<PAGE>
PETROLEUM
& RESOURCES
CORPORATION
Annual Report
1999
investing in resources
for the future/r/
<PAGE>
1999 AT A GLANCE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
THE COMPANY STOCK DATA
o a closed-end equity investment company NYSE Symbol........................PEO
emphasizing natural resources stocks Market Price as of 12/31/99....$32 1/4
o objectives: preservation of capital Discount.........................18.3%
reasonable income 52-Week Range..........$36 7/8-$28 1/4
opportunity for capital gain Shares Outstanding..........14,314,180
o internally-managed
o low expense ratio
o low turnover
</TABLE>
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Year Ended December 31
1999 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value per share $ 39.48 $ 34.30
Total net assets 565,075,001 474,821,118
Unrealized appreciation 230,465,953 155,040,245
Net investment income 9,806,876 11,060,345
Total realized gain 22,803,830 20,532,408
Total return (based on market value) 13.3% (10.0)%
Total return (based on net asset value) 23.8% (11.1)%
Expense ratio 0.43% 0.31%
- ------------------------------------------------------------------------------------------
</TABLE>
1999 DIVIDENDS AND DISTRIBUTIONS
<TABLE>
<CAPTION>
Amount
Paid (per share) Type
- ------------------------------------------------------------------------------------------
<S> <C> <C>
March 1, 1999 $0.10 Long-term capital gain
March 1, 1999 0.10 Investment income
June 1, 1999 0.20 Investment income
September 1, 1999 0.20 Investment income
December 27, 1999 1.40 Long-term capital gain
December 27, 1999 0.11 Short-term capital gain
December 27, 1999 0.22 Investment income
- ------------------------------------------------------------------------------------------
$2.33
==========================================================================================
</TABLE>
2000 ANNUAL MEETING OF STOCKHOLDERS
Location: The Colony Hotel, Palm Beach, Florida
Date: March 28, 2000
Time: 10:00 a.m.
Holders of Record: February 14, 2000
1
<PAGE>
PORTFOLIO REVIEW
- --------------------------------------------------------------------------------
TEN LARGEST PORTFOLIO HOLDINGS (12/31/99)
<TABLE>
<CAPTION>
Market Value % of Net Assets
------------ ---------------
<S> <C> <C> <C>
Royal Dutch Petroleum Co. $ 51,478,127 9.1
Exxon Mobil Corp. 48,920,043 8.7
General Electric Co. 30,950,000 5.5
Enron Corp. $13.65 Conv. Pfd. Ser. J 27,863,063 4.9
BP Amoco plc ADR 23,725,000 4.2
Schlumberger Ltd. 12,875,075 2.3
"Shell" Transport and Trading Co. plc ADR 11,760,000 2.1
Kerr McGee Corp. 11,237,686 2.0
Chevron Corp. 10,395,000 1.8
Texaco Inc. 10,144,217 1.8
------------ ----
Total $239,348,211 42.4%
</TABLE>
SECTOR WEIGHTINGS (12/31/99)
[GRAPH APPEARS HERE]
Internationals 29.4
Domestics 10.3
Producers 8.7
Distributors 18.0
Services 11.9
Basic Materials 3.7
Capital Goods & Other 8.6
Paper & Forest Products 7.0
Cash & Equivalent 2.1
2
<PAGE>
LETTER TO STOCKHOLDERS
- -------------------------------------------------------------------------------
Petroleum & Resources posted an attractive performance over the past year,
significantly exceeding the returns of our benchmark indices. We are pleased to
submit the financial statements for the year ended December 31, 1999. In
addition, there is a schedule of investments provided along with other
financial information and the report of independent accountants.
THE YEAR IN REVIEW
The return on net assets, including income and capital gains distributions for
the calendar year was an excellent 23.8%, exceeding the 21.0% rate of return for
the Standard & Poor's 500 Stock Index and the 15.4% return of the Dow Jones
Energy Index. Total dividends and distributions paid in 1999 were $2.33 per
share compared to $2.29 in 1998.
With robust growth in worldwide energy demand and surging prices for both crude
oil and natural gas, the operating environment for energy companies was
excellent throughout most of the year. After an initial two-month, 7% decline,
energy stocks staged a dramatic recovery during the remainder of the first half
as the Dow Jones Energy Index advanced 17.7%. Despite this attractive
performance, a tightened oil market and oil prices in a $23-25 range, energy
stocks declined a disappointing 2% during the last six months of 1999. The
comparable returns for the S&P 500 during these two periods were 11.6% and 7.0%
respectively. Investors seemingly disregarded attractive valuations in energy
and resource stocks while focusing on technology and internet securities.
All of our energy sectors recorded attractive stock market performance for the
full year. Oil service and drilling stocks were the big gainers with advances
exceeding 30%. Major international oils, mid-sized exploration companies and
natural gas pipeline stocks advanced approximately 10-12%. Gas utilities were
the laggards with a 4% gain. Our diverse holdings in basic industries and paper
and forest products stocks collectively outperformed the S&P 500. Cash and short
term investments at year-end stood at 2.1% of net assets compared to 5.6% the
prior year.
