<PAGE>
LETTER TO STOCKHOLDERS
- -------------------------------------------------------------------------------
We are pleased to submit the financial statements of the Corporation for the
nine months ended September 30, 1999. In addition, there is a schedule of in-
vestments provided along with other financial information.
Financial Summary
Net assets of the Corporation at September 30, 1999 were $40.35 per share,
compared with $34.30 per share at December 31, 1998, on the 13,841,375 shares
outstanding on each date. On March 1, 1999, a distribution of $0.20 per share
was paid consisting of $0.10 from 1998 long-term capital gain, $0.02 from 1998
investment income and $0.08 from 1999 investment income, all taxable in 1999.
Regular 1999 investment income dividends of $0.20 per share were paid on
June 1, 1999 and September 1, 1999.
Net investment income for the nine months ended September 30, 1999 amounted to
$7,758,637, compared with $8,596,809 for the same period in 1998. These earn-
ings are equal to $0.56 and $0.64 per share, respectively, on the average num-
ber of shares outstanding during each period.
Net capital gain realized on investments for the nine months ended September
30, 1999 amounted to $16,709,590, the equivalent of $1.21 per share.
Performance
As noted on page 7 of this report, the Corporation realized a total investment
return on its net asset value (with reinvestment of income and capital gains
distributions) of 19.8% in the nine months ended September 30, 1999. The re-
turn on the market price of our stock was 12.5%, reflecting the widening of
the discount of the market price from the net asset value. Both of these fig-
ures compare favorably to the 5.4% return of the Standard & Poor's 500 Compos-
ite Index. All energy sectors recorded attractive stock market gains, with ma-
jor natural gas pipelines, oil service companies and offshore drillers the
best performers.
Year 2000 Readiness Disclosure
As the countdown continues to the Year 2000, the Corporation, along with other
investment companies and financial institutions, could be adversely affected
if computer systems and embedded technology do not properly process and calcu-
late date-related information relating to Year 2000 ("Y2K"). The Corporation's
Y2K project team has completed testing of in-house hardware and software sys-
tems and, based on the testing results, anticipates being Year 2000 ready. Ad-
ditionally, the companies whose securities are in the Corporation's portfolio
holdings have been surveyed to determine their Y2K readiness. The results of
these surveys indicate the majority of the companies have advised us that they
are Y2K ready and all anticipate being Y2K ready by the last quarter of 1999.
The Corporation's custodian and transfer agent, The Bank of New York, has con-
firmed that it will also be Year 2000 ready. The Corporation has incurred no
significant costs relating to the Year 2000 issue. Despite these efforts,
there is no assurance that any adverse impact on the Corporation will be
avoided.
Fund Reports
In a letter included with your June 30, 1999 report, we noted the decision by
Value Line to discontinue its coverage of Petroleum & Resources Corporation
and the decision by Morningstar to discontinue printed reports on all closed-
end funds, including Petroleum & Resources Corporation. Despite numerous peti-
tions from our shareholders, neither has altered its decision. However, Morn-
ingstar continues to cover Petroleum & Resources and the information is
available on Morningstar's website [www.morningstar.com].
Spread the Word
Research has indicated that a significant number of Petroleum & Resources
shareholders learned about the Corporation and its investment record by word
of mouth from a friend or family member. To assist us in "getting the word
out," we have enclosed a post-
<PAGE>
LETTER TO STOCKHOLDERS
- --------------------------------------------------------------------------------
age-paid card which you may complete and return to us so that we may send a
package of information to someone you know.
Current and potential shareholders can find information about the Corporation,
including 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.peteres.com. Also available at the website are a brief history of
the Corporation, historical financial information, and more general industry
material. Further information regarding shareholder services is located on page
11 of this report.
The Corporation is an internally-managed equity fund emphasizing petroleum and
other natural resource investments. The investment policy of the fund is based
on the primary objectives of preservation of capital, the attainment of reason-
able income from investments and, in addition, an opportunity for capital
appreciation.
