<PAGE> 1
PROSPECTUS
DATED MAY 1, 1996
GROUP FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
ISSUED BY
MONY VARIABLE ACCOUNT A
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
The Group Flexible Payment Variable Annuity Contracts (the "Contracts")
described in this Prospectus provide for accumulation of cash value on a
variable basis and payment of annuity benefits. The Contracts are designed for
use by qualifying groups for retirement plans that may or may not qualify for
special federal income tax treatment. The types of pension plans that may
purchase the Contracts are retirement plans which receive favorable tax
treatment under Sections 401, 403, 408, or 457 of the Internal Revenue Code.
(See "Definitions -- Qualified Plans" at page 2.)
Individuals who are members of qualifying groups may make purchase payments
for the Contracts and will receive a certificate ("Certificate") which
summarizes the provisions of the Contracts. Holders of Certificates
("Certificateholders") may allocate, at the election of the Certificateholder,
purchase payments to either (i) a segregated investment account of The Mutual
Life Insurance Company of New York (the "Company"), which account has been
designated MONY Variable Account A (the "Variable Account"), or (ii) the
Guaranteed Interest Account, which is a part of the Company's General Account or
to both as the Certificateholder may determine. The Variable Account invests in
shares of OCC Accumulation Trust at their net asset value. (See "The Fund" at
page 9.) Upon the issuance of the Certificate, purchase payments will be
allocated to the Money Market Subaccount of the Variable Account and will be
held there pending expiration of the Free Look Period. After expiration of the
Free Look Period, the Cash Value of the Certificate will automatically be
transferred to one or more of the subaccounts of the Variable Account in
accordance with the instructions of the Certificateholder. (See "PAYMENT AND
ALLOCATION OF NET PURCHASE PAYMENTS" at page 12.) Certificateholders bear the
complete investment risk for all amounts allocated to the Variable Account. This
Prospectus generally describes only the variable features of the Certificate.
(For a summary of the Guaranteed Interest Account, see "Guaranteed Interest
Account" at page 11.) This Prospectus sets forth the basic information that a
prospective purchaser should know before investing. Please keep this Prospectus
for future reference.
A Statement of Additional Information dated May 1, 1996, incorporated
herein by reference, and containing additional information about the Contracts
and the Certificates, has been filed with the Securities and Exchange
Commission. The Statement of Additional Information is available from the
Company without charge upon written request to the address shown on the request
form on page of this Prospectus or by telephoning 1-800-487-6669. The Table of
Contents of the Statement of Additional Information can be found on page 32 of
this Prospectus.
This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy the Contracts or the Certificates in any jurisdiction in which
such may not be lawfully made.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION, PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS IS VALID
ONLY WHEN ACCOMPANIED (OR PRECEDED) BY A CURRENT
PROSPECTUS FOR OCC ACCUMULATION TRUST.
------------------------
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
1740 BROADWAY
NEW YORK, NEW YORK 10019
1-800-487-6669
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Definitions........................................................................... 1
Synopsis.............................................................................. 3
The Company and the Variable Account.................................................. 9
The Mutual Life Insurance Company of New York....................................... 9
MONY Variable Account A............................................................. 9
The Fund............................................................................ 9
Guaranteed Interest Account........................................................... 11
Payment and Allocation of Net Purchase Payments....................................... 12
Issuance of the Certificate......................................................... 12
Free Look Privilege................................................................. 13
Allocation of Net Purchase Payments and Cash Value.................................. 13
Termination of the Certificate...................................................... 16
Surrenders............................................................................ 16
Death Benefit......................................................................... 18
Death Benefit Provided by the Certificate........................................... 18
Election and Effective Date of Election............................................. 18
Payment of Death Benefit............................................................ 18
Charges and Deductions................................................................ 18
Deductions from Payments............................................................ 18
Charges Against Cash Value.......................................................... 19
Mortality and Expense Risk Charge................................................... 21
Taxes............................................................................... 21
Investment Advisory Fee............................................................. 21
Annuity Provisions.................................................................... 22
Annuity Commencement Date........................................................... 22
Election and Change of Settlement Option............................................ 22
Settlement Options.................................................................. 22
Frequency of Annuity Payments....................................................... 23
Additional Provisions............................................................... 23
Other Provisions...................................................................... 24
Ownership........................................................................... 24
Provision Required by Section 72(s) of the Code..................................... 24
Provision Required by Section 401(a)(9) of the Code................................. 24
Contingent Annuitant................................................................ 25
Assignment.......................................................................... 26
Change of Beneficiary............................................................... 26
Substitution of Securities.......................................................... 26
Modification of the Contracts and Certificates...................................... 26
Change in Operation of Variable Accounts............................................ 26
Voting Rights......................................................................... 27
Distribution of the Contracts and Certificates........................................ 28
Federal Tax Status.................................................................... 28
Introduction........................................................................ 28
Tax Treatment of the Company........................................................ 28
Taxation of Annuities in General.................................................... 28
Annuity Contracts Governed by Section 403(b) of the Code............................ 29
Retirement Plans.................................................................... 30
Performance Data...................................................................... 30
Additional Information................................................................ 31
Legal Proceedings..................................................................... 31
Financial Statements.................................................................. 31
Table of Contents of Statement of Additional Information.............................. 32
Calculation of Surrender Charge....................................................... A-1
</TABLE>
i
<PAGE> 3
DEFINITIONS
ANNUITANT -- The person upon whose continuation of life any annuity payment
depends.
ANNUITY COMMENCEMENT DATE -- The date on which annuity payments are to
commence.
BENEFICIARY -- The party entitled to receive benefits payable at the death
of the Annuitant or (if applicable) the Contingent Annuitant.
CASH VALUE -- The dollar value as of any Valuation Date of all amounts
accumulated under the Certificate.
CERTIFICATE -- A Certificate issued in accordance with the Contract.
CERTIFICATE ANNIVERSARY -- An anniversary of the Certificate Date of the
Certificate.
CERTIFICATEHOLDER -- The person so designated in the application. If a
Certificate has been absolutely assigned, the assignee becomes the
Certificateholder. A collateral assignee is not the Certificateholder.
CERTIFICATE DATE -- The date shown as the Certificate Date in the
Certificate.
CERTIFICATE YEAR -- Any period of twelve (12) months commencing with the
Certificate Date and each Certificate Anniversary thereafter.
COMPANY -- The Mutual Life Insurance Company of New York.
CONTINGENT ANNUITANT -- The party designated by the Certificateholder to
become the Annuitant, subject to certain conditions, on the death of the
Annuitant.
CONTRACT -- The Flexible Payment Variable Annuity Contract offered by the
Company and described in this Prospectus.
FREE LOOK PERIOD -- A period which follows the application for the
Certificate and its issuance to the Certificateholder. The period runs to the
date which 10 days (or longer in certain states) after the Certificateholder
receives the Certificate. (The Free Look Period is referred to in the
Certificate as the "Right to Return Certificate" period.) During the Free Look
Period, the Certificateholder may cancel the Certificate and receive a refund.
FUND -- OCC Accumulation Trust, a Massachusetts business trust formerly
Quest for Value Accumulation Trust and originally Quest Asset Builder Trust,
Massachusetts business trust.
GUARANTEED FREE SURRENDER AMOUNT --
For Non-Qualified Certificates -- An amount, up to 10 percent of the
Certificate's Cash Value on the date the first partial surrender request is
received during a Certificate Year, that may be surrendered without the
imposition of a Surrender Charge. For the purposes of the Guaranteed Free
Surrender Amount only, Non-Qualified Certificates include Certificates issued
for IRAs and SEP-IRAs.
For Qualified Certificates -- An amount, up to the greater of $10,000 (but
not more than the Certificate's Cash Value) or 10 percent of the Certificate's
Cash Value on the date the first partial surrender request is received during a
Certificate Year, that may be surrendered without the imposition of a Surrender
Charge. For the purposes of the Guaranteed Free Surrender Amount only, Qualified
Certificates include Qualified Certificates issued on and after May 1, 1994 and
exclude Certificates issued for IRAs and SEP-IRAs.
GUARANTEED INTEREST ACCOUNT -- A part of the Company's general account, the
Guaranteed Interest Account pays interest at a rate declared by the Company,
which the Company guarantees will not be less than 4%. For Certificates issued
on or after May 1, 1994 (or on or after such date as approval required in
certain states is obtained), the rate declared by the Company is guaranteed to
be not less than 3.5%.
HOME OFFICE -- The Company's administrative office at 1740 Broadway, New
York, N.Y. 10019. "Home Office" also includes the Company's Operations Center at
1 MONY Plaza, Syracuse, N.Y. 13202.
1
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NET PURCHASE PAYMENT -- An amount equal to a Purchase Payment, less any
deduction for premium or similar taxes.
NON-QUALIFIED CERTIFICATES -- Certificates issued under Non-Qualified
Plans.
NON-QUALIFIED PLANS -- Retirement Plans that do not receive favorable tax
treatment under Sections 401, 403, 408, or 457 of the Internal Revenue Code.
OPERATIONS CENTER -- The administrative office of the Company located at 1
MONY Plaza, Syracuse, New York 13202.
PORTFOLIO -- A separate investment portfolio of the Fund.
PURCHASE PAYMENT (PAYMENT) -- An amount paid to the Company by the
Certificateholder or on the Certificateholder's behalf as consideration for the
benefits provided by the Certificate.
QUALIFIED CERTIFICATES -- Certificates issued under Qualified Plans.
QUALIFIED PLANS -- Retirement plans that receive favorable tax treatment
under Sections 401, 403, 408, or 457 of the Internal Revenue Code.
SUBACCOUNT -- A subdivision of the Variable Account. Each Subaccount
invests exclusively in the shares of a corresponding Portfolio of the Fund.
SUCCESSOR CERTIFICATEHOLDER -- The living person who, at the death of the
Certificateholder, becomes the new Certificateholder.
SURRENDER CHARGE -- A contingent deferred sales charge that may be applied
against amounts surrendered. (See "Charges Against Cash Value -- Surrender
Charge" at page 19.)
SURRENDER VALUE -- The Certificate's Cash Value, less (1) any applicable
Surrender Charge and (2) any applicable Annual Certificate Charge.
UNIT -- The measure by which the Certificate's interest in each Subaccount
is determined.
VALUATION DATE -- Each day that the New York Stock Exchange is open for
trading or any other day on which there is sufficient trading in the securities
of a Portfolio of the Fund to affect materially the value of the Units of the
corresponding Subaccount.
VARIABLE ACCOUNT -- A separate investment account of the Company,
designated as MONY Variable Account A, into which Net Purchase Payments will be
allocated.
2
<PAGE> 5
SYNOPSIS
THE CONTRACTS AND THE CERTIFICATES
The Group Flexible Payment Variable Annuity Contracts (the "Contracts")
described in this Prospectus provide for the accumulation of values on a
variable basis or a guaranteed interest basis or a combination of both and the
payment of annuity benefits. The Contracts are designed for use in connection
with personal retirement plans, some of which (the "Qualified Plans") may
qualify for federal income tax advantages available under Sections 401, 403, 408
and 457 of the Internal Revenue Code (the "Code"). Individuals who are members
of qualifying groups may make purchase payments and each receive a certificate
("Certificate") which summarizes the provisions of the Contracts.
The Contracts and Certificates offered by this Prospectus are not available
for sale in connection with Qualified Plans which intend to qualify for federal
income tax advantages available under Section 403(b) of the Code.
THE VARIABLE ACCOUNT
Net Purchase Payments for the Certificates will be allocated at the
Certificateholder's option to Subaccounts, made available therefor in accordance
with the terms of the Certificates, of a segregated investment account of The
Mutual Life Insurance Company of New York (the "Company"), which account has
been designated MONY Variable Account A (the "Variable Account") or to the
Guaranteed Interest Account, which is a part of the Company's general account
and consists of all the Company's assets other than assets allocated to
segregated investment accounts of the Company, including the Variable Account.
The Subaccounts of the Variable Account invest in shares of the OCC Accumulation
Trust at their net asset value. (See "The Fund" at page 9). Certificateholders
bear the entire investment risk for all amounts allocated to the Variable
Account. Net Purchase Payments allocated to the Guaranteed Interest Account will
be credited with interest at rates guaranteed by the Company for specified
periods. (See "Guaranteed Interest Account" at page 11.)
PURCHASE PAYMENTS
For Non-Qualified Plans and individual retirement accounts and annuities
purchased by individuals under Section 408 of the Code (other than Simplified
Employee Pensions), the minimum initial Purchase Payment for the Certificate is
$2,000, except that, on and after May 1, 1992, the minimum initial Purchase
Payment for individuals is $600 if Purchase Payments are made through automatic
checking account withdrawals. For H.R.10 plans, certain corporate or association
retirement plans, Simplified Employee Pensions under Section 408 of the Code,
and annuity purchase plans sponsored by certain tax-exempt organizations,
governmental entities, or public school systems, the minimum initial Purchase
Payment is $600. Additional Purchase Payments of at least $100 may be made at
any time. Different limits apply where certain automatic payment plans are used.
(See "Issuance of the Certificate" at page 12.) The Company may change any of
these requirements in the future.
DEDUCTIONS FROM PURCHASE PAYMENTS
Deductions may be made from Purchase Payments for premium or similar taxes.
Currently, the Company makes no such deduction, but may do so with respect to
future payments. The amount of the deduction will vary from state to state, but
will generally range from 0 percent to 3.5 percent of Payments. Residents of the
Commonwealth of Pennsylvania should be aware that a tax on Purchase Payments has
been adopted; however, the Company currently is assuming responsibility for
payment of this tax. In the event that the Company will begin to make deductions
for such tax from future Purchase Payments, it will give notice to each affected
Certificateholder.
3
<PAGE> 6
FREE LOOK PRIVILEGE
Within ten days (or longer in certain states) of the day the Certificate is
delivered to the Certificateholder, it may be returned to the Company or to the
agent through whom it was purchased. When the Certificate is received by the
Company, it will be voided as if it had never been in force. Except for
Certificates entered into in the Commonwealth of Pennsylvania, the amount to be
refunded is equal to the greater of: (i) all Purchase Payments; and (ii) the
cash Value of the Certificate (as of the date the returned Certificate is
received at the Home Office or a local office of the Company, or by the agent
who sold the Certificate, or, if returned by mail, upon being postmarked,
properly addressed, and postage prepaid) plus any deductions from Purchase
Payments for taxes applicable to annuity considerations that may have been
deducted, any mortality and expense risk charges deducted in determining the
Unit value of the Variable Account, and asset charges deducted in determining
the share value of the Fund. For Certificates entered into in the Commonwealth
of Pennsylvania, the amount to be refunded is described in clause (ii) of the
immediately preceding sentence.
SURRENDER CHARGE
A contingent deferred sales charge (called a "Surrender Charge") will be
imposed upon requests for surrenders or commencement of annuity benefits where
the amount requested exceeds the amount of Net Purchase Payments during the
Certificate Year when the surrender or commencement of annuity benefits is
requested and during the seven preceding Certificate Years.
The Surrender Charge, which otherwise would have been deducted, will not be
deducted to the extent necessary to permit the Certificateholder to obtain, for
Qualified Certificates (other than Certificates issued for IRA and SEP-IRA), an
amount up to the greater of $10,000 (but not more than the Certificate's Cash
Value) or 10 percent of the Certificate's Cash Value on the date the first
partial surrender request is received during a Contract Year; and for
NonQualified Certificates (and Certificates issued for IRA and SEP-IRA and for
Qualified Certificates issued before May 1, 1994), an amount up to 10% of the
Cash Value of the Certificate on the date the first partial surrender request is
received during a Contract Year. The Company reserves the right to limit the
number of partial surrenders under this provision to 12 during any Certificate
Year. In addition, the Certificate details certain other circumstances under
which a surrender charge will not be imposed. The Surrender Charge is intended
to reimburse the Company for expenses incurred that are related to sales of the
Certificate. In no event will the aggregate Surrender Charge exceed 7 percent of
the total Purchase Payments made in the Certificate Year of the surrender and
during the 7 preceding Certificate Years. (See "Charges Against Cash
Value -- Surrender Charge" at page 19.)
MORTALITY AND EXPENSE RISK CHARGE
A Mortality and Expense Risk Charge is deducted daily from the net assets
of the Variable Account for mortality and expense risks assumed by the Company.
This daily charge is equal to a charge on an annual basis of 1.25 percent of the
net assets of the Variable Account. (See "Mortality and Expense Risk Charge" at
page 21.)
TRANSFER CHARGE
Certificate value may be transferred without charge as many as 4 times in
any Certificate Year. For any additional transfer during a Certificate Year, a
transfer charge is not currently imposed, but the Company has reserved the right
to impose a charge for each transfer in excess of 4, which will not exceed $25
per transfer. If imposed, the transfer charge will be deducted from the
Certificate's Cash Value. (See "Charges Against Cash Value -- Transfer Charge"
at page 21.)
ANNUAL CERTIFICATE CHARGE
On each Certificate Anniversary prior to the Annuity Commencement Date, on
the Annuity Commencement Date, and on full surrender of the Certificate, the
Company deducts an Annual Certificate Charge from the Cash Value, to reimburse
the Company for administrative expenses relating to the maintenance of the
4
<PAGE> 7
Certificate. The charge is currently $30, but the Company may in the future
change the amount of the charge. The charge will never, however, exceed $50.
(See "Charges Against Cash Value -- Annual Certificate Charge" at page 20.)
DEATH BENEFIT
In the event of death of the Annuitant (and the Contingent Annuitant, if
one has been named) prior to the Annuity Commencement Date, the Company will pay
a death benefit to the Beneficiary. If death of the Annuitant occurs after the
Annuity Commencement Date, no death benefit will be payable except as may be
payable under the settlement option selected. (See "Death Benefit" at page 18.)
TAX UPON SURRENDER
Amounts surrendered may be subject to income tax. In addition, a penalty
tax may be payable pursuant to the Internal Revenue Code on withdrawal of
amounts accumulated under any annuity contract. (See "Federal Tax Status" at
page 28.)
THE MERGER
Pursuant to an Agreement and Plan of Merger, entered into between MONY
Legacy Life Insurance Company ("MONY Legacy") and the Company, MONY Legacy was
merged ("Merger") into the Company on February 28, 1991. As a result of the
Merger, the Company became the depositor of, and became obligated under,
contracts issued by MONY Legacy ("Legacy Contracts"). As a result of the Merger,
assets, reserves, and other liabilities allocated to the MONY Legacy Variable
Account A (to which purchase payments made for the Legacy Contracts were
allocated prior to the Merger) became the assets, reserves, and other
liabilities of the Variable Account.
THE SUBSTITUTION
After September 16, 1994, purchase payments made by ValueMaster
Certificateholders allocated to the Subaccounts are used to purchase shares of
corresponding portfolios of the OCC Accumulation Trust, a Massachusetts business
trust, which was established as the Quest Asset Builder Trust. The name Quest
for Value Accumulation Trust, was adopted on September 16, 1994, and the present
name was adopted effective May 1, 1996. On September 16, 1994, the shares of the
portfolio company previously purchased with ValueMaster Certificateholder
purchase payments (which is now named the Enterprise Accumulation Trust) were
redeemed in kind and the assets received were used to purchase shares of the
Quest for Value Accumulation Trust (the "Substitution"). (See "Prospectus
Summary -- The Fund" at page 3 of the accompanying prospectus for the OCC
Accumulation Trust.) OpCap Advisors, then known as Quest for Value Advisors, the
investment advisor to the OCC Accumulation Trust, has agreed to continue to
waive payment of that part or all of its investment management fee which would
cause the expenses of any portfolio of the OCC Accumulation Trust, when such fee
is added to the other expenses of the OCC Accumulation Trust, to exceed 1.00% of
that portfolio's assets.
5
<PAGE> 8
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
MONY VARIABLE ACCOUNT A
TABLE OF FEES FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
CERTIFICATEOWNER TRANSACTION EXPENSES
Maximum Deferred Sales Load (Surrender Charge) (as a percentage of amount
surrendered)..................................................................... 7%*
ANNUAL CERTIFICATE CHARGE............................................................. $30
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Fees..................................................... 1.25%**
</TABLE>
ANNUAL EXPENSES OF OCC ACCUMULATION TRUST:
OCC ACCUMULATION TRUST
PRO FORMA ANNUAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1995
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
SMALL MONEY
EQUITY CAP MANAGED BOND MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Expenses........................... .20% .20% .14% .50% .60%
Management Fees.................... .80%*** .80%*** .80%*** .50% .40%
--- --- --- ----- ---- -
Total OCC Accumulation
Trust Annual Expenses After
Limitation.................... 1.00%**** 1.00%**** .94% 1.00%**** 1.00%****
=== === === ===== =====
</TABLE>
- ---------------
* The Surrender Charge percentage, which reduces to zero as shown in the
table below is determined by the number of Certificate Anniversaries since
a purchase payment was received.
SURRENDER CHARGE PERCENTAGE TABLE
<TABLE>
<CAPTION>
# OF CONTRACT SURRENDER
ANNIVERSARIES SINCE CHARGE
PURCHASE PAYMENT RECEIVED PERCENTAGE
- ------------------------- ----------
<S> <C>
0 7%
1 7
2 6
3 6
4 5
5 4
6 3
7 2
8 (or more) 0
</TABLE>
Surrender Charge may be reduced under certain circumstances which include
reduction in order to guarantee that certain amounts may be received free
of surrender charge. See "Charges Against Cash Value -- Guaranteed Free
Surrender Amount" at page 20.
** The Mortality and Expense Risk charge is deducted at a daily rate
equivalent to an annual rate of 1.25 percent from the value of the net
assets of the Separate Account.
*** Management Fees reflect investment advisory fees which became effective on
and after May 1, 1996. Prior thereto, the investment advisory fees were
.60%. (See "CHARGES AND DEDUCTIONS -- Investment Advisory Fee" at page 21.
***** The expenses reflect expense limitations in effect on May 1, 1996. Absent
these expense limitations, expenses would have been as follows:
Equity -- 1.25%; Small Cap -- 1.19%; Bond -- 1.25%; and Money
Market -- 1.14%.
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<PAGE> 9
The purpose of the Table of Fees above is to assist the Certificateholder
in understanding the various costs and expenses that the Certificateholder will
bear, directly or indirectly. The table reflects the expenses of the separate
account as well as of OCC Accumulation Trust. OCC Accumulation Trust has
provided information relating to its operations. The expenses borne by the
Separate Account are explained under the caption "CHARGES AND DEDUCTIONS" at
page 18 of this Prospectus. The expenses borne by OCC Accumulation Trust assumes
that the expense limitations currently in effect will continue throughout the
period shown. Expenses are limited by contract with OpCap Advisors to 1.25% if
average daily net assets and, through April 30, 1997, are further limited to
1.00% of Average daily net assets. (See "Management of the Fund" at page 22 of
the accompanying prospectus for OCC Accumulation Trust). The table does not
reflect income taxes or penalty taxes which may become payable under the
Internal Revenue Code or premium or other taxes which may be imposed under state
or local laws. No separate charges are assessed on the Group Contractholder.
EXAMPLE
If you surrender your Certificate at the end of the time periods shown
below, you would pay the following expenses (estimated as described in the
footnotes to the Table of Fees) on a $1,000 investment, assuming 5% annual
return on assets:
<TABLE>
<CAPTION>
AFTER AFTER AFTER AFTER
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity........................................... $ 86 $ 125 $ 167 $263
Small Cap........................................ $ 86 $ 125 $ 167 $263
Managed.......................................... $ 85 $ 123 $ 164 $256
Bond............................................. $ 86 $ 125 $ 167 $263
Money Market..................................... $ 86 $ 125 $ 167 $263
</TABLE>
If you annuitize at the end of the time periods shown below, you would pay
the following expenses (estimated as described in the footnotes to the Table of
Fees) on a $1,000 investment, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
AFTER AFTER AFTER AFTER
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity........................................... $ 86 $ 125 $ 123 $263
Small Cap........................................ $ 86 $ 125 $ 123 $263
Managed.......................................... $ 85 $ 123 $ 119 $256
Bond............................................. $ 86 $ 125 $ 123 $263
Money Market..................................... $ 86 $ 125 $ 123 $263
</TABLE>
If you do not surrender your Certificate at the end of the time periods
shown below, you would pay the following expenses (estimated as described in the
footnotes to the Table of Fees) on a $1,000 investment, assuming 5% annual
return on assets:
<TABLE>
<CAPTION>
AFTER AFTER AFTER AFTER
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity........................................... $ 23 $72 $ 123 $263
Small Cap........................................ $ 23 $72 $ 123 $263
Managed.......................................... $ 23 $70 $ 119 $256
Bond............................................. $ 23 $72 $ 123 $263
Money Market..................................... $ 23 $72 $ 123 $263
</TABLE>
The examples above should not be considered a representation of past or
future expenses, and actual expenses may be greater or lesser than those shown.
All Variable Account expenses as well as portfolio company (OCC Accumulation
Trust) expenses (estimated as described in the footnotes to the Table of Fees),
net of fee waivers, are reflected in the examples. Not reflected in the examples
which assume redemption at the end of each time period are income taxes and
penalty taxes which may become payable under the Internal Revenue Code or
premium or other taxes which may be imposed under state or local laws.
7
<PAGE> 10
CONDENSED FINANCIAL INFORMATION
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
MONY VARIABLE ACCOUNT A
ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
UNIT VALUE UNITS OUTSTANDING
-------------------------------------------- -----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
SUBACCOUNT INCEPTION* 1994 1995 1994 1995
- ----------------------------- ---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Equity....................... $20.15 $19.59 $26.89 10,593 10,944
Small Cap.................... $21.68 $21.46 $24.43 18,271 18,419
Managed...................... $14.20 $14.10 $34.85 60,890 317,313
Bond......................... $25.44 $24.22 $16.06 315,452 51,825
Money Market................. $12.44 $12.54 $13.01 37,816 33,665
</TABLE>
- ---------------
* Variable Account A commenced operations on December 30, 1987. The Subaccounts
shown above became available for allocation on September 16, 1994.
8
<PAGE> 11
THE COMPANY AND THE VARIABLE ACCOUNT
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
The Mutual Life Insurance Company of New York (the "Company") is a mutual
life insurance company organized in the state of New York in 1842. The Company
is currently licensed to sell life insurance and annuities in all states of the
United States, the District of Columbia, Puerto Rico, the Virgin Islands, and
all Provinces of Canada. The Company's financial statements may be found in the
Statement of Additional Information. The principal offices of the Company are at
1740 Broadway, New York, New York 10019.
MONY VARIABLE ACCOUNT A
The Company established MONY Variable Account A (the "Variable Account") on
November 28, 1990, under New York law as a separate investment account. The
Variable Account holds assets that are segregated from all of the Company's
other assets and at present is used only to support flexible payment variable
annuity contracts. As a result of the Merger, the Variable Account received the
assets, reserves, and other liabilities of the MONY Legacy Variable Account A.
The Company is the legal holder of the assets in the Variable Account and
will at all times maintain assets in the Variable Account with a total market
value at least equal to the contract liabilities for the Variable Account. The
obligations under the Certificates are obligations of the Company. Income,
gains, and losses, whether or not realized, from assets allocated to the
Variable Account, are, in accordance with the Certificates, credited to or
charged against the Variable Account without regard to other income, gains, or
losses of the Company. The assets in the Variable Account may not be charged
with liabilities which arise from any other business the Company conducts. The
Variable Account's assets may include accumulations of the charges the Company
makes against Certificates participating in the Variable Account. From time to
time, any such additional assets may be transferred in cash to the Company's
General Account.
The Variable Account is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940 ("1940 Act") as a
unit investment trust, which is a type of investment company. This does not
involve any supervision by the SEC of the management or investment policies or
practices of the Variable Account. For state law purposes, the Variable Account
is treated as a part or division of the Company. There are currently 11
Subaccounts within the Variable Account, however, not all Subaccounts are
available to the Certificateholder.
THE FUND
The OCC Accumulation Trust was established as the Quest Asset Builder
Trust, and the Quest for Value Accumulation Trust name was adopted on September
16, 1994. The present name was adopted effective May 1, 1996. The OCC
Accumulation Trust was established for the purpose of offering its shares to the
Company for allocation to Subaccounts of MONY Variable Account A in accordance
with instructions received from ValueMaster Contractholders concerning the
allocation of their purchase payments and to the separate accounts of other
insurance companies for allocation in accordance with the instructions of their
variable annuity and variable life insurance contractholders. (See "Prospectus
Summary" at page 3 of the accompanying prospectus for OCC Accumulation Trust.)
At the close of business on September 16, 1994, the shares of the portfolio
company previously purchased with ValueMaster Contractholder purchase payments
(which is now named Enterprise Accumulation Trust) were redeemed through an
in-kind redemption, and the securities and cash received was used to purchase
shares of what is now known as the OCC Accumulation Trust. The Enterprise
Accumulation Trust was established on March 1, 1988 as the Quest for Value
Accumulation Trust, and its name was changed to Enterprise Accumulation Trust on
September 16, 1994. Under its former name, its shares were offered to the
Company for purchase with ValueMaster Certificateholder purchase payments
allocated to MONY Variable Account A until the close of business on September
16, 1994.