Oil prices ended 1999 at approximately $25 per barrel, more than doubling from
the year earlier $12 level. The initial low price reflected the combination of
substantial excess oil production from OPEC countries and reduced consumption
caused by mild domestic winter weather patterns and sluggish foreign economic
activity. An agreement by OPEC and several key non-OPEC countries in mid-March
to reduce oil production caused oil prices to quickly advance over 60% to $19
per barrel at mid-year. During the second half, the combination of surprisingly
solid OPEC discipline (averaging approximately 87% compliance) and strong
worldwide growth in energy demand generated a significant reduction in global
inventories. With oil inventories declining to ten year lows, oil prices moved
steadily higher, recording a 30% gain over the final six months to the highest
level since the 1990 Gulf War. Led by the economic recovery in several Southeast
Asian countries, worldwide petroleum consumption for the full year advanced in
excess of one million barrels per day or 1.5%. On the supply side, production
from non-OPEC nations experienced its first decrease in six years with U.S. oil
output declining 4.5%.
Despite the warmest winter weather conditions in 100 years and an excess storage
build up during the first quarter, domestic natural gas prices were still able
to establish a ten percent increase for the year. The weakness in heating demand
was offset by a stronger economy and increased consumption by gas-fired electric
generators. With supply restricted due to reduced drilling activity, the gas
market tightened and prices recovered throughout the summer. While fourth
quarter heating consumption was disrupted by 10% warmer than normal
temperatures, the natural gas market remained in balance and yearend gas prices
held at attractive levels.
INVESTMENT RESULTS
Net assets of the Corporation on December 31, 1999 were $565,075,001 or $39.48
per common share on 14,314,180 common shares outstanding as compared with
$474,821,118 or $34.30 per common share on 13,841,375 common shares outstanding
a year earlier.
Net investment income for 1999 was $9,806,876 compared to $11,060,345 for 1998.
These earnings are equivalent to $0.72 and $0.82 per common share, respectively,
on the average number of common shares outstanding throughout each year. It has
been increasingly difficult to generate income in the portfolio as both the
percentage of stocks paying dividends and the percentage of dividend increases
have declined markedly in the past several years. The dividend yield on the
Standard & Poor's 500 has fallen from 3.76% in 1990 to 1.16% in 1999. We
continue to seek out ways to generate additional income without impacting
performance through the use of convertible securities and other actions. In
1999, our 0.43% expense ratio (expenses to net assets) was once again at a very
low level compared to the industry.
Net realized gains amounted to $22,803,830 during the year, while the unrealized
appreciation on investments increased from $155,040,245 at December 31, 1998 to
$230,465,953 at year end.
DIVIDENDS AND DISTRIBUTIONS
As announced on November 11, 1999, a year-end distribution consisting of
investment income of $0.22 and capital gains of $1.51 was made on December 27,
1999, both realized and taxable in 1999. On January 13, 2000, an additional
distribution of $0.20 per share was declared payable March 1, 2000, representing
the
3
<PAGE>
balance of undistributed net investment income and capital gains earned in
1999 and an initial distribution from 2000 net investment income, all taxable to
shareholders in 2000.
OUTLOOK FOR 2000
Continued favorable worldwide energy demand growth, lean global inventories and
steadfast OPECproduction compliance suggest that the oil market will remain in
solid balance. With further expansion of the U.S. and Southeast Asian economies
anticipated for this year, the growth of oil consumption should again exceed 1
million barrels per day or 1.5%. On the supply side, since non-OPEC production
will increase modestly as drilling activity slowly expands in response to higher
prices, inventory reductions will continue until OPEC increases production.
Also, Iraqi exports are nearing capacity and will only expand gradually during
the year. The major oil-producing nations are scheduled to establish new output
ceilings in late March. Oil prices for the second half will be dependent on
OPEC's ability to maintain their newfound discipline to these new production
targets. While the current lofty $25 per barrel price exceeds all industry and
OPEC expectations, the tight supply/demand balance for the remainder of the year
suggests that crude oil prices will stabilize above $20 per barrel.
While energy stocks outperformed the S&P 500 over the past year, valuations for
the group remain attractive, as investors appear reticent to incorporate current
oil pricing into a longer term forecast. Once the crude oil price stabilizes,
investor attention is expected to refocus on the favorable ongoing industry
fundamentals. The Exxon/Mobil and BP/Amoco combinations were the largest of the
numerous energy mergers completed last year. Although the scale will be smaller,
several consolidations within the various energy sectors are anticipated.
Domestic natural gas prices are expected to average 5-10% higher this year. This
positive forecast reflects the benefits of a surging domestic economy on gas
demand and supply constraints. The risk to this outlook is that improving
commodity pricing and attractive drilling costs could stimulate excessive
investment and exploration activity. The themes for the year 2000 in the natural
gas industry are consolidation, capital discipline and share repurchase.
SHARE REPURCHASE PROGRAM
On November 11, 1999, the Board of Directors authorized the management to
repurchase up to 5% of the outstanding shares of the Corporation (approximately
700,000 shares) over the ensuing twelve months, as long as the discount of the
market price of the shares from the net asset value is greater than 8%. It was
felt that, by so doing, the growth in the number of shares outstanding would
slow, the net asset value per share would increase, and the dilution caused by
the issuance of shares in lieu of cash for the year-end capital gain
distribution would diminish. In addition, the liquidity of the Corporation's
shares in the marketplace should increase and the discount to net asset value
could decrease. This program is expected to benefit all the shareholders of the
Corporation.
