UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-00248
---------------------------------------------
THE ADAMS EXPRESS COMPANY
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(Exact name of registrant as specified in charter)
7 Saint Paul Street, Suite 1140, Baltimore, Maryland 21202
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(Address of principal executive offices) (Zip code)
Lawrence L. Hooper, Jr.
The Adams Express Company
7 Saint Paul Street
Suite 1140
Baltimore, Maryland 21202
Registrant's telephone number, including area code: 410-752-5900
Date of fiscal year end: December 31, 2006
Date of reporting period: June 30, 2006
Item 1: Reports to Stockholders.
THE ADAMS EXPRESS COMPANY
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Board of Directors
Enrique R. Arzac 1,3
Phyllis O. Bonanno 1,4
Daniel E. Emerson 2,3
Frederic A. Escherich 2,3
Roger W. Gale 1,3
Thomas H. Lenagh 1,4
Kathleen T. McGahran 2,4
Douglas G. Ober 1
John J. Roberts 1,3
Craig R. Smith 2,4
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
Lawrence L. Hooper, Jr. Vice President, General Counsel and Secretary
Maureen A. Jones Vice President, Chief Financial Officer and Treasurer
Stephen E. Kohler Vice President--Research
David R. Schiminger Vice President--Research
D. Cotton Swindell Vice President--Research
Christine M. Sloan Assistant Treasurer
Geraldine H. Pare Assistant Secretary
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Stock Data
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Market Price (6/30/06) $ 12.87
Net Asset Value (6/30/06) $ 15.12
Discount: 14.9%
New York Stock Exchange and Pacific Exchange ticker symbol: ADX
NASDAQ Mutual Fund Quotation Symbol: XADEX
Newspaper stock listings are generally under the abbreviation: AdaEx
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Distributions in 2006
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From Investment Income (paid or declared) $ 0.13
From Net Realized Gains 0.02
--------
Total $ 0.15
========
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2006 Dividend Payment Dates
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March 1, 2006
June 1, 2006
September 1, 2006
December 27, 2006*
*Anticipated
[GRAPHIC APPEARS HERE]
The Adams Express Company
Semi-Annual Report
June 30,2006
building for the future with solid investments (R)
LETTER TO STOCKHOLDERS
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We submit herewith the financial statements of the Company for the six months
ended June 30, 2006. Also provided are the report of the independent registered
public accounting firm, a schedule of investments, and other summary financial
information.
Net assets of the Company at June 30, 2006 were $15.12 per share on 85,116,812
shares outstanding, compared with $14.71 per share at December 31, 2005 on
86,099,607 shares outstanding. On March 1, 2006, a distribution of $0.05 per
share was paid, consisting of $0.02 from 2005 investment income, $0.02 from 2005
short-term capital gain, and $0.01 from 2006 investment income, all taxable in
2006. A 2006 investment income dividend of $0.05 per share was paid on June 1,
2006, and another $0.05 per share investment income dividend has been declared
to shareholders of record August 15, 2006, payable on September 1, 2006.
Net investment income for the six months ended June 30, 2006 amounted to
$8,966,520, compared with $8,701,535 for the same period in 2005. These earnings
are equal to $0.11 and $0.10 per share.
Net capital gain realized on investments for the six months ended June 30, 2006
amounted to $7,348,305, the equivalent of $0.09 per share.
Current and potential shareholders can find information about the Company,
including the daily net asset value (NAV) per share, the market price, and the
discount/premium to the NAV, at its website (www.adamsexpress.com). Also
available at the website are a history of the Company, historical financial
information, and other useful content. Further information regarding shareholder
services is located on page 15 of this report.
The Company is an internally-managed equity fund whose investment policy is
based on the primary objectives of preservation of capital, the attainment of
reasonable income from investments, and an opportunity for capital appreciation.
By order of the Board of Directors,
[GRAPHIC APPEARS HERE]
Douglas G. Ober,
Chairman and Chief Executive Officer
[GRAPHIC APPEARS HERE]
Joseph M. Truta,
President
July 14, 2006
STATEMENT OF ASSETS AND LIABILITIES
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June 30, 2006
Assets
Investments* at value:
Common stocks and convertible securities
(cost $895,034,434) $ 1,197,495,589
Non-controlled affiliate, Petroleum & Resources Corporation
(cost $27,963,162) 67,504,004
Short-term investments (cost $17,352,468) 17,352,468
Securities lending collateral (cost $66,398,828) 66,398,828 $ 1,348,750,889
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Cash 279,882
Receivables:
Investment securities sold 40,949
Dividends and interest 1,282,938
Prepaid pension cost 5,356,114
Prepaid expenses and other assets 1,766,549
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Total Assets 1,357,477,321
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Liabilities
Investment securities purchased 489,662
Open written option contracts at value (proceeds $840,914) 498,500
Obligations to return securities lending collateral 66,398,828
Accrued expenses 3,195,995
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Total Liabilities 70,582,985
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Net Assets $ 1,286,894,336
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Net Assets
Common Stock at par value $1.00 per share, authorized 150,000,000 shares; issued
and outstanding 85,116,812 shares (includes 58,794 restricted shares,
restricted stock units for 9,000 shares, and deferred stock units for 2,004
shares) (Note 6) $ 85,116,812
Additional capital surplus 846,250,117
Unearned compensation-- restricted stock awards (Note 6) (740,041)
Undistributed net investment income 6,809,676
Undistributed net realized gain on investments 7,113,361
Unrealized appreciation on investments 342,344,411
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Net Assets Applicable to Common Stock $ 1,286,894,336
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Net Asset Value Per Share of Common Stock $15.12
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*See Schedule of Investments on pages 8 and 9.