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After September 16, 1994, each Subaccount of the Variable Account will
invest only in the shares of a corresponding Portfolio of OCC Accumulation Trust
(the "Fund"). The Fund is registered with the SEC under the 1940 Act as open-end
diversified management investment company. This registration does not involve
supervision by the SEC of the management or investment practices or policies of
the Fund. Shares of the Fund are also currently sold to a separate account of a
life insurance company affiliate of the Company that was established to fund
certain Flexible Premium Variable Annuity contracts. Shares of the Fund may in
the future be sold to other separate accounts, and the Fund may in the future
create new Portfolios. In addition, the Company may make available additional
Subaccounts with differing or similar investment objectives. The Fund may
withdraw from sale any or all of the respective Portfolios in accordance with
applicable law.
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 contractholders and variable life insurance contractholders and
shall report any such conflict to the boards of the Company and its affiliates.
The Boards of Directors of the Company and its affiliates have agreed to be
responsible for reporting any potential or existing conflicts to the Trustees of
the Fund and, 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.
The Variable Account will purchase and redeem shares from the Fund at net
asset value. Shares will be redeemed to the extent necessary for the Company to
collect charges under the Certificates, to pay Surrender Value upon full
surrenders of the Certificates, to fund partial surrenders, to provide benefits
under the Certificates, and to transfer assets from one Subaccount to another or
between one or more Subaccounts of the Variable Account and the Guaranteed
Interest Account as requested by Certificateholders. Any dividend or capital
gain distribution received from a Portfolio of the Fund will be reinvested
immediately at net asset value in shares of that Portfolio and retained as
assets of the corresponding Subaccount.
The Fund receives investment advice with respect to each of its Portfolios
from OpCap Advisors which acts as investment adviser to the Fund. OpCap
Advisors, formerly known as Quest for Value Advisors, is a subsidiary of
Oppenheimer Capital, which is a subsidiary of Oppenheimer Financial Corp. The
change of name to OpCap Advisors was occasioned by the sale of certain of the
operations of Quest for Value Advisors to Oppenheimer Management Corporation in
November 1995. No change in the personnel responsible for the day-to-day
management of the Portfolio will occur as a result of this change.
The investment objectives of the Portfolios currently available to
Certificateholders through corresponding Subaccounts of the Variable Account are
set forth in the accompanying prospectus for each of the Funds and are described
briefly below. There is no assurance that these objectives will be met.
The investment objectives of each Portfolio are fundamental and may not be
changed without the approval of the holders of a majority of the outstanding
shares of the Portfolio affected (which, for the Fund means the lesser of (1) 67
percent of the Portfolio shares represented at a meeting at which more than 50
percent of the outstanding Portfolio shares are represented or (2) more than 50
percent of the outstanding Portfolio shares).
Each Certificateholder should periodically consider the allocation among
the Subaccounts and the Guaranteed Interest Account in light of current market
conditions and the investment risks attendant to investing in each of the Fund's
various Portfolios. A full description of the Fund, its investment objectives,
policies and restrictions, its expenses, the risks attendant to investing in
each of the Fund's Portfolios, and other aspects of its operation is contained
in the accompanying prospectus for the Fund, which should be read together with
this Prospectus.
The investment objectives of each of the Portfolios of the Fund is as
follows:
Equity Portfolio: Capital appreciation through investment in a diversified
portfolio of primarily equity securities selected on the basis of a
value-oriented approach to investing.
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Small Cap Portfolio: Capital appreciation through investments in a
diversified portfolio of primarily equity securities of companies with market
capitalizations of under $1 billion.
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 over time based on the investment manager's
assessments of relative investment values.
Bond Portfolio: High returns and projection of capital through investment
in a diversified portfolio of bonds and other fixed-income objectives.
Money Market Portfolio: Maximum current income consistent with stability
of principal by investing in a portfolio of high quality money market
instruments.
GUARANTEED INTEREST ACCOUNT
The Guaranteed Interest Account is a part of the Company's General Account
and consists of all the Company's assets other than assets allocated to
segregated investment accounts of the Company, including the Variable Account.
Crediting of Interest. Net Purchase Payments allocated by a
Certificateholder to the Guaranteed Interest Account will be credited with
interest at the rate declared by the Company which the Company guarantees will
not be less than 4% (0.010746% compounded daily). For Certificates issued on or
after May 1, 1994 (or on or after such later date as approval required in
certain states is obtained), the rate declared by the Company will be not less
than 3.5% (0.009426% compounded daily). Each interest rate declared by the
Company will be applicable for all Net Purchase Payments received or transfers
from the Variable Account completed within the period during which it is
effective. Initial Net Purchase Payments allocated to the Guaranteed Interest
Account will be credited with interest at the rate in effect for the date on
which the Certificate is issued (and the funds transferred into the Money Market
Subaccount) from and after the date on which the Free Look Privilege expires on
all funds transferred from the Money Market Subaccount to the Guaranteed
Interest Account. Amounts withdrawn from the Guaranteed Interest Account as a
result of a transfer, partial surrender, or any charge imposed in accordance
with the Certificate, will be deemed to be withdrawals of amounts (and any
interest credited thereon) most recently credited to the Guaranteed Interest
Account.
Prior to the expiration of the period for which a particular interest rate
was guaranteed, the Company will declare a renewal interest rate to be effective
for such succeeding period as the Company shall determine.
Descriptions of the Guaranteed Interest Account are included in this
Prospectus for the convenience of the purchaser. The Guaranteed Interest Account
and the general account of the Company are not registered under the Securities
Act of 1933 or the Investment Company Act of 1940. Accordingly, neither the
general account of the Company nor the Guaranteed Interest Account are generally
subject to the provisions of these Acts; however, disclosures regarding the
Guaranteed Interest Account and the general account of the Company may be
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses. The staff of the Securities and Exchange Commission has not
reviewed the disclosures in this Prospectus which relate to the Guaranteed
Interest Account and the general account of the Company.
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<PAGE> 14
PAYMENT AND ALLOCATION OF NET PURCHASE PAYMENTS
ISSUANCE OF THE CERTIFICATE
Individuals who are members of a qualifying group and wish to purchase a
Certificate must complete an application and personally deliver it to a licensed
agent of the Company who is also a registered representative of MONY Securities
Corp. ("MSC"), a wholly-owned subsidiary of the Company, which is the principal
underwriter for the Certificates, or a registered broker-dealer which has been
authorized by MSC to sell the Certificate. Except where certain automatic
payment plans (i.e., government allotment, payroll deduction, or automatic
checking account withdrawal plans) are used, the minimum initial Purchase
Payment for the Certificate is currently $2,000 for NonQualified Plans, $2,000
for individual retirement accounts and annuities purchased by individuals under
Section 408 of the Code (other than Simplified Employee Pensions), and $600 for
H.R. 10 plans (self employed individuals' retirement plans under Sections 401 or
403(c) of the Code), Simplified Employee Pensions under Section 408 of the Code,
and annuity purchase plans sponsored by certain tax-exempt organizations,
governmental entities, or public school systems under Section 403(b) of the Code
("Tax Sheltered Annuities") and deferred compensation plans under Section 457 of
the Code. These minimum initial Payments must be paid with the application for
the Certificate. Additional Payments may be made at any time in the minimum
amount of $100. For certain automatic payment plans, however, the minimum
additional payment is $50.
The Contracts and Certificates offered by this Prospectus are not available
for sale in connection with Qualified Plans which intend to qualify for federal
income tax advantages available under Section 403(b) of the Code.
Different rules apply for government allotment, payroll deduction, and
automatic checking account withdrawal plans. For payroll deduction and automatic
checking account withdrawal plans, Purchase Payments must be made at an
annualized rate of $600 (i.e., $600 per year, $300 semiannually, $150 for each
quarter year, or $50 per month). For government allotment plans, the minimum
Purchase Payment is $50 per month.
The Company reserves the right to revise its rules from time to time to
specify different minimum Purchase Payments.
In addition, the prior approval of the Company is required before it will
accept a Purchase Payment where, with that Payment, cumulative Purchase Payments
made under any one or more Certificates held by the Certificateholder, less the
amount of any prior partial surrenders and their Surrender Charges, exceed
$1,500,000. The prior approval of the Company is also required before it will
accept that part of a payment (or transfer) which would cause amounts credited
to the Guaranteed Interest Account to exceed $250,000 on the date of payment (or
transfer).
The Company reserves the right to reject an application for any reason
permitted by law.
Net Purchase Payments received before the Certificate Date will be held in
the Company's General Account and will be credited with interest at not less
than 3.5 percent per annum if the Certificate is issued by the Company and
accepted by the Certificateholder. No interest will be paid if the Certificate
is not issued or if it is declined by the Certificateholder. If the application
is approved and the Certificate is subsequently issued and accepted by the
Certificateholder, then on the Certificate Date, amounts allocable to the
Certificate held in the Company's General Account will be transferred to the
Money Market Subaccount of the Variable Account. These amounts will be held in
that Subaccount pending expiration of the Free Look Period. (See "Free Look
Privilege" at page 13.) For purposes of crediting interest on amounts held in
the General Account, Purchase Payments will be treated as received on the day of
actual receipt at the Company's Operations Center. If an application is not
complete when received by the Company at its Operations Center, and if it is not
made complete within 5 days, the prospective purchaser will be informed of the
reasons for the delay and the initial Purchase Payment will be returned in full
(and the application will be declined), unless the prospective purchaser
consents to the Company's retaining the Purchase Payment until the application
is made complete.
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FREE LOOK PRIVILEGE
Within the period of 10 days (or longer in certain states) following the
day the Certificate is delivered to the Certificateholder (the "Free Look
Period"), the Certificateholder may return the Certificate to the Company or to
the agent through whom it was purchased. When the Certificate is received by the
Company, it will be voided as if it had never been in force. Except for
Certificates issued in the Commonwealth of Pennsylvania, the amount to be
refunded is equal to the greater of: (i) all Purchase Payments; and (ii) the
Cash Value of the Certificate (as of the date the returned Certificate is
received at the Home Office or a local office of the Company, or by the agent
who sold the Certificate, or, if returned by mail, upon being postmarked,
properly addressed, and postage prepaid) plus any deductions from Purchase
Payments for taxes, any mortality and expense risk charges deducted in
determining the Unit value of the Variable Account, and asset charges deducted
in determining the share value of the Funds. For Certificates entered into in
the Commonwealth of Pennsylvania, the amount to be refunded is described in
clause (ii) of the immediately preceding sentence.
ALLOCATION OF NET PURCHASE PAYMENTS AND CASH VALUE
Allocation of Net Purchase Payments. The Certificateholder may allocate on
the application Net Purchase Payments to the Subaccount(s) of the Variable
Account or to the Guaranteed Interest Account. Any Net Purchase Payments
received before the end of the Free Look Period (and any interest thereon) will
initially be allocated to the Money Market Subaccount of the Variable Account on
the later of (i) the Certificate Date and (ii) the date the Payment is received
at the Company's Operations Center. Net Purchase Payments will continue to be
allocated to that Subaccount until the Free Look Period expires and, if the
allocation on the application is incomplete or incorrect, a complete and correct
allocation notification is received by the Company. (See "Free Look Privilege"
above) After the Free Look Period has expired and, if applicable, the correct
and complete allocation notification has been received, the Certificate's Cash
Value held in the Money Market Subaccount will automatically be transferred to
the Subaccount(s) of the Variable Account or to the Guaranteed Interest Account
in accordance with the Certificateholder's percentage allocation.
After the Free Look Period, Net Purchase Payments under a nonautomatic
payment plan will be allocated in accordance with the Certificateholder's most
recent instructions on record with the Company, unless the Certificateholder at
the time a Purchase Payment is made specifies the amount (not less than $10.00
per Subaccount or 10 percent of the Payment) or the percentage of the Net
Purchase Payment to be allocated among the Subaccount(s). If the specific
allocation is incorrect or incomplete, then that Net Purchase Payment will be
made in accordance with the most recent correct payment allocation on record.
For automatic payment plans, Net Purchase Payments will be allocated in
accordance with the Certificateholder's most recent instructions on record.
The Certificateholder may change the allocation formula specified in the
initial allocation notification, or as changed in any subsequent notification,
for future Net Purchase Payments at any time without charge by sending the
Company at the Operations Center written notification. Prior allocation
instructions may also be changed by telephone, subject to the rules of the
Company and its right to terminate telephone allocation. Any such change,
whether made in writing or by telephone, will be effective not later than 7 days
after notification is received. The Company has adopted rules relating to
changes of allocations by telephone, which, among other things, outlines
procedures to be followed which are designed, and which the Company believes are
reasonable, to prevent unauthorized instructions. If these procedures are
followed, the Company shall not be liable for, and the Certificateholder will
therefore bear the entire risk of, any loss as a result of the Company's
following telephone instructions in the event that such instructions prove to be
fraudulent. A copy of the Guidelines and the Company's form for electing
telephone allocation privileges is available from licensed agents of the Company
who are also registered representatives of MSC or of a broker-dealer authorized
by MSC to offer the Certificates, or by calling 1-800-487-6669. The Company's
form must be signed and received at the Company's Syracuse Operations Center
before telephone allocation instructions will be accepted.
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<PAGE> 16
The minimum percentage of each Net Purchase Payment that may be allocated
to any Subaccount of the Variable Account or to the Guaranteed Interest Account
is 10 percent; all percentages must be expressed in whole numbers and must total
100 percent. The minimum amount of each Net Purchase Payment that may be
allocated to any Subaccount of the Variable Account or to the Guaranteed
Interest Account is $10.00.
Upon receipt of a Purchase Payment, the Net Purchase Payments allocated to
Subaccounts of the Variable Account will be credited to the designated
Subaccount(s) in the form of Units. The number of Units to be credited to a
Subaccount is determined by dividing the dollar amount allocated to the
particular Subaccount by the Unit value for the particular Subaccount for the
Valuation Date on which the Purchase Payment is received.
The Unit Value for each Subaccount was established at $10 for the first
Valuation Date. The Unit Value for a Subaccount for any subsequent Valuation
Date is determined by subtracting (b) from (a) and dividing the result by (c),
where:
(a) is the per share net asset value on the Valuation Date of the Fund
Portfolio in which the Subaccount invests times the number of such shares
held in the Subaccount before the purchase or redemption of any shares on
that Date;
(b) is the mortality and expense risk charge accrued as of that
Valuation Date (the daily mortality and expense risk charge is a percentage
of the Subaccount's net asset value on the previous Valuation Date. If the
previous day was not a Valuation Date, then the daily mortality and expense
risk charge is the applicable percentage times the number of days since the
last Valuation Date times the Subaccount's net asset value on the last
Valuation Date); and
(c) is the total number of Units held in the Subaccount on the
Valuation Date before the purchase or redemption of any Units on that Date.
The Unit Value for these Subaccounts may increase, decrease, or remain
constant from Valuation Date to Valuation Date, depending upon the investment
performance of the Portfolio of the Fund in which the Subaccount is invested and
any expenses and charges deducted from the Variable Account. The
Certificateholder bears the entire investment risk. Certificateholders should
periodically review their allocations of payments and values in light of market
conditions and overall financial planning requirements.
Net Purchase Payments to be allocated to the Guaranteed Interest Account
will be credited to that account on the date of receipt at the Operations
Center, if that date is a Valuation Date, and, if not, on the next Valuation
Date. Interest will be credited daily. In the event that allocation of a Net
Purchase Payment would cause the amounts credited to the Guaranteed Interest
Account to exceed the $250,000 limit imposed by the Company, that part of a Net
Purchase Payment allocated to the Guaranteed Interest Account which equals the
difference between $250,000 and the amount credited to the Guaranteed Interest
Account on the date the allocation is to be made will be accepted (and credited
to the Guaranteed Interest Account) but the remainder of such allocation will be
returned to the Certificateholder.
Cash Value. The Certificate's Cash Value will reflect the investment
performance of the selected Subaccount(s) of the Variable Account, amounts
credited to the Guaranteed Interest Account, any Net Purchase Payments, any
partial surrenders, and all charges imposed in connection with the Certificate.
There is no guaranteed minimum Cash Value, except to the extent Net Purchase
Payments have been allocated to the Guaranteed Interest Account, and because a
Certificate's Cash Value at any future date will be dependent on a number of
variables, it cannot be predetermined.
Determination of Cash Value. The Cash Value of the Certificate is
determined on each Valuation Date. The Cash Value will be calculated first on
the Certificate Date and thereafter on each Valuation Date. On the Certificate
Date, the Certificate's Cash Value will be the Net Purchase Payments received
plus any interest credited on those Payments. During the period when Net
Purchase Payments are held in the General Account, interest will be credited to
the Certificate. (See "Issuance of the Certificate" at page 12.) After
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<PAGE> 17
allocation of the amounts in the General Account to the Variable Account or to
the Guaranteed Interest Account, on each Valuation Date, the Certificate's Cash
Value will be:
(1) The aggregate of the Cash Values attributable to the Certificate
in each of the Subaccounts on the Valuation Date, determined for each
Subaccount by multiplying the Subaccount's Unit value on that date by the
number of Subaccount Units allocated to the Certificate; plus
(2) any amount credited to the Guaranteed Interest Account (which
shall be the aggregate of all Net Purchase Payments, plus interest
credited, if any, plus or minus amounts transferred, if any, less partial
surrenders, if any, less any charges and deductions imposed in accordance
with the Certificate terms detailed in the Prospectus), plus
(3) any Net Purchase Payment received on that Valuation Date; less
(4) any partial surrender amount and its Surrender Charge made on that
Valuation Date; less
(5) any Annual Certificate Charge deductible on that Valuation Date.
In computing the Certificate's Cash Value, the number of Subaccount Units
allocated to the Certificate is determined after any transfers among Subaccounts
(and deduction of transfer charges) or between one or more of the Subaccounts
and the Guaranteed Interest Account, but before any other Certificate
transactions, such as receipt of Net Purchase Payments and partial surrenders,
on the Valuation Date. If the Certificate's Cash Value is to be calculated for a
day that is not a Valuation Date, the next following Valuation Date will be
used.
Transfers. After the Free Look Period has expired, the value attributable
to the Certificate may be transferred among the Subaccounts of the Variable
Account. There is no minimum amount that need be transferred. The Company will
effectuate transfers and determine all values in connection with transfers among
the Subaccounts on the date on which the transfer request is received at the
Operations Center, if that date is a Valuation Date and, if not, on the next
Valuation Date. Different provisions apply to transfers involving the Guaranteed
Interest Account. (See "Allocation of Net Purchase Payments and Cash Value --
Transfers Involving the Guaranteed Interest Account" at page 13.) Transfers may
be made by sending a written request to the Operations Center or by telephone,
subject to the rules of the Company and its right to terminate telephone
transfers. If a written transfer request is incomplete or incorrect, no transfer
will be made and the request will be returned to the Certificateholder.
Telephone transfer instructions will only be accepted if complete and correct.
The Company has adopted Guidelines relating to telephone transfers which, among
other things, outlines procedures to be followed which are designed, and which
the Company believes are reasonable, to prevent unauthorized transfers. If these
procedures are followed, the Company shall not be liable for, and the
Certificateholder will therefore bear the entire risk of, any loss as a result
of the Company's following telephone instructions in the event that such
instructions prove to be fraudulent. A copy of the Guidelines and the Company's
form for electing telephone transfers is available from licensed agents of the
Company who are also registered representatives of MSC or a broker-dealer
authorized by MSC to offer the Certificates, or by calling 1-800-487-6669. The
Company's form must be signed and received at the Company's Syracuse Operations
Center before telephone transfers will be accepted.
A transfer charge will not be imposed on the first 4 transfers made during
any Certificate Year. (See "Charges Against Cash Value -- Transfer Charge" at
page 21.) For any additional transfers during a Certificate Year, a transfer
charge is not currently imposed, but the Company has reserved the right to
impose a charge for each transfer in excess of 4, which will not exceed $25 per
transfer. If imposed, the transfer charge will be deducted from the
Subaccount(s) or the Guaranteed Interest Account from which the amounts are
transferred. This charge is in addition to the amount transferred. If, however,
there is insufficient Cash Value in a Subaccount or in the Guaranteed Interest
Account to provide for its proportionate share of the charge, then the entire
charge will be allocated in the same manner as the Annual Certificate Charge.
(See "Charges Against Cash Value -- Annual Certificate Charge" at page 20.) All
transfers included in a single request are treated as one transfer transaction.
A transfer resulting from the first reallocation of Cash Value at the expiration
of the Free Look Period will not be subject to a transfer charge, nor will it be
counted against the
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4 transfers allowed in each Certificate Year without charge Under present law,
transfers are not taxable transactions.
Transfers Involving the Guaranteed Interest Account. Transfers to or from
the Guaranteed Interest Account are subject to the following limitations. The
prior approval of the Company is required before it will accept that part of a
transfer which would cause amounts credited to the Guaranteed Interest Account
to exceed $250,000. The portion of any transfer which cannot be made because of
such limitation will be allocated back to the Subaccounts designated in that
transfer as the Subaccounts from which amounts were to be transferred in the
proportion that the amount requested by the Certificateholder to be transferred
from each Subaccount bears to the total amount transferred. Transfers of amounts
credited to the Guaranteed Interest Account to one or more Subaccounts may be
made once during each Certificate Year, and the amount which may be transferred
is limited to the greater of (i) 25% of the amounts credited to the Guaranteed
Interest Account of the Certificateholder on the date the transfer would take
effect or (ii) $5,000. Transfer requests involving the Guaranteed Interest
Account will be effective only on an anniversary of the Certificate Date or on a
Valuation Date not more than 30 days thereafter. Requests received not more than
10 days before the anniversary of the Certificate Date will be executed on the
anniversary of the Certificate Date. Requests received within 30 days after the
anniversary of the Certificate date will be executed on the Valuation Date which
coincides with or next follows the date the request is received. Requests
received more than thirty days before or after the anniversary of the
Certificate Date will be returned to the Certificateholder.
TERMINATION OF THE CERTIFICATE
The Certificate will remain in force until the earlier of (1) the date the
Certificate is surrendered in full, (2) the Annuity Commencement Date, (3) the
Certificate Anniversary on which, after deduction for any Annual Certificate
Charge then due, no Cash Value remains in the Certificate, and (4) the date the
Death Benefit is payable under the Certificate.
SURRENDERS
At any time on or before the Annuity Commencement Date and during the
lifetime of the Annuitant, the Certificateholder may elect to make a surrender
of all or part of the Certificate's value. Any such election shall specify the
amount of the surrender and will be effective on the date a proper request is
received by the Company at its Operations Center.
The amount of the surrender may be equal to the Certificate's Surrender
Value, which is its Cash Value less (1) any applicable Surrender Charge and (2)
(for a full surrender) any Annual Certificate Charge. The Surrender may also be
for a lesser amount (a "partial surrender") of at least $100. If a partial
surrender is requested, and that surrender would leave a Cash Value of less than
$1,000, then that partial surrender will be treated and processed as a full
surrender, and the entire Surrender Value will be paid to the Certificateholder.
For a partial surrender, any Surrender Charge will be in addition to the amount
requested by the Certificateholder.
A surrender will result in the cancellation of Units and the withdrawal of
amounts credited to the Guaranteed Interest Account, in accordance with the
directions of the Certificateholder, with an aggregate value equal to the dollar
amount of the surrender plus, if applicable, the Annual Certificate Charge and
any Surrender Charge. For a partial surrender, the Company will cancel Units of
the particular Subaccounts and withdraw amounts from the Guaranteed Interest
Account in accordance with the allocation specified by the Certificateholder in
written notice to the Company at its Operations Center at the time the request
for the partial surrender is received; provided, however, that allocations by a
Certificateholder against the Guaranteed Interest Account will be limited (the
"GIA Allocation Limitation") to that amount which bears the same proportion to
the total amount being surrendered as the amount credited to the Guaranteed
Interest Account of the Certificateholder bears to the total of (i) all amounts
credited to the Guaranteed Interest Account of the Certificateholder and (ii)
the aggregate value of Units held in all Subaccounts of the Certificateholder,
unless there is no Cash Value in any Subaccount at the time the transfer request
is received. Allocations may be by either amount or percentage. Allocations by
amount require that at least $25 be allocated against the
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<PAGE> 19
Guaranteed Interest Account or any Subaccount designated by the
Certificateholder. If there is insufficient Cash Value in the
Certificateholder's Guaranteed Interest Account or a Subaccount to provide for
the requested allocation against it, or if the GIA Allocation Limitation is
exceeded, or the request is incorrect, the request will not be accepted. If an
allocation is not requested, then the entire amount of the partial surrender
will be allocated against the Guaranteed Interest Account and each Subaccount in
the same proportion that the Certificate's Cash Value held in the Guaranteed
Interest Account and each Subaccount bears to the Certificate's Cash Value.
Any Surrender Charge will be allocated against the Guaranteed Interest
Account and each Subaccount in the same proportion that the amount of a partial
surrender allocated against the Guaranteed Interest Account and each Subaccount
bears to the total amount of the partial surrender. In the event that an
allocation of the partial surrender is not made, or there is insufficient cash
value in the Guaranteed Interest Account or any Subaccount to provide for its
proportionate share of the Surrender Charge, then the entire Surrender Charge
will be allocated against the Guaranteed Interest Account and each Subaccount in
the same proportion that the Cash Value held in the Guaranteed Interest Account
and each Subaccount (after allocation of the partial surrender amount) bears to
the Certificate's Cash Value.
Any cash surrender amount will be paid within seven (7) days from the date
the election becomes effective, except as the Company may be permitted to
postpone such payment in accordance with the Investment Company Act of 1940.
Postponement is currently permissible only (1) for any period (a) during which
the New York Stock Exchange is closed other than customary weekend and holiday
closings, or (b) during which trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission, (2) for any
period during which an emergency exists as a result of which (a) disposal of
securities held by the Fund is not reasonably practicable, or (b) it is not
reasonably practicable to determine the value of the net assets of the Fund, or
(3) for such other periods as the Securities and Exchange Commission may by
order permit for the protection of Certificateholders. Any cash surrender
involving payment from amounts credited to the Guaranteed Interest Account may,
to the extent amounts are paid from the Guaranteed Interest Account, be
postponed, at the option of the Company, for up to 6 months from the date the
request for a surrender or proof of death is received by the Company. The
Certificateholder may elect to have the amount of a surrender settled under one
of the Settlement Options of the Certificate. (See "Annuity Provisions" at page
22). Since the Certificates offered by this Prospectus may be issued in
connection with retirement plans that meet the requirements of certain sections
of the Internal Revenue Code, reference should be made to the terms of the
particular retirement plan for any limitations or restrictions on cash
surrenders.
The tax consequences of a cash surrender should be carefully considered
(see "FEDERAL TAX STATUS" at page 28).
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DEATH BENEFIT
DEATH BENEFIT PROVIDED BY THE CERTIFICATE
In the event of the death of the Annuitant (and the Contingent Annuitant,
if one has been named) (see "Contingent Annuitant" at page 25) prior to the
Annuity Commencement Date, the Company will pay a Death Benefit to the
Beneficiary. The amount of the Death Benefit will be the greater of (a) the Cash
Value on the date of the Annuitant's death, and (b) the Purchase Payments paid,
less any partial surrenders and their Surrender Charges. If the death of the
Annuitant occurs on or after the Annuity Commencement Date, no Death Benefit
will be payable except as may be provided under the Settlement Option elected.
ELECTION AND EFFECTIVE DATE OF ELECTION
During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Certificateholder may elect to have the Death Benefit of the
Certificate applied under one or more Settlement Options to effect an annuity
for the Beneficiary as payee after the death of the Annuitant. (See "Settlement
Options" at page 22.) If no election of a Settlement Option for the Death
Benefit is in effect on the date when proceeds become payable, the Beneficiary
may elect (a) to receive the Death Benefit in the form of a cash payment; or (b)
to have the Death Benefit applied under one of the Settlement Options. (See
"Settlement Options" at page 22.) If an election by the payee is not received by
the Company within thirty (30) days following the date proceeds become payable,
the payee will be deemed to have elected a cash payment. Either election
described above may be made by filing with the Company a written election in
such form as the Company may require. Any proper election of a method of
settlement of the Death Benefit by the Certificateholder will become effective
on the date it is signed, but any election will be subject to any payment made
or action taken by the Company before receipt of the notice at the Company's
Operations Center.
Reference should be made to the terms of any applicable retirement plan and
any applicable legislation for any limitations or restrictions on the election
of a method of settlement and payment of the Death Benefit.
