LETTER TO STOCKHOLDERS
We are pleased to present summary financial information of The Adams Express Company (the Company) for the three months ended March 31, 2010.
Net assets of the Company at March 31, 2010 were $12.56 per share on 87,427,760 shares outstanding, compared with $11.95 per share at December 31, 2009 on 87,415,193 shares outstanding. On March 1, 2010, a distribution of $0.05 per share was paid, consisting of $0.01 from 2009 investment income, $0.02 from 2009 short-term capital gain, $0.01 from 2009 long-term capital gain, and $0.01 from 2010 investment income, all taxable in 2010. On April 7, 2010, an investment income dividend of $0.05 per share was declared to stockholders of record May 14, 2010, payable June 1, 2010.
Net investment income for the three months ended March 31, 2010 amounted to $3,135,897, compared with $3,033,510 for the same three month period in 2009. These earnings are equal to $0.04 and $0.03 per share, respectively.
Net capital gain realized on investments for the three months ended March 31, 2010 amounted to $8,375,428, or $0.10 per share.
For the three months ended March 31, 2010, the total return on the net asset value (with dividends and capital gains reinvested) of the Company’s shares was 5.6%. The total return on the market value of the Company’s shares for the period was 5.0%. These compare to a 5.4% total return for the Standard & Poor’s 500 Composite Stock Index (“S&P 500”) and a 4.9% total return for the Lipper Large-Cap Core Mutual Fund Average over the same time period.
For the twelve months ended March 31, 2010, the Company’s total return on net asset value was 50.1% and on market value was 46.9%. Comparable figures for the S&P 500 and the Lipper Large-Cap Core Mutual Fund Average were 49.8% and 48.5%, respectively.
The Annual Meeting was held on March 23, 2010 in Baltimore, Maryland. The results of the voting at the Annual Meeting are shown on page 7.
We are pleased to announce that on March 23, 2010, the Board of Directors elected the following executives to new positions. Mr. David D. Weaver was elected President, after serving the Company as Executive Vice President. He has been a member of our portfolio management team since 2008 and started as a research analyst in 2004. Ms. Nancy J. F. Prue was elected Executive Vice President and has now joined our portfolio management team. Ms. Prue has served as a research analyst for the Company since 1982. She also is Executive Vice President of the Company’s non-controlled affiliate, Petroleum & Resources Corporation, and has served in that capacity since 2009. She has also been a research analyst for Petroleum & Resources since 1986. Mr. Richard A. Church was elected Vice President-Research. Mr. Church has been with the Company as a senior research analyst covering the information technology and telecom services sectors since 2008.
Current and potential stockholders can find information about the Company, including the daily net asset value (NAV) per share, the market price, and the discount/premium to the NAV, on our website at www.adamsexpress.com. Also available on the website are a history of the Company, historical financial information, and other useful content.
By order of the Board of Directors,
Douglas G. Ober,
Chairman and
Chief Executive Officer
David D. Weaver,
President
April 7, 2010
SUMMARY FINANCIAL INFORMATION
Three Months Ended March 31
(unaudited)
| 2010 | 2009 | ||||||
| Net asset value per share |
$ | 12.56 | $ | 8.76 | |||
| Total net assets |
1,097,711,849 | 760,002,176 | |||||
| Unrealized appreciation (depreciation) |
