<PAGE> 1
PROSPECTUS
DATED MAY 1, 1996
INDIVIDUAL FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
ISSUED BY
MONY AMERICA VARIABLE ACCOUNT A
MONY LIFE INSURANCE COMPANY OF AMERICA
The Individual 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 individuals in 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.)
At the election of the Contractholder, purchase payments for the Contracts
will be allocated to either (i) a segregated investment account of MONY Life
Insurance Company of America (the "Company"), which account has been designated
MONY America 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 Contractholder 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 Contract, purchase payments for the Contracts 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 Contract will automatically be
transferred to one or more of the Subaccounts of the Variable Account in
accordance with the instructions of the Contractholder. (See "PAYMENT AND
ALLOCATION OF PREMIUMS" at page 12.) Contractholders bear the complete
investment risk for all amounts allocated to the Variable Account. This
Prospectus generally describes only the variable features of the Contract. (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,
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 32 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 of this Prospectus.
This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy the Contracts 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.
------------------------
MONY LIFE INSURANCE COMPANY OF AMERICA
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
Condensed Financial Information....................................................... 8
The Company and the Variable Account.................................................. 9
MONY Life Insurance Company of America.............................................. 9
MONY America Variable Account A..................................................... 9
The Fund............................................................................ 9
Guaranteed Interest Account........................................................... 11
Payment and Allocation of Premiums.................................................... 12
Issuance of the Contract............................................................ 12
Free Look Privilege................................................................. 13
Allocation of Premiums and Cash Value............................................... 13
Termination of the Contract......................................................... 16
Surrenders............................................................................ 16
Death Benefit......................................................................... 18
Death Benefit Provided by the Contract.............................................. 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....................................................... 26
Change in Operation of Variable Accounts............................................ 26
Voting Rights......................................................................... 27
Distribution of the Contracts......................................................... 27
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
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>
ii
<PAGE> 4
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 Contract.
COMPANY -- MONY Life Insurance Company of America.
CONTINGENT ANNUITANT -- The party designated by the Contractholder 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.
CONTRACT ANNIVERSARY -- An anniversary of the Contract Date of the
Contract.
CONTRACTHOLDER -- The person so designated in the application. If a
Contract has been absolutely assigned, the assignee becomes the Contractholder.
A collateral assignee is not the Contractholder.
CONTRACT DATE -- The date shown as the Contract Date in the Contract.
CONTRACT YEAR -- Any period of twelve (12) months commencing with the
Contract Date and each Contract Anniversary thereafter.
FREE LOOK PERIOD -- A period which follows the application for the Contract
and its issuance to the Contractholder. The period runs to the date which is 10
days (or longer in certain states) after the Contractholder receives the
Contract. (The Free Look Period is referred to in the Contract as the "Right to
Return Contract" period.) During the Free Look Period, the Contractholder may
cancel the Contract and receive a refund.
FUND -- OCC Accumulation Trust, a Massachusetts business trust, formerly
Quest for Value Accumulation Trust and originally Quest Asset Builder Trust, a
Massachusetts business trust.
GUARANTEED FREE SURRENDER AMOUNT --
For Non-Qualified Contracts -- An amount, up to 10 percent of the
Contract's Cash Value on the date the first partial surrender request is
received during a Contract Year, that may be surrendered without the imposition
of a Surrender Charge. For the purposes of the Guaranteed Free Surrender Amount
only, Non-Qualified Contracts include Contracts issued for IRAs and SEP-IRAs.
For Qualified Contracts -- An amount, up to the greater of $10,000 (but not
more than the Contract's Cash Value) or 10 percent of the Contract's Cash Value
on the date the first partial surrender request is received during a Contract
Year, that may be surrendered without the imposition of a Surrender Charge. For
the purposes of the Guaranteed Free Surrender Amount only, Qualified Contracts
include Qualified Contracts issued on and after May 1, 1994 and exclude
Contracts 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 Contracts issued on
or after May 1, 1994 (on or after such later 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.
NET PURCHASE PAYMENT -- An amount equal to a Purchase Payment, less any
deduction for premium or similar taxes.
1
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NON-QUALIFIED CONTRACTS -- Contracts 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
Contractholder or on the Contractholder's behalf as consideration for the
benefits provided by the Contract.
QUALIFIED CONTRACTS -- Contracts 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 CONTRACTHOLDER -- The living person who, at the death of the
Contractholder, becomes the new Contractholder.
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 Contract's Cash Value, less (1) any applicable
Surrender Charge and (2) any applicable Annual Contract Charge.
UNIT -- The measure by which the Contract'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 America Variable Account A, into which Net Purchase Payments
will be allocated.
2
<PAGE> 6
SYNOPSIS
THE CONTRACTS
The Individual 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").
Effective January 1, 1989, the Contracts offered by this Prospectus have
been withdrawn from sale in all states 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 Contracts will be allocated at the
Contractholder's option to Subaccounts, made available therefor in accordance
with the terms of the Contracts, of a segregated investment account of MONY Life
Insurance Company of America (the "Company"), which account has been designated
MONY America 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 (the "Fund") at
their net asset value. (See "The Fund" at page 9.) Contractholders 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 Contract 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 Contract" 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 Purchase Payments, it will give notice to each affected
Contractholder.
FREE LOOK PRIVILEGE
Within 10 days (or longer in certain states) of the day the Contract is
delivered to the Contractholder, it may be returned to the Company or to the
agent through whom it was purchased. When the Contract is received by the
Company, it will be voided as if it had never been in force. Except for
Contracts entered into in
3
<PAGE> 7
the Commonwealth of Pennsylvania, the amount to be refunded is equal to the
greater of: (i) all Purchase Payments; and (ii) Cash Value of the Contract (as
of the date the returned Contract is received at the Home Office 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, 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 Contracts
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 prior to the
Contract Year when the surrender or commencement of annuity benefits is
requested and during the seven preceding Contract Years.
The Surrender Charge, which otherwise would have been deducted, will not be
deducted to the extent necessary to permit the Contractholder to obtain, for
Qualified Contracts (other than Contracts issued for IRA and SEP-IRA) an amount
up to the greater of $10,000 (but not more than the Contract's Cash Value) or 10
percent of the Contract's Cash Value on the date the first partial surrender
request is received during a Contract Year; and for Non-Qualified Contracts (and
Contracts issued for IRA and SEP-IRA and Qualified Contracts issued before May
1, 1994), an amount up to 10% of the Cash Value of the Contract 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 Contract Year. In addition, the Contract 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 Contract. In no event will the aggregate
Surrender Charge exceed 7 percent of the total Purchase Payments made in the
Contract Year of the surrender and during the 7 preceding Contract 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
Contract value may be transferred without charge as many as 4 times in any
Contract Year. For any additional transfer during a Contract 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 Contract's
Cash Value. (See "Charges Against Cash Value -- Transfer Charge" at page 21.)
ANNUAL CONTRACT CHARGE
On each Contract Anniversary prior to the Annuity Commencement Date, on the
Annuity Commencement Date, and on full surrender of the Contract, the Company
deducts an Annual Contract Charge from the Cash Value, to reimburse the Company
for administrative expenses relating to the maintenance of the Contract. 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 Contract Charge" at page 20.)
4
<PAGE> 8
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 withdrawn 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 SUBSTITUTION
After September 16, 1994, purchase payments made by ValueMaster
Contractholders 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 Contractholder 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, 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 to
exceed 1.00% of that portfolio's assets.
5
<PAGE> 9
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY AMERICA VARIABLE ACCOUNT A
TABLE OF FEES FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
CONTRACTOWNER TRANSACTION EXPENSES:
Maximum Deferred Sales Load (Surrender Charge) (as a percentage of amount
surrendered.)................................................................. 7%*
ANNUAL CONTRACT CHARGE............................................................. $30
TOTAL 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 BOND MANAGED MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Expenses................................... .20% .20% .50% .14% .60%
Management Fees............................ .80%*** .80%*** .50% .80%*** .40%
---- ---- ----- ---- -----
Total OCC Accumulation
Trust Annual Expenses After
Limitations.............................. 1.00%**** 1.00%**** 1.00%**** .94% 1.00%****
==== ==== ===== ==== =====
</TABLE>
- ---------------
* The Surrender Charge percentage, which reduces to zero as shown in the
table below, is determined by the number of Contract 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>
The 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 Fees" 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%.
6
<PAGE> 10
The purpose of the table on page 6 is to assist the Contractholder in
understanding the various costs and expenses that the Contractholder 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 estimated expenses borne by OCC Accumulation Trust assume
that the expense limitations currently in effect will continue throughout the
period shown. Expenses are limited by contrast with OpCap Advisors to 1.25% of
average daily net assets and through April 30, 1997, are further limited to
1.00% of average daily net assets. (See "Management of 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 become payable under state or
local laws.
EXAMPLE
If you surrender your Contract 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 a 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 $264
Small Cap........................................ $ 86 $ 125 $ 167 $264
Managed.......................................... $ 86 $ 124 $ 164 $257
Bond............................................. $ 86 $ 125 $ 167 $264
Money Market..................................... $ 86 $ 125 $ 167 $264
</TABLE>
If you annuitize at the end of the time periods shown below, you would pay
the following expenses on (estimated as described in the footnotes to the Table
of Fees) 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 $264
Small Cap........................................ $ 86 $ 125 $ 123 $264
Managed.......................................... $ 86 $ 124 $ 120 $257
Bond............................................. $ 86 $ 125 $ 123 $264
Money Market..................................... $ 86 $ 125 $ 123 $264
</TABLE>
If you do not surrender your Contract 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 $264
Small Cap........................................ $ 23 $ 72 $ 123 $264
Managed.......................................... $ 23 $ 70 $ 120 $257
Bond............................................. $ 23 $ 72 $ 123 $264
Money Market..................................... $ 23 $ 72 $ 123 $264
</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, net of fee waivers, are reflected in the examples. Not
reflected in the examples which assume surrender 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. The examples shown above reflect the operations of MONY America Variable
Account A prior to the Substitution. (See "The Substitution" at page 5 and
"Prospectus Summary -- The Fund" at page 3 of the accompanying prospectus for
the OCC Accumulation Trust.)
7
<PAGE> 11
CONDENSED FINANCIAL INFORMATION
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY AMERICA 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 $26.88 129,693 106,172
Small Cap............................. 21.73 21.51 24.49 197,050 136,744
Managed............................... 14.21 14.11 34.86 198,239 1,286,294
Bond.................................. 25.45 24.23 16.06 1,449,807 129,078
Money Market.......................... 12.47 12.58 13.05 234,062 271,019
</TABLE>
- ---------------
* Variable Account A commenced operations on November 25, 1987. The Subaccounts
shown above became available for allocation on September 16, 1994.
8
<PAGE> 12
THE COMPANY AND THE VARIABLE ACCOUNT
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY Life Insurance Company of America (the "Company") is a stock life
insurance company organized in the state of Arizona. The Company is currently
licensed to sell life insurance and annuities in 49 states (not including New
York), the District of Columbia, the U. S. Virgin Islands, and Puerto Rico. The
Company is the corporate successor of VICO Credit Life Insurance Company,
incorporated in Arizona on March 6, 1969. The Company's financial statements may
be found in the Statement of Additional Information.
The Company is a wholly owned subsidiary of The Mutual Life Insurance
Company of New York ("MONY"), a mutual life insurance company organized under
the laws of the state of New York in 1842. The principal offices of both MONY
and the Company are at 1740 Broadway, New York, New York 10019. MONY Securities
Corp., a wholly-owned subsidiary of MONY, is the principal underwriter for the
Contracts described in this Prospectus. The Company may purchase certain
administrative services from MONY under a services agreement, to enable the
Company to administer the Contracts.
MONY AMERICA VARIABLE ACCOUNT A
The Company established MONY America Variable Account A (the "Variable
Account") on March 27, 1987, under Arizona 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 individual flexible payment
variable annuity contracts.
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 Contracts 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 Contracts, 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
Contracts 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 Contractholder.
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
MONY America for allocation to Subaccounts of MONY America 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
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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 MONY
America for purchase with ValueMaster Contractholder purchase payments allocated
to MONY America Variable Account A until the close of business on September 16,
1994.
After September 16, 1994, each Subaccount of the Variable Account will
invest only in the shares of a corresponding Portfolio of the OCC Accumulation
Trust (the "Fund"). The Fund is registered with the SEC under the 1940 Act as an
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 sold to MONY Variable Account
A, a separate account of MONY that was established to fund contracts similar to
the Contracts described in this Prospectus. 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 MONY. The Board
of Directors of the Company and the Board of Trustees of MONY have agreed to be
responsible for reporting any potential or existing conflicts to the Trustees of
the Fund and, at its 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 Contracts, to pay Surrender Value upon full surrenders
of the Contracts, to fund partial surrenders, to provide benefits under the
Contracts, 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 Contractholders. 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. 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 Portfolios will occur as a result of the
change.
The investment objectives of the Portfolios currently available to
Contractholders through corresponding Subaccounts of the Variable Account are
set forth in the accompanying prospectus for the Fund 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 Contractholder 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 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.
