OCC ACCUMULATION TRUST, 497, 1997-05-07

OCC ACCUMULATION TRUST
497, 1997-05-07

Previous: GNA VARIABLE ANNUITY SEPARATE ACCOUNT, 497J, 1997-05-07

Next: SMITH BARNEY DIVERSIFIED FUTURES FUND L P II, 424B3, 1997-05-07

<PAGE>

OCC ACCUMULATION TRUST
One World Financial Center, New York, New York 10281

OCC ACCUMULATION TRUST (formerly known as 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 three 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:

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.

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 separate accounts of various life insurance companies for the purpose of
funding variable annuity and variable life insurance contracts (the
"Contracts"). These separate accounts (the "Separate 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 Separate Accounts. The
Separate Accounts will redeem Shares to the extent necessary to provide benefits
under the Contracts.

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 15.

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, 1997 (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 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.
OPCAP ADVISORS
Investment Manager
Prospectus dated May 1, 1997

<PAGE>

TABLE OF CONTENTS

PAGE
----

Prospectus Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

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

Investment Objectives and Policies. . . . . . . . . . . . . . . . . . . . . .8

Small Cap Portfolio . . . . . . . . . . . . . . . . . . . . . .8

Global Equity Portfolio . . . . . . . . . . . . . . . . . . . .9

Managed Portfolio . . . . . . . . . . . . . . . . . . . . . . .9

Additional Information on Investment Objectives and Policies. . . . . . . . .10

Investment Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Management of the Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Determination of Net Asset Value. . . . . . . . . . . . . . . . . . . . . . .16

Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Redemption of Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

State Law Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Dividends, Distributions and Taxes. . . . . . . . . . . . . . . . . . . . . .18

Calculation of Performance. . . . . . . . . . . . . . . . . . . . . . . . . .18

Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . .19

<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 three series
available for investment through the Separate Accounts,
each of which is designated as a "Portfolio".
Together, the three 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
two of the current three available 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 OpCap 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
$10.0 billion at March 31, 1997 and is a subsidiary of
Oppenheimer Capital, a registered investment adviser,
which had assets under management, including those of
OpCap Advisors, of approximately $49.4 billion at March
31, 1997. See "Management of the Fund" for a
description of a pending transaction that if
consummated will involve a change in control of OpCap
Advisors.

MANAGEMENT FEE The Manager receives a monthly fee from each Portfolio
at varying annual percentage rates of average daily
net assets, as follows:.80 percent on the first

<PAGE>

$400 million, .75 percent on the next $400 million and
.70 percent thereafter of the average daily net assets
for the Small Cap, Managed and Global Equity Portfolios
(see page 15).
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 Separate 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 Separate 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 Separate
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 Separate
Accounts, the terms "shareholder" or "shareholders" in
this Prospectus shall refer to the Separate 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 Separate 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 requests to the insurance
companies issuing the Contracts.

SMALL CAP PORTFOLIO

For a share outstanding throughout each period:

<TABLE>
<CAPTION>
SEPTEMBER 16,
YEAR ENDED YEAR ENDED 1994(1)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1996 1995 1994
-------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . . . $19.91 $17.38 $17.49
-------------- ---------------- ----------------

Income from investment operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . 0.14 0.26 0.06
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . . . . 3.45 2.37 (0.17)
-------------- ---------------- ----------------
Total from investment operations . . . . . . . . . . . . . . . 3.59 2.63 (0.11)
-------------- ---------------- ----------------

Dividends and distributions to shareholders:
Dividends to shareholders from net investment income . . . . . . (0.25) (0.05) ---
Distributions to shareholders from net realized capital gains . (0.64) (0.05) ---
-------------- ---------------- ----------------
Total dividends and distributions. . . . . . . . . . . . . . . (0.89) (0.10) ---
-------------- ---------------- ----------------

Net asset value, end of period . . . . . . . . . . . . . . . . . $22.61 $19.91 $17.38
-------------- ---------------- ----------------
-------------- ---------------- ----------------

Total return (2) . . . . . . . . . . . . . . . . . . . . . . . . 18.7% 15.2% (.6%)
-------------- ---------------- ----------------
-------------- ---------------- ----------------

Net assets, end of period. . . . . . . . . . . . . . . . . . . . $34,256,671 $16,004,392 $9,210,443
-------------- ---------------- ----------------

Ratio of net operating expenses to average net assets (6). . . . 0.93% (4,5) 0.74% 0.74% (3)
-------------- ---------------- ----------------

