THE ADAMS EXPRESS COMPANY -------------------------------------------------------------------------------- Board of Directors Enrique R. Arzac/2/,/4/ Douglas G. Ober/1/ Daniel E. Emerson/1/,/4/ Landon Peters/3/,/4/ Thomas H. Lenagh/2/,/3/ John J. Roberts/2/,/4/ W.D. MacCallan/1/,/4/ Susan C. Schwab/1/,/3/ W. Perry Neff/1/,/2/ Robert J.M. Wilson/1/,/3/ /1/. Member of Executive Committee /2/. Member of Audit Committee /3/. Member of Compensation Committee /4/. Member of Retirement Benefits Committee Officers Douglas G. Ober Chairman and Chief Executive Officer Joseph M. Truta President Richard F. Koloski Executive Vice President Richard B. Tumolo Vice President--Research Lawrence L. Hooper, Jr. Vice President, Secretary and General Counsel Maureen A. Jones Vice President and Treasurer Christine M. Sloan Assistant Treasurer Geraldine H. Stegner Assistant Secretary ---------- Stock Data ---------- Price (3/31/01) $17.52 Net Asset Value (3/31/01) $19.49 Discount: 10.1% New York Stock Exchange and Pacific Exchange ticker symbol: ADX NASDAQ Mutual Fund Quotation Symbol: XADEX Newspaper stock listings are generally under the abbreviation: AdaEx --------------------- Distributions in 2001 --------------------- From Investment Income $0.12 (paid or declared) From Net Realized Gains 0.04 ----- Total $0.16 ===== --------------------------- 2001 Divident Payment Dates --------------------------- March 1, 2001 June 1, 2001 September 1, 2001* December 27, 2001* * Anticipated [LOGO OF ADAMS EXPRESS COMPANY] FIRST QUARTER REPORT -------------------- March 31, 2001 building for the future with solid investments Letter to Stockholders ------------------------------------------------------------------------------- We are pleased to submit the financial statements for the three months ended March 31, 2001. In addition, a schedule of investments and summary financial information for the Company are provided. Net assets of the Company at March 31, 2001 were $19.49 per share on 81,926,962 shares outstanding, compared with $23.72 per share at December 31, 2000 on 82,292,262 shares outstanding. On March 1, 2001, a distribution of $0.08 per share was paid consisting of $0.04 from 2000 long-term capital gain, $0.03 from 2000 investment income, and $0.01 from 2001 investment income, all taxable in 2001. A 2001 investment income dividend of $0.08 per share has been declared to shareholders of record May 18, 2001, payable June 1, 2001. Net investment income for the three months ended March 31, 2001 amounted to $5,180,500, compared with $3,425,653 for the same period in 2000. These earn- ings are equal to $0.06 and $0.04 per share, respectively, on the average num- ber of shares outstanding during each period. Net capital gain realized on investments for the three months ended March 31, 2001 amounted to $80,426,068, the equivalent of $0.98 per share. The Annual Meeting, held on March 27, 2001 in Baltimore, Maryland, was well attended by shareholders. Upon conclusion of the formal segment of the meet- ing, management reviewed the portfolio's performance in 2000 and discussed the outlook for the future. The results of the voting at the Annual Meeting are shown on page 10. Current and potential shareholders can find information about the Company, in- cluding the daily net asset value (NAV) per share, the market price, and the discount/ premium to the NAV, at its site on the Internet. The address for the site is www.adamsexpress.com. Also available at the website are a brief his- tory of the Company, historical financial information, and more general indus- try material. Further information regarding shareholder services is located on page 11 of this report. The Company is an internally-managed equity fund whose investment policy is essentially based on the primary objectives of preservation of capital, the attainment of reasonable income from investments and, in addition, an opportu- nity for capital appreciation. By order of the Board of Directors, /s/ Douglas G. Ober /s/ Joseph M. Truta Douglas G. Ober, Joseph M. Truta, Chairman and Chief Executive Officer President April 20, 2001 Statement of Assets and Liabilities -------------------------------------------------------------------------------- March 31, 2001 (unaudited) Assets Investments* at value: Common stocks and convertible securities (cost $910,724,768) $1,506,044,419 Non-controlled affiliate, Petroleum & Resources Corporation (cost $26,585,260) 52,054,286 Short-term investments (cost $36,340,229) 36,340,229 $1,594,438,934 ----------------------------------------------------------------------------- Cash 208,451 Securities lending collateral 293,183,469 Dividends and interest receivable 1,510,206 Prepaid expenses and other assets 6,835,280 ----------------------------------------------------------------------------- Total Assets 