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The investment objectives of each of the Portfolios of the Fund are as
follows:
Equity Portfolio: Long term capital appreciation through investment in a
diversified portfolio of primarily equity securities selected on the basis of a
value-oriented approach to investing.
Small Cap Portfolio: Capital appreciation through investment in a
diversified portfolio of 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 protection of capital through investment
in a diversified portfolio of bonds and other fixed-income obligations.
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 Contractholder
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 Contracts 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 not be 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 Contract 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 Contract, 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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PAYMENT AND ALLOCATION OF PREMIUMS
ISSUANCE OF THE CONTRACT
Individuals wishing to purchase a Contract 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 Contracts,
or a registered broker-dealer which has been authorized by MSC to sell the
Contract. 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 Contract is currently
$2,000 for Non-Qualified 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 Section 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 Contract.
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.
Effective January 1, 1989, the Contracts offered by this Prospectus have
been withdrawn from sale in all states 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 Contracts held by the Contractholder, 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 Contract 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 Contract is issued by the Company and accepted by
the Contractholder. No interest will be paid if the Contract is not issued or if
it is declined by the Contractholder. If the application is approved and the
Contract is subsequently issued and accepted by the Contractholder, then on the
Contract Date, amounts allocable to the Contract 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" below.) 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 10 days, or longer in certain states, of the day the Contract is
delivered to the Contractholder (the "Free Look Period"), it may be returned to
the Company or to the agent through whom it was purchased. When the Contract is
received by the Company, it will be voided as if it had never been in force.
Except for Contracts entered into in the Commonwealth of Pennsylvania, the
amount to be refunded is equal to the greater of: (i) all Purchase Payments; and
(ii) Cash Value of the Contract (as of the date the returned Contract is
received at the Home Office 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, 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 Contracts entered into in the Commonwealth of
Pennsylvania, the amount to be refunded is described in clause (ii) of the
immediately preceding sentence.
ALLOCATION OF PREMIUMS AND CASH VALUE
Allocation of Premiums. The Contractholder 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
Contract 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 Contract'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 Contractholder's percentage allocation.
After the Free Look Period, Net Purchase Payments under a nonautomatic
payment plan will be allocated in accordance with the Contractholder's most
recent instructions on record with the Company, unless the Contractholder at the
time a Purchase Payment is made specifies the amount (not less than $10.00 per
Subaccount) or the percentage (not less than 10 percent of the Payment) 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 Contractholder's most recent instructions on record.
The Contractholder 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 written
notification to the Company at the Operations Center. 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 Contractholder 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 rules 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 a broker-dealer authorized by MSC to
offer the Contracts, 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.
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
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Whole Numbers and must total 100 percent. The minimum amount of each Net
Purchase Payment that may be allocated to any Subaccount 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.)
(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 Contractholder
bears the entire investment risk. Contractholders 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 Contractholder.
Cash Value. The Contract'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 Contract.
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
Contract'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 Contract is determined
on each Valuation Date. The Cash Value will be calculated first on the Contract
Date and thereafter on each Valuation Date. On the Contract Date, the Contract'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 Contract. (See "Issuance of
the Contract" at page 12.) After
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allocation of the amounts in the General Account to the Variable Account or to
the Guaranteed Interest Account, on each Valuation Date, the Contract's Cash
Value will be:
(1) the aggregate of the Cash Values attributable to the Contract 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 Contract; 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 Contract 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 Contract Charge deductible on that Valuation Date.
In computing the Contract's Cash Value, the number of Subaccount Units
allocated to the Contract 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 Contract transactions,
such as receipt of Net Purchase Payments and partial surrenders, on the
Valuation Date. If the Contract'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 Contract 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 Premiums and Cash Value -- Transfers
Involving the Guaranteed Interest Account" at page 16.) 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 Contractholder. 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 Contractholder 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 transfer privileges 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 Contracts, 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 Contract Year. (See "Charges Against Cash Value -- Transfer Charge" at page
25.) For any additional transfers during a Contract 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 Contract Charge. (See "Charges Against Cash
Value -- Annual Contract 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 Contract 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 Contractholder to be transferred
from each Subaccount bears to the total amount transferred. Transfers from
amounts credited to the Guaranteed Interest Account to one or more Subaccounts
may be made once during each Contract 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 Contractholder on the date the transfer would
take effect or (ii) $5,000. Transfer of amounts from the Guaranteed Interest
Account to one or more Subaccounts will be effective only on an anniversary of
the Contract Date or on a Valuation Date not more than 30 days thereafter.
Requests received not more than 10 days before the anniversary of the Contract
Date will be executed on the anniversary of the Contract Date. Requests received
within 30 days after the anniversary of the Contract date will be executed on
the Valuation Date which coincides with or next follows the date the request is
received. Requests received more than 10 days before or 30 days after the
anniversary of the Contract Date will be returned to the Contractholder.
TERMINATION OF THE CONTRACT
The Contract will remain in force until the earlier of (1) the date the
Contract is surrendered in full, (2) the Annuity Commencement Date, (3) the
Contract Anniversary on which, after deduction for any Annual Contract Charge
then due, no Cash Value remains in the Contract, and (4) the date the Death
Benefit is payable under the Contract.
SURRENDERS
At any time on or before the Annuity Commencement Date and and during the
lifetime of the Annuitant, the Contractholder may elect to make a surrender of
all or part of the Contract'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 Contract's Surrender Value,
which is its Cash Value less (1) any applicable Surrender Charge and (2) (for a
full surrender) any Annual Contract 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 Contractholder. For a partial
surrender, any Surrender Charge will be in addition to the amount requested by
the Contractholder.
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 Contractholder, with an aggregate value equal to the dollar
amount of the surrender plus, if applicable, the Annual Contract 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 Contractholder 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
Contractholder 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 Contractholder bears to the total of (i) all amounts credited to
the Guaranteed Interest Account of the Contractholder and (ii) the aggregate
value of Units held in all Subaccounts of the Contractholder, 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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Guaranteed Interest Account or any Subaccount designated by the Contractholder.
Allocations by percentage must be in whole percentages (totalling 100 percent),
and at least 10 percent of the partial surrender must be allocated to any
Subaccount designated by the Contractholder. If there is insufficient Cash Value
in the Contractholder'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 Contract's Cash Value held in the Guaranteed
Interest Account and each Subaccount bears to the Contract'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 Contract'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 Contractholders. 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 Contractholder may
elect to have the amount of a surrender settled under one of the Settlement
Options of the Contract. (See "Annuity Provisions" at page 22.)
Since the Contracts 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.
Surrenders of certain Qualified Contracts are restricted not only by the
terms of the particular plan pursuant to which such Qualified Contract is
issued. Without such restrictions on surrender, the Contracts would be subject
to treatment under the Internal Revenue Code as annuity contracts rather than
contracts governed by Section 403(b). (See "Federal Tax Status" at page 28.)
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 CONTRACT
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 Payment 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 Contractholder may elect to have the Death Benefit of the Contract
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 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 Contractholder 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
Charges may be assessed under the Contracts 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 Contractholder 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 adopted; however, the Company currently is
assuming responsibility for payment of this tax. In the event that
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<PAGE> 22
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 Contract 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 Contract. 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 Contract'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 Contract Year up to an amount
equal to Net Purchase Payments made by the Contractholder prior to the Contract
Year of the surrender and the preceding 7 Contract Years. In addition, the
Surrender Charge, which otherwise would have been deducted, will not be deducted
to the extent necessary to permit the Contractholder 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 Contract has been in force for at least 10 Contract Years; and (iii)
one or more Purchase Payments were remitted during each of at least 7 of the 10
Contract Years immediately preceding the date of surrender. Except in certain
states, no Surrender Charge will be imposed if the Contract is surrendered after
the third Contract 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 Contract Years.
For a partial surrender, the Surrender Charge will be deducted from any
remaining Contract 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. Contractholders 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 the 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> 23
Step 2. Multiply each such allocated Purchase Payment by the appropriate
surrender charge percentage determined on the basis of the table
below:
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>
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 Contract. For
Non-Qualified Contracts (and Contracts 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 Contract's Cash Value (on the date the
first partial surrender request is received) may be surrendered without
application of a surrender charge. For Qualified Contracts issued on or after
May 1, 1994 (other than Contracts 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 Contract's Cash Value) or 10% of
the Contract's Cash Value (on the date the first partial surrender request is
received during a Contract 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 Contract who is also a licensed agent of the
Company for which states have granted approval.) For holders of Qualified
Contracts issued before May 1, 1994 and for holders of Contracts in those states
where approval has not been granted, the Guaranteed Free Surrender Amount
provides that an amount up to 10% of the Contract's Cash Value (on the date the
partial surrender request is received) may be surrendered without application of
a surrender charge, provided no prior partial surrender was made during that
Contract Year. The Company reserves the right to limit the number of partial
surrenders available under the Guaranteed Free Surrender Amount to 12 per
Contract 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 Contract Anniversaries ago.
For illustrations of how the Surrender Charge is calculated, see Appendix A
beginning on page A-1 of this Prospectus.
Annual Contract Charge. The Company has primary responsibility for the
administration of the Contract 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 Contract,
including the review of applications and the establishment of Contract records.
The Company intends to administer the Contract itself through an
arrangement whereby the Company may purchase some administrative services from
MONY and such other sources as may be available.
An Annual Contract Charge will be deducted from the Contract'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
Contractholder. The charge will be deducted on (a) each Contract 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 Contract Anniversary). The
amount of the charge will be allocated against the
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<PAGE> 24
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 Value of the Contract. 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
Contractholder 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
Contract 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
Contract'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 Contract Charge. (See "Charges Against Cash Value -- Annual Contract
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 Contract. 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 individual 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 Contracts will exceed the administrative charges provided in
the Contracts.
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 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
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<PAGE> 25
.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 Contract will begin on the Annuity Commencement
Date that is selected by the Contractholder at the time the Contract is applied
for. The Annuity Commencement Date chosen may be no earlier than the Contract
Anniversary nearest the Annuitant's 10th birthday, and no later than the
Contract Anniversary nearest the Annuitant's 95th birthday. The minimum number
of years from the Contract Date to the Annuity Commencement Date is 10. The
Annuity Commencement Date may be advanced to a date not earlier than the 10th
Contract Anniversary or deferred from time to time by the Contractholder 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 Contract Anniversary nearest the Annuitant's 95th birthday. A
particular retirement plan may contain other restrictions.
On the Annuity Commencement Date, the Contract's Surrender Value will be
applied to provide an annuity or any other option previously chosen by the
Contractholder 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 Contract'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 Contracts 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 Contractholder 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 Contractholder 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 Contractholder 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> 26
Settlement Option 1 -- Interest Income: Interest on the proceeds at a rate
(not less than 2 3/4 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 Contract 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 in the Contract.
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 Contractholders 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 Contract. 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 Contract 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 Contract 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> 27
The Contracts 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 Contracts
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 Norrisdecision 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
Contract may be purchased.
OTHER PROVISIONS
OWNERSHIP
The Contractholder has all rights and may receive all benefits under the
Contract. During the lifetime of the Annuitant (and the Contingent Annuitant if
one has been named), the Contractholder shall be the person so designated in the
application, unless changed, or unless a Successor Contractholder becomes the
Contractholder. On and after the death of the Annuitant (and the Contingent
Annuitant, if applicable), the Beneficiary shall be the Contractholder.
The Contractholder may name a Successor Contractholder or a new
Contractholder at any time. If the Contractholder dies, the Successor
Contractholder, if living, becomes the Contractholder. 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
Contractholder or Successor Contractholder will not apply to any payment made or
action taken by the Company prior to the time a request for change is received.
Contractholders should consult a competent tax advisor prior to changing
Contractholders.
PROVISION REQUIRED BY SECTION 72(s) OF THE CODE
If the Contractholder of a Non-Qualified Plan dies before the Annuity
Commencement Date and while the Annuitant is living, and if that
Contractholder's spouse is not the Successor Contractholder as of the date of
that Contractholder's death (as evidenced by proof satisfactory to the Company),
then the Contract will be surrendered as of the date of that death. If the
Successor Contractholder is the Beneficiary, the surrender proceeds may, at the
option of the Successor Contractholder, be paid over the life of the Successor
Contractholder. Such payments must begin no later than one year after such date
of death. If the Successor Contractholder is a surviving spouse, then the
surviving spouse will be treated as the new Contractholder of the Contract.
Under such circumstances, it shall not be necessary to surrender the Contract.
If the spouse is not the Successor Contractholder 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 Contract, if the spouse is not the
Successor Contractholder, the Contract 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 Contract beyond the date when death proceeds become
payable.
Further, if the Contractholder 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
Contractholder'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 Contractholder or his/her Designated Beneficiary either by
or beginning not later than April 1 of the calendar year following the calendar
year in which the Qualified Plan Participant attains age 70 1/2. The period over
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<PAGE> 28
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 the Contractholder'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
Contract 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.
