<PAGE>
LETTER TO STOCKHOLDERS
- -------------------------------------------------------------------------------
We are pleased to submit the financial statements of the Corporation for the
three months ended March 31, 2000. In addition, there is a schedule of invest-
ments provided along with other financial information.
Net assets of the Corporation at March 31, 2000 were $43.85 per share, com-
pared with $39.48 per share at December 31, 1999, on the 13,916,380 shares and
14,314,180 shares outstanding on each respective date. On March 1, 2000, a
distribution of $0.20 per share was paid consisting of $0.13 from 1999 long-
term capital gain, $0.03 from 1999 investment income and $0.04 from 2000 in-
vestment income, all taxable in 2000. A 2000 investment income dividend of
$0.20 per share has been declared to shareholders of record May 19, 2000, pay-
able June 1, 2000.
Net investment income for the three months ended March 31, 2000 amounted to
$1,056,548, compared with $1,984,605 for the same period in 1999. These earn-
ings are equal to $0.08 and $0.14 per share, respectively, on the average num-
ber of shares outstanding during each period.
Net capital gain realized on investments for the three months ended March 31,
2000 amounted to $6,521,959, the equivalent of $0.47 per share.
----------------------
We are pleased to announce the election of Dr. Susan C. Schwab to the Board of
Directors, effective January 13, 2000. Dr. Schwab is currently the Dean of the
School of Public Affairs at the University of Maryland, College Park,
Maryland.
The Annual Meeting, held on March 28, 2000 in Palm Beach, Florida, was well
attended by shareholders. Upon conclusion of the formal segment of the meet-
ing, management reviewed the portfolio's performance in 1999 and discussed the
outlook for the future. The results of the voting at the Annual Meeting are
shown on page 10.
Current and potential shareholders can find information about the Corporation,
including the daily net asset value (NAV) per share, the market price, and the
discount/premium to the NAV, at its site on the Internet. The address for the
site is www.peteres.com. Also available at the website are a brief history of
the Corporation, historical financial information, and more general industry
material. Further information regarding shareholder services is located on
page 11 of this report.
The Corporation is an internally-managed equity fund emphasizing petroleum and
other natural resource investments. The investment policy of the fund is based
on the primary objectives of preservation of capital, the attainment of rea-
sonable income from investments and, in addition, an opportunity for capital
appreciation.
By order of the Board of Directors,
/s/ Douglas G. Ober
___________________
Douglas G. Ober,
Chairman and
Chief Executive Officer
/s/ Richard F. Koloski
______________________
Richard F. Koloski,
President
April 21, 2000
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 2000
(unaudited)
<TABLE>
<S> <C> <C>
Assets
Investments* at value:
Common stocks and convertible securities
(cost $310,226,999) $594,160,970
Short-term investments (cost $17,049,986) 17,049,986 $611,210,956
- ---------------------------------------------------------------
Cash 11,051
Securities lending collateral 23,804,997
Receivables:
Investment securities sold 36,361
Dividends and interest 586,691
Prepaid expenses 1,756,504
- ----------------------------------------------------------------------------
Total Assets 637,406,560
- ----------------------------------------------------------------------------
Liabilities
Investment securities purchased 687,448
Open option contracts at value (proceeds
$259,069) 193,750
Obligations to return securities lending collateral 23,804,997
Accrued expenses 2,507,533
- ----------------------------------------------------------------------------
Total Liabilities 27,193,728
- ----------------------------------------------------------------------------
Net Assets $610,212,832
============================================================================
Net Assets
Common Stock at par value $1.00 per share, authorized
50,000,000 shares; issued and outstanding
13,916,380 shares $ 13,916,380
Additional capital surplus 305,239,521
Undistributed net investment income 533,022
Undistributed net realized gain on investments 6,524,619
Unrealized appreciation on investments 283,999,290
- ----------------------------------------------------------------------------
Net Assets Applicable to Common Stock $610,212,832
============================================================================
Net Asset Value per Share of Common Stock $43.85
============================================================================
</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, 2000
(unaudited)
<TABLE>
<S> <C>
Investment Income
Income:
Dividends $ 2,026,273
Interest 212,830
- ---------------------------------------------------------------------------
Total income 2,239,103
- ---------------------------------------------------------------------------
Expenses:
Investment research 681,266
Administration and operations 249,537
Directors' fees 52,500
Reports and stockholder communications 80,009
Transfer agent, registrar and custodian expenses 33,292
Auditing services 11,778
Legal services 12,224
Occupancy and other office expenses 21,536
Travel, telephone and postage 14,983
Other 25,430
