<PAGE>
The Adams Express Company
-------------------------------------------------
Board of Directors [ART APPEARS HERE]
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/
[ADAMS EXPRESS CO LOGO]
1. Member of Executive Committee
2. Member of Audit Committee
3. Member of Compensation Committee
4. Member of Retirement Benefits Committee
Third Quarter Report
Officers --------------------
September 30, 2000
Douglas G. Ober Chairman and
Chief Executive Officer
Joseph M. Truta President
Richard F. Koloski Executive Vice President
Richard B. Tumolo Vice President--Research
Lawrence L. Hooper, Jr. Vice President,
Secretary and
General Counsel
Maureen A. Jones Vice President and
Treasurer
Christine M. Sloan Assistant Treasurer
Geraldine H. Stegner Assistant Secretary
----------
Stock Data
----------
Price (9/30/00) $38.625
Net Asset Value (9/30/00) $42.61
Discount: 9.4%
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
---------------------
From Investment Income $0.29
From Net Realized Gains 0.07
-----
Total $0.36
=====
---------------------------
2000 Dividend Payment Dates
---------------------------
March 1, 2000
June 1, 2000
September 1, 2000 building for the future
December 27, 2000* with solid investments(R)
*Anticipated
<PAGE>
Letter to Stockholders
-------------------------------------------------------------------------------
We are pleased to submit the financial statements for the nine months ended
September 30, 2000. In addition, a schedule of investments, and summary finan-
cial information for the Company are provided.
Net assets of the Company at September 30, 2000 were $42.61 per share on
52,533,567 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.
Regular 2000 investment income dividend of $0.12 per share were paid on June
1, 2000 and September 1, 2000.
Net investment income for the nine months ended September 30, 2000 amounted to
$14,087,205, compared with $15,236,955 for the same period in 1999. These
earnings are equal to $0.26 and $0.29 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, 2000 amounted to $130,233,783, the equivalent of $2.48 per share.
The Company realized a total investment return on its net asset value (with
reinvestment of income and capital gains distributions) of 6.8% in the nine
months ended September 30, 2000. The return on the market price of our stock
was 10.2%, reflecting the narrowing of the discount of the market price from
the net asset value from 16.7% at the beginning of 2000 to 9.4% at the end of
September. The Company's performance on both its net asset value and market
price compare favorably to the (6.3)% return of the Dow Jones Industrial Aver-
age and the (1.4)% return of the Standard & Poor's 500 Composite Index.
On September 18, 2000, the Board of Directors declared a 3-for-2 split of the
Company's shares in the form of a 50% stock dividend to be paid on October 19,
2000. The excellent performance of the Company over the past several years has
been reflected in the stock price and the Board felt that by splitting the
stock, it would be more attractive to investors and its liquidity would in-
crease. This would serve the shareholders well. Specific information regarding
the split will be mailed to shareholders with their new shares.
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 10 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,
Douglas G. Ober,
Chairman and Chief Joseph M. Truta,
Executive Officer President
October 20, 2000
<PAGE>
Statement of Assets and Liabilities
--------------------------------------------------------------------------------
September 30, 2000 (unaudited)
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $844,911,347) $2,106,721,754
Non-controlled affiliate, Petroleum &
Resources Corporation
(cost $24,134,839) 50,899,200
Short-term investments (cost $76,349,031) 76,349,031 $2,233,969,985
------------------------------------------------------------------------------
Cash 185,729
Securities lending collateral 343,796,861
Receivables:
Investment securities sold 7,046,910
Dividends and interest 944,451
Prepaid expenses and other assets 6,530,498
------------------------------------------------------------------------------
Total Assets 2,592,474,434
------------------------------------------------------------------------------
Liabilities
Investment securities purchased 3,442,536
Open written option contracts at value
(proceeds $905,328) 680,438
Obligations to return securities lending
collateral 343,796,861
Accrued expenses 6,282,074
------------------------------------------------------------------------------
Total Liabilities 354,201,909
------------------------------------------------------------------------------
Net Assets $2,238,272,525
------------------------------------------------------------------------------
Net Assets
Common Stock at par value $1.00 per share,
authorized 150,000,000 shares; issued and
outstanding 52,533,567 shares $ 52,533,567
Additional capital surplus 767,281,432
Undistributed net investment income (750,000)
Undistributed net realized gain on investments 130,407,868
Unrealized appreciation on investments 1,288,799,658
------------------------------------------------------------------------------