The accompanying notes are an integral part of the financial statements.
2
STATEMENT OF OPERATIONS
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Six Months Ended June 30, 2006
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 11,218,641
From non-controlled affiliate 374,999
Interest and other income 444,677
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Total income 12,038,317
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Expenses:
Investment research 1,351,231
Administration and operations 701,319
Directors' fees 181,331
Reports and stockholder communications 200,188
Transfer agent, registrar and custodian expenses 183,040
Auditing and accounting services 58,997
Legal services 55,005
Occupancy and other office expenses 226,234
Travel, telephone and postage 49,374
Other 65,078
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Total expenses 3,071,797
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Net Investment Income 8,966,520
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Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 7,209,285
Net realized gain distributed by regulated investment company (non-controlled affiliate) 139,020
Change in unrealized appreciation on investments 25,867,044
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Net Gain on Investments 33,215,349
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Change in Net Assets Resulting from Operations $ 42,181,869
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The accompanying notes are an integral part of the financial statements.
3
STATEMENTS OF CHANGES IN NET ASSETS
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Six Months Ended Year Ended
June 30, 2006 December 31, 2005
----------------- -----------------
From Operations:
Net investment income $ 8,966,520 $ 18,288,551
Net realized gain on investments 7,348,305 53,817,950
Change in unrealized appreciation on investments 25,867,044 (27,193,045)
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Change in net assets resulting from operations 42,181,869 44,913,456
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Distributions to Stockholders from:
Net investment income (6,829,548) (18,634,893)
Net realized gain from investment transactions (1,719,287) (53,672,531)
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Decrease in net assets from distributions (8,548,835) (72,307,424)
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From Capital Share Transactions:
Value of shares issued in payment of distributions 5,264 30,523,934
Cost of shares purchased (Note 4) (13,657,423) (32,052,187)
Deferred compensation (Notes 4, 6) 184,809 101,973
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Change in net assets from capital share transactions (13,467,350) (1,426,280)
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Total Change in Net Assets 20,165,684 (28,820,248)
Net Assets:
Beginning of period 1,266,728,652 1,295,548,900
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End of period (including undistributed net investment
income of $6,809,676 and $4,672,704, respectively) $ 1,286,894,336 $ 1,266,728,652
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The accompanying notes are an integral part of the financial statements.
4
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 at June 30, 2006 was $1,006,261,641 and net unrealized appreciation
aggregated $342,489,248, of which the related gross unrealized appreciation and
depreciation were $428,504,151 and $86,014,903, respectively.
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Accordingly, annual
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 of management, and
recommendations to that committee are made by the research staff.
Purchases and sales of portfolio securities, other than options and short-term
investments, during the six months ended June 30, 2006 were $86,465,886 and
$98,499,222, respectively. Options may be written (sold) or purchased by the
Company. The Company, as writer of an option, bears the risks of possible
illiquidity of the option markets and from movements in security values. The
risk associated with purchasing an option is limited to the premium originally
paid. A schedule of outstanding option contracts as of June 30, 2006 can be
found on page 11.
Transactions in written covered call and collateralized put options during the
six months ended June 30, 2006 were as follows:
Covered Calls Collateralized Puts
------------------- -------------------
Contracts Premiums Contract Premiums
--------- -------- -------- --------
Options outstanding,
December 31, 2005 2,320 $244,294 2,465 $317,641
Options written 4,530 568,993 5,960 676,298
Options terminated
in closing
purchase
transactions (400) (44,798) (2,250) (261,535)
Options expired (2,500) (252,381) (3,035) (364,786)
Options exercised (270) (30,688) (125) (12,124)
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Options outstanding,
June 30, 2006 3,680 $485,420 3,015 $355,494
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4. Capital Stock
The Company has 10,000,000 authorized and unissued preferred shares without par
value.
On December 27, 2005, the Company issued 2,400,624 shares of its Common Stock at
a price of $12.715 per share (the average market price on December 12, 2005) to
stockholders of record on November 22, 2005 who elected to take stock in payment
of the year-end distribution from 2005 capital gain and investment income.
During 2006, the Company issued 395 shares of its Common Stock at a weighted
average price of $13.26 per share as dividend equivalents to holders of deferred
stock units and restricted stock units under the 2005 Equity Incentive
Compensation Plan.