140,472,812 | (205,512,286 | ) | ||||
| Net investment income |
3,135,897 | 3,033,510 | |||||
| Net realized gain |
8,375,428 | 19,462,868 | |||||
| Market price |
10.55 | 7.52 | |||||
| Shares outstanding |
87,427,760 | 86,767,691 | |||||
| Shares repurchased |
28,300 | 676,675 | |||||
| Total return (based on market price) |
5.0% | (5.6)% | |||||
| Total return (based on net asset value) |
5.6% | (8.1)% | |||||
| Key ratios: |
|||||||
| Net investment income to average net assets (annualized) |
1.20% | 1.58% | |||||
| Expenses to average net assets (annualized) |
0.60% | 0.92% | |||||
| Portfolio turnover |
3.20% | 5.28% | |||||
| Net cash & short-term investments to net assets |
3.1% | 9.2% | |||||
RETURNS ON NET ASSET VALUE
As of March 31, 2010
(unaudited)
2
FIVE YEAR DISTRIBUTION HISTORY
(unaudited)
| Income Dividends Per Share |
Short-Term Capital Gains Per Share |
Long-Term Capital Gains Per Share |
Total Distributions Per Share |
Dividend Yield* |
Annual Rate of Distribution** |
|||||||||||||
| 2005 |
$ | 0.22 | $ | 0.09 | $ | 0.55 | $ | 0.86 | 1.7 | % | 6.7 | % | ||||||
| 2006 |
0.23 | 0.04 | 0.63 | 0.90 | 1.7 | 6.8 | ||||||||||||
| 2007 |
0.32 | 0.08 | 0.63 | 1.03 | 2.2 | 7.2 | ||||||||||||
| 2008 |
0.26 | 0.01 | 0.37 | 0.64 | 2.3 | 5.6 | ||||||||||||
| 2009 |
0.15 | 0.05 | 0.25 | 0.45 | 1.7 | 5.2 | ||||||||||||
| Average: | 1.9 | % | 6.3 | % | ||||||||||||||
| * | The dividend yield is the total income dividends during the year divided by the average daily market price of the Company’s Common Stock. |
| ** | The annual rate of distribution is the total dividends and capital gain distributions during the year divided by the average daily market price of the Company’s Common Stock. |
CHANGES IN PORTFOLIO SECURITIES
During the Three Months Ended March 31, 2010
(unaudited)
| Shares | ||||||||
| Additions | Reductions | Held March 31, 2010 | ||||||
| Bank of America Corp. |
50,000 | (1) | 1,185,000 | |||||
| Cliffs Natural Resources Inc. |
75,740 | 102,140 | ||||||
| Freeport-McMoRan Copper & Gold Inc. |
5,000 | 115,000 | ||||||
| Google Inc. |
4,000 | 24,000 | ||||||
| Hewlett-Packard Co. |
199,989 | 199,989 | ||||||
| JPMorgan Chase & Co. |
60,000 | 510,000 | ||||||
| Norfolk Southern Corp. |
100,000 | 100,000 | ||||||
| Praxair, Inc. |
109,292 | 109,292 | ||||||
| QUALCOMM Inc. |
50,000 | 300,000 | ||||||
| T. Rowe Price Group Inc. |
190,000 | 190,000 | ||||||
| Bank of America Corp. Common |
||||||||
| Equivalent Securities |
50,000 | (1) | — | |||||
| Capital One Financial Corp. |
110,000 | 100,000 | ||||||
| ConocoPhillips |
100,000 | — | ||||||
| Del Monte Foods Co. |
200,000 | 800,000 | ||||||
| Northwest Natural Gas Co. |
200,000 | — | ||||||
| Visa Inc. |
100,000 | 90,000 | ||||||
| WGL Holdings, Inc. |
74,375 | 164,225 | ||||||
| (1) | Received one share for each share of Bank Of America Corp. Common Equivalent Securities exchanged. |
3
PORTFOLIO SUMMARY
March 31, 2010
(unaudited)
Ten Largest Portfolio Holdings
| Market Value | % of Net Assets | |||||
| Petroleum & Resources Corporation* |
$ | 52,110,824 | 4.8 | % | ||
| Microsoft Corp. |
34,538,600 | 3.1 | ||||
| Oracle Corp. |
28,259,000 | 2.6 | ||||
| General Electric Co. |
27,081,600 | 2.5 | ||||
| PepsiCo, Inc. |
23,817,600 | 2.2 | ||||
| JPMorgan Chase & Co. |
22,822,500 | 2.1 | ||||
| Cisco Systems, Inc. |
22,125,500 | 2.0 | ||||
| United Technologies Corp. |
22,083,000 | 2.0 | ||||
| Bank of America Corp. |
21,152,250 | 1.9 | ||||
| Unilever plc ADR |
21,119,664 | 1.9 | ||||
| Total |
$ | 275,110,538 | 25.1 | % | ||
| *Non-controlled affiliate |
