THE ADAMS EXPRESS COMPANY
--------------------------------------------------------------------------------
Board of Directors
Enrique R. Arzac/2/,/4/ Douglas G. Ober/1/
Daniel E. Emerson/1/,/4/ Landon Peters/3/,/4/
Thomas H. Lenagh/2/,/3/ John J. Roberts/2/,/4/
W.D. MacCallan/1/,/4/ Susan C. Schwab/1/,/3/
W. Perry Neff/1/,/2/ Robert J.M. Wilson/1/,/3/
/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
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
----------
Stock Data
----------
Price (3/31/01) $17.52
Net Asset Value (3/31/01) $19.49
Discount: 10.1%
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
---------------------
Distributions in 2001
---------------------
From Investment Income $0.12
(paid or declared)
From Net Realized Gains 0.04
-----
Total $0.16
=====
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2001 Divident Payment Dates
---------------------------
March 1, 2001
June 1, 2001
September 1, 2001*
December 27, 2001*
* Anticipated
[LOGO OF ADAMS EXPRESS COMPANY]
FIRST QUARTER REPORT
--------------------
March 31, 2001
building for the future
with solid investments
Letter to Stockholders
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We are pleased to submit the financial statements for the three months ended
March 31, 2001. In addition, a schedule of investments and summary financial
information for the Company are provided.
Net assets of the Company at March 31, 2001 were $19.49 per share on
81,926,962 shares outstanding, compared with $23.72 per share at December 31,
2000 on 82,292,262 shares outstanding. On March 1, 2001, a distribution of
$0.08 per share was paid consisting of $0.04 from 2000 long-term capital gain,
$0.03 from 2000 investment income, and $0.01 from 2001 investment income, all
taxable in 2001. A 2001 investment income dividend of $0.08 per share has been
declared to shareholders of record May 18, 2001, payable June 1, 2001.
Net investment income for the three months ended March 31, 2001 amounted to
$5,180,500, compared with $3,425,653 for the same period in 2000. These earn-
ings are equal to $0.06 and $0.04 per share, respectively, on the average num-
ber of shares outstanding during each period.
Net capital gain realized on investments for the three months ended March 31,
2001 amounted to $80,426,068, the equivalent of $0.98 per share.
The Annual Meeting, held on March 27, 2001 in Baltimore, Maryland, was well
attended by shareholders. Upon conclusion of the formal segment of the meet-
ing, management reviewed the portfolio's performance in 2000 and discussed the
outlook for the future. The results of the voting at the Annual Meeting are
shown on page 10.
Current and potential shareholders can find information about the Company, in-
cluding the daily net asset value (NAV) per share, the market price, and the
discount/ premium to the NAV, at its site on the Internet. The address for the
site is www.adamsexpress.com. Also available at the website are a brief his-
tory of the Company, historical financial information, and more general indus-
try material. Further information regarding shareholder services is located on
page 11 of this report.
The Company is an internally-managed equity fund whose investment policy is
essentially based on the primary objectives of preservation of capital, the
attainment of reasonable income from investments and, in addition, an opportu-
nity for capital appreciation.
By order of the Board of Directors,
/s/ Douglas G. Ober /s/ Joseph M. Truta
Douglas G. Ober, Joseph M. Truta,
Chairman and Chief
Executive Officer President
April 20, 2001
Statement of Assets and Liabilities
--------------------------------------------------------------------------------
March 31, 2001 (unaudited)
Assets
Investments* at value:
Common stocks and convertible securities
(cost $910,724,768) $1,506,044,419
Non-controlled affiliate, Petroleum &
Resources Corporation
(cost $26,585,260) 52,054,286
Short-term investments (cost $36,340,229) 36,340,229 $1,594,438,934
-----------------------------------------------------------------------------
Cash 208,451
Securities lending collateral 293,183,469
Dividends and interest receivable 1,510,206
Prepaid expenses and other assets 6,835,280
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Total Assets 1,896,176,340
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Liabilities
Investment securities purchased 703,550
Open option contracts at value (proceeds
$1,531,733) 953,770
Obligations to return securities lending
collateral 293,183,469
Accrued expenses 4,483,131
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Total Liabilities 299,323,920
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Net Assets $1,596,852,420
-----------------------------------------------------------------------------
Net Assets
Common Stock at par value $1.00 per share,
authorized 150,000,000 shares; issued and
outstanding 81,926,962 shares $ 81,926,962
Additional capital surplus 806,939,614
Undistributed net investment income 5,669,708
Undistributed net realized gain on investments 80,949,496
Unrealized appreciation on investments 621,366,640
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Net Assets Applicable to Common Stock $1,596,852,420
-----------------------------------------------------------------------------
Net Asset Value Per Share of Common Stock $19.49
-----------------------------------------------------------------------------
*See Schedule of Investments on pages 6 through 8.