Net Assets Applicable to Common Stock $2,238,272,525
------------------------------------------------------------------------------
Net Asset Value Per Share of Common Stock $42.61
------------------------------------------------------------------------------
</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, 2000 (unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends:
From unaffiliated issuers $ 13,951,223
From non-controlled affiliate 568,740
Interest 3,822,537
Securities lending 874,386
----------------------------------------------------------------------------
Total income 19,216,886
----------------------------------------------------------------------------
Expenses:
Investment research 2,614,881
Administration and operations 1,151,776
Directors' fees 140,500
Reports and stockholder communications 290,435
Transfer agent, registrar and custodian expenses 298,872
Auditing and accounting services 90,928
Legal services 78,412
Occupancy and other office expenses 199,257
Travel, telephone and postage 101,755
Other 162,865
----------------------------------------------------------------------------
Total expenses 5,129,681
----------------------------------------------------------------------------
Net Investment Income 14,087,205
----------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on
Investments
Net realized gain on security transactions 130,076,472
Net realized gain distributed by regulated investment company
(non-controlled affiliate) 157,311
Change in unrealized appreciation on investments (9,863,028)
----------------------------------------------------------------------------
Net Gain on Investments 120,370,755
----------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $134,457,960
----------------------------------------------------------------------------
</TABLE>
Statement of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Year Ended
Ended Sept. 30, 2000 Dec. 31, 1999
-------------------- -------------
(unaudited)
<S> <C> <C>
From Operations:
Net investment income $ 14,087,205 $ 19,143,783
Net realized gain on investments 130,233,783 106,820,166
Change in unrealized appreciation on
investments (9,863,028) 419,522,952
---------------------------------------------------------------------------------
Increase in net assets resulting from
operations 134,457,960 545,486,901
---------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (15,339,628) (20,231,884)
Net realized gain from investment
transactions (3,741,681) (106,865,901)
---------------------------------------------------------------------------------
Decrease in net assets from distributions (19,081,309) (127,097,785)
---------------------------------------------------------------------------------
From Capital Share Transactions:
Value of shares issued in payment of
exercised options and distributions 116,850 65,780,453
Cost of shares purchased (note 4) (48,022,851) (1,448,030)
---------------------------------------------------------------------------------
Change in net assets from capital share
transactions (47,906,001) 64,332,423
---------------------------------------------------------------------------------
Total Increase in Net Assets 64,470,650 482,721,539
Net Assets:
Beginning of period 2,170,801,875 1,688,080,336
---------------------------------------------------------------------------------
End of period (including undistributed net
investment
income of $(750,000) and $502,423,
respectively) $2,238,272,525 $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 September 30, 2000 was $945,588,490, and net
unrealized appreciation aggregated $1,289,286,823 of which the related gross
unrealized appreciation and depreciation were $1,372,138,358 and 82,851,535,
respectively.
Distributions are determined in accordance with income tax regulations which
may differ from accounting principles generally accepted in the United States
of America. Accordingly, periodic reclassifications are made within the
Company's capital accounts to reflect income and gains available for distribu-
tion 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, 2000 were $196,973,516
and $254,580,326, 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, 2000. 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. At the begin-
ning of 2000, the Company had purchased and was holding 43,500 shares of com-
mon stock at a total cost of $1,448,030 and a weighted average discount from
net asset value of 16.2% During the nine months ended September 30, 2000, the
Company purchased 1,364,300 shares of common stock at a total cost of
$48,022,851 and a weighted average discount from net asset value of 13.9%. At
September 30, 2000, the Company held a total of 1,407,800 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 nine months ended September 30, 2000, the Company granted
options 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 43,227 stock option shares were exercised at a weighted average
market price of $35.7225 per share and the stock options relating to those
rights, which had a weighted average exercise price of $10.46 per share, were
cancelled. In addition, 3,040 stock options were exercised at a price of
$24.1825 per share in which the related market price per share was $38.4375.
