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<SEC-DOCUMENT>0000889812-96-001175.txt : 19960829
<SEC-HEADER>0000889812-96-001175.hdr.sgml : 19960829
ACCESSION NUMBER:		0000889812-96-001175
CONFORMED SUBMISSION TYPE:	N-30D
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	19960816
FILED AS OF DATE:		19960828
SROS:			NYSE

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			QUEST FOR VALUE DUAL PURPOSE FUND INC
		CENTRAL INDEX KEY:			0000799029
		STANDARD INDUSTRIAL CLASSIFICATION:	UNKNOWN SIC - 0000 [0000]
		IRS NUMBER:				133387182
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		N-30D
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-04797
		FILM NUMBER:		96621733

	BUSINESS ADDRESS:	
		STREET 1:		OPPENHEIMER TWR
		STREET 2:		ONE WORLD FINANCIAL CTR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10281-1098
		BUSINESS PHONE:		2126677333

	MAIL ADDRESS:	
		STREET 1:		OPPENHEIMER TOWER
		STREET 2:		ONE WORLD FINANCIAL CENTER
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10281-1098

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	QFV DUAL PURPOSE FUND INC
		DATE OF NAME CHANGE:	19870111
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<DESCRIPTION>SEMI-ANNUAL REPORT
<TEXT>


<PAGE>
QUEST FOR VALUE
DUAL PURPOSE
FUND, INC.                                 AUGUST 16, 1996
 
DEAR SHAREHOLDER:
 
The Dual Purpose Fund continued to outperform the Standard & Poor's 500 Index in
the second quarter. The Fund had a total return on its portfolio of 4.9% in the
quarter, surpassing the 4.5% return of the Standard & Poor's 500 Index including
dividends (S&P 500). For the first half, the Fund's total return on its
portfolio was 13.2%, above the 10.1% return of the S&P 500.

The Fund has also performed well over longer periods, producing a compound
annual total return on its portfolio of 16.3% since inception on February 13,
1987, exceeding by a wide margin the 13.2% return of the S&P 500.
 
The Fund is a closed-end investment company with an equal number of Capital
Shares and Income Shares. Capital Shares receive all the capital appreciation
and absorb any losses from the Fund's entire portfolio, while Income Shares
receive all net income. Both classes of shares delivered positive returns in the
second quarter and the first half.
 
PORTFOLIO HOLDINGS AND CHANGES
 
The Fund owns a diversified portfolio of securities aimed at generating capital
appreciation and income. At the end of the second quarter, the Fund's assets
were allocated 76% to common stocks, 8% to securities convertible into common
stocks, 14% to bonds, notes and preferred stock, and 2% to cash and equivalents.
This allocation reflected a moderate increase in common stocks during the
quarter and a moderate decrease in convertible securities, due in part to the
sale of AMR Corp. convertible debentures and the purchase of AMR common shares.
 
The Fund's performance in the quarter and the half was driven primarily by
favorable stock selection. The common stocks in the Fund's portfolio produced a
total return of 6.2% in the quarter, exceeding the 4.5% return of the S&P 500.
During the quarter, we added significantly to the Fund's position in Countrywide
Credit Industries, Inc., the nation's largest residential mortgage lender. The
only major sale was the elimination of our investment in Frontier Corp.
 
The Fund invests in superior, undervalued businesses for the long-term. We stick
with quality companies until their value is reflected in the stock price, or
until we find companies that offer even better value.
 
The five largest equity holdings at June 30, 1996 were WorldCom, Inc., the
nation's fourth largest long-distance telecommunications company, representing
5.5% of the Fund's net assets; Mid Ocean Ltd., a Bermuda-based provider of
excess property and casualty insurance, 5.4% of net assets; Canadian Pacific,
Ltd., a Canadian transportation and natural resources company, 5.3% of net
assets; Varity Corp., a highly profitable manufacturer of automotive components
and other products, 5.3% of net assets; and ACE, Ltd., a Bermuda-based provider
of excess directors and officers liability insurance, 5.2% of net assets.
 
WorldCom, the Fund's top position, highlights the superior business qualities we

look for in a company. Since its merger with IDB Communications in December 1994
and its acquisition of the network services operations of Williams
Telecommunications in January 1995, WorldCom has grown rapidly by offering a
full array of long-distance telecommunications services to its customers,
primarily businesses.

<PAGE>

WorldCom's operations are extremely profitable. Operating returns are about 67%
of net operating assets, versus about 18% for the average U.S. non-financial
company. Most companies with this level of profitability cannot reinvest excess
cash flow at similar returns. WorldCom is an exception. The company spends about
$400 million a year on capital additions, compared with depreciation of roughly
$180 million, and its returns on investment continue to climb. WorldCom has
identified additional city pair network construction opportunities that may
require $650 million to $800 million of capital over the next two years. If
these investments are made, they too should be accretive to returns.
 
How can a company deploy so much capital so profitably? The answer lies in an
extraordinarily rapid growth rate. Excluding the operator service business,
which the company is exiting due to inadequate profitability, internal unit
volume growth is 24% to 26% a year. The company constantly reduces prices to
gain market share. As a result, 25% unit volume growth produces 20% internal
revenue growth. However, as fixed line costs and depreciation are spread over a
larger revenue base, operating margins expand. With 20% revenue growth, WorldCom
can increase its operating profits 30% per year internally!
 
The company also enjoys external growth opportunities through mergers and
acquisitions. It is a beneficiary, as well, of the Telecommunications Bill
passed earlier this year. As new participants enter the long-distance market,
WorldCom will provide capacity to many of them.
 
