UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-00248
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THE ADAMS EXPRESS COMPANY
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(Exact name of registrant as specified in charter)
7 Saint Paul Street, Suite 1140, Baltimore, Maryland 21202
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(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, 2006
Date of reporting period: September 30, 2006
Item 1: SCHEDULE OF INVESTMENTS.
SCHEDULE OF INVESTMENTS
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September 30, 2006
(unaudited)
Shares Value (A) Shares Value (A)
--------- ------------ --------- ------------
Stocks and Convertible Securities -- 96.1% Health Care -- 12.9%
Abbott Laboratories 320,000 $ 15,539,200
Consumer -- 17.6% Advanced Medical Optics,
Consumer Discretionary -- 7.6% Inc. (B)(C) 310,000 12,260,500
BJ's Wholesale Club, Inc. (B) 500,000 $ 14,590,000 Bristol-Myers Squibb Co. 345,000 8,597,400
Clear Channel Caremark Rx Inc. 245,000 13,884,150
Communications, Inc. 350,000 10,097,500 Genentech, Inc. (B) 220,000 18,194,000
Comcast Corp. (B) 365,000 13,450,250 Johnson & Johnson 255,000 16,559,700
Gannett Co., Inc. 112,500 6,393,375 Laboratory Corp. of America
Harley-Davidson, Inc. 200,000 12,550,000 Holdings (B) 140,000 9,179,800
Newell Rubbermaid Inc. 400,000 11,328,000 MedImmune, Inc. (B) 225,000 6,572,250
OSI Restaurant Partners, Inc. 315,000 9,988,650 Medtronic, Inc. 310,000 14,396,400
Ryland Group Inc. (C) 50,000 2,160,500 Pfizer Inc. 1,120,000 31,763,200
Target Corp. 350,000 19,337,500 Teva Pharmaceutical Industries
------------ Ltd. ADR 20,000 681,800
99,895,775 Wyeth Co. 325,000 16,523,000
------------ Zimmer Holdings, Inc. (B) 125,000 8,437,500
Consumer Staples -- 10.1% ------------
Avon Products, Inc. 430,000 13,183,800 172,588,900
Bunge Ltd. (C) 235,000 13,618,250 ------------
Coca-Cola Co. 200,000 8,936,000 Industrials -- 12.7%
Dean Foods Co. (B) 350,000 14,707,000 Cintas Corp. 300,000 12,249,000
Del Monte Foods Co. 1,115,000 11,651,750 Curtiss-Wright Corp. 460,000 13,961,000
PepsiCo, Inc. 400,000 26,104,000 Donnelley (R.R.) & Sons Co. (C) 225,000 7,416,000
Procter & Gamble Co. 340,000 21,073,200 Emerson Electric Co. 200,000 16,772,000
Safeway Inc. 423,000 12,838,050 Essex Corp. (B) 116,500 2,027,100
Unilever plc ADR 550,000 13,645,500 General Electric Co. 1,487,700 52,515,810
------------ Illinois Tool Works Inc. 250,000 11,225,000
135,757,550 Masco Corp. (C) 450,000 12,339,000
------------ 3M Co. 160,000 11,907,200
Energy -- 11.0% United Parcel Service, Inc. 155,000 11,150,700
BP plc ADR 95,000 6,230,100 United Technologies Corp. 300,000 19,005,000
ConocoPhillips 345,000 20,537,850 ------------
ENSCO International, Inc. 134,150 5,879,795 170,567,810
Exxon Mobil Corp. 215,000 14,426,500 ------------
Marathon Oil Co. 120,000 9,228,000 Information Technology -- 12.9%
Murphy Oil Corp. 38,500 1,830,675 Communication Equipment -- 1.9%
Petroleum & Resources Avaya Inc. (B) 600,000 6,864,000
Corporation (D) 1,985,996 64,902,349 Corning Inc. (B) 500,000 12,205,000
Schlumberger Ltd. 380,000 23,571,400 Lucent Technologies Inc. (B) 2,900,000 6,786,000
------------ ------------
146,606,669 25,855,000
------------ ------------
Financials -- 17.8% Computer Related -- 9.1%
Banking -- 13.9% Automatic Data Processing
BankAtlantic Bancorp, Inc. 880,000 12,513,600 Inc. 300,000 14,202,000
Bank of America Corp. 610,000 32,677,700 BEA Systems, Inc. (B) 800,000 12,160,000
Bank of New York Co., Inc. Cisco Systems, Inc. (B) 1,110,000 25,530,000
(The) 375,000 13,222,500 Dell Inc. (B) 565,000 12,904,600
Compass Bancshares Inc. 300,000 17,094,000 Microsoft Corp. 1,180,000 32,249,400
Fifth Third Bancorp (C) 280,000 10,662,400 Oracle Corp. (B) 1,356,001 24,055,458
Investors Financial Services ------------
Corp. (C) 382,500 16,478,100 121,101,458
Morgan Stanley 200,000 14,582,000 ------------
Wachovia Corp. 470,000 26,226,000 Electronics -- 1.9%
Wells Fargo & Co. 650,000 23,517,000 Cree, Inc. (B)(C) 375,000 7,541,250
Wilmington Trust Corp. 420,000 18,711,000 Intel Corp. 550,000 11,313,500
------------ Solectron Corp. (B) 1,850,000 6,031,000
185,684,300 ------------
------------ 24,885,750
Insurance -- 3.9% ------------
AMBAC Financial Group, Inc. 240,000 19,860,000
American International Group,
Inc. 500,000 33,130,000
------------
52,990,000
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8
SCHEDULE OF INVESTMENTS (CONTINUED)
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September 30, 2006
(unaudited)
Prin.
