<PAGE> 1
REGISTRATION NOS. 333-59717
811-5166
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. 2
POST-EFFECTIVE AMENDMENT NO. [ ]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 2
(CHECK APPROPRIATE BOX OR BOXES.)
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MONY AMERICA VARIABLE ACCOUNT A
(EXACT NAME OF REGISTRANT)
MONY LIFE INSURANCE COMPANY
OF AMERICA
(NAME OF DEPOSITOR)
1740 BROADWAY
NEW YORK, NEW YORK 10019
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 708-2000
EDWARD P. BANK
VICE PRESIDENT AND DEPUTY GENERAL COUNSEL
THE MUTUAL LIFE INSURANCE COMPANY OF NEW YORK
1740 BROADWAY
NEW YORK, NEW YORK 10019
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as possible after the
effective date of this Registration Statement. It is proposed that this filing
will become effective: (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule
485
[ ] pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment
designates a new effective date for
a previously filed post-effective
amendment.
TITLE OF SECURITIES BEING REGISTERED: Flexible Payment Variable Annuity
Contracts
Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until Registrant shall file a
further amendment which specifically states that this Registration Statement
shall become effective in accordance with Section 8(a) of the Securities Act of
1933 or until this Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may determine.
STATEMENT PURSUANT TO RULE 24f-2
The Registrant registers an indefinite number or amount of its flexible
payment variable annuity contracts under the Securities Act of 1933 pursuant to
Rule 24f-2 under the Investment Company Act of 1940. The Rule 24f-2 notice for
the Registrant's fiscal year ending December 31, 1997 was filed on March 31,
1998.
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CROSS REFERENCE SHEET
(REQUIRED BY RULE 495)
PART A
<TABLE>
<CAPTION>
ITEM NO. LOCATION
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<C> <S> <C>
1. Cover Page...................................... Cover Page
2. Definitions..................................... Definitions
3. Synopsis........................................ Synopsis
4. Condensed Financial Information................. Condensed Financial Information
5. General Description of Registrant, Depositor,
and Portfolio Companies......................... MONY Life Insurance Company of America;
MONY America Variable Account A; The
Funds; Charges and Deductions
6. Deductions and Expenses......................... Charges and Deductions
7. General Description of Variable Annuity
Contracts....................................... Payment and Allocation of Purchase
Payments; Other Provisions
8. Annuity Period.................................. Annuity Provisions
9. Death Benefit................................... Death Benefit; Annuity Provisions
10. Purchases and Contract Value.................... Payment and Allocation of Purchase
Payments
11. Redemptions..................................... Surrenders
12. Taxes........................................... Federal Tax Status
13. Legal Proceedings............................... Legal Proceedings
14. Table of Contents of Statement of Additional
Information..................................... Table of Contents of Statement of
Additional Information
PART B
Information Required in a Statement of Additional Information
15. Cover Page...................................... Cover Page
16. Table of Contents............................... Table of Contents
17. General Information and History................. MONY Life Insurance Company of America
18. Services........................................ Not Applicable
19. Purchase of Securities Being Offered............ Not Applicable
20. Underwriters.................................... Prospectus -- MONY Life Insurance Company
of America
21. Calculation of Performance Data................. Performance Data
22. Annuity Payments................................ Not Applicable
23. Financial Statements............................ Financial Statements
PART C
Information related to the following Items is set forth under the appropriate Item, so numbered, in
Part C to this Registration Statement.
24. Financial Statements and Exhibits
25. Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Control with the Depositor or Registrant
27. Number of Contractowners
28. Indemnification
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
</TABLE>
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PROSPECTUS
DATED NOVEMBER 13, 1998
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 on a variable
basis and payment of annuity benefits. The Contracts are designed for use by
individuals for retirement accumulations including for funding plans that may or
may not qualify for special federal income tax treatment. In addition, pension
and retirement plans may purchase the Contracts if they receive favorable tax
treatment under Sections 401, 403 (other than section 403 (b)), 408, 408A or 457
of the Internal Revenue Code. (See "Definitions -- Qualified Plans" at page 2.)
At the election of the Owner, 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 Owner may determine. The Variable Account purchases shares of MONY Series
Fund, Inc. and Enterprise Accumulation Trust at their net asset value. (See "The
Funds" at page 9.) Upon the issuance of the Contract, interest will be credited
until the end of the Right to Return Contract Period on payments received before
the end of the Right to Return Contract Period. Interest will be credited at a
rate declared by the Company, but not less than 3.5% per year. After expiration
of the Right to Return Contract Period, the Fund 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 Owner. (See "PAYMENT AND
ALLOCATION OF PREMIUMS" at page 12.) Owners 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.) A
separate prospectus describes the market value adjustment provision of the
Contract. 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 November 13, 1998, 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 33 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 33 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.
In pursuing its investment objective, the High-Yield Bond Subaccount
purchases shares of the High Yield Bond Portfolio which may invest significantly
in lower rated bonds, commonly referred to as "Junk Bonds." Bonds of this type
are considered to be speculative with regard to the payment of interest and
return of principal. Investment in these types of securities have special risks
and therefore, may not be suitable for all investors. Investors should carefully
assess the risks associated with allocating purchase payments to this
subaccount.
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 MONY SERIES FUND, INC., ENTERPRISE ACCUMULATION TRUST, AND MONY LIFE
INSURANCE COMPANY OF AMERICA.
MONY LIFE INSURANCE COMPANY OF AMERICA
1740 BROADWAY
NEW YORK, NEW YORK 10019
1-800-487-6669
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Definitions................................................. 1
Synopsis.................................................... 3
Condensed Financial Information............................. 9
The Company and the Variable Account........................ 10
MONY Life Insurance Company of America.................... 10
Year 2000 Issue........................................... 10
MONY America Variable Account A........................... 10
The Funds................................................. 11
Guaranteed Interest Account................................. 13
Payment and Allocation of Purchase Payments................. 14
Issuance of the Contract.................................. 14
Right to Return Contract Provision........................ 15
Allocation of Purchase Payments and Fund Value............ 15
Termination of the Contract............................... 18
Surrenders.................................................. 18
Loans....................................................... 19
Death Benefit............................................... 19
Death Benefit Provided by the Contract.................... 19
Optional Enhancement Death Benefit........................ 20
Election and Effective Date of Election................... 20
Payment of Death Benefit.................................. 20
Charges and Deductions...................................... 20
Deductions from Payments.................................. 20
Charges Against Fund Value................................ 21
Mortality and Expense Risk Charge......................... 23
Taxes..................................................... 23
Investment Advisory Fee................................... 23
Annuity Provisions.......................................... 25
Annuity Starting Date..................................... 25
Election and Change of Settlement Option.................. 25
Settlement Options........................................ 25
Frequency of Annuity Payments............................. 26
Additional Provisions..................................... 26
Other Provisions............................................ 27
Ownership................................................. 27
Provision Required by Section 72(s) of the Code........... 27
Provision Required by Section 401(a)(9) of the Code....... 27
Secondary Annuitant....................................... 28
Assignment................................................ 28
Change of Beneficiary..................................... 29
Substitution of Securities................................ 29
Modification of the Contracts............................. 29
Change in Operation of Variable Accounts.................. 29
Voting Rights............................................... 29
Distribution of the Contracts............................... 30
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Federal Tax Status.......................................... 31
Introduction.............................................. 31
Tax Treatment of the Company.............................. 31
Taxation of Annuities in General.......................... 31
Retirement Plans.......................................... 32
Performance Data............................................ 32
Additional Information...................................... 33
Legal Proceedings........................................... 33
Financial Statements........................................ 33
Table of Contents of Statement of Additional Information.... 34
</TABLE>
<PAGE> 6
DEFINITIONS
ADMINISTRATIVE 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. 13221.