It is the Contractholder's responsibility to assure that distribution rules
imposed by the Code will be met.
Qualified Plan contracts include those qualifying for special treatment
under Sections 401, 403, and 408 of the Code.
CONTINGENT ANNUITANT
Except where the Contract is issued in connection with a Qualified Plan, a
Contingent Annuitant may be designated by the Contractholder. Such designation
may be made once before annuitization, either (1) in the application for the
Contract, or (2) after the Contract 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 Contract
automatically by the Company as of the Contract Anniversary nearest the
Contingent Annuitant's 95th 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 Contractholder on the date of death, the
Successor Contractholder must have been the Annuitant's spouse; and
(4) if the Annuity Commencement Date is later than the Contract
Anniversary nearest the Contingent Annuitant's 95th birthday, the Annuity
Commencement Date will be automatically advanced to that Contract
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 Contract
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
Contractholder directed otherwise, will become the Beneficiary. All other rights
and benefits under the Contract will continue in effect during the lifetime of
the Contingent Annuitant as if the Contingent Annuitant were the Annuitant.
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<PAGE> 29
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 Contract 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 Contractholder should
consult a competent tax advisor before assigning the Contract.
CHANGE OF BENEFICIARY
So long as the Contract 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 Contract 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 Directors, further investment in shares of one or more of the
Portfolios of the Fund should become inappropriate in view of the purposes of
the Contract, 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 Contract. 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
Upon notice to the Contractholder, the Contract may be modified by the
Company, but only if such modification (1) is necessary to make the Contract 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 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 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
make appropriate endorsement to the Contract to reflect the change and take such
other action as may be necessary and appropriate to effect the change.
26
<PAGE> 30
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
Contractholders) at shareholder meetings of the Fund in accordance with the
instructions received from Contractholders. 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 Contractholders 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 Contractholders of that action and its
reasons for the action in the next semiannual report to Contractholders.
Each Contractholder will have the equivalent of one vote per $100 of value
attributable to the Contract held in each Subaccount of the Variable Account,
with fractional votes for amounts less than $100. For voting purposes, this
value attributable to the Contract 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 Contractholders 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 Contractholder is determined
by dividing the portion of the value attributable to the Contract 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 Contract 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 Contractholder could issue instructions on 5.4 votes (representing votes per
$100 of value attributable to the Contract held in the Subaccount), which would
be converted into instructions on 27 shares of the Fund.
Matters on which Contractholders may give voting instructions include the
following: (1) approval of any change in the Investment Advisory Agreement and
Services Agreement, if any, for the Portfolio(s) of the Fund(s) corresponding to
the Contractholder's selected Subaccount(s); (2) any change in the fundamental
investment policies of the Portfolio(s) corresponding to the Contractholder'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,
Contractholders participating in that Portfolio will vote separately on the
matter pursuant to the requirements of Rule 18f-2 under the 1940 Act.
DISTRIBUTION OF THE CONTRACTS
MONY Securities Corp. ("MSC"), a New York corporation which is a
wholly-owned subsidiary of MONY, will act as the principal underwriter of the
Contracts, 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
27
<PAGE> 31
of the National Association of Securities Dealers. The Contracts are sold by
individuals who are registered representatives of MSC and who are also licensed
as life insurance agents for the Company. The Contracts 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 Contract will not exceed
6.0 percent of Purchase Payments. Additional compensation may be paid for
persistency, sales quality, and contract size and for other services not
directly related to the sale of the Contract. Such services include the training
of personnel and the production of promotional literature.
FEDERAL TAX STATUS
INTRODUCTION
The Contracts 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 Contract's Cash Value, on
annuity payments, and on the economic benefit to the Contractholder, the
Annuitant, and the Beneficiary may depend upon the type of retirement plan for
which the Contract is purchased and upon the tax and employment status of the
individual concerned.
The following discussion of the treatment of the Contracts 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 Contract
should consult a qualified tax adviser. A more detailed description of the
treatment of the Contract 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 CONTRACT OR ANY
TRANSACTION INVOLVING THE CONTRACTS.
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
Contracts, is substantially nontaxable to the Company.
TAXATION OF ANNUITIES IN GENERAL
The Contracts 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
Contracts. 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 Contractholder is other than a natural
person unless the contract is held as an agent for a natural person. Annuity
payments made as retirement distributions under a Contract, except to the extent
of participant (in the case of Qualified Plans) or Contractholder (in the case
of Non-Qualified Plans) contributions, are generally taxable to the annuitant as
ordinary income. Contractholders, 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 Contracts 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 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
28
<PAGE> 32
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 Contract unless the Contractholder 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 Contractholder 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 additional rules to prevent avoidance of
this rule through serial 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
retirement 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 will apply even if the distribution 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 Contract 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 Contractholder attains age 59 1/2; (2) when the Contractholder
separates from the service of his employer; (3) when the Contractholder dies;
(4) when the Contractholder becomes permanently disabled within the meaning of
Section 72(m)(7) of the Code; or (5) in the case of hardship. These restrictions
generally apply to contributions made after December 31, 1988 and to any
increase in Cash Value of the Contract 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
Contractholder's Purchase Payments). However, any Purchase Payments that
29
<PAGE> 33
reflect employer contributions and the earnings thereon will not be restricted
unless specifically provided for by the applicable employer's plan.
RETIREMENT PLANS
The Contracts 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 (Effective
January 1, 1989, the Contracts offered by this Prospectus have been
withdrawn from sale in all states 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
Contracts with the various types of retirement plans. Participants in such plans
as well as Contractholders, 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 Contracts. The Company will provide purchasers of Contracts 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 Contract 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.
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
30
<PAGE> 34
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
Contractholder 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 Contract 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
Contract during the prior year.
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.
In addition, reference in advertisements may be made to various indices
including, without limitation, the Standard & Poor's Stock Index and Shearson
Lehman Brothers Government/Corporate 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 of comparison
for performance.
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
offered by this Prospectus, including the Statement of Additional Information
(which includes financial statements relating to the Company), Contractholders
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 is a party.
The Company and the principal underwriter are engaged in various kinds of
routine litigation which, in the opinions of the Company and the principal
underwriter, are not of material importance in relation to the total capital and
surplus of the Company or the principal underwriter.
FINANCIAL STATEMENTS
The financial statements for the Company should be distinguished from the
financial statements of the Variable Account and should be considered only as
bearing on the ability of the Company to meet its obligations under the
Contracts. 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> 35
TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1996
<TABLE>
<CAPTION>
ITEM PAGE
- -------------------------------------------------------------------------------------- ----
<S> <C>
MONY Life Insurance Company of America................................................ 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 America 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 America Variable Account A Statement of
Additional Information.
Policy B2-88/B4-88/B6-88
FORM NO. 13488SL (5/96) 33-20696
32
<PAGE> 36
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
CONTRACT ANNIVERSARIES
SINCE PURCHASE AMOUNT AMOUNT AVAILABLE
PAYMENT CONTRACT 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
CONTRACT ANNIVERSARIES AMOUNT OF
SINCE PURCHASE AMOUNT SURRENDER SURRENDER
PAYMENT CONTRACT YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PET)
- ---------------------- ---------------- ------------ ---------- -----------
<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 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> 37
The Surrender Charge is determined as follows:
Step 1: Purchase Payments are allocated to the surrender amount, as
follows:
<TABLE>
<CAPTION>
# OF
CONTRACT ANNIVERSARIES AMOUNT
SINCE PURCHASE PAYMENT CONTRACT YEAR ALLOCATED
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER
- ---------------------- ---------------- ------------
<S> <C> <C>
0 10 $ 0
1 9 0
2 8 0
3 7 0
4 6 0
5 5 0
6 4 0
7 3 0
8or
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 AMOUNT OF
CONTRACT ANNIVERSARIES AMOUNT SURRENDER SURRENDER
SINCE PURCHASE PAYMENT CONTRACT YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PET)
- ---------------------- ---------------- ------------ ---------- -----------
<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 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 --
A-2
<PAGE> 38
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 allocated to
surrender ($13,000) by the Guaranteed Free Surrender Amount
($10,000), and apply the Surrender Charge Percentages as follows:
<TABLE>
<CAPTION>
# OF
CONTRACT ANNIVERSARIES AMOUNT OF
SINCE PURCHASE AMOUNT SURRENDER SURRENDER
PAYMENT CONTRACT YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PET)
- ---------------------- ---------------- ------------ ---------- -----------
<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
CONTRACT ANNIVERSARIES
SINCE PURCHASE AMOUNT AMOUNT AVAILABLE
PAYMENT CONTRACT 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
CONTRACT ANNIVERSARIES AMOUNT OF
SINCE PURCHASE AMOUNT SURRENDER SURRENDER
PAYMENT CONTRACT YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PET)
- ---------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
0 3 $0 7% $ 0
1 2 0 7 0
2 1 0 6 0
</TABLE>
A-3
<PAGE> 39
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $0.
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 AMOUNT
CONTRACT ANNIVERSARIES AVAILABLE
SINCE PURCHASE AMOUNT FOR ALLOCATION TO
PAYMENT CONTRACT YEAR ALLOCATED FUTURE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER 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
CONTRACT ANNIVERSARIES AMOUNT OF
SINCE PURCHASE AMOUNT SURRENDER SURRENDER
PAYMENT CONTRACT YEAR ALLOCATED CHARGE CHARGE
RECEIVED BY US PAYMENT RECEIVED TO SURRENDER PERCENTAGE (AMT X PET)
- ---------------------- ---------------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
6 4 $2,000 3% $60
7 3 2,000 2 40
8or
more 1 and 2 240 0 0
</TABLE>
Step 3: Summing the resulting Amounts of Surrender Charge produces a total
Surrender Charge of $100.
A-4
<PAGE> 40
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.
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> 41
THE VALUEMASTER
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1996
INDIVIDUAL FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACT
ISSUED BY
MONY AMERICA VARIABLE ACCOUNT A
AND
MONY LIFE INSURANCE COMPANY OF AMERICA
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 Individual Flexible Payment Variable Annuity Contract ("Contract")
issued by MONY Life Insurance Company of America ("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>
MONY Life Insurance Company of America................................................ 1
Legal Opinion......................................................................... 1
Independent Accountants............................................................... 1
Federal Tax Status.................................................................... 1
Performance Data...................................................................... 4
Financial Statements.................................................................. F-1
</TABLE>
FORM NO. 13488 SL 5/96 33-20696
<PAGE> 42
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY Life Insurance Company of America ("Company"), is a stock life
insurance company organized in the state of Arizona. The Company is the
corporate successor of Vico Credit Life Insurance Company, incorporated in
Arizona on March 6, 1969, re-named Vico Life Insurance Company on July 7, 1972,
and re-named Consumers National Life Insurance Company on December 22, 1977. The
Mutual Life Insurance Company of New York ("MONY") purchased Consumers National
Life Insurance Company on December 10, 1981 and changed the corporate name to
MONY Life Insurance Company of America. The Company is currently licensed to
sell life insurance in 49 states (not including New York), the District of
Columbia and Puerto Rico.
MONY is a mutual life insurance company organized under the laws of the
state of New York in 1842. The principal offices of both MONY and the Company
are at 1740 Broadway, New York, New York 10019. MONY had consolidated assets at
the end of 1995 of approximately $14.6 billion. As of December 31, 1995, MONY
had approximately $115.6 million invested in the Company to support its
insurance operations. MONY intends from time to time to make additional capital
contributions to the Company as needed to enable it to meet its reserve
requirements and expenses in connection with its business. Generally, MONY is
under no obligation to make such contributions, and its assets do not back the
benefits payable under the Contracts.
At May 1, 1995, the rating assigned to MONY by A.M. Best Company, Inc., an
independent insurance company rating organization, was A- (Excellent) based upon
an analysis of financial condition and operating performance through the end of
1994. At the same date, MONY Life Insurance Company of America was rated A- on
the same basis. 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
Contracts.
The Company has a service agreement with MONY whereby MONY provides the
Company with such personnel, facilities, etc., as are reasonably necessary for
the conduct of the Company's business. These services are provided on a cost
reimbursement basis. The Company intends to administer the Contract itself
utilizing the services provided by MONY as a part of the Service Agreement.
During 1995, the Company paid MONY $42,261,667 for all services provided
under the Service Agreement.
LEGAL OPINION
Legal matters relating to federal securities laws applicable to the issue
and sale of the Contract and all matters of Arizona law pertaining to the
Contract, including the validity of the Contract and the Company's right to
issue the Contract, have been passed upon by Willard G. Eldred, Esq., then Vice
President and Deputy General Counsel, MONY.
INDEPENDENT ACCOUNTANTS
The audited financial statements of the Company and the Variable Account
appearing on the following pages 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 Contract 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 Contract value, on
annuity payments, and on the economic benefit to the Contractholder, Annuitant,
or Beneficiary depends on the type of retirement plan for which the Contract is
purchased and upon the tax and
1
<PAGE> 43
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 Contractholders, there
are no income taxes on increases in the value of a Contract until a distribution
occurs, in the form of a full surrender, a partial surrender, a death benefit,
an assignment or gift of the Contract, or as annuity payments.