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 2006 and 2005 were as follows:
Shares Amount
------------------------ --------------------------
Six months Six months
ended Year ended ended Year ended
June 30, December 31, June 30, December 31,
2006 2005 2006 2005
---------- ------------ ----------- ------------
Shares issued in
payment of
dividends 395 2,400,624 $ 5,264 $ 30,523,934
Shares purchased
(at a
weighted
average
discount from
net asset
value of
14.1% and
12.6%,
respectively) (1,040,700) (2,458,500) (13,657,423) (32,052,187)
Net share
activity
under the
2005 Equity
Incentive
Compensation
Plan 57,510 22,191 184,809 101,973
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Net change (982,795) (35,685) $(13,467,350) $ (1,426,280)
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5. Retirement Plans
The Company's qualified defined benefit pension plan covers all employees with
at least one year of service. In addition, the Company has
5
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
a nonqualified defined benefit plan which provides eligible employees with
retirement benefits to supplement the qualified plan. Benefits are based on
length of service and compensation during the last five years of employment. The
Company's policy is to contribute annually to the plans those amounts that can
be deducted for federal income tax purposes, plus additional amounts as the
Company deems appropriate in order to provide assets sufficient to meet benefits
to be paid to plan participants. During the six months ended June 30, 2006, the
Company did not contribute to the plans. The Company does not anticipate making
any contributions to the plans in 2006.
The following table aggregates the components of the plans' net periodic pension
cost for the six months ended June 30, 2006:
Service cost $ 230,485
Interest cost 259,008
Expected return on plan assets (397,018)
Amortization of prior service cost 59,888
Amortization of net loss 90,382
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Net periodic pension cost $ 242,745
-------------------------------------------------------
The Company also sponsors a defined contribution plan that covers substantially
all employees. For the six months ended June 30, 2006, the Company expensed
contributions of $91,492. The Company does not provide postretirement medical
benefits.
6. Stock-Based Compensation
The Stock Option Plan adopted in 1985 ("1985 Plan") permits the issuance of
stock options and stock appreciation rights for the purchase of up to 2,610,146
shares of the Company's Common Stock at the fair market value on the date of
grant. The exercise price of the options and related stock appreciation rights
is reduced by the per share amount of capital gains paid by the Company during
subsequent years. Options are exercisable beginning not less than one year after
the date of grant and stock appreciation rights are exercisable beginning not
less than two years after the date of grant. The stock appreciation rights allow
the holders to surrender their rights to exercise their options and receive cash
or shares in an amount equal to the difference between the option exercise price
and the fair market value of the Common Stock at the date of surrender. All
options terminate 10 years from the date of grant if not exercised. With the
adoption of the 2005 Equity Incentive Compensation Plan at the 2005 Annual
Meeting, no further grants will be made under the 1985 Plan, although
unexercised awards granted in 2004 and prior years remain outstanding.
A summary of option activity under the 1985 Plan as of June 30, 2006, and
changes during the period then ended, is presented below:
Weighted- Weighted-
Average Average
Exercise Remaining
Options Price Life (Years)
-------- --------- ------------
Outstanding at
December 31, 2005 254,766 $ 11.71 5.71
Exercised (34,063) 7.94
Cancelled (8,233) 10.87
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Outstanding at
June 30, 2006 212,470 $ 12.32 5.12
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Exercisable at
June 30, 2006 134,538 $ 12.44 5.00
------------------------------------------------------------
The options outstanding as of June 30, 2006 are set forth below:
Weighted Weighted
Average Average
Options Exercise Remaining
Exercise Price Outstanding Price Life (Years)
-----------------------------------------------------------------
$8.50-$10.74 57,538 $ 9.68 3.50
$10.75-$12.99 103,784 11.51 6.54
$13.00-$15.24 -- -- --
$15.25-$17.50 51,148 16.94 4.09
-----------------------------------------------------------------
Outstanding at
June 30, 2006 212,470 $ 12.32 5.12
-----------------------------------------------------------------
Compensation cost resulting from stock options and stock appreciation rights
granted under the 1985 Plan is based on the intrinsic value of the award,
recognized over the award's vesting period, and remeasured at each reporting
date through the date of settlement. The total compensation cost recognized for
the six months ended June 30, 2006 was $60,678.
The 2005 Equity Incentive Compensation Plan ("2005 Plan") permits the grant of
stock options, restricted stock awards and other stock incentives to key
employees and all non-employee directors. The 2005 Plan provides for the
issuance of up to 3,413,131 shares of the Company's Common Stock, including both
performance and nonperformance-based restricted stock. Performance-based
restricted stock awards vest at the end of a specified three year period, with
the ultimate number of awards earned contingent on achievement of certain
performance targets. If performance targets are not achieved, all or a portion
of the performance-based awards are forfeited and become available for future
grants. Nonperformance-based restricted stock awards vest ratably over a three
year period and nonperformance-based restricted stock units (granted to
non-employee directors) vest over a one year period. The 2005 Plan provides for
accelerated vesting in the event of death or retirement. Non-employee directors
also may elect to defer a portion of their cash compensation, with such deferred
amount to be paid by delivery of deferred stock units. Outstanding awards were
granted at fair market value on grant date. The number of shares of Common Stock
which remains available for future grants under the 2005 Plan at June 30, 2006
is 3,332,648 shares.
The Company pays dividends and dividend equivalents on outstanding awards, which
are charged to net assets when paid. Dividends and dividend equivalents paid on
restricted awards that are later forfeited are reclassified to compensation
expense.