We believe WorldCom's valuation is modest relative to its prospects. Economic
earnings (including about $.75 per share of goodwill amortization) are expected
to reach about $2.65 per share in 1996 and about $3.35 per share in 1997. Based
on the recent stock price, this equals a price/earnings ratio of 21x for 1996
and 16.5x for 1997, a low valuation for a company with 30%-plus internal growth
in operating profits and the potential for additional growth deriving from the
Telecommunications Bill.
 
For these reasons, WorldCom is one of the Fund's major positions.
 
CAPITAL SHARES
 
The Capital Shares of the Fund are intended for investors seeking capital
appreciation, leverage and professional management at no cost (the management
fees and expenses of the Fund are paid out of current income by the Income
Shareholders).
 
The net asset value (NAV) of the Capital Shares gained 5.4% in the second
quarter and 15.5% in the first half, exceeding the S&P 500 in both periods. At
June 30, 1996, the Capital Shares had an NAV of $38.86 each and were entitled to
the capital appreciation or depreciation on the entire net assets of the Fund,
equal to $50.60 per Capital Share--thereby magnifying changes in value, up or

down, of the Fund's portfolio by approximately 1.3 times.
 
The Capital Shares have provided returns well in excess of the S&P 500 over
extended periods. From the Fund's inception on February 13, 1987 through June
30, 1996 they provided a compound annual pretax return of 19.0% (based on the
NAV, after adjustment for short-term capital gains distributions and for federal
taxes paid on net realized long-term capital gains retained by the Fund),
readily outpacing the 13.2% return of the S&P 500. This excellent performance
reflects a combination of above-average investment returns and the impact of
leverage.
 
The market price of the Capital Shares on the New York Stock Exchange increased
6.2% in the quarter and 13.7% in the half. As of June 30, 1996, the market price
of the Capital Shares was $36.25 per share, a 6.7% discount from NAV. The
Capital Shares will be redeemable at their full NAV and any remaining discount
will automatically disappear after January 31, 1997, when the Fund will either
liquidate or, following a vote of shareholders, convert to an open-end fund.
 
INCOME SHARES
 
The Income Shares are intended for investors seeking high current income and
relative safety of principal. The Fund paid regular monthly dividends of $.10
per Income Share in the first half, or a total of $.60 per share for the
six-month period.
 
The Income Shares' total return (dividends paid and change in market price
assuming the reinvestment of dividends) was 1.5% in the second quarter and 3.0%
in the first half, exceeding the total return of 0.1% and 1.4%, respectively, on
a 10-year Treasury security maturing in February 1997. From inception on
February 13, 1987 through June 30, 1996, the compound annual total return on the
Income Shares was 10.4% at market, assuming reinvestment of dividends, well
above the 7.6% compound return for a 10-year Treasury security maturing in
February 1997.

<PAGE>

The Income Shares had a market price of $11.75 each at June 30, 1996. They are
scheduled to be redeemed on January 31, 1997 at $11.60 per share plus all
accumulated and unpaid income. That income will consist primarily of income
earned by the Fund in January 1997, since the Fund will declare a dividend in
December 1996 which will include almost all of the income, if any, earned but
not previously paid through year-end 1996.
 
RECENT DEVELOPMENT
 
At a meeting of the Fund's Board of Directors on August 15, OpCap Advisors, the
Fund's investment adviser, and OppenheimerFunds, Inc. proposed that the Fund
become an open-end fund, with capital appreciation as its investment objective,
after the Income Shares are redeemed on January 31, 1997. On becoming an
open-end fund, the present Capital Shares would be redeemable at net asset
value. The Board is actively considering the proposal. If approved by the Board,
the proposal would be submitted to the Capital Shareholders seeking their
approval. Should the proposal be adopted, OppenheimerFunds, Inc. intends to
offer each Income Shareholder the option to receive, in lieu of cash, Class A

shares of any Oppenheimer Fund without payment of sales charge.
 
You will be receiving more detailed information about this proposal during the
next few months.
 
OUTLOOK
 
The stock market had advanced for nearly six years through the 1996 second
quarter without as much as a 10% decline. Although the market, as measured by
the popular indices, appears to be highly valued to overvalued, we believe the
stocks owned by the Fund are still reasonably priced, offering opportunities for
sustained investment returns.
 
We will continue to do what we do best, which is to invest in securities
offering value and solid prospects for profitable growth. Our goal in doing so
is to produce above-average returns with below-average risk.
 
Thank you for investing with us. We at the Fund and its investment adviser,
OpCap Advisors, appreciate the trust you have placed in us. We remain dedicated
to serving your investment needs.
 
                                             Sincerely,
 
                                             Joseph M. La Motta
                                             President

<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
                      SCHEDULE OF INVESTMENTS (UNAUDITED)
                                 JUNE 30, 1996
<TABLE>
<CAPTION>
 PRINCIPAL
   AMOUNT                                          VALUE
- ------------                                    ------------
<C>           <S>                               <C>
              REPURCHASE
              AGREEMENT--1.1%
$ 10,312,000  Lehman Brothers, 5.35%, 7/01/96,
                (dated 6/28/96, proceeds at
                maturity: $10,316,597,
                collateralized by $10,010,000
                par, $10,521,511 value, U.S.
                Treasury Notes, 8.00%,
                1/15/97)                        $ 10,312,000
                (cost--$10,312,000)...........
                                                ------------
              CORPORATE NOTES AND BONDS--12.9%
              Casinos/Gaming--2.4%
$ 19,000,000  Trump Holdings & Funding
                Sr. Sub. Notes
                15.50%, 6/15/05...............  $ 22,372,500
                                                ------------
              Media/Broadcasting--3.9%
  37,750,000  American Radio Systems Corp.
                Sr. Sub. Notes
                9.00%, 2/01/06................    35,579,375
                                                ------------
              Printing/Publishing--1.7%
  16,700,000  Hollinger International
                Publishing Sr. Sub. Notes
                9.25%, 2/01/06................    15,280,500
                                                ------------
              Textiles--4.9%
  46,000,000  WestPoint Stevens, Inc.
                Sr. Sub. Deb.
                9.375%, 12/15/05..............    44,390,000
                                                ------------
              Total Corporate Notes and Bonds
                (cost--$118,303,711)..........  $117,622,375
                                                ------------
              CONVERTIBLE CORPORATE
              NOTES AND BONDS--4.1%
              Oil/Gas--2.0%
$ 12,970,545  Crusader Ltd.
                Conv. Sub. Notes
                6.00%, 2/14/04 (A)............  $ 18,588,088
                                                ------------
              Real Estate--2.1%
  18,442,153  Security Capital Group, Inc.