The accompanying notes are an integral part of the financial statements.
2
Statement of Operations
--------------------------------------------------------------------------------
Three Months Ended March 31, 2001 (unaudited)
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 4,992,125
From non-controlled affiliate 191,376
Interest 942,057
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Total income 6,125,558
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Expenses:
Investment research 338,711
Administration and operations 64,462
Directors' fees 54,250
Reports and stockholder communications 134,730
Transfer agent, registrar and custodian expenses 127,965
Auditing and accounting services 27,652
Legal services 11,651
Occupancy and other office expenses 51,268
Travel, telephone and postage 30,567
Other 103,802
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Total expenses 945,058
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Net Investment Income 5,180,500
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Realized Gain and Change in Unrealized Appreciation on
Investments
Net realized gain on security transactions 80,368,655
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 57,413
Change in unrealized appreciation on investments (426,102,704)
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Net Loss on Investments (345,676,636)
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Change in Net Assets Resulting from Operations $(340,496,136)
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Statement of Changes in Net Assets
--------------------------------------------------------------------------------
Three Months Year Ended
Ended March 31, 2001 Dec. 31, 2000
-------------------- -------------
(unaudited)
From Operations:
Net investment income $ 5,180,500 $ 20,941,465
Net realized gain on investments 80,426,068 128,091,337
Change in unrealized appreciation on
investments (426,102,704) (251,193,342)
---------------------------------------------------------------------------------
Change in net assets resulting from
operations (340,496,136) (102,160,540)
---------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (3,278,331) (17,702,862)
Net realized gain from investment
transactions (3,278,334) (128,205,341)
---------------------------------------------------------------------------------
Decrease in net assets from distributions (6,556,665) (145,908,203)
---------------------------------------------------------------------------------
From Capital Share Transactions:
Value of shares issued in payment of
exercised options and distributions -0- 77,508,318
Cash in lieu of fractional shares issued
in payment of 3-for-2 stock split -0- (123,043)
Cost of shares purchased (Note 4) (7,657,757) (48,555,429)
---------------------------------------------------------------------------------
Change in net assets from capital share
transactions (7,657,757) 28,829,846
---------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets (354,710,558) (219,238,897)
Net Assets:
Beginning of period 1,951,562,978 2,170,801,875
---------------------------------------------------------------------------------
End of period (including undistributed net
investment
income of $5,669,708 and $3,767,539,
respectively) $1,596,852,420 $1,951,562,978
---------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
3
Notes to Financial Statements (unaudited)
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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 invest-
ment 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 are valued at
amortized cost. Written options are valued at the last sale price or last
quoted asked price.
Affiliated Companies -- Investments in companies 5% or more of whose outstand-
ing voting securities are held by the Company are defined as "Affiliated Com-
panies" in Section 2(a)(3) of the Investment Company Act of 1940.
Security Transactions and Investment Income -- Investment transactions are ac-
counted 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 distribu-
tions to shareholders are recognized on the ex-dividend date, and interest in-
come is recognized on the accrual basis.
2. Federal Income Taxes
The Company's policy is to distribute all of its taxable income to its share-
holders in compliance with the requirements of the Internal Revenue Code ap-
plicable 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 March 31, 2001 was $974,116,862, and net
unrealized appreciation aggregated $621,853,805, of which the related gross
unrealized appreciation and depreciation were $752,736,503 and $130,882,698,
respectively.
Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. Accordingly, peri-
odic reclassifications are made within the Company's capital accounts to re-
flect income and gains available for distribution under income tax regula-
tions.