As of January 13, 2000, a total of 125,400 shares have been repurchased at a
total cost of $4,021,973 and a weighted average discount to net asset value of
17.7%. The Corporation was restricted from buying shares until late in December,
1999.
YEAR 2000 READINESS DISCLOSURE
The countdown is over for Year 2000, and we have entered into the new century
unscathed. We are pleased to report there were no system failures, either in-
house or reported by any of our critical vendors or portfolio companies. The
Corporation incurred no significant costs relating to the Year 2000 issue.
--------------------
The Corporation included in its Third Quarter Report to Shareholders a postcard
inviting shareholders to send us the names of investors who might be interested
in learning more about the Corporation. We have received a good response to this
initiative, with over 140 cards returned and information packages mailed out to
prospective holders. It is our intention to repeat the insertion in our First
Quarter Report and periodic future mailings. Please feel free to provide us with
names and addresses at any time, either by mail, telephone, or through our soon
to be updated website at www. peteres.com.
--------------------
Mr. Allan Comrie resigned from the Board of Directors as of December 31, 1999.
Mr. Comrie, a director since 1984, shared his extensive investment knowledge
with the Board as former President and Chief Executive Officer of the U.S. &
Foreign Securities Corp. We have been enriched by his participation on the Board
and wish him all the best in the future.
The proxy statement for the Annual Meeting of Stockholders to be held in Palm
Beach, Florida on March 28, 2000, will be mailed on or about February 17, 2000
to holders of record on February 14, 2000.
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
January 21, 2000
4
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
December 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments* at value:
Common stocks and convertible securities
(cost $321,202,227) $551,675,306
Short-term investments (cost $11,879,657) 11,879,657 $563,554,963
- ---------------------------------------------------------------------------------------------
Cash 43,171
Securities lending collateral 44,294,479
Receivables:
Investment securities sold 3,095,156
Dividends and interest 699,144
Prepaid expenses 1,685,705
- -------------------------------------------------------------------------------------------------------------------
Total Assets 613,372,618
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES
Investment securities purchased 1,197,093
Open written option contracts at value (proceeds $189,562) 196,688
Obligations to return securities lending collateral 44,294,479
Accrued expenses 2,609,357
- -------------------------------------------------------------------------------------------------------------------
Total Liabilities 48,297,617
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS $565,075,001
===================================================================================================================
NET ASSETS
Common Stock at par value $1.00 per share, authorized
25,000,000 shares; issued and outstanding 14,314,180 shares $ 14,314,180
Additional capital surplus 318,004,817
Undistributed net investment income 460,295
Undistributed net realized gain on investments 1,829,756
Unrealized appreciation on investments 230,465,953
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON STOCK $565,075,001
===================================================================================================================
NET ASSET VALUE PER SHARE OF COMMON STOCK $39.48
===================================================================================================================
</TABLE>
* See schedule of investments on pages 12 through 14.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
Year Ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME
Income:
Dividends $ 10,372,918
Interest 1,706,820
- ---------------------------------------------------------------------------------------------------------------------
Total income 12,079,738
- ---------------------------------------------------------------------------------------------------------------------
Expenses:
Investment research 1,030,796
Administration and operations 356,563
Directors' fees 186,500
Reports and stockholder communications 221,878
Transfer agent, registrar and custodian expenses 143,203
Auditing services 46,919
Legal services 27,468
Occupancy and other office expenses 96,363
Travel, telephone and postage 68,547
Other 94,625
- ---------------------------------------------------------------------------------------------------------------------
Total expenses 2,272,862
- ---------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 9,806,876
- ---------------------------------------------------------------------------------------------------------------------
REALIZED GAIN AND CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS
Net realized gain on security transactions 22,803,830
Change in unrealized appreciation on investments 75,425,708
- ---------------------------------------------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 98,229,538
- ---------------------------------------------------------------------------------------------------------------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $108,036,414
=====================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended
------------------------------------
Dec. 31, 1999 Dec. 31, 1998
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income $ 9,806,876 $ 11,060,345
Net realized gain on investments 22,803,830 20,532,408
Change in unrealized appreciation on investments 75,425,708 (95,161,348)
- --------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 108,036,414 (63,568,595)
- --------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO STOCKHOLDERS FROM:
Net investment income (9,965,792) (10,469,774)
Net realized gain from investment transactions (22,284,614) (20,268,408)
- --------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions (32,250,406) (30,738,182)
- --------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
Value of common shares issued in payment of optional distributions 15,851,054 12,675,346
Cost of common shares purchased (note 4) (1,383,179) --
- --------------------------------------------------------------------------------------------------------------------
Change in net assets from capital share transactions 14,467,875 (81,631,431)
- --------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 90,253,883 (97,212,822)
NET ASSETS:
Beginning of year 474,821,118 556,452,549
- --------------------------------------------------------------------------------------------------------------------
End of year (including undistributed net investment
income of $460,295 and 590,571, respectively) $565,075,001 $474,821,118
====================================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 securities
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 December 31, 1999 was $333,248,747, and net
unrealized appreciation aggregated $230,495,779, of which the related gross
unrealized appreciation and depreciation were $259,775,122 and $29,279,343,
respectively.