                Conv. Sub. Deb.
                12.00%, 6/30/14 (A)...........    18,921,283
                                                ------------
              Total Convertible Corporate
                Notes and Bonds
                (cost--$30,353,643)...........  $ 37,509,371
                                                ------------
 
<CAPTION>
   SHARES                                          VALUE
- ------------                                    ------------
<C>           <S>                               <C>
              PREFERRED STOCK--1.2%
              Entertainment
     310,000  Time Warner Financing Trust
                $1.24 Pfd.
                (cost--$9,652,620)............  $ 11,160,000
                                                ------------
              CONVERTIBLE PREFERRED
              STOCKS--4.2%
              Media/Broadcasting--1.3%
     200,000  American Radio Systems Corp.
                $3.50 Conv. Exch. Pfd.........  $ 11,800,000
                                                ------------
              Miscellaneous Financial
              Services--1.2%
     500,000  Merrill Lynch & Co., Inc.
                Cox--Strypes
                $1.37 Conv. Exch. Pfd.........    11,062,500
                                                ------------
              Tobacco/Beverages/Food
              Products--1.7%
   1,163,900  Flagstar Companies, Inc.
                $2.25 Conv. Exch. Pfd.........    14,913,051
                                                ------------
              Total Convertible Preferred
                Stocks
                (cost--$48,078,775)...........  $ 37,775,551
                                                ------------
              COMMON STOCKS--75.7%
              Airlines--4.5%
     450,000  AMR Corp.*......................  $ 40,950,000
                                                ------------
              Automotive--5.3%
   1,000,000  Varity Corp.*...................    48,125,000
                                                ------------
              Casinos/Gaming--3.8%
     515,000  GTECH Holdings Corp.*...........    15,256,875
     679,600  Trump Hotels & Casino Resorts,
                Inc.*.........................    19,368,600
                                                ------------
                                                  34,625,475
                                                ------------
              Chemicals--1.1%

     254,700  SGL Carbon AG ADR*..............     9,742,275
                                                ------------
              Conglomerates--5.3%
   2,200,000  Canadian Pacific, Ltd...........    48,400,000
                                                ------------
              Electronics--4.7%
   1,035,800  UCAR International, Inc.*.......    43,115,175
                                                ------------
              Insurance--21.9%
   1,000,000  ACE, Ltd........................    47,000,000
     652,700  EXEL Ltd........................    46,015,350
      75,400  Horace Mann Educators Corp......     2,393,950
   1,210,000  Mid Ocean Ltd...................    49,610,000
   1,035,000  PartnerRe Ltd...................    30,920,625
     500,000  Progressive Corp., Ohio.........    23,125,000
                                                ------------
                                                 199,064,925
                                                ------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
   SHARES                                          VALUE
- ------------                                    ------------
<C>           <S>                               <C>
              Metals/Mining--4.7%
              Freeport McMoRan, Copper
              & Gold
     646,250  (Class A).......................  $ 19,306,719
     752,601  (Class B).......................    23,989,157
                                                ------------
                                                  43,295,876
                                                ------------
              Miscellaneous Financial
              Services--3.4%
   1,250,000  Countrywide Credit Industries,
                Inc...........................    30,937,500
                                                ------------
              Oil/Gas--2.6%
     485,000  Triton Energy Ltd. (Class A)*...    23,583,125
                                                ------------
              Real Estate--2.9%
      24,346  Security Capital Group, Inc.
                (A)...........................    26,127,473
                                                ------------
              Telecommunications--5.5%
     900,000  WorldCom, Inc.*.................    49,837,500
                                                ------------
<CAPTION>
   SHARES                                          VALUE

- ------------                                    ------------
<C>           <S>                               <C>
              Tobacco/Beverages/Food
              Products--10.0%
     450,000  Philip Morris Companies, Inc....  $ 46,800,000

   1,300,000  UST, Inc........................    44,525,000
                                                ------------
                                                  91,325,000
                                                ------------
              Total Common Stocks
                (cost--$568,626,311)..........  $689,129,324
                                                ------------
</TABLE>

<TABLE>
<S>                                     <C>     <C>
TOTAL INVESTMENTS
  (cost--$785,327,060).................  99.2%  $903,508,621

Other Assets in Excess of
  Other Liabilities....................    0.8     7,430,807
                                        ------  ------------
 
TOTAL NET ASSETS....................... 100.0%  $910,939,428
                                        ------  ------------
                                        ------  ------------
</TABLE>
 
                See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
 * Non-income producing security.
 