- ---------------------------------------------------------------------------
Total expenses 1,182,555
- ---------------------------------------------------------------------------
Net Investment Income 1,056,548
- ---------------------------------------------------------------------------
Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions 6,521,959
Change in unrealized appreciation on investments 53,533,337
- ---------------------------------------------------------------------------
Net Gain on Investments 60,055,296
- ---------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $61,111,844
===========================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Year ended
ended December 31,
March 31, 2000 1999
-------------- ------------
(unaudited)
<S> <C> <C>
From Operations:
Net investment income $ 1,056,548 $ 9,806,876
Net realized gain on investments 6,521,959 22,803,830
Change in unrealized appreciation on investments 53,533,337 75,425,708
- ---------------------------------------------------------------------------------
Increase in net assets resulting from operations 61,111,844 108,036,414
- ---------------------------------------------------------------------------------
Dividends to Stockholders from:
Net investment income (983,821) (9,965,792)
Net realized gain from investment transactions (1,827,096) (22,284,614)
- ---------------------------------------------------------------------------------
Decrease in net assets from distributions (2,810,917) (32,250,406)
- ---------------------------------------------------------------------------------
From Capital Share Transactions:
Value of common shares issued in payment of
optional distributions --0-- 15,851,054
Cost of common shares purchased (note 4) (13,163,096) (1,383,179)
- ---------------------------------------------------------------------------------
Change in net assets from capital share
transactions (13,163,096) 14,467,875
- ---------------------------------------------------------------------------------
Total Increase in Net Assets 45,137,831 90,253,883
Net Assets:
Beginning of period 565,075,001 474,821,118
- ---------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $533,022 and $460,295, respectively) $610,212,832 $565,075,001
=================================================================================
</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. On March
28, 2000, the Corporation received shareholder approval to change its
registration to a non-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, 2000 was $327,440,910, and net
unrealized appreciation aggregated $284,029,115, of which the related gross
unrealized appreciation and depreciation were $307,519,120 and $23,490,005,
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, 2000 were $5,625,673 and
$22,943,120, 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, 2000 . 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. During
the three months ended March 31, 2000, the Corporation purchased 403,300
shares of common stock at a total cost of $13,163,096 and a weighted average
discount from net asset value of 16.3%. At March 31, 2000, the Corporation
held a total of 441,000 shares of its common stock.
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 2000, there were
148,916 options outstanding at a weighted average exercise price of $22.4389
per share. During the three months ended March 31, 2000, the Corporation
granted options including stock appreciation rights for 15,223 shares of com-
mon stock with an exercise price of $30.1875. During the period stock appreci-
ation rights relating to 1,094 stock option shares were exercised at a
weighted average market price of $34.75 per share and the stock options relat-
ing to these rights, which had a weighted average exercise price of $27.7125
were cancelled. At March 31, 2000, there were outstanding exercisable options
to purchase 53,431 common shares at $13.815-33.625 (weighted average price of
$18.428) per share and unexercisable options to purchase 109,614 common shares
at $18.2125-33.6250 per share (weighted average price of $25.6841). The
weighted average remaining contractual life of outstanding exercisable and
unexercisable options was 4.0793 years and 7.0044 years, respectively. The to-
tal compensation expense for stock options and stock appreciation rights rec-
ognized for the three months ended March 31, 2000 was $459,089. At March 31,
2000 , there were 320,907 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 individual stocks and bonds
and mutual funds.
The actuarially computed net pension cost credit for the three months ended
March 31, 2000 was $37,206, and consisted of service cost of $21,758, interest
cost of $48,874, expected return on plan assets of $89,299, and net amortiza-
tion credit of $18,539.
In determining the actuarial present value of the projected benefit obliga-
tion, the interest rate used for the weighted average discount rate was 8.0%,
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, 2000, the projected benefit obligation for service rendered to
date was $2,480,710. During the three months ended March 31, 2000 , the pro-
jected benefit obligation increased due to service cost and interest cost of
$21,758 and $48,874, respectively, and decreased due to benefit payments in
the amount of $18,499. The projected benefit obligation at March 31, 2000 was
$2,532,843.