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Accordingly, periodic
reclassifications are made within the Corporation's capital accounts to reflect
income and gains available for distribution under income tax regulations.
3. INVESTMENT TRANSACTIONS
Purchases and sales of portfolio securities, other than options and short-term
investments, during the year ended December 31, 1999 were $67,841,714 and
$60,968,855, 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 year ended December 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
On December 27, 1999, the Corporation issued 516,005 shares of its common stock
at a price of $30.7188 per share (market value) to stockholders of record
November 22, 1999 who elected to take stock in payment of the distribution from
1999 capital gain and investment income.
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. During
1999, the Corporation purchased and is holding 43,200 shares of common stock at
a total cost of $1,383,179 and a weighted average discount from net asset value
of 17.8%.
The Corporation has 5,000,000 authorized and 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 exercisable
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 exercisable
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 surrender.
Under the plan, the exercise price of the options and related stock appreciation
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 1999, the Corporation granted options, including stock
appreciation rights, for 16,565 shares of common stock with an exercise price of
$30.1875 per share.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
During the year stock appreciation 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 relating to these rights which had a weighted average exercise
price of $20.2514 per share were cancelled. At December 31, 1999, there were
54,525 outstanding exercisable options to purchase common shares at $13.945-
$33.755 per share (weighted average price of $18.7417) and unexercisable options
to purchase 94,391 common shares at $18.3425-$33.755 per share (weighted average
price of $24.5746). The weighted average remaining contractual life of
outstanding exercisable and unexercisable options was 4.4030 years and 6.6504
years, respectively. The total compensation expense recognized in 1999 for the
stock options and stock appreciation rights plan was $520,707. At December 31,
1999, there were 336,130 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 year ended December 31,
1999 was $116,489, and consisted of service cost of $98,640, interest cost of
$176,517, expected return on plan assets of $343,449, and net amortization
credit of $48,197.
In determining the actuarial present value of the projected benefit obligation,
the interest rate used for the weighted average discount rate and expected rate
of annual salary increases was 7.0%, and the expected long-term 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 1999, the projected benefit obligation increased due
to service cost and interest cost of $98,640 and $176,517, respectively, and
decreased due to benefits paid in the amount of $73,900. The projected benefit
obligation at December 31, 1999 was $2,853,269.
On January 1, 1999, the fair value of plan assets was $4,330,062. During 1999,
the fair value of plan assets increased due to the expected return on plan
assets of $343,449 and decreased due to benefits paid in the amount of $73,900.
At December 31, 1999, the projected fair value of plan assets amounted to
$4,599,611, which resulted in excess plan assets of $1,746,342. The remaining
components of prepaid pension cost at December 31, 1999 included $508,118 in
unrecognized gain, $331,938 in unrecognized prior service cost and $74,198 is
the remaining portion 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 December 31, 1999 was $1,495,964.
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 December 31, 1999 for employees and
former employees of the Corporation was $1,697,089. Aggregate remuneration paid
or accrued during the year ended December 31, 1999 to officers and directors
amounted to $1,364,720.
Research, accounting and other office services provided by and reimbursed to The
Adams Express Company, an investment company which owned 8.5% of the
Corporation's common stock, amounted to $391,126 for the year ended December 31,
1999.
7. PORTFOLIO SECURITIES LOANED
The Corporation makes loans of securities to brokers, secured by cash deposits,
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
investment 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 securities
loaned plus accrued interest. Gain or loss in the fair value of securities
loaned that may occur during the term of the loan will be for the account of the
Corporation. At December 31, 1999, the Corporation had securities on loan of
$42,938,006 and held collateral of $44,294,479.
9
<PAGE>
PETROLEUM & RESOURCES CORPORATION
- -------------------------------------------------------------------------------
Calendar Market Cumulative Cumulative Total Total net
Years value market value market value market asset
of of capital of income value value
original gains dividends
shares distributions taken in
taken in shares
shares
- -------------------------------------------------------------------------------
1985 $ 9,764 $ 883 $ 535 $11,182 $11,854
1986 10,585 2,410 1,244 14,239 13,453
1987 7,574 2,750 1,524 11,848 13,870
1988 7,665 3,441 1,998 13,104 15,500
1989 9,855 5,278 3,362 18,495 21,297
1990 9,171 5,674 3,848 18,693 21,271
1991 9,490 6,837 4,629 20,956 22,624
1992 9,216 7,637 5,064 21,917 24,009
1993 10,038 9,444 6,176 25,658 27,654
1994 9,216 9,759 6,426 25,401 27,001
1995 10,311 12,194 8,061 30,566 34,094
1996 12,684 16,464 10,850 39,998 42,691
1997 13,323 19,050 12,267 44,640 50,706
1998 11,178 17,845 11,157 40,180 45,002
1999 11,771 21,048 12,653 45,472 55,667
ILLUSTRATION OF AN ASSUMED
15 YEAR INVESTMENT OF $10,000
(unaudited)
Investment income dividends and capital gains distributions are taken in
additional shares. This chart covers the years 1985-1999. These results should
not be considered representative of the dividend income or capital gain or loss
which may be realized in the future. No adjustment has been made for any income
taxes payable by stockholders on income dividends or on capital gains
distributions.