||||||
Sector Weightings
4
SCHEDULE OF INVESTMENTS
March 31, 2010
(unaudited)
| Shares | Value (A) | |||||
| Stocks — 96.9% |
||||||
| Consumer — 21.4% |
||||||
| Consumer Discretionary — 7.2% |
||||||
| Lowe’s Companies, Inc. |
600,000 | $ | 14,544,000 | |||
| McDonald’s Corp. |
250,000 | 16,680,000 | ||||
| Newell Rubbermaid Inc. (B) |
400,000 | 6,080,000 | ||||
| Ryland Group Inc. |
343,500 | 7,708,140 | ||||
| Target Corp. |
320,000 | 16,832,000 | ||||
| Walt Disney Co. |
480,000 | 16,756,800 | ||||
| 78,600,940 | ||||||
| Consumer Staples — 14.2% |
||||||
| Avon Products, Inc. |
324,600 | 10,994,202 | ||||
| Bunge Ltd. (B)(F) |
160,000 | 9,860,800 | ||||
| Coca-Cola Co. |
250,000 | 13,750,000 | ||||
| CVS/Caremark Corp. |
285,000 | 10,419,600 | ||||
| Dean Foods Co. (B)(C) |
425,000 | 6,668,250 | ||||
| Del Monte Foods Co. |
800,000 | 11,680,000 | ||||
| Hansen Natural Corp. (C)(F) |
260,000 | 11,278,800 | ||||
| Mead Johnson Nutrition Co. |
117,383 | 6,107,437 | ||||
| PepsiCo, Inc. (G) |
360,000 | 23,817,600 | ||||
| Procter & Gamble Co. |
315,000 | 19,930,050 | ||||
| Safeway Inc. |
390,000 | 9,695,400 | ||||
| Unilever plc ADR |
721,300 | 21,119,664 | ||||
| 155,321,803 | ||||||
| Energy — 11.1% |
||||||
| Chevron Corp. |
200,000 | 15,166,000 | ||||
| CONSOL Energy Inc. (F) |
200,000 | 8,532,000 | ||||
| Exxon Mobil Corp. (G) |
215,000 | 14,400,700 | ||||
| Halliburton Co. |
300,000 | 9,039,000 | ||||
| Petroleum & Resources |
2,186,774 | 52,110,824 | ||||
| Spectra Energy Corp. |
405,780 | 9,142,223 | ||||
| Transocean Ltd. (C) |
160,000 | 13,820,800 | ||||
| 122,211,547 | ||||||
| Financials — 12.6% |
||||||
| Banks — 2.7% |
||||||
| PNC Financial Services Group, Inc. |
270,000 | 16,119,000 | ||||
| Wells Fargo & Co. |
425,000 | |
13,226,000 | |||
| |
29,345,000 | |||||
| Diversified Financials — 8.2% |
||||||
| Bank of America Corp. |
1,185,000 | 21,152,250 | ||||
| Bank of New York Mellon Corp. |
403,775 | 12,468,572 | ||||
| Capital One Financial Corp. |
100,000 | 4,141,000 | ||||
| JPMorgan Chase & Co. |
510,000 | 22,822,500 | ||||
| Morgan Stanley |
300,000 | 8,787,000 | ||||
| State Street Corp. |
230,000 | 10,382,200 | ||||
| T. Rowe Price Group Inc. (B) |
190,000 | 10,436,700 | ||||
| 90,190,222 | ||||||
| Insurance — 1.7% |
||||||
| Prudential Financial, Inc. (B) |
310,000 | 18,755,000 | ||||
| Health Care — 12.0% |
||||||
| Abbott Laboratories |
320,000 | 16,857,600 | ||||
| Bristol-Myers Squibb Co. |
159,061 | 4,246,929 | ||||
| Gilead Sciences Inc. (C) |
200,000 | 9,096,000 | ||||
| Hospira Inc. (C)(F) |
225,000 | 12,746,250 | ||||
| Johnson & Johnson |
255,000 | 16,626,000 | ||||
| Medtronic, Inc. |
350,000 | 15,760,500 | ||||
| Pfizer Inc. |
1,015,125 | 17,409,394 | ||||
| Senomyx, Inc. (C) |
1,284,400 | 4,206,410 | ||||
| Teva Pharmaceutical Industries Ltd. ADR |
330,000 | 20,816,400 | ||||
| UnitedHealth Group Inc. |
140,000 | 4,573,800 | ||||
| Zimmer Holdings, Inc. (C)(F) |
150,000 | 8,880,000 | ||||
| 131,219,283 | ||||||
| Industrials — 15.5% |
||||||
| Cintas Corp. (B) |
300,000 | 8,427,000 | ||||
| Curtiss-Wright Corp. |
360,000 | 12,528,000 | ||||
| Emerson Electric Co. |
300,000 | 15,102,000 | ||||
| General Electric Co. |
1,488,000 | 27,081,600 | ||||
| Harsco Corp. |
310,000 | 9,901,400 | ||||
| Illinois Tool Works Inc. |
250,000 | 11,840,000 | ||||
| Masco Corp. |
450,000 | 6,984,000 | ||||
| Norfolk Southern Corp. |
100,000 | |
5,589,000 | |||
| Oshkosh Corp. (B)(F) |
380,000 | 15,329,200 | ||||
| Spirit AeroSystems Holdings, Inc. (C) |
720,000 | 16,833,600 | ||||
| Tata Motors Ltd. ADR (B) |