A summary of the status of the Company's awards granted under the 2005 Plan as
of June 30, 2006, and changes during the period then ended is presented below:
Weighted Average
Shares/ Grant-Date Fair
Awards Units Value
--------------------------------------------------------------
Balance at December 31, 2005 21,441 $ 12.57
Granted:
Restricted stock 49,500 12.93
Restricted stock units 7,500 13.24
Deferred stock units 2,004 13.05
Vested & issued (9,165) 12.56
Forfeited (1,482) 12.56
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Balance at
June 30, 2006 (includes 49,500
performance-based awards and
20,298 nonperformance-based
awards) 69,798 $ 12.91
--------------------------------------------------------------
6
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
Compensation costs resulting from awards granted under the 2005 Plan are based
on the fair value of the award on grant date (determined by the average of the
high and low price on grant date) and recognized on a straight-line basis over
the requisite service period. For those awards with performance conditions,
compensation costs are based on the most probable outcome and, if such goals are
not met, no compensation cost is recognized and any recognized compensation cost
is reversed. The total compensation costs for restricted stock granted to
employees for the period ending June 30, 2006 were $116,803. The total
compensation costs for restricted stock units granted to non-employee directors
for the period ended June 30, 2006 were $61,748. As of June 30, 2006, there were
total unrecognized compensation costs of $740,041 related to nonvested
share-based compensation arrangements granted under the 2005 Plan. Those costs
are expected to be recognized over a weighted average period of 2.17 years.
7. Expenses
The aggregate remuneration paid during the six months ended June 30, 2006 to
officers and directors amounted to $1,742,394, of which $204,230 was paid as
fees and compensation to directors who were not officers. These amounts
represent the taxable income to the Company's officers and directors and
therefore differ from the amounts reported in the accompanying Statement of
Operations that are recorded and expensed in accordance with generally accepted
accounting principles.
8. 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 at all times by
collateral of at least 102% of the fair value of the securities loaned plus
accrued interest. Gain or loss in the fair value of the securities loaned that
may occur during the term of the loan will be for the account of the Company. At
June 30, 2006, the Company had securities on loan of $64,774,133 and held
collateral of $66,398,828, consisting of an investment trust fund which may
invest in money market instruments, commercial paper, repurchase agreements,
U.S. Treasury Bills, and U.S. agency obligations.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Six Months Ended
------------------------
Year Ended December 31
June 30, June 30, ----------------------------------------------------------
2006 2005 2005 2004 2003 2002 2001
-------- -------- ------ ------ ------ ------ ------
Per Share Operating Performance
Net asset value, beginning of period $14.71 $15.04 $15.04 $14.36 $12.12 $16.05 $23.72
---------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.11 0.10 0.22 0.23* 0.19 0.20 0.26
Net realized gains and
increase (decrease) in
unrealized appreciation 0.37 (0.01) 0.32 1.39 2.85 (3.38) (6.21)
---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.48 0.09 0.54 1.62 3.04 (3.18) (5.95)
---------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment
income (0.08) (0.09) (0.22) (0.24) (0.17) (0.19) (0.26)
Distributions from net
realized gains (0.02) (0.01) (0.64) (0.66) (0.61) (0.57) (1.39)
---------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.10) (0.10) (0.86) (0.90) (0.78) (0.76) (1.65)
---------------------------------------------------------------------------------------------------------------------------------
Capital share repurchases 0.03 0.03 0.05 0.02 0.04 0.05 0.04
Reinvestment of distributions -- -- (0.06) (0.06) (0.06) (0.04) (0.11)
---------------------------------------------------------------------------------------------------------------------------------
Total capital share transactions 0.03 0.03 (0.01) (0.04) (0.02) 0.01 (0.07)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $15.12 $15.06 $14.71 $15.04 $14.36 $12.12 $16.05
---------------------------------------------------------------------------------------------------------------------------------
Per share market price, end
of period $12.87 $12.87 $12.55 $13.12 $12.41 $10.57 $14.22
Total Investment Return
Based on market price 3.3% (1.2)% 2.2% 13.2% 25.2% (20.6)% (24.7)%
Based on net asset value 3.6% 0.9% 4.5% 12.1% 26.3% (19.4)% (24.7)%
Ratios/Supplemental Data
Net assets, end of period
(in 000's) $1,286,894 $1,279,265 $1,266,729 $1,295,549 $ 1,218,862 $1,024,810 $1,368,366
Ratio of expenses to average
net assets 0.47%+ 0.44%+ 0.45% 0.43% 0.47% 0.34% 0.19%
Ratio of net investment income
to average net assets 1.38%+ 1.37%+ 1.44% 1.54% 1.45% 1.42% 1.33%
Portfolio turnover 13.55%+ 14.82%+ 12.96% 13.43% 12.74% 17.93% 19.15%
Number of shares outstanding at
end of period (in 000's) 85,117 84,961 86,100 86,135 84,886 84,536 85,233
------------------
* In 2004 the Company received $2,400,000, or $0.03 per share, in an
extraordinary dividend from Microsoft Corp.
+ Ratios presented on an annualized basis.
