N-CSRS 1 adxncsrs06302007.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-00248 --------------------------------------------- THE ADAMS EXPRESS COMPANY -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 7 Saint Paul Street, Suite 1140, Baltimore, Maryland 21202 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Lawrence L. Hooper, Jr. The Adams Express Company 7 Saint Paul Street Suite 1140 Baltimore, Maryland 21202 Registrant's telephone number, including area code: 410-752-5900 Date of fiscal year end: December 31, 2007 Date of reporting period: June 30, 2007 Item 1: Reports to Stockholders. THE ADAMS EXPRESS COMPANY -------------------------------------------------------------------------------- Board of Directors Enrique R. Arzac /1,4,5/ Thomas H. Lenagh /2,3/ Phyllis O. Bonanno /1,4,5/ Kathleen T. McGahran /2,4/ Daniel E. Emerson/ 1,3,5/ Douglas G. Ober/ 1/ Frederic A. Escherich /2,3/ Craig R. Smith /2,4/ Roger W. Gale /1,3,5/ 1.Member of Executive Committee 2.Member of Audit Committee 3.Member of Compensation Committee 4.Member of Retirement Benefits Committee 5.Member of Nominating and Governance Committee Officers Douglas G. Ober Chairman and Chief Executive Officer Joseph M. Truta President Lawrence L. Hooper, Jr. Vice President, General Counsel and Secretary Maureen A. Jones Vice President, Chief Financial Officer and Treasurer Stephen E. Kohler Vice President--Research David R. Schiminger Vice President--Research D. Cotton Swindell Vice President--Research David D. Weaver Vice President--Research Christine M. Sloan Assistant Treasurer Geraldine H. Pare Assistant Secretary
-------- Stock Data -------- Market Price (6/30/07) $14.89 Net Asset Value (6/30/07) $17.06 Discount: 12.7%
New York Stock Exchange ticker symbol: ADX NASDAQ Mutual Fund Quotation Symbol: XADEX Newspaper stock listings are generally under the abbreviation: AdaEx ---------------- Distributions in 2007 ---------------- From Investment Income (paid or declared) $0.14 From Net Realized Gains 0.01 ----- Total $0.15 =====
---------------------- 2007 Dividend Payment Dates ---------------------- March 1, 2007 June 1, 2007 September 1, 2007 December 27, 2007* *Anticipated The Adams Express Company Semi-Annual Report June 30, 2007 Generation after generation we grow with you/tm INVEST/PROTECT/GROW [GRAPHIC] LETTER TO STOCKHOLDERS -------------------------------------------------------------------------------- We submit herewith the financial statements of The Adams Express Company (the Company) for the six months ended June 30, 2007. Also provided are the report of the independent registered public accounting firm, a schedule of investments, and other summary financial information. Net assets of the Company at June 30, 2007 were $17.06 per share on 85,893,132 shares outstanding, compared with $15.86 per share at December 31, 2006 on 86,838,223 shares outstanding. On March 1, 2007, a distribution of $0.05 per share was paid, consisting of $0.03 from 2006 investment income, $0.01 from 2006 short-term capital gain, and $0.01 from 2007 investment income, all taxable in 2007. A 2007 invest-ment income dividend of $0.05 per share was paid on June 1, 2007, and another $0.05 per share investment income dividend has been declared to shareholders of record August 14, 2007, payable September 1, 2007. Net investment income for the six months ended June 30, 2007 amounted to $16,387,719, compared with $8,966,520 for the same period in 2006. These earnings are equal to $0.19 and $0.11 per share. Net capital gain realized on investments for the six months ended June 30, 2007 amounted to $35,958,118, or $0.42 per share. The total return on the net asset value (with dividends and capital gains reinvested) of the Company's shares was 8.3% for the six months ended June 30, 2007. The total return on the market value of the Company's shares in the period was 8.1%. These compare to a 7.0% total return for the Standard & Poor's 500 Composite Stock Index and a 6.9% total return for the Lipper Large Cap Core Mutual Fund Average over the same time period. For the twelve months ended June 30, 2007, the Company's total return on net asset value was 20.3% and on market value was 23.3%, as the discount narrowed during the period. Comparable figures for the S&P 500 and the Lipper Large Cap Core Mutual Fund Average were 20.6% and 19.6%, respectively. In June 2007, the Board of Directors of the Company adopted Amended and Restated Bylaws for the Company. Further information may be found on page 16 of this report. Current and potential stockholders can find information about the Company, including the daily net asset value (NAV) per share, the market price, and the discount/premium to the NAV, on our website at www.adamsexpress.com. Also available on the website are a history of the Company, historical financial information, and other useful content. Further information regarding stockholder services is located on page 18 of this report. ----------------- By order of the Board of Directors, /s/ Douglas G. Ober, Chairman and Chief Executive Officer /s/ Joseph M. Truta Joseph M. Truta, President July 13, 2007 STATEMENT OF ASSETS AND LIABILITIES -------------------------------------------------------------------------------- June 30, 2007 Assets Investments* at value: Common stocks and convertible securities (cost $893,749,645) $1,320,403,289 Non-controlled affiliate, Petroleum & Resources Corporation (cost $34,735,404) 84,453,212 Short-term investments (cost $56,042,573) 56,042,573 Securities lending collateral (cost $51,790,258) 51,790,258 $1,512,689,332 ------------------------------------------------------------------------------------------------ Cash 394,141 Investment securities sold 1,279,753 Dividends and interest receivable 1,254,791 Prepaid pension cost 3,384,802 Prepaid expenses and other assets 2,305,143 --------------------------------------------------------------------------------------------------------------- Total Assets 1,521,307,962 --------------------------------------------------------------------------------------------------------------- Liabilities Investment securities purchased 349,156 Open written option contracts at value (proceeds $522,629) 613,325 Obligations to return securities lending collateral 51,790,258 Accrued expenses 3,305,316 --------------------------------------------------------------------------------------------------------------- Total Liabilities 56,058,055 --------------------------------------------------------------------------------------------------------------- Net Assets $1,465,249,907 --------------------------------------------------------------------------------------------------------------- Net Assets Common Stock at par value $0.001 per share, authorized 150,000,000 shares; issued and outstanding 85,893,132 shares (includes 86,867 restricted shares, 6,000 restricted stock units, and 4,112 deferred stock units) (Note 6) $ 85,893 Additional capital surplus 940,985,075 Accumulated other comprehensive income (Note 5) (1,716,072) Undistributed net investment income 13,257,872 Undistributed net realized gain on investments 36,356,383 Unrealized appreciation on investments 476,280,756 --------------------------------------------------------------------------------------------------------------- Net Assets Applicable to Common Stock $1,465,249,907 --------------------------------------------------------------------------------------------------------------- Net Asset Value Per Share of Common Stock $17.06 ---------------------------------------------------------------------------------------------------------------