1,000,000 | 18,460,000 | ||||
| United Technologies Corp. |
300,000 | 22,083,000 | ||||
| 170,158,800 | ||||||
| Information Technology — 17.9% |
||||||
| Semiconductors — 2.9% |
||||||
| Broadcom Corp. |
400,000 | 13,272,000 | ||||
| Intel Corp. |
840,000 | 18,698,400 | ||||
| |
31,970,400 | |||||
| Software & Services — 8.9% |
||||||
| Automatic Data Processing Inc. |
300,000 | 13,341,000 | ||||
| Google Inc. (C) |
24,000 | 13,608,240 | ||||
| Microsoft Corp. |
1,180,000 | 34,538,600 | ||||
| Oracle Corp. |
1,100,000 | 28,259,000 | ||||
| Visa Inc. |
90,000 | 8,192,700 | ||||
| 97,939,540 | ||||||
| Technology Hardware & Equipment — 6.1% |
||||||
| Apple Inc. (C) |
75,000 | 17,619,750 | ||||
| Cisco Systems, Inc. (C) |
850,000 | 22,125,500 | ||||
| Dell Inc. (C) |
285,000 | 4,277,850 | ||||
| Hewlett-Packard Co. (B) |
199,989 | |
10,629,415 | |||
| QUALCOMM Inc. |
300,000 | 12,597,000 | ||||
| 67,249,515 | ||||||
| Materials — 2.9% |
||||||
| Cliffs Natural Resources Inc. (F) |
102,140 | 7,246,833 | ||||
| Freeport-McMoRan Copper & Gold Inc. |
115,000 | 9,607,100 | ||||
| Potash Corporation of Saskatchewan Inc. (B)(F) |
54,000 | 6,444,900 | ||||
| Praxair, Inc. |
109,292 | 9,071,237 | ||||
| 32,370,070 | ||||||
| Telecom Services — 1.0% |
||||||
| AT&T Corp. |
400,000 | 10,336,000 | ||||
| Utilities — 2.5% |
||||||
| MDU Resources Group, Inc. |
562,500 | 12,138,750 | ||||
| Northeast Utilities |
350,000 | 9,674,000 | ||||
| WGL Holdings, Inc. (B) |
164,225 | 5,690,396 | ||||
| 27,503,146 | ||||||
| Total Stocks (Cost $922,835,109) |
1,063,171,266 | |||||
| Short-Term Investments — 3.0% |
||||||
| Commercial Paper — 0.8% |
||||||
| General Electric Capital Corp., 0.15%, due 4/16/10 |
9,800,000 | 9,799,388 | ||||
| Money Market Funds — 2.2% |
||||||
| Fidelity Institutional Money Market – Government Portfolio, 0.04% (E) |
100,778 | 100,778 | ||||
| Shares | Value (A) | |||||
| RBC U.S. Government Money Market (Institutional Class I), 0.09% (E) |
19,947,082 | 19,947,082 | ||||
| Vanguard Federal Money Market, 0.01% (E) |
35,499 | 35,499 | ||||
| Western Asset Institutional Government Money Market (Class I), 0.05% (E) |
3,552,726 | 3,552,726 | ||||
| 23,636,085 | ||||||
| Total Short-Term Investments |
33,435,473 | |||||
| Total Securities Lending
Collateral — 4.0% |
||||||
| Money Market Funds — 4.0% |
||||||
| Invesco Aim Short-Term Investment Trust – Liquid Assets Portfolio (Institutional Class), 0.13% (E) |
43,428,755 | 43,428,755 | ||||
| Total Investments — 103.9% |
1,140,035,494 | |||||
| Cash, receivables, prepaid expenses and other assets, less liabilities — (3.9)% |
(42,323,645 | |||||
| Net Assets — 100% |
$ | 1,097,711,849 | ||||
Notes:
| (A) | Securities are listed on the New York Stock Exchange or the NASDAQ and are valued at the last reported sale price on the day of valuation. |
| (B) | A portion of shares held are on loan. |
| (C) | Presently non-dividend paying. |
| (D) | Non-controlled affiliate, a closed-end sector fund, registered as an investment company under the Investment Company Act of 1940. |
| (E) | Rate presented is as of period-end and represents the annualized yield earned over the previous seven days. |
| (F) | All or a portion of this security is pledged to cover open written call option contracts. Aggregate market value of such pledged securities is $9,736,764. |
| (G) | All or a portion of this security is pledged to collateralize open written put option contracts with an aggregate value to deliver upon exercise of $2,090,000. |
This report 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.
6
ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders was held on March 23, 2010. The following votes were cast for directors:
| Votes For | Votes Withheld | |||
| Enrique R. Arzac |
66,381,279 | 6,157,545 | ||
| Phyllis O. Bonanno |
67,774,039 | 4,764,785 | ||
| Kenneth J. Dale |
67,666,481 | 4,872,342 | ||
| Daniel E. Emerson |
66,090,091 | 6,448,732 | ||
| Frederic A. Escherich |
67,752,507 | 4,786,317 | ||
| Roger W. Gale |
67,856,773 | 4,682,051 | ||
| Thomas H. Lenagh |
67,807,454 | 6,731,369 | ||
| Kathleen T. McGahran |
67,729,510 | 4,809,313 | ||
| Douglas G. Ober |
66,595,361 | 5,943,462 | ||
| Craig R. Smith | 63,125,035 | 9,413,788 |
A proposal to approve and ratify the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the Company for 2010 was approved with 68,391,097 votes for, 2,634,005 votes against, and 1,513,723 shares abstaining.
A proposal to reapprove the 2005 Equity Compensation Plan was approved with 39,999,398 votes for, 6,670,082 votes against, and 2,367,272 shares abstaining.
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 Stockholder Inquiries to:
Stockholder 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 10269-0560
Website: www.amstock.com
E-mail: info@amstock.com
7
THE ADAMS EXPRESS COMPANY
Board of Directors
| Enrique R. Arzac 2,4 |
Roger W. Gale 2,4 | |
| Phyllis O. Bonanno 2,4 |
Thomas H. Lenagh 2,3 | |
| Kenneth J. Dale 3,4 |
Kathleen T. McGahran 1,3,5 | |
| Daniel E. Emerson 1,3,5 |
Douglas G. Ober 1 | |
| Frederic A. Escherich 1,4,5 |
Craig R. Smith 1,3,5 |
| 1. | Member of Executive Committee |
| 2. | Member of Audit Committee |
| 3. | Member of Compensation Committee |
| 4. | Member of Retirement Benefits Committee |
| 5. | Member of Nominating and Governance Committee |
Officers
| Douglas G. Ober |
Chairman and Chief Executive Officer | |
| David D. Weaver |
President | |
| Nancy J. F. Prue |
Executive Vice President | |
| Lawrence L. Hooper, Jr. |
Vice President, General Counsel and Secretary | |
| Richard A. Church |
Vice President—Research | |
| David R. Schiminger |
Vice President—Research | |
| D. Cotton Swindell |
Vice President—Research | |
| Brian S. Hook |
Treasurer | |
| Christine M. Sloan |
Assistant Treasurer | |
| Geraldine H. Paré |
Assistant Secretary |
Stock Data
| Market Price (3/31/10) |
$10.55 | |
| Net Asset Value (3/31/10) |
$12.56 | |
| Discount: |
16.0% |
New York Stock Exchange ticker symbol: ADX
NASDAQ Mutual Fund Quotation Symbol: XADEX
Newspaper stock listings are generally under the abbreviation: AdamsExp
Distributions in 2010
| From Investment Income (paid or declared) |
$ | 0.07 | |
| From Net Realized Gains |
0.03 | ||
| Total |
$ | 0.10 | |
2010 Dividend Payment Dates
March 1, 2010
June 1, 2010
September 1, 2010*
December 27, 2010*
*Anticipated