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SIGNATURE
TITLE
PRICEWATERHOUSECOOPERS (LOGO)
- --------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
250 WEST PRATT STREET
BALTIMORE MD 21201-2304
TELEPHONE (410) 783 7600
FACSIMILE (410) 783 7680
REPORT OF INDEPENDENT ACCOUNTANTS
----------
To the Board of Directors of
Petroleum & Resources Corporation:
In planning and performing our audit of the financial statements and financial
highlights of Petroleum & Resources Corporation (hereafter referred to as the
"Corporation") for the year ended December 31, 1998, we considered its internal
control, including control activities for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on internal control.
The management of the Corporation is responsible for establishing and
maintaining internal control. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of controls. Generally, controls that are relevant to an audit pertain to
the entity's objective of preparing financial statements and financial
highlights for external purposes that are fairly presented in conformity with
generally accepted accounting principles. Those controls include the
safeguarding of assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors or fraud may occur
and not be detected. Also, projection of any evaluation of internal control to
future periods is subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design and operation may
deteriorate.
Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of one or more
of the internal control components does not reduce to a relatively low level the
risk that misstatements caused by error or fraud in amounts that would be
material in relation to the financial statements and financial highlights being
audited may occur and not be detected within a timely period by employees in the
normal course of performing their assigned functions. However, we noted no
matters involving internal control and its operation, including controls for
safeguarding securities, that we consider to be material weaknesses as defined
above as of December 31, 1998.
This report is intended solely for the information and use of the Board of
Directors and management of Petroleum & Resources Corporation, and the
Securities and Exchange Commission.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Baltimore, Maryland
January 12, 1999
III-3