3. Investment Transactions
Purchases and sales of portfolio securities, other than options and short-term
investments, during the three months ended March 31, 2001 were $149,524,634
and $153,990,913, 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. Option transactions comprised an insignificant portion of
operations during the period ended March 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
The Company has 10,000,000 authorized and unissued preferred shares without
par value.
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. During the
three months ended March 31, 2001, the Company purchased 365,300 shares of its
common stock at a total cost of $7,657,757 and a weighted average discount
from net asset value of 10.0%, compared to purchases of 690,600 shares at a
total cost of $23,388,422 and a weighted average discount from net asset value
of 14.9% for the same period in 2000.
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 exercis-
able 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 ex-
ercisable 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 holders 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 sur-
render. 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, 339,403 options
were outstanding, with a weighted average exercise price of $8.1169 per share.
During the three months ended March 31, 2001, the Company granted options in-
cluding stock appreciation rights for 38,563 shares of common stock with a
weighted average exercise price of $21.00. Stock appreciation rights relating
to 15,629 stock option shares were exercised at a weighted average market
price of $19.24 per share and the stock options relating to those rights,
which had a weighted average exercise price of $5.3121 per share, were can-
celled. At March 31, 2001, there were outstanding exercisable options to pur-
chase 126,511 common shares at $3.7033-$20.5417 per share (weighted average
price of $6.7414), and unexercisable options to purchase 235,826 common shares
at $3.7033-$20.5417 per share (weighted average price of $11.0833). The
weighted average remaining contractual life of outstanding exercisable and
unexercisable options is 3.7943 years and 6.1928 years, respectively. Total
compensation expense recognized for the three months ended March 31, 2001 re-
lated to the stock options and stock appreciation rights plan was $(727,865).
At March 31, 2001, there were 1,272,022 shares available for future option
grants.
5. Retirement Plans
The Company provides retirement benefits for its employees under a non-con-
tributory qualified defined benefit pension plan. The benefits are based on
years of service and compensation during the last 36 months 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 of investments in individual stocks, bonds and mutual funds.
The actuarially computed net pension cost credit for the three months ended
March 31, 2001 was $104,219, and consisted of service cost of $51,103, inter-
est cost of $90,562, expected return on plan assets of $224,278, and net amor-
tization credit of $21,606.
In determining the actuarial present value of the projected benefit obliga-
tion, 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 long-term ex-
pected rate of return on plan assets was 8.0%.
4
Notes to Financial Statements (continued)
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On January 1, 2001, the projected benefit obligation for service rendered to
date was $4,932,613. During the three months ended March 31, 2001, the pro-
jected benefit obligation increased due to service cost and interest cost of
$51,103 and $90,562, respectively, and decreased due to benefit payments in
the amount of $51,334. The projected benefit obligation March 31, 2001 was
$5,022,944.
On January 1, 2001, the actual fair value of plan assets was $11,316,574. Dur-
ing the three months ended March 31, 2001, the fair value of plan assets in-
creased due to the expected return on plan assets of $224,278 and decreased
due to benefit payments in the amount of $51,334. At March 31, 2001, the pro-
jected fair value of plan assets amounted to $11,489,518, which resulted in
excess plan assets of $6,466,574. The remaining components of prepaid pension
cost at March 31, 2001 included $986,308 in unrecognized net gain, $513,336 in
unrecognized prior service cost and $71,942 is the remaining portion of the
unrecognized net asset existing at January 1, 1987, which is being amortized
over 15 years. Prepaid pension cost included in other assets at March 31, 2001
was $5,921,660.
In addition, the Company has a nonqualified benefit plan which provides em-
ployees with defined retirement benefits to supplement the qualified plan. The
Company does not provide postretirement medical benefits.
6. Expenses
The cumulative amount of accrued expenses at March 31, 2001 for employees and
former employees of the Company was $4,261,755. Aggregate remuneration paid or
accrued during the three months ended March 31, 2001 to officers and directors
amounted to $252,326, which includes a credit of $727,865 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 compen-
sation 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 in-
terest or dividends on the securities loaned. The loans are secured by collat-
eral 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 March 31, 2001, the Company had securities on loan of
$280,852,157 and held collateral of $293,183,469.