On January 1, 2000, the actual fair value of plan assets was $4,501,921. Dur-
ing the three months ended March 31, 2000 , the fair value of plan assets in-
creased due to the expected return on plan assets of $89,299 and decreased due
to benefit payments in the amount of $18,499. At March 31, 2000 , the pro-
jected fair value of plan assets amounted to $4,572,721, which resulted in ex-
cess plan assets of $2,039,878. The remaining components of prepaid pension
cost at March 31, 2000 included $762,382 in un-
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
- -------------------------------------------------------------------------------
recognized net gain, $320,597 in unrecognized prior service cost and $64,923
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 March 31, 2000 was $1,533,170.
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, 2000 for employees and
former employees of the Corporation was $2,096,818. Aggregate remuneration
paid or accrued during the three months ended March 31, 2000 to officers and
directors amounted to $759,674.
Research, accounting and other office services provided by and reimbursed to
The Adams Express Company, an investment company which owns 8.7% of the Corpo-
ration's common stock, amounted to $125,083 for the three months ended March
31, 2000.
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, 2000, the Corporation had outstanding loans
of $23,167,619 and held collateral of $23,804,997.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
--------------------
(unaudited) Year Ended December 31
March 31, March 31, -------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating
Performance
Net asset value,
beginning of period $39.48 $34.30 $34.30 $41.46 $37.09 $31.51 $26.84
- -------------------------------------------------------------------------------------------------
Net investment income 0.08 0.14 0.72 0.82 0.77 0.79 0.86
Net realized gains and
change in unrealized
appreciation
(depreciation) and
other changes 4.49 1.34 6.79 (5.69) 5.93 6.93 5.90
- -------------------------------------------------------------------------------------------------
Total from investment
operations 4.57 1.48 7.51 (4.87) 6.70 7.72 6.76
Less distributions
Dividends from net
investment income (0.07) (0.10) (0.72) (0.78) (0.77) (0.82) (0.87)
Distributions from net
realized gains (0.13) (0.10) (1.61) (1.51) (1.56) (1.32) (1.22)
- -------------------------------------------------------------------------------------------------
Total distributions (0.20) (0.20) (2.33) (2.29) (2.33) (2.14) (2.09)
- -------------------------------------------------------------------------------------------------
Net asset value, end of
period $43.85 $35.58 $39.48 $34.30 $41.46 $37.09 $31.51
=================================================================================================
Per share market price,
end of period $36.00 $32.625 $32.25 $30.625 $36.50 $34.75 $28.25
Total Investment Return
Based on market price 12.3% 7.3% 13.3% (10.0)% 11.7% 31.2% 20.5%
Based on net asset value 11.7% 4.4% 23.8% (11.1)% 18.9% 25.5% 26.5%
Ratios/Supplemental Data
Net assets, end of
period (in 000's) $610,213 $492,537 $565,075 $474,821 $556,453 $484,589 $401,405
Ratio of expenses to
average net assets 0.84%+ 0.54%+ 0.43% 0.31% 0.47% 0.63% 0.57%
Ratio of net investment
income to average net
assets 0.75%+ 1.72%+ 1.86% 2.13% 1.91% 2.31% 2.89%
Portfolio turnover 4.08%+ 9.33%+ 11.89% 12.70% 13.09% 15.50% 15.86%
Number of shares
outstanding at end of
period (in 000's) 13,916 13,841 14,314 13,841 13,423 13,066 12,739
</TABLE>
- --------
+Ratios presented on an annualized basis.
