<PAGE>
QUEST FOR VALUE
DEAR SHAREHOLDER:
The fiscal year ended October 31, 1995 was an excellent period for investors.
Financial assets performed well in an environment of low inflation, slow
economic growth and generally low interest rates.
The stock market provided a total return of 26.4%, as measured by the Standard &
Poor's 500 Index including dividends (S&P 500). Returns on corporate bonds were
also favorable, with the Lehman Brothers Aggregate Bond Index showing a total
return of 15.6% for the year.
IMPORTANT CHANGE
As you may know, even though the Quest for Value organization is no longer in
the mutual fund distribution business, it continues to manage assets under the
new name of OpCap Advisors.
In line with this change, effective November 24, 1995, Oppenheimer Management
Corporation became the adviser/distributor of the Quest for Value Fund, Quest
for Value Small Capitalization Fund, Quest for Value Opportunity Fund, and Quest
for Value Growth and Income Fund. Concurrently, the funds adopted new names --
Oppenheimer Quest Value Fund, Oppenheimer Quest Small Cap Value Fund,
Oppenheimer Quest Opportunity Value Fund and Oppenheimer Quest Growth & Income
Value Fund, respectively.
The four funds can now be found in the mutual funds quotations listings of daily
newspapers under the heading Oppenheimer/Quest.
OpCap Advisors continues to provide portfolio management services to the four
equity funds through a Subadvisory Agreement with Oppenheimer Management. We
want to assure you there has been no change in the portfolio managers of the
four funds. Eileen Rominger continues as portfolio manager for the Oppenheimer
Quest Value Fund, Richard J. Glasebrook II for the Opportunity Value Fund, Jenny
Beth Jones and Louis Goldstein for the Small Cap Value Fund, and Colin Glinsman
for the Growth & Income Value Fund.
Also effective November 24, 1995, the Quest for Value U.S. Government Income
Fund was merged into Oppenheimer Management's U.S. Government Trust and the
Quest for Value Investment Quality Income Fund was merged into the Oppenheimer
Bond Fund. We have enjoyed the opportunity to serve your fixed income investment
needs and thank you for the confidence you placed in us.
Your investment assets are in good hands at Oppenheimer Management Corporation
- -- and, of course, we remain involved in managing the four Oppenheimer Quest
equity funds. Oppenheimer Management is a leading mutual fund organization with
more than $40 billion of assets under management.
RESULTS OF THE QUEST FOR VALUE FUNDS
In the following pages of this report, we are pleased to tell you about the
results and investment activities of the funds in the fiscal year ended October
31, 1995. Detailed information on the performance and holdings of each fund is
presented in the Investment Review and financial statements.
Thank you for your support. Together with Oppenheimer Management Corporation, we
at OpCap Advisors remain dedicated to meeting your investment needs.
Sincerely,
[SIG]
Joseph M. La Motta
Chairman, OpCap Advisors
<PAGE>
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INVESTMENT REVIEW
QUEST FOR VALUE FUND, INC.
(NOW CALLED OPPENHEIMER QUEST 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.
ANNUAL REVIEW
The Fund, which invests primarily in the common stocks of large and mid-sized
companies, continued its strong performance in the fiscal year ended October 31,
1995. The Fund's Class A shares provided a total return at net asset value of
24.7% in the year, below the 26.4% return of the S&P 500 but above the average
total return of 22.2% for the growth funds monitored by Morningstar, Inc., a
leading independent reporter of mutual fund performance. The Fund's performance
ranked 246th among the 720 growth funds in the Morningstar universe.
Our goal is to deliver above-average performance with below-average risk. We are
pleased with the Fund's performance in the latest fiscal year, which was
achieved with little exposure to technology, by far the best-performing stock
market group during the period. The extremely short product cycles, brutal
competition and fragile profitability which characterize most technology
businesses represent just one layer of risk. The other layer is the lofty
valuations the stocks command. While the rewards can be great, and were during
the past year, the attendant risks do not suit our investment approach.
The Fund's strong performance in fiscal 1995 was generated by a variety of
companies in dissimilar businesses, rather than by incurring the risk of an
overweighting in technology. The Fund's holdings of a diverse group of financial
stocks, including specialty insurance, banking and mortgage companies,
contributed importantly to gains. Leading contributors, in addition to financial
stocks, were McDonnell Douglas Corp., Becton, Dickinson & Co., Freeport McMoRan
Copper & Gold (Class B) and Intel Corp. Our stock selection is based primarily
on company-specific factors, such as competitive position, cash flow generation
and allocation of capital by management. This contrasts to other widely-used
approaches which rely on top-down sector analysis or interest rate bets.
In the second fiscal half ended October 31, 1995, the Class A shares provided a
total return of 13.9%, compared with 14.5% for the S&P 500 and the 14.8% average
total return for the growth funds monitored by Morningstar. Since its inception
on April 30, 1980, the Fund has generated a compound annual return of 18.5%,
surpassing by a wide margin the 15.9% average return for the S&P 500 during this
period. The Fund's performance would have been lower if sales charges were taken
into account.
As with the other Quest equity funds, the Fund is designed for the long-term
investor who seeks to preserve capital and make it grow. Our investment
philosophy is based on the concept that the single most important determinant of
whether a stock will increase in value is the rate of return on invested capital
within the company. We believe companies with high returns can increase their
value for extended periods. Therefore, we look for companies with above-average
returns where those returns are protected by strong competitive positions, and
we want to buy those companies at what we consider to be reasonable prices.
The Fund maintained an above-average cash position throughout most of the fiscal
year; we took profits on some stocks as prices rose and were cautious about
reinvesting the cash in view of high market valuations. As of October 31, 1995,
80.0% of the Fund's portfolio was invested in common stocks and securities
convertible into common stocks and 20.0% in cash and cash equivalents.
2
<PAGE>
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PORTFOLIO HOLDINGS
Major industry positions as of October 31, 1995 were in the insurance,
miscellaneous financial services, retail, aerospace and electronics sectors.
(The Fund's portfolio composition is actively managed and subject to change
daily.) The Fund owned the common stocks of 37 companies, with the five largest
positions together accounting for 24.3% of the Fund's net assets. These five
largest positions were:
EXEL Ltd.
Strongly capitalized specialty insurance company
Federal Home Loan Mortgage Corp. (Freddie Mac)
The second largest insurer of home mortgages
May Department Stores Co.
Leading retailer
McDonnell Douglas Corp.
Largest manufacturer of military aircraft and an important competitor in
commercial aircraft
Becton, Dickinson & Co.
Worldwide producer of medical products and diagnostic test systems
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT* IN
QUEST FOR VALUE FUND, INC. (CLASS A) FROM INCEPTION (4/30/80)
THROUGH 10/31/95 AND TOTAL RETURN ON S&P 500 INDEX**
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QFV FUND S&P 500
<S> <C> <C> <C>
Apr-80 $9,425 $10,000
Oct-80 $ 12,026 $12,309
Oct-81 $ 14,895 $12,376
Oct-82 $ 20,030 $14,395
Oct-83 $ 29,154 $16,416
Oct-84 $ 31,811 $19,501
Oct-85 $ 37,843 $23,378
Oct-86 $ 47,449 $31,136
Oct-87 $ 45,508 $33,126
Oct-88 $ 54,402 $36,001
Oct-89 $ 62,031 $46,071
Oct-90 $ 54,482 $44,476
Oct-91 $ 75,153 $59,373
Oct-92 $ 89,019 $65,284
Oct-93 $ 99,938 $75,038
Oct-94 $ 104,949 $ 77,936
Oct-95 $ 130,915 $ 98,543
Average Annual Total Return (Class A)*
1 Year 5 Year 10 Year
17.6% 17.8% 12.5%
Average Annual Total Return
Class B Class B Class C
at Maximum CDSC without CDSC at Maximum CDSC
1 Year 19.1% 24.1% 23.1%
Inception 9/2/93 10.9% 12.1% 12.9%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account current maximum sales charge of 5.75%
(until November 24, 1995 the maximum sales charge was 5.50%)
** with dividends
<CAPTION>
<S> <C>
Apr-80
Oct-80
Oct-81
Oct-82
Oct-83
Oct-84
Oct-85
Oct-86
Oct-87
Oct-88
Oct-89
Oct-90
Oct-91
Oct-92
Oct-93
Oct-94
Oct-95
Average Annual Total Return (Class A)*
Inception
18.0%
Average Annual Total Return
Class C
without CDSC
1 Year 24.1%
Inception 9/2/93 12.9%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account current maximum sales charge of 5.75%
(until November 24, 1995 the maximum sales charge was 5.50%)
** with dividends
</TABLE>
CDSC = contingent deferred sales charge
Performance of B and C classes will differ
from performance of A class shown
above based on differences in loads and
fees paid by shareholders of the
different classes.
3
<PAGE>
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INVESTMENT REVIEW (CONTINUED)
QUEST FOR VALUE OPPORTUNITY FUND
(NOW CALLED OPPENHEIMER QUEST OPPORTUNITY VALUE 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.
ANNUAL REVIEW
The Fund continued its excellent performance as one of the top-rated funds in
its industry category. Its Class A shares provided a total return at net asset
value of 29.9% in the fiscal year ended October 31, 1995, exceeding both the
26.4% total return of the S&P 500 and the 17.4% average total return for the
asset allocation funds monitored by Morningstar, Inc. The Fund's performance
ranked second best among the 133 asset allocation funds in the Morningstar
universe.
The Fund's performance in the fiscal year was driven by good stock selection,
including its significant holdings of financial service company stocks, one of
the market's strongest sectors. Investments in banking, insurance and
miscellaneous financial services stocks accounted for 27.3% of the Fund's net
assets as of October 31, 1995. Also contributing to performance were the Fund's
large positions in Intel Corp. and McDonnell Douglas Corp., both of which were
up significantly in price during the year.
In the second fiscal half ended October 31, 1995, the Fund's Class A shares had
a total return of 15.3%, surpassing the 14.5% total return of the S&P 500 and
the 10.0% average total return of the funds in the Morningstar asset allocation
category. The Fund has provided a compound annual return of 17.4% since its
inception on January 1, 1989, exceeding the 14.9% annual return of the S&P 500
for the period. The Fund's performance would have been lower if sales charges
were taken into account.
Although the Fund can invest in stocks, bonds and cash equivalents, in practice
it invests primarily in common stocks based on the premise that stocks provide
the best returns over time. The Fund seeks to buy quality undervalued stocks and
hold them for price appreciation. Its portfolio is generally characterized by
low turnover.
As much as was possible, given the large daily inflows of cash from sales of
shares, the Fund remained fully invested throughout the fiscal year, in many
cases adding to investment positions it already owned. During the six months
ended October 31, 1995, the Fund established new positions in the common stocks
of AMR Corp., E.I. du Pont de Nemours & Co., Harrahs Entertainment, Inc., Loral
Corp. and National Semiconductor Corp. The Fund eliminated its holdings of
Promus Companies, Inc., Sundstrand Corp. and Warner-Lambert Co. and reduced its
investments in Alliant Techsystems, Inc., Collins & Aikman Corp. and Hercules,
Inc.
At October 31, 1995, the Fund's asset mix was 85.0% common stocks, 0.5% Treasury
notes, and 14.5% cash and cash equivalents.
4
<PAGE>
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PORTFOLIO HOLDINGS
Major industry positions as of October 31, 1995 were in the banking,
miscellaneous financial services, aerospace, electronics and paper products
sectors. (The Fund's portfolio composition is actively managed and subject to
change daily.) The Fund owned the stocks of 36 companies, with the five largest
positions together accounting for 27.3% of the Fund's net assets. These five
positions were:
McDonnell Douglas Corp.
Largest manufacturer of military aircraft and an important competitor in
commercial aircraft
Federal Home Loan Mortgage Corp. (Freddie Mac)
The second largest insurer of home mortgages
Citicorp
Leading banking and financial services company
Intel Corp.
Major producer of computer chips
Freeport McMoRan Copper & Gold (Class B)
Operator of a major copper and gold mine in Irian Jaya, Indonesia
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT* IN
QUEST FOR VALUE OPPORTUNITY FUND (CLASS A) FROM INCEPTION (1/01/89)
THROUGH 10/31/95 AND TOTAL RETURN ON S&P 500 INDEX**
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QFV OPP S&P 500
<S> <C> <C> <C>
Dec-88 $ 9,425 $ 10,000
Oct-89 $ 10,924 $ 12,603
Oct-90 $ 9,545 $ 11,660
Oct-90 $ 14,360 $ 15,566
Oct-92 $ 17,509 $ 17,116
Oct-93 $ 20,021 $ 19,672
Oct-94 $ 21,703 $ 20,431
Oct-95 $ 28,189 $ 25,835
Average Annual Total Return (Class A)*
1 Year 5 Year Inception
22.4% 22.7% 16.4%
Average Annual Total Return
Class B Class B Class C
at Maximum CDSC without CDSC at Maximum CDSC
1 Year 24.2% 29.2% 28.2%
Inception (9/2/93 15.3% 16.5% 16.4%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account current maximum sales charge of 5.75%
(until November 24, 1995 the maximum sales charge was 5.50%)
** with dividends
<CAPTION>
<S> <C>
Dec-88
Oct-89
Oct-90
Oct-90
Oct-92
Oct-93
Oct-94
Oct-95
Average Annual Total Return (Class A)*
Average Annual Total Return
Class C
without CDSC
1 Year 29.2%
Inception (9/2/93 16.4%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account current maximum sales charge of 5.75%
(until November 24, 1995 the maximum sales charge was 5.50%)
** with dividends
</TABLE>
CDSC = contingent deferred sales charge
Performance of B and C classes will differ
from performance of A class shown above
based on differences in loads and fees paid
by shareholders of the different classes.