Ratio of net investment income to average net assets (6) . . . . 1.03% (4) 1.75% 1.22% (3)
-------------- ---------------- ----------------

Portfolio turnover rate. . . . . . . . . . . . . . . . . . . . . 50% 69% 32%
-------------- ---------------- ----------------

Average commission rate. . . . . . . . . . . . . . . . . . . . . $0.0493 -- --
-------------- ---------------- ----------------

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

</TABLE>

(1) Commencement of operations.
(2) Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
(3) Annualized.
(4) Average net assets for the year ended December 31, 1996 were $22,131,648.
(5) Gross of expense offsets. (See note 1G in Notes to Financial Statements)
(6) During the periods presented above, the Adviser waived a portion or all of
its fees and assumed a portion of the Portfolio's operating expenses.
Additionally, for the year ended December 31, 1996, the Portfolio benefited
from an expense offset arrangement with its custodian bank. If such
waivers, assumptions and expense offsets had not been in effect, the ratios
of net operating expenses to average daily net assets and the ratios of net
investment income to average daily net assets would have been 1.01% and
0.92%, respectively, for the year ended December 31, 1996, 0.99% and 1.50%,
respectively, for the year ended December 31, 1995 and 1.64% and 0.32%,
annualized, respectively, for the period September 16, 1994 (commencement
of operations) to December 31, 1994.

5
<PAGE>

GLOBAL EQUITY PORTFOLIO

For a share outstanding throughout each period:

<TABLE>
<CAPTION>
MARCH 1,
YEAR ENDED 1995(1)
DECEMBER 31, TO DECEMBER 31,
1996 1995
--------------- ---------------
<S> <C> <C>
Net asset value, beginning of period.. . . . . . . . . . . . . . . . . . . . . . . . . . $11.61 $10.00
--------------- ---------------

Income from investment operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.04 0.05
Net realized gain (loss) and unrealized appreciation (depreciation) on investments
and translation of other assets and liabilities denominated in foreign currencies. . . 1.70 1.83
--------------- ---------------
Total from investment operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.74 1.88
--------------- ---------------

Dividends and distributions to shareholders:
Dividends to shareholders from net investment income.. . . . . . . . . . . . . . . . . . (0.05) (0.03)
Distributions to shareholders from net realized capital gains. . . . . . . . . . . . . . (0.07) (0.24)
--------------- ---------------
Total dividends and distributions to shareholders.. . . . . . . . . . . . . . . . . (0.12) (0.27)
--------------- ---------------

Net asset value, end of period.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.23 $11.61
--------------- ---------------
--------------- ---------------

Total return (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.0% 18.9%
--------------- ---------------
--------------- ---------------

Net assets, end of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,972,488 $2,891,321
--------------- ---------------

Ratio of net operating expenses to average net assets (5). . . . . . . . . . . . . . . . 1.42% (3,4) 1.25% (6)
--------------- ---------------

Ratio of net investment income to average net assets (5) . . . . . . . . . . . . . . . . 0.81% (3) 1.02% (6)
--------------- ---------------

Portfolio turnover rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40% 67%
--------------- ---------------

Average commission rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.0254 --
--------------- ---------------

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

(1) Commencement of operations.
(2) Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
(3) Average net assets for the year ended December 31, 1996 were $9,072,948.
(4) Gross of expense offsets. (See note 1G in Notes to Financial Statements)
(5) During the periods presented above, the Adviser waived a portion or all of
its fees and assumed a portion of the Portfolio's operating expenses.
Additionally, for the year ended December 31, 1996, the Portfolio benefited
from an expense offset arrangement with its custodian bank. If such
waivers, assumptions and expense offsets had not been in effect, the ratios
of net operating expenses to average daily net assets and the ratios of net
investment income (loss) to average daily net assets would have been 1.83%
and 0.22%, respectively, for the year ended December 31, 1996, and 3.94.%
and (1.67)%, annualized, respectively, for the period March 1, 1995
(commencement of operations) to December 31, 1995.
(6) Annualized.