* See Schedule of Investments on pages 9 and 10. The accompanying notes are an integral part of the financial statements. 2 STATEMENT OF OPERATIONS -------------------------------------------------------------------------------- Six Months Ended June 30, 2007 Investment Income Income: Dividends: From unaffiliated issuers $ 17,571,283 From non-controlled affiliate 415,487 Interest and other income 1,669,448 ------------------------------------------------------------------------------------------------------- Total income 19,656,218 ------------------------------------------------------------------------------------------------------- Expenses: Investment research 1,478,739 Administration and operations 726,243 Directors' fees 172,626 Reports and stockholder communications 195,593 Transfer agent, registrar and custodian expenses 171,863 Auditing and accounting services 61,351 Legal services 67,968 Occupancy and other office expenses 231,935 Travel, telephone and postage 48,160 Other 114,021 ------------------------------------------------------------------------------------------------------- Total expenses 3,268,499 ------------------------------------------------------------------------------------------------------- Net Investment Income 16,387,719 ------------------------------------------------------------------------------------------------------- Realized Gain and Change in Unrealized Appreciation on Investments Net realized gain on security transactions 35,805,044 Net realized gain distributed by regulated investment company (non-controlled affiliate) 153,074 Change in unrealized appreciation on investments 57,524,500 ------------------------------------------------------------------------------------------------------- Net Gain on Investments 93,482,618 ------------------------------------------------------------------------------------------------------- Change in Net Assets Resulting from Operations $109,870,337 -------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 3 STATEMENTS OF CHANGES IN NET ASSETS --------------------------------------------------------------------------------
Six Months Ended Year Ended June 30, 2007 December 31, 2006 ---------------- ----------------- From Operations: Net investment income $ 16,387,719 $ 19,691,488 Net realized gain on investments 35,958,118 56,553,881 Change in unrealized appreciation on investments 57,524,500 102,278,889 Change in accumulated other comprehensive income (note 5) 108,033 (1,824,105) ---------------------------------------------------------------------------------------------- Change in net assets resulting from operations 109,978,370 176,700,153 ---------------------------------------------------------------------------------------------- Distributions to Stockholders from: Net investment income (7,762,435) (19,554,259) Net realized gain from investment transactions (868,719) (56,771,240) ---------------------------------------------------------------------------------------------- Decrease in net assets from distributions (8,631,154) (76,325,499) ---------------------------------------------------------------------------------------------- From Capital Share Transactions: Value of shares issued in payment of distributions 3,761 31,661,698 Cost of shares purchased (Note 4) (13,843,891) (21,770,315) Deferred compensation (Notes 4,6) 324,511 423,621 ---------------------------------------------------------------------------------------------- Change in net assets from capital share transactions (13,515,619) 10,315,004 ---------------------------------------------------------------------------------------------- Total Increase in Net Assets 87,831,597 110,689,658 Net Assets: Beginning of period 1,377,418,310 1,266,728,652 ---------------------------------------------------------------------------------------------- End of period (including undistributed net investment income of $13,257,872 and $4,632,588, respectively) $1,465,249,907 $1,377,418,310 ----------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements. 4 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 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 is an internally-managed fund whose investment objectives are preservation of capital, the attainment of reasonable income from investments, and an opportunity for capital appreciation. 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 (excluding purchased options) are valued at amortized cost. Purchased and written options are valued at the last quoted asked price. Affiliated Companies -- Investments in companies 5% or more of whose outstanding voting securities are held by the Company are defined as "Affiliated Companies" in Section 2(a)(3) of the Investment Company Act of 1940. Security Transactions and Investment Income -- Investment transactions are accounted for on the trade date. Gain or loss on sales of securities and options is determined on the basis of identified cost. Dividend income and distributions to stockholders are recognized on the ex-dividend date, and interest income is recognized on the accrual basis. 2. Federal Income Taxes The Company's policy is to distribute all of its taxable income to its stockholders in compliance with the requirements of the Internal Revenue Code applicable to regulated investment companies. Therefore, no federal income tax provision is required. For federal income tax purposes, the identified cost of securities at June 30, 2007 was $1,035,830,629 and net unrealized appreciation aggregated $476,858,703, of which the related gross unrealized appreciation and depreciation were $530,588,714 and $53,730,011, respectively. Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Accordingly, annual reclassifications are made within the Company's capital accounts to reflect income and gains available for distribution under income tax regulations. Any income tax-related interest or penalties would be classified as income tax expense. Effective June 29, 2007, the Company adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, a clarification of FASB Statement No. 109, Accounting for Income Taxes. FIN 48 establishes financial reporting rules regarding recognition and measurement of tax positions taken or expected to be taken on a tax return. The adoption of FIN 48 had no impact on the Company's net assets or results of operations. 3. Investment Transactions The Company's investment decisions are made by a committee of management, and recommendations to that committee are made by the research staff. Purchases and sales of portfolio securities, other than options and short-term investments, during the six months ended June 30, 2007 were $93,154,357 and $89,051,906, respectively. Options may be written (sold) or purchased by the Company. The Company, as writer of an option, bears the risks of possible illiquidity of the option markets and from movements in security values. The risk associated with purchasing an option is limited to the premium originally paid. A schedule of outstanding option contracts as of June 30, 2007 can be found on page 12. Transactions in written covered call and collateralized put options during the six months ended June 30, 2007 were as follows:
Covered Calls Collateralized Puts ------------------- ------------------- Contracts Premiums Contracts Premiums --------- --------- --------- --------- Options outstanding, December 31, 2006 3,745 $ 497,618 2,103 $ 220,313 Options written 3,690 465,727 3,035 327,642 Options terminated in closing purchase transactions (550) (83,598) -- -- Options expired (2,395) (293,125) (2,853) (310,810) Options exercised (2,100) (301,138) -- -- --------------------------------------------------------------- Options outstanding, June 30, 2007 2,390 $ 285,484 2,285 $ 237,145 ---------------------------------------------------------------
