QUEST FOR VALUE ACCUMULATION TRUST, 497, 1996-01-31

QUEST FOR VALUE ACCUMULATION TRUST
497, 1996-01-31

Previous: FIRST TRUST COMBINED SERIES 230, 485BPOS, 1996-01-31

Next: TIMES MIRROR CO /NEW/, SC 13G/A, 1996-01-31

<PAGE>

SUPPLEMENT DATED JANUARY 31, 1996 TO QUEST FOR VALUE
ACCUMULATION TRUST PROSPECTUS DATED MAY 1, 1995

On January 30, 1996, the Board of Trustees of Quest for Value Accumulation
Trust (the "Trust") approved an amendment to the Investment Advisory
Agreement ("Amended Advisory Agreement"), to be effective May 1, 1996,
between OpCap Advisors, formally called Quest for Value Advisors and the
Trust for the Equity, Small Cap, Managed and Global Equity Portfolios
(collectively, the "Portfolios"), resulting in an increase in the management
fees for these Portfolios, as noted below. The Amended Advisory Agreement is
subject to approval by the shareholders of each of the Equity, Small Cap,
Managed and Global Equity Portfolios of the Trust at a special meeting (the
"Special Meeting") scheduled to be called for such purpose to be held on
April 15, 1996.

Under the Amended Advisory Agreement, the Trust would pay OpCap Advisors
a monthly fee that is equal on an annual basis to 0.80% of the average daily
net assets of each of the Portfolios, respectively, of the first $400 million
of assets accumulated in each of the respective Portfolios, 0.75% of the next
$400 million and 0.70% for any amounts thereafter. Currently the Trust pays
OpCap Advisors at the annual rate of 0.60% of the average daily net assets of
each of the Equity, Small Cap and Managed Portfolios and 0.75% of the average
daily net assets of the Global Equity Portfolio. Also, under the Amended
Advisory Agreement, OpCap Advisors will limit total operating expenses of the
Portfolios to 1.25% of their respective average daily net assets. OpCap will
also limit total operating expenses of the remaining Portfolios (U.S.
Government Income, Bond and Money Market Portfolios) to 1.25% of their
respective average daily net assets should either the Equity, Small Cap,
Managed or Global Equity Portfolios approve the proposal to increase their
respective management fees. This contractual expense reimbursement agreement
will replace OpCap Advisors' current voluntary agreement to limit total
operating expenses of all the Portfolios of the Trust as described in the
Trust's prospectus, which voluntary agreement will lapse effective May 1,
1996.

Unrelated to the Special Meeting and to the proposal which the
shareholders of the Portfolios will be asked to vote on, effective May 1,
1996, the Trust's name will change to OCC Accumulation Trust.

The Trust anticipates mailing proxy materials relating to the Special
Meeting on or about February 26, 1996 to all shareholders of record as of
February 16, 1996.

The date of this supplement is January 31, 1996.

<PAGE>

SUPPLEMENT DATED JANUARY 31, 1996 TO QUEST FOR VALUE
ACCUMULATION TRUST PROSPECTUS DATED MAY 1, 1995

On January 30, 1996, the Board of Trustees of Quest for Value
Accumulation Trust (the "Trust") approved an amendment to the Investment
Advisory Agreement ("Amended Advisory Agreement"), to be effective May 1,
1996, between OpCap Advisors, formally called Quest for Value Advisors and
the Trust for the Small Cap, Managed and Global Equity Portfolios
(collectively, the "Portfolios"), resulting in an increase in the management
fees for these Portfolios, as noted below. The Amended Advisory Agreement is
subject to approval by the shareholders of each of the Small Cap, Managed and
Global Equity Portfolios of the Trust at a special meeting (the "Special
Meeting") scheduled to be called for such purpose to be held on April 15,
1996.

Under the Amended Advisory Agreement, the Trust would pay OpCap Advisors
a monthly fee that is equal on an annual basis to 0.80% of the average daily
net assets of each of the Portfolios, respectively, of the first $400 million
of assets accumulated in each of the respective Portfolios, 0.75% of the next
$400 million and 0.70% for any amounts thereafter. Currently the Trust pays
OpCap Advisors at the annual rate of 0.60% of the average daily net assets of
the Small Cap and Managed Portfolios and 0.75% of the average daily net
assets of the Global Equity Portfolio. Also, under the Amended Advisory
Agreement, OpCap Advisors will limit total operating expenses of the
Portfolios to 1.25% of their respective average daily net assets. This
contractual expense reimbursement agreement will replace OpCap Advisors'
current voluntary agreement to limit total operating expenses of the
Portfolios of the Trust as described in the Trust's prospectus, which
voluntary agreement will lapse effective May 1, 1996.

Unrelated to the Special Meeting and to the proposal which the
shareholders of the Portfolios will be asked to vote on, effective May 1,
1996, the Trust's name will change to OCC Accumulation Trust.

The Trust anticipates mailing proxy materials relating to the Special
Meeting on or about February 26, 1996 to all shareholders of record as of
February 16, 1996.

The date of this supplement is January 31, 1996.

<PAGE>

SUPPLEMENT DATED JANUARY 31, 1996 TO QUEST FOR VALUE
ACCUMULATION TRUST PROSPECTUS DATED MAY 1, 1995,
AS REVISED AUGUST 31, 1995

On January 30, 1996, the Board of Trustees of Quest for Value
Accumulation Trust (the "Trust") approved an amendment to the Investment
Advisory Agreement ("Amended Advisory Agreement"), to be effective May 1,
1996, between OpCap Advisors, formally called Quest for Value Advisors and
the Trust for the Small Cap and Managed Portfolios (collectively, the
"Portfolios"), resulting in an increase in the management fees for these
Portfolios, as noted below. The Amended Advisory Agreement is subject to
approval by the shareholders of each of the Small Cap and Managed Portfolios
of the Trust at a special meeting (the "Special Meeting") scheduled to be
called for such purpose to be held on April 15, 1996.

Unrelated to the Special Meeting and to the proposal which the
shareholders of the Portfolios will be asked to vote on, effective May 1,
1996, the Trust's name will change to OCC Accumulation Trust.

The Trust anticipates mailing proxy materials relating to the Special
Meeting on or about February 26, 1996 to all shareholders of record as of
February 16, 1996.

The date of this supplement is January 31, 1996.

<PAGE>

QUEST FOR VALUE ACCUMULATION TRUST
One World Financial Center, New York, New York 10281
(800) 232-FUND

QUEST FOR VALUE ACCUMULATION TRUST (the "Fund") is a registered open-end
diversified management investment company offering several investment
alternatives. It permits an investor the flexibility of choosing among
different investment objectives, through the following seven Portfolios (the
"Portfolios"), each of which is a separate series of shares of beneficial
interest of the Fund ("Shares"). The investment objective of each Portfolio is
as follows:

EQUITY PORTFOLIO: Long term capital appreciation through investment in a
diversified portfolio of equity securities selected on the basis of a value
oriented approach to investing.

SMALL CAP PORTFOLIO: Capital appreciation through investment in a diversified
portfolio of equity securities of companies with market capitalizations of under
$1 billion.

GLOBAL EQUITY PORTFOLIO: Long term capital appreciation through a global
investment strategy primarily involving equity securities.

MANAGED PORTFOLIO: Growth of capital over time through investment in a
portfolio consisting of common stocks, bonds and cash equivalents, the
percentages of which will vary based on management's assessments of relative
investment values.

BOND PORTFOLIO: High current income through investment in a diversified
portfolio of investment grade fixed income obligations.

U.S. GOVERNMENT INCOME PORTFOLIO: High current income together with the
protection of capital through investment of securities issued or guaranteed by
the U.S. Government, its agencies and instrumentalities.

MONEY MARKET PORTFOLIO: Maximum current income consistent with stability of
principal and liquidity through investment in a portfolio of high quality money
market instruments. ALTHOUGH THE MONEY MARKET PORTFOLIO SEEKS TO MAINTAIN ITS
SHARE PRICE AT $1.00, AN INVESTMENT IN THE MONEY MARKET PORTFOLIO IS NOT
GUARANTEED OR INSURED BY THE U.S. GOVERNMENT AND THERE IS NO ASSURANCE THAT THE
MONEY MARKET PORTFOLIO WILL MAINTAIN A CONSTANT PRICE OF $1.00 PER SHARE.

The Fund is an investment vehicle for variable annuity and variable life
insurance contracts of various life insurance companies, and qualified pension
and retirement plans ("Qualified Plans"). Shares of the Fund are currently sold
to variable accounts of various life insurance companies for the purpose of
funding variable annuity and variable life insurance contracts (the
"Contracts"). These variable accounts (the "Variable Accounts") invest in
Shares of the Fund in accordance with allocation instructions received from
owners (the "Contractowners") of the Contracts. Allocation rights are further
described in the accompanying prospectus for the Variable Accounts. The
Variable Accounts will redeem Shares to the extent necessary to provide benefits
under the Contracts. Certain Portfolios may not be available for investment
with respect to certain Contracts offered by certain life insurance companies.
Please check with your insurance company for available Portfolios.

It is possible, although not presently anticipated, that a material
conflict could arise between and among the various variable accounts which
invest in Shares of the Fund and the Qualified Plans, which may, in the future
invest in Shares of the Fund. Such conflict could cause the liquidation of
assets of one or more of the Fund Portfolios to raise cash at times not
otherwise deemed advantageous by the Fund Manager. See "Management of the
Fund," page 20.

This Prospectus sets forth concisely information about the Fund that a
prospective investor ought to know before investing, must be accompanied by a
current prospectus for the Variable Accounts and both should be retained for
future reference. A Statement of Additional Information dated May 1, 1995 (the
"Additional Statement") has been filed with the Securities and Exchange
Commission and is available without charge upon written request to your broker
or by contacting the Fund at the address or telephone number listed in this
Prospectus. The Additional Statement (which is incorporated in its entirety by
reference in this Prospectus) contains more detailed information about the Fund
and its management, including more complete information about certain risk
factors.

THIS PROSPECTUS SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUS FOR THE
VARIABLE ACCOUNTS. THESE PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR
FUTURE REFERENCE. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

QUEST FOR VALUE ADVISORS
Investment Manager
Prospectus dated May 1, 1995
Quest for Value is a service mark of Oppenheimer Capital.

<PAGE>

TABLE OF CONTENTS

PAGE
----
Prospectus Summary . . . . . . . . . . . . . . . . 3

Financial Highlights . . . . . . . . . . . . . . . 5

Investment Objectives and Policies . . . . . . . . 10

Equity Portfolio . . . . . . . . . . . . 10

Small Cap Portfolio. . . . . . . . . . . 10

Global Equity Portfolio. . . . . . . . . 11

Bond Portfolio . . . . . . . . . . . . . 11

U.S. Government Income Portfolio . . . . 12

Money Market Portfolio . . . . . . . . . 12

Managed Portfolio. . . . . . . . . . . . 12

Additional Information on Investment
Objectives and Policies . . . . . . . . . . . . . 13

Investment Techniques. . . . . . . . . . . . . . . 17

Investment Restrictions. . . . . . . . . . . . . . 19

Management of the Fund . . . . . . . . . . . . . . 20

Determination of Net Asset Value . . . . . . . . . 21

Purchase of Shares . . . . . . . . . . . . . . . . 21

Redemption of Shares . . . . . . . . . . . . . . . 22

State Law Restrictions . . . . . . . . . . . . . . 22

Dividends, Distributions and Taxes . . . . . . . . 22

Calculation of Performance . . . . . . . . . . . . 23

Additional Information . . . . . . . . . . . . . . 25

<PAGE>

PROSPECTUS SUMMARY

THE FUND The Fund is a Massachusetts business trust which issues its
shares in series as separate classes of shares of beneficial
interest. There are currently seven series, each of which
is designated as a "Portfolio". Together, the seven
Portfolios are designed to enable investors to choose a
number of investment alternatives to achieve their financial
goals and to shift assets conveniently among Portfolios when
and if their investment aims or perception of the
marketplace change.