AGE -- The person's age as of his or her last birthday on the Effective
Date, increased by the number of complete Contract Years elapsed.
ANNUITANT -- The person upon whose continuation of life any annuity payment
depends.
ANNUITY STARTING DATE -- The date on which annuity payments are to begin.
BENEFICIARY -- The party entitled to receive benefits payable at the death
of the Annuitant or (if applicable) the Secondary Annuitant.
BUSINESS DAY -- 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 on a national or international securities exchange to
affect materially the value of the Units of the corresponding Subaccount.
CASH VALUE -- The Fund Value of the Contract, less (1) any applicable
surrender charges, (2) any market value adjustments, and (3) outstanding loan
balance including accrued interest, if any.
COMPANY -- MONY Life Insurance Company of America.
CONTRACT -- The Flexible Payment Variable Annuity Contract offered by the
Company and described in this Prospectus.
CONTRACT ANNIVERSARY -- An anniversary of the Effective Date of the
Contract.
CONTRACT YEAR -- Any period of twelve (12) months commencing with the
Effective Date and each Contract Anniversary thereafter.
EFFECTIVE DATE -- The date the contract goes into effect as shown in the
Contract.
ENTERPRISE ACCUMULATION TRUST -- The Enterprise Accumulation Trust, a
Massachusetts business trust.
FUND VALUE -- The aggregate dollar value as of any Business Day of all
amounts accumulated under each of the Subaccounts, the Guaranteed Interest
Account, and the Loan Account of the Contract. If the term Fund Value is
preceded or followed by the terms Subaccount(s), the Guaranteed Interest
Account, and the Loan Account, or any one of more of those terms, Fund Value
means only the Fund Value of the Subaccount, the Guaranteed Interest Account, or
the Loan Account, as the context requires.
FUNDS -- MONY Series Fund, Inc. and Enterprise Accumulation Trust.
FREE PARTIAL SURRENDER AMOUNT:
For Non-qualified Contracts -- An amount, up to 10 percent of the Fund
Value of the Subaccount(s) and the Guaranteed Interest Account (not the Loan
Account) at the beginning of the Contract Year, that may be surrendered without
the imposition of a Surrender Charge. For the purposes of the Free Partial
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 Fund Value of the Subaccount(s) and the Guaranteed Interest
Account or 10 percent of the Fund Value of the Subaccount(s) and the Guaranteed
Interest Account at the beginning of the Contract Year, that may be surrendered
without the imposition of a Surrender Charge. Fund Value for this purpose means
only the Fund Value of the Subaccounts and the Guaranteed Interest Account (not
the Loan Account). For the purposes of the Free Partial Surrender Amount only,
Qualified Contracts exclude Contracts issued for IRAs and SEP-IRAs.
1
<PAGE> 7
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 3.5%.
LOAN ACCOUNT -- A part of the Company's general account, the Loan Account
pays interest at a rate not less than 3.5% per year. For those contracts that
have a loan provision, an amount equal to the loan requested is transferred from
one or more of the Subaccounts and/or the Guaranteed Interest Account as
determined by the Owner, subject to the provisions of the Contract, to the Loan
Account as security for the loan.
MARKET VALUE ADJUSTMENT -- An amount added to or deducted from the amount
surrendered or transferred from the Guaranteed Interest Account.
MONY SERIES FUND -- MONY Series Fund, Inc., a Maryland Corporation.
NET PURCHASE PAYMENT -- An amount equal to a Purchase Payment, less any
deduction for premium or similar taxes.
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 13221.
OUTSTANDING DEBT -- Total loan balance plus any accrued loan interest.
OWNER -- The person so designated in the application. If a Contract has
been absolutely assigned, the assignee becomes the Owner. A collateral assignee
is not the Owner.
PORTFOLIO -- A separate investment portfolio of the Funds.
PURCHASE PAYMENT (PAYMENT) -- An amount paid to the Company by the Owner or
on the Owner'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, 408A or 457 of the Internal Revenue Code.
RIGHT TO RETURN CONTRACT PERIOD -- A period which follows the application
for the Contract and its issuance to the Owner. The period runs to the date
which is 10 days (or longer in certain states) after the Owner receives the
Contract. During the Right to Return Contract Period, the Owner may cancel the
Contract and receive the amount provided for under the terms of the Contract.
SECONDARY ANNUITANT -- The party designated by the Owner to become the
Annuitant, subject to certain conditions, on the death of the Annuitant.
SUBACCOUNT -- A subdivision of the Variable Account. Each Subaccount
invests exclusively in the shares of a corresponding Portfolio of the Fund.
SUCCESSOR OWNER -- The living person who, at the death of the Owner,
becomes the new Owner.
SURRENDER CHARGE -- A contingent deferred sales charge that may be applied
against amounts surrendered. (See "Charges Against Fund Value -- Surrender
Charge" at page 19.)
UNIT -- The measure by which the Contract's interest in each Subaccount is
determined.
VARIABLE ACCOUNT -- A separate investment account of the Company,
designated as MONY America Variable Account A, to which Net Purchase Payments
will be allocated.
2
<PAGE> 8
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
(other than Section 403(b)), 408, 408A and 457 of the Internal Revenue Code (the
"Code").
THE VARIABLE ACCOUNT
Net Purchase Payments for the Contracts will be allocated at the Owner's
option to Sub-accounts, 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 MONY Series Fund, Inc. (the "MONY Series
Fund") and The Enterprise Accumulation Trust (the "Accumulation Trust") (the
MONY Series Fund and the Accumulation Trust are collectively called the "Funds")
at their net asset value. (See "The Funds" at page 9.) Owners 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 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 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. In the event
that the Company will begin to make deductions for such tax from future Purchase
Payments, it will give notice to each affected Owner.
RIGHT TO RETURN CONTRACT PROVISION
Within 10 days (or longer in certain states) of the day the Contract is
delivered to the Owner, 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. The amount to be refunded is
equal to all Purchase Payments received.
3
<PAGE> 9
SURRENDER CHARGE
A contingent deferred sales charge (called a "Surrender Charge") will be
imposed upon requests for surrenders or commencement of annuity benefits during
the first 8 contract years. 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 Fund Value. (See "Charges Against Fund
Value -- Surrender Charge" at page 19.)
The Surrender Charge, which otherwise would have been deducted, will not be
deducted to the extent necessary to permit the Contractholder to obtain during a
contract year, 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 Fund Value of the subaccounts and the Guaranteed Interest Account) or
10 percent of the Contract's Fund Value of the subaccounts and the Guaranteed
Interest Account on the first day of the contract year; and for Non-qualified
Contracts (and Contracts issued for IRA and SEP-IRA), an amount up to 10% of the
Contract's Fund Value of the subaccounts and the Guaranteed Interest Account on
the first day of the contract year. Contract Fund Value for this purpose means
the Fund Value at the beginning of the contract year in the sub-accounts and the
Guaranteed Interest Account (the Loan Account, if any).
