LETTER TO STOCKHOLDERS
We are pleased to submit the financial statements of the Company for the nine
months ended September 30, 1996, a schedule of investments and a list of
principal changes in portfolio securities for the third quarter.
Net assets of the Company at September 30, 1996 were $23.81 per share as
compared with $21.36 per share at December 31, 1995 on the 46,165,517 shares
outstanding on each date. The total return on net assets (with reinvestment of
income and capital gains distributions) for the period was 13.3%. On March
1, 1996, a distribution of $0.12 per share was paid consisting of $0.03 from
1995 short-term capital gain, $0.02 from 1995 investment income and $0.07
from 1996 investment income. All are taxable in 1996. Regular 1996
investment income dividends of $0.12 per share were paid to shareholders on June
1, 1996 and September 1, 1996.
Net investment income for the nine months ended September 30, 1996 amounted to
$17,772,006 compared with $16,566,136 for the same period in 1995. These
earnings are equal to $0.38 and $0.37 respectively, per share, on the average
number of shares outstanding during each period.
Net capital gain realized on investments for the nine months ended September 30,
1996 amounted to $51,725,334, the equivalent of $1.12 per share.
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
opportunity 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 President
Executive Officer
October 18, 1996
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1996 (unaudited)
<TABLE>
<S> <C>
Assets
Investments* at value:
Non-controlled affiliate, Petroleum & Resources
Corporation (cost $22,153,015) $ 37,947,006
Common stocks and convertible securities
(cost $573,868,785) 928,227,127
Short-term investments (cost $137,064,426) 137,064,426 $1,103,238,559
- ------------------------------------------------------------------------------------------------
Cash 143,047
Receivables:
Investment securities sold 43,274
Dividends and interest 2,108,296
Prepaid expenses and other assets 3,300,468
- ------------------------------------------------------------------------------------------------
Total Assets 1,108,833,644
Liabilities
Investment securities purchased 5,362,740
Open option contracts at value (proceeds $983,440) 1,804,615
Accrued expenses 2,316,213
- ------------------------------------------------------------------------------------------------
Total Liabilities 9,483,568
Net Assets $1,099,350,076
================================================================================================
NET ASSETS
Common Stock at par value $1.00 per share, authorized 75,000,000
shares; issued and outstanding 46,165,517 shares $ 46,165,517
Additional capital surplus 627,210,838
Undistributed net investment income 4,384,352
Undistributed net realized gain on investments 52,258,211
Unrealized appreciation on investments 369,331,158
Net Assets Applicable to Common Stock $1,099,350,076
================================================================================================
Net Asset Value Per Share of Common Stock $23.81
</TABLE>
*See Schedule of Investments on pages 6 through 8.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENT OF OPERATIONS
Nine Months Ended September 30, 1996 (unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 12,873,153
From non-controlled affiliate 687,342
Interest 7,332,914
- -----------------------------------------------------------------------------------------------------------------
Total income 20,893,409
Expenses:
Investment research 1,232,876
Administration and operations 635,234
Directors' fees 110,700
Reports and stockholder communications 195,810
Transfer agent, registrar and custodian expenses 301,962
Auditing services 43,462
Legal services 109,100
Occupancy and other office expenses 174,076
Travel, telephone and postage 111,255
Other 206,928
- -----------------------------------------------------------------------------------------------------------------
Total expenses 3,121,403
Net Investment Income 17,772,006
Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 51,690,967
Net realized gain distributed by regulated investment company (non-controlled affiliate) 34,367
Change in unrealized appreciation on investments 60,241,409
- -----------------------------------------------------------------------------------------------------------------
Net Gain on Investments 111,966,743
Change in Net Assets Resulting from Operations $129,738,749
=================================================================================================================
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Nine Months Year Ended
Ended Sept. 30, 1996 Dec. 31, 1995
(unaudited)
<S> <C>
From Operations:
Net investment income $ 17,772,006 $ 22,394,045
Net realized gain on investments 51,725,334 50,917,119
Change in unrealized appreciation on investments 60,241,409 155,573,255
- ------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 129,738,749 228,884,419
Dividends to Stockholders from:
Net investment income (15,234,621) (23,082,795)
Net realized gain from investment transactions (1,384,966) (50,604,589)
- ------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (16,619,587) (73,687,384)
From Capital Share Transactions:
Value of common shares issued in payment of optional distributions -0- 32,736,279
- ------------------------------------------------------------------------------------------------------------------
Total increase in net assets 113,119,162 187,933,314
Net Assets:
Beginning of period 986,230,914 798,297,600
End of period (including undistributed net investment
income of $4,384,352 and $1,846,967, respectively) $1,099,350,076 $986,230,914
==================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 are stated at
cost which, when combined with accrued interest receivable, approximates value.