6
<PAGE>

MANAGED PORTFOLIO

For a share outstanding throughout each period:

<TABLE>
<CAPTION>
SEPTEMBER 16,
YEAR ENDED YEAR ENDED 1994(1)
DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1996 1995 1994
-------------- --------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period.. . . . . . . . . . . . . . . $30.14 $20.83 $21.80
-------------- ---------------- -------------

Income from investment operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . . 0.43 0.42 0.14
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . . . . . 6.31 9.02 (1.11)
-------------- ---------------- -------------
Total from investment operations . . . . . . . . . . . . . . . . 6.74 9.44 (0.97)
-------------- ---------------- -------------

Dividends and distributions to shareholders:
Dividends to shareholders from net investment income . . . . . . . (0.41) (0.13) -
Distributions to shareholders from net realized capital gains. . . (0.26) - -
-------------- ---------------- -------------
Total dividends and distributions to shareholders. . . . . . . . (0.67) (0.13) 0.00
-------------- ---------------- -------------

Net asset value, end of period.. . . . . . . . . . . . . . . . . . $36.21 $30.14 $20.83
-------------- ---------------- -------------
-------------- ---------------- -------------

Total return (2).. . . . . . . . . . . . . . . . . . . . . . . . . 22.8% 45.6% (4.4%)
-------------- ---------------- -------------
-------------- ---------------- -------------

Net assets, end of period. . . . . . . . . . . . . . . . . . . . . $180,728,094 $99,188,147 $54,943,371
-------------- ---------------- -------------

Ratio of net operating expenses to average net assets (6). . . . . 0.84% (4,5) 0.66% 0.66% (3)
-------------- ---------------- -------------

Ratio of net investment income to average net assets (6).. . . . . 1.66% (4) 1.85% 2.34% (3)
-------------- ---------------- -------------

Portfolio turnover rate. . . . . . . . . . . . . . . . . . . . . . 27% 22% 8%
-------------- ---------------- -------------

Average commission rate. . . . . . . . . . . . . . . . . . . . . . $0.0592 - -
-------------- ---------------- -------------

</TABLE>

(1) Commencement of operations.
(2) Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
(3) Annualized.
(4) Average net assets for the year ended December 31, 1996 were $130,347,107.
(5) Gross of expense offsets. (See note 1G in Notes to Financial Statements)
(6) During the periods presented above, the Adviser waived a portion of its
fees. Additionally, for the year ended December 31, 1996, the Portfolio
benefited from an expense offset arrangement with its custodian bank. If
such waivers and expense offsets had not been in effect, the ratios of net
operating expenses to average daily net assets and the ratios of net
investment income to average daily net assets would have been 0.85% and
1.65%, respectively, for the year ended December 31, 1996, 0.74% and 1.77%,
respectively, for the year ended December 31, 1995 and 0.96% and 2.04%,
annualized, respectively, for the period September 16, 1994 (commencement
of operations) to December 31, 1994.

7
<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. 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,
President, 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.

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 percent 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 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 Timothy McCormack, Timothy Curro and Gavin Albert, each of whom
is a Vice President of Oppenheimer Capital. Mr. McCormack became a
portfolio manager of the Portfolio in May 1996. He joined Oppenheimer
Capital in 1994. From March 1993 to July 1994 Mr. McCormack was a security
analyst at U.S. Trust Company and prior to that he was a securities analyst
with Gabelli and Company. He has a Masters of Business Administration degree
from the Wharton School. Timothy Curro and Gavin Albert became portfolio
managers of the Portfolio on January 1, 1997. Mr. Curro has been a Vice
President of Oppenheimer Capital since November 1996. Prior thereto, he was
a general partner of Value Holdings, L.P., an investment partnership, from
May 1995 to November 1996, a Vice President in the equity research department
at UBS Securities Inc. from June 1994 through May 1995 and from January 1991
through February 1993 and was a partner with Omega Advisors, Inc. from March
1993 to March 1994. He has a Masters of Business Administration degree from
the University of California, Berkeley. Mr. Albert, Vice President of
Oppenheimer Capital since December 1996, joined the firm in September 1994 as
a research analyst. Prior thereto he was a management consultant for EDS
Energy Management in 1994, attended the Vanderbilt University Business School

8
<PAGE>

from September 1992 to May 1994 (with a Masters of Business Administration
degree in finance and management) and was a financial analyst in the
Corporate Finance department of Texaco, Inc. from 1990 to 1992.

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
percent 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 percent 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 percent 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. He joined Oppenheimer Capital in 1991. 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.

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. Although there is neither a minimum nor
maximum percentage of the Portfolio's assets that may, at any given time, be
invested in any of the types of investments identified above, it is
anticipated that most of the time the majority of the Portfolio's assets will
be invested in common stocks. The investments of the Managed Portfolio are
managed by Richard J. Glasebrook II, Managing Director of Oppenheimer Capital.