1,896,176,340 ----------------------------------------------------------------------------- Liabilities Investment securities purchased 703,550 Open option contracts at value (proceeds $1,531,733) 953,770 Obligations to return securities lending collateral 293,183,469 Accrued expenses 4,483,131 ----------------------------------------------------------------------------- Total Liabilities 299,323,920 ----------------------------------------------------------------------------- Net Assets $1,596,852,420 ----------------------------------------------------------------------------- Net Assets Common Stock at par value $1.00 per share, authorized 150,000,000 shares; issued and outstanding 81,926,962 shares $ 81,926,962 Additional capital surplus 806,939,614 Undistributed net investment income 5,669,708 Undistributed net realized gain on investments 80,949,496 Unrealized appreciation on investments 621,366,640 ----------------------------------------------------------------------------- Net Assets Applicable to Common Stock $1,596,852,420 ----------------------------------------------------------------------------- Net Asset Value Per Share of Common Stock $19.49 ----------------------------------------------------------------------------- *See Schedule of Investments on pages 6 through 8. The accompanying notes are an integral part of the financial statements. 2 Statement of Operations -------------------------------------------------------------------------------- Three Months Ended March 31, 2001 (unaudited) Investment Income Income: Dividends: From unaffiliated issuers $ 4,992,125 From non-controlled affiliate 191,376 Interest 942,057 ----------------------------------------------------------------------------- Total income 6,125,558 ----------------------------------------------------------------------------- Expenses: Investment research 338,711 Administration and operations 64,462 Directors' fees 54,250 Reports and stockholder communications 134,730 Transfer agent, registrar and custodian expenses 127,965 Auditing and accounting services 27,652 Legal services 11,651 Occupancy and other office expenses 51,268 Travel, telephone and postage 30,567 Other 103,802 ----------------------------------------------------------------------------- Total expenses 945,058 ----------------------------------------------------------------------------- Net Investment Income 5,180,500 ----------------------------------------------------------------------------- Realized Gain and Change in Unrealized Appreciation on Investments Net realized gain on security transactions 80,368,655 Net realized gain distributed by regulated investment company (non-controlled affiliate) 57,413 Change in unrealized appreciation on investments (426,102,704) ----------------------------------------------------------------------------- Net Loss on Investments (345,676,636) ----------------------------------------------------------------------------- Change in Net Assets Resulting from Operations $(340,496,136) ----------------------------------------------------------------------------- Statement of Changes in Net Assets -------------------------------------------------------------------------------- Three Months Year Ended Ended March 31, 2001 Dec. 31, 2000 -------------------- ------------- (unaudited) From Operations: Net investment income $ 5,180,500 $ 20,941,465 Net realized gain on investments 80,426,068 128,091,337 Change in unrealized appreciation on investments (426,102,704) (251,193,342) --------------------------------------------------------------------------------- Change in net assets resulting from operations (340,496,136) (102,160,540) --------------------------------------------------------------------------------- Dividends to Stockholders from: Net investment income (3,278,331) (17,702,862) Net realized gain from investment transactions (3,278,334) (128,205,341) --------------------------------------------------------------------------------- Decrease in net assets from distributions (6,556,665) (145,908,203) --------------------------------------------------------------------------------- From Capital Share Transactions: Value of shares issued in payment of exercised options and distributions -0- 77,508,318 Cash in lieu of fractional shares issued in payment of 3-for-2 stock split -0- (123,043) Cost of shares purchased (Note 4) (7,657,757) (48,555,429) --------------------------------------------------------------------------------- Change in net assets from capital share transactions (7,657,757) 28,829,846 --------------------------------------------------------------------------------- Total Increase (Decrease) in Net Assets (354,710,558) (219,238,897) Net Assets: Beginning of period 1,951,562,978 2,170,801,875 --------------------------------------------------------------------------------- End of period (including undistributed net investment income of $5,669,708 and $3,767,539, respectively) $1,596,852,420 $1,951,562,978 --------------------------------------------------------------------------------- The accompanying notes are an integral part of the financial statements. 