<PAGE>
LETTER TO STOCKHOLDERS
- -------------------------------------------------------------------------------
We are pleased to submit the financial statements of the Corporation for the
three months ended March 31, 1999. In addition, there is a schedule of invest-
ments provided along with other financial information.
Net assets of the Corporation at March 31, 1999 were $35.58 per common share,
as compared with $34.30 per common share at December 31, 1998, on the
13,841,375 common shares outstanding on each date. The total return on net as-
sets (with reinvestment of income and capital gains distributions) for the pe-
riod was 4.4%. 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 invest-
ment income and $0.08 from 1999 investment income, all taxable in 1999. A 1999
investment income dividend of $0.20 per share has been declared to sharehold-
ers of record May 19, 1999, payable June 1, 1999.
Net investment income for the three months ended March 31, 1999 amounted to
$1,984,605, compared with $1,997,276 for the same period in 1998. These earn-
ings are equal to $0.14 and $0.15 per common share, respectively, on the aver-
age number of common shares outstanding during each period.
Net capital gain realized on investments for the three months ended March 31,
1999 amounted to $2,168,443, the equivalent of $0.16 per common share.
Year 2000 Readiness Disclosure: As the countdown continues to the Year 2000,
the Corporation, along with other investment companies and financial institu-
tions, could be adversely affected if computer systems and embedded technology
do not properly process and calculate date-related information relating to
Year 2000 ("Y2K"). The Corporation's Y2K project team has completed testing of
in-house hardware and software systems and, based on the testing results, an-
ticipates being Year 2000 ready. The Corporation's custodian and transfer
agent, The Bank of New York, has confirmed 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 im-
pact on the Corporation will be avoided.
The Annual Shareholders Meeting was held on March 30, 1999 in New York City.
Upon conclusion of the formal segment of the meeting, management reviewed the
portfolio's performance in 1998 and discussed the outlook for the future. The
results of the voting at the Annual Meeting are shown on page 10.
Effective April 1, 1999, the Board of Directors elected Mr. Lawrence L. Hoop-
er, Jr. to Vice President. Mr. Hooper retains the titles of Secretary and Gen-
eral Counsel of the Corporation.
Current and potential shareholders can find information about the Corporation,
including the daily net asset value (NAV) per share and the market price dis-
count 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 Cor-
poration, historical financial information, and more general industry materi-
al. Further information regarding shareholder services is located on page 11
of this report.
The Corporation is an internally-managed equity fund emphasizing petroleum and
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,
Douglas G. Ober,
Chairman and
Chief Executive Officer
Richard F. Koloski,
President
April 16, 1999
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1999
(unaudited)
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $298,717,119) $470,072,334
Short-term investments (cost $22,235,072) 22,235,072 $492,307,406
- ----------------------------------------------------------------------------
Cash 68,816
Securities lending collateral 17,917,231
Dividends and interest receivable 906,624
Prepaid expenses 1,527,378
- ----------------------------------------------------------------------------
Total Assets 512,727,455
- ----------------------------------------------------------------------------
Liabilities
Investment securities purchased 486,525
Open option contracts at value (proceeds
$300,924) 284,563
Obligations to return securities lending collat-
eral 17,917,231
Accrued expenses 1,501,916
- ----------------------------------------------------------------------------
Total Liabilities 20,190,235
- ----------------------------------------------------------------------------
Net Assets $492,537,220
- ----------------------------------------------------------------------------
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 1,191,037
Undistributed net realized gain on investments 2,094,845
Unrealized appreciation on investments 171,371,576
- ----------------------------------------------------------------------------
Net Assets Applicable to Common Stock $492,537,220
- ----------------------------------------------------------------------------
Net Asset Value per Share of Common Stock $35.58
- ----------------------------------------------------------------------------
</TABLE>
* See Schedule of Investments on pages 7 and 8.
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
Three Months Ended March 31, 1999
(unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends $ 2,189,045
Interest 423,534
- ---------------------------------------------------------------------------
Total income 2,612,579
- ---------------------------------------------------------------------------
Expenses:
Investment research 350,485
Administration and operations 74,046
Directors' fees 50,250
Reports and stockholder communications 33,770
Transfer agent, registrar and custodian expenses 44,102
Auditing services 11,565
Legal services 3,761
Occupancy and other office expenses 19,488
Travel, telephone and postage 15,119
Other 25,388
- ---------------------------------------------------------------------------
Total expenses 627,974
- ---------------------------------------------------------------------------
Net Investment Income 1,984,605
- ---------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on Invest-
ments
Net realized gain on security transactions 2,168,443
Change in unrealized appreciation on investments 16,331,331
- ---------------------------------------------------------------------------
Net Gain on Investments 18,499,774
- ---------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $20,484,379
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
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.