[MOUNTAIN GRAPH APPEARS HERE -- SEE PLOT POINTS BELOW]
Cumulative
Market
Value of
Market Shares from Net Asset
Value of Capital Gains Value of
Original Distributions Total Total
Investment and Income Dividend Market Value Shares
---------- ------------------- ------------ ---------
85 9,764 10,647 11,182 11,854
86 10,585 12,995 14,239 13,453
87 7,574 10,324 11,848 13,870
88 7,665 11,106 13,104 15,500
89 9,855 15,133 18,495 21,297
90 9,171 14,845 18,693 21,271
91 9,490 16,327 20,956 22,624
92 9,216 16,853 21,917 24,009
93 10,038 19,482 25,658 27,654
94 9,216 18,975 25,401 27,001
95 10,311 22,505 30,566 34,094
96 12,684 29,148 39,998 42,691
97 13,323 32,373 44,640 50,706
98 11,178 29,023 40,180 45,002
99 11,771 32,819 45,472 55,667
Initial Net Asset Value $10,074
10
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $34.30 $41.46 $37.09 $31.51 $26.84
- --------------------------------------------------------------------------------------------------------------------
Net investment income 0.72 0.82 0.77 0.79 0.86
Net realized gains and change in unrealized
appreciation and other changes 6.79 (5.69) 5.93 6.93 5.90
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations 7.51 (4.87) 6.70 7.72 6.76
- --------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends from net investment income (0.72) (0.78) (0.77) (0.82) (0.87)
Distributions from net realized gains (1.61) (1.51) (1.56) (1.32) (1.22)
- --------------------------------------------------------------------------------------------------------------------
Total distributions (2.33) (2.29) (2.33) (2.14) (2.09)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $39.48 $34.30 $41.46 $37.09 $31.51
====================================================================================================================
Per share market price, end of year $32.25 $30.625 $36.50 $34.75 $28.25
- --------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN
Based on market price 13.3% (10.0)% 11.7% 31.2% 20.5%
Based on net asset value 23.8% (11.1)% 18.9% 25.5% 26.5%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (in 000's) $565,075 $474,821 $556,453 $484,589 $401,405
Ratio of expenses to average net assets 0.43% 0.31% 0.47% 0.63% 0.57%
Ratio of net investment income to average net assets 1.86% 2.13% 1.91% 2.31% 2.89%
Portfolio turnover 11.89% 12.70% 13.09% 15.50% 15.86%
Number of shares outstanding at end of year
(in 000's) 14,314 13,841 13,423 13,066 12,739
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
December 31, 1999
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
STOCKS AND CONVERTIBLE SECURITIES -- 97.6%
ENERGY -- 78.3%
Internationals -- 29.4%
BP Amoco plc ADR........................................................ 400,000 $ 23,725,000
Chevron Corp. .......................................................... 120,000 10,395,000
Exxon Mobil Corp. ...................................................... 607,231 48,920,043
Royal Dutch Petroleum Co. .............................................. 850,000 51,478,127
"Shell" Transport and Trading Co., plc ADR.............................. 240,000 11,760,000
Texaco Inc. ............................................................ 186,775 10,144,217
TotalFina S.A. ADR...................................................... 140,000 9,695,000
-------------
166,117,387
-------------
Domestics -- 10.3%
Amerada Hess Corp. ..................................................... 100,000 5,675,000
Atlantic Richfield Co. ................................................. 50,000 4,325,000
Conoco Inc. Class B..................................................... 300,000 7,462,500
Kerr McGee Corp. ....................................................... 181,253 11,237,686
Murphy Oil Corp. ....................................................... 110,000 6,311,250
Phillips Petroleum Co. ................................................. 90,000 4,230,000
Tesoro Petroleum Corp. (B).............................................. 300,000 3,468,750
Tosco Corp. ............................................................ 175,000 4,757,813
Unocal Capital Trust $3.125 Conv. Pfd. ................................. 72,540 3,536,325
Unocal Corp. .......................................................... 150,000 5,034,375
Valero Energy Corp. .................................................... 125,000 2,484,375
-------------
58,523,074
-------------
Producers -- 8.7%
Anadarko Petroleum Corp. ............................................... 195,000 6,654,375
Apache Corp. ........................................................... 130,000 4,801,875
Barrett Resources Corp. (B)............................................. 70,000 2,060,625
Burlington Resources Inc. .............................................. 120,000 3,967,500
Devon Energy Corp. ..................................................... 70,000 2,301,250
EOG Resources, Inc. .................................................... 290,000 5,093,125
Noble Affiliates Inc. .................................................. 91,855 1,969,142
Occidental Petroleum Corp. ............................................. 175,000 3,784,374
Ocean Energy, Inc. (B).................................................. 622,450 4,823,988
Stone Energy Corp. (B).................................................. 102,000 3,633,750
Union Pacific Resources Group, Inc. .................................... 225,816 2,879,154
Vastar Resources, Inc. ................................................. 125,000 7,375,000
-------------
49,344,158
-------------
</TABLE>
12
<PAGE>
- -------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (continued)
- -------------------------------------------------------------------------------
December 31, 1999
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Distributors --18.0%