5
<PAGE>
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INVESTMENT REVIEW (CONTINUED)
QUEST FOR VALUE SMALL CAPITALIZATION FUND
(NOW CALLED OPPENHEIMER QUEST SMALL CAP VALUE FUND)
OBJECTIVE
Seeks capital appreciation by investing in a diversified portfolio of
undervalued stocks, primarily of companies with market capitalizations under $1
billion.
ANNUAL REVIEW
Small capitalization stocks delivered favorable returns in the fiscal year ended
October 31, 1995, although below the average performance of larger
capitalization issues. The total return of the Russell 2000 Index, a widely
followed benchmark which includes many small cap issues, was 18.4% in the year.
The Fund's Class A shares had a total return at net asset value of 8.8%,
compared with an average total return of 22.4% for the small company funds in
the Morningstar universe. The Fund's performance was 288th among the 310 funds
in this Morningstar category. In the second fiscal half ended October 31, 1995,
the total return of the Fund's Class A shares was 7.0%, below the 12.3% return
of the Russell 2000 Index and the average 16.5% total return of the small
company funds followed by Morningstar. Since its inception on January 1, 1989,
the Fund has provided a compound annual return of 12.1%, compared with a 12.7%
annual return for the Russell 2000 during the period. The Fund's performance
would have been lower if sales charges were taken into account.
The Fund invests conservatively in the small-cap sector, seeking to control risk
and achieve growth of capital by purchasing the shares of undervalued companies
with established operating histories, excellent balance sheets and cash flow,
and skilled, experienced managements who are dedicated to the creation of
shareholder value.
The Fund underperformed the small-cap market in the fiscal year due, in large
part, to its underweighting in high-technology and financial service company
(particularly banking) stocks, the small-cap market's strongest sectors. This
underweighting is based on company-specific, bottom-up stock selection and our
emphasis on preserving capital, not on sector or market analysis. We do not
currently find many small-cap technology stocks that meet our criteria, given
the lofty valuations in this sector, the limited operating histories of many
companies and the prospect that many of their products could be leapfrogged in
an environment of rapid technology change. While the Fund's lack of exposure to
technology has hurt its performance in the short term, this technology
underweighting should benefit performance and preserve capital in any selloff of
this volatile sector. Similarly, the Fund's underweighting in banks was based on
stock selection rather than sector allocation. We believe prices of small-cap
banks have been bid up indiscriminately as acquisition candidates. Conversely,
the Fund was overweighted in real estate investment trusts (REITs). Many quality
REITs appear to be significantly undervalued. However, with their defensive
investment characteristics, they have not performed well in a rising market.
6
<PAGE>
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At a time when technology stocks have captured headlines in the small-cap
sector, soaring to new highs in the past year, many quality non-technology
small-cap issues have not risen sharply and, we believe, remain reasonably
valued. In managing the Fund, we continue to perform the rigorous, in-depth
analysis to identify quality small-cap businesses where the value of the
franchise is underpriced by the market. We believe quality undervalued stocks
will provide favorable investment returns over time. Our philosophy is
illustrated by E.W. Blanch Holdings, Inc., a leading reinsurance broker; we
increased the Fund's holdings of this stock in the second fiscal half. Blanch
has an astute, shareholder-oriented management, earns a return on capital of
32%, which we believe to be sustainable, and is attractively valued at about 11
times earnings. Another of the Fund's recent purchases is Shorewood Packaging
Corp., a leading designer/manufacturer of paperboard packaging for specialized
growth niches, such as CD-ROMs. With its 18% average three-year return on
capital and its excellent business prospects, we believe the stock is
inexpensive at approximately 12 times earnings.
As of October 31, 1995, 84.4% of the Fund's portfolio was invested in common
stocks, 1.1% in convertible securities, 0.4% in corporate notes and bonds, and
14.1% in cash and cash equivalents. During the second fiscal half, we
established new positions in the common stocks of such companies as EG&G, Inc.,
Oak Industries, Inc., Ralcorp Holdings, Inc., Shorewood Packaging Corp., Singer
Co., N.V. and WestPoint Stevens, Inc. We increased the Fund's holdings of such
stocks as Exabyte Corp., Martin Marietta Materials, Inc., Repap Enterprises,
Inc. and True North Communications. We reduced the Fund's holdings of Arrow
Electronics, Inc., Interpool, Inc., Marshall Industries and Sybron International
Corp., among others, and eliminated its investments in such stocks as Cash
America International, Inc., Dionex Corp., Fingerhut Companies, Inc., SafeCard
Services, Inc. and Warnaco Group, Inc. (Class A).
PORTFOLIO HOLDINGS
As of October 31, 1995, the Fund had a diversified portfolio of the common
stocks of 77 companies, no one of which accounted for more than 4% of the Fund's
net assets. Major industry positions were in the electronics, real estate,
oil/gas, advertising, and machinery and engineering sectors. (The Fund's
portfolio composition is actively managed and subject to change daily.) The
Fund's five largest equity holdings were:
True North Communications
Advertising agency holding company; operations include Foote, Cone & Belding
Communications, Inc., one of the largest advertising agencies in North America
Marshall Industries
Distributor of electronic components
Crane Co.
Manufacturer of aerospace, fluid handling and controls components and of
vending machines; distributor/ manufacturer of housing-related building
products
Martin Marietta Materials, Inc.
One of the largest aggregates (gravel and sand) producers in the United States
Security Capital Industrial Trust, Inc.
Real estate investment trust; owns, manages and develops industrial warehouses
in the Southeast and Southwest
7
<PAGE>
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INVESTMENT REVIEW (CONTINUED)
QUEST FOR VALUE SMALL CAPITALIZATION FUND, INC. (CONT'D)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT* IN
QUEST FOR VALUE SMALL CAPITALIZATION FUND (CLASS A) FROM INCEPTION (1/01/89)
THROUGH 10/31/95 AND TOTAL RETURN ON RUSSELL 2000 INDEX**
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SMALL CAP RUSSELL 2000
<S> <C> <C> <C>
Dec-88 $ 9,425 $ 10,000
Oct-89 $ 10,283 $ 11,504
Oct-90 $ 9,398 $ 8,363
Oct-90 $ 13,018 $ 13,265
Oct-92 $ 14,528 $ 14,523
Oct-93 $ 18,917 $ 19,227
Oct-94 $ 18,924 $ 19,180
Oct-95 $ 20,593 $ 22,699
Average Annual Total Return (Class A)*
1 Year 5 Year Inception
2.6% 18.2% 11.2%
Average Annual Total Return
Class B Class B Class C
at Maximum CDSC without CDSC at Maximum CDSC
1 Year 3.2% 8.2% 7.2%
Inception (9/2/93) 3.5% 4.8% 4.8%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account current maximum sales charge of 5.75%
(until November 24, 1995 the maximum sales charge was 5.50%)
** with dividends
<CAPTION>
<S> <C>
Dec-88
Oct-89
Oct-90
Oct-90
Oct-92
Oct-93
Oct-94
Oct-95
Average Annual Total Return (Class A)*
Average Annual Total Return
Class C
without CDSC
1 Year 8.2%
Inception (9/2/93) 4.8%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account current maximum sales charge of 5.75%
(until November 24, 1995 the maximum sales charge was 5.50%)
** with dividends
</TABLE>
CDSC = contingent deferred sales charge
Performance of B and C classes will differ
from performance of A class shown above
based on differences in loads and fees paid
by shareholders of the different classes.
8
<PAGE>
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QUEST FOR VALUE GROWTH AND INCOME FUND
(NOW CALLED OPPENHEIMER QUEST GROWTH & INCOME VALUE FUND)
OBJECTIVE
Seeks total return by investing in a combination of attractively valued quality
stocks and fixed income securities.
ANNUAL REVIEW
The Fund's Class A shares provided a total return at net asset value of 16.4% in
the fiscal year ended October 31, 1995, compared with a 20.8% average total
return for the funds in the Morningstar growth and income category. The Fund
ranked 363rd among the 409 funds in this Morningstar category.
In the six months ended October 31, 1995, the total return of the Class A shares
was 6.6%, compared with an average total return of 12.1% for the funds in the
Morningstar growth and income category. Since its inception on November 4, 1991,
the Fund has provided a compound annual total return of 11.4%. The Fund's
performance would have been lower if sales charges were taken into account.
The Fund is designed for investors who want to participate in the equity market
for total return with above-average income. Income dividends paid during the
past fiscal year came to $.29 per Class A share.
The Fund's 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. The Fund's performance in the past fiscal year was dominated by
its emphasis on protecting principal in a risky stock market environment. While
typically the Fund might invest at least two-thirds of its assets in common
stocks, stocks represented 50% or even slightly less of the portfolio for some
periods of the year. Because of this conservative posture, the Fund did not
participate fully in a rising market, and its total return for the year was
below that of many other growth and income funds. On the other hand, because it
had larger-than-normal holdings of fixed income securities, the Fund generated a
greater rate of income for shareholders than did many funds with more aggressive
investment positions.
The Fund increased its holdings of common stocks in the second half of the year,
and its current posture is neither conservative nor aggressive. As of October
31, 1995, 72.6% of the Fund's portfolio was invested in common stocks, 6.5% in
securities convertible into common stocks, 18.2% in notes and bonds, and 2.7% in
cash and cash equivalents.
In the second fiscal half, the Fund established significant new positions in the
common stocks of Briggs & Stratton Corp., Champion International Corp., du Pont
(E.I.) de Nemours & Co. and Tele-Communications TCI Group (Series A). The Fund
eliminated or significantly reduced its investments in the common stocks of
Boeing Co., First Interstate Bancorp, Intel Corp., Freeport McMoRan Oil & Gas
Corp., Mellon Bank Corp. and Stone Container Corp. and the convertible preferred
stock of Gerrity Oil & Gas Corp.
9
<PAGE>
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INVESTMENT REVIEW (CONTINUED)
QUEST FOR VALUE GROWTH AND INCOME FUND (CONT'D)
PORTFOLIO HOLDINGS
Major industry positions as of October 31, 1995 were in the textiles, banking,
insurance, metals/mining and conglomerates sectors. (The Fund's portfolio
composition is actively managed and subject to change daily.) The Fund's five
largest equity holdings were:
Freeport McMoRan Copper & Gold (Class A)
Operator of a major copper and gold mine in Irian Jaya, Indonesia
V.F. Corp.
International apparel company
Sprint Corp.
Leading long-distance telephone company
Citicorp
Major banking and financial services company
McDonnell Douglas Corp.
Largest manufacturer of military aircraft and an important competitor in
commercial aviation
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT* IN
QUEST FOR VALUE GROWTH AND INCOME FUND (CLASS A) FROM INCEPTION (11/04/91)
THROUGH 10/31/95 AND TOTAL RETURN ON S&P 500 INDEX**
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QFV GROWTH S&P 500
<S> <C> <C> <C>
Nov-91 $ 9,425 $ 10,000
Oct-92 $ 10,447 $ 11,028
Oct-93 $ 11,484 $ 12,675
Oct-94 $ 12,476 $ 13,164
Oct-95 $ 14,518 $ 16,545
Average Annual Total Return (Class A)*
1 Year Inception
9.7% 9.8%
Average Annual Total Return
Class B Class B Class C
at Maximum CDSC without CDSC at Maximum CDSC
1 Year 10.7% 15.7% 14.4%
Inception (9/2/93) 10.0% 11.2% 11.1%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account current maximum charge of 5.75%
(until November 24, 1995 the maximum sales charge was 4.75%)
** with dividends
<CAPTION>
<S> <C>
Nov-91
Oct-92
Oct-93
Oct-94
Oct-95
Average Annual Total Return (Class A)*
Average Annual Total Return
Class C
without CDSC
1 Year 15.4%
Inception (9/2/93) 11.1%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account current maximum charge of 5.75%
(until November 24, 1995 the maximum sales charge was 4.75%)
** with dividends
</TABLE>
CDSC = contingent deferred sales charge
Performance of B and C classes will differ
from performance of A class shown above
based on differences in loads and fees paid
by shareholders of the different classes.
10
<PAGE>
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QUEST FOR VALUE 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.
ANNUAL REVIEW
The Fund continued to meet its objective of providing a high level of income
from intermediate-term government securities. The Fund paid dividends of $.639
per Class A share in the fiscal year ended October 31, 1995, up from $.593 per
Class A share in the prior fiscal year. The total return at net asset value
(dividends plus price appreciation) on the Class A shares was 10.8% in the
fiscal year, compared with a total return of 11.8% for the Lehman Brothers
Intermediate Government Bond Index and an average total return of 12.3% for the
funds in the Morningstar general government bond fund category. The Fund ranked
229th among the 347 funds in this Morningstar grouping.
In the second fiscal half ended October 31, 1995, the Class A shares provided a
total return of 5.0%, compared with an average total return of 6.2% for the
funds in the Morningstar general government bond category and 4.0% for the
Lehman Brothers Intermediate Government Bond Index. Since inception on May 6,
1988, the Fund produced a compound annual return of 7.7%, while maintaining a
relatively stable net asset value similar to the volatility of a five-year
Treasury note. The Fund's performance would have been lower if sales charges
were taken into account.