The Fund commenced operations on September 16, 1994 when an
investment company then called Quest for Value Accumulation
Trust, with portfolios corresponding to five of the current
seven portfolios of the Fund, was effectively divided into
two investment funds, the original investment company, whose
name was changed, and the Fund.

INVESTMENT
OBJECTIVES
AND RESTRICTIONS The investment objective of each of the Portfolios is set
forth on the cover page of this Prospectus. These
objectives are described in more detail under the heading
"Investment Objectives and Policies." Although each
Portfolio will be actively managed by experienced
professionals, there can be no assurance that the objectives
will be achieved.

The value of the portfolio securities of each Portfolio and
therefore the Portfolio's net asset value per share (other
than the Money Market Portfolio) are expected to increase or
decrease because of varying factors. There are generally
two types of risk associated with an investment in one or
more of the Portfolios; market (or interest rate) risk and
financial (or credit) risk. Market risk for equities is the
risk associated with movement of the stock market in
general.

Market risk for fixed income securities is the risk that
interest rates will change, thereby affecting their value.
Generally, the value of fixed income securities declines as
interest rates rise, and conversely, their value rises as
interest rates decline. The second type of risk, financial
or credit risk, is associated with the financial condition
and profitability of an individual equity or fixed income
issuer. The financial risk in owning equities is related to
earnings stability and overall financial soundness of
individual issuers and of issuers collectively which are
part of a particular industry. For fixed income securities,
credit risk relates to the financial ability of an issuer to
make periodic interest payments and ultimately repay the
principal at maturity. (See "Additional Information on
Investment Objectives and Policies" for risk aspects of the
individual Portfolios).

INVESTMENT MANAGER Quest for Value Advisors (the "manager"), the investment
manager of each of the Portfolios, is investment manager and
sub-adviser to several other registered investment companies
with assets under management of approximately $6.6 Billion
at March 31, 1995 and is a subsidiary of Oppenheimer
Capital, a registered investment adviser, which had assets
under management of approximately $31.2 Billion at March
31, 1995.

MANAGEMENT FEE The Manager receives a monthly fee from each Portfolio at
varying annual percentage rates of average daily net assets,
as follows: .75 Percent of average daily net assets for
the Global Equity Portfolio; .60 Percent of average daily
net assets for the Eqity, Small Cap, U.S. Government Income
and Managed

3
<PAGE>

Portfolios; .50 Percent of average daily net assets for the
Bond Portfolio; and .40 Percent of average daily net
assets for the Money Market Portfolio (see page 20).

PURCHASES AND
REDEMPTION OF
SHARES Currently, shares of the Fund are sold at their net asset
value per share, without sales charge, for allocation to the
Variable Accounts as the underlying investment for the
contracts. Accordingly, the interest of the Contractowner
with respect to the Fund is subject to the terms of the
Contract as described in the accompanying Prospectus for the
Variable Accounts, Which should be reviewed carefully by a
person considering the purchase of a Contract. That
Prospectus describes the relationship between increases or
decreases in the net asset value of Fund shares and any
distributions on such shares, and the benefits provided
under a Contract. The rights of the Variable Accounts as
shareholders of the Fund should be distinguished from the
rights of a Contractowner which are described in the
Contract. As long as shares of the Fund are sold for
allocation to the Variable Accounts, the terms "shareholder"
or "shareholders" in this Prospectus shall refer to the
Variable Accounts. Shares are redeemed at their respective
net asset values as next determined after receipt of proper
notice of redemption.

The above is qualified in its entirety by the detailed information appearing
elsewhere in this Prospectus, the Additional Statement, and the accompanying
Prospectus for the Variable Accounts.

4
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights have been audited by Price Waterhouse LLP,
independent accountants, whose unqualified report thereon appears in the
Additional Statement (Part B). This information should be read in conjunction
with the financial statements and related notes thereto included in the
Additional Statement. Total return information for the Portfolios of the Fund
provided in the Financial Highlights does not include charges and deductions
which are imposed under the Contracts and described in the Prospectus for the
Variable Accounts. Inclusion of these charges and deductions would reduce the
total return of the Portfolios of the Fund. Further information about the
performance of each Portfolio is available in the Fund's Annual Report. Annual
reports can be obtained without charge upon written request to the insurance
companies issuing the Contracts.

EQUITY PORTFOLIO

- --------------------------------------------------------------------------------
SEPTEMBER 16, 1994*
TO DECEMBER 31, 1994
- --------------------------------------------------------------------------------

NET ASSET VALUE, BEGINNING OF PERIOD $18.57

INCOME FROM INVESTMENT OPERATIONS:

NET INVESTMENT INCOME 0.09

NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (0.54)
- --------------------------------------------------------------------------------

TOTAL FROM INVESTMENT OPERATIONS (0.45)
- --------------------------------------------------------------------------------

NET ASSET VALUE, END OF PERIOD $18.12
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TOTAL RETURN (2.4%)0
- --------------------------------------------------------------------------------

NET ASSETS, END OF PERIOD $4,281,256
- --------------------------------------------------------------------------------

RATIO OF NET OPERATING EXPENSES
TO AVERAGE NET ASSETS 0.72%(1,2,3)
- --------------------------------------------------------------------------------

RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 1.80%(1,2,3)
- --------------------------------------------------------------------------------

PORTFOLIO TURNOVER 6%
- --------------------------------------------------------------------------------

*COMMENCEMENT OF OPERATIONS.

(1) AVERAGE NET ASSETS FOR THE PERIOD SEPTEMBER 16, 1994 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1994 WERE $3,992,422.

(2) DURING THE PERIOD PRESENTED ABOVE, THE MANAGER VOLUNTARILY WAIVED A PORTION
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 AND THE RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.09% AND 0.43%, RESPECTIVELY.

(3) ANNUALIZED.
- --------------------------------------------------------------------------------

0 Assumes reinvestment of all dividends and distributions

5
<PAGE>

SMALL CAP PORTFOLIO

NET ASSET VALUE, BEGINNING OF PERIOD $17.49

INCOME FROM INVESTMENT OPERATIONS:

NET INVESTMENT INCOME 0.06

NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS (0.17)
- --------------------------------------------------------------------------------

TOTAL FROM INVESTMENT OPERATIONS (0.11)
- --------------------------------------------------------------------------------

NET ASSET VALUE, END OF PERIOD $17.38
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TOTAL RETURN (0.6%)0
- --------------------------------------------------------------------------------

NET ASSETS, END OF PERIOD $9,210,443
- --------------------------------------------------------------------------------

RATIO OF NET OPERATING EXPENSES
TO AVERAGE NET ASSETS 0.74%(1,2,3)
- --------------------------------------------------------------------------------

RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 1.22%(1,2,3)
- --------------------------------------------------------------------------------

PORTFOLIO TURNOVER 32%
- --------------------------------------------------------------------------------

* COMMENCEMENT OF OPERATIONS.

(1) AVERAGE NET ASSETS FOR THE PERIOD SEPTEMBER 16, 1994 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1994 WERE $8,378,178.

(3) ANNUALIZED.
- --------------------------------------------------------------------------------

0 Assumes reinvestment of all dividends and distributions

6
<PAGE>

BOND PORTFOLIO
- --------------------------------------------------------------------------------
SEPTEMBER 16, 1994*
TO DECEMBER 31, 1994
- --------------------------------------------------------------------------------

NET ASSET VALUE, BEGINNING OF PERIOD $9.40

INCOME FROM INVESTMENT OPERATIONS:

NET INVESTMENT INCOME 0.17

NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS (0.20)
- --------------------------------------------------------------------------------

TOTAL FROM INVESTMENT OPERATIONS (0.03)
- --------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS:

DIVIDENDS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (0.17)
- --------------------------------------------------------------------------------

TOTAL DIVIDENDS AND DISTRIBUTIONS (0.17)
- --------------------------------------------------------------------------------

NET ASSET VALUE, END OF PERIOD $9.20
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TOTAL RETURN (0.3%)0
- --------------------------------------------------------------------------------

NET ASSETS, END OF PERIOD $3,655,354
- --------------------------------------------------------------------------------

RATIO OF NET OPERATING EXPENSES
TO AVERAGE NET ASSETS 1.00(1,2,3)
- --------------------------------------------------------------------------------

RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 6.26%(1,2,3)
- --------------------------------------------------------------------------------

PORTFOLIO TURNOVER 7%
- --------------------------------------------------------------------------------

*COMMENCEMENT OF OPERATIONS.

(1) AVERAGE NET ASSETS FOR THE PERIOD SEPTEMBER 16, 1994 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1994 WERE $3,667,574.

(2) DURING THE PERIOD PRESENTED ABOVE, THE MANAGER VOLUNTARILY WAIVED A PORTION
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 AND THE RATIO OF NET
INVESTMENT INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 2.05% AND 5.21%,
RESPECTIVELY.

(3) ANNUALIZED.

- --------------------------------------------------------------------------------
0 Assumes reinvestment of all dividends and distributions

7
<PAGE>

MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
SEPTEMBER 16, 1994*
TO DECEMBER 31, 1994
- --------------------------------------------------------------------------------

NET ASSET VALUE, BEGINNING OF PERIOD $1.00

INCOME FROM INVESTMENT OPERATIONS:

NET INVESTMENT INCOME 0.01
- --------------------------------------------------------------------------------

TOTAL FROM INVESTMENT OPERATIONS 0.01
- --------------------------------------------------------------------------------
LESS DIVIDENDS AND DISTRIBUTIONS:

DIVIDENDS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (0.01)
- --------------------------------------------------------------------------------

TOTAL DIVIDENDS AND DISTRIBUTIONS (0.01)
- --------------------------------------------------------------------------------

NET ASSET VALUE, END OF PERIOD $1.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TOTAL RETURN 4.2%(3)O
- --------------------------------------------------------------------------------

NET ASSETS, END OF PERIOD $3,519,526
- --------------------------------------------------------------------------------

RATIO OF NET OPERATING EXPENSES
TO AVERAGE NET ASSETS 1.00%(1,2,3)
- --------------------------------------------------------------------------------

RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 4.13%(1.2.3)
- --------------------------------------------------------------------------------

*COMMENCEMENT OF OPERATIONS.

