REVERE PAUL SEPARATE ACCOUNT ONE, N-30D, 1996-02-29

REVERE PAUL SEPARATE ACCOUNT ONE
N-30D, 1996-02-29

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<PAGE>

ANNUAL REPORT
For the period from
Inception (October 25, 1995) through
December 31, 1995

[LOGO]

WORCESTER, MASSACHUSETTS
<PAGE>
STATEMENT OF ASSETS, LIABILITIES AND
CONTRACT OWNERS' EQUITY

<TABLE>
<CAPTION>
DECEMBER 31, 1995
-------------------
<S> <C>
ASSETS
INVESTMENTS:
DREYFUS VARIABLE INVESTMENT FUND:
Money Market Portfolio -- 106,437 shares at a net asset value of $1.00 per share (cost:
$106,437)...................................................................................... $ 106,437
Quality Bond Portfolio -- 1,113.449 shares at a net asset value of $11.81 per share (cost:
$13,214)....................................................................................... 13,150
Growth and Income Portfolio -- 55.596 shares at a net asset value of $18.33 per share
(cost: $1,043)................................................................................. 1,019
International Equity Portfolio -- 79.344 shares at a net asset value of $12.82 per share (cost:
$1,006)........................................................................................ 1,017
DREYFUS STOCK INDEX FUND:
Dreyfus Stock Index Fund -- 86.761 shares at a net asset value of $17.20 per share (cost:
$1,519)........................................................................................ 1,492
QUEST FOR VALUE ACCUMULATION TRUST:
Equity Portfolio -- 168.217 shares at a net asset value of $25.05 per share (cost: $4,000)...... 4,214
Small Cap Portfolio -- 737.832 shares at a net asset value of $19.91 per share (cost:
$14,516)....................................................................................... 14,690
Global Equity Portfolio -- 130.917 shares at a net asset value of $11.61 per share (cost:
$1,535)........................................................................................ 1,520
DIVIDENDS RECEIVABLE.............................................................................. 31
----------
TOTAL ASSETS.................................................................................. $ 143,570
----------
----------
LIABILITIES AND CONTRACT OWNERS' EQUITY
FEES PAYABLE TO THE PAUL REVERE VARIABLE INSURANCE COMPANY........................................ $ 112
----------
TOTAL LIABILITIES............................................................................. 112
CONTRACT OWNERS' EQUITY:
Dreyfus Variable Money Market -- 105,850.718 accumulation units at $1.004986 per unit........... 106,377
Dreyfus Variable Quality Bond -- 1,302.071 accumulation units at $10.095226 per unit............ 13,144
Dreyfus Variable Growth and Income -- 99.635 accumulation units at $10.223250 per unit.......... 1,019
Dreyfus Variable International Equity -- 100.008 accumulation units at $10.166455 per unit...... 1,017
Dreyfus Stock Index -- 149.583 accumulation units at $9.971634 per unit......................... 1,491
Quest Equity -- 397.926 accumulation units at $10.573803 per unit............................... 4,208
Quest Small Cap -- 1,441.537 accumulation units at $10.186613 per unit.......................... 14,684
Quest Global Equity -- 150.303 accumulation units at $10.098220 per unit........................ 1,518
----------
TOTAL CONTRACT OWNERS' EQUITY................................................................. 143,458
----------
----------
TOTAL LIABILITIES AND CONTRACT OWNERS' EQUITY................................................. $ 143,570
----------
----------
</TABLE>

See accompanying notes.
<PAGE>
STATEMENT OF CHANGES IN CONTRACT OWNERS' EQUITY

<TABLE>
<CAPTION>
FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) THROUGH DECEMBER 31, 1995
----------------------------------------------------------------------------------------------
QUEST FOR VALUE
DREYFUS VARIABLE INVESTMENT FUND
-------------------------------------------- DREYFUS ACCUMULATION TRUST
GROWTH STOCK --------------------------
MONEY QUALITY AND INTERNATIONAL INDEX SMALL GLOBAL
MARKET BOND INCOME EQUITY FUND EQUITY CAP EQUITY TOTAL
-------- ------- -------- ------------- ------- ------ ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net Investment
Income................ $ 409 $ 192 $ 43 $ 6 $ 18 $ (6) $ (7) $ 33 $ 688
Net Change in
Unrealized Gain (Loss)
on Investments........ -- (64) (24 ) 11 (27) 214 175 (15 ) 270
-------- ------- -------- ------------- ------- ------ ------- -------- --------
NET INCREASE (DECREASE)
IN CONTRACT OWNERS'
EQUITY RESULTING FROM
OPERATIONS............. 409 128 19 17 (9) 208 168 18 958
-------- ------- -------- ------------- ------- ------ ------- -------- --------
FROM ACCOUNT UNIT
TRANSACTIONS
Proceeds from Units
Sold.................. 132,000 -- 1,000 1,000 1,500 4,000 1,500 1,500 142,500
Transfers.............. (26,032) 13,016 -- -- -- -- 13,016 -- --
-------- ------- -------- ------------- ------- ------ ------- -------- --------
NET INCREASE IN CONTRACT
OWNERS' EQUITY FROM
ACCOUNT UNIT
TRANSACTIONS........... 105,968 13,016 1,000 1,000 1,500 4,000 14,516 1,500 142,500
-------- ------- -------- ------------- ------- ------ ------- -------- --------
NET INCREASE IN CONTRACT
OWNERS' EQUITY......... 106,377 13,144 1,019 1,017 1,491 4,208 14,684 1,518 143,458
-------- ------- -------- ------------- ------- ------ ------- -------- --------
CONTRACT OWNERS' EQUITY:
Beginning of Period.... -- -- -- -- -- -- -- -- --
-------- ------- -------- ------------- ------- ------ ------- -------- --------
End of Period.......... $106,377 $13,144 $ 1,019 $1,017 $1,491 $4,208 $14,684 $ 1,518 $143,458
-------- ------- -------- ------------- ------- ------ ------- -------- --------
-------- ------- -------- ------------- ------- ------ ------- -------- --------
</TABLE>

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) THROUGH DECEMBER 31, 1995
-------------------------------------------------------------------------------------
QUEST FOR VALUE
DREYFUS VARIABLE INVESTMENT FUND
----------------------------------------- DREYFUS ACCUMULATION TRUST
GROWTH STOCK -----------------------
MONEY QUALITY AND INTERNATIONAL INDEX SMALL GLOBAL
MARKET BOND INCOME EQUITY FUND EQUITY CAP EQUITY TOTAL
------ ------- ------ ------------- ------- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $499 $198 $ 43 $ 6 $ 19 $-- $-- $ 35 $800
------ ------- ------ --- ------- ------ ----- ------ -----
Total Investment
Income.............. 499 198 43 6 19 -- -- 35 800
FEES PAYABLE TO THE PAUL
REVERE VARIABLE ANNUITY
INSURANCE COMPANY:
Mortality & Expense
Risk Charge........... 76 5 -- -- 1 5 6 2 95
Administrative
Charge................ 14 1 -- -- -- 1 1 -- 17
------ ------- ------ --- ------- ------ ----- ------ -----
Total Expenses....... 90 6 -- -- 1 6 7 2 112
------ ------- ------ --- ------- ------ ----- ------ -----
NET INVESTMENT INCOME.... 409 192 43 6 18 (6) (7) 33 688
NET CHANGE IN UNREALIZED
GAIN (LOSS)
ON INVESTMENTS......... -- (64) (24) 11 (27) 214 175 (15) 270
------ ------- ------ --- ------- ------ ----- ------ -----
NET INCREASE (DECREASE)
IN CONTRACT OWNERS'
EQUITY RESULTING FROM
OPERATIONS............. $409 $128 $ 19 $17 $ (9) $208 $168 $ 18 $958
------ ------- ------ --- ------- ------ ----- ------ -----
------ ------- ------ --- ------- ------ ----- ------ -----
</TABLE>

See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS

FOR THE PERIOD FROM INCEPTION (OCTOBER 25, 1995) THROUGH DECEMBER 31, 1995

1. ORGANIZATION
Paul Revere Separate Account One (the "Separate Account") is a segregated
asset account established by a resolution of the Board of Directors of The
Paul Revere Variable Annuity Insurance Company (the "Company") pursuant to
Massachusetts law on August 18, 1994. The Separate Account operates as a Unit
Investment Trust pursuant to the provisions of the Investment Company Act of
1940. The assets and liabilities of the Separate Account are clearly
identified and distinguished from the other assets and liabilities of the
Company.

The Company is a wholly-owned subsidiary of The Paul Revere Life Insurance
Company, a Massachusetts corporation. The Paul Revere Life Insurance Company
is wholly-owned by The Paul Revere Corporation, a Massachusetts corporation.
The Paul Revere Corporation was wholly-owned by Textron, Inc., a Delaware
corporation through October 26, 1993. On that date, Textron sold to the public
17% of The Paul Revere Corporation, retaining 83% of the outstanding shares.
The Paul Revere Corporation is comprised of The Paul Revere Life Insurance
Company, The Paul Revere Variable Annuity Insurance Company, The Paul Revere
Protective Life Insurance Company and other non-insurance affiliates.