3
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Year ended
ended December 31,
March 31, 1999 1998
-------------- ------------
(unaudited)
<S> <C> <C>
From Operations:
Net investment income $ 1,984,605 $ 11,060,345
Net realized gain on investments 2,168,443 20,532,408
Change in unrealized appreciation on investments 16,331,331 (95,161,348)
- -------------------------------------------------------------------------------
Change in net assets resulting from operations 20,484,379 (63,568,595)
- -------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (1,384,139) (10,469,774)
Net realized gain from investment transactions (1,384,138) (20,268,408)
- -------------------------------------------------------------------------------
Decrease in net assets from distributions (2,768,277) (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 17,716,102 (81,631,431)
Net Assets:
Beginning of period 474,821,118 556,452,549
- -------------------------------------------------------------------------------
End of period (including undistributed net in-
vestment income of
$1,191,037 and $590,571, respectively) $492,537,220 $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 March 31, 1999 was $321,206,929, and net
unrealized appreciation aggregated $171,401,401, of which the related gross
unrealized appreciation and depreciation were $212,178,494 and $40,777,093,
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.
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than options and short-term
investments, during the three months ended March 31, 1999 were $14,571,045 and
$10,195,295, respectively. The Corporation, as writer of an option, bears the
market risk of an unfavorable change in the price of the security underlying
the written option. Option transactions comprised an insignificant portion of
operations during the period ended March 31, 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 three months ended March 31, 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 three months ended March 31, 1999, the Corporation
granted options including stock appreciation rights for 16,565 shares of com-
mon stock with an exercise price of $30.1875; no options or stock appreciation
rights were exercised. At March 31, 1999, there were outstanding exercisable
options to purchase 53,086 common shares at $15.455-35.265 (weighted average
price of $20.2195) 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 5.1271 years and 7.1057 years, respec-
tively. The total compensation expense for stock options and stock apprecia-
tion rights recognized for the three months ended March 31, 1999 was $222,048.
At March 31, 1999, there were 333,783 shares available for future 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 three months ended
March 31, 1999 was $29,122, and consisted of service cost of $24,660, interest
cost of $44,129, expected return on plan assets of $85,862, and net amortiza-
tion credit of $12,049.
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 three months ended March 31, 1999, the pro-
jected benefit obligation increased due to service cost and interest cost of
$24,660 and $44,129, respectively, and decreased due to benefit payments in
the amount of $18,475. The projected benefit obligation at March 31, 1999 was
$2,702,326.
On January 1, 1999, the actual fair value of plan assets was $4,330,062. Dur-
ing the three months ended March 31, 1999, the fair value of plan assets in-
creased due to the expected return on plan assets of $85,862 and decreased due
to benefit payments in the amount of $18,475. At March 31, 1999, the projected
fair value of plan assets amounted to $4,397,449, which resulted in excess
plan assets of $1,695,123. The remaining components of prepaid pension cost at
March 31, 1999 included $550,461 in unrecognized net gain, $365,958 in unrec-
ognized prior service cost and $102,023 is the remaining portion of the unrec-
ognized net asset existing at January 1, 1987, which is being amortized over
15 years. Prepaid pension cost included in other assets at March 31, 1999 was
$1,408,597.
5
<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 March 31, 1999 for employees and
former employees of the Corporation was $1,423,363. Aggregate remuneration
paid or accrued during the three months ended March 31, 1999 to officers and
directors amounted to $435,200.