(1) AVERAGE NET ASSETS FOR THE PERIOD SEPTEMBER 16, 1994 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1994 WERE $3,533,254

(3) ANNUALIZED.
- --------------------------------------------------------------------------------

O Assumes reinvestment of all dividends and distributions

8
<PAGE>

MANAGED PORTFOLIO
- --------------------------------------------------------------------------------
SEPTEMBER 16, 1994*
TO DECEMBER 31, 1994
- --------------------------------------------------------------------------------

NET ASSET VALUE, BEGINNING OF PERIOD $21.80

INCOME FROM INVESTMENT OPERATIONS:

NET INVESTMENT INCOME 0.14

NET REALIZED AND UNREALIZED
LOSS ON INVESTMENTS (1.11)
- --------------------------------------------------------------------------------

TOTAL FROM INVESTMENT OPERATIONS (0.97)
- --------------------------------------------------------------------------------

NET ASSET VALUE, END OF PERIOD $20.83
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

TOTAL RETURN (4.4%)0
- --------------------------------------------------------------------------------

NET ASSETS, END OF PERIOD $54,943,371
- --------------------------------------------------------------------------------

RATIO OF NET OPERATING EXPENSES
TO AVERAGE NET ASSETS 0.66%(1,2,3)
- --------------------------------------------------------------------------------

RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 2.34%(1,2,3)
- --------------------------------------------------------------------------------

PORTFOLIO TURNOVER 8%
- --------------------------------------------------------------------------------

*COMMENCEMENT OF OPERATIONS.

(1) AVERAGE NET ASSETS FOR THE PERIOD SEPTEMBER 16, 1994 (COMMENCEMENT OF
OPERATIONS) TO DECEMBER 31, 1994 WERE $53,122,154.

(2) DURING THE PERIOD PRESENTED ABOVE, THE MANAGER VOLUNTARILY WAIVED A PORTION
OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIO OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS WOULD HAVE BEEN 0.96% AND 2.04%, RESPECTIVELY.

(3) ANNUALIZED.
- --------------------------------------------------------------------------------

O Assumes reinvestment of all dividends and distributions

9
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives and policies of each Portfolio of the Fund are
described below. Investment objectives of each Portfolio are fundamental
policies which cannot be changed for any Portfolio without a majority vote of
the shareholders of that Portfolio; investment policies are not fundamental and
may be adjusted by the Manager at any time, usually in response to its
perception of developments in the securities markets. The extent to which a
Portfolio will be able to achieve its distinct investment objectives depends
upon the Manager's ability to evaluate and develop the information it receives
into a successful investment program. Although each Portfolio will be managed
by experienced professionals, there can be no assurance that any Portfolio will
achieve its investment objectives. For Portfolios other than the Money Market
Portfolio, the values of the securities held in each Portfolio will fluctuate
and the net asset value per share at the time shares are redeemed may be more or
less than the net asset value per share at the time of purchase. Investors
should also refer to "Investment Techniques" for additional information
concerning the investment techniques employed for some or all of the Portfolios.

INVESTMENT OBJECTIVES OF THE FUND PORTFOLIOS

The Manager's equity investment policy is overseen by George Long, Managing
Director and Chief Investment Officer of Oppenheimer Capital, the parent of the
Manager. Mr. Long has been with Oppenheimer Capital since 1982. Fixed income
investment policy is overseen by Robert J. Bluestone, Managing Director and
Director of Fixed Income Management of Oppenheimer Capital. Mr. Bluestone has
been with the firm since 1986.

EQUITY PORTFOLIO

The investment objective of the Equity Portfolio is long term capital
appreciation through investment in securities (primarily equity securities) of
companies that are believed by the Manager to be undervalued in the marketplace
in relation to factors such as the companies' assets or earnings. It is the
Manager's intention to invest in securities of companies which in the Manager's
opinion possess one or more of the following characteristics: undervalued
assets, valuable consumer or commercial franchises, securities valuation below
peer companies, substantial and growing cash flow and/or a favorable price to
book value relationship. Investment policies aimed at achieving the Portfolio's
objective are set in a flexible framework of securities selection which
primarily includes equity securities, such as common stocks, preferred stocks,
convertible securities, rights and warrants in proportions which vary from time
to time. Under normal circumstances at least 65% of the Portfolio's assets will
be invested in equity securities. The Portfolio will invest primarily in stocks
listed on the New York Stock Exchange. In addition, it may also purchase
securities listed on other domestic securities exchanges, securities traded in
the domestic over-the-counter market and foreign securities provided that they
are listed on a domestic or foreign securities exchange or represented by
American depository receipts listed on a domestic securities exchange or traded
in domestic or foreign over-the-counter markets. Investments of the Equity
Portfolio are managed by Eileen Rominger, Managing Director of Oppenheimer
Capital . Ms. Rominger has been an analyst and portfolio manager at Oppenheimer
Capital since 1981.

SMALL CAP PORTFOLIO

The investment objective of the 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. Smaller-capitalization companies are often under-priced for the
following reasons: (i) institutional investors, which currently represent a
majority of the trading volume in the shares of publicly-traded companies, are
often less interested in such companies because in order to acquire an equity
position that is large enough to be meaningful to an institutional investor,
such an investor may be required to buy a large percentage of the company's
outstanding equity securities and (ii) such companies may not be regularly
researched by stock analysts, thereby resulting in greater discrepancies in
valuation. The Portfolio may also purchase securities in initial public
offerings, or shortly after such offerings have been completed, when the Manager
believes that such securities have greater-than-average market appreciation
potential. Under normal circumstances at least 65% of the Portfolio's assets
will be invested in equity securities. The majority of securities purchased by
the Portfolio will be traded on the New York Stock Exchange, the American Stock
Exchange or in the over-the-counter market, and will also include options,
warrants, bonds, notes and debentures which are convertible into or exchangeable
for, or which

10
<PAGE>

grant a right to purchase or sell, such securities. In addition, the Portfolio
may also purchase foreign securities provided that they are listed on a domestic
or foreign securities exchange or are represented by American depository
receipts listed on a domestic securities exchange or traded in domestic or
foreign over-the-counter markets. The Small Cap Portfolio is managed by Jenny
Beth Jones, Senior Vice President of Oppenheimer Capital and Louis Goldstein,
Vice President of Oppenheimer Capital. Ms. Jones has been a portfolio manager
at Oppenheimer Capital since 1990. Previously, Ms. Jones was a portfolio
manager and analyst with Mutual of America. Mr. Goldstein has been portfolio
manager of the Portfolio since January 3, 1995. Mr. Goldstein has been a
security analyst with Oppenheimer Capital since 1991. From 1988 to 1991 he was
a security analyst with David J. Greene & Co.

GLOBAL EQUITY PORTFOLIO

The investment objective of the Global Equity Portfolio is to seek long
term capital appreciation through pursuit of a global investment strategy
primarily involving equity securities. The Portfolio may invest anywhere in the
world with no requirement that any specific percentage of its assets be
committed to any given country. Under normal circumstances, at least 65% of the
Portfolio's total assets will be invested in equity securities in at least three
different countries, one of which may be the United States. Opportunities for
capital appreciation may also be presented by debt securities. The Portfolio
may invest up to 35% of its total assets in debt obligations with remaining
maturities of one year or more of U.S. or foreign corporate, governmental or
bank issuers. It is the present intention of the Portfolio, although not a
fundamental policy, not to invest more than 5% of its total assets in debt
securities rated below investment-grade. Although there is no minimum rating
for this category of debt investments of the Portfolio, the Portfolio does not
intend to invest in bonds which are in default. Domestic investments of this
Portfolio are managed by Richard J. Glasebrook II, Managing Director of
Oppenheimer Capital. Previously, he was a Partner with Delafield Asset
Management where he served as a portfolio manager and analyst. The Portfolio's
investments in foreign securities are managed by Pierre Daviron, President and
Chief Investment Officer of Oppenheimer Capital International, a division of
Oppenheimer Capital created in 1993. Previously, he was Chairman and Chief
Executive Officer at Indosuez Gartmore Asset Management, a division of Banque
Indosuez, Paris, France. Prior thereto he was a Managing Director in Mergers
and Acquisitions at J.P. Morgan.

BOND PORTFOLIO

The investment objective of the Bond Portfolio is to seek a high level of
current income consistent with moderate risk of capital and maintenance of
liquidity. The Portfolio invests primarily in U.S. Government and corporate
bonds which are rated Baa3 or better by Moody's Investor Services, Inc.
("Moody's") or BBB- or better by Standard & Poor's Corporation ("S&P"), Fitch
Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc. ("Duff") or in unrated
fixed income obligations which in the judgment of the Manager are of at least
equal quality. (See the Appendix for a description of those ratings and of the
speculative characteristics of bonds in the lowest permitted rating category.)
These securities are generally considered to be of "investment grade" and under
normal circumstances will constitute at least 65% of the assets of the
Portfolio. The Portfolio will seek current income greater than that generally
available from a portfolio of short-term obligations such as the Money Market
Portfolio and will present moderate risk of capital inherent in a portfolio of
longer-term debt obligations. The dynamic portfolio management process will
involve such factors as sector allocation, yield spreads between different
investment grades, issuer quality ratings, yield curve analysis and the
liquidity needs of the Portfolio. It is not anticipated that the Portfolio's
investments will have any particular maturity. The Portfolio may also invest in
mortgage-backed securities, issued or guaranteed by the United States
government, its agencies or instrumentalities, income producing preferred stocks
and convertible securities within the above limitations. The Bond Portfolio is
managed by Vikki Hanges, Vice President of Oppenheimer Capital. Ms. Hanges has
assisted with the management of Quest Cash Reserves, Inc. since 1987 and has
been on the fixed income trading desk at Oppenheimer Capital since 1982.

11
<PAGE>

U.S. GOVERNMENT INCOME PORTFOLIO

The investment objective of the U.S. Government Income Portfolio is to seek
a high level of current income together with protection of capital by investing
exclusively in debt obligations, including mortgage-backed securities, issued or
guaranteed by the United States government, its agencies or instrumentalities
("U.S. government securities"). Among the securities the Portfolio may purchase
are mortgage-backed securities guaranteed by the Government National Mortgage
Association ("Ginnie Mae"), the Federal Home Loan National Mortgage Corporation
("Freddie Mac") and the Federal National Mortgage Association ("Fannie Mae").
The Portfolio normally intends to maintain at least 65% of its assets in U.S.
Government Securities. The average maturity of the Portfolio's investments will
vary based on market conditions. It is estimated that the average dollar
weighted maturity of the Portfolio will be between five and ten years. The U.S.
Government Income Portfolio is managed by Vikki Hanges, Vice President of
Oppenheimer Capital.

MONEY MARKET PORTFOLIO

The investment objective of the Money Market Portfolio is to seek maximum
current income consistent with stability of principal and liquidity. The
Portfolio may invest only in money market instruments and corporate obligations
denominated in U.S. dollars which have a maturity at the time of investment of
one year or less and repurchase and reverse repurchase agreements which extend
for no more than seven days. The Portfolio does not presently intend to enter
into reverse repurchase agreements. Money market instruments include U.S.
government securities, short-term bank obligations such as certificates of
deposit, bankers' acceptances and letters of credit and corporate commercial
paper. All investments will be of high quality as determined by one or more
nationally-recognized statistical rating organizations or, in the case of non-
rated securities, of comparable quality in accordance with standards and
procedures established by the Board of Trustees. It is expected that all or
almost all of the Portfolio's income will come from interest and that little or
no income will be the result of capital gains. (See "Additional Information on
Investment Objectives and Policies" for a more complete description of the
specific securities.)