PAYMENT OF DEATH BENEFIT
If the Death Benefit is to be paid in cash to the Beneficiary, payment will
be made within seven (7) days of the date the election becomes effective or is
deemed to become effective and due proof of death is received, except as the
Company may be permitted to postpone such payment in accordance with the
Investment Company Act of 1940. If the Death Benefit is to be paid in one sum to
the Successor Beneficiary, or to the estate of the deceased Annuitant, payment
will be made within seven (7) days of the date due proof of the death of the
Annuitant and the Beneficiary is received by the Company. Interest at a rate
determined by the Company will be paid on any Death Benefit paid in one sum,
from the date of the Annuitant's (or Contingent Annuitant's, if applicable)
death to the date of payment. The interest rate will not be less than 2 3/4
percent annually.
CHARGES AND DEDUCTIONS
No separate charges are assessed the Group Contractholder. Charges may be
assessed under the Certificates as follows:
DEDUCTIONS FROM PAYMENTS
A deduction may be made from each Purchase Payment for premium or similar
taxes prior to allocation of any Net Purchase Payment among the Subaccounts of
the Variable Account. Currently, the Company does not make such a deduction, but
may do so in the future. The Company will provide the Certificateholder with
written notice of its intention to make deductions for premium or other taxes.
Any such deduction will apply only to Purchase Payments made after notice has
been sent by the Company. The amount of the deduction will vary from locality to
locality, but will generally range from 0 percent to 3.5 percent of Purchase
Payments. Residents of the Commonwealth of Pennsylvania should be aware that a
tax on Purchase Payments has been
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<PAGE> 21
adopted; however, the Company currently is assuming responsibility for payment
of this tax. In the event that the Company will begin to make deductions for
such tax from future Purchase Payments, it will give notice to each affected
Contractholder.
CHARGES AGAINST CASH VALUE
Surrender Charge. The Certificate imposes a contingent deferred sales
charge, called a "Surrender Charge," on full and partial surrenders and on the
Annuity Commencement Date. The Surrender Charge, which will never exceed 7
percent of total Purchase Payments, is intended to reimburse the Company for
expenses incurred in distributing the Certificate. To the extent such charge is
insufficient to cover all distribution costs, the Company will make up the
difference using funds from its General Account, which may contain funds
deducted from the Variable Account to cover mortality and expense risks borne by
the Company. (See "Mortality and Expense Risk Charge" at page 21.)
If all or a portion of the Certificate's Surrender Value (see "Surrenders"
at page 16) is surrendered or if the Surrender Value is received at maturity on
the Annuity Commencement Date, a Surrender Charge will be calculated at the time
of surrender and will be deducted from the Cash Value. A Surrender Charge will
not be imposed against Cash Value surrendered in a Certificate Year up to an
amount equal to Net Purchase Payments made by the Certificateholder prior to the
Certificate Year of the surrender and the preceding 7 Certificate Years. In
addition, the Surrender Charge, which otherwise would have been deducted, will
not be deducted to the extent necessary to permit the Certificateholder to
obtain an amount equal to the Guaranteed Free Surrender Amount ("Guaranteed Free
Surrender Amount"). (See "Guaranteed Free Surrender Amount" at page 20.) No
Surrender Charge will be imposed if the surrender is a full surrender and the
following conditions are met: (i) the Annuitant is age 59 1/2 or older on the
date of the full surrender; (ii) the Certificate has been in force for at least
10 Certificate Years; and (iii) one or more Purchase Payments were remitted
during each of at least 7 of the 10 Certificate Years immediately preceding the
date of surrender. In addition, no Surrender Charge will be imposed if the
Certificate is surrendered after the third Certificate Year and the surrender
proceeds are paid under either Settlement Option 3 or Settlement Option 3A (See
"Settlement Options" at page 22). In no event will the aggregate Surrender
Charge exceed 7 percent of the total Purchase Payments made in the Year of the
surrender and during the 7 preceding Certificate Years. The Certificate Date and
Certificate Years shall remain unchanged as a result of the Merger.
For a partial surrender, the Surrender Charge will be deducted from any
remaining Certificate Value, if sufficient; otherwise, it will be deducted from
the amount surrendered. Any Surrender Charge will be allocated against the
Guaranteed Interest Account and each Subaccount of the Variable Account in the
same proportion that the amount of the partial surrender allocated against the
Guaranteed Interest Account and each Subaccount bears to the total amount of the
partial surrender. But, if there is insufficient cash value in the Guaranteed
Interest Account or any Subaccount to provide for its proportionate share of the
charge, then the entire charge will be allocated against the Guaranteed Interest
Account and each Subaccount in the same proportion that the Cash Value held in
the Guaranteed Interest Account and each Subaccount bears to the cash value in
the Guaranteed Interest Account and all Subaccounts.
No Surrender Charge will be deducted from Death Benefits. (See "DEATH
BENEFIT" at page 18.)
For purposes of determining the Surrender Charge, surrenders will be
attributed to payments on a first-in, first-out basis. Certificateholders should
note that this is different from the allocation method that is used for
determining tax obligations. (See "FEDERAL TAX STATUS" at page 28.)
Amount of Surrender Charge. The amount of Surrender Charge is determined
as follows:
Step 1. Allocate Purchase Payments on a first-in, first-out basis to the
amount surrendered (any Purchase Payments previously allocated to
calculate a surrender charge are unavailable for allocation to
calculate any future surrender charges); and
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<PAGE> 22
Step 2. Multiply each such allocated Purchase Payment by the appropriate
surrender charge percentage determined on the basis of the table
below:
<TABLE>
<CAPTION>
# OF CONTRACT SURRENDER
ANNIVERSARIES SINCE CHARGE
PURCHASE PAYMENT RECEIVED PERCENTAGE
- ------------------------- ----------
<S> <C>
0 7%
1 7
2 6
3 6
4 5
5 4
6 3
7 2
8 (or more) 0
</TABLE>
Step 3. Add the products of each multiplication in Step 2 above.
Guaranteed Free Surrender Amount. The Surrender Charge may be reduced by
using the Guaranteed Free Surrender Amount provided for in the Certificate. For
Non-Qualified Certificates (and Certificates issued for IRA and SEP-IRA) in
certain states which have granted approval, the Guaranteed Free Surrender Amount
provides that an amount up to 10% of the Certificate's Cash Value (on the date
the first partial surrender request is received during a Certificate Year) may
be surrendered without application of a surrender charge. For Qualified
Certificates (other than Certificates issued for IRA and SEP-IRA) in certain
states which have granted approval, the Guaranteed Free Surrender Amount
provides that the greater of $10,000 (but not more than the Certificate's Cash
Value) or 10% of the Certificate's Cash Value (on the date the first partial
surrender request is received during a Certificate Year) may be surrendered
without application of surrender charge. (See a registered representative of MSC
or of a broker-dealer authorized by MSC to offer the Certificates who is also a
licensed agent of the Company for which states have granted approval.) For
holders of Qualified Certificates issued before May 1, 1994 and for holders of
Certificates in those states where approval has not been granted, the Guaranteed
Free Surrender Amount provides that up to 10% of the Certificate's Cash Value
(on the date the partial surrender request is received) may be surrendered
without application of a surrender charge, provided that no prior partial
surrender was made during that Certificate Year. Since Purchase Payments are
allocated on a first-in, first-out basis, the free surrender amount will not
reduce surrender charges to the extent that any Cash Value in that amount is
equal to Purchase Payments received 8 or more Certificate Anniversaries ago. The
Company reserves the right to limit the number of partial surrender requests to
not more than 12 per Certificate Year.
For illustrations of how the Surrender Charge is calculated, see Appendix A
on page A-1 of this Prospectus.
Annual Certificate Charge. The Company has primary responsibility for the
administration of the Certificate and the Variable Account. Ordinary
administrative expenses expected to be incurred include premium collection,
recordkeeping, processing death benefit claims and surrenders, preparing and
mailing reports, and overhead costs. In addition, the Company expects to incur
certain additional administrative expenses in connection with the issuance of
the Certificate, including the review of applications and the establishment of
Certificate records.
The Company intends to administer the Certificate itself.
An Annual Certificate Charge will be deducted from the Certificate's Cash
Value to help cover administrative expenses. Currently, the amount of the charge
is $30, but it may be increased to as much as $50 on 30 days' written notice to
the Certificateholder. The charge will be deducted on (a) each Certificate
Anniversary prior to the Annuity Commencement Date, (b) the Annuity Commencement
Date, and (c) the date of full surrender (if that date is not a Certificate
Anniversary). The amount of the charge will be allocated against the Guaranteed
Interest Account and each Subaccount of the Variable Account in the same
proportion that the Cash Value in the Guaranteed Interest Account and each
Subaccount bears to the Cash
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<PAGE> 23
Value of the Certificate. The Company does not expect to make any profit from
the administrative cost deductions.
Transfer Charge. The Company has reserved the right to impose a transfer
charge, which will not exceed $25, for each transfer instructed by the
Certificateholder among the Subaccounts or to or from the Guaranteed Interest
Account and one or more of the Subaccounts in excess of 4 transfers in a
Certificate Year, to compensate the Company for the costs of effectuating the
transfer. Currently, the Company does not do so. The Company does not expect to
make a profit from the transfer charge. This charge will be deducted from the
Certificate's Cash Value held in the Subaccount(s) from which the transfer is
made, or from the Guaranteed Interest Account if a transfer is made therefrom,
and will be allocated against these Subaccount(s) or the Guaranteed Interest
Account in the same proportion as the amounts transferred. If there is
insufficient value in a Subaccount or the Guaranteed Interest Account to provide
for that Subaccount's or the Guaranteed Interest Account's proportionate share
of the charge, then the entire charge will be allocated in the same manner as
the Annual Certificate Charge. (See "Charges Against Cash Value -- Annual
Certificate Charge" at page 20.)
MORTALITY AND EXPENSE RISK CHARGE
A daily charge will be deducted from the value of the net assets of the
Variable Account to compensate the Company for mortality and expense risks
assumed in connection with the Certificate. This daily charge from the Variable
Account will be at the rate of 0.003425 percent (equivalent to an annual rate of
1.25 percent) of the average daily net assets of the Variable Account. Of the
1.25 percent charge, .80 percent is for assuming mortality risks, and .45
percent is for assuming expense risks. The daily charge will be deducted from
the net asset value of the Variable Account, and therefore the Subaccounts, on
each Valuation Date. These charges will not be deducted from the Guaranteed
Interest Account. Where the previous day (or days) was not a Valuation Date, the
deduction on the Valuation Date will be 0.003425 percent multiplied by the
number of days since the last Valuation Date.
The Company believes that this level of charge is within the range of
industry practice for comparable flexible payment variable annuity contracts.
The mortality risk assumed by the Company is that Annuitants may live for a
longer time than projected, and that an aggregate amount of annuity benefits
greater than that projected will accordingly be payable. In making this
projection, the Company has used the mortality rates from the 1983 Table "a"
(discrete functions without projections for future mortality), with 3 percent
interest. The expense risk assumed is that expenses incurred in issuing and
administering the Certificates will exceed the administrative charges provided
in the Certificates.
The Company does not expect to make a profit from the mortality and expense
risk charge. Should, however, the amount of the charge exceed the amount needed,
the excess will be retained by the Company in its general account. Should the
amount of the charge be inadequate, the Company will pay the difference out of
its general account.
TAXES
Currently, no charge will be made against the Variable Account for federal
income taxes. The Company may, however, make such a charge in the future if
income or gains within the Variable Account will incur any federal income tax
liability. Charges for other taxes, if any, attributable to the Variable Account
may also be made. (See "FEDERAL TAX STATUS" at page 28.)
INVESTMENT ADVISORY FEE
Because the Variable Account purchases shares of the Fund, the net assets
of the Variable Account will reflect the investment advisory fee and other
expenses incurred by the Fund. OpCap Advisors, a subsidiary of Oppenheimer
Capital, as investment adviser to the Fund, will receive .80 percent of the
first $400 million of the aggregate average daily net assets, .75 percent of the
next $400 million of the aggregate average daily net
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<PAGE> 24
assets, and .70 percent thereafter of the aggregate average daily net assets of
the Equity, Small Cap, and Managed Portfolios; .50 percent of the aggregate
average daily net assets of the Bond Portfolio; and .40 percent of the aggregate
average daily net assets of the Money Market Portfolio. The investment adviser
will reimburse the Fund for the amount, if any, by which the aggregate ordinary
operating expenses of any of these Portfolios incurred by the Fund in any
calendar year in which shares are being offered exceed the most restrictive
expense limitations then in effect under any state securities law or regulation.
Currently, the most restrictive expense limitation in effect limits expenses of
each Fund Portfolio to an amount equal to 2.5 percent of the first $30 million
of average daily net assets of the Portfolio, 2.0 percent of the next $70
million of average daily net assets of the Portfolio, and 1.5 percent of the
average daily net assets of the Portfolio in excess of $100 million.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
Annuity payments under a Certificate will begin on the Annuity Commencement
Date that is selected by the Certificateholder at the time the Certificate is
applied for. The Annuity Commencement Date chosen may be no earlier than the
Certificate Anniversary nearest the Annuitant's 10th birthday, and no later than
the Certificate Anniversary nearest the Annuitant's 85th birthday. The minimum
number of years from the Certificate Date to the Annuity Commencement Date is
10. The Annuity Commencement Date may be advanced to a date not earlier than the
10th Certificate Anniversary or deferred from time to time by the
Certificateholder by written notice to the Company, provided that (1) notice of
such deferral or advance is received by the Company prior to the then current
Annuity Commencement Date, and (2) the new Annuity Commencement Date is a date
which is not later than the Certificate Anniversary nearest the Annuitant's 85th
birthday. A particular retirement plan may contain other restrictions.
On the Annuity Commencement Date, the Certificate's Surrender Value will be
applied to provide an annuity or any other option previously chosen by the
Certificateholder and permitted by the Company. A supplementary contract will be
issued, and that contract will set forth the terms of the settlement. No
payments may be requested under the Certificate's surrender provisions after the
Annuity Commencement Date, and no surrender will be permitted except as may be
available under the Settlement Option elected.
For Certificates issued in connection with retirement plans, reference
should be made to the terms of the particular retirement plan for any
limitations or restrictions on the Annuity Commencement Date.
ELECTION AND CHANGE OF SETTLEMENT OPTION
During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Certificateholder may elect one or more of the Settlement Options
described below, or such other settlement option (including a lump-sum payment)
as may be agreed to by the Company. The Certificateholder may also change any
election, but written notice of an election or change of election must be
received by the Company at its Operations Center prior to the Annuity
Commencement Date. If no election is in effect on the Annuity Commencement Date,
Settlement Option 3, for a Life Annuity with 10 years certain, based on the
Annuitant's life, will be deemed to have been elected.
Settlement Options may also be elected by the Certificateholder or the
Beneficiary as provided in the Death Benefit and Surrender sections of this
Prospectus. (See "DEATH BENEFIT" at page 18 and "SURRENDERS" at page 16.)
Where applicable, reference should be made to the terms of a particular
retirement plan and any applicable legislation for any limitations or
restrictions on the options that may be elected.
SETTLEMENT OPTIONS
Proceeds settled under the Settlement Options listed below or otherwise
currently available will not participate in the investment experience of the
Variable Account.
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<PAGE> 25
Settlement Option 1 -- Interest Income: Interest on the proceeds at a rate
(not less than 2 2/3 percent per year) set by the Company each year.
Settlement Option 2 -- Income for Specified Period: Fixed monthly payments
for a specified period of time, as elected. The payments may, at the Company's
option, be increased by additional interest each year.
Settlement Option 3 -- Single Life Income: Payments for the life of the
payee and for a period certain. The period certain may be (a) 0 years, 10 years,
or 20 years, or (b) the period required for the total income payments to equal
the proceeds (refund period certain). The amount of the income will be
determined by the Company on the date the proceeds become payable.
Settlement Option 3A -- Joint Life Income: Payments during the joint
lifetime of the payee and one other person, and during the lifetime of the
survivor. The survivor's monthly income may be equal to either (a) the income
payable during the joint lifetime or (b) two-thirds of that income. If a person
for whom this option is chosen dies before the first monthly payment is made,
the survivor will receive proceeds instead under Settlement Option 3, with 10
years certain.
Settlement Option 4 -- Income of Specified Amount: Income, of an amount
chosen, for as long as the proceeds and interest last. The amount chosen to be
received as income in each year may not be less than 10 percent of the proceeds
settled. Interest will be credited annually on the amount remaining unpaid at a
rate determined annually by the Company. This rate will not be less than 2 3/4
percent per year.
The Certificate contains annuity payment rates for Settlement Options 3 and
3A described in this Prospectus. The rates show, for each $1,000 applied, the
dollar amount of the monthly fixed annuity payment, when this payment is based
on minimum guaranteed interest as described above.
The annuity payment rates may vary according to the Settlement Option
elected and the age of the payee. The mortality table used in determining the
annuity payment rates for Options 3 and 3A is the 1983 Table "a" (discrete
functions, without projections for future mortality), with 3 1/2 percent
interest.
Under Settlement Option 3, if income based on the period certain elected is
the same as the income provided by another available period or periods certain,
the Company will deem the election to have been made of the longest period
certain.
In Qualified Plans, settlement options available to Certificateholders may
be restricted by the terms of the plans.
FREQUENCY OF ANNUITY PAYMENTS
Annuity payments will be paid as monthly installments unless the payee
requests quarterly, semiannual, or annual installments at the time the option is
chosen. However, if the net amount available to apply under any Settlement
Option under any circumstances is less than $1,000, the Company shall have the
right to pay such amount in one lump sum. In addition, if the payments provided
for would be less than $25, the Company shall have the right to change the
frequency of payments to such intervals as will result in payments of at least
$25.
ADDITIONAL PROVISIONS
The Company may require proof of age of the Annuitant before making any
life annuity payment provided for by the Certificate. If the age of the
Annuitant has been misstated, the amount payable will be the amount that the
amount settled would have provided at the correct age. Once life income payments
have begun, any underpayments will be made up in one sum with the next annuity
payment; overpayments will be deducted from the future annuity payments until
the total is repaid.
The Certificate must be returned to the Company upon any settlement. Prior
to any settlement of a death claim, due proof of the Annuitant's death must be
submitted to the Company.
Where any benefits under the Certificate are contingent upon the
recipient's being alive on a given date, the Company may require proof
satisfactory to it that such condition has been met.
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<PAGE> 26
The Certificates described in this Prospectus contain annuity payment rates
that distinguish between men and women. On July 6, 1983, the Supreme Court held
in Arizona Governing Committee v. Norris that optional annuity benefits provided
under an employer's deferred compensation plan could not, under Title VII of the
Civil Rights Act of 1964, vary between men and women on the basis of sex.
Because of this decision, the annuity payment rates applicable to Certificates
purchased under an employment-related insurance or benefit program may in some
cases not vary on the basis of the Annuitant's sex. Unisex rates to be provided
by the Company will apply for Qualified Plans and those plans where an employer
believes that the Norris decision applies.
Employers and employee organizations should consider, in consultation with
legal counsel, the impact of Norris, and Title VII generally, and any comparable
state laws that may be applicable, on any employment-related plan for which a
Certificate may be purchased.
OTHER PROVISIONS
OWNERSHIP
The Certificateholder has all rights and may receive all benefits under the
Certificate. During the lifetime of the Annuitant (and the Contingent Annuitant
if one has been named), the Certificateholder shall be the person so designated
in the application, unless changed, or unless a Successor Certificateholder
becomes the Certificateholder. On and after the death of the Annuitant (and the
Contingent Annuitant, if applicable), the Beneficiary shall be the
Certificateholder.
The Certificateholder may name a Successor Certificateholder or a new
Certificateholder at any time. If the Certificateholder dies, the Successor
Certificateholder, if living, becomes the Certificateholder. Any request for
change must be: (1) made in writing; and (2) received at the Company. The change
will become effective as of the date the written request is signed. A new choice
of Certificateholder or Successor Certificateholder will not apply to any
payment made or action taken by the Company prior to the time a request for
change is received. Certificateholders should consult a competent tax advisor
prior to changing Certificateholders.
PROVISION REQUIRED BY SECTION 72(s) OF THE CODE
If the Certificateholder of a Non-Qualified Plan dies before the Annuity
Commencement Date and while the Annuitant is living, and if that
Certificateholder's spouse is not the Successor Certificateholder as of the date
of that Certificateholder's death (as evidenced by proof satisfactory to the
Company), then the Certificate will be surrendered as of the date of that death.
If the Successor Certificateholder is the Beneficiary, the surrender proceeds
may, at the option of the Successor Certificateholder, be paid over the life of
the Successor Certificateholder. Such payments must begin no later than one year
after such date of death. If the Successor Certificateholder is a surviving
spouse, then the surviving spouse will be treated as the new Certificateholder
of the Certificate. Under such circumstances, it shall not be necessary to
surrender the Certificate. If the spouse is not the Successor Certificateholder
and there is no designated beneficiary, the proceeds must be distributed within
5 years after the date of death. However, under the terms of the Certificate, if
the spouse is not the Successor Certificateholder, the Certificate will be
surrendered as of the date of death and the proceeds will be paid to the
Beneficiary. This provision shall not extend the term of the Certificate beyond
the date when death proceeds become payable.
Further, if the Certificateholder dies on or after the Annuity Commencement
Date, then any remaining portion of the proceeds will be distributed at least as
rapidly as under the method of distribution being used as of the date of the
Certificateholder's death.
PROVISION REQUIRED BY SECTION 401(a)(9) OF THE CODE
The entire interest of a Qualified Plan Participant under the contract will
be distributed to the Certificateholder or his/her designated Beneficiary either
by or beginning not later than April 1 of the calendar
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<PAGE> 27
year following the calendar year in which such Participant attains age 70 1/2.
The period over which such distribution will be made is the life of such
Participant or the lives of such Participant and Designated Beneficiary.
Where distributions have begun in accordance with the previous paragraph
and the Participant dies before Certificateholder's entire interest has been
distributed to him/her, the remaining portion of such interest will be
distributed at least as rapidly as under the method of distribution being used
as of the date of the Participant's death. If the Participant dies before the
commencement of such distributions and there is no Designated Beneficiary, the
Certificate will be surrendered as of the date of death. The surrender proceeds
must be distributed within 5 years after the date of death. But if there is a
Designated Beneficiary, the surrender proceeds may, at the option of the
Designated Beneficiary, be paid over the life of the Designated Beneficiary. In
such case, distributions will begin not later than one year after the
Participant's death. If the Designated Beneficiary is the surviving spouse of
the Participant, the date on which the distributions will begin shall not be
earlier than the date on which the Participant would have attained age 70 1/2.
If the surviving spouse dies before distributions to him/her begin, the
provisions of this paragraph shall be applied as if the surviving spouse were
the Participant. If the Plan is an IRA under Section 408 of the Code, the
surviving spouse may elect to forgo distribution and treat the IRA as his/her
own Plan.
Qualified Plan Certificates include those qualifying for special treatment
under Section 401, 403, and 408 of the Code.
It is the Certificateholder's responsibility to assure that distribution
rules imposed by the Code will be met.
CONTINGENT ANNUITANT
Except where the Certificate is issued in connection with a Qualified Plan,
a Contingent Annuitant may be designated by the Certificateholder. Such
designation may be made once before annuitization, either (1) in the application
for the Certificate, or (2) after the Certificate is issued, by written notice
to the Company at its Operations Center. The Contingent Annuitant may be deleted
by written notice to the Company at its Operations Center. A designation or
deletion of a Contingent Annuitant will take effect as of the date the written
election was signed. The Company, however, must first accept and record the
change at its Operations Center. The change will be subject to any payment made
by the Company or action taken by the Company before receipt of the notice at
the Company's Operations Center. The Contingent Annuitant will be deleted from
the Certificate automatically by the Company as of the Certificate Anniversary
nearest the Contingent Annuitant's 85th birthday.
On the death of the Annuitant, the Contingent Annuitant will become the
Annuitant, under the following conditions:
(1) the death of the Annuitant must have occurred before the Annuity
Commencement Date;
(2) the Contingent Annuitant is living on the date of the Annuitant's
death;
(3) if the Annuitant was the Certificateholder on the date of death,
the Successor Certificateholder must have been the Annuitant's spouse; and
(4) if the Annuity Commencement Date is later than the Certificate
Anniversary nearest the Contingent Annuitant's 85th birthday, the Annuity
Commencement Date will be automatically advanced to that Certificate
Anniversary.
Effect of Contingent Annuitant's Becoming the Annuitant. If the Contingent
Annuitant becomes the Annuitant at the death of the Annuitant, in accordance
with the conditions specified above, the Death Benefit proceeds of the
Certificate will be paid to the Beneficiary only on the death of the Contingent
Annuitant. If the Contingent Annuitant was the Beneficiary on the Annuitant's
death, the Beneficiary will be changed automatically to the person who was the
Successor Beneficiary on the date of death. If there was no Successor
Beneficiary, then the Contingent Annuitant's executors or administrators, unless
the Certificateholder directed
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<PAGE> 28
otherwise, will become the Beneficiary. All other rights and benefits under the
Certificate will continue in effect during the lifetime of the Contingent
Annuitant as if the Contingent Annuitant were the Annuitant.
ASSIGNMENT
The Company will not be bound by any assignment until the assignment (or a
copy) is received by the Company at its Home Office. The Company is not
responsible for assessing the validity or effect of any assignment. The Company
shall not be liable as to any payment or other settlement made by the Company
before receipt of the assignment.
If the Certificate is issued pursuant to certain retirement plans, then it
may not be assigned, pledged or otherwise transferred except under such
conditions as may be allowed under applicable law.
Because an assignment may be a taxable event, a Certificateholder should
consult a competent tax advisor before assigning the Certificate.
CHANGE OF BENEFICIARY
So long as the Certificate is in force, the Beneficiary or Successor
Beneficiary may be changed by written request to the Company at its Operations
Center in a form acceptable to the Company. The Certificate need not be returned
unless requested by the Company. The change will take effect as of the date the
request is signed, whether or not the Annuitant is living when the request is
received by the Company. The Company will not, however, be liable for any
payment made or action taken before receipt and acknowledgement of the request
at its Operations Center.
SUBSTITUTION OF SECURITIES
If the shares of any Portfolio of the Fund should no longer be available
for investment by the Variable Account or, if in the judgment of the Company's
Board of Trustees, further investment in shares of one or more of the Portfolios
of the Fund should become inappropriate in view of the purposes of the
Certificate, the Company may substitute shares of another mutual fund for shares
of the Fund already purchased or to be purchased in the future by Purchase
Payments under the Certificate. A substitution of securities in any Subaccount
will take place only with prior approval of the Securities and Exchange
Commission and under such requirements as it may impose.
MODIFICATION OF THE CONTRACTS AND CERTIFICATES
Upon notice to the Contractholder and the Certificateholder, the Contract
and the Certificate may be modified by the Company, but only if such
modification (1) is necessary to make the Contract or the Certificate or the
Variable Account comply with any law or regulation issued by a governmental
agency to which the Company is subject or (2) is necessary to assure continued
qualification of the Contract and the Certificate under the Internal Revenue
Code or other federal or state laws relating to retirement annuities or annuity
contracts or (3) is necessary to reflect a change in the operation of the
Variable Account or the Subaccounts or the Guaranteed Interest Account or (4)
provides additional Settlement Options or fixed accumulation options. In the
event of any modification, the Company may make appropriate endorsement in the
Contract and the Certificate to reflect such modification.
CHANGE IN OPERATION OF VARIABLE ACCOUNTS
At the Company's election and subject to any necessary vote by persons
having the right to give instructions with respect to the voting of shares of
the Fund held by the Subaccounts, the Variable Account may be operated as a
management company under the Investment Company Act of 1940 or it may be
deregistered under the Investment Company Act of 1940 in the event registration
is no longer required. Deregistration of the Variable Account requires an order
by the Securities and Exchange Commission. In the event of any change in the
operation of the Variable Account pursuant to this provision, the Company may
26
<PAGE> 29
make appropriate endorsement to the Certificate to reflect the change and take
such other action as may be necessary and appropriate to effect the change.
VOTING RIGHTS
All of the assets held in the Subaccounts of the Variable Account will be
invested in shares of the corresponding Portfolios of the Fund. The Company is
the legal holder of those shares and as such has the right to vote to elect the
Board of Trustees of the Fund, to vote upon certain matters that are required by
the 1940 Act to be approved or ratified by the shareholders of a mutual fund,
and to vote upon any other matter that may be voted upon at a shareholder's
meeting. To the extent required by law, the Company will vote the shares of the
Fund held in the Variable Account (whether or not attributable to
Certificateholders) at shareholder meetings of the Fund in accordance with the
instructions received from Certificateholders. The number of votes will be
determined as of the record date selected by the Board of Trustees of the Fund.
The Company will furnish Certificateholders with the proper forms to enable them
to give it these instructions. Currently, the Company may disregard voting
instructions under the circumstances described in the following paragraph.
