<PAGE>
Letter to Stockholders
- -------------------------------------------------------------------------------
We are pleased to submit the financial statements for the nine months ended
September 30, 1999. In addition, a schedule of investments and summary finan-
cial information for the Company are provided.
Financial Summary
Net assets of the Company at September 30, 1999 were $33.89 per share, com-
pared with $32.54 per share at December 31, 1998, on the 51,876,651 shares
outstanding on each date. On March 1, 1999, a distribution of $0.12 per share
was paid consisting of $0.06 from 1998 long-term capital gain, $0.01 from 1998
investment income and $0.05 from 1999 investment income. All are taxable in
1999. Regular 1999 investment income dividends of $0.12 per share were paid on
June 1, 1999 and September 1, 1999.
Net investment income for the nine months ended September 30, 1999 amounted to
$15,236,955, compared with $17,006,249 for the same period in 1998. These
earnings are equal to $0.29 and $0.34 per share, respectively, on the average
number of shares outstanding during each period.
Net capital gain realized on investments for the nine months ended September
30, 1999 amounted to $112,780,023, the equivalent of $2.17 per share.
Performance
As noted on page 6 of this report, the Company realized a total investment re-
turn on its net asset value (with reinvestment of income and capital gains
distributions) of 5.5% in the nine months ended September 30, 1999. The return
on the market price of our stock was 8.9%, due to the narrowing of the dis-
count of the market price from the net asset value. Both of these figures com-
pare favorably to the 5.4% return of the Standard & Poor's 500 Composite In-
dex. The chief reason for our good relative performance is the selection of
stocks in the communications services and technology segments of the portfo-
lio. The bulk of the other sector holdings performed on par with the index,
with our health care holdings comparing less favorably.
Year 2000 Readiness Disclosure
As the countdown continues to the Year 2000, the Company, along with other in-
vestment companies and financial institutions, could be adversely affected if
computer systems and embedded technology do not properly process and calculate
date-related information relating to Year 2000 ("Y2K"). The Company's Y2K
project team has completed testing of in-house hardware and software systems
and, based on the testing results, anticipates being Year 2000 ready. Addi-
tionally, the companies whose securities are in the Company's portfolio hold-
ings have been surveyed to determine their Y2K readiness. The results of these
surveys indicate the majority of the companies have advised us that they are
Y2K ready and all anticipate being Y2K ready by the last quarter of 1999. The
Company's custodian and transfer agent, The Bank of New York, has confirmed
that it will also be Year 2000 ready. The Company has incurred no significant
costs relating to the Year 2000 issue. Despite these efforts, there is no as-
surance that any adverse impact on the Company will be avoided.
Fund Reports
In a letter included with your June 30, 1999 report, we noted the decision by
Morningstar to discontinue its printed reports on closed-end funds, including
Adams Express, and invited your assistance in our effort to dissuade them from
doing so. We were most pleased with your support, as exemplified by copies of
letters, faxes, and e-mails sent to Morningstar. They have not relented, how-
ever, as it is their strategy to eventually become completely Internet-based.
Morningstar's reports on Adams Express and other closed-end funds are avail-
able only at Morningstar's website [www.morningstar.com].
<PAGE>
Letter to Stockholders (continued)
- -------------------------------------------------------------------------------
Spread the Word
Research has indicated that a significant number of Adams Express shareholders
learned about the Company and its investment record by word of mouth from a
friend or family member. To assist us in "getting the word out," we have en-
closed a postage-paid card which you may complete and return to us so that we
may send a package of information to someone you know.