SURRENDERS, DEATH BENEFITS, ASSIGNMENTS AND GIFTS
A Contractholder who fully surrenders his or her Contract is taxed on the
portion of the payment that exceeds his or her cost basis in the Contract. For
Non-Qualified Contracts, the cost basis is generally the amount of the Purchase
Payments made for the Contract, and the taxable portion of the surrender payment
is taxed as ordinary income. For Qualified Contracts, the cost basis is
generally zero, except to the extent of non-deductible employee 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 certain Qualified Contracts. 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
Contractholder's cost basis in the Contract. 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 Contracts prior to
annuitization are first included in gross income to the extent Surrender Value
exceeds Purchase Payments less prior nontaxable distributions, and the balance
is treated as a non-taxable return of principal to the Contractholder. For
partial surrenders under a Qualified Contract, payments are generally prorated
between taxable income and nontaxable 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
Contracts is generally zero, however, partial surrender amounts will generally
be fully taxed as ordinary income.
A Contractholder who assigns or pledges a Non-Qualified Contract 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 Contractholder who gives
away the Contract (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 Contract.
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
Contract 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 Contracts, 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.
2
<PAGE> 44
PENALTY TAX
Payments received by Contractholders, Annuitants, and Beneficiaries under
both Qualified and Non-Qualified Contracts 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 Contractholder (or, where the Contractholder 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 Contracts. An additional exception for Non-Qualified
Contracts 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 Contract unless the recipient
elects not to have withholding apply. The Company will notify recipients of
their right to elect not to have withholding apply.
Effective January 1, 1993, distributions of plan benefits from qualified
retirement 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 will apply even if the distribution 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 Fund is
designed to be managed to meet the diversification requirements for the Contract
as those requirements may change from time to time. The Company intends to
satisfy those requirements so that the Contract 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
Contractholder's control of the investments of a segregated asset account may
cause the Contractholder, 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 Contract. The Company,
however, has reserved certain rights to alter the Contract 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, Contractholders are urged to consult with their own tax advisers.
QUALIFIED PLANS
The Contract 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
3
<PAGE> 45
is made herein to provide more than general information about the use of the
Contract with the various types of Qualified Plans. Participants under such
Qualified Plans as well as Contractholders, 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 Contract issued in connection
therewith. Following are brief descriptions of the various types of Qualified
Plans and of the use of the Contract in connection therewith. Purchasers of the
Contract should seek competent advice concerning the terms and conditions of the
particular Qualified Plan and use of the Contract 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." Effective January 1, 1989, the
Contracts have been withdrawn from sale to Qualified Plans which intend to
qualify for federal income tax advantages available under Section 403(b). 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 Contract 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 Contract 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 Quest for Value
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
Contractholders. The performance shown below should not be taken as an
indication of future performance of the portfolios of the OCC Accumulation
Trust.
4
<PAGE> 46
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 4.52% and
the effective yield was 4.62%.
The yield is 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.
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
Contract Charge imposed on each Contract Anniversary which has been prorated 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 in the Contract Year of surrender and the preceding
7 Contract Years.
5
<PAGE> 47
SUBACCOUNTS OTHER THAN MONEY MARKET SUBACCOUNT
TOTAL RETURN:
The average annual total return for the Subaccounts other than the Money
Market Subaccount, assuming full surrender of the Contract for cash at the end
of the period, is shown in the table below. This table does not reflect the
impact of the tax laws, if any, on average annual total return as a result of
the surrender.
MONY AMERICA VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $1,000 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............................................. 30.09% 18.97%
Small Cap.......................................... 6.57% 3.36%
Bond............................................... 6.77% 3.92%
Managed............................................ 35.38% 19.51%
</TABLE>
- ---------------
Although MONY America Variable Account A commenced operations on November 25,
1987, the Subaccounts shown above became available for allocation on September
17, 1994. Average annual 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 Contractholder surrendered the Contract 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 Contract Charge imposed on each
Contract 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 Subaccounts since inception of those Subaccounts (September 17, 1994),
assuming that the Contracts remain in force throughout the period, is shown in
the table below.
MONY AMERICA VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $1,000 PAYMENT AT BEGINNING OF
PERIOD AND CONTRACT 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............................................. 36.14% 24.22%
Small Cap.......................................... 12.78% 8.91%
Bond............................................... 12.98% 9.30%
Managed............................................ 41.39% 25.75%
</TABLE>
- ---------------
Although MONY America Variable Account A commenced operations on November 25,
1987, 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> 48
The table above reflects the same assumptions and results as the table
appearing on the top of page 6, except that no contingent deferred sales
(surrender) charge has been deducted. The data reflected in the table above
reflects the total return a Contractholder would have received during that
period if he did not surrender his Contract.
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 Contract. For
1995, this amount was $25,000. The following tables show average annual total
returns calculated on the same basis as the two tables above, except that the
purchase payment is $25,000.
MONY AMERICA 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............................................. 31.15% 20.54%
Small Cap.......................................... 7.61% 4.95%
Bond............................................... 7.60% 5.21%
Managed............................................ 37.78% 23.07%
</TABLE>
- ---------------
Although MONY America Variable Account A commenced operations on November 25,
1987, 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.
MONY AMERICA VARIABLE ACCOUNT A
TOTAL RETURN
(ASSUMING $25,000 PAYMENT AT BEGINNING OF
PERIOD AND CONTRACT 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............................................. 37.19% 25.00%
Small Cap.......................................... 13.81% 9.70%
Bond............................................... 13.81% 9.95%
Managed............................................ 43.77% 27.53%
</TABLE>
- ---------------
Although MONY America Variable Account A commenced operations on November 25,
1987, 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 30-day yield for each of the Subaccounts other than the Money Market
Subaccount is shown in the table below.
MONY AMERICA VARIABLE ACCOUNT A
YIELD FOR 30-DAY PERIOD
<TABLE>
<CAPTION>
YIELD FOR 30 DAYS ENDED EQUITY SMALL CAP BOND MANAGED
- ---------------------------------------------------------- ------ --------- ----- -------
<S> <C> <C> <C> <C>
December 31, 1995......................................... - .78% - 1.16% 3.93% - 0.19%
</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
7
<PAGE> 49
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 (1/360 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 Contract Year of surrender and the preceding 7 Contract
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 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.
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 feature 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,
respectively, 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 the
top of page 6, except, in the case of the column headed "Contract Continues In
Force," no contingent deferred sales (surrender) charge or annual contract
charge has been deducted:
MONY AMERICA 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 CONTRACT CONTINUES
SUBACCOUNT END OF PERIOD IN FORCE
- ----------------------------------------------------- ------------- ---------------------
<S> <C> <C>
Equity............................................... -1.72% 5.61%
Managed.............................................. -2.31% 6.47%
Small Cap............................................ -6.05% 1.32%
Bond................................................. -6.91% 0.26%
</TABLE>
8
<PAGE> 50
MONY AMERICA 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............................................... -0.69% 5.61%
Managed.............................................. 0.11% 6.47%
Small Cap............................................ -5.01% 1.32%
Bond................................................. -6.07% 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 should not be considered as bearing
on the investment performance of the assets held in the Variable Account.
9
<PAGE> 51
FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
With respect to MONY America 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 MONY Life Insurance Company of America:
Report of Independent Accountants................................................... F-17
Balance Sheets as of December 31, 1995 and 1994..................................... F-18
Statements of operations for the years ended December 31, 1995 and 1994............. F-19
Statements of capital and surplus for the years ended December 31, 1995 and 1994.... F-20
Statements of cash flows for the years ended December 31, 1995 and 1994............. F-21
Notes to financial statements....................................................... F-22
</TABLE>
F-1
<PAGE> 52
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MONY Life Insurance Company of America and the
Contractholders of MONY America Variable Account A:
We have audited the accompanying statements of assets and liabilities of
MONY America 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 the 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 November 22, 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 23, 1994 and
November 28, 1994, respectively, (commencements 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 America'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 America 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> 53
MONY AMERICA
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)........ $783,130 $ 884,798 $30,730,076 $47,528,912 $1,526,225 $91,287,195 $7,477,983
======== ========== =========== =========== ========== =========== ==========
Investments in MONY Series Fund,
Inc., at net asset value (Note
2)................................ $968,409 $1,134,112 $30,626,426 $51,238,915 $1,806,327 $91,287,195 $7,474,168
Amount due from MONY America........ 0 0 251 6,253 0 581,497 29,283
Amount due from MONY Series Fund,
Inc. ............................. 0 0 2,706 52,723 60 236,504 6
-------- ---------- ----------- ----------- ---------- ----------- ----------
Total assets................ 968,409 1,134,112 30,629,383 51,297,891 1,806,387 92,105,196 7,503,457
-------- ---------- ----------- ----------- ---------- ----------- ----------
LIABILITIES
Amount due to MONY America.......... 0 0 2,706 52,723 60 236,504 6
Amount due to MONY Series Fund,
Inc. ............................. 0 0 251 6,253 0 581,497 29,283
-------- ---------- ----------- ----------- ---------- ----------- ----------
Total liabilities........... 0 0 2,957 58,976 60 818,001 29,289
-------- ---------- ----------- ----------- ---------- ----------- ----------
Net assets.......................... $968,409 $1,134,112 $30,626,426 $51,238,915 $1,806,327 $91,287,195 $7,474,168
======== ========== =========== =========== ========== =========== ==========
Net assets consist of:
Contractholders' net payments..... $269,801 $ 299,344 $25,907,740 $38,952,360 $ 690,576 $84,116,631 $7,189,657
Undistributed net investment
income.......................... 152,322 401,085 4,944,176 9,159,909 630,440 7,170,564 195,257
Accumulated net realized gains
(losses) on investments......... 361,007 184,369 (121,840 ) (583,357) 205,209 0 93,069
Unrealized appreciation
(depreciation) of investments... 185,279 249,314 (103,650 ) 3,710,003 280,102 0 (3,815 )
-------- ---------- ----------- ----------- ---------- ----------- ----------
Net assets.......................... $968,409 $1,134,112 $30,626,426 $51,238,915 $1,806,327 $91,287,195 $7,474,168
======== ========== =========== =========== ========== =========== ==========
Number of units outstanding*........ 37,368 45,391 1,806,518 2,477,673 83,511 6,504,679 679,711
-------- ---------- ----------- ----------- ---------- ----------- ----------
Net asset value per unit
outstanding....................... $ 25.92 $ 24.99 $ 16.95 $ 20.68 $ 21.63 $ 14.03 $ 11.00
======== ========== =========== =========== ========== =========== ==========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-3
<PAGE> 54
MONY AMERICA
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)......... $121,132,914 $139,216,581 $ 896,982,250 $ 15,561,552 $13,642,773
============ ============ ============== ============ ============
Investments in Enterprise
Accumulation Trust at net asset
value (Note 2)..................... $145,529,920 $145,993,789 $1,109,112,619 $ 16,346,562 $13,786,083
Amount due from Enterprise
Accumulation Trust................. 23,355 9,040 157,318 1,816 299
Amount due from MONY America......... 75,509 27,748 191,594 5,876 82
------------ ------------ -------------- ------------ ------------