By order of the Board of Directors,
/s/ Douglas G. Ober
Douglas G. Ober,
Chairman and
Chief Executive Officer
/s/ Richard F. Koloski
Richard F. Koloski,
President
October 22, 1999
2
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
September 30, 1999
(unaudited)
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $308,789,406) $531,414,394
Short-term investments (cost $23,520,560) 23,520,560 $554,934,954
- ---------------------------------------------------------------
Cash 111,315
Securities lending collateral 71,891,316
Receivables:
Investment securities sold 3,035,151
Dividends and interest 921,420
Prepaid expenses 1,572,776
- ----------------------------------------------------------------------------
Total Assets 632,466,932
- ----------------------------------------------------------------------------
Liabilities
Open option contracts at value (proceeds
$331,965) 433,500
Obligations to return securities lending collat-
eral 71,891,316
Accrued expenses 1,674,390
- ----------------------------------------------------------------------------
Total Liabilities 73,999,206
- ----------------------------------------------------------------------------
Net Assets $558,467,726
- ----------------------------------------------------------------------------
Net Assets
Common Stock at par value $1.00 per share, autho-
rized
25,000,000 shares; issued and outstanding
13,841,375 shares $ 13,841,375
Additional capital surplus 304,038,387
Undistributed net investment income 1,428,519
Undistributed net realized gain on investments 16,635,992
Unrealized appreciation on investments 222,523,453
- ----------------------------------------------------------------------------
Net Assets Applicable to Common Stock $558,467,726
- ----------------------------------------------------------------------------
Net Asset Value per Share of Common Stock $40.35
- ----------------------------------------------------------------------------
</TABLE>
* See Schedule of Investments on pages 8 and 9.
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Nine Months Ended September 30, 1999
(unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends $ 8,261,680
Interest 1,232,116
- ---------------------------------------------------------------------------
Total income 9,493,796
- ---------------------------------------------------------------------------
Expenses:
Investment research 830,575
Administration and operations 280,190
Directors' fees 134,750
Reports and stockholder communications 140,332
Transfer agent, registrar and custodian expenses 115,268
Auditing services 35,275
Legal services 18,420
Occupancy and other office expenses 72,349
Travel, telephone and postage 46,350
Other 61,650
- ---------------------------------------------------------------------------
Total expenses 1,735,159
- ---------------------------------------------------------------------------
Net Investment Income 7,758,637
- ---------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on Invest-
ments
Net realized gain on security transactions 16,709,590
Change in unrealized appreciation on investments 67,483,208
- ---------------------------------------------------------------------------
Net Gain on Investments 84,192,798
- ---------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $91,951,435
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Year ended
ended December 31,
Sept. 30, 1999 1998
-------------- ------------
(unaudited)
<S> <C> <C>
From Operations:
Net investment income $ 7,758,637 $ 11,060,345
Net realized gain on investments 16,709,590 20,532,408
Change in unrealized appreciation on investments 67,483,208 (95,161,348)
- -------------------------------------------------------------------------------
Change in net assets resulting from operations 91,951,435 (63,568,595)
- -------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (6,920,689) (10,469,774)
Net realized gain from investment transactions (1,384,138) (20,268,408)
- -------------------------------------------------------------------------------
Decrease in net assets from distributions (8,304,827) (30,738,182)
- -------------------------------------------------------------------------------
From Capital Share Transactions:
Value of common shares issued in payment of op-
tional distributions -0- 12,675,346
- -------------------------------------------------------------------------------
Total Increase (Decrease) in Net Assets 83,646,608 (81,631,431)
Net Assets:
Beginning of period 474,821,118 556,452,549
- -------------------------------------------------------------------------------
End of period (including undistributed net in-
vestment income of $1,428,519 and $590,571,
respectively) $558,467,726 $474,821,118
- -------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- -------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Petroleum & Resources Corporation (the Corporation) is registered under the
Investment Company Act of 1940 as a diversified investment company. The
Corporation's investment objectives as well as the nature and risk of its
investment transactions are set forth in the Corporation's registration
statement.