4. Capital Stock The Company has 10,000,000 authorized and unissued preferred shares, $0.001 par value. On December 27, 2006, the Company issued 2,301,959 shares of its Common Stock at a price of $13.75 per share (the average market price on December 11, 2006) to stockholders of record on November 21, 2006 who elected to take stock in payment of the year-end distribution from 2006 capital gain and investment income. In addition, 722 shares were issued at a weighted average price of $13.43 per share as dividend equivalents to holders of deferred stock units and restricted stock units under the 2005 Equity Incentive Compensation Plan. During 2007, the Company has issued 267 shares of its Common Stock at a weighted average price of $14.02 per share as dividend equivalents to holders of deferred stock units and restricted stock units under the 2005 Equity Incentive Compensation Plan. 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. Transactions in Common Stock for 2007 and 2006 were as follows:
Shares Amount ---------------------- -------------------------- Six months Six months ended Year ended ended Year ended June 30, December 31, June 30, December 31, 2007 2006 2007 2006 ---------- ------------ ------------ ------------ Shares issued in payment of distributions 267 2,302,681 $ 3,761 $ 31,661,698 Shares purchased (at a weighted average discount from net asset value of 13.2% and 13.9%, respectively) (989,124) (1,623,542) (13,843,891) (21,770,315) Net activity under the Equity-Based Compensation Plans 43,766 59,477 324,511 423,621 -------------------------------------------------------------------------- Net change (945,091) 738,616 $(13,515,619) $ 10,315,004 --------------------------------------------------------------------------
5 NOTES TO FINANCIAL STATEMENTS (CONTINUED) -------------------------------------------------------------------------------- 5. Retirement Plans The Company's non-contributory qualified defined benefit pension plan covers all employees with at least one year of service. In addition, the Company has a non-contributory nonqualified defined benefit plan which provides eligible employees with retirement benefits to supplement the qualified plan. Benefits are based on length of service and compensation during the last five years of employment. The funded status of the plans is recognized as an asset (overfunded plan) or a liability (underfunded plan) in the Statement of Assets and Liabilities. Changes in the prior service costs and accumulated actuarial gains and losses are recognized as accumulated other comprehensive income, a component of net assets, in the year in which the changes occur. The Company's policy is to contribute annually to the plans those amounts that can be deducted for federal income tax purposes, plus additional amounts as the Company deems appropriate in order to provide assets sufficient to meet benefits to be paid to plan participants. During the six months ended June 30, 2007, the Company did not contribute to the plans. The Company does not anticipate making any contribution to the overfunded plan in 2007. The following table aggregates the components of the plans' net periodic pension cost:
Six months ended Year ended June 30, December 31, 2007 2006 ---------- ------------ Service cost $ 243,658 $ 460,969 Interest cost 284,247 518,015 Expected return on plan assets (427,777) (922,155) Amortization of prior service cost 47,254 119,776 Amortization of net loss 81,313 180,764 Deferred asset gain -- 128,119 ---------------------------------------------------------- Net periodic pension cost $ 228,695 $ 485,488 ----------------------------------------------------------
The Company also sponsors a defined contribution plan that covers substantially all employees. For the six months ended June 30, 2007, the Company expensed contributions of $95,309. The Company does not provide postretirement medical benefits. 6. Equity-Based Compensation Although the Stock Option Plan of 1985 ("1985 Plan") has been discontinued and no further grants will be made under this plan, unexercised grants of stock options and stock appreciation rights granted in 2004 and prior years remain outstanding. The exercise price of the unexercised options and related stock appreciation rights is the fair market value on date of grant, reduced by the per share amount of capital gains paid by the Company during subsequent years. All options and related stock appreciation rights terminate 10 years from date of grant, if not exercised. A summary of option activity under the 1985 Plan as of June 30, 2007, and changes during the six month period then ended, is presented below:
Weighted- Weighted- Average Average Exercise Remaining Options Price Life (Years) ------- --------- ------------ Outstanding at December 31, 2006 201,990 $11.81 4.79 Exercised (55,186) 10.38 -- ---------------------------------------------------------------- Outstanding at June 30, 2007 146,804 $12.33 3.97 ---------------------------------------------------------------- Exercisable at June 30, 2007 80,282 $12.86 3.25 ----------------------------------------------------------------
The options outstanding as of June 30, 2007 are set forth below:
Weighted Weighted Average Average Options Exercise Remaining Exercise Price Outstanding Price Life (Years) -------------- ----------- -------- ------------ $8.25-$10.49 42,817 $ 9.25 3.64 $10.50-$12.74 52,839 11.02 5.10 $12.75-$14.99 -- -- -- $15.00-$17.25 51,148 16.28 3.09 -------------------------------------------------------------- Outstanding at June 30, 2007 146,804 $12.33 3.97 --------------------------------------------------------------
Compensation cost resulting from stock options and stock appreciation rights granted under the 1985 Plan is based on the intrinsic value of the award, recognized over the award's vesting period, and remeasured at each reporting date through the date of settlement. The total compensation cost recognized for the six months ended June 30, 2007 was $115,897. The 2005 Equity Incentive Compensation Plan ("2005 Plan"), adopted at the 2005 Annual Meeting, permits the grant of stock options, restricted stock awards and other stock incentives to key employees and all non-employee directors. The 2005 Plan provides for the issuance of up to 3,413,131 shares of the Company's Common Stock, including both performance and nonperformance-based restricted stock. Performance-based restricted stock awards vest at the end of a specified three year period, with the ultimate number of awards earned contingent on achievement of certain performance targets. If performance targets are not achieved, all or a portion of the performance-based awards are forfeited and become available for future grants. Nonperformance-based restricted stock awards vest ratably over a three year period and nonperformance-based restricted stock units (granted to non-employee directors) vest over a one year period. It is the current intention that employee grants will be performance-based. The 2005 Plan provides for accelerated vesting in the event of death or retirement. Non-employee directors also may elect to defer a portion of their cash compensation, with such deferred amount to be paid by delivery of deferred stock units. Outstanding awards are granted at fair market value on grant date. The number of shares of Common Stock which remains available for future grants under the 2005 Plan at June 30, 2007 is 3,289,337 shares. The Company pays dividends and dividend equivalents on outstanding awards, which are charged to net assets when paid. Dividends and dividend equivalents paid on restricted awards that are later forfeited are reclassified to compensation expense. A summary of the status of the Company's awards granted under the 2005 Plan as of June 30, 2007, and changes during the six month period then ended, is presented below:
Weighted Average Shares/ Grant-Date Awards Units Fair Value ------ ------- ---------- Balance at December 31, 2006 70,493 $12.92 Granted: Restricted stock 32,720 13.73 Restricted stock units 6,000 14.07 Deferred stock units 963 13.90 Vested (13,197) 12.99 Forfeited -- -- ------------------------------------------------------------- Balance at June 30, 2007 (includes 82,220 performance-based awards and 14,759 nonperformance-based awards) 96,979 $13.13 -------------------------------------------------------------
6 NOTES TO FINANCIAL STATEMENTS (CONTINUED) -------------------------------------------------------------------------------- Compensation costs resulting from awards granted under the 2005 Plan are based on the fair value of the award on grant date (determined by the average of the high and low price on grant date) and recognized on a straight-line basis over the requisite service period. For those awards with performance conditions, compensation costs are based on the most probable outcome and, if such goals are not met, compensation cost is not recognized and any previously recognized compensation cost is reversed. The total compensation costs for restricted stock granted to employees for the period ending June 30, 2007 were $209,452. The total compensation costs for restricted stock units granted to non-employee directors for the period ended June 30, 2007 were $44,876. As of June 30, 2007, there were total unrecognized compensation costs of $807,143, a component of additional capital surplus, related to nonvested equity-based compensation arrangements granted under the 2005 Plan. Those costs are expected to be recognized over a weighted average period of 1.87 years. 7. Officer and Director Compensation The aggregate remuneration paid during the six months ended June 30, 2007 to officers and directors amounted to $2,080,502, of which $185,041 was paid as fees and compensation to directors who were not officers. These amounts represent the taxable income to the Company's officers and directors and therefore differ from the amounts reported in the accompanying Statement of Operations that are recorded and expensed in accordance with generally accepted accounting principles. 8. 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 compensation 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 interest or dividends on the securities loaned. The loans are secured at all times by collateral of at least 102% 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 June 30, 2007, the Company had securities on loan of $50,590,515 and held collateral of $51,790,258, consisting of an investment trust fund which may invest in money market instruments, commercial paper, repurchase agreements, U.S. Treasury Bills, and U.S. agency obligations. 7 FINANCIAL HIGHLIGHTS --------------------------------------------------------------------------------
------------------------ Six Months Ended ---------------------- Year Ended December 31 June 30, June 30, ------------------------------------------------------ 2007 2006 2006 2005 2004 2003 2002 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Per Share Operating Performance Net asset value, beginning of period $15.86 $14.71 $14.71 $15.04 $14.36 $12.12 $16.05 -------------------------------------------------------------------------------------------------------------------- Net investment income 0.19* 0.11 0.23 0.22 0.23** 0.19 0.20 Net realized gains and increase (decrease) in unrealized appreciation 1.09 0.37 1.86 0.32 1.39 2.85 (3.38) Change in accumulated other comprehensive income (note 5) -- -- (0.02) -- -- -- -- -------------------------------------------------------------------------------------------------------------------- Total from investment operations 1.28 0.48 2.07 0.54 1.62 3.04 (3.18) -------------------------------------------------------------------------------------------------------------------- Less distributions Dividends from net investment income (0.09) (0.08) (0.23) (0.22) (0.24) (0.17) (0.19) Distributions from net realized gains (0.01) (0.02) (0.67) (0.64) (0.66) (0.61) (0.57) -------------------------------------------------------------------------------------------------------------------- Total distributions (0.10) (0.10) (0.90) (0.86) (0.90) (0.78) (0.76) -------------------------------------------------------------------------------------------------------------------- Capital share repurchases 0.02 0.03 0.04 0.05 0.02 0.04 0.05 Reinvestment of distributions -- -- (0.06) (0.06) (0.06) (0.06) (0.04) -------------------------------------------------------------------------------------------------------------------- Total capital share transactions 0.02 0.03 (0.02) (0.01) (0.04) (0.02) 0.01 -------------------------------------------------------------------------------------------------------------------- Net asset value, end of period $17.06 $15.12 $15.86 $14.71 $15.04 $14.36 $12.12 -------------------------------------------------------------------------------------------------------------------- Per share market price, end of period $14.89 $12.87 $13.87 $12.55 $13.12 $12.41 $10.57 Total Investment Return Based on market price 8.1% 3.3% 17.9% 2.2% 13.2% 25.2% (20.6)% Based on net asset value 8.3% 3.6% 15.0% 4.5% 12.1% 26.3% (19.4)% Ratios/Supplemental Data Net assets, end of period (in 000's) $1,465,250 $1,286,894 $1,377,418 $1,266,729 $1,295,549 $1,218,862 $1,024,810 Ratio of expenses to average net assets 0.46%+ 0.47%+ 0.50% 0.45% 0.43% 0.47% 0.34% Ratio of net investment income to average net assets 2.31%+ 1.38%+ 1.50% 1.44% 1.54% 1.45% 1.42% Portfolio turnover 13.11%+ 13.55%+ 10.87% 12.96% 13.43% 12.74% 17.93% Number of shares outstanding at end of period (in 000's) 85,893 85,117 86,838 86,100 86,135 84,886 84,536 ------------------------
-------- *In April 2007 the Company received $5,100,000, or $0.06 per share, in a special cash dividend from Dean Foods Co. **In 2004 the Company received $2,400,000, or $0.03 per share, in an extraordinary dividend from Microsoft Corp. +Ratios presented on an annualized basis. 8 SCHEDULE OF INVESTMENTS -------------------------------------------------------------------------------- June 30, 2007
Shares Value (A) - --------- ------------ Stocks and Convertible Securities -- 95.9% Consumer -- 16.6% Consumer Discretionary -- 7.1% BJ's Wholesale Club, Inc. (B) 450,000 $ 16,213,500 Comcast Corp. (B) 525,000 14,763,000 Gannett Co., Inc. 112,500 6,181,875 Harley-Davidson, Inc. (C) 120,000 7,153,200 Lowe's Companies, Inc. 575,000 17,646,750 Newell Rubbermaid Inc. 400,000 11,772,000 Ryland Group Inc. (C) 305,000 11,397,850 Target Corp. 290,000 18,444,000 ------------ 103,572,175 ------------ Consumer Staples -- 9.5% Avon Products, Inc. 418,400 15,376,200 Bunge Ltd. 140,000 11,830,000 Coca-Cola Co. 200,000 10,462,000 Dean Foods Co. 340,000 10,835,800 Del Monte Foods Co. 1,115,000 13,558,400 PepsiCo, Inc. 400,000 25,940,000 Procter & Gamble Co. 340,000 20,804,600 Safeway Inc. 390,000 13,271,700 Unilever plc ADR 550,000 17,743,000 ------------ 139,821,700 ------------ Energy -- 13.1% ConocoPhillips 345,000 27,082,500 ENSCO International, Inc. 209,150 12,760,242 Exxon Mobil Corp. 215,000 18,034,200 Marathon Oil Co. 240,000 14,390,400 Murphy Oil Corp. 38,500 2,288,440 Petroleum & Resources Corporation (D) 2,186,774 84,453,212 Schlumberger Ltd. 380,000 32,277,200 ------------ 191,286,194 ------------ Financials -- 16.4% Banking -- 12.8% BankAtlantic Bancorp, Inc. 880,000 7,576,800 Bank of America Corp. 610,000 29,822,900 Bank of New York Co., Inc. (The) 375,000 15,540,000 Compass Bancshares Inc. 85,000 5,863,300 Fifth Third Bancorp 280,000 11,135,600 Investors Financial Services Corp. 357,500 22,047,024 Morgan Stanley 150,000 12,582,000 PNC Financial Services Group Inc. 200,000 14,316,000 Prosperity Bancshares, Inc. 200,000 6,552,000 Wachovia Corp. 470,000 24,087,500 Wells Fargo & Co. 650,000 22,860,500 Wilmington Trust Corp. 363,000 15,068,130 ------------ 187,451,754 ------------