NOTES TO SCHEDULE OF INVESTMENTS:
 
(A) Restricted Securities (The Fund will not bear any costs, including those
    involved in registration under the Securities Act of 1933, in connection
    with the disposition of these securities.):
 
<TABLE>
<CAPTION>
                                                                                                             FAIR VALUE
                                                           DATE OF          PAR                  AVERAGE        AS OF
                     DESCRIPTION                         ACQUISITION      AMOUNT       SHARES     COST      JUNE 30, 1996
- ------------------------------------------------------   -----------    -----------    ------    -------    -------------
<S>                                                      <C>            <C>            <C>       <C>        <C>
Crusader Limited 6.00% 2/14/04........................     4/28/94      $12,970,545      --      $  100        $   143
Security Capital Group, Inc.
  12.00%, 6/30/14.....................................     6/16/94       18,442,153      --          94            103
Security Capital Group, Inc.
  Common Stock........................................     8/02/93          --         24,346       699          1,073
</TABLE>

<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
                STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
                                 JUNE 30, 1996
<TABLE>
<S>                                                                                    <C>               <C>
                                                       ASSETS
Investments, at value (cost--$785,327,060)........................................     $903,508,621
Cash..............................................................................              209
Dividends and interest receivable.................................................        6,837,454
Income tax receivable.............................................................          116,952
Receivable for investments sold...................................................           63,125
Prepaid expenses and other assets.................................................          618,456
                                                                                       ------------
  Total assets....................................................................                       $911,144,817
 
                                                     LIABILITIES
Dividends payable to Income Shareholders..........................................           79,409
Other payables and accrued expenses...............................................          125,980
                                                                                       ------------
  Total liabilities...............................................................                            205,389
                                                                                                         ------------
 
                                                     NET ASSETS
                                               (Shareholders' Equity)
Net assets applicable to 18,004,302 Income Shares outstanding of
   $.01 par value.................................................................     $211,354,299
Net assets applicable to 18,004,302 Capital Shares outstanding of
   $.01 par value.................................................................      699,585,129
                                                                                       ------------
  Total Net Assets................................................................                       $910,939,428
                                                                                                         ------------
                                                                                                         ------------
 
<CAPTION>
 
                                                                                          INCOME           CAPITAL
                                                                                          SHARES            SHARES
                                                                                       ------------      ------------
<S>                                                                                    <C>               <C>
Net asset value per share.........................................................        $11.74            $38.86
</TABLE>
 
                See accompanying notes to financial statements.
- --------------------------------------------------------------------------------

<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
                      STATEMENT OF OPERATIONS (UNAUDITED)
                     FOR THE SIX MONTHS ENDED JUNE 30, 1996
 
<TABLE>
<S>                                                                                      <C>             <C>
INVESTMENT INCOME:
  Interest..........................................................................     $8,251,025
  Dividends.........................................................................      7,619,150
                                                                                         ----------
     Total investment income........................................................                     $ 15,870,175
 
OPERATING EXPENSES:
  Investment advisory fees (note 2a)................................................     $2,402,422
  Administration fees (note 2b).....................................................        430,757
  Reports and notices to shareholders...............................................         89,642
  Custodian fees (note 2d)..........................................................         45,688
  Transfer and dividend disbursing agent fees.......................................         31,201
  Auditing, consulting and tax return preparation fees..............................         30,278
  Directors' fees and expenses......................................................         21,134
  Exchange fees.....................................................................         18,410
  Legal fees........................................................................          5,694
  Miscellaneous.....................................................................         26,731
                                                                                         ----------
     Total operating expenses.......................................................      3,101,957
     Less: Expense offset arrangement (note 2d).....................................        (12,833)
                                                                                         ----------
       Net operating expenses.......................................................                        3,089,124
                                                                                                         ------------
       Net investment income........................................................                       12,781,051
                                                                                                         ------------
 
REALIZED AND UNREALIZED GAIN (LOSS) ON
   INVESTMENTS--NET:
  Net realized gain on investments..................................................                     $169,312,182
  Net change in unrealized appreciation (depreciation) on investments...............                      (75,529,949)
                                                                                                         ------------
     Net realized gain and change in unrealized appreciation (depreciation) on
      investments...................................................................                       93,782,233
                                                                                                         ------------
Net increase in net assets resulting from operations................................                     $106,563,284
                                                                                                         ------------
                                                                                                         ------------
</TABLE>
 
                See accompanying notes to financial statements.
- --------------------------------------------------------------------------------

<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
                       STATEMENT OF CHANGES IN NET ASSETS
 
<TABLE>
<CAPTION>
                                                                                        SIX MONTHS
                                                                                          ENDED           YEAR ENDED
                                                                                         JUNE 30,        DECEMBER 31,
                                                                                         1996 (1)            1995
                                                                                       ------------      ------------
 
<S>                                                                                    <C>               <C>
Net investment income.............................................................     $ 12,781,051      $ 25,044,472
Net realized gain on investments..................................................      169,312,182        75,958,250
Net change in unrealized appreciation (depreciation) on investments...............      (75,529,949)       94,400,856
Provision for income taxes on capital gains retained (note 1b)....................               --       (28,346,378)
                                                                                       ------------      ------------
  Net increase in net assets resulting from operations............................      106,563,284       167,057,200
Dividends to Income Shareholders
   ($.60 and $1.39 per share, respectively).......................................      (10,802,582)      (25,025,980)
Distributions to Capital Shareholders
   ($0 and $.033 per share, respectively).........................................               --          (594,142)
                                                                                       ------------      ------------
  Total increase in net assets....................................................       95,760,702       141,437,078
Net Assets:
  Beginning of period.............................................................      815,178,726       673,741,648
                                                                                       ------------      ------------
  End of period (including undistributed net investment income of
     $2,496,376 and $517,907, respectively).......................................     $910,939,428      $815,178,726
                                                                                       ------------      ------------
                                                                                       ------------      ------------
</TABLE>
 
                See accompanying notes to financial statements.
 
- --------------------------------------------------------------------------------
 
(1) Unaudited.