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
Douglas G. Ober, /s/ Joseph M. Truta
Joseph M. Truta,
Chairman and Chief
Executive Officer President
October 22, 1999
2
<PAGE>
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
September 30, 1999 (unaudited)
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $820,150,748) $1,644,016,097
Non-controlled affiliate, Petroleum &
Resources Corporation
(cost $22,153,015) 38,734,586
Short-term investments (cost $68,342,555) 68,342,555 $1,751,093,238
- --------------------------------------------------------------
Cash 183,259
Securities lending collateral 204,374,082
Receivables:
Investment securities sold 7,207,952
Dividends and interest 1,498,837
Prepaid expenses and other assets 5,514,285
- -----------------------------------------------------------------------------
Total Assets 1,969,871,653
- -----------------------------------------------------------------------------
Liabilities
Investment securities purchased 1,717,095
Open option contracts at value (proceeds
$1,186,796) 1,670,963
Obligations to return securities lending
collateral 204,374,082
Accrued expenses 3,864,769
- -----------------------------------------------------------------------------
Total Liabilities 211,626,909
- -----------------------------------------------------------------------------
Net Assets $1,758,244,744
=============================================================================
Net Assets
Common Stock at par value $1.00 per share,
authorized 75,000,000 shares; issued and
outstanding 51,876,651 shares $ 51,876,651
Additional capital surplus 751,569,658
Undistributed net investment income 1,598,141
Undistributed net realized gain on investments 113,237,541
Unrealized appreciation on investments 839,962,753
- -----------------------------------------------------------------------------
Net Assets Applicable to Common Stock $1,758,244,744
=============================================================================
Net Asset Value Per Share of Common Stock $33.89
=============================================================================
</TABLE>
*See Schedule of Investments on pages 7 through 9.
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
Statement of Operations
- ---------------------------------------------------------------------------
Nine Months Ended September 30, 1999 (unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $13,413,824
From non-controlled affiliate 572,785
Interest 4,525,091
- ---------------------------------------------------------------------------
Total income 18,511,700
- ---------------------------------------------------------------------------
Expenses:
Investment research 1,344,522
Administration and operations 723,375
Directors' fees 134,750
Reports and stockholder communications 216,121
Transfer agent, registrar and custodian expenses 303,724
Auditing services 40,757
Legal services 32,044
Occupancy and other office expenses 235,259
Travel, telephone and postage 88,744
Other 155,449
- ---------------------------------------------------------------------------
Total expenses 3,274,745
- ---------------------------------------------------------------------------
Net Investment Income 15,236,955
- ---------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on
Investments
Net realized gain on security transactions 112,665,466
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 114,557
Change in unrealized appreciation on investments (39,176,981)
- ---------------------------------------------------------------------------
Net Gain on Investments 73,603,042
- ---------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $88,839,997
===========================================================================
</TABLE>
Statement of Changes in Net Assets
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Year Ended
Ended Sept. 30, 1999 Dec. 31, 1998
-------------------- -------------
(unaudited)
<S> <C> <C>
From Operations:
Net investment income $ 15,236,955 $ 22,579,513
Net realized gain on investments 112,780,023 82,933,498
Change in unrealized appreciation on
investments (39,176,981) 213,960,698
- ---------------------------------------------------------------------------------
Change in net assets resulting from
operations 88,839,997 319,473,709
- ---------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (15,562,990) (22,477,158)
Net realized gain from investment
transactions (3,112,599) (82,416,244)
- ---------------------------------------------------------------------------------
Decrease in net assets from distributions (18,675,589) (104,893,402)
- ---------------------------------------------------------------------------------
From Capital Share Transactions:
Value of common shares issued in payment
of optional distributions -0- 49,329,604
- ---------------------------------------------------------------------------------
Total Increase in Net Assets 70,164,408 263,909,911
Net Assets:
Beginning of period 1,688,080,336 1,424,170,425
- ---------------------------------------------------------------------------------
End of period (including undistributed net
investment
income of $1,598,141 and $1,924,176,
respectively) $1,758,244,744 $1,688,080,336
=================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<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 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. 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 September 30, 1999 was $911,830,118, and net
unrealized appreciation aggregated $840,449,918 of which the related gross
unrealized appreciation and depreciation were $909,824,633 and $69,374,715,
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 nine months ended September 30, 1999 were $241,656,116
and $286,216,450, 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 September 30, 1999. All investment deci-
sions 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, 1999.