Financial Highlights
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Three Months Ended
----------------------
(unaudited)
Year Ended December 31
March 31, March 31, ---------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------- ----------- -----------
Per Share Operating Performance*
Net asset value, beginning of period $23.72 $26.85 $26.85 $21.69 $19.01 $15.80 $14.24
--------------------------------------------------------------------------------------------------------------------------
Net investment
income 0.06 0.04 0.26 0.25 0.30 0.29 0.35
Net realized gains and change in
unrealized appreciation and other
changes (4.22) 2.01 (1.63) 6.54 3.78 4.22 2.36
--------------------------------------------------------------------------------------------------------------------------
Total from investment operations (4.16) 2.05 (1.37) 6.79 4.08 4.51 2.71
--------------------------------------------------------------------------------------------------------------------------
Capital share
repurchases 0.01 0.05 0.09 -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Less
distributions
Dividends from net investment income (0.04) (0.03) (0.22) (0.26) (0.30) (0.29) (0.35)
Distributions from net realized gains (0.04) (0.05) (1.63) (1.37) (1.10) (1.01) (0.80)
--------------------------------------------------------------------------------------------------------------------------
Total
distributions (0.08) (0.08) (1.85) (1.63) (1.40) (1.30) (1.15)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $19.49 $28.87 $23.72 $26.85 $21.69 $19.01 $15.80
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Per share market price, end of period $17.52 $24.92 $21.00 $22.38 $17.75 $16.13 $13.17
Total Investment Return
Based on market
price (16.3)% 11.8% 1.7% 36.1% 19.3% 33.1% 16.4%
Based on net
asset value (17.5)% 7.9% (4.3)% 33.6% 23.7% 30.7% 21.0%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $1,596,852 $2,303,559 $1,951,563 $2,170,802 $1,688,080 $1,424,170 $1,138,760
Ratio of expenses to average net assets 0.21%+ 0.50%+ 0.24% 0.32% 0.22% 0.39% 0.34%
Ratio of net investment income to
average net
assets 1.14%+ 0.63%+ 0.97% 1.06% 1.48% 1.61% 2.30%
Portfolio
turnover 33.65%+ 13.75%+ 12.74% 15.94% 22.65% 17.36% 19.60%
Number of shares outstanding at
end of period (in 000's)* 81,927 79,806 82,292 80,842 77,815 74,924 72,055
--------
* Prior year data has been adjusted to reflect the 3-for-2 stock split ef-
fected in October, 2000.
+ Ratios presented on an annualized basis.
5
Schedule of Investments
--------------------------------------------------------------------------------
March 31, 2001 (unaudited)
Prin. Amt.
or Shares Value (A)
---------- ---------
Stocks And Convertible Securities -- 97.8%
Basic Materials -- 1.5%
Engelhard Corp. 530,000 $ 13,705,800
Mead Corp. 400,000 10,036,000
------------
23,741,800
------------
Capital Goods -- 10.9%
Black & Decker Corp. (B) 300,000 11,025,000
General Electric Co. 1,855,000 77,650,301
ITT Industries 355,000 13,756,250
Minnesota Mining & Manufacturing Co. (B) 285,000 29,611,500
Pall Corp. 600,000 13,152,000
United Technologies Corp. 390,000 28,587,000
------------
173,782,051
------------
Communication Services -- 11.0%
Telecommunications -- Cellular and Wireless -- 2.2%
MediaOne Group, Inc.
6.25% PIES due 2001 85,000 5,593,000
Nextel Communications Inc.
5.25% Conv. Notes
due 2010 (C) $10,000,000 6,412,500
Nextel Communications Inc. (B)(D) 1,040,000 14,950,000
Vodafone Group plc ADS (B) 287,500 7,805,625
------------
34,761,125
------------
Telecommunications -- Long Distance -- 3.0%
Qwest Communications International, Inc.
5.75% TRENDS Pfd.
due 2003 (C) 538,000 32,616,250
Williams Communications Group, Inc. (B)(D) 500,000 4,500,000
WorldCom, Inc. (B)(D) 550,000 10,278,125
------------
47,394,375
------------
Telephone -- 5.8%
American Tower Corp.