Options are valued at the last sale price or 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 including options, at September 30, 1996 was $734,413,272, and net
unrealized appreciation aggregated $369,808,727, of which the related gross
unrealized appreciation and depreciation were $380,619,945 and $10,811,218,
respectively.
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Accordingly, periodic
reclassifications are made within the Company's capital accounts to reflect
income and gains available for distribution under income tax regulations.
3. Investment Transactions
Purchases and sales of portfolio securities, other than options and short-term
investments, during the nine months ended September 30, 1996 were $157,179,639
and $174,704,591, respectively. Option transactions comprised an insignificant
portion of operations during the period ended September 30, 1996. 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 may purchase shares of its Common Stock from time to time at such
prices and amounts as the Board of Directors may deem advisable. No purchases
were made during the nine months ended September 30, 1996.
The Company has 10,000,000 unissued preferred shares without par value.
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 2,050,000 shares of the Company's common stock at 100%
of the fair market value at date of grant. There were 271,334 stock options and
stock appreciation rights that expired unissued. Options are exercisable
beginning not less than one year after the date of grant and extend over ten
years from the date of grant. Stock appreciation rights are exercisable
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 optionees 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 surrender.
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. During the nine months ended September 30, 1996, no
options or stock appreciation rights were granted; stock appreciation rights
relating to 50,722 stock option shares were exercised at market prices of
$18.500-$19.125 per share and the stock options relating to these rights which
had exercise prices of $9.175-$16.455 per share were cancelled. At September 30,
1996, there were outstanding exercisable options to purchase 147,278 common
shares at $8.740-$16.425 per share and unexercisable options to purchase 319,250
common shares at $14.4550-$18.4075 per share. At September 30, 1996, there
were 943,376 shares available for future option grants.
5. Retirement Plans
The Company provides retirement benefits for its employees under a
non-contributory 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 actuarially computed net pension cost credit for the six months ended
September 30, 1996 was $326,634 and consisted of service expense of $131,337,
interest expense of $225,411, expected return on plan assets of $529,038, and a
net amortization credit of $154,344.
In determining the actuarial present value of the projected benefit obligation,
the interest rate used for the weighted-average discount rate and the expected
rate of annual salary increases was 7.0% and the expected long-term rate of
return on plan assets was 8.0%.
On January 1, 1996, the accumulated benefit obligation, including vested
benefits, was $3,553,626. The fair value of the plan assets was $8,912,506 and
the projected benefit obligation for service rendered to date was $4,388,767.
This resulted in excess plan assets of $4,523,739 of which $747,869 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 September 30, 1996 was $2,987,091.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
In addition, the Company has a nonqualified unfunded benefit plan which provides
employees with defined retirement benefits to supplement the qualified plan. The
Company does not provide postretirement medical benefits.
6. Expenses
Aggregate remuneration paid or accrued during the nine months ended September
30, 1996 to officers and directors amounted to $1,740,853 of which $110,700 was
paid as fees to directors who were not officers.
Research, accounting and other office services provided to and reimbursed by the
Company's non-controlled affiliate, Petroleum & Resources Corporation, amounted
to $410,931 for the nine months ended September 30, 1996.
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 value of which exceeds the
market value of such loaned securities. At September 30, 1996, the value of
security loans outstanding was $31,987,925.