Stock options and stock appreciation rights relating to 3,001 shares were can-
celled during the nine months ended September 30, 2000. At September 30, 2000,
there were outstanding exercisable options to purchase 66,286 common shares at
$7.9850-24.1825 per share (weighted average price of $10.8669), and
unexercisable options to purchase 160,004 common shares at $7.9850-$33.2425
per share (weighted average price of $16.0702). The weighted average remaining
contractual life of outstanding exercisable and unexercisable options is
4.1716 years and 6.0164 years, respectively. Total compensation expense recog-
nized for the nine months ended September 30, 2000 related to the stock op-
tions and stock appreciation rights plan was $1,176,533. At September 30,
2000, there were 886,714 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 nine months ended
September 30, 2000 was $425,133, and consisted of service cost of $134,750,
interest cost of $253,516, expected return on plan assets of $669,991, and net
amortization credit of $143,408.
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%.
4
<PAGE>
Notes to Financial Statements (continued)
-------------------------------------------------------------------------------
On January 1, 2000, the projected benefit obligation for service rendered to
date was $4,322,841. During the nine months ended September 30, 2000, the pro-
jected benefit obligation increased due to service cost and interest cost of
$134,750 and $253,516, respectively, and decreased due to benefit payments in
the amount of $146,358. The projected benefit obligation September 30, 2000
was $4,564,749.
On January 1, 2000, the actual fair value of plan assets was $11,264,093. Dur-
ing the nine months ended September 30, 2000, the fair value of plan assets
increased due to the expected return on plan assets of $669,991 and decreased
due to benefit payments in the amount of $146,358. At September 30, 2000, the
projected fair value of plan assets amounted to $11,787,726 which resulted in
excess plan assets of $7,222,977. The remaining components of prepaid pension
cost at September 30, 2000 included $1,995,700 in unrecognized net gain,
$568,355 in unrecognized prior service cost and $119,903 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 prepaid expenses and
other assets at September 30, 2000 was $5,675,729.
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, 2000 for employees
and former employees of the Company was $5,852,814. Aggregate remuneration
paid or accrued during the nine months ended September 30, 2000 to officers
and directors amounted to $3,223,163.
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 nine months ended September 30, 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 September 30, 2000, the Company had securities on loan of
$322,681,996 and held collateral of $343,796,861.
Financial Highlights
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
------------------------
(unaudited)
Year Ended December 31
Sept. 30, Sept. 30, ---------------------------------------------------------
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 0.26 0.29 0.37 0.45 0.43 0.52 0.50
Net realized gains and change in
unrealized appreciation and other
changes 2.43 1.42 9.82 5.68 6.33 3.55 4.54
----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.69 1.71 10.19 6.13 6.76 4.07 5.04
Less
distributions
Dividends from net investment income (0.29) (0.30) (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 (0.36) (0.36) (2.45) (2.10) (1.96) (1.72) (1.66)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $42.61 $33.89 $40.28 $32.54 $28.51 $23.71 $21.36
----------------------------------------------------------------------------------------------------------------------------
Per share market price, end of period $38.625 $28.625 $33.5625 $26.625 $24.1875 $19.75 $18.50
Total Investment Return
Based on market
price 10.2% 8.9% 36.1% 19.3% 33.1% 16.4% 29.5%
Based on net
asset value 6.8% 5.5% 33.6% 23.7% 30.7% 21.0% 29.9%
Ratios/Supplemental Data
Net assets, end of period (in 000's) $2,238,273 $1,758,245 $2,170,802 $1,688,080 $1,424,170 $1,138,760 $986,231
Ratio of expenses to average net assets 0.31%/+/ 0.25%/+/ 0.32% 0.22% 0.39% 0.34% 0.46%
Ratio of net investment income to
average net
assets 0.85%/+/ 1.16%/+/ 1.06% 1.48% 1.61% 2.30% 2.51%
Portfolio
turnover 12.24%/+/ 17.24%/+/ 15.94% 22.65% 17.36% 19.60% 23.98%
Number of shares outstanding at
end of period (in 000's) 52,534 51,877 53,895 51,877 49,949 48,037 46,166
</TABLE>
--------
/+/ Ratios presented on an annualized basis.