7
SCHEDULE OF INVESTMENTS
--------------------------------------------------------------------------------
June 30, 2006
Shares Value (A)
---------- -------------
Stocks and Convertible Securities -- 98.3%
Consumer -- 18.0%
Consumer Discretionary -- 7.8%
BJ's Wholesale Club,
Inc. (B) 500,000 $ 14,175,000
Clear Channel
Communications, Inc. 350,000 10,832,500
Comcast Corp. (B) 365,000 11,950,100
Gannett Co., Inc. 112,500 6,292,125
Harley-Davidson, Inc. 235,000 12,899,150
Newell Rubbermaid Inc. 515,000 13,302,450
OSI Restaurant Partners,
Inc. (C) 315,000 10,899,000
Target Corp. 410,000 20,036,700
-------------
100,387,025
-------------
Consumer Staples -- 10.2%
Avon Products, Inc. 420,000 13,020,000
Bunge Ltd. (C) 235,000 11,808,750
Coca-Cola Co. 200,000 8,604,000
Dean Foods Co. (B) 450,000 16,735,500
Del Monte Foods Co. 1,115,000 12,521,450
PepsiCo, Inc. 400,000 24,016,000
Procter & Gamble Co. 340,000 18,904,000
Safeway Inc. 423,000 10,998,000
Unilever plc ADR 621,000 13,997,340
-------------
130,605,040
-------------
Energy -- 11.9%
BP plc ADR 270,000 18,794,700
ConocoPhillips 345,000 22,607,850
Exxon Mobil Corp. 130,000 7,975,500
Marathon Oil Co. 120,000 9,996,000
Murphy Oil Corp. 38,500 2,150,610
Petroleum & Resources
Corporation (D) 1,985,996 67,504,004
Schlumberger Ltd. 380,000 24,741,800
-------------
153,770,464
-------------
Financials -- 17.9%
Banking -- 13.7%
BankAtlantic Bancorp, Inc. 880,000 13,059,200
Bank of America Corp. 610,000 29,341,000
Bank of New York Co.,
Inc. (The) 375,000 12,075,000
Compass Bancshares Inc. 300,000 16,680,000
Fifth Third Bancorp 280,000 10,346,000
Investors Financial
Services
Corp. (C) 382,500 17,174,250
Morgan Stanley 200,000 12,642,000
Wachovia Corp. 470,000 25,417,600
Wells Fargo & Co. 325,000 21,801,000
Wilmington Trust Corp. 420,000 17,715,600
-------------
176,251,650
-------------
Insurance -- 4.2%
AMBAC Financial Group,
Inc. 295,000 23,924,500
American International
Group, Inc. 500,000 29,525,000
-------------
53,449,500
-------------
Health Care -- 13.8%
Abbott Laboratories 350,000 $ 15,263,500
Advanced Medical Optics,
Inc. (B)(C) 300,000 15,210,000
Bristol-Myers Squibb Co. 345,000 8,921,700
Caremark Rx Inc. 255,000 12,716,850
Genentech, Inc. (B) 220,000 17,996,000
HCA Inc. 250,000 10,787,500
Johnson & Johnson 255,000 15,279,600
Laboratory Corp. of
America Holdings (B) 200,000 12,446,000
MedImmune, Inc. (B) 225,000 6,097,500
Medtronic, Inc. 310,000 14,545,200
Pfizer Inc. 1,120,000 26,286,400
Wyeth Co. 325,000 14,433,250
Zimmer Holdings, Inc. (B) 125,000 7,090,000
-------------
177,073,500
-------------
Industrials -- 13.2%
Cintas Corp. (C) 300,000 11,928,000
Curtiss-Wright Corp. 460,000 14,204,800
Donnelley (R.R.) & Sons Co. 260,000 8,307,000
Emerson Electric Co. 200,000 16,762,000
General Electric Co. 1,487,700 49,034,592
Illinois Tool Works Inc. 250,000 11,875,000
Masco Corp. 450,000 13,338,000
3M Co. 160,000 12,923,200
United Parcel Service,
Inc. 155,000 12,761,150
United Technologies Corp. 300,000 19,026,000
-------------
170,159,742
-------------
Information Technology -- 12.0%
Communication Equipment -- 2.0%
Avaya Inc. (B) 600,000 6,852,000
Corning Inc. (B) 500,000 12,095,000
Lucent Technologies Inc. (B) 2,900,000 7,018,000
-------------
25,965,000
-------------
Computer Related -- 8.4%
Automatic Data Processing
Inc. 300,000 13,605,000
BEA Systems, Inc. (B)(C) 800,000 10,472,000
Cisco Systems, Inc. (B) 1,200,000 23,436,000
Dell Inc. (B) 545,000 13,303,450
Microsoft Corp. 1,180,000 27,494,000
Oracle Corp. (B) 1,356,001 19,648,455
-------------
107,958,905
-------------
Electronics -- 1.6%
Cree, Inc. (B)(C) 375,000 8,910,000
Intel Corp. 310,000 5,874,500
Solectron Corp. (B) 1,850,000 6,327,000
-------------
21,111,500
-------------
8
SCHEDULE OF INVESTMENTS (CONTINUED)
--------------------------------------------------------------------------------
June 30, 2006
Shares Value (A)
---------- ---------------
Materials -- 5.1%
Air Products and
Chemicals, Inc. 250,000 $ 15,980,000
du Pont (E.I.) de Nemours
and Co. 360,000 14,976,000
Florida Rock Industries
Inc. 150,000 7,450,500
Martin Marietta
Materials, Inc. 83,000 7,565,450
Rohm & Haas Co. 400,000 20,048,000
---------------
66,019,950
---------------
Telecom Services -- 2.8%
Alltel Corp. 300,000 19,149,000
AT&T Corp. 595,000 16,594,550
---------------
35,743,550
---------------
Utilities -- 3.6%
Aqua America, Inc. (C) 650,000 14,813,500
Duke Energy Corp. 611,560 17,961,517
MDU Resources Group, Inc. 375,000 13,728,750
---------------
46,503,767
---------------
Total Stocks and Convertible Securities
(Cost $922,997,596) (E) $ 1,264,999,593
---------------
Prin. Amt. Value (A)
----------- ---------
Short-Term Investments -- 1.4%
U.S. Government
Obligations -- 1.3%
U.S. Treasury Bills,
4.74%, due 8/17/06 $16,500,000 $ 16,397,893
--------------
Time Deposit -- 0.0%
Bank of America Corp.,
4.50%, due 7/3/06 180,006
--------------
Commercial Paper -- 0.1%
General Electric Capital Corp.,
5.00%, due 7/5/06 775,000 774,569