The Company may, if required by state insurance officials, disregard voting
instructions if those instructions would require shares to be voted to cause a
change in the subclassification or investment objectives or policies of one or
more of the Portfolios of the Fund, or to approve or disapprove an investment
adviser or principal underwriter for the Fund. In addition, the Company itself
may disregard voting instructions that would require changes in the investment
objectives or policies of any Portfolio or in an investment adviser or principal
underwriter for the Fund, if the Company reasonably disapproves those changes in
accordance with applicable federal regulations. If the Company does disregard
voting instructions, it will advise Certificateholders of that action and its
reasons for the action in the next semiannual report to Certificateholders.
Each Certificateholder will have the equivalent of one vote per $100 of
value attributable to the Certificate held in each Subaccount of the Variable
Account, with fractional votes for amounts less than $100. For voting purposes,
this value attributable to the Certificate is equal to the Cash Value. These
votes, represented as votes per $100 of value in each Subaccount of the Variable
Account, are converted into a proportionate number of votes in shares of the
corresponding Portfolio of the Fund. Shares of the Fund held in each Subaccount
for which no timely instructions from Certificateholders are received will be
voted by the Company in the same proportion as those shares in that Subaccount
for which instructions are received. Should applicable federal securities laws
or regulations permit, the Company may elect to vote shares of the Fund in its
own right.
The number of shares of the corresponding Portfolio of the Fund in a
Subaccount for which instructions may be given by a Certificateholder is
determined by dividing the portion of the value attributable to the Certificate
held in that Subaccount by the net asset value of one share in the corresponding
Portfolio of the Fund. In other words, if the value attributable to the
Certificate held in the Subaccount were $540 and the net asset value of the
Fund's shares of the Portfolio held in that Subaccount were $20 per share on the
record date, then the Certificateholder could issue instructions on 5.4 votes
(representing votes per $100 of value attributable to the Certificate held in
the Subaccount), which would be converted into instructions on 27 shares of the
Fund.
Matters on which Certificateholders may give voting instructions include
the following: (1) approval of any change in the Investment Advisory Agreement
and Services Agreement for the Portfolio(s) of the Fund corresponding to the
Certificateholder's selected Subaccount(s); (2) any change in the fundamental
investment policies of the Portfolio(s) corresponding to the Certificateholder's
selected Subaccount(s); and (3) any other matter requiring a vote of the
shareholders of the Fund. With respect to approval of the Investment Advisory
Agreement or any change in a Portfolio's fundamental investment policies,
Certificate holders participating in that Portfolio will vote separately on the
matter pursuant to the requirements of Rule 18f-2 under the 1940 Act.
27
<PAGE> 30
DISTRIBUTION OF THE CONTRACTS AND CERTIFICATES
MONY Securities Corp. ("MSC"), a New York corporation which is a
wholly-owned subsidiary of the Company, will act as the principal underwriter of
the Contracts and the Certificates, pursuant to an underwriting agreement with
the Company. MSC is registered as a broker-dealer under the Securities Exchange
Act of 1934 and is a member of the National Association of Securities Dealers.
The Contracts and the Certificates are sold by individuals who are registered
representatives of MSC and who are also licensed as life insurance agents for
the Company. The Contracts and the Certificates may also be sold through other
broker-dealers authorized by MSC and applicable law to do so. Commissions and
other expenses directly related to the sale of the Certificates will not exceed
6.0 percent of Purchase Payments. Additional compensation may be paid for other
services not directly related to the sale of the Certificates. Such services
include the training of personnel and the production of promotional literature.
FEDERAL TAX STATUS
INTRODUCTION
The Contracts and the Certificates described in this Prospectus are
designed for use by retirement plans that may or may not qualify for favorable
tax treatment under the provisions of Section 401, 403, 408(b), and 457 of the
Code. The ultimate effect of federal income taxes on the value of the
Certificate's Cash Value, on annuity payments, and on the economic benefit to
the Certificateholder, the Annuitant, and the Beneficiary may depend upon the
type of retirement plan for which the Certificate is purchased and upon the tax
and employment status of the individual concerned.
The following discussion of the treatment of the Certificates and of the
Company under the federal income tax laws is general in nature, is based upon
the Company's understanding of current federal income tax laws, and is not
intended as tax advice. Any person contemplating the purchase of a Certificate
should consult a qualified tax adviser. A more detailed description of the
treatment of the Certificate under federal income tax laws is contained in the
Statement of Additional Information. THE COMPANY DOES NOT MAKE ANY GUARANTEE
REGARDING ANY TAX STATUS, FEDERAL, STATE, OR LOCAL, OF ANY CERTIFICATE OR ANY
TRANSACTION INVOLVING THE CERTIFICATES.
TAX TREATMENT OF THE COMPANY
Under existing federal income tax laws, the income of the Variable
Accounts, to the extent that it is applied to increase reserves under the
Certificates, is substantially non-taxable to the Company.
TAXATION OF ANNUITIES IN GENERAL
The Certificates offered by this Prospectus are designed for use in
connection with Qualified Plans and Non-Qualified Plans. All or a portion of the
contributions to such plans will be used to make Purchase Payments under the
Certificates. In general, contributions to Qualified Plans and income earned on
contributions to all plans are tax-deferred until distributed to plan
participants or their beneficiaries. Such tax deferral is not, however,
available for Non-Qualified Plans if the Certificateholder is other than a
natural person unless the Certificate is held as agent for a natural person.
Annuity payments made as retirement distributions under a Certificate, except to
the extent of employee (in the case of Qualified Plans) or Certificateholder (in
the case of Non-Qualified Plans) contributions, are generally taxable to the
annuitant as ordinary income. Certificateholders, Annuitants, and Beneficiaries
should seek qualified advice about the tax consequences of distributions,
withdrawals, and payments under the retirement plans in connection with which
the Certificates are purchased.
The Company was advised on February 23, 1995 by Quest for Value Advisors
(now known as OpCap Advisors), investment adviser to the Trust, that the Bond
Portfolio of the Trust inadvertently did not comply with the investment
diversification requirements of, and regulations under, Internal Revenue Code
Section 817(h) ("817(h) Requirements") during the period from September 17, 1994
to February 22, 1995. The
28
<PAGE> 31
Company was also advised at that time that the bond portfolio of the trust ("Old
Trust"), the shares of which were purchased by purchase payments allocated by
Contractholders to the Bond Subaccount prior to September 17, 1994, also did not
comply with the 817(h) Requirements during the period from December 31, 1993 to
September 16, 1994 (the date on which the Substitution, discussed on page 5 of
the Prospectus, of the shares of the Bond Portfolio were substituted for shares
of the bond portfolio of the Old Trust). The result of the failure to meet the
diversification requirements ("non-diversification") was that the Company was
required to file a request with the Internal Revenue Service for a private
letter ruling that the inadvertent non-diversification will not cause the
Contracts of Contractholders who had purchase payments allocated to the Bond
Subaccount during the period from October 1, 1993 to December 31, 1994 to lose
the income tax deferral on the increase in cash values of those Contracts during
such period or otherwise fail to be considered as an annuity during such period.
The request for a private letter ruling was filed and will involve payment by
the Company of such penalties to the Internal Revenue Service as may be agreed
upon by the Internal Revenue Service and the Company. Finally, the Company was
advised that revised procedures had been adopted to help assure that the
portfolios will be managed in accordance with the 817(h) Requirements in the
future and that, since February 23, 1995, the portfolios all have been in
compliance with the 817(h) Requirements.
The Company will withhold and remit to the United States Government and,
where applicable, to state governments part of the taxable portion of each
distribution made under a Certificate unless the Certificateholder or Annuitant
provides his or her taxpayer identification number to the Company and notifies
the Company that he or she chooses not to have amounts withheld.
Under the Technical and Miscellaneous Revenue Act of 1988 ("TAMRA"), for
purposes of determining the amount includible in gross income with respect to
distributions not received as an annuity, including deemed distributions
resulting from gratuitous transfers, all annuity contracts issued by the same
company to the same Certificateholder during any 12 month period, other than
those issued to qualified retirement plans, will be treated as one annuity
contract. The IRS is given power to prescribe rules to prevent avoidance of this
rule through special purchases of contracts or otherwise. None of these rules is
expected to affect tax-benefitted plans.
Effective January 1, 1993, distributions of plan benefits from qualified
plans, other than individual retirement arrangements ("IRAs"), generally will be
subject to mandatory federal income tax withholding unless they either are:
1. Part of a series of substantially equal periodic payments (at least
annually) for the participant's life or life expectancy, the joint lives or
life expectancies of the participant and his/her beneficiary, or a period
certain of not less than 10 years; or
2. Required by the Code upon the participant's attainment of age
70 1/2 or death.
Such withholding can be avoided if the participant's interest is rolled
over into another qualified plan, including an IRA. The withholding can be
avoided if the participant's interest is directly transferred by the old plan to
another eligible qualified plan, including an IRA. A direct transfer to the new
plan can be made only in accordance with the terms of the old plan. If
withholding is not avoided, the amount withheld may be subject to income tax and
excise tax penalties.
Under the generation skipping transfer tax, the Company may be liable for
payment of this tax under certain circumstances. In the event that the Company
determines that such liability exists, an amount necessary to pay the generation
skipping transfer tax may be subtracted from the death benefit proceeds.
ANNUITY CONTRACTS GOVERNED BY SECTION 403(B) OF THE CODE
An annuity contract will not be treated as a Qualified Certificate under
Section 403(b) of the Code unless distributions which are attributable to a
contribution made pursuant to a salary reduction agreement may be paid only: (1)
when the Certificateholder attains age 59 1/2; (2) when the Certificateholder
separates from the service of his employer; (3) when the Certificateholder dies;
(4) when the Certificateholder becomes permanently disabled within the meaning
of Section 72(m) of the Code; or (5) in the case of hardship. These
29
<PAGE> 32
restrictions generally apply to contributions made after December 31, 1988 and
to any increase in Cash Value of the Certificate after December 31, 1988.
Therefore effective January 1, 1989 and thereafter, any contributions made, or
increase in Cash Value, on or after January 1, 1989 will be restricted from
withdrawal except upon attainment of age 59 1/2, separation from service, death,
disability or hardship (hardship withdrawals are to be limited to the amount of
the Certificateholder's Purchase Payments). However, any Purchase Payments that
reflect employer contributions and the earnings thereon will not be restricted
unless specifically provided for by the applicable employer's plan.
RETIREMENT PLANS
The Certificates described in this Prospectus are designed for use with the
following types of retirement plans:
(1) Pension and Profit-Sharing Plans established by business employers
and certain associations, as permitted by Sections 401(a) and 401(k) of the
Code, including those purchasers who would have been covered under the
rules governing H.R. 10 (Keogh) Plans;
(2) Individual Retirement Annuities permitted by Sections 219 and
408(b) of the Code, including Simplified Employee Pensions established by
employers pursuant to Section 408(k);
(3) Tax-Sheltered Annuity Plans established by certain educational and
tax-exempt organizations under Section 403(b) of the Code (the Certificates
offered by this Prospectus are not available for sale in connection with
Qualified Plans which intend to qualify for federal income tax advantages
available under Section 403(b) of the Code);
(4) Deferred compensation plans provided by certain governmental
entities under Section 457 of the Code; and
(5) Non-Qualified Plans.
The tax rules applicable to participants in such retirement plans vary
according to the type of plan and its terms and conditions. Therefore, no
attempt is made herein to provide more than general information about the use of
Certificates with the various types of retirement plans. Participants in such
plans as well as Certificateholders, Annuitants, and Beneficiaries are cautioned
that the rights of any person to any benefits under these plans are subject to
the terms and conditions of the plans themselves, regardless of the terms and
conditions of the Certificates. The Company will provide purchasers of
Certificates used in connection with Individual Retirement Annuities with such
supplementary information as may be required by the Internal Revenue Service or
other appropriate agency. Any person contemplating the purchase of a Certificate
should consult a qualified tax adviser.
PERFORMANCE DATA
From time to time the performance of one or more of the Subaccounts 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 Subaccount reflects the results of the corresponding Portfolio of the Fund
and recurring charges and deductions borne by or imposed on the Portfolio and
the Subaccount. Set forth below for each Subaccount is the manner in which the
data contained in such advertisements will be calculated.
Money Market Subaccount. The performance data for this Subaccount will
reflect the "yield" and "effective yield". The "yield" of the Subaccount refers
to the income generated by an investment in the Subaccount over the seven day
period stated in the advertisement. This income is "annualized", that is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly, but, when annualized,
the income earned by an investment in the Subaccount is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
30
<PAGE> 33
Subaccounts other than the Money Market Subaccount. The performance data
for these Subaccounts will reflect the "yield" and "total return". The "yield"
of each of these Subaccounts refers to the income generated by an investment in
that Subaccount over the 30 day period stated in the advertisement and is the
result of dividing that income by the value of the Subaccount. The value of each
Subaccount is the average daily number of Units outstanding multiplied by the
Unit Value on the last day of the period. The "yield" reflects deductions for
all charges, expenses, and fees of both the Fund and the Variable Account other
than the Surrender Charge. "Total return" for each of these Subaccounts refers
to the return a Certificateholder would receive during the period indicated if a
$1,000 Purchase Payment was made the indicated number of years ago. It reflects
historical investment results less charges and deductions of both the Fund and
the Variable Account, including any Surrender Charge imposed as a result of the
full Surrender, with the distribution being made in cash rather than in the form
of one of the settlement options, at the close of the period for which the
"total return" data is given. Returns for periods exceeding one year reflect the
average annual total return for such period. Total return data may also be shown
assuming that the Certificate continues in force (i.e., was not surrendered)
beyond the close of the periods indicated in which case that data would reflect
all charges and deductions of both the Fund and the Variable Account other than
the Surrender Charge. In addition, to the total return data described above
based upon a $1,000 investment, comparable data may also be shown for an
investment equal to the amount of the average purchase payment made by a
purchaser of a Certificate during the prior year.
Non-standardized Performance Data. From time to time, average total return
or other performance data may also be advertised in non-standardized formats.
Non-standardized performance data will be accompanied by standard performance
data, and the period covered or other non-standard features will be disclosed.
In addition, reference in advertisements may be made to various indices,
including without limitation, the Standard & Poor's 500 Stock Index and the
Shearson Lehman Brothers Corporate/Government Index, and to various ranking
services, including, without limitation, the Lipper Annuity and Closed End
Survey compiled by Lipper Analytical Services and the VARDS report compiled by
Variable Annuity Research and Data Service in order to provide the reader a
basis for comparison.
ADDITIONAL INFORMATION
This prospectus does not contain all the information set forth in the
registration statement, certain portions of which have been omitted pursuant to
the rules and regulations of the Securities and Exchange Commission. The omitted
information may be obtained from the Commission's principal office in
Washington, D.C., upon payment of the fees prescribed by the Commission.
For further information with respect to the Company and the Contracts and
Certificates offered by this prospectus, including the Statement of Additional
Information (which includes financial statements relating to the Company),
Contractholders and Certificateholders and prospective investors may also
contact the Company at its address or phone number set forth on the cover of
this Prospectus for requesting such statement. The Statement of Additional
Information is available from the Company without charge.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Variable Account or the
principal underwriter is a party. The Company is engaged in various kinds of
routine litigation which, in the opinion of the Company, are not of material
importance in relation to the total capital and surplus of the Company.
FINANCIAL STATEMENTS
The financial statements for the Company, included in the Statement of
Additional Information, should be considered only as bearing on the ability of
the Company to meet its obligations under the Contracts and Certificates. The
financial statements of the Company should not be considered as bearing on the
investment performance of the assets held in the Variable Account. The financial
statements of the Company and the Variable Account are included in the Statement
of Additional Information.
31
<PAGE> 34
TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
<TABLE>
<CAPTION>
ITEM PAGE
- -------------------------------------------------------------------------------------- ----
<S> <C>
The Mutual Life Insurance Company of New York......................................... 1
Legal Opinion......................................................................... 1
Independent Accountants............................................................... 1
Federal Tax Status.................................................................... 1
Performance Data...................................................................... 4
Financial Statements.................................................................. F-1
</TABLE>
If you would like to receive a copy of the MONY Variable Account A
Statement of Additional Information, please return this request to:
The Mutual Life Insurance Company of New York
Mail Drop 76-18
500 Frank W. Burr Boulevard
Teaneck, New Jersey 07666-6888
Your name
--------------------------------------------------------------
Address
----------------------------------------------------------------
City State Zip
-------------------------------- ---------- ----------
Please send me a copy of the MONY Variable Account A Statement of
Additional Information.
Policy C3-88
FORM NO. 13493SL (5/96) 33-37718
32
<PAGE> 35
APPENDIX A
CALCULATION OF SURRENDER CHARGE
ILLUSTRATION 1
Suppose an initial Purchase Payment of $15,000 is the only payment made,
and no taxes are deducted from this payment. At the beginning of the third
Contract Year, the Cash Value of the Contract has grown to $18,000 and the
Contractholder requests a partial surrender of $2,000.
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
# OF
CERTIFICATE ANNIVERSARIES
SINCE PURCHASE AMOUNT AMOUNT AVAILABLE
PAYMENT CERTIFICATE YEAR ALLOCATED FOR ALLOCATION TO
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER FUTURE SURRENDERS
- ------------------------- ---------------- ------------ -----------------
<S> <C> <C> <C>
0 3 $ 0 $ 0
1 2 0 0
2 1 2,000 13,000
</TABLE>
IF THE CONTRACT IS A NON-QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as 10% of the
Cash Value ($1,800). Reduce the resulting amount allocated to
surrender ($2,000) by the Guaranteed Free Surrender Amount
($1,800), and apply the Surrender Charge Percentages as follows:
<TABLE>
<CAPTION>
# OF
CERTIFICATE ANNIVERSARIES AMOUNT OF
SINCE PURCHASE AMOUNT SURRENDER SURRENDER
PAYMENT CERTIFICATE YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PCT)
- ------------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0 3 $ 0 7% $ 0
1 2 0 7 0
2 1 200 6 12
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $12.
The Surrender Charge, plus the amount of the surrender is then deducted
from the remaining Cash Value of the Non-Qualified Contract, for a total
withdrawal of $2,012.
IF THE CONTRACT IS A QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to the
greater of 10% of the Cash Value ($1,800) of the Qualified Contract
or up to $10,000. Since the partial surrender requested is less
than $10,000 (although it is greater than 10 percent), there is no
Surrender Charge.
Since there is no Surrender Charge, the entire amount requested is
available under the Guaranteed Free Surrender Amount provision of the Qualified
Contract.
Assuming that in the middle of the tenth Contract Year, a full surrender is
requested. The Cash Value at the time of full surrender is $28,000. Since this
is a full surrender, the Annual Contract Charge (currently $30) is deducted from
the Cash Value, leaving a remaining Cash Value balance of $27,970. For this
calculation, there is $13,000 of Purchase Payments made in the first Contract
Year.
A-1
<PAGE> 36
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
# OF
CONTRACT ANNIVERSARIES
SINCE PURCHASE AMOUNT
PAYMENT CONTRACT YEAR ALLOCATED
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER
- ---------------------- ---------------- ------------
<S> <C> <C>
0 0 $ 10
1- 9 0
2 8 0
3 7 0
4 6 0
5 5 0
6 4 0
7 3 0
8 or more 1 and 2 13,000
</TABLE>
IF THE CONTRACT IS A NON-QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to 10% of
the Cash Value ($2,800) of the Non-Qualified Contract. Reduce the
resulting amount allocated to surrender ($13,000) by the Guaranteed
Free Surrender Amount ($2,800), and apply the Surrender Charge
Percentages as follows:
<TABLE>
<CAPTION>
# OF
CERTIFICATE ANNIVERSARIES AMOUNT OF
SINCE PURCHASE AMOUNT SURRENDER SURRENDER
PAYMENT CERTIFICATE YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PCT)
- ------------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0 0 $ 10 0% $ 7
1 9 0 7 0
2 8 0 6 0
3 7 0 6 0
4 6 0 5 0
5 5 0 4 0
6 4 0 3 0
7 3 0 2 0
8 or more 1 and 2 10,200 0 0
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $0.
IF THE CONTRACT IS A QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to the
greater of 10% of the Cash Value ($2,800) of the Qualified Contract
or up to $10,000. Reduce the resulting amount
A-2
<PAGE> 37
allocated to surrender ($13,000) by the Guaranteed Free Surrender
Amount ($10,000), and apply the Surrender Charge Percentages as
follows:
<TABLE>
<CAPTION>
# OF AMOUNT OF
CERTIFICATE ANNIVERSARIES AMOUNT SURRENDER SURRENDER
SINCE PURCHASE PAYMENT CERTIFICATE YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PCT)
- ------------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0 10 $ 0 7% $ 0
1 9 0 7 0
2 8 0 6 0
3 7 0 6 0
4 6 0 5 0
5 5 0 4 0
6 4 0 3 0
7 3 0 2 0
8or
more 1 and 2 3,000 0 0
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $0.
Since there are no Purchase Payments such that 7 or less policy
anniversaries had passed since they were received, no part of the surrender
proceeds are subject to a Surrender Charge. Hence, no Surrender Charge is
assessed on this full surrender.
ILLUSTRATION 2
Suppose Purchase Payments of $2,000 are made at the beginning of every
Contract Year. No taxes are deducted from these Payments. In the middle of the
third Contract Year, a partial surrender of $500 is requested. Suppose the Cash
Value has grown to $7,000 at the time of the partial surrender request.
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
# OF
CERTIFICATE ANNIVERSARIES
SINCE PURCHASE AMOUNT AMOUNT AVAILABLE
PAYMENT CERTIFICATE YEAR ALLOCATED FOR ALLOCATION TO
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER FUTURE SURRENDERS
- ------------------------- ---------------- ------------ -----------------
<S> <C> <C> <C>
0 3 $ 0 $ 2,000
1 2 0 2,000
2 1 500 1,500
</TABLE>
IF THE CONTRACT IS A NON-QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to 10% of
the Cash Value ($700) of the Non-Qualified Contract. Reduce the
resulting amount allocated to surrender ($500) by the Guaranteed
Free Surrender Amount ($700), and apply the Surrender Charge
Percentages as follows:
<TABLE>
<CAPTION>
# OF AMOUNT OF
CERTIFICATE ANNIVERSARIES AMOUNT SURRENDER SURRENDER
SINCE PURCHASE PAYMENT CERTIFICATE YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PCT)
- ------------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0 3 $0 7% $ 0
1 2 0 7 0
2 1 0 6 0
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $0.
A-3
<PAGE> 38
The partial surrender will be allocated to $500 of payments made in the
first Contract Year. But since 10 percent of the Cash Value ($700) of the
Non-Qualified Contract could be surrendered under the Guaranteed Free Surrender
Amount Provision, the partial surrender of $500 could be withdrawn without a
surrender charge.
IF THE CONTRACT IS A QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to the
greater of 10% of the Cash Value ($700) of the Qualified Contract
or up to $10,000. Since the partial surrender requested is less
than $10,000 and less than 10% there is no surrender charge.
Since there is no Surrender Charge, the entire amount requested is
available under the Guaranteed Free Surrender Amount provision of the Qualified
Contract.
Assume that Purchase Payments of $2,000 have continually been made at the
beginning of each Contract Year, and that in the middle of the tenth Contract
Year, a partial surrender of $7,500 is requested. The Cash Value is $32,600 at
the time of the partial surrender request.
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
# OF
CERTIFICATE ANNIVERSARIES
SINCE PURCHASE AMOUNT AMOUNT AVAILABLE
PAYMENT CERTIFICATE YEAR ALLOCATED FOR ALLOCATION TO
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER FUTURE SURRENDERS
- ------------------------- ---------------- ------------ -----------------
<S> <C> <C> <C>
0 10 $ 0 $ 2,000
1 9 0 2,000
2 8 0 2,000
3 7 0 2,000
4 6 0 2,000
5 5 0 2,000
6 4 2,000 0
7 3 2,000 0
8 or more 1 and 2 3,500 0
</TABLE>
IF THE CONTRACT IS A NON-QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as 10% of the
Cash Value ($3,260) of the Non-Qualified Contract. Reduce the
resulting amount allocated to surrender ($3,500) in Contract Years
1 and 2 by the Guaranteed Free Surrender Amount ($3,260), and apply
the Surrender Charge Percentages as follows:
<TABLE>
<CAPTION>
# OF
CERTIFICATE ANNIVERSARIES AMOUNT OF
SINCE PURCHASE AMOUNT SURRENDER SURRENDER
PAYMENT CERTIFICATE YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PCT)
- ------------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
6 4 $2,000 3% $60
7 3 2,000 2 40
8 or more 1 and 2 240 0 0
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $100.
The Surrender Charge, plus the amount of the surrender is then deducted
from the remaining Cash Value of the Non-Qualified Contract, for a total
withdrawal of $7,600.
A-4
<PAGE> 39
IF THE CONTRACT IS A QUALIFIED CONTRACT --
Step 2: The Guaranteed Free Surrender Amount is calculated as up to the
greater of 10% of the Cash Value ($3,260) of the Qualified Contract
or up to $10,000. Since the partial surrender requested is less
than $10,000 (although it is greater than 10 percent), there is no
surrender charge.
Since there is no Surrender Charge, the entire amount requested is
available under the Guaranteed Free Surrender Amount provision of the Qualified
Contract.
Assuming that in the middle of the twelfth Contract Year, a full surrender
with the full proceeds being settled under Settlement Option 3, Single Life
Income for 10 years certain and during the balance of the annuitant's lifetime,
payments of $2,000 have continuously been made at the beginning of each contract
year. The Cash Value at the time of the full surrender is $26,000. Since this
example assumes a full surrender is being made, the Annual Contract Charge
(currently $30) is deducted from the Cash Value, leaving a remaining Cash Value
of $25,970.
Since the full proceeds are being applied to Settlement Option 3, the
Surrender Charge is $0. The entire remaining Cash Value of $25,970 is applied to
the settlement option.
A-5
<PAGE> 40
THE VALUEMASTER
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1996
GROUP FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACT
ISSUED BY
MONY VARIABLE ACCOUNT A
AND
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
This Statement of Additional Information is not a prospectus, but it
relates to, and should be read in conjunction with, the prospectus dated May 1,
1996 for the Group Flexible Payment Variable Annuity Contract ("Contract")
issued by The Mutual Life Insurance Company of New York ("Company"). The
prospectus is available, at no charge, by writing the Company at 500 Frank W.
Burr Boulevard, Teaneck, New Jersey, 07666-6888, Mail Drop 76-18 or by calling
1-800-487-6669.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- -------------------------------------------------------------------------------------- ----
<S> <C>
The Mutual Life Insurance Company of New York......................................... 1
Legal Opinion......................................................................... 1
Independent Accountants............................................................... 1
Federal Tax Status.................................................................... 1
Performance Data...................................................................... 4
Financial Statements.................................................................. F-1
</TABLE>
FORM NO. 13493 SL (5/96) 33-37718
<PAGE> 41
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
The Mutual Life Insurance Company of New York ("Company") is a mutual life
insurance company organized under the laws of the state of New York in 1842. The
principal offices of the Company are at 1740 Broadway, New York, New York 10019.
The Company had consolidated assets at the end of 1995 of approximately $14.6
billion. The Company is licensed to sell insurance and annuities in all states
of the United States, the District of Columbia, Puerto Rico, the Virgin Islands,
and all Provinces of Canada.
At May 1, 1995, the rating assigned to the Company by A.M. Best Company,
Inc., an independent insurance company rating organization, was Company A-
(Excellent) based upon an analysis of financial condition and operating
performance through the end of 1994. The A.M. Best rating of the Company should
be considered only as bearing on the ability of the Company to meet its
obligations under the Certificates.
LEGAL OPINION
Legal matters relating to federal securities laws applicable to the issue
and sale of the Contracts and the Certificates and all matters of New York law
pertaining to the Contracts and the Certificates, including the validity of the
Contracts and the Certificates and the Company's right to issue the Contracts
and the Certificates, have been passed upon by Edward P. Bank, Esq., Vice
President and Deputy General Counsel, of the Company.
INDEPENDENT ACCOUNTANTS
The financial statements included herein have been audited by Coopers &
Lybrand L.L.P., independent accountants, and are included herein in reliance on
the reports of said firm given on the authority of that firm as experts in
accounting and auditing. Coopers & Lybrand's office is located at 1301 Avenue of
the Americas, New York, New York 10019.
FEDERAL TAX STATUS
INTRODUCTION
The Certificate is designed for use to fund retirement plans which may or
may not be Qualified Plans under the provisions of the Internal Revenue Code
(the "Code"). The ultimate effect of federal income taxes on the Certificate
value, on annuity payments, and on the economic benefit to the
Certificateholder, Annuitant, or Beneficiary depends on the type of retirement
plan for which the Certificate is purchased and upon the tax and employment
status of the individual concerned. The discussion contained herein is general
in nature and is not intended as tax advice. Each person concerned should
consult a competent tax adviser. No attempt is made to consider any applicable
state or other tax laws. Moreover, the discussion herein is based upon the
Company's understanding of current federal income tax laws as they are currently
interpreted. No representation is made regarding the likelihood of continuation
of those current federal income tax laws or of the current interpretations by
the Internal Revenue Service.