During the first fiscal half ended April 30, 1995, 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. In the second fiscal half, we moved back into
intermediate-term securities.
As of October 31, 1995, the Fund's assets were allocated 30.4% to Treasuries,
44.2% to mortgage-backed government agency securities and 25.5% to net cash and
short-term securities. Put options were written on 0.1% of the Fund's assets,
generating additional income.
On November 24, 1995, the Fund was merged into the Oppenheimer U.S. Government
Trust. All of us at Quest for Value want to thank the Fund's shareholders for
having invested with us and we wish to express our appreciation for their
support.
11
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW (CONTINUED)
QUEST FOR VALUE U.S. GOVERNMENT INCOME FUND (CONT'D)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT* IN
QUEST FOR VALUE U.S. GOVERNMENT INCOME FUND (CLASS A) FROM 5/31/88
THROUGH 10/31/95 AND TOTAL RETURN ON LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QFV GOVT LEHMAN
<S> <C> <C> <C>
May-88 $ 9,525 $ 10,000
Oct-88 $ 9,978 $ 10,464
Oct-89 $ 10,918 $ 11,552
Oct-90 $ 11,789 $ 12,456
Oct-91 $ 13,368 $ 14,115
Oct-92 $ 14,435 $ 15,505
Oct-93 $ 15,670 $ 16,933
Oct-94 $ 15,023 $ 16,645
Oct-95 $ 16,643 $ 18,607
Average Annual Total Return (Class A)*
1 Year 5 Year Inception
5.5% 6.1% 7.0%
Average Annual Total Return
Class B Class B Class C
at Maximum CDSC withou CDSC at Maximum CDSC
1 Year 5.0% 10.0% 8.9%
Inception (9/2/93) 1.0% 2.3% 2.3%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account maximum sales charge of 4.75%
** with dividends
<CAPTION>
<S> <C>
May-88
Oct-88
Oct-89
Oct-90
Oct-91
Oct-92
Oct-93
Oct-94
Oct-95
Average Annual Total Return (Class A)*
Average Annual Total Return
Class C
without CDSC
1 Year 9.9%
Inception (9/2/93) 2.3%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account maximum sales charge of 4.75%
** with dividends
</TABLE>
CDSC = contingent deferred sales charge
Performance of B and C classes will differ
from performance of A class shown above
based on differences in loads and fees paid
by shareholders of the different classes.
12
<PAGE>
- --------------------------------------------------------------------------------
QUEST FOR VALUE 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.
ANNUAL REVIEW
The Investment Quality Income Fund continued its strong performance in the
fiscal year ended October 31, 1995, ranking among the top funds in its industry
category. Dividends totaled $.707 per Class A share in the year, up from $.680
in the prior fiscal year. The Class A shares produced a total return at net
asset value (dividends plus price appreciation) of 20.5% in the latest fiscal
year, exceeding the 18.8% return of the Lehman Brothers Corporate Bond Index and
the 11.5% average total return for the funds in the Morningstar high-quality
corporate bond category. The Fund ranked second best among the 195 funds in this
Morningstar universe.
In the second fiscal half ended October 31, 1995, the total return on the Class
A shares was 10.3%, surpassing the 9.6% return on the Lehman Brothers Corporate
Bond Index and the 6.2% average total return for the funds in the Morningstar
high-quality corporate bond category. Since its inception on December 18, 1990,
the Fund produced a compound annual total return of 9.5%. The Fund's performance
would have been lower if sales charges were taken into account.
On an annualized basis, the monthly distribution yield on the net asset value
(NAV) of the Class A shares was 6.27% as of October 31, 1995. The average
maturity of the portfolio was 24.7 years as of October 31, 1995.
The Fund's strong performance in the fiscal year was driven by its investments
in quality long-term corporate bonds at a time of rising prices for these
securities. During the year, we emphasized investments in noncallable
securities, many of which outperformed the market. In addition, at fiscal year
end about one-sixth of the portfolio was invested in U.S. dollar-denominated
bonds of foreign issuers, primarily Canadian, which provide attractive yields
and favorable relative value.
On November 24, 1995, the Fund was merged into the Oppenheimer Bond Fund. All of
us at Quest for Value appreciate the opportunity we have had to serve the fixed
income investment needs of shareholders and want to thank shareholders for their
confidence and trust.
13
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW (CONTINUED)
QUEST FOR VALUE INVESTMENT QUALITY INCOME FUND (CONT'D)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT* IN
QUEST FOR VALUE INVESTMENT QUALITY INCOME FUND (CLASS A) FROM 12/31/90
THROUGH 10/31/95 AND TOTAL RETURN ON LEHMAN BROTHERS CORP. BOND INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
QFV INVESTMENT S&P 500
<S> <C> <C> <C>
Dec-90 $ 9,525 $ 10,000
Oct-91 $ 10,273 $ 11,364
Oct-92 $ 11,425 $ 12,627
Oct-93 $ 13,555 $ 14,541
Oct-94 $ 12,252 $ 13,785
Oct-95 $ 14,798 $ 16,378
Average Annual Total Return (Class A)*
1 Year Inception
14.8% 8.4%
Average Annual Total Return
Class B Class B Class C
at Maximum CDSC without CDSC at Maximum CDSC
1 Year 14.8% 19.8% 18.7%
Inception (9/2/93) 2.4% 3.6% 3.7%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account maximum sales charge of 4.75%
** with dividends
<CAPTION>
<S> <C>
Dec-90
Oct-91
Oct-92
Oct-93
Oct-94
Oct-95
Average Annual Total Return (Class A)*
Average Annual Total Return
Class C
without CDSC
1 Year 19.7%
Inception (9/2/93) 3.7%
Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
* after taking into account maximum sales charge of 4.75%
** with dividends
</TABLE>
CDSC = contingent deferred sales charge
Performance of B and C classes will differ
from performance of A class shown above
based on differences in loads and fees paid
by shareholders of the different classes.
14
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
QUEST FOR VALUE FUND, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 19.9%
AUTOMOTIVE -- 6.0%
Ford Motor Credit Co.
$ 2,400,000 5.72%, 11/20/95 $ 2,392,755
6,600,000 5.73%, 11/27/95 6,572,687
General Motors Acceptance Corp.
335,000 5.74%, 11/20/95 333,985
10,700,000 5.77%, 11/20/95 10,667,415
------------
19,966,842
------------
BANKING -- 1.4%
4,700,000 Norwest Financial, Inc.
5.73%, 11/13/95 4,691,023
------------
COMPUTERS -- 0.1%
430,000 IBM Credit Corp.
5.70%, 11/06/95 429,660
------------
MACHINERY & ENGINEERING -- 2.1%
Deere (John) Capital Corp.
3,300,000 5.71%, 11/13/95 3,293,719
3,600,000 5.75%, 11/13/95 3,593,100
------------
6,886,819
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.1%
Beneficial Corp.
1,300,000 5.72%, 11/27/95 1,294,629
225,000 5.74%, 11/27/95 224,067
800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 798,472
Household Finance Corp.
14,200,000 5.72%, 12/04/95 14,125,545
1,000,000 5.73%, 11/27/95 995,862
Merrill Lynch & Co., Inc.
500,000 5.72%, 11/06/95 499,603
15,345,000 5.75%, 11/06/95 15,332,745
------------
33,270,923
------------
OIL/GAS -- 0.2%
500,000 Chevron Oil Finance Co.
5.71%, 11/08/95 499,445
------------
Total Short-Term Corporate Notes
(cost -- $65,744,712) $ 65,744,712
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 0.7%
REAL ESTATE
$ 2,330,921 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $2,198,259) $ 2,330,921
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 79.3%
AEROSPACE -- 6.0%
127,000 AlliedSignal, Inc. $ 5,397,500
177,000 McDonnell Douglas Corp. 14,469,750
------------
19,867,250
------------
APPAREL -- 1.4%
202,600 Warnaco Group, Inc. (Class A)* 4,710,450
------------
BANKING -- 3.4%
110,000 Citicorp 7,136,250
81,215 Mellon Bank Corp. 4,070,902
------------
11,207,152
------------
CHEMICALS -- 4.5%
60,000 du Pont (E.I.) de Nemours & Co. 3,742,500
81,000 Hercules, Inc. 4,323,375
64,000 Monsanto Co. 6,704,000
------------
14,769,875
------------
CONGLOMERATES -- 1.7%
90,200 General Electric Co. 5,705,150
------------
CONSUMER PRODUCTS -- 1.5%
149,000 Reebok International Ltd. 5,066,000
------------
CONTAINERS -- 2.2%
160,000 Temple - Inland, Inc. 7,280,000
------------
COSMETICS/TOILETRIES -- 1.5%
67,800 Avon Products, Inc. 4,822,275
------------
DRUGS & MEDICAL PRODUCTS -- 4.8%
179,000 Becton, Dickinson & Co. 11,635,000
48,000 Warner-Lambert Co. 4,086,000
------------
15,721,000
------------
</TABLE>
* Non-income producing security.
15
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 5.3%
177,000 Arrow Electronics, Inc.* $ 8,982,750
122,000 Intel Corp. 8,524,750
------------
17,507,500
------------
HEALTHCARE SERVICES -- 2.4%
440,000 Tenet Healthcare Corp. 7,865,000
------------
INSURANCE -- 17.2%
216,200 Ace Ltd. 7,350,800
35,300 AFLAC, Inc. 1,438,475
99,000 American International Group, Inc. 8,353,125
464,200 EXEL Ltd. 24,834,700
197,000 Progressive Corp., Ohio 8,175,500
101,000 Transamerica Corp. 6,842,750
------------
56,995,350
------------
METALS/MINING -- 2.7%
66,333 Freeport McMoRan, Inc. 2,479,208
8,518 Freeport McMoRan, Copper & Gold
(Class A) 194,849
279,290 Freeport McMoRan, Copper & Gold
(Class B) 6,353,848
------------
9,027,905
------------
MISCELLANEOUS FINANCIAL SERVICES -- 8.8%
200,000 American Express Co. 8,125,000
290,000 Countrywide Credit Industries, Inc. 6,416,250
214,000 Federal Home Loan Mortgage Corp. 14,819,500
------------
29,360,750
------------
PAPER PRODUCTS -- 1.9%
120,000 Champion International Corp. $ 6,420,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
REAL ESTATE -- 0.8%
3,050 Security Capital Realty, Inc. (A) 2,689,844
------------
RETAIL -- 6.3%
373,000 May Department Stores Co. 14,640,250
140,000 Mercantile Stores Co., Inc. 6,282,500
------------
20,922,750
------------
TELECOMMUNICATIONS -- 2.6%
344 Bell Atlantic Corp. 21,887
225,200 Sprint Corp. 8,670,200
------------
8,692,087
------------
TEXTILES -- 1.3%
340,000 Shaw Industries, Inc. 4,335,000
------------
TOYS/GAMES/HOBBY -- 0.9%
92,000 Hasbro, Inc. 2,806,000
------------
TRANSPORTATION -- 2.1%
84,000 CSX Corp. 7,035,000
------------
Total Common Stocks
(cost -- $190,764,443) $262,806,338
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $258,707,414)) 99.9% $330,881,971
Other Assets in Excess of
Other Liabilities 0.1 429,932
------ ------------
TOTAL NET ASSETS 100.0 % $331,311,903
------ ------------
------ ------------
</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>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 9/15/94 $2,330,921 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 9/15/94 -- 3,050 926 882
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.6%
AUTOMOTIVE -- 2.4%
$15,000,000 General Motors Acceptance Corp.
5.77%, 11/20/95 $ 14,954,321
------------
BANKING -- 2.8%
Norwest Financial, Inc.
1,800,000 5.73%, 11/13/95 1,796,562
16,000,000 5.73%, 11/27/95 15,933,787
------------
17,730,349
------------
COMPUTERS -- 0.2%
1,490,000 IBM Credit Corp.
5.70%, 11/06/95 1,488,820
------------
MACHINERY & ENGINEERING -- 3.0%
Deere (John) Capital Corp.
13,600,000 5.71%, 11/13/95 13,574,115
5,235,000 5.74%, 11/13/95 5,224,984
------------
18,799,099
------------
MISCELLANEOUS FINANCIAL SERVICES -- 7.1%
Beneficial Corp.
1,200,000 5.72%, 11/20/95 1,196,377
10,455,000 5.73%, 11/20/95 10,423,382
1,800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 1,796,562
15,980,000 Household Finance Corp.
5.73%, 11/08/95 15,962,196
Merrill Lynch & Co., Inc.
4,500,000 5.75%, 11/02/95 4,499,281
11,475,000 5.75%, 11/06/95 11,465,836
------------
45,343,634
------------
OIL/GAS -- 0.1%
491,000 Chevron Oil Finance Co.