Total assets.................... 145,628,784 146,030,577 1,109,461,531 16,354,254 13,786,464
------------ ------------ -------------- ------------ ------------
LIABILITIES
Amount due to Enterprise Accumulation
Trust.............................. 75,509 27,748 191,594 5,876 82
Amount due to MONY America........... 23,355 9,040 157,318 1,816 299
------------ ------------ -------------- ------------ ------------
Total liabilities............... 98,864 36,788 348,912 7,692 381
------------ ------------ -------------- ------------ ------------
Net assets........................... $145,529,920 $145,993,789 $1,109,112,619 $ 16,346,562 $13,786,083
============ ============ ============== ============ ============
Net assets consist of:
Contractholders' net payments...... $102,712,824 $119,642,653 $ 740,486,254 $ 14,693,276 $13,019,850
Undistributed net investment
income.......................... 8,216,372 14,380,408 85,564,180 680,398 524,690
Accumulated net realized gains on
investments..................... 10,203,718 5,193,520 70,931,816 187,878 98,233
Unrealized appreciation of
investments..................... 24,397,006 6,777,208 212,130,369 785,010 143,310
------------ ------------ -------------- ------------ ------------
Net assets........................... $145,529,920 $145,993,789 $1,109,112,619 $ 16,346,562 $13,786,083
============ ============ ============== ============ ============
Number of units outstanding*......... 5,426,511 6,055,472 31,540,233 1,456,982 1,194,315
------------ ------------ -------------- ------------ ------------
Net asset value per unit
outstanding........................ $ 26.82 $ 24.11 $ 35.17 $ 11.22 $ 11.54
============ ============ ============== ============ ============
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-4
<PAGE> 55
MONY AMERICA
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)................. $3,536,160 $1,957,185 $2,136,141 $2,951,202 $32,856,206
========== ========== ========== ========== ===========
Investments in Quest for Value Accumulation
Trust at net asset value (Note 2).......... $3,536,160 $2,072,459 $2,854,428 $3,349,075 $44,843,297
Amount due from Quest for Value Accumulation
Trust...................................... 17 16 0 0 27
Dividends receivable......................... 1,379 770 0 0 0
---------- ---------- ---------- ---------- -----------
Total assets............................ 3,537,556 2,073,245 2,854,428 3,349,075 44,843,324
---------- ---------- ---------- ---------- -----------
LIABILITIES
Amount due to MONY America................... 17 16 0 0 27
---------- ---------- ---------- ---------- -----------
Net assets................................... $3,537,539 $2,073,229 $2,854,428 $3,349,075 $44,843,297
========== ========== ========== ========== ===========
Net assets consist of:
Contractholders' net payments.............. $3,388,926 $1,767,838 $2,055,462 $2,933,451 $31,910,521
Undistributed/(Accumulated) net investment
income (loss)........................... 148,613 152,262 (31,951) (36,333) (418,008)
Accumulated net realized gains on
investments............................. 0 37,855 112,630 54,084 1,363,693
Unrealized appreciation of investments..... 0 115,274 718,287 397,873 11,987,091
---------- ---------- ---------- ---------- -----------
Net assets................................... $3,537,539 $2,073,229 $2,854,428 $3,349,075 $44,843,297
========== ========== ========== ========== ===========
Number of units outstanding*................. 271,019 129,078 106,172 136,744 1,286,294
---------- ---------- ---------- ---------- -----------
Net asset value per unit outstanding......... $ 13.05 $ 16.06 $ 26.88 $ 24.49 $ 34.86
========== ========== ========== ========== ===========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-5
<PAGE> 56
MONY AMERICA
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.................. $ 63,713 $ 58,355 $ 1,707,446 $ 2,761,661 $ 95,512 $ 3,708,654 $ 235,059
Mortality and expense risk
charges (Note 3)............... 12,384 13,437 347,610 518,616 21,644 842,325 40,630
-------- -------- ---------- ---------- -------- ------------ --------
Net investment income............ 51,329 44,918 1,359,836 2,243,045 73,868 2,866,329 194,429
-------- -------- ---------- ---------- -------- ------------ --------
Realized and unrealized gains
(losses) on investments (Note
2):
Proceeds from sales............ 272,020 180,633 7,675,898 11,854,465 259,899 389,648,709 1,482,859
Cost of shares sold............ 182,647 140,972 7,893,627 12,827,357 200,890 389,648,709 1,389,790
-------- -------- ---------- ---------- -------- ------------ --------
Net realized gains (losses) on
investments.................... 89,373 39,661 (217,729) (972,892) 59,009 0 93,069
Net increase (decrease) in
unrealized appreciation of
investments.................... 113,737 211,754 2,334,874 9,104,767 248,851 0 (2,911 )
-------- -------- ---------- ---------- -------- ------------ --------
Net realized and unrealized gains
on investments................. 203,110 251,415 2,117,145 8,131,875 307,860 0 90,158
-------- -------- ---------- ---------- -------- ------------ --------
Net increase in net assets
resulting from operations...... $254,439 $296,333 $ 3,476,981 $10,374,920 $381,728 $ 2,866,329 $ 284,587
======== ======== ========== ========== ======== ============ ========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 57
MONY AMERICA
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........................... $ 7,642,676 $ 8,716,607 $ 70,753,028 $ 796,201 $ 606,469
Mortality and expense risk charges (Note
3)...................................... 1,351,438 1,669,812 10,671,972 114,579 83,188
----------- ----------- ------------ ---------- --------
Net investment income..................... 6,291,238 7,046,795 60,081,056 681,622 523,281
----------- ----------- ------------ ---------- --------
Realized and unrealized gains on
investments (Note 2):
Proceeds from sales..................... 18,490,654 37,009,830 123,710,483 3,734,812 2,006,517
Cost of shares sold..................... 14,370,407 36,737,998 94,893,051 3,546,741 1,908,283
----------- ----------- ------------ ---------- --------
Net realized gains on investments......... 4,120,247 271,832 28,817,432 188,071 98,234
Net increase in unrealized appreciation of
investments............................. 21,768,708 6,498,712 206,163,963 765,785 142,908
----------- ----------- ------------ ---------- --------
Net realized and unrealized gains on
investments............................. 25,888,955 6,770,544 234,981,395 953,856 241,142
----------- ----------- ------------ ---------- --------
Net increase in net assets resulting from
operations.............................. $32,180,193 $13,817,339 $295,062,451 $ 1,635,478 $ 764,423
=========== =========== ============ ========== ========
</TABLE>
See notes to financial statements.
F-7
<PAGE> 58
MONY AMERICA
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............................... $ 166,236 $ 140,524 $ 11,915 $ 24,232 $ 228,055
Mortality and expense risk charges (Note 3)... 42,087 29,233 34,643 45,598 516,836
---------- ---------- -------- ---------- -----------
Net investment income (loss).................. 124,149 111,291 (22,728) (21,366) (288,781)
---------- ---------- -------- ---------- -----------
Realized and unrealized gains on investments
(Note 2):
Proceeds from sales......................... 3,191,219 1,289,952 718,004 1,656,065 8,065,662
Cost of shares sold......................... 3,191,219 1,249,931 604,108 1,599,533 6,680,543
---------- ---------- -------- ---------- -----------
Net realized gains on investments............. 0 40,021 113,896 56,532 1,385,119
Net increase in unrealized appreciation of
investments................................. 0 174,324 780,175 420,585 13,614,561
---------- ---------- -------- ---------- -----------
Net realized and unrealized gains on
investments................................. 0 214,345 894,071 477,117 14,999,680
---------- ---------- -------- ---------- -----------
Net increase in net assets resulting from
operations.................................. $ 124,149 $ 325,636 $871,343 $ 455,751 $14,710,899
========== ========== ======== ========== ===========
</TABLE>
See notes to financial statements.
F-8
<PAGE> 59
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONY SERIES FUND, INC.
------------------------------------------------------------------------
INTERMEDIATE
EQUITY GROWTH EQUITY INCOME TERM BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------------------- --------------------------- ------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 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........................... $ 51,329 $ 12,588 $ 44,918 $ 47,982 $ 1,359,836
Net realized gains (losses) on investments...... 89,373 36,154 39,661 22,326 (217,729)
Net increase (decrease) in unrealized
appreciation of investments................... 113,737 (41,034) 211,754 (76,424) 2,334,874
-------- ---------- ---------- ---------- -----------
Net increase (decrease) in net assets resulting
from operations................................. 254,439 7,708 296,333 (6,116) 3,476,981
-------- ---------- ---------- ---------- -----------
From unit transactions:
Net proceeds from the issuance of units......... 19,737 59,762 25,913 78,166 6,168,848
Net asset value of units redeemed or used to
meet contract obligations..................... 248,505 135,671 163,157 106,044 5,230,269
-------- ---------- ---------- ---------- -----------
Net increase (decrease) from unit transactions.... (228,768) (75,909) (137,244) (27,878) 938,579
-------- ---------- ---------- ---------- -----------
Net increase (decrease) in net assets............. 25,671 (68,201) 159,089 (33,994) 4,415,560
Net assets beginning of year...................... 942,738 1,010,939 975,023 1,009,017 26,210,866
-------- ---------- ---------- ---------- -----------
Net assets end of year*........................... $968,409 $ 942,738 $1,134,112 $ 975,023 $30,626,426
======== ========== ========== ========== ===========
Units outstanding beginning of year............... 46,927 50,759 51,336 52,872 1,753,781
Units issued during the year...................... 874 2,986 1,242 4,033 382,452
Units redeemed during the year.................... 10,433 6,818 7,187 5,569 329,715
-------- ---------- ---------- ---------- -----------
Units outstanding end of year..................... 37,368 46,927 45,391 51,336 1,806,518
======== ========== ========== ========== ===========
* Includes undistributed net investment income of: $152,322 $ 100,993 $ 401,085 $ 356,167 $ 4,944,176
<CAPTION>
LONG TERM BOND
SUBACCOUNT
---------------------------
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
From operations:
Net investment income........................... $ 1,182,720 $ 2,243,045 $ 2,155,360
Net realized gains (losses) on investments...... (282,740 ) (972,892 ) (833,747 )
Net increase (decrease) in unrealized
appreciation of investments................... (1,651,723 ) 9,104,767 (4,797,147 )
----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations................................. (751,743 ) 10,374,920 (3,475,534 )
----------- ----------- -----------
From unit transactions:
Net proceeds from the issuance of units......... 9,508,436 13,405,984 15,748,446
Net asset value of units redeemed or used to
meet contract obligations..................... 8,268,006 8,681,500 21,824,839
----------- ----------- -----------
Net increase (decrease) from unit transactions.... 1,240,430 4,724,484 (6,076,393 )
----------- ----------- -----------
Net increase (decrease) in net assets............. 488,687 15,099,404 (9,551,927 )
Net assets beginning of year...................... 25,722,179 36,139,511 45,691,438
----------- ----------- -----------
Net assets end of year*........................... $26,210,866 $51,238,915 $36,139,511
=========== =========== ===========
Units outstanding beginning of year............... 1,673,790 2,245,807 2,631,575
Units issued during the year...................... 629,461 714,746 943,142
Units redeemed during the year.................... 549,470 482,880 1,328,910
----------- ----------- -----------
Units outstanding end of year..................... 1,753,781 2,477,673 2,245,807
=========== =========== ===========
* Includes undistributed net investment income of: $ 3,584,340 $ 9,159,909 $ 6,916,864
</TABLE>
See notes to financial statements.
F-9
<PAGE> 60
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MONY SERIES FUND, INC.--(CONTINUED)
----------------------------------------------------------------------------------------
GOVERNMENT
SECURITIES
SUBACCOUNT
----------------------------
DIVERSIFIED MONEY MARKET FOR THE
SUBACCOUNT SUBACCOUNT PERIOD
--------------------------- --------------------------- NOVEMBER 22,
FOR THE FOR THE FOR THE FOR THE FOR THE 1994**
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THROUGH
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................ $ 73,868 $ 34,425 $ 2,866,329 $ 1,352,440 $ 194,429 $ 828
Net realized gains (losses) on
investments....................... 59,009 19,183 0 0 93,069 0
Net increase (decrease) in unrealized
appreciation of investments....... 248,851 (58,060) 0 0 (2,911) (904)
---------- ---------- ----------- ----------- ---------- --------
Net increase (decrease) in net assets
resulting from operations............ 381,728 (4,452) 2,866,329 1,352,440 284,587 (76)
---------- ---------- ----------- ----------- ---------- --------
From unit transactions:
Net proceeds from the issuance of
units............................. 73,106 102,471 387,429,226 321,019,860 7,481,232 174,231
Net asset value of units redeemed or
used to meet contract
obligations....................... 223,895 143,496 370,351,387 299,495,468 465,806 0
---------- ---------- ----------- ----------- ---------- --------
Net increase (decrease) from unit
transactions......................... (150,789) (41,025) 17,077,839 21,524,392 7,015,426 174,231
---------- ---------- ----------- ----------- ---------- --------
Net increase (decrease) in net
assets............................... 230,939 (45,477) 19,944,168 22,876,832 7,300,013 174,155
Net assets beginning of year........... 1,575,388 1,620,865 71,343,027 48,466,195 174,155 0
---------- ---------- ----------- ----------- ---------- --------
Net assets end of year*................ $1,806,327 $1,575,388 $ 91,287,195 $ 71,343,027 $7,474,168 $ 174,155
========== ========== =========== =========== ========== ========
Units outstanding beginning of year.... 90,907 93,312 5,304,884 3,698,103 17,347 0
Units issued during the year........... 3,710 5,848 28,090,440 24,225,370 706,241 17,347
Units redeemed during the year......... 11,106 8,253 26,890,645 22,618,589 43,877 0
---------- ---------- ----------- ----------- ---------- --------
Units outstanding end of year.......... 83,511 90,907 6,504,679 5,304,884 679,711 17,347
========== ========== =========== =========== ========== ========
- ---------------
* Includes undistributed net
investment income of: $ 630,440 $ 556,572 $ 7,170,564 $ 4,304,235 $ 195,257 $ 828
</TABLE>
** Commencement of operations.
See notes to financial statements.