3 Notes to Financial Statements (unaudited) ------------------------------------------------------------------------------- 1. Significant Accounting Policies The Adams Express Company (the Company) is registered under the Investment Company Act of 1940 as a diversified investment company. The Company's invest- ment objectives as well as the nature and risk of its investment transactions are set forth in the Company's registration statement. Security Valuation -- Investments in securities traded on a national security exchange are valued at the last reported sale price on the day of valuation. Over-the-counter and listed securities for which a sale price is not available are valued at the last quoted bid price. Short-term investments are valued at amortized cost. Written options are valued at the last sale price or last quoted asked price. Affiliated Companies -- Investments in companies 5% or more of whose outstand- ing voting securities are held by the Company are defined as "Affiliated Com- panies" in Section 2(a)(3) of the Investment Company Act of 1940. Security Transactions and Investment Income -- Investment transactions are ac- counted for on the trade date. Gain or loss on sales of securities and options is determined on the basis of identified cost. Dividend income and distribu- tions to shareholders are recognized on the ex-dividend date, and interest in- come is recognized on the accrual basis. 2. Federal Income Taxes The Company's policy is to distribute all of its taxable income to its share- holders in compliance with the requirements of the Internal Revenue Code ap- plicable to regulated investment companies. Therefore, no federal income tax provision is required. For federal income tax purposes, the identified cost of securities, including options, at March 31, 2001 was $974,116,862, and net unrealized appreciation aggregated $621,853,805, of which the related gross unrealized appreciation and depreciation were $752,736,503 and $130,882,698, respectively. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Accordingly, peri- odic reclassifications are made within the Company's capital accounts to re- flect income and gains available for distribution under income tax regula- tions. 3. Investment Transactions Purchases and sales of portfolio securities, other than options and short-term investments, during the three months ended March 31, 2001 were $149,524,634 and $153,990,913, respectively. The Company, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. Option transactions comprised an insignificant portion of operations during the period ended March 31, 2001. All investment decisions are made by a committee, and no one person is primarily responsible for making recommendations to that committee. 4. Capital Stock The Company has 10,000,000 authorized and unissued preferred shares without par value. The Company may purchase shares of its common stock from time to time at such prices and amounts as the Board of Directors may deem advisable. During the three months ended March 31, 2001, the Company purchased 365,300 shares of its common stock at a total cost of $7,657,757 and a weighted average discount from net asset value of 10.0%, compared to purchases of 690,600 shares at a total cost of $23,388,422 and a weighted average discount from net asset value of 14.9% for the same period in 2000. The Company has an employee incentive stock option and stock appreciation rights plan which provides for the issuance of options and stock appreciation rights for the purchase of up to 2,610,146 shares of the Company's common stock at 100% of the fair market value at date of grant. Options are exercis- able beginning not less than one year after the date of grant and extend and vest over ten years from the date of grant. Stock appreciation rights are ex- ercisable beginning not less than two years after the date of grant and extend over the period during which the option is exercisable. The stock appreciation rights allow the holders to surrender their rights to exercise their options and receive cash or shares in an amount equal to the difference between the option price and the fair market value of the common stock at the date of sur- render. Under the plan, the exercise price of the options and related stock appreciation rights is reduced by the per share amount of capital gain paid by the Company during subsequent years. At the beginning of 2001, 339,403 options were outstanding, with a weighted average exercise price of $8.1169 per share. During the three months ended March 31, 2001, the Company granted options in- cluding stock appreciation rights for 38,563 shares of common stock with a weighted average exercise price of $21.00. Stock appreciation rights relating to 15,629 stock option shares were exercised at a weighted average market price of $19.24 per share and the stock options relating to those rights, which had a weighted average exercise price of $5.3121 per share, were can- celled. At March 31, 2001, there were outstanding exercisable options to pur- chase 126,511 common shares at $3.7033-$20.5417 per share (weighted average price of $6.7414), and unexercisable options to purchase 235,826 common shares at $3.7033-$20.5417 per share (weighted average price of $11.0833). The weighted average remaining contractual life of outstanding exercisable and unexercisable options is 3.7943 years and 6.1928 years, respectively. Total compensation expense recognized for the three months ended March 31, 2001 re- lated to the stock options and stock appreciation rights plan was $(727,865). At March 31, 2001, there were 1,272,022 shares available for future option grants. 5. Retirement Plans The Company provides retirement benefits for its employees under a non-con- tributory qualified defined benefit pension plan. The benefits are based on years of service and compensation during the last 36 months of employment. The Company's current funding policy is to contribute annually to the plan only those amounts that can be deducted for federal income tax purposes. The plan assets consist of investments in individual stocks, bonds and mutual funds. The actuarially computed net pension cost credit for the three months ended March 31, 2001 was $104,219, and consisted of service cost of $51,103, inter- est cost of $90,562, expected return on plan assets of $224,278, and net amor- tization credit of $21,606. In determining the actuarial present value of the projected benefit obliga- tion, the interest rate used for the weighted average discount rate was 7.5%, the expected rate of annual salary increases was 7.0%, and the long-term ex- pected rate of return on plan assets was 8.0%. 4 Notes to Financial Statements (continued) ------------------------------------------------------------------------------- On January 1, 2001, the projected benefit obligation for service rendered to date was $4,932,613. During the three months ended March 31, 2001, the pro- jected benefit obligation increased due to service cost and interest cost of $51,103 and $90,562, respectively, and decreased due to benefit payments in the amount of $51,334. The projected benefit obligation March 31, 2001 was $5,022,944. On January 1, 2001, the actual fair value of plan assets was $11,316,574. Dur- ing the three months ended March 31, 2001, the fair value of plan assets in- creased due to the expected return on plan assets of $224,278 and decreased due to benefit payments in the amount of $51,334. At March 31, 2001, the pro- jected fair value of plan assets amounted to $11,489,518, which resulted in excess plan assets of $6,466,574. The remaining components of prepaid pension cost at March 31, 2001 included $986,308 in unrecognized net gain, $513,336 in unrecognized prior service cost and $71,942 is the remaining portion of the unrecognized net asset existing at January 1, 1987, which is being amortized over 15 years. Prepaid pension cost included in other assets at March 31, 2001 was $5,921,660. In addition, the Company has a nonqualified benefit plan which provides em- ployees with defined retirement benefits to supplement the qualified plan. The Company does not provide postretirement medical benefits. 6. Expenses The cumulative amount of accrued expenses at March 31, 2001 for employees and former employees of the Company was $4,261,755. Aggregate remuneration paid or accrued during the three months ended March 31, 2001 to officers and directors amounted to $252,326, which includes a credit of $727,865 for stock options and stock appreciation rights. 7. Portfolio Securities Loaned The Company makes loans of securities to brokers, secured by cash deposits, U.S. Government securities, or bank letters of credit. The Company accounts for securities lending transactions as secured financing and receives compen- sation in the form of fees or retains a portion of interest on the investment of any cash received as collateral. The Company also continues to receive in- terest or dividends on the securities loaned. The loans are secured by collat- eral of at least 102%, at all times, of the fair value of the securities loaned plus accrued interest. Gain or loss in the fair value of the securities loaned that may occur during the term of the loan will be for the account of the Company. At March 31, 2001, the Company had securities on loan