5.71%, 11/08/95 490,455
------------
Total Short-Term Corporate Notes
(cost -- $98,806,678) $ 98,806,678
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
U.S. TREASURY NOTES -- 0.5%
$ 1,000,000 7.50%, 11/15/01 $ 1,081,410
1,000,000 7.50%, 5/15/02 1,086,410
550,000 7.875%, 4/15/98 577,241
550,000 7.875%, 8/15/01 603,537
------------
Total U.S. Treasury Notes
(cost -- $3,143,397) $ 3,348,598
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 85.0%
AEROSPACE -- 9.0%
100,000 Loral Corp. $ 2,962,500
525,000 McDonnell Douglas Corp. 42,918,750
200,000 Northrop Grumman Corp. 11,450,000
------------
57,331,250
------------
AIRLINES -- 1.0%
100,000 AMR Corp.* 6,600,000
------------
BANKING -- 13.6%
525,000 Citicorp 34,059,375
34,100 First Empire State Corp. 6,709,175
450,000 Mellon Bank Corp. 22,556,250
110,000 Wells Fargo & Co. 23,113,750
------------
86,438,550
------------
CASINOS/GAMING -- 2.9%
750,000 Harrahs Entertainment, Inc. 18,562,500
------------
CHEMICALS -- 4.4%
260,000 du Pont (E.I.) de Nemours & Co. 16,217,500
220,000 Hercules, Inc. 11,742,500
------------
27,960,000
------------
CONSUMER PRODUCTS -- 3.2%
600,000 Reebok International Ltd. 20,400,000
------------
COSMETICS/TOILETRIES -- 0.7%
60,600 Avon Products, Inc. 4,310,175
------------
DRUGS & MEDICAL PRODUCTS -- 2.8%
275,000 Becton, Dickinson & Co. 17,875,000
------------
</TABLE>
* Non-income producing security.
17
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 8.1%
460,000 Intel Corp. $ 32,142,500
200,000 National Semiconductor Corp.* 4,875,000
50,000 Raychem Corp. 2,318,750
440,000 Unitrode Corp.* 11,825,000
------------
51,161,250
------------
INSURANCE -- 3.2%
300,000 EXEL Ltd. 16,050,000
60,000 Transamerica Corp. 4,065,000
------------
20,115,000
------------
METALS/MINING -- 5.2%
83,333 Freeport McMoRan, Inc. 3,114,583
1,302,100 Freeport McMoRan Copper & Gold
(Class B) 29,622,775
------------
32,737,358
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.5%
250,000 American Express Co. 10,156,250
500,000 Countrywide Credit Industries, Inc. 11,062,500
500,000 Federal Home Loan Mortgage Corp. 34,625,000
100,000 Federal National Mortgage Assoc. 10,487,500
------------
66,331,250
------------
OIL/GAS -- 6.0%
80,000 Mapco, Inc. 4,120,000
610,000 Tenneco, Inc. 26,763,750
149,300 Triton Energy Corp.* 6,961,113
------------
37,844,863
------------
PAPER PRODUCTS -- 7.2%
535,000 Champion International Corp. 28,622,500
325,000 Scott Paper Co. 17,306,250
------------
45,928,750
------------
TELECOMMUNICATIONS -- 1.8%
300,000 Sprint Corp. 11,550,000
------------
TEXTILES -- 2.4%
155,000 Collins & Aikman Corp.* $ 1,240,000
1,100,000 Shaw Industries, Inc. 14,025,000
------------
15,265,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
TOYS/GAMES/HOBBY -- 2.7%
600,000 Mattel, Inc. 17,250,000
------------
OTHER -- 0.3%
40,000 Alliant Techsystems, Inc.* 1,860,000
------------
Total Common Stocks
(cost -- $440,332,557) $539,520,946
------------
<CAPTION>
- ------------------------------------------------------
WARRANTS VALUE
- ------------------------------------------------------
<C> <S> <C>
WARRANTS -- 0.0%
HEALTHCARE SERVICES
34 Laboratory Corp. of America
Holdings
(cost -- $81) $ 21
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $542,282,713) 101.1% $641,676,243
Other Liabilities in Excess of
Other Assets (1.1) (7,165,129)
------ ------------
TOTAL NET ASSETS 100.0% $634,511,114
------ ------------
------ ------------
</TABLE>
SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.1%
AUTOMOTIVE -- 1.8%
$ 2,758,000 General Motors Acceptance Corp.
5.81%, 11/06/95 $ 2,755,774
------------
BANKING -- 4.0%
6,000,000 Norwest Financial, Inc.
5.73%, 11/14/95 5,987,585
------------
INSURANCE -- 4.7%
7,000,000 Prudential Funding Corp.
5.73%, 11/27/95 6,971,031
------------
</TABLE>
* Non-income producing security.
18
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 1.8%
Deere (John) Capital Corp.
$ 1,560,000 5.71%, 11/13/95 $ 1,557,031
1,074,000 5.75%, 11/13/95 1,071,942
------------
2,628,973
------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.8%
3,635,000 Beneficial Corp.
5.73%, 11/22/95 3,622,850
575,000 Household Finance Corp.
5.72%, 11/13/95 573,904
------------
4,196,754
------------
Total Short-Term Corporate Notes
(cost -- $22,540,117) $ 22,540,117
------------
CORPORATE NOTES & BONDS -- 0.4%
AUTOMOTIVE -- 0.0%
$ 62,950 Collins Industries, Inc.
8.75%, 1/11/00 $ 57,577
------------
OIL/GAS -- 0.4%
500,000 Global Marine, Inc.
12.75%, 12/15/99 552,500
------------
Total Corporate Notes & Bonds
(cost -- $585,111) $ 610,077
------------
CONVERTIBLE CORPORATE BONDS -- 0.9%
REAL ESTATE
$ 1,404,189 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $1,325,889) $ 1,404,189
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
RETAIL
36,000 Family Bargain Corp.
$0.95 Conv. Pfd.
(cost -- $360,000) $ 220,500
------------
COMMON STOCKS -- 84.4%
ADVERTISING -- 6.2%
77,600 Katz Media Group, Inc.* $ 1,396,800
30,000 Omnicom Group, Inc. 1,916,250
292,400 True North Communications 5,921,100
------------
9,234,150
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
AEROSPACE -- 0.5%
97,500 BE Aerospace, Inc.* $ 767,813
------------
AUTOMOTIVE -- 1.7%
126,000 Collins Industries, Inc.* 259,875
120,100 Masland Corp. 1,681,400
70,000 Sudbury, Inc.* 586,250
------------
2,527,525
------------
BUILDING & CONSTRUCTION -- 5.8%
57,300 Carlisle Cos., Inc. 2,356,462
190,547 D.R. Horton, Inc. 2,119,835
26,500 Insituform Technologies (Class A)* 331,250
204,000 Martin Marietta Materials, Inc. 3,876,000
------------
8,683,547
------------
CHEMICALS -- 1.7%
86,400 OM Group, Inc. 2,505,600
------------
COMPUTER SERVICES -- 3.6%
149,900 BancTec, Inc.* 2,810,625
52,000 DST Systems, Inc. 1,092,000
114,000 Exabyte Corp.* 1,474,875
------------
5,377,500
------------
CONTAINERS -- 1.9%
169,000 Shorewood Packaging Corp.* 2,830,750
------------
DRUGS & MEDICAL PRODUCTS -- 1.9%
49,900 Amerisource Health Corp. (Class A) 1,359,775
33,900 Sybron International Corp. -
Wisconsin* 1,440,750
------------
2,800,525
------------
ELECTRONICS -- 8.9%
35,700 Arrow Electronics, Inc* 1,811,775
174,900 EG&G, Inc. 3,257,512
146,500 Marshall Industries* 5,164,125
111,000 Oak Industries, Inc.* 2,317,125
26,200 Unitrode Corp.* 704,125
------------
13,254,662
------------
</TABLE>
* Non-income producing security.
19
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ENTERTAINMENT -- 0.2%
25,000 Hollywood Park, Inc.* $ 243,750
------------
FOOD SERVICES -- 1.0%
70,000 IHOP Corp.* 1,505,000
------------
HEALTHCARE SERVICES -- 2.8%
16,000 Charter Medical Corp.* 288,000
20,000 Community Health Systems, Inc.* 635,000
51,900 Dentsply International, Inc. 1,790,550
54,000 SpaceLabs Medical, Inc.* 1,390,500
------------
4,104,050
------------
HOUSEHOLD PRODUCTS -- 2.4%
120,000 Singer Co. 2,820,000
35,000 The Rival Co. 682,500
------------
3,502,500
------------
INSURANCE -- 5.3%
47,000 Ace Ltd. 1,598,000
62,800 Capsure Holdings Corp.* 855,650
119,400 E.W. Blanch Holdings, Inc. 2,298,450
112,500 Guaranty National Corp. 1,603,125
7,000 Horace Mann Educators Corp. 186,375
64,200 Prudential Reinsurance Holdings,
Inc. 1,308,075
------------
7,849,675
------------
LEASING -- 1.1%
101,700 Interpool, Inc.* 1,627,200
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 6.0%
50,000 Baldwin Technologies Co., Inc
(Class A)* $ 268,750
40,000 Briggs & Stratton Corp. 1,615,000
52,100 BW/IP Holdings, Inc. (Class A) 872,675
145,000 Crane Co. 5,129,375
67,400 Harmon Industries, Inc. 994,150
------------
8,879,950
------------
MANUFACTURING -- 1.9%
94,000 North American Watch Corp. 1,703,750
50,000 Pall Corp. 1,218,750
------------
2,922,500
------------
METALS/MINING -- 0.4%
70,000 Olympic Steel, Inc.* 568,750
------------
OFFICE EQUIPMENT -- 0.8%
60,600 Nu-Kote Holdings, Inc. (Class A)* 1,257,450
------------
OIL/GAS -- 6.4%
92,800 Aquila Gas Pipeline Corp. 1,020,800
84,000 Belden & Blake Corp.* 1,219,313
200,000 Global Natural Resources, Inc.* 2,000,000
137,500 Noble Drilling Corp.* 962,500
165,000 Petroleum Heat & Power Co., Inc.
(Class A) 1,278,750
105,400 St. Mary Land & Exploration Co. 1,409,725
34,000 Triton Energy Corp.* 1,585,250
------------
9,476,338
------------
PAPER PRODUCTS -- 1.8%
422,000 Repap Enterprises, Inc.* 2,663,875
------------
PRINTING/PUBLISHING -- 1.4%
69,000 International Imaging Materials,
Inc. 1,742,250
20,000 Merrill Corp. 320,000
------------
2,062,250
------------
</TABLE>
* Non-income producing security.
20
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
REAL ESTATE -- 8.7%
151,800 Cousins Properties, Inc. $ 2,637,525
44,000 Post Properties, Inc. 1,320,000
231,600 Security Capital Industrial Trust,
Inc. 3,792,450
199,363 Security Capital Pacific Trust,
Inc. 3,563,614
1,800 Security Capital Realty, Inc. (A) 1,587,600
------------
12,901,189
------------
RETAIL -- 0.7%
10,900 Blair Corp. 321,550
60,000 The Maxim Group, Inc.* 780,000
------------
1,101,550
------------
TELECOMMUNICATIONS -- 1.2%
94,500 ECI Telecommunications Ltd. 1,795,500
------------
TEXTILES -- 4.8%
89,000 Collins & Aikman Corp.* 712,000
64,000 Culp, Inc. 624,000
42,700 Fab Industries, Inc. 1,248,975
149,600 Mohawk Industries, Inc.* 2,244,000
110,500 WestPoint Stevens, Inc.* 2,334,313
------------
7,163,288
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 2.6%
55,900 Morningstar Group, Inc.* 433,225
111,800 Ralcorp Holdings, Inc. 2,571,400
84,700 Sylvan, Inc.* 899,937
------------
3,904,562
------------
TRANSPORTATION -- 0.1%
8,000 MTL, Inc.* 117,000
------------
UTILITIES -- 1.5%
34,600 Sithe Energies, Inc.* 246,525
96,000 UGI Corp. 2,016,000
------------
2,262,525
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
OTHER -- 1.1%
93,300 McGrath RentCorp. $ 1,632,750
------------
Total Common Stocks
(cost -- $116,900,149) $125,523,724
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $141,711,266) 101.0% $150,298,607
Other Liabilities in Excess of
Other Assets (1.0) (1,483,609)
------ ------------
TOTAL NET ASSETS 100.0% $148,814,998
------ ------------
------ ------------
</TABLE>
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 1.9%
AUTOMOTIVE -- 0.4%
$ 200,000 Ford Motor Credit Co.
5.73%, 11/06/95 $ 199,841
------------
MISCELLANEOUS FINANCIAL SERVICES -- 1.5%
Beneficial Corp.
447,000 5.72%, 11/02/95 446,929
230,000 5.74%, 11/15/95 229,486
------------
676,415
------------
Total Short-Term Corporate Notes
(cost -- $876,256) $ 876,256
------------
CORPORATE NOTES & BONDS -- 18.2%
CASINOS/GAMING -- 1.9%
$ 1,000,000 Harrah's Jazz Co.
14.25%, 11/15/01 $ 875,000
------------
COSMETICS/TOILETRIES -- 3.8%
2,000,000 Playtex Family Products Corp.
9.00%, 12/15/03 1,790,000
------------
</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>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 6/16/94 $1,404,189 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 8/02/93 -- 1,800 684 882
</TABLE>
21
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL VALUE
AMOUNT
- ------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT -- 3.7%
$ 5,000,000 Time Warner, Inc.
Zero Coupon, 12/17/12 $ 1,725,000
------------
FOOD SERVICES -- 0.9%
1,000,000 Shoney's, Inc.
Zero Coupon, 4/11/04 402,500
------------
OIL/GAS -- 3.7%
2,000,000 Triton Energy Corp.