F-10
<PAGE> 61
MONY AMERICA
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 (loss)...... $ 6,291,238 $ 835,913 $ 7,046,795 $ 4,864,392 $ 60,081,056 $17,502,663
Net realized gains (losses) on
investments..................... 4,120,247 2,580,938 271,832 2,054,819 28,817,432 20,641,817
Net increase (decrease) in
unrealized appreciation of
investments..................... 21,768,708 (1,808,298 ) 6,498,712 (8,145,294 ) 206,163,963 (32,810,120)
------------ ----------- ------------ ------------ -------------- ------------
Net increase (decrease) in net
assets resulting from
operations........................ 32,180,193 1,608,553 13,817,339 (1,226,083 ) 295,062,451 5,334,360
------------ ----------- ------------ ------------ -------------- ------------
From unit transactions:
Net proceeds from the issuance of
units........................... 51,339,101 29,386,142 35,366,448 66,054,130 304,419,702 237,090,207
Net asset value of units redeemed
or used to meet contract
obligations..................... 13,768,394 11,715,014 31,951,502 29,598,056 94,036,492 92,203,422
------------ ----------- ------------ ------------ -------------- ------------
Net increase from unit
transactions...................... 37,570,707 17,671,128 3,414,946 36,456,074 210,383,210 144,886,785
------------ ----------- ------------ ------------ -------------- ------------
Net increase in net assets......... 69,750,900 19,279,681 17,232,285 35,229,991 505,445,661 150,221,145
Net assets beginning of year....... 75,779,020 56,499,339 128,761,504 93,531,513 603,666,958 453,445,813
------------ ----------- ------------ ------------ -------------- ------------
Net assets end of year*............ $145,529,920 $75,779,020 $145,993,789 $ 128,761,504 $1,109,112,619 $603,666,958
============ =========== ============ ============ ============== ============
Units outstanding beginning of
year.............................. 3,865,965 2,956,822 5,924,266 4,249,653 24,924,610 18,964,250
Units issued during the year....... 2,143,227 1,509,820 1,572,208 3,073,217 9,733,146 9,679,254
Units redeemed during the year..... 582,681 600,677 1,441,002 1,398,604 3,117,523 3,718,894
------------ ----------- ------------ ------------ -------------- ------------
Units outstanding end of year...... 5,426,511 3,865,965 6,055,472 5,924,266 31,540,233 24,924,610
============ =========== ============ ============ ============== ============
- ---------------
* Includes undistributed net
investment income (loss) of: $ 8,216,372 $ 1,925,134 $14,380,408 $ 7,333,613 $ 85,564,180 $25,483,124
** Commencement of operations.
<CAPTION>
INTERNATIONAL GROWTH HIGH YIELD BOND
SUBACCOUNT SUBACCOUNT
---------------------------- ----------------------------
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 23, NOVEMBER 28,
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 (loss)...... $ 681,622 ($ 1,224) $ 523,281 $ 1,409
Net realized gains (losses) on
investments..................... 188,071 (193) 98,234 (1)
Net increase (decrease) in
unrealized appreciation of
investments..................... 765,785 19,225 142,908 402
----------- ---------- ----------- ---------
Net increase (decrease) in net
assets resulting from
operations........................ 1,635,478 17,808 764,423 1,810
----------- ---------- ----------- ---------
From unit transactions:
Net proceeds from the issuance of
units........................... 14,604,230 2,044,932 13,314,491 268,256
Net asset value of units redeemed
or used to meet contract
obligations..................... 1,955,796 90 562,893 4
----------- ---------- ----------- ---------
Net increase from unit
transactions...................... 12,648,434 2,044,842 12,751,598 268,252
----------- ---------- ----------- ---------
Net increase in net assets......... 14,283,912 2,062,650 13,516,021 270,062
Net assets beginning of year....... 2,062,650 0 270,062 0
----------- ---------- ----------- ---------
Net assets end of year*............ $16,346,562 $2,062,650 $13,786,083 $270,062
=========== ========== =========== =========
Units outstanding beginning of
year.............................. 208,202 0 26,870 0
Units issued during the year....... 1,442,749 208,211 1,218,090 26,870
Units redeemed during the year..... 193,969 9 50,645 0
----------- ---------- ----------- ---------
Units outstanding end of year...... 1,456,982 208,202 1,194,315 26,870
=========== ========== =========== =========
- ---------------
* Includes undistributed net
investment income (loss) of: $ 680,398 ($ 1,224) $ 524,690 $ 1,409
** Commencement of operations.
</TABLE>
See notes to financial statements.
F-11
<PAGE> 62
MONY AMERICA
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)................ $ 124,149 $ 24,464 $ 111,291 $ 40,971 ($ 22,728)
Net realized gains (losses) on
investments............................... 0 0 40,021 (2,166) 113,896
Net increase (decrease) in unrealized
appreciation of investments............... 0 0 174,324 (59,050) 780,175
---------- ---------- ----------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations................... 124,149 24,464 325,636 (20,245) 871,343
---------- ---------- ----------- ---------- ----------
From unit transactions:
Net proceeds from the issuance of units..... 3,607,557 3,150,273 213,153 2,975,062 122,424
Net asset value of units redeemed or used to
meet contract obligations................. 3,138,264 230,640 1,262,489 157,888 680,113
---------- ---------- ----------- ---------- ----------
Net increase (decrease) from unit
transactions................................ 469,293 2,919,633 (1,049,336) 2,817,174 (557,689)
---------- ---------- ----------- ---------- ----------
Net increase (decrease) in net assets......... 593,442 2,944,097 (723,700) 2,796,929 313,654
Net assets beginning of year.................. 2,944,097 0 2,796,929 0 2,540,774
---------- ---------- ----------- ---------- ----------
Net assets end of year*....................... $ 3,537,539 $2,944,097 $ 2,073,229 $2,796,929 $ 2,854,428
========== ========== =========== ========== ==========
Units outstanding beginning of year........... 234,062 0 198,239 0 129,693
Units issued during the year.................. 282,367 252,462 13,880 209,397 5,049
Units redeemed during the year................ 245,410 18,400 83,041 11,158 28,570
---------- ---------- ----------- ---------- ----------
Units outstanding end of year................. 271,019 234,062 129,078 198,239 106,172
========== ========== =========== ========== ==========
- ---------------
* Includes undistributed net investment
income (loss) of: $ 148,613 $ 24,464 $ 152,262 $ 40,971 ($ 31,951)
** 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)................ ($ 9,223) ($ 21,366) ($ 14,967) ($ 288,781) ($ 129,227)
Net realized gains (losses) on
investments............................... (1,266) 56,532 (2,448) 1,385,119 (21,426)
Net increase (decrease) in unrealized
appreciation of investments............... (61,888) 420,585 (22,712) 13,614,561 (1,627,470)
---------- ----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations................... (72,377) 455,751 (40,127) 14,710,899 (1,778,123)
---------- ----------- ---------- ----------- -----------
From unit transactions:
Net proceeds from the issuance of units..... 2,631,427 185,178 4,342,410 2,329,894 37,312,175
Net asset value of units redeemed or used to
meet contract obligations................. 18,276 1,530,650 63,487 7,328,456 403,092
---------- ----------- ---------- ----------- -----------
Net increase (decrease) from unit
transactions................................ 2,613,151 (1,345,472) 4,278,923 (4,998,562) 36,909,083
---------- ----------- ---------- ----------- -----------
Net increase (decrease) in net assets......... 2,540,774 (889,721) 4,238,796 9,712,337 35,130,960
Net assets beginning of year.................. 0 4,238,796 0 35,130,960 0
---------- ----------- ---------- ----------- -----------
Net assets end of year*....................... $2,540,774 $ 3,349,075 $4,238,796 $44,843,297 $ 35,130,960
========== =========== ========== =========== ===========
Units outstanding beginning of year........... 0 197,050 0 1,449,807 0
Units issued during the year.................. 130,630 7,680 200,054 79,150 1,466,229
Units redeemed during the year................ 937 67,986 3,004 242,663 16,422
---------- ----------- ---------- ----------- -----------
Units outstanding end of year................. 129,693 136,744 197,050 1,286,294 1,449,807
========== =========== ========== =========== ===========
- ---------------
* Includes undistributed net investment
income (loss) of: ($ 9,223) ($ 36,333) ($ 14,967) ($ 418,008) ($ 129,227)
** Commencement of operations.
</TABLE>
See notes to financial statements.
F-12
<PAGE> 63
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
MONY America Variable Account A (the "Variable Account") is a separate
investment account established on March 27, 1987 by MONY Life Insurance Company
of America ("MONY America"), under the laws of the State of Arizona.
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 America's other assets and, at
present, is used only to support flexible payment variable annuity policies.
These policies are issued by MONY America, which is a wholly-owned subsidiary of
The Mutual Life Insurance Company of New York ("MONY"). MONY America is
currently taxed as a life insurance company and will include the Variable
Account's operations in its tax return. MONY America 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, and
each invests only in a corresponding portfolio of the MONY Series Fund, Inc.
(the "Fund"), the 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 value of each portfolio. Except for the Money Market Portfolio,
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 America is the legal holder of the assets of the Variable Account.
Purchase payments received from MONY America by the Variable Account
represent gross purchase payments recorded by MONY America 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 $1,330,841.
MONY America 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 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.
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
F-13
<PAGE> 64
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CHANGE IN ADVISORY ARRANGEMENT (CONTINUED)
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.......................................................... $ 2,591,985
Small Cap....................................................... 4,235,745
Managed......................................................... 37,076,482
Bond............................................................ 2,974,135
Money Market.................................................... 2,780,980
</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 $443,166,
$235,611, $6,460,220 and ($348,510), respectively, on September 16, 1994 as a
realized gain/(loss) on the net assets redeemed.
F-14
<PAGE> 65
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS
Investment 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.......................... 45,786 62,783 2,688,294 3,451,720 119,893 71,343,027 18,313
Amount.......................... $871,196 $937,463 $28,649,390 $41,534,275 $ 1,544,137 $ 71,343,027 $ 175,059
-------- -------- ----------- ----------- ---------- ------------ ----------
Shares acquired:
Shares.......................... 1,285 1,718 773,868 1,306,665 5,793 405,884,223 836,011
Amount.......................... $ 30,868 $ 29,952 $ 8,266,867 $16,060,333 $ 87,466 $405,884,223 $8,457,655
Shares received for reinvestment
of dividends:
Shares.......................... 2,537 2,976 161,537 214,415 6,076 3,708,654 23,022
Amount.......................... $ 63,713 $ 58,355 $ 1,707,446 $ 2,761,661 $ 95,512 $ 3,708,654 $ 235,059
Shares redeemed:
Shares.......................... 11,042 9,644 726,213 994,624 16,856 389,648,709 145,301
Amount.......................... $182,647 $140,972 $ 7,893,627 $12,827,357 $ 200,890 $389,648,709 $1,389,790
-------- -------- ----------- ----------- ---------- ------------ ----------
Net change:
Shares.......................... (7,220 ) (4,950 ) 209,192 526,456 (4,987) 19,944,168 713,732
Amount.......................... ($88,066 ) ($ 52,665) $ 2,080,686 $ 5,994,637 ($ 17,912) $ 19,944,168 $7,302,924
-------- -------- ----------- ----------- ---------- ------------ ----------
Shares end of year:
Shares.......................... 38,566 57,833 2,897,486 3,978,176 114,906 91,287,195 732,045
Amount.......................... $783,130 $884,798 $30,730,076 $47,528,912 $ 1,526,225 $ 91,287,195 $7,477,983
======== ======== =========== =========== ========== ============ ==========
</TABLE>
Investment in Enterprise Accumulation Trust at cost, at December 31, 1995
consists of the following:
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY SMALL CAP MANAGED GROWTH HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Shares beginning of year:
Shares..................... 4,179,758 7,332,660 28,994,571 416,697 54,239
Amount..................... $ 73,150,722 $128,483,008 $597,700,552 $ 2,043,425 $ 269,660
------------ ------------ ------------ ----------- -----------
Shares acquired:
Shares..................... 2,548,366 2,177,758 12,528,986 3,194,145 2,807,573
Amount..................... $ 54,709,923 $ 38,754,964 $323,421,721 $ 16,268,667 $14,674,927
Shares received for
reinvestment of dividends:
Shares..................... 368,281 498,088 2,882,791 146,981 114,893
Amount..................... $ 7,642,676 $ 8,716,607 $ 70,753,028 $ 796,201 $ 606,469
Shares redeemed:
Shares..................... 863,860 2,108,409 4,879,882 725,066 380,456
Amount..................... $ 14,370,407 $ 36,737,998 $ 94,893,051 $ 3,546,741 $ 1,908,283
------------ ------------ ------------ ----------- -----------
Net change:
Shares..................... 2,052,787 567,437 10,531,895 2,616,060 2,542,010
Amount..................... $ 47,982,192 $ 10,733,573 $299,281,698 $ 13,518,127 $13,373,113
------------ ------------ ------------ ----------- -----------
Shares end of year:
Shares..................... 6,232,545 7,900,097 39,526,466 3,032,757 2,596,249
Amount..................... $121,132,914 $139,216,581 $896,982,250 $ 15,561,552 $13,642,773
============ ============ ============ =========== ===========
</TABLE>
F-15
<PAGE> 66
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENTS (CONTINUED)
Investment in Quest for Value Accumulation Trust at cost, at December 31,
1995 consists 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.......................... 2,944,097 304,014 140,219 243,889 1,686,556
Amount.......................... $2,944,097 $2,855,979 $2,602,662 $4,261,508 $36,758,430
------------ ------------ ------------ ----------- -----------
Shares acquired:
Shares.......................... 3,618,425 21,952 5,648 14,352 97,695
Amount.......................... $3,618,425 $ 211,383 $ 125,672 $ 264,995 $ 2,550,264
Shares received for reinvestment
of dividends:
Shares.......................... 164,857 14,459 613 1,424 10,029
Amount.......................... $ 164,857 $ 139,754 $ 11,915 $ 24,232 $ 228,055
Shares redeemed:
Shares.......................... 3,191,219 132,971 32,531 91,454 306,447
Amount.......................... $3,191,219 $1,249,931 $ 604,108 $1,599,533 $ 6,680,543
------------ ------------ ------------ ----------- -----------
Net change:
Shares.......................... 592,063 (96,560) (26,270) (75,678) (198,723)
Amount.......................... $ 592,063 ($ 898,794) ($ 466,521) ($1,310,306) ($ 3,902,224)
------------ ------------ ------------ ----------- -----------
Shares end of year:
Shares.......................... 3,536,160 207,454 113,949 168,211 1,487,833
Amount.......................... $3,536,160 $1,957,185 $2,136,141 $2,951,202 $32,856,206
============ ============ ============ =========== ===========
</TABLE>
F-16
<PAGE> 67
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
MONY Life Insurance Company of America:
We have audited the accompanying balance sheets of MONY Life Insurance
Company of America as of December 31, 1995 and 1994, and the related statements
of operations, capital and 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 MONY Life Insurance Company
of America 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