The Company has 10,000,000 authorized and 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. 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 1999, 254,301 options
were outstanding, with a weighted average exercise price of $13.2803 per
share. During the nine months ended September 30, 1999, the Company granted
options including stock appreciation rights for 25,859 shares of common stock
with a weighted average exercise price of $26.294. Stock appreciation rights
relating to 27,110 stock option shares were exercised at a weighted average
market price of $27.7618 per share and the stock options relating to those
rights, which had a weighted average exercise price of $12.9101 per share,
were cancelled. At September 30, 1999, there were outstanding exercisable op-
tions to purchase 55,063 common shares at $8.740-$23.665 per share (weighted
average price of $11.553), and unexercisable options to purchase 197,987 com-
mon shares at $10.0550-$26.2525 per share (weighted average price of
$15.4315). The weighted average remaining contractual life of outstanding ex-
ercisable and unexercisable options is 4.7225 years and 6.1041 years, respec-
tively. Total compensation expense recognized for the nine months ended Sep-
tember 30, 1999 related to the stock options and stock appreciation rights
plan was $585,319. At September 30, 1999, there were 906,219 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 primarily of investments in mutual funds.
The actuarially computed net pension cost credit for the nine months ended
September 30, 1999 was $404,913, and consisted of service cost of $141,405,
interest cost of $222,810, expected return on plan assets of $640,545, and net
amortization credit of $128,583.
In determining the actuarial present value of the projected benefit obliga-
tion, the interest rate used for the weighted average discount rate was 6.75%,
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%.
On January 1, 1999, the projected benefit obligation for service rendered to
date was $4,501,469. During the nine months ended September 30, 1999, the pro-
jected benefit obligation increased due to service cost and interest cost of
$141,405 and $222,809, respectively, and decreased due to benefit payments
5
<PAGE>
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
in the amount of $150,437. The projected benefit obligation at September 30,
1999 was $4,715,246.
On January 1, 1999, the actual fair value of plan assets was $10,776,045. Dur-
ing the nine months ended September 30, 1999, the fair value of plan assets
increased due to the expected return on plan assets of $640,546 and decreased
due to benefit payments in the amount of $150,437. At September 30, 1999, the
projected fair value of plan assets amounted to $11,266,154 which resulted in
excess plan assets of $6,550,908. The remaining components of prepaid pension
cost at September 30, 1999 included $1,901,497 in unrecognized net gain,
$682,039 in unrecognized prior service cost and $215,825 is the remaining por-
tion 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 Sep-
tember 30, 1999 was $5,115,625.
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 September 30, 1999 for employees
and former employees of the Company was $3,684,073. Aggregate remuneration
paid or accrued during the nine months ended September 30, 1999 to officers
and directors amounted to $1,621,229.
Research, accounting and other office services provided to and reimbursed by
the Company's non-controlled affiliate, Petroleum & Resources Corporation,
amounted to $287,073 for the nine months ended September 30, 1999.
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 September 30, 1999, the Company had securities on loan of
$198,576,238 and held collateral of $204,374,082.
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
------------------------
(unaudited)
Year Ended December 31
Sept. 30, Sept. 30, -------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period $32.54 $28.51 $28.51 $23.71 $21.36 $17.98 $19.78
- --------------------------------------------------------------------------------------------------------------------------
Net investment
income 0.29 0.34 0.45 0.43 0.52 0.50 0.51
Net realized gains and change in
unrealized appreciation and other
changes 1.42 (0.04) 5.68 6.33 3.55 4.54 (0.71)
- --------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.71 0.30 6.13 6.76 4.07 5.04 (0.20)
Less
distributions
Dividends from net investment income (0.30) (0.31) (0.45) (0.44) (0.52) (0.52) (0.50)
Distributions from net realized gains (0.06) (0.05) (1.65) (1.52) (1.20) (1.14) (1.10)
- --------------------------------------------------------------------------------------------------------------------------
Total
distributions (0.36) (0.36) (2.10) (1.96) (1.72) (1.66) (1.60)
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $33.89 $28.45 $32.54 $28.51 $23.71 $21.36 $17.98
==========================================================================================================================
Per share market price, end of period $28.625 $23.125 $26.625 $24.1875 $19.75 $18.50 $15.625
Total Investment Return
Based on market
price 8.9% (3.1)% 19.3% 33.1% 16.4% 29.5% (3.7)%
Based on net
asset value 5.5% 1.2% 23.7% 30.7% 21.0% 29.9% 0.1%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $1,758,245 $1,420,909 $1,688,080 $1,424,170 $1,138,760 $986,231 $798,298
Ratio of expenses to average net assets 0.25%+ 0.19%+ 0.22% 0.39% 0.34% 0.46% 0.33%
Ratio of net investment income to
average net
assets 1.16%+ 1.51%+ 1.48% 1.61% 2.30% 2.51% 2.65%
Portfolio
turnover 17.24%+ 19.18%+ 22.65% 17.36% 19.60% 23.98% 19.23%
Number of shares outstanding at
end of period (in 000's) 51,877 49,949 51,877 49,949 48,037 46,166 44,390
</TABLE>
- --------
+ Ratios presented on an annualized basis.