Zero Coupon, 11/01/97 1,700,000
------------
TELECOMMUNICATIONS -- 4.2%
1,000,000 Comcast Corp.
10.625%, 7/15/12 1,097,500
1,500,000 Nextel Communications, Inc.
0.00/11.50%, 9/01/03** 870,000
------------
1,967,500
------------
Total Corporate Notes & Bonds
(cost -- $8,705,038) $ 8,460,000
------------
CONVERTIBLE CORPORATE BONDS -- 6.5%
MANUFACTURING
$ 4,000,000 Mascotech, Inc.
4.50%, 12/15/03
(cost -- $3,042,591) $ 3,040,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 72.6%
AEROSPACE -- 4.4%
25,000 McDonnell Douglas Corp. $ 2,043,750
------------
AUTOMOTIVE -- 3.8%
40,000 General Motors Corp. 1,750,000
------------
BANKING -- 7.6%
32,000 Citicorp 2,076,000
50,000 U.S. Bancorp 1,481,250
------------
3,557,250
------------
CHEMICALS -- 2.7%
20,000 du Pont (E.I.) de Nemours & Co. 1,247,500
------------
COMPUTER SOFTWARE -- 1.1%
5,000 Microsoft Corp.* $ 500,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONGLOMERATES -- 3.4%
100,000 Canadian Pacific Ltd. 1,600,000
------------
CONTAINERS -- 3.9%
40,000 Temple-Inland, Inc. 1,820,000
------------
ELECTRONICS -- 0.2%
1,000 Intel Corp. 69,875
------------
HEALTHCARE SERVICES -- 1.0%
10,000 Columbia/HCA Healthcare Corp. 491,250
------------
HOUSEHOLD PRODUCTS -- 4.0%
40,000 Premark International, Inc. 1,850,000
------------
INSURANCE -- 6.8%
15,000 Ace, Ltd. 510,000
10,000 AFLAC, Inc. 407,500
30,000 Progressive Corp., Ohio 1,245,000
20,000 Travelers, Inc. 1,010,000
------------
3,172,500
------------
MACHINERY & ENGINEERING -- 3.9%
45,000 Briggs & Stratton Corp. 1,816,875
------------
MEDIA/BROADCASTING -- 4.0%
20,000 Tele-Communications Liberty Media
Group (Series A)* 492,500
80,000 Tele-Communications TCI Group
(Series A)* 1,360,000
------------
1,852,500
------------
METALS/MINING -- 6.6%
133,687 Freeport McMoRan, Copper & Gold
(Class A) 3,058,090
------------
MISCELLANEOUS FINANCIAL SERVICES -- 0.5%
1,000 Countrywide Credit Industries, Inc. 22,125
3,000 Federal Home Loan Mortgage Corp. 207,750
------------
229,875
------------
OIL/GAS -- 1.6%
10,000 Triton Energy Corp.* $ 466,250
15,000 Union Texas Petroleum Holdings,
Inc. 270,000
------------
736,250
------------
</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.
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
PAPER PRODUCTS -- 4.0%
35,000 Champion International Corp. 1,872,500
------------
TELECOMMUNICATIONS -- 4.5%
55,000 Sprint Corp. 2,117,500
------------
TEXTILES -- 8.6%
20,000 Shaw Industries, Inc. 255,000
50,000 Unifi, Inc. 1,125,000
55,000 VF Corp. 2,633,125
------------
4,013,125
------------
Total Common Stocks
(cost -- $30,820,524) $ 33,798,840
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $43,444,409) 99.2% $ 46,175,096
Other Assets in Excess of
Other Liabilities 0.8 358,263
------ ------------
TOTAL NET ASSETS 100.0 % $ 46,533,359
------ ------------
------ ------------
</TABLE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 24.6%
$28,300,000 J.P. Morgan, 5.85%, 11/01/95
(proceeds at maturity:
$28,304,599, collateralized by
$27,265,000 par, $28,866,819
value, U.S. Treasury Notes,
7.50%, 10/31/99)
(cost -- $28,300,000) $ 28,300,000
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.6%
$ 652,460 9.50%, 12/01/02 - 11/01/03
(cost -- $657,455) $ 679,981
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I -- 43.6%
$19,729,923 7.00%, 2/15/22 - 11/15/23 $ 19,594,181
10,813,268 7.50%, 2/15/22 - 5/15/24 10,955,138
7,998,232 8.00%, 4/15/02 - 5/15/25 8,250,767
10,522,241 8.50%, 6/15/01 - 9/15/24 10,956,944
449,937 10.50%, 1/15/98 - 12/15/00 472,573
------------
Total Government National Mortgage
Association I (cost -- $50,865,933) $ 50,229,603
------------
U.S. TREASURY NOTES -- 30.4%
$15,000,000 5.875%, 8/15/98 $ 15,070,350
5,000,000 6.125%, 5/31/97 5,035,950
14,000,000 7.75%, 11/30/99 14,975,660
------------
Total U.S. Treasury Notes
(cost -- $34,397,838) $ 35,081,960
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments
(cost -- $114,221,226) 99.2% $114,291,544
------ ------------
- ------------------------------------------------
PRINCIPAL
AMOUNT
SUBJECT
TO PUT VALUE
- ------------------------------------------------------
WRITTEN PUT OPTIONS OUTSTANDING -- (0.1%)
$25,000,000 U.S. Treasury Notes, 6.125%,
9/30/00, expiring Nov. '95, strike
@ $101.3125
(premium received: $132,812) $ (117,188)
------------
Other Assets in Excess of
Other Liabilities 0.9 1,067,411
------ ------------
TOTAL NET ASSETS 100.0 % $115,241,767
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
23
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
INVESTMENT QUALITY INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 4.5%
MISCELLANEOUS FINANCIAL SERVICES
$ 1,800,000 Beneficial Corp.
5.75%, 11/06/95 $ 1,798,563
570,000 Household Finance Corp.
5.73%, 11/06/95 569,546
425,000 Merrill Lynch & Co., Inc.
5.75%, 11/02/95 424,932
------------
Total Short-Term Corporate Notes
(cost -- $2,793,041) $ 2,793,041
------------
CORPORATE NOTES & BONDS -- 93.6%
AEROSPACE -- 3.4%
$ 2,000,000 Boeing Co.
7.50%, 8/15/42 $ 2,092,300
------------
AIRLINES -- 2.9%
1,000,000 American Airlines
9.73%, 9/29/14 1,133,870
550,000 Delta Air Lines, Inc.
10.375%, 2/01/11 650,551
------------
1,784,421
------------
AUTOMOTIVE -- 3.6%
2,000,000 Ford Motor Credit Co. (A)
8.875%, 11/15/22 2,234,600
------------
BANKING -- 6.5%
70,000 NatWest Bancorp, Inc.
9.375%, 11/15/03 81,979
1,300,000 NCNB Corp.
10.20%, 7/15/15 1,680,731
500,000 RBSG Capital Corp.
10.125%, 3/01/04 606,020
1,500,000 Westpac Banking Corp.
9.125%, 8/15/01 1,680,810
------------
4,049,540
------------
CHEMICALS -- 1.0%
500,000 Rohm & Haas Co.
9.50%, 4/01/21 607,720
------------
CONGLOMERATES -- 4.0%
2,000,000 Canadian Pacific Ltd.
9.45%, 8/01/21 2,517,380
------------
ENTERTAINMENT -- 5.2%
3,000,000 Time Warner, Inc.
9.15%, 2/01/23 3,253,800
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
INSURANCE -- 11.6%
$ 1,000,000 Aetna Life & Casualty Co.
8.00%, 1/15/17 $ 1,015,020
1,200,000 Capital Holding Corp.
8.75%, 1/15/17 1,263,636
2,000,000 CNA Financial Corp.
7.25%, 11/15/23 1,900,200
3,000,000 Torchmark, Inc.
7.875%, 5/15/23 3,064,440
------------
7,243,296
------------
LEASING -- 2.7%
1,600,000 Ryder Systems, Inc.
8.75%, 3/15/17 1,712,464
------------
MACHINERY & ENGINEERING -- 3.3%
1,750,000 Caterpillar, Inc.
9.75%, 6/01/19 2,056,373
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.4%
20,000 Beneficial Corp.
12.875%, 8/01/13 24,110
1,500,000 BHP Finance USA Ltd.
8.50%, 12/01/12 1,700,430
Lehman Brothers, Inc.
865,000 9.875%, 10/15/00 955,280
115,000 10.00%, 5/15/99 127,045
205,000 Midland American Capital Corp.
12.75%, 11/15/03 240,533
3,000,000 Prudential Funding Corp.
6.75%, 9/15/23 (B) 2,672,760
1,250,000 Source One Mortgage Services Corp.
9.00%, 6/01/12 1,363,087
------------
7,083,245
------------
OIL/GAS -- 5.9%
3,000,000 Occidental Petroleum Corp.
11.125%, 6/01/19 3,677,430
------------
PAPER PRODUCTS -- 0.2%
100,000 Union Camp Corp.
10.00%, 5/01/19 113,709
------------
PIPELINES -- 3.1%
1,500,000 TransCanada Pipelines Ltd.
9.875%, 1/01/21 1,930,965
------------
RETAIL -- 1.3%
May Department Stores Co.
250,000 9.875%, 6/01/17 276,337
405,000 10.625%, 11/01/10 541,542
------------
817,879
------------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
TELECOMMUNICATIONS -- 11.8%
$ 2,500,000 New York Telephone Co.
9.375%, 7/15/31 $ 2,965,900
2,000,000 Pacific Bell
8.50%, 8/15/31 2,191,900
2,000,000 Southern New England Telephone Co.
8.70%, 8/15/31 2,168,720
------------
7,326,520
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.5%
2,000,000 American Brands, Inc.
7.875%, 1/15/23 2,153,300
------------
UTILITIES -- 7.0%
2,000,000 Hydro-Quebec
8.50%, 12/01/29 2,203,280
2,000,000 Southern California Edison Co.
8.875%, 6/01/24 2,140,540
------------
4,343,820
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
OTHER -- 5.2%
$ 1,447,305 DLJ Mortgage Acceptance Corp.
8.75%, 11/25/24 $ 1,471,276
1,500,000 Nova Scotia (Province of)
8.875%, 7/01/19 1,733,370
------------
3,204,646
------------
Total Corporate Notes & Bonds
(cost -- $54,144,780) $ 58,203,408
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $56,937,821) 98.1 % $ 60,996,449
Other Assets in Excess of
Other Liabilities 1.9 1,192,720
------ ------------
TOTAL NET ASSETS 100.0 % $ 62,189,169
------ ------------
------ ------------
</TABLE>
(A) Security segregated (partial) as collateral for open futures contracts. The
aggregate market value of such security is $558,650.