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Nine Months Ended
(unaudited) Year Ended December 31
Sept. 30, Sept. 30, ---------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- -------- -------- -------- -------- --------
<S> <C>
Per Share Operating Performance
Net asset value, beginning of period $21.36 $17.98 $17.98 $19.78 $20.48 $20.21 $16.82
- -----------------------------------------------------------------------------------------------------------------
Net investment income 0.38 0.37 0.50 0.51 0.48 0.46 0.53
Net realized gains and change in
unrealized appreciation and other
changes 2.43 3.64 4.54 (0.71) 1.18 1.43 4.49
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations 2.81 4.01 5.04 (0.20) 1.66 1.89 5.02
Less distributions
Dividends from net investment
income (0.33) (0.33) (0.52) (0.50) (0.45) (0.46) (0.54)
Distributions from net realized gains (0.03) (0.03) (1.14) (1.10) (1.18) (1.16) (1.09)
Total distributions (0.36) (0.36) (1.66) (1.60) (1.63) (1.62) (1.63)
Dilution resulting from the rights
offering -- -- -- -- (0.73) -- --
Net asset value, end of period $23.81 $21.63 $21.36 $17.98 $19.78 $20.48 $20.21
=================================================================================================================
Per share market price, end of period $20.125 $18.375 $18.50 $15.625 $17.875 $20.00 $19.00
Total Investment Return
Based on market price 10.8% 20.1% 29.5% (3.7)% (2.7)% 14.1% 41.0%
Ratios/Supplemental Data
Net assets, end of period
(in 000's) $1,099,350 $960,174 $986,231 $798,298 $840,610 $696,925 $661,896
Ratio of expenses to average
net assets 0.40%+ 0.45%+ 0.46% 0.33% 0.36% 0.49% 0.58%
Ratio of net investment income to
average net assets 2.29%+ 2.53%+ 2.51% 2.65% 2.33% 2.30% 2.74%
Portfolio turnover 22.84%+ 23.99%+ 23.98% 19.23% 21.40% 17.97% 17.64%
Average brokerage commission rate $0.07 -- -- -- -- -- --
Number of shares outstanding at
end of period (in 000's) 46,166 44,390 46,166 44,390 42,498 34,027 32,747
=================================================================================================================
</TABLE>
+ Ratios presented on an annualized basis.
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.
5
<PAGE>
SCHEDULE OF INVESTMENTS
September 30, 1996 (unaudited)
Prin. Amt.
or Shares Value(A)
Stocks And Convertible
Securities -- 87.9%
Basic Materials -- 3.2%
Air Products & Chemicals, Inc. 160,000 $ 9,320,000
Consolidated Papers, Inc. 100,000 5,212,500
Inco Ltd. 7.75% Conv.
Debs. due 2016 $5,000,000 5,225,000
Kimberly-Clark Corp. 170,000 14,981,250
-----------
34,738,750
-----------
Capital Goods -- 10.3%
Boeing Co. 89,100 8,419,950
Cemex, S.A. de C.V. 4.25%
Conv. Sub. Debs. due 1997(B) $4,000,000 3,830,000
Cooper Industries, Inc. 7.05%
Conv. Sub. Debs. due 2015 $4,540,000 4,959,950
Deere & Co. 270,000 11,340,000
Dover Corp. 34,200 1,633,050
Emerson Electric Co. 36,500 3,289,563
General Electric Co. 350,000 31,850,000
The BFGoodrich Co. 110,000 4,963,750
Granite Construction Inc. 365,000 7,573,750+
Minnesota Mining &
Manufacturing Co. 190,000 13,252,500
Pall Corp. 265,000 7,486,250
Rockwell International Corp. 250,000 14,093,750
-----------
112,692,513
-----------
Consumer -- 14.1%
Consumer Distribution -- 1.7%
Borders Group, Inc. (C) 195,000 7,263,750
Dillard Department Stores, Inc. 200,000 6,450,000
Home Depot, Inc. 90,000 5,118,750
-----------
18,832,500
-----------
Consumer Services -- 3.6%
Brinker International, Inc. (C) 345,000 5,865,000
Cracker Barrel Old Country
Store, Inc. 350,000 7,918,750+
McDonald's Corp. 315,000 14,923,125
Scandinavian Broadcasting
System SA 7.25% Conv. Sub.
Debs. due 2005 $3,000,000 3,007,500+
Time Warner Inc. 150,000 5,775,000
USWEST Media Group, Inc. (C) 150,000 2,531,250
-----------
40,020,625
-----------
Prin. Amt.