6
<PAGE>
Schedule of Investments
- --------------------------------------------------------------------------------
September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Stocks And Convertible Securities -- 95.7%
Basic Materials -- 2.4%
Avery Dennison Corp. 217,200 $ 11,457,300
Consolidated Papers, Inc. 410,000 11,018,750
Engelhard Corp. 300,000 5,475,000
Mead Corp. 400,000 13,750,000
------------
41,701,050
------------
Capital Goods -- 8.4%
Black & Decker Corp. 300,000 13,706,250
Corning, Inc. 460,000 31,538,750
Dover Corp. 260,000 10,627,500
General Electric Co. 655,000 77,658,438
Pall Corp. 600,000 13,912,500
------------
147,443,438
------------
Communication Services -- 12.2%
Telecommunications -- Cellular and Wireless -- 3.6%
MediaOne Group, Inc.
6.25% PIES due 2001 85,000 8,919,688
Nextel Communications Inc. (B) 600,000 40,687,500
Vodafone AirTouch plc ADS 57,500 13,670,625
------------
63,277,813
------------
Telecommunications -- Long Distance -- 3.3%
MCI WorldCom, Inc. (B) 410,000 29,468,750
Qwest Communications International, Inc.
5.75% TRENDS Pfd.
due 2003 (C) 125,000 6,125,000
Qwest Communications International, Inc. (B) 792,012 23,413,855
------------
59,007,605
------------
Telephone -- 5.3%
Ameritech Corp. 310,000 20,692,500
BellSouth Corp. 440,000 20,020,000
Global Crossing Ltd. 922,500 24,446,250
SBC Communications Inc. 380,000 19,403,750
Time Warner Telecom Inc. (B) 379,500 7,922,062
------------
92,484,562
------------
Consumer -- 10.4%
Consumer Cyclical -- 2.1%
Albertson's Inc. 308,700 12,212,944
Delphi Automotive, Inc. 660,000 10,601,250
Polo Ralph Lauren Corp. (B) 135,000 2,421,562
Tiffany & Co. 200,000 11,987,500
------------
37,223,256
------------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Consumer Staples -- 8.3%
CBRL Group, Inc. 340,000 $ 5,270,000
Coca-Cola Co. 170,000 8,202,500
Dean Foods Co. 300,000 13,068,750
Fort James Corp. 575,000 15,345,312
Gillette Co. 439,120 14,902,635
Houston Industries Inc.
7.00% conv. DECS due 2000 150,000 15,300,000
Interstate Bakeries Corp. 138,000 3,174,000
Ivex Packaging Corp. (B) 600,000 6,000,000
McDonald's Corp. 560,000 24,220,000
MediaOne Group, Inc. (B) 150,000 10,246,875
Owens-Illinois, Inc. (B) 610,000 12,085,625
PepsiCo, Inc. 295,000 8,997,500
Ralston Purina
7.00% SAILS due 2000 180,000 8,460,000
-----------
145,273,197
-----------
Energy -- 7.0%
BP Amoco plc ADR 150,000 16,621,875
Enron Corp. 500,000 20,531,250
Mobil Corp. 120,000 12,090,000
Petroleum & Resources
Corporation (D) 1,145,570 38,734,586
Royal Dutch Petroleum Co. 180,000 10,631,250
Schlumberger Ltd. 88,400 5,508,425
Williams Companies, Inc. 500,000 18,812,500
-----------
122,929,886
-----------
Financial -- 14.4%
Banking -- 9.0%
Associates First Capital Corp.
Ser. A 546,800 19,684,800
Bank One Corp. 330,000 11,488,125
Federal Home Loan Mortgage Corp. 360,000 18,720,000
Greenpoint Financial Corp. 425,000 11,289,062
Investors Financial Services Corp. 480,000 16,500,000
Mellon Bank Corp. 420,000 14,122,500
National City Corp. 160,000 4,270,000
Peoples Heritage Financial Group 474,000 7,880,250
Provident Bankshares Corp. 303,875 6,466,865
Wachovia Corp. 190,000 14,938,750
Wells Fargo & Co. 550,000 21,793,750
Wilmington Trust Corp. 210,000 10,198,125
-----------
157,352,227
-----------
</TABLE>
7
<PAGE>
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Insurance -- 5.4%
AMBAC Financial Group, Inc. 379,600 $ 17,983,550
American International Group, Inc. 506,250 44,012,110
Annuity & Life Re (Holdings), Ltd. 700,000 17,412,500
Financial Security Assurance Holdings Ltd. 307,387 15,888,066
------------
95,296,226
------------
Health Care -- 11.0%
Drugs -- 9.2%
ALZA Corp. (B) 340,000 14,556,250
American Home Products Corp. 460,000 19,090,000
Baxter International 255,000 15,363,750
Chiron Corp. (B) 550,000 15,228,125
Elan Corp., plc ADR (B) 870,000 29,199,375
Lilly (Eli) & Co. 290,000 18,614,375
Merck & Co., Inc. 300,000 19,443,750
Pharmacia & Upjohn Inc. 300,000 14,887,500
SmithKline Beecham plc ADR 260,000 14,982,500
------------
161,365,625
------------
Medical Supplies and Services -- 1.8%
Abbott Laboratories 430,000 15,775,625
American Retirement Corp.. 5.75% Conv. Sub. Debs. due
2002 $4,000,000 2,880,000
American Retirement Corp. (B) 151,100 1,482,669
Integrated Health Services, Inc. 5.75% Conv. Sub.
Debs. due 2001 $1,375,000 137,500
Sunrise Assisted Living, Inc. (B) 440,000 11,687,500
------------
31,963,294
------------
Technology -- 25.4%
Communication Equipment -- 7.5%
Ericsson (L.M.) Telephone Co. 4.25% Conv. Sub. Debs.
due 2000 $120,000 1,012,500
Ericsson (L.M.) Telephone Co. ADR 750,000 23,437,500
Lucent Technologies Inc. 170,000 11,028,750
Motorola, Inc. 161,874 14,244,912
Nokia Corp. ADR 485,000 43,589,375
Nortel Networks Corp. 760,000 38,760,000
------------
132,073,037
------------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Computer Related -- 12.3%
Cisco Systems, Inc. (B) 917,500 $ 62,906,094
DST Systems Inc. (B) 319,000 18,143,125
First Data Corp. 343,980 15,092,123
Hewlett-Packard Co. 200,000 18,150,000
International Network Services (B) 400,000 21,750,000
Oracle Corp. (B) 280,000 12,740,000
QRS Corp. (B) 502,500 32,222,813
Sapient Corp. (B) 270,000 25,447,500
Sterling Commerce, Inc. (B) 575,000 10,673,437
--------------
217,125,092
--------------
Electronics -- 5.6%
Intel Corp. 340,000 25,266,250
Solectron Corp. (B) 1,010,000 72,530,625
--------------
97,796,875
--------------
Transportation -- 0.8%
Canadian National Railway Co. 5.25% Conv. Pfd. QUIDS
due 2029 15,000 775,312
Canadian National Railway Co. 60,000 1,818,750
Ryder System, Inc. 600,000 12,225,000
--------------
14,819,062
--------------
Utilities -- 3.7%
Black Hills Corp. 555,000 12,938,438
CINergy Corp. 300,000 8,493,750
ENDESA, S.A. ADR 350,000 6,693,750
Northwestern Corp. 500,000 11,375,000
TECO Energy, Inc. 300,000 6,337,500
United Water Resources Inc. 600,000 19,575,000
--------------
65,413,438
--------------
Other -- 0.0%
Stocks under accumulation 205,000
--------------
Total Stocks and Convertible Securities
(Cost $842,303,763)(E) 1,682,750,683
--------------
</TABLE>
8
<PAGE>
Schedule of Investments (continued)
- -------------------------------------------------------------------------------
September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Short-Term Investments -- 3.9%
U.S. Government Obligations -- 0.9%
U.S. Treasury Bills,