<PAGE>

ADDITIONAL INFORMATION ON INVESTMENT OBJECTIVES AND POLICIES

For 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 percent of each
Portfolio's assets will be invested in common stocks or securities
convertible into common stocks.

In the event that future economic or financial conditions adversely affect
equity securities, or stocks are considered overvalued, each of the 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.

Each 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
percent of the value of its total assets is represented by any one
investment, no more than 70 percent is represented by any two investments, no
more than 80 percent is represented by any three investments, and no more
than 90 percent 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 Portfolio can invest in any single issuer,
including direct obligations of the U.S. Treasury, to 55 percent of the
Portfolio's total assets at the end of any calendar quarter.

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 "Financial Highlights" table shows the Portfolios' portfolio turnover
rates. The portfolio turnover rates of the Portfolios cannot be accurately
predicted. Nevertheless, it is anticipated that the 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 percent or less. It
is anticipated that the Small Cap Portfolio will have an annual turnover rate
in excess of 100 percent. A 100 percent 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 percent can be expected to result in correspondingly higher
transaction costs.

<PAGE>

RISK ASPECTS OF THE INDIVIDUAL PORTFOLIOS
- -----------------------------------------

MANAGED PORTFOLIO. 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. As the Managed Portfolio may
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, 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 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.

<PAGE>

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.

HIGH YIELD SECURITIES: It is the present intention of the Manager with
respect to each of the Small Cap, 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 percent 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.

OPTIONS AND FUTURES: To the extent permitted by applicable state law,
the Global Equity and Small Cap Portfolios may 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 Portfolio 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 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"). 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.

<PAGE>

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 percent of the value of the total assets of the Small
Cap and Managed Portfolios and 33 1/3 percent of the value of the total
assets of the Global Equity Portfolio. Securities loans must also meet
applicable tests under the 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 and Small Cap 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 Portfolio may 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 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 percent 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

<PAGE>

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 Managed Portfolio 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 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 percent. 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 and Managed 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. 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:

<PAGE>

1. Invest more than 5 percent of the value of its total assets in the
securities of any one issuer, or purchase more than 10 percent of the voting
securities, or more than 10 percent 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 percent 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 percent 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 percent 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 percent 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 percent 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 percent of its assets in
illiquid securities.) Other investment restrictions are described in the
Additional Statement.

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 existing conflicts to the
Trustees of the Fund, and if a material irreconcilable conflict exists, to
remedy such conflict, up to and including redeeming Shares of the Portfolios
held by the Qualified Plans. The Additional Statement contains information
about the Trustees and Officers.

<PAGE>

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 .80 percent on the first $400 million, .75 percent on the next
$400 million and .70 percent thereafter of the average daily net assets for
the Global Equity, Managed and Small Cap Portfolios. Through at least
December 31, 1997, the expenses of the Small Cap and Managed Portfolios will
be voluntarily limited by the Manager so that annualized operating fund
expenses (net of any expense offsets) do not exceed 1.00 percent of their
respective average daily net assets.

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 such that the
total operating expenses (net of any expense offsets) of each of the
Portfolios of the Fund do not exceed 1.25 percent of their respective average
daily net assets.

The Manager is a subsidiary of Oppenheimer Capital, a registered
investment adviser with approximately $49.4 billion in assets under
management on March 31, 1997. All investment management services performed
under the Advisory Agreement are performed by employees of Oppenheimer
Capital. Oppenheimer Financial Corp. ("Opfin"), a holding company, is a 1.0%
general partner of the Manager and holds a one-third managing general partner
interest in Oppenheimer Capital, and Oppenheimer Capital, L.P., a Delaware
limited partnership of which Opfin is the sole 1.0% general partner and whose
units are traded on the New York Stock Exchange ("NYSE"), owns the remaining
two-thirds interest. On February 13, 1997, PIMCO Advisors L.P., a registered
investment adviser, with $110 billion in assets under management through
various subsidiaries, signed an Agreement and Plan of Merger with Oppenheimer
Group, Inc. ("OGI") and its subsidiary Opfin pursuant to which PIMCO Advisors
L.P. and its affiliate, Thomson Advisory Group, Inc. ("TAG") will acquire the
one-third managing general partner interest in Oppenheimer Capital, the 1.0%
general partner interest in OpCap Advisors and the 1.0% general partner
interest in Oppenheimer Capital L.P. (the "Transaction") and OGI will be
merged with and into TAG. The Transaction is subject to certain conditions
being satisfied prior to closing, including consents from certain lenders,
approvals from regulatory authorities including a favorable tax ruling from
the Internal Revenue Service and consents of certain clients, which are
expected to take up to six months to obtain. If the Transaction is
consummated, it will involve a change of control of Oppenheimer Capital and
its subsidiary the Manager which will constitute an assignment and
termination of the Advisory Agreement between the Manager and the Fund. On
February 28, 1997, the Board of Directors of the Fund approved a new Advisory
Agreement (on the identical terms as the existing Advisory Agreement) to take
effect upon consummation of Transaction and recommended that the new Advisory
Agreement be submitted to the shareholders of the Fund for their approval. A
proxy statement will be sent to shareholders in the next few months. 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