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 $109,926 for the three months ended March
31, 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 March 31, 1999, the Corporation had outstanding loans
of $16,921,946 and held collateral of $17,917,231.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Year Ended December 31
------------------ -------------------------------------------------
(unaudited)
March 31, March 31,
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Per-
formance
Net asset value, begin-
ning of period $34.30 $41.46 $41.46 $37.09 $31.51 $26.84 $29.64
- -------------------------------------------------------------------------------------------------
Net investment income 0.14 0.15 0.82 0.77 0.79 0.86 0.94
Net realized gains and
change in unrealized
appreciation (deprecia-
tion) and other changes 1.34 1.77 (5.69) 5.93 6.93 5.90 (1.64)
- -------------------------------------------------------------------------------------------------
Total from investment
operations 1.48 1.92 (4.87) 6.70 7.72 6.76 (0.70)
Less distributions
Dividends from net in-
vestment income (0.10) (0.12) (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 (0.20) (0.20) (2.29) (2.33) (2.14) (2.09) (2.10)
- -------------------------------------------------------------------------------------------------
Net asset value, end of
period $35.58 $43.18 $34.30 $41.46 $37.09 $31.51 $26.84
- -------------------------------------------------------------------------------------------------
Per share market price,
end of period $32.625 $39.0625 $30.625 $36.50 $34.75 $28.25 $25.25
Total Investment Return
Based on market price 7.3% 7.6% (10.0)% 11.7% 31.2% 20.5% (0.7)%
Based on net asset value 4.4% 4.7% (11.1)% 18.9% 25.5% 26.5% (2.0)%
Ratios/Supplemental Data
Net assets, end of pe-
riod (in 000's) $492,537 $579,546 $474,821 $556,453 $484,589 $401,405 $332,279
Ratio of expenses to av-
erage net assets 0.54%+ 0.35%+ 0.31% 0.47% 0.63% 0.57% 0.42%
Ratio of net investment
income to average net
assets 1.72%+ 1.63%+ 2.13% 1.91% 2.31% 2.89% 3.19%
Portfolio turnover 9.33%+ 7.67%+ 12.70% 13.09% 15.50% 15.86% 10.95%
Number of shares out-
standing 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.
6
<PAGE>
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Stocks And Convertible Securities--95.5%
Energy--78.2%
Internationals--30.6%
BP Amoco plc ADR 220,999 $ 22,320,899
Chevron Corp. 110,000 9,762,500
Exxon Corp. 330,000 23,285,625
Mobil Corp. 240,000 21,120,000
Royal Dutch Petroleum Co. 868,000 45,136,001
"Shell" Transport and Trading Co., plc ADR 240,000 9,750,000
Texaco Inc. 186,775 10,599,482
TOTAL S.A. ADR 140,000 8,540,000
------------
150,514,507
------------
Domestics--10.2%
Amerada Hess Corp. 45,000 2,289,375
Ashland Inc. 115,950 4,746,703
Atlantic Richfield Co. 80,000 5,850,000
Conoco Inc. 104,000 2,554,500
Kerr McGee Corp. 181,253 5,947,364
Murphy Oil Corp. 110,000 4,565,000
Phillips Petroleum Co. 90,000 4,252,500
Tesoro Petroleum Corp. (B) 300,000 3,300,000
TOSCO Corp. 175,000 4,342,188
Unocal Capital Trust $3.125 Conv. Pfd. 72,540 3,880,890
Unocal Corp. 150,000 5,531,250
Valero Energy Corp. 125,000 3,109,375
------------
50,369,145
------------
Producers--8.0%
Anadarko Petroleum Corp. 180,000 6,795,000
Apache Corp. 97,783 2,548,469
Barrett Resources Corp. (B) 120,400 3,017,525
Burlington Resources, Inc. 55,000 2,196,563
Enron Oil & Gas Co. 290,000 4,821,250
Noble Affiliates Inc. 91,855 2,663,795
Occidental Petroleum Corp. $3.00 Conv. Exch. Pfd. 30,000 1,485,000
Occidental Petroleum Corp. 175,000 3,150,000
Ocean Energy Inc. (B) 622,450 4,240,441
Union Pacific Resources Group, Inc. 225,816 2,681,565
Vastar Resources, Inc. 125,000 5,968,750
------------