4.85%, due 11/26/99 $16,000,000 $15,879,332
-----------
Certificates of Deposit -- 1.4%
Northern Trust Co., Chicago, 5.35%, due 12/27/99 10,000,000 10,000,000
Old Kent Bank & Trust Co., 5.26%, due 12/27/99 10,000,000 10,000,000
SouthTrust Bank of Alabama,
5.28%, due 10/19/99 5,000,000 5,000,000
-----------
25,000,000
-----------
Commercial Paper -- 1.6%
Chevron UK Investments plc, 5.30%, due 10/12/99 1,875,000 1,871,964
Chevron USA,
5.29%, due 10/28/99 8,125,000 8,092,764
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Ford Motor Credit Corp.,
5.29-5.30%,
due 10/7/99-10/26/99 $8,410,000 $ 8,396,963
General Electric Capital Corp., 5.28-5.30%,
due 10/14/99-11/4/99 9,130,000 9,101,532
--------------
27,463,223
--------------
Total Short-Term Investments
(Cost $68,342,555) 68,342,555
--------------
Total Investments
(Cost $910,646,318) 1,751,093,238
Cash, receivables and other assets, less liabilities 7,151,506
--------------
Net Assets -- 100.0% $1,758,244,744
==============
</TABLE>
- -------------------------------------------------------------------------------
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) Presently non-dividend paying.
(C) Restricted security (Qwest Communications International, Inc. 5.75% TRENDS
Pfd. due 2003, acquired 12/4/98, cost $5,218,750).
(D) Non-controlled affiliate.
(E) The aggregate market value of stocks held in escrow at September 30, 1999
covering open call option contracts written was $12,916,875. In addition,
the aggregate market value of securities segregated by the custodian re-
quired to collateralize open put option contracts written was $14,996,000.
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> <C> <C> <C> <C>
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
1996.................... 1,138,760,396 48,036,528 23.71 .52 1.20
1997.................... 1,424,170,425 49,949,239 28.51 .44 1.52
1998.................... 1,688,080,336 51,876,651 32.54 .45 1.65
Sept. 30, 1999
(unaudited) ........... 1,758,244,744 51,876,651 33.89 .30 .06
</TABLE>
- --------
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.
9
<PAGE>
Principal Changes in Portfolio Securities
- --------------------------------------------------------------------------------
During the Three Months Ended September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Shares or Principal Amount
--------------------------------------------
Held
Additions Reductions Sept. 30, 1999
--------- ---------- --------------
<S> <C> <C> <C>
American International Group,
Inc............................. 101,250(/1/) 506,250
Avery Dennison Corp. ............ 127,200 217,200
Black & Decker Corp. ............ 94,900 300,000
Engelhard Corp. ................. 300,000 300,000
Enron Corp. ..................... 250,000(/1/) 500,000
Global Crossing, Ltd. ........... 922,500(/2/) 922,500
National City Corp. ............. 80,000(/1/) 160,000
Nortel Networks Corp. ........... 380,000(/1/) 760,000
Owens-Illinois, Inc. ............ 310,000 610,000
Oracle Corp. .................... 280,000 280,000
QRS Corp. ....................... 178,750(/1/) 33,750 502,500
Sapient Corp. ................... 270,000 270,000
Time Warner Telecom Inc. ........ 159,500 379,500
Tiffany & Co. ................... 100,000(/1/) 5,000 200,000
American Home Products Corp. .... 70,000 460,000
Chiron Corp. .................... 200,000 550,000
Delta Air Lines, Inc. ........... 109,100 --
Dillard's Inc. .................. 120,000 --
DST Systems Inc. ................ 41,000 319,000
Frontier Corp. .................. 450,000(/2/) --
FDX Corp. ....................... 260,000 --
Integrated Health Services, Inc.