<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
          STATEMENT OF CHANGES IN UNDISTRIBUTED NET INVESTMENT INCOME,
                     REALIZED AND UNREALIZED GAINS (LOSSES)
 
<TABLE>
<CAPTION>
                                                                                        SIX MONTHS
                                                                                          ENDED           YEAR ENDED
                                                                                         JUNE 30,        DECEMBER 31,
                                                                                         1996 (1)            1995
                                                                                       ------------      ------------
<S>                                                                                    <C>               <C>
Net investment income available for distribution:
   Balance, beginning of period....................................................    $    517,907      $    499,415
   Net investment income...........................................................      12,781,051        25,044,472
   Dividends to Income Shareholders
     ($.60 and $1.39 per share, respectively)......................................     (10,802,582)      (25,025,980)
                                                                                       ------------      ------------
      Balance, end of period.......................................................    $  2,496,376      $    517,907
                                                                                       ------------      ------------
                                                                                       ------------      ------------
 
Accumulated net realized gains:
   Balance, beginning of period....................................................    $203,233,461      $156,215,731
   Net realized gain on investments................................................     169,312,182        75,958,250
   Provision for income taxes on long-term capital gains retained (note 1b)........              --       (28,346,378)
   Distributions to Capital Shareholders
     ($0 and $.033 per share, respectively)........................................              --          (594,142)
                                                                                       ------------      ------------
      Balance, end of period.......................................................    $372,545,643      $203,233,461
                                                                                       ------------      ------------
                                                                                       ------------      ------------
 
Net unrealized appreciation (depreciation) on investments:
  Balance, beginning of period.....................................................    $193,711,510      $ 99,310,654
  Net change in unrealized appreciation (depreciation) on investments..............     (75,529,949)       94,400,856
                                                                                       ------------      ------------
     Balance, end of period........................................................    $118,181,561      $193,711,510
                                                                                       ------------      ------------
                                                                                       ------------      ------------
</TABLE>
 
                See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
 
(1) Unaudited.

<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
                   NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
                                 JUNE 30, 1996
 
    (1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 
    Quest for Value Dual Purpose Fund, Inc. (the 'Fund') is a diversified,
closed-end, 'dual-purpose' investment company. The Fund commenced investment
operations on February 13, 1987. OpCap Advisors (the 'Adviser'), a majority-
owned (99%) subsidiary of Oppenheimer Capital, serves as the Fund's investment
adviser. Oppenheimer Capital (the 'Administrator') serves as the Fund's
administrator. 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. The
following is a summary of significant accounting policies consistently followed
by the Fund:
 
    (A) VALUATION OF INVESTMENTS
 
    Investment securities listed on a national securities exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such
reported sales, the 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 day by an independent 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 sixty days or less are valued at
amortized cost or amortized value, which approximates market value. Any
securities or other assets for which market quotations are not readily available
are valued at their fair value as determined in good faith under procedures
established by the Fund's Board of Directors. 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 Fund's intention to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable ordinary income to its shareholders;
accordingly, no Federal income tax provision is required. Net realized long-term
capital gains, if any, on investment transactions are retained and applicable
taxes thereon will be accrued at the end of the Fund's fiscal year.
 
    (C) INVESTMENT TRANSACTIONS AND OTHER INCOME
 
    Investment transactions are accounted for on the trade date. In determining
the gain or loss from the sale of investments, the cost of investments 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 are accreted or amortized to interest income over

the lives of the respective securities.
 
    (D) REPURCHASE AGREEMENTS
 
    The Fund enters into repurchase agreements as part of its investment
program. The Fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default of the obligor to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the counterparty
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
 
    (E) DIVIDENDS AND DISTRIBUTIONS
 
    The Fund distributes its net investment income to Income Shareholders at a
fixed monthly rate (currently $.10 a share) with any excess net investment
income generally declared by year end. Income Shares are entitled to cumulative
dividends in an amount equivalent to net investment income with a minimum annual
rate of $.875 per share.
 
    To the extent that any such minimum cumulative dividend cannot be satisfied
from net investment income, it will be paid from any tax basis net realized
short-term or long-term capital gains. Capital Shares will not be entitled to
receive dividends from net investment income as long as Income Shares are
outstanding.
<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
              NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
                                 JUNE 30, 1996
 
    The Fund declared dividends of $.60 per Income Share during the six months
ended June 30, 1996. To the extent not needed to pay the Income Shares' minimum
cumulative dividends, distributions from tax basis net realized short-term
capital gains, if any, may be paid to holders of the Capital Shares. The Fund
will not distribute tax basis net realized long-term capital gains except to the
limited extent described previously. Dividends and distributions to shareholders
are recorded on the ex-dividend date.
 
    On January 31, 1997 Income Shares will be redeemed at $11.60 per share, plus
accumulated and unpaid dividends. Should assets be insufficient to redeem the
Income Shares at such amount, total net assets of the Fund would be distributed
to Income Shareholders on a pro-rata basis.
 
    (2) INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS WITH
    AFFILIATES
 
    (a) The investment advisory fee is payable monthly to the Adviser and is
computed on the average weekly net assets of the Fund as of the close of
business each week at the following annual rates: .75% on the first $200
million; and .50% on net assets in excess of $200 million.
 
    (b) The administration fee is payable monthly to the Administrator and is

computed on the average weekly net assets of the Fund as of the close of
business each week at the annual rate of .10%.
 
    (c) Total brokerage commissions paid by the Fund during the six months ended
June 30, 1996 amounted to $745,498 of which Oppenheimer & Co., Inc., an
affiliate of the Adviser, received $141,429.
 
    (d) The Fund benefits from an expense offset arrangement with its custodian
bank where uninvested cash balances earn credits that reduce monthly fees. Had
these cash balances been invested in income producing securities, they would
have generated income for the Fund.
 
    (3) PURCHASES AND SALES OF SECURITIES
 
    During the six months ended June 30, 1996, purchases and sales of investment
securities, other than short-term securities, aggregated $438,884,424 and
$473,139,017, respectively.
 