The Company has retained the services of Seabury & Smith, Inc., a wholly-owned
subsidiary of Marsh & McLennan Companies, Inc., to act as administrator of the
Separate Account pursuant to an administration agreement. Such administration
services include issuance of contracts and maintenance of contract owners'
records.

The Separate Account is divided into sub-accounts, with the assets of each
sub-account invested in either the Dreyfus Variable Investment Fund ("Dreyfus
Variable"), Dreyfus Stock Index Fund ("Dreyfus Stock"), or Quest for Value
Accumulation Trust ("Quest"). The Separate Account's assets for Dreyfus
Variable and Dreyfus Stock are held by Dreyfus Institutional Services. The
Separate Account's assets for Quest are held by State Street Bank. Currently,
Dreyfus Variable consists of four portfolios: the Money Market, Quality Bond,
Growth and Income, and International Equity Portfolios. Dreyfus Stock consists
of the Dreyfus Stock Index Fund. Quest currently has three portfolios
available for investment: Equity, Small Cap and Global Equity. Dreyfus
Variable, Dreyfus Stock and Quest are open-ended management investment
companies which are intended to meet differing investment objectives.

The goal of the Dreyfus Variable Money Market Portfolio is to provide as high
a level of current income as is consistent with the preservation of capital
and the maintenance of liquidity. The Quality Bond Portfolio invests in debt
obligations of corporations, the U.S. Government and its agencies and
instrumentalities, and major U.S. banking institutions to maximize current
income while preserving capital and maintaining liquidity. The Growth and
Income Portfolio invests in equity and debt securities and money market
instruments of domestic and foreign investors to provide long-term capital
growth, current income, and growth of income. The International Equity
Portfolio invests in equity securities of foreign issuers. Equity securities
consist of common stocks, convertible securities and preferred stocks.

The Dreyfus Stock Index Fund's investment objective is to provide investment
results that correspond to the price and yield performance of publicly traded
common stocks in the aggregate, as represented by the Standard & Poor's 500
Composite Stock Price Index.

The investment objective of the Quest Equity Portfolio is long-term capital
appreciation through investment in securities (primarily equity securities) of
companies that are believed by the investment adviser to be undervalued in the
market place in relation to factors such as the companies' assets or earnings.
The investment objective of the
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Small Cap Portfolio is to seek capital appreciation through investments in a
diversified portfolio consisting primarily of equity securities of companies
with market capitalizations of under $1 billion. The Global Equity Portfolio
may invest in equity securities anywhere in the world with no requirement that
any specific percentage of its assets be committed to any given country.

2. SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATION
Investments in shares of Dreyfus Variable, Dreyfus Stock and Quest are carried
in the statement of assets, liabilities and contract owners' equity at their
underlying net asset values. These net asset values have been determined on
the market value basis. Investment transactions are accounted for on the date
the shares are purchased or sold.

REINVESTMENT OF DIVIDENDS
Dividends received from net investment income and net realized capital gains
are reinvested in additional shares of the portfolio of Dreyfus Variable,
Dreyfus Stock and Quest making the distribution or, at the election of the
Separate Account, received in cash. Dividend income and capital gain
distributions are recorded as income on the ex-dividend date.

FEDERAL INCOME TAXES
Operations of the Separate Account form a part of the Company, which is taxed
as a "Life Insurance Company" under the Internal Revenue Code ("Code"). Under
current provisions of the Code, no Federal income taxes are payable by the
Company or the Separate Account with respect to earnings of the Separate
Account.

USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from these estimates.

3. CONTRACT CHARGES
There are no deductions made from purchase payments for sales charges at the
time of purchase. An annual contract maintenance charge of $25 is imposed on
all contracts on their policy anniversary. The charge covers the cost of
contract administration for the previous year and is prorated between the
sub-accounts to which the contract value is allocated.

Mortality and expense risks assumed by the Company are compensated by a charge
equivalent to an annual rate of 0.80% of the average daily net asset value of
the Separate Account. This charge can be increased but will not exceed 1.25%
of the average daily net asset value of the Separate Account.

In addition, the Separate Account bears certain administration expenses, which
are charged by the Company at an annual rate of 0.15% of the average daily net
asset value of the Separate Account. These charges cover the cost of
establishing and maintaining the contracts and the Separate Account.

4. ACCOUNT TRANSFERS
Subject to certain restrictions, the contract owner may transfer all or a
part of the contract owner's interest in a sub-account to another sub-account
without the imposition of any fee or charge. If more than 12 transfers have
been made in the contract year, a transfer fee in the lesser of $25 or 2% of
the amount transferred will be deducted from the account value.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INVESTMENT ACTIVITY
Purchases and proceeds from sales of investments by the Separate Account
during the year ended December 31, 1995 are shown below:

<TABLE>
<CAPTION>
PURCHASES SALES
----------- ---------
<S> <C> <C>
Dreyfus Variable Investment Fund:
Money Market Portfolio.............................................................. $ 132,468 $ 26,031
Quality Bond Portfolio.............................................................. 13,214
Growth and Income Portfolio......................................................... 1,043
International Equity Portfolio...................................................... 1,006
Dreyfus Stock Index Fund:
Dreyfus Stock Index Fund............................................................ 1,519
Quest For Value Accumulation Trust:
Equity Portfolio.................................................................... 4,000
Small Cap Portfolio................................................................. 14,516
Global Equity Portfolio............................................................. 1,535
</TABLE>

6. ACCOUNT UNIT TRANSACTIONS
The number of accumulation units sold and redeemed from account unit
transactions are as follows:

<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND QUEST FOR VALUE
---------------------------------------------- DREYFUS ACCUMULATION TRUST
GROWTH STOCK ---------------------------
MONEY QUALITY AND INTERNATIONAL INDEX SMALL GLOBAL
MARKET BOND INCOME EQUITY FUND EQUITY CAP EQUITY
------------ --------- ------ ------------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at October 25,
1995.................... -- -- -- -- -- -- -- --
Units Sold............... 131,804.680 -- 99.635 100.008 149.583 397.926 150.047 150.303
Units Transferred........ (25,953.962) 1,302.071 -- -- -- -- 1,291.490 --
------------ --------- ------ ------------- ------- ------- --------- -------
Balances at December 31,
1995.................... 105,850.718 1,302.071 99.635 100.008 149.583 397.926 1,441.537 150.303
------------ --------- ------ ------------- ------- ------- --------- -------
------------ --------- ------ ------------- ------- ------- --------- -------
</TABLE>

7. SUBSEQUENT EVENT
By mutual agreement, on January 29, 1996, the Company and Seabury & Smith,
Inc. agreed to cease all sales and marketing activities of the Separate
Account and to terminate their relationship as underwriter and administrator,
respectively. The Company intends to offer current contract owners transfers
to alternate variable annuity contracts or full redemption of contract value.
<PAGE>
SUPPLEMENTARY INFORMATION --
FINANCIAL HIGHLIGHTS

Financial highlights for each accumulation unit outstanding throughout the
period per sub-account are presented below:

<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND -- MONEY MARKET PORTFOLIO
<S> <C>
FOR THE PERIOD
FROM
10/25/95
(DATE OF
INCEPTION)
THROUGH 12/31/95
----------------
Investment Income............................................................ $ 0.006
Expenses..................................................................... (0.001)
----------------
Net Investment Income........................................................ 0.005
Net Increase in Accumulation Unit Value...................................... 0.005
Accumulation Unit Value:
Beginning of Period........................................................ 1.000
----------------
End of Period.............................................................. $ 1.005
Ratio of Expenses to Average Contract Owners' Equity......................... 0.49%*
Ratio of Net Investment Income to Average Contract Owners' Equity............ 2.21%*
Ratio of Increase in Contract Owners' Equity From Operations to Average
Contract Owners' Equity..................................................... 2.21%*
Number of Units Outstanding at End of Period................................. 105,850.718
</TABLE>

<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND -- QUALITY BOND PORTFOLIO

<S> <C>
FOR THE PERIOD
FROM
10/25/95
(DATE OF
INCEPTION)
THROUGH 12/31/95
----------------
Investment Income............................................................ $ 0.15
Expenses..................................................................... (0.01)
----------------
Net Investment Income........................................................ 0.14
Net Unrealized Loss on Investments........................................... (0.04)
----------------
Net Increase in Accumulation Unit Value...................................... 0.10
Accumulation Unit Value:
Beginning of Period........................................................ 10.00
----------------
End of Period.............................................................. $ 10.10
Ratio of Expenses to Average Contract Owners' Equity......................... 0.25%*
Ratio of Net Investment Income to Average Contract Owners' Equity............ 7.84%*
Ratio of Increase in Contract Owners' Equity From Operations to Average
Contract Owners' Equity..................................................... 5.23%*
Number of Units Outstanding at End of Period................................. 1,302.071
</TABLE>

* Annualized

See accompanying notes.
<PAGE>
SUPPLEMENTARY INFORMATION --
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND -- GROWTH AND INCOME PORTFOLIO

