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.
How do the Funds make their investment decisions?
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.
Do the Funds' shares trade at a discount or premium? If so, how do I find out what that is?
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.
Do the Funds repurchase their shares?
Adams Diversified Equity Fund has an active share repurchase program currently in place. In December 2014, the Board of Directors authorized the repurchase of up to 5% of the then-outstanding shares of common stock. Such 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). Share repurchase amounts are provided in the Fund's regular quarterly reports.
Is leverage used in the Funds?
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.
How do the Funds’ expense ratios compare to other funds?
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 0.65% for Adams Diversified Equity Fund and 0.96% for Adams Natural Resources Funds as of December 31, 2019, which compare very favorably to actively-managed equity funds. The average U.S. actively-managed equity fund last year had an expense ratio of 1.12% (Source: Morningstar).
What are the advantages of an investment in Adams Funds?
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 80+ years
The ability to invest and reinvest at a discount
How do I invest in Adams Funds?
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.
Where do I get information on the Fund's price and/or net asset value?
The daily closing market price and net asset value (NAV) per share of Adams Funds may be obtained from our website.
Do the Funds have a managed distribution policy?
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.
Do the Funds issue new shares?
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.
What have the discounts to NAV been historically for the Adams Diversified Equity Fund and the Adams Natural Resources Fund?
Over the past 10 years, the discount has averaged 14.6% for Adams Diversified Equity Fund. For Adams Natural Resources Fund, the discount has averaged 13.0%.
How are your distributions taxed?
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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