39,568,358
------------
Distributors--18.8%
AGL Resources, Inc. 200,000 3,512,500
Atmos Energy Corp. 200,000 4,812,500
Coastal Corp. 220,000 7,260,000
Consolidated Natural Gas Co. 75,000 3,651,563
El Paso Natural Gas Co. 170,000 5,556,875
Energen Corp. 353,900 5,286,381
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
---------- ---------
<S> <C> <C>
Enron Corp. $13.65 Conv. Pfd. Ser. J 25,000 $ 21,925,313
Equitable Resources Inc. 160,000 4,170,000
KN Energy, Inc. 8.25% PEPS Units due 2001 130,000 4,428,125
National Fuel Gas Co. 100,000 3,925,000
New Jersey Resources, Inc. 185,000 6,579,063
Northwestern Corp. 200,000 5,187,500
Questar Corp. 268,000 4,539,250
Washington Gas Light Co. 100,000 2,262,500
Western Gas Resources Inc. 186,000 1,395,000
Williams Companies, Inc. 200,000 7,900,000
------------
92,391,570
------------
Services--10.6%
BJ Services Co. (B) 200,000 4,650,000
Diamond Offshore Drilling, Inc. 96,800 3,061,300
ENSCO International, Inc. 140,000 1,863,750
Global Industries Ltd. (B) 243,400 2,464,425
Halliburton Co. 150,000 5,775,000
Loews Corp. 3.125% Exch. Sub. Debs. due 2007 $1,500,000 1,267,500
Nabors Industries, Inc. (B) 245,000 4,455,938
Petroleum Geo-Services ASA ADR (B) 150,000 2,287,500
Santa Fe International Corp. 120,000 2,242,500
Schlumberger Ltd. 229,400 13,807,014
Transocean Offshore Inc. 230,000 6,626,875
Weatherford International, Inc. (B) 139,000 3,631,371
------------
52,133,173
------------
Basic Industries--17.3%
Basic Materials--4.0%
E.I. du Pont de Nemours & Co. 80,000 4,645,000
Freeport-McMoRan Copper & Gold Inc. Ser. A (B) 127,603 1,307,931
Newpark Resources, Inc. (B) 420,000 3,045,000
Southdown, Inc. 100,000 5,368,750
United Water Resources Inc. 250,000 5,187,500
------------
19,554,181
------------
Capital Goods & Other--6.8%
Deere & Co. 120,000 4,635,000
Dover Corp. 200,400 6,588,150
General Electric Co. 200,000 22,125,000
------------
33,348,150
------------
Paper and Forest Products--6.5%
Boise Cascade Corp. 200,000 6,450,000
Consolidated Papers, Inc. 257,000 6,039,500
Fort James Corp. 220,000 6,971,250
Mead Corp. 210,000 6,457,500
Temple-Inland, Inc. 100,000 6,275,000
------------
32,193,250
------------
Total Stocks And Convertible Securities
(Cost $298,717,119) (C) 470,072,334
------------
</TABLE>
7
<PAGE>
SCHEDULE OF INVESTMENTS (continued)
- -------------------------------------------------------------------------------
March 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Short-Term Investments--4.5%
U.S. Government Obligations--1.4%
U.S. Treasury Bills, 4.53%, due 5/27/99 $7,000,000 $6,950,677
----------
Commercial Paper--3.1%
Chevron USA, 4.80%, due 4/15/99 3,170,000 3,164,083
Deere (John) Capital Corp., 4.82%, due 4/15/99 2,140,000 2,135,988
Ford Motor Credit Corp.,
4.82-4.84%,
due 4/16/99-4/20/99 5,000,000 4,990,904
</TABLE>
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
General Electric Capital Corp., 4.83-4.84%,
due 4/8/99-4/22/99 $5,000,000 $ 4,993,420
------------
15,284,395
------------
Total Short-Term Investments
(Cost $22,235,072) 22,235,072
------------
Total Investments
(Cost $320,952,191) 492,307,406
Cash, receivables and other
assets, less liabilities 229,814
------------
Net Assets--100.0% $492,537,220
============
</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 March 31, 1999 cov-
ering open call option contracts written was $731,250. In addition, the
aggregate market value of securities segregated by the custodian required
to collateralize open put option contracts written was $5,087,500.
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
March 31, 1999
(unaudited)............ 492,537,220 13,841,375 35.58 .30* .10
</TABLE>
- --------
* Paid or declared.
