<PAGE>
Letter to Stockholders
- -------------------------------------------------------------------------------
We are pleased to submit the financial statements for the three months ended
March 31, 2000. In addition, a schedule of investments and summary financial
information for the Company are provided.
Net assets of the Company at March 31, 2000 were $43.30 per share on
53,204,227 shares outstanding, compared with $40.28 per share at December 31,
1999, on 53,894,827 shares outstanding. On March 1, 2000, a distribution of
$0.12 per share was paid consisting of $0.07 from 1999 long-term capital gain
and $0.05 from 2000 investment income. All are taxable in 2000. A 2000 invest-
ment income dividend of $0.12 per share has been declared to shareholders of
record May 19, 2000, payable June 1, 2000.
Net investment income for the three months ended March 31, 2000 amounted to
$3,425,653, compared with $4,955,572 for the same period in 1999. These earn-
ings are equal to $0.06 and $0.10 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,
2000 amounted to $63,880,311, the equivalent of $1.20 per share.
----------------------
We are pleased to announce the election of Dr. Susan C. Schwab to the Board of
Directors, effective January 13, 2000. Dr. Schwab is currently the Dean of the
School of Public Affairs at the University of Maryland, College Park, Mary-
land.
The Annual Meeting, held on March 28, 2000 in Palm Beach, Florida, was well
attended by shareholders. Upon conclusion of the formal segment of the meet-
ing, management reviewed the portfolio's performance in 1999 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 President
Executive Officer
April 21, 2000
<PAGE>
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
March 31, 2000 (unaudited)
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $827,538,116) $2,201,860,781
Non-controlled affiliate, Petroleum &
Resources Corporation
(cost $24,134,839) 43,563,060
Short-term investments (cost $66,075,823) 66,075,823 $2,311,499,664
- --------------------------------------------------------------
Cash 100,353
Securities lending collateral 504,246,747
Receivables:
Investment securities sold 173,482
Dividends and interest 1,469,741
Prepaid expenses and other assets 6,286,342
- -----------------------------------------------------------------------------
Total Assets 2,823,776,329
- -----------------------------------------------------------------------------
Liabilities
Investment securities purchased 7,625,596
Open option contracts at value (proceeds
$767,774) 601,637
Obligations to return securities lending
collateral 504,246,747
Accrued expenses 7,742,905
- -----------------------------------------------------------------------------
Total Liabilities 520,216,885
- -----------------------------------------------------------------------------
Net Assets $2,303,559,444
- -----------------------------------------------------------------------------
Net Assets
Common Stock at par value $1.00 per share,
authorized 150,000,000 shares; issued and
outstanding 53,204,227 shares $ 53,204,227
Additional capital surplus 791,128,351
Undistributed net investment income 1,255,447
Undistributed net realized gain on investments 64,054,396
Unrealized appreciation on investments 1,393,917,023
- -----------------------------------------------------------------------------
Net Assets Applicable to Common Stock $2,303,559,444
- -----------------------------------------------------------------------------
Net Asset Value Per Share of Common Stock $43.30
- -----------------------------------------------------------------------------
</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
- --------------------------------------------------------------------------------
Three Months Ended March 31, 2000 (unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 4,822,723
From non-controlled affiliate 84,706
Interest 1,199,262
- ---------------------------------------------------------------------------
Total income 6,106,691
- ---------------------------------------------------------------------------
Expenses:
Investment research 1,479,870
Administration and operations 663,004
Directors' fees 52,500
Reports and stockholder communications 156,007
Transfer agent, registrar and custodian expenses 95,666
Auditing services 13,941
Legal services 37,796
Occupancy and other office expenses 76,836
Travel, telephone and postage 32,276
Other 73,142
- ---------------------------------------------------------------------------
Total expenses 2,681,038
- ---------------------------------------------------------------------------
Net Investment Income 3,425,653
- ---------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on
Investments
Net realized gain on security transactions 63,723,000
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 157,311
Change in unrealized appreciation on investments 95,254,337
- ---------------------------------------------------------------------------
Net Gain on Investments 159,134,648
- ---------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $162,560,301
- ---------------------------------------------------------------------------
</TABLE>
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Year Ended
Ended March 31, 2000 Dec. 31, 1999
-------------------- -------------
(unaudited)
<S> <C> <C>
From Operations:
Net investment income $ 3,425,653 $ 19,143,783
Net realized gain on investments 63,880,311 106,820,166
Change in unrealized appreciation on
investments 95,254,337 419,522,952
- ---------------------------------------------------------------------------------------
Increase in net assets resulting from
operations 162,560,301 545,486,901
- ---------------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (2,672,629) (20,231,884)
Net realized gain from investment
transactions (3,741,681) (106,865,901)
- ---------------------------------------------------------------------------------------
Decrease in net assets from distributions (6,414,310) (127,097,785)
- ---------------------------------------------------------------------------------------
From Capital Share Transactions:
Value of common shares issued in payment
of optional distributions -0- 65,780,453
Cost of common shares purchased (note 4) (23,388,422) (1,448,030)
- ---------------------------------------------------------------------------------------
Change in net assets from capital share
transactions (23,388,422) 64,332,423
- ---------------------------------------------------------------------------------------
Total Increase in Net Assets 132,757,569 482,721,539
Net Assets:
Beginning of period 2,170,801,875 1,688,080,336
- ---------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $1,255,447 and $502,423, respectively) $2,303,559,444 $2,170,801,875
- ---------------------------------------------------------------------------------------
</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 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, 2000 was $917,863,250, and net
unrealized appreciation aggregated $1,394,404,188 of which the related gross
unrealized appreciation and depreciation were $1,468,871,274 and 74,467,086,
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, 2000 were $72,969,721 and
$116,274,269, 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, 2000. 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. During the
three months ended March 31, 2000, the Company purchased 690,600 shares of
common stock at a total cost of $23,388,422 and a weighted average discount
from net asset value of 14.9%. At March 31, 2000, the Company held a total of
734,100 shares of its common stock.
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 2000, 253,050 options
were outstanding, with a weighted average exercise price of $12.5875 per
share. During the three months ended March 31, 2000, the Company granted op-
tions including stock appreciation rights for 22,508 shares of common stock
with a weighted average exercise price of $33.3125. Stock appreciation rights
relating to 20,764 stock option shares were exercised at a weighted average
market price of $33.8516 per share and the stock options relating to those
rights, which had a weighted average exercise price of $8.7156 per share, were
cancelled. At March 31, 2000, there were outstanding exercisable options to
purchase 59,517 common shares at $7.985-21.595 per share (weighted average
price of $9.9279), and unexercisable options to purchase 195,277 common shares
at $7.9850-$24.1825 per share (weighted average price of $16.1063). The
weighted average remaining contractual life of outstanding exercisable and
unexercisable options is 4.6898 years and 6.3955 years, respectively. Total
compensation expense recognized for the three months ended March 31, 2000 re-
lated to the stock options and stock appreciation rights plan was $737,922. At
March 31, 2000, there were 883,713 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 and bonds and mutual funds.
The actuarially computed net pension cost credit for the three months ended
March 31, 2000 was $141,711, and consisted of service cost of $44,917, inter-
est cost of $84,505, expected return on plan assets of $223,330, and net amor-
tization credit of $47,803.
In determining the actuarial present value of the projected benefit obliga-
tion, the interest rate used for the weighted average discount rate was 8.0%,
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, 2000, the projected benefit obligation for service rendered to
date was $4,322,841. During the three months ended March 31, 2000, the pro-
jected benefit obligation increased due to service cost and interest cost of
$44,917 and $84,505, respectively, and decreased due to benefit payments
4
<PAGE>
Notes to Financial Statements (continued)
- -------------------------------------------------------------------------------
in the amount of $48,786. The projected benefit obligation March 31, 2000 was
$4,403,477.
On January 1, 2000, the actual fair value of plan assets was $11,264,093. Dur-
ing the three months ended March 31, 2000, the fair value of plan assets in-
creased due to the expected return on plan assets of $223,330 and decreased
due to benefit payments in the amount of $48,786. At March 31, 2000, the pro-
jected fair value of plan assets amounted to $11,438,637 which resulted in ex-
cess plan assets of $7,035,160. The remaining components of prepaid pension
cost at March 31, 2000 included $2,100,186 in unrecognized net gain, $625,197
in unrecognized prior service cost and $167,864 is the remaining portion of
the unrecognized net asset existing at January 1, 1987, which is being amor-
tized over 15 years. Prepaid pension cost included in other assets at March
31, 2000 was $5,392,307.
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, 2000 for employees and
former employees of the Company was $5,672,421. Aggregate remuneration paid or
accrued during the three months ended March 31, 2000 to officers and directors
amounted to $1,429,839.
Research, accounting and other office services provided to and reimbursed by
the Company's non-controlled affiliate, Petroleum & Resources Corporation,
amounted to $125,083 for the three months ended March 31, 2000.
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, 2000, the Company had securities on loan of
$493,394,657 and held collateral of $504,246,747.
Financial Highlights
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
------------------------
(unaudited)
Year Ended December 31
March 31, March 31, --------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
----------- ----------- ---------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period $40.28 $32.54 $32.54 $28.51 $23.71 $21.36 $17.98
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income 0.06 0.10 0.37 0.45 0.43 0.52 0.50
Net realized gains and change in
unrealized appreciation and other
changes 3.08 0.83 9.82 5.68 6.33 3.55 4.54
- ---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.14 0.93 10.19 6.13 6.76 4.07 5.04
Less distributions
Dividends from net investment income (0.05) (0.06) (0.39) (0.45) (0.44) (0.52) (0.52)
Distributions from net realized gains (0.07) (0.06) (2.06) (1.65) (1.52) (1.20) (1.14)
- ---------------------------------------------------------------------------------------------------------------------------
Total distributions (0.12) (0.12) (2.45) (2.10) (1.96) (1.72) (1.66)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $43.30 $33.35 $40.28 $32.54 $28.51 $23.71 $21.36
- ---------------------------------------------------------------------------------------------------------------------------
Per share market price, end of period $37.375 $27.125 $33.5625 $26.625 $24.1875 $19.75 $18.50
Total Investment Return
Based on market price 11.8% 2.3% 36.1% 19.3% 33.1% 16.4% 29.5%
Based on net asset value 7.9% 3.0% 33.6% 23.7% 30.7% 21.0% 29.9%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $2,303,559 $1,730,306 $2,170,802 $1,688,080 $1,424,170 $1,138,760 $986,231
Ratio of expenses to average net assets 0.50%+ 0.25%+ 0.32% 0.22% 0.39% 0.34% 0.46%
Ratio of net investment income to
average net assets 0.63%+ 1.17%+ 1.06% 1.48% 1.61% 2.30% 2.51%
Portfolio turnover 13.75%+ 26.21%+ 15.94% 22.65% 17.36% 19.60% 23.98%
Number of shares outstanding at
end of period (in 000's) 53,204 51,877 53,895 51,877 49,949 48,037 46,166
</TABLE>
- --------
+ Ratios presented on an annualized basis.
5
<PAGE>
Schedule of Investments
- --------------------------------------------------------------------------------
March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Stocks And Convertible Securities -- 97.4%
Basic Materials -- 1.5%
Avery Dennison Corp. 237,800 $ 14,520,663
Engelhard Corp. 375,000 5,671,875
Mead Corp. 400,000 13,975,000
------------
34,167,538
------------
Capital Goods -- 9.9%
Black & Decker Corp. 300,000 11,268,750
Corning, Inc. 435,000 84,390,000
Dover Corp. 260,000 12,447,500
General Electric Co. 645,000 100,095,938
Honeywell Int'l. Co. 100,000 5,268,750
Pall Corp. 600,000 13,462,500
------------
226,933,438
------------
Communication Services -- 15.2%
Telecommunications -- Cellular and Wireless -- 5.0%
MediaOne Group, Inc.
6.25% PIES due 2001 85,000 10,093,750
Nextel Communications Inc.
5.25% Conv. Notes
due 2010 (B) 10,000,000 11,900,000
Nextel Communications Inc. (C) 520,000 77,090,000
Vodafone AirTouch plc ADS 287,500 15,974,219
------------
115,057,969
------------
Telecommunications -- Long Distance -- 4.2%
MCI WorldCom, Inc. (C) 550,000 24,921,875
Qwest Communications International, Inc.
5.75% TRENDS Pfd.
due 2003 (B) 125,000 9,500,000
Qwest Communications International, Inc. (C) 760,000 36,860,000
Williams Communications Group, Inc. (C) 468,700 24,284,519
------------
95,566,394
------------
Telephone -- 6.0%
American Tower Corp.
5.00% Conv. Notes
due 2010 (B) 9,500,000 10,663,750
BellSouth Corp. 440,000 20,680,000
Global Crossing Ltd. (C) 720,000 29,475,000
RCN Corp. (C) 240,000 12,930,000
SBC Communications Inc. 787,960 33,094,320
Time Warner Telecom Inc. (C) 404,500 32,157,750
------------
139,000,820
------------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Consumer -- 5.9%
Consumer Cyclical -- 1.1%
Delphi Automotive, Inc. 690,000 $ 11,040,000
Tiffany & Co. 175,000 14,634,375
------------
25,674,375
------------
Consumer Staples -- 4.8%
Coca-Cola Co. 170,000 7,979,375
Dean Foods Co. 300,000 8,025,000
Fort James Corp. 610,000 13,420,000
Houston Industries Inc.
7.00% Conv. ACES due 2000 90,000 14,310,000
Interstate Bakeries Corp. 138,000 1,966,500
Ivex Packaging Corp. (C) 928,000 7,018,000
McDonald's Corp. 560,000 21,035,000
MediaOne Group, Inc. (C) 150,000 12,150,000
Owens-Illinois, Inc. (C) 610,000 10,293,750
PepsiCo, Inc. 295,000 10,195,937
Ralston Purina
7.00% SAILS due 2000 180,000 5,253,750
------------
111,647,312
------------
Energy -- 5.9%
BP Amoco plc ADR 270,000 14,326,876
Enron Corp. 500,000 37,437,500
Exxon Mobil Corp. 158,418 12,326,900
Petroleum & Resources
Corporation (D) 1,210,085 43,563,060
Schlumberger Ltd. 88,400 6,762,600
Williams Companies, Inc. 500,000 21,968,750
------------
136,385,686
------------
Financial -- 11.3%
Banking -- 6.3%
Associates First Capital Corp.
Ser. A 546,800 11,722,025
Bank One Corp. 330,000 11,343,750
Federal Home Loan Mortgage Corp. 360,000 15,907,500
Greenpoint Financial Corp. 435,000 8,536,875
Investors Financial Services Corp. 420,000 24,727,500
Mellon Financial Corp. 420,000 12,390,000
National City Corp. 160,000 3,300,000
Peoples Heritage Financial Group 474,000 7,110,000
Provident Bankshares Corp. 303,875 4,786,039
Wachovia Corp. 190,000 12,836,875
Wells Fargo & Co. 550,000 22,515,625
Wilmington Trust Corp. 210,000 10,211,250
------------
145,387,439
------------
</TABLE>
6
<PAGE>
Schedule of Investments (continued)
- --------------------------------------------------------------------------------
March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Insurance -- 5.0%
AMBAC Financial Group, Inc. 379,600 $ 19,122,350
American International Group, Inc. 506,250 55,434,376
Annuity & Life Re (Holdings), Ltd. 700,000 18,200,000
Financial Security Assurance Holdings Ltd. 307,387 22,573,733
--------------
115,330,459
--------------
Health Care -- 9.5%
Abbott Laboratories 255,000 8,972,813
ALZA Corp. (C) 340,000 12,771,250
American Home Products Corp. 425,000 22,790,625
Baxter International 255,000 15,985,312
Chiron Corp. (C) 550,000 27,431,250
Elan Corp., plc ADR (C) 870,000 41,325,000
Johnson & Johnson 126,500 8,862,906
Lilly (Eli) & Co. 290,000 18,270,000
Merck & Co., Inc. 300,000 18,637,500
Pharmacia & Upjohn Inc. 310,000 18,367,500
SmithKline Beecham plc ADR 260,000 17,176,250
Vertex Pharmaceuticals Inc. 5.00% Conv. Sub. Notes
due 2007 (B) 10,000,000 7,437,500
--------------
218,027,906
--------------
Technology -- 34.0%
Communication Equipment -- 13.9%
Ericsson (L.M.) Telephone Co. 4.25% Conv. Sub. Debs.
due 2000 $120,000 3,120,000
Ericsson (L.M.) Telephone Co. ADR 750,000 70,359,375
Lucent Technologies Inc. 508,920 30,916,890
Motorola, Inc. 161,874 23,046,811
Nokia Corp. ADR 460,000 99,935,000
Nortel Networks Corp. 745,000 93,870,000
--------------
321,248,076
--------------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Computer Related -- 14.7%
BMC Software Inc. (C) 300,000 $ 14,812,500
Cisco Systems, Inc. (C) 1,835,000 141,868,438
First Data Corp. 343,980 15,221,115
Hewlett-Packard Co. 200,000 26,512,500
Legato Systems Inc. (C) 280,000 12,495,000
Oracle Corp. (C) 590,000 46,056,875
QRS Corp. (C) 435,000 32,733,750
Sapient Corp. (C) 575,000 48,228,125
--------------
337,928,303
--------------
Electronics -- 5.4%
Intel Corp. 340,000 44,858,750
Solectron Corp. (C) 2,000,000 80,125,000
--------------
124,983,750
--------------
Transportation -- 0.5%
Canadian National Railway Co. 5.25% Conv. Pfd. QUIDS
due 2029 15,000 626,250
Canadian National Railway Co. 60,000 1,601,250
Ryder System, Inc. 445,000 10,095,938
--------------
12,323,438
--------------
Utilities -- 3.7%
Black Hills Corp. 555,000 12,244,688
Calpine Capital Trust 5.75% Conv. Pfd. HIGH TIDES 202,500 18,579,375
Calpine Corp. (C) 35,000 3,290,000
CINergy Corp. 300,000 6,450,000
ENDESA, S.A. ADR 350,000 8,203,125
Northwestern Corp. 500,000 10,312,500
TECO Energy, Inc. 300,000 5,831,250
United Water Resources Inc. 600,000 20,850,000
--------------
85,760,938
--------------
Total Stocks and Convertible Securities
(Cost $851,672,955) (E) 2,245,423,841
--------------
</TABLE>
7
<PAGE>
Schedule of Investments (continued)
- -------------------------------------------------------------------------------
March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Short-Term Investments -- 2.9%
U.S. Government Obligations -- 0.6%
U.S. Treasury Bills,
4.88-5.70%, due 5/25/00 $15,000,000 $ 14,873,391
--------------
Certificates of Deposit -- 0.9%
Northern Trust Co., Chicago, 6.02%, due 5/2/00 10,000,000 10,000,000
Old Kent Bank & Trust Co., 6.00%, due 4/25/00 10,000,000 10,000,000
--------------
20,000,000
--------------
Commercial Paper -- 1.4%
Chevron UK Investments plc,
5.84%, due 4/11/00 5,000,000 4,991,889
Chevron USA, 6.00%, due 4/18/00 5,050,000 5,035,692
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Ford Motor Credit Corp.,
5.25%, due 4/3/00 $ 2,730,000 $ 2,729,204
General Electric Capital Corp., 5.85-5.95%,
due 4/4/00-4/13/00 8,500,000 8,489,125
Gillette Co., 6.02%,
due 4/27/00 10,000,000 9,956,522
--------------
31,202,432
--------------
Total Short-Term Investments
(Cost $66,075,823) 66,075,823
--------------
Total Investments
(Cost $917,748,778) 2,311,499,664
Cash, receivables and other assets, less
liabilities (7,940,220)
--------------
Net Assets -- 100.0% $2,303,559,444
==============
</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) Restricted securities (American Tower Corp. 5% Conv. Notes due 2010, ac-
quired 2/9/00-2/22/00, cost $9,538,750, Nextel Communications Inc. 5.25%
Conv. Notes due 2010, acquired 1/21/00, cost $10,000,000, Qwest Communica-
tions International, Inc. 5.75% TRENDS Pfd. due 2003, acquired 12/4/98,
cost $5,218,750, and Vertex Pharmaceuticals Inc. Conv. Sub Notes due 2007,
acquired 3/9/00, cost $10,000,000).
(C) Presently non-dividend paying.
(D) Non-controlled affiliate.
(E) The aggregate market value of stocks held in escrow at March 31, 2000 cov-
ering open call option contracts written was $15,191,380. In addition, the
aggregate market value of securities segregated by the custodian required
to collateralize open put option contracts written was $10,846,000.
Historical Financial Statistics
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dividends Distributions
Net from from
Common Asset Net Investment Net Realized
Value of Shares Value per Income Gains
Dec. 31 Net Assets Outstanding Share per Share per Share
- ------- ---------- ----------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
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
1999.................... 2,170,801,875 53,894,827 40.28 .39 2.06
March 31, 2000
(unaudited) ........... 2,303,559,444 53,204,227 43.30 .17* .07
</TABLE>
- --------
*Paid or declared
8
<PAGE>
Principal Changes in Portfolio Securities
- --------------------------------------------------------------------------------
During the Three Months Ended March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Shares
-----------------------------------------
Held
Additions Reductions March 31, 2000
--------- ---------- --------------
<S> <C> <C> <C>
American Tower Corp. 5.00% Conv.
Notes due 2010..................... 9,500,000 9,500,000
Calpine Capital Trust 5.75% Conv.
Pfd. HIGH TIDES.................... 77,500 202,500
Cisco Systems....................... 917,500(/1/) 1,835,000
Fort James Corp. ................... 110,000 610,000
Honeywell Int'l Co. ................ 100,000 100,000
Legato Systems Inc. ................ 280,000 280,000
Nextel Communications Inc. 5.25%
Conv. Notes due 2010............... 10,000,000 10,000,000
Oracle Corp. ....................... 295,000(/1/) 590,000
RCN Corp. .......................... 67,500 240,000
Solectron Corp. .................... 1,000,000(/1/) 2,000,000
Vertex Pharmaceuticals Inc. 5.00%
Conv. Sub. Notes due 2007.......... 10,000,000 10,000,000
Williams Communications Group,
Inc. .............................. 248,700 468,700
Consolidated Papers, Inc. .......... 410,000 --
Corning Inc. ....................... 25,000 435,000
DST Systems Inc. ................... 70,000 --
Gillette Co. ....................... 439,120 --
Global Crossing Ltd. ............... 202,500 720,000
Houston Industries Inc. 7.00% Conv.
ACES due 2000...................... 60,000 90,000
MCI WorldCom, Inc. ................. 65,000 550,000
Nextel Communications Inc. ......... 80,000 520,000
Nokia Corp. ADR..................... 25,000 460,000
QRS Corp. .......................... 67,500 435,000
Royal Dutch Petroleum Co. .......... 80,000 --
Sterling Commerce, Inc. ............ 575,000 --
Tiffany & Co. ...................... 25,000 175,000
</TABLE>
- --------
(/1/)By stock split.
------------------
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]
9
<PAGE>
Annual Meeting of Stockholders
- -------------------------------------------------------------------------------
The Annual Meeting of Stockholders was held on March 28, 2000. For those nomi-
nated, the following votes were cast for directors:
<TABLE>
<CAPTION>
votes for votes withheld
--------- --------------
<S> <C> <C>
(A) Enrique R. Arzac: 45,653,918 617,467
(B) Daniel E. Emerson: 45,554,074 717,311
(C) Thomas H. Lenagh: 45,316,443 954,942
(D) W.D. MacCallan: 45,565,120 706,265
(E) W. Perry Neff: 45,573,260 698,125
(F) Douglas G. Ober: 45,552,091 719,294
(G) Landon Peters: 45,674,933 596,452
(H) John J. Roberts: 45,496,388 774,997
(I) Susan C. Schwab: 45,464,906 806,479
(J) Robert J.M. Wilson: 45,522,082 749,303
</TABLE>
A proposal to approve and ratify the selection of PricewaterhouseCoopers LLP
as the firm of independent accountants of the Company for 2000 was approved
with 45,501,965 votes for, 350,221 votes against, and 419,199 votes ab-
staining.
A proposal to approve an amendment to Article SIXTH of the Articles of Incor-
poration to increase the number of authorized shares of Common Stock of the
Company from 75,000,000 shares to 150,000,000 shares was approved with
41,970,457 votes for, 3,497,900 votes against, and 803,028 votes abstaining.
A stockholder proposal to request the Board of Directors to consider promptly
causing the Company to conduct a self-tender offer for at least 5% of the out-
standing shares at or close to net asset value, which proposal was opposed by
the Board of Directors, was defeated. Of the 34,774,726 shares that were voted
on this proposal, 5,276,640 shares (15.1 percent) were voted for, 27,073,950
shares (77.8 percent) were voted against, and 2,424,136 shares (6.9 percent)
abstained. Of the total number of shares outstanding as of March 28, 2000,
only 9.86 percent were voted for the proposal.
Stockholder proposals to be included in the proxy statement for next year's
Annual Meeting must be received at the offices of the Company by October 26,
2000. The date stated in the 2000 Proxy Statement was incorrect.
-------------------
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
<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.
BuyDIRECT/SM/*
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 Company The Bank of New York
Lawrence L. Hooper, Jr., Shareholder Relations Dept.-8W
Vice President, Secretary and P.O. Box 11258
General Counsel Church Street Station
Seven St. Paul Street, New York, NY 10286
Suite 1140 (800) 432-8224
Baltimore, MD 21202 Website:
(800) 638-2479 http://stock.bankofny.com
Website: E-mail:
www.adamsexpress.com Shareowner-svcs@ bankofny.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
issued shares of common stock in which event there would be no fees or
commissions in connection with this dividend and capital gain distribution.
11
<PAGE>
[logo of ADAMS EXPRESS COMPANY First Quarter Report]
The Adams Express Company
- --------------------------------------------------------------------------------
Board of Directors
Enrique R. Arzac/1/,/4/ Douglas G. Ober/1/
Daniel E. Emerson/2/,/4/ Landon Peters/2/,/4/
Thomas H. Lenagh/2/,/3/ John J. Roberts/1/,/4/
W.D. MacCallan/1/,/3/ Susan C. Schwab/1/,/3/
W. Perry Neff/1/,/2/ Robert J.M. Wilson/3/,/4/
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
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
----------
<TABLE>
<S> <C>
Price (3/31/00) $37.375
Net Asset Value (3/31/00) $43.30
Discount: 13.7%
</TABLE>
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 2000
---------------------
<TABLE>
<S> <C>
From Investment Income $0.17
(paid or declared)
From Net Realized Gains 0.07
-----
Total $0.24
=====
</TABLE>
---------------------------
2000 Dividend Payment Dates
---------------------------
March 1, 2000
June 1, 2000
September 1, 2000*
December 27, 2000*
*Anticipated