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
(See "Mortality and Expense Risk Charge" at page 21.)
TRANSFER CHARGE
Contract value may be transferred. A transfer charge is not currently
imposed, but the Company has reserved the right to impose a charge for each
transfer, which will not exceed $25 per transfer. If imposed, the transfer
charge will be deducted from the Contract's Fund Value. (See "Charges Against
Fund Value -- Transfer Charge" at page 21.)
MARKET VALUE ADJUSTMENT
A Market Value Adjustment will be imposed on transfers or surrenders
(partial or full) from the Guaranteed Interest Account. The adjustment can be
either a positive or negative assessment. The Market Value Adjustment reflects
the difference between the rate(s) then being credited to amounts allocated to
the Guaranteed Interest Account and the currently declared rate applicable to
new payments to the Guaranteed Interest Account. No adjustment is made for
amount withdrawn or transferred within 30 days before the end of the
accumulation period, nor to benefits paid as a result of the death of the
Annuitant. A Market Value Adjustment will be imposed on benefits paid as a
result of the death of the Owner. The Guaranteed Interest Account and its market
value adjustment feature are described in a separate prospectus which
accompanies this Prospectus.
ANNUAL CONTRACT CHARGE
On each Contract Anniversary prior to the Annuity Starting Date, the
Company deducts an Annual Contract Charge from the Fund Value, to reimburse the
Company for administrative expenses relating to the maintenance of the Contract.
The charge is currently $0, but the Company may in the future change the amount
of the charge. The charge will never, however, exceed $50. (See "Charges Against
Fund Value -- Annual Contract Charge" at page 20.)
DEATH BENEFIT
In the event of death of the Annuitant (and the Secondary Annuitant, if one
has been named) prior to the Annuity Starting Date, the Company will pay a death
benefit to the Beneficiary. If death of the Annuitant
4
<PAGE> 10
occurs after the Annuity Starting 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.)
MONY LIFE INSURANCE COMPANY OF AMERICA
MONY AMERICA VARIABLE ACCOUNT A
TABLE OF FEES FOR THE YEAR ENDED DECEMBER 31, 1997
CONTRACTOWNER TRANSACTION EXPENSES:
<TABLE>
<S> <C>
Maximum Deferred Sales Load (Surrender Charge) (as a
percentage of fund value.)............................ 7%*
ANNUAL CONTRACT CHARGE:..................................... $0**
TRANSFER CHARGE:............................................ $0**
SEPARATE ACCOUNT ANNUAL EXPENSES:
Mortality and Expense Risk Fees...................... 1.25%***
Total Separate Account Annual Expenses............... 1.25%***
</TABLE>
ANNUAL EXPENSES OF MONY SERIES FUND, INC. AND ENTERPRISE ACCUMULATION TRUST:
MONY SERIES FUND, INC.
PRO FORMA ANNUAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1997
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
LONG TERM GOVERNMENT
INTERMEDIATE TERM BOND SECURITIES MONEY MARKET
BOND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Management Fees........................... .50%***** .50%***** .50%***** .40%
Other Expenses (After
reimbursement)****...................... .16% .12% .25% .09%
--- --- --- ---
Total MONY Series Fund, Inc.
Annual Expenses......................... .66% .62% .75% .49%
=== === === ===
</TABLE>
ENTERPRISE ACCUMULATION TRUST
PRO FORMA ANNUAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1997
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
HIGH SMALL
SMALL INTERNATIONAL YIELD COMPANY EQUITY
EQUITY CAP MANAGED GROWTH BOND GROWTH INCOME GROWTH
PORTFOLIO PORTFOLIO+ PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO++ PORTFOLIO++ PORTFOLIO++
--------- ---------- --------- ------------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees.......... .80% .80% .73% .85% .60% 1.00% .75% .75%
Other Expenses (After
Reimbursement)......... .04% .06% .03% .34% .17% .40%++ .30%++ .40%++
---- ---- ---- ----- ---- ----- ----- -----
Total Accumulation
Trust Annual Expenses
(After
Reimbursement)......... .84%+++ .86%+++ .76%+++ 1.19%+++ .77%+++ 1.40%++ 1.05%++ 1.15%++
==== ==== ==== ===== ==== ===== ===== =====
<CAPTION>
GROWTH
CAPITAL AND
APPRECIATION INCOME
PORTFOLIO++ PORTFOLIO++
------------ -----------
<S> <C> <C>
Management Fees.......... .75% .75%
Other Expenses (After
Reimbursement)......... .55%++ .30%++
----- -----
Total Accumulation
Trust Annual Expenses
(After
Reimbursement)......... 1.30%++ 1.05%++
===== =====
</TABLE>
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* The Surrender Charge percentage, which reduces to zero as shown in the table
on page 6, is determined by the number of Contract Anniversaries since the
Effective date of the Contract.
5
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Surrender Charge Percentage Table
<TABLE>
<CAPTION>
# OF CONTRACT SURRENDER
ANNIVERSARIES CHARGE
SINCE EFFECTIVE DATE PERCENTAGE
-------------------- ----------
<S> <C>
0...................................................... 7%
1...................................................... 7
2...................................................... 6
3...................................................... 6
4...................................................... 5
5...................................................... 4
6...................................................... 3
7...................................................... 2
8 (or more)............................................ 0
</TABLE>
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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 Fund Value -- Free Partial
Surrender Amount" at page 20.
** The Annual Contract charge currently is $0. However, the Company may in
the future change the amount of the charge to an amount not exceeding $50
per contract year. The Transfer Charge currently is $0. However, the
Company has reserved the right to a charge for each transfer, which will
not exceed $25.
*** The Mortality and Expense Risk charge is deducted at a current daily rate
equivalent to an annual rate of 1.25 percent (and is guaranteed not to
exceed a daily rate equivalent to an annual rate of 1.35 percent) from the
value of the net assets of the Separate Account.
**** Expenses reflect the reallocation of the fees and expenses associated with
the computation of the net asset value of the Fund from MONY America to
the Fund which became effective on and after October 14, 1997. The table
reflects the impact of the reallocation of fees and expenses as if the
reallocation had become effective on and after January 1, 1997. Expenses
also includes custodial credit percentages as follows: Intermediate Term
Bond -- .0080%; Long Term Bond -- .0043%; Government Securities -- .0169%;
and Money Market -- .0048% .
***** Management Fees reflect investment advisory fees of .50% which became
effective on and after October 14, 1997. Prior thereto, the investment
advisory fees were .40%. The table reflects the impact of the increased
fees as if they increase had become effective on and after January 1,
1997. (See "CHARGES AND DEDUCTIONS -- Investment Advisory Fee" at page
.)
+ The name, but not the investment objectives or policies, of the Small Cap
Portfolio was changed effective May 1, 1998 to the Small Company Value
Portfolio.