<S> <C>
FOR THE PERIOD
FROM
10/25/95
(DATE OF
INCEPTION)
THROUGH 12/31/95
----------------
Investment Income............................................................ $ 0.51
Expenses..................................................................... --
--------
Net Investment Income........................................................ 0.51
Net Unrealized Loss on Investments........................................... (0.29)
--------
Net Increase in Accumulation Unit Value...................................... 0.22
Accumulation Unit Value:
Beginning of Period........................................................ 10.00
--------
End of Period.............................................................. $ 10.22
Ratio of Expenses to Average Contract Owners' Equity......................... --
Ratio of Net Investment Income to Average Contract Owners' Equity............ 22.66%*
Ratio of Increase in Contract Owners' Equity From Operations to Average
Contract Owners' Equity..................................................... 10.01%*
Number of Units Outstanding at End of Period................................. 99.635
</TABLE>

<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND -- INTERNATIONAL EQUITY

<S> <C>
FOR THE PERIOD
FROM
10/25/95
(DATE OF
INCEPTION)
THROUGH 12/31/95
----------------
Investment Income............................................................ $ 0.06
Expenses..................................................................... --
----------------
Net Investment Income........................................................ 0.06
Net Unrealized Gain on Investments........................................... 0.11
----------------
Net Increase in Accumulation Unit Value...................................... 0.17
Accumulation Unit Value:
Beginning of Period........................................................ 10.00
----------------
End of Period.............................................................. $ 10.17
Ratio of Expenses to Average Contract Owners' Equity......................... --
Ratio of Net Investment Income to Average Contract Owners' Equity............ 3.17%*
Ratio of Increase in Contract Owners' Equity From Operations to Average
Contract Owners' Equity..................................................... 8.98%*
Number of Units Outstanding at End of Period................................. 100.008
</TABLE>

* Annualized

See accompanying notes.
<PAGE>
SUPPLEMENTARY INFORMATION --
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
DREYFUS STOCK INDEX FUND

<S> <C>
FOR THE PERIOD
FROM
10/25/95
(DATE OF
INCEPTION)
THROUGH 12/31/95
----------------
Investment Income............................................................ $ 0.06
Expenses..................................................................... --
----------------
Net Investment Income........................................................ 0.06
Net Unrealized Loss on Investments........................................... (0.09)
----------------
Net Decrease in Accumulation Unit Value...................................... (0.03)
Accumulation Unit Value:
Beginning of Period........................................................ 10.00
----------------
End of Period.............................................................. $ 9.97
Ratio of Expenses to Average Contract Owners' Equity......................... 0.36%*
Ratio of Net Investment Income to Average Contract Owners' Equity............ 6.48%*
Ratio of Decrease in Contract Owners' Equity From Operations to Average
Contract Owners' Equity..................................................... (3.24)%*
Number of Units Outstanding at End of Period................................. 149.583
</TABLE>

<TABLE>
<CAPTION>
QUEST FOR VALUE ACCUMULATION TRUST -- EQUITY PORTFOLIO

<S> <C>
FOR THE PERIOD
FROM
10/25/95
(DATE OF
INCEPTION)
THROUGH 12/31/95
----------------
Investment Income............................................................ $ --
Expenses..................................................................... (0.02)
----------------
Net Investment Expense....................................................... (0.02)
Net Unrealized Gain on Investments........................................... 0.59
----------------
Net Increase in Accumulation Unit Value...................................... 0.57
Accumulation Unit Value:
Beginning of Period........................................................ 10.00
----------------
End of Period.............................................................. $ 10.57
Ratio of Expenses to Average Contract Owners' Equity......................... 0.93%*
Ratio of Net Investment Expense to Average Contract Owners' Equity........... (0.93)%*
Ratio of Increase in Contract Owners' Equity From Operations to Average
Contract Owners' Equity..................................................... 32.36%*
Number of Units Outstanding at End of Period................................. 397.926
</TABLE>

* Annualized

See accompanying notes.
<PAGE>
SUPPLEMENTARY INFORMATION --
FINANCIAL HIGHLIGHTS (CONTINUED)

<TABLE>
<CAPTION>
QUEST FOR VALUE ACCUMULATION TRUST -- SMALL CAP PORTFOLIO

<S> <C>
FOR THE PERIOD
FROM
10/25/95
(DATE OF
INCEPTION)
THROUGH 12/31/95
----------------
Investment Income............................................................ $ --
Expenses..................................................................... (0.01)
----------------
Net Investment Expense....................................................... (0.01)
Net Unrealized Gain on Investments........................................... 0.20
----------------
Net Increase in Accumulation Unit Value...................................... 0.19
Accumulation Unit Value:
Beginning of Period........................................................ 10.00
----------------
End of Period.............................................................. $ 10.19
Ratio of Expenses to Average Contract Owners' Equity......................... 0.26%*
Ratio of Net Investment Expense to Average Contract Owners' Equity........... (0.26)%*
Ratio of Increase in Contract Owners' Equity From Operations to Average
Contract Owners' Equity..................................................... 6.14%*
Number of Units Outstanding at End of Period................................. 1,441.537
</TABLE>

<TABLE>
<CAPTION>
QUEST FOR VALUE ACCUMULATION TRUST -- GLOBAL EQUITY PORTFOLIO

<S> <C>
FOR THE PERIOD
FROM
10/25/95
(DATE OF
INCEPTION)
THROUGH 12/31/95
----------------
Investment Income............................................................ $ 0.19
Expenses..................................................................... (0.01)
----------------
Net Investment Income........................................................ 0.18
Net Unrealized Loss on Investments........................................... (0.08)
----------------
Net Increase in Accumulation Unit Value...................................... 0.10
Accumulation Unit Value:
Beginning of Period........................................................ 10.00
----------------
End of Period.............................................................. $ 10.10
Ratio of Expenses to Average Contract Owners' Equity......................... 0.91%*
Ratio of Net Investment Income to Average Contract Owners' Equity............ 15.09%*
Ratio of Increase in Contract Owners' Equity From Operations to Average
Contract Owners' Equity..................................................... 8.23%*
Number of Units Outstanding at End of Period................................. 150.303
</TABLE>

* Annualized

See accompanying notes.
<PAGE>
INDEPENDENT AUDITORS REPORT

The Contract Owners of
Paul Revere Separate Account One of
The Paul Revere Variable Annuity Insurance Company:

We have audited the accompanying statement of assets, liabilities and contract
owners' equity of Paul Revere Separate Account One of The Paul Revere Variable
Annuity Insurance Company (the Separate Account) as of December 31, 1995, and
the related statements of operations and changes in contract owners' equity, and
the financial highlights for the period from inception (October 25, 1995)
through December 31, 1995. These financial statements and financial highlights
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit.

We conducted our audit 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 the securities owned as of December 31, 1995
by correspondence with State Street Bank & Trust and Dreyfus Institutional
Services. 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 audit provides a
reasonable basis for our opinion.

In our opinion, based on our audit, the financial statements and financial
highlights referred to above present fairly, in all material respects, the
financial position of Paul Revere Separate Account One of The Paul Revere
Variable Annuity Insurance Company as of December 31, 1995, and the results of
its operations, the changes in its contract owners' equity and the financial
highlights for the period from inception (October 25, 1995) through December 31,
1995 in conformity with generally accepted accounting principles.

Ernst & Young LLP

Boston, Massachusetts
February 9, 1996
<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
Managed by

LOGO

We at OpCap Advisors are pleased to report on the investment activities
and results of the portfolios in the Quest for Value Accumulation Trust for
1995, a very favorable year for investors. Prices of stocks and bonds rose
sharply during the year in an environment of declining interest rates, low
inflation, strong corporate profits and slow economic growth.

Our Value-Based Investment Philosophy

The portfolios in the Quest for Value Accumulation Trust are intended for
the long-term investor who seeks to preserve capital and make it grow. Our
objective in managing the portfolios is to deliver above-average returns with
below-average risk.

Our philosophy in buying common stocks is to purchase quality companies
at reasonable prices. We believe the single most important determinant of
whether a stock will increase in value is the rate of return on invested
capital within the company. In our view, companies with high returns can
compound their capital and increase their value for extended periods.
Therefore, we look for companies with above-average returns where those
returns are protected by strong competitive positions. Moreover, we want these
companies to use their cash flow to benefit shareholders -- through stock
buybacks or astute acquisitions, for instance. We stick with good companies
until their value is reflected in the stock price, or until we find companies
that offer even better value.

Similarly, we are value investors in the bond market. We seek to preserve
capital and maximize income by looking for sector, maturity and quality groups
that provide the highest yield at the lowest price with the least amount of
risk. We avoid such techniques as interest rate forecasting and market timing,
which in our view tend to increase volatility and add to risk.