Shares Value (A) Amt. Value (A)
------- -------------- ----------- --------------
Materials -- 4.9% Short-Term Investments -- 3.3%
Air Products and Chemicals, U.S. Government Obligations --
Inc. 250,000 $ 16,592,500 1.2%
du Pont (E.I.) de Nemours U.S. Treasury Bills,
and Co. 360,000 15,422,400 4.98%, due 11/16/06 $16,500,000 $ 16,395,005
Florida Rock Industries Inc. 200,000 7,742,000 --------------
Martin Marietta Materials, Inc. 83,000 7,023,460 Time Deposit -- 0.0%
Rohm & Haas Co. 400,000 18,940,000 J.P. Morgan,
-------------- 4.63%, due 10/2/06 224,843
65,720,360 --------------
-------------- Commercial Paper --
Telecom Services -- 3.0% 2.1%
Alltel Corp. 300,000 16,650,000 American General
AT&T Corp. 595,000 19,373,200 Finance, Inc.,
Windstream Corp. 310,178 4,091,248 5.24%, due 10/3/06
-------------- - 10/31/06 8,000,000 7,978,766
40,114,448 Chevron Funding Co.,
-------------- 5.19- 5.20%, due
Utilities -- 3.3% 10/3/06 - 10/26/06 5,600,000 5,583,867
Aqua America, Inc. (C) 608,000 13,339,520 General Electric
Duke Energy Corp. 611,560 18,469,112 Capital Corp.,
MDU Resources Group, Inc. 562,500 12,566,250 5.23%, due
-------------- 10/10/06 - 10/17/06 7,750,000 7,735,726
44,374,882 Toyota Motor Credit
-------------- Corp., 5.20- 5.23%,
Total Stocks and Convertible Securities due 10/5/06 -
(Cost $918,292,437) (E) $1,286,142,902 10/19/06 6,375,000 6,363,195
-------------- --------------
27,661,554
--------------
Total Short-Term Investments
(Cost $44,281,402) 44,281,402
--------------
Securities Lending Collateral --
5.0%
Brown Brothers Investment
Trust, 5.25%, due 10/2/06 66,863,737
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Total Securities Lending Collateral
(Cost $66,863,737) 66,863,737
--------------
Total Investments -- 104.4%
(Cost $1,029,437,576) 1,397,288,041
Cash, receivables, prepaid
expenses and other assets, less
liabilities -- (4.4)% (58,622,675)
--------------
Net Assets -- 100% $1,338,665,366
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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 September 30, 2006
covering open call option contracts written was $21,037,760. In addition,
the aggregate market value of securities segregated by the Company's
custodian required to collateralize open put option contracts written was
$14,884,000.
9
SCHEDULE OF OUTSTANDING OPTION CONTRACTS
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September 30, 2006
(unaudited)
Contracts Contract
(100 shares Strike Expiration Appreciation/
each) Security Price Date (Depreciation)
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COVERED CALLS
100 Air Products and Chemicals, Inc..... $ 75 Dec 06 $ 8,700
100 AMBAC Financial Group, Inc.......... 85 Nov 06 9,439
100 AMBAC Financial Group, Inc.......... 90 Jan 07 8,699
100 AMBAC Financial Group, Inc.......... 90 Feb 07 12,199
200 American International Group, Inc... 70 Feb 07 (7,601)
100 Avon Products, Inc.................. 35 Oct 06 9,200
200 Bunge Ltd........................... 65 Jan 07 (1,601)
100 Caremark Rx Inc..................... 60 Oct 06 6,200
100 Caremark Rx Inc..................... 60 Dec 06 (1,800)
100 Caremark Rx Inc..................... 65 Jan 07 2,700
100 Dean Foods Co....................... 40 Dec 06 (20,800)
100 Harley-Davidson, Inc................ 65 Jan 07 (8,301)
250 Harley-Davidson, Inc................ 65 Feb 07 (47,626)
100 Investors Financial Services Corp... 50 Oct 06 11,450
100 Investors Financial Services Corp... 55 Oct 06 14,324
100 Investors Financial Services Corp... 50 Jan 07 12,199
200 Investors Financial Services Corp... 55 Jan 07 19,399
100 Laboratory Corp. of America Holdings 70 Nov 06 4,200
150 Laboratory Corp. of America Holdings 72.50 Nov 06 15,299
200 Marathon Oil Co..................... 100 Jan 07 24,171
80 Martin Marietta Materials, Inc...... 140 Oct 06 13,759
100 Martin Marietta Materials, Inc...... 100 Jan 07 (3,801)
100 Morgan Stanley...................... 75 Jan 07 (12,800)
100 Murphy Oil Corp..................... 55 Oct 06 12,700
200 Ryland Group Inc.................... 60 Jan 07 10,399
100 Target Corp......................... 55 Jan 07 (58,301)
100 United Technologies Corp............ 70 Jan 07 3,200
100 Zimmer Holdings, Inc................ 80 Jan 07 5,267
----- --------
3,480 40,873
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COLLATERALIZED PUTS
150 Avon Products, Inc.................. 25 Jan 07 12,300
150 Cintas Corp......................... 35 Nov 06 15,299
100 ENSCO International, Inc............ 40 Oct 06 6,700
200 ENSCO International, Inc............ 45 Oct 06 (17,523)
250 ENSCO International, Inc............ 40 Dec 06 (10,751)
150 Exxon Mobil Corp.................... 52.50 Oct 06 14,550
100 Florida Rock Industries Inc......... 35 Dec 06 6,949
200 Florida Rock Industries Inc......... 30 Jan 07 10,399