(B) Resale of the security is restricted to qualified institutional investors.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<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 --
$258,707,414, $542,282,713,
$141,711,266, $43,444,409,
$85,921,226 and $56,937,821,
respectively)...................... $330,881,971 $641,676,243 $150,298,607 $46,175,096 $ 85,991,544 $60,996,449
Repurchase agreement
(cost -- $28,300,000).............. -- -- -- -- 28,300,000 --
Cash................................ 45,640 547,052 554,656 43,048 147,175 59,556
Receivable for fund shares sold..... 530,951 3,886,531 429,526 135,588 112,467 66,286
Dividends receivable 243,046 997,122 50,222 40,770 -- --
Interest receivable................. 70,681 80,486 85,156 232,993 1,100,769 1,428,564
Receivable for investments sold..... -- 3,775,999 1,519,249 -- -- --
Receivable for mortgage
prepayments........................ -- -- -- -- 9,512 --
Deferred organization expenses...... -- -- -- 19,361 -- 1,598
Other assets........................ 39,549 22,478 12,365 17,891 30,144 12,304
------------ ------------ ------------ ----------- ------------ -----------
Total Assets...................... 331,811,838 650,985,911 152,949,781 46,664,747 115,691,611 62,564,757
------------ ------------ ------------ ----------- ------------ -----------
LIABILITIES
Written put options outstanding, at
value (premiums received:
$132,812).......................... -- -- -- -- 117,188 --
Payable for fund shares redeemed.... 246,415 541,931 381,171 39,485 94,741 182,432
Distribution fee payable............ 57,478 218,953 31,207 9,227 13,696 14,560
Investment advisory fee payable..... 54,437 103,767 24,467 6,603 11,374 6,111
Payable for investments purchased... -- 15,310,750 3,596,750 -- -- --
Dividends payable................... -- -- -- -- 100,543 79,161
Payable for futures variation
margin............................. -- -- -- -- -- 33,750
Other payables and accrued
expenses........................... 141,605 299,396 101,188 76,073 112,302 59,574
------------ ------------ ------------ ----------- ------------ -----------
Total Liabilities................. 499,935 16,474,797 4,134,783 131,388 449,844 375,588
------------ ------------ ------------ ----------- ------------ -----------
NET ASSETS
Par value........................... 22,865,787 259,205 86,170 42,633 102,228 57,180
Paid-in-surplus..................... 211,941,042 523,701,982 131,509,611 41,486,396 124,603,694 59,929,025
Accumulated undistributed net
investment income (loss)........... 2,115,981 3,043,582 817,130 62,229 (100,543) (1,302)
Accumulated undistributed net
realized gain (loss) on
investments........................ 22,214,536 8,112,815 7,814,746 2,211,414 (9,449,554) (1,441,862)
Net unrealized appreciation on
investments........................ 72,174,557 99,393,530 8,587,341 2,730,687 85,942 3,646,128
------------ ------------ ------------ ----------- ------------ -----------
Total Net Assets.................. $331,311,903 $634,511,114 $148,814,998 $46,533,359 $115,241,767 $62,189,169
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS A:
Fund shares outstanding............. 19,476,461 14,934,153 6,717,417 3,395,059 9,111,820 4,144,692
------------ ------------ ------------ ----------- ------------ -----------
Net asset value per share........... $ 14.51 $ 24.59 $ 17.31 $ 10.92 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
Maximum offering price per share*... $ 15.35 $ 26.02 $ 18.32 $ 11.46 $ 11.83 $ 11.42
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS B:
Fund shares outstanding............. 2,682,851 8,945,500 1,369,612 700,417 855,263 1,207,703
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.37 $ 24.33 $ 17.11 $ 10.88 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS C:
Fund shares outstanding............. 706,475 2,040,801 529,946 167,833 255,735 365,603
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.35 $ 24.31 $ 17.11 $ 10.89 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
</TABLE>
*Sales charges decrease on purchases of $50,000 or higher.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GROWTH
QUEST FOR SMALL AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
FUND, INC. FUND FUND FUND INCOME FUND INCOME FUND
----------- ----------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends*................... $4,933,153 $5,805,392 $ 1,902,266 $ 693,240 $ -- $ --
Interest..................... 2,545,437 4,798,092 1,684,966 1,089,203 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
Total investment income.... 7,478,590 10,603,484 3,587,232 1,782,443 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
OPERATING EXPENSES
Investment advisory fees
(note 2a)................... 2,893,435 3,923,159 1,456,594 333,289 755,883 351,860
Distribution fees (note
2c)......................... 1,607,236 2,665,031 859,394 191,723 455,179 311,219
Transfer and dividend
disbursing agent fees (note
1i)......................... 330,355 410,006 206,267 73,852 130,367 71,201
Accounting service fees (note
2b)......................... -- 103,747 108,951 112,800 121,310 105,362
Registration fees............ 54,800 141,636 34,952 34,042 32,098 33,871
Custodian fees............... 40,216 47,751 22,819 18,724 70,657 21,556
Reports and notices to
shareholders................ 40,057 44,869 27,492 8,814 17,517 10,688
Auditing, consulting and tax
return preparation fees..... 24,597 18,515 18,514 14,435 40,367 17,355
Directors'(Trustees') fees
and expenses................ 17,270 17,270 17,270 8,870 17,270 17,270
Legal fees................... 11,749 10,120 7,222 4,721 6,836 5,236
Amortization of deferred
organization expenses (note
1c)......................... -- -- -- 19,148 -- 12,374
Miscellaneous................ 19,575 13,337 9,189 4,500 14,726 5,566
----------- ----------- ------------- ---------- ----------- -----------
Total operating expenses... 5,039,290 7,395,441 2,768,664 824,918 1,662,210 963,558
Less: Investment advisory
fees waived (note 2a)..... -- -- -- (8,286) -- (42,245)
----------- ----------- ------------- ---------- ----------- -----------
Net operating expenses... 5,039,290 7,395,441 2,768,664 816,632 1,662,210 921,313
----------- ----------- ------------- ---------- ----------- -----------
Net investment income.... 2,439,300 3,208,043 818,568 965,811 7,232,730 3,951,646
----------- ----------- ------------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -- NET
Net realized gain (loss) on
security transactions....... 22,321,532 8,125,065 8,630,413 2,227,731 (3,475,568) (24,232)
Net realized loss on option
transactions (note 1f)...... -- -- -- -- (267,734) --
Net realized loss on futures
transactions (note 1g)...... -- -- (86,670) -- -- (464,750)
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss) on
investments............... 22,321,532 8,125,065 8,543,743 2,227,731 (3,743,302) (488,982)
Net change in unrealized
appreciation (depreciation)
on investments.............. 39,322,642 85,013,107 3,040,965 2,324,387 9,332,957 7,336,722
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss)
and change in unrealized
appreciation
(depreciation) on
investments............... 61,644,174 93,138,172 11,584,708 4,552,118 5,589,655 6,847,740
----------- ----------- ------------- ---------- ----------- -----------
Net increase in net assets
resulting from operations... $64,083,474 $96,346,215 $ 12,403,276 $5,517,929 $12,822,385 $10,799,386
----------- ----------- ------------- ---------- ----------- -----------
----------- ----------- ------------- ---------- ----------- -----------
<FN>
* Net of withholding taxes of $6,473, $732 and $1,752 for Quest for Value, Small
Capitalization and Growth and Income, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUEST FOR VALUE FUND,
INC. OPPORTUNITY FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss).............................. $ 2,439,300 $ 1,726,225 $ 3,208,043 $ 1,397,364
Net realized gain (loss) on investments................... 22,321,532 16,664,331 8,125,065 7,139,720
Net change in unrealized appreciation (depreciation) on
investments.............................................. 39,322,642 (6,250,090) 85,013,107 4,721,481
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. 64,083,474 12,140,466 96,346,215 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) (1,498,248)
Net realized gains -- Class B............................. (1,014,005) (115,604) (1,562,718) (30,484)
Net realized gains -- Class C............................. (255,884) (11,081) (267,734) (11,476)
Tax return of capital -- Class A.......................... -- -- -- --
Tax return of capital -- Class B.......................... -- -- -- --
Tax return of capital -- Class C.......................... -- -- -- --
----------- ----------- ----------- -----------
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................................... 53,027,793 61,908,256 201,988,591 90,332,759
Reinvestment of dividends and distributions............... 16,047,556 9,385,655 6,034,648 3,405,284
Cost of shares redeemed................................... (64,462,161) (80,014,950) (60,771,127) (65,200,453)
----------- ----------- ----------- -----------
Net increase (decrease) -- Class A...................... 4,613,188 (8,721,039) 147,252,112 28,537,590
----------- ----------- ----------- -----------
CLASS B
Net proceeds from sales................................... 22,392,431 12,409,864 160,670,137 40,604,196
Reinvestment of dividends and distributions............... 1,045,812 123,599 1,804,130 124,021
Cost of shares redeemed................................... (3,681,109) (544,061) (14,031,965) (1,026,439)
----------- ----------- ----------- -----------
Net increase -- Class B................................. 19,757,134 11,989,402 148,442,302 39,701,778
----------- ----------- ----------- -----------
CLASS C
Net proceeds from sales................................... 6,835,837 3,521,667 40,882,367 6,945,412
Reinvestment of dividends and distributions............... 280,898 13,020 314,274 32,567
Cost of shares redeemed................................... (1,738,997) (271,901) (4,067,767) (254,081)
----------- ----------- ----------- -----------
Net increase -- Class C................................. 5,377,738 3,262,786 37,128,874 6,723,898
----------- ----------- ----------- -----------
Total net increase (decrease) in net assets from fund
share transactions....................................... 29,748,060 6,531,149 332,823,288 74,963,266
----------- ----------- ----------- -----------
Total increase (decrease) in net assets................. 75,272,768 8,483,512 420,565,369 84,292,784
NET ASSETS
Beginning of year......................................... 256,039,135 247,555,623 213,945,745 129,652,961
----------- ----------- ----------- -----------
End of year (including undistributed net investment income
(loss) of $2,115,981, $1,464,120; $3,043,582, $1,291,867;
$817,130, ($238,336); $62,229, $127,460; ($100,543), $0
and ($1,302), $0, respectively).......................... $331,311,903 $256,039,135 $634,511,114 $213,945,745
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<FN>
*Certain figures have been restated to conform to current year presentation for
Opportunity, Growth and Income and U.S. Government.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAPITALIZATION U.S. GOVERNMENT INCOME
FUND GROWTH AND INCOME FUND FUND INVESTMENT QUALITY
INCOME FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
- -------------------------- ------------------------ -------------------------- ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 818,568 $ (238,336) $ 965,811 $ 966,108 $ 7,232,730 $ 8,291,969 $ 3,951,646 $ 3,846,353
8,543,743 3,366,835 2,227,731 1,768,686 (3,743,302) (4,366,839) (488,982) (952,880)
3,040,965 (3,118,979) 2,324,387 (189,442) 9,332,957 (11,007,688) 7,336,722 (9,068,979)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
12,403,276 9,520 5,517,929 2,545,352 12,822,385 (7,082,558) 10,799,386 (6,175,506)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
-- -- (917,781) (936,128) (6,680,576) (8,071,564) (3,164,967) (3,482,793)
-- -- (105,700) (41,545) (464,033) (196,735) (586,935) (244,424)
-- -- (17,697) (7,305) (89,583) (39,362) (199,744) (119,136)
(3,010,761) (8,036,736) (1,275,011) (4,278,474) -- (3,218,859) -- (367,910)
(434,007) (160,831) (129,812) (152,311) -- (42,833) -- (10,112)
(91,772) (19,543) (20,124) (19,378) -- (7,144) -- (637)
-- -- -- -- (140,061) -- -- --
-- -- -- -- (8,675) -- -- --
-- -- -- -- (1,431) -- -- --
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(3,536,540) (8,217,110) (2,466,125) (5,435,141) (7,384,359) (11,576,497) (3,951,646) (4,225,012)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
38,194,245 127,081,752 8,471,883 5,937,491 18,642,107 17,007,814 8,023,597 12,621,718
2,840,961 7,215,556 2,097,137 5,008,623 5,896,557 9,588,703 2,288,961 2,758,350
(52,052,199) (111,134,238) (6,705,888) (6,040,040) (50,011,121) (74,313,512) (17,520,761) (20,364,228)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(11,016,993) 23,163,070 3,863,132 4,906,074 (25,472,457) (47,716,995) (7,208,203) (4,984,160)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
10,160,304 15,275,222 4,674,731 2,763,975 5,110,647 6,748,251 7,327,816 6,440,954
408,265 148,570 217,205 188,513 319,245 187,137 462,628 185,172
(4,495,109) (811,203) (533,417) (260,750) (3,026,400) (964,994) (2,363,759) (800,932)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,073,460 14,612,589 4,358,519 2,691,738 2,403,492 5,970,394 5,426,685 5,825,194
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,393,572 3,345,761 1,497,250 341,819 2,026,463 1,424,484 1,204,849 3,141,700
88,907 18,810 36,149 26,593 85,658 46,127 93,152 93,436
(1,180,484) (229,505) (232,677) (4,696) (533,211) (289,465) (285,205) (422,838)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
5,301,995 3,135,066 1,300,722 363,716 1,578,910 1,181,146 1,012,796 2,812,298
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
358,462 40,910,725 9,522,373 7,961,528 (21,490,055) (40,565,455) (768,722) 3,653,332
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
9,225,198 32,703,135 12,574,177 5,071,739 (16,052,029) (59,224,510) 6,079,018 (6,747,186)
139,589,800 106,886,665 33,959,182 28,887,443 131,293,796 190,518,306 56,110,151 62,857,337
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
$148,814,998 $139,589,800 $46,533,359 $33,959,182 $115,241,767 $131,293,796 $62,189,169 $56,110,151
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
</TABLE>
29
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
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 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 Adviser 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 major market makers 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
30
<PAGE>
- --------------------------------------------------------------------------------
date and interest income is accrued as earned. Discounts or premiums on debt
securities purchased are accreted or 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.
As required by Statement of Position 93 - 2, Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies, the following table discloses the
reclassifications from accumulated undistributed net investment income(loss) and
accumulated undistributed capital gain(loss) on investments to paid-in-surplus
during the fiscal year ended October 31, 1995:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
NET ACCUMULATED
INVESTMENT UNDISTRIBUTED PAID
INCOME NET REALIZED IN
(LOSS) GAIN (LOSS) SURPLUS
---------- --------------- --------
<S> <C> <C> <C>
Quest for Value -- -- --
Opportunity 3,056 (5,991) 2,935
Small Capitalization 236,898 (559,292) 322,394
Growth and Income 10,136 (152,783) 142,647
U.S. Government (99,081) (407,920) 507,001
Investment Quality (1,302) -- 1,302
</TABLE>
31
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(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, cash
equivalents 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 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. At October 31, 1995, Investment Quality had
the following futures contracts open:
<TABLE>
<CAPTION>
NET
NUMBER OF UNREALIZED
TYPE CONTRACTS SHORT VALUE EXPIRATION LOSS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
CBT U.S. Treasury Bond 120 $13,635,000 Dec. '95 $412,500
</TABLE>
(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 year ended October 31, 1995,
transfer and dividend disbursing agent fees accrued to classes A, B and C were
$279,089, $36,906 and $14,360, respectively, for Quest for Value; $236,086,
$141,736 and $32,184, respectively, for Opportunity; $146,564, $44,501 and
$15,202, respectively, for Small Capitalization; $61,191, $8,864 and $3,797,
respectively, for Growth and Income; $117,106, $8,732 and $4,529, respectively,
for U.S. Government and $58,422, $8,814 and $3,965, respectively, for Investment
Quality Income. These expenses are consolidated, by fund, in the accompanying
Statements of Operations.
32
<PAGE>
- --------------------------------------------------------------------------------
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 year ended October
31, 1995, the Adviser voluntarily waived $8,286 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
year ended October 31, 1995, the Adviser received $48,747, $53,951, $57,800,
$56,310 and $50,362, 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, .05% for U.S. Government and .15% for Investment Quality
and Growth and Income. 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.