Security Valuation--Investments in securities traded on national security
exchanges 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 quoted asked price.
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 shareholders are recognized on the ex-dividend date, and
interest income is recognized on the accrual basis.
2. FEDERAL INCOME TAXES
The Corporation's policy is to distribute all of its taxable income to its
shareholders 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, including options, at September 30, 1999 was $332,713,640, and net
unrealized appreciation aggregated $222,553,278, of which the related gross
unrealized appreciation and depreciation were $251,215,130 and $28,661,852,
respectively.
Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. Accordingly,
periodic reclassi-fications are made within the Corporation's capital accounts
to reflect income and gains available for distribution under income tax
regulations.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than options and short-term
investments, during the nine months ended September 30, 1999 were $51,759,223
and $51,370,354, respectively. The Corporation, as writer of an option, bears
the market risk of an unfavorable change in the price of the security under-
lying the written option. Option transactions comprised an insignificant por-
tion of operations during the period ended September 30, 1999. 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 Corporation may purchase shares of its common stock from time to time at
such prices and amounts as the Board of Directors may deem advisable. No pur-
chases were made during the nine months ended September 30, 1999.
The Corporation has 5,000,000 unissued preferred shares without par value.
The Corporation 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 815,000 shares of the Corporation'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 apprecia-
tion rights is reduced by the per share amount of capital gain paid by the
Corporation during subsequent years. At the beginning of 1999, there were
145,912 options outstanding at a weighted average exercise price of $23.0084
per share. During the nine months ended September 30, 1999, the Corporation
granted options including stock appreciation rights for 16,565 shares of com-
mon stock with an exercise price of $30.1875. During the period stock appreci-
ation rights relating to 13,561 stock option shares were exercised at a
weighted average market price of $36.0844 per share and the stock options re-
lating to these rights, which had a weighted average exercise price of
$20.2514 were cancelled. At September 30, 1999, there were outstanding exer-
cisable options to purchase 39,525 common shares at $15.455-$35.265 (weighted
average price of $20.2085) per share and unexercisable options to purchase
109,391 common shares at $16.935-$35.265 per share (weighted average price of
$25.3004). The weighted average remaining contractual life of outstanding ex-
ercisable and unexercisable options was 4.6155 years and 6.6057 years, respec-
tively. The total compensation expense for stock options and stock apprecia-
tion rights recognized for the nine months ended September 30, 1999 was
$489,218. At September 30, 1999, there were 333,783 shares available for fu-
ture option grants.
5. RETIREMENT PLANS
The Corporation provides retirement benefits for its employees under a non-
contributory qualified defined benefit pension plan. The benefits are based on
years of service and compensation during the last 36 months of employment. The
Corporation'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 primarily of investments in mutual funds.
The actuarially computed net pension cost credit for the nine months ended
September 30, 1999 was $87,366, and consisted of service cost of $73,980, in-
terest cost of $132,388, expected return on plan assets of $257,587, and net
amortization credit of $36,147.
In determining the actuarial present value of the projected benefit obliga-
tion, the interest rate used for the weighted average discount rate was 6.75%,
the expected rate of annual salary increases was 7.0%, and the long-term ex-
pected rate of return on plan assets was 8.0%.
On January 1, 1999, the projected benefit obligation for service rendered to
date was $2,652,012. During the nine months ended September 30, 1999, the pro-
jected benefit obligation increased due to service cost and interest cost of
$73,980 and $132,388, respectively, and decreased due to benefit payments in
the amount of $55,425. The projected benefit obligation at September 30, 1999
was $2,802,955.
On January 1, 1999, the actual fair value of plan assets was $4,330,062. Dur-
ing the nine months ended September 30, 1999, the fair value of plan assets
increased due to the expected return on plan assets of $257,587 and decreased
due to benefit payments in the amount of $55,425. At September 30, 1999, the
projected fair value of plan assets amounted to $4,532,224, which resulted in
excess plan assets of $1,729,269. The remaining components of prepaid pension
cost at September 30, 1999 included $522,233 in unrecognized net gain,
$343,278 in unrecognized prior service cost and $83,473 is the remaining por-
tion of the unrecognized net asset existing at January 1, 1987, which is being
amortized over 15 years. Prepaid pension cost included in other assets at Sep-
tember 30, 1999 was $1,466,841.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------------------
In addition, the Corporation has a nonqualified benefit plan which provides
employees with defined retirement benefits to supplement the qualified plan.
The Corporation does not provide postretirement medical benefits.
6. EXPENSES
The cumulative amount of accrued expenses at September 30, 1999 for employees
and former employees of the Corporation was $1,572,687. Aggregate remuneration
paid or accrued during the nine months ended September 30, 1999 to officers
and directors amounted to $1,092,223.
Research, accounting and other office services provided by and reimbursed to
The Adams Express Company, an investment company which owns 8.3% of the Corpo-
ration's common stock, amounted to $287,073 for the nine months ended Septem-
ber 30, 1999.
7. PORTFOLIO SECURITIES LOANED
The Corporation makes loans of securities to brokers, secured by cash depos-
its, U.S. Government securities, or bank letters of credit. The Corporation
accounts for securities lending transactions as secured financing and receives
compensation in the form of fees or retains a portion of interest on the in-
vestment of any cash received as collateral. The Corporation also continues to
receive interest or dividends on the securities loaned. The loans are secured
by collateral of at least 102%, at all times, of the fair value of the securi-
ties loaned plus accrued interest. Gain or loss in the fair value of securi-
ties loaned that may occur during the term of the loan will be for the account
of the Corporation. At September 30, 1999, the Corporation had outstanding
loans of $69,677,963 and held collateral of $71,891,316.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Ended
-------------------
(unaudited)
Year Ended December 31
Sept. 30, Sept. 30, -------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance
Net asset value,
beginning of period $34.30 $41.46 $41.46 $37.09 $31.51 $26.84 $29.64
- ------------------------------------------------------------------------------------------------
Net investment income 0.56 0.64 0.82 0.77 0.79 0.86 0.94
Net realized gains and
change in unrealized
appreciation
(depreciation) and
other changes 6.09 (5.55) (5.69) 5.93 6.93 5.90 (1.64)
- ------------------------------------------------------------------------------------------------
Total from investment
operations 6.65 (4.91) (4.87) 6.70 7.72 6.76 (0.70)
Less distributions
Dividends from net
investment income (0.50) (0.52) (0.78) (0.77) (0.82) (0.87) (0.92)
Distributions from net
realized gains (0.10) (0.08) (1.51) (1.56) (1.32) (1.22) (1.18)
- ------------------------------------------------------------------------------------------------
Total distributions (0.60) (0.60) (2.29) (2.33) (2.14) (2.09) (2.10)
- ------------------------------------------------------------------------------------------------
Net asset value, end of
period $40.35 $35.95 $34.30 $41.46 $37.09 $31.51 $26.84
- ------------------------------------------------------------------------------------------------
Per share market price,
end of period $33.8125 $33.625 $30.625 $36.50 $34.75 $28.25 $25.25
Total Investment Return
Based on market price 12.5% (6.4)% (10.0)% 11.7% 31.2% 20.5% (0.7)%
Based on net asset value 19.8% (11.8)% (11.1)% 18.9% 25.5% 26.5% (2.0)%
Ratios/Supplemental Data
Net assets, end of
period (in 000's) $558,468 $482,492 $474,821 $556,453 $484,589 $401,405 $332,279
Ratio of expenses to
average net assets 0.44%+ 0.31%+ 0.31% 0.47% 0.63% 0.57% 0.42%
Ratio of net investment
income to average net
assets 1.98%+ 2.15%+ 2.13% 1.91% 2.31% 2.89% 3.19%
Portfolio turnover 13.72%+ 11.56%+ 12.70% 13.09% 15.50% 15.86% 10.95%
Number of shares
outstanding at end of
period (in 000's) 13,841 13,423 13,841 13,423 13,066 12,739 12,380
</TABLE>
- --------
+Ratios presented on an annualized basis.
7
<PAGE>
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
September 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Stocks And Convertible Securities -- 95.1%
Energy -- 79.5%
Internationals -- 29.6%
BP Amoco plc ADR 220,999 $ 24,489,451
Chevron Corp. 110,000 9,762,500
Exxon Corp. 330,000 25,080,000
Mobil Corp. 240,000 24,180,000
Royal Dutch Petroleum Co. 850,000 50,203,127
"Shell" Transport and Trading Co., plc ADR 240,000 10,920,000
Texaco Inc. 186,775 11,790,172
TotalFina S.A. ADR 140,000 8,881,250
------------
165,306,500
------------
Domestics -- 10.5%
Amerada Hess Corp. 90,000 5,512,500
Atlantic Richfield Co. 50,000 4,431,250
Conoco Inc. Class B 270,000 7,391,250
Kerr McGee Corp. 181,253 9,980,243
Murphy Oil Corp. 110,000 5,946,875
Phillips Petroleum Co. 90,000 4,387,500
Tesoro Petroleum Corp. (B) 300,000 4,950,000
TOSCO Corp. 175,000 4,418,750
Unocal Capital Trust $3.125 Conv. Pfd. 72,540 3,899,025
Unocal Corp. 150,000 5,559,375
Valero Energy Corp. 125,000 2,406,250
------------
58,883,018
------------
Producers -- 9.5%
Anadarko Petroleum Corp. 180,000 5,501,250
Apache Corp. 120,000 5,182,500
Barrett Resources Corp. (B) 120,400 4,447,275
Burlington Resources, Inc. 55,000 2,021,250
EOG Resources Inc. 290,000 6,162,500
Noble Affiliates Inc. 91,855 2,663,795
Occidental Petroleum Corp. 175,000 4,046,875
Ocean Energy Inc. (B) 622,450 6,341,209
Stone Energy Corp. (B) 102,000 5,202,000
Union Pacific Resources Group, Inc. 225,816 3,669,510
Vastar Resources, Inc. 125,000 7,820,313
------------
53,058,477
------------
Distributors -- 19.2%
AGL Resources, Inc. 170,000 2,762,500
Atmos Energy Corp. 200,000 4,825,000
Coastal Corp. 220,000 9,006,250
Columbia Energy Group 100,000 5,537,500
El Paso Energy Corp. 170,000 6,842,500
Energen Corp. 353,900 7,166,475
Enron Corp. $13.65 Conv. Pfd. Ser. J 25,000 28,025,156
Equitable Resources Inc. 160,000 6,050,000
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
KN Energy, Inc. 8.25% PEPS Units due 2001 130,000 $ 4,745,000
National Fuel Gas Co. 100,000 4,718,750
New Jersey Resources, Inc. 185,000 7,400,000
Northwestern Corp. 200,000 4,550,000
Questar Corp. 268,000 4,857,500
Western Gas Resources Inc. 186,000 3,475,875
Williams Companies, Inc. 200,000 7,525,000
------------
107,487,506
------------
Services -- 10.7%
BJ Services Co. (B) 200,000 6,362,500
Diamond Offshore Drilling, Inc. 96,800 3,230,700
ENSCO International, Inc. 140,000 2,528,750
Global Industries Ltd. (B) 243,400 1,977,625
Halliburton Co. 150,000 6,150,000
Nabors Industries, Inc. (B) 245,000 6,125,000
Petroleum Geo-Services ASA ADR (B) 250,000 4,765,625
Santa Fe International Corp. 120,000 2,587,500
Schlumberger Ltd. 229,400 14,294,488
Transocean Offshore Inc. 230,000 7,043,750
Weatherford International, Inc. (B) 139,000 4,448,000
------------
59,513,938
------------
Basic Industries -- 15.6%
Basic Materials -- 3.5%
Avery Dennison Corp. 90,600 4,779,150
Engelhard Corp. 250,000 4,562,500
Freeport-McMoRan Copper & Gold Inc. Ser. A (B) 127,603 1,770,492
Newpark Resources, Inc. (B) 420,000 3,255,000
Southdown, Inc. 100,000 5,350,000
------------
19,717,142
------------
Capital Goods & Other -- 6.0%
Dover Corp. 140,000 5,722,500
General Electric Co. 200,000 23,712,500
Owens-Illinois, Inc. (B) 200,000 3,962,500
------------
33,397,500
------------
Paper and Forest Products -- 6.1%
Boise Cascade Corp. 205,000 7,469,688
Consolidated Papers, Inc. 275,000 7,390,625
Fort James Corp. 220,000 5,871,250
Mead Corp. 210,000 7,218,750
Temple-Inland, Inc. 100,000 6,100,000
------------
34,050,313
------------
Total Stocks And Convertible Securities
(Cost $308,789,406) (C) 531,414,394
------------
</TABLE>
8
<PAGE>
SCHEDULE OF INVESTMENTS (continued)
- -------------------------------------------------------------------------------
September 30, 1999
(unaudited)
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Short-Term Investments -- 4.2%
U.S. Government Obligations -- 1.4%
U.S. Treasury Bills, 4.85%, due 11/26/99 $8,000,000 $7,939,666
----------
Certificates of Deposit -- 0.9%
Old Kent Bank, 5.23%, due 10/21/99 4,835,000 4,835,000
----------
Commercial Paper -- 1.9%
Chevron UK Investment plc, 5.30%, due 10/7/99 1,875,000 1,873,344
Deere (John) Capital Corp., 5.13%, due 10/12/99 3,570,000 3,564,404
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Ford Motor Credit Corp.,
5.29%, due 10/19/99 $1,815,000 $ 1,810,199
General Electric Capital Corp., 5.28%, due 10/5/99 3,500,000 3,497,947
------------
10,745,894
------------
Total Short-Term Investments
(Cost $23,520,560) 23,520,560
------------
Total Investments
(Cost $332,309,966) 554,934,954
Cash, receivables and other
assets, less liabilities 3,532,772
------------
Net Assets--100.0% $558,467,726
============
</TABLE>
- -------------------------------------------------------------------------------
Notes:
(A) See note 1 to financial statements. Securities are listed on the New York
Stock Exchange, the American Stock Exchange, or the NASDAQ.
(B) Presently non-dividend paying.
(C) The aggregate market value of stocks held in escrow at September 30, 1999
covering open call option contracts written was $903,438. In addition, the
aggregate market value of securities segregated by the custodian required
to collateralize open put option contracts written was $7,537,500.
HISTORICAL FINANCIAL STATISTICS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Dividends Distributions
Common Asset from Net from Net
Value of Shares Value per Investment Realized
Dec. 31 Net Assets Outstanding Share Income Gains
- -------- ------------ ----------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
1989.................... $322,866,019 10,384,600 $31.09 $1.20 $1.20
1990.................... 308,599,851 10,793,289 28.59 1.10 1.25
1991.................... 314,024,187 11,185,572 28.07 .92 1.23
1992.................... 320,241,282 11,579,503 27.66 .77 1.23
1993.................... 355,836,592 12,006,671 29.64 .82 1.30
1994.................... 332,279,398 12,380,300 26.84 .92 1.18
1995.................... 401,404,971 12,739,383 31.51 .87 1.22
1996.................... 484,588,990 13,065,819 37.09 .82 1.32
1997.................... 566,452,549 13,422,787 41.46 .77 1.56
1998.................... 474,821,118 13,841,375 34.30 .78 1.51
Sept. 30, 1999
(unaudited)............ 558,467,726 13,841,375 40.35 .50 .10
</TABLE>
This report, including the financial statements herein, is transmitted
to the stockholders of Petroleum & Resources Corporation for their in-
formation. It is not a prospectus, circular or representation intended
for use in the purchase or sale of shares of the Corporation or of any
securities mentioned in this report.
9
<PAGE>
PRINCIPAL CHANGES IN PORTFOLIO SECURITIES
- -------------------------------------------------------------------------------
During the Three Months Ended September 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Shares
-------------------------------------------
Held
Additions Reductions Sept. 30, 1999
--------- ---------- --------------
<S> <C> <C> <C>
Amerada Hess Corp. ............... 35,000 90,000
Apache Corp. ..................... 22,217 120,000
Avery Dennison Corp. ............. 45,600 90,600
Columbia Energy Group............. 40,000 100,000
Conoco Inc. Class B............... 270,000(/1/) 270,000
Engelhard Corp. .................. 40,000 250,000
Owens-Illinois, Inc. ............. 107,000 200,000
Petroleum Geo-Services ASA ADR.... 40,000 250,000
Stone Energy Corp. ............... 102,000 102,000
Atlantic Richfield Co. ........... 30,000 50,000
Consolidated Natural Gas Co. ..... 75,000 --
Conoco Inc. ...................... 104,000 --
Dover Corp. ...................... 60,400 140,000
E.I. du Pont de Nemours & Co. .... 80,000(/1/) --
Occidental Petroleum Corp $3.00
Conv. Exch. Pfd. ................ 30,000 --
United Water Resources Inc. ...... 250,000 --
</TABLE>
- --------
(1) Received 98,273 shares of Conoco Inc. Class B for 33,313 shares of E.I. du
Pont de Nemours & Co. Purchased 171,727 shares of Conoco Inc. Class B and
sold 46,687 shares of E.I. du Pont de Nemours & Co. separately.
----------------------
Common Stock
Listed on the New York Stock Exchange
and the Pacific Exchange
Petroleum & Resources Corporation
Seven St. Paul Street, Suite 1140, Baltimore, MD 21202
Website: www.peteres.com
E-mail: [email protected]
Telephone: (410) 752-5900 or (800) 638-2479
Counsel: Chadbourne & Parke L.L.P.
Independent Accountants: PricewaterhouseCoopers LLP
Transfer Agent, Registrar & Custodian of Securities
The Bank of New York
101 Barclay Street
New York, NY 10286
The Bank's Shareholder Relations Department: (800) 432-8224
E-mail: [email protected]
10
<PAGE>
SHAREHOLDER INFORMATION AND SERVICES
- --------------------------------------------------------------------------------
DIVIDEND PAYMENT SCHEDULE
The Corporation 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 es-
timated 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 elec-
tion card in mid-November.
Stockholders holding shares in "street" or brokerage accounts may make their
elections by notifying their brokerage house representative.
BuyDIRECT/SM*/
BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvest-
ment plan, sponsored and administered by our transfer agent, The Bank of New
York. The Plan provides registered stockholders and interested first time in-
vestors an affordable alternative for buying, selling, and reinvesting in Pe-
troleum & Resources shares. Direct purchase plans are growing in popularity and
Petroleum & Resources 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.
<TABLE>
<S> <C>
Initial Enrollment $7.50
</TABLE>
A one-time fee for new accounts who are not currently registered holders.
<TABLE>
<S> <C>
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
</TABLE>
<TABLE>
<S> <C>
Sale of Shares
Service Fee $10.00
Brokerage Commission $0.05 per share
Deposit of Certificates for safekeeping Included
Book to Book Transfers Included
</TABLE>
To transfer shares to another participant or to a new participant
Fees are subject to change at any time.