--------------
Total Short-Term Investments
(Cost $17,352,468) 17,352,468
--------------
Securities Lending Collateral -- 5.2%
Brown Brothers Investment
Trust, 5.16%, due 7/3/06 66,398,828
--------------
Total Securities Lending Collateral
(Cost $66,398,828) 66,398,828
--------------
Total Investments -- 104.8%
(Cost $1,006,748,892) 1,348,750,889
Cash, receivables, prepaid
expenses and other assets, less
liabilities-- (4.8)% (61,856,553)
--------------
Net Assets-- 100% $1,286,894,336
==============
--------------------------------------------------------------------------------
Notes:
(A) See note 1 to financial statements. Securities are listed on the New York
Stock Exchange, the American Stock Exchange or the NASDAQ.
(B) Presently non-dividend paying.
(C) Some of the shares of this company are on loan. See note 8 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) The aggregate market value of stocks held in escrow at June 30, 2006
covering open call option contracts written was $18,579,600. In addition,
the aggregate market value of securities segregated by the Company's
custodian required to collateralize open put option contracts written was
$14,917,500.
9
PORTFOLIO SUMMARY
--------------------------------------------------------------------------------
June 30, 2006
Ten Largest Portfolio Holdings
Market Value % of Net Assets
-------------- -----------------
Petroleum & Resources Corporation* $ 67,504,004 5.2
General Electric Co. 49,034,592 3.8
American International Group, Inc. 29,525,000 2.3
Bank of America Corp. 29,341,000 2.3
Microsoft Corp. 27,494,000 2.1
Pfizer Inc. 26,286,400 2.0
Wachovia Corp. 25,417,600 2.0
Schlumberger Ltd. 24,741,800 1.9
PepsiCo, Inc. 24,016,000 1.9
AMBAC Financial Group, Inc. 23,924,500 1.9
------------- -----
Total $ 327,284,896 25.4%
--------------------------------------------------------------------------------
* Non-controlled affiliate
Sector Weightings
[GRAPHIC APPEARS HERE]
Consumer 18.0%
Energy 11.9%
Financials 17.9%
Health Care 13.8%
Industrials 13.2%
Information Technolgy 12.0%
Materials 5.1%
Telecom Services 2.8%
Utilities 3.6%
Cash & Equivalent 1.4%
10
SCHEDULE OF OUTSTANDING OPTION CONTRACTS
--------------------------------------------------------------------------------
June 30, 2006
Contracts Contract
(100 shares Strike Expiration Appreciation/
each) Security Price Date (Depreciation)
--------------------------------------------------------------------------------------------------------------
COVERED CALLS
100 Advanced Medical Optics, Inc. ............................ $ 50 Jul 06 $ (2,301)
100 Advanced Medical Optics, Inc. ............................ 50 Aug 06 (12,801)
100 Air Products and Chemicals, Inc. ......................... 70 Sep 06 6,700
100 Air Products and Chemicals, Inc. ......................... 75 Dec 06 4,200
200 AMBAC Financial Group, Inc. .............................. 85 Aug 06 21,399
100 AMBAC Financial Group, Inc. .............................. 85 Nov 06 (5,061)
100 Avon Products, Inc. ...................................... 35 Oct 06 5,200
150 Bunge Ltd. ............................................... 65 Jul 06 26,549
100 Bunge Ltd. ............................................... 70 Jul 06 14,224
100 Caremark Rx Inc. ......................................... 55 Sep 06 (50)
200 Corning Inc. ............................................. 30 Aug 06 17,399
150 Cree, Inc. ............................................... 35 Sep 06 13,050
150 Cree, Inc. ............................................... 40 Sep 06 18,299
100 Emerson Electric Co. ..................................... 95 Sep 06 6,700
150 HCA Inc. ................................................. 55 Aug 06 14,549
200 Illinois Tool Works Inc. ................................. 50 Sep 06 (13,050)
200 Illinois Tool Works Inc. ................................. 52.50 Sep 06 200
150 Investors Financial Services Corp. ....................... 45 Jul 06 (5,990)
100 Investors Financial Services Corp. ....................... 50 Jul 06 21,699
100 Investors Financial Services Corp. ....................... 55 Oct 06 7,824
100 Laboratory Corp. of America Holdings...................... 65 Aug 06 2,200
80 Martin Marietta Materials, Inc. .......................... 140 Oct 06 10,159
100 Murphy Oil Corp. ......................................... 55 Jul 06 (8,800)
150 OSI Restaurant Partners, Inc. ............................ 50 Aug 06 19,799
250 Rohm & Haas Co. .......................................... 55 Jul 06 28,274
200 Rohm & Haas Co. .......................................... 55 Oct 06 3,399
150 United Technologies Corp. ................................ 65 Aug 06 (2,851)
------------ ----------
3,680 190,919
------------ ----------
COLLATERALIZED PUTS
170 Advanced Medical Optics, Inc. ............................ 35 Jul 06 17,999
250 Bunge Ltd. ............................................... 45 Jul 06 15,139
150 Caremark Rx Inc. ......................................... 40 Sep 06 6,300