6
<PAGE>
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 2000
(unaudited)
<TABLE>
<CAPTION>
Shares Value (A)
------- ---------
<S> <C> <C>
Stocks And Convertible Securities -- 97.4%
Energy -- 81.4%
Internationals -- 26.3%
BP Amoco plc ADR 400,000 $ 21,225,000
Chevron Corp. 130,000 12,016,875
Exxon Mobil Corp. 607,231 47,250,201
Royal Dutch Petroleum Co. 850,000 48,928,126
"Shell" Transport and Trading Co., plc ADR 240,000 11,775,000
Texaco Inc. 186,775 10,015,810
TotalFinaElf ADR 125,000 9,203,125
------------
160,414,137
------------
Domestics -- 9.7%
Amerada Hess Corp. 100,000 6,462,500
Atlantic Richfield Co. 50,000 4,249,999
Conoco Inc. Class B 300,000 7,687,500
Kerr McGee Corp. 181,253 10,467,361
Murphy Oil Corp. 110,000 6,338,750
Phillips Petroleum Co. 60,000 2,775,000
Tesoro Petroleum Corp. (B) 300,000 3,450,000
TOSCO Corp. 175,000 5,326,562
Unocal Capital Trust $3.125
Conv. Pfd. 72,540 3,844,620
Unocal Corp. 150,000 4,462,500
Valero Energy Corp. 125,000 3,828,125
------------
58,892,917
------------
Producers -- 9.9%
Anadarko Petroleum Corp. 195,000 7,544,063
Apache Corp. 130,000 6,467,500
Burlington Resources, Inc. 130,000 4,810,000
Devon Energy Corp 70,000 3,399,375
EOG Resources Inc. 290,000 6,144,375
Noble Affiliates Inc. 91,855 3,013,992
Occidental Petroleum Corp. 175,000 3,631,250
Ocean Energy Inc. (B) 550,000 7,906,250
Stone Energy Corp. (B) 104,300 5,136,775
Union Pacific Resources Group, Inc. 225,816 3,274,332
Vastar Resources, Inc. 125,000 9,289,062
------------
60,616,974
------------
Distributors -- 20.3%
Atmos Energy Corp. 200,000 3,275,000
Coastal Corp. 220,000 10,120,000
Columbia Energy Group 100,000 5,925,000
El Paso Energy Corp. 110,000 4,441,250
Energen Corp. 353,900 5,640,281
Enron Corp. $27.30 Conv.
Pfd. Ser. J 23,000 47,014,013
Equitable Resources Inc. 180,500 8,088,656
<CAPTION>
Shares Value (A)
------ ---------
<S> <C> <C>
Kinder Morgan, Inc. 8.25% PEPS
Units due 2001 130,000 $ 6,142,500
National Fuel Gas Co. 100,000 4,456,250
New Jersey Resources, Inc. 185,000 7,908,750
Northwestern Corp. 200,000 4,125,000
Questar Corp. 268,000 4,974,750
Western Gas Resources Inc. 186,000 2,952,750
Williams Companies, Inc. 200,000 8,787,500
------------
123,851,700
------------
Services -- 15.2%
BJ Services Co. (B) 200,000 14,775,000
Diamond Offshore Drilling, Inc. 96,800 3,865,950
ENSCO International, Inc. 120,000 4,335,000
Global Industries Ltd. (B) 243,400 3,559,725
Halliburton Co. 150,000 6,150,000
Nabors Industries, Inc. (B) 245,000 9,509,063
Petroleum Geo-Services ASA ADR (B) 250,000 4,328,125
Santa Fe International Corp. 180,000 6,660,000
Schlumberger Ltd. 229,400 17,549,100
Transocean Sedco Forex Inc. 274,411 14,080,758
Weatherford International, Inc. (B) 139,000 8,192,313
------------
93,005,034
------------
Basic Industries -- 16.0%
Basic Materials -- 3.3%
Avery Dennison Corp. 100,000 6,106,250
Engelhard Corp. 250,000 3,781,250
Freeport-McMoRan Copper & Gold Inc. Ser. A (B) 127,603 1,419,583
Newpark Resources, Inc. (B) 370,000 2,960,000
Southdown, Inc. 100,000 5,900,000
------------
20,167,083
------------
Capital Goods & Other -- 8.5%
Calpine Capital Trust 5.75% Conv. Pfd. HIGH TIDES 87,500 8,028,125
Calpine Corp. (B) 40,000 3,760,000
Dover Corp. 140,000 6,702,500
General Electric Co. 190,000 29,485,625
Owens-Illinois, Inc. (B) 225,000 3,796,875
------------
51,773,125
------------
Paper and Forest Products -- 4.2%
Boise Cascade Corp. 205,000 7,123,750
Fort James Corp. 250,000 5,500,000
Mead Corp. 210,000 7,336,875
Temple-Inland, Inc. 110,000 5,479,375
------------
25,440,000
------------
Total Stocks And Convertible Securities
(Cost $310,226,999) (C) 594,160,970
------------
</TABLE>
7
<PAGE>
SCHEDULE OF INVESTMENTS (continued)
- -------------------------------------------------------------------------------
March 31, 2000
(unaudited)
<TABLE>
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Short-Term Investments -- 2.8%
U.S. Government Obligations -- 1.2%
U.S. Treasury Bills, 5.70%, due 5/25/00 $7,500,000 $7,436,535
----------
Commercial Paper -- 1.6%
Chevron USA 6.00-6.05%,
due 4/11/00-4/13/00 5,135,000 5,125,644
<CAPTION>
Prin. Amt. Value (A)
---------- ---------
<S> <C> <C>
Ford Motor Credit Corp.,
5.84-6.04%, due
4/14/00-4/18/00 $4,495,000 $ 4,487,807
------------
9,613,451
------------
Total Short-Term Investments
(Cost $17,049,986) 17,049,986
------------
Total Investments
(Cost $327,276,985) 611,210,956
Cash, receivables and other
assets, less liabilities (998,124)
------------
Net Assets--100.0% $610,212,832
============
</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, 2000 cov-
ering open call option contracts written was $4,170,625. In addition, the
aggregate market value of securities segregated by the custodian required
to collateralize open put option contracts written was $2,945,000.
HISTORICAL FINANCIAL STATISTICS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dividends Distributions
Net from Net from Net
Common Asset Investment Realized
Value of Shares Value per Income Gains
Dec. 31 Net Assets Outstanding Share per Share per Share
- --------- ------------ ----------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
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
1999.................... 565,075,001 14,314,180 39.48 .72 1.61
March 31, 2000
(unaudited)............ 610,212,832 13,916,380 43.85 .27* .13
</TABLE>
- --------
*Paid or declared
8
<PAGE>
PRINCIPAL CHANGES IN PORTFOLIO SECURITIES
- --------------------------------------------------------------------------------
During the Three Months Ended March 31, 2000 (unaudited)
<TABLE>
<CAPTION>
Shares
-----------------------------------
Held
Additions Reductions March 31, 2000
--------- ---------- --------------
<S> <C> <C> <C>
Calpine Capital Trust 5.75% Conv. Pfd.
HIGH TIDES............................... 32,500 87,500
Chevron Corp. ............................ 10,000 130,000
Owens-Illinois, Inc. ..................... 45,000 20,000 225,000
AGL Resources, Inc. ...................... 170,000 --
Barrett Resources Corp. .................. 70,000 --
Consolidated Papers, Inc. ................ 275,000 --
ENSCO International, Inc. ................ 20,000 120,000
El Paso Energy Corp. ..................... 75,000 110,000
General Electric Co. ..................... 10,000 190,000
Ocean Energy, Inc. ....................... 72,450 550,000
Phillips Petroleum Co. ................... 30,000 60,000
TotalFinaElf ADR.......................... 15,000 125,000
</TABLE>
----------------------
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 28, 2000. For those nomi-
nated, the following votes were cast for directors:
<TABLE>
<CAPTION>
votes
votes for withheld
---------- --------
<S> <C> <C>
(A) Enrique R. Arzac: 12,286,551 208,211
(B) Daniel E. Emerson: 12,243,420 251,342
(C) Thomas H. Lenagh: 12,197,845 296,917
(D) W.D. MacCallan: 12,274,118 220,644
(E) W. Perry Neff: 12,240,693 254,069
(F) Douglas G. Ober: 12,291,881 202,881
(G) Landon Peters: 12,263,584 231,178
(H) John J. Roberts: 12,197,563 297,199
(I) Susan C. Schwab: 12,242,483 252,279
(J) Robert J.M. Wilson: 12,228,467 266,295
</TABLE>
A proposal to approve and ratify the selection of PricewaterhouseCoopers LLP
as the firm of independent accountants of the Corporation for 2000 was ap-
proved with 12,273,718 votes for, 110,104 votes against, and 110,940 votes ab-
staining.
A proposal to approve an amendment to Article SIXTH of the Articles of Incor-
poration to increase the number of authorized shares of Common Stock of the
Corporation from 25,000,000 shares to 50,000,000 shares and to remove a class
of convertible preferred stock, par value $25.00 per share, was approved with
11,634,459 votes for, 665,175 votes against, and 195,128 votes abstaining.