of $280,852,157 and held collateral of $293,183,469. Financial Highlights ------------------------------------------------------------------------------- Three Months Ended ---------------------- (unaudited) Year Ended December 31 March 31, March 31, --------------------------------------------------------- 2001 2000 2000 1999 1998 1997 1996 ---------- ---------- ---------- ---------- ----------- ----------- ----------- Per Share Operating Performance* Net asset value, beginning of period $23.72 $26.85 $26.85 $21.69 $19.01 $15.80 $14.24 -------------------------------------------------------------------------------------------------------------------------- Net investment income 0.06 0.04 0.26 0.25 0.30 0.29 0.35 Net realized gains and change in unrealized appreciation and other changes (4.22) 2.01 (1.63) 6.54 3.78 4.22 2.36 -------------------------------------------------------------------------------------------------------------------------- Total from investment operations (4.16) 2.05 (1.37) 6.79 4.08 4.51 2.71 -------------------------------------------------------------------------------------------------------------------------- Capital share repurchases 0.01 0.05 0.09 -- -- -- -- -------------------------------------------------------------------------------------------------------------------------- Less distributions Dividends from net investment income (0.04) (0.03) (0.22) (0.26) (0.30) (0.29) (0.35) Distributions from net realized gains (0.04) (0.05) (1.63) (1.37) (1.10) (1.01) (0.80) -------------------------------------------------------------------------------------------------------------------------- Total distributions (0.08) (0.08) (1.85) (1.63) (1.40) (1.30) (1.15) -------------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $19.49 $28.87 $23.72 $26.85 $21.69 $19.01 $15.80 -------------------------------------------------------------------------------------------------------------------------- Per share market price, end of period $17.52 $24.92 $21.00 $22.38 $17.75 $16.13 $13.17 Total Investment Return Based on market price (16.3)% 11.8% 1.7% 36.1% 19.3% 33.1% 16.4% Based on net asset value (17.5)% 7.9% (4.3)% 33.6% 23.7% 30.7% 21.0% Ratios/Supplemental Data Net assets, end of period (in 000's) $1,596,852 $2,303,559 $1,951,563 $2,170,802 $1,688,080 $1,424,170 $1,138,760 Ratio of expenses to average net assets 0.21%+ 0.50%+ 0.24% 0.32% 0.22% 0.39% 0.34% Ratio of net investment income to average net assets 1.14%+ 0.63%+ 0.97% 1.06% 1.48% 1.61% 2.30% Portfolio turnover 33.65%+ 13.75%+ 12.74% 15.94% 22.65% 17.36% 19.60% Number of shares outstanding at end of period (in 000's)* 81,927 79,806 82,292 80,842 77,815 74,924 72,055 -------- * Prior year data has been adjusted to reflect the 3-for-2 stock split ef- fected in October, 2000. + Ratios presented on an annualized basis. 5 Schedule of Investments -------------------------------------------------------------------------------- March 31, 2001 (unaudited) Prin. Amt. or Shares Value (A) ---------- --------- Stocks And Convertible Securities -- 97.8% Basic Materials -- 1.5% Engelhard Corp. 530,000 $ 13,705,800 Mead Corp. 400,000 10,036,000 ------------ 23,741,800 ------------ Capital Goods -- 10.9% Black & Decker Corp. (B) 300,000 11,025,000 General Electric Co. 1,855,000 77,650,301 ITT Industries 355,000 13,756,250 Minnesota Mining & Manufacturing Co. (B) 285,000 29,611,500 Pall Corp. 600,000 13,152,000 United Technologies Corp. 390,000 28,587,000 ------------ 173,782,051 ------------ Communication Services -- 11.0% Telecommunications -- Cellular and Wireless -- 2.2% MediaOne Group, Inc. 6.25% PIES due 2001 85,000 5,593,000 Nextel Communications Inc. 5.25% Conv. Notes due 2010 (C) $10,000,000 6,412,500 Nextel Communications Inc. (B)(D) 1,040,000 14,950,000 Vodafone Group plc ADS (B) 287,500 7,805,625 ------------ 34,761,125 ------------ Telecommunications -- Long Distance -- 3.0% Qwest Communications International, Inc. 5.75% TRENDS Pfd. due 2003 (C) 538,000 32,616,250 Williams Communications Group, Inc. (B)(D) 500,000 4,500,000 WorldCom, Inc. (B)(D) 550,000 10,278,125 ------------ 47,394,375 ------------ Telephone -- 5.8% American Tower Corp. 5.00% Conv. Notes due 2010 (C) $10,000,000 8,050,000 BellSouth Corp. 440,000 18,004,800 Global Crossing Ltd. 6.75% Conv. Pfd. due 2012 40,000 6,020,000 Global Crossing Ltd. (B)(D) 644,000 8,687,560 RCN Corp. (B)(D) 280,000 1,688,750 SBC Communications Inc. 787,960 35,166,655 Time Warner Telecom Inc. (B)(D) 404,500 14,713,688 ------------ 92,331,453 ------------ Prin. Amt. or Shares Value (A) ---------- --------- Consumer -- 4.0% Coca-Cola Co. (B) 170,000 $ 7,677,200 Dean Foods Co. 300,000 10,158,000 Ivex Packaging Corp. (D) 928,000 12,760,000 PepsiCo, Inc. (B) 295,000 12,965,250 Procter & Gamble Co. (B) 160,000 10,016,000 Tiffany & Co. (B) 