or Shares Value(A)
Consumer Staples -- 8.8%
CPC International Inc. 127,500 $ 9,546,563
Campbell Soup Co. 190,000 14,820,000
Coca-Cola Co. 180,000 9,157,500
Crown Cork &
Seal Co., Inc. 205,000 9,455,625
Duracell International Inc. 265,000 16,972,429
Houghton Mifflin Co. 175,400 8,265,725
International Flavors &
Fragrances, Inc. 100,000 4,362,500
Interstate Bakeries Corp. 83,400 3,044,100
PepsiCo, Inc. 320,000 9,040,000
Procter & Gamble Co. 125,000 12,187,500
-----------
96,851,942
-----------
Energy -- 9.0%
British Petroleum plc ADR 80,000 10,000,000
Enron Corp. 6.25%
Exch. Notes due 1998 411,900 9,679,650
MCN Corp. 400,000 10,750,000
Mobil Corp. 60,000 6,945,000
Petroleum & Resources
Corporation (D) 1,145,570 37,947,006
Royal Dutch Petroleum Co. 45,000 7,025,625
Schlumberger Ltd. 54,200 4,579,900
Texaco Inc. 15,000 1,380,000
Union Pacific Resources Group Inc. 165,000 4,620,000
Unocal Capital Trust
$3.125 Conv. Pfd. 111,600 5,914,800+
-----------
98,841,981
-----------
Financial -- 11.3%
Banking -- 6.3%
Associates First Capital Corp.
Ser. A 75,000 3,075,000
Federal Home Loan Mortgage Corp. 90,000 8,786,250
Investors Financial Services Corp. 160,000 4,120,000+
Mellon Bank Corp. 165,000 9,776,250
National City Corp. 80,000 3,370,000
Norwest Corp. 330,000 13,447,500
Peoples Heritage Financial Group 237,000 5,539,875+
Provident Bankshares Corp. 131,250 4,642,969+
Wachovia Corp. 210,000 10,395,000
Wilmington Trust Corp. 185,000 6,613,750+
-----------
69,766,594
-----------
6
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1996 (unaudited)
Prin. Amt.
or Shares Value(A)
Insurance -- 5.0%
AMBAC Inc. 199,800 $11,138,850
American International Group, Inc. 180,000 18,135,000
Lincoln National Corp. 140,000 6,142,500
Reinsurance Group of America, Inc. 199,900 8,770,613
Salomon Inc. 7.625% Exch. Notes
due 1999 (B) 375,000 10,500,000
-----------
54,686,963
Health Care -- 9.4%
Drugs -- 4.5%
Elan Corp., plc ADR (C) 460,000 13,742,500
Lilly (Eli) & Co. 169,200 10,913,400
Merck & Co., Inc. 190,000 13,371,250
SmithKline Beecham plc ADR 180,000 10,957,500
-----------
48,984,650
-----------
Medical Supplies and Services -- 4.9%
Abbott Laboratories 290,000 14,282,500
Allergan, Inc. 151,300 5,768,313
Beckman Instruments, Inc. 175,000 6,803,125
Integrated Health Services, Inc.
5.75% Conv. Sub. Debs. due 2001 $6,675,000 6,541,500
Integrated Health Services, Inc.
6% Conv. Sub. Debs. due 2003 $500,000 491,250
Life Technologies, Inc. 307,500 6,918,750+
MedPartners Inc. (C) 363,000 8,258,250
ONCOR, Inc. (C) 900,000 4,669,200
OPTION Care, Inc. (C) 71,500 473,688+
-----------
54,206,576
-----------
Technology -- 13.8%
Communication Equipment -- 3.6%
Ericsson (L.M.) Telephone Co. 4.25%
Conv. Sub. Debs. due 2000 $120,000 411,600+
Ericsson (L.M.) Telephone Co. ADR 440,000 11,165,000+
Motorola, Inc. LYONs due 2009 $650,000 625,625
Motorola, Inc. 160,000 8,240,000
Nokia Corp. Pfd. ADR 150,000 6,637,500
Northern Telecom Ltd. 215,000 12,416,250
-----------
39,495,975
-----------
Computer Related -- 6.9%
American Express Co. 6.25%
DECS due 1996 210,000 14,070,000
Computer Sciences Corp.(C) 136,000 10,455,000
DST Systems Inc. (C) 175,000 5,600,000
Electronic Data Systems Corp. 168,936 10,368,447
Keane, Inc. (C) 270,000 12,960,000
QuickResponse Services, Inc. (C) 218,000 8,120,500+
Sterling Software, Inc. (C) 195,000 14,893,125
-----------
76,467,072
-----------
Prin. Amt.