5
<PAGE>
Schedule of Investments
--------------------------------------------------------------------------------
September 30, 2000 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Stocks And Convertible Securities -- 96.4%
Basic Materials -- 1.5%
Cabot Corp. 470,000 $ 14,893,125
Engelhard Corp. 530,000 8,612,500
Mead Corp. 400,000 9,350,000
--------------
32,855,625
--------------
Capital Goods -- 13.3%
Black & Decker Corp. 300,000 10,256,250
Corning, Inc. 390,000 115,830,000
Dover Corp. 260,000 12,203,750
General Electric Co. 1,900,000 109,606,251
Honeywell Int'l. Co. 360,000 12,825,000
Minnesota Mining & Manufacturing Co. 265,000 24,148,125
Pall Corp. 600,000 11,962,500
--------------
296,831,876
--------------
Communication Services -- 12.1%
Telecommunications -- Cellular and Wireless --
3.4%
MediaOne Group, Inc.
6.25% PIES due 2001 85,000 7,081,562
Nextel Communications Inc.
5.25% Conv. Notes
due 2010 $10,000,000 9,337,500
Nextel Communications Inc. (B) 1,040,000 48,620,000
Vodafone Group plc ADS 287,500 10,637,500
--------------
75,676,562
--------------
Telecommunications -- Long Distance -- 3.2%
Qwest Communications International, Inc.
5.75% TRENDS Pfd.
due 2003 (C) 125,000 9,687,500
Qwest Communications International, Inc. (B) 760,000 36,527,500
Williams Communications Group, Inc. (B) 493,700 9,874,000
WorldCom, Inc. (B) 550,000 16,706,250
--------------
72,795,250
--------------
Telephone -- 5.5%
American Tower Corp.
5.00% Conv. Notes
due 2010 $10,000,000 9,625,000
BellSouth Corp. 440,000 17,710,000
Global Crossing Ltd. 6.75% Conv. Pfd. due 2012 40,000 10,015,000
Global Crossing Ltd. (B) 644,000 19,964,000
RCN Corp. (B) 280,000 5,810,000
SBC Communications Inc. 787,960 39,398,000
Time Warner Telecom Inc. (B) 404,500 19,542,406
--------------
122,064,406
--------------
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Consumer -- 4.9%
Consumer Cyclical -- 1.1%
Delphi Automotive, Inc. 690,000 $ 10,436,250
Tiffany & Co. 350,000 13,496,875
--------------
23,933,125
--------------
Consumer Staples -- 3.8%
Coca-Cola Co. 170,000 9,371,250
Dean Foods Co. 300,000 9,975,000
Fort James Corp. 446,000 13,630,875
Interstate Bakeries Corp. 138,000 2,018,250
Ivex Packaging Corp. (B) 928,000 9,106,000
McDonald's Corp. 560,000 16,905,000
PepsiCo, Inc. 295,000 13,570,000
Time Warner Inc. 148,752 11,639,844
--------------
86,216,219
--------------
Energy -- 8.7%
BP Amoco plc ADR 270,000 14,310,001
Calpine Capital Trust 5.75% Conv. Pfd. HIGH TIDES 202,500 37,133,437
Calpine Corp. (B) 50,000 5,218,750
Enron Corp. 500,000 43,812,500
Exxon Mobil Corp. 158,418 14,119,004
Petroleum & Resources
Corporation (D) 1,210,085 50,899,200
Schlumberger Ltd. 88,400 7,276,425
Williams Companies, Inc. 500,000 21,125,000
--------------
193,894,317
--------------
Financial -- 13.8%
Banking -- 8.6%
Associates First Capital Corp.