350,000 9,537,500 ----------- 63,113,950 ----------- Energy -- 10.9% BP Amoco plc ADR 270,000 13,397,401 Calpine Capital Trust 5.75% Conv. Pfd. HIGH TIDES 202,500 39,639,375 Calpine Corp. (B)(D) 50,000 2,753,500 Enron Corp. (B) 450,000 26,145,000 Exxon Mobil Corp. 158,418 12,831,858 Petroleum & Resources Corporation (E) 1,913,761 52,054,286 Schlumberger Ltd. 88,400 5,092,724 Williams Companies, Inc. 500,000 21,425,000 ----------- 173,339,144 ----------- Financial -- 18.4% Banking -- 11.0% BankNorth Group, Inc. 474,000 9,420,750 Citigroup Inc. 401,023 18,038,020 Federal Home Loan Mortgage Corp. 345.000 22,366,350 Greenpoint Financial Corp. 435,000 14,181,000 Investors Financial Services Corp. 630,000 36,933,750 Mellon Financial Corp. 420,000 17,018,400 Provident Bankshares Corp. 319,068 7,139,147 Wachovia Corp. 190,000 11,447,500 Wells Fargo & Co. 550,000 27,208,500 Wilmington Trust Corp. 210,000 12,406,800 ----------- 176,160,217 ----------- Insurance -- 7.4% AMBAC Financial Group, Inc. 569,400 36,117,042 American International Group, Inc. 759,375 61,129,689 Annuity & Life Re (Holdings), Ltd. 695,000 20,676,250 ----------- 117,922,981 ----------- 6 Schedule of Investments (continued) -------------------------------------------------------------------------------- March 31, 2001 (unaudited) Prin. Amt or Shares Value (A) --------- --------- Health Care -- 13.5% Abbott Laboratories (B) 255,000 $ 12,033,450 ALZA Corp. (B)(D) 480,000 19,440,000 American Home Products Corp. 300,000 17,625,000 Baxter International 255,000 24,005,700 Elan Corp., plc ADR (B)(D) 550,000 28,737,500 Genentech, Inc. (B)(D) 270,000 13,635,000 GlaxoSmithKline plc ADR 250,360 13,093,828 Human Genome Sciences Inc. (B)(D) 200,000 9,200,000 Johnson & Johnson 180,000 15,744,600 Lilly (Eli) & Co. 190,000 14,565,400 Merck & Co., Inc. 250,000 18,975,000 Pharmacia Corp. (B) 368,900 18,581,493 Vertex Pharmaceuticals Inc. (D) 248,016 9,083,586 ------------ 214,720,557 ------------ Technology -- 17.0% Communication Equipment -- 7.5% Corning Inc. 1,170,000 24,207,300 Ericsson (L.M.) Telephone Co. ADR (B) 3,133,333 17,527,081 Lucent Technologies Inc. (B) 508,920 5,073,932 Motorola, Inc. 495,622 7,067,570 Nokia Corp. ADR (B) 1,840,000 44,160,000 Nortel Networks Corp. 1,490,000 20,934,500 ------------ 118,970,383 ------------ Computer Related -- 6.0% BMC Software Inc. (B)(D) 310,000 6,665,000 Cisco Systems, Inc. (D) 1,835,000 29,015,938 Diamondcluster International Inc. (B)(D) 300,000 2,606,250 First Data Corp. (B) 175,000 10,449,250 Oracle Corp. (D) 1,180,000 17,676,400 QRS Corp. (D) 585,000 4,972,500 Sapient Corp. (B)(D) 1,150,000 8,265,625 Sun Microsystems Inc. (D) 480,000 7,377,600 Symantec Corp. (D) 222,500 9,303,281 ------------ 96,331,844 ------------ Electronics -- 3.5% Intel Corp. 690,000 18,155,625 Solectron Corp. (B)(D) 2,000,000 38,020,000 ------------ 56,175,625 ------------ Prin. Amt. or Shares Value (A) ---------- --------- Transportation -- 1.7% Canadian National Railway Co. 5.25% Conv. Pfd. QUIDS due 2029 170,000 $ 9,129,000 Canadian National Railway Co. (B) 85,000 3,201,950 United Parcel Service, Inc. (B) 255,000 14,509,500 ------------- 26,840,450 ------------- Utilities -- 8.9% Black Hills Corp. (B) 555,000 25,369,050 CINergy Corp. 300,000 10,065,000 Duke Energy Corp. 8.25% Conv. Pfd. due 2004 400,000 10,900,000 Duke Energy Corp. (B) 355,000 15,172,700 Keyspan Corp. 400,000 15,252,000 Mirant Corp. (B)(D) 310,000 11,005,000 Northwestern Corp. 500,000 12,250,000 Orion Power Holdings, Inc. (B) 750,000 23,025,000 TECO Energy, Inc. 650,000 19,474,000 ------------- 142,512,750 ------------- Total Stocks and Convertible Securities (Cost $937,310,028) (F) 1,558,098,705 ------------- 7 Schedule of Investments (continued) ------------------------------------------------------------------------------- March 31, 2001 (unaudited) Prin. Amt. or Shares Value (A) ---------- --------- Short-Term Investments -- 2.3% U.S. Government Obligations -- 1.2% U.S. Treasury Bills, 4.54-4.85%, due 5/24/01 $20,000,000 $19,856,906 ------------ Commercial Paper -- 1.1% Ford Motor Credit Corp., 4.88-4.97%, due 4/03/01-4/17/01 9,650,000 9,639,436 General Electric Capital Corp., 4.83-4.98%, due 4/05/01-4/10/01 6,850,000 6,843,887 ------------ 16,483,323 ------------ Value (A) --------- Total Short-Term Investments (Cost $36,340,229) $ 36,340,229 -------------- Total Investments (Cost $973,650,257) 1,594,438,934 Cash, receivables and other assets, less liabilities 2,413,486 -------------- Net Assets -- 100.0% $1,596,852,420 ============== ------------------------------------------------------------------------------- Notes: (A) See note 1 to financial statements. Securities are listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ, except re- stricted securities. (B) All or a portion of these securities is on