TAXATION OF ANNUITIES IN GENERAL
Section 72 of the Code governs taxation of annuities in general. Except in
the case of certain corporate and other non-individual Certificateholders, there
are no income taxes on increases in the value of a Certificate until a
distribution occurs, in the form of a full surrender, a partial surrender, a
death benefit, an assignment or gift of the Certificate, or as annuity payments.
SURRENDERS, DEATH BENEFITS, ASSIGNMENTS AND GIFTS
A Certificateholder who fully surrenders his or her Certificate is taxed on
the portion of the payment that exceeds his or her cost basis in the
Certificate. For Non-Qualified Certificates, the cost basis is generally the
amount of the Purchase Payments made for the Certificate, and the taxable
portion of the surrender payment
1
<PAGE> 42
is taxed as ordinary income. For Qualified Certificates, the cost basis is
generally zero, except to the extent of non-deductible employer contributions,
and the taxable portion of the surrender payment is generally taxed as ordinary
income subject to special elective 5-year (and, for certain eligible persons,
10-year) income averaging in the case of Qualified Certificates. A Beneficiary
entitled to receive a lump sum death benefit upon the death of the Annuitant is
taxed on the portion of the amount that exceeds the Certificateholder's cost
basis in the Certificate. If the Beneficiary elects to receive annuity payments
within 60 days of the Annuitant's death, different tax rules apply. (See
"Annuity Payments" below.)
Partial surrenders received under Non-Qualified Certificates prior to
annuitization are first included in gross income to the extent Surrender Value
exceeds Purchase Payments, less prior non-taxable distributions, and the balance
is treated as a non-taxable return of principal to the Certificateholder. For
partial surrenders under a Qualified Certificate, payments are generally
prorated between taxable income and non-taxable return of investment.
There are special rules for Qualified Plans or contracts involving 85
percent or more employee contributions. Since the cost basis of Qualified
Certificates is generally zero, however, partial surrender amounts will
generally be fully taxed as ordinary income.
A Certificateholder who assigns or pledges a Non-Qualified Certificate is
treated as if he or she had received the amount assigned or pledged and thus is
subject to taxation under the rules applicable to surrenders. A
Certificateholder who gives away the Certificate (i.e., transfers it without
full and adequate consideration) to anyone other than his or her spouse is
treated for income tax purposes as if he or she had fully surrendered the
Certificate.
ANNUITY PAYMENTS
The non-taxable portion of each annuity payment is determined by an
"exclusion ratio" formula which establishes the ratio that the cost basis of the
Certificate bears to the total expected value of annuity payments for the term
of the annuity. The remaining portion of each payment is taxable. Such taxable
portion is taxed at ordinary income rates. For Qualified Certificates, the cost
basis is generally zero. With annuity payments based on life contingencies, the
payments will become fully taxable once the Annuitant lives longer than the life
expectancy used to calculate the non-taxable portion of the prior payments.
Conversely, a tax deduction in the Annuitant's last taxable year, equal to the
unrecovered cost basis, is available if the Annuitant does not live to life
expectancy.
PENALTY TAX
Payments received by Certificateholders, Annuitants, and Beneficiaries
under both Qualified and Non-Qualified Certificates may be subject to both
ordinary income taxes and a penalty tax equal to 10 percent of the amount
received that is includable in income. The penalty is not imposed on amounts
received: (a) after the taxpayer attains age 59 1/2; (b) in a series of
substantially equal payments made for life or life expectancy following
separation from service; (c) after the death of the Certificateholder (or, where
the Certificateholder is not a human being, the death of the Annuitant); (d) if
the taxpayer is totally disabled; (e) upon early retirement under the plan after
the taxpayer's attainment of age 55; or (f) which are used for certain medical
care expenses. Exceptions (e) and (f) do not apply to Individual Retirement
Accounts and Annuities and Non-Qualified Certificates. An additional exception
for Non-Qualified Certificates is amounts received as an immediate annuity.
INCOME TAX WITHHOLDING
The Company is required to withhold federal, and, where applicable, state,
income taxes on taxable amounts paid under the Certificate unless the recipient
elects not to have withholding apply. The Company will notify recipients of
their right to elect not to have withholding apply.
2
<PAGE> 43
Effective January 1, 1993, distributions of plan benefits from qualified
plans, other than individual retirement arrangements ("IRAs"), generally will be
subject to mandatory federal income tax withholding unless they either are:
1. Part of a series of substantially equal periodic payments (at least
annually) for the participant's life or life expectancy, the joint lives or
life expectancies of the participant and his/her beneficiary, or a period
certain of not less than 10 years; or
2. Required by the Code upon the participant's attainment of age
70 1/2 or death.
Such withholding can be avoided if the participant's interest is rolled
over into another qualified plan, including an IRA. The withholding can be
avoided if the participant's interest is directly transferred by the old plan to
another eligible qualified plan, including an IRA. A direct transfer to the new
plan can be made only in accordance with the terms of the old plan. If
withholding is not avoided, the amount withheld may be subject to income tax and
excise tax penalties.
DIVERSIFICATION STANDARDS
The United States Secretary of the Treasury has the authority to set
standards for diversification of the investments underlying variable annuity
contracts (other than pension plan contracts). The Secretary of the Treasury has
issued certain regulations. Further regulations may be issued. The Funds are
designed to be managed to meet the diversification requirements for the
Certificate as those requirements may change from time to time. The Company
intends to satisfy those requirements so that the Certificate will be treated as
an annuity contract. The Secretary of the Treasury has announced that he expects
to issue regulations or Revenue Rulings that will prescribe the circumstances in
which a Certificateholder's control of the investments of a segregated asset
account may cause the Certificateholder, rather than the insurance company, to
be treated as the owner of the assets of the account. The regulations or Revenue
Rulings could impose requirements that are not reflected in the Certificate. The
Company, however, has reserved certain rights to alter the Certificate and
investment alternatives so as to comply with such regulations or Revenue
Rulings. Since the regulations or Revenue Rulings have not been issued, there
can be no assurance as to the content of such regulations or Revenue Rulings or
even whether application of the regulations or Revenue Rulings will be
prospective. For these reasons, Certificateholders are urged to consult with
their own tax advisers.
QUALIFIED PLANS
The Certificate is designed for use with several types of Qualified Plans.
The tax rules applicable to participants in such Qualified Plans vary according
to the type of plan and the terms and conditions of the plan itself. Moreover,
many of these tax rules were changed by the Tax Reform Act of 1986. Therefore,
no attempt is made herein to provide more than general information about the use
of the Certificate with the various types of Qualified Plans. Participants under
such Qualified Plans as well as Certificateholders, Annuitants, and
Beneficiaries are cautioned that the rights of any person to any benefits under
such Qualified Plans may be subject to the terms and conditions of the plans
themselves, regardless of the terms and conditions of the Certificate issued in
connection therewith. Following are brief descriptions of the various types of
Qualified Plans and of the use of the Certificate in connection therewith.
Purchasers of the Certificate should seek competent advice concerning the terms
and conditions of the particular Qualified Plan and use of the Certificate with
that plan.
TAX-SHELTERED ANNUITIES
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable organizations specified in Section 501(c)(3) of the
Code and certain educational organizations to purchase annuity contracts and,
subject to certain contribution limitations, exclude the amount of Purchase
Payments from gross income for tax purposes. However, such Purchase Payments may
be subject to Social Security (FICA) taxes. These annuity contracts are commonly
referred to as "Tax-Sheltered Annuities." The Certificates are not available for
sale to Qualified Plans which intend to qualify for federal income tax
advantages under Section 403(b).
3
<PAGE> 44
H.R. 10 PLANS
The Self-Employed Individuals Tax Retirement Act of 1962, as amended, which
is commonly referred to as "H.R. 10," permits self-employed individuals to
establish Qualified Plans for themselves and their employees. The tax
consequences to participants under such plans depend upon the plan itself. In
addition, such plans are limited by law to maximum permissible contributions,
distribution dates, and tax rates applicable to distributions. In order to
establish such a plan, a plan document, usually in prototype form preapproved by
the Internal Revenue Service, is adopted and implemented by the employer.
INDIVIDUAL RETIREMENT ACCOUNTS AND ANNUITIES
Section 408 of the Code permits eligible individuals to contribute to
individual retirement programs known as "Individual Retirement Accounts" and
"Individual Retirement Annuities." These Individual Retirement Accounts and
Annuities are subject to limitations on the amounts which may be contributed,
the persons who may be eligible, and on the time when distributions may
commence. In addition, distributions from certain types of Qualified Plans may
be placed on a tax-deferred basis into an Individual Retirement Account or
Annuity.
CORPORATE PENSION AND PROFIT-SHARING PLANS
Sections 401(a) and 403(a) of the Code permit corporate employers to
establish various types of retirement plans for employees. Such retirement plans
may permit the purchase of the Certificate to provide benefits under the plans.
CERTAIN GOVERNMENTAL ENTITIES
Section 457 of the Code permits certain governmental entities to establish
deferred contribution plans. Such deferred contribution plans may permit the
purchase of the Certificate to provide benefits under the plans.
PERFORMANCE DATA
The Equity, Small Cap, Managed, Bond, and Money Market Subaccounts will be
used to purchase shares of the corresponding portfolios of the OCC Accumulation
Trust. Those portfolios will be managed according to the same investment
objectives, policies, and techniques as the portfolios of the same name of the
Enterprise Accumulation Trust, the shares of which were previously available for
purchase by the Company with purchase payments made by ValueMaster
Certificateholders. The performance shown below should not be taken as an
indication of future performance of the portfolios of the OCC Accumulation
Trust.
Shares of the Enterprise Accumulation Trust were redeemed in kind at the
close of business on September 16, 1994, and the assets received were used to
purchase shares of the OCC Accumulation Trust (see "The Substitution" at page 5
of the Prospectus and "Prospectus Summary -- The Fund" at page 3 of the
accompanying prospectus for the OCC Accumulation Trust).
MONEY MARKET SUBACCOUNT
For the seven-day period ended December 31, 1995, the yield was 4.49% and
the effective yield was 4.59%.
The yield was calculated by dividing the result of subtracting the value of
one Unit at the end of the seven day period ("Seventh Day Value") from the value
of one Unit at the beginning of the seven day period ("First Day Value") by the
First Day Value (the resulting quotient being the "Base Period Return") and
multiplying the Base Period Return by 365 divided by 7 to obtain the annualized
yield.
4
<PAGE> 45
The effective yield was calculated by compounding the Base Period Return
calculated in accordance with the preceding paragraph, adding 1 to the Base
Period Return, raising that sum to a power equal to 365 divided by 7 and
subtracting 1 from the result.
As the Money Market Subaccount invests only in shares of the Money Market
Portfolio of the Fund, the First Day Value reflects the per share net asset
value of the Money Market Portfolio (which will normally be $1.00) and the
number of shares of the Money Market Portfolio of the Fund held in the Money
Market Subaccount. The Seventh Day Value reflects increases or decreases in the
number of shares of the Money Market Portfolio of the Fund held in the Money
Market Subaccount due to the declaration of dividends (in the form of shares and
including dividends (in the form of shares) on shares received as dividends) of
the net investment income and the daily charges and deductions from the
Subaccount for mortality and expense risks and a deduction for the Annual
Certificate Charge imposed on each Certificate Anniversary which has been
pro-rated to reflect the shortened 7-day period and allocated to the Money
Market Subaccount in the proportion that the total value of the Money Market
Subaccount bore to the total value of the Variable Account at the end of the
period indicated. Net investment income reflects earnings on investments less
expenses of the Fund including the Investment Advisory Fee (which for
calculating the yield and effective yield quoted above is assumed to be .40
percent, the fee which would be charged based upon the amount of assets under
management on the last day of the period for which the quoted yield is stated).
Not reflected in either the yield or effective yield are surrender charges,
which will not exceed 7% of total Purchase Payments made prior to the
Certificate Year of surrender and the preceding 7 Certificate Years.
SUBACCOUNTS OTHER THAN MONEY MARKET SUBACCOUNT
TOTAL RETURN
The average annual total return for the Subaccounts other than the Money
Market Subaccount, assuming that the Certificates remain in force throughout the
periods, is shown in the table below. This table does not reflect the impact of
the tax laws, if any, on total return as a result of the surrender.
MONY VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $1,000 PAYMENT AT BEGINNING
OF PERIOD AND SURRENDER AT END OF PERIOD)
<TABLE>
<CAPTION>
FOR THE PERIOD SINCE
FOR THE YEAR ENDED INCEPTION THROUGH
SUBACCOUNT DECEMBER 31, 1995 DECEMBER 31, 1995
- --------------------------------------------------- ------------------ ------------------------------
<S> <C> <C>
Equity............................................. 30.61% 19.74%
Small Cap.......................................... 6.62% 3.44%
Managed............................................ 35.74% 20.06%
Bond............................................... 6.37% 3.30%
</TABLE>
- ---------------
Although MONY Variable Account A commenced operations in February 1991, the
Subaccounts shown above became available for allocation on September 17, 1994.
Total return for the period since inception reflects the average annual total
return since that date. Total return is not indicative of future performance.
The table above assumes that a $1,000 payment was made to each Subaccount
at the beginning of the period shown, that no further payments were made, that
any distributions from the corresponding Portfolio of the Fund were reinvested,
and that the Certificateholder surrendered the Certificate for cash, rather than
electing commencement of annuity benefits in the form of one of the Settlement
Options available, at the end of the period shown. The total return percentages
shown in the table reflect the historical rates of return, deductions for all
charges, expenses, and fees of both the Fund (including the Investment Advisory
Fee described in the Prospectus (see "Investment Advisory Fee" at page 21) and
the Variable Account which would be imposed on the payment assumed, including a
contingent deferred sales (Surrender) charge imposed as a result of the full
surrender and a deduction for the Annual Certificate Charge imposed on each
Certificate
5
<PAGE> 46
Anniversary and upon full surrender and allocated to each Subaccount in the
proportion that the total value of that Subaccount bore to the total value of
the Variable Account at the end of the period indicated. Total return since
inception is annualized.
The average annual total return for the Subaccounts other than the Money
Market Subaccount, assuming that the Certificates remain in force throughout the
periods indicated, is shown in the table below.
MONY VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $1,000 PAYMENT AT BEGINNING OF
PERIOD AND CERTIFICATE CONTINUES IN FORCE)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD SINCE INCEPTION
SUBACCOUNT DECEMBER 31, 1995 THROUGH DECEMBER 31, 1995
- --------------------------------------------------- ------------------ ------------------------------
<S> <C> <C>
Equity............................................. 36.65% 24.60%
Small Cap.......................................... 12.83% 8.95%
Managed............................................ 41.75% 26.02%
Bond............................................... 12.58% 8.99%
</TABLE>
- ---------------
Although MONY Variable Account A commenced operations in February 1991, the
Subaccounts shown above became available for allocation on September 17, 1994.
Total return for the period since inception reflects the average annual total
return since that date. Total return is not indicative of future performance.
The table above reflects the same assumptions and results as the table
appearing on page 5, except that no contingent deferred sales (surrender) charge
has been deducted. The data reflected in the table above reflects the total
return a Certificateholder would have received during that period if he did not
surrender his Certificate.
In addition to the total returns shown above, total returns may also be
shown for the average purchase payment made by a purchaser of the Certificate.
For 1995, the average purchase payment made was assumed to be $25,000. The
following tables show total returns calculated on the same basis as the two
tables above, except that the purchase payment is $25,000.
MONY VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $25,000 PAYMENT AT BEGINNING OF
PERIOD AND SURRENDER AT END OF PERIOD)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD SINCE INCEPTION
SUBACCOUNT DECEMBER 31, 1995 THROUGH DECEMBER 31, 1995
- --------------------------------------------------- ------------------ ------------------------------
<S> <C> <C>
Equity............................................. 31.17% 20.75%
Small Cap.......................................... 7.60% 4.95%
Managed............................................ 37.79% 23.09%
Bond............................................... 7.59% 5.18%
</TABLE>
- ---------------
Although MONY Variable Account A commenced operations in February 1991, the
Subaccounts shown above became available for allocation on September 17, 1994.
Total return for the period since inception reflects the average annual total
return since that date. Total return is not indicative of future performance.
6
<PAGE> 47
MONY VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $25,000 PAYMENT AT BEGINNING OF
PERIOD AND CERTIFICATE CONTINUES IN FORCE)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD SINCE INCEPTION
SUBACCOUNT DECEMBER 31, 1995 THROUGH DECEMBER 31, 1995
- --------------------------------------------------- ------------------ ------------------------------
<S> <C> <C>
Equity............................................. 37.21% 25.02%
Small Cap.......................................... 13.81% 9.69%
Managed............................................ 43.78% 27.54%
Bond............................................... 13.79% 9.93%
</TABLE>
- ---------------
Although MONY Variable Account A commenced operations in February 1991, the
Subaccounts shown above became available for allocation on September 17, 1994.
Total return for the period since inception reflects the average annual total
return since that date. Total return is not indicative of future performance.
30-DAY YIELD:
The yield for each of the Subaccounts other than the Money Market
Subaccount is shown for the 30-day periods indicated in the following table.
MONY VARIABLE ACCOUNT A
YIELD FOR 30-DAY PERIOD
<TABLE>
<CAPTION>
YIELD FOR 30 DAYS ENDED EQUITY SMALL CAP MANAGED BOND
- ---------------------------------------------------- ------ --------- ------- -----
<S> <C> <C> <C> <C>
December 31, 1995................................... -0.78% -1.16% -0.19% 3.93%
</TABLE>
- ---------------
The 30-day yield is not indicative of future results.
The yield shown in the table above is computed by subtracting from the net
investment income of the corresponding Portfolio of the Fund charges and
expenses imposed by the Variable Account and dividing the result by the value of
the Subaccount. For the Equity and Small Cap Portfolios and for the stocks and
equity securities of the Managed Portfolio of the Fund, net investment income is
the net of the dividends accrued (of the stated dividend rate multiplied by the
number of days the particular security is in the Portfolio) on all equity
securities during the 30-day period and expenses accrued for the period. It does
not reflect capital gains or losses. For the Bond Portfolio and the debt
obligations held by the Managed Portfolio of the Fund, net investment income is
the net of interest earned on the obligation held by the Portfolio and expenses
accrued for the period. Interest earned on the obligation is determined by (i)
computing the yield to maturity based on the market value of each obligation
held in the corresponding Portfolio at the close of business on the thirtieth
day of the period (or as to obligations purchased during that 30-day period,
based on the purchase price plus accrued interest); (ii) dividing the yield to
maturity for each obligation by 360; (iii) multiplying that quotient by the
market value of each obligation (including actual accrued interest) for each day
of the subsequent 30-day month that the obligation is in the Portfolio; and (iv)
totaling the interest on each obligation. Discount or premium amortization is
recomputed at the beginning of each 30-day period and with respect to discount
and premium on mortgage or other receivables-backed obligations subject to
monthly payment of principal and interest, discount and premium is amortized on
the remaining security, based on the cost of the security, to the weighted
average maturity date, if available, or to the remaining term of the security,
if the weighted average maturity date is not available. Gain or loss
attributable to actual monthly paydowns is reflected as an increase or decrease
in interest income during that period.
The yield shown reflects deductions for all charges, expenses, and fees of
both the Fund and the Variable Account other than the contingent deferred sales
(surrender) charge. The surrender charge will not exceed 7% of total Purchase
Payments made in the Certificate Year of surrender and the preceding 7
Certificate Years.
Net investment income of the corresponding Portfolio less all charges and
expenses imposed by the Variable Account is divided by the product of the
average daily number of Units outstanding and the value of
7
<PAGE> 48
one Unit on the last day of the period. The sum of the quotient and 1 is raised
to the 6th power, 1 is subtracted from the result, and then multiplied by 2.
OTHER NON-STANDARDIZED PERFORMANCE DATA:
From time to time, average annual total return or other performance data
may also be advertised in non-standardized formats. Non-standard performance
data will be accompanied by standard performance data, and the period covered or
other non-standard features will be disclosed.
YEAR TO DATE TOTAL RETURN:
The tables below show total returns for the year to date (January 1, 1996
to February 9, 1996) which have not been annualized and which assume a $1,000
and a $25,000 payment made at the beginning of the period and reflecting the
same assumptions and results as the table appearing on page 5, except, in the
case of the column headed "Certificate Continues In Force", no contingent
deferred sales (surrender) charge or annual contract charge has been deducted:
MONY VARIABLE ACCOUNT A
YEAR TO DATE TOTAL RETURN
JANUARY 1 TO FEBRUARY 9, 1996
(ASSUMING $1,000 PAYMENT AT BEGINNING OF PERIOD)
<TABLE>
<CAPTION>
SURRENDER AT CERTIFICATE CONTINUES
SUBACCOUNT END OF PERIOD IN FORCE
- ----------------------------------------------------- ------------- ---------------------
<S> <C> <C>
Equity............................................... -1.21% 5.61%
Small Cap............................................ -5.97% 1.32%
Managed.............................................. -1.94% 6.46%
Bond................................................. -7.29% 0.26%
</TABLE>
MONY VARIABLE ACCOUNT A
YEAR TO DATE TOTAL RETURN
JANUARY 1 TO FEBRUARY 9, 1996
(ASSUMING $25,000 PAYMENT AT BEGINNING OF PERIOD)
<TABLE>
<CAPTION>
SURRENDER AT CERTIFICATE CONTINUES
SUBACCOUNT END OF PERIOD IN FORCE
- ----------------------------------------------------- ------------- ---------------------
<S> <C> <C>
Equity............................................... -0.67% 5.61%
Small Cap............................................ -5.01% 1.32%
Managed.............................................. 0.12% 6.46%
Bond................................................. -6.09% 0.26%
</TABLE>
FINANCIAL STATEMENTS
The financial statements of the Company should be distinguished from the
financial statements of the Variable Account. The financial statements of the
Company should be considered only as bearing upon the ability of the Company to
meet its obligations under the Contracts and Certificates and should not be
considered as bearing on the investment performance of the assets held in the
Variable Account. The financial statements of the Company and the Variable
Account are included in the Statement of Additional Information.
8
<PAGE> 49
FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
With respect to MONY Variable Account A...............................................
Report of Independent Accountants................................................... F-2
Statements of assets and liabilities as of December 31, 1995........................ F-3
Statements of operations for the year ended December 31, 1995....................... F-6
Statements of changes in net assets for the years ended December 31, 1995 and
1994............................................................................. F-9
Notes to financial statements....................................................... F-13
With respect to The Mutual Life Insurance Company of New York:
Comment on financial statements of MONY............................................. F-18
Report of Independent Accountants................................................... F-19
Balance sheets as of December 31, 1995 and 1994..................................... F-20
Statements of operations for the years ended December 31, 1995 and 1994............. F-21
Statements of surplus for the years ended December 31, 1995 and 1994................ F-22
Statements of cash flows for the years ended December 31, 1995 and 1994............. F-23
Notes to financial statements....................................................... F-24
</TABLE>
F-1
<PAGE> 50
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Mutual Life Insurance Company of New York and the
Contractholders of MONY Variable Account A:
We have audited the accompanying statements of assets and liabilities of
MONY Variable Account A (comprising, respectively, the MONY Series Fund, Inc.'s
Equity Growth, Equity Income, Intermediate Term Bond, Long Term Bond,
Diversified, Money Market and Government Securities Subaccounts; the Enterprise
Accumulation Trust's Equity, Small Cap, Managed (formerly, three of the
subaccounts constituting the Quest for Value Accumulation Trust), International
Growth and High Yield Bond Subaccounts; and the Quest for Value Accumulation
Trust's Money Market, Bond, Equity, Small Cap, and Managed Subaccounts as of
December 31, 1995, the related statements of operations for the year then ended
and the statements of changes in net assets for each of the two years in the
period then ended for all of the subaccounts except MONY Series Fund, Inc.'s
Government Securities Subaccount for which the period is for the year ended
December 31, 1995 and for the period from December 16, 1994 (commencement of
operations) to December 31, 1994; the Enterprise Accumulation Trust's
International Growth and High Yield Bond Subaccounts for which the period is for
the year ended December 31, 1995 and for the period from November 22, 1994
(commencement of operations) to December 31, 1994; and the Quest for Value
Accumulation Trust's Subaccounts for which the period is for the year ended
December 31, 1995 and for the period from September 17, 1994 (commencement of
operations) to December 31, 1994. These financial statements are the
responsibility of MONY's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995 by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of each of the respective
subaccounts constituting MONY Variable Account A as of December 31, 1995, and
the results of their operations and the changes in their net assets for each of
the periods referred to above, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 19, 1996
F-2
<PAGE> 51
MONY
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
MONY SERIES FUND, INC.
-------------------------------------------------------------------------------------------
EQUITY EQUITY INTERMEDIATE LONG TERM MONEY GOVERNMENT
GROWTH INCOME TERM BOND BOND DIVERSIFIED MARKET SECURITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments at cost (Note 5)..... $149,239 $190,930 $6,638,222 $ 9,666,493 $217,223 $17,196,047 $923,948
======== ======== ========== =========== ======== =========== ========
Investments in MONY Series Fund,
Inc., at net asset value (Note
2)............................. $210,036 $249,805 $6,621,329 $10,317,775 $254,933 $17,196,047 $914,216
Amount due from MONY............. 0 0 0 303 0 101,067 0
Amount due from MONY Series Fund,
Inc. .......................... 0 0 0 23 0 7 0
-------- -------- ---------- ----------- -------- ----------- --------
Total assets............ 210,036 249,805 6,621,329 10,318,101 254,933 17,297,121 914,216
-------- -------- ---------- ----------- -------- ----------- --------
LIABILITIES
Amount due to MONY............... 0 0 0 23 0 7 0
Amount due to MONY Series
Fund, Inc. .................... 0 0 0 303 0 101,067 0
-------- -------- ---------- ----------- -------- ----------- --------
Total liabilities....... 0 0 0 326 0 101,074 0
-------- -------- ---------- ----------- -------- ----------- --------
Net assets....................... $210,036 $249,805 6,621,329 10,317,775 254,933 17,196,047 914,216
======== ======== ========== =========== ======== =========== ========
Net assets consist of:
Contractholders' net
payments..................... $ 67,208 $ 42,076 $5,219,301 $ 6,989,824 $ 69,918 $15,735,193 $885,394
Undistributed net investment
income....................... 32,493 100,358 1,346,640 2,300,661 100,496 1,460,854 24,958
Accumulated net realized gains
on investments............... 49,538 48,496 72,281 376,008 46,809 0 13,596
Unrealized appreciation
(depreciation) of
investments.................. 60,797 58,875 (16,893 ) 651,282 37,710 0 (9,732)
-------- -------- ---------- ----------- -------- ----------- --------
Net assets....................... $210,036 $249,805 $6,621,329 $10,317,775 $254,933 $17,196,047 $914,216
======== ======== ========== =========== ======== =========== ========
Number of units outstanding*..... 8,091 10,336 398,283 495,169 12,152 1,227,811 83,571
-------- -------- ---------- ----------- -------- ----------- --------
Net asset value per unit
outstanding.................... $ 25.96 $ 24.17 $ 16.62 $ 20.84 $ 20.98 $ 14.01 $ 10.94
======== ======== ========== =========== ======== =========== ========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-3
<PAGE> 52
MONY
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
ENTERPRISE ACCUMULATION TRUST
------------------------------------------------------------------
INTERNATIONAL HIGH YIELD
EQUITY SMALL CAP MANAGED GROWTH BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at cost (Note 5).............. $17,549,548 $18,570,563 $119,918,497 $1,795,214 $1,055,403
=========== =========== ============ ========== ==========
Investments in Enterprise Accumulation
Trust at net asset value (Note 2)....... $21,419,650 $19,422,970 $149,533,008 $1,874,221 $1,067,865
Amount due from MONY...................... 4,423 5,071 61,201 824 19,300
Amount due from Enterprise Accumulation
Trust................................... 25 46 2,828 4 0
----------- ----------- ------------ ---------- ----------
Total assets.................... 21,424,098 19,428,087 149,597,037 1,875,049 1,087,165
----------- ----------- ------------ ---------- ----------
LIABILITIES
Amount due to MONY........................ 25 46 2,828 4 0
Amount due to Enterprise Accumulation
Trust................................... 4,423 5,071 61,201 824 19,300
----------- ----------- ------------ ---------- ----------
Total liabilities............... 4,448 5,117 64,029 828 19,300
----------- ----------- ------------ ---------- ----------
Net assets................................ $21,419,650 $19,422,970 $149,533,008 $1,874,221 $1,067,865
=========== =========== ============ ========== ==========
Net assets consist of:
Contractholders' net payments........... $14,336,028 $15,842,399 $ 93,565,212 $1,697,196 $1,002,329
Undistributed net investment income..... 1,339,019 1,836,130 12,761,788 80,878 43,560
Accumulated net realized gains on
investments.......................... 1,874,501 892,034 13,591,497 17,140 9,514
Unrealized appreciation of
investments.......................... 3,870,102 852,407 29,614,511 79,007 12,462
----------- ----------- ------------ ---------- ----------
Net assets................................ $21,419,650 $19,422,970 $149,533,008 $1,874,221 $1,067,865
=========== =========== ============ ========== ==========
Number of units outstanding*.............. 798,552 807,452 4,253,824 167,074 92,358
----------- ----------- ------------ ---------- ----------
Net asset value per unit outstanding...... $ 26.82 $ 24.05 $ 35.15 $ 11.22 $ 11.56
=========== =========== ============ ========== ==========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-4
<PAGE> 53
MONY
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
QUEST FOR VALUE ACCUMULATION TRUST
---------------------------------------------------------------
MONEY
MARKET BOND EQUITY SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at cost (Note 5)............ $437,924 $783,901 $224,035 $392,188 $ 8,074,354
======== ======== ======== ========= ===========
Investments in Quest for Value
Accumulation Trust at net asset value
(Note 2).............................. $437,924 $831,844 $294,259 $450,059 $11,058,091
Dividends receivable.................... 172 309 0 0 0
Amount due from Quest for Value
Accumulation Trust.................... 4,001 0 0 0 0
-------- -------- -------- -------- -----------
Total assets.................. 442,097 832,153 294,259 450,059 11,058,091
-------- -------- -------- -------- -----------
LIABILITIES
Amount due to MONY...................... 4,001 0 0 0 0
-------- -------- -------- --------- -----------
Net assets.............................. $438,096 $832,153 $294,259 $450,059 $11,058,091
======== ======== ======== ======== ===========
Net assets consist of:
Contractholders' net payments......... $416,813 $728,554 $222,914 $392,624 $ 8,078,128
Undistributed/(Accumulated) net
investment income (loss)........... 21,283 52,173 (2,951) (4,207) (98,904)
Accumulated net realized gains on
investments........................ 0 3,483 4,072 3,771 95,130
Unrealized appreciation of
investments........................ 0 47,943 70,224 57,871 2,983,737
-------- -------- -------- -------- -----------
Net assets.............................. $438,096 $832,153 $294,259 $450,059 $11,058,091
======== ======== ======== ======== ===========
Number of units outstanding *........... 33,665 51,825 10,944 18,419 317,313
-------- -------- -------- -------- -----------
Net asset value per unit outstanding.... $ 13.01 $ 16.06 $ 26.89 $ 24.43 $ 34.85
======== ======== ======== ======== ===========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-5
<PAGE> 54
MONY
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
MONY SERIES FUND, INC.