AGL Resources Inc. ...................................................... 170,000 $ 2,890,000
Atmos Energy Corp. ...................................................... 200,000 4,087,500
Coastal Corp. ........................................................... 220,000 7,796,250
Columbia Energy Group.................................................... 100,000 6,325,000
El Paso Energy Corp. .................................................... 185,000 7,180,313
Energen Corp. ........................................................... 353,900 6,392,319
Enron Corp. $13.65 Conv. Pfd. Ser. J..................................... 23,000 27,863,063
Equitable Resources Inc. ................................................ 180,500 6,024,188
Kinder Morgan, Inc. 8.25% PEPS Units due 2001............................ 130,000 4,225,000
National Fuel Gas Co. .................................................. 100,000 4,650,000
New Jersey Resources, Inc. .............................................. 185,000 7,226,563
Northwestern Corp. ...................................................... 200,000 4,400,000
Questar Corp. ........................................................... 268,000 4,020,000
Western Gas Resources Inc. .............................................. 186,000 2,452,875
Williams Companies, Inc. ................................................ 200,000 6,112,500
-------------
101,645,571
-------------
Services -- 11.9%
BJ Services Co. (B)...................................................... 200,000 8,362,500
Diamond Offshore Drilling, Inc. ......................................... 96,000 2,958,450
ENSCO International, Inc. ............................................... 140,000 3,202,500
Global Industries Ltd. (B)............................................... 243,400 2,099,325
Halliburton Co. ......................................................... 150,000 6,037,500
Nabors Industries, Inc. (B).............................................. 245,000 7,579,688
Petroleum Geo-Services ASA ADR (B)....................................... 250,000 4,453,125
Santa Fe International Corp. ............................................ 180,000 4,657,500
Schlumberger Ltd. ....................................................... 229,400 12,875,075
Transocean Sedco Forex Inc. ............................................. 274,411 9,244,221
Weatherford International, Inc. (B)...................................... 139,000 5,551,313
-------------
67,021,197
-------------
BASIC INDUSTRIES -- 19.3%
Basic Materials -- 3.7%
Avery Dennison Corp. .................................................... 90,600 6,602,475
Engelhard Corp. ......................................................... 250,000 4,718,750
Freeport-McMoRan Copper & Gold Inc. Ser. A (B)........................... 127,603 2,368,631
Newpark Resources, Inc. (B).............................................. 370,000 2,266,250
Southdown, Inc. ......................................................... 100,000 5,162,500
-------------
21,118,606
-------------
</TABLE>
13
<PAGE>
SCHEDULE OF INVESTMENTS (continued)
- --------------------------------------------------------------------------------
December 31, 1999
<TABLE>
<CAPTION>
Prin. Amt.
or Shares Value (A)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Goods & Other -- 8.6%
Calpine Corp. (B)........................................................ 40,000 $ 2,560,000
Calpine Capital Trust 5.75% Conv. Pfd. High Tides........................ 55,000 3,581,875
Dover Corp. ............................................................. 140,000 6,352,500
General Electric Co. .................................................... 200,000 30,950,000
Owens-Illinois, Inc. (B)................................................. 200,000 5,012,500
-------------
48,456,875
-------------
Paper and Forest Products -- 7.0%
Boise Cascade Corp. ..................................................... 205,000 8,302,500
Consolidated Papers, Inc. ............................................... 275,000 8,748,438
Fort James Corp. ........................................................ 220,000 6,022,500
Mead Corp. .............................................................. 210,000 9,121,875
Temple-Inland, Inc. ..................................................... 110,000 7,253,125
-------------
39,448,438
-------------
TOTAL STOCKS AND CONVERTIBLE SECURITIES
(Cost $321,202,227) (C)........................................................ 551,675,306
-------------
SHORT-TERM INVESTMENTS -- 2.1%
U.S. Government Obligations -- 1.6%
U.S. Treasury Bills, 5.10%, due 2/24/00..................................... $9,000,000 8,931,096
-------------
Commercial Paper -- 0.5%
Chevron USA, 6.35%, due 1/13/00............................................. $1,925,000 1,920,925
Ford Motor Credit Corp., 5.45%, due 2/17/00................................. $1,035,000 1,027,636
-------------
2,948,561
-------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $11,879,657)............................................................. 11,879,657
-------------
TOTAL INVESTMENTS
(Cost $333,081,884)........................................................... 563,554,963
Cash, receivables and other assets, less liabilities........................ 1,520,038
-------------
NET ASSETS-- 100% ................................................................ $565,075,001
===========================================================================================================================
</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 December 31, 1999
covering open call option contracts written was $956,875. In addition, the
required aggregate market value of securities segregated by the custodian to
collaterize open put option contracts written was $5,010,000.