MANAGED PORTFOLIO

The investment objective of the Managed Portfolio is to achieve growth of
capital over time through investment in a portfolio consisting of common stocks,
bonds and cash equivalents, the percentages of which will vary based on the
Manager's assessments of the relative outlook for such investments. In seeking
to achieve its investment objective, the types of equity securities in which the
Portfolio may invest are likely to be the same as those in which the Equity
Portfolio invests, although securities of the type in which the Small Cap
Portfolio invests may, to a lesser extent, be included. Debt securities are
expected to be predominantly investment grade intermediate to long term U.S.
Government and corporate debt, although the Portfolio will also invest in high
quality short term money market and cash equivalent securities and may invest
almost all of its assets in such securities when the Manager deems it advisable
in order to preserve capital. In addition, the Portfolio may also purchase
foreign securities provided that they are listed on a domestic or foreign
securities exchange or are represented by American depository receipts listed on
a domestic securities exchange or traded in domestic or foreign over-the-counter
markets.

The allocation of the Portfolio's assets among the different types of
permitted investments will vary from time to time based upon the Manager's
evaluation of economic and market trends and its perception of the relative
values available from such types of securities at any given time. There is
neither a minimum nor a maximum percentage of the Portfolio's assets that may,
at any given time, be invested in any of the types of investments identified
above. Consequently, while the Portfolio will earn income to the extent it is
invested in bonds or cash equivalents, the Portfolio does not have any specific
income objective. The investments of the Managed Portfolio are managed by
Richard J. Glasebrook II, Managing Director of Oppenheimer Capital.

12
<PAGE>

ADDITIONAL INFORMATION ON INVESTMENT OBJECTIVES AND POLICIES

For the Equity, the Small Cap and the Global Equity Portfolios, at times
when the investment climate is viewed as favorable, common stocks will be
heavily emphasized. Under normal circumstances, at least 65% of each
Portfolio's assets will be invested in common stocks or securities convertible
into common stocks.

Under normal conditions, no less than 65% of the assets of the Bond
Portfolio and U.S. Government Income Portfolio will be invested in the debt
securities identified under "Bond Portfolio" and "U.S. Government Income
Portfolio", respectively.

In the event that future economic or financial conditions adversely affect
equity securities, or stocks are considered overvalued, each of the Equity,
Small Cap and Global Equity Portfolios may invest a substantial portion of its
assets in debt securities, with an emphasis on money market instruments or cash
and cash equivalents. The Bond and U.S. Government Income Portfolios may
increase the proportion of their assets which are invested in money market
instruments or cash in the event that the Manager deems such investments
advisable to preserve capital.

Each Portfolio (other than the Money Market Portfolio) will in the normal
course have varying amounts of cash assets which have not yet been invested in
accordance with its objectives. This cash will be temporarily invested in high
quality short term money market securities and cash equivalents.

Regulations under Section 817(h) of the Internal Revenue Code ("IRC
817(h)") require each Portfolio to diversify its investments. To comply with
these regulations each Portfolio is required to diversify its investments so
that on the last day of each quarter of a calendar year no more than 55% of the
value of its total assets is represented by any one investment, no more than 70%
is represented by any two investments, no more than 80% is represented by any
three investments, and no more than 90% is represented by any four investments.
For this purpose, securities of a given issuer generally are treated as one
investment, but each U.S. Government agency and instrumentality is treated as a
separate and distinct issuer. As such, any security issued, guaranteed, or
insured (to the extent so guaranteed or insured) by the U.S. or an agency or
instrumentality of the U.S. is treated as a security issued by the U.S.
Government or its agency or instrumentality, whichever is applicable. These
diversification rules limit the amount that any Portfolio, and in particular the
U.S. Government Income and Bond Portfolios can invest in any single issuer,
including direct obligations of the U.S. Treasury, to 55% of the Portfolio's
total assets at the end of any calendar quarter.

SECURITIES IN WHICH THE MONEY MARKET PORTFOLIO INVESTS

(1) Securities issued or guaranteed by the U.S. Government.

(2) Obligations issued or guaranteed by agencies or instrumentalities of
the U.S. Government. Some of such obligations may be supported by the full
faith and credit of the U.S. Treasury while others may be supported only by the
credit of the particular Federal agency or instrumentality issuing the
obligation.

(3) Certificates of deposit, bankers' acceptances and letters of credit of
prime quality of U.S. banks and savings and loan associations and their foreign
branches (Eurodollars), foreign banks, and U.S. branches of foreign banks
(Yankees) having total assets in excess of $500 million.

(4) Certificates of deposit of prime quality fully insured as to principal
by the Federal Deposit Insurance Corp.

(5) Commercial paper of prime quality.

13
<PAGE>

(6) Corporate notes, bonds and debentures that have a remaining maturity
of 365 calendar days or less if a class of short term debt comparable with the
security issued by the same issuer is of prime quality.

(7) Repurchase agreements involving securities listed above, which are
described on page 17 of this Prospectus.

The Portfolio operates under a Rule (the "Rule") of the Securities and
Exchange Commission ("SEC") which, if certain conditions are met, allows the
Portfolio to use the amortized cost method of valuing its portfolio securities
to determine its net asset value per share. As long as the Portfolio continues
to use the Rule, it must abide by certain conditions. Some of those conditions
relate to portfolio management: (i) it must maintain a dollar-weighted average
portfolio maturity not in excess of 90 days; (ii) it must limit its investments,
including repurchase agreements, to those instruments which are denominated in
U.S. dollars, and which are of "prime quality" as determined by any major rating
service or in the case of any instrument that is not rated, of comparable
quality as determined by the Board of Trustees in accordance with procedures
adopted pursuant to the Rule; and (iii) it may not purchase any instruments with
a remaining maturity of more than thirteen months. For the purposes of this
prospectus, prime quality shall mean the security (or the issuer for a
comparable security) is rated in one of the two highest rating categories for
short-term debt obligations by any two of Moody's, S&P, Fitch, Duff or Thomson's
BankWatch, Inc., or by one of such rating agencies if only one rating agency has
issued a rating with respect to the security, or, if not rated, judged by the
Manager pursuant to criteria adopted by the Fund's Board of Trustees to be of
comparable quality. See the Appendix for a description of ratings. In
addition, the Rule requires that investments by the Money Market Portfolio which
do not satisfy one of the following requirements are limited in the aggregate to
5% of the Portfolio's assets in regard to issues and 1% of assets (or $1 million
if greater) in regard to any one issuer of such issues: (i) issues rated in the
highest category (or the issuer is so rated for a comparable security) by at
least two of such rating agencies; or (ii) if rated by only one agency, rated in
the highest category; or (iii) if unrated determined by the Board of Trustees to
be of quality comparable to issues which qualify under (i) or (ii). For further
information, see "Determination of Net Asset Value" in the Additional Statement.

MANAGEMENT OF ASSETS

The Manager intends to manage each Portfolio's assets by buying and selling
securities to help attain its investment objective. This may result in
increases or decreases in a Portfolio's current income available for
distribution to its shareholders. While none of the Portfolios is managed with
the intent of generating short-term capital gains, each of the Portfolios may
dispose of investments (including money market instruments) regardless of the
holding period if, in the opinion of the Manager, an issuer's creditworthiness
or perceived changes in a company's growth prospects or asset value make selling
them advisable. Such an investment decision may result in capital gains or
losses and could result in a high portfolio turnover rate during a given period,
resulting in increased transaction costs related to equity securities.
Disposing of debt securities in these circumstances should not increase direct
transaction costs since debt securities are normally traded on a principal basis
without brokerage commissions. However, such transactions do involve a mark-up
or mark-down of the price.

During periods of unusual market conditions when the Manager believes that
investing for defensive purposes is appropriate, or in order to meet anticipated
redemption requests, part or all of the assets of one or more of the Portfolios
may be invested in cash or cash equivalents including obligations listed above.

The portfolio turnover rates of the Portfolios cannot be accurately
predicted. Nevertheless, it is anticipated that the Equity, Managed and Global
Equity Portfolios will have an annual turnover rate (excluding turnover of
securities having a maturity of one year or less) of 100% or less and that the
U.S. Government Income Portfolio will have an annual turnover rate of 200% or
less. It is anticipated that the Small Cap and the Bond Portfolios will have an
annual turnover rate in excess of 100%. A 100% annual turnover rate would
occur, for example, if all the securities in a Portfolio's investment portfolio
were replaced once in a period of one year. A portfolio turnover rate in excess
of 100% can be expected to result in correspondingly higher transaction costs.
Because the Money Market Portfolio will consist of securities with a maturity of
one year or less, the turnover rate as defined is not meaningful. Because of
the short-term nature of its investments, it is anticipated that the number of
purchases and sales or maturities of such securities will be substantial.

14
<PAGE>

RISK ASPECTS OF THE INDIVIDUAL PORTFOLIOS

BOND AND MONEY MARKET PORTFOLIOS. An investment in the Bond Portfolio will
generally entail greater market (interest rate) risk than an investment in the
Money Market Portfolio. The debt securities in which the Bond Portfolio
invests, having longer maturities, are generally more sensitive to interest rate
changes than the short term securities in which the Money Market Portfolio
invests. The Manager will undertake a more thorough credit analysis, both at
the time of purchase and while held in the Bond Portfolio, in connection with
lower-rated debt than of securities with higher ratings. As the Bond Portfolio
may invest in mortgage-backed securities, such securities involve the additional
risk of prepayment because mortgage prepayments are passed through to the holder
of the mortgage-backed security and must be reinvested. Prepayments of mortgage
principal reduce the stream of future payments and generate cash which must be
reinvested. When interest rates fall, prepayments tend to rise. As such, the
Bond Portfolio may have to reinvest that portion of its assets invested in such
securities more frequently when interest rates are low than when interest rates
are high. In addition, the Money Market Portfolio conforms to requirements
which permit it to maintain a constant net asset value of $1.00 per share
through use of the amortized cost method of valuation. The Money Market
Portfolio may invest in U.S. dollar denominated securities of foreign branches
of U.S. banks and U.S. branches of foreign banks. These investments involve
risks that are different from investments in securities of U.S. banks. While
there is no risk from exchange rate fluctuations, there may be risk of future
unfavorable political and economic developments, possible withholding taxes,
seizure of foreign deposits, currency controls, interest limitations or other
governmental restrictions which might affect payment of principal or interest.
Additionally, there may be less public information available about foreign banks
and their branches.

MANAGED AND U.S. GOVERNMENT INCOME PORTFOLIOS. An investment in the
Managed Portfolio will entail both market and financial risk, the extent of
which depends on the amount of the Portfolio's assets which are committed to
equity, longer term debt or money market securities at any particular time. The
U.S. Government Income Portfolio is expected to have greater interest rate risk
due to the Portfolio's primary investments in mortgage-backed securities. As
the Managed Portfolio may and the U.S. Government Income Fund will invest in
mortgage-backed securities, such securities, while similar to other fixed-income
securities, involve the additional risk of prepayment because mortgage
prepayments are passed through to the holder of the mortgage-backed security and
must be reinvested. Prepayments of mortgage principal reduce the stream of
future payments and generate cash which must be reinvested. When interest rates
fall, prepayments tend to rise. As such these Portfolios may have to reinvest
that portion of their respective assets invested in such securities more
frequently when interest rates are low than when interest rates are high.

