistant Secretary
1. Member of Executive Committee
2. Member of Audit Committee
3. Member of Compensation Committee
4. Member of Retirement Benefits Committee
24
The Adams Express Company
Seven St. Paul Street, Suite 1140
Baltimore, MD 21202
(410) 752-5900 or (800) 638-2479
Contact us on the Web at:
www.adamsexpress.com
[LOGO]