-------------------------------------------------------------------------------------------
EQUITY EQUITY INTERMEDIATE LONG TERM MONEY GOVERNMENT
GROWTH INCOME TERM BOND BOND DIVERSIFIED MARKET SECURITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dividend income................... $ 13,818 $ 12,854 $369,082 $ 557,081 $ 13,480 $ 691,256 $ 29,095
Mortality and expense risk charges
(Note 3)........................ 2,294 2,890 76,517 110,129 3,597 157,003 4,267
------- ------- ---------- ---------- -------- -------- --------
Net investment income............. 11,524 9,964 292,565 446,952 9,883 534,253 24,828
------- ------- ---------- ---------- -------- -------- --------
Realized and unrealized gains
(losses) on investments (Note
2):
Proceeds from sales............. 15,648 44,280 1,472,571 1,526,848 119,941 45,587,526 296,620
Cost of shares sold............. 9,153 34,705 1,498,048 1,529,229 100,700 45,587,526 283,024
------- ------- ---------- ---------- -------- -------- --------
Net realized gains (losses) on
investments..................... 6,495 9,575 (25,477) (2,381) 19,241 0 13,596
Net increase (decrease) in
unrealized appreciation of
investments..................... 27,822 43,846 502,043 1,758,079 34,672 0 (9,571)
------- ------- ---------- ---------- -------- -------- --------
Net realized and unrealized gains
on investments.................. 34,317 53,421 476,566 1,755,698 53,913 0 4,025
------- ------- ---------- ---------- -------- -------- --------
Net increase in net assets
resulting from operations....... $ 45,841 $ 63,385 $769,131 $2,202,650 $ 63,796 $ 534,253 $ 28,853
======= ======= ========== ========== ======== ======== ========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 55
MONY
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
ENTERPRISE ACCUMULATION TRUST
------------------------------------------------------------------
INTERNATIONAL HIGH YIELD
EQUITY SMALL CAP MANAGED GROWTH BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ----------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Dividend income............................... $1,189,471 $1,110,701 $ 9,739,464 $ 92,801 $ 49,428
Mortality and expense risk charges (Note 3)... 211,683 215,615 1,487,428 11,801 6,790
---------- ---------- ----------- -------- -------
Net investment income......................... 977,788 895,086 8,252,036 81,000 42,638
---------- ---------- ----------- -------- -------
Realized and unrealized gains on investments
(Note 2):
Proceeds from sales......................... 3,413,484 3,438,959 17,547,549 286,657 142,981
Cost of shares sold......................... 2,710,441 3,288,884 13,329,046 269,059 133,467
---------- ---------- ----------- -------- -------
Net realized gains on investments............. 703,043 150,075 4,218,503 17,598 9,514
Net increase in unrealized appreciation of
investments................................. 3,414,730 785,984 28,860,483 76,868 11,925
---------- ---------- ----------- -------- -------
Net realized and unrealized gains on
investments................................. 4,117,773 936,059 33,078,986 94,466 21,439
---------- ---------- ----------- -------- -------
Net increase in net assets resulting from
operations.................................. $5,095,561 $1,831,145 $41,331,022 $ 175,466 $ 64,077
========== ========== =========== ======== =======
</TABLE>
See notes to financial statements.
F-7
<PAGE> 56
MONY
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
QUEST FOR VALUE ACCUMULATION TRUST
--------------------------------------------------------------
MONEY
MARKET BOND EQUITY SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Dividend income............................... $ 22,791 $ 50,422 $ 982 $ 2,460 $ 50,106
Mortality and expense risk charges (Note 3)... 5,745 10,545 3,166 5,398 120,855
-------- -------- ------- ------- ----------
Net investment income (loss).................. 17,046 39,877 (2,184) (2,938) (70,749)
-------- -------- ------- ------- ----------
Realized and unrealized gains on investments
(Note 2):
Proceeds from sales......................... 500,543 151,115 24,186 67,422 620,204
Cost of shares sold......................... 500,543 147,491 20,102 63,599 518,771
-------- -------- ------- ------- ----------
Net realized gains on investments............. 0 3,624 4,084 3,823 101,433
Net increase in unrealized appreciation of
investments................................. 0 66,019 75,352 58,016 3,336,819
-------- -------- ------- ------- ----------
Net realized and unrealized gains on
investments................................. 0 69,643 79,436 61,839 3,438,252
-------- -------- ------- ------- ----------
Net increase in net assets resulting from
operations.................................. $ 17,046 $109,520 $ 77,252 $ 58,901 $3,367,503
======== ======== ======= ======= ==========
</TABLE>
See notes to financial statements.
F-8
<PAGE> 57
MONY
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONY SERIES FUND, INC.
------------------------------------------------------
INTERMEDIATE
EQUITY GROWTH EQUITY INCOME TERM BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------- ------------------- ----------
1995 1994 1995 1994 1995
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
From operations:
Net investment income.................................................... $ 11,524 $ 2,161 $ 9,964 $ 11,145 $ 292,565
Net realized gains (losses) on investments............................... 6,495 8,883 9,575 5,284 (25,477)
Net increase (decrease) in unrealized appreciation of investments........ 27,822 (10,106) 43,846 (17,480) 502,043
-------- -------- -------- -------- -----------
Net increase (decrease) in net assets resulting from operations............ 45,841 938 63,385 (1,051) 769,131
-------- -------- -------- -------- -----------
From unit transactions:
Net proceeds from the issuance of units.................................. 14,140 931 0 1,308 1,002,924
Net asset value of units redeemed or used to meet contract obligations... 13,354 17,715 41,390 25,568 993,119
-------- -------- -------- -------- -----------
Net increase (decrease) from unit transactions............................. 786 (16,784) (41,390) (24,260) 9,805
-------- -------- -------- -------- -----------
Net increase (decrease) in net assets...................................... 46,627 (15,846) 21,995 (25,311) 778,936
Net assets beginning of year............................................... 163,409 179,255 227,810 253,121 5,842,393
-------- -------- -------- -------- -----------
Net assets end of year*.................................................... $210,036 $163,409 $249,805 $227,810 $6,621,329
======== ======== ======== ======== ===========
Units outstanding beginning of year........................................ 8,121 8,985 12,401 13,713 398,645
Units issued during the year............................................... 602 43 0 69 62,985
Units redeemed during the year............................................. 632 907 2,065 1,381 63,347
-------- -------- -------- -------- -----------
Units outstanding end of year.............................................. 8,091 8,121 10,336 12,401 398,283
======== ======== ======== ======== ===========
- ---------------
*Includes undistributed net investment
income of: $ 32,493 $ 20,969 $100,358 $ 90,394 $1,346,640
<CAPTION>
LONG TERM BOND
SUBACCOUNT
-------------------------
1994 1995 1994
---------- ----------- -----------
<S> <C> <C> <C>
From operations:
Net investment income.................................................... $ 267,069 $ 446,952 $ 466,439
Net realized gains (losses) on investments............................... (36,270) (2,381) 23,548
Net increase (decrease) in unrealized appreciation of investments........ (390,623) 1,758,079 (1,185,741)
----------- ------------ ------------
Net increase (decrease) in net assets resulting from operations............ (159,824) 2,202,650 (695,754)
----------- ------------ ------------
From unit transactions:
Net proceeds from the issuance of units.................................. 2,137,359 1,593,024 2,625,849
Net asset value of units redeemed or used to meet contract obligations... 1,484,343 1,201,141 2,942,799
----------- ------------ ------------
Net increase (decrease) from unit transactions............................. 653,016 391,883 (316,950)
----------- ------------ ------------
Net increase (decrease) in net assets...................................... 493,192 2,594,533 (1,012,704)
Net assets beginning of year............................................... 5,349,201 7,723,242 8,735,946
----------- ------------ ------------
Net assets end of year*.................................................... $5,842,393 $10,317,775 $ 7,723,242
=========== ============ ============
Units outstanding beginning of year........................................ 354,965 476,335 499,364
Units issued during the year............................................... 144,778 86,051 156,210
Units redeemed during the year............................................. 101,098 67,217 179,239
----------- ------------ ------------
Units outstanding end of year.............................................. 398,645 495,169 476,335
=========== ============ ============
- ---------------
*Includes undistributed net investment
income of: $1,054,075 $ 2,300,661 $ 1,853,709
</TABLE>
See notes to financial statements.
F-9
<PAGE> 58
MONY
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MONY SERIES FUND, INC. (CONTINUED)
---------------------------------------------------------
DIVERSIFIED MONEY MARKET
SUBACCOUNT SUBACCOUNT
--------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
From operations:
Net investment income............................................. $ 9,883 $ 5,772 $ 534,253 $ 232,930
Net realized gains on investments................................. 19,241 4,941 0 0
Net increase (decrease) in unrealized appreciation of
investments..................................................... 34,672 (11,623) 0 0
-------- -------- ----------- -----------
Net increase (decrease) in net assets resulting from operations..... 63,796 (910) 534,253 232,930
-------- -------- ----------- -----------
From unit transactions:
Net proceeds from the issuance of units........................... 26,476 8,628 45,186,737 42,507,931
Net asset value of units redeemed or used to meet contract
obligations..................................................... 116,344 47,110 40,234,100 39,141,870
-------- -------- ----------- -----------
Net increase (decrease) from unit transactions...................... (89,868) (38,482) 4,952,637 3,366,061
-------- -------- ----------- -----------
Net increase (decrease) in net assets............................... (26,072) (39,392) 5,486,890 3,598,991
Net assets beginning of year........................................ 281,005 320,397 11,709,157 8,110,166
-------- -------- ----------- -----------
Net assets end of year*............................................. $254,933 $281,005 $17,196,047 $11,709,157
======== ======== =========== ===========
Units outstanding beginning of year................................. 16,718 19,018 872,441 620,100
Units issued during the year........................................ 1,375 526 3,284,314 3,214,369
Units redeemed during the year...................................... 5,941 2,826 2,928,944 2,962,028
-------- -------- ----------- -----------
Units outstanding end of year....................................... 12,152 16,718 1,227,811 872,441
======== ======== =========== ===========
- ---------------
* Includes undistributed net investment income of: $100,496 $ 90,613 $ 1,460,854 $ 926,601
** Commencement of operations.
<CAPTION>
GOVERNMENT SECURITIES
SUBACCOUNT
---------------------------
FOR THE
PERIOD
DECEMBER 16,
FOR THE 1994 **
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
<S> <C> <C>
From operations:
Net investment income............................................. $ 24,828 $ 130
Net realized gains on investments................................. 13,596 0
Net increase (decrease) in unrealized appreciation of
investments..................................................... (9,571) (161)
-------- -------
Net increase (decrease) in net assets resulting from operations..... 28,853 (31)
-------- -------
From unit transactions:
Net proceeds from the issuance of units........................... 905,752 25,706
Net asset value of units redeemed or used to meet contract
obligations..................................................... 46,064 0
-------- -------
Net increase (decrease) from unit transactions...................... 859,688 25,706
-------- -------
Net increase (decrease) in net assets............................... 888,541 25,675
Net assets beginning of year........................................ 25,675 0
-------- -------
Net assets end of year*............................................. $914,216 $ 25,675
======== =======
Units outstanding beginning of year................................. 2,571 0
Units issued during the year........................................ 85,300 2,571
Units redeemed during the year...................................... 4,300 0
-------- -------
Units outstanding end of year....................................... 83,571 2,571
======== =======
- ---------------
* Includes undistributed net investment income of: $ 24,958 $ 130
** Commencement of operations.
</TABLE>
See notes to financial statements.
F-10
<PAGE> 59
MONY
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
ENTERPRISE ACCUMULATION TRUST
----------------------------------------------------------------------------------
EQUITY SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
-------------------------- -------------------------- --------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994 1995 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income.......................... $ 977,788 $ 139,265 $ 895,086 $ 577,930 $ 8,252,036 $ 2,697,195
Net realized gains (loss) on investments....... 703,043 266,597 150,075 295,680 4,218,503 4,500,670
Net increase (decrease) in unrealized
appreciation of investments.................. 3,414,730 (140,222 ) 785,984 (993,907 ) 28,860,483 (6,171,838)
----------- ----------- ----------- ----------- ------------ -----------
Net increase (decrease) in net assets resulting
from operations................................ 5,095,561 265,640 1,831,145 (120,297 ) 41,331,022 1,026,027
----------- ----------- ----------- ----------- ------------ -----------
From unit transactions:
Net proceeds from the issuance of units........ 5,740,714 4,393,632 4,091,027 7,123,098 35,331,913 29,888,848
Net asset value of units redeemed or used to
meet contract obligations.................... 2,181,404 1,388,936 2,597,244 2,524,254 12,561,716 15,783,741
----------- ----------- ----------- ----------- ------------ -----------
Net increase from unit transactions.............. 3,559,310 3,004,696 1,493,783 4,598,844 22,770,197 14,105,107
----------- ----------- ----------- ----------- ------------ -----------
Net increase in net assets....................... 8,654,871 3,270,336 3,324,928 4,478,547 64,101,219 15,131,134
Net assets beginning of year..................... 12,764,779 9,494,443 16,098,042 11,619,495 85,431,789 70,300,655
----------- ----------- ----------- ----------- ------------ -----------
Net assets end of year*.......................... $21,419,650 $12,764,779 $19,422,970 $16,098,042 $149,533,008 $85,431,789
=========== =========== =========== =========== ============ ===========
Units outstanding beginning of year.............. 651,102 496,795 742,341 529,142 3,528,618 2,941,211
Units issued during the year..................... 242,264 223,727 182,069 330,290 1,137,075 1,208,188
Units redeemed during the year................... 94,814 69,420 116,958 117,091 411,869 620,781
----------- ----------- ----------- ----------- ------------ -----------
Units outstanding end of year.................... 798,552 651,102 807,452 742,341 4,253,824 3,528,618
=========== =========== =========== =========== ============ ===========
- ---------------
* Includes undistributed net investment income
(loss) of:.................................... $ 1,339,019 $ 361,231 $ 1,836,130 $ 941,044 $ 12,761,788 $ 4,509,752
** Commencement of operations.
<CAPTION>
INTERNATIONAL GROWTH HIGH YIELD BOND
SUBACCOUNT SUBACCOUNT
--------------------------- ---------------------------
FOR THE FOR THE
PERIOD PERIOD
NOVEMBER 22, NOVEMBER 22,
FOR THE 1994** FOR THE 1994**
YEAR ENDED THROUGH YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
From operations:
Net investment income.......................... $ 81,000 ($ 122) $ 42,638 $ 922
Net realized gains (loss) on investments....... 17,598 (458) 9,514 0
Net increase (decrease) in unrealized
appreciation of investments.................. 76,868 2,139 11,925 537
---------- ---------- ---------- --------
Net increase (decrease) in net assets resulting
from operations................................ 175,466 1,559 64,077 1,459
---------- ---------- ---------- --------
From unit transactions:
Net proceeds from the issuance of units........ 1,635,614 195,813 870,043 145,312
Net asset value of units redeemed or used to
meet contract obligations.................... 127,032 7,199 13,019 7
---------- ---------- ---------- --------
Net increase from unit transactions.............. 1,508,582 188,614 857,024 145,305
---------- ---------- ---------- --------
Net increase in net assets....................... 1,684,048 190,173 921,101 146,764
Net assets beginning of year..................... 190,173 0 146,764 0
---------- ---------- ---------- --------
Net assets end of year*.......................... $1,874,221 $ 190,173 $1,067,865 $ 146,764
========== ========== ========== ========
Units outstanding beginning of year.............. 19,197 0 14,621 0
Units issued during the year..................... 160,171 19,940 78,634 14,622
Units redeemed during the year................... 12,294 743 897 1
---------- ---------- ---------- --------
Units outstanding end of year.................... 167,074 19,197 92,358 14,621
========== ========== ========== ========
- ---------------
* Includes undistributed net investment income
(loss) of:.................................... $ 80,878 ($ 122) $ 43,560 $ 922
** Commencement of operations.
</TABLE>
See notes to financial statements.
F-11
<PAGE> 60
MONY
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
QUEST FOR VALUE ACCUMULATION TRUST
----------------------------------------------------------------------------
MONEY MARKET BOND EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------------- ----------------------------- ------------
FOR THE PERIOD FOR THE PERIOD
SEPTEMBER 17, SEPTEMBER 17,
FOR THE 1994** FOR THE 1994** FOR THE
YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994 1995
------------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss)...................... $ 17,046 $ 4,237 $ 39,877 $ 12,296 ($ 2,184)
Net realized gains (losses) on investments........ 0 0 3,624 (141) 4,084
Net increase (decrease) in unrealized appreciation
of investments.................................. 0 0 66,019 (18,076) 75,352
-------- -------- --------- -------- --------
Net increase (decrease) in net assets resulting
from operations................................... 17,046 4,237 109,520 (5,921) 77,252
-------- -------- --------- -------- --------
From unit transactions:
Net proceeds from the issuance of units........... 416,556 641,363 4,079 866,925 29,438
Net asset value of units redeemed or used to meet
contract obligations............................ 469,730 171,376 140,292 2,158 19,982
-------- -------- --------- -------- --------
Net increase (decrease) from unit transactions..... (53,174) 469,987 (136,213) 864,767 9,456
-------- -------- --------- -------- --------
Net increase (decrease) in net assets.............. (36,128) 474,224 (26,693) 858,846 86,708
Net assets beginning of year....................... 474,224 0 858,846 0 207,551
-------- -------- --------- -------- --------
Net assets end of year*............................ $438,096 $474,224 $832,153 $858,846 $294,259
======== ======== ========= ======== ========
Units outstanding beginning of year................ 37,816 0 60,890 0 10,593
Units issued during the year....................... 32,841 51,569 274 61,044 1,189
Units redeemed during the year..................... 36,992 13,753 9,339 154 838
-------- -------- --------- -------- --------
Units outstanding end of year...................... 33,665 37,816 51,825 60,890 10,944
======== ======== ========= ======== ========
- ---------------
*Includes undistributed net investment income
(loss) of:........................................ $ 21,283 $ 4,237 $ 52,173 $ 12,296 ($ 2,951)
**Commencement of operations.
<CAPTION>
SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT
----------------------------- -----------------------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
SEPTEMBER 17, SEPTEMBER 17, SEPTEMBER 17,
1994** FOR THE 1994** FOR THE 1994**
THROUGH YEAR ENDED THROUGH YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1994 1995 1994
-------------- ------------ -------------- ------------ --------------
<S> <<C> <C> <C> <C> <C>
From operations:
Net investment income (loss)...................... ($ 767) ($ 2,938) ($ 1,269) ($ 70,749 ) ($ 28,155)
Net realized gains (losses) on investments........ (12) 3,823 (52) 101,433 (6,303)
Net increase (decrease) in unrealized appreciation
of investments.................................. (5,128) 58,016 (145) 3,336,819 (353,082)
-------- -------- -------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations................................... (5,907) 58,901 (1,466) 3,367,503 (387,540)
-------- -------- -------- ----------- ----------
From unit transactions:
Net proceeds from the issuance of units........... 218,605 59,056 396,030 514,537 8,148,593
Net asset value of units redeemed or used to meet
contract obligations............................ 5,147 60,028 2,434 465,075 119,927
-------- -------- -------- ----------- ----------
Net increase (decrease) from unit transactions..... 213,458 (972) 393,596 49,462 8,028,666
-------- -------- -------- ----------- ----------
Net increase (decrease) in net assets.............. 207,551 57,929 392,130 3,416,965 7,641,126
Net assets beginning of year....................... 0 392,130 0 7,641,126 0
-------- -------- -------- ----------- ----------
Net assets end of year*............................ $207,551 $450,059 $392,130 $11,058,091 $ 7,641,126
======== ======== ======== =========== ==========
Units outstanding beginning of year................ 0 18,271 0 315,452 0
Units issued during the year....................... 10,848 2,780 18,384 17,915 320,287
Units redeemed during the year..................... 255 2,632 113 16,054 4,835
-------- -------- -------- ----------- ----------
Units outstanding end of year...................... 10,593 18,419 18,271 317,313 315,452
======== ======== ======== =========== ==========
- ---------------
*Includes undistributed net investment income
(loss) of:........................................ ($ 767) ($ 4,207) ($ 1,269) ($ 98,904 ) ($ 28,155)
**Commencement of operations.
</TABLE>
See notes to financial statements.
F-12
<PAGE> 61
MONY
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
MONY Variable Account A (the "Variable Account") is a separate investment
account established on November 28, 1990 by The Mutual Life Insurance Company of
New York ("MONY"), under the laws of the State of New York.
The Variable Account operates as a unit investment trust under the
Investment Company Act of 1940 (the "1940 Act"). The Variable Account holds
assets that are segregated from all of MONY's other assets and, at present, is
used only to support Flexible Payment Variable Annuity Policies. These policies
are issued by MONY. MONY is currently taxed as a life insurance company and will
include the Variable Account's operations in its tax return. MONY does not
expect, based upon current tax law, to incur any income tax burden upon the
earnings or realized capital gains attributable to the Variable Account. Based
on this expectation, no charges are currently being deducted from the Variable
Account for federal income tax purposes.
There are currently seventeen subaccounts within the Variable Account, each
invests only in a corresponding portfolio of the MONY Series Fund, Inc.
("Fund"), Enterprise Accumulation Trust ("Enterprise") or the Quest for Value
Accumulation Trust ("Quest") collectively the "Funds". The Funds are registered
under the 1940 Act as open end, diversified, management investment companies.
A full presentation of the related financial statements and footnotes of
the Fund, Enterprise and Quest are contained on pages 66 to 128; 129 to 174; and
175 to 230; respectively, and should be read in conjunction with these financial
statements.
2. SIGNIFICANT ACCOUNTING POLICIES
Investments:
The investment in shares of each of the respective portfolios is stated at
the net asset values of each portfolio. Except for the Money Market Portfolios,
net asset values are based upon market quotations of the securities held in each
of the corresponding portfolios of the Funds. For the Money Market Portfolio,
the net asset values are based on the amortized cost of the securities held
which approximates value.
3. RELATED PARTY TRANSACTIONS
MONY is the legal holder of the assets held by the Variable Account.
Purchase payments received from MONY by the Variable Account represent
gross purchase payments recorded by MONY less deductions retained for any
premium taxes.
A periodic deduction is made from the cash value of the contract for the
annual contract charge. The deduction is for the expenses of administration and
is treated by the Variable Account as a contractholder redemption. The amount
deducted from all subaccounts for 1995 was $161,738.
MONY receives from the Variable Account the amounts deducted for mortality
and expense risks at an annual rate of 1.25 percent of aggregate average daily
net assets. As MONY America, a wholly-owned subsidiary of MONY, acts as
investment adviser to the Fund, it receives amounts paid by the Fund for those
services.
Enterprise Capital Management, Inc., a wholly-owned subsidiary of MONY,
acts as investment adviser to Enterprise, and it receives amounts paid by
Enterprise for those services.
F-13
<PAGE> 62
MONY
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CHANGE IN ADVISORY ARRANGEMENT
Quest offered its shares to variable annuity separate accounts of the
Mutual Life Insurance Company of New York ("MONY") and its affiliate, MONY Life
Insurance Company of America as a funding vehicle for the MONYMaster and
ValueMaster variable annuity contracts issued by them. Quest also offered its
shares to variable annuity separate accounts of Provident Mutual Life Insurance
Company of Philadelphia and its affiliate, Provident Mutual Life and Annuity
Company of America (together, the "PM Companies") as a funding vehicle for
certain variable annuity contracts issued by these insurers. Owners of
ValueMaster contracts and contracts issued by the PM Companies are referred to
herein as "non-MONYMaster" contract owners.
On May 26, 1994, the Board of Trustees (the "Trustees") of Quest approved
new advisory arrangements for the Equity, Small Cap and Managed Portfolios of
Quest. Such advisory arrangements were approved by the shareholders of each
portfolio at a special meeting called for such purpose (the "Special Meeting").
Under the new arrangements, Enterprise became the investment adviser for the
three portfolios, and Quest for Value Advisors ("Quest Advisors"), the
portfolios' former investment adviser, became sub-adviser to these portfolios,
subject to the oversight of Enterprise. The two firms are rendering these
services at the same aggregate annual advisory fee rate as is currently in
effect (.60% of average daily net assets). The current advisory arrangements
were not changed for the Bond and Money Market Portfolios of Quest.
In connection with the implementation of new advisory arrangements as
described above, the assets of the Equity, Small Cap, Managed, Bond and Money
Market Portfolios of Quest supporting the non-MONYMaster contracts were
transferred on a pro-rata basis to substantially identical corresponding
portfolios of a newly-formed management investment company advised by Quest
Advisors, the new Quest for Value Accumulation Trust (the "New Quest"). The
division of net assets were in accordance with relative net asset value of the
shares of each portfolio of Quest attributable to MONYMaster contract owners and
non-MONYMaster contract owners, respectively. Shares of each portfolio
attributable to non-MONYMaster contract owners were redeemed in kind at net
asset value without a sales charge, and such assets were reinvested in the New
Quest by using such assets to purchase an equivalent number of shares of the New
Quest.
The assets transferred to New Quest were as follows:
<TABLE>
<S> <C>
Equity................................................................... $ 217,603
Small Cap................................................................ 318,781
Managed.................................................................. 8,126,663
Bond..................................................................... 783,568
Money Market............................................................. 626,212
</TABLE>
This transaction resulted in an adjustment to the basis of the net assets
reinvested in New Quest. As a result, the Equity, Small Cap, Managed and Bond
Subaccounts recognized unrealized appreciation/ (depreciation) of $37,748,
($254), $1,633,195 and ($80,426) on September 16, 1994 as a realized gain/(loss)
on the net assets redeemed.