SMALL CAP PORTFOLIO. The Small Cap Portfolio is expected to have greater
risk exposure and reward potential than a portfolio which invests primarily in
larger-capitalization companies. The trading volumes of securities of smaller-
capitalization companies are normally less than those of larger-capitalization
companies. This often translates into greater price swings, both upward and
downward. The waiting period for the achievement of an investor's objectives
might be longer since these securities are not closely monitored by research
analysts and, thus, it takes more time for investors to become aware of
fundamental changes or other factors which have motivated the Portfolio's
purchase. Smaller-capitalization companies often achieve higher growth rates
and experience higher failure rates than do larger-capitalization companies.

ADDITIONAL RISKS OF FOREIGN SECURITIES: The Global Equity, Equity, Small
Cap and Managed Portfolios may purchase foreign securities that are listed on a
domestic or foreign securities exchange, traded in domestic or foreign over-the
counter markets or represented by American Depository Receipts. There is no
limit to the amount of such foreign securities the Portfolios may acquire. It
will be the general practice of the Global Equity Portfolio to invest in foreign
equity securities. Certain factors and risks are presented by investment in
foreign securities which are in addition to the usual risks inherent in domestic
securities. Foreign companies are not necessarily subject to uniform
accounting, auditing and financial reporting standards or other regulatory
requirements comparable to those applicable to U.S. companies. Thus, there may
be less available information concerning non-U.S. issuers of securities held by
a Portfolio than is available concerning U.S. companies. In addition, with
respect to some foreign countries, there is the possibility of nationalization,
expropriation or confiscatory taxation; income earned in the foreign nation
being subject to taxation, including withholding taxes on interest and
dividends, or

15
<PAGE>

other taxes imposed with respect to investments in the foreign nation;
limitations on the removal of securities, property or other assets of a fund;
difficulties in pursuing legal remedies and obtaining judgments in foreign
courts, or political or social instability or diplomatic developments which
could affect U.S. investments in those countries. For a description of the
risks of possible losses through holding of securities in foreign custodian
banks and depositories, see "Investment of Assets" in the Additional Statement.

Securities of many non-U.S. companies may be less liquid and their prices
more volatile than securities of comparable U.S. companies. Non-U.S. stock
exchanges and brokers are generally subject to less governmental supervision and
regulation than in the U.S. and commissions on foreign stock exchanges are
generally higher than negotiated commissions on U.S. transactions. In addition,
there may in certain instances be delays in the settlement of non-U.S. stock
exchange transactions. Certain countries restrict foreign investments in their
securities markets. These restrictions may limit or preclude investment in
certain countries, industries or market sectors, or may increase the cost of
investing in securities of particular companies. Purchasing the shares of
investment companies which invest in securities of a given country may be the
only or the most efficient way to invest in that country. This may require the
payment of a premium above the net asset value of such investment companies and
the return will be reduced by the operating expenses of those investment
companies.

A decline in the value of the U.S. dollar against the value of any
particular currency will cause an increase in the U.S. dollar value of a
Portfolio's holdings denominated in such currency. Conversely, a decline in the
value of any particular currency against the U.S. dollar will cause a decline in
the U.S. dollar value of the Portfolio's holdings of securities denominated in
such currency. Some foreign currency values may be volatile and there is the
possibility of governmental controls on currency exchange or governmental
intervention in currency markets which could adversely affect a Portfolio. The
Portfolios do not intend to speculate in foreign currency in connection with the
purchase or sale of securities on a foreign securities exchange but may enter
into foreign currency contracts to hedge their foreign currency exposure. While
those transactions may minimize the impact of currency appreciation and
depreciation, the Portfolios will bear a cost for entering into the transaction
and such transactions do not protect against a decline in the security's value
relative to other securities denominated in that currency.

It is expected that the Global Equity Portfolio will invest in American
Depository Receipts ("ADRs") or European Depository Receipts ("EDRs") which are
sponsored by persons other than the underlying issuers. ADRs are U.S. dollar-
denominated securities designed for use in the U.S. securities markets. They
represent and may be converted into the underlying foreign security. EDRs are
designed for use in the European securities market. Issuers of the stock of
such unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, there may not be a correlation between such
information and the market value of such ADRs.

EMERGING MARKET COUNTRIES: Certain developing countries may have relatively
unstable governments, economies based on only a few industries that are
dependent upon international trade and reduced secondary market liquidity.
Foreign investment in certain emerging market countries is restricted or
controlled in varying degrees. In the past, securities in these countries have
experienced greater price movement, both positive and negative, than securities
of companies located in developed countries. Lower-rated high-yielding emerging
market securities may be considered to have speculative elements.

EASTERN EUROPE: The Global Equity Portfolio presently intends not to invest
more than 5% of its net assets in companies located in Eastern European
countries, but may invest in companies located outside of such countries which
conduct business in such countries.

HIGH YIELD SECURITIES: It is the present intention of the Manager with
respect to each of the Equity, Small Cap, Bond, Global Equity and Managed
Portfolios to invest no more than 5 percent of its net assets in bonds rated
below Baa3 by Moody's or BBB by S&P (commonly known as "junk bonds"). In the
event that the Manager intends in the future to invest more than 5% of the net
assets of any such Portfolio in junk bonds, appropriate disclosures will be made
to existing and prospective shareholders. For information about the possible
risks of investing in junk bonds see "Investment of Assets" in the Additional
Statement.

16
<PAGE>

OPTIONS AND FUTURES: To the extent permitted by applicable state law, the
Global Equity, Small Cap and Equity Portfolios intend to engage in futures
contracts and options on futures contracts for bona fide hedging or other non-
speculative purposes. The Global Equity and Small Cap Portfolios may also
engage in options on stock indices. The Small Cap and Equity Portfolios may
write covered call options on individual securities. These Portfolios will not
enter into any leveraged futures transactions. Different uses of futures and
options have different risk and return characteristics. Generally, selling
futures contracts, purchasing put options and writing call options are
strategies designed to protect against falling security prices and can limit
potential gains if prices rise. Purchasing futures contracts, purchasing call
options and writing put options are strategies whose returns tend to rise and
fall together with securities prices and can cause losses if prices fall. If
securities prices remain unchanged over time, option writing strategies tend to
be profitable while option buying strategies tend to be unprofitable. For more
information about Options and Futures see "Investment Techniques" in this
Prospectus and "Investment of Assets" in the Additional Statement.

INVESTMENT TECHNIQUES

The investment techniques or instruments described below are used for the
Portfolios' investment programs:

SHORT-TERM INVESTMENTS. Each Portfolio, other than the Money Market
Portfolio, typically invests a part of its assets in various types of U.S.
Government securities and high quality, short-term debt securities with
remaining maturities of one year or less ("money market instruments"). The
Money Market Portfolio invests all of its assets in these types of securities.
This type of short-term investment is made to provide liquidity for the
purchase of new investments and to effect redemptions of shares. The money
market instruments in which each Portfolio may invest include government
obligations, certificates of deposit, bankers' acceptances, commercial paper,
short-term corporate securities and repurchase agreements.

REPURCHASE AGREEMENTS. Each Portfolio may acquire securities subject to
repurchase agreements. Under a typical repurchase agreement, a Portfolio would
acquire a debt security for a relatively short period (usually for one day and
not for more than one week) subject to an obligation of the seller to repurchase
and of the Portfolio to resell the debt security at an agreed-upon higher price,
thereby establishing a fixed investment return during the Portfolio's holding
period. A Portfolio will enter into repurchase agreements with member banks of
the Federal Reserve System having total assets in excess of $500 million and
with dealers registered with the SEC. Under each repurchase agreement the
selling institution will be required to maintain as collateral securities whose
market value is at least equal to the repurchase price. Repurchase agreements
could involve certain risks in the event of default or insolvency of the selling
institution, including costs of disposing of securities held as collateral and
any loss resulting from delays or restrictions upon the Portfolio's ability to
dispose of securities. Pursuant to guidelines established by the Portfolio's
Board of Trustees, the Manager considers the creditworthiness of those banks and
non-bank dealers with which a Portfolio enters into repurchase agreements and
monitors on an ongoing basis the value of securities held as collateral to
ensure that such value is maintained at the required level. A Portfolio will
not enter into a repurchase agreement with a dealer if the agreement has a
maturity beyond seven days. The staff of the SEC has taken the position that
repurchase agreements are loans collateralized by the underlying securities.

LOANS OF PORTFOLIO SECURITIES. Each Portfolio may lend its portfolio
securities if such loans are secured continuously by collateral (cash, U.S.
Government or agency obligations or letters of credit) maintained on a daily
basis in an amount at least equal at all times to the market value of the
securities loaned and if the Portfolio does not incur any fees (other than the
transaction fees of its custodian bank) in connection with such loans. A
Portfolio may call the loan at any time on five days' notice and reacquire the
loaned securities. During the loan period, the Portfolio would continue to
receive the equivalent of the interest paid by the issuer on the securities
loaned and would also have the right to receive the interest on investment of
the cash collateral in short-term debt instruments. A portion of either or both
kinds of such interest may be paid to the borrower of such securities. It is
not intended that the value of the securities loaned, if any, would exceed 10%
of the value of the total assets of the Equity, Small Cap, Managed, Bond and
Money Market Portfolios and 33 1/3% of the value of the total assets of the U.S.
Government Income and Global Equity Portfolios. Securities loans must also meet
applicable tests under the

17
<PAGE>

Internal Revenue Code. A Portfolio could experience various costs or loss if a
borrower defaults on its obligation to return the borrowed securities.

OPTIONS AND FUTURES. To the extent permitted by applicable state law, the
Global Equity, Small Cap and Equity Portfolios may engage in options and futures
transactions. The Global Equity Portfolio may purchase and sell financial
futures contracts (including bond futures contracts and index futures
contracts), forward foreign currency contracts, foreign currency futures
contracts, options on futures contracts and stock indices and options on
currencies for bona fide hedging or other non-speculative purposes. The Small
Cap and Equity Portfolios intend to engage in futures contracts or options on
futures contracts for bona fide hedging or other non-speculative purposes and to
write calls on individual securities. The Small Cap, Equity and Managed
Portfolios may also enter into forward foreign currency contracts to purchase or
sell foreign currencies in connection with any transactions in foreign
securities. The Small Cap Portfolio may also engage in options on stock
indices. When any of such Portfolios anticipate a significant market or market
sector advance, the purchase of a futures contract affords a hedge against not
participating in the advance at a time when such Portfolio is not fully invested
("anticipatory hedge"). Such a purchase of a futures contract would serve as a
temporary substitute for the purchase of individual securities, which then may
be purchased in an orderly fashion once the market has stabilized. As
individual securities are purchased, an equivalent amount of futures contracts
could be terminated by offsetting sales. The Portfolios may sell futures
contracts in anticipation of or in a general market or market sector decline
that may adversely affect the market value of such Portfolio's securities
("defensive hedge"). To the extent that the Portfolios' securities change in
value in correlation with the underlying security or index, the sale of futures
contracts would substantially reduce the risk to the Portfolios of a market
decline and by so doing, provide an alternative to the liquidation of securities
positions in the Portfolios with attendant transaction costs. So long as the
Commodities Futures Trading Commission rules so require, none of the Portfolios
will enter into any financial futures or options contract unless such
transactions are for bona fide hedging purposes, or for other purposes only if
the aggregate initial margins and premiums required to establish such non-
hedging positions would not exceed 5% of the liquidation value of such
Portfolio's assets. When writing put options, the Fund, on behalf of the
Portfolio, will maintain in a segregated account at its Custodian liquid assets
with a value equal to at least the exercise price of the option to secure its
obligation to pay for the underlying security. As a result, such Portfolio
forgoes the opportunity of trading the segregated assets or writing calls
against those assets. There may not be a complete correlation between the price
of options and futures and the market prices of the underlying securities. The
Portfolio may lose the ability to profit from an increase in the market value of
the underlying security or may lose its premium payment. If due to a lack of a
market a Portfolio could not effect a closing purchase transaction with respect
to an OTC option, it would have to hold the callable securities until the call
lapsed or was exercised.

