ADAMS NATURAL RESOURCES FUND

FIRST QUARTER REPORT

MARCH 31, 2017

LETTER TO SHAREHOLDERS

Dear Fellow Shareholders,

An improving economic outlook, rising confidence among businesses and consumers, and expectations for business-friendly policies in the U.S. helped send equity markets higher in the first three months of the year. Stocks continued to advance after the Federal Reserve raised short-term interest rates in response to economic data that indicated improvements in the labor market and signs of rising inflation. The rally stalled later in the quarter when Congress failed to pass health care reform legislation. Investors questioned the impact this could have on President Trump’s ability to fulfill his policy agenda. Though the market pulled back from its earlier highs, the S&P 500 posted its largest quarterly gain since the end of 2015, reporting a 6.1% increase.

Energy was the worst performing sector in the S&P 500 in the quarter. After advancing 27.4% last year, the sector declined 6.7%, reflecting declines in oil and gas prices. The Fund was down only 3.4%, benefiting from the Fund’s diversification. Holdings in the Basic Materials sector provided an offset to Energy sector declines.

The trigger for the sell-off in energy stocks was the decline in commodity prices. Crude oil (WTI) fell 5.8%, closing the quarter at $51 per barrel. Despite OPEC adhering to announced production cuts, increased U.S. crude oil production and rising inventories pressured prices. As the quarter drew to a close, crude prices moved higher due to supply disruptions in Libya and speculation that the OPEC cuts will be extended through the end of 2017.

Natural gas prices also came under pressure and were down 14.3% for the first three months of the year. A combination of a warmer-than-expected winter and rising production led to large inventories. Weakness in the natural gas markets provided the opportunity for us to add to our position in Range Resources. We believe that having low cost assets in both Pennsylvania and the Gulf Coast positions Range to be a long-term winner in the natural gas market.

Within Energy, the pipeline industry, which is less sensitive to energy prices than other industries, provided the only positive return. Targa Resources, which has a significant presence in the Permian Basin, was the best performer in this group, advancing 8.5%. During the quarter, we added to our position in Targa, and also increased our exposure to Williams Companies, an East Coast-focused pipeline company. With the sale of its non-core businesses, Williams can now focus on growing its strong natural gas infrastructure system. Also during the quarter, Enbridge and Spectra Energy closed their merger transaction creating an energy infrastructure leader that brings together their attractive liquids and natural gas franchises across North America. We held a position in Spectra, which we maintained post the merger, as we see an opportunity for above-average revenue growth and meaningful synergies in the combined organization.

The worst performing industry in the Energy sector was equipment drillers, declining 12.9% during the quarter. We had no exposure to these stocks. Offshore drillers are suffering from declining demand in a well-supplied market. Land drillers, though experiencing rising activity, are contracting at lower prices than in previous years.

In contrast to the declines in Energy, the Basic Materials sector advanced 5.9% in the quarter driven by chemical stocks. Two of the best performers in the Fund were Dow Chemical and DuPont. Both companies beat earnings expectations and provided solid outlooks. Additionally, the merger between Dow and DuPont, announced in December 2016, passed another hurdle and was given clearance by the European Union in March.

LETTER TO SHAREHOLDERS (CONTINUED)

This increases the likelihood that the transaction will close later this year. The synergies in the combination are significant. In the industrial metals industry, we increased our position in Steel Dynamics. As the lowest cost domestic producer of steel, the company has been able to run its utilization in the mid-80’s compared to the industry average in the low-70’s. We believe Steel Dynamics is positioned to benefit from increased infrastructure spending and is the best way to participate in the improving steel market.

Despite Energy’s recent decline, we continue to believe long-term supply and demand trends remain favorable. We see opportunities in companies with strong balance sheets, high-quality assets, and low production costs.

For the three months ended March 31, 2017, the total return on the Fund’s net asset value (“NAV”) per share (with dividends and capital gains reinvested) was -3.4%. This compares to total returns of -6.6% for Dow Jones U.S. Oil & Gas Index, 7.6% for Dow Jones U.S. Basic Materials Index, and -1.3% for Lipper Global Natural Resources Funds Average over the same time period. The total return on the market price of the Fund’s shares for the period was -3.2%.

For the twelve months ended March 31, 2017, the Fund’s total return on NAV was 14.7%. Comparable returns for Dow Jones U.S. Oil & Gas Index, Dow Jones U.S. Basic Materials Index, and Lipper Global Natural Resources Funds Average were 13.9%, 24.1%, and 17.0%. The Fund’s total return on market price was 14.1%.

During the quarter, the Fund paid distributions to shareholders in the amount of $2.9 million, or $.10 per share, consisting of $.04 net investment income and $.04 long-term capital gain, realized in 2016, and $.02 net investment income realized in 2017, all taxable in 2017. On April 21, 2017, an additional net investment income distribution of $.10 per share was declared for payment on June 1, 2017. These constitute the first two payments toward our annual 6% minimum distribution rate commitment.

By order of the Board of Directors,

Mark E. Stoeckle

Chief Executive Officer

April 21, 2017

Disclaimers

This report contains “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Fund’s actual results are the performance of the portfolio of stocks held by the Fund, the conditions in the U.S. and international financial markets, the price at which shares of the Fund will trade in the public markets, and other factors discussed in the Fund’s periodic filings with the Securities and Exchange Commission.

This report is transmitted to the shareholders of the Fund for their information. It is not a prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund 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 no guarantee of future investment results.

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SUMMARY FINANCIAL INFORMATION

(unaudited)

TEN LARGEST EQUITY PORTFOLIO HOLDINGS

March 31, 2017

(unaudited)

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SCHEDULE OF INVESTMENTS

March 31, 2017 (unaudited)

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SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2017 (unaudited)

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SCHEDULE OF INVESTMENTS (CONTINUED)

March 31, 2017 (unaudited)

Notes:

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ADAMS NATURAL RESOURCES FUND, INC.

Board of Directors

Officers

500 East Pratt Street, Suite 1300, Baltimore, MD 21202

410.752.5900          800.638.2479

Website: www.adamsfunds.com

E-mail: contact@adamsfunds.com

Tickers: PEO (NYSE), XPEOX (NASDAQ)

Counsel: Chadbourne & Parke LLP

Independent Registered Public Accounting Firm: PricewaterhouseCoopers LLP

Custodian of Securities: The Northern Trust Company

Transfer Agent & Registrar: American Stock Transfer & Trust Company, LLC

Stockholder Relations Department

6201 15^th Avenue

Brooklyn, NY 11219

(866) 723-8330

Website: www.astfinancial.com

Email: info@astfinancial.com