++ The Sub-accounts corresponding to these Portfolios first became available
for allocation in
-------------, 1998. These expenses are estimated and reflect an agreement
with the investment adviser to assume expenses which, with the investment
management fee, exceed 1.40% for the Small Company Growth Portfolio, 1.05%
for the Equity Income Portfolio, 1.15% for the Growth Portfolio, 1.30% for
the Capital Appreciation Portfolio, and 1.05% for the Growth and Income
Portfolio. Without the agreement by the investment adviser to assume such
expenses, it is estimated that expenses would be 1.70% for the Small Company
Growth Portfolio, 1.45% for the Equity Income Portfolio, 1.45% for the
Growth Portfolio, 1.45 % for the Capital Appreciation Portfolio, and 1.45%
for the Growth and Income Portfolio. These estimates are based upon the
assumption that each Portfolio will have $5,000,000 in assets. Because of
fees and expenses that do not vary with the amount of assets under
management, such as custodian and accounting fees, if average net assets
exceed this assumption, fees and expenses as a percentage of average net
assets will decrease; however, if average net assets are less than this
assumption, fees and expenses will increase.
+++ These expenses reflect expense reimbursements in effect on May 1, 1995.
Absent these expense reimbursements, expenses would have been as follows:
Equity -- .84%; Small Cap-- .86%; Managed --
6
<PAGE> 12
.76%; International Growth -- 1.19%; and High Yield Bond -- .77%. The
Equity, Small Cap, and Managed Portfolio reimbursements relate to mutual
fund accounting expense.
The purpose of the Table of Fees beginning on page 5 is to assist the Owner
in understanding the various costs and expenses that the Owner will bear,
directly or indirectly. The table reflects the expenses of the separate account
as well as of the MONY Series Fund, Inc. and the Enterprise Accumulation Trust.
MONY Series Fund, Inc. and Enterprise Accumulation Trust have provided
information relating to their respective operations. The expenses borne by the
Separate Account are explained under the caption "Charges and Deductions" at
page 19 of this Prospectus. The expenses borne by the MONY Series Fund, Inc. are
explained under the caption "Investment Management Arrangements and Expenses" at
page 19 of the accompanying prospectus for MONY Series Fund, Inc. The expenses
borne by the Enterprise Accumulation Trust assume that the expense
reimbursements in effect on and after May 1, 1990 for the Equity, Small Cap, and
Managed Portfolios which limit the total annual expenses to 1.00% of average net
assets and expense reimbursements which, on and after November 16, 1994
(commencement of operations), limit the total annual expenses of the
International Growth Portfolio to 1.55% of average net assets and the High Yield
Bond Portfolio to .85% of average net assets, will continue throughout the
period shown and are explained under the caption "Management of the Fund" at
page 14 of the accompanying prospectus for the Accumulation Trust. The table
does not reflect income taxes or penalty taxes which may become payable under
the Internal Revenue Code or premium or other taxes which may be imposed under
state or local laws.
EXAMPLE
If you surrender your Contract at the end of the time periods shown below,
you would pay the following expenses 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....................................... $84 $119 $157 $242
Small Company Value.......................... $84 $120 $158 $244
Managed...................................... $83 $116 $152 $234
International Growth......................... $88 $130 $174 $278
Small Company Growth*........................ $87 $127 $169 $265
Equity Income*............................... $86 $125 $167 $264
Growth*...................................... $87 $128 $172 $274
Growth and Income*........................... $86 $125 $167 $264
Capital Appreciation*........................ $88 $130 $175 $277
High Yield Bond.............................. $83 $117 $153 $235
Intermediate Term Bond....................... $81 $109 $140 $207
Long Term Bond............................... $80 $108 $139 $205
Government Securities........................ $81 $110 $142 $213
Money Market................................. $80 $107 $137 $202
</TABLE>
If you annuitize at the end of the time periods shown below, you would pay
the following expenses on a $1,000 investment, assuming 5% annual return on
assets:
7
<PAGE> 13
<TABLE>
<CAPTION>
AFTER AFTER AFTER AFTER
SUBACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------- ------ -------- -------- ---------
<S> <C> <C> <C> <C>
Equity....................................... $84 $119 $112 $242
Small Company Value.......................... $84 $120 $113 $244
Managed...................................... $83 $116 $108 $234
International Growth......................... $88 $130 $130 $278
Small Company Growth*........................ $87 $127 $125 $265
Equity Income*............................... $86 $125 $123 $264
Growth*...................................... $87 $128 $128 $274
Growth and Income*........................... $86 $125 $123 $264
Capital Appreciation*........................ $88 $130 $130 $277
High Yield Bond.............................. $83 $117 $109 $235
Intermediate Term Bond....................... $81 $109 $95 $207
Long Term Bond............................... $80 $108 $94 $205
Government Securities........................ $81 $110 $98 $213
Money Market................................. $80 $107 $93 $202
</TABLE>
If you do not surrender your Contract at the end of the time periods shown
below, you would pay the following expenses 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....................................... $21 $65 $112 $242
Small Company Value.......................... $21 $66 $113 $244
Managed...................................... $20 $63 $108 $234
International Growth......................... $25 $76 $130 $278
Small Company Growth*........................ $24 $73 $125 $265
Equity Income*............................... $23 $72 $123 $264
Growth*...................................... $24 $75 $128 $274
Growth and Income*........................... $23 $72 $123 $264
Capital Appreciation*........................ $25 $76 $130 $277
High Yield Bond.............................. $21 $63 $109 $235
Intermediate Term Bond....................... $18 $55 $95 $207
Long Term Bond............................... $18 $55 $94 $205
Government Securities........................ $18 $57 $98 $213
Money Market................................. $17 $54 $93 $202
</TABLE>
- ---------------
* These expenses are estimated and reflect an agreement with the investment
adviser to assume expenses which, with the investment management fee, exceed
1.40% for the Small Company Growth Portfolio, 1.05% for the Equity Income
Portfolio, 1.15% for the Growth Portfolio, 1.30% for the Capital Appreciation
Portfolio, and 1.05% for the Growth and Income Portfolio.
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 (MONY Series Fund and
the Accumulation Trust) expenses, net of expense reimbursements, 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.
8
<PAGE> 14
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"), organized under the laws of the State of New York
in 1842 as a mutual life insurance company. The principal offices of MONY and
the Company are at 1740 Broadway, New York, New York 10019. MONY Securities
Corp., an affiliate of the Company and 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.
In September 1998, MONY announced that it had begun the process of
demutualization. If completed, it is not expected that demutualization will have
any material effect on MONY America Variable Account A.
YEAR 2000 ISSUE
The Year 2000 issue is the result of widespread use of computer systems
which use two digits (rather than four) to define the applicable year. Such
programming was a common industry practice designed to avoid the significant
costs associated with the additional mainframe computer capacity which would
have been necessary to accommodate a four digit year field. As a result, any of
the Company's computer systems that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a major system failure or in miscalculations.
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and has
developed and implemented a plan to resolve the issue. The Company currently
believes that with the modifications to existing software and converting to new
software, the Year 2000 problem will not pose significant operational problems
for the Company's computer systems. However, if such modifications and
conversions are not completed on a timely basis, the Year 2000 problem may have
a material impact on the operations of the Company. Further, even if the Company
completes such modifications and conversions, there can be no assurance that the
failure by vendors or other third parties to solve the Year 2000 problem will
not have a material impact on the operations of the company.
MONY Series Fund and the Accumulation Trust have reviewed with their
respective investment advisers and other suppliers of services the status of
their Year 2000 issue. MONY Series Fund and the Accumulation Trust prospectuses,
which are included in the Prospectus Portfolio, contain the results of those
status reviews. See MONY Series Fund prospectus at page 20; Accumulation Trust
prospectus at page .