loan. See Note 7 to Financial Statements. (C) Restricted securities (American Tower Corp. 5% Conv. Notes due 2010, ac- quired 2/9/00-4/13/00, cost $10,037,239, Nextel Communications Inc. 5.25% Conv. Notes due 2010, acquired 1/21/00, cost $10,000,000, and Qwest Commu- nications International, Inc. 5.75% TRENDS Pfd. due 2003, acquired 12/4/98-2/21/01, cost $32,969,481). (D) Presently non-dividend paying. (E) Non-controlled affiliate. (F) The aggregate market value of stocks held in escrow at March 31, 2001 cov- ering open call option contracts written was $22,333,448. In addition, the aggregate market value of securities segregated by the custodian required to collateralize open put option contracts written was $14,085,000. Historical Financial Statistics ------------------------------------------------------------------------------- Dividends Distributions Net from from Asset Net Investment Net Realized Value of Shares Value per Income Gains December 31 Net Assets Outstanding* Share* Per Share* Per Share* ----------- ---------- ------------ --------- -------------- ------------- 1991........................ $ 661,895,779 49,121,246 $13.47 $.36 $ .73 1992........................ 696,924,779 51,039,938 13.65 .31 .77 1993........................ 840,610,252 63,746,498 13.19 .30 .79 1994........................ 798,297,600 66,584,985 11.99 .33 .73 1995........................ 986,230,914 69,248,276 14.24 .35 .76 1996........................ 1,138,760,396 72,054,792 15.80 .35 .80 1997........................ 1,424,170,425 74,923,859 19.01 .29 1.01 1998........................ 1,688,080,336 77,814,977 21.69 .30 1.10 1999........................ 2,170,801,875 80,842,241 26.85 .26 1.37 2000........................ 1,951,562,978 82,292,262 23.72 .22 1.63 March 31, 2001 (unaudited).. 1,596,852,420 81,926,962 19.49 .12+ .04 -------- * Prior years have been adjusted to reflect the 3-for-2 stock split effected in October, 2000. + Paid or declared. 8 Principal Changes in Portfolio Securities -------------------------------------------------------------------------------- During the Three Months Ended March 31, 2001 (unaudited) Shares --------------------------------------- Held Additions Reductions March 31, 2001 --------- ---------- -------------- AOL Time Warner Inc................... 223,128(/1/) 223,128 -- Canadian National Railway Co. 5.25% Conv. Pfd. QUIDS due 2029...... 155,000 170,000 Duke Energy Corp. 8.25% Conv. Pfd. due 2004............ 400,000 400,000 Duke Energy Corp...................... 338,000(/2/) 245,000 355,000 Genentech, Inc........................ 270,000 270,000 Human Genome Sciences Inc............. 200,000 200,000 ITT Industries........................ 355,000 355,000 Keyspan Corp.......................... 400,000 400,000 Mirant Corp........................... 310,000 310,000 Orion Power Holdings, Inc............. 360,000 750,000 TECO Energy, Inc...................... 350,000 650,000 United Parcel Service, Inc............ 80,000 255,000 United Technologies Corp.............. 135,000 390,000 Qwest Communications International, Inc. 5.75% TRENDS Pfd. due 2003........... 413,000 538,000 Cabot Corp............................ 470,000 -- Chiron Corp........................... 550,000 -- Delphi Automotive, Inc................ 370,000 -- Dover Corp............................ 260,000 -- First Data Corp....................... 168,980 175,000 Hewlett-Packard Co.................... 400,000 -- McDonald's Corp....................... 560,000 -- National City Corp.................... 160,000 -- Qwest Communications International, Inc.................................. 760,000 -- -------- (/1/)Received 1.5 shares of AOL Time Warner Inc. for each share of Time Warner Inc. held. (/2/)Received 300,000 shares of Duke Energy Corp. from stock split. Addition- ally purchased 38,000 shares of Duke Energy Corp. ------------------ Common Stock Listed on the New York Stock Exchange and the Pacific Exchange The Adams Express Company Seven St. Paul Street, Suite 1140, Baltimore, MD 21202 Website: www.adamsexpress.com E-mail: contact@adamsexpress.com Telephone: (410) 752-5900 or (800) 638-2479 Counsel: Chadbourne & Parke L.L.P. Independent Accountants: PricewaterhouseCoopers LLP Transfer Agent, Registrar & Custodian of Securities The Bank of New York 101 Barclay Street New York, NY 10286 The Bank's Shareholder Relations Department: (800) 432-8224 E-mail: Shareowner-svcs@bankofny.com 9 Annual Meeting of Stockholders -------------------------------------------------------------------------------- The Annual Meeting of Stockholders was held on March 27, 2001. For those nomi- nated, the following votes were cast for directors: votes for votes withheld --------- -------------- (A) Enrique R. Arzac: 68,370,823 572,379 (B) Daniel E. Emerson: 68,187,505 755,697 (C) Thomas H. Lenagh: 67,816,679 1,126,523 (D) W.D. MacCallan: 68,146,076 797,126 (E) W. Perry Neff: 68,242,428 700,774 (F) Douglas G. Ober: 68,094,854 848,348 (G) Landon Peters: 68,285,348 657,854 (H) John J. Roberts: 68,123,524 819,678 (I) Susan C. Schwab: 68,308,217 634,985 (J) Robert J.M. Wilson: 67,951,649 991,553 A proposal to approve and ratify the selection of PricewaterhouseCoopers LLP as the firm of independent accountants of the Company for 2001 was approved with 68,170,131 votes for, 387,364 votes against, and 385,707 votes abstaining. ------------------- This report, including the financial statements herein, is transmitted to the stockholders of The Adams Express Company for their information. It is not a prospectus, circular or representation intended for use in the pur- chase or sale of shares of the Company or of any securities mentioned in the report. The rates of return will vary and the market value of an investment will fluctuate. Shares, if sold, may be worth more or less than their origi- nal cost. Past performance is not indicative of future investment results. 10 Shareholder Information and Services ------------------------------------------------------------------------------- DIVIDEND PAYMENT SCHEDULE The Company presently pays dividends four times a year, as follows: (a) three interim distributions on or about March 1, June 1, and September 1, and (b) a "year-end" distribution, payable in late December, consisting of the estimated balance of the net investment income for the year and the net realized capital gain earned through October 31. Stockholders may elect to receive the year-end distribution in stock or cash. In connection with this distribution, all stockholders of record are sent a dividend announcement notice and an election card in mid-November. Stockholders holding shares in "street" or brokerage accounts may make their election by notifying their brokerage house representative. BuyDIRECTSM* BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvest- ment plan, sponsored and administered by our transfer agent, The Bank of New York. The Plan provides registered stockholders and interested first time in- vestors an affordable alternative for buying, selling, and reinvesting in Adams Express shares. Direct purchase plans are growing in popularity and Adams Express is pleased to participate in such a plan. The costs to participants in administrative service fees and brokerage commis- sions for each type of transaction are listed below. Please note that the fees for the reinvestment of dividends as well as the $0.05 per share commission for each share purchased under the Plan have not increased since 1973. Initial Enrollment $7.50 A one-time fee for new accounts who are not currently registered holders. Optional Cash Investments Service Fee $2.50 per investment Brokerage Commission $0.05 per share Reinvestment of Dividends** Service Fee 10% of amount invested (maximum of $2.50 per investment) Brokerage Commission $0.05 per share Sale of Shares Service Fee $10.00 Brokerage Commission $0.05 per share Deposit of Certificates for safekeeping Included Book to Book Transfers Included To transfer shares to another participant or to a new participant Fees are subject to change at any time. Minimum and Maximum Cash Investments Initial minimum investment (non-holders) $500.00 Minimum optional investment (existing holders) $50.00 Electronic Funds Transfer (monthly minimum) $50.00 Maximum per transaction $25,000.00 Maximum per year NONE A brochure which further details the benefits and features of BuyDIRECT as well as an enrollment form may be obtained by contacting The Bank of New York. For Non-Registered Shareholders For shareholders whose stock is held by a broker in "street" name, The Bank of New York's Dividend Reinvestment Plan remains available through many regis- tered investment security dealers. If your shares are currently held in a "street" name or brokerage account, please contact your broker for details about how you can participate in the Plan or contact The Bank of New York about the BuyDIRECT Plan. ----------- The Company The Transfer Agent The Adams Express The Bank of New York Company Shareholder Relations Dept.-8W Lawrence L. P.O. Box 11258 Hooper, Jr., Church Street Station Vice President, New York, NY 10286 Secretary and (800) 432-8224 General Counsel Website: Seven St. Paul http://stock.bankofny.com Street, E-mail: Suite 1140 Shareowner-svcs@ bankofny.com Baltimore, MD 21202 (800) 638-2479 Website: www.adamsexpress.com E-mail: contact@adamsexpress.com *BuyDIRECT is a service mark of The Bank of New York. **The year-end dividend and capital gain distribution may be made in newly is- sued shares of common stock in which event there would be no fees or commis- sions in connection with this dividend and capital gain distribution. 11