For the year ended October 31, 1995, distribution and service fees charged
to classes A, B and C were $1,286,200, $253,926 and $67,110, respectively, for
Quest for Value; $1,258,129, $1,165,226 and $241,676, respectively, for
Opportunity; $597,200, $201,055 and $61,139, respectively, for Small
Capitalization; $133,588, $48,455 and $9,680, respectively, for Growth and
Income; $344,839, $92,104 and $18,236, respectively, for U.S. Government and
$183,475, $95,449 and $32,295, respectively, for Investment Quality Income.
These expenses are consolidated, by fund, in the accompanying Statements of
Operations.
(D) Total brokerage commissions paid by Quest for Value, Opportunity, Small
Capitalization and Growth and Income were $309,310, $647,240, $400,477 and
$112,411, respectively, of which Oppenheimer & Co., Inc., an affiliate of the
Adviser, received $156,970, $266,868, $161,399 and $54,131, respectively, for
the year ended October 31, 1995.
(E) Oppenheimer & Co., Inc. has informed the funds that it received
approximately $390,000, $959,000, $241,000, $35,000, $162,000 and $88,000 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 year ended October 31, 1995.
33
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Distributor has also informed the funds that it received contingent
deferred sales charges on the redemption of Class A and Class C shares of
approximately $10,000, $20,000, $10,000, $100, $6,000 and $2,000 for Quest for
Value, Opportunity, Small Capitalization, Growth and Income, U.S. Government and
Investment Quality, respectively, for the year ended October 31, 1995.
For the year ended October 31, 1995, the Distributor had assigned the right
to receive the compensation and contingent deferred sales charge on Class B
shares to a bank in return for the bank's reimbursement to the Distributor of
commissions paid by the Distributor to brokers/dealers on the sale of Class B
shares.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 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 $ 89,609,378 $ 350,805,248 $ 92,530,292 $54,163,330 $259,064,073 $5,329,244
Sales 116,160,440 67,743,053 99,613,323 41,657,071 304,565,951 4,275,980
</TABLE>
The following table summarizes activity in written option transactions for U.S.
Government for the year ended October 31, 1995:
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
----------- -----------
<S> <C> <C>
Option contracts written: Outstanding
beginning of year 2 $ 142,188
Options written 47 3,306,327
Options terminated in closing purchase
transactions (25) (1,788,359)
Options exercised (15) (920,313)
Options expired (8) (607,031)
--- -----------
Option contracts written: Outstanding end of
year 1 $ 132,812
--- -----------
--- -----------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
4. FUND SHARE TRANSACTIONS
The following tables summarize the fund share activity for the two years
ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL CAPITALIZATION
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued................................ 4,045,256 5,077,999 9,028,138 4,781,210 2,307,655 7,804,081
Dividends and distributions
reinvested........................... 1,440,961 797,941 328,864 186,714 181,647 450,409
Redeemed.............................. (4,924,606) (6,566,112) (2,718,312) (3,470,990) (3,125,095) (6,835,042)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 561,611 (690,172) 6,638,690 1,496,934 (635,793) 1,419,448
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 1,718,575 1,020,362 7,259,921 2,145,988 620,242 936,328
Dividends and distributions
reinvested........................... 94,418 10,514 98,923 6,821 26,272 9,286
Redeemed.............................. (277,524) (44,566) (624,721) (54,500) (271,244) (50,575)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 1,535,469 986,310 6,734,123 2,098,309 375,270 895,039
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 523,083 289,679 1,828,198 367,367 389,503 205,454
Dividends and distributions
reinvested........................... 25,381 1,106 17,240 1,789 5,721 1,176
Redeemed.............................. (127,913) (22,509) (176,839) (13,680) (71,284) (13,923)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 420,551 268,276 1,668,599 355,476 323,940 192,707
----------- ----------- ----------- ----------- ----------- -----------
Total net increase................ 2,517,631 564,414 15,041,412 3,950,719 63,417 2,507,194
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT INVESTMENT QUALITY
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Issued................................ 790,817 591,037 1,685,034 1,484,549 777,291 1,194,443
Dividends and distributions
reinvested........................... 216,701 506,743 534,322 839,276 222,241 263,168
Redeemed.............................. (641,530) (600,435) (4,526,190) (6,552,668) (1,706,041) (1,940,417)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 365,988 497,345 (2,306,834) (4,228,843) (706,509) (482,806)
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 438,682 269,571 467,177 594,901 708,238 614,495
Dividends and distributions
reinvested........................... 22,368 19,104 28,912 16,698 44,636 18,150
Redeemed.............................. (51,318) (26,407) (272,297) (86,599) (228,114) (77,488)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 409,732 262,268 223,792 525,000 524,760 555,157
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 140,694 33,894 182,514 123,553 116,706 290,357
Dividends and distributions
reinvested........................... 3,711 2,697 7,733 4,123 8,984 9,047
Redeemed.............................. (21,778) (469) (47,976) (25,877) (27,176) (41,081)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 122,627 36,122 142,271 101,799 98,514 258,323
----------- ----------- ----------- ----------- ----------- -----------
Total net increase (decrease)..... 898,347 795,735 (1,940,771) (3,602,044) (83,235) 330,674
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
35
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At October 31, 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 $72,832,935 $ (782,009) $72,050,926 $258,831,045
Opportunity 107,623,664 (8,230,134) 99,393,530 542,282,713
Small Capitalization 13,114,205 (4,646,081) 8,468,124 141,830,483
Growth and Income 3,674,355 (1,106,543) 2,567,812 43,607,284
U.S. Government 852,086 (2,085,345) (1,233,259) 115,524,803
Investment Quality 4,461,416 (402,788) 4,058,628 56,937,821
</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 two years ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR SMALL
VALUE OPPORTUNITY CAPITALIZATION
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, 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 U.S. INVESTMENT
INCOME GOVERNMENT QUALITY
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.289 $ 0.319 $ 0.639 $ 0.593 $ 0.707 $ 0.680
Class B.......................... 0.242 0.265 0.562 0.510 0.646 0.609
Class C.......................... 0.209 0.261 0.549 0.509 0.643 0.608
NET REALIZED GAINS:
Class A.......................... $ 0.422 $ 1.669 -- $ 0.213 -- $ 0.069
Class B.......................... 0.422 1.669 -- 0.213 -- 0.069
Class C.......................... 0.422 1.669 -- 0.213 -- 0.069
TAX RETURN OF CAPITAL:
Class A.......................... -- -- $ 0.013 -- -- --
Class B.......................... -- -- 0.013 -- -- --
Class C.......................... -- -- 0.013 -- -- --
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
During the year ended October 31, 1995, U.S. Government wrote covered
options and Small Capitalization and Investment Quality entered into futures
contracts in order to hedge their existing portfolio securities against
fluctuations in value. Written options and futures contracts involve elements of
market risk in excess of the amounts reflected in the fund's Statements of
Assets and Liabilities. A 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, a fund bears the market risk of an unfavorable change in the price of
the security underlying the written option. For futures contracts, the contract
amount reflects the extent of a fund's exposure to off balance sheet risk.
Written options and futures contracts also have elements of credit risk; i.e.
the risk that the counterparty may not perform. If the option or futures
contracts are traded through a regulated exchange, the counterparty risk is
generally eliminated since the exchange interposes itself into the transaction.
If, however, the option or futures contracts are traded in the over-the-counter
market, counterparty risk can exist.
9. NET CAPITAL LOSS CARRYOVERS
For the fiscal year ended October 31, 1995, Growth and Income will utilize
$188,067 of net capital loss carryovers. Growth and Income has net capital loss
carryovers of $233,749 of which $177,811 and $55,938 will be available, to the
extent provided by regulations, to offset future net capital gains realized
through the fiscal years ending 1996 and 2000, respectively. However, due to the
acquisition of the Unified Income Fund and the Unified Mutual Shares Fund in
1992, the loss carryovers are further limited by IRC Section 382 to $188,067
annually. As a result, Growth and Income had $370,083 of net capital loss
carryover expire on October 31, 1995 which is no longer available for future
periods. In addition, U.S. Government, at October 31, 1995, had a net capital
loss carryover of $8,145,977 available, to the extent provided by regulations,
to offset future net capital gains realized before the end of fiscal year 2003.
Also at October 31, 1995, Investment Quality had a net capital loss carryover of
$1,854,362 of which $952,880 and $901,482 will be available to offset future net
capital gains realized through the fiscal years ending 2002 and 2003,
respectively. To the extent that the capital loss carryovers are used to offset
future net capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
10. SUBSEQUENT EVENTS
(a) On November 22, 1995, OCC Distributors (previously Quest for Value
Distributors), OpCap Advisors (previously Quest for Value Advisors) and their
parent Oppenheimer Capital consummated a transaction with Oppenheimer Management
Corporation ("OMC") which resulted in the sale to OMC of certain mutual fund
assets of OCC Distributors and OpCap Advisors including the transfer of the
management agreements and other contracts relating to certain Quest for Value
Funds and the use of the name "Quest for Value". As part of the transaction,
certain former Quest for Value Funds, including the Quest for Value Fund and the
Opportunity Fund, the Small Capitalization Fund, the Growth and Income Fund and
the Officers Fund, portfolios of the Quest for Value Family of Funds, have
entered into an investment advisory agreement with OMC and OMC has entered into
a sub-advisory agreement with OpCap Advisors with respect to each of such funds.
Pursuant to the transaction, the U.S. Government Income Fund, the Investment
Quality Income Fund, the National Tax-Exempt Fund, the California Tax-Exempt
Fund and the New York Tax-Exempt Fund were merged, as part of a tax-free
reorganization, into the Oppenheimer U.S. Government Trust, the Oppenheimer Bond
Fund, the Oppenheimer Tax-Free Bond Fund, the Oppenheimer California Tax-Exempt
Fund and the Oppenheimer New York Tax-Exempt Fund, respectively.
(b) On November 22, 1995, U.S. Government and Investment Quality paid the
following per share net investment income dividends to shareholders of record on
the close of business November 22, 1995:
<TABLE>
<CAPTION>
CLASS CLASS CLASS
A B C
------ ------ ------
<S> <C> <C> <C>
U.S. Government $0.0352 $0.0302 $0.0298
Investment Quality 0.0384 0.0345 0.0343
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 12.59 $ 0.12 $ 2.71 $ 2.83 ($ 0.08) ($ 0.83) ($ 0.91)
1994 12.51 0.09 0.50 0.59 (0.04) (0.47) (0.51)
1993 11.71 0.05 1.34 1.39 (0.05) (0.54) (0.59)
1992 10.61 0.04 1.77 1.81 (0.07) (0.64) (0.71)
1991 7.84 0.09 2.84 2.93 (0.16) -- (0.16)
Class B,
YEAR ENDED OCTOBER 31,
1995 12.53 0.05 2.69 2.74 (0.07) (0.83) (0.90)
1994 12.51 0.02 0.50 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.14) (0.15) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 12.52 0.04 2.70 2.74 (0.08) (0.83) (0.91)
1994 12.50 0.01 0.51 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.15) (0.16) -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $14.51 24.74% $282,615 1.68%(1) 0.90%(1) 36%
1994 12.59 5.01% 238,085 1.71% 0.72% 49%
1993 12.51 12.27% 245,320 1.75% 0.40% 27%
1992 11.71 18.45% 142,939 1.75% 0.53% 41%
1991 10.61 37.94% 79,914 1.83% 1.06% 48%
Class B,
YEAR ENDED OCTOBER 31,
1995 14.37 24.08% 38,557 2.21%(1) 0.36%(1) 36%
1994 12.53 4.43% 14,373 2.24% 0.14% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.51 (1.19%) 2,015 2.27%(5) (1.19%)(5) 27%
Class C,
YEAR ENDED OCTOBER 31,
1995 14.35 24.10% 10,140 2.26%(1) 0.31%(1) 36%
1994 12.52 4.45% 3,581 2.28% 0.09% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.50 (1.26%) 221 2.27%(5) (0.90%)(5) 27%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $257,239,913, $25,392,617 AND $6,711,023, RESPECTIVELY.
Opportunity Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 19.69 $ 0.23 $ 5.40 $ 5.63 ($ 0.12) ($ 0.61) ($ 0.73)
1994 18.71 0.18 1.35 1.53 (0.33) (0.22) (0.55)
1993 16.73 0.35 2.02 2.37 (0.07) (0.32) (0.39)
1992 14.29 0.09 2.93 3.02 (0.03) (0.55) (0.58)
1991 9.74 0.03 4.78 4.81 (0.23) (0.03) (0.26)
Class B,
YEAR ENDED OCTOBER 31,
1995 19.59 0.11 5.36 5.47 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.34 1.42 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 19.58 0.08 5.38 5.46 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.33 1.41 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $24.59 29.88% $367,240 1.69%(1) 1.02%(1) 21%
1994 19.69 8.41% 163,340 1.78% 0.96% 42%
1993 18.71 14.34% 127,225 1.83% 2.69% 24%
1992 16.73 21.93% 40,563 2.27% 0.72% 32%
1991 14.29 50.44% 8,446 2.35%(2) 0.30%(2) 88%
Class B,
YEAR ENDED OCTOBER 31,
1995 24.33 29.19% 217,663 2.21%(1) 0.48%(1) 21%
1994 19.59 7.84% 43,317 2.34% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 2,115 2.52%(5) 1.32%(5) 24%
Class C,
YEAR ENDED OCTOBER 31,
1995 24.31 29.16% 49,608 2.31%(1) 0.37%(1) 21%
1994 19.58 8.06% 7,289 2.35% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 313 2.52%(5) 1.13%(5) 24%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $251,625,672, $116,522,609 AND $24,167,608, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO 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.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** 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.