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
9
<PAGE> 15
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 19
Subaccounts within the Variable Account, and each invests only in a
corresponding Portfolio of MONY Series Fund, Inc. or the Enterprise Accumulation
Trust. Not all Subaccounts are available to the Owner.
THE FUNDS
Each Subaccount of the Variable Account will invest only in the shares of a
corresponding Portfolio of MONY Series Fund, Inc. (the "MONY Series Fund") or
the Enterprise Accumulation Trust (the "Accumulation Trust") (the MONY Series
Fund and the Accumulation Trust are collectively called the "Funds"). The Funds
are registered with the SEC under the 1940 Act as open-end diversified
management investment companies. These registrations do not involve supervision
by the SEC of the management or investment practices or policies of the Funds.
Shares of the MONY Series Fund are currently sold to, separate accounts of, the
Company and MONY, to fund variable life insurance contracts issued by the
Company and MONY and to fund certain individual variable annuity contracts
issued by MONY and MONY America. In addition, the Company may make available
additional Subaccounts with differing or similar investment objectives. The
Funds, or either of them, may withdraw from sale any or all of the respective
Portfolios in accordance with applicable law.
The Board of Directors of the MONY Series Fund and the Board of Trustees of
the Accumulation Trust each have undertaken to monitor the respective Fund for
the existence of any material irreconcilable conflict between the interests of
variable annuity Owners and variable life insurance Owners 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 Directors and Trustees,
respectively, of each of the Funds and, at their own cost, to remedy such
conflict up to and including establishing a new registered management investment
company and segregating the assets underlying the variable annuity contracts and
the variable life insurance contracts.
The Variable Account will purchase and redeem shares from the Funds at net
asset value. Shares will be redeemed to the extent necessary for the Company to
collect charges under the Contracts, to pay Cash Value upon full surrenders of
the Contracts, to fund partial surrenders and loans, 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 Owners. Any dividend or capital gain distribution
received from a Portfolio of a Fund will be reinvested immediately at net asset
value in shares of that Portfolio and retained as assets of the corresponding
Subaccount.
Investment Advisers. The MONY Series Fund at present receives investment
advice with respect to each of its Portfolios from the Company, which acts as
investment adviser to the MONY Series Fund.
The investment adviser with respect to the all of the Portfolios of the
Accumulation Trust is Enterprise Capital Management, Inc., an affiliate of the
Company ("Enterprise Capital"). Enterprise Capital has entered into a
sub-advisory agreement with Op Cap Advisors with respect to the Equity and
Managed Portfolios (OpCap Advisors is a subsidiary of Oppenheimer Capital, which
is a subsidiary of Oppenheimer Financial Corp.); with 1740 Advisers, Inc. with
respect to the Equity Income Portfolio; with Retirement System Investors, Inc.
with respect to the Growth and Income Portfolio; with Montag & Caldwell, Inc.
with respect to the Growth Portfolio; with Provident Investment Counsel, Inc.
with respect to the Capital Appreciation Portfolio, with Pilgrim Baxter &
Associates with respect to the Small Company Growth Portfolio; with Gabelli
Asset Management, Inc. with respect to the Small Company Growth Portfolio; with
Brinson Partners
10
<PAGE> 16
with respect to the International Growth Portfolio; and with Caywood Scholl
Capital Corporation. with respect to the High Yield Bond Portfolio.
Investment Objectives. The investment objectives of the Portfolios
currently available to Owners through corresponding Subaccounts of the Variable
Account are set forth in the accompanying prospectus for each of the Funds and
are described briefly below. There is no assurance that these objectives will be
met.
The investment objectives of each Portfolio are fundamental and may not be
changed without the approval of the holders of a majority of the outstanding
shares of the Portfolio affected (which, for each of the Funds, 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 Owner 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 Funds'
various Portfolios. A full description of each of the Funds, their investment
objectives, policies and restrictions, their expenses, the risks attendant to
investing in each of the Funds' Portfolios, and other aspects of their operation
is contained in the accompanying prospectus for each of the Funds, which should
be read together with this Prospectus.
The investment objectives of each of the Portfolios of the Funds and
identification of which of the Funds offers the Portfolio is as follows:
Money Market Portfolio: The maximum current income consistent with
preservation of capital and maintenance of liquidity, through investment in
money market instruments. The MONY Series Fund offers this Portfolio.
Government Securities Portfolio: The maximum current income over the
intermediate term consistent with preservation of capital, through
investment in highly-rated debt securities of the United States government
and its agencies and money market instruments with a dollar-weighted
average life of up to ten years at the time of purchase. MONY Series Fund
offers this Portfolio.
Long Term Bond Portfolio: The maximum income over the longer term
consistent with preservation of capital, through investment in highly rated
debt securities, U.S. Government obligations, and money market instruments,
together having a dollar-weighted average life of more than 8 years. The
MONY Series Fund offers this Portfolio.
Intermediate Term Bond Portfolio: The maximum income over the
intermediate term consistent with preservation of capital, through
investment in highly rated debt securities, U.S. Government obligations,
and money market instruments, together having a dollar-weighted average
life of between 4 and 8 years. MONY Series Fund offers this Portfolio.
Equity Income Portfolio: A combination of growth and income to
achieve an above average and consistent total return, primarily from
investments in dividend-paying common stocks. The Accumulation Trust offers
this Portfolio.
Growth and Income Portfolio: Total return in excess of the total
return of the Lipper Growth and Income Mutual Funds Average measured over a
new period of three to five years, by investing in a broadly diversified
group of large capitalization stocks. The Accumulation Trust offers this
Portfolio.
Growth Portfolio: Capital appreciation, primarily from investments in
common stocks. The Accumulation Trust offers this Portfolio.
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. The Accumulation Trust
offers this Portfolio.
11
<PAGE> 17
Capital Appreciation Portfolio: Maximum capital appreciation,
primarily through investment in common stock of companies that demonstrate
accelerating earnings momentum and consistently strong financial
characteristics. The Accumulation Trust offers this Portfolio.
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. The Accumulation Trust offers
this Portfolio.
Small Company Growth Portfolio: Capital appreciation by investing
primarily in common stocks of small capitalization companies believed by
the Portfolio Manager to have an outlook for strong earnings growth and
potential for significant capital appreciation. The Accumulation Trust
offers this Portfolio.
Small Company Value Portfolio: Capital appreciation through
investment in a diversified portfolio of primarily equity securities of
companies with market capitalizations of under $1 billion. The Accumulation
Trust offers this Portfolio.
International Growth Portfolio: Capital appreciation, primarily
through a diversified portfolio of non-United States equity securities. The
Accumulation Trust offers this Portfolio.
High Yield Bond Portfolio: Maximum current income, primarily from
debt securities that are rated Ba or lower by Moody's Investors Service,
Inc. or BB or lower by Standard & Poor's Corporation. The Accumulation
Trust offers this Portfolio.
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. The entire initial purchase payment always earns
interest at a rate not less than 3.5% per year until the end of the Right to
Return Contract period, at which time it is transferred to the selected
subaccounts and/or accumulation periods. When the Right to Return Contract
Period expires, the portion of the Initial Net Purchase Payment to be allocated
to the Guaranteed Interest Account will be transferred to the Guaranteed
Interest Account.
Net Purchase Payments allocated by an Owner 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 3.5% (0.0094%, compounded daily).