MORTGAGE-BACKED SECURITIES. The U.S. Government Income, Managed and Bond
Portfolios may invest in a type of mortgage-backed security known as modified
pass-through certificates. Each certificate evidences an interest in a specific
pool of mortgages that have been grouped together for sale and provides
investors with payments of interest and principal. The issuer of modified pass-
through certificates guarantees the payment of the principal and interest
whether or not the issuer has collected such amounts on the underlying mortgage.

The average life of these securities varies with the maturities of the
underlying mortgage instruments (generally up to 30 years) and with the extent
of prepayments on the mortgages themselves. Any such prepayments are passed
through to the certificate holder, reducing the stream of future payments.
Prepayments tend to rise in periods of falling interest rates, decreasing the
average life of the certificate and generating cash which must be invested in a
lower interest rate environment. This could also limit the appreciation
potential of the certificates when compared to similar debt obligations which
may not be paid down at will, and could cause losses on certificates purchased
at a premium or gains on certificates purchased at a discount. Ginnie Mae
certificates represent pools of mortgages insured by the Federal Housing
Administration or the Farmers Home Administration or guaranteed by the Veteran's
Administration. The guarantee of payments under these certificates is backed by
the full faith and credit of the United States. Fannie Mae is a government-
sponsored corporation owned entirely by private stockholders. The guarantee of
payments under these instruments is that of Fannie Mae only. They are not
backed by the full faith and credit of the United States but the U.S. Treasury
may extend credit to Fannie Mae through discretionary purchases of its
securities. The U.S. Government has no obligation to assume the liabilities of
Fannie Mae. Freddie Mac is a corporate instrumentality of the United States
government whose stock is owned by the Federal Home Loan Banks. Certificates
issued by Freddie Mac represent interest in mortgages from its

18
<PAGE>

portfolio. Freddie Mac guarantees payments under its certificates but this
guarantee is not backed by the full faith and credit of the United States and
Freddie Mac does not have authority to borrow from the U.S. Treasury.

The coupon rate of these instruments is lower than the interest rate on the
underlying mortgages by the amount of fees paid to the issuing agencies, usually
approximately 1/2 of 1%. It is not anticipated that the Portfolios' investments
will have any particular maturity. Mortgage-backed securities, due to the
scheduled periodic repayment of principal, and the possibility of accelerated
repayment of underlying mortgage obligations, fluctuate in value in a different
manner than other, non-redeemable debt securities. The U.S. Government Income,
Managed and Bond Portfolios also may invest in "collateralized mortgage
obligations" ("CMO's") which are debt obligations secured by mortgage-backed
securities where the investor looks only to the issuer of the security for
payment of principal and interest.

PORTFOLIO TRANSACTIONS. The Manager's primary consideration when executing
security transactions with broker-dealers is to obtain, and maintain the
availability of, execution at the most favorable prices and in the most
effective manner possible. The Manager may select, under certain conditions,
Oppenheimer & Co., Inc. ("OpCo"), an affiliate of the Manager, to execute each
Portfolio's transactions. When selecting broker-dealers other than OpCo to
execute a Portfolio's transactions, the Manager may consider their record of
sales of shares of other investment company clients of the Manager. Selection
of broker-dealers to execute portfolio transactions must be done in a manner
consistent with the foregoing primary consideration, the "Rules of Fair
Practice" of the National Association of Securities Dealers, Inc. and such other
policies as the Board of Trustees may determine. (For a further discussion of
portfolio trading, see the Additional Statement, "Investment Management and
Other Services.")

INVESTMENT RESTRICTIONS

Each Portfolio is subject to certain investment restrictions which,
together with its investment objective, are fundamental policies changeable only
by shareholder vote. (The restrictions in 1, 2 and 3 do not apply to U.S.
Government securities.) Under some of those restrictions, each Portfolio may
not:

1. Invest more than 5% of the value of its total assets in the securities
of any one issuer, or purchase more than 10% of the voting securities, or more
than 10% of any class of security, of any issuer (for this purpose all
outstanding debt securities of an issuer are considered as one class and all
preferred stock of an issuer are considered as one class).

2. Concentrate its investments in any particular industry, but if deemed
appropriate for attaining its investment objective, a Portfolio may invest up to
25% of its total assets (valued at the time of investment) in any one industry
classification used by that Portfolio for investment purposes.

3. Invest more than 5% of the value of its total assets in securities of
issuers having a record, together with predecessors, of less than three years of
continuous operation.

4. Make loans, except through the purchase of U.S. Government securities
and corporate debt obligations, repurchase agreements or lending portfolio
securities as described above under "Loans of Portfolio Securities".

5. Borrow money in excess of 10% of the value of its total assets. It may
borrow only as a temporary measure for extraordinary or emergency purposes and
will make no additional investments while such borrowings exceed 5% of the total
assets. Such prohibition against borrowing does not prohibit escrow or other
collateral or margin arrangements in connection with the hedging instruments
which a Portfolio is permitted to use by any of its other fundamental policies.

6. Invest more than 15% of its assets in illiquid securities (securities
for which market quotations are not readily available) and repurchase agreements
which have a maturity of longer than seven days. (Money Market Portfolio may
not invest more than 10% of its assets in illiquid securities.) Other investment
restrictions are described in the Additional Statement.

19
<PAGE>

All percentage limitations apply immediately after a purchase or initial
investment and any subsequent change in any applicable percentage resulting from
market fluctuations or other changes in the amount of total assets does not
require elimination of any security from a Portfolio.

MANAGEMENT OF THE FUND

The Fund's Board of Trustees has overall responsibility for the management
of the Fund under the laws of Massachusetts governing the responsibilities of
trustees of a Massachusetts business trust. In general, such responsibilities
are comparable to those of directors of a Massachusetts business corporation.
The Board of Trustees of the Fund has undertaken to monitor the Fund for the
existence of any material irreconcilable conflict between the interests of
variable annuity Contractowners, variable life insurance Contractowners and
Qualified Plans due to the difference of tax treatment and other considerations,
and shall report any such conflict to the boards of the respective life
insurance companies which use the Fund as an investment vehicle for their
respective variable annuity and life insurance contracts and to the Qualified
Plans. The Boards of Directors of those life insurance companies and the
Manager have agreed to be responsible for reporting any potential or existing
conflicts to the Trustees of the Fund. If a material irreconcilable conflict
exists that affects those life insurance companies, those life insurance
companies have agreed, at their own cost, to remedy such conflict up to and
including establishing a new registered management investment company and
segregating the assets underlying the variable annuity contracts and the
variable life insurance contracts. Qualified Plans which acquire more than 10
percent of the assets of the Fund will be required to report any potential or
exisiting conflicts to the Trustees of the Fund, and if a material
irreconcilable conflict exists, to remedy such conflict, up to and including
redeeiming Shares of the Portfolios held by the Qualified Plans. The Additional
Statement contains information about the Trustees and Officers.

THE ADVISORY AGREEMENT. The Manager is responsible for management of the
Fund's business. Pursuant to the investment advisory agreement (the "Advisory
Agreement") with the Fund, and subject to the authority of the Board of
Trustees, the Manager supervises the investment operations of each Portfolio,
furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities and provides certain
administrative services for the Fund.

Under the Advisory Agreement the annual management fee is computed at an
annual rate of .75 percent of the average daily net assets of the Global Equity
Portfolio, .60 percent of the average daily net assets of each of the Equity,
Small Cap, U.S. Government Income and Managed Portfolios, .50 percent of the
average daily net assets of the Bond Portfolio and .40 percent of the average
daily net assets of the Money Market Portfolio. Through at least December 31,
1995, the expenses of the Portfolios of the Fund will be voluntarily limited by
the Manager so that annualized operating fund expenses do not exceed the
following percentages of the average daily net assets of the Portfolios of the
Fund: (1) .72 percent of the Equity Portfolio; (2) .74 percent of the Small Cap
Portfolio; (3) .66 percent of the Managed Portfolio; (4) 1.00 percent of the
Bond Portfolio; (5) 1.00 percent of the Money Market Portfolio; (6) .75 percent
of the U.S. Government Portfolio; and (7) 1.25 percent of the Global Equity
Portfolio. For the period September 16, 1994 (commencement of operations) to
December 31, 1994, the Manager waived its fee of $6,957, $14,599, $5,326, and
$4,105 for the Equity, Small Cap, Bond and Money Market Portfolios,
respectively. In addition, the Manager reimbursed operating expenses of $9,647,
$7,395, $5,861 and $6,449, respectively, to such Portfolios. For the period
September 16, 1994 (commencement of operations) to December 31, 1994, the total
management fee accrued or paid on the Managed Portfolio was $92,564; the total
management fee waived was $46,152.

Under the Advisory Agreement, each Portfolio is responsible for bearing
organizational expenses, taxes and governmental fees; brokerage commissions,
interest and other expenses incurred in acquiring and disposing of portfolio
securities; trustees fees, out of pocket travel expenses and other expenses for
trustees who are not interested persons; legal, accounting and audit expenses;
custodian, dividend disbursing and transfer agent fees; and other expenses not
expressly assumed by the Manager under the Advisory Agreement, which is
discussed below. The Manager will reimburse the Fund for the amount, if any, by
which the aggregate ordinary operating expenses of any of these Portfolios
incurred by the Fund in any calendar year exceed the most restrictive expense

20
<PAGE>

limitations (currently, 2 1/2% of the first $30 million of assets, 2% of the
next $70 million of assets and 1 1/2% of the remaining average net assets) then
in effect under any state securities law or regulation.

The Manager is a subsidiary of Oppenheimer Capital, a general partnership
which is registered as an investment adviser under the Investment Advisers Act
of 1940, by whose employees all investment management services performed under
the Advisory Agreement are rendered to the Portfolios. Oppenheimer Financial
Corp., a holding company, holds a 33% interest in Oppenheimer Capital, and
Oppenheimer Capital, L.P., a Delaware limited partnership of which Oppenheimer
Financial Corp. is the sole general partner and whose units are traded on the
New York Stock Exchange ("NYSE"), owns the remaining 67% interest. The Manager
and its affiliates have operated as investment advisers to both mutual funds and
other clients since l968, and had approximately $31.2 billion under management
as of March 31, 1995. The Additional Statement contains more information about
the Advisory Agreement, including a more complete description of the management
fee and expense arrangements, exculpation provisions and portfolio transactions
for the Fund.

DETERMINATION OF NET ASSET VALUE

The net asset value per share is calculated separately for each Portfolio.
The net asset value of each Portfolio is determined at the close of the regular
trading session ("Close") of the NYSE (currently 4:00 p.m. Eastern Time) each
day the NYSE is open and on each other day on which there is a sufficient degree
of trading in any Portfolio's securities affecting materially the value of such
securities (if the Fund receives a request to redeem its shares that day), by
dividing the value of the Portfolio's net assets by the number of shares
outstanding. The Fund's Board of Trustees has established procedures to value
the Portfolios' securities to determine net asset value; in general, except for
the Money Market Portfolio, those valuations are based on market value, with
special provisions for (i) securities (including restricted securities) not
having readily-available market quotations and (ii) short-term debt securities.
Securities listed on a national securities exchange or designated as national
market system securities are valued at the last sale price or, if there has been
no sale that day, at the last bid price. Debt and equity securities actively
traded in the over-the-counter market but not designated as national market
system securities are valued at the most recent bid price. Valuations may be
provided by a pricing service or from independent securities dealers. Short-
term investments with remaining maturities of less than 60 days are valued at
amortized cost so long as the Fund's Board of Trustees determines in good faith
that such method reflects fair value. Other securities are valued by methods
that the Fund's Board of Trustees believes accurately reflect fair value.

Generally, trading in foreign securities is substantially completed each
day at various times prior to the Close of the NYSE. The values of such
securities used in computing the net asset value of a Portfolio's shares are
determined as of such times. Foreign currency exchange rates are also generally
determined prior to the Close of the NYSE. If events materially affecting the
value of such securities and exchange rates occur between the time of such
determination and/or the Close of the NYSE, then these securities will be valued
at their fair value as determined in good faith under procedures established by
and under the supervision of the Fund's Board. Further details are in the
Additional Statement. The Money Market Portfolio uses the amortized cost method
of valuation as described in "Additional Information on Additional Information
on Investment Objectives and Policies - Securities in which the Money Market
Portfolio Invests" in this Prospectus and "Determination of Net Asset Value" in
the Additional Statement and generally will have a constant net asset value of
$1.00 per share except under extraordinary circumstances.

PURCHASE OF SHARES

Investments in the Fund may be made only by Variable Accounts and
Qualified Plans. Persons desiring to purchase Contracts funded by any Portfolio
or Portfolios of the Fund should read this Prospectus in conjunction with the
Prospectus of the Variable Accounts.

Shares of each Portfolio of the Fund are offered to the Variable Accounts
and Qualified Plans without sales charge at the respective net asset values of
the Portfolios next determined after receipt by the Fund of the purchase payment
in the manner set forth above under "Determination of Net Asset Value."
Certificates

21
<PAGE>

representing shares of the Fund will not be physically issued. Quest for Value
Distributors acts without remuneration from the Fund as the exclusive
Distributor of the Fund's shares. The principal executive office of the
Distributor is located at Two World Financial Center, New York, New York l0080.

REDEMPTION OF SHARES

Shares of any Portfolio of the Fund can be redeemed by the Variable
Accounts and Qualified Plans at any time for cash, at the net asset value next
determined after receipt of the redemption request in proper form. The market
value of the securities in each of the Portfolios is subject to daily
fluctuation and the net asset value of each Portfolio's shares, other than
shares of the Money Market Portfolio, are expected to fluctuate accordingly.
The redemption value of the Fund's shares may be either more or less than the
original cost to the Variable Accounts. Payment for redeemed shares is
ordinarily made within seven days after receipt by the Fund's transfer agent of
redemption instructions in proper form. The redemption privilege may be
suspended and payment postponed during any period when: (l) the NYSE is closed
other than for customary weekend or holiday closings or trading thereon is
restricted as determined by the SEC; (2) an emergency, as defined by the SEC
exists making trading of portfolio securities or valuation of net assets not
reasonably practicable; (3) the SEC has by order permitted such suspension.

STATE LAW RESTRICTIONS

The investments of the Variable Accounts are subject to the provisions of
the insurance laws of the States of domicile of the life insurance companies
offering the Contracts. The Fund and its Portfolios will voluntarily comply with
the statutory investment restrictions applicable to the investments of life
insurance company separate accounts, of the States of domicile of the life
insurance companies offering the Contracts, even though these state law
investment restrictions do not apply to the Fund and its Portfolios. For a
description of the state law restrictions applicable to the separate accounts of
the life insurance companies offering the Contracts, see the accompanying
Prospectus for the Variable Accounts.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Portfolio intends to distribute substantially all of its net
investment income and any net realized capital gains. Dividends from net
investment income and any distributions of realized capital gains will be paid
in additional shares of the Portfolio paying the dividend or making the
distribution and credited to the shareholder's account unless the shareholder
elects to receive such dividends or distributions in cash.

MONEY MARKET PORTFOLIO. Dividends from net income on the Money Market
Portfolio will be declared on each day the NYSE is open for business to
shareholders of record as of the close of business the preceding business day.
Net income, for dividend purposes, includes accrued interest and amortization of
any discount, less the amortization of market premium and the estimated expenses
of the Money Market Portfolio. The amount of dividend may fluctuate from day to
day and may be omitted on some days. Daily dividends accrued since the prior
dividend payment will be paid monthly. Any net realized capital gains will be
declared and paid at least once per calendar year; net short-term gains may be
paid more frequently, with the distribution of dividends from net investment
income.

U.S. GOVERNMENT INCOME AND BOND PORTFOLIOS. Dividends from net investment
income on the U.S. Government Income and Bond Portfolios will be declared on
each day the NYSE is open for business to shareholders of record as of the
close of business the preceding business day. These Portfolios will pay monthly
dividends from net investment income. Distributions of realized net short-term
capital gains, if any, and realized long-term capital gains will be declared and
paid at least once per calendar year.

22
<PAGE>

EQUITY, SMALL CAP, GLOBAL EQUITY AND MANAGED PORTFOLIOS. Dividends from
net investment income, if any, on the Small Cap, Equity, Global Equity and
Managed Portfolios will be declared and paid at least annually, and any net
realized capital gains will be declared and paid at least once per calendar
year.

TAXES. Because the Fund intends to distribute all of the net investment
income and capital gains of each Portfolio and otherwise qualify each Portfolio
as a regulated investment company under Subchapter M of the Internal Revenue
Code, it is not expected that any Portfolio of the Fund will be required to pay
any federal income tax on such income and capital gains. Since the Variable
Accounts are the sole shareholders of the Fund, no discussion is presented
herein as to the federal income tax consequences at the shareholder level. For
information concerning the federal income tax consequences to contractowners,
see the accompanying Prospectus for the Variable Accounts.

The Bond Portfolio inadvertently failed to comply with the investment
diversification requirements of, and regulations under IRC 817(h) since the
commencement of operations of the Portfolio on September 16, 1994 and for the
quarter periods ending September 30, 1994 and December 31, 1994. The Bond
Portfolio is currently in compliance with IRC 817(h). The Manager has put into
place revised procedures to assure compliance by the Bond Portfolio with IRC
817(h) in the future. The failure of the Bond Portfolio to comply with IRC
817(h) affects The Mutual Life Insurance Company of New York and MONY Life
Insurance Company of America (collectively "MONY") ValueMaster variable annuity
contractowners whose purchase payments were allocated to the Bond Portfolio
during the period of non-compliance. The Manager is working with MONY to file a
request with the Internal Revenue Service to obtain a private letter ruling that
the inadvertent non-diversification will not cause contracts of those
ValueMaster contractowners who had purchase payments allocated to the Bond
Portfolio during the period of non-compliance with IRC 817(h) to lose income tax
deferral on any increase in cash values of those contracts during the period of
non-compliance or otherwise fail to be considered as an annuity during such
period and to pay any required penalties to the Internal Revenue Service.
Further information concerning the effects of non-compliance of the Bond
Portfolio with IRC 817(h) can be found in the ValueMaster Prospectus for the
MONY Variable Accounts.

CALCULATION OF PERFORMANCE

From time to time the performance of one or more of the Portfolios may be
advertised. The performance data contained in these advertisements is based
upon historical earnings and is not indicative of future performance. The data
for each Portfolio reflects the results of that Portfolio of the Fund and
recurring charges and deductions borne by or imposed on the Portfolio. As the
performance for any Portfolio does not include charges and deductions under the
Contracts, comparisons with other portfolios used in connection with different
variable accounts may not be useful. Set forth below for each Portfolio is the
manner in which the data contained in such advertisements will be calculated as
well as performance information for the Portfolios as indicated below. This
performance information does not include charges and deductions which are
imposed under the Contracts and described in the Prospectus for the Variable
Accounts.

MONEY MARKET PORTFOLIO. The performance data for this Portfolio will
reflect the "yield" and "effective yield". The "yield" of the Portfolio refers
to the income generated by an investment in the Portfolio over the seven day
period stated in the advertisement. This income is "annualized", that is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly, but, when
annualized, the income earned by an investment in the Portfolio is assumed to
be reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.

23
<PAGE>

YIELD FOR 7-DAY PERIOD ENDED DECEMBER 31, 1994 FOR
MONEY MARKET PORTFOLIO OF QUEST FOR VALUE ACCUMULATION TRUST

YIELD1

CURRENT EFFECTIVE

MONEY MARKET PORTFOLIO 4.94% 5.06%

1Reflects reimbursement of advisory fees and expenses by the Manager. Had the
reimbursement not been in effect during the period, the yield and effective
yield would have been 3.56% and 3.63%, respectively, for the Money Market
Portfolio.

PORTFOLIOS OTHER THAN THE MONEY MARKET PORTFOLIO. The performance data for
these Portfolios will reflect the "yield" and "total return". The "yield" of
each of these Portfolios refers to the income generated by an investment in that
Portfolio over the 30 day period stated in the advertisement and is the result
of dividing that income by the value of the Portfolio. The value of each
Portfolio is the average daily number of shares outstanding multiplied by the
net asset value per share on the last day of the period. "Total Return" for
each of these Portfolios refers to the value a Shareholder would receive on the
date indicated if a $1,000 investment had been made the indicated number of
years ago. It reflects historical investment results less charges and
deductions of the Fund.

YIELD FOR 30-DAY PERIOD ENDED DECEMBER 31, 1994 FOR
BOND PORTFOLIO OF QUEST FOR VALUE ACCUMULATION TRUST

YIELD1

BOND PORTFOLIO 6.90%

1Reflects reimbursement of advisory fees and other expenses by the Manager. Had
the reimbursement not been in effect during the period, the yield would have
been 5.12% for the Bond Portfolio.

AVERAGE ANNUAL TOTAL RETURN OF BOND, EQUITY, MANAGED AND SMALL CAP PORTFOLIOS
OF QUEST FOR VALUE ACCUMULATION TRUST1, 2

PORTFOLIO
- ---------
FOR THE ONE YEAR FOR THE FIVE YEAR FOR THE PERIOD FROM
PERIOD ENDED PERIOD ENDED INCEPTION TO
DECEMBER 31, 1994 DECEMBER 31, 1994 DECEMBER 31, 1994
----------------- ----------------- ------------------

Bond (3.83)% 6.70% 6.78%
Equity 3.81% 11.11% 12.39%
Managed 2.61% 13.58% 16.16%
Small Cap (1.01)% 13.94% 13.98%

1On September 16, 1994, an investment company then called Quest for Value
Accumulation Trust (the "Old Trust") was effectively divided into two investment
funds, the Old Trust and the Fund, at which time the Fund commenced operations.
The total net assets for each of the Equity, Small Cap and Managed Portfolios
immediately after the transaction were $86,789,755, $139,812,573 and
$682,601,380, respectively, with respect to the Old Trust and for each of the
Equity, Small Cap, Managed, and Bond Portfolios, $3,764,598, $8,129,274,
$51,345,102, and $3,756,161 respectively, with respect to the Fund.