Name Changes

In November, the Trust's investment adviser changed its name from Quest
for Value Advisors to OpCap Advisors. Effective May 1, 1996, the name of the
Accumulation Trust will become OCC Accumulation Trust. These name changes will
link both the Trust and its adviser more closely to Oppenheimer Capital, the
adviser's parent. OpCap is short for Oppenheimer Capital, while OCC is the New
York Stock Exchange symbol of the publicly traded partnership which owns a
majority interest in Oppenheimer Capital. Most important of all, these name
changes have no effect on the investment philosophy or structure of the
Accumulation Trust. The same professionals continue to manage the portfolios
of the Trust, employing the same value philosophy and backed by the same
organization and support staff.

<PAGE>

EQUITY PORTFOLIO

The Equity Portfolio continued its excellent performance in 1995. The
Portfolio invests primarily in the common stocks of large and mid-sized
companies. Its total return of 38.9% in 1995 exceeded the total return of
37.6% with dividends included for the Standard & Poor's 500 Index (S&P 500),
an unmanaged index of 500 of the largest corporations weighted by market
capitalization. This performance was sixth best among the 39 capital
appreciation funds in Lipper's Variable Insurance Products Performance
Analysis Service Report. The Portfolio's 1995 performance included a total
return of 12.5% in the second fiscal half, compared with 14.4% for the S&P
500.

For the five years ended December 31, 1995, the Portfolio's average
annual total return of 19.2%* exceeded the 16.6% average annual return of the
S&P 500 Index. The Portfolio's five-year performance ranked 10th among the 21
portfolios in the Lipper capital appreciation category. The Portfolio's
average annual total return since its inception on August 1, 1988 has been
15.6%*, compared with 15.2% for the S&P 500. Returns for the Portfolio take
into account expenses incurred by the Portfolio, but not other charges imposed
by the Variable Accounts.

The Portfolio achieved above-market returns in 1995 despite a
conservative investment posture, including a sizable cash position, and
without making significant investments in technology stocks. The Portfolio
benefited from good stock selection, as a number of its major positions
outperformed the S&P 500. The five stocks which contributed most to the
Portfolio's performance in 1995 were EXEL Ltd., Federal Home Loan Mortgage
Corp. (Freddie Mac), Intel Corp., Citicorp and McDonnell Douglas Corp.

The Portfolio's performance was helped also by its substantial holdings
of financial service company stocks, which were among the market leaders for
the year. Such securities, representing 32% of the Portfolio's net assets as
of December 31, 1995, include an eclectic group of specialty insurers and
other financial service companies. Most have been investments of long standing
that appeared undervalued to us regardless of the interest rate environment,
although the decline in rates in 1995 did help fuel their market performance.

As of December 31, 1995, the Portfolio's net assets were allocated 82% to
equities and 21% to cash and cash equivalents, with 3% in liabilities in
excess of other assets. Major portfolio changes during the second half
included new positions in the common stocks of Prudential Reinsurance
Holdings, Inc., Shaw Industries, Inc. and Varity Corp. Positions that were
eliminated included Mellon Bank Corp., Morgan Stanley Group, Inc., Premark
International, Inc. and Sara Lee Corp.

The Portfolio owned the common stocks of 41 companies as of December 31,
1995. Major industry positions were in the insurance, financial services,
banking, aerospace & defense and retail sectors. The Portfolio's five largest
equity positions were Federal Home Loan Mortgage Corp. (Freddie Mac), the
second largest insurer of home mortgages in the United States; EXEL Ltd., a
strongly capitalized specialty insurance company; Citicorp, a leading bank;
May Department Stores Co., a leading retailer; and Becton, Dickinson & Co., a
worldwide producer of medical products and diagnostic test systems.
- ---------------

* Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced

<PAGE>

operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds -- the
Old Trust and the present Quest for Value Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The total net
assets of the Equity Portfolio immediately after the transaction were
$86,789,755 in the Old Trust and $3,764,598 in the Present Trust. For the
periods prior to September 16, 1994, the performance reflects the performance
of the corresponding Equity Portfolio of the Old Trust.

Comparison of Change in Value of $10,000 Investment in
Quest for Value Accumulation Trust Equity Portfolio from inception (8/1/88)*
through 12/31/95 and Total Return on S&P 500 Index+

Past performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
+with dividends.
The performance graph does not reflect charges imposed by the Variable
Accounts.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS

December 31, 1995

Principal
Amount Value
- --------- ----------
<S> <C> <C>
SHORT-TERM CORPORATE NOTES - 21.2%
Automotive - 1.5%
$ 130,000 Ford Motor Credit Co., 5.65%, 1/31/96.................................. $ 129,388
----------
Banking - 1.1%
100,000 Norwest Financial, Inc., 5.62%, 1/22/96................................ 99,672
----------
Insurance - 3.3%
300,000 Prudential Funding Corp., 5.81%, 1/9/96................................ 299,613
----------
Machinery/Engineering - 2.2%
200,000 Deere (John) Capital Corp., 5.73%, 1/9/96.............................. 199,745
----------

Miscellaneous Financial Services - 8.7%
380,000 Beneficial Corp., 5.77%, 1/16/96....................................... 379,086
410,000 Household Finance Corp., 5.75%, 1/10/96................................ 409,411
----------
788,497
----------
Technology - 4.4%
400,000 IBM Credit Corp., 5.73%, 1/3/96........................................ 399,873
----------
Total Short-Term Corporate Notes (amortized cost-$1,916,788)........... $1,916,788
----------
Shares
--------
COMMON STOCKS - 81.6%
Aerospace/Defense - 5.4%
3,380 AlliedSignal, Inc...................................................... $ 160,550
9,000 Coltec Industries, Inc................................................. 104,625
2,447 McDonnell Douglas Corp. ............................................... 225,124
----------
490,299
----------
Banking - 6.2%
4,656 Citicorp............................................................... 313,116
1,800 First Interstate Bancorp............................................... 245,700
----------
558,816
----------
Chemicals - 4.9%
2,000 du Pont (E.I.) de Nemours & Co. ....................................... 139,750
3,198 Hercules, Inc.......................................................... 180,287
982 Monsanto Co............................................................ 120,295
----------
440,332
----------
Conglomerates - 1.7%

<PAGE>

2,156 General Electric Co. .................................................. 155,232
----------
Consumer Products - 4.6%
1,922 Avon Products, Inc..................................................... 144,871
3,370 Hasbro, Inc. .......................................................... 104,470
5,475 Mattel, Inc............................................................ 168,356
----------
417,697

----------
</TABLE>

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)

December 31, 1995

Shares Value
- --------- ----------
<S> <C> <C>
COMMON STOCKS (continued)
Containers - 2.1%
4,298 Temple-Inland, Inc..................................................... $ 189,649
----------

Drugs & Medical Products - 4.3%
4,021 Becton, Dickinson & Co. ............................................... 301,575
874 Warner-Lambert Co...................................................... 84,887
----------
386,462
----------
Electronics - 1.9%
4,038 Arrow Electronics, Inc.*............................................... 174,139
----------
Energy - 1.9%
2,996 Triton Energy Corp.*................................................... 171,896
----------
Health & Hospitals - 3.8%
3,500 Columbia / HCA Healthcare Corp. ....................................... 177,625
8,000 Tenet Healthcare Corp.*................................................ 166,000
----------
343,625
----------
Insurance - 18.4%
6,500 Ace Ltd. .............................................................. 258,375
3,248 AFLAC, Inc. ........................................................... 140,882
2,262 American International Group, Inc. .................................... 209,235
6,726 EXEL Ltd............................................................... 410,286
4,579 Progressive Corp. (Ohio)............................................... 223,799
10,000 Prudential Reinsurance Holdings, Inc. ................................. 233,750
874 Transamerica Corp...................................................... 63,693
10 Transport Holdings, Inc.*.............................................. 407
2,000 Travelers, Inc. ....................................................... 125,750
----------
1,666,177
----------
Manufacturing - 4.2%
8,000 Shaw Industries, Inc................................................... 118,000
7,000 Varity Corp.*.......................................................... 259,875
----------
377,875
----------
Metals & Mining - .7%
2,145 Freeport McMoRan Copper & Gold (Class B)............................... 60,328
----------
Miscellaneous Financial Services - 7.7%
3,245 American Express Co.................................................... 134,262
5,912 Countrywide Credit Industries, Inc..................................... 128,586
5,155 Federal Home Loan Mortgage Corp........................................ 430,442
----------

<PAGE>
693,290
----------
Paper Products - 1.4%
3,100 Champion International Corp. .......................................... 130,200
----------

</TABLE>

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)

December 31, 1995

Shares Value
- --------- ----------
<S> <C> <C>
COMMON STOCKS (continued)
Railroads - 1.9%
2,100 Norfolk Southern Corp.................................................. $ 166,688
----------
Retail - 5.0%
7,388 May Department Stores Co............................................... 312,143
3,000 Penney (J.C.) Co., Inc................................................. 142,875
----------
455,018
----------
Technology - 1.9%
3,046 Intel Corp. ........................................................... 172,860
----------
Telecommunication - 1.8%
4,000 Sprint Corp. .......................................................... 159,500
----------
Transportation - 1.8%
3,600 CSX Corp. ............................................................. 164,250
----------
Total Common Stocks (cost-$5,850,568).................................. $7,374,333
----------

Total Investments (A) (cost-$7,767,356)....................... 102.8% $9,291,121
Other Liabilities in Excess of Other Assets................... (2.8) (255,139)
----- ----------
Total Net Assets.............................................. 100.0% $9,035,982
===== =========

- ---------------

* Non-income producing security.