Contract Owners who make purchase payments allocated to or transfer funds into
the Guaranteed Interest Account choose between a 3, 5, 7, or 10 year
accumulation period. Prior to the beginning of each calendar month, interest
rates will be declared for each period, if more favorable then the guaranteed
rate. 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. The purchase payment is locked
in to this interest rate for the entire duration of the period selected by the
Contract Owner. Within 45 days, but not less than 15 days before the
Accumulation Period expires, we will send notice of the new rates then being
declared by the Company. When the period expires the Contract Owner can elect an
accumulation period of 3, 5, 7, or 10 years, or may elect to transfer the entire
amount allocated to the expiring accumulation period to the separate account. If
no election is made, the entire amount allocated to the expiring accumulation
period will automatically be held for an accumulation period of the same
duration. If that period will extend beyond the maturity date or if that period
is no longer offered, the money will be transferred into the Money Market
subaccount.
Surrenders. The Contract Owner must specify the source by interest rate
accumulation period of amounts withdrawn from the Guaranteed Interest Account as
a result of a transfer, partial surrender, loan or any charge imposed in
accordance with the Contract. Partial and full surrenders or transfers from the
Guaranteed Interest Account are subject to the Market Value Adjustment. This
Adjustment is determined by
12
<PAGE> 18
multiplying the amount of the surrender or transfer from each accumulation
period and interest rate by the following factor:
[(1 + a)/(1+b)](n-t)/12) - 1
where
<TABLE>
<S> <C> <C>
a = rate declared at the beginning of accumulation period
b = rate then currently declared for an accumulation period
equal to the time remaining in the guaranteed period, plus
0.25%
n = guaranteed period in months
t = number of elapsed months (or portion thereof) in the
guaranteed period
</TABLE>
If an Accumulation Period equal to the time remaining is not issued by the
Company, the rate will be an interpolation between two available Accumulation
Periods. If two such Periods are not available, we will use the rate for the
next available Accumulation Period.
Market Value Adjustments do not apply for partial or full surrenders or
transfers requested within 30 days before the end of the accumulation period,
nor to any benefits paid upon the death of the Annuitant. The Market Value
Adjustment does apply to benefits paid upon death of the Owner.
The Guaranteed Interest Account and its market value adjustment feature are
described in a separate prospectus which accompanies this Prospectus.
PAYMENT AND ALLOCATION OF PURCHASE PAYMENTS
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 Sections 408 and 408A of the Code, annuity
purchase plans sponsored by certain tax-exempt organizations, governmental
entities, 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.
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 Owner, less the amount of any
prior partial surrenders and their Surrender Charges, exceed $1,500,000.
The Company reserves the right to reject an application for any reason
permitted by law.
13
<PAGE> 19
Net Purchase Payments received before the Effective 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 Owner. No interest will be paid if the Contract is not issued or if it is
declined by the Owner. If the application is approved and the Contract is
subsequently issued and accepted by the Owner, then on the Effective Date,
amounts allocable to the Contract held in the Company's General Account will
earn interest at the annual rate of not less than 3.5%. Upon expiration of the
Right to Return Contract Period (See "Right to Return Contract Provision"
below), money is transferred to the selected options. 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.
RIGHT TO RETURN CONTRACT PROVISION
Within 10 days (or longer in certain states) of the day the Contract is
delivered to the Owner (the "Right to Return Contract Period"), it may be
returned to the Company or to any agent of the Company. When the Contract is
received by the Company, it will be voided as if it had never been in force. The
amount to be refunded is equal to all Purchase Payments.
ALLOCATION OF PURCHASE PAYMENTS AND FUND VALUE
Allocation of Purchase Payments. The Owner 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 Right to Return Contract Period (and any interest thereon) will initially
earn interest at a rate not less than 3.5% per year beginning on the later of
(i) the Effective Date and (ii) the date the Payment is received at the
Company's Operations Center. Net Purchase Payments will continue to earn
interest at a rate not less than 3.5% per year until the Right to Return
Contract Period expires. (See "Right to Return Contract Provision" above.) After
the Right to Return Contract Period has expired, the Contract's Fund Value will
automatically be transferred to the Subaccount(s) of the Variable Account or to
the Guaranteed Interest Account in accordance with the Owner's percentage
allocation.
After the Right to Return Contract Period, Net Purchase Payments under a
nonautomatic payment plan will be allocated in accordance with the Owner's most
recent instructions on record with the Company, unless the Owner at the time a
Purchase Payment is made specifies the amount 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 Owner's most recent instructions on
record.
The Owner 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. The Company reserves
the right to deny any telephone allocation request. If all telephone lines are
busy (which might occur, for example, during periods of substantial market
fluctuations), Owners might not be able to request changes in allocation of
purchase payments by telephone and would have to submit written requests. Any
such change, whether made in writing or by telephone, will be effective when
recorded on the records of the Company, in accordance with the applicable
requirements of state insurance departments and the Investment Company Act of
1940. 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 Owner 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
14
<PAGE> 20
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 by calling 1-800-487-6669. The Company's form must be
signed and received at the Company's 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 whole numbers and must total
100 percent.
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 which Unit
value is determined at the close of the Business Day on which the Purchase
Payment is received.
The Unit value for each Subaccount was established at $10 for the first
Business Day. The Unit value for a Subaccount for any subsequent Business Day is
determined by subtracting (b) from (a) and dividing the result by (c), where:
(a) is the per share net asset value on the Business Day 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
Business Day. The daily mortality and expense risk charge is a percentage
of the Subaccount's net asset value on the previous Business Day. (If the
previous day was not a Business Day, then the daily mortality and expense
risk charge is the applicable percentage times the number of days since the
last Business Day times the Subaccount's net asset value on the last
Business Day.)
(c) is the total number of Units held in the Subaccount on the
Business Day before the purchase or redemption of any Units on that Date.
The Unit value for these Subaccounts may increase, decrease, or remain
constant from Business Day to Business Day, 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 Owner bears the
entire investment risk. Owners 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 Business Day, and, if not, on the next Business Day.
Interest will be credited daily.
Fund Value. The Contract's Fund Value will reflect the investment
performance of the selected Subaccount(s) of the Variable Account, amounts
credited to the Guaranteed Interest Account, amounts credited to the Loan
Account, if any, any Net Purchase Payments, any partial surrenders, and all
charges imposed in connection with the Contract. There is no guaranteed minimum
Fund Value, except to the extent Net Purchase Payments have been allocated to
the Guaranteed Interest Account, and because a Contract's Fund Value at any
future date will be dependent on a number of variables, it cannot be
predetermined.
Determination of Fund Value. The Fund Value of the Contract is determined
on each Business Day. The Fund Value will be calculated first on the Effective
Date and thereafter on each Business Day. On the Effective Date, the Contract's
Fund 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
15
<PAGE> 21
allocation of the amounts in the General Account to the Variable Account or to
the Guaranteed Interest Account, on each Business Day, the Contract's Fund Value
will be:
(1) The aggregate of the Fund Values attributable to the Contract in
each of the Subaccounts on the Business Day, 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, market value adjustments, and
deductions imposed in accordance with the Contract terms detailed in the
Prospectus); plus
(3) any amount credited to the Loan Account, if available (which shall
be the aggregate of all amounts transferred plus interest credited, if any,
less loan repayments, if any, less any charges and deductions imposed in
accordance with the Contract terms detailed in the Prospectus); plus
(4) any Net Purchase Payment received on that Business Day; less
(5) any transfer charge made on that Business Day; less
(6) any partial surrender amount and its Surrender Charge made on that
Business Day; less
(7) any Annual Contract Charge deductible on that Business Day.