Ser. A 546,800 20,778,400
Bank One Corp. 330,000 12,746,250
BankNorth Group, Inc. 474,000 8,472,750
Federal Home Loan Mortgage Corp. 345,000 18,651,563
Greenpoint Financial Corp. 435,000 12,886,875
Investors Financial Services Corp. 700,000 44,187,500
Mellon Financial Corp. 420,000 19,477,500
National City Corp. 160,000 3,540,000
Provident Bankshares Corp. 319,068 5,344,389
Wachovia Corp. 190,000 10,770,625
Wells Fargo & Co. 550,000 25,265,625
Wilmington Trust Corp. 210,000 11,261,250
--------------
193,382,727
--------------
</TABLE>
6
<PAGE>
Schedule of Investments (continued)
--------------------------------------------------------------------------------
September 30, 2000 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Insurance -- 5.2%
AMBAC Financial Group, Inc. 379,600 $ 27,805,700
American International Group, Inc. 759,375 72,662,697
Annuity & Life Re (Holdings), Ltd. 700,000 16,887,500
--------------
117,355,897
--------------
Health Care -- 10.6%
Abbott Laboratories 255,000 12,128,438
ALZA Corp. (B) 240,000 20,760,000
American Home Products Corp. 300,000 16,968,750
Baxter International 255,000 20,352,188
Chiron Corp. (B) 550,000 24,750,000
Elan Corp., plc ADR (B) 550,000 30,112,500
Johnson & Johnson 180,000 16,908,750
Lilly (Eli) & Co. 210,000 17,036,250
Merck & Co., Inc. 250,000 18,609,375
Pharmacia Corp. 368,900 22,203,169
SmithKline Beecham plc ADR 220,000 15,097,500
Vertex Pharmaceuticals Inc. 5.00% Conv. Sub. Notes
due 2007 (C) $10,000,000 21,700,000
--------------
236,626,920
--------------
Technology -- 27.9%
Communication Equipment -- 10.6%
Ericsson (L.M.) Telephone Co. ADR 3,133,333 46,412,495
Lucent Technologies Inc. 508,920 15,553,868
Motorola, Inc. 485,622 13,718,822
Nokia Corp. ADR 1,840,000 73,255,000
Nortel Networks Corp. 1,490,000 88,748,125
--------------
237,688,310
--------------
</TABLE>
<TABLE>
<CAPTION>
Prin.
Amt.
or Shares Value (A)
--------- ---------
<S> <C> <C>
Computer Related -- 11.9%
Axent Technologies Inc.(B) 445,000 $ 9,595,312
BMC Software Inc. (B) 310,000 5,928,750
Cisco Systems, Inc. (B) 1,835,000 101,383,750
Diamond Technology Partners Inc. (B) 48,000 3,564,000
First Data Corp. 343,980 13,436,719
Hewlett-Packard Co. 200,000 19,400,000
Oracle Corp. (B) 590,000 46,462,500
QRS Corp. (B) 585,000 8,811,563
Sapient Corp. (B) 1,150,000 46,790,625
Sun Microsystems Inc. (B) 105,000 12,258,750
--------------
267,631,969
--------------
Electronics -- 5.4%
Intel Corp. 680,000 28,262,500
Solectron Corp. (B) 2,000,000 92,250,000
--------------
120,512,500
--------------
Transportation -- 0.5%
Canadian National Railway Co. 5.25% Conv. Pfd. QUIDS
due 2029 15,000 669,375
Canadian National Railway Co. 60,000 1,758,750
Ryder System, Inc. 445,000 8,204,688
--------------
10,632,813
--------------
Utilities -- 3.1%
Black Hills Corp. 555,000 15,574,688
CINergy Corp. 300,000 9,918,750
Duke Energy Corp. 262,000 22,466,500
ENDESA, S.A. ADR 170,000 3,187,500
Northwestern Corp. 500,000 9,750,000
TECO Energy, Inc. 300,000 8,625,000
--------------
69,522,438
--------------
Total Stocks and Convertible Securities
(Cost $869,046,186) (E) 2,157,620,954
--------------
</TABLE>
7
<PAGE>
Schedule of Investments (continued)
-------------------------------------------------------------------------------
September 30, 2000 (unaudited)
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Short-Term Investments --3.4%
U.S. Government Obligations --0.7%
U.S. Treasury Bills,
6.11%, due 11/24/00 $15,000,000 $ 14,862,564
--------------
Certificates of Deposit -- 0.5%
Old Kent Bank & Trust Co., 6.52%, due 12/27/00 11,400,000 11,400,000
--------------
Commercial Paper --2.2%
Chevron USA, 6.49-6.50%, due 10/3/00-10/12/00 11,495,000 11,483,145
Ford Motor Credit Corp.,
6.49%, due 10/19/00-10/31/00 10,850,000 10,800,784
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
General Electric Capital Corp., 6.48-6.50%,
due 10/6/00-11/9/00 $12,625,000 $ 12,561,760
Hertz Corp., 6.52%, due 10/5/00 9,100,000 9,093,408
Texaco, Inc., 6.48%,
due 10/17/00-10/26/00 6,170,000 6,147,370
--------------
50,086,467
--------------
Total Short-Term Investments
(Cost $76,349,031) 76,349,031
--------------
Total Investments
(Cost $945,395,217) 2,233,969,985
Cash, receivables and other assets, less
liabilities 4,302,540
--------------
Net Assets -- 100.0% $2,238,272,525
==============
</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 securities (Qwest Communications International, Inc. 5.75%
TRENDS Pfd. due 2003, acquired 12/4/98, cost $5,218,750, and Vertex Phar-
maceuticals Inc. Conv. Sub Notes due 2007, acquired 3/9/00, cost
$10,000,000).