150 Exxon Mobil Corp. ........................................ 52.50 Oct 06 7,799
100 Florida Rock Industries Inc. ............................. 45 Sep 06 (7,800)
150 Harley-Davidson, Inc. .................................... 45 Aug 06 11,174
100 Harley-Davidson, Inc. .................................... 47.50 Aug 06 12,699
100 Harley-Davidson, Inc. .................................... 50 Aug 06 3,200
100 Marathon Oil Co. ......................................... 60 Jul 06 11,700
100 Marathon Oil Co. ......................................... 65 Jul 06 24,199
100 Marathon Oil Co. ......................................... 75 Jul 06 8,700
100 Marathon Oil Co. ......................................... 55 Oct 06 9,200
170 Martin Marietta Materials, Inc. .......................... 80 Jul 06 19,889
250 MedImmune, Inc. .......................................... 25 Dec 06 (3,251)
75 Morgan Stanley............................................ 55 Oct 06 6,900
100 Procter & Gamble Co. ..................................... 55 Oct 06 (3,300)
100 Target Corp. ............................................. 45 Oct 06 700
250 Wachovia Corp. ........................................... 47.50 Jul 06 22,999
100 Wachovia Corp. ........................................... 50 Oct 06 3,700
150 Zimmer Holdings, Inc. .................................... 55 Sep 06 (13,200)
250 Zimmer Holdings, Inc. .................................... 50 Dec 06 (3,251)
------------ ----------
3,015 151,495
------------ ----------
$342,414
==========
11
CHANGES IN PORTFOLIO SECURITIES
--------------------------------------------------------------------------------
During the Three Months Ended June 30, 2006
(unaudited)
Shares
---------------------------
Held
Additions Reductions June 30, 2006
---------- ---------- -------------
BankAtlantic Bancorp, Inc................................................. 130,000 880,000
Bank of America Corp...................................................... 60,000 610,000
Bank of New York Co., Inc. (The).......................................... 375,000 375,000
Caremark Rx Inc. ......................................................... 255,000 255,000
Curtiss-Wright Corp....................................................... 230,000(1) 460,000
Dell Inc. ................................................................ 145,000 545,000
Harley-Davidson, Inc...................................................... 235,000 235,000
Illinois Tool Works Inc. ................................................. 125,000(1) 250,000
Marathon Oil Co........................................................... 10,000 120,000
Morgan Stanley............................................................ 25,000 200,000
Schlumberger Ltd.......................................................... 190,000(1) 380,000
Unilever plc ADR.......................................................... 276,000(1) 621,000
Wachovia Corp............................................................. 75,000 470,000
Aqua America, Inc......................................................... 150,000 650,000
Black Hills Corp.......................................................... 245,000 --
Laboratory Corp. of America Holdings...................................... 25,000 200,000
Murphy Oil Corp........................................................... 51,500 38,500
North Fork Bancorp, Inc. ................................................. 525,000 --
PepsiCo, Inc.............................................................. 40,000 400,000
Sapient Corp.............................................................. 1,150,000 --
Smurfit-Stone Container Corp.............................................. 650,000 --
------------------
(1) By stock split.
HISTORICAL FINANCIAL STATISTICS
--------------------------------------------------------------------------------
Dividends Distributions
Net from from
Asset Net Investment Net Realized
Value of Shares Value per Income Gains
December 31 Net Assets Outstanding* Share* per Share* per Share*
------------ --------------- ---------------- ------------ ---------------- -------------
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
2004.................................... 1,295,548,900 86,135,292 15.04 .24 .66
2005.................................... 1,266,728,652 86,099,607 14.71 .22 .64
June 30, 2006........................... 1,286,894,336 85,116,812 15.12 .13+ .02+
------------------
* Adjusted to reflect the 3-for-2 stock split effected in October 2000.
+ Paid or declared.
12
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Board of Directors and Stockholders of
The Adams Express Company:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Adams Express Company
(hereafter referred to as the "Company") at June 30, 2006, 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 the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 2006, by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
July 13, 2006
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.