250 Intel Corp.......................... 17.50 Oct 06 22,999
100 Marathon Oil Co..................... 75 Oct 06 (5,300)
100 Marathon Oil Co..................... 67.50 Jan 07 (8,800)
200 Masco Corp.......................... 25 Jan 07 2,399
250 MedImmune, Inc...................... 25 Dec 06 20,499
200 Medtronic, Inc...................... 42.50 Nov 06 9,399
100 Procter & Gamble Co................. 55 Oct 06 8,700
250 Ryland Group Inc.................... 30 Oct 06 22,999
150 Ryland Group Inc.................... 35 Oct 06 12,299
100 Ryland Group Inc.................... 37.50 Oct 06 7,200
53 Ryland Group Inc.................... 30 Jan 07 2,491
100 Target Corp......................... 42.50 Oct 06 11,200
100 Target Corp......................... 45 Oct 06 9,700
150 United Parcel Service, Inc.......... 65 Oct 06 8,549
100 Wachovia Corp....................... 50 Oct 06 12,200
200 Wachovia Corp....................... 47.50 Jan 07 11,399
75 Zimmer Holdings, Inc................ 60 Dec 06 6,200
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3,778 192,056
----- --------
$232,929
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11
(SELECTED) NOTES TO FINANCIAL STATEMENTS (Unaudited)
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The Adams Express Company (the Company) is registered under
the Investment 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.
For federal income tax purposes, the identified cost of
securities at September 30, 2006 was $1,028,950,325 and net
unrealized appreciation aggregated $368,337,716, of which
the related gross unrealized appreciation and depreciation
were $444,297,240 and $75,959,524, respectively. time at
such prices and amounts as the Board of Directors may deem
advisable.
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 September 30, 2006, the Company had securities on loan of
$65,171,190 and held collateral of $66,863,737, 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.
Item 2. CONTROLS AND PROCEDURES.
Conclusions of principal officers concerning controls and
procedures:
(a) As of April 24, 2007, an evaluation was performed under
the supervision and with the participation of the officers
of The Adams Express Company (the "Company"), including the
principal executive officer ("PEO") and principal financial
officer ("PFO"), of the effectiveness of the Company's
disclosure controls and procedures. Based on that
evaluation, the Company's officers, including the PEO and
PFO, concluded that, as of April 24, 2007, the Company's
disclosure controls and procedures were reasonably designed
so as to ensure: (1) that information required to be
disclosed by the Company on Form N-Q is properly recorded,
processed, and summarized in accordance with the rules and
forms of the Securities and Exchange Commission; and (2)
that material information relating to the Company is made
known to the PEO and PFO as appropriate to allow timely
decisions regarding required disclosure.
Prior to this evaluation, the Company uncovered a weakness
in its disclosure controls and procedures that caused this
Form N-Q, which was due to be filed on or before November
29, 2006, not to be filed timely. This weakness was
primarily attributable to human error. The 2006 Third
Quarter Report to stockholders, containing the exact
portfolio information called for in this Form N-Q, was
timely issued and filed; however the Company failed to file
this Form N-Q by the due date. To prevent similar problems
in the future, the Company has modified its computer-based
reminder system to issue alerts to the appropriate personnel
of the need to prepare and file the Forms N-Q several times
during the 60 day period for the filing.
(b) There have been no significant changes in the Company's
internal control over financial reporting (as defined in
Rule 30 a-3(d) under the Investment Company Act of 1940 (17
CFR 270.30a-3(d)) that occurred during the Company's last
fiscal quarter that have materially affected, or are
reasonably likely to materially affect, the Company's
internal control over financial reporting.
Item 3. EXHIBITS.
The certifications of the principal executive officer and
principal financial officer pursuant to Rule 30a-2(a) under
the Investment Company Act of 1940 are attached hereto as
Form N-Q Certifications.
SIGNATURES
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
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Douglas G. Ober
Chief Executive Officer
Date: April 25, 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
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Douglas G. Ober
Chief Executive Officer
(Principal Executive Officer)
Date: April 25, 2007
BY: /s/ Maureen A. Jones
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Maureen A. Jones
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: April 25, 2007