    (4) UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR
        FEDERAL INCOME TAX PURPOSES
 
    At June 30, 1996, the cost of investments for Federal income tax purposes
was $785,327,060. Aggregate gross unrealized appreciation (all securities in
which there is an excess of value over tax cost) amounted to $124,355,244 and
aggregate gross unrealized depreciation (all securities in which there is an
excess of tax cost over value) amounted to $6,173,683, resulting in net
unrealized appreciation of $118,181,561.
<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
              NOTES TO FINANCIAL STATEMENTS (UNAUDITED)(CONTINUED)
                                 JUNE 30, 1996
 
    (5) CAPITAL STOCK
 
    The Fund is authorized to issue 20 million Capital Shares and 20 million
Income Shares at $.01 par value, respectively. Each class of shares has
18,004,302 issued and outstanding, representing $180,043 at par and $208,677,881
paid-in-surplus.
 
    (6) QUARTERLY RESULTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                                                            REALIZED AND
                                                                                       NET                   UNREALIZED
                                                            INVESTMENT              INVESTMENT             GAIN (LOSS) ON
                                                              INCOME                  INCOME              INVESTMENTS--NET
                                                       --------------------    --------------------    ----------------------
                                                                       PER                     PER                      PER
                   QUARTER ENDED                          TOTAL       SHARE       TOTAL       SHARE       TOTAL        SHARE
- ----------------------------------------------------   -----------    -----    -----------    -----    ------------    ------
<S>                                                    <C>            <C>      <C>            <C>      <C>             <C>
March 31, 1996......................................   $ 7,608,934    $0.42    $ 6,096,637    $0.34    $ 58,115,335    $ 3.23

June 30, 1996.......................................     8,261,241     0.46      6,684,414     0.37      35,666,898      1.98
                                                       -----------    -----    -----------    -----    ------------    ------
                                                       $15,870,175    $0.88    $12,781,051    $0.71    $ 93,782,233    $ 5.21
                                                       -----------    -----    -----------    -----    ------------    ------
                                                       -----------    -----    -----------    -----    ------------    ------
March 31, 1995......................................   $ 7,638,860    $0.43    $ 6,365,976    $0.35    $ 57,584,502    $ 3.20
June 30, 1995.......................................     7,777,455     0.43      6,387,012     0.36      60,006,065      3.33
September 30, 1995..................................     6,404,802     0.35      4,899,611     0.27      60,450,460      3.36
December 31, 1995...................................     8,932,620     0.50      7,391,873     0.41     (36,028,299)*   (2.00)
                                                       -----------    -----    -----------    -----    ------------    ------
                                                       $30,753,737    $1.71    $25,044,472    $1.39    $142,012,728*   $ 7.89
                                                       -----------    -----    -----------    -----    ------------    ------
                                                       -----------    -----    -----------    -----    ------------    ------
</TABLE>
 
- ------------------
* After provision for income taxes accrued on net realized long-term gains.
 
    (7) SUBSEQUENT EVENTS
 
    On July 15, 1996, a dividend of $.10 per share or approximately $1,800,430
was declared to Income Shareholders payable July 31, 1996 to shareholders of
record on July 17, 1996.
 
    On August 9, 1996, a dividend of $.10 per share or approximately $1,800,430
was declared to Income Shareholders payable August 30, 1996 to shareholders of
record on August 19, 1996.

<PAGE>
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
                              FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
                                         SIX MONTHS
                                           ENDED                              YEAR ENDED DECEMBER 31,
                                          JUNE 30,           ---------------------------------------------------------
                                          1996 (1)               1995           1994           1993           1992
                                        ------------         ------------   ------------   ------------   ------------
<S>                                     <C>                  <C>            <C>            <C>            <C>
PER SHARE OPERATING PERFORMANCE:
Income Shares:
   Net Asset Value, Beginning of
     Period..........................   $      11.63         $      11.63   $      11.61   $      11.61   $      11.60
   Net investment income.............           0.71                 1.39           1.36           1.30           1.35
   Dividends from net investment
     income..........................          (0.60)               (1.39)         (1.34)         (1.30)         (1.34)
                                        ------------         ------------   ------------   ------------   ------------
   Net Asset Value, End of Period....   $      11.74         $      11.63   $      11.63   $      11.61   $      11.61
                                        ------------         ------------   ------------   ------------   ------------
                                        ------------         ------------   ------------   ------------   ------------
   Market Value, End of Period.......   $      11.75         $      12.00   $     12.125   $      13.25   $      13.00
                                        ------------         ------------   ------------   ------------   ------------
                                        ------------         ------------   ------------   ------------   ------------
   Total Investment Return (2).......           3.0%                10.9%           1.8%          12.3%           7.4%
                                        ------------         ------------   ------------   ------------   ------------
                                        ------------         ------------   ------------   ------------   ------------
 
Capital Shares:
   Net Asset Value, Beginning of
     Period..........................   $      33.65         $      25.79   $      27.09   $      26.29   $      22.59
   Net realized and unrealized gain
     (loss) on investments...........           5.21                 9.46          (0.38)          2.45           6.09
   Provision for corporate income
     taxes on net realized long-term
     capital gains...................             --                (1.57)         (0.53)         (1.43)         (1.10)
   Distributions from net realized
     short-term capital gains........             --                (0.03)         (0.39)         (0.22)         (1.29)
                                        ------------         ------------   ------------   ------------   ------------
   Net Asset Value, End of Period....   $      38.86         $      33.65   $      25.79   $      27.09   $      26.29
                                        ------------         ------------   ------------   ------------   ------------
                                        ------------         ------------   ------------   ------------   ------------
   Market Value, End of Period.......   $      36.25         $     31.875   $      23.00   $      23.75   $      23.00
                                        ------------         ------------   ------------   ------------   ------------
                                        ------------         ------------   ------------   ------------   ------------
   Total Investment Return (3).......          13.7%                45.6%           0.9%          10.5%          44.6%
                                        ------------         ------------   ------------   ------------   ------------
                                        ------------         ------------   ------------   ------------   ------------
 