A proposal to approve an amendment to the Corporation's investment policy to
change the Corporation's subclassification under the Investment Company Act of
1940 from a diversified investment company to a non-diversified investment
company was approved with 7,957,752 votes for, 380,811 votes against, and
260,762 votes abstaining.
Stockholder proposals to be included in the proxy statement for next year's
Annual Meeting must be received at the offices of the Corporation by Octo-
ber 26, 2000. The date stated in the 2000 Proxy Statement was incorrect.
------------------
- -----------------------------------------------------------------------------
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. The rates of return will vary and
the market value of an investment will fluctuate Shares, if sold, may be
worth more or less than their original cost. Past performance is not in-
dicative of future investment results.
- -----------------------------------------------------------------------------
10
<PAGE>
SHAREHOLDER INFORMATION AND SERVICES
- --------------------------------------------------------------------------------
DIVIDEND PAYMENT SCHEDULE
The Corporation presently pays dividends four times a year, as follows: (a)
three interim distributions on or about March 1, June 1, and September 1 and
(b) a "year-end" distribution, payable in late December, consisting of the es-
timated balance of the net investment income for the year and the net realized
capital gain earned through October 31. Stockholders may elect to receive the
year-end distribution in stock or cash. In connection with this distribution,
all stockholders of record are sent a dividend announcement notice and an elec-
tion card in mid-November.
Stockholders holding shares in "street" or brokerage accounts may make their
elections by notifying their brokerage house representative.
BuyDIRECT/SM/*
BuyDIRECT is a direct purchase and sale plan, as well as a dividend reinvest-
ment plan, sponsored and administered by our transfer agent, The Bank of New
York. The Plan provides registered stockholders and interested first time in-
vestors an affordable alternative for buying, selling, and reinvesting in Pe-
troleum & Resources shares. Direct purchase plans are growing in popularity and
Petroleum & Resources is pleased to participate in such a plan.
The costs to participants in administrative service fees and brokerage commis-
sions for each type of transaction are listed below. Please note that the fees
for the reinvestment of dividends as well as the $0.05 per share commission for
each share purchased under the Plan have not increased since 1973.
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 the Plan or contact The Bank of New York about
the BuyDIRECT Plan.
----------
The Corporation The Transfer Agent
Petroleum & Resources Corp. The Bank of New York
Lawrence L. Hooper, Jr., Shareholder Relations
Vice President, Secretary and Dept.-8W
Geneeral Counsel P.O. Box 11258
Seven St. Paul Street, Church Street Station
Suite 1140 New York, NY 10286
Baltimore, MD 21202 (800) 432-8224
(800) 638-2479 Website:
Website: http://stock.bankofny.com
www.peteres.com E-mail:
E-mail: Shareowner-svcs@
[email protected] bankofny.com
*BuyDIRECT is a service mark of The Bank of New York.
**The year-end dividend and capital gain distribution may be made in newly
issued shares of common stock in which event there would be no fees or
commis sions in connection with this dividend and capital gain distribution.
11
<PAGE>
[PETROLEUM & RESOURCES CORPORATION LOGO APPEARS HERE]
Petroleum & Resources Corporation
- ---------------------------------
Board of Directors
Enrique R. Arzac/1,4/ Douglas G. Ober/1/
Daniel E. Emerson/2,4/ Landon Peters/2,4/
Thomas H. Lenagh/2,3/ John J. Roberts/1,4/
W.D. MacCallan/1,3/ Susan C. Schwab/1,3/
W. Perry Neff/1,2/ Robert J.M. Wilson/3,4/
1. Member of Executive Committee
2. Member of Audit Committee
3. Member of Compensation Committee
4. Member of Retirement Benefits 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
--------------
Price (3/31/00) $36.00
Net Asset Value (3/31/00) $43.85
Discount: 17.9%
New York Stock Exchange and Pacific Exchange ticker symbol: PEO
NASDAQ Mutual Fund Quotation Symbol: XPEOX
Newspaper stock listings are generally under the abbreviation: PetRs
-------------------------
Distributions in 2000
-------------------------
From Investment Income $0.27
(paid or declared)
From Net Realized Gains 0.13
-----
Total $0.40
=====
-------------------------------
2000 Dividend Payment Dates
-------------------------------
March 1, 2000
June 1, 2000
September 1, 2000*
December 27, 2000*
*Anticipated