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments Distributions
<S> <C> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 16.33 $ 0.11 $ 1.29 $ 1.40 $ -- ($ 0.42) ($ 0.42)
1994 17.68 (0.03) 0.01 (0.02) -- (1.33) (1.33)
1993 14.60 (0.04) 4.26 4.22 -- (1.14) (1.14)
1992 13.52 -- 1.50 1.50 -- (0.42) (0.42)
1991 8.80 (0.05) 4.85 4.80 (0.08) -- (0.08)
Class B,
YEAR ENDED OCTOBER 31,
1995 16.24 0.02 1.27 1.29 -- (0.42) (0.42)
1994 17.66 (0.11) 0.02 (0.09) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.49 0.47 -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 16.23 0.01 1.29 1.30 -- (0.42) (0.42)
1994 17.67 (0.13) 0.02 (0.11) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.50 0.48 -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $17.31 8.82% $116,307 1.80%(1) 0.67%(1) 76%
1994 16.33 0.04% 120,102 1.88% (0.14%) 67%
1993 17.68 30.21% 104,898 1.89% (0.36%) 74%
1992 14.60 11.60% 39,693 2.11% (0.04%) 95%
1991 13.52 55.01% 20,686 2.25%(2) (0.41%)(2) 103%
Class B,
YEAR ENDED OCTOBER 31,
1995 17.11 8.17% 23,440 2.37%(1) 0.09%(1) 76%
1994 16.24 (0.39%) 16,144 2.48% (0.70%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.66 2.73% 1,754 2.57%(5) (1.15%)(5) 74%
Class C,
YEAR ENDED OCTOBER 31,
1995 17.11 8.24% 9,068 2.38%(1) 0.08%(1) 76%
1994 16.23 (0.51%) 3,344 2.59% (0.81%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.67 2.79% 235 2.57%(5) (1.20%)(5) 74%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $119,440,010, $20,105,476 AND $6,113,900, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO 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.
Growth and Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.09 $ 0.27 $ 1.27 $ 1.54 ($ 0.29) ($ 0.42) ($ 0.71)
1994 11.24 0.32 0.55 0.87 (0.32) (1.70) (2.02)
1993 10.80 0.30 0.73 1.03 (0.26) (0.33) (0.59)
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.00(3) 0.28 0.80 1.08 (0.28) -- (0.28)
Class B,
YEAR ENDED OCTOBER 31,
1995 10.07 0.19 1.28 1.47 (0.24) (0.42) (0.66)
1994 11.23 0.25 0.56 0.81 (0.27) (1.70) (1.97)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
Class C,
YEAR ENDED OCTOBER 31,
1995 10.07 0.15 1.30 1.45 (0.21) (0.42) (0.63)
1994 11.23 0.24 0.56 0.80 (0.26) (1.70) (1.96)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $10.92 16.35% $37,082 1.99%(1,2) 2.60%(1,2) 130%
1994 10.09 8.64% 30,576 1.86%(2) 3.16%(2) 113%
1993 11.24 9.93% 28,466 1.90%(2) 2.66%(2) 192%
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.80 10.84% 8,057 2.23%(2,5) 2.73%(2,5) 77%
Class B,
YEAR ENDED OCTOBER 31,
1995 10.88 15.65% 7,623 2.59%(1,2) 1.71%(1,2) 130%
1994 10.07 7.96% 2,928 2.47%(2) 2.53%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 319 2.49%(2,5) 1.83%(2,5) 192%
Class C,
YEAR ENDED OCTOBER 31,
1995 10.89 15.38% 1,828 2.88%(1,2) 1.39%(1,2) 130%
1994 10.07 7.91% 455 2.62%(2) 2.39%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 102 2.49%(2,5) 2.18%(2,5) 192%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995 FOR CLASSES A, B, AND
C WERE $33,396,923, $4,845,598 AND $967,910, 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 2.02% AND 2.57%,
RESPECTIVELY, FOR THE YEAR ENDED OCOTBER 31, 1995, 2.32% AND 2.70%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 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 2.57% AND 1.73%, RESPECTIVELY, FOR CLASS B AND 2.84%
AND 1.43%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 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) COMMENCEMENT OF OPERATIONS.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** 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.
39
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
(CONTINUED)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Tax
Value, Investment (Loss) from from Net Realized return
Beginning Income on Investment Investment Gain on of
of Period (Loss) Investments Operations Income Investments Capital
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.79 $ 0.64 $ 0.49 $ 1.13 ($ 0.64) $ -- ($ 0.01)
1994 12.08 0.59 (1.08) (0.49) (0.59) (0.21) --
1993 11.92 0.65 0.35 1.00 (0.68) (0.16) --
1992 11.80 0.74 0.18 0.92 (0.74) (0.06) --
1991 11.35 0.85 0.61 1.46 (0.86) (0.15) --
Class B,
YEAR ENDED OCTOBER 31,
1995 10.79 0.56 0.49 1.05 (0.56) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
Class C,
YEAR ENDED OCTOBER 31,
1995 10.79 0.55 0.49 1.04 (0.55) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Total Value, End of Average (Loss) Portfolio
Dividends and End of Total Period Net to Average Turnover
Distributions Period Return* (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 ($0.65) $11.27 10.78% $102,718 1.26%(1) 5.81%(1) 245%
1994 (0.80) 10.79 (4.15%) 123,257 1.20%(2) 5.19%(2) 126%
1993 (0.84) 12.08 8.55% 189,091 1.15%(2) 5.33%(2) 315%
1992 (0.80) 11.92 7.98% 151,197 1.15%(2) 6.26%(2) 207%
1991 (1.01) 11.80 13.40% 82,400 1.15%(2) 7.24%(2) 309%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.57) 11.27 10.01% 9,641 1.94%(1) 5.04%(1) 245%
1994 (0.72) 10.79 (4.84%) 6,813 1.92%(2) 4.53%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.29% 1,286 1.85%(2,5) 3.07%(2,5) 315%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.56) 11.27 9.89% 2,883 2.06%(1) 4.91%(1) 245%
1994 (0.72) 10.79 (4.84%) 1,224 1.94%(2) 4.57%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.34% 141 1.85%(2,5) 3.89%(2,5) 315%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $114,946,501, $9,210,406 AND $1,823,599, RESPECTIVELY.
(2) DURING THE PERIODS NOTED 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, AND 1.46% AND 6.93%,
RESPECTIVELY, FOR THE YEAR ENDED 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 1.93% 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, RESEPCTIVELY, 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.
Investment Quality Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 9.67 $ 0.71 $ 1.21 $ 1.92 ($ 0.71) $ -- $ --
1994 11.49 0.68 (1.75) (1.07) (0.68) (0.07) --
1993 10.36 0.68 1.19 1.87 (0.68) (0.06) --
1992 10.06 0.80 0.30 1.10 (0.80) -- --
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 10.00(3) 0.71 0.06 0.77 (0.71) -- --
Class B,
YEAR ENDED OCTOBER 31,
1995 9.67 0.65 1.21 1.86 (0.65) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.08 (0.03) 0.05 (0.08) -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 9.67 0.64 1.21 1.85 (0.64) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.09 (0.03) 0.06 (0.09) -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 ($0.71) $10.88 20.49% $ 45,078 1.44%(1,2) 6.90%(1,2) 8%
1994 (0.75) 9.67 (9.61%) 46,922 1.29%(2) 6.47%(2) 33%
1993 (0.74) 11.49 18.64% 61,288 1.20%(2) 6.07%(2) 12%
1992 (0.80) 10.36 11.21% 29,701 0.95%(2) 7.62%(2) 18%
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 (0.71) 10.06 8.11% 17,235 0.82%(2,5) 8.25%(2,5) 19%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.65) 10.88 19.78% 13,134 2.03%(1,2) 6.15%(1,2) 8%
1994 (0.68) 9.67 (10.22%) 6,605 1.92%(2) 5.85%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.08) 11.49 0.45% 1,468 1.84%(2,5) 3.68%(2,5) 12%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.64) 10.88 19.72% 3,977 2.08%(1,2) 6.18%(1,2) 8%
1994 (0.68) 9.67 (10.23%) 2,583 1.90%(2) 6.01%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 11.49 0.55% 101 1.84%(2,5) 4.83%(2,5) 12%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $45,868,837, $9,544,915 AND $3,229,501, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND ASSUMED A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND ASSUMPTIONS 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 1.52% AND 6.82%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1995, 1.59% AND 6.71%,
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
AASETS WOULD HAVE BEEN 2.09% AND 6.09%, RESPECTIVELY, FOR CLASS B AND 2.15%
AND 6.11%, RESPECTIVELY FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 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) 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.
40
<PAGE>
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of
Quest for Value Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of Quest
for Value Fund, Inc., including the schedule of investments, as of October 31,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two year period
then ended and the financial highlights for each of the years in the five year
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Quest
for Value Fund, Inc. as of October 31, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the years in the
two year period then ended, and the financial highlights for each of the years
in the five year period then ended in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
New York, New York
December 20, 1995
41
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Quest for Value Family of Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Opportunity Fund, the Small
Capitalization Fund, the Growth and Income Fund, the U.S. Government Income
Fund, and the Investment Quality Income Fund (constituting part of Quest for
Value Family of Funds, hereafter referred to as the "Fund") at October 31, 1995,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 20, 1995
42
<PAGE>
- --------------------------------------------------------------------------------
TAX INFORMATION
We are required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise you within 60 days of the funds' fiscal year end (October 31,
1995) as to the Federal tax status of dividends and distributions received by
shareholders during such fiscal year. Accordingly, we are advising you that
during the fiscal year ended October 31, 1995, the funds paid per share
dividends and distributions to shareholders as follows:
<TABLE>
<CAPTION>
TAXABLE AS ORDINARY INCOME
------------------------------
NET INVESTMENT SHORT-TERM LONG-TERM TAX RETURN
INCOME CAPITAL GAINS CAPITAL GAINS OF CAPITAL
--------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
QUEST FOR VALUE FUND, INC.
Class A..................................... $ 0.0830 $ 0.0924 $ 0.7355 $ --
Class B..................................... 0.0743 0.0924 0.7355 --
Class C..................................... 0.0813 0.0924 0.7355 --
OPPORTUNITY FUND
Class A..................................... 0.1171 0.2077 0.4058 --
Class B..................................... 0.1166 0.2077 0.4058 --
Class C..................................... 0.1168 0.2077 0.4058 --
SMALL CAPITALIZATION FUND
Class A..................................... -- 0.0959 0.3195 --
Class B..................................... -- 0.0959 0.3195 --
Class C..................................... -- 0.0959 0.3195 --
GROWTH AND INCOME FUND
Class A..................................... 0.2888 0.2351 0.1864 --
Class B..................................... 0.2423 0.2351 0.1864 --
Class C..................................... 0.2091 0.2351 0.1864 --
U.S. GOVERNMENT INCOME FUND
Class A..................................... 0.6389 -- -- 0.0126
Class B..................................... 0.5615 -- -- 0.0126
Class C..................................... 0.5490 -- -- 0.0126
INVESTMENT QUALITY INCOME FUND
Class A..................................... 0.7074 -- -- --
Class B..................................... 0.6456 -- -- --
Class C..................................... 0.6429 -- -- --
</TABLE>
Since each funds' fiscal year is not the calendar year, another notification
will be sent with respect to calendar year 1995. In January 1996, you will be
advised on IRS Form 1099 DIV as to the Federal tax status of the dividends and
distributions received by you in calendar 1995. The amounts that will be
reported, will be the amounts to use on your 1995 Federal income tax return and
probably will differ from the amounts which we must report for each funds'
fiscal year ended October 31, 1995. Shareholders are advised to consult with
their own tax advisers as to the Federal, state and local tax status of each
funds' income dividends and realized gain distributions received.
43
<PAGE>
QUEST FOR VALUE QUEST FOR VALUE
<TABLE>
<S> <C>
TABLE OF CONTENTS
PRESIDENT'S LETTER............ 1
INVESTMENT REVIEW............. 2
SCHEDULES OF INVESTMENTS...... 15
STATEMENTS OF ASSETS AND
LIABILITIES................... 26
STATEMENTS OF OPERATIONS...... 27
STATEMENTS OF CHANGES IN NET
ASSETS........................ 28
NOTES TO FINANCIAL
STATEMENTS.................... 30
FINANCIAL HIGHLIGHTS.......... 38
INDEPENDENT AUDITORS'
REPORT........................ 41
REPORT OF INDEPENDENT
ACCOUNTANTS................... 42
TAX INFORMATION............... 43
</TABLE>
QUEST FOR VALUE FUND, INC.
OPPORTUNITY FUND
SMALL CAPITALIZATION FUND
GROWTH AND INCOME FUND
U.S. GOVERNMENT INCOME FUND
INVESTMENT QUALITY INCOME FUND
ANNUAL REPORT
OCTOBER 31, 1995
[LOGO]
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION ONLY TO SHAREHOLDERS AND TO OTHERS
WHO HAVE RECEIVED A COPY OF THE PROSPECTUS.