(A) Aggregate gross unrealized appreciation for securities in which there is
an excess of value over tax cost is $1,637,034, aggregate gross unrealized
depreciation for securities in which there is an excess of tax cost over
value is $113,269 and net unrealized appreciation for Federal income tax
purpose is $1,523,765. Federal income tax basis of portfolio securities is
substantially the same as for financial reporting purposes.
</TABLE>

See accompanying notes to financial statements.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES

December 31, 1995

<TABLE>

<S> <C>
Assets
Investments, at value (cost -- $7,767,356)....................................... $9,291,121
Cash............................................................................. 858
Receivable from fund shares sold................................................. 1,533
Dividends receivable............................................................. 7,702
Receivable from Adviser.......................................................... 38
Other assets..................................................................... 125
----------
Total Assets................................................................... 9,301,377
----------
Liabilities
Payable for investments purchased................................................ 250,000
Other payables and accrued expenses.............................................. 15,395
----------
Total Liabilities.............................................................. 265,395
----------
Net Assets
Par value ($.01 per share)....................................................... 3,607
Paid-in-surplus.................................................................. 7,172,859
Accumulated undistributed net investment income.................................. 111,781
Accumulated undistributed net realized gain on investments....................... 223,970
Net unrealized appreciation on investments....................................... 1,523,765
----------
Total Net Assets............................................................... $9,035,982
==========
Fund shares outstanding.......................................................... 360,689
----------
Net asset value per share........................................................ $ 25.05
==========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
STATEMENT OF OPERATIONS

For the year ended December 31, 1995

<TABLE>

<S> <C>
Investment Income
Dividends...................................................................... $ 93,124
Interest....................................................................... 64,858
----------
Total investment income..................................................... 157,982
----------
Operating Expenses
Investment advisory fee (note 2a).............................................. 38,504
Custodian fees................................................................. 14,481
Auditing, consulting and tax return preparation fees........................... 10,044
Transfer and dividend disbursing agent fees.................................... 9,103
Legal fees..................................................................... 2,714
Reports and notices to shareholders............................................ 1,692
Miscellaneous.................................................................. 4,408
----------
Total operating expenses.................................................... 80,946
Less: Investment advisory fee waived (note 2a).............................. (34,745)
----------
Net operating expenses................................................. 46,201
----------
Net investment income.................................................. 111,781
----------
Realized and Unrealized Gain (Loss) on Investments - Net
Net realized gain on investments................................................. 233,302
Net change in unrealized appreciation (depreciation) on investments.............. 1,628,793
----------
Net realized gain and change in unrealized appreciation (depreciation)
on investments......................................................... 1,862,095
----------
Net increase in net assets resulting from operations................... $1,973,876
==========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS

Year ended September 16, 1994(1)
December 31, 1995 to December 31, 1994
----------------- ---------------------
<S> <C> <C>
Operations
Net investment income.................................... $ 111,781 $ 20,888
Net realized gain (loss) on investments.................. 233,302 (9,332)
Net change in unrealized appreciation (depreciation) on
investments............................................ 1,628,793 (105,028)
---------- ----------
Net increase (decrease) in net assets resulting from
operations........................................ 1,973,876 (93,472)
---------- ----------
Dividends to Shareholders
Net investment income.................................... (20,888) --
---------- ----------
Fund Share Transactions
Net proceeds from sales.................................. 3,630,236 677,749
Net value of securities received (note 1)................ -- 3,764,598
Reinvestment of dividends................................ 20,888 --
Cost of shares redeemed.................................. (849,386) (67,619)
---------- ----------
Net increase in net assets from fund share
transactions...................................... 2,801,738 4,374,728
---------- ----------
Total increase in net assets................... 4,754,726 4,281,256
Net Assets
Beginning of period...................................... 4,281,256 0
---------- ----------
End of period (including undistributed net investment
income of $111,781 and $20,888, respectively).......... $ 9,035,982 $ 4,281,256
========== ==========
Shares Issued and Redeemed
Issued................................................... 161,702 37,272
Issued in exchange for securities (note 1)............... -- 202,725
Issued in reinvestment of dividends...................... 1,074 --
Redeemed................................................. (38,368) (3,716)
---------- ----------
Net increase........................................ 124,408 236,281
========== ==========

- ---------------

(1) Commencement of operations.
</TABLE>

See accompanying notes to financial statements.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS

December 31, 1995

(1) Organization and Significant Accounting Policies

Quest for Value Accumulation Trust (the "Trust") was organized on May 12,
1994 as a Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust is authorized to issue an unlimited number of
seven classes of shares of beneficial interest at $.01 par value: the Equity
Portfolio, the Small Cap Portfolio, the Global Equity Portfolio, the Managed
Portfolio, the Bond Portfolio, the U. S. Government Income Portfolio and the
Money Market Portfolio. OpCap Advisors (formerly called Quest for Value
Advisors; the "Adviser"), a majority-owned (99%) subsidiary of Oppenheimer
Capital, serves as the Trust's investment adviser. The Equity Portfolio (the
"Portfolio"), one of the Trust's seven portfolios had no operations until
September 16, 1994, when the Enterprise Accumulation Trust Equity Portfolio
(formerly known as Quest for Value Accumulation Trust Equity Portfolio),
distributed cash and securities with an aggregate market value of $3,764,598
in exchange for 202,725 shares of the Portfolio. The following is a summary of
significant accounting policies consistently followed by the Portfolio in the
preparation of its financial statements:

(A) Valuation of Investments

Investment securities, other than debt securities, listed on a national
exchange or traded in the over-the-counter National Market System are valued
each business day at the last reported sale price; if there are no such
reported sales, the securities are valued at their 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 business day by an
independent pricing service approved by the Board of Trustees. Investments are
valued by the pricing service using methods which include current market
quotations from a major market maker in the securities and trader-reviewed
"matrix" prices. Short-term debt securities having a remaining maturity of
more than sixty days are valued on a "marked-to-market" basis, that is, at
prices based upon market quotations for securities of similar type, yield,
quality and maturity. Short-term debt securities having a remaining maturity
of sixty days or less are valued at amortized cost, which approximates market
value. Any securities or other assets for which market quotations are not
readily available are valued at their fair value as determined in good faith
by the Board of Trustees. The ability of issuers of debt instruments to meet
their obligations may be affected by economic developments in a specific
industry or region.

(B) Federal Income Taxes

It is the Portfolio'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 shareholders;
accordingly, no Federal income tax provision is required.

<PAGE>

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 has
been determined on the basis of identified cost. Dividend income is recorded
on the ex-dividend date and interest income is accrued as earned. Discounts or
premiums on debt securities purchased are accreted or amortized to interest
income over the lives of the respective securities.

(D) Dividends and Distributions

Dividends and distributions to shareholders from net investment income
and net realized capital gains, if any, are declared and paid at least
annually.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1995

(1) Organization and Significant Accounting Policies (continued)
(D) Dividends and Distributions (continued)
The Portfolio 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. At December 31,
1995, the Portfolio did not have any permanent book-tax differences.

(E) Allocation of Expenses

Expenses specifically identifiable to a particular portfolio are borne by
that portfolio. Other expenses are allocated to each portfolio based on its
net assets in relation to the total net assets of all the applicable
portfolios of the Trust or another reasonable basis.

(F) Use of Estimates

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.

(2) Investment Advisory Fee and Other Transactions with Affiliates

(a) The investment advisory fee is accrued daily and payable monthly to
the Adviser, and is computed as a percentage of the Portfolio's net assets as
of the close of business each day at the annual rate of .60%.

The Adviser has agreed to waive that portion of the advisory fee and to
reimburse any necessary expenses to limit operating expenses of the Portfolio
to .72% of average daily net assets on an annual basis through at least
December 31, 1995.

(b) Total brokerage commissions paid by the Portfolio for the year ended
December 31, 1995, amounted to $6,942, of which Oppenheimer & Co., Inc., an
affiliate of the Adviser, received $3,800.

(3) Purchases and Sales of Securities

For the year ended December 31, 1995, purchases and sales of investment
securities, other than short-term securities were $3,641,204 and $1,633,047,

<PAGE>

respectively.