(D) Non-controlled affiliate.
(E) The aggregate market value of stocks held in escrow at September 30, 2000
covering open call option contracts written was $18,621,875. In addition,
the aggregate market value of securities segregated by the custodian re-
quired to collateralize open put option contracts written was $13,932,500.
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
September 30, 2000
(unaudited)............ 2,238,272,525 52,533,567 42.61 .29 .07
</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. 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.
------------------------------------------------------------------------------
8
<PAGE>
Principal Changes in Portfolio Securities
--------------------------------------------------------------------------------
During the Three Months Ended September 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Shares
----------------------------------------------
Held
Additions Reductions Sept. 30, 2000
--------- ---------- --------------
<S> <C> <C> <C>
American International Group,
Inc. 253,125/(1)/ 759,375
AT&T Corp. 134,321/(2)/ 134,321/(2)/ --
Cabot Corp. 395,000 470,000
Diamond Technology Partners
Inc. 48,000 48,000
Duke Energy Corp. 262,000 262,000
Engelhard Corp. 135,000 530,000
Intel Corp. 340,000/(1)/ 680,000
Minnesota Mining &
Manufacturing Co. 265,000 265,000
Sapient Corp. 575,000/(1)/ 1,150,000
Sun Microsystems Inc. 55,000 105,000
Tiffany & Co. 175,000/(1)/ 350,000
ALZA Corp. 100,000 240,000
American Home Products Corp. 125,000 300,000
Avery Dennison Corp. 70,000 --
Corning Inc. 35,000 390,000
Elan Corp. 155,000 550,000
ENDESA, S.A. ADR 180,000 170,000
Fort James Corp. 254,000 446,000
Investors Financial Services
Corp. 100,000 700,000
Lilly (Eli) & Co. 80,000 210,000
Merck & Co., Inc. 50,000 250,000
MediaOne Group, Inc. 150,000/(2)/ --
SmithKline Beecham plc ADR 40,000 220,000
United Water Resources Inc. 600,000/(3)/ --
</TABLE>
--------
/(1)/By stock split.
/(2)/Received for shares of MediaOne Group, Inc. held.
/(3)/Received cash for entire position of United Water Resources, Inc. 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 10007
The Bank's Shareholder Relations Department: (800) 432-8224
E-mail: [email protected]
9
<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.
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
Vice President, Secretary and Dept.-8W
General Counsel P.O. Box 11258
Seven St. Paul Street, Church Street Station
Suite 1140 New York, NY 10286
Baltimore, MD 21202 (800) 432-8224
(800) 638-2479 Website:
Website: http://stock.bankofny.com
www.adamsexpress.com E-mail:
E-mail: Shareowner-svcs@
[email protected] bankofny.com
*BuyDIRECT is a service mark of The Bank of New York.
**The year-end dividend and capital gain distribution may be made in newly is-
sued shares of common stock in which event there would be no fees or commis-
sions in connection with this dividend and capital gain distribution.
10