or Shares Value(A)
Electronics -- 3.3%
Intel Corp. 85,000 $ 8,112,230+
Itron, Inc. (C) 121,000 3,176,250+
Solectron Corp. (C) 240,000 11,760,000
Verifone, Inc. (C) 292,500 13,089,375
-----------
36,137,855
-----------
Transportation -- 4.2%
AMR Corp. (C) 57,000 4,538,625
Delta Air Lines, Inc. 150,071 10,805,112
Illinois Central Corp. 210,000 6,641,250
Ryder System, Inc. 500,000 14,812,500
Union Pacific Corp. 130,000 9,522,500
-----------
46,319,987
-----------
Utilities -- 12.5%
Electric And Gas Utilities-- 4.9%
Black Hills Corp. 300,600 7,778,025
CINergy Corp. 300,000 9,262,500
DPL Inc. 400,000 9,350,000
Empresa Nacional de
Electricidad, S.A. ADR 150,000 8,906,250
LG&E Energy Corp. 250,000 5,562,500
TECO Energy, Inc. 300,000 7,125,000
Washington Gas Light Co. 257,000 5,654,000
-----------
53,638,275
-----------
Telephone Utilities -- 7.6%
AT&T Co. 200,000 10,450,000
AirTouch Communications (C) 200,000 5,525,000
Ameritech Corp. 155,000 8,156,875
Bell Atlantic Corp. 100,000 5,987,500
BellSouth Corp. 220,000 8,140,000
First Chicago Corp. 5.50%
DECS due 1997 120,000 2,295,000
GTE Corp. 250,000 9,625,000
LCI International, Inc. (C) 300,000 9,525,000
MFS Communications Co. (C) 200,000 8,725,000+
SBC Communications Inc. 200,000 9,625,000
Tele Danmark A/S ADS 260,000 6,142,500
-----------
84,196,875
-----------
Other -- 0.1%
Stocks under accumulation 295,000
-----------
Total Stocks and Convertible
Securities
(Cost $596,021,800)(E) 966,174,133
-----------
7
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
September 30, 1996 (unaudited)
Prin. Amt. Value(A)
Short-Term Investments -- 12.5%
Certificates of Deposit -- 5.6%
Bank One, Akron, N.A.,
5.23%, due 10/24/96 $10,000,000 $10,000,000
Fifth Third Bank, Cincinnati,
5.25%, due 10/10/96 10,000,000 10,000,000
First Alabama Bank, Birmingham,
5.23%, due 10/3/96 6,445,000 6,445,000
Mercantile-Safe Deposit &
Trust Co., 5.45%,
due 10/3/96-10/10/96 10,000,000 10,000,000
Northern Trust Co., Chicago,
5.28%, due 10/31/96 5,180,000 5,180,000
SouthTrust Bank of Alabama,
5.24%, due 10/17/96 5,000,000 5,000,000
U.S. National Bank of Oregon,
5.30%, due 10/31/96 5,000,000 5,000,000
Wachovia Bank of Georgia N.A.,
5.28%, due 10/31/96 10,000,000 10,000,000
-----------
61,625,000
-----------
Commercial Paper -- 6.9%
Chevron Oil Finance Co.,
5.30%, due 10/17/96 4,021,000 4,011,250
Chevron UK Investment PLC,
5.34%, due 10/24/96 5,900,000 5,879,279
Prin. Amt. Value(A)
Coca-Cola Co.,
5.29%, due 10/24/96 $10,000,000 $ 9,965,209
Deere (John)Capital Corp.,
5.25-5.30%,
due 10/17/96-10/24/96 9,926,000 9,896,894
Disney (Walt) Co.,
5.25%, due 10/10/96 1,636,000 1,633,745
Ford Motor Credit Corp.,
5.33-5.34%, due 10/24/96 9,925,000 9,890,217
General Electric Capital Corp.,
5.25%, due 10/3/96 10,000,000 9,996,998
Penney (J.C.) Funding Corp.,
5.27%, due 10/3/96 10,000,000 9,996,986
PepsiCo, Inc.,
5.21-5.35%,
due 10/2/96-10/3/96 8,155,000 8,152,574
USAA Capital Corp.,
5.33%, due 10/16/96 6,030,000 6,016,274
--------------
75,439,426
--------------
Total Short-Term Investments
(Cost $137,064,426) 137,064,426
--------------
Total Investments
(Cost $733,086,226) 1,103,238,559
Cash, receivables and other
assets, less liabilities (3,888,483)
--------------
Net Assets -- 100.0% $1,099,350,076
==============
Notes:
(A) See note 1 to financial statements. Securities are listed on the New York
Stock Exchange, the American Stock Exchange or the Toronto Stock Exchange
except restricted securities and also those marked (+), which are traded
"Over-the-Counter."