In computing the Contract's Fund 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 Business
Day. If the Contract's Fund Value is to be calculated for a day that is not a
Business Day, the next following Business Day will be used.
Transfers. After the Right to Return Contract 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 at Unit values, and determine all Unit values
in connection with transfers, among the Subaccounts at the close of the day on
which the transfer request is received at the Operations Center, if that date is
a Business Day and, if not, on the next Business Day. Different provisions apply
to transfers involving the Guaranteed Interest Account. (See "Allocation of
Premiums and Fund 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. The Company reserves the right to deny
any telephone transfer request. If all telephone lines are busy (which might
occur, for example, during periods of substantial market fluctuations), Owners
might not be able to request transfers by telephone and would have to submit
written requests. If a written transfer request is incomplete or incorrect, no
transfer will be made and the request will be returned to the Owner. 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 Owner 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 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 is not currently imposed (See "Charges Against Fund
Value -- Transfer Charge" at page 21.), but the Company has reserved the right
to impose a charge which will not exceed $25 per transfer. If imposed, the
transfer charge will be deducted from the first of the Subaccount(s) or the
Guaranteed Interest Account from which the amounts are transferred. This charge
is in addition to the amount transferred. All transfers included in a single
request are treated as one transfer transaction. A transfer resulting from the
first reallocation of Fund Value at the expiration of the Right to Return
Contract Period will not be subject to a transfer charge. Under present law,
transfers are not taxable transactions.
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<PAGE> 22
Transfers Involving the Guaranteed Interest Account. Transfers may be made
from the Guaranteed Interest Account at any time, but if they are made before
the end of the 3, 5, 7, or 10 year accumulation period there will be a Market
Value Adjustment. If the transfer request is received within 30 days before the
end of the Accumulation Period, no market value adjustment will apply.
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 Starting Date, (3) the Contract
Anniversary on which, after deduction for any Annual Contract Charge then due,
no Fund Value in the Subaccounts and the Guaranteed Interest Account 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 Starting Date and during the lifetime
of the Annuitant, the Owner 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 Cash Value,
which is its Fund Value less (1) any applicable Surrender Charge, (2) any Market
Value Adjustment, and (3) any Outstanding Debt. The Surrender may also be for a
lesser amount (a "partial surrender"). If a partial surrender is requested, and
that surrender would leave a Fund Value of less than $1,000, then that partial
surrender will be treated and processed as a full surrender, and the entire Cash
Value will be paid to the Owner. For a partial surrender, any Surrender Charge
or Market Value Adjustment will be in addition to the amount requested by the
Owner.
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 Owner, with an aggregate value equal to the dollar amount of
the surrender plus, if applicable, any Surrender Charge and any Market Value
Adjustment. The Guaranteed Interest Account and its market value adjustment
feature are described in a separate prospectus which accompanies this
Prospectus. Partial or full surrenders allocated to the Guaranteed Interest
Account will be subject to a market value adjustment. 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 Owner in written notice to the Company at its Operations Center at the
time the request for the partial surrender is received. Allocations may be by
either amount or percentage. Allocations by percentage must be in whole
percentages (totaling 100 percent), and at least 10 percent of the partial
surrender must be allocated to any Subaccount or to the Guaranteed Interest
Account designated by the Owner. If there is insufficient Fund Value in the
Owner's Guaranteed Interest Account or a Subaccount to provide for the requested
allocation against it, or the request is incorrect, the request will not be
accepted.
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.
Any cash surrender amount will be paid in accordance with the requirements
of state insurance departments and the Investment Company Act of 1940.
Postponement is currently permissible under the Investment Company Act of 1940
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 Funds is not reasonably
practicable, or (b) it is not reasonably practicable to determine the value of
the net assets of the Funds, or (3) for such other periods as the Securities and
Exchange Commission may by order permit for the protection of Owners. 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
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<PAGE> 23
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. Surrenders involving
payment from the Guaranteed Interest Account may also be subject to a Market
Value Adjustment, in addition to a surrender charge. The Owner 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 may also be restricted by the
terms of the particular plan pursuant to which such Qualified Contract is
issued. Without such restriction 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.)
LOANS
Qualified Contracts issued under an Internal Revenue Code Section 401(k)
plan will have a loan provision. All of the following conditions apply in order
for the amount to be considered a loan, rather than a (taxable) partial
surrender:
- The term of the loan must be 5 years or less.
- Repayments are required at least quarterly and must be substantially
level.
- The loan amount is limited to certain dollar amounts, as specified by the
IRS.
The Owner (Plan Trustee) must certify that these conditions are satisfied.
In any event, the maximum outstanding loan on a contract is 50% of the Fund
Value of the subaccounts and/or the Guaranteed Interest Account. Loans are not
permitted before the end of the Right to Return Contract period. In requesting a
Loan, the Contract Owner must specify the Subaccounts from which Fund Value
equal to the amount of the Loan requested will be taken. Loans from the
Guaranteed Interest Account are not taken until Fund Value in the subaccounts is
exhausted. If in order to provide the Contract Owner with the amount of the Loan
requested, Fund Values must be taken from the Guaranteed Interest Account, then
the Contract Owner must specify the Accumulation Periods from which Fund Values
equal to such amount will be taken. If the Contract Owner fails to specify
Subaccounts and Accumulation Periods, the request for a Loan will be returned to
a Contract Owner.
Values are transferred to a Loan Account that earns interest at an annual
rate of 3.5%. The annual loan interest rate charged will be 6%.
Loan repayments must be specifically earmarked as a loan repayment and will
be allocated to the sub-accounts and/or the Guaranteed Interest Account using
the most recent payment allocation on record.
DEATH BENEFIT
DEATH BENEFIT PROVIDED BY THE CONTRACT
In the event of the death of the Annuitant prior to the Annuity Starting
Date, the Company will pay a Death Benefit to the Beneficiary. The amount of the
Death Benefit will be the greater of (a) the Fund Value less any Outstanding
Debt on the date of the Annuitant's death, and (b) the Purchase Payments paid,
less any partial surrenders and their Surrender Charges less any Outstanding
Debt. If there are funds allocated to the Guaranteed Interest Account at the
time of death, any applicable market value adjustment will be waived. If the
death of the Annuitant occurs on or after the Annuity Starting Date, no Death
Benefit will be payable except as may be provided under the Settlement Option
elected.
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<PAGE> 24
OPTIONAL ENHANCED DEATH BENEFIT
An enhanced death benefit may apply. On the 5th Contract anniversary and
each subsequent 5th Contract anniversary prior to the Annuitant's 71st birthday
(prior to the first 5th anniversary for issue ages greater than 65), the
Guaranteed Minimum Death Benefit ("GMDB") is increased to the then current Fund
Value, if it is greater than the current GMDB, proportionally reduced by any
partial surrenders including Surrender Charges and Market Value Adjustments
assessed, since the last Reset Anniversary. In no event will the GMDB exceed
200% of the total Purchase Payments made, reduced proportionately for any
partial surrenders including Surrender Charges and Market Value Adjustments,
less any Outstanding Debt. The proportionate reduction for each partial
surrender will be equal to (i) the amount of that partial surrender (including
any Surrender Charges and Market Value Adjustments assessed), divided by (ii)
the Fund Value immediately before that partial surrender, multiplied by (iii)
the Enhanced Death Benefit immediately before the surrender. All Subaccounts are
eligible for GMDB coverage. The cost of this enhancement is reflected in the
Mortality and Expense Risk Charge. Once the last value is set (prior to the
Annuitant's 71st birthday or on the first 5th anniversary for issue ages greater
than 65), it will not be reset.