Shares Value (A) - --------- ------------ Insurance -- 3.6% AMBAC Financial Group, Inc. 200,000 $ 17,438,000 American International Group, Inc. 500,000 35,015,000 ------------ 52,453,000 ------------ Health Care -- 12.1% Abbott Laboratories 320,000 17,136,000 Advanced Medical Optics, Inc. (B)(C) 325,000 11,336,000 Bristol-Myers Squibb Co. 345,000 10,888,200 CVS/Caremark Corp. 208,750 7,608,938 Genentech, Inc. (B) 220,000 16,645,200 Johnson & Johnson 255,000 15,713,100 Medtronic, Inc. 310,000 16,076,600 Pfizer Inc. 1,120,000 28,638,400 Senomyx, Inc. (B)(C) 550,000 7,425,000 Teva Pharmaceutical Industries Ltd. ADR 385,000 15,881,250 Wyeth Co. 325,000 18,635,500 Zimmer Holdings, Inc. (B) 125,000 10,611,250 ------------ 176,595,438 ------------ Industrials -- 14.2% Cintas Corp. 300,000 11,829,000 Curtiss-Wright Corp. 360,000 16,779,600 Emerson Electric Co. 400,000 18,720,000 General Electric Co. 1,487,700 56,949,156 Illinois Tool Works Inc. 250,000 13,547,500 Masco Corp. 450,000 12,811,500 Oshkosh Truck Corp. 270,000 16,988,400 3M Co. 160,000 13,886,400 Spirit AeroSystems Holdings, Inc. (B) 395,000 14,239,750 United Parcel Service, Inc. 155,000 11,315,000 United Technologies Corp. 300,000 21,279,000 ------------ 208,345,306 ------------ Information Technology -- 12.7% Communication Equipment -- 1.6% Avaya Inc. (B) 600,000 10,104,000 Corning Inc. (B) 500,000 12,775,000 ------------ 22,879,000 ------------ Computer Related -- 8.3% Automatic Data Processing Inc. 300,000 14,541,000 BEA Systems, Inc. (B) 800,000 10,952,000 Cisco Systems, Inc. (B) 850,000 23,672,500 Dell Inc. (B) 585,000 16,701,750 Microsoft Corp. 1,180,000 34,774,600 Oracle Corp. (B) 1,100,000 21,681,000 ------------ 122,322,850 ------------ Electronics -- 2.8% Broadcom Corp. (B) 400,000 11,700,000 Cree, Inc. (B)(C) 375,000 9,693,750 Intel Corp. 800,000 19,008,000 ------------ 40,401,750 ------------
9 SCHEDULE OF INVESTMENTS (CONTINUED) -------------------------------------------------------------------------------- June 30, 2007
Shares Value (A) - ------- -------------- Materials -- 4.9% Air Products and Chemicals, Inc. 230,000 $ 18,485,100 du Pont (E.I.) de Nemours and Co. 360,000 18,302,400 Florida Rock Industries Inc. 200,000 13,500,000 Rohm & Haas Co. 400,000 21,872,000 -------------- 72,159,500 -------------- Telecom Services -- 2.8% Alltel Corp. 300,000 20,265,000 AT&T Corp. 400,000 16,600,000 Windstream Corp. 310,178 4,578,227 -------------- 41,443,227 -------------- Utilities -- 3.1% Aqua America, Inc. (C) 499,000 11,222,510 Duke Energy Corp. 611,560 11,191,548 MDU Resources Group, Inc. 562,500 15,772,500 Spectra Energy Corp. 305,780 7,938,049 -------------- 46,124,607 -------------- Total Stocks and Convertible Securities (Cost $928,485,049) (E) $1,404,856,501 --------------
Prin. Amt. Value (A) - ----------- -------------- Short-Term Investments -- 3.8% U.S. Government Obligations -- 1.1% U.S. Treasury Bills, 4.70%, due 8/16/07 $16,500,000 $ 16,400,908 -------------- Time Deposit -- 0.0% Bank of America Corp., 4.64%, due 7/2/07 206,900 -------------- Commercial Paper -- 2.7% AIG Funding Inc., 5.25%, due 7/5/07 5,400,000 5,396,850 American General Finance, Inc., 5.26%, due 7/10/07 5,000,000 4,993,431 Chevron Funding Corp., 5.21%, due 7/17/07 6,000,000 5,986,107 General Electric Capital Corp., 5.23-5.24%, due 7/5/07-7/19/07 11,500,000 11,476,108 Toyota Motor Credit Corp., 5.21-5.23%, due 7/3/07- 7/24/07 11,600,000 11,582,269 -------------- 39,434,765 -------------- Total Short-Term Investments (Cost $56,042,573) 56,042,573 -------------- Total Securities Lending Collateral -- 3.5% (Cost $51,790,258) Brown Brothers Investment Trust, 5.28%, due 7/2/07 51,790,258 -------------- Total Investments -- 103.2% (Cost $1,036,317,880) 1,512,689,332 Cash, receivables, prepaid pension cost, prepaid expenses and other assets, less liabilities -- (3.2)% (47,439,426) -------------- Net Assets -- 100% $1,465,249,907 ==============
-------------------------------------------------------------------------------- Notes: (A)See note 1 to financial statements. Securities are listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ. (B)Presently non-dividend paying. (C)Some of the shares of this company are on loan. See note 8 to financial statements. (D)Non-controlled affiliate, a closed-end sector fund, registered as an investment company under the Investment Company Act of 1940. (E)The aggregate market value of stocks held in escrow at June 30, 2007 covering open call option contracts written was $12,388,240. In addition, the aggregate market value of securities segregated by the Company's custodian required to collateralize open put option contracts written was $10,952,500. 10 PORTFOLIO SUMMARY -------------------------------------------------------------------------------- June 30, 2007 (unaudited) Ten Largest Portfolio Holdings
Market Value % of Net Assets - ------------ --------------- Petroleum & Resources Corporation* $ 84,453,212 5.8 General Electric Co. 56,949,156 3.9 American International Group, Inc. 35,015,000 2.4 Microsoft Corp. 34,774,600 2.4 Schlumberger Ltd. 32,277,200 2.2 Bank of America Corp. 29,822,900 2.0 Pfizer Inc. 28,638,400 2.0 ConocoPhillips 27,082,500 1.8 PepsiCo, Inc. 25,940,000 1.8 Wachovia Corp. 24,087,500 1.6 ------------ ---- Total $379,040,468 25.9% ---------------------------------------------------------------
*Non-controlled affiliate Sector Weightings [CHART] Consumer 16.6% Energy 13.1% Financials 16.4% Health Care 12.1% Industrials 14.2% Information Technology 12.7% Materials 4.9% Telecom Services 2.8% Utilities 3.1% Short-Term Investments 3.8% 11 SCHEDULE OF OUTSTANDING OPTION CONTRACTS -------------------------------------------------------------------------------- June 30, 2007
Contracts Contract (100 shares Strike Expiration Appreciation/ each) Security Price Date (Depreciation) ------------------------------------------------------------------------------- COVERED CALLS 100 AMBAC Financial Group, Inc. $100 Aug 07 $ 8,700 200 Avon Products, Inc. 45 Oct 07 19,399 250 BJ's Wholesale Club, Inc. 45 Dec 07 9,249 100 Bunge Ltd. 90 Jul 07 4,700 100 Bunge Ltd. 95 Oct 07 (5,200) 250* Comcast Corp. 33.38 Jul 07 24,874 100 Cree, Inc. 30 Sep 07 (300) 240 Marathon Oil Co. 62.50 Oct 07 (67,560) 100 Morgan Stanley 85 Jul 07 (2,301) 200 Rohm & Haas Co. 55 Oct 07 (22,075) 200 Ryland Group Inc. 65 Jul 07 40,399 250 Safeway Inc. 40 Sep 07 16,624 100 Target Corp. 70 Jul 07 10,949 200 Target Corp. 70 Oct 07 (6,201) ----- --------- 2,390 31,257 ----- --------- COLLATERALIZED PUTS 250 Broadcom Corp. 30 Aug 07 (23,875) 100 Exxon Mobil Corp. 65 Jul 07 11,100 250 Lowe's Companies, Inc. 30 Oct 07 (10,125) 200 Lubrizol Corp. 55 Dec 07 (78,600) 200 Lubrizol Corp. 60 Dec 07 (48,600) 250 Oshkosh Truck Corp. 45 Jul 07 17,999 150 Oshkosh Truck Corp. 50 Jul 07 14,549 100 PNC Financial Services Group Inc. 70 Aug 07 (3,300) 100 Procter & Gamble Co. 60 Oct 07 (6,300) 150 Ryland Group Inc. 37.50 Jul 07 (4,950) 35 Ryland Group Inc. 40 Jul 07 (7,455) 250 Spirit AeroSystems Holdings, Inc. 35 Oct 07 (14,145) 250 3M Corp. 70 Jul 07 31,749 ----- --------- 2,285 (121,953) ----- --------- $ (90,696) =========
-------- *150 shares per contract. 12 CHANGES IN PORTFOLIO SECURITIES -------------------------------------------------------------------------------- During the Three Months Ended June 30, 2007 (unaudited)
Shares ----------------------------------------- Held Additions Reductions June 30, 2007 --------- ---------- ------------- Broadridge Financial Solutions, Inc. 75,000/(1)/ 75,000 -- Broadcom Corp....................... 400,000 400,000 Lowe's Companies, Inc............... 575,000 575,000 Marathon Oil Co..................... 120,000/(2)/ 240,000 Ryland Group Inc.................... 170,000 305,000 Senomyx, Inc........................ 550,000 550,000 Spirit Aerosystems Holdings, Inc.... 395,000 395,000 Air Products and Chemicals, Inc..... 20,000 230,000 Aqua America, Inc................... 109,000 499,000 Avon Products, Inc.................. 11,600 418,400 BJ's Wholesale Club, Inc............ 50,000 450,000 Bunge Ltd........................... 40,000 140,000 Clear Channel Communications, Inc... 175,000 -- Compass Bancshares Inc.............. 215,000 85,000 Curtiss-Wright Corp................. 100,000 360,000 Investors Financial Services Corp... 25,000 357,500 Martin Marietta Materials, Inc...... 14,600 -- MedImmune, Inc...................... 225,000/(3)/ -- Morgan Stanley...................... 20,000 150,000 OSI Restaurant Partners, Inc........ 315,000 --
-------- /(1)/Received .25 share for each share of Automatic Data Processing Inc. held. /(2)/By stock split. /(3)/Received $58.00 per share through tender offer. 13 HISTORICAL FINANCIAL STATISTICS -------------------------------------------------------------------------------- (unaudited)
Dividends Distributions Total From From Net Dividends Net Asset Market Investment Realized and Annual Value Of Shares Value Per Value Income Gains Distributions Rate of Dec. 31 Net Assets Outstanding* Share* Per Share* Per Share* Per Share* Per Share* Distribution** ------- ---------- ------------ --------- ---------- ---------- ------------- ------------- -------------- 1997 $1,424,170,425 74,923,859 $19.01 $16.13 $.29 $1.01 $1.30 8.65% 1998 1,688,080,336 77,814,977 21.69 17.75 .30 1.10 1.40 8.17 1999 2,170,801,875 80,842,241 26.85 22.38 .26 1.37 1.63 8.53 2000 1,951,562,978 82,292,262 23.72 21.00 .22 1.63 1.85 7.76 2001 1,368,366,316 85,233,262 16.05 14.22 .26 1.39 1.65 9.44 2002 1,024,810,092 84,536,250 12.12 10.57 .19 .57 .76 6.14 2003 1,218,862,456 84,886,412 14.36 12.41 .17 .61 .78 6.80 2004 1,295,548,900 86,135,292 15.04 13.12 .24 .66 .90 7.05 2005 1,266,728,652 86,099,607 14.71 12.55 .22 .64 .86 6.65 2006 1,377,418,310 86,838,223 15.86 13.87 .23 .67 .90 6.80 June 30, 2007 1,465,249,907 85,893,132 17.06 14.89 .14+ .01+ .15+ --
-------- *Adjusted to reflect the 3-for-2 stock split effected in October 2000. **The annual rate of distribution is the total dividends and capital gain distributions during the year divided by the average daily market price of the Company's Common Stock. +Paid or declared. ----------------- Common Stock Listed on the New York Stock Exchange The Adams Express Company Seven St. Paul Street, Suite 1140, Baltimore, MD 21202 (410) 752-5900 or (800) 638-2479 Website: www.adamsexpress.com E-mail: contact@adamsexpress.com Counsel: Chadbourne & Parke L.L.P. Independent Registered Public Accounting Firm: PricewaterhouseCoopers LLP Transfer Agent & Registrar: American Stock Transfer & Trust Co. Custodian of Securities: Brown Brothers Harriman & Co. 14 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------------------------------- To the Board of Directors and Stockholders of The Adams Express Company: In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Adams Express Company (the Company) at June 30, 2007, the results of its operations, the changes in its net assets and the financial highlights for each of the fiscal periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2007, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Baltimore, Maryland July 13, 2007 15 AMENDED AND RESTATED BYLAWS -------------------------------------------------------------------------------- In June 2007, the Board of Directors of the Company adopted Amended and Restated Bylaws for the Company. Among other changes, the Amended and Restated Bylaws: . add procedures and informational requirements governing the calling of a stockholder-requested special meeting of stockholders; . add informational requirements and modify the timing for the advance notice of stockholder nominees for the Board of Directors and of other stockholder proposals --stockholders are now generally required to notify the Company in writing of any proposal which they intend to present at an annual meeting of stockholders, including any nominations for director, between 120 and 150 days prior to the first anniversary of the mailing date of the notice for the prior year's annual meeting of stockholders; . implement changes to conform to the charter of the Company as recently amended and restated by the stockholders; and . include updates to conform to changes in Maryland law and current corporate governance practice. As a result of the changes to the advance notice bylaws summarized above, the advance notice of Director nominees and any other proposals that a stockholder seeks to bring before the 2008 Annual Meeting but does not seek to have included in the Company's proxy statement and form of proxy for that meeting must be received at the office of the Company no earlier than September 19, 2007, and no later than October 19, 2007. Please note that these dates are different from those that were provided in the Company's proxy statement for the 2007 Annual Meeting, which dates are no longer correct. The foregoing is only a summary and is qualified in its entirety by reference to the Amended and Restated Bylaws, a copy of which will be filed with the Securities and Exchange Commission as an exhibit to the Company's next report on Form NSAR. The Amended and Restated Bylaws are also available upon written request to the Secretary of the Company. ----------------- This report, including the financial statements herein, is transmitted to the stockholders of The Adams Express Company for their information. It is not a prospectus, circular or representation intended for use in the purchase or sale of shares of the Company or of any securities mentioned in the report. The rates of return will vary and the principal value of an investment will fluctuate. Shares, if sold, may be worth more or less than their original cost. Past performance is not indicative of future investment results. 16 OTHER INFORMATION -------------------------------------------------------------------------------- Statement on Quarterly Filing of Complete Portfolio Schedule In addition to publishing its complete schedule of portfolio holdings in the First and Third Quarter Reports to stockholders, the Company files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Company's Forms N-Q are available on the Commission's website at www.sec.gov. The Company's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room, and information on the operation of the Public Reference Room may be obtained by calling (800) SEC-0330. The Company also posts its Forms N-Q on its website at www.adamsexpress.com under the heading "Financial Reports". Proxy Voting Policies and Record A description of the policies and procedures that the Company uses to determine how to vote proxies relating to portfolio securities owned by the Company and information as to how the Company voted proxies relating to portfolio securities during the 12 month period ended June 30, 2007 are available (i) without charge, upon request, by calling the Company's toll free number at (800) 638-2479; (ii) on the Company's website by clicking on "Corporate Information" heading on the website; and (iii) on the Securities and Exchange Commission's website at http//www.sec.gov. Privacy Policy In order to conduct its business, The Adams Express Company, through its transfer agent, currently American Stock Transfer & Trust Company, collects and maintains certain nonpublic personal information about our stockholders of record with respect to their transactions in shares of our securities. This information includes the stockholder's address, tax identification or Social Security number, share balances, and dividend elections. We do not collect or maintain personal information about stockholders whose shares of our securities are held in "street name" by a financial institution such as a bank or broker. We do not disclose any nonpublic personal information about you, our other stockholders or our former stockholders to third parties unless necessary to process a transaction, service an account or as otherwise permitted by law. To protect your personal information internally, we restrict access to nonpublic personal information about our stockholders to those employees who need to know that information to provide services to our stockholders. We also maintain certain other safeguards to protect your nonpublic personal information. 17 STOCKHOLDER 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. INVESTORS CHOICE INVESTORS CHOICE is a direct stock purchase and sale plan, as well as a dividend reinvestment plan, sponsored and administered by our transfer agent, American Stock Transfer & Trust Company (AST). The Plan provides registered stockholders and interested first time investors an affordable alternative for buying, selling, and reinvesting in Adams Express shares. The costs to participants in administrative service fees and brokerage commissions for each type of transaction are listed below. Initial Enrollment and Optional Cash Investments Service Fee $2.50 per investment Brokerage Commission $0.05 per share Reinvestment of Dividends* Service Fee 2% 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 $7.50 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 INVESTORS CHOICE as well as an enrollment form may be obtained by contacting AST. For Non-Registered Stockholders For stockholders whose stock is held by a broker in "street" name, the AST INVESTORS CHOICE Direct Stock Purchase and Sale Plan remains available through many registered 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 AST's Plan or contact AST. ---------- The Company The Adams Express Company Lawrence L. Hooper, Jr. Vice President, General Counsel and Secretary Seven St. Paul Street, Suite 1140, Baltimore, MD 21202 (800) 638-2479 Website: www.adamsexpress.com E-mail: contact@adamsexpress.com The Transfer Agent American Stock Transfer & Trust Company Address Stockholder Inquiries to: Stockholder Relations Department 59 Maiden Lane New York, NY 10038 (877) 260-8188 Website: www.amstock.com E-mail: info@amstock.com Investors Choice Mailing Address: Attention: Dividend Reinvestment P.O. Box 922 Wall Street Station New York, NY 10269-0560 Website: www.amstock.com E-mail: info@amstock.com *The year-end dividend and capital gain distribution will usually be made in newly issued shares of common stock. There are no fees or commissions in connection with this dividend and capital gain distribution when made in newly issued shares. 18 Item 2: Code(s) of Ethics for senior financial officers - Item not applicable to semi-annual report. Item 3: Audit Committee Financial Expert - Item not applicable to semi-annual report. Item 4: Principal Accountant Fees and Services - Item not applicable to semi-annual report. Item 5: Audit Committee of Listed Registrants - Item not applicable to semi-annual report. Item 6: Schedule of Investments - This schedule is included as part of the report to shareholders filed under Item 1 of this form. Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies - Item not applicable to semi-annual report. Item 8: Portfolio Managers of Closed-End Management Investment Companies - Item not applicable to semi-annual report. Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. Maximum Total Number (or Number of Approximate Shares (or Dollar Value) Total Units) of Shares (or Number Purchased Units) that of Average as Part of May Yet Be Shares Price Publicly Purchased (or Paid per Announced Under the Units) Share (or Plans or Plans or Period(2) Purchased Unit) Programs Programs -------- --------- --------- --------- --------- Jan. 2007 158,900 $ 13.83 158,900 3,927,692 Feb. 2007 236,055 $ 14.03 236,055 3,691,637 Mar. 2007 409,219 $ 13.82 409,219 3,282,418 Apr. 2007 117,050 $ 14.17 117,050 3,165,368 May 2007 0 $ 0 0 3,165,368 June 2007 67,900 $ 15.01 67,900 3,097,468 -------- --------- --------- --------- --------- Total 989,124(1) $ 14.00 989,124(2) 3,097,468(2) (1) There were no shares purchased other than through a publicly announced plan or program. (2.a) The Plan was reapproved on December 14, 2006. (2.b) The share amount approved in 2006 was 5% of outstanding shares, or approximately 4,235,634 shares. (2.c) Unless reapproved, the Plan will expire on or about December 13, 2007. (2.d) None. (2.e) None. Item 10. Submission of Matters to a Vote of Security Holders. In June 2007, Registrant's Board of Directors adopted Amended and Restated Bylaws for the Company that, among other changes, make material changes to the procedures by which stockholders may recommend nominees to Registrant's Board of Directors. In general, the changes add informational requirements and modify the timing for the advance notice of stockholder nominees for the Board of Directors and of other stockholder proposals -- stockholders are now generally required to notify the Company in writing of any proposal which they intend to present at an annual meeting of stockholders, including any nominations for director, between 120 and 150 days prior to the first anniversary of the mailing date of the notice for the prior year's annual meeting of stockholders. The Amended and Restated Bylaws governing the advance notice requirements for stockholders who wish to recommend Director nominees provide as follows: Section 2.9. Advance Notice of Stockholder Nominees for Director and Other Stockholder Proposals. (a) Annual Meetings of Stockholders. (1) Nominations of individuals for election to the Board of Directors and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice by the stockholder as provided for in this Section 2.9(a) and at the time of the annual meeting, who is entitled to vote at the meeting and who has complied with this Section 2.9(a). (2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 2.9, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must otherwise be a proper matter for action by the stockholders. To be timely, a stockholder's notice shall set forth all information required under this Section 2.9 and shall be delivered to the Secretary at the principal executive office of the Corporation not earlier than the 150th day prior to the first anniversary of the Date of Mailing of the Notice (as defined herein) for the preceding year's annual meeting nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the Date of Mailing of the Notice for the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the 150th day prior to the date of such annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to the date of such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made. The public announcement of a postponement or adjournment of an annual meeting shall not commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth (i) as to each individual whom the stockholder proposes to nominate for election or reelection as a director, (A) the name, age, business address and residence address of such individual, (B) the class, series and number of any shares of stock of the Corporation that are beneficially owned by such individual, (C) the date such shares were acquired and the investment intent of such acquisition, (D) whether such stockholder believes any such individual is, or is not, an "interested person" of the Corporation, as defined in the Investment Company Act of 1940, as amended, and the rules promulgated thereunder (the "Investment Company Act") and information regarding such individual that is sufficient, in the discretion of the Board of Directors or any committee thereof or any authorized officer of the Corporation, to make such determination and (E) all other information relating to such individual that is required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A (or any successor provision) under the