14
<PAGE>
PRINCIPAL CHANGES IN PORTFOLIO SECURITIES
- -------------------------------------------------------------------------------
During the Three Months Ended December 31, 1999
<TABLE>
<CAPTION>
Shares
-----------------------------------------------
Held
Additions Reductions Dec. 31, 1999
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BP Amoco plc ADR.................................................... 220,999(1) 41,998 400,000
Burlington Resources, Inc. ......................................... 65,000 120,000
Chevron Corp. ...................................................... 10,000 120,000
Conoco, Inc. Class B................................................ 30,000 300,000
Calpine Corp. ...................................................... 40,000 40,000
Calpine Corp. 5.75% TIDES........................................... 55,000 55,000
Devon Energy Corp. ................................................. 70,000 70,000
Exxon Mobil Corp. .................................................. 277,231(2) 607,231
Santa Fe International Corp. ....................................... 60,000 180,000
Barrett Resources Corp. ............................................ 50,400 70,000
Enron Corp. 13.65% Conv. Pfd. Ser. J. .............................. 2,000 23,000
Mobil Corp. ........................................................ 240,000(2) --
</TABLE>
- -------------------
(1) By stock split.
(2) Received 1.32015 shares of Exxon Mobil Corp. for each share of Mobil Corp.
held. Sold 30,000 shares of Mobil Corp. 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]
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- -------------------------------------------------------------------------------
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
PETROLEUM & RESOURCES CORPORATION:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statement of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Petroleum & Resources Corporation,
hereafter referred to as the "Corporation", at December 31, 1999, and the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights
for each of the five years in the period then ended in conformity with generally
accepted accounting principles of the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Corporation's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards of the United States which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1999, by correspondence with custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Baltimore, Maryland
January 7, 2000
16
<PAGE>
SHAREHOLDER INFORMATION AND SERVICES
- -------------------------------------------------------------------------------
WE ARE OFTEN ASKED --
HOW DO I INVEST IN PETROLEUM & RESOURCES?
Petroleum & Resources common stock is listed on the New York Stock Exchange and
Pacific Exchange. The stock's ticker symbol is "PEO" and may be bought and sold
through registered investment security dealers. Your broker will be able to
assist you in this regard. In addition, stock may be purchased through the Bank
of New York's BuyDIRECT Purchase and Sale Plan (see page 18).
WHERE DO I GET INFORMATION ON THE STOCK'S PRICE, TRADING AND/OR NET ASSET VALUE?
The daily net asset value (NAV) per share and closing market price may be
obtained from our website at www.peteres.com. The daily NAV is also available on
the NASDAQ Mutual Fund Quotation System under the symbol XPEOX. The week-ending
NAV is published on Saturdays in various newspapers and on Mondays in The Wall
Street Journal in a table titled "Closed-End Funds." The table compares the net
asset value at the close of the week's last business day to the market price of
the shares, and shows the amount of the discount or premium.
Petroleum's daily trading is shown in the stock tables of most daily newspapers,
usually with the abbreviated form "PetRs." Local newspapers determine, usually
by volume of traded shares, which securities to list. If your paper does not
carry our listing, please telephone the Corporation at (800)638-2479 or visit
our website.
HOW DO I REPLACE A LOST CERTIFICATE(S) OR HOW DO ICORRECT A SPELLING ERROR ON MY
CERTIFICATE?
Your Petroleum stock certificates are valuable documents and should be kept in a
safe place. For tax purposes, keep a record of each certificate, including the
cost or market value of the shares it covers at the time acquired. If a
certificate is lost, destroyed or stolen, notify the Transfer Agent immediately
so a "stop transfer" order can be placed on the records to prevent an
unauthorized transfer of your certificate. The necessary forms and requirements
to permit the issuance of a replacement certificate will then be sent to you. A
certificate can be replaced only after the receipt of an affidavit regarding the
loss accompanied by an open penalty bond, for which a small premium is paid by
the stockholder.
In the event a certificate is issued with the holder's name incorrectly spelled,
a correction can only be made if the certificate is returned to the Transfer
Agent with instructions for correcting the error. Transferring shares to another
name also requires that the certificate be forwarded to the Transfer Agent with
the appropriate assignment forms completed and the signature of the registered
owner Medallion guaranteed by a bank or member firm of The New York Stock
Exchange, Inc.
CAN YOU SEND MY DIVIDEND CHECKS DIRECTLY TO MY BANK?
Yes, provide the Transfer Agent with your bank's name, your branch's mailing
address and your account number at your bank. (Sorry, The Bank of New York
cannot electronically transfer funds at this time.)
WHO DO INOTIFY OF A CHANGE OF ADDRESS?
The Transfer Agent.
WE GO TO FLORIDA (ARIZONA) EVERY WINTER. HOW DO WE GET OUR MAIL FROM PETROLEUM &
RESOURCES?
The Transfer Agent can program a seasonal address into its system; simply send
the temporary address and the dates you plan to be there to The Bank of New
York.
I WANT TO GIVE SHARES TO MY CHILDREN, GRANDCHILDREN, ETC. AS A GIFT. HOW DO I GO
ABOUT IT?
Giving shares of Petroleum is simple and is handled through our Transfer Agent.