For the period prior to September 16, 1994, the performance figures above for
each of the Equity, Small Cap, Managed and Bond Portfolios reflect the
performance of the corresponding Portfolios of the Old Trust.

24
<PAGE>

2Reflects reimbursement of advisory fees and other expenses by the Manager.
Without such reimbursement, the average annual total return during the periods
would have been lower.

The Global Equity Portfolio of the Fund is managed in the same manner as the
Quest for Value Global Equity Fund, Inc., an open end investment company,
managed by the Manager. The performance of the Quest for Value Global Equity
Fund, Inc. is shown below.

AVERAGE ANNUAL TOTAL RETURN OF
QUEST FOR VALUE GLOBAL EQUITY FUND, INC.1

<TABLE>
<CAPTION>
FOR THE ONE YEAR PERIOD ENDED 12/31/94 FOR THE PERIOD FROM INCEPTION THROUGH 12/31/94 2
- -------------------------------------- ------------------------------------------------
<S> <C>
3.41% 6.80%
</TABLE>

1The returns shown are of Class A shares of the Quest for Value Global
Equity Fund, Inc. Although those shares are sold with a front end sales charge,
since no sales charge is imposed on sales of the shares of the Portfolios of the
Fund the results shown above do not reflect the sales charge. In addition, the
Quest for Value Global Equity Fund, Inc. is charged an administration and 12b-1
fee, which is not imposed on the Global Equity Portfolio. The results shown
above have not been adjusted to omit the administration and 12b-1 fee which are
inapplicable to the Global Equity Portfolio. The performance results shown above
are that of the Quest for Value Global Equity Fund, Inc., and not that of the
Global Equity Portfolio of the Fund and should not be taken as an indication of
the future performance of the Global Equity Portfolio of the Fund.

2The Quest for Value Global Equity Fund, Inc. commenced operations on
July 2, 1990.

In addition, reference in advertisements may be made to various indices,
including, without limitation, the S & P 500 Stock Index, the Russell 2000 and
the Lehman Brothers Corporate/Government Index, and various rankings by
independent evaluators such as Morningstar and Lipper Analytical Services, Inc.
in order to provide the reader a basis for comparison.

ADDITIONAL INFORMATION

ORGANIZATION OF THE FUND. The Fund was organized as a Massachusetts
business trust on May 12, 1994 and is registered with the SEC as an open-end
diversified management investment company. When issued, shares are fully paid
and have no preemptive or conversion rights. The shares of beneficial interest
of the Fund, $0.01 par value, are divided into seven separate series. The
shares of each series are freely-transferable and equal as to earnings, assets
and voting privileges with all other shares of that series. There are no
conversion, preemptive or other subscription rights. Upon liquidation of the
Fund or any Portfolio, shareholders of a Portfolio are entitled to share pro
rata in the net assets of that Portfolio available for distribution to
shareholders after all debts and expenses have been paid. The shares do not
have cumulative voting rights.

The Fund's Board of Trustees, whose responsibilities are comparable to
those of directors of a Massachusetts corporation, is empowered to issue
additional classes of shares, which classes may either be identical except as to
dividends or may have separate assets and liabilities; classes having separate
assets and liabilities are referred to as "series". The creation of additional
series and offering of their shares (the proceeds of which would be invested in
separate, independently managed portfolios with distinct investment objectives,
policies and restrictions) would not affect the interests of the current
shareholders in the existing Portfolios.

The assets received by the Fund on the sale of shares of each Portfolio and
all income, earnings, profits and proceeds thereof, subject only to the rights
of creditors, are allocated to each Portfolio, and constitute the assets of such
Portfolio. The assets of each Portfolio are required to be segregated on the
Fund's books of account. The Fund's Board of Trustees has agreed to monitor the
portfolio transactions and management of each of the Portfolios and to consider
and resolve any conflict that may arise.

VOTING. For matters affecting only one Portfolio, only the shareholders of
that Portfolio are entitled to vote. For matters relating to all the Portfolios
but affecting the Portfolios differently, separate votes by Portfolio are

25
<PAGE>

required. Approval of an Investment Management Agreement and a change in
fundamental policies would be regarded as matters requiring separate voting by
each Portfolio. To the extent required by law, the Variable Accounts will vote
the shares of the Fund, or any Portfolio of the Fund, held in the Variable
Accounts in accordance with instructions from Contractowners, as described under
the caption "Voting Rights" in the accompanying Prospectus for the Variable
Accounts. Shares for which no instructions are received as well as shares which
the Manager or its parent, Oppenheimer Capital, may own, will be voted in the
same proportion as shares for which instructions are received. The Fund does
not intend to hold annual meetings of shareholders. However, the Board of
Trustees will call special meetings of shareholders for action by shareholder
vote as may be requested in writing by holders of 10% or more of the outstanding
shares of a Portfolio or as may be required by applicable laws or the
Declaration of Trust pursuant to which the Fund has been organized.

Under Massachusetts law shareholders could, in certain circumstances, be
held personally liable as partners for Fund obligations. The Fund's Declaration
of Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given in
each instrument entered into or executed by the Fund. The Declaration of Trust
also provides for indemnification out of the Fund's property for any
shareholder held personally liable for any Fund obligation. Thus, the risk of
loss to a shareholder from being held personally liable for obligations of the
Fund is limited to the unlikely circumstance in which the Fund itself would be
unable to meet its obligations.

CUSTODIAN AND TRANSFER AGENT. The custodian of the assets of the Fund is
State Street Bank and Trust Company, P.O. Box 8505, Boston, MA 02266-8505,
which also acts as transfer agent and shareholder servicing agent for the Fund.

CONTRACTOWNERS INQUIRIES. Inquiries concerning the purchase and sale of
shares of the Fund as well as inquiries concerning dividends and account
statements should be directed to the respective life insurance companies which
use the Fund as an investment vehicle for their respective variable annuity and
life insurance contracts. Inquiries concerning management and investment
policies of the Fund should be directed to the Manager at Quest for Value
Advisors, c/o Oppenheimer Capital, One World Financial Center, New York, New
York 10281; or telephone 800-232-FUND.

26
<PAGE>

APPENDIX

DESCRIPTION OF COMMERCIAL PAPER AND CORPORATE BOND RATINGS

COMMERCIAL PAPER RATINGS

Moody's commercial paper ratings are opinions of the ability of issuers to
repay promissory obligations when due. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers: Prime 1 - Superior Ability for Repayment;
Prime 2 - Strong Ability for Repayment; Prime 3 - Acceptable Ability for
Repayment.

S&P's commercial paper rating is a current assessment of the likelihood of
timely payment. Ratings are graded into four categories, ranging from "A" for
the highest quality obligations to "D" for the lowest. Issues assigned the
highest rating, "A", are regarded as having the greatest capacity for timely
payment. Issues in this category are delineated with the numbers "1", "2", and
"3" to indicate the relative degree of safety. The designation "A-1" indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. The "A+" designation is applied to those issues rated "A-1" which
possess overwhelming safety characteristics. Capacity for timely payment on
issues with the designation "A-2" is strong. However, the relative degree of
safety is not as high as for issues designated "A-1."

Fitch's commercial paper ratings represent Fitch's assessment of the
issuer's ability to meet its obligations in a timely manner. The assessment
places emphasis on the existence of liquidity. Ratings range from "F-1+" which
represents exceptionally strong credit quality to "F-4" which represents weak
credit quality.

Duff's short-term ratings apply to all obligations with maturities of under
one year, including commercial paper, the uninsured portion of certificates of
deposit, unsecured bank loans, master notes, bankers acceptances, irrevocable
letters of credit and current maturities of long-term debt. Emphasis is placed
on liquidity. Ratings range for Duff 1+ for the highest quality to Duff 5 for
the lowest, issuers in default. Issues rated Duff 1+ are regarded as having the
highest certainty of timely payment. Issues rated Duff 1 are regarded as having
very high certainty of timely payment.

Thomson's BankWatch, Inc. assigns only one Issuer Rating to each company,
based upon a qualitative and quantitative analysis of the consolidated
financials of an issuer and its subsidiaries. The rating incorporates TBW's
opinion of the vulnerability of the company to adverse developments which may
impact the marketability of its securities, as well as the issuer's ability to
repay principal and interest. Ratings range from "TBW-1" for highest quality to
"TBW-3" for the lowest, companies with very serious problems.

BOND RATINGS

A bond rated "Aaa" by Moody's is judged to be the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is deemed secure.
While the various protective elements may change, such foreseeable changes are
unlikely to impair the fundamentally strong position of such issues. Bonds
which are rated "Aa" are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high
grade bonds. Margins of protection on "Aa" bonds may not be as large as on
"Aaa" securities or fluctuations of protective elements may be of greater
magnitude or there may be other elements present which make the long-term risks
appear somewhat larger than "Aaa" securities. Bonds which are rated "A" possess
many favorable investment attributes and are to be considered as upper medium
grade obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a susceptibility
to impairment some time in the future. Bonds rated "Baa" are considered medium
grade obligations whose interest payments and principal security appear adequate
for the present but may lack certain protective elements or may be
characteristically unreliable over any great length of time. Moody's applies
numerical modifiers "1", "2" and "3" in each generic rating classification from
"Aa" through "B" in its corporate bond rating system. The modifier "1"
indicates that the security ranks in the higher end of its generic rating
category; the modifier "2" indicates a mid-

27
<PAGE>

range ranking; and the modifier "3" indicates that the issue ranks in the lower
end of its generic rating category. Bonds rated "Ba" are judged to have
speculative elements and bonds rated below "Ba" are speculative to a higher
degree.

Debt rated "AAA" by S&P has the highest rating assigned by it. Capacity to
pay interest and repay principal is extremely strong. Debt rated "AA" has a
strong capacity to pay interest and repay principal and differs from "AAA"
issues only in small degree. Debt rated "A" has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories. Debt
rated "BB" and below is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal.

Debt rated "AAA", the highest rating by Fitch, is considered to be of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Debt rated "AA" is regarded as very high credit quality.
The obligor's ability to pay interest and repay principal is very strong. Debt
rated "A" is of high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than debt with higher
ratings. Debt rated "BBB" is of satisfactory credit quality. The obligor's
ability to pay interest and repay principal is adequate, however a change in
economic conditions may adversely affect timely payment. Plus (+) and minus (-)
signs are used with a rating symbol (except "AAA") to indicate the relative
position within the category.

Debt rated "AAA", the highest rating by Duff is considered to be of the
highest credit quality. The risk factors are negligible being only slightly
more than for risk-free U.S. Treasury debt. Debt rated "AA" is regarded as high
credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions. Debt rated "A" is
considered to have average but adequate protection factors. Bonds rated "BBB"
are considered to have below average protection factors but still sufficient for
prudent investment. Bonds rated "BB" and below are below investment grade and
possess fluctuating protection factors and risk.