<PAGE>

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.

PURCHASE OF SHARES

Investments in the Fund may be made only by Separate 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 Separate Accounts.

Shares of each Portfolio of the Fund are offered to the Separate 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 representing shares of the Fund will not be physically
issued. OCC 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 Separate
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 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 Separate Accounts and
Qualified Plans. 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 Separate 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 Prospectus
for the Separate Accounts.

<PAGE>

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.

SMALL CAP, GLOBAL EQUITY AND MANAGED PORTFOLIOS. Dividends from net
investment income, if any, on the Small Cap, 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 Separate Accounts are the 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 Prospectus for the Separate 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 Separate 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 Separate Accounts.

AVERAGE ANNUAL TOTAL RETURN OF MANAGED, SMALL CAP AND GLOBAL EQUITY PORTFOLIOS
OF OCC ACCUMULATION TRUST(1,2)

Portfolio For the one year For the five year For the period from
--------- period ended period ended inception to
December 31, 1996 December 31, 1996 December 31, 1996*
----------------- ------------------ ------------------
<S> <C> <C> <C>
Managed 22.77% 19.13% 20.09%
Small Cap 18.72% 14.46% 14.67%
Global Equity 15.02% N/A 18.51%

</TABLE>

*Inception date of the Global Equity Portfolio is March 1, 1995. The
Managed and Small Cap Portfolios commenced operations as part of the Fund on
September 16, 1994. The Old Trust commenced operations on August 1, 1988.

(1)On 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 Small Cap and
Managed Portfolios immediately after the transaction were $139,812,573 and
$682,601,380, respectively, with respect to the Old Trust and for each of the
Small Cap and Managed Portfolios, $8,129,274 and $51,345,102, respectively,
with respect to the Fund.

<PAGE>

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

(2)Reflects waivers of all or a portion of the advisory fees and
reimbursement of other expenses for certain Portfolios by the Manager.
Without such waivers and reimbursements, the average annual total return
during the periods would have been lower.

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 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
Separate Accounts will vote the shares of the Fund, or any Portfolio of the
Fund, held in the Separate Accounts in accordance with instructions from
Contractowners, as described under the caption "Voting Rights" in the
accompanying Prospectus for the Separate 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 percent 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

<PAGE>

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, dividends, account statements and management and
investment policies of the Fund 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.

<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-

<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. Plus (+) and minus (-) signs are used with a rating symbol
to indicate the relative position within the category.

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. Plus
(+) and minus (-) signs are used with a rating symbol to indicate the
relative position within the category.

<PAGE>

OCC ACCUMULATION TRUST
One World Financial Center, New York, New York 10281

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.

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.

OPCAP ADVISORS
Investment Manager
Prospectus dated May 1, 1997

<PAGE>

TABLE OF CONTENTS

PAGE
----

Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

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

Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . .8

Equity Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Small Cap Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . .8

Managed Portfolio. . . . . . . . . . . . . . . . . . . . . . . . . . .9

Additional Information on Investment Objectives and Policies . . . . . . .10

Investment Techniques. . . . . . . . . . . . . . . . . . . . . . . . . . .12

Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . .14

Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . .15

Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . .16

Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Redemption of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . .17

State Law Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . .17

Dividends, Distributions and Taxes . . . . . . . . . . . . . . . . . . . .17

Calculation of Performance . . . . . . . . . . . . . . . . . . . . . . . .18

Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . .19

<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 three series
available for investment through the Variable Accounts,
each of which is designated as a "Portfolio."
Together, the three 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
the three available portfolios of the Fund, was
effectively divided into two investment funds, the
original investment company, whose name was changed,
and the Fund.