Exchange Act and the rules thereunder (including such individual's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a description of such business, the reasons for proposing such business at the meeting and any material interest in such business of such stockholder and any Stockholder Associated Person (as defined below), individually or in the aggregate, including any anticipated benefit to the stockholder and the Stockholder Associated Person therefrom; (iii) as to the stockholder giving the notice and any Stockholder Associated Person, (A) the class, series and number of all shares of stock of the Corporation which are owned by such stockholder and by such Stockholder Associated Person, if any, (B) the nominee holder for, and number of, shares owned beneficially but not of record by such stockholder and by any such Stockholder Associated Person, (C) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk of share price changes for, or to increase the voting power of, such stockholder or any such Stockholder Associated Person with respect to any share of stock of the Corporation (collectively, "Hedging Activities") and (D) a general description of whether and the extent to which such stockholder or such Stockholder Associated Person has engaged in Hedging Activities with respect to shares of stock of any other closed-end investment company; (iv) as to the stockholder giving the notice and any Stockholder Associated Person covered by clauses (ii) or (iii) of this paragraph (2) of this Section 2.9(a), the name and address of such stockholder, as they appear on the Corporation's stock ledger and current name and address, if different, and of such Stockholder Associated Person; and (v) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such stockholder's notice. (3) Notwithstanding anything in this subsection (a) of this Section 2.9 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement of such action at least 130 days prior to the first anniversary of the date of mailing of the notice of the preceding year's annual meeting, a stockholder's notice required by this Section 2.9(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive office of the Corporation not later than 5:00 p.m., Eastern Time, on the tenth day following the day on which such public announcement is first made by the Corporation. (4) For purposes of this Section 2.9, "Stockholder Associated Person" of any stockholder shall mean (i) any person controlling, directly or indirectly, or acting in concert with, such stockholder (including, without limitation, any person who is a member of a "group" for purposes of Section 13(d) of the Exchange Act, or any successor provision, that includes such stockholder), (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder and (iii) any person controlling, controlled by or under common control with such Stockholder Associated Person. (b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of individuals for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 2.9 and at the time of the special meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 2.9. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more individuals to the Board of Directors, any such stockholder may nominate an individual or individuals (as the case may be) for election as a director as specified in the Corporation's notice of meeting, if the stockholder's notice required by paragraph (2) of this Section 2.9(a) shall be delivered to the Secretary at the principal executive office of the Corporation not earlier than the 150th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The public announcement of a postponement or adjournment of a special meeting shall not commence a new time period for the giving of a stockholder's notice as described above. (c) General. (1) Upon written request by the Secretary or the Board of Directors or any committee thereof, any stockholder proposing a nominee for election as a director or any proposal for other business at a meeting of stockholders shall provide, within five Business Days of delivery of such request (or such other period as may be specified in such request), written verification, satisfactory, in the discretion of the Board of Directors or any committee thereof or any authorized officer of the Corporation, to demonstrate the accuracy of any information submitted by the stockholder pursuant to this Section 2.9. If a stockholder fails to provide such written verification within such period, the information as to which written verification was requested may be deemed not to have been provided in accordance with this Section 2.9. (2) Only such individuals who are nominated in accordance with this Section 2.9 shall be eligible for election by stockholders as directors, and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with this Section 2.9. The chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with this Section 2.9. (3) For purposes of this Section 2.9, (a) the "Date of Mailing of the Notice" shall mean the date of the proxy statement for the solicitation of proxies for election of directors and (b) "public announcement" shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, PR Newswire or comparable news service or (ii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act or the Investment Company Act. (4) Notwithstanding the foregoing provisions of this Section 2.9, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.9. Nothing in this Section 2.9 shall be deemed to affect any right of a stockholder to request inclusion of a proposal in, nor the right of the Corporation to omit a proposal from, the Corporation's proxy statement pursuant to Rule 14a-8 (or any successor provision) under the Exchange Act. The Amended and Restated Advance Notice Bylaws apply to Registrant's 2008 Annual Meeting, and the advance notice of Director nominees and any other proposals that a stockholder seeks to bring before the 2008 Annual Meeting but does not seek to have included in the Company's proxy statement and form of proxy for that meeting must be received at the office of the Company no earlier than September 19, 2007, and no later than October 19, 2007. Item 11. Controls and Procedures. Conclusions of principal officers concerning controls and procedures. (a) As of July 23, 2007, an evaluation was performed under the supervision and with the participation of the officers of registrant, including the principal executive officer (PEO) and principal financial officer (PFO), of the effectiveness of registrant's disclosure controls and procedures. Based on that evaluation, the registrant's officers, including the PEO and PFO, concluded that, as of July 23, 2007, the registrant's disclosure controls and procedures were reasonably designed so as to ensure that material information relating to the registrant is made known to the PEO and PFO. (b) There have been no significant changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940 (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits attached hereto. (Attach certifications as exhibits) (1) Not applicable. See registrant's response to Item 2, above. (2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2 under the Investment Company Act of 1940, are attached. A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is attached. Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE ADAMS EXPRESS COMPANY BY: /s/ Douglas G. Ober ----------------------- Douglas G. Ober Chief Executive Officer (Principal Executive Officer) Date: July 23, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. BY: /s/ Douglas G. Ober ----------------------- Douglas G. Ober Chief Executive Officer (Principal Executive Officer) Date: July 23, 2007 BY: /s/ Maureen A. Jones ----------------------- Maureen A. Jones Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) Date: July 23, 2007