(B) Restricted securities (Cemex, S.A. de C.V. 4.25% Conv. Sub. Debs. due 1997,
acquired 9/28/94, cost $4,053,999, Salomon Inc. 7.625% Exch. Notes due 1999,
acquired 5/8/96, cost $10,017,100).
(C) Presently non-dividend paying.
(D) Non-controlled affiliate.
(E) The aggregate market value of stocks held in escrow at September 30, 1996
covering open call contracts written was $15,577,500. In addition, the
required aggregate market value of securities segregated by the custodian to
collateralize open put option contracts written was $14,492,500.
HISTORICAL FINANCIAL STATISTICS
<TABLE>
<CAPTION>
Net Dividends Distributions
Asset from from
Common Value Net Investment Net Realized
Value of Shares per Income Gains
Dec. 31 Net Assets Outstanding Share per Share per Share
<S> <C>
1986........................... $ 468,344,507 24,004,882 $19.51 $.71 $3.74
1987........................... 427,225,965 26,833,998 15.92 .78 2.66
1988........................... 455,825,580 28,295,508 16.11 .50 1.32
1989........................... 550,091,129 29,982,939 18.35 .70 1.36
1990........................... 529,482,769 31,479,340 16.82 .66 1.06
1991........................... 661,895,779 32,747,497 20.21 .54 1.09
1992........................... 696,924,779 34,026,625 20.48 .46 1.16
1993........................... 840,610,252 42,497,665 19.78 .45 1.18
1994........................... 798,297,600 44,389,990 17.98 .50 1.10
1995........................... 986,230,914 46,165,517 21.36 .52 1.14
September 30, 1996 (unaudited) 1,099,350,076 46,165,517 23.81 .33 .03
</TABLE>
8
<PAGE>
PRINCIPAL CHANGES IN PORTFOLIO SECURITIES
During the Three Months Ended September 30, 1996 (unaudited)
<TABLE>
<CAPTION>
Shares
--------------------------------------------------
Held
Additions Reductions Sept. 30, 1996
------------- ------------ ----------------
<S> <C>
Delta Air Lines, Inc. 118,751(1) 150,071
Dover Corp. 34,200 34,200
Elan Corp. 230,000(2) 460,000
Intel Corp. 35,000 85,000
Interstate Bakeries Corp. 83,400 83,400
Investors Financial Services Corp. 110,000 160,000(3)
Itron, Inc. 121,000 121,000
Life Technologies, Inc. 102,500(2) 307,500
MFS Communications Co. 200,000 200,000
MedPartners Inc. 363,000(4) 363,000
Minnesota Mining & Manufacturing Co. 65,000 190,000
Norwest Corp. 40,000 330,000
Ryder Systems, Inc. 100,000 500,000
Salomon Inc. 7.625% Exch. Notes due 1999 35,000 375,000
Solectron Corp. 240,000 240,000
Union Pacific Resources Group Inc. 165,000 165,000
Unocal Capital Trust $3.125 Conv. Pfd. 111,600(5) 111,600
AMP Inc. 100,000 --
British Petroleum plc ADR 30,577 80,000
Consolidated Natural Gas Co. 115,800 --
Great Western Financial Corp. 425,000 --
Home Depot, Inc. 173,870 90,000
Houghton Mifflin Co. 42,500 175,400
International Flavors & Fragrances, Inc. 90,000 100,000
Keane, Inc. 130,000 270,000
Nabisco Holdings Corp. 50,000 --
Northern Telecom Ltd. 35,000 215,000
Royal Dutch Petroleum Co. 10,000 45,000
Sterling Software, Inc. 50,000 195,000
Texaco Inc. 74,000 15,000
Wells Fargo &Co. 20,000 --
Wisconsin Energy Corp. 129,000 --
- --------------------------------------------------------------------------------------------
</TABLE>
(1) Received .7605 shares for each share of Delta Air Lines, Inc. $3.50 Ser. C
Conv. Pfd., and purchased additional 10,000 shares.
(2) By stock split.
(3) Includes shares previously listed under "Stocks under Accumulation" in the
Schedule of Investments.
(4) Received 1.21 shares for each share of Caremark International Inc.
(5) Received 1.116 shares for each share of Unocal Corp. $3.50 Conv. Pfd.
9
<PAGE>
DIVIDEND PAYMENT SCHEDULE AND THE
AUTOMATIC DIVIDEND REINVESTMENT PLAN
The Company presently pays dividends four times a year, as follows: (a) Three
interim investment income dividends on or about March, June and September 1st.
(b) A "year-end" payment consisting of the estimated balance of the net
investment income for the year and the net realized capital gain earned through
October 31st, payable in late December. Stockholders may elect to receive this
payment in stock or cash. In connection with this payment, all stockholders of
record are sent a dividend announcement notice and an election card in
mid-November. The following options are available:
(1) Full shares of stock for the combined income dividend and capital gain
distribution to the extent possible.
(2) Full shares of stock for the capital gain distribution to the extent
possible. Fractional shares and the income dividend are paid in cash. Without a
timely response, stockholders will be paid in accordance with this option.
(3) Both the income dividend and capital gain distribution in cash.
Stockholders holding shares in "street" or brokerage accounts may make one of
the above elections by notifying their brokerage house representative.
Stockholders of record of Adams stock have two additional ways to increase their
investment in the Company.
The Bank of New York's Automatic Dividend Reinvestment Plan provides that its
participants' four distributions are automatically invested in additional shares
of Adams common stock. New shares acquired are held on a book basis by the Bank.
Additionally, after the participants' first dividend is reinvested, they are
eligible to make cash payments in any amount from $25.00.
The Bank provides participants with reinvestment confirmations after each
dividend or cash payment. The Bank's fee for this service is 10% of the amount
received up to a maximum of $2.50 for the interim dividend payments and cash
payments. There is no charge for the "year-end" distribution.
The Bank's plan also provides for the deposit of certificate shares into the
participant's "book share" account for a one-time charge of $5.00.
A brochure and enrollment card may be obtained by calling the Bank at (800)
432-8224 or by writing to:
The Bank of New York
Dividend Reinvestment
P.O. Box 11258
Church Street Station
New York, NY 10277
Common Stock
Listed on the New York Stock Exchange
and the Pacific Stock Exchange
Transfer Agent, Registrar & Custodian of Securities
The Bank of New York
101 Barclay Street, 11E
New York, NY 10007
The Bank's Shareholder Relations Department: (800) 432-8224
The Company Office Address: Seven St. Paul Street,
Suite 1140, Baltimore, MD 21202
The Company Office Telephone: (410) 752-5900 or (800) 638-2479
Counsel: Chadbourne & Parke L.L.P.
Independent Accountants: Coopers & Lybrand L.L.P.
10
<PAGE>
THE ADAMS EXPRESS COMPANY
Board of Directors
Enrique R. Arzac(3,4) Augustine R. Marusi(1,3)
Leigh Carter(1,3) W. Perry Neff(1,4)
Allan Comrie(2,4) Douglas G. Ober(1)
Daniel E. Emerson(1,3) Landon Peters(1,3)
Thomas H. Lenagh(2,4) John J. Roberts
W.D. MacCallan(2,4) Robert J.M. Wilson(1,2)
1. Member of Executive Committee
2. Member of Audit Committee
3. Member of Compensation Committee
4. Member of Retirement Committee
Officers
Douglas G. Ober Chairman and
Chief Executive Officer
Joseph M. Truta President
Richard F. Koloski Executive Vice President
Joan E. Sinclair Vice President--Research
Richard B. Tumolo Vice President--Research
Simeon F. Wooten, III Vice President--Research
J. G. Whitney Vice President and Secretary
Maureen A. Jones Treasurer
R. M. Carlsson Assistant Treasurer
Geraldine H. Stegner Assistant Secretary
Stock Data
Price (9/30/96) $20.125
Net Asset Value (9/30/96) $23.81
Discount: 15.5%
New York Stock Exchange and Pacific Stock Exchange ticker symbol: ADX
Newspaper stock listings are generally under the abbreviation: AdaEx
Distributions in 1996
From Investment Income $0.33
From Net Realized Gains 0.03
Total $0.36
1996 Dividend Payment Dates
March 1, 1996
June 1, 1996
September 1, 1996
December 27, 1996*
*Anticipated
[Recycled logo] Printed on recycled paper
THIRD QUARTER REPORT
September 30, 1996
[Adams Express Company Logo][Registration symbol]
BUILDING FOR THE FUTURE
WITH SOLID INVESTMENTS[Registration symbol]