The value of the portfolio securities of each Portfolio
and therefore the Portfolio's net asset value per share
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.

INVESTMENT MANAGER OpCap 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
$10.0 billion at March 31, 1997 and is a subsidiary of
Oppenheimer Capital, a registered investment adviser,
which had assets under management, including those of
OpCap Advisors, of approximately $49.4 billion at
March 31, 1997. See "Management of the Fund" for a
description of a pending transaction that if
consummated will involve a change in control of OpCap
Advisors.

MANAGEMENT FEE The Manager receives a monthly fee from each
Portfolio at varying annual percentage rates of
average daily net assets, as follows: .80 percent
on the first

<PAGE>

$400 million, .75 percent on the next $400 million and
.70 percent thereafter of the average daily net assets
for the Equity, Small Cap and Managed Portfolios (see
page 15).
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.

<PAGE>
FINANCIAL HIGHLIGHTS

EQUITY PORTFOLIO

For a share outstanding throughout each period:

<TABLE>
<CAPTION>
SEPTEMBER 16,
YEAR ENDED YEAR ENDED 1994(1) TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994
------------ ------------ -------------
<S> <C> <C> <C>
Net asset value, beginning of period.. . . . . . . . . . . . . . $25.05 $18.12 $18.57
------------ ------------ -------------

Income from investment operations:
Net investment income. . . . . . . . . . . . . . . . . . . . . . 0.21 0.31 0.09
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . . . . . . . . . . 5.52 6.71 (0.54)
------------ ------------ -------------
Total from investment operations . . . . . . . . . . . . . . . 5.73 7.02 (0.45)
------------ ------------ -------------

Dividends and distributions to shareholders:
Dividends to shareholders from net investment income . . . . . . (0.24) (0.09) -
Distributions to shareholders from net realized capital gains. . (0.47) - -
------------ ------------ -------------
Total dividends and distributions to shareholders. . . . . . . (0.71) (0.09) -
------------ ------------ -------------

Net asset value, end of period.. . . . . . . . . . . . . . . . . $30.07 $25.05 $18.12
------------ ------------ -------------
------------ ------------ -------------

Total return (2).. . . . . . . . . . . . . . . . . . . . . . . . 23.4% 38.9% (2.4%)
------------ ------------ -------------
------------ ------------ -------------

Net assets, end of period. . . . . . . . . . . . . . . . . . . . $19,842,998 $9,035,982 $4,281,256
------------ ------------ -------------

Ratio of net operating expenses to average net assets (6). . . . 0.93% (4,5) 0.72% 0.72% (3)
------------ ------------ -------------

Ratio of net investment income to average net assets (6) . . . . 1.29% (4) 1.74% 1.80% (3)
------------ ------------ -------------

Portfolio turnover rate. . . . . . . . . . . . . . . . . . . . . 36% 31% 6%
------------ ------------ -------------

Average commission rate . . . . . . . . . . . . . . . . . . . . $0.0588 -- --
------------ ------------ -------------

</TABLE>
(1) Commencement of operations.
(2) Assumes reinvestment of all dividends and distributions. Aggregate (not
annualized) total return is shown for any period shorter than one year.
(3) Annualized.
(4) Average net assets for the year ended December 31, 1996 were $14,669,645.
(5) Gross of expense offsets. (See note 1G in Notes to Financial Statements)
(6) During the periods presented above, the Adviser waived a portion or all of
its fees and assumed a portion of the Portfolio's operating expenses.
Additionally for the year ended December 31, 1996 the Portfolio benefited
from an expense offset arrangement with its custodian bank. If such
waivers, assumptions and expense offsets had not been in effect, the ratios
of net operating expenses to average daily net assets and the ratios of net
investment income to average daily net assets would have been 1.05% and
1.15%, respectively, for the year ended December 31, 1996, 1.26% and 1.20%,
respectively, for the year ended December 31, 1995 and 2.09% and 0.43%,
annualized, respectively, for the period September 16, 1994 (commencement
of operations) to December 31, 1994.

5
<PAGE>

SMALL CAP PORTFOLIO

For a share outstanding throughout each period:

Dividends and distributions to shareholders:
Dividends to shareholders from net investment income . . . . . . (0.25) (0.05) --
Distributions to shareholders from net realized capital gains. . (0.64) (0.05) --
-------------- ---------------- ----------------
Total dividends and distributions. . . . . . . . . . . . . . . (0.89) (0.10) --
-------------- ---------------- ----------------