5.00% Conv. Notes
due 2010 (C) $10,000,000 8,050,000
BellSouth Corp. 440,000 18,004,800
Global Crossing Ltd. 6.75% Conv. Pfd. due 2012 40,000 6,020,000
Global Crossing Ltd. (B)(D) 644,000 8,687,560
RCN Corp. (B)(D) 280,000 1,688,750
SBC Communications Inc. 787,960 35,166,655
Time Warner Telecom Inc. (B)(D) 404,500 14,713,688
------------
92,331,453
------------
Prin. Amt.
or Shares Value (A)
---------- ---------
Consumer -- 4.0%
Coca-Cola Co. (B) 170,000 $ 7,677,200
Dean Foods Co. 300,000 10,158,000
Ivex Packaging Corp. (D) 928,000 12,760,000
PepsiCo, Inc. (B) 295,000 12,965,250
Procter & Gamble Co. (B) 160,000 10,016,000
Tiffany & Co. (B) 350,000 9,537,500
-----------
63,113,950
-----------
Energy -- 10.9%
BP Amoco plc ADR 270,000 13,397,401
Calpine Capital Trust 5.75% Conv. Pfd. HIGH TIDES 202,500 39,639,375
Calpine Corp. (B)(D) 50,000 2,753,500
Enron Corp. (B) 450,000 26,145,000
Exxon Mobil Corp. 158,418 12,831,858
Petroleum & Resources
Corporation (E) 1,913,761 52,054,286
Schlumberger Ltd. 88,400 5,092,724
Williams Companies, Inc. 500,000 21,425,000
-----------
173,339,144
-----------
Financial -- 18.4%
Banking -- 11.0%
BankNorth Group, Inc. 474,000 9,420,750
Citigroup Inc. 401,023 18,038,020
Federal Home Loan Mortgage Corp. 345.000 22,366,350
Greenpoint Financial Corp. 435,000 14,181,000
Investors Financial Services Corp. 630,000 36,933,750
Mellon Financial Corp. 420,000 17,018,400
Provident Bankshares Corp. 319,068 7,139,147
Wachovia Corp. 190,000 11,447,500
Wells Fargo & Co. 550,000 27,208,500
Wilmington Trust Corp. 210,000 12,406,800
-----------
176,160,217
-----------
Insurance -- 7.4%
AMBAC Financial Group, Inc. 569,400 36,117,042
American International Group, Inc. 759,375 61,129,689
Annuity & Life Re (Holdings), Ltd. 695,000 20,676,250
-----------
117,922,981
-----------
6
Schedule of Investments (continued)
--------------------------------------------------------------------------------
March 31, 2001 (unaudited)
Prin. Amt
or Shares Value (A)
--------- ---------
Health Care -- 13.5%
Abbott Laboratories (B) 255,000 $ 12,033,450
ALZA Corp. (B)(D) 480,000 19,440,000
American Home Products Corp. 300,000 17,625,000
Baxter International 255,000 24,005,700
Elan Corp., plc ADR (B)(D) 550,000 28,737,500
Genentech, Inc. (B)(D) 270,000 13,635,000
GlaxoSmithKline plc ADR 250,360 13,093,828
Human Genome Sciences Inc. (B)(D) 200,000 9,200,000
Johnson & Johnson 180,000 15,744,600
Lilly (Eli) & Co. 190,000 14,565,400
Merck & Co., Inc. 250,000 18,975,000
Pharmacia Corp. (B) 368,900 18,581,493
Vertex Pharmaceuticals Inc. (D) 248,016 9,083,586
------------
214,720,557
------------
Technology -- 17.0%
Communication Equipment -- 7.5%
Corning Inc. 1,170,000 24,207,300
Ericsson (L.M.) Telephone Co. ADR (B) 3,133,333 17,527,081
Lucent Technologies Inc. (B) 508,920 5,073,932
Motorola, Inc. 495,622 7,067,570
Nokia Corp. ADR (B) 1,840,000 44,160,000
Nortel Networks Corp. 1,490,000 20,934,500
------------
118,970,383
------------
Computer Related -- 6.0%
BMC Software Inc. (B)(D) 310,000 6,665,000
Cisco Systems, Inc. (D) 1,835,000 29,015,938
Diamondcluster International Inc. (B)(D) 300,000 2,606,250
First Data Corp. (B) 175,000 10,449,250
Oracle Corp. (D) 1,180,000 17,676,400
QRS Corp. (D) 585,000 4,972,500
Sapient Corp. (B)(D) 1,150,000 8,265,625
Sun Microsystems Inc. (D) 480,000 7,377,600
Symantec Corp. (D) 222,500 9,303,281
------------
96,331,844
------------
Electronics -- 3.5%
Intel Corp. 690,000 18,155,625
Solectron Corp. (B)(D) 2,000,000 38,020,000
------------
56,175,625
------------
Prin. Amt.
or Shares Value (A)
---------- ---------
Transportation -- 1.7%
Canadian National Railway Co. 5.25% Conv. Pfd. QUIDS
due 2029 170,000 $ 9,129,000
Canadian National Railway Co. (B) 85,000 3,201,950
United Parcel Service, Inc. (B) 255,000 14,509,500
-------------
26,840,450
-------------
Utilities -- 8.9%
Black Hills Corp. (B) 555,000 25,369,050
CINergy Corp. 300,000 10,065,000
Duke Energy Corp. 8.25% Conv. Pfd. due 2004 400,000 10,900,000
Duke Energy Corp. (B) 355,000 15,172,700
Keyspan Corp. 400,000 15,252,000
Mirant Corp. (B)(D) 310,000 11,005,000
Northwestern Corp. 500,000 12,250,000
Orion Power Holdings, Inc. (B) 750,000 23,025,000
TECO Energy, Inc. 650,000 19,474,000
-------------
142,512,750
-------------
Total Stocks and Convertible Securities
(Cost $937,310,028) (F) 1,558,098,705
-------------
7
Schedule of Investments (continued)
-------------------------------------------------------------------------------
March 31, 2001 (unaudited)
Prin. Amt.
or Shares Value (A)
---------- ---------
Short-Term Investments -- 2.3%
U.S. Government Obligations -- 1.2%
U.S. Treasury Bills,
4.54-4.85%, due 5/24/01 $20,000,000 $19,856,906
------------
Commercial Paper -- 1.1%
Ford Motor Credit Corp.,
4.88-4.97%,
due 4/03/01-4/17/01 9,650,000 9,639,436
General Electric Capital Corp., 4.83-4.98%,
due 4/05/01-4/10/01 6,850,000 6,843,887
------------
16,483,323
------------
Value (A)
---------
Total Short-Term Investments
(Cost $36,340,229) $ 36,340,229
--------------
Total Investments
(Cost $973,650,257) 1,594,438,934
Cash, receivables and other assets, less liabilities 2,413,486
--------------
Net Assets -- 100.0% $1,596,852,420
==============
-------------------------------------------------------------------------------
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 re-
stricted securities.
(B) All or a portion of these securities is on loan. See Note 7 to Financial
Statements.
(C) Restricted securities (American Tower Corp. 5% Conv. Notes due 2010, ac-
quired 2/9/00-4/13/00, cost $10,037,239, Nextel Communications Inc. 5.25%
Conv. Notes due 2010, acquired 1/21/00, cost $10,000,000, and Qwest Commu-
nications International, Inc. 5.75% TRENDS Pfd. due 2003, acquired
12/4/98-2/21/01, cost $32,969,481).
(D) Presently non-dividend paying.
(E) Non-controlled affiliate.
(F) The aggregate market value of stocks held in escrow at March 31, 2001 cov-
ering open call option contracts written was $22,333,448. In addition, the
aggregate market value of securities segregated by the custodian required
to collateralize open put option contracts written was $14,085,000.
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*
----------- ---------- ------------ --------- -------------- -------------
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
March 31, 2001 (unaudited).. 1,596,852,420 81,926,962 19.49 .12+ .04
--------
* Prior years have been adjusted to reflect the 3-for-2 stock split effected
in October, 2000.
+ Paid or declared.
8
Principal Changes in Portfolio Securities
--------------------------------------------------------------------------------
During the Three Months Ended March 31, 2001 (unaudited)
Shares
---------------------------------------
Held
Additions Reductions March 31, 2001
--------- ---------- --------------
AOL Time Warner Inc................... 223,128(/1/) 223,128 --
Canadian National Railway Co.
5.25% Conv. Pfd. QUIDS due 2029...... 155,000 170,000
Duke Energy Corp.
8.25% Conv. Pfd. due 2004............ 400,000 400,000
Duke Energy Corp...................... 338,000(/2/) 245,000 355,000
Genentech, Inc........................ 270,000 270,000
Human Genome Sciences Inc............. 200,000 200,000
ITT Industries........................ 355,000 355,000
Keyspan Corp.......................... 400,000 400,000
Mirant Corp........................... 310,000 310,000
Orion Power Holdings, Inc............. 360,000 750,000
TECO Energy, Inc...................... 350,000 650,000
United Parcel Service, Inc............ 80,000 255,000
United Technologies Corp.............. 135,000 390,000
Qwest Communications International,
Inc.
5.75% TRENDS Pfd. due 2003........... 413,000 538,000
Cabot Corp............................ 470,000 --
Chiron Corp........................... 550,000 --
Delphi Automotive, Inc................ 370,000 --
Dover Corp............................ 260,000 --
First Data Corp....................... 168,980 175,000
Hewlett-Packard Co.................... 400,000 --
McDonald's Corp....................... 560,000 --
National City Corp.................... 160,000 --
Qwest Communications International,
Inc.................................. 760,000 --
--------
(/1/)Received 1.5 shares of AOL Time Warner Inc. for each share of Time Warner
Inc. held.
(/2/)Received 300,000 shares of Duke Energy Corp. from stock split. Addition-
ally purchased 38,000 shares of Duke Energy Corp.
------------------
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
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: (800) 432-8224
E-mail: Shareowner-svcs@bankofny.com
9
Annual Meeting of Stockholders
--------------------------------------------------------------------------------
The Annual Meeting of Stockholders was held on March 27, 2001. For those nomi-
nated, the following votes were cast for directors:
votes for votes withheld
--------- --------------
(A) Enrique R. Arzac: 68,370,823 572,379
(B) Daniel E. Emerson: 68,187,505 755,697
(C) Thomas H. Lenagh: 67,816,679 1,126,523
(D) W.D. MacCallan: 68,146,076 797,126
(E) W. Perry Neff: 68,242,428 700,774
(F) Douglas G. Ober: 68,094,854 848,348
(G) Landon Peters: 68,285,348 657,854
(H) John J. Roberts: 68,123,524 819,678
(I) Susan C. Schwab: 68,308,217 634,985
(J) Robert J.M. Wilson: 67,951,649 991,553
A proposal to approve and ratify the selection of PricewaterhouseCoopers LLP as
the firm of independent accountants of the Company for 2001 was approved with
68,170,131 votes for, 387,364 votes against, and 385,707 votes abstaining.
-------------------
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 pur-
chase or sale of shares of the Company or of any securities mentioned in the
report. The rates of return will vary and the market value of an investment
will fluctuate. Shares, if sold, may be worth more or less than their origi-
nal cost. Past performance is not indicative of future investment results.
10
Shareholder Information and Services
-------------------------------------------------------------------------------
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.
BuyDIRECTSM*
BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvest-
ment plan, sponsored and administered by our transfer agent, The Bank of New
York. The Plan provides registered stockholders and interested first time in-
vestors an affordable alternative for buying, selling, and reinvesting in
Adams Express shares. Direct purchase plans are growing in popularity and
Adams Express is pleased to participate in such a plan.
The costs to participants in administrative service fees and brokerage commis-
sions for each type of transaction are listed below. Please note that the fees
for the reinvestment of dividends as well as the $0.05 per share commission
for each share purchased under the Plan have not increased since 1973.
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 regis-
tered 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 the Plan or contact The Bank of New York
about the BuyDIRECT Plan.
-----------
The Company The Transfer Agent
The Adams Express The Bank of New York
Company Shareholder Relations Dept.-8W
Lawrence L. P.O. Box 11258
Hooper, Jr., Church Street Station
Vice President, New York, NY 10286
Secretary and (800) 432-8224
General Counsel Website:
Seven St. Paul http://stock.bankofny.com
Street, E-mail:
Suite 1140 Shareowner-svcs@ bankofny.com
Baltimore, MD
21202
(800) 638-2479
Website:
www.adamsexpress.com
E-mail:
contact@adamsexpress.com
*BuyDIRECT is a service mark of The Bank of New York.
**The year-end dividend and capital gain distribution may be made in newly is-
sued shares of common stock in which event there would be no fees or commis-
sions in connection with this dividend and capital gain distribution.
11