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. Options
are valued at the last sale price or 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
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, 1996 was $292,740,802, and net unrealized appreciation aggregated $191,813,497,
of which the related gross unrealized appreciation and depreciation were $198,926,175 and $7,112,678,
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.