Operating under The Adams Express Company name, and named for its founder, Alvin Adams, Adams Diversified Equity Fund began in 1840 as a delivery business for transporting securities, documents, and parcels up and down the northeastern U.S. As part of the nationalization of the railroads during World War I, Adams Express used the money it received for its express delivery operations to become an investment fund. In 1929, the company incorporated as a closed-end fund, and is today Adams Diversified Equity Fund. Adams Natural Resources Fund, previously Petroleum & Resources Corp., was formed that same year as a closed-end fund. Adams Natural Resources Fund remains the oldest closed-end fund specializing in energy company stocks. In March of 2015, both Funds became part of a newly-branded Adams Funds platform. More information on our history can be found on our website.
Adams Funds, through our time-tested investment philosophy, seeks high-quality companies that are executing well and trade at attractive prices. We utilize a disciplined approach to our investment decisions, focusing on long-term growth opportunities, while also carefully managing risk in the overall portfolio. Our portfolio managers are supported by an in-house team of research analysts who bring significant experience in the sectors they cover. More information on our portfolio managers and analysts can be found on our website.
As closed-end funds, the Funds’ shares trade on the New York Stock Exchange under the stock ticker symbols ADX (Adams Diversified Equity Fund) and PEO (Adams Natural Resources Fund). Because our shares are publicly traded, the price is set by the marketplace, and the share price may be different from the Fund's Net Asset Value (NAV). Typically, our Funds’ shares trade at a discount to the NAV, meaning that the market price is less than the underlying value of the assets owned by the Funds. We post each Fund's closing market price, NAV, and discount/premium daily on our website.
Adams Diversified Equity Fund and Adams Natural Resources Fund each have an active share repurchase program currently in place that is authorized and overseen by the Board of Directors. Share repurchases may be made in the open market from time to time, as determined by the portfolio management team, when market conditions and portfolio management considerations warrant, and when shares are trading at a discount of at least 10% from net asset value (NAV). In September 2020, the Board of Directors adopted an enhanced discount management and liquidity program mandating share repurchases when the discount exceeds 15% for at least 30 consecutive trading days. The enhanced program also provides that the Fund will engage in a proportional tender offer to repurchase shares when the discount exceeds 19% for 30 consecutive trading days, not to exceed one such offer in any twelve-month period. Share repurchase amounts are provided in the Fund's annual reports.
Adams Funds generally do not use leverage. The Funds may from time to time buy and sell options and utilize swap programs, which are considered a form of leverage.
At Adams Funds, we recognize the importance of low expenses to investors. As internally-managed funds, we are able to keep a very tight rein on our expenses. Our current expense ratios are 0.62% for Adams Diversified Equity Fund and 0.64% for Adams Natural Resources Fund as of June 30, 2023, which compare very favorably to actively-managed equity funds. The average of U.S. actively-managed equity funds last year was 1.12% and the average of U.S. actively-managed sector funds was 1.24% (Source: Investment Company Institute).
Although each investor's particular financial needs, goals, and time frame may differ, Adams Funds’ offer the following attributes:
- An experienced investment team providing sophisticated and active portfolio management
- Careful attention to risk-control
- Low expenses
- Consistent dividend and capital gains payouts – the Funds have paid dividends for 85+ years
- The ability to invest and reinvest at a discount
The Funds are traded on the New York Stock Exchange. Adams Diversified Equity Funds’ stock ticker symbol is ADX and Adams Natural Resources Funds’ stock ticker symbol is PEO. Shares may be purchased through our transfer agent, AST. In addition, shares may be bought and sold through registered investment security dealers. Your broker will be able to assist you in this regard.
The daily closing market price and net asset value (NAV) per share of Adams Funds may be obtained from our website.
No, Adams Funds have not implemented a managed distribution policy. Instead, each Fund has committed to distribute annually an amount equal to at least 6% of the Fund’s trailing 12-month average month-end market price. The Funds make distributions to shareholders four times a year. The first three quarterly distributions consist of net investment income. The first quarter distribution also includes "spillover" dividend and distribution amounts from investment activity in the fourth quarter of the prior year. The fourth quarter distribution is the largest because it primarily consists of capital gains.
New shares are issued in each Fund to shareholders who elect to reinvest all or part of their year-end distribution. A significant portion of our shareholder base elects to take their distributions in the form of stock, which provides an opportunity to take advantage of the discount to NAV that characterizes many closed-end funds.
Over the past 10 years, the discount has averaged 14.3% for Adams Diversified Equity Fund. For Adams Natural Resources Fund, the discount has averaged 14.5%.
The tax treatment of the distributions is provided annually to our shareholders in form 1099-DIV, and summarized in the tax information letter we issue in January. The net investment income distributions are taxed at the applicable dividend income rate and the capital gains are taxed at the applicable capital gains rates. Return of capital is non-taxable and reduces the cost basis of your shares. Historical information on the Funds' distributions can be found on our website.
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