Arizona, which are considered generally accepted accounting principles for stock
life insurance subsidiaries of 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-17
<PAGE> 68
MONY LIFE INSURANCE COMPANY OF AMERICA
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash.................................................................. $ 3,663 $ 10,394
Investments:
Short-term investments.............................................. 121,499 68,268
Bonds............................................................... 1,017,646 992,054
Common stocks....................................................... 690 300
Mortgage loans...................................................... 173,154 175,708
Real estate......................................................... 58,375 69,893
Policy loans........................................................ 38,124 32,364
Other invested assets............................................... 7,953 7,293
Investment income due and accrued..................................... 21,383 21,898
Other assets.......................................................... 9,777 16,997
Separate account assets............................................... 1,685,770 998,100
--------- ---------
Total assets................................................ $3,138,034 $2,393,269
========= =========
POLICY RESERVES, LIABILITIES, CAPITAL AND SURPLUS
Policy reserves:
Life insurance and annuity reserves................................. $1,319,777 $1,289,343
Deposits left with the Company...................................... 23,287 15,088
Liabilities:
Policy claims in process of settlement.............................. 6,531 3,255
Taxes accrued....................................................... 16,965 7,548
Other liabilities................................................... 13,979 2,557
Transfers from separate accounts.................................... (65,082) (48,616)
Separate account liabilities........................................ 1,685,770 998,100
Interest maintenance reserve........................................ 3,138 3,179
Investment reserves................................................. 4,000 4,000
Asset valuation reserve............................................. 14,039 13,900
--------- ---------
Total policy reserves and liabilities....................... 3,022,404 2,288,354
Capital and surplus:
Capital stock, $1.00 par value; authorized, 5,000,000 shares issued
and outstanding 2,500,000 shares................................. 2,500 2,500
Additional paid-in capital.......................................... 133,500 123,500
Unassigned funds.................................................... (20,370) (21,085)
--------- ---------
Total capital and surplus................................... 115,630 104,915
--------- ---------
Total policy reserves, liabilities, capital and surplus..... $3,138,034 $2,393,269
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE> 69
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Premiums, annuity considerations and fund deposits.............................. $607,099 $500,329
Net investment income........................................................... 104,923 96,287
Other income (net).............................................................. 2,557 23
-------- --------
714,579 596,639
Policyholder benefits........................................................... 309,335 246,105
Change in policy and contract reserves.......................................... 38,633 42,117
Commissions..................................................................... 32,257 24,682
Operating expenses.............................................................. 44,713 34,451
Transfer to separate accounts................................................... 275,600 237,588
-------- --------
700,538 584,943
Net gain from operations before federal income taxes............................ 14,041 11,696
Federal income taxes............................................................ 7,984 3,241
-------- --------
Net gain from operations........................................................ 6,057 8,455
Net realized capital losses (See Note 4)...................................... (1,410) (2,344)
-------- --------
Net Income...................................................................... $ 4,647 $ 6,111
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE> 70
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-----------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Capital and Surplus, beginning of year............................... $104,915 $102,233
-------- --------
Net income........................................................... 4,647 6,111
Change in net unrealized capital losses.............................. (3,846) (13,043)
Change in non-admitted assets........................................ 53 311
Change in asset valuation reserve.................................... (139) (697)
Change in investment reserves........................................ -- 10,000
Increase in paid-in capital.......................................... 10,000 --
-------- --------
Net change in capital and surplus for the year....................... 10,715 2,682
-------- --------
Capital and Surplus, end of year..................................... $115,630 $104,915
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE> 71
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
1995 1994
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOW PROVIDED FROM OPERATIONS:
Premiums, annuity considerations and fund deposits............... $ 607,410 $ 500,312
Investment income net of investment expenses..................... 107,636 100,491
Other income..................................................... 2,555 --
Net change in policy loans....................................... (5,761) (1,829)
Policy benefits paid............................................. (307,107) (241,776)
Transfers to separate accounts................................... (292,066) (250,360)
Commissions, other expenses and taxes paid....................... (76,337) (57,174)
--------- ---------
Net cash from operations................................. 36,330 49,664
--------- ---------
PROCEEDS FROM INVESTMENTS SOLD, MATURED OR REPAID:
Bonds............................................................ 148,517 317,540
Stocks........................................................... 5 2,524
Mortgage loans................................................... 20,465 47,899
Real estate...................................................... 19,751 6,826
Other invested assets............................................ 162 382
--------- ---------
Total investment proceeds................................ 188,900 375,171
--------- ---------
OTHER CASH PROVIDED:
Increase in paid in capital...................................... 10,000 --
Other sources.................................................... 18,693 303
--------- ---------
Total cash provided...................................... 253,923 425,138
--------- ---------
CASH APPLIED:
Cost of investments acquired:
Bonds......................................................... 177,057 328,444
Stocks........................................................ 400 442
Mortgage loans................................................ 23,813 24,689
Real estate................................................... 5,530 5,276
Other invested assets......................................... 354 393
--------- ---------
Total investments acquired............................... 207,154 359,244
--------- ---------
Other cash applied............................................... 269 24,121
--------- ---------
Total cash applied....................................... 207,423 383,365
--------- ---------
Net change in cash and short-term investments.................... 46,500 41,773
Cash and short-term investments, beginning of year................. 78,662 36,889
--------- ---------
Cash and short-term investments, end of year....................... $ 125,162 $ 78,662
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE> 72
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
MONY Life Insurance Company of America (the "Company"), an Arizona
corporation, is a wholly owned subsidiary of The Mutual Life Insurance Company
of New York ("MONY"), a mutual life insurance company. The Company's primary
business is to provide interest-sensitive life insurance and asset accumulation
products to business owners, growing families, and pre-retirees. The Company's
insurance and financial products are marketed and distributed directly to
individuals primarily through MONY's career agency sales force. These products
are sold throughout the United States (except New York) 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 Arizona, which are currently considered to be
generally accepted accounting principals ("GAAP") for stock life insurance
subsidiaries (domiciled in Arizona) of mutual life insurance companies (see Note
13). 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 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 not backed by
other loans, which are 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. Preferred stocks are carried at
cost. 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.
There were no encumbrances in 1995 or in 1994. Joint venture partnerships
in real estate 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 the estimated fair value at the time of foreclosure, less
cumulative depreciation and encumbrances. Mortgage loans in process of
foreclosure are also carried at the lower of cost or the 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.
The Company provides, through a direct charge to surplus, an
investment valuation reserve for permanent impairment of real estate
investments, joint venture partnerships in real estate, mortgage loans
F-22
<PAGE> 73
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 $4 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 investment 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 AVR are recorded
directly to surplus.
d. Policy reserves for deferred annuity contracts are computed by the
net level premium method and the Commissioners' Annuity Reserve Valuation
Method by using the 1971 IAM Table for contracts issued before 1984 and the
1983 Table A for contracts issued since 1983 and permitted statutory
interest rates. Policy reserves for universal life and single premium whole
life contracts are computed by using the Commissioners' Reserve Valuation
Method and by using the 1958 and 1980 CSO Tables, and permitted statutory
interest rates.
e. Certain assets designated as "non-admitted" assets (principally
miscellaneous receivables) are excluded from the balance sheets.
f. Separate account assets and liabilities represent segregated funds
administered and invested by the Company for the benefit of certain
contractholders. Assets consist of securities reported at market value.
Premiums, benefits and expenses of the separate accounts are included in
the Company's statements of operations.
g. No deferred taxes are recognized for differences that exist between
financial reporting and taxable income.
h. The Company uses the constant-yield method of depreciation for
substantially all investment real estate and real estate joint venture
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
$1.7 million and $1.4 million in 1995 and 1994, respectively; accumulated
depreciation was $4.6 million and $4.0 at December 31, 1995 and 1994,
respectively.
i. Certain amounts for 1994 have been reclassified to conform to the
1995 presentation.
2. CAPITAL AND SURPLUS
MONY guaranteed to the states who requested it, pursuant to conditions
imposed by such states as a prerequisite for the licensing of new subsidiaries,
that the Company's capital and surplus would be maintained at a level at least
equivalent to the minimum capital and surplus required for admission to conduct
business in those states. As of December 31, 1995 and 1994, this guarantee was
outstanding in the state of New Jersey.
F-23
<PAGE> 74
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FEDERAL INCOME TAXES
The Company is included in the consolidated federal income tax return with
its parent, The Mutual Life Insurance Company of New York, and the parent's
non-life affiliates. The allocation of federal income taxes is based upon
separate return calculations with current credit for net losses. 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 depreciation expense and
related recapture, utilization of capital loss carryovers, capital gains
deferred to the IMR, alternative minimum tax preference items and equity in
partnerships and joint ventures.
4. CAPITAL GAINS/(LOSSES)
The Company realized net capital losses (after-tax and IMR) of $1.4 million
in 1995 and $2.3 million in 1994 as follows:
<TABLE>
<CAPTION>
REALIZED CAPITAL GAINS/(LOSSES) 1995 1994
------------------------------------------------------------- ----- -----
(IN MILLIONS)
<S> <C> <C>
Bonds and stocks............................................. $ 0.2 $(4.3)
Real estate and mortgage loans............................... (0.4) (0.8)
----- -----
(0.2) (5.1)
Taxes........................................................ (0.7) 0.0
Transferred to IMR, net of taxes............................. (0.5) 2.8
----- -----
Net realized capital losses.................................. $(1.4) $(2.3)
===== =====
</TABLE>
During 1995 and 1994, realized capital gains/(losses) resulting from
changes in interest rates on fixed income securities of $0.5 million (net of
$0.2 million tax) and ($2.8) million (net of ($1.5) million tax), respectively,
were transferred to the Company's IMR for future amortization into net income.
The Company incurred net unrealized capital losses of $3.8 million in 1995
and $13.0 million in 1994. The 1995 and 1994 unrealized losses include
writedowns of approximately $1.2 million and $13.8 million, respectively, on
real estate acquired through foreclosure and mortgage loans in process of
foreclosure. These losses are detailed by asset type in the table below.
<TABLE>
<CAPTION>
UNREALIZED CAPITAL GAINS/(LOSSES) 1995 1994
---------------------------------------------------------- ----- ------
(IN MILLIONS)
<S> <C> <C>
Bonds and stocks.......................................... $(2.6) $ 0.6
Real estate and mortgage loans............................ (1.2) (13.8)
Other investments......................................... 0.0 0.2
----- ------
Total unrealized capital losses........................... $(3.8) $(13.0)
===== ======
</TABLE>
F-24
<PAGE> 75
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. FIXED INCOME SECURITIES
FIXED INCOME SECURITIES BY INVESTMENT TYPE
The amortized cost and estimated fair value (see note 8) 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
------------------- ------------ ------------ -------------------
1995 1994 1995 1994 1995 1994 1995 1994
-------- -------- ----- ---- ---- ----- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury & Other
Agencies...................... $ 21.0 $ 21.0 $ 0.1 $0.0 $0.1 $ 1.0 $ 21.0 $ 20.0
Collateralized Mortgage
Obligations:
Government Agency Backed...... 128.8 111.8 2.9 0.0 0.2 10.8 131.5 101.0
Non-Agency Backed............. 36.9 22.7 2.5 0.0 0.0 1.6 39.4 21.1
Other asset backed securities:
Government Agency Backed...... 0.3 0.4 0.0 0.0 0.0 0.0 0.3 0.4
Non-Agency Backed............. 78.5 60.1 2.5 0.7 0.6 2.1 80.4 58.7
Foreign governments............. 0.0 5.0 0.0 0.0 0.0 0.5 0.0 4.5
Utilities....................... 127.1 135.5 4.9 1.1 0.2 7.6 131.8 129.0
Corporate bonds................. 625.0 635.5 25.7 3.4 3.2 35.6 647.5 603.3
-------- -------- ----- ---- ---- ----- -------- --------
Total bonds........... 1,017.6 992.0 38.6 5.2 4.3 59.2 1,051.9 938.0
Commercial paper................ 121.5 68.3 0.0 0.0 0.0 0.0 121.5 68.3
-------- -------- ----- ---- ---- ----- -------- --------
Total................. $1,139.1 $1,060.3 $38.6 $5.2 $4.3 $59.2 $1,173.4 $1,006.3
======== ======== ===== ==== ==== ===== ======== ========
</TABLE>
Amortized cost represents the principal amount of the fixed income
securities adjusted by unamortized premium or discount and reduced by writedowns
of $4.4 million and $1.8 million at December 31, 1995 and 1994, respectively, as
required by the NAIC for securities which are in or near default.