The stock transfer rules, designed to protect you, the investor, are clear and
precise for most forms of transfer. They will vary slightly depending on each
transfer, so write to the Transfer Agent stating the exact intent of your gift
plans and the Agent will send you the instructions and forms necessary to effect
your transfer.
17
<PAGE>
SHAREHOLDER INFORMATION AND SERVICES (CONTINUED)
- -------------------------------------------------------------------------------
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 estimated
balance of the net investment income for the year and the net realized capital
gain earned through October 31. Stockholders may elect to receive the year-end
distribution in stock or cash. In connection with this distribution, all
stockholders of record are sent a dividend announcement notice and an election
card in mid-November.
STOCKHOLDERS HOLDING SHARES IN "STREET" OR BROKERAGE ACCOUNTS MAY MAKE THEIR
ELECTIONS BY NOTIFYING THEIR BROKERAGE HOUSE REPRESENTATIVE.
BuyDIRECT/SM/*
BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvestment
plan, sponsored and administered by our transfer agent, The Bank of New York.
The plan provides registered stockholders and interested first time investors an
affordable alternative for buying, selling, and reinvesting in Petroleum &
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
commissions 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.
Initial Enrollment $7.50
A one-time fee for new accounts who are not currently
registered holders.
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
Sale of Shares
Service Fee $10.00
Brokerage Commission $0.05 per share
Deposit of Certificates for safekeeping Included
Book to Book Transfers Included
To transfer shares to another participant or to a new
participant
Fees are subject to change at any time.
MINIMUM AND MAXIMUM CASH INVESTMENTS
Initial minimum investment (non-holders) $500.00
Minimum optional investment
(existing holders) $50.00
Electronic Funds Transfer (monthly minimum) $50.00
Maximum per transaction $25,000.00
Maximum per year NONE
A brochure which further details the benefits and features of 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 AGENT
Petroleum & Resources The Bank of New York
Corp. Shareholder Relations
Lawrence L. Hooper, Jr., Dept.-8W
Vice President, Secretary P.O. Box 11258
and General Counsel Church Street Station
Seven St. Paul Street, New York, NY 10286
Suite 1140 (800) 432-8224
Baltimore, MD 21202 Website:
(800) 638-2479 http://stock.bankofny.com
Website: E-mail:
www.peteres.com Shareowner-svcs@
E-mail: bankofny.com
[email protected]
*BuyDirect is a service mark of The Bank of New York.
**The year-end dividend and capital gain distribution may be made in newly
issued shares of common stock in which event there would be no fees or
commissions in connection with this dividend and capital gain distribution.
18
<PAGE>
HISTORICAL FINANCIAL STATISTICS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per Common Share
Value of -----------------------------
Net Assets Net Asset Dividends Distributions
Applicable to Common Value Per From Net From Net
Common Shares Common Investment Realized
Dec. 31 Stock Outstanding Share Income Gains
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1985 $237,489,296 8,372,627 $28.36 $1.38 $2.34
1986 246,071,990 8,979,978 27.40 1.45 2.89
1987 234,062,235 9,636,306 24.29 1.67 2.31
1988 248,370,688 9,997,584 24.84 .92 1.20
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 556,452,549 13,422,787 41.46 .77 1.56
1998 474,821,118 13,841,375 34.30 .78 1.51
1999 565,075,001 14,314,180 39.48 .72 1.61
</TABLE>
- -------------------------------------------------------------------------------
STOCK DATA
- -------------------------------------------------------------------------------
Price (12/31/99) $32.25
Net Asset Value (12/31/99) $39.48
Discount: 18.3%
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
This report, including the financial statements herein, is transmitted to the
stockholders of Petroleum & Resources Corporation for their information. 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 the report.
The rates of return will vary and the principal value of an investment will
fluctuate. Shares, if sold, may be worth more or less than their original cost.
Past performance is not indicative of future investment results.
19
<PAGE>
PETROLEUM & RESOURCES CORPORATION
- -------------------------------------------------------------------------------
BOARD OF DIRECTORS (with their principal affiliations)
Enrique R. Arzac/1,3/
Professor of Finance
and Economics
Columbia University
Daniel E. Emerson/2,4/
Retired Executive Vice President
NYNEX Corporation
Thomas H. Lenagh/3,4/
Financial Advisor
W.D. MacCallan/1,3/
Retired Chairman of the Corpora-
tion and The Adams Express Com-
pany
W. Perry Neff/1,3/
Retired Executive Vice President
Chemical Bank
Douglas G. Ober/1/
Chairman of the Corporation
Landon Peters/2,4/
Private Investor
John J. Roberts/1,4/
Senior Advisor, American
International Group, Inc.
Robert J.M. Wilson/2,4/
Retired President of the Corpora-
tion and The Adams Express Com-
pany
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
1. Member of Executive Committee
2. Member of Audit Committee
3. Member of Compensation Committee
4. Member of Retirement Benefits Committee
20
<PAGE>
Petroleum & Resources Corporation
Seven St. Paul Street, Suite 1140
Baltimore, MD 21202
(410) 752-5900 or (800) 638-2479
Contact us on the Web at:
www.peteres.com
[PEO NYSE LOGO]
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