(4) Capital Loss Carryforward

For the fiscal year ended December 31, 1995, the Portfolio will utilize
$9,332 of net capital loss carryforwards.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

Year ended September 16, 1994(1)
December 31, 1995 to December 31, 1994
----------------- ---------------------
<S> <C> <C>
Net asset value, beginning of period..................... $ 18.12 $ 18.57
Income from investment operations:
Net investment income.................................... 0.31 0.09
Net realized and unrealized gain (loss) on investments... 6.71 (0.54)
---------- ----------
Total from investment operations....................... 7.02 (0.45)
---------- ----------
Dividends to shareholders:
Dividends to shareholders from net investment income..... (0.09) --
---------- ----------
Net asset value, end of period........................... $ 25.05 $ 18.12
========== ==========
Total return(2).......................................... 38.9% (2.4%)
========== ==========
Net assets, end of period................................ $ 9,035,982 $ 4,281,256
---------- ----------
Ratio of net operating expenses to average net
assets(5).............................................. 0.72%(4) 0.72%(3)
---------- ----------
Ratio of net investment income to average net
assets(5).............................................. 1.74%(4) 1.80%(3)
---------- ----------
Portfolio turnover....................................... 31% 6%
---------- ----------

- ---------------

(1) Commencement of operations.

(2) Assumes reinvestment of all dividends and distributions.

(3) Annualized.

(4) Average net assets for the year ended December 31, 1995 were $6,417,381.

(5) During the periods presented above, the Adviser waived a portion or all of
its fees and reimbursed the Portfolio for a portion of its operating
expenses. If such waivers and reimbursements had not been in effect, the
ratio of net operating expenses to average net assets would have been
1.26% and 2.09% and the ratio of net investment income to average net
assets would have been 1.20% and 0.43%, respectively

</TABLE>

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Trustees of
Quest for Value Accumulation Trust -- Equity Portfolio

In our opinion, the accompanying statement of assets and liabilities,
including the schedule 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 Equity
Portfolio (one of the portfolios constituting Quest for Value Accumulation
Trust, hereafter referred to as the "Portfolio") at December 31, 1995, the
results of its operations for the year then ended, and the changes in its net
assets and the financial highlights for the year ended December 31, 1995 and
for the period September 16, 1994 (commencement of operations) through
December 31, 1994, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
Portfolio'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 December 31, 1995 by
correspondence with the custodian and broker, provide a reasonable basis for
the opinion expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 16, 1996

<PAGE>

SMALL CAP PORTFOLIO

The Small Cap Portfolio, which as its name implies invests primarily in
the common stocks of smaller companies, had a total return of 15.2% in 1995,
below the total return of 28.5% with dividends included for the Russell 2000
Index, a widely followed benchmark which includes smaller capitalization
stocks. The Portfolio's performance was 25th among the 28 small company growth
funds in Lipper's Variable Insurance Products Performance Analysis Service
Report. In the 1995 second half, the Portfolio provided a total return of
8.8%, compared with 12.3% for the Russell 2000.

The Portfolio underperformed the index, in large part, because it did not
own many technology or financial service company stocks, two of the small cap
market's strongest sectors in 1995. Conversely, the Portfolio was overweighted
in real estate investment trusts (REITs). Many quality REITs appear to be
significantly undervalued. However, with their defensive investment
characteristics, they did not perform well during 1995 in a rising market.

For the five years ended December 31, 1995, the Portfolio provided an
average annual total return of 19.7%*, compared with the 21.0% average annual
return for the Russell 2000 Index. The Portfolio's five-year performance was
sixth among seven funds in the Lipper small company growth fund category. From
its inception on August 1, 1988 through December 31, 1995, the Portfolio
provided an average annual total return of 14.2%*, exceeding the 12.6% annual
total return for the Russell Index. Returns for the Portfolio take into
account expenses incurred by the Portfolio, but not any of the charges imposed
by the Variable Accounts.

Technology issues are only part of the small cap universe, and an
expensive and volatile part at that. The rest of the small cap market carries
valuations that are, in many cases, quite reasonable. We are conservative
investors in small cap stocks, seeking to control volatility and generate
superior returns by purchasing quality businesses that are mispriced by the
market. The Portfolio owns a diverse group of companies distinguished by their
excellent business and financial characteristics, including high cash flow and
strong competitive positions. An example is Oak Industries, Inc., the
Portfolio's largest equity position. Oak Industries is the dominant supplier
of coaxial cable connectors to the cable television industry and is benefiting
from systems upgrading throughout the industry. The telecommunications bill
before the Congress, if passed in its current form, should further boost Oak's
business by promoting increased competition in the delivery of
telecommunications services to the home. Moreover, international revenues
account for approximately 40% of the sales of Oak's major subsidiary, and
these revenues are increasing at a rate of about 40% a year as Oak capitalizes
on the rapid growth of cable TV overseas. Oak Industries earns a high return
on capital and has increased its gross margins from 18.7% in 1989 to 40.1% in
1995. We believe the stock is significantly undervalued at 11 times reported
earnings.

We remain disciplined and confident in our approach and continue to
perform the rigorous, in-depth analysis to identify quality businesses, such
as Oak Industries, where the value of the franchise is underpriced in the
market. Our goal is to provide above-average returns with below-average risk
over time as the market recognizes the merits of the undervalued stocks we
own.

As of December 31, 1995, the Portfolio's net assets were allocated 85% to
common stocks and securities convertible into common stocks, 14% to cash and

<PAGE>

cash equivalents, and 1% to assets in excess of liabilities. The Portfolio
owned the common stocks of 74 companies. Major industry positions were in the
manufacturing, electronics, energy, real estate and insurance sectors. The
Portfolio's five largest equity holdings were Oak Industries, Inc., with its
core business of manufacturing coaxial cable connectors for the cable
television industry; BancTec, Inc., which provides electronic systems and
software for processing financial documents and transactions; Westpoint
Stevens, Inc., a leading manufacturer of home textiles, including sheets and
other bedding products; Crane Co., which manufactures aerospace, fluid
handling and controls components and vending machines and distributes and
manufactures housing-related building products; and True North Communications,
Inc., an advertising agency holding company owning Foote, Cone & Belding
Communications, Inc., one of the largest advertising agencies in North
America.
- ---------------

* Based on results of the Quest for Value Accumulation Trust and its
predecessor. On September 16, 1994, an investment company which had commenced
operations on August 1, 1988, then called Quest for Value Accumulation Trust
(the "Old Trust"), was effectively divided into two investment funds -- the
Old Trust and the present Quest for Value Accumulation Trust (the "Present
Trust") -- at which time the Present Trust commenced operations. The total net
assets of the Small Cap Portfolio immediately after the transaction were
$139,812,573 in the Old Trust and $8,129,274 in the Present Trust. For the
periods prior to September 16, 1994, the performance reflects the performance
of the corresponding Small Cap Portfolio of the Old Trust.

Comparison of Change in Value of $10,000 Investment in
Quest for Value Accumulation Trust Small Cap Portfolio from inception
(8/1/88)*
through 12/31/95 and Total Return on Russell 2000 Index+

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS

December 31, 1995

Principal
Amount Value
- --------- -----------
<S> <C> <C>
SHORT-TERM CORPORATE NOTES - 13.9%

Banking - 3.9%
$ 625,000 Norwest Financial, Inc., 5.62%, 1/23/96............................... $ 622,853
-----------
Conglomerates - 1.6%
150,000 General Electric Capital Corp., 5.76%, 1/8/96......................... 149,832
100,000 General Electric Capital Services, Inc., 5.76%, 1/8/96................ 99,888
-----------
249,720
-----------
Insurance - 1.2%
200,000 Prudential Funding Corp., 5.75%, 1/17/96.............................. 199,489
-----------
Machinery - 2.8%
Deere (John) Capital Corp.,
300,000 5.63%, 1/17/96........................................................ 299,249
150,000 5.73%, 1/4/96......................................................... 149,929
-----------
449,178
-----------
Miscellaneous Financial Services - 4.4%
Beneficial Corp.,
500,000 5.70%, 1/5/96......................................................... 499,683
100,000 5.76%, 1/8/96......................................................... 99,888
100,000 Household Finance Corp., 5.67%, 1/23/96............................... 99,654
-----------
699,225
-----------
Total Short-Term Corporate Notes (amortized cost-$2,220,465).......... $ 2,220,465
-----------
CORPORATE NOTES - .1%
Automotive - .0%
$ 2,148 Collins Industries, Inc., 8.75%, 1/11/00.............................. $ 2,005
-----------
Energy - .1%
15,125 Global Marine, Inc., 12.75%, 12/15/99................................. 16,713
-----------
Total Corporate Notes (cost - $18,363)................................ $ 18,718
-----------
CONVERTIBLE CORPORATE BONDS - .3%
Real Estate - .3%
Security Capital Realty, Inc., 12.00%, 6/30/14(A)(B) (cost -
$ 51,487 $46,860).............................................................. $ 51,487
-----------

Shares
- ---------
CONVERTIBLE PREFERRED STOCK - .6%

<PAGE>

Retail - .1%
2,200 Family Bargain Corp. $.95 Conv. Pfd................................... $ 12,925

Transportation - .5%
825 Interpool, Inc., 5.75%, Conv. Pfd..................................... 77,550
-----------
Total Convertible Preferred Stock (cost-$81,675)...................... $ 90,475
-----------
</TABLE>

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)

December 31, 1995
<TABLE>
<CAPTION>

Shares Value
- --------- -----------
<S> <C> <C>
COMMON STOCKS - 83.9%
Advertising - 6.2%
20,000 Katz Media Group, Inc.*............................................... $ 352,500
6,000 Omnicom Group, Inc.................................................... 223,500
22,864 True North Communications, Inc. ...................................... 422,984
-----------
998,984
-----------