At December 31, 1995, 78% 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 and estimated fair value of fixed income securities by
maturity date (excluding scheduled sinking funds) as of December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
--------- ---------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less........................................... $ 170.4 $ 171.6
Due after one year through five years............................. 358.8 367.0
Due after five years through ten years............................ 380.9 397.9
Due after ten years............................................... 229.0 236.9
--------- ---------
$1,139.1 $ 1,173.4
========= =========
</TABLE>
F-25
<PAGE> 76
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. 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 $40 million and $241 million, respectively. Gross gains of $0.6 million in
1995 and $0 million in 1994, and gross losses of $1.4 million in 1995 and $5.5
million in 1994 were realized on these sales.
6. CONCENTRATION OF CREDIT RISK
As of December 31, 1995 and 1994, the Company had no single investment
(excluding U.S. Treasury securities) exceeding 1.3% and 1.1%, respectively, of
total general account assets.
The bond portfolio is diversified by industry type. The industries
comprising more than 10% of the carrying value of the bond portfolio at December
31, 1995 are Government and Agencies of $150 million (14.8%), Public Utilities
of $127 million (12.5%), Non-Government -- Asset/Mortgage Backed of $116 million
(11.4%), Financial Services of $108 million (10.6%), Consumer Goods and Services
of $105 million (10.3%) and Other Manufacturing of $102 million (10.0%). At
December 31, 1994, the industries comprising more than 10% of the carrying value
of the bond portfolio were Government and Agencies of $138 million (13.9%),
Public Utilities of $135 million (13.6%), Other Manufacturing of $110 million
(11.1%) and Consumer Goods and Services of $104 million (10.5%).
The Company holds below investment grade bonds of $84 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, $60 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 $70 million.
The Company has investments in commercial and agricultural mortgage loans
and real estate (including joint venture partnerships). Approximately 48.5% of
the Company's real estate and mortgage portfolio is invested in agricultural
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>
1955 1994
----------- -----------
GEOGRAPHIC REGION $ % $ %
------------------------------------------------------------- --- ----- --- -----
<S> <C> <C> <C> <C>
West......................................................... 73 30.5 71 28.1
Mountain..................................................... 52 21.7 53 20.9
Southeast.................................................... 31 13.1 41 16.2
Midwest...................................................... 30 12.7 34 13.6
Northeast.................................................... 30 12.6 37 14.5
Southwest.................................................... 23 9.4 17 6.7
--- ----- --- -----
Total.............................................. 239 100.0 253 100.0
=== ===== === =====
</TABLE>
The states with the largest concentrations of mortgage loans and real
estate investments at December 31, 1995 are: California, $44 million (18.4%);
Texas, $23 million (9.4%); Arizona, $19 million (8.1%); New York, $19 million
(8.0%); Washington, $14 million (5.9%); Illinois, $13 million (5.5%); Florida,
$12 million (5.0%); Idaho, $12 million (5.0%); and Oregon, $12 million (4.9%).
F-26
<PAGE> 77
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. MORTGAGE LOANS AND REAL ESTATE
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 or agricultural
properties. As of December 31, 1995, $60.7 million of mortgage loans have terms
that require amortization, and $112.4 million of loans require partial
amortization or are non-amortizing. Mortgage loans delinquent over 90 days or in
process of foreclosure were $0 million at December 31, 1995 and $2.3 million at
December 31, 1994. Properties acquired through foreclosure during the year
amounted to $4.8 million and $18.8 million in 1995 and 1994, respectively.
The Company has performing restructured mortgage loans of $15.1 million as
of December 31, 1995 and $10.9 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 $1.5 million in 1995 and $1.1 million in 1994. Gross interest
income recognized in net income for the period from these loans was $1.0 million
in 1995 and $0.6 million in 1994. There are no commitments to lend additional
funds to any debtor involved in a restructuring.
Other invested assets of $8.0 and $7.3 million at December 31, 1995 and
1994, respectively, include, primarily, investments in real estate partnerships.
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and respective 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...................................... 1,017.6 1,051.9
Separate Account Assets...................................... 1,685.8 1,685.8
LIABILITIES
Investment-type contracts.................................... 847.5 859.7
Separate Account Liabilities................................. 1,685.8 1,685.8
</TABLE>
The estimated fair values of cash, short term investments, equity
securities and mortgage loans approximate their carrying amounts.
The methods and assumptions utilized in estimating these fair values of
financial instruments are summarized as follows:
FIXED INCOME SECURITIES (SEE NOTE 5)
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.
F-27
<PAGE> 78
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
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
approximates their respective carrying amounts.
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.
9. 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
-------------
(IN MILLIONS)
<S> <C>
Not subject to discretionary withdrawal provision...................... $ 76
Subject to discretionary withdrawal -- with adjustment:
- at book value less surrender charges............................... 240
- at market value.................................................... 1,609
------
Subtotal..................................................... 1,849
Subject to discretionary withdrawal -- without adjustment:
- at book value (minimal or no charge or adjustment)................. 554
------
Total annuity actuarial reserves and deposit liabilities
(gross).................................................... $ 2,479
======
</TABLE>
The amounts above are included in the Company's balance sheet as life
insurance and annuity reserves ($869) million and separate account liabilities
($1,610) million.
10. REINSURANCE
Life insurance business is ceded on a yearly renewable term basis to MONY
and other insurance companies under various reinsurance contracts. The Company's
practice is to retain no more than $0.5 million of risk on any one person. The
total amount of reinsured life insurance in force on this basis was $2.2 billion
and $2.3 billion at December 31, 1995 and 1994, respectively. Premiums ceded
under these contracts were $12.3 million and $11.7 million; benefit payments
recovered were $23.3 million and $12.3 million; policy
F-28
<PAGE> 79
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. REINSURANCE (CONTINUED)
reserve credits recorded were $9.7 million and $9.2 million; and recoverable
amounts on paid and unpaid losses were $5.1 million and $1.6 million in 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.
11. COMMITMENTS AND CONTINGENCIES
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, the outcome of the legal proceedings and assessments will not have a
material adverse effect on the financial position and the results of operations
of the Company.
12. RELATED PARTY TRANSACTIONS
At December 31, 1995 and 1994, approximately 30% and 35%, respectively, of
the Company's investments in mortgages were held through joint participation
with MONY. In addition, approximately 82% and 81% of the Company's real estate
and joint venture investments were held through joint participation with MONY at
December 31, 1995 and 1994, respectively.
During 1994, the Company sold commercial mortgages with a book value of
approximately $5 million to MONY for consideration of approximately $4 million
based on the estimated fair value of the assets. The Company received capital
contributions of $10 million from MONY in 1995.
The Company and MONY are parties to an agreement dated February 28, 1995
whereby MONY agrees to reimburse the Company to the extent that the Company'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 received payments from MONY totaling $2.1 million in 1995.
13. 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 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
F-29
<PAGE> 80
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
13. ACCOUNTING DEVELOPMENTS (CONTINUED)
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. The Company is currently evaluating the
impact of these accounting developments on its financial statements.
F-30
<PAGE> 81
MONY LIFE INSURANCE COMPANY OF AMERICA
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.
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INVESTMENT INCOME EARNED
Government Bonds.............................................. 1,169
Other bonds (unaffiliated).................................... 76,939
Bonds of affiliates........................................... 0
Preferred stocks (unaffiliated)............................... 0
Preferred stocks of affiliates................................ 0
Common stocks (unaffiliated).................................. 0
Common stocks of affiliates................................... 0
Mortgage loans................................................ 14,867
Real estate................................................... 15,991
Premium notes, policy loans and liens......................... 2,847
Collateral loans.............................................. 0
Cash on hand and on deposit................................... 6
Short-term investments........................................ 6,637
Other Invested Assets......................................... 331
Derivative Instruments........................................ 0
Aggregate write-ins for investment income..................... 1,119
---------
Gross investment income.................................... 119,906
=========
REAL ESTATE OWNED -- BOOK VALUE LESS ENCUMBRANCES............... 58,375
MORTGAGE LOANS -- BOOK VALUE:
Farm mortgages................................................ 116,212
Residential mortgages......................................... 0
Commercial mortgages.......................................... 56,942
---------
Total mortgage loans....................................... 173,154
=========
MORTGAGE LOANS BY STANDING -- BOOK VALUE:
Good standing................................................. 158,052
Good standing with restructured terms......................... 15,102
Interest overdue more than three months, not in foreclosure... 0
Foreclosure in process........................................ 0
OTHER LONG TERM ASSETS -- STATEMENT VALUE....................... 45,555
COLLATERAL LOANS................................................ 0
BONDS AND STOCKS OF PARENTS, SUBSIDIARIES AND AFFILIATES -- BOOK
VALUE
Bonds......................................................... 0
Preferred Stocks.............................................. 0
Common Stocks................................................. 0
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MONY LIFE INSURANCE COMPANY OF AMERICA
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA -- (CONTINUED)
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BONDS AND SHORT-TERM INVESTMENTS BY CLASS AND
MATURITY:
BONDS BY MATURITY -- STATEMENT VALUE
Due within one year or less...................... 202,895
Over 1 year through 5 years...................... 467,791
Over 5 years through 10 years.................... 405,896
Over 10 years through 20 years................... 35,127
Over 20 years.................................... 27,436
---------
Total by Maturity.............................. 1,139,145
=========
BONDS BY CLASS -- STATEMENT VALUE
Class 1.......................................... 654,088
Class 2.......................................... 401,003
Class 3.......................................... 60,371
Class 4.......................................... 12,242
Class 5.......................................... 1,779
Class 6.......................................... 9,662
---------
Total by Class................................. 1,139,145
=========
TOTAL BONDS PUBLICLY TRADED........................... 652,479
TOTAL BONDS PRIVATELY PLACED.......................... 486,666
PREFERRED STOCKS -- STATEMENT VALUE................... 0
COMMON STOCKS -- MARKET VALUE......................... 690
SHORT TERM INVESTMENTS -- BOOK VALUE.................. 121,499
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............................. 3,663
LIFE INSURANCE IN FORCE:
Industrial.......................................... 0
Ordinary............................................ 8,602,040
Credit Life......................................... 0
Group Life.......................................... 1,567,629
AMOUNT OF ACCIDENTAL DEATH INSURANCE IN FORCE UNDER
ORDINARY POLICIES................................... 138,196
LIFE INSURANCE POLICIES WITH DISABILITY PROVISIONS IN
FORCE:
Industrial.......................................... 0
Ordinary............................................ 2,927,376
Credit Life......................................... 0
Group Life.......................................... 212,113
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MONY LIFE INSURANCE COMPANY OF AMERICA
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA -- (CONTINUED)
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SUPPLEMENTARY CONTRACTS IN FORCE:
Ordinary -- Not Involving Life Contingencies
Amount on Deposit................................ 21,022
Income Payable................................... 939
Ordinary -- Involving Life Contingencies
Income Payable................................... 2,472
Group -- Not Involving Life Contingencies
Amount on Deposit................................ 0
Income Payable................................... 0
Group -- Involving Life Contingencies
Income Payable................................... 4
ANNUITIES:
Ordinary
Immediate -- Amount of Income Payable............ 0
Deferred -- Fully Paid Account Balance........... 0
Deferred -- Not Fully Paid -- Account Balance.... 0
Group
Amount of Income Payable......................... 0
Fully Paid Account Balance....................... 76,681
Not Fully Paid -- Account Balance................ 0
ACCIDENT AND HEALTH INSURANCE -- PREMIUMS IN FORCE:
Ordinary............................................ 0
Group............................................... 0
Credit.............................................. 0
DEPOSIT FUNDS AND DIVIDEND ACCUMULATIONS:
Deposit Funds -- Account Balance.................... 764,066
Dividend Accumulations -- Account Balance........... 0
CLAIM PAYMENTS 1995:
Group Accident and Health Year -- Ended December 31,
1995............................................. 0
1994............................................. 0
1993............................................. 0
Other Accident & Health
1995............................................. 0
1994............................................. 0
1993............................................. 0
Other Coverages that use developmental methods to
calculate claim reserves
1995............................................. 0
1994............................................. 0
1993............................................. 0
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