F-14
<PAGE> 63
MONY
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS
Investments in MONY Series Fund, Inc. at cost, at December 31, 1995 consist
of the following:
<TABLE>
<CAPTION>
EQUITY EQUITY INTERMEDIATE LONG TERM MONEY GOVERNMENT
GROWTH INCOME TERM BOND BOND DIVERSIFIED MARKET SECURITIES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ------------ ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares beginning of year:
Shares................... 7,936 14,669 599,220 737,654 21,385 11,709,157 2,700
Amount................... $ 130,434 $ 212,781 $6,361,329 $8,830,039 $ 277,967 $11,709,157 $ 25,836
-------- -------- ---------- ---------- -------- ----------- --------
Shares acquired:
Shares................... 586 0 130,668 148,430 1,747 50,383,160 112,702
Amount................... $ 14,140 $ 0 $1,405,859 $1,808,602 $ 26,476 $50,383,160 $1,152,041
Shares received for
reinvestment of
dividends:
Shares................... 550 655 34,918 43,252 857 691,256 2,850
Amount................... $ 13,818 $ 12,854 $ 369,082 $ 557,081 $ 13,480 $ 691,256 $ 29,095
Shares redeemed:
Shares................... 707 2,585 138,379 128,267 7,772 45,587,526 28,711
Amount................... $ 9,153 $ 34,705 $1,498,048 $1,529,229 $ 100,700 $45,587,526 $ 283,024
-------- -------- ---------- ---------- -------- ----------- --------
Net change:
Shares................... 429 (1,930) 27,207 63,415 (5,168) 5,486,890 86,841
Amount................... $ 18,805 ($ 21,851) $ 276,893 $ 836,454 ($ 60,744) $ 5,486,890 $ 898,112
-------- -------- ---------- ---------- -------- ----------- --------
Shares end of year:
Shares................... 8,365 12,739 626,427 801,069 16,217 17,196,047 89,541
Amount................... $ 149,239 $ 190,930 $6,638,222 $9,666,493 $ 217,223 $17,196,047 $ 923,948
======== ======== ========== ========== ======== =========== ========
</TABLE>
F-15
<PAGE> 64
MONY
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS (CONTINUED)
Investments in Enterprise Accumulation Trust, Inc. at cost, at December 31,
1995 consist of the following:
<TABLE>
<CAPTION>
INTERNATIONAL HIGH YIELD
EQUITY SMALL CAP MANAGED GROWTH BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Shares beginning of year:
Shares......................... 704,069 916,745 4,103,352 38,419 29,471
Amount......................... $12,309,407 $16,031,619 $ 84,677,761 $ 188,034 $ 146,227
----------- ----------- ------------ ---------- ----------
Shares acquired:
Shares......................... 317,112 264,655 1,512,069 347,010 188,057
Amount......................... $ 6,761,111 $ 4,717,127 $ 38,830,318 $ 1,783,438 $ 993,215
Shares received for reinvestment
of dividends:
Shares......................... 57,653 63,325 397,823 17,129 10,476
Amount......................... $ 1,189,471 $ 1,110,701 $ 9,739,464 $ 92,801 $ 49,428
Shares redeemed:
Shares......................... 161,504 193,698 684,199 54,936 26,899
Amount......................... $ 2,710,441 $ 3,288,884 $ 13,329,046 $ 269,059 $ 133,467
----------- ----------- ------------ ---------- ----------
Net change:
Shares......................... 213,261 134,282 1,225,693 309,203 171,634
Amount......................... $ 5,240,141 $ 2,538,944 $ 35,240,736 $ 1,607,180 $ 909,176
----------- ----------- ------------ ---------- ----------
Shares end of year:
Shares......................... 917,330 1,051,027 5,329,045 347,622 201,105
Amount......................... $17,549,548 $18,570,563 $119,918,497 $ 1,795,214 $1,055,403
=========== =========== ============ ========== ==========
</TABLE>
F-16
<PAGE> 65
MONY
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS (CONTINUED)
Investments in Quest for Value Accumulation Trust, Inc. at cost, at
December 31, 1995 consist of the following:
<TABLE>
<CAPTION>
MONEY
MARKET BOND EQUITY SMALL CAP MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Shares beginning of year:
Shares................................... 474,224 93,353 11,454 22,562 366,833
Amount................................... $ 474,224 $ 876,922 $ 212,679 $ 392,275 $7,994,208
-------- -------- -------- -------- ----------
Shares acquired:
Shares................................... 441,624 464 1,324 3,534 21,652
Amount................................... $ 441,624 $ 4,357 $ 30,476 $ 61,052 $ 548,811
Shares received for reinvestment of
dividends:
Shares................................... 22,619 5,141 51 145 2,203
Amount................................... $ 22,619 $ 50,113 $ 982 $ 2,460 $ 50,106
Shares redeemed:
Shares................................... 500,543 15,690 1,082 3,636 23,797
Amount................................... $ 500,543 $ 147,491 $ 20,102 $ 63,599 $ 518,771
-------- -------- -------- -------- ----------
Net change:
Shares................................... (36,300) (10,085) 293 43 58
Amount................................... ($ 36,300) ($ 93,021) $ 11,356 ($ 87) $ 80,146
-------- -------- -------- -------- ----------
Shares end of year:
Shares................................... 437,924 83,268 11,747 22,605 366,891
Amount................................... $ 437,924 $ 783,901 $ 224,035 $ 392,188 $8,074,354
======== ======== ======== ======== ==========
</TABLE>
F-17
<PAGE> 66
COMMENT ON FINANCIAL STATEMENTS OF MONY
The following financial statements relate to the condition and operations
of MONY and should be distinguished from the financial statements of MONY
Variable Account A. As explained on the preceding pages, the values of the
interests of Contractholders under the Contract described in this Prospectus are
affected by the investment results of MONY Variable Account A. Financial
statements of MONY should be considered only as bearing upon the ability of MONY
to meet its obligations under the Contract.
F-18
<PAGE> 67
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
The Mutual Life Insurance Company of New York:
We have audited the accompanying balance sheets of The Mutual Life
Insurance Company of New York as of December 31, 1995 and 1994, and the related
statements of operations, surplus, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Mutual Life Insurance
Company of New York as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
accounting practices prescribed or permitted by the Insurance Department of the
State of New York, which are considered generally accepted accounting principles
for mutual life insurance companies.
Our audits were conducted for the purpose of expressing an opinion on the
financial statements taken as a whole. The Supplemental Schedule of Selected
Financial Data is presented to comply with the NAIC's Annual Statement
Instructions and is not a required part of the basic financial statements. The
Supplemental Schedule of Selected Financial Data has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated, in all material respects, in relation to the
basic financial statements taken as a whole.
New York, New York
February 21, 1996
F-19
<PAGE> 68
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Cash.............................................................. $ 17,199 $ 15,466
Investments:
Short-term investments.......................................... 248,671 135,206
Bonds........................................................... 3,769,905 3,568,544
Preferred stocks................................................ 17,173 19,467
Common stocks................................................... 264,166 191,795
Subsidiary companies............................................ 135,875 123,401
Mortgage loans.................................................. 1,636,538 1,771,305
Real estate..................................................... 1,739,890 1,943,241
Policy loans.................................................... 1,180,454 1,188,775
Other invested assets........................................... 352,536 339,151
Investment income due and accrued................................. 143,412 139,570
Premiums deferred and uncollected................................. 207,142 210,547
Separate account assets........................................... 1,530,226 1,835,772
Federal income taxes recoverable.................................. -- 45,045
Amounts due from reinsurers....................................... 81,200 104,622
Other assets...................................................... 46,705 38,094
----------- -----------
Total assets................................................. $11,371,092 $11,670,001
=========== ===========
POLICY RESERVES, LIABILITIES AND SURPLUS
Policy reserves:
Life insurance and annuity reserves............................. $ 7,316,732 $ 7,385,975
Health insurance reserves....................................... 146,802 134,796
Deposits left with the Company.................................. 513,347 496,421
Liabilities:
Dividends to policyholders...................................... 204,332 210,841
Policy claims in process of settlement.......................... 66,003 65,559
Funds held under coinsurance.................................... 112,025 117,379
Taxes accrued................................................... 64,148 160,636
Notes payable and accrued interest.............................. 76,405 --
Separate account liabilities.................................... 1,520,965 1,828,368
Other liabilities............................................... 290,083 266,080
Interest maintenance reserve.................................... 10,028 3,728
Investment reserves............................................. 90,000 90,000
Asset valuation reserve......................................... 271,205 230,148
----------- -----------
Total policy reserves and liabilities........................ 10,682,075 10,989,931
Surplus:
Surplus notes................................................... 72,317 72,317
Special surplus funds........................................... 27,250 27,150
Unassigned surplus.............................................. 589,450 580,603
----------- -----------
Surplus...................................................... 689,017 680,070
----------- -----------
Total policy reserves, liabilities and surplus............... $11,371,092 $11,670,001
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE> 69
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
----------------------------
1995 1994
---------- -----------
<S> <C> <C>
Premiums, annuity considerations and fund deposits............... $1,214,625 $ 1,380,437
Net investment income............................................ 627,609 590,504
Revenue from ceded reinsurance................................... 86,104 155,071
Other income (net)............................................... 20,934 38,969
---------- -----------
1,949,272 2,164,981
---------- -----------
Policyholder and contractholder benefits......................... 1,517,313 1,508,822
Change in policy and contract reserves........................... (56,389) (32,767)
Commissions...................................................... 62,211 70,923
Operating expenses............................................... 273,783 291,003
Reinsurance of group pension liabilities......................... 540,230 2,619,449
Transfer to/(from) separate accounts............................. (677,525) (2,607,724)
Other deductions (net)........................................... 7,094 6,927
---------- -----------
1,666,717 1,856,633
---------- -----------
Net gain from operations before dividends and federal income
taxes.......................................................... 282,555 308,348
Dividends to policyholders....................................... 210,675 215,932
---------- -----------
Net gain from operations before federal income taxes............. 71,880 92,416
Federal income taxes............................................. 10,057 6,700
---------- -----------
Net gain from operations......................................... 61,823 85,716
Net realized capital losses (See Note 8)....................... (8,480) (4,296)
---------- -----------
Net Income....................................................... $ 53,343 $ 81,420
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE> 70
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF SURPLUS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
Surplus, beginning of year............................................. $680,070 $600,175
-------- --------
Net income............................................................. 53,343 81,420
Change in net unrealized capital gains/(losses)........................ 10,220 (55,211)
Change in non-admitted assets.......................................... (7,689) (5,274)
Change in asset valuation reserve...................................... (41,057) (5,149)
Change in policy reserve valuation basis............................... 5,081 --
Provision for contingencies............................................ (11,300) (9,800)
Issuance of surplus notes (See Note 17)................................ -- 69,990
Other changes to surplus............................................... 349 3,919
-------- --------
Net change in surplus for the year..................................... 8,947 79,895
-------- --------
Surplus, end of year................................................... $689,017 $680,070
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-22
<PAGE> 71
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------
1995 1994
----------- -----------
<S> <C> <C>
CASH FLOW PROVIDED FROM OPERATIONS:
Premiums, annuity considerations and fund deposits.............. $ 1,221,753 $ 1,380,988
Investment income net of investment expenses.................... 674,055 640,325
Other income.................................................... 198,984 97,437
Net change in policy loans...................................... 8,388 23,940
Policy benefits paid............................................ (1,526,855) (1,492,816)
Transfers from/(to) separate accounts........................... 133,921 (11,525)
Commissions, other expenses and taxes paid...................... (325,054) (360,655)
Dividends to policyholders...................................... (217,183) (209,576)
Federal income taxes (excluding capital gains tax).............. (66,395) 6,502
----------- -----------
Net cash from operations..................................... 101,614 74,620
----------- -----------
PROCEEDS FROM INVESTMENTS SOLD, MATURED OR REPAID:
Bonds........................................................... 685,588 805,903
Stocks.......................................................... 81,590 115,515
Mortgage loans.................................................. 190,373 337,436
Real estate..................................................... 279,098 34,725
Other invested assets........................................... 15,260 27,615
Other........................................................... (45,091) 145
----------- -----------
Total investment proceeds.................................... 1,206,818 1,321,339
----------- -----------
OTHER CASH PROVIDED:
Notes payable (See Note 16)..................................... 76,341 --
Issuance of surplus notes (See Note 17)......................... -- 69,990
Other sources................................................... 8,263 1,381
----------- -----------
Total cash provided.......................................... 1,393,036 1,467,330
----------- -----------
CASH APPLIED:
Cost of investments acquired:
Bonds........................................................ 879,648 1,061,124
Stocks....................................................... 137,745 92,753
Mortgage loans............................................... 117,247 112,269
Real estate.................................................. 76,032 128,269
Other invested assets........................................ 24,318 36,988
----------- -----------
Total investments acquired................................. 1,234,990 1,431,403
----------- -----------
Other cash applied.............................................. 42,848 90,125
----------- -----------
Total cash applied........................................... 1,277,838 1,521,528
----------- -----------
Net change in cash and short-term investments................... 115,198 (54,198)
Cash and short-term investments, beginning of year................ 150,672 204,870
----------- -----------
Cash and short-term investments, end of year...................... $ 265,870 $ 150,672
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE> 72
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations
The Mutual Life Insurance Company of New York (the "Company") is a mutual
life insurance company primarily engaged in the business of providing individual
life insurance and disability income protection and asset accumulation products.
The Company's principal markets consist of business owners, growing families,
and pre-retirees. The Company's insurance and financial products are marketed
and distributed directly to individuals primarily through the Company's career
agency sales force. These products are sold throughout the United States and
Puerto Rico.
Basis of Presentation
The Company's financial statements have been prepared on the basis of
accounting practices and procedures prescribed or permitted by the Insurance
Department of the State of New York, which are currently considered to be
generally accepted accounting principles ("GAAP") for mutual life insurance
companies domiciled in New York (see Note 18). The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
The following is a description of the principal accounting practices and
procedures:
a. Premiums are included in revenue over the premium payment periods
of the related policies. Annuity considerations and fund deposits are
included in revenue as received.
Commissions and other costs related to issuance, maintenance and
settlement of policies are charged to operations in the year incurred.
b. Short-term investments are carried at cost and consist of
securities with maturities of three months or less. Bonds eligible for
amortization under rules promulgated by the National Association of
Insurance Commissioners ("NAIC") are carried at amortized cost, while all
other bonds are carried at values adopted by the NAIC, which approximate
fair market value. Loan backed bonds and structured securities are valued
at amortized cost using the effective interest method considering
anticipated prepayments at the date of purchase; significant changes in the
estimated cash flows from the original purchase assumptions are accounted
for using the retrospective method. Common stocks are carried at market
value except investments in subsidiaries, which are generally carried on
the equity basis. Preferred stocks are carried principally at cost except
for those securities in or near default which are valued at market. Policy
loans are carried at their unpaid balances.
Mortgage loans other than those in process of foreclosure are carried
at their unpaid balances adjusted for unamortized discount. Real estate
owned for investment is carried at depreciated cost, less encumbrances ($2
million in 1995 and $7 million in 1994). Joint ventures and limited
partnerships in real estate, cable television and energy are included in
other invested assets and are carried principally at their equity value.
Other investments are generally carried at cost.
Real estate acquired through foreclosure is carried at the lower of
cost or estimated fair value at the time of foreclosure, less accumulated
depreciation and encumbrances. Mortgage loans in process of foreclosure are
also carried at the lower of cost or estimated fair value. Fair value is
determined by using the estimated discounted cash flows expected from the
underlying real estate properties. These projected cash flows are based on
estimates regarding future operating expenses, lease rates, occupancy
levels and investors' targeted yields.
F-24
<PAGE> 73
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
The Company provides, through a direct charge to surplus, an
investment valuation reserve for permanent impairment of real estate
investments, joint ventures and limited partnerships in real estate and
mortgage loans delinquent for more than 60 days and restructured mortgage
loans. This reserve reflects, in part, the excess of the carrying value of
such assets over the estimated undiscounted cash flows expected from the
underlying real estate properties. These projected cash flows are based on
estimates similar to those described in the preceding paragraph. As of
December 31, 1995 and 1994, the Company's investment reserve for its
mortgage loan and real estate investments was $90 million.
c. Realized investment gains and losses (net of tax) for bonds and
mortgage loans resulting from changes in interest rates are deferred, and
credited or charged to the Interest Maintenance Reserve ("IMR"). These
amounts are amortized into net income over the remaining years to expected
maturity of the assets sold. Unrealized capital gains and losses are
recorded directly to surplus.
The Asset Valuation Reserve ("AVR") is based upon a formula prescribed
by the NAIC and functions as a reserve for potential non-interest-related
investment losses. In addition, realized investment gains and losses (not
subject to the IMR) and unrealized gains and losses result in offsetting
increases and decreases in the AVR. These changes to the AVR are recorded
directly to surplus.
d. Policy reserves for life insurance, annuities, and supplemental
benefits are computed by using prescribed statutory interest rates and
mortality factors. Reserves computed by a modified commissioners' reserve
valuation method represent approximately 74% of gross life insurance
reserves at December 31, 1995 and 1994.
Reserves for life insurance were principally determined by using the
1941, 1958 and 1980 Commissioners' Standard Ordinary Mortality and the
American Experience Tables and assumed interest rates ranging from 2.25% to
7%. Reserves for individual and group annuity mortality tables have assumed
interest rates ranging from 2.25% to 9.5%.
During 1995, the Company changed its methods of accounting for certain
minimum reserves with the approval of the New York State Insurance
Department. The Company incorporated 10-year select factors in its minimum
mortality standard for certain 1980 CSO products, resulting in an increase
in surplus of $5.1 million.
Policy claims in process of settlement include provisions for payments
to be made on reported claims and on claims incurred but not reported.
e. The Company's subsidiaries are not consolidated. The subsidiaries
are carried principally on the statutory equity basis. Changes in the
Company's equity in subsidiaries are included in unrealized capital gains
and losses. Dividends from subsidiaries are recognized as investment income
when declared.
f. Dividends to policyholders are determined annually by the Board of
Trustees.
g. Certain assets designated as "non-admitted" assets (principally
miscellaneous receivables) are excluded from the balance sheets.
h. Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of certain
contractholders. Approximately 98% of these assets consist of securities
reported at market value and 2% consist of fixed income securities carried
at amortized cost. Premiums, benefits and expenses of the separate accounts
are included in the Company's statements of operations.
i. No deferred taxes are recognized for differences that exist between
financial reporting and taxable income.
F-25
<PAGE> 74
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: -- (CONTINUED)
j. The Company uses the constant-yield method of depreciation for
substantially all investment real estate, real estate joint ventures and
cable television limited partnerships acquired prior to January 1, 1991.
Acquisitions subsequent to January 1, 1991 and foreclosed real estate are
depreciated on the straight line method. Real estate assets and
improvements are generally depreciated over ten to forty year periods and
leasehold improvements over the lives of the leases. Depreciation expense
related to investments in real estate was $48.8 million and $50.5 million
in 1995 and 1994, respectively; accumulated depreciation was $214.3 million
and $185.1 million at December 31, 1995 and 1994, respectively.
k. Special surplus funds consist primarily of amounts required by the
State of New York to be assigned as surplus funds for group insurance,
separate accounts, and aviation reinsurance.
l. Certain amounts for 1994 have been reclassified to conform to the
1995 presentation.
2. REINSURANCE OF GROUP PENSION BUSINESS:
On December 31, 1993, the Company entered into an agreement with AEGON USA,
Inc. ("AEGON USA") under which the Company agreed to transfer $6.3 billion in
group pension assets and liabilities, including $2.7 billion of general account
assets and $3.6 billion of separate account assets. Pursuant to the transaction,
the Company transferred substantially all of its group pension business and
operations, including its full service group pension contracts, consisting
primarily of tax-deferred annuity, 401(k) and managed funds lines of business,
to AEGON USA's wholly-owned subsidiary, AUSA Life Insurance Company, Inc. ("AUSA
Life"). AUSA Life also acquired the corporate infrastructure supporting the
group pension business, including personnel, data processing systems, facilities
and regional offices. In connection with the transaction, the Company and AEGON
USA have entered into certain service agreements. These agreements, among other
things, provide that the Company will continue to manage the transferred assets,
and that AUSA Life will continue to provide certain administrative services to
the Company's remaining group pension contracts not included in the transfer.
Effective with the agreement, AUSA reinsured, on an indemnity reinsurance
basis, the contract liabilities funded by such general account assets. AUSA
agreed to reinsure such general account liabilities on an assumption reinsurance
basis upon the consent of general account contractholders to assumption of their
contracts pursuant to the Group Pension Transaction. The separate account assets
and liabilities were to be transferred to AUSA based upon the consent of
separate account contractholders to assumption of their contracts. As of
December 31, 1995, approximately $6.0 billion, representing 95% of the original
transferred contractholder liabilities were converted from indemnity to
assumption reinsurance, whereby AUSA Life replaced the Company as the primary
obligor. As of December 31, 1995, the remaining nontransferred assets subject to
indemnity reinsurance in the Company's general account amounted to approximately
$215 million in addition to separate account assets of approximately $110
million. To the extent that assumption reinsurance is precluded by law or
contractholder election, certain contracts will continue to be reinsured under
indemnity agreements. If any such contractholder rejects the assumption, or if
the assumption of any holder's contract is precluded by law, such holder's
contract will continue to be reinsured by AUSA Life on an indemnity reinsurance
basis, and the Company will remain contingently liable under the contract in the
event that AUSA Life fails to perform its reinsurance obligations.
In connection with the transaction at December 31, 1993, the Company made a
$200 million capital investment in AEGON USA by purchasing $150 million of
Series A and $50 million of Series B notes, which have a term of nine years and
receive a market rate of interest. In addition to interest payments on the
notes, the Company has the right to receive certain payments based on the
profits of the transferred business in force on the transaction date, a future
payment tied to the determination of the value of the transferred business at
the end of nine years, and a potential payment based on new business growth. The
Company has the option to
F-26
<PAGE> 75
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. REINSURANCE OF GROUP PENSION BUSINESS: -- (CONTINUED)
purchase additional Series A notes with payments from the profits of the
transferred business. Net operating losses, if any, on the transferred business
for any year will be carried forward to reduce profit payments in subsequent
years. Any deficit remaining at the end of the nine year term and any adjustment
related to the final value of the transferred business may only be applied to
reduce the principal amount of any outstanding Series A notes. At December 31,
1995, the Company owned $233.7 million of Series A Notes. During 1995 and 1994,
the Company earned $70.2 million and $84.7 million, respectively, based upon the
profits of the transferred group pension business and recorded this amount as
revenue from ceded reinsurance in the statement of operations. Pursuant to the
assumption agreement, the Company expects to acquire approximately $67 million
of additional Series A notes during 1996 with payments from the profits of the
transferred business.
3. SUBSIDIARY COMPANIES:
At December 31, 1995 and 1994, the Company's investments in subsidiaries,
all of which are wholly-owned, consisted of the following:
<TABLE>
<CAPTION>
1995 1994
------ ------
(IN MILLIONS)
<S> <C> <C>
MONY Life Insurance Company of America..................... $115.6 $104.9
Non-life subsidiaries...................................... 20.3 18.5
------ ------
$135.9 $123.4
====== ======
</TABLE>
At December 31, 1995, MONY Life Insurance Company of America ("MONY
America") had assets of $3.1 billion; including bonds ($1,018 million), mortgage
loans ($173 million) and separate account assets ($1,686 million); and
liabilities of $3.0 billion, primarily life insurance and annuity reserves ($1.3
billion) and separate account liabilities ($1.7 billion). Capital and surplus of
MONY America was $115.6 million. In 1995 and 1994, total revenues of MONY
America were $715 million and $597 million, benefits and expenses were $701 and
$585 million and net income, including realized capital losses, was $5 and $6
million, respectively.
During 1995, the Company contributed $10 million to the capital of MONY
America. During 1995 and 1994, the Company made aggregate capital contributions
of $2.5 and $3.5 million to certain non-life subsidiaries. The Company also
received aggregate capital distributions of $5.3 million in 1995 and $3 million
in 1994 from its non-life subsidiaries. In 1994, the Company purchased
commercial mortgages with a book value of $5 million from MONY America for
consideration of $4 million. The consideration was based on the estimated fair
value of the assets.
The Company and MONY America are parties to an agreement dated February 28,
1995 whereby the Company agrees to reimburse MONY America to the extent that
MONY America's recognized loss as a result of mortgage loan default or
foreclosure or subsequent sale of the underlying collateral exceeds the 75% loan
to value ratio for each such mortgage loan at origination. Pursuant to the
agreement, the Company made payments to MONY America totaling $2.1 million in
1995.
4. COMMITMENTS AND CONTINGENCIES:
The Company has guaranteed to certain states that the surplus of MONY
America will be maintained at amounts at least equal to the minimum surplus
required for admission to those states.
During 1986 and 1987, MONY Funding Inc., a wholly-owned subsidiary of the
Company, issued $150 million of 8 1/4% notes due October 29, 1996 and $125
million of 8 1/8% notes due April 7, 1997, and invested the proceeds in
partially amortizing and nonamortizing commercial mortgage loans scheduled to
mature concurrently with the notes. As of December 31, 1995, the Company had
repurchased approximately
F-27
<PAGE> 76
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. COMMITMENTS AND CONTINGENCIES: -- (CONTINUED)
$60 million of these notes. The Company has guaranteed the principal and
interest of the remaining outstanding notes.
At December 31, 1995, the Company has guaranteed $34 million related to
real estate held by unrelated investors.
The Company maintains lines of credit with domestic banks totaling $150
million with scheduled renewal dates during 1996. The Company has not borrowed
against its credit lines since 1982.
In 1994, the Company reached an agreement for the transfer of the
management of its information systems operations to Computer Sciences
Corporation ("CSC"). Under the terms of this agreement to operate, manage and
enhance its information systems operations, the Company will pay CSC an
estimated $171 million over the remaining contract period. The total payments
under the contract may vary based upon certain factors, including the volume of
computing services and the introduction of new information systems technology.
The Company is a defendant in various legal actions arising primarily from
its investment and insurance operations. In addition, insurance companies are
subject to assessments, up to statutory limits, by state guaranty funds for
losses of policyholders of insolvent insurance companies. In the opinion of
management, assessments and the outcome of the legal proceedings will not have a
material adverse effect on the financial position and the results of operations
of the Company.
5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS:
Employee and Field Underwriter Retirement Plans
The Company has a qualified pension plan covering substantially all of its
salaried employees. The provisions of the plan provide both (a) defined benefit
accruals based on (i) years of service, (ii) the employee's final average annual
compensation and (iii) wage bases or benefits under Social Security and (b)
defined contribution accruals based on a Company matching contribution equal to
100% of the employee's elective deferrals under the incentive savings plan for
employees up to 3% of the employee's eligible compensation and an additional 2%
of eligible compensation for each active participant. The Company's funding and
accounting policies are to contribute annually the maximum amount that can be
deducted for federal income taxes and to charge expenses in the year in which
the contributions are made. No contributions were made in the current year or
prior year because the plan was subject to the full funding limitation under
Section 412 of the Internal Revenue Code. At December 31, 1994, the plan's
accumulated benefit obligation, determined in accordance with Statements of
Financial Accounting Standards Nos. 87 and 88 and based on an assumed settlement
rate of 8%, was $226.5 million, including vested benefits of $225.5 million. The
fair value of Plan assets as of December 31, 1994 was $334.8 million.
The Company also has a qualified money purchase pension plan covering
substantially all career field underwriters. Company contributions of 5% of
earnings plus an additional 2% of such earnings in excess of the social security
wage base are made each year. In addition, after-tax voluntary field underwriter
contributions of up to 10% of earnings are allowed. At December 31, 1994, the
fair value of plan assets was $176.2 million.
The Company sponsors a non-qualified defined benefit pension plan, which
provides benefits in excess of Internal Revenue Service limits to certain
employees. The benefits are based on years of service and the employee's final
average annual compensation. Pension benefits are paid from the Company's
general account. The amounts accrued by the Company for this plan, based on an
assumed 7.3% weighted average interest rate for 1995 and 7.4% for 1994 were
$33.1 million and $32.4 million in 1995 and 1994, respectively. The Company also
maintains various non-qualified defined contribution plans for field
underwriters and key employees. The amounts accrued for these various plans were
$54.2 million and $43.4 million in 1995 and 1994, respectively.
F-28
<PAGE> 77
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. PENSION PLANS AND OTHER POST-RETIREMENT BENEFITS: -- (CONTINUED)
Deferred Compensation Plan
The Company has incentive savings plans in which substantially all
employees and career field underwriters are eligible to participate. The Company
matches employee and field underwriter contributions up to 3% and 2%,
respectively, of eligible compensation as defined. In addition, for employees,
the Company contributes 2% of eligible compensation for non-officer employees,
and may contribute up to an additional 3%. In addition, the Company has two
compensation plans for key employees which allow deferral of current
compensation, as allowed by New York Insurance Law.
Postretirement Benefits
The Company provides certain health care and life insurance (postretirement
benefits) for retired employees and field underwriters. In accordance with NAIC
requirements, the Company accrues the estimated employee cost of retiree benefit
payments for current retirees and fully vested employees and field underwriters
by estimating the actuarial present value of benefits expected to be paid after
retirement.
At December 31, 1992, the Company determined that the total pre-tax
postretirement benefit obligation approximated $82.9 million. The Company has
elected to amortize this transition obligation over a period of twenty years as
an expense in its statement of operations. The amount of unrecognized transition
obligation was reduced by approximately $10.8 million due to plan amendments
adopted during 1995. The amount of transition obligation amortized in 1995 and
1994 totaled approximately $3.6 million and $4.2 million, respectively. The
total cost to provide life insurance and health benefits for fully vested and
retired employees and field underwriters including the expense described above,
was $9.2 million in 1995 and $12.4 million in 1994.