Automotive - 1.1%
4,400 Collins Industries, Inc.*............................................. 7,150
12,000 Masland Corp. ........................................................ 168,000
-----------
175,150
-----------
Banking - .8%
6,800 First Financial Caribbean Corp........................................ 127,500
-----------
Building & Construction - 3.1%
9,739 D.R. Horton, Inc. .................................................... 114,433
3,000 Insituform Technologies (Class A)*.................................... 34,875
16,500 Martin Marietta Materials, Inc. ...................................... 340,313
-----------
489,621
-----------
Chemicals - 1.3%
6,500 OM Group, Inc......................................................... 215,312
-----------
Computer Services - 3.5%
25,867 BancTec, Inc.*........................................................ 478,539
3,394 Globalink, Inc.*...................................................... 22,061
2,800 Keane, Inc.*.......................................................... 61,950
-----------
562,550
-----------
Conglomerates - 1.8%
12,100 Ralcorp Holdings, Inc.*............................................... 293,425
-----------
Drugs & Medical Products - 2.8%
5,000 Dentsply International, Inc. ......................................... 200,000
5,000 Spacelabs, Inc........................................................ 143,750
4,600 Sybron International Corp.*........................................... 109,250
-----------
453,000
-----------
Electrical Equipment - 8.6%
17,200 EG & G, Inc........................................................... 417,100
11,800 Marshall Industries*.................................................. 379,075
30,920 Oak Industries, Inc. ................................................. 579,750
-----------

<PAGE>

1,375,925
-----------
</TABLE>

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)

December 31, 1995
<TABLE>
<CAPTION>

Shares Value
- --------- -----------
<S> <C> <C>
COMMON STOCKS (continued)
Energy - 8.2%
7,948 Aquila Gas Pipeline Corp. ............................................ $ 102,330
12,600 Belden & Blake Corp.*................................................. 220,500
15,500 Global Natural Resources, Inc.*....................................... 162,750
13,000 Noble Drilling Corp.*................................................. 117,000
11,200 Petroleum Heat & Power Company, Inc. (Class A)........................ 91,000
10,100 St. Mary Land & Exploration Co........................................ 141,400
25,942 Sithe Energies, Inc.*................................................. 155,652
8,000 Tesoro Petroleum Corp.*............................................... 69,000
2,000 Triton Energy Corp.*.................................................. 114,750
6,900 UGI Corp. ............................................................ 143,175
-----------
1,317,557
-----------
Entertainment - .4%
6,000 Hollywood Park, Inc................................................... 60,375
15,983 Spectravision, Inc. (Class B)*........................................ 2,997
-----------
63,372
-----------
Food Services - 1.1%
7,000 IHOP Corp.*........................................................... 182,000
-----------
Health & Hospitals - 3.4%
1,700 Community Health Services, Inc.*...................................... 60,562
20,200 Magellan Health Services, Inc.*....................................... 484,800
-----------
545,362
-----------
Household Products - .2%
3,200 Crown Crafts, Inc..................................................... 36,800
-----------
Insurance - 6.7%
4,100 Ace, LTD. ............................................................ 162,975
15,000 Capsure Holdings Corp.*............................................... 264,375
12,000 E.W. Blanch Holdings, Inc. ........................................... 280,500
9,453 Guaranty National Corp................................................ 145,340
7,000 Penn-America Group, Inc.*............................................. 99,750
5,400 Prudential Reinsurance Holdings, Inc. ................................ 126,225
-----------
1,079,165
-----------
Manufacturing - 12.1%
3,800 Alltrista Corp.*...................................................... 68,400
13,000 Baldwin Technology Co. (Class A)...................................... 65,813
5,700 Briggs & Stratton Corp................................................ 247,237
9,000 Carlisle Companies, Inc............................................... 363,375
11,800 Crane Co. ............................................................ 435,125
12,700 Exabyte Corp.*........................................................ 185,737

</TABLE>

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)

December 31, 1995
<TABLE>
<CAPTION>

Shares Value
- --------- -----------
<S> <C> <C>
COMMON STOCKS (continued)
Manufacturing (continued)
12,000 Harmon Industries, Inc. .............................................. $ 189,000
6,048 North American Watch Co............................................... 116,424
9,400 Singer Co. N.V........................................................ 262,025
-----------
1,933,136
-----------
Paper Products - 3.3%
44,800 Repap Enterprises, Inc.*.............................................. 198,800
22,800 Shorewood Packaging Corp.*............................................ 324,900
-----------
523,700
-----------
Printing & Publishing - 2.3%
8,300 International Imaging Materials, Inc.*................................ 209,575
8,900 Nu-Kote Holdings, Inc. (Class A)*..................................... 151,300
-----------
360,875
-----------
Real Estate - 6.8%
13,291 Cousins Properties, Inc. ............................................. 269,143
6,161 Post Properties, Inc.................................................. 196,382
17,500 Security Capital Industrial Trust, Inc................................ 306,250
12,752 Security Capital Pacific Trust........................................ 251,852
66 Security Capital Realty, Inc. (A)..................................... 58,212
-----------
1,081,839
-----------
Retail - .3%
3,500 Maxim Group, Inc.*.................................................... 47,250
-----------
Security/Investigation - .1%
10,801 Automated Security (Holdings) PLC ADS*................................ 8,101
-----------
Technology - .3%
1,500 Unitrode Corp......................................................... 42,375
-----------
Telecommunication - 1.0%
7,000 ECI Telecom, Ltd. .................................................... 159,688
-----------
Textiles/Apparel - 4.4%
11,000 Dyersburg Corp........................................................ 55,000
3,426 Fab Industries, Inc. ................................................. 109,204
6,400 Mohawk Industries, Inc.*.............................................. 100,000
22,000 Westpoint Stevens, Inc. (Class A)*.................................... 441,375
-----------
705,579
-----------
Tobacco/Beverages/Food Products - 1.1%

<PAGE>

12,900 Morningstar Group, Inc.*.............................................. 103,200
6,000 Sylvan Foods Holdings, Inc.*.......................................... 71,250
-----------
174,450
-----------
</TABLE>

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)

December 31, 1995
<TABLE>
<CAPTION>

Shares Value
- --------- -----------
<S> <C> <C>
COMMON STOCKS (continued)
Transportation - 1.7%
8,300 Interpool, Inc. *..................................................... $ 148,363
8,500 MTL, Inc*............................................................. 119,000
-----------
267,363
-----------
Other - 1.3%
8,250 McGrath RentCorp...................................................... 156,750
6,470 Olympic Steel, Inc.*.................................................. 56,612
-----------
213,362
-----------
Total Common Stocks (cost - $12,333,334).............................. $13,433,441
-----------
Contracts
PURCHASED PUT OPTIONS - .0%
Triton Energy Corp., expiring August '96 @ $50 (premium
20 paid - $5,511)........................................................ $ 4,125
-----------

Total Investments(C) (cost - $14,706,208)................... 98.8% $15,818,711
Other Assets in Excess of Other Liabilities................. 1.2 185,681
----- -----------
Total Net Assets............................................ 100.0% $16,004,392
===== ==========

- ---------------

* Non-income producing security.

(A) Restricted securities (the Portfolio 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>

<TABLE>
<CAPTION>
Date of Par Unit Unit Valuation as of
Description Acquisition Amount Shares Cost December 31, 1995
- ---------------------------------------------------- ----------- ------- ------ ---- --------------------
<S> <C> <C> <C> <C> <C>
Security Capital Realty, Inc.
12.00%, 6/30/14................................... 9/16/94 $51,487 -- $ 91 $100
Security Capital Realty, Inc.
Common Stock...................................... 9/16/94 -- 66 $949 $882

(B) Security Capital at its discretion may defer interest payments.

<PAGE>

(C) Aggregate gross unrealized appreciation for securities in which there is
an excess of value over tax cost is $1,745,435, aggregate gross unrealized
depreciation for securities in which there is an excess of tax cost over
value is $632,932, and net unrealized appreciation for Federal income tax
purposes is $1,112,503. Federal income tax basis of portfolio securities
is substantially the same as for financial reporting purposes.