8
<PAGE>
PRINCIPAL CHANGES IN PORTFOLIO SECURITIES
- -------------------------------------------------------------------------------
During the Three Months Ended March 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Shares
-------------------------------------------
Held
Additions Reductions March 31, 1999
--------- ---------- --------------
<S> <C> <C> <C>
Amerada Hess Corp. ................ 60,000 15,000 45,000
Boise Cascade Corp. ............... 50,000 200,000
BP Amoco ADR....................... 43,083(/1/) 220,999
Consolidated Papers, Inc. ......... 37,000 257,000
Equitable Resources Inc. .......... 60,000 160,000
Fort James Corp. .................. 42,000 220,000
Kerr McGee Corp. .................. 71,253(/2/) 181,253
Ocean Energy, Inc. ................ 186,300(/3/) 622,450
Williams Companies, Inc............ 98,000 200,000
Amoco Corp. ....................... 50,000(/1/) --
Atlantic Richfield Co. ............ 20,000 80,000
Consolidated Natural Gas Co. ...... 25,000 75,000
Devon Energy Corp. ................ 137,900 --
LG&E Energy Corp. ................. 150,000 --
Oryx Energy Corp. ................. 193,100(/2/) --
Seagull Energy Corp. .............. 200,000(/3/) --
</TABLE>
- --------
(1) Received .66166 share in exchange for each share of Amoco Corp. held. Pur-
chased 10,000 shares of BP Amoco ADR separately.
(2) Received .369 share in exchange for each share of Oryx Energy Corp. held.
(3) Received one share of Ocean Energy, Inc. in exchange for each share of
Seagull Energy Corp. Sold 13,700 shares of Seagull Energy Corp. separate-
ly.
----------------------
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]
9
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
- -------------------------------------------------------------------------------
The Annual Meeting of Stockholders was held on March 30, 1999. For those nomi-
nated, the following votes were cast for directors:
<TABLE>
<CAPTION>
votes for votes withheld
---------- --------------
<S> <C> <C>
(A) Enrique R. Arzac: 12,050,724 215,951
(B) Allan Comrie: 11,989,662 277,013
(C) Daniel E. Emerson: 12,020,327 246,348
(D) Thomas H. Lenagh: 11,969,214 297,461
(E) W.D. MacCallan: 12,030,454 236,221
(F) W. Perry Neff: 12,003,820 262,855
(G) Douglas G. Ober: 12,057,516 209,159
(H) Landon Peters: 12,024,546 242,129
(I) John J. Roberts: 11,972,701 293,974
(J) Robert J.M. Wilson: 12,004,159 262,516
</TABLE>
A proposal to approve and ratify the selection of PricewaterhouseCoopers LLP
as the firm of independent accountants of the Corporation for 1999 was ap-
proved with 12,050,038 votes for, 89,722 votes against and 126,915 votes ab-
staining.
10
<PAGE>
SHAREHOLDER INFO 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.
BuyDIRECTSM*
BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvest-
ment plan, sponsored and administered by our transfer agent, The Bank of New
York. On September 1, 1998, the Automatic Dividend Reinvestment Plan was re-
placed and enhanced by BuyDIRECT. The Plan provides registered stockholders and
interested first time investors an affordable alternative for buying, selling,
and reinvesting in Petroleum & Resources shares without going through a broker.
Direct purchase plans are growing in popularity and Petroleum & Resources is
pleased to be one of the first closed-end funds 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
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-
[email protected]
*BuyDIRECT is a service mark of The Bank of New York.
**The year-end dividend and capital gain distribution will usually be made in
newly issued shares of common stock. There will be no fees or commissions in
connection with this dividend and capital gain distribution.
11
<PAGE>
Petroleum & Resources Corporation
- --------------------------------------------------------------------------------
Board of Directors
Enrique R. Arzac/1/,/3/ W. Perry Neff/1/,/3/
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/
1.Member of Executive Committee
2.Member of Audit Committee
3.Member of Compensation Committee
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 (3/31/99) $32.625
Net Asset Value (3/31/99) $35.58
Discount: 8.3%
</TABLE>
New York Stock Exchange and Pacific Exchange ticker symbol: PEO
Newspaper stock listings are generally under the abbreviation: PetRs
---------------
Distributions in 1999
---------------
<TABLE>
<S> <C>
From Investment Income $0.30
(paid or declared)
From Net Realized Gains 0.10
-----
Total $0.40
=====
</TABLE>
---------------------
1999 Dividend Payment Dates
---------------------
March 1, 1999
June 1, 1999
September 1, 1999*
December 27, 1999*
*Anticipated