RATIOS/SUPPLEMENTAL DATA:
   Net Assets, End of Period.........   $910,939,428         $815,178,726   $673,741,648   $696,802,938   $682,373,943
                                        ------------         ------------   ------------   ------------   ------------
   Ratio of Operating Expenses to

     Average Net Assets..............          0.72%(4,5,6)         0.73%          0.74%          0.74%          0.74%
                                        ------------         ------------   ------------   ------------   ------------
   Ratio of Net Investment Income to
     Average Net Assets..............          2.97%(4,5,6)         3.20%          3.47%          3.29%          3.61%
                                        ------------         ------------   ------------   ------------   ------------
   Portfolio Turnover Rate...........            51%                  72%            45%            51%            45%
                                        ------------         ------------   ------------   ------------   ------------
   Average Commission Rate...........   $       0.05                   --             --             --             --
                                        ------------         ------------   ------------   ------------   ------------
   Number of each class of Income and
     Capital Shares outstanding at
     the end of period...............     18,004,302           18,004,302     18,004,302     18,004,302     18,004,302
                                        ------------         ------------   ------------   ------------   ------------
                                        ------------         ------------   ------------   ------------   ------------
 
<CAPTION>
 
                                           1991
                                       ------------
<S>                                    <C>
PER SHARE OPERATING PERFORMANCE:
Income Shares:
   Net Asset Value, Beginning of
     Period..........................  $      11.60
   Net investment income.............          1.37
   Dividends from net investment
     income..........................         (1.37)
                                       ------------
   Net Asset Value, End of Period....  $      11.60
                                       ------------
                                       ------------
   Market Value, End of Period.......  $     13.375
                                       ------------
                                       ------------
   Total Investment Return (2).......         15.0%
                                       ------------
                                       ------------
Capital Shares:
   Net Asset Value, Beginning of
     Period..........................  $      16.43
   Net realized and unrealized gain
     (loss) on investments...........          6.77
   Provision for corporate income
     taxes on net realized long-term
     capital gains...................         (0.60)
   Distributions from net realized
     short-term capital gains........         (0.01)
                                       ------------
   Net Asset Value, End of Period....  $      22.59
                                       ------------
                                       ------------
   Market Value, End of Period.......  $     17.625
                                       ------------
                                       ------------

   Total Investment Return (3).......         52.1%
                                       ------------
                                       ------------
RATIOS/SUPPLEMENTAL DATA:
   Net Assets, End of Period.........  $615,726,914
                                       ------------
   Ratio of Operating Expenses to
     Average Net Assets..............         0.77%
                                       ------------
   Ratio of Net Investment Income to
     Average Net Assets..............         4.39%
                                       ------------
   Portfolio Turnover Rate...........           62%
                                       ------------
   Average Commission Rate...........            --
                                       ------------
   Number of each class of Income and
     Capital Shares outstanding at
     the end of period...............    18,004,302
                                       ------------
                                       ------------
</TABLE>
 
- ------------------
(1) Unaudited.
(2) Change in market price assuming reinvestment of dividends on payable date
    (at market).
(3) Change in market price assuming reinvestment of short-term capital gains on
    payable date and federal taxes paid on long-term capital gains on year end
    (both at market).
(4) Average net assets for the period ended June 30, 1996 were $866,248,725.
(5) Annualized.
(6) Gross of expense offsets (see note 2d in Notes to Financial Statements).

<PAGE>
                                     ABOUT
                    QUEST FOR VALUE DUAL PURPOSE FUND, INC.
 
    The Quest for Value Dual Purpose Fund, Inc. (the 'Fund') is a closed-end
dual-purpose investment company which invests primarily in stocks, convertible
securities, and corporate notes and bonds. The Fund has two classes of shares:
Capital Shares (NYSE symbol KFV) for those seeking long-term growth of capital;
and Income Shares (NYSE symbol KFV Pr.) for those seeking current and long-term
growth of income.
 
    Capital Share investors provided 50% of the Fund's capital at inception in
1987, yet receive all of the portfolio's capital appreciation (depreciation).
Income Share investors, on the other hand, initially provided 50% of the Fund's
capital, but receive all of the portfolio's net investment income. Consequently,
investors in each class of shares have more assets working for their respective
investment goals than they have contributed.
 
    After redemption of the Income Shares on January 31, 1997, at initial net
asset value of $11.60, plus any accumulated and unpaid dividends, Capital
Shareholders will own all remaining assets. Thereafter, the Fund will either
liquidate or submit to the Capital Shareholders a proposal to continue as an
open-end investment company (i.e., a mutual fund).
 
                                SHARE COMPARISON
 
    The following is a brief summary of certain rights for each class of shares
of the Fund.
 
  CAPITAL SHARES                                  INCOME SHARES
o Generally will be entitled to all capital       o Entitled to all the Fund's
  appreciation and subject to all depreciation      Net Investment Income.
  from 100% of the assets of the Fund.
 
- -------------------------------------------------------------------------------
 
o No distributions from Net Investment Income     o Minimum cumulative dividend
  as long as Income Shares are outstanding.         of $.875 annually.
 
- -------------------------------------------------------------------------------
 
o Bear none of the Fund's expenses.               o Potential for growing 
                                                    income stream. 1996 
                                                    dividends amounted to $.60
                                                    through June 30, 1996.
 
- -------------------------------------------------------------------------------
 
o NYSE symbol KFV.                                o NYSE symbol KFV Pr.
 