Minimum and Maximum Cash Investments
<TABLE>
<S> <C>
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
</TABLE>
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 Automatic Dividend Reinvestment 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 this Plan or contact The Bank of New York
about the BuyDIRECT Plan.
----------
The Corporation The Transfer
Petroleum & Re- Agent
sources Corp. The Bank of
Lawrence L. Hooper, New York
Jr., Shareholder
Vice President, Relations
Secretary and Gen- Dept.-8W
eral Counsel P.O. Box 11258
Seven St. Paul Church Street
Street, Suite 1140 Station
Baltimore, MD 21202 New York, NY
(800) 638-2479 10286
Website: (800) 432-8224
www.peteres.com Website:
E-mail: http://stock.bankofny.com
[email protected] E-mail:
Shareowner-
svcs@
bankofny.com
*BuyDIRECT is a service mark of The Bank of New York.
**The year-end dividend and capital gain distribution may be made in newly is-
sued shares of common stock in which event there would be no fees or commis-
sions in connection with this dividend and capital gain distribution.
11
<PAGE>
<TABLE>
<CAPTION>
Petroleum & Resources Corporation
- ---------------------------------
Board of Directors
<S> <C>
Enrique R. Arzac/1/,/3/ W. Perry Neff/1/,/3/ [LOGO OF PETROLEUM & RESOURCES CORPORATION]
Allan Comrie/1/,/2/ Douglas G. Ober/1/
Daniel E. Emerson/2/,/4/ Landon Peters/2/,/4/
Thomas H. Lenagh/3/,/4/ John J. Roberts/1/,/4/
W.D. MacCallan/1/,/3/ Robert J.M. Wilson/2/,/4/
</TABLE>
1. Member of Executive Committee Third Quarter Report
2. Member of Audit Committee ------------------------
3. Member of Compensation Committee September 30, 1999
4. Member of Retirement Committee
Officers
Douglas G. Ober Chairman and
Chief Executive Officer
Richard F. Koloski President
Joseph M. Truta Executive Vice President
Nancy J.F. Prue Vice President--Research
Lawrence L. Hooper, Jr. Vice President,
Secretary and
General Counsel
Maureen A. Jones Vice President and
Treasurer
Christine M. Griffith Assistant Treasurer
Geraldine H. Stegner Assistant Secretary
----------
Stock Data
----------
<TABLE>
<S> <C>
Price (9/30/99) $33.8125
Net Asset Value (9/30/99) $40.35
Discount: 16.2%
</TABLE>
New York Stock Exchange and Pacific Exchange ticker symbol: PEO
NASDAQ Mutual Fund Quotation Symbol: XPEOX
Newspaper stock listings are generally under the abbreviation: PetRs
---------------------
Distributions in 1999
---------------------
<TABLE>
<S> <C>
From Investment Income $0.50
From Net Realized Gains 0.10
-----
Total $0.60
=====
</TABLE>
---------------------------
1999 Dividend Payment Dates
---------------------------
March 1, 1999
June 1, 1999
September 1, 1999
December 27, 1999*
*Anticipated Investing in resources
for the future
<PAGE>
Petroleum & Resources Corporation
Investing in Resources for the Future
If you think Petroleum & Resources is a good investment,
help us spread the word to your family and friends.
Please send an investor packet to:
------------------------------ ---------------------------------
Name Your Name (optional)
------------------------------ ---------------------------------
Address Address
------------------------------ ---------------------------------
------------------------------ ---------------------------------
Telephone Telephone
<PAGE>
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST-CLASS MAIL PERMIT NO. 1947 BALTIMORE, MD
POSTAGE WILL BE PAID BY ADDRESSEE
PETROLEUM & RESOURCES CORPORATION
INVESTOR RELATIONS
7 ST. PAUL STREET, SUITE 1140
BALTIMORE, MD 21202-1637