13
OTHER INFORMATION
--------------------------------------------------------------------------------
Statement on Quarterly Filing of Complete Portfolio Schedule
In addition to publishing its complete schedule of portfolio holdings in the
First and Third Quarter Reports to shareholders, the Company files its complete
schedule of portfolio holdings with the Securities and Exchange Commission for
the first and third quarters of each fiscal year on Form N-Q. The Company's
Forms N-Q are available on the Commission's website at www.sec.gov. The
Company's Forms N-Q may be reviewed and copied at the Commission's Public
Reference Room, and information on the operation of the Public Reference Room
may be obtained by calling 1-800-SEC-0330. The Company also posts its Forms N-Q
on its website at www.adamsexpress.com under the heading "Financial Reports".
Proxy Voting Policies and Record
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 and
information as to how the Company voted proxies relating to portfolio securities
during the 12 month period ended June 30, 2006 are available (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 "Corporate Information" heading on the
website; and (iii) on the Securities and Exchange Commission's website at
http//www.sec.gov.
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.
----------
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 Registered Public Accounting Firm: PricewaterhouseCoopers LLP
Transfer Agent & Registrar: American Stock Transfer & Trust Co.
Custodian of Securities: Brown Brothers Harriman & Co.
14
SHAREHOLDER INFORMATION AND SERVICES
--------------------------------------------------------------------------------
DIVIDEND PAYMENT SCHEDULE
The Corporation 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 10269-0560
Website: www.amstock.com
E-mail: info@amstock.com
*The year-end dividend and capital gain distribution will usually be made in
newly issued shares of common stock. There are no fees or commissions in
connection with this dividend and capital gain distribution when made in newly
issued shares.
15
Item 2: Code(s) of Ethics for senior financial officers -
Item not applicable to semi-annual report.
Item 3: Audit Committee Financial Expert - Item not
applicable to semi-annual report.
Item 4: Principal Accountant Fees and Services - Item not
applicable to semi-annual report.
Item 5: Audit Committee of Listed Registrants - Item not
applicable to semi-annual report.
Item 6: Schedule of Investments - This schedule is included
as part of the report to shareholders filed under Item 1 of
this form.
Item 7: Disclosure of Proxy Voting Policies and Procedures
for Closed-End Management Investment Companies - Item not
applicable to semi-annual report.
Item 8: Portfolio Managers of Closed-End Management
Investment Companies - Item not applicable to semi-annual
report.
Item 9: Purchases of Equity Securities by Closed-End
Management Investment Company and Affiliated Purchasers.
Maximum
Total Number (or
Number of Approximate
Shares (or Dollar Value)
Total Units) of Shares (or
Number Purchased Units) that
of Average as Part of May Yet Be
Shares Price Publicly Purchased
(or Paid per Announced Under the
Units) Share (or Plans or Plans or
Period(2) Purchased Unit) Programs Programs
-------- --------- --------- --------- ---------
Jan. 2006 243,200 $ 12.94 243,200 3,792,429
Feb. 2006 250,400 $ 12.97 250,400 3,542,029
Mar. 2006 345,600 $ 13.21 345,600 3,196,429
Apr. 2006 165,700 $ 13.36 165,700 3,030,729
May 2006 35,800 $ 13.45 35,800 2,994,929
June 2006 0 $ 0 0 2,994,929
-------- --------- --------- --------- ---------
Total 1,040,700(1) $ 13.12 1,040,700(2) 2,994,929(2)
(1) There were no shares purchased other than through a
publicly announced plan or program.
(2.a) The Plan was announced on December 9, 2004 and was
reapproved on December 8, 2005.
(2.b) The share amount approved in 2004 was 5% of
outstanding shares, or approximately 4,172,453 shares, and
in 2005 was 5% of outstanding shares, or approximately
4,192,729 shares.
(2.c) The Plan will expire on or about December 8, 2006.
(2.d) None.
(2.e) None.
Item 10. Submission of Matters to a Vote of Security Holders.
There were no material changes to the procedures by which
shareholders may recommend nominees to the registrant's
board of directors made or implemented after the registrant
last provided disclosure in response to the requirements of
Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or
this Item.
Item 11. Controls and Procedures.
Conclusions of principal officers concerning controls and
procedures.
(a) As of July 12, 2006, 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 registrant's disclosure controls and
procedures. Based on that evaluation, the registrant's
officers, including the PEO and PFO, concluded that, as of
July 12, 2006, the registrant's 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
registrant's 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
registrant's last fiscal half-year that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits attached hereto. (Attach certifications as
exhibits)
(1) Not applicable. See registrant's response to Item 2,
above.
(2) Separate certifications by the registrant's principal
executive officer and principal financial officer, pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 and
required by Rule 30a-2 under the Investment Company Act of
1940, are attached.
A certification by the registrant's principal executive
officer and principal financial officer, pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, is attached.
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, thereunto duly authorized.
THE ADAMS EXPRESS COMPANY
BY: /s/ Douglas G. Ober
-----------------------
Douglas G. Ober
Chief Executive Officer
(Principal Executive Officer)
Date: July 26, 2006
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: July 26, 2006
BY: /s/ Maureen A. Jones
-----------------------
Maureen A. Jones
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: July 26, 2006