At December 31, 1995, the unfunded postretirement benefit obligation for
retirees and fully vested employees was $81.4 million, with $17.3 million
included in other liabilities. The discount rate used in determining the
accumulated postretirement benefit obligation was 6.75%, and the health care
cost trend rate was 11.0% graded to 6.0% over 14 years.
The health care cost trend rate assumption has an effect on the amounts
reported. To illustrate, an increase in the assumed health care cost trend rates
of one percentage point in each year would increase the estimated postretirement
benefit obligation as of December 31, 1995 by $0.8 million and the estimated
eligibility cost and interest cost components of net periodic postretirement
benefit cost for 1995 by $0.1 million.
6. FEDERAL INCOME TAXES:
The Company files a consolidated federal income tax return with its life
and non-life affiliates. The allocation of federal income taxes is based upon
separate return calculations with current credit for net losses. Intercompany
tax balances are settled annually in the first quarter.
The Company's federal income tax returns for years through 1989 have been
examined with no proposed material adjustments. In the opinion of management,
adequate provision has been made for any additional taxes which may become due
with respect to open years.
Pre-tax operating gains and pre-tax realized gains, as reported in the
accompanying statements of operations, differ from taxable income reported for
tax purposes. Significant differences include the deferral and amortization of
policy acquisition costs for tax purposes, the difference between statutory and
tax reserves, the taxable portion of the Company's surplus (as applicable to
mutual life insurers), depreciation expense and related recapture, capital gains
deferred to the IMR, alternative minimum tax preference items and equity in
partnerships and joint ventures.
F-29
<PAGE> 78
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. FEDERAL INCOME TAXES: -- (CONTINUED)
During 1994, the Company reached a settlement with the United States
Department of Justice relating to tax litigation for the years 1981-1983. The
settlement provided for a refund of taxes of $15 million. Interest on the refund
of approximately $30 million was included in other income in the 1994 statement
of operations. The Company recorded a $45 million receivable for the combined
tax refund and related interest as federal income taxes recoverable at December
31, 1994. The Company received $47 million on August 28, 1995 which included
additional interest through that date.
7. LEASES:
The Company has entered into various operating lease agreements for office
space and furniture and equipment. These leases have remaining non-cancelable
lease terms in excess of one year. Total rental expense for these operating
leases amounted to $25.1 million in 1995 and $25.8 million in 1994. The future
minimum rental obligations under these leases at December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
1996............................................................. $ 20.2
1997............................................................. 18.2
1998............................................................. 14.3
1999............................................................. 11.1
2000............................................................. 11.3
Later years...................................................... 66.0
------
$ 141.1
======
</TABLE>
8. CAPITAL GAINS/(LOSSES):
The Company realized net capital losses (after tax and IMR) of $(8) million
in 1995 and $(4) million in 1994 as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
(IN MILLIONS)
<S> <C> <C>
REALIZED CAPITAL GAINS/(LOSSES)
Bonds and preferred stock................................. $ 1 $ 0
Common stock.............................................. 8 (2 )
Mortgage loans............................................ (3 ) 7
Real estate and other investments......................... 0 (3 )
--- ---
6 2
Tax provision............................................. (5 ) (4 )
Transferred to IMR, net of taxes.......................... (9 ) (2 )
--- ---
Net realized capital gains/(losses)..................... $(8 ) $(4 )
=== ===
</TABLE>
During 1995 and 1994, realized capital gains resulting from changes in
interest rates on fixed income securities of $9.2 million (net of $4.9 million
tax) and $1.6 million (net of $0.6 million tax), respectively, were transferred
to the Company's IMR for future amortization into net income.
The Company incurred net unrealized gains of $10 million in 1995 and net
unrealized capital losses of $55 million in 1994. The 1995 and 1994 unrealized
gains and losses include writedowns of approximately $13 million and $86
million, respectively, on real estate acquired through foreclosure and mortgage
loans in
F-30
<PAGE> 79
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
8. CAPITAL GAINS/(LOSSES): -- (CONTINUED)
process of foreclosure, including real estate held by subsidiaries. These gains
and losses are detailed by asset type in the table below:
<TABLE>
<CAPTION>
1995 1994
---- ----
(IN MILLIONS)
<S> <C> <C>
UNREALIZED CAPITAL GAINS/(LOSSES)
Bonds and preferred stock................................. $ 7 $ 19
Common stock.............................................. 10 (6)
Mortgage loans............................................ (13) (10)
Real estate............................................... 0 (73)
Subsidiaries.............................................. 8 2
Other investments......................................... (2) 13
---- ----
Total unrealized capital losses......................... $ 10 $(55)
==== ====
</TABLE>
9. COMMON STOCKS:
Common stocks include marketable equity securities carried at market values
of $136.3 million and $55.9 million at December 31, 1995 and 1994, respectively,
and nonmarketable equity investments carried at estimated fair values of $127.9
million and $135.9 million at December 31, 1995 and 1994, respectively. The cost
of marketable equity securities was $115.1 million and $62.7 million at December
31, 1995 and 1994, respectively. At December 31, 1995, gross unrealized gains
were $29.8 million, and gross unrealized losses were $8.6 million for marketable
equity securities.
F-31
<PAGE> 80
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
10. FIXED INCOME SECURITIES:
Fixed Income Securities by Investment Type:
The amortized cost and estimated fair value (see note 13) of investments in
fixed income securities which include short-term investments, bonds and
preferred stocks as of December 31, 1995 and December 31, 1994 are as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------------- --------------- --------------- --------------------
(DOLLARS IN MILLIONS) 1995 1994 1995 1994 1995 1994 1995 1994
- ------------------------------------------- -------- -------- ------ ----- ----- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities and obligations of
U.S. government agencies................. $ 165.0 $ 314.5 $ 4.5 $ 0.9 $ 0.0 $ 4.2 $ 169.5 $ 311.2
Collateralized Mortgage Obligations:
Government Agency-Backed................. 254.1 250.5 4.3 0.0 0.7 26.6 257.7 223.9
Non-Agency Backed........................ 66.3 52.2 2.4 0.1 0.2 2.6 68.5 49.7
Other asset-backed securities:
Government Agency-Backed................. 83.4 90.0 4.0 1.1 0.3 5.1 87.1 86.0
Non-Agency Backed........................ 221.7 168.9 13.3 2.4 0.3 3.7 234.7 167.6
Foreign governments........................ 4.5 4.5 0.1 0.0 0.0 0.1 4.6 4.4
Utilities.................................. 448.5 393.7 28.6 6.8 1.0 24.4 476.1 376.1
Affiliates................................. 30.2 30.2 0.7 0.0 0.0 0.1 30.9 30.1
Corporate bonds............................ 2,496.2 2,264.0 141.7 24.6 16.4 99.6 2,621.5 2,189.0
-------- -------- ------ ----- ----- ------ -------- --------
Total bonds............................ 3,769.9 3,568.5 199.6 35.9 18.9 166.4 3,950.6 3,438.0
Redeemable preferred stock................. 17.2 19.5 0.3 0.2 0.5 0.7 17.0 19.0
Commercial paper........................... 248.7 135.2 0.0 0.0 0.0 0.0 248.7 135.2
-------- -------- ------ ----- ----- ------ -------- --------
Total...................................... $4,035.8 $3,723.2 $199.9 $36.1 $19.4 $167.1 $4,216.3 $3,592.2
======== ======== ====== ===== ===== ====== ======== ========
</TABLE>
Amortized cost represents the principal amount of fixed income securities
adjusted by unamortized premium or discount and reduced by writedowns of $33.5
million and $40.5 million for bonds and $0.8 million and $0.3 million for
preferred stock at December 31, 1995 and 1994, respectively, as required by the
NAIC for securities which are in or near default.
At December 31, 1995, 79% of the Company's Collateralized Mortgage
Obligation (CMO) portfolio was held in U.S. government and government
agency-backed securities. The remainder of the CMO portfolio consisted of NAIC
category 1 investment grade securities.
Maturities of Fixed Income Securities:
The amortized cost of fixed income securities and estimated fair value by
maturity date (excluding scheduled sinking funds) as of December 31, 1995 is the
following:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
-------- --------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less................................. $ 335.4 $ 339.7
Due after one year through five years................... 795.0 819.6
Due after five years through ten years.................. 1,817.7 1,904.0
Due after ten years..................................... 1,087.7 1,153.0
-------- --------
$4,035.8 $4,216.3
======== ========
</TABLE>
F-32
<PAGE> 81
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
10. FIXED INCOME SECURITIES: -- (CONTINUED)
Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.
Proceeds from sales of investments in debt securities during 1995 and 1994
were $383.5 million and $331.9 million, respectively. Gross gains of $10.2
million in 1995 and $19.5 million in 1994, and gross losses of $14.5 million in
1995 and $10.9 million in 1994 were realized on these sales.
11. OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK:
Financial Instruments with Off-Balance Sheet Risk:
In 1992, the Company entered into an agreement with a bank to lend
securities to approved borrowers. There were no loaned securities as of December
31, 1995 or 1994.
Concentration of Credit Risk:
At December 31, 1995 and 1994, the Company had no single investment
(excluding U.S. Treasury securities) exceeding 2.9% and 2.1%, respectively, of
total general account assets.
The bond portfolio is diversified by industry type. The industries that
comprise more than 10% of the carrying value of the bond portfolio at December
31, 1995 are Financial Services of $555 million (14.7%), Government and Agencies
of $507 million (13.5%), Public Utilities of $449 million (11.9%), Other
Manufacturing of $400 million (10.6%), and Consumer goods and services of $381
million (10.1%). At December 31, 1994, the industries comprising in excess of
10% of the bond portfolio carrying value were Government and Agencies of $677
million (18.9%), Financial Services of $477 million (13.4%), and Consumer goods
and services of $356 million (10.0%).
The Company holds below investment grade bonds of $227 million at December
31, 1995. Below investment grade bonds are defined as those securities rated in
categories 3 through 6 by the NAIC, which are approximately equivalent to bonds
rated below BBB by rating agencies. These bonds consist mostly of privately
issued bonds, which are monitored by the Company through extensive internal
analysis of the financial condition of the borrowers, and which include
protective debt covenants. Of these bonds, $131 million are in category 3, which
is considered to be medium quality by the NAIC. At December 31, 1994, the
Company's investments in below investment grade bonds were $231 million.
The Company has significant investments in commercial and agricultural
mortgage loans and real estate (including joint ventures and partnerships).
Approximately 53.5% of the Company's real estate and mortgage portfolio is
invested in office building properties. The locations of property
collateralizing mortgage loans and real estate investment carrying values (in
millions) at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---------------- ----------------
GEOGRAPHIC REGION $ % $ %
- ------------------------------------------------------ ------ ----- ------ -----
<S> <C> <C> <C> <C>
Southeast............................................. $ 982 26.4 $1,133 28.0
West.................................................. 718... 19.3 742 18.3
Northeast............................................. 647 17.4 669 16.5
Mountain.............................................. 582 15.7 584 14.5
Southwest............................................. 393 10.6 463 11.5
Midwest............................................... 392 10.6 453 11.2
------ ----- ------ -----
Total............................................... $3,714 100.0% $4,044 100.0%
====== ===== ====== =====
</TABLE>
F-33
<PAGE> 82
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
11. OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK: -- (CONTINUED)
The states with the largest concentrations of mortgage loans and real
estate investments at December 31, 1995 are: California, $539 million (14.5%);
New York, $329 million (8.9%); Texas, $325 million (8.8%); Georgia, $316 million
(8.5%); Arizona, $279 million (7.5%); Illinois, $246 million (6.6%); Florida,
$239 million (6.4%); Colorado, $195 million (5.3%).
12. MORTGAGE LOANS, REAL ESTATE AND OTHER INVESTED ASSETS:
The Company invests in mortgage loans collateralized by commercial and
agricultural real estate. Such mortgage loans consist primarily of first
mortgage liens on completed income producing properties. As of December 31,
1995, $395 million of mortgage loans have terms that require amortization, and
$1.2 billion of loans require partial amortization or are non-amortizing.
Mortgage loans delinquent over 90 days or in process of foreclosure were $48
million at December 31, 1995 and $33 million at December 31, 1994. Properties
acquired through foreclosure during the year amounted to $47 million and $108
million in 1995 and 1994, respectively.
The Company has performing restructured mortgage loans of $250 million as
of December 31, 1995 and $237 million as of December 31, 1994. The new terms
typically defer a portion of contract interest payments to future periods.
Interest is recognized in income based on the modified rate of the loan.
Deferred interest, which is the difference between the original contractual rate
and the modified rate, is excluded from income. Gross interest income on
restructured loans that would have been recorded in accordance with the loans'
original terms was approximately $24 million in 1995 and $23 million in 1994.
Gross interest income recognized in net income for the period from these loans
was approximately $17 million in 1995 and $16 million in 1994. There are no
commitments to lend additional funds to any debtor involved in a restructuring.
Other invested assets of $353 million and $339 million at December 31, 1995
and 1994, respectively, include, primarily, investments in real estate joint
ventures and limited partnerships.
13. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1995. The calculations of
estimated fair values involve considerable judgement. Accordingly, these
estimates of fair value are not necessarily indicative of the values that could
be negotiated in an actual sale.
<TABLE>
<CAPTION>
ESTIMATED
CARRYING FAIR
AMOUNT VALUE
-------- ----------
(IN MILLIONS)
<S> <C> <C>
ASSETS:
Fixed Income Securities................................. 3,769.9 3,950.6
Separate Account Assets................................. 1,530.2 1,530.9
LIABILITIES:
Investment-type contracts............................... 1,745.0 1,747.5
Separate Account Liabilities............................ 1,521.0 1,520.5
</TABLE>
The estimated fair values of cash, short term investments, equity
securities, mortgage loans and short term notes payable approximate their
carrying amounts.
F-34
<PAGE> 83
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
13. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS: -- (CONTINUED)
The methods and assumptions utilized in estimating these fair values of
financial instruments are summarized as follows:
Fixed Income Securities (See Note 10)
The estimated fair values of fixed income securities are based upon quoted
market prices, where available. The fair values of fixed income securities not
actively traded and other non-publicly traded securities are estimated using
values obtained from independent pricing services or, in the case of private
placements, by discounting expected future cash flows using a current market
interest rate commensurate with the credit quality and term of the investments.
Mortgage Loans
The fair value of mortgage loans is estimated by discounting expected
future cash flows, using current interest rates for similar loans to borrowers
with similar credit risk. Loans with similar characteristics are aggregated for
purposes of the calculations.
Policy Loans
Policy loans are an integral component of insurance contracts and have no
maturity dates. Management has determined that it is not practicable to estimate
the fair value of policy loans.
Separate Account
The estimated fair value of separate account assets and liabilities is
based upon estimates of values available upon full surrender.
Investment-type contract liabilities
The fair values of the Company's liabilities under investment-type
contracts are estimated by discounting expected cash outflows using interest
rates currently offered for similar contracts with maturities consistent with
those remaining for the contracts being valued, where appropriate. The fair
values of other investment-type contracts are based on estimates of the value of
payments available upon full surrender.
F-35
<PAGE> 84
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
14. RESERVES:
The withdrawal characteristics of the Company's annuity actuarial reserves
and deposit liabilities as of December 31, 1995 were as follows:
<TABLE>
<CAPTION>
RESERVES
-------------
<S> <C>
(IN MILLIONS)
Not subject to discretionary withdrawal provision................ $ 1,190
SUBJECT TO DISCRETIONARY WITHDRAWAL -- WITH ADJUSTMENT:
- with market value adjustment.................................. 406
- at book value less surrender charges.......................... 179
- at market value............................................... 825
------
Subtotal.................................................... 1,410
SUBJECT TO DISCRETIONARY WITHDRAWAL -- WITHOUT ADJUSTMENT:
- at book value (minimal or no charge or adjustment)............ 1,001
------
Total annuity actuarial reserves and deposit liabilities
(gross)........................................................ 3,601
Less: Reinsurance........................................... 223
------
Total annuity actuarial reserves and deposit liabilities (net)... $ 3,378
======
</TABLE>
The amounts shown above are included in the Company's balance sheet as life
insurance and annuity reserves ($1.9 billion) and separate account liabilities
($1.5 billion).
15. REINSURANCE:
Life insurance business is ceded on a yearly renewable term basis under
various reinsurance contracts. The Company's practice is to retain no more than
$3 million of risk on any one person for individual products and $4.5 million
for last survivor products. The total amount of reinsured life insurance in
force on this basis was $8.2 billion and $8.9 billion at December 31, 1995 and
1994, respectively. Premiums ceded under these contracts were $34.3 million and
$33.0 million; benefit payments recovered were approximately $30.2 million and
$23.3 million; policy reserve credits recorded were $30.2 million and $28.9
million; and recoverable amounts on paid and unpaid losses were $7.3 million and
$8.2 million in 1995 and 1994, respectively.
The Company reinsured certain whole life contracts issued from 1985 through
1991 under an agreement which combines the modified coinsurance and the
coinsurance bases. This contract was amended effective December 31, 1995. The
policies previously reinsured were recaptured and replaced by whole life and
endowment policies for issue years through 1974. The amended agreement is a
combination of coinsurance and modified coinsurance. Reserves subject to this
agreement were $963 million in 1995 and $295.9 million in 1994, for which the
Company recorded policy reserve credits of $44 million and $45.0 million,
respectively. Premiums ceded under this contract were $57.5 million in 1995 and
$58.1 million in 1994.
The Company also reinsured certain whole life contracts issued from 1985
through 1988 under an agreement which combines the modified coinsurance and the
coinsurance bases. This contract was amended effective December 31, 1995. The
policies previously reinsured were recaptured and replaced by whole life and
endowment policies for issue years through 1974. The amended agreement is a
combination of coinsurance and modified coinsurance. Reserves subject to this
agreement were $785 million in 1995 and $325.0 million in 1994, for which the
Company recorded policy reserve credits of $34.2 million and $55.0 million in
1995 and 1994, respectively. The Company also recorded a dividend liability
credit of $16.0 million in 1995. Premiums ceded under this contract were $51
million in 1995 and $51.1 million in 1994.
F-36
<PAGE> 85
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
15. REINSURANCE: -- (CONTINUED)
The Company has entered into coinsurance agreements with other insurers
related to a portion of its disability income, extended term insurance,
guaranteed interest contract and long-term disability claim liabilities. Under
the terms of these agreements at December 31, 1995 and 1994, ceded premiums were
$43.7 million and $41.1 million, respectively. The total ceded reserves and
claims liabilities under these agreements were $241.5 million and $244 million
at December 31, 1995 and 1994, respectively.
During 1994, the Company entered into an agreement to reinsure
approximately 50% of its block of paid-up life insurance policies. Pursuant to
this agreement, the Company received a ceding commission of $12.7 million from
the reinsurer in 1994. The Company transferred assets equal to the total
liabilities ceded into a segregated portfolio within its general account to
secure benefit payments from the reinsurer and established a funds withheld
liability to the reinsurer for a corresponding amount. Reserves ceded under this
agreement were $103.5 and $111.4 million at December 31, 1995 and 1994,
respectively.
The Company is contingently liable with respect to ceded insurance should
any reinsurer be unable to meet its obligations under these agreements.
16. NOTES PAYABLE:
During 1995, the Company transferred $434.3 million of performing mortgage
loans to a trust which qualifies as a REMIC (Real Estate Mortgage Investment
Conduit) under Section 860 of the Internal Revenue Code. The trust issued two
classes of floating rate notes in equal principal amounts of $43.4 million,
totaling $86.8 million to third party investors, using the transferred mortgages
as collateral. The interest rate on these notes ranged from 6% to 6.19% during
1995. The proceeds of the assets of the trust will be the sole source of
payments on the notes. The Company has not guaranteed these notes or the
mortgage loans held by the trust. The cash flow from the collateralized
mortgages will be used to retire the debt over an estimated 24 month payment
schedule. The actual date on which the principal amount of the notes may be paid
in full could be substantially earlier or later based upon performance of these
mortgages, among other factors. The Company has accounted for this transaction
by consolidating the trust's mortgages and debt. The Insurance Department of the
State of New York has the authority to direct payment in full of the aggregate
outstanding principal balance of the notes and accrued interest at any time
prior to the maturity or payment in full of the outstanding notes.
17. SURPLUS NOTES:
In 1994, the Company completed the sale of $125 million of 30-year Surplus
Notes which generated net proceeds of $70 million after a discount of 42.146%
from the principal amount payable at maturity and issuance expenses of
approximately $2.3 million. The $70 million of net proceeds has increased the
Company's surplus by a corresponding amount. Following the discount period,
interest will begin to accrue on August 15, 1999; thereafter, interest on the
Notes is scheduled to be paid on February 15 and August 15 of each year,
commencing February 15, 2000, at a rate of 11.25% per annum. Each accrual and
payment of interest on the Notes may be made only with the prior approval of the
New York State Superintendent of Insurance. Accordingly, the Company has made no
charge against its surplus for the accretion of discount on the Notes as
authorized by the New York State Insurance Department.
18. ACCOUNTING DEVELOPMENTS:
During 1993, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 40, "Applicability of Generally Accepted Accounting
Principles to Mutual Life Insurance and Other Enterprises." The Interpretation
requires mutual life insurance companies which issue financial statements
described as prepared "in conformity with generally accepted accounting
principles" to apply all applicable authoritative accounting pronouncements in
preparing those statements. The provisions of this Interpretation
F-37
<PAGE> 86
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
18. ACCOUNTING DEVELOPMENTS: -- (CONTINUED)
are effective for fiscal years beginning after December 15, 1995. The
Interpretation indicates that financial statements of mutual life insurance
companies which are prepared on the basis of statutory accounting practices may
no longer receive an unqualified audit opinion stating that the financial
statements have been prepared in accordance with GAAP.
In January 1995, the FASB issued Statement of Financial Accounting
Standards No. 120, "Accounting and Reporting by Mutual Life Insurance
Enterprises and by Insurance Enterprises for Certain Long-Duration Participating
Contracts." This Statement extends the requirements of FASB Statements No. 60,
"Accounting and Reporting by Insurance Enterprises", No. 97, "Accounting and
Reporting by Insurance Enterprises for Certain Long-Duration Contracts and for
Realized Gains and Losses from the Sale of Investments", and No. 113,
"Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration
Contracts", to mutual life insurance enterprises. In 1995, the AICPA established
accounting for certain participating life insurance contracts of mutual life
insurance enterprises in its Statement of Position 95-1, "Accounting for Certain
Insurance Activities of Mutual life Insurance Enterprises". FASB Statement No.
120 and the AICPA Statement of Position are effective for fiscal years beginning
after December 15, 1995.
F-38
<PAGE> 87
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA
FOR THE YEAR ENDED DECEMBER 31, 1995
(AMOUNTS IN $ THOUSANDS)
The following is a summary of certain financial data from the Company's
Annual Statement included in other exhibits and schedules subjected to audit
procedures by independent accountants and utilized by the Company's actuaries in
the determination of reserves.
<TABLE>
<S> <C>
INVESTMENT INCOME EARNED
U.S. Government Bonds........................................ 18,549
Other bonds (unaffiliated)................................... 275,209
Bonds of affiliates.......................................... 2,486
Preferred stocks (unaffiliated).............................. 1,218
Preferred stocks of affiliates............................... 0
Common stocks (unaffiliated)................................. 44,660
Common stocks of affiliates.................................. 92
Mortgage loans............................................... 146,445
Real estate.................................................. 307,462
Premium notes, policy loans and liens........................ 79,149
Collateral loans............................................. 0
Cash on hand and on deposit.................................. 361
Short-term investments....................................... 11,286
Other Invested Assets........................................ 21,401
Derivative Instruments....................................... (532)
Aggregate write-ins for investment income.................... 3,038
---------
Gross investment income................................... 910,824
=========
REAL ESTATE OWNED -- BOOK VALUE LESS ENCUMBRANCES.............. 1,739,890
MORTGAGE LOANS -- BOOK VALUE:
Farm mortgages............................................... 430,141
Residential mortgages........................................ 3,940
Commercial mortgages......................................... 1,203,521
---------
Total mortgage loans...................................... 1,637,602
=========
MORTGAGE LOANS BY STANDING -- BOOK VALUE:
Good standing................................................ 1,339,365
Good standing with restructured terms........................ 249,916
Interest overdue more than three months, not in
foreclosure............................................... 28,493
Foreclosure in process....................................... 19,828
OTHER LONG TERM ASSETS -- STATEMENT VALUE...................... 1,525,913
COLLATERAL LOANS............................................... 0
BONDS AND STOCKS OF PARENTS, SUBSIDIARIES AND
AFFILIATES -- BOOK VALUE
Bonds........................................................ 30,215
Preferred Stocks............................................. 0
Common Stocks................................................ 238,649
</TABLE>
F-39
<PAGE> 88
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA -- (CONTINUED)
<TABLE>
<S> <C>
BONDS AND SHORT-TERM INVESTMENTS BY CLASS AND MATURITY:
BONDS BY MATURITY -- STATEMENT VALUE
Due within one year or less............................... 433,460
Over 1 year through 5 years............................... 1,094,125
Over 5 years through 10 years............................. 1,969,495
Over 10 years through 20 years............................ 358,164
Over 20 years............................................. 163,332
---------
Total by Maturity....................................... 4,018,576
=========
BONDS BY CLASS -- STATEMENT VALUE
Class 1................................................... 2,231,202
Class 2................................................... 1,560,624
Class 3................................................... 131,219
Class 4................................................... 54,414
Class 5................................................... 7,328
Class 6................................................... 33,789
---------
Total by Class.......................................... 4,018,576
=========
TOTAL BONDS PUBLICLY TRADED.................................... 1,777,626
TOTAL BONDS PRIVATELY PLACED................................... 2,240,950
PREFERRED STOCKS -- STATEMENT VALUE............................ 17,173
COMMON STOCKS -- MARKET VALUE.................................. 400,041
SHORT TERM INVESTMENTS -- BOOK VALUE........................... 248,671
FINANCIAL OPTIONS OWNED -- STATEMENT VALUE..................... 0
FINANCIAL OPTIONS WRITTEN AND IN FORCE -- STATEMENT VALUE...... 0
FINANCIAL FUTURES CONTRACTS OPEN -- CURRENT PRICE.............. 0
CASH ON HAND & ON DEPOSIT...................................... 17,199
LIFE INSURANCE IN FORCE:
Industrial................................................... 0
Ordinary..................................................... 68,142,226
Credit Life.................................................. 0
Group Life................................................... 6,579,728
AMOUNT OF ACCIDENTAL DEATH INSURANCE IN FORCE UNDER ORDINARY
POLICIES..................................................... 4,185,362
LIFE INSURANCE POLICIES WITH DISABILITY PROVISIONS IN FORCE:
Industrial................................................... 0
Ordinary..................................................... 38,187,825
Credit Life.................................................. 0
Group Life................................................... 147,300
</TABLE>
F-40
<PAGE> 89
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA -- (CONTINUED)
<TABLE>
<S> <C>
SUPPLEMENTARY CONTRACTS IN FORCE:
Ordinary -- Not Involving Life Contingencies
Amount on Deposit......................................... 187,459
Income Payable............................................ 1,828
Ordinary -- Involving Life Contingencies
Income Payable............................................ 6,179
Group -- Not Involving Life Contingencies
Amount on Deposit......................................... 4,038
Income Payable............................................ 541
Group -- Involving Life Contingencies
Income Payable............................................ 7
ANNUITIES:
Ordinary
Immediate -- Amount of Income Payable..................... 7,165
Deferred -- Fully Paid Account Balance.................... 20,534
Deferred -- Not Fully Paid -- Account Balance............. 10,342
Group
Amount of Income Payable.................................. 27,650
Fully Paid Account Balance................................ 35,945
Not Fully Paid -- Account Balance......................... 0
ACCIDENT AND HEALTH INSURANCE -- PREMIUMS IN FORCE:
Ordinary..................................................... 79,012
Group........................................................ 4,217
Credit....................................................... 0
DEPOSIT FUNDS AND DIVIDEND ACCUMULATIONS:
Deposit Funds -- Account Balance.......................... 931,196
Dividend Accumulations -- Account Balance................. 305,758
</TABLE>
F-41
<PAGE> 90
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA -- (CONTINUED)
<TABLE>
<S> <C>
CLAIM PAYMENTS 1995:
Group Accident and Health Year -- Ended December 31, 1995
1995...................................................... 13,363
1994...................................................... 4,112
1993...................................................... 4,244
Other Accident & Health
1995...................................................... 2,471
1994...................................................... 4,056
1993...................................................... 8,430
Other Coverages that use developmental methods to calculate
claim reserves
1995...................................................... 0
1994...................................................... 0
1993...................................................... 0
</TABLE>
F-42