All other basic death benefits as outlined in this prospectus continue to
apply. The largest death benefit under any of these provisions will be paid.
ELECTION AND EFFECTIVE DATE OF ELECTION
During the lifetime of the Annuitant and prior to the Annuity Starting
Date, the Owner 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 23.)
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
23.) If an election by the payee is not received by the Company within one month
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 Owner 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.
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 Owner with written notice
of its intention to make deductions for premium or other taxes. Any such
deduction will apply only to
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<PAGE> 25
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.
CHARGES AGAINST FUND VALUE
Surrender Charge. The Contract imposes a contingent deferred sales charge,
called a "Surrender Charge," on full and partial surrenders and on the Annuity
Starting Date. The Surrender Charge, which will never exceed 7 percent of total
Fund Value, 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 Cash Value (see "SURRENDERS" at page
16) is surrendered or if the Cash Value is received at maturity on the Annuity
Starting Date, a Surrender Charge will be calculated at the time of surrender
and will be deducted from the Fund Value. A Surrender Charge will not be imposed
against Fund Value surrendered after the eighth Contract Year. In addition, the
Surrender Charge, which otherwise would have been deducted, will not be deducted
to the extent necessary to permit the Owner to obtain, an amount equal to the
Free Partial Surrender Amount. (See "Free Partial Surrender Amount" at page
20.). 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 23.) In no event will the aggregate Surrender
Charge exceed 7 percent of the total Fund Value.
For a partial surrender, the Surrender Charge will be deducted from any
remaining Fund 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. Cash Values surrendered to pay surrender charges are subject
to surrender charges.
No Surrender Charge will be deducted from Death Benefits except as
described in "DEATH BENEFIT" at page 18.
Amount of Surrender Charge. The amount of the Surrender Charge is equal to
a varying percentage of Fund Value during the first 8 Contract Years. The
percentage is determined as follows:
SURRENDER CHARGE PERCENTAGE TABLE
<TABLE>
<CAPTION>
# OF CONTRACT SURRENDER
ANNIVERSARIES CHARGE
SINCE EFFECTIVE DATE PERCENTAGE
-------------------- ----------
<S> <C>
0...................................................... 7 %
1...................................................... 7
2...................................................... 6
3...................................................... 6
4...................................................... 5
5...................................................... 4
6...................................................... 3
7...................................................... 2
8 (or more)............................................ 0
</TABLE>
Free Partial Surrender Amount. The Surrender Charge may be reduced by
using the Free Partial Surrender Amount provided for in the Contract. For
Non-qualified Contracts (and Contracts issued for IRA and SEP-IRA) , the Free
Partial Surrender Amount provides that an amount up to 10% of the Contract's
Fund Value may be surrendered without application of a surrender charge. For
Qualified Contracts (other than Contracts issued for IRA and SEP-IRA), the Free
Partial Surrender Amount provides that the greater
20
<PAGE> 26
of $10,000, (but not more than the Contract's Fund Value) or 10% of the
Contract's Fund Value (at the beginning of a Contract Year) may be surrendered
without application of surrender charge. Contract Fund Value here means the Fund
Value at the beginning of the contract year in the sub-accounts (and the
Guaranteed Interest Account not the Loan Account).
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 collection of purchase payments,
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 Fund Value
to help cover administrative expenses. Currently, the amount of the charge is
$0, but it may be increased to as much as $50 on 30 days' written notice to the
Owner. The charge will be deducted on each Contract Anniversary prior to the
Annuity Starting Date. The amount of the charge will be allocated against the
Guaranteed Interest Account and each Subaccount of the Variable Account in the
same proportion that the Fund Value in the Guaranteed Interest Account and each
Subaccount bears to the Fund 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 Owner
among the Subaccounts or to or from the Guaranteed Interest Account and one or
more of the Subaccounts (including transfers made by telephone, if permitted by
the Company) 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 Fund Value held in the Subaccount(s) or from the
Guaranteed Interest Account from which the first transfer is made.
Market Value Adjustment. Full and partial surrenders or transfers from the
Guaranteed Interest Account are subject to a Market Value Adjustment. The
adjustment is determined by multiplying the amount of the surrender or transfer
from each accumulation period and interest rate by the following factor:
[(1 + a)/(1+b)](n-t)/12) - 1
where
<TABLE>
<S> <C> <C>
a = rate declared at beginning of the accumulation period
b = rate then currently declared for an accumulation period
equal to the time remaining in the guaranteed period, plus
0.25%
n = guaranteed period in months
t = number of elapsed months (or portion thereof) in the
guaranteed period
</TABLE>
If an Accumulation Period equal to the time remaining is not issued by the
Company, the rate will be an interpolation between two available Accumulation
Periods. If two such Periods are not available, we will use the rate for the
next available Accumulation Period.
Market Value Adjustments do not apply for full and partial surrenders or
transfers requested within 30 days before the end of the accumulation period,
nor in the calculation of any benefits paid upon the death of the Annuitant.
Market Value Adjustments apply to benefits paid upon death of the Owner.
Descriptions of the Guaranteed Interest Account are included in this
Prospectus for the convenience of the purchaser. The Guaranteed Interest Account
and its market value adjustment feature are described in a separate prospectus
which accompanies this Prospectus. The general account of the Company is not
registered under the Securities Act of 1933 or the Investment Company Act of
1940. Accordingly, the general account of the Company is not generally subject
to the provisions of these Acts; however, disclosures regarding the
21
<PAGE> 27
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.
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. The Mortality and Expense Risk charge
is deducted at a current daily rate equivalent to an annual rate of 1.25 percent
(and is guaranteed not to exceed a daily rate equivalent to an annual rate of
1.35 percent) from the value of the net assets of the Separate Account. Of the
1.25 percent current charge, .80 percent is for assuming mortality risks (which
is guaranteed not to exceed .90 percent), 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 Business Day. These
charges will not be deducted from the Guaranteed Interest Account. Where the
previous day (or days) was not a Business Day, the deduction currently on the
next Business Day will be 0.003425 percent (guaranteed not to exceed 0.003699
percent) multiplied by the number of days since the last Business Day.
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 1/2
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 Funds, the net assets
of the Variable Account will reflect the investment advisory fee and other
expenses incurred by the Funds. The Company, as investment adviser to the MONY
Series Fund, will receive a daily investment advisory fee at an annual rate of
0.50 percent of the first $400 million, 0.35 percent of the next $400 million,
and 0.30 percent of the aggregate average daily net assets in excess of $800
million of the Intermediate Term Bond, Long Term Bond, and Government Securities
Portfolios of the MONY Series Fund, and as investment adviser to the MONY Series
Fund, the Company will receive a daily investment advisory fee at an annