<PAGE>
QUEST FOR VALUE SM-
JUNE 21, 1995
DEAR SHAREHOLDER:
As you may have read in the press, Quest for Value Advisors and Oppenheimer
Management Corporation are discussing a transaction that would involve the Quest
for Value funds. Oppenheimer Management Corporation and its affiliates manage
funds with assets of more than $35 billion, held in more than 2.4 million
shareholder accounts. Although at one time Oppenheimer Management Corporation
was affiliated with Oppenheimer Capital, the parent of Quest for Value Advisors,
that is not currently the case.
Under the proposed transaction, the Quest for Value Fund, the Small
Capitalization Fund, the Opportunity Fund and the Growth and Income Fund would
enter into an Investment Advisory Agreement with Oppenheimer Management. Quest
for Value Advisors would continue to provide portfolio management services to
the funds under a Subadvisory Agreement with Oppenheimer Management. Under the
proposal, there would be no change in portfolio managers of the four funds.
Eileen Rominger would continue as portfolio manager for the Quest for Value
Fund, Richard J. Glasebrook II for the Opportunity Fund, Jenny Beth Jones and
Louis Goldstein for the Small Capitalization Fund, and Colin Glinsman for the
Growth and Income Fund.
The Quest for Value U.S. Government Income Fund and Investment Quality Income
Fund would be merged into Oppenheimer Management's U.S. Government Bond Fund and
Investment Grade Bond Fund, respectively.
The transaction is subject to the signing of a definitive agreement by
Oppenheimer Management Corporation and Quest for Value Advisors and approval of
the funds' boards and shareholders.
SIX-MONTH RESULTS
While we are excited about the future, in this report we want to bring you up to
date on the performance of your investment in the six months ended April 30,
1995, an excellent period for investors in both the stock and bond markets. The
results of the funds in the Quest for Value Family were generally gratifying,
with several ranking in the upper echelon of their respective Morningstar
categories. Detailed information on the performance and holdings of each fund is
presented in the Investment Review and financial statements that follow.
FINANCIAL MARKET PERFORMANCE
The stock market, as measured by the Standard & Poor's 500 Index including
dividends (S&P 500), advanced 10.5% in the six months. As usual, there were
significant crosscurrents within the market. In general, technology, health care
and financial services stocks were strong performers, while many cyclical issues
were flat to down. Moreover, stocks of smaller companies generally lagged the
performance of large-capitalization issues, as indicated by the total return of
5.4% on the Russell 2000 Index including dividends. The Russell 2000 is a widely
followed benchmark which includes smaller capitalization stocks.
QUEST FOR VALUE FUNDS
ONE WORLD FINANCIAL
CENTER
NEW YORK, NY 10281
EQUITY FUNDS
QUEST FOR VALUE FUND
GLOBAL EQUITY FUND
OPPORTUNITY FUND
SMALL CAPITALIZATION FUND
GROWTH AND INCOME FUND
FIXED INCOME FUNDS
TAXABLE
U.S. GOVERNMENT
INCOME FUND
INVESTMENT QUALITY
INCOME FUND
GLOBAL INCOME FUND
TAX-EXEMPT
NATIONAL TAX-EXEMPT FUND
CALIFORNIA TAX-EXEMPT FUND
NEW YORK TAX-EXEMPT FUND
MONEY MARKET FUNDS
QUEST CASH RESERVES:
TAXABLE
PRIMARY PORTFOLIO
GOVERNMENT PORTFOLIO
TAX-EXEMPT
GENERAL MUNICIPAL PORTFOLIO
CALIFORNIA MUNICIPAL PORTFOLIO
NEW YORK MUNICIPAL PORTFOLIO
FOR MORE INFORMATION
OR ASSISTANCE
WITH YOUR ACCOUNT
PLEASE CALL:
1-800-232-3863
SM-Quest for Value is a registered service mark of Oppenheimer Capital.
<PAGE>
Our equity philosophy is to preserve capital and make it grow by investing in
superior companies at reasonable prices. Superior companies, in our view,
include those that hold strong competitive positions, earn high returns on
invested capital and use their cash flow to create value for shareholders. These
companies create value by investing in operations, making astute acquisitions or
returning capital to their shareholders through dividend payments or the
repurchase of shares. We think our philosophy makes sense, and it works.
Prices of fixed income securities also increased significantly during the six
months, reversing the sharp declines of the prior year. As measured by the
Lehman Brothers Aggregate Bond Index, the bond market delivered a 7.0% total
return in the six months ended April 30, 1995.
Six months ago, in our fiscal 1994 annual report, we wrote, "Now that yields on
long-term Treasury bonds have climbed to approximately 8% from 5.8% a year ago,
we wonder if the mood pendulum has finally reached the end of its arc and is
ready to change direction. Do today's bond yields offer an attractive buying
opportunity?" The answer, it turned out, was yes. We were well positioned for
this turnaround and remain generally optimistic about the bond market outlook at
this time.
SUMMARY
In our search for value in the markets, we seek to identify quality securities
that are underpriced and offer the potential for superior returns over time. We
are conservative, long-term investors and strive to preserve your capital and
make it grow.
Thank you for your support. Together with Oppenheimer Management Corporation, we
at Quest for Value remain dedicated to meeting your future investment needs.
Sincerely,
[/S/JOSEPH M. LA MOTTA]
Joseph M. La Motta
President
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
QUEST FOR VALUE FUND, INC.
OBJECTIVE
Seeks capital appreciation through investment primarily in equity securities of
companies believed to be undervalued in the marketplace in terms of assets,
earnings, growth potential and cash flow.
SIX-MONTH REVIEW
The Fund's Class A shares provided a total return of 9.5% in the six months
ended April 30, 1995, well in excess of the average return of 6.3% for the 764
growth funds monitored by Morningstar, Inc., a leading independent reporter of
mutual fund performance, but below the 10.5% return on the S&P 500.
The Fund has been a consistent performer over time, in both up and down markets.
Since its inception in April 1980, the Fund has delivered a total return of
1,119.6%, or a compound annual return of 18.1%, exceeding by a wide margin the
15.4% average return for the S&P 500 over the same period.
The Fund seeks to control risk and generate favorable returns in two ways: by
purchasing superior companies that are less vulnerable to market declines, and
by purchasing these superior companies inexpensively. As of April 30, 1995,
87.0% of the Fund's portfolio was invested in common stocks and securities
convertible into common stocks and 13.0% in cash and cash equivalents. During
the six months, the Fund's performance was driven primarily by its substantial
holdings of financial services companies, including EXEL Ltd., Federal Home Loan
Mortgage Corp. (Freddie Mac), Mellon Bank Corp. and American International
Group, Inc. As prices rose, we took profits in several of our financial service
holdings, reducing the Fund's investments in Countrywide Credit Industries,
Inc., General Reinsurance Corp., Morgan Stanley Group, Inc. and others. We also
reduced the Fund's positions in such stocks as Avon Products, Inc., Becton,
Dickinson & Co. and John Alden Financial Corp. and eliminated its investment in
Pall Corp. We increased the Fund's investments in several retailing companies,
including May Department Stores Co. and Mercantile Stores Co., Inc., and
established a new position in J.C. Penney Co. These high-quality retailing
companies earn attractive returns on investment, and we believe the stocks are
reasonably priced. The Fund added new positions, as well, in Shaw Industries,
Inc. and Temple-Inland, Inc.
PORTFOLIO HOLDINGS
Major industry positions as of April 30, 1995 were in the insurance,
miscellaneous financial services, retail and aerospace sectors. The Fund's five
largest equity holdings were:
EXEL Ltd.
Strongly capitalized specialty insurance company
May Department Stores Co.
Leading retailer
McDonnell Douglas Corp.
Largest manufacturer of military aircraft and an important competitor in
commercial aircraft
Intel Corp.
Major producer of computer chips
Federal Home Loan Mortgage Corp. (Freddie Mac)
The second largest insurer of home mortgages
3
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW (CONTINUED)
OPPORTUNITY FUND
OBJECTIVE
Seeks capital appreciation by looking for opportunities in the equity and fixed
income markets; the balance between stocks, bonds and cash will vary, based on
an assessment of the best relative opportunities under prevailing market
conditions.
SIX-MONTH REVIEW
The Opportunity Fund continued its excellent performance as one of the top-rated
funds in its industry category. The Fund's Class A shares delivered a total
return of 12.7% in the six months ended April 30, 1995, exceeding both the 5.3%
average return for the 156 asset allocation funds monitored by Morningstar, Inc.
and the 10.5% return of the S&P 500. The Fund has provided a compound annual
return of 16.2% since its inception in January 1989, exceeding the 13.7% annual
return of the S&P 500 for that period.
The Fund's performance in the six months was driven in large measure by its
significant holdings of financial services stocks, one of the market's strongest
sectors during the period. Investments in banking and miscellaneous financial
services stocks accounted for 26.4% of the Fund's net assets as of April 30,
1995. Also contributing to performance were McDonnell Douglas Corp., up more
than 30% in price during the six months, and Intel Corp., up more than 60%.
In managing the Fund, we take a long-term perspective. The Fund's philosophy is
based on the premise that common stocks provide the best returns over time, so
there is a bias in the Fund toward owning common stocks. The Fund also invests
in bonds and cash equivalents, which can be valuable tools for preserving
capital. At April 30, 1995, the Fund's asset mix was 84.1% common stocks, 0.9%
Treasury notes, and 15.0% cash and cash equivalents.
As with our other funds, in managing the Opportunity Fund we seek to buy
companies that generate high cash flow and use it to increase shareholder value
- -- and we want to buy these companies at reasonable prices. During the six
months, the Fund established new positions in the common stocks of Champion
International Corp., Northrop Grumman Corp., Promus Companies, Inc. and Reebok
International Ltd. and increased its holdings of such stocks as Citicorp, EXEL
Ltd., Intel Corp. and Mattel, Inc. The Fund eliminated its positions in Hasbro,
Inc., Lehman Brothers Holdings, Inc., Monsanto Co., Morgan Stanley Group, Inc.
and U.S. Bancorp and reduced its investment in Warner-Lambert Co.
PORTFOLIO HOLDINGS
Major industry positions as of April 30, 1995 were in the banking, miscellaneous
financial services, aerospace and electronics sectors. The Fund's five largest
equity holdings were:
McDonnell Douglas Corp.
Largest manufacturer of military aircraft and an important competitor in
commercial aircraft
Citcorp
Leading banking and financial services company
Intel Corp.
Major producer of computer chips
Mellon Bank Corp.
Major money center bank
Federal Home Loan Mortgage Corp. (Freddie Mac)
The second largest insurer of home mortgages
4
<PAGE>
- --------------------------------------------------------------------------------
SMALL CAPITALIZATION FUND
OBJECTIVE
Seeks capital appreciation by investing in a diversified portfolio of
undervalued stocks, primarily of companies with market capitalizations under $1
billion.
SIX-MONTH REVIEW
During the six months ended April 30, 1995, small capitalization stocks lagged
the performance of large capitalization issues. The total return of the Russell
2000 Index, a widely followed benchmark which includes many small cap issues,
was 5.4%, about half the total return of the S&P 500. The Fund's Class A shares
had a total return of 1.7%, compared with an average return of 5.6% for the 280
small company funds in the Morningstar universe.
There were two main reasons for the Fund's underperformance. First, the Fund was
significantly underweighted in the technology, financial services and health
care sectors, which delivered some of the highest returns in the small cap
market. Second, several individual holdings dragged down the Fund's performance.
These included John Alden Financial Corp., Fingerhut Cos., Inc. and Sithe
Energies, Inc. We remain optimistic about our ability to improve performance and
generate favorable returns for shareholders.
Since its inception in January 1989, the Fund has delivered a compound annual
return of 11.9%, compared with an 11.8% annual return for the Russell 2000
during the same period. The small cap market has traditionally provided high
investment returns over time, subject to short-term volatility. Our strategy is
to capture the market's dynamic returns and control risk by investing in
established smaller companies with sound financial positions and strong market
shares.
We continue our active, in-depth research programs to identify quality smaller
companies that are underpriced in the market. At April 30, 1995, 78.3% of the
Fund's portfolio was invested in common stocks, 1.1% in convertible securities,
0.4% in corporate notes and bonds, and 20.2% in cash and cash equivalents. The
Fund's portfolio contains an eclectic group of securities selected to meet our
value criteria. During the six months, we added new positions in or increased
existing holdings of stocks such as Arrow Electronics, Inc., Crane Co., D.R.
Horton, Inc., Katz Media Group, Inc., Marshall Industries and Sybron
International Corp. We reduced our holdings of B.E. Aerospace, Inc., Brookstone,
Inc. and Dionex Corp. and eliminated our investments in National Data Corp. and
Stratus Computer, Inc., among others.
5
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW (CONTINUED)
SMALL CAPITALIZATION FUND (CONT'D)
PORTFOLIO HOLDINGS
Major industry positions as of April 30, 1995 were in the real estate,
electronics, oil and gas, and machinery and engineering sectors. The Fund's five
largest equity holdings were:
Crane Co.
Manufacturer and/or distributor of numerous products, including aerospace
systems and building products
Marshall Industries
Distributor of electronic components
True North Communications
Well-known advertising agency; formerly called Foote, Cone & Belding
Communications, Inc.
Sybron International Corp.
Manufacturer of laboratory supplies and dental products
Security Capital Industrial Trust, Inc.
Real estate investment trust
GROWTH AND INCOME FUND
OBJECTIVE
Seeks total return by investing in a combination of attractively valued quality
stocks and fixed income securities.
SIX-MONTH REVIEW
The Fund's Class A shares provided a total return of 9.1% in the six months
ended April 30, 1995, exceeding the 7.8% average return of the 403 funds in the
Morningstar growth and income category. Income dividends paid by the Fund during
the six months totaled $.1824 per Class A share.
The Growth and Income Fund is designed for investors who want to participate in
the equity market for total return with above-average income. In managing the
Fund, we seek to maintain a diversified portfolio that balances the need for
protection of principal with the pursuit of long-term capital appreciation and
income. The portfolio is structured around three broad segments: common stocks,
which provide growth potential and some income; higher-yielding bonds, which
generate relatively more income but are also selected for their potential for
capital appreciation; and fixed income securities which are convertible into
common stocks. By participating in these three segments, we can usually select
common stocks based almost exclusively on their prospects for total return while
still delivering a high level of income.
6
<PAGE>
- --------------------------------------------------------------------------------
The Fund performed well in the six months despite a conservative investment
posture in a rising market. As of April 30, 1995, 53.7% of the Fund's portfolio
was invested in common stocks, 9.9% in securities convertible into common
stocks, 8.6% in notes and bonds, and 27.8% in cash and cash equivalents. Because
of its relatively high cash holdings, the Fund is currently generating more
income than normal. The Fund's income level is likely to decline when cash is
reinvested in the stock market.
Portfolio activity during the six months was dominated by sales of common
stocks, as we raised cash to protect principal. We eliminated our investments in
American Express Co., Avon Products, Inc., Equitable Cos., Lehman Brothers
Holdings, Inc., May Department Stores Co., PepsiCo, Inc., Philip Morris
Companies, Inc., TIG Holdings, Inc., UNUM Corp. and Wells Fargo & Co. On the
purchase side, we added new positions in stocks such as AFLAC, Inc., Boeing Co.,
First Interstate Bancorp, Premark International, Inc., Shaw Industries, Inc. and
Temple-Inland, Inc. Existing positions in the common stocks of Canadian Pacific
Ltd., Citicorp and Sprint Corp. were increased, as was our investment in Gerrity
Oil & Gas Corp. convertible preferred stock.
PORTFOLIO HOLDINGS
Major industry positions as of April 30, 1995 were in the miscellaneous
financial services, oil and gas, telecommunications and aerospace sectors. The
Fund's five largest equity holdings were:
Gerrity Oil & Gas Corp. convertible preferred
U.S. oil and gas exploration and production company
Freeport McMoRan Copper & Gold (Class A)
Major copper and gold producer from a mine in Irian Jaya in the South Pacific
Sprint Corp.
Leading long-distance telephone company
Temple-Inland, Inc.
Manufacturer of paperboard and other forest products
McDonnell Douglas Corp.
Largest manufacturer of military aircraft and an important competitor in
commercial aviation
U.S. GOVERNMENT INCOME FUND
OBJECTIVE
Seeks to provide shareholders with a high level of current income together with
protection of capital; invests in debt obligations issued or guaranteed by the
U.S. Government, its agencies or intermediaries and in related futures, options
and repurchase agreements.
7
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW (CONTINUED)
U.S. GOVERNMENT INCOME FUND (CONT'D)
SIX-MONTH REVIEW
The Fund paid total income dividends of $.322 per Class A share in the six
months ended April 30, 1995, up from $.284 in the first six months of the prior
fiscal year. For the six months ended April 30, 1995, the Class A shares
produced a total return of 5.5%. This performance compares with an average total
return of 5.4% for the 352 funds in the Morningstar general government bond fund
category and a total return of 7.5% for the Lehman Brothers Intermediate
Government Bond Index. Since its inception in May 1988, the Fund has provided a
compound annual return of 7.6%.
Unlike many other government bond funds, the U.S. Government Income Fund invests
primarily in intermediate-term securities and places a high priority on
maintaining a relatively stable net asset value (NAV) per share. The volatility
of the Fund, that is the amount of price movement of the NAV, is similar to the
volatility of a five-year Treasury note.
As of April 30, 1995, the Fund's assets were allocated 34.7% to Treasuries,
48.2% to mortgage-backed government agency securities and 17.3% to net cash and
short-term securities. Call options were written on 0.2% of the Fund's assets.
Although the Fund writes call options, it does not own any of the complex
derivatives that have caused problems for many other bond funds during the past
year.
Because of the Fund's intermediate-term nature, it did not participate fully
during the past six months in the rally of long-term bonds, the market's
strongest sector. To improve performance while maintaining an average maturity
of five years, we adopted a "barbell" strategy: we invested a portion of assets
in short-term securities and a portion in long-term issues. Toward the end of
the six months, we moved back into intermediates.
Going forward, we intend to manage the Fund's portfolio more actively, becoming
more strategic in capturing what the market offers at any given time. Given the
increased volatility of fixed income markets generally, we will be more
opportunistic in seeking to capture the benefits of this volatility without
compromising our dedication to a relatively stable NAV and protection of
principal.
INVESTMENT QUALITY INCOME FUND
OBJECTIVE
Seeks to provide as high a level of current income as possible, consistent with
conservation of principal; invests primarily in fixed income obligations, with
at least 80% of its holdings, at time of their purchase, being rated A or better
and none being below investment grade.
SIX-MONTH REVIEW
The Investment Quality Income Fund enjoyed a strong performance in the six
months ended April 30, 1995. Its Class A shares produced a total return of 9.3%,
exceeding both the 5.0% average return for the 183 funds in the Morningstar
high-quality corporate bond category and the 8.4% return of the Lehman Brothers
Corporate Bond Index.
8
<PAGE>
- --------------------------------------------------------------------------------
The Fund paid income dividends of $.362 per Class A share during the six months,
up from $.332 in the first six months of the prior fiscal year. On an annualized
basis, the monthly distribution yield on the net asset value (NAV) of the Class
A shares was 6.95% at April 30, 1995.
Since its inception in December 1990, the Fund has produced a compound annual
total return of 8.2%. The Fund provides a convenient means to invest in a
diversified portfolio of quality, longer term fixed income securities of
corporate America. The average maturity of the portfolio was 24.3 years as of
April 30, 1995.
Included in the portfolio are the securities of such companies as Boeing Co.,
New York Telephone Company and Occidental Petroleum Corp. In addition, about
one-fifth of the portfolio is invested in dollar-denominated bonds of foreign
issuers, primarily Canadian, which provide attractive yields and favorable
relative value.
9
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED)
QUEST FOR VALUE FUND, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 12.9%
<C> <S> <C>
AUTOMOTIVE -- 0.7%
Ford Motor Credit Co.
$ 1,300,000 5.98%, 5/01/95 $ 1,300,000
578,000 5.98%, 5/15/95 576,656
------------
1,876,656
------------
BANKING -- 4.6%
13,000,000 Norwest Financial, Inc.
5.94%, 5/30/95 12,937,795
------------
COMPUTERS -- 0.5%
IBM Credit Corp.
800,000 5.95%, 5/30/95 796,165
700,000 5.99%, 5/08/95 699,185
------------
1,495,350
------------
INSURANCE -- 2.1%
6,000,000 Prudential Funding Corp.
5.98%, 5/08/95 5,993,023
------------
MACHINERY & ENGINEERING -- 1.3%
3,800,000 Deere (John) Capital Corp.
5.94%, 5/30/95 3,781,817
------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.9%
4,800,000 Commercial Credit Co. (A)
5.85%, 5/09/95 4,794,447
Household Finance Corp.
487,000 5.97%, 5/15/95 485,869
3,000,000 5.97%, 5/22/95 2,989,553
------------
8,269,869
------------
OIL/GAS -- 0.8%
2,100,000 Chevron Oil Finance Co.
5.97%, 5/01/95 2,100,000
------------
Total Short-Term Corporate Notes
(cost -- $36,454,510) $ 36,454,510
------------
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
CONVERTIBLE CORPORATE BONDS -- 0.8%
REAL ESTATE
$ 2,314,448 Security Capital Realty, Inc. (B)
12.00%, 6/30/14
(cost -- $2,181,786) $ 2,314,448
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 86.2%
AEROSPACE -- 8.7%
215,000 AlliedSignal, Inc. $ 8,519,375
177,000 McDonnell Douglas Corp. 10,974,000
90,000 Sundstrand Corp. 4,995,000
------------
24,488,375
------------
APPAREL -- 2.3%
372,600 Warnaco Group, Inc. (Class A)* 6,380,775
------------
BANKING -- 2.7%
196,215 Mellon Bank Corp. 7,701,439
------------
CHEMICALS -- 3.3%
81,000 Hercules, Inc. 4,039,875
64,000 Monsanto Co. 5,328,000
------------
9,367,875
------------
CONGLOMERATES -- 1.8%
90,200 General Electric Co. 5,051,200
------------
CONTAINERS -- 1.4%
90,700 Temple-Inland, Inc. 3,990,800
------------
COSMETICS/TOILETRIES -- 1.5%
67,800 Avon Products, Inc. 4,288,350
------------
DRUGS & MEDICAL PRODUCTS -- 4.6%
163,000 Becton, Dickinson & Co. 9,087,250
48,000 Warner-Lambert Co. 3,828,000
------------
12,915,250
------------
ELECTRONICS -- 6.4%
177,000 Arrow Electronics, Inc.* 8,230,500
97,000 Intel Corp. 9,930,375
------------
18,160,875
------------
HOUSEHOLD PRODUCTS -- 0.9%
52,100 Premark International, Inc. 2,513,825
------------
</TABLE>
* Non-income producing security.
10
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
INSURANCE -- 16.9%
<C> <S> <C>
66,000 American International Group,
Inc. $ 7,045,500
434,200 EXEL Ltd. 19,756,100
30,000 General Reinsurance Corp. 3,821,250
212,000 Progressive Corp., Ohio 8,003,000
101,000 Transamerica Corp. 5,719,125
76,000 UNUM Corp. 3,258,500
------------
47,603,475
------------
MACHINERY & ENGINEERING -- 1.4%
160,000 Case Corp. 4,060,000
------------
METALS/MINING -- 2.5%
8,518 Freeport McMoRan, Copper &
Gold (Class A) 177,813
398,000 Freeport McMoRan, Inc. 7,014,750
------------
7,192,563
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.4%
200,000 American Express Co. 6,950,000
110,000 Citicorp 5,101,250
270,000 Countrywide Credit Industries,
Inc. 4,961,250
152,000 Federal Home Loan Mortgage
Corp. 9,918,000
50,200 John Alden Financial Corp. 909,875
60,000 Morgan Stanley Group, Inc. 4,170,000
------------
32,010,375
------------
REAL ESTATE -- 1.0%
3,050 Security Capital Realty, Inc.
(B) 2,689,844
------------
RETAIL -- 10.5%
210,000 J.C. Penney Co. 9,187,500
348,000 May Department Stores Co. 12,615,000
175,000 Mercantile Stores Co., Inc. 7,743,750
------------
29,546,250
------------
TELECOMMUNICATIONS -- 1.7%
344 Bell Atlantic Corp. 18,877
145,200 Sprint Corp. 4,791,600
------------
4,810,477
------------
TEXTILES -- 1.4%
300,000 Shaw Industries, Inc. $ 3,937,500
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.2%
116,000 Dole Food Co. 3,465,500
200,000 Sara Lee Corp. 5,575,000
------------
9,040,500
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
TOYS/GAMES/HOBBY -- 2.6%
232,000 Hasbro, Inc. 7,366,000
------------
Total Common Stocks
(cost -- $193,143,927) $243,115,748
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $231,780,223) 99.9 % $ 281,884,706
Other Assets in Excess of
Other Liabilities 0.1 116,210
--------- -------------
TOTAL NET ASSETS 100.0 % $ 282,000,916
--------- -------------
--------- -------------
OPPORTUNITY FUND
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
U.S. GOVERNMENT AGENCY -- 1.1%
$ 4,020,000 Federal Home Loan Bank
5.93%, 5/01/95
(cost -- $4,020,000) $ 4,020,000
------------
SHORT-TERM CORPORATE NOTES -- 13.8%
AUTOMOTIVE -- 0.4%
$ 1,260,000 Ford Motor Credit Co.
5.96%, 5/01/95 $ 1,260,000
------------
BANKING -- 1.1%
Norwest Financial, Inc.
3,630,000 5.96%, 5/22/95 3,617,380
362,000 5.98%, 5/01/95 362,000
------------
3,979,380
------------
</TABLE>
* Non-income producing security.
(A) Security is segregated as collateral for pending purchase of Security
Capital Realty, Inc.
(B) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
DATE OF VALUATION AS OF
DESCRIPTION ACQUISITION PAR AMOUNT SHARES UNIT COST APRIL 30, 1995
<CAPTION>
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 9/15/94 $2,314,448 -- $ 94 $100
Security Capital
Realty, Inc.
Common Stock 9/15/94 -- 3,050 926 882
</TABLE>
11
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
OPPORTUNITY FUND (CONT'D)
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
COMPUTERS -- 0.1%
$ 445,000 IBM Credit Corp.
5.99%, 5/08/95 $ 444,482
------------
INSURANCE -- 2.3%
Prudential Funding Corp.
970,000 5.97%, 5/01/95 970,000
7,027,000 5.98%, 5/08/95 7,018,829
------------
7,988,829
------------
MACHINERY & ENGINEERING -- 0.4%
1,465,000 Deere (John) Capital Corp.
5.92%, 5/22/95 1,459,941
------------
MISCELLANEOUS FINANCIAL SERVICES -- 8.4%
4,140,000 Beneficial Corp.
5.95%, 5/08/95 4,135,211
13,690,000 Commercial Credit Co.
5.95%, 5/08/95 13,674,161
11,915,000 Household Finance Corp.
5.97%, 5/15/95 11,887,337
------------
29,696,709
------------
OIL/GAS -- 1.1%
990,000 Chevron Oil Finance Co.
5.97%, 5/01/95 990,000
2,960,000 Texaco, Inc.
5.96%, 5/22/95 2,949,709
------------
3,939,709
------------
Total Short-Term Corporate Notes
(cost -- $48,769,050) $ 48,769,050
------------
U.S. TREASURY NOTES -- 0.9%
$ 1,000,000 7.50%, 11/15/01 $ 1,027,810
1,000,000 7.50%, 5/15/02 1,030,160
550,000 7.875%, 4/15/98 566,588
550,000 7.875%, 8/15/01 575,867
------------
Total U.S. Treasury Notes
(cost -- $3,146,446) $ 3,200,425
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 84.1%
AEROSPACE -- 9.6%
400,000 McDonnell Douglas Corp. $ 24,800,000
120,000 Northrop Grumman Corp. 5,955,000
60,000 Sundstrand Corp. 3,330,000
------------
34,085,000
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
BANKING -- 16.0%
500,000 Citicorp $ 23,187,500
34,000 First Empire State Corp. 5,457,000
420,000 Mellon Bank Corp. 16,485,000
70,000 Wells Fargo & Co. 11,611,250
------------
56,740,750
------------
CASINOS/GAMING -- 1.1%
100,000 Promus Companies, Inc.* 3,850,000
------------
CHEMICALS -- 3.2%
225,000 Hercules, Inc. 11,221,875
------------
CONSUMER PRODUCTS -- 2.6%
300,000 Reebok International Ltd. 9,375,000
------------
COSMETICS/TOILETRIES -- 1.1%
60,000 Avon Products, Inc. 3,795,000
------------
DRUGS & MEDICAL PRODUCTS -- 3.3%
105,000 Becton, Dickinson & Co. 5,853,750
75,000 Warner-Lambert Co. 5,981,250
------------
11,835,000
------------
ELECTRONICS -- 8.6%
190,000 Intel Corp. 19,451,250
50,000 Raychem Corp. 1,781,250
445,000 Unitrode Corp.* 9,233,750
------------
30,466,250
------------
HEALTHCARE SERVICES -- 1.8%
435,000 National Health Laboratories,
Inc.* 6,525,000
------------
INSURANCE -- 5.9%
300,000 EXEL Ltd. 13,650,000
60,000 Transamerica Corp. 3,397,500
90,000 Travelers, Inc. 3,723,750
------------
20,771,250
------------
METALS/MINING -- 2.2%
200,000 Freeport McMoRan, Copper &
Gold (Class A) 4,175,000
202,500 Freeport McMoRan, Inc. 3,569,062
------------
7,744,062
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.4%
230,000 American Express Co. 7,992,500
480,000 Countrywide Credit Industries,
Inc. 8,820,000
230,000 Federal Home Loan Mortgage
Corp. 15,007,500
55,000 Federal National Mortgage
Assoc. 4,853,750
------------
36,673,750
------------
</TABLE>
* Non-income producing security.
12
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
OIL/GAS -- 6.0%
<C> <S> <C>
80,000 Mapco, Inc. $ 4,550,000
240,000 Tenneco, Inc. 11,010,000
149,300 Triton Energy Corp.* 5,748,050
------------
21,308,050
------------
PAPER PRODUCTS -- 4.9%
330,000 Champion International Corp. 14,520,000
30,000 Scott Paper Co. 2,673,750
------------
17,193,750
------------
TELECOMMUNICATIONS -- 2.1%
220,000 Sprint Corp. 7,260,000
------------
TEXTILES -- 2.5%
161,500 Collins & Aikman Corp.* 1,211,250
600,000 Shaw Industries, Inc. 7,875,000
------------
9,086,250
------------
TOYS/GAMES/HOBBY -- 2.3%
350,000 Mattel, Inc. 8,312,500
------------
OTHER -- 0.5%
50,000 Alliant Techsystems, Inc.* 1,843,750
------------
Total Common Stocks
(cost -- $250,665,773) $298,087,237
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $306,601,269) 99.9 % $354,076,712
Other Assets in Excess of
Other Liabilities 0.1 248,508
-------- ------------
TOTAL NET ASSETS 100.0 % $354,325,220
-------- ------------
-------- ------------
</TABLE>
SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES -- 18.1%
AUTOMOTIVE -- 0.2%
$ 325,000 Ford Motor Credit Co.
5.96%, 5/01/95 $ 325,000
------------
BANKING -- 1.7%
Norwest Financial, Inc.
1,120,000 5.94%, 5/30/95 1,114,641
1,296,000 5.96%, 5/22/95 1,291,494
------------
2,406,135
------------
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
COMPUTERS -- 1.2%
IBM Credit Corp.
$ 1,123,000 5.93%, 5/22/95 $ 1,119,115
550,000 5.95%, 5/30/95 547,364
------------
1,666,479
------------
CONGLOMERATES -- 1.6%
2,335,000 General Electric Capital Corp.
5.96%, 5/22/95 2,326,882
------------
INSURANCE -- 3.6%
Prudential Funding Corp.
400,000 5.93%, 5/30/95 398,089
4,852,000 5.98%, 5/08/95 4,846,358
------------
5,244,447
------------
MACHINERY & ENGINEERING -- 4.8%
6,910,000 Deere (John) Capital Corp.
5.94%, 5/30/95 6,876,936
------------
MISCELLANEOUS FINANCIAL SERVICES -- 3.6%
Beneficial Corp.
386,000 5.95%, 5/08/95 385,554
1,373,000 5.95%, 5/15/95 1,369,823
Commercial Credit Co.
475,000 5.95%, 5/08/95 474,451
1,500,000 5.97%, 5/22/95 1,494,776
1,432,000 Household Finance Corp.
5.97%, 5/15/95 1,428,675
------------
5,153,279
------------
OIL/GAS -- 1.4%
Chevron Oil Finance Co.
875,000 5.94%, 5/30/95 870,813
1,190,000 6.00%, 5/08/95 1,188,612
------------
2,059,425
------------
Total Short-Term Corporate Notes
(cost -- $26,058,583) $ 26,058,583
------------
CORPORATE NOTES & BONDS -- 0.4%
AUTOMOTIVE -- 0.0%
$ 62,950 Collins Industries, Inc.
8.75%, 1/11/00 $ 55,363
------------
OIL/GAS -- 0.4%
500,000 Global Marine, Inc.
12.75%, 12/15/99 546,875
------------
Total Corporate Notes & Bonds
(cost -- $587,196) $ 602,238
------------
</TABLE>
* Non-income producing security.
13
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
SMALL CAPITALIZATION FUND (CONT'D)
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 1.0%
<C> <S> <C>
REAL ESTATE
$ 1,385,009 Security Capital Realty, Inc.
(A)
12.00%, 6/30/14
(cost -- $1,306,709) $ 1,385,009
------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 0.1%
RETAIL
36,000 Family Bargain Corp.
$0.95 Conv. Pfd.
(cost -- $360,000) $ 207,000
------------
COMMON STOCKS -- 78.3%
ADVERTISING -- 5.4%
57,600 Katz Media Group, Inc. $ 928,800
39,000 Omnicom Group, Inc. 2,169,375
246,200 True North Communications 4,677,800
------------
7,775,975
------------
AEROSPACE -- 0.6%
130,000 BE Aerospace, Inc.* 926,250
------------
APPAREL -- 1.5%
128,000 Warnaco Group, Inc. (Class A)* 2,192,000
------------
AUTOMOTIVE -- 1.1%
126,000 Collins Industries, Inc.* 267,750
65,100 Masland Corp. 895,125
70,000 Sudbury, Inc.* 476,875
------------
1,639,750
------------
BUILDING & CONSTRUCTION -- 4.3%
145,000 CRSS, Inc. 1,377,500
132,600 D.R. Horton, Inc. 1,292,850
5,500 Insituform Technologies (Class
A)* 70,812
165,000 Martin Marietta Materials,
Inc. 3,423,750
------------
6,164,912
------------
CHEMICALS -- 2.3%
141,400 OM Group, Inc. 3,375,925
------------
COMPUTER SERVICES -- 2.8%
147,700 BancTec, Inc.* 2,510,900
89,000 Exabyte Corp.* 1,123,625
34,600 Globalink, Inc.* 406,550
------------
4,041,075
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
DRUGS & MEDICAL PRODUCTS -- 3.3%
125,900 Sybron International Corp.* $ 4,674,038
------------
ELECTRONICS -- 6.5%
37,000 Arrow Electronics, Inc.* 1,720,500
37,000 Dionex Corp.* 1,535,500
195,500 Marshall Industries* 5,400,687
35,000 Unitrode Corp.* 726,250
------------
9,382,937
------------
HEALTHCARE SERVICES -- 1.3%
14,000 Community Health Systems,
Inc.* 486,500
54,000 Spacelabs Medical, Inc. 1,323,000
------------
1,809,500
------------
INSURANCE -- 2.1%
55,300 Capsure Holdings Corp. 725,813
23,400 E.W. Blanch Holdings, Inc. 438,750
112,500 Guaranty National Corp. 1,856,250
------------
3,020,813
------------
JEWELRY -- 1.6%
170,000 North American Watch Corp. 2,337,500
------------
LEASING -- 1.3%
121,700 Interpool, Inc.* 1,795,075
------------
MACHINERY & ENGINEERING -- 5.1%
12,700 Baldwin Technologies Co. 74,612
97,100 BWIP Holdings, Inc. (Class A) 1,711,387
160,000 Crane Co. 5,560,000
------------
7,345,999
------------
MANUFACTURING -- 1.4%
50,000 Giddings & Lewis, Inc. 906,250
55,000 Harmon Industries, Inc. 783,750
131,300 Interlake Corp.* 377,488
------------
2,067,488
------------
METALS/MINING -- 0.5%
70,000 Olympic Steel, Inc.* 682,500
------------
MISCELLANEOUS FINANCIAL SERVICES -- 4.2%
150,000 AmeriCredit Corp.* 1,350,000
49,700 John Alden Financial Corp. 900,813
200,000 SafeCard Services, Inc. 3,500,000
24,300 Union Corp.* 337,163
------------
6,087,976
------------
</TABLE>
* Non-income producing security.
14
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
OIL/GAS -- 7.5%
136,800 Aquila Gas Pipeline Corp. $ 1,162,800
300,155 Global Natural Resources,
Inc.* 2,964,031
125,000 Nahama & Weagant Energy Co.* 1,250
137,500 Noble Drilling Corp.* 910,937
165,000 Petroleum Heat & Power, Inc.
(Class A) 1,196,250
74,400 St. Mary Land & Exploration
Co. 948,600
116,200 Tesoro Petroleum Corp. 1,147,475
65,000 Triton Energy Corp.* 2,502,500
------------
10,833,843
------------
PAPER PRODUCTS -- 0.9%
61,500 CSS Industries, Inc.* 1,030,125
40,000 Repap Enterprises, Inc. 281,250
------------
1,311,375
------------
PRINTING/PUBLISHING -- 3.4%
72,000 CCH, Inc. (Class B) 1,161,000
119,100 Nu-Kote Holdings, Inc. (Class
A)* 3,275,250
12,250 Pulitzer Publishing Co. 494,594
------------
4,930,844
------------
REAL ESTATE -- 8.7%
151,800 Cousins Properties, Inc. 2,542,650
44,000 Post Properties, Inc. 1,303,500
231,600 Security Capital Industrial
Trust, Inc. 3,618,750
199,363 Security Capital Pacific Trust 3,488,853
1,800 Security Capital Realty, Inc.
(A) 1,587,600
------------
12,541,353
------------
RETAIL -- 4.0%
18,000 Blair Corp. 623,250
64,700 Brookstone, Inc.* 331,587
304,700 Cash America International,
Inc. 2,323,337
173,700 Fingerhut Companies, Inc. 2,019,262
52,500 Freds, Inc. 511,875
------------
5,809,311
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
SECURITY/INVESTIGATION SERVICES -- 0.3%
202,910 Automated Security Holdings
PLC ADS $ 380,456
------------
TEXTILES -- 4.0%
89,000 Collins & Aikman Corp.* 667,500
15,700 Culp, Inc. 153,075
40,000 Dyersburg Corp. 215,000
42,700 Fab Industries, Inc. 1,286,338
244,900 Mohawk Industries, Inc.* 3,367,375
------------
5,689,288
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 1.0%
55,900 Morningstar Group, Inc. 447,200
89,700 Sylvan Food Holdings, Inc.* 1,031,550
------------
1,478,750
------------
UTILITIES -- 2.0%
221,200 Sithe Energies, Inc.* 1,935,500
46,000 UGI Corp. 891,250
------------
2,826,750
------------
OTHER -- 1.2%
107,500 McGrath RentCorp. 1,679,688
------------
Total Common Stocks
(cost -- $110,337,018) $112,801,371
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost --
$138,649,506) 97.9 % $141,054,201
Other Assets in
Excess of
Other Liabilities 2.1 3,089,011
--------- -----------
TOTAL NET ASSETS 100.0 % $144,143,212
--------- -----------
--------- -----------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
DATE OF VALUATION AS OF
DESCRIPTION ACQUISITION PAR AMOUNT SHARES UNIT COST APRIL 30, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital Realty, Inc.
12.00%, 6/30/14 6/16/94 $1,385,009 -- $ 94 $ 100
Security Capital Realty, Inc.
Common Stock 8/02/93 -- 1,800 684 882
</TABLE>
15
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT AGENCY -- 2.0%
$ 755,000 Federal Home Loan Bank
5.93%, 5/01/95
(cost -- $755,000) $ 755,000
------------
SHORT-TERM CORPORATE NOTES -- 27.2%
AUTOMOTIVE -- 3.4%
$ 1,295,000 Ford Motor Credit Co.
5.94%, 5/12/95 $ 1,292,650
------------
COMPUTERS -- 2.6%
1,000,000 IBM Credit Corp.
5.93%, 5/15/95 997,694
------------
CONGLOMERATES -- 4.7%
General Electric Capital Corp.
860,000 5.93%, 5/05/95 859,433
929,000 5.96%, 5/08/95 927,923
------------
1,787,356
------------
MACHINERY/ENGINEERING -- 3.0%
1,133,000 Deere (John) Capital Corp.
5.90%, 5/03/95 1,132,629
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.6%
1,729,000 American Express Credit Corp.
5.95%, 5/02/95 1,728,714
CIT Group Holdings, Inc.
715,000 5.89%, 5/08/95 714,181
1,134,000 5.92%, 5/03/95 1,133,627
860,000 Household Finance Corp.
5.94%, 5/05/95 859,432
------------
4,435,954
------------
OIL/GAS -- 1.9%
716,000 Chevron Oil Finance Co.
5.90%, 5/08/95 715,179
------------
Total Short-Term Corporate Notes
(cost -- $10,361,462) $ 10,361,462
------------
CORPORATE NOTES & BONDS -- 8.6%
ENTERTAINMENT -- 4.2%
$ 5,000,000 Time Warner, Inc.
Zero Coupon, 12/17/12 $ 1,618,750
------------
TELECOMMUNICATIONS -- 4.4%
3,000,000 Nextel Communications, Inc.
0.00/11.50%, 9/01/03 ** 1,657,500
------------
Total Corporate Notes & Bonds
(cost -- $3,655,626) $ 3,276,250
------------
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 9.9%
OIL/GAS -- 6.0%
180,000 Gerrity Oil & Gas Corp.
$1.50 Conv. Pfd. $ 2,295,000
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.9%
80,000 Flagstar Companies, Inc.
$2.25 Conv. Pfd. 1,500,000
------------
Total Convertible Preferred Stocks
(cost -- $4,504,546) $ 3,795,000
------------
COMMON STOCKS -- 53.7%
AEROSPACE -- 7.4%
20,000 Boeing Co. $ 1,100,000
28,000 McDonnell Douglas Corp. 1,736,000
------------
2,836,000
------------
AUTOMOTIVE -- 1.2%
10,000 General Motors Corp. 451,250
------------
BANKING -- 7.4%
35,000 Citicorp 1,623,125
5,000 First Interstate Bancorp 384,375
10,000 Mellon Bank Corp. 392,500
15,000 U.S. Bancorp 414,375
------------
2,814,375
------------
CONGLOMERATES -- 1.6%
40,000 Canadian Pacific Ltd. 610,000
------------
CONTAINERS -- 6.2%
30,000 Stone Container Corp.* 596,250
40,000 Temple-Inland, Inc. 1,760,000
------------
2,356,250
------------
ELECTRONICS -- 4.3%
16,000 Intel Corp. 1,638,000
------------
HEALTHCARE SERVICES -- 1.1%
10,000 Columbia/HCA Healthcare Corp. 420,000
------------
HOUSEHOLD PRODUCTS -- 4.4%
35,000 Premark International, Inc. 1,688,750
------------
</TABLE>
<TABLE>
<C> <S> <C>
INSURANCE -- 4.3%
10,000 AFLAC, Inc. 412,500
10,000 Progressive Corp., Ohio 377,500
20,000 Travelers, Inc. 827,500
------------
1,617,500
------------
METALS/MINING -- 5.1%
93,687 Freeport McMoRan, Copper &
Gold (Class A) 1,955,716
------------
</TABLE>
* Non-income producing security.
** Represents a step-up floater which will receive 0.00% interest until 9/01/98,
then will "step-up" to 11.50% until maturity.
16
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
METALS/MINING (CONT'D)
<C> <S> <C>
MISCELLANEOUS FINANCIAL SERVICES -- 2.0%
20,000 Countrywide Credit Industries,
Inc. $ 367,500
6,000 Federal Home Loan Mortgage
Corp. 391,500
------------
759,000
------------
OIL/GAS -- 1.9%
5,000 McMoRan Oil & Gas Corp. 13,750
10,000 Triton Energy Corp.* 385,000
15,000 Union Texas Petroleum
Holdings, Inc. 320,625
------------
719,375
------------
TELECOMMUNICATIONS -- 4.8%
55,000 Sprint Corp. 1,815,000
------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
TEXTILES -- 2.0%
20,000 Shaw Industries, Inc. 262,500
20,000 Unifi, Inc. 502,500
-------------
765,000
-------------
Total Common Stocks
(cost -- $17,690,285) $ 20,446,216
-------------
Total Investments
(cost -- $36,966,919) 101.4% $ 38,633,928
Other Liabilities in Excess of
Other Assets (1.4) (536,829)
------- -------------
TOTAL NET ASSETS 100.0 % $ 38,097,099
------- -------------
------- -------------
</TABLE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 24.1%
$30,850,000 Lehman Brothers, 5.90%,
5/02/95
(proceeds at maturity:
$30,855,056, collateralized
by $19,275,000 and
$10,940,000 par, $20,423,790
and $11,051,588 value, U.S.
Treasury Notes, 7.50%,
10/31/99 and 6.875%,
8/31/99, respectively.)
(cost -- $30,850,000) $ 30,850,000
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.6%
$ 735,108 9.50%, 12/01/02 - 11/01/03
(cost -- $740,736) $ 763,593
------------
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I -- 47.6%
$20,299,186 7.00%, 10/15/22 - 11/15/23 (A) $ 19,214,398
16,436,078 7.50%, 2/15/22 - 2/15/24 16,030,271
13,594,094 8.00%, 4/15/02 - 2/15/23 (A) 13,617,665
11,189,477 8.50%, 6/15/01 - 9/15/24 (A) 11,412,022
566,178 10.50%, 1/15/98 - 12/15/00 596,961
------------
Total Government National Mortgage
Association I (cost -- $63,765,062) $ 60,871,317
------------
U.S. TREASURY BOND -- 7.8%
$10,000,000 7.50%, 11/15/16 (A)
(cost -- $9,314,127) $ 10,045,300
------------
U.S. TREASURY NOTES -- 26.9%
$20,000,000 6.625%, 3/31/97 (A) $ 20,012,400
14,000,000 7.75%, 11/30/99 14,468,160
------------
(cost -- $34,434,623) $ 34,480,560
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments
(cost -- $139,104,548) 107.0% $137,010,770
----- ------------
- ------------------------------------------------------
PRINCIPAL
AMOUNT
SUBJECT
TO CALL VALUE
- ------------------------------------------------------
WRITTEN CALL OPTIONS OUTSTANDING -- (0.2%)
$10,000,000 Government National
Mortgage Association I,
7.00%, expiring May '95,
strike @ $94.22 $ (68,750)
10,000,000 Government National
Mortgage Association I,
8.00%, expiring May '95,
strike @ $100.06 (31,250)
10,000,000 Government National
Mortgage Association I,
8.50%, expiring May '95,
strike @ $101.56 (59,375)
10,000,000 U.S. Treasury Bonds,
7.50%, expiring May '95,
strike @ $100.67 (78,125)
20,000,000 U.S. Treasury Notes,
6.625%, expiring May '95,
strike @ $100.34 (12,500)
------------
Total Written Call Options
Outstanding (premiums
received: $301,562) $ (250,000)
------------
Other Liabilities in Excess of
Other Assets (6.8 ) (8,710,696)
----- ------------
TOTAL NET ASSETS 100.0 % $128,050,074
----- ------------
----- ------------
</TABLE>
* Non-income producing security.
(A) Securities segregated (full or partial) as collateral for written call
options outstanding. The aggregate market value of such segregated
securities is $60,393,531.
17
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
INVESTMENT QUALITY INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
SHORT-TERM CORPORATE NOTES -- 5.8%
AUTOMOTIVE -- 2.4%
$ 1,430,000 Ford Motor Credit Co.
5.92%, 5/09/95 $ 1,428,119
------------
COMPUTERS -- 0.8%
455,000 IBM Credit Corp.
5.93%, 5/15/95 453,951
------------
OIL/GAS -- 2.6%
1,500,000 Chevron Oil Finance Co.
5.96%, 5/02/95 1,499,751
------------
Total Short-Term Corporate Notes
(cost -- $3,381,821) $ 3,381,821
------------
CORPORATE NOTES & BONDS -- 91.5%
AEROSPACE -- 3.1%
$ 2,000,000 Boeing Co.
7.50%, 8/15/42 $ 1,835,260
------------
AIRLINES -- 2.8%
1,000,000 American Airlines
9.73%, 9/29/14 1,028,920
550,000 Delta Air Lines, Inc.
10.375%, 2/01/11 598,812
------------
1,627,732
------------
BANKING -- 6.4%
70,000 NatWest Bancorp, Inc.
9.375%, 11/15/03 77,305
1,300,000 NCNB Corp.
10.20%, 7/15/15 1,510,223
500,000 RBSG Capital Corp.
10.125%, 3/01/04 568,735
1,500,000 Westpac Banking Corp.
9.125%, 8/15/01 1,603,080
------------
3,759,343
------------
CHEMICALS -- 0.9%
500,000 Rohm & Haas Co.
9.50%, 4/01/21 554,480
------------
CONGLOMERATES -- 3.8%
2,000,000 Canadian Pacific Ltd.
9.45%, 8/01/21 2,241,860
------------
ENTERTAINMENT -- 5.0%
3,000,000 Time Warner, Inc.
9.15%, 2/01/23 2,898,900
------------
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
INSURANCE -- 11.3%
$ 1,000,000 Aetna Life & Casualty Co.
8.00%, 1/15/17 $ 937,090
1,200,000 Capital Holding Corp.
8.75%, 1/15/17 1,247,928
2,000,000 CNA Financial Corp.
7.25%, 11/15/23 1,653,300
3,000,000 Torchmark, Inc.
7.875%, 5/15/23 2,759,130
------------
6,597,448
------------
LEASING -- 2.8%
1,600,000 Ryder Systems, Inc.
8.75%, 3/15/17 1,619,008
------------
MACHINERY & ENGINEERING -- 3.3%
1,750,000 Caterpillar, Inc.
9.75%, 6/01/19 1,940,452
------------
MISCELLANEOUS FINANCIAL SERVICES -- 13.9%
20,000 Beneficial Corp.
12.875%, 8/01/13 23,819
1,500,000 BHP Finance USA Ltd.
8.50%, 12/01/12 1,557,030
1,000,000 ITT Financial Corp.
6.50%, 5/01/11 808,410
Lehman Brothers, Inc.
865,000 9.875%, 10/15/00 919,063
115,000 10.00%, 5/15/99 121,478
205,000 Midland American Capital Corp.
12.75%, 11/15/03 238,251
800,000 Paine Webber Group, Inc.
9.25%, 12/15/01 835,136
3,000,000 Prudential Funding Corp.
6.75%, 9/15/23 2,400,900
1,250,000 Source One Mortgage Services
Corp.
9.00%, 6/01/12 1,212,450
------------
8,116,537
------------
OIL/GAS -- 6.0%
3,000,000 Occidental Petroleum Corp.
11.125%, 6/01/19 3,507,540
------------
PAPER PRODUCTS -- 0.2%
100,000 Union Camp Corp.
10.00%, 5/01/19 111,152
------------
PIPELINES -- 3.0%
1,500,000 TransCanada Pipelines Ltd.
9.875%, 1/01/21 1,747,020
------------
</TABLE>
18
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
RETAIL -- 1.3%
<C> <S> <C>
May Department Stores Co.
$ 250,000 9.875%, 6/01/17 $ 272,925
405,000 10.625%, 11/01/10 496,137
------------
769,062
------------
TELECOMMUNICATIONS -- 12.5%
420,000 GTE Corp.
10.25%, 11/01/20 472,492
2,500,000 New York Telephone Co.
9.375%, 7/15/31 2,708,775
2,000,000 Pacific Bell
8.50%, 8/15/31 2,015,700
2,000,000 Southern New England Telephone
Co.
8.70%, 8/15/31 2,123,880
------------
7,320,847
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.3%
2,000,000 American Brands, Inc.
7.875%, 1/15/23 1,920,560
------------
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
<C> <S> <C>
UTILITIES -- 6.9%
$ 2,000,000 Hydro-Quebec
8.50%, 12/01/29 $ 1,987,680
2,000,000 Southern California Edison Co.
8.875%, 6/01/24 2,039,640
------------
4,027,320
------------
OTHER -- 5.0%
1,468,228 DLJ Mortgage Acceptance Corp.
8.75%, 11/25/24 1,408,122
1,500,000 Nova Scotia (Province of)
8.875%, 7/01/19 1,524,345
------------
2,932,467
------------
Total Corporate Notes & Bonds
(cost -- $53,950,659) $ 53,526,988
------------
Total Investments
(cost -- $57,332,480) 97.3 % $ 56,908,809
Other Assets in Excess of
Other Liabilities 2.7 1,549,987
----- ------------
TOTAL NET ASSETS 100.0 % $ 58,458,796
----- ------------
----- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE FUND, OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
------------ ------------ ------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost --
$231,780,223, $306,601,269,
$138,649,506, $36,966,919,
$108,254,548 and $57,332,480,
respectively)........................ $281,884,706 $354,076,712 $141,054,201 $38,633,928 $106,160,770 $56,908,809
Repurchase agreement (cost --
$30,850,000)......................... -- -- -- -- 30,850,000 --
Cash.................................. 192,917 6,009 7,649 4,785 42,627 7,874
Receivable for investments sold....... 6,121,804 4,960,166 4,386,238 -- -- --
Receivable for fund shares sold....... 1,373,346 7,437,751 530,404 161,403 552,378 344,370
Dividends receivable.................. 490,541 682,550 99,920 106,583 -- --
Interest receivable................... 18,808 80,066 81,628 -- 1,266,952 1,415,841
Receivable for mortgage prepayments... -- -- -- -- 8,659 --
Receivable for options written........ -- -- -- -- 81,250 --
Deferred organization expenses........ -- -- -- 29,014 -- 7,835
Other assets.......................... 43,688 27,106 18,450 22,152 33,006 18,897
------------ ------------ ------------- ----------- ------------ -----------
Total Assets........................ 290,125,810 367,270,360 146,178,490 38,957,865 138,995,642 58,703,626
------------ ------------ ------------- ----------- ------------ -----------
LIABILITIES
Written call options outstanding, at
value (premiums received:
$301,562)............................ -- -- -- -- 250,000 --
Payable for investments purchased..... 7,304,992 11,854,122 1,469,403 773,238 10,006,250 --
Payable for fund shares redeemed...... 637,029 825,136 417,908 19,581 466,636 70,490
Investment advisory fee payable....... 38,549 48,250 19,738 4,507 10,495 4,781
Distribution fee payable.............. 36,734 95,043 24,513 5,223 13,601 10,314
Dividends payable..................... -- -- -- -- 96,618 96,734
Other payables and accrued expenses... 107,590 122,589 103,716 58,217 101,968 62,511
------------ ------------ ------------- ----------- ------------ -----------
Total Liabilities................... 8,124,894 12,945,140 2,035,278 860,766 10,945,568 244,830
------------ ------------ ------------- ----------- ------------ -----------
NET ASSETS
Par value............................. 22,152,829 166,616 89,258 36,874 115,966 57,361
Paid-in-surplus....................... 203,275,875 304,361,426 136,615,872 34,963,133 139,644,958 60,186,256
Accumulated undistributed net
investment income.................... 857,581 1,269,754 89,051 116,490 -- --
Accumulated undistributed net realized
gain (loss) on investments........... 5,610,148 1,053,210 4,944,336 1,520,866 (9,371,173) (1,361,150 )
Distributions in excess of
undistributed net realized gains..... -- (1,229) -- (207,273 ) (297,461) --
Net unrealized appreciation
(depreciation) on investments........ 50,104,483 47,475,443 2,404,695 1,667,009 (2,042,216) (423,671 )
------------ ------------ ------------- ----------- ------------ -----------
Total Net Assets.................... $282,000,916 $354,325,220 $144,143,212 $38,097,099 $128,050,074 $58,458,796
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
CLASS A:
Fund shares outstanding............... 19,766,758 10,873,320 7,345,404 3,189,862 10,497,081 4,499,943
------------ ------------ ------------- ----------- ------------ -----------
Net asset value per share............. $ 12.74 $ 21.33 $ 16.18 $ 10.34 $ 11.04 $ 10.19
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
Maximum offering price per share*..... $ 13.48 $ 22.57 $ 17.12 $ 10.86 $ 11.59 $ 10.70
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
CLASS B:
Fund shares outstanding............... 1,881,688 4,838,180 1,225,644 410,588 930,025 911,890
------------ ------------ ------------- ----------- ------------ -----------
Net asset value and offering price per
share................................ $ 12.65 $ 21.16 $ 16.03 $ 10.31 $ 11.04 $ 10.19
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
CLASS C:
Fund shares outstanding............... 504,383 950,086 354,729 86,947 169,500 324,279
------------ ------------ ------------- ----------- ------------ -----------
Net asset value and offering price per
share................................ $ 12.64 $ 21.15 $ 16.03 $ 10.32 $ 11.04 $ 10.19
------------ ------------ ------------- ----------- ------------ -----------
------------ ------------ ------------- ----------- ------------ -----------
<FN>
*Sales charges decrease on purchases of $50,000 or higher.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
20
<PAGE>
SIX MONTHS ENDED APRIL 30, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION AND GOVERNMENT QUALITY
FUND, INC. FUND FUND INCOME FUND INCOME FUND INCOME FUND
----------- ----------- --------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................... $2,464,480 $2,280,636 $ 1,042,987 $ 460,092 $ -- $ --
Interest.................... 932,852 1,585,855 590,633 507,119 4,558,825 2,416,775
----------- ----------- --------------- ------------ ------------ ------------
Total investment income... 3,397,332 3,866,491 1,633,620 967,211 4,558,825 2,416,775
----------- ----------- --------------- ------------ ------------ ------------
OPERATING EXPENSES
Investment advisory fees
(note 2a).................. 1,277,397 1,301,376 691,364 143,923 377,214 164,771
Distribution fees (note
2c)........................ 695,255 840,342 400,554 79,492 223,379 141,037
Transfer and dividend
disbursing agent fees (note
1i)........................ 145,940 121,890 93,680 31,356 62,635 29,006
Accounting service fees
(note 2b).................. -- 51,874 54,475 56,400 60,655 52,681
Registration fees........... 24,615 54,230 19,488 15,018 17,130 16,605
Reports and notices to
shareholders............... 18,150 14,988 14,257 9,430 13,141 11,207
Custodian fees.............. 16,433 12,971 8,306 9,529 34,387 11,110
Auditing, consulting and tax
return preparation fees.... 11,800 9,188 9,858 7,939 18,160 8,652
Directors'(Trustees') fees
and expenses............... 8,574 8,535 8,535 4,369 8,534 8,530
Legal fees.................. 5,604 3,720 3,720 2,655 3,490 2,852
Amortization of deferred
organization expenses (note
1c)........................ -- -- -- 9,495 -- 6,136
Miscellaneous............... 12,664 10,106 1,996 9,352 13,715 8,818
----------- ----------- --------------- ------------ ------------ ------------
Total operating
expenses................. 2,216,432 2,429,220 1,306,233 378,958 832,440 461,405
Less: Investment advisory
fees waived (note 2a).... -- -- -- (41,225) -- (42,245)
----------- ----------- --------------- ------------ ------------ ------------
Net operating
expenses............... 2,216,432 2,429,220 1,306,233 337,733 832,440 419,160
----------- ----------- --------------- ------------ ------------ ------------
Net investment income... 1,180,900 1,437,271 327,387 629,478 3,726,385 1,997,615
----------- ----------- --------------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -- NET
Net realized gain (loss) on
security transactions...... 5,717,144 1,058,240 5,111,342 1,177,023 (3,993,026) (299,770)
Net realized loss on option
transactions (note 1f)..... -- -- -- -- (227,109) --
Net realized loss on futures
transactions (note 1g)..... -- -- -- -- -- (108,500)
----------- ----------- --------------- ------------ ------------ ------------
Net realized gain (loss)
on investments........... 5,717,144 1,058,240 5,111,342 1,177,023 (4,220,135) (408,270)
Net change in unrealized
appreciation (depreciation)
on investments............. 17,252,568 33,095,020 (3,141,681) 1,260,709 7,204,799 3,266,923
----------- ----------- --------------- ------------ ------------ ------------
Net realized gain (loss)
and change in unrealized
appreciation
(depreciation) on
investments.............. 22,969,712 34,153,260 1,969,661 2,437,732 2,984,664 2,858,653
----------- ----------- --------------- ------------ ------------ ------------
Net increase in net assets
resulting from
operations................. $24,150,612 $35,590,531 $ 2,297,048 $ 3,067,210 $ 6,711,049 $ 4,856,268
----------- ----------- --------------- ------------ ------------ ------------
----------- ----------- --------------- ------------ ------------ ------------
<FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
21
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUEST FOR VALUE FUND,
INC. OPPORTUNITY FUND
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss).......... $ 1,180,900 $ 1,726,225 $ 1,437,271 $ 1,397,364
Net realized gain (loss) on
investments.......................... 5,717,144 16,664,331 1,058,240 7,139,720
Net change in unrealized appreciation
(depreciation) on investments........ 17,252,568 (6,250,090) 33,095,020 4,721,481
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations... 24,150,612 12,140,466 35,590,531 13,258,565
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income -- Class A...... (1,649,576) (819,873) (1,066,642) (2,269,483)
Net investment income -- Class B...... (108,497) (11,801) (335,822) (98,258)
Net investment income -- Class C...... (29,366) (2,040) (56,920) (21,098)
Net realized gains -- Class A......... (15,501,438) (9,227,704) (5,314,298) (1,497,052)
Net realized gains -- Class B......... (1,014,005) (115,604) (1,562,718) (30,460)
Net realized gains -- Class C......... (255,884) (11,081) (267,734) (11,467)
Distributions in excess of net
realized gains -- Class A............ -- -- -- (1,196)
Distributions in excess of net
realized gains -- Class B............ -- -- -- (24)
Distributions in excess of net
realized gains -- Class C............ -- -- -- (9)
------------ ------------ ------------ ------------
Total dividends and distributions to
shareholders....................... (18,558,766) (10,188,103) (8,604,134) (3,929,047)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales............... 22,813,206 61,908,256 62,597,373 90,332,759
Reinvestment of dividends and
distributions........................ 16,047,556 9,385,655 6,034,648 3,405,284
Cost of shares redeemed............... (29,730,613) (80,014,950) (18,132,883) (65,200,453)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class
A.................................. 9,130,149 (8,721,039) 50,499,138 28,537,590
------------ ------------ ------------ ------------
CLASS B
Net proceeds from sales............... 8,806,276 12,409,864 53,070,214 40,604,196
Reinvestment of dividends and
distributions........................ 1,045,812 123,599 1,804,130 124,021
Cost of shares redeemed............... (1,208,420) (544,061) (3,356,853) (1,026,439)
------------ ------------ ------------ ------------
Net increase -- Class B............. 8,643,668 11,989,402 51,517,491 39,701,778
------------ ------------ ------------ ------------
CLASS C
Net proceeds from sales............... 2,794,417 3,521,667 11,871,650 6,945,412
Reinvestment of dividends and
distributions........................ 280,898 13,020 314,273 32,567
Cost of shares redeemed............... (479,197) (271,901) (809,474) (254,081)
------------ ------------ ------------ ------------
Net increase -- Class C............. 2,596,118 3,262,786 11,376,449 6,723,898
------------ ------------ ------------ ------------
Total net increase (decrease) in net
assets from fund share
transactions......................... 20,369,935 6,531,149 113,393,078 74,963,266
------------ ------------ ------------ ------------
Total increase (decrease) in net
assets............................. 25,961,781 8,483,512 140,379,475 84,292,784
NET ASSETS
Beginning of period................... 256,039,135 247,555,623 213,945,745 129,652,961
------------ ------------ ------------ ------------
End of period (including undistributed
net investment income (loss) of
$857,581, $1,464,120; $1,269,754,
$1,291,867; $89,051, ($238,336);
$116,490, $127,460; $0, $0 and $0,
$0, respectively..................... $282,000,916 $256,039,135 $354,325,220 $213,945,745
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<FN>
*Unaudited.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAPITALIZATION FUND GROWTH AND INCOME FUND
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net investment income (loss).......... $ 327,387 $ (238,336) $ 629,478 $ 966,108
Net realized gain (loss) on
investments............................. 5,111,342 3,366,835 1,177,023 1,768,686
Net change in unrealized appreciation
(depreciation) on investments........... (3,141,681) (3,118,979) 1,260,709 (189,442)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations........ 2,297,048 9,520 3,067,210 2,545,352
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income -- Class A...... -- -- (571,223) (936,128)
Net investment income -- Class B...... -- -- (59,120) (41,545)
Net investment income -- Class C...... -- -- (10,105) (7,305)
Net realized gains -- Class A......... (3,008,172) (8,036,736) (1,274,907) (4,079,198)
Net realized gains -- Class B......... (433,897) (160,831) (129,812) (145,217)
Net realized gains -- Class C......... (91,772) (19,543) (20,124) (18,475)
Distributions in excess of net
realized gains -- Class A............... -- -- -- (199,276)
Distributions in excess of net
realized gains -- Class B............... -- -- -- (7,094)
Distributions in excess of net
realized gains -- Class C............... -- -- -- (903)
------------ ------------ ------------ ------------
Total dividends and distributions to
shareholders............................ (3,533,841) (8,217,110) (2,065,291) (5,435,141)
------------ ------------ ------------ ------------
Fund Share Transactions
CLASS A
Net proceeds from sales............... 18,655,389 127,081,752 2,360,697 5,937,491
Reinvestment of dividends and
distributions........................... 2,840,961 7,215,556 1,765,990 5,008,623
Cost of shares redeemed............... (21,690,503) (111,134,238) (2,560,041) (6,040,040)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class A.. (194,153) 23,163,070 1,566,646 4,906,074
------------ ------------ ------------ ------------
CLASS B
Net proceeds from sales............... 4,874,110 15,275,222 1,175,765 2,763,975
Reinvestment of dividends and
distributions........................ 408,265 148,570 174,643 188,513
Cost of shares redeemed............... (1,631,572) (811,203) (185,264) (260,750)
------------ ------------ ------------ ------------
Net increase -- Class B............... 3,650,803 14,612,589 1,165,144 2,691,738
------------ ------------ ------------ ------------
CLASS C
Net proceeds from sales............... 2,624,975 3,345,761 395,836 341,819
Reinvestment of dividends and
distributions........................... 88,907 18,810 28,952 26,593
Cost of shares redeemed............... (380,327) (229,505) (20,580) (4,696)
------------ ------------ ------------ ------------
Net increase -- Class C............. 2,333,555 3,135,066 404,208 363,716
------------ ------------ ------------ ------------
Total net increase (decrease) in net
assets from fund share transactions..... 5,790,205 40,910,725 3,135,998 7,961,528
------------ ------------ ------------ ------------
Total increase (decrease) in net
assets.................................. 4,553,412 32,703,135 4,137,917 5,071,739
NET ASSETS
Beginning of period................... 139,589,800 106,886,665 33,959,182 28,887,443
------------ ------------ ------------ ------------
End of period (including undistributed
net investment income (loss) of
$857,581, $1,464,120; $1,269,754,
$1,291,867; $89,051, ($238,336);
$116,490, $127,460; $0, $0 and $0, $0,
respectively............................ $144,143,212 $139,589,800 $ 38,097,099 $ 33,959,182
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<CAPTION>
INVESTMENT QUALITY INCOME
U.S. GOVERNMENT INCOME FUND FUND
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net investment income (loss).......... $ 3,726,385 $ 8,291,969 $ 1,997,615 $ 3,846,353
Net realized gain (loss) on
investments............................. (4,220,135) (4,366,839) (408,270) (952,880)
Net change in unrealized appreciation
(depreciation) on investments........... 7,204,799 (11,007,688) 3,266,923 (9,068,979)
------------ ------------ ------------ ------------
Net increase (decrease) in net
assets resulting from operations........ 6,711,049 (7,082,558) 4,856,268 (6,175,506)
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Net investment income -- Class A...... (3,470,735) (8,071,564) (1,649,048) (3,482,793)
Net investment income -- Class B...... (220,601) (196,735) (252,908) (244,424)
Net investment income -- Class C...... (36,512) (39,362) (95,659) (119,136)
Net realized gains -- Class A......... (140,061) (2,925,946) -- (367,910)
Net realized gains -- Class B......... (8,675) (38,935) -- (10,112)
Net realized gains -- Class C......... (1,431) (6,494) -- (637)
Distributions in excess of net
realized gains -- Class A............... -- (292,913) -- --
Distributions in excess of net
realized gains -- Class B............... -- (3,898) -- --
Distributions in excess of net
realized gains -- Class C............... -- (650) -- --
------------ ------------ ------------ ------------
Total dividends and distributions to
shareholders............................ (3,878,015) (11,576,497) (1,997,615) (4,225,012)
------------ ------------ ------------ ------------
Fund Share Transactions
CLASS A
Net proceeds from sales............... 8,337,955 17,007,814 3,437,254 12,621,718
Reinvestment of dividends and
distributions........................... 3,118,963 9,588,703 1,160,982 2,758,350
Cost of shares redeemed............... (21,385,264) (74,313,512) (7,963,295) (20,364,228)
------------ ------------ ------------ ------------
Net increase (decrease) -- Class A.. (9,928,346) (47,716,995) (3,365,059) (4,984,160)
------------ ------------ ------------ ------------
CLASS B
Net proceeds from sales............... 3,810,282 6,748,251 2,929,597 6,440,954
Reinvestment of dividends and
distributions........................ 163,256 187,137 203,461 185,172
Cost of shares redeemed............... (734,031) (964,994) (846,378) (800,932)
------------ ------------ ------------ ------------
Net increase -- Class B............... 3,239,507 5,970,394 2,286,680 5,825,194
------------ ------------ ------------ ------------
CLASS C
Net proceeds from sales............... 668,202 1,424,484 576,084 3,141,700
Reinvestment of dividends and
distributions........................... 36,507 46,127 40,824 93,436
Cost of shares redeemed............... (92,626) (289,465) (48,537) (422,838)
------------ ------------ ------------ ------------
Net increase -- Class C............. 612,083 1,181,146 568,371 2,812,298
------------ ------------ ------------ ------------
Total net increase (decrease) in net
assets from fund share transactions..... (6,076,756) (40,565,455) (510,008) 3,653,332
------------ ------------ ------------ ------------
Total increase (decrease) in net
assets.................................. (3,243,722) (59,224,510) 2,348,645 (6,747,186)
NET ASSETS
Beginning of period................... 131,293,796 190,518,306 56,110,151 62,857,337
------------ ------------ ------------ ------------
End of period (including undistributed
net investment income (loss) of
$857,581, $1,464,120; $1,269,754,
$1,291,867; $89,051, ($238,336);
$116,490, $127,460; $0, $0 and $0, $0,
respectively............................ $128,050,074 $131,293,796 $ 58,458,796 $ 56,110,151
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
23
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Funds are registered under the Investment Company Act of
1940, as diversified, open-end management investment companies. Quest for Value
Fund, Inc. ("Quest for Value") is a Maryland corporation. Opportunity Fund
("Opportunity"), Small Capitalization Fund ("Small Capitalization"), Growth and
Income Fund ("Growth and Income"), U.S. Government Income Fund ("U.S.
Government") and Investment Quality Income Fund ("Investment Quality") are five
of nine funds currently offered in the Quest for Value Family of Funds, a
Massachusetts business trust. Quest for Value Advisors (the "Adviser") serves as
investment adviser and provides accounting and administrative services to each
fund. Quest for Value Distributors (the "Distributor") serves as each fund's
distributor. Both the Advisor and Distributor are majority-owned (99%)
subsidiaries of Oppenheimer Capital.
Prior to September 1, 1993, the funds issued only one class of shares which
were redesignated Class A shares. Subsequent to that date all funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charges and distribution fee arrangements. Furthermore, Class B shares will
automatically convert to Class A shares of the same fund eight years after their
respective purchase.
The following is a summary of significant accounting policies consistently
followed by each fund in the preparation of its financial statements:
(A) VALUATION OF INVESTMENTS
Investment securities listed on a national securities exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such
reported sales, the securites are valued at the last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each day by an independent pricing service
approved by the Board of Directors (Trustees) using methods which include
current market quotations from a major market maker in the securities and
trader-reviewed "matrix" prices. Futures contracts are valued based upon their
daily settlement value as of the close of the exchange upon which they trade.
OTC options are valued based upon formulas which utilize the market value of the
underlying securities, strike prices and expiration dates of the options.
Short-term debt securities having a remaining maturity of sixty days or less are
valued at amortized cost or amortized value, which approximates market value.
Any securities or other assets for which market quotations are not readily
available are valued at their fair values as determined in good faith under
procedures established by each fund's Board of Directors (Trustees). The ability
of issuers of debt securities held by the funds to meet their obligations may be
affected by economic or political development in a specific state, industry or
region.
(B) FEDERAL INCOME TAXES
It is each fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders; accordingly, no
Federal income tax provision is required.
(C) DEFERRED ORGANIZATION EXPENSES
The following approximate costs were incurred in connection with their
organization: Growth and Income -- $96,000 and Investment Quality -- $62,000.
These costs have been deferred and are being amortized to expense on a
straight-line basis over sixty months from commencement of each fund's
operations.
(D) SECURITY TRANSACTIONS AND OTHER INCOME
Security transactions are accounted for on the trade date. In determining
the gain or loss from the sale of securities, the cost of securities sold is
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend date and interest income is accrued as earned. Discounts or premiums
on debt securities purchased are accreted or
24
<PAGE>
- --------------------------------------------------------------------------------
amortized to interest income over the lives of the respective securities. Net
investment income, other than class specific expenses and unrealized gains and
losses are allocated daily to each class of shares based upon the relative
proportion of net assets, as defined, of each class.
(E) DIVIDENDS AND DISTRIBUTIONS
The following table summarizes each fund's dividend and capital gain
declaration policy:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
INCOME CAPITAL CAPITAL
DIVIDENDS GAINS GAINS
--------- ------------ ------------
<S> <C> <C> <C>
Quest for Value annually annually annually
Opportunity annually annually annually
Small
Capitalization annually annually annually
Growth and
Income quarterly annually annually
U.S. Government daily * quarterly annually
Investment
Quality daily * annually annually
* paid monthly.
</TABLE>
Each fund records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book-tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains, respectively. To the extent distributions
exceed current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment
income(loss), net realized gain(loss) and net assets were not affected by this
change.
(F) WRITTEN OPTIONS ACCOUNTING POLICIES
When a fund writes a call option or a put option, an amount equal to the
premium received by the fund is included in the fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. If the option expires on its stipulated expiration date or if a
fund enters into a closing purchase transaction, the fund will realize a gain
(or loss if the cost of a closing purchase tranaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option will
be extinguished. If a call option which a fund has written is exercised, the
fund realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received. If a
put option which a fund has written is exercised, the amount of the premium
originally received will reduce the cost of the security which the fund
purchases upon exercise of the option.
(G) FUTURES ACCOUNTING POLICIES
Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, a fund is required to pledge to the broker an amount of cash or U.S.
Government securities equal to the minimum "initial margin" requirements of the
exchange. Pursuant to the contract, a fund agrees to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in the value of the
contract. Such receipts or payments are known as "variation margin" and are
recorded by the fund as unrealized appreciation or
25
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
depreciation. When a contract is closed, the fund records a realized gain or
loss equal to the difference between the value of the contract at the time it
was opened and the value at the time it was closed and reverses any unrealized
appreciation or depreciation previously recorded.
(H) REPURCHASE AGREEMENTS
U.S. Government enters into repurchase agreements as part of its investment
program. The fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to-market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default by the obligor to repurchase, the fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(I) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis. For the six months ended April 30, 1995,
transfer and dividend disbursing agent fees accrued to classes A, B and C were
$129,947, $12,171 and $3,822, respectively, for Quest for Value; $75,445,
$38,525 and $7,920, respectively, for Opportunity; $68,052, $19,412 and $6,216,
respectively, for Small Capitalization; $27,244, $3,447 and $665, respectively,
for Growth and Income; $55,832, $4,401 and $2,402, respectively, for U.S.
Government and $22,873, $4,242 and $1,891, respectively, for Investment Quality
Income.
2. INVESTMENT ADVISORY FEE, ACCOUNTING SERVICES FEE, DISTRIBUTION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
(a) The investment advisory fee is payable monthly to the Adviser, and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: 1.00% for Quest for Value, Opportunity
and Small Capitalization, respectively; .85% for Growth and Income and .60% for
U.S. Government and Investment Quality, respectively. For the six months ended
April 30, 1995, the Adviser voluntarily waived $41,225 and $42,245 in investment
advisory fees for Growth and Income and Investment Quality, respectively.
(b) A portion of the accounting services fee for Opportunity, Small
Capitalization, Growth and Income, U.S. Government and Investment Quality is
payable monthly to the Adviser. These funds reimburse the Adviser for a portion
of the salaries of officers and employees of Oppenheimer Capital based upon the
amount of time such persons spend in providing services to each fund in
accordance with the provisions of the Investment Advisory Agreement. For the six
months ended April 30, 1995, the Adviser received $24,374, $26,976, $28,900,
$28,155 and $25,181, respectively.
(c) The funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which each fund is permitted to compensate the Distributor
in connection with the distribution of fund shares. Under the Plan, the
Distributor has entered into agreements with securities dealers and other
financial institutions and organizations to obtain various sales-related
services in rendering distribution assistance. To compensate the Distributor for
the services it and other dealers under the Plan provide and for the expenses
they bear under the Plan, the funds pay the Distributor compensation, accrued
daily and payable monthly on each fund's average daily net assets for Class A
shares at the following annual rates: .25% for Quest for Value, Opportunity and
Small Capitalization, respectively, .05% for U.S. Government and .15% for
Investment Quality and Growth and Income, respectively. Each fund's Class A
shares also pay a service fee at the annual rate of .25%. Compensation for Class
B and Class C shares of each fund is at an annual rate of .75% of average daily
net assets. Each fund's Class B and Class C shares also pay a service fee at the
annual rate of .25%. Distribution and service fees may be paid by the
Distributor to broker dealers or others for providing personal service,
maintenance of accounts and ongoing sales or shareholder support functions in
connection with the distribution of fund shares. While payments under the plan
may not exceed the stated percentage of average daily net assets on an annual
basis, the payments are not limited to the amounts actually incurred by the
Distributor.
26
<PAGE>
- --------------------------------------------------------------------------------
For the six months ended April 30, 1995, distribution and service fees
charged to classes A, B and C were $582,142, $90,112 and $23,001, respectively,
for Quest for Value; $461,034, $320,958 and $58,350, respectively, for
Opportunity; $290,811, $87,657 and $22,086, respectively, for Small
Capitalization; $59,886, $16,582 and $3,024, respectively, for Growth and
Income; $173,704, $42,572 and $7,103, respectively, for for U.S. Government and
$89,054, $37,698 and $14,285, respectively, for Investment Quality Income.
(d) Total brokerage commissions paid by Quest for Value, Opportunity, Small
Capitalization and Growth and Income were $133,585, $220,756, $192,780 and
$56,481, respectively, of which Oppenheimer & Co., Inc., an affiliate of the
Adviser, received $72,545, $95,213, $87,012 and $37,521, respectively, for the
six months ended April 30, 1995.
(e) Oppenheimer & Co., Inc. has informed the funds that it received
approximately $175,000, $324,000, $122,000, $15,000, $88,000 and $39,000 in
connection with the sale of Class A shares for Quest for Value, Opportunity,
Small Capitalization, Growth and Income, U.S. Government and Investment Quality,
respectively, for the six months ended April 30, 1995.
The Distributor has informed the funds that it received contingent deferred
sales charges on the redemption of Class C shares of approximately $200, $1,800,
$700, $200, and $200 for Quest for Value, Opportunity, Small Capitalization,
U.S. Government and Investment Quality, respectively, for the six months ended
April 30, 1995.
(f) The Distributor has assigned the right to receive the compensation and
contingent deferred sales charge on the Class B shares to a bank in return for
the banks reimbursement to the Distributor of commissions paid by the
Distributor to broker/dealers on Class B shares.
3. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1995, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
----------- ----------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Purchases $38,600,646 $118,902,351 $ 36,306,804 $15,994,318 $220,176,718 $3,096,231
Sales 46,184,287 20,875,977 46,436,460 19,114,061 246,008,186 1,990,980
</TABLE>
The following table summarizes activity in written option transactions for
U.S. Government for the six months ended April 30, 1995:
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
---------- ------------
<S> <C> <C>
Option contracts written: Outstanding beginning of period 2 $ 142,188
Options written 34 2,465,702
Options terminated in closing purchase transaction (20) (1,501,640)
Options exercised (7) (503,125)
Options expired (4) (301,563)
--
------------
Option contracts written: Outstanding end of period 5 $ 301,562
--
--
------------
------------
</TABLE>
27
<PAGE>
APRIL 30, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. FUND SHARE TRANSACTIONS
The following tables summarize the fund share activity for the six months
ended April 30, 1995 and the year ended October 31, 1994:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
---------------------------- ---------------------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994 1995* 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued.................... 1,887,076 5,077,999 3,177,603 4,781,210 1,168,097 7,804,081
Dividends and
distributions
reinvested............... 1,440,961 797,941 328,864 186,714 181,647 450,409
Redeemed.................. (2,476,129) (6,566,112) (928,610) (3,470,990) (1,357,550) (6,835,042)
------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease)............. 851,908 (690,172) 2,577,857 1,496,934 (7,806) 1,419,448
------------ ------------ ------------ ------------ ------------ ------------
CLASS B
Issued.................... 740,489 1,020,362 2,702,721 2,145,988 308,792 936,328
Dividends and
distributions
reinvested............... 94,418 10,514 98,923 6,821 26,272 9,286
Redeemed.................. (100,601) (44,566) (174,841) (54,500) (103,762) (50,575)
------------ ------------ ------------ ------------ ------------ ------------
Net increase............ 734,306 986,310 2,626,803 2,098,309 231,302 895,039
------------ ------------ ------------ ------------ ------------ ------------
CLASS C
Issued.................... 231,783 289,679 600,865 367,367 166,967 205,454
Dividends and
distributions
reinvested............... 25,381 1,106 17,240 1,789 5,721 1,176
Redeemed.................. (38,705) (22,509) (40,221) (13,680) (23,965) (13,923)
------------ ------------ ------------ ------------ ------------ ------------
Net increase............ 218,459 268,276 577,884 355,476 148,723 192,707
------------ ------------ ------------ ------------ ------------ ------------
Total net increase.... 1,804,673 564,414 5,782,544 3,950,719 372,219 2,507,194
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
---------------------------- ---------------------------- ----------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994 1995* 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued.................... 240,232 591,037 764,507 1,484,549 347,221 1,194,443
Dividends and
distributions
reinvested............... 186,609 506,743 286,809 839,276 116,979 263,168
Redeemed.................. (266,050) (600,435) (1,972,889) (6,552,668) (815,458) (1,940,417)
------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease)............. 160,791 497,345 (921,573) (4,228,843) (351,258) (482,806)
------------ ------------ ------------ ------------ ------------ ------------
CLASS B
Issued.................... 121,157 269,571 350,917 594,901 294,053 614,495
Dividends and
distributions
reinvested............... 18,473 19,104 15,011 16,698 20,468 18,150
Redeemed.................. (19,727) (26,407) (67,374) (86,599) (85,574) (77,488)
------------ ------------ ------------ ------------ ------------ ------------
Net increase............ 119,903 262,268 298,554 525,000 228,947 555,157
------------ ------------ ------------ ------------ ------------ ------------
CLASS C
Issued.................... 40,779 33,894 61,226 123,553 58,013 290,357
Dividends and
distributions
reinvested............... 3,054 2,697 3,354 4,123 4,105 9,047
Redeemed.................. (2,092) (469) (8,544) (25,877) (4,928) (41,081)
------------ ------------ ------------ ------------ ------------ ------------
Net increase............ 41,741 36,122 56,036 101,799 57,190 258,323
------------ ------------ ------------ ------------ ------------ ------------
Total net increase
(decrease)........... 322,435 795,735 (566,983) (3,602,044) (65,121) 330,674
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
<FN>
*Unaudited.
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
5. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At April 30, 1995, the composition of unrealized appreciation (depreciation)
of investment securities and the cost of investments for Federal income tax
purposes were as follows:
<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Quest for Value $51,733,096 $ (1,752,244) $ 49,980,852 $ 231,903,854
Opportunity 49,286,577 (1,812,363) 47,474,214 306,602,498
Small Capitalization 10,004,767 (7,766,524) 2,238,243 138,815,958
Growth and Income 2,889,041 (1,284,031) 1,605,010 37,028,918
U.S. Government 966,818 (8,766,967) (7,800,149) 144,810,919
Investment Quality 1,588,495 (2,012,166) (423,671) 57,332,480
</TABLE>
6. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE
<TABLE>
<CAPTION>
QUEST SMALL GROWTH U.S. INVESTMENT
FOR VALUE OPPORTUNITY CAPITALIZATION AND INCOME GOVERNMENT QUALITY
----------- ------------ --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Authorized fund shares 35,000,000 unlimited unlimited unlimited unlimited unlimited
Par value per share $1.00 $.01 $.01 $.01 $.01 $.01
</TABLE>
7. DIVIDENDS AND DISTRIBUTIONS
The following tables summarize the per share dividends and distributions
made for the six months ended April 30, 1995 and the year ended October 31,
1994:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
------------------------- ------------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994 1995* 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A................... $ 0.083 $ 0.040 $ 0.117 $ 0.326 -- --
Class B................... 0.074 0.031 0.117 0.313 -- --
Class C................... 0.081 0.033 0.117 0.312 -- --
NET REALIZED GAINS:
Class A................... $ 0.828 $ 0.469 $ 0.614 $ 0.219 $ 0.415 $ 1.331
Class B................... 0.828 0.469 0.614 0.219 0.415 1.331
Class C................... 0.828 0.469 0.614 0.219 0.415 1.331
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
------------------------- ------------------------- -------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
1995* 1994 1995* 1994 1995* 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A................... $ 0.182 $ 0.319 $ 0.322 $ 0.593 $ 0.362 $ 0.680
Class B................... 0.162 0.265 0.284 0.510 0.332 0.609
Class C................... 0.142 0.261 0.279 0.509 0.329 0.608
NET REALIZED GAINS:
Class A................... $ 0.422 $ 1.669 $ 0.013 $ 0.213 -- $ 0.069
Class B................... 0.422 1.669 0.013 0.213 -- 0.069
Class C................... 0.422 1.669 0.013 0.213 -- 0.069
<FN>
*Unaudited.
</TABLE>
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
At April 30, 1995, U.S. Government had written options outstanding. Written
options have elements of risk in excess of the amounts reflected in the
Statement of Assets and Liabilities. The fund, as a writer of an option, has no
control over whether the option is exercised. The underlying security may be
sold and, as a result, the fund bears the market risk of an unfavorable change
in the price of the security underlying the written option.
29
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized Dividends to
and to Shareholders Net
Net Asset Net Unrealized Shareholders from Net Total Asset
Value, Investment Gain Total from from Net Realized Dividends Value,
Beginning Income (Loss) on Investment Investment Gain on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
Quest for Value Fund, Inc.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $12.59 $ 0.06 $ 1.00 $ 1.06 $(0.08) $(0.83) $(0.91) $12.74 9.52%
YEAR ENDED
OCTOBER 31,
1994 12.51 0.09 0.50 0.59 (0.04) (0.47) (0.51) 12.59 5.01%
1993 11.71 0.05 1.34 1.39 (0.05) (0.54) (0.59) 12.51 12.27%
1992 10.61 0.04 1.77 1.81 (0.07) (0.64) (0.71) 11.71 18.45%
1991 7.84 0.09 2.84 2.93 (0.16) -- (0.16) 10.61 37.94%
1990 (2) 9.85 0.18 (1.38) (1.20) (0.26) (0.55) (0.81) 7.84 (13.43%)
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 12.53 0.03 0.99 1.02 (0.07) (0.83) (0.90) 12.65 9.23%
YEAR ENDED
OCTOBER 31, 1994 12.51 0.02 0.50 0.52 (0.03) (0.47) (0.50) 12.53 4.43%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 12.66(3) (0.01) (0.14) (0.15) -- -- -- 12.51 (1.19%)
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 12.52 0.03 1.00 1.03 (0.08) (0.83) (0.91) 12.64 9.31%
YEAR ENDED
OCTOBER 31, 1994 12.50 0.01 0.51 0.52 (0.03) (0.47) (0.50) 12.52 4.45%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 12.66(3) (0.01) (0.15) (0.16) -- -- -- 12.50 (1.26%)
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses to (Loss) to Portfolio
Period Average Net Average Net Turnover
(000's) Assets Assets Rate
Quest for Value Fund, Inc.
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 251,821 1.69%(1,5) 0.97%(1,5) 17%
YEAR ENDED
OCTOBER 31,
1994 238,085 1.71% 0.72% 49%
1993 245,320 1.75% 0.40% 27%
1992 142,939 1.75% 0.53% 41%
1991 79,914 1.83% 1.06% 48%
1990 (2) 49,740 1.82% 1.71% 51%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 23,805 2.21%(1,5) 0.45%(1,5) 17%
YEAR ENDED
OCTOBER 31, 1994 14,373 2.24% 0.14% 49%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 2,015 2.27%(5) (1.19%)(5) 27%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 6,375 2.24%(1,5) 0.43%(1,5) 17%
YEAR ENDED
OCTOBER 31, 1994 3,581 2.28% 0.09% 49%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 221 2.27%(5) (0.90%)(5) 27%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $234,786,678, $18,171,756, $4,638,234, RESPECTIVELY.
(2) SHARE AND PER SHARE DATA HAVE BEEN RETROACTIVELY RESTATED TO REFLECT A 200%
STOCK DIVIDEND AS OF JULY 1, 1991.
</TABLE>
<TABLE>
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS
----------------------------------- DIVIDENDS AND DISTRIBUTIONS
Net ---------------------------------------
Realized Distributions
and Dividends to
Unreal- to Shareholders Net
Net Asset Net In- ized Gain Shareholders from Net Asset
Value, Be- vestment (Loss) on Total from from Net Realized Total Divi- Value, Total
ginning of Income In- Investment Investment Gain on dends and End of Re-
Period (Loss) vestments Operations Income Investments Distributions Period turn*
Opportunity Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS
ENDED APRIL 30,
1995 (6) $19.69 $ 0.12 $ 2.25 $ 2.37 $(0.12) $(0.61) $(0.73) $ 21.33 12.66%
YEAR ENDED
OCTOBER 31,
1994 18.71 0.18 1.35 1.53 (0.33) (0.22) (0.55) 19.69 8.41%
1993 16.73 0.35 2.02 2.37 (0.07) (0.32) (0.39) 18.71 14.34%
1992 14.29 0.09 2.93 3.02 (0.03) (0.55) (0.58) 16.73 21.93%
1991 9.74 0.03 4.78 4.81 (0.23) (0.03) (0.26) 14.29 50.44%
1990 11.59 0.25 (1.64) (1.39) (0.22) (0.24) (0.46) 9.74 (12.62%)
Class B,
SIX MONTHS
ENDED APRIL 30,
1995 (6) 19.59 0.07 2.23 2.30 (0.12) (0.61) (0.73) 21.16 12.36%
YEAR ENDED
OCTOBER 31,
1994 18.70 0.08 1.34 1.42 (0.31) (0.22) (0.53) 19.59 7.84%
SEPTEMBER 2,
1993 (4) TO
OCTOBER 31,
1993 18.73(3) 0.02 (0.05) (0.03) -- -- -- 18.70 (0.16%)
Class C,
SIX MONTHS
ENDED APRIL 30,
1995 (6) 19.58 0.07 2.23 2.30 (0.12) (0.61) (0.73) 21.15 12.37%
YEAR ENDED
OCTOBER 31,
1994 18.70 0.08 1.33 1.41 (0.31) (0.22) (0.53) 19.58 7.78%
SEPTEMBER 2,
1993 (4) TO
OCTOBER 31,
1993 18.73(3) 0.02 (0.05) (0.03) -- -- -- 18.70 (0.16%)
<CAPTION>
RATIOS
-------------------------------------------
Ratio of
Ratio of Net
Net Net Investment
Assets Operating Income
End of Expenses to (Loss) to Portfolio
Period Average Net Average Net Turnover
Opportunity Fund (000's) Assets Assets Rate
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS
ENDED APRIL 30,
1995 (6) $ 231,881 1.71%(1,5) 1.25%(1,5) 10%
YEAR ENDED
OCTOBER 31,
1994 163,340 1.78% 0.96% 42%
1993 127,225 1.83% 2.69% 24%
1992 40,563 2.27% 0.72% 32%
1991 8,446 2.35%(2) 0.30%(2) 88%
1990 4,570 2.00%(2) 2.30%(2) 206%
Class B,
SIX MONTHS
ENDED APRIL 30,
1995 (6) 102,353 2.24%(1,5) 0.75%(1,5) 10%
YEAR ENDED
OCTOBER 31,
1994 43,317 2.34% 0.43% 42%
SEPTEMBER 2,
1993 (4) TO
OCTOBER 31,
1993 2,115 2.52%(5) 1.32%(5) 24%
Class C,
SIX MONTHS
ENDED APRIL 30,
1995 (6) 20,091 2.26%(1,5) 0.73%(1,5) 10%
YEAR ENDED
OCTOBER 31,
1994 7,289 2.35% 0.43% 42%
SEPTEMBER 2,
1993 (4) TO
OCTOBER 31,
1993 313 2.52%(5) 1.13%(5) 24%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $185,941,734, $64,723,666, $11,766,750, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEES
AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME (LOSS) TO AVERAGE NET ASSETS WOULD HAVE BEEN 3.33% AND (0.68%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 3.69% AND 0.61%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990.
- ------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) UNAUDITED.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
30
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized to
and Dividends Shareholders
Unrealized to from Net Net
Net Asset Net Gain Shareholders Realized Total Asset
Value, Investment (Loss) Total from from Net Gain Dividends Value,
Beginning Income on Investment Investment on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
Small Capitalization Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $16.33 $ 0.05 $ 0.22 $ 0.27 $-- $(0.42) $(0.42) $16.18 1.71%
YEAR ENDED
OCTOBER 31,
1994 17.68 (0.03) 0.01 (0.02) -- (1.33) (1.33) 16.33 0.04%
1993 14.60 (0.04) 4.26 4.22 -- (1.14) (1.14) 17.68 30.21%
1992 13.52 0.00 1.50 1.50 -- (0.42) (0.42) 14.60 11.60%
1991 8.80 (0.05) 4.85 4.80 (0.08) -- (0.08) 13.52 55.01%
1990 10.91 0.07 (2.04) (1.97) (0.08) (0.06) (0.14) 8.80 (18.33%)
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 16.24 (0.01) 0.22 0.21 -- (0.42) (0.42) 16.03 1.35%
YEAR ENDED
OCTOBER 31, 1994 17.66 (0.11) 0.02 (0.09) -- (1.33) (1.33) 16.24 (0.39%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 17.19(3) (0.02) 0.49 0.47 -- -- -- 17.66 2.73%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 16.23 0.00 0.22 0.22 -- (0.42) (0.42) 16.03 1.41%
YEAR ENDED
OCTOBER 31, 1994 17.67 (0.13) 0.02 (0.11) -- (1.33) (1.33) 16.23 (0.51%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 17.19(3) (0.02) 0.50 0.48 -- -- -- 17.67 2.79%
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses (Loss) Portfolio
Period to Average to Average Turnover
(000's) Net Assets Net Assets Rate
Small Capitalization Fund
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 118,909 1.80%(1,5) 0.56%(1,5) 29%
YEAR ENDED
OCTOBER 31,
1994 120,102 1.88% (0.14%) 67%
1993 104,898 1.89% (0.36%) 74%
1992 39,693 2.11% (0.04%) 95%
1991 20,686 2.25%(2) (0.41%)(2) 103%
1990 1,880 2.00%(2) 0.71%(2) 18%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 19,564 2.37%(1,5) (0.01%)(1,5) 29%
YEAR ENDED
OCTOBER 31, 1994 16,144 2.48% (0.70%) 67%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 1,754 2.57%(5) (1.15%)(5) 74%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 5,670 2.35%(1,5) (0.01%)(1,5) 29%
YEAR ENDED
OCTOBER 31, 1994 3,344 2.59% (0.81%) 67%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 235 2.57%(5) (1.20%)(5) 74%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $117,288,229, $17,676,777, $4,453,700, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEES
AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME (LOSS) TO AVERAGE NET ASSETS WOULD HAVE BEEN 3.27% AND (1.43%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 5.82% AND (3.11%),
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990.
</TABLE>
Growth and Income Fund
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized to
and Dividends Shareholders
Unrealized to from Net Net
Net Asset Net Gain Shareholders Realized Total Asset
Value, Investment (Loss) Total from from Net Gain Dividends Value,
Beginning Income on Investment Investment on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
Growth and Income Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $10.09 $ 0.18 $ 0.67 $ 0.85 $(0.18) $(0.42) $(0.60) $10.34 9.11%
YEAR ENDED
OCTOBER 31,
1994 11.24 0.32 0.55 0.87 (0.32) (1.70) (2.02) 10.09 8.64%
1993 10.80 0.30 0.73 1.03 (0.26) (0.33) (0.59) 11.24 9.93%
NOVEMBER 4, 1991
(7) TO OCTOBER
31, 1992 10.00(3) 0.28 0.80 1.08 (0.28) -- (0.28) 10.80 10.84%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10.07 0.16 0.66 0.82 (0.16) (0.42) (0.58) 10.31 8.79%
YEAR ENDED
OCTOBER 31, 1994 11.23 0.25 0.56 0.81 (0.27) (1.70) (1.97) 10.07 7.96%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07) 11.23 0.81%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10.07 0.14 0.67 0.81 (0.14) (0.42) (0.56) 10.32 8.67%
YEAR ENDED
OCTOBER 31, 1994 11.23 0.24 0.56 0.80 (0.26) (1.70) (1.96) 10.07 7.91%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07) 11.23 0.81%
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses (Loss) Portfolio
Period to Average to Average Turnover
(000's) Net Assets Net Assets Rate
Growth and Income Fund
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 32,969 1.92%(1,2,5) 3.78%(1,2,5) 63%
YEAR ENDED
OCTOBER 31,
1994 30,576 1.86%(2) 3.16%(2) 113%
1993 28,466 1.90%(2) 2.66%(2) 192%
NOVEMBER 4, 1991
(7) TO OCTOBER
31, 1992 8,057 2.23%(2,5) 2.73%(2,5) 77%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 4,231 2.49%(1,2,5) 3.25%(1,2,5) 63%
YEAR ENDED
OCTOBER 31, 1994 2,928 2.47%(2) 2.53%(2) 113%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 319 2.49%(2,5) 1.83%(2,5) 192%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 897 2.77%(1,2,5) 3.00%(1,2,5) 63%
YEAR ENDED
OCTOBER 31, 1994 455 2.62%(2) 2.39%(2) 113%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 102 2.49%(2,5) 2.18%(2,5) 192%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $30,191,320, $3,343,785, $609,761, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A
PORTION OF ITS FEES. IF SUCH WAIVER HAD NOT BEEN IN EFFECT, THE RATIOS OF
NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 2.17%
AND 3.53%, ANNUALIZED, RESPECTIVELY, FOR THE SIX MONTHS ENDED APRIL 30,
1995, 2.32% AND 2.70%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994
AND 2.18% AND 2.38%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993 AND
2.98% AND 1.98%, ANNUALIZED, RESPECTIVELY, FOR THE PERIOD NOVEMBER 4, 1991
(COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1992. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.73% AND 3.01%, ANNUALIZED,
RESPECTIVELY, FOR CLASS B AND 3.00% AND 2.77%, ANNUALIZED, RESPECTIVELY,
FOR CLASS C, FOR THE SIX MONTHS ENDED APRIL 30, 1995, 2.93% AND 2.07%,
RESPECTIVELY, FOR CLASS B AND 3.10% AND 1.91%, RESPECTIVELY, FOR CLASS C,
FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.88% AND 1.44%, ANNUALIZED,
RESPECTIVELY, FOR CLASS B AND 2.87% AND 1.80%, ANNUALIZED, RESPECTIVELY,
FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER
31, 1993.
- ------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) UNAUDITED.
(7) COMMENCEMENT OF OPERATIONS.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
31
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized Dividends to
and to Shareholders Net
Net Asset Net Unrealized Shareholders from Net Total Asset
Value, Investment Gain Total from from Net Realized Dividends Value,
Beginning Income (Loss) on Investment Investment Gain on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
U.S. Government Income F und
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $10.79 $ 0.32 $ 0.26 $ 0.58 $(0.32) $(0.01) $(0.33) $11.04 5.50%
YEAR ENDED
OCTOBER 31,
1994 12.08 0.59 (1.08) (0.49) (0.59) (0.21) (0.80) 10.79 (4.15%)
1993 11.92 0.65 0.35 1.00 (0.68) (0.16) (0.84) 12.08 8.55%
1992 11.80 0.74 0.18 0.92 (0.74) (0.06) (0.80) 11.92 7.98%
1991 11.35 0.85 0.61 1.46 (0.86) (0.15) (1.01) 11.80 13.40%
1990 11.50 0.93 (0.06) 0.87 (0.93) (0.09) (1.02) 11.35 7.98%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10.79 0.28 0.26 0.54 (0.28) (0.01) (0.29) 11.04 5.14%
YEAR ENDED
OCTOBER 31, 1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) (0.72) 10.79 (4.84%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) (0.09) 12.08 0.29%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10.79 0.28 0.26 0.54 (0.28) (0.01) (0.29) 11.04 5.09%
YEAR ENDED
OCTOBER 31, 1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) (0.72) 10.79 (4.84%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) (0.09) 12.08 0.34%
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses (Loss) Portfolio
Period to Average to Average Turnover
(000's) Net Assets Net Assets Rate
U.S. Government Income Fund
<S> <C> <C> <C> <C>
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 115,898 1.27%(1,5) 5.99%(1,5) 205%
YEAR ENDED
OCTOBER 31,
1994 123,257 1.20%(2) 5.19%(2) 126%
1993 189,091 1.15%(2) 5.33%(2) 315%
1992 151,197 1.15%(2) 6.26%(2) 207%
1991 82,400 1.15%(2) 7.24%(2) 309%
1990 52,742 1.15%(2) 8.21%(2) 101%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 10,280 1.93%(1) 5.18%(1) 205%
YEAR ENDED
OCTOBER 31, 1994 6,813 1.92%(2) 4.53%(2) 126%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 1,286 1.85%(2,5) 3.07%(2,5) 315%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 1,872 2.05%(1) 5.14%(1) 205%
YEAR ENDED
OCTOBER 31, 1994 1,224 1.94%(2) 4.57%(2) 126%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 141 1.85%(2,5) 3.89%(2,5) 315%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $116,762,622, $8,585,009, $1,432,342, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A
PORTION OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF
NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET
INVESTMENT INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.23%
AND 5.16%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.20% AND
5.28%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.17% AND 6.24%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, 1.46% AND 6.93%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991 AND 1.44% AND 7.92%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1990. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.93% AND 4.52%, RESPECTIVELY,
FOR CLASS B AND 1.95% AND 4.56%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR
ENDED OCTOBER 31, 1994 AND 1.96% AND 2.96%, ANNUALIZED, RESPECTIVELY, FOR
CLASS B AND 1.96% AND 3.78%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE
PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
</TABLE>
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
----------------------------------- ---------------------------------------
Net Distributions
Realized Dividends to
and to Shareholders Net
Net Asset Net Unrealized Shareholders from Net Total Asset
Value, Investment Gain Total from from Net Realized Dividends Value,
Beginning Income (Loss) on Investment Investment Gain on and End of Total
of Period (Loss) Investments Operations Income Investments Distributions Period Return*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Quality Income Fund
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 9.67 $ 0.36 $ 0.52 $ 0.88 $(0.36) $-- $(0.36) $10.19 9.28%
YEAR ENDED
OCTOBER 31,
1994 11.49 0.68 (1.75) (1.07) (0.68) (0.07) (0.75) 9.67 (9.61%)
1993 10.36 0.68 1.19 1.87 (0.68) (0.06) (0.74) 11.49 18.64%
1992 10.06 0.80 0.30 1.10 (0.80) -- (0.80) 10.36 11.21%
DECEMBER 18, 1990
(7) TO OCTOBER
31, 1991 10.00(3) 0.71 0.06 0.77 (0.71) -- (0.71) 10.06 8.11%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 9.67 0.33 0.52 0.85 (0.33) -- (0.33) 10.19 8.96%
YEAR ENDED
OCTOBER 31, 1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) (0.68) 9.67 (10.22%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 11.52(3) 0.08 (0.03) 0.05 (0.08) -- (0.08) 11.49 0.45%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 9.67 0.33 0.52 0.85 (0.33) -- (0.33) 10.19 8.92%
YEAR ENDED
OCTOBER 31, 1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) (0.68) 9.67 (10.23%)
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 11.52(3) 0.09 (0.03) 0.06 (0.09) -- (0.09) 11.49 0.55%
<CAPTION>
RATIOS
----------------------------------------------
Ratio of Net
Net Ratio of Net Investment
Assets Operating Income
End of Expenses (Loss) Portfolio
Period to Average to Average Turnover
(000's) Net Assets Net Assets Rate
<S> <C> <C> <C> <C>
Investment Quality Income Fund
Class A,
SIX MONTHS ENDED
APRIL 30, 1995
(6) $ 45,860 1.41%(1,2,5) 7.41%(1,2,5) 4%
YEAR ENDED
OCTOBER 31,
1994 46,922 1.29%(2) 6.47%(2) 33%
1993 61,288 1.20%(2) 6.07%(2) 12%
1992 29,701 0.95%(2) 7.62%(2) 18%
DECEMBER 18, 1990
(7) TO OCTOBER
31, 1991 17,235 0.82%(2,5) 8.25%(2,5) 19%
Class B,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 9,293 2.01%(1,2,5) 6.71%(1,2,5) 4%
YEAR ENDED
OCTOBER 31, 1994 6,605 1.92%(2) 5.85%(2) 33%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 1,468 1.84%(2,5) 3.68%(2,5) 12%
Class C,
SIX MONTHS ENDED
APRIL 30, 1995
(6) 3,306 2.07%(1,2,5) 6.70%(1,2,5) 4%
YEAR ENDED
OCTOBER 31, 1994 2,583 1.90%(2) 6.01%(2) 33%
SEPTEMBER 2, 1993
(4) TO OCTOBER
31, 1993 101 1.84%(2,5) 4.83%(2,5) 12%
<FN>
(1) AVERAGE NET ASSETS FOR THE SIX MONTHS ENDED APRIL 30, 1995, FOR CLASSES A,
B, AND C WERE $44,895,780, $7,602,107, $2,880,817, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND REIMBURSED THE FUND FOR A PORTION OF ITS OPERATING
EXPENSES. IF SUCH WAIVERS AND REIMBURSEMENTS HAD NOT BEEN IN EFFECT, THE
RATIOS OF NET OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF
NET INVESTMENT INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN
1.26% AND 7.56%, ANNUALIZED, RESPECTIVELY, FOR THE SIX MONTHS ENDED APRIL
30, 1995, 1.59% AND 6.17%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31,
1994, 1.50% AND 5.77%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993,
1.72% AND 6.85%, RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND
2.11% AND 6.96%, ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 18, 1990
(COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1991. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.86% AND 6.86%, ANNUALIZED,
RESPECTIVELY, FOR CLASS B AND 1.92% AND 6.85%, ANNUALIZED, RESPECTIVELY FOR
CLASS C, FOR THE SIX MONTHS ENDED APRIL 30, 1995, 2.23% AND 5.54%,
RESPECTIVELY, FOR CLASS B AND 2.21% AND 5.70%, RESPECTIVELY, FOR CLASS C,
FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.07% AND 3.45%, ANNUALIZED,
RESPECTIVELY, FOR CLASS B AND 2.06% AND 4.61%, ANNUALIZED, RESPECTIVELY,
FOR CLASS C FOR THE PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER
31, 1993.
- ------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) UNAUDITED.
(7) COMMENCEMENT OF OPERATIONS.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
</TABLE>
32
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
THE QUEST FOR VALUE FAMILY OF FUNDS
- --------------------------------------------------------------------------------
EQUITY FUNDS
QUEST FOR VALUE FUND invests primarily in common stocks with an objective of
capital appreciation.
QUEST FOR VALUE OPPORTUNITY FUND seeks capital appreciation by investing through
a mix of stocks, fixed income and money market securities.
QUEST FOR VALUE SMALL CAPITALIZATION FUND seeks capital appreciation by
investing primarily in undervalued stocks of companies with market
capitalizations under $1 billion.
QUEST FOR VALUE GLOBAL EQUITY FUND seeks long term growth through a global
investment strategy primarily involving equity securities.
QUEST FOR VALUE GROWTH AND INCOME FUND seeks total return by investing in a
combination of stocks, U.S. government securities and investment grade bonds.
FIXED-INCOME FUNDS
QUEST FOR VALUE INVESTMENT QUALITY INCOME FUND seeks high monthly income
consistent with conservation of principal through a portfolio of corporate and
U.S. government bonds, 80% of which are rated A or better.
QUEST FOR VALUE GLOBAL INCOME FUND invests in fixed income securities of
domestic and foreign governments and corporations with an objective of high
monthly income.
QUEST FOR VALUE U.S. GOVERNMENT INCOME FUND seeks high current income together
with protection of principal by investing in U.S. government securities.
QUEST FOR VALUE TAX EXEMPT FUNDS are three portfolios investing in investment
grade municipal obligations with the objective of high current income exempt
from federal taxes and, in some cases, state and local income taxes. The three
portfolios are: the National Tax Exempt Fund, the New York Tax Exempt Fund and
the California Tax Exempt Fund.
<PAGE>
- --------------------------------------------------------------------------------
QUEST FOR VALUE QUEST FOR VALUE
DIRECTORS (TRUSTEES) AND OFFICERS
JOSEPH M. LA MOTTA DIRECTOR (TRUSTEE), PRESIDENT
PAUL Y. CLINTON DIRECTOR (TRUSTEE)
THOMAS W. COURTNEY DIRECTOR (TRUSTEE)
LACY B. HERRMANN DIRECTOR (TRUSTEE)
GEORGE LOFT DIRECTOR (TRUSTEE)
BERNARD H. GARIL VICE PRESIDENT
ROBERT J. BLUESTONE VICE PRESIDENT
RICHARD J. GLASEBROOK, II VICE PRESIDENT
COLIN GLINSMAN VICE PRESIDENT
LOUIS GOLDSTEIN VICE PRESIDENT
VIKKI HANGES VICE PRESIDENT
JENNY BETH JONES VICE PRESIDENT
EILEEN P. ROMINGER VICE PRESIDENT
GEORGE TILGHMAN VICE PRESIDENT
SHELDON SIEGEL TREASURER
DEBORAH KABACK SECRETARY
LESLIE KLEIN ASSISTANT TREASURER
THOMAS E. DUGGAN ASSISTANT SECRETARY
MARIA CAMACHO ASSISTANT SECRETARY
INVESTMENT ADVISER
QUEST FOR VALUE ADVISORS
ONE WORLD FINANCIAL CENTER
NEW YORK, NY 10281
DISTRIBUTOR
QUEST FOR VALUE DISTRIBUTORS
TWO WORLD FINANCIAL CENTER
NEW YORK, NY 10080
TRANSFER AND SHAREHOLDER SERVICING AGENT
STATE STREET BANK AND TRUST COMPANY
P.O. BOX 8505
BOSTON, MA 02266
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
P.O. BOX 351
BOSTON, MA 02101
TABLE OF CONTENTS
PRESIDENT'S LETTER........................... 1
INVESTMENT REVIEW............................ 3
SCHEDULES OF INVESTMENTS..................... 10
STATEMENTS OF ASSETS AND LIABILITIES......... 20
STATEMENTS OF OPERATIONS..................... 21
STATEMENTS OF CHANGES IN NET ASSETS.......... 22
NOTES TO FINANCIAL STATEMENTS................ 24
FINANCIAL HIGHLIGHTS......................... 30
QUEST FOR VALUE FUND, INC.
OPPORTUNITY FUND
SMALL CAPITALIZATION FUND
GROWTH AND INCOME FUND
U.S. GOVERNMENT INCOME FUND
INVESTMENT QUALITY INCOME FUND
SEMI-ANNUAL
REPORT
APRIL 30, 1995
MANAGED BY
QUEST FOR VALUE ADVISORS
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY TO SHAREHOLDERS AND TO OTHERS
WHO HAVE RECEIVED A COPY OF THE PROSPECTUS.