</TABLE>

See accompanying notes to financial statements.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES

December 31, 1995
<TABLE>

<S> <C>
Assets
Investments, at value (cost - $14,706,208)...................................... $15,818,711
Cash............................................................................ 2,921
Receivable from investments sold................................................ 158,499
Receivable from fund shares sold................................................ 24,462
Dividends receivable............................................................ 18,425
Interest receivable............................................................. 3,421
Other assets.................................................................... 169
-----------
Total Assets.................................................................. 16,026,608
-----------
Liabilities
Payable for fund shares redeemed................................................ 200
Investment advisory fee payable................................................. 1,050
Other payables and accrued expenses............................................. 20,966
-----------
Total Liabilities............................................................. 22,216
-----------
Net Assets
Par value ($.01 per share)...................................................... 8,037
Paid-in-surplus................................................................. 14,215,173
Accumulated undistributed net investment income................................. 211,870
Accumulated undistributed net realized gain on investments...................... 456,809
Net unrealized appreciation on investments...................................... 1,112,503
-----------
Total Net Assets.............................................................. $16,004,392
===========
Fund shares outstanding......................................................... 803,674
-----------
Net asset value per share....................................................... $ 19.91
===========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
STATEMENT OF OPERATIONS

For the year ended December 31, 1995
<TABLE>

<S> <C>
Investment Income
Dividends...................................................................... $ 143,632
Interest....................................................................... 157,866
----------
Total investment income..................................................... 301,498
----------
Operating Expenses
Investment advisory fee (note 2a).............................................. 72,770
Custodian fees................................................................. 15,454
Auditing, consulting and tax return preparation fees........................... 10,095
Transfer and dividend disbursing agent fees.................................... 9,197
Legal fees..................................................................... 3,156
Reports and notices to shareholders............................................ 2,392
Miscellaneous.................................................................. 6,639
----------
Total operating expenses.................................................... 119,703
Less: Investment advisory fee waived (note 2a).............................. (30,075)
----------
Net operating expenses................................................. 89,628
----------
Net investment income.................................................. 211,870
----------
Realized and Unrealized Gain (Loss) on Investments - Net
Net realized gain on investments................................................. 456,809
Net change in unrealized appreciation (depreciation) on investments.............. 1,189,804
----------
Net realized gain and change in unrealized appreciation (depreciation)
on investments......................................................... 1,646,613
----------
Net increase in net assets resulting from operations................... $1,858,483
==========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
Year ended September 16, 1994(1)
December 31, 1995 to December 31, 1994
----------------- ---------------------
<S> <C> <C>
Operations
Net investment income...................................... $ 211,870 $ 29,623
Net realized gain on investments........................... 456,809 26,352
Net change in unrealized appreciation (depreciation) on
investments.............................................. 1,189,804 (77,301)
----------- ----------
Net increase (decrease) in net assets resulting from
operations.......................................... 1,858,483 (21,326)
----------- ----------
Dividends and Distributions to Shareholders
Net investment income...................................... (29,623) --
Net realized gains......................................... (26,352) --
----------- ----------
Total dividends and distributions to shareholders..... (55,975) --
----------- ----------
Fund Share Transactions
Net proceeds from sales.................................... 7,801,061 1,287,020
Net value of securities received (note 1).................. -- 8,129,274
Reinvestment of dividends and distributions................ 55,975 --
Cost of shares redeemed.................................... (2,865,595) (184,525)
----------- ----------
Net increase in net assets from fund share
transactions........................................ 4,991,441 9,231,769
----------- ----------
Total increase in net assets..................... 6,793,949 9,210,443
Net Assets
Beginning of period........................................ 9,210,443 0
----------- ----------
End of period (including undistributed net investment
income of $211,870 and $29,623, respectively)............ $16,004,392 $ 9,210,443
=========== ==========
Shares Issued and Redeemed
Issued..................................................... 427,444 75,859
Issued in exchange for securities (note 1)................. -- 464,795
Issued in reinvestment of dividends and distributions...... 3,289 --
Redeemed................................................... (156,903) (10,810)
----------- ----------
Net increase.......................................... 273,830 529,844
=========== ==========

- ---------------

(1) Commencement of operations.
</TABLE>

See accompanying notes to financial statements.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS

December 31, 1995

(1) Organization and Significant Accounting Policies

Quest for Value Accumulation Trust (the "Trust") was organized on May 12,
1994 as a Massachusetts business trust and is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust is authorized to issue an unlimited number of
seven classes of shares of beneficial interest at $.01 par value: the Equity
Portfolio, the Small Cap Portfolio, the Global Equity Portfolio, the Managed
Portfolio, the Bond Portfolio, the U. S. Government Income Portfolio and the
Money Market Portfolio. OpCap Advisors (formerly called Quest for Value
Advisors; the "Adviser"), a majority-owned (99%) subsidiary of Oppenheimer
Capital, serves as the Trust's investment adviser. The Small Cap Portfolio
(the "Portfolio"), one of the Trust's seven portfolios, had no operations
until September 16, 1994, when the Enterprise Accumulation Trust Small Cap
Portfolio (formerly known as Quest for Value Accumulation Trust Small Cap
Portfolio), distributed cash and securities with an aggregate market value of
$8,129,274 in exchange for 464,795 shares of the Portfolio. The following is a
summary of significant accounting policies consistently followed by the
Portfolio in the preparation of its financial statements:

(A) Valuation of Investments

(B) Federal Income Taxes

<PAGE>

(D) Dividends and Distributions

Dividends and distributions to shareholders from net investment income
and net realized capital gains, if any, are declared and paid at least
annually.

The Portfolio 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

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)

December 31, 1995

(1) Organization and Significant Accounting Policies (continued)
(D) Dividends and Distributions (continued)
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. At
December 31, 1995, the Portfolio did not have any permanent book-tax
differences.

(E) Allocation of Expenses

(F) Use of Estimates

(G) Purchased Put Option Accounting Policy

When a Portfolio purchases a put option, it pays a premium and an amount
equal to the premium is recorded as an investment. The option is subsequently
marked-to-market to reflect its current market value. The Portfolio, as
purchaser of an option, has control over whether the option is exercised. If
an option expires unexercised, the Portfolio realizes a loss in the amount of
the premium paid. If an option is exercised, the premium paid is an adjustment
to the proceeds from the sale in determining whether the Portfolio has
realized a gain or loss. The difference between the premium paid and the
amount received on effecting a closing sale transaction is the realized gain
or loss. The Portfolio, as a purchaser of an option, bears the risk of the
potential inability of the counterparties to meet the terms of their
contracts.

(2) Investment Advisory Fee and Other Transactions with Affiliates

<PAGE>

The Adviser has agreed to waive that portion of the advisory fee and to
reimburse any necessary expenses to limit operating expenses of the Portfolio
to .74% of average daily net assets on an annual basis through at least
December 31, 1995.

(b) Total brokerage commissions paid by the Portfolio for the year ended
December 31, 1995, amounted to $35,395, of which Oppenheimer & Co., Inc., an
affiliate of the Adviser, received $12,805.

(3) Purchases and Sales of Securities

For the year ended December 31, 1995, purchases and sales of investment
securities, other than short-term securities were $10,968,368 and $6,786,171,
respectively.

(4) Capital Loss Deferral

Capital losses incurred after October 31, 1995 are deemed to arise on the
first business day of the following fiscal year. Accordingly, the Portfolio
incurred and elected to defer $87,890 in net capital losses.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
FINANCIAL HIGHLIGHTS

For a share outstanding throughout each period:

<TABLE>
<CAPTION>
Year ended September 16, 1994(1)
December 31, 1995 to December 31, 1994
----------------- ---------------------
<S> <C> <C>
Net asset value, beginning of period..................... $ 17.38 $ 17.49
Income from investment operations:
Net investment income.................................... 0.26 0.06
Net realized and unrealized gain (loss) on investments... 2.37 (0.17)
----------- ----------
Total from investment operations....................... 2.63 (0.11)
----------- ----------
Dividends and distributions to shareholders:
Dividends to shareholders from net investment income..... (0.05) --
Distributions to shareholders from net realized capital
gains.................................................. (0.05) --
----------- ----------
Total dividends and distributions...................... (0.10) --
----------- ----------
Net asset value, end of period........................... $ 19.91 $ 17.38
=========== ==========
Total return(2).......................................... 15.2% (.6%)
=========== ==========
Net assets, end of period................................ $16,004,392 $ 9,210,443
----------- ----------
Ratio of net operating expenses to average net
assets(5).............................................. 0.74%(4) 0.74%(3)
----------- ----------
Ratio of net investment income to average net
assets(5).............................................. 1.75%(4) 1.22%(3)
----------- ----------
Portfolio turnover....................................... 69% 32%
----------- ----------

- ---------------

(1) Commencement of operations.

(2) Assumes reinvestment of all dividends and distributions.

(3) Annualized.

(4) Average net assets for the year ended December 31, 1995 were $12,128,267.

(5) During the periods presented above, the Adviser waived a portion or all of
its fees and reimbursed the Portfolio for a portion of its operating
expenses. If such waivers and reimbursements had not been in effect, the
ratio of net operating expenses to average net assets would have been
0.99% and 1.64% and the ratio of net investment income to average net
assets would have been 1.50% and 0.32%, respectively.
</TABLE>

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Trustees of
Quest for Value Accumulation Trust -- Small Cap Portfolio

In our opinion, the accompanying statement of assets and liabilities,
including the schedule 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 Small Cap
Portfolio (one of the portfolios constituting Quest for Value Accumulation
Trust hereafter referred to as the "Portfolio") at December 31, 1995, the
results of its operations for the year then ended, and the changes in its net
assets and the financial highlights for the year ended December 31, 1995 and
for the period September 16, 1994 (commencement of operations) through
December 31, 1994, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the
Portfolio'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 December 31, 1995 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 16, 1996