                           DIVIDEND REINVESTMENT PLAN
 

    Income Shareholders may participate in the dividend reinvestment plan (the
'Plan') by calling the Plan Agent, BostonEquiServe L.P. at 1-800-426-5523 if the
shares are held in your own name. If shares are held in nominee name (in the
name of your brokerage firm, bank or other institution), contact your nominee
and request that they either participate on your behalf or re-register the
shares in your name.
 
    The Plan, in brief, works like this: On the payable date for a dividend the
Plan Agent will pool the dividends payable to participants in the Plan. Shortly
thereafter, the plan agent will purchase shares on the open market on behalf of
the Plan. When completed, they will allocate the shares to each participant.
Each participant will pay the same purchase cost plus a proportionate share of
the brokerage commissions. The administrative expenses of the Plan will be paid
by the Fund. Participation in the Plan in no way reduces or eliminates tax
liability on dividends reinvested. Participants may withdraw from the Plan at
any time by contacting the Plan Agent.

<PAGE>
ANNUAL SHAREHOLDERS MEETING
- --------------------------------------------------------------------------------
 
     The Fund held its annual shareholders meeting on May 23, 1996. At the
meeting, income and capital shareholders voted separately on the election of the
income and capital share directors, voted together on the election of combined
income/capital directors and ratified the selection of Price Waterhouse LLP as
the independent accountants of the Fund. The following table provides
information concerning the matters voted on at the meeting:
 
1. ELECTION OF DIRECTORS (INCOME SHARES VOTING ONLY)
 
<TABLE>
<CAPTION>
                             NOMINEE                                VOTES FOR     VOTES AGAINST    WITHHELD AUTHORITY
- -----------------------------------------------------------------   ----------    --------------   ------------------
<S>                                                                 <C>           <C>              <C>
Pamela W. McCann.................................................   15,154,356          0                129,634
Dr. Thomas W. Murnane............................................   15,157,459          0                126,531
</TABLE>
 
2. ELECTION OF DIRECTORS (CAPITAL SHARES VOTING ONLY)
 
<TABLE>
<CAPTION>
                             NOMINEE                                VOTES FOR     VOTES AGAINST    WITHHELD AUTHORITY
- -----------------------------------------------------------------   ----------    --------------   ------------------
<S>                                                                 <C>           <C>              <C>
Eugene D. Brody..................................................   13,481,942          0                125,937
George Loft......................................................   13,479,452          0                128,427
</TABLE>
 
3. ELECTION OF DIRECTORS (INCOME/CAPITAL SHARES VOTING)
 
<TABLE>
<CAPTION>
                             NOMINEE                                VOTES FOR     VOTES AGAINST    WITHHELD AUTHORITY
- -----------------------------------------------------------------   ----------    --------------   ------------------
<S>                                                                 <C>           <C>              <C>
Joseph M. La Motta...............................................   28,643,987          0                247,882
George D. Langdon, Jr............................................   28,644,251          0                247,618
Lawrence Sherman.................................................   28,643,701          0                248,168
</TABLE>
 
4. RATIFICATION OF PRICE WATERHOUSE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
FUND
 
<TABLE>
<CAPTION>
                                                                    VOTES FOR     VOTES AGAINST     VOTES ABSTAINED
                                                                    ----------    --------------   ------------------
<S>                                                                 <C>           <C>              <C>
                                                                    28,527,957       115,835             248,077

</TABLE>
 
     The following table provides information concerning the Directors of the
Fund:
 
<TABLE>
<CAPTION>
                 DIRECTOR                       TERM EXPIRATION
- -------------------------------------------   -------------------
<S>                                           <C>                
Joseph M. La Motta (1).....................   1997 Annual Meeting
Eugene D. Brody (2)........................   1997 Annual Meeting
George D. Langdon, Jr. (1).................   1997 Annual Meeting
George Loft (2)............................   1997 Annual Meeting
Pamela W. McCann (3).......................   1997 Annual Meeting
Dr. Thomas W. Murnane (3)..................   1997 Annual Meeting
Lawrence Sherman (1).......................   1997 Annual Meeting
</TABLE>
 
- ------------------
Key:
(1) Director for both Income and Capital Shares
(2) Director for Capital Shares
(3) Director for Income Shares

<PAGE>
QUEST FOR VALUE                                            QUEST FOR VALUE
DUAL PURPOSE                                               DUAL PURPOSE
FUND, INC.                                                 FUND, INC.

DIRECTORS AND OFFICERS
 
Joseph M. La Motta                Director, President (1)
Eugene D. Brody                   Director (2)
George D. Langdon, Jr.            Director (1)
George Loft                       Director (2)
Pamela W. McCann                  Director (3)
Dr. Thomas W. Murnane             Director (3)
Lawrence Sherman                  Director (1)
Jeffrey C. Whittington            Vice President
Bernard H. Garil                  Vice President
Sheldon Siegel                    Treasurer
Thomas E. Duggan                  Secretary
Richard L. Peteka                 Assistant Treasurer
Deborah Kaback                    Assistant Secretary
 
                                                           SEMI-ANNUAL
                                                           REPORT
INVESTMENT ADVISER
 
OpCap Advisors
One World Financial Center
New York, NY 10281
                                                           JUNE 30, 1996
TRANSFER AGENT, DIVIDEND PAYING AGENT AND REGISTRAR
 
BostonEquiServe L.P.
P.O. Box 8200
Boston, MA 02266
 
INDEPENDENT ACCOUNTANTS
 
Price Waterhouse LLP
1177 Avenue of Americas
New York, NY 10036
KEY:
 
(1) Director for both Capital and Income Shares
(2) Director for Capital Shares
(3) Director for Income Shares


This report, including the financial information herein, is transmitted to the
shareholders of Quest for Value Dual Purpose Fund, Inc. for their information.
It is not a prospectus, circular or representation intended for use in
the purchase of shares of the Fund or any securities mentioned in this
report.
                                                                MANAGED BY
                                                                OPCAP ADVISORS
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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