5.75% Conv. Sub. Debs. due
2001............................ $5,300,000 $1,375,000
Nokia Corp. ADR.................. 55,000 485,000
Procter & Gamble Co. ............ 100,000 --
Reinsurance Group of America,
Inc. ........................... 449,775 --
</TABLE>
- --------
(1) By stock split.
(2) Received 2.05 shares of Global Crossing, Ltd. for each share of Frontier
Corp. held.
------------------
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: [email protected]
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: [email protected]
10
<PAGE>
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.
<TABLE>
<S> <C>
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
</TABLE>
<TABLE>
<S> <C>
Reinvestment of Dividends**
Service Fee 10% of amount invested
(maximum of $2.50 per investment)
</TABLE>
<TABLE>
<S> <C>
Brokerage Commission $0.05 per share
</TABLE>
<TABLE>
<S> <C>
Sale of Shares
Service Fee $10.00
Brokerage Commission $0.05 per share
</TABLE>
<TABLE>
<S> <C>
Deposit of Certificates for safekeeping Included
</TABLE>
<TABLE>
<S> <C>
Book to Book Transfers Included
</TABLE>
To transfer shares to another participant or to a new participant
Fees are subject to change at any time.
<TABLE>
<S> <C>
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
</TABLE>
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 this 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:
[email protected]
*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
<PAGE>
The Adams Express Company
- --------------------------------------------------------------------------------
Board of Directors
Enrique R. Arzac/1/,/3/ W. Perry Neff/1/,/3/
Allan Comrie/1/,/2/ Douglas G. Ober/1/
Daniel E. Emerson/2/,/4/ Landon Peters/2/,/4/ [ADAMS LOGO]
Thomas H. Lenagh/3/,/4/ John J. Roberts/1/,/4/
W.D. MacCallan/1/,/3/ Robert J.M. Wilson/2/,/4/
1. Member of Executive Committee
2. Member of Audit Committee Third Quarter Report
3. Member of Compensation Committee ----------------------
4. Member of Retirement Committee September 30, 1999
Officers
Douglas G. Ober Chairman and
Chief Executive Officer
Joseph M. Truta President
Richard F. Koloski Executive Vice President
Barbara L. Rishel Vice President--Research
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. Griffith Assistant Treasurer
Geraldine H. Stegner Assistant Secretary
----------
Stock Data
----------
Price (9/30/99) $28.625
Net Asset Value (9/30/99) $33.89
Discount: 15.5%
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 1999
---------------------
From Investment Income $0.30
From Net Realized Gains 0.06
-----
Total $0.36
=====
---------------------------
1999 Dividend Payment Dates
---------------------------
March 1, 1999
June 1, 1999
September 1, 1999
December 27, 1999* building for the future
*Anticipated with solid investments
<PAGE>
The Adams Express Company
The Right Choice for Over Seventy Years
If you think Adams Express is a good investment,
help us spread the word to your family and friends.
Please send an investor packet to:
---------------------- ------------------------------------
Name Your Name (optional)
---------------------- ------------------------------------
Address Address
---------------------- ------------------------------------
---------------------- ------------------------------------
Telephone Telephone
<PAGE>
------------------
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
------------------
--------------------------------------------------
BUSINESS REPLY MAIL
FIRST-CLASS MAIL PERMIT NO. 1947 BALTIMORE, MD
--------------------------------------------------
POSTAGE WILL BE PAID BY ADDRESSEE
THE ADAMS EXPRESS COMPANY
INVESTOR RELATIONS
7 ST. PAUL STREET, SUITE 1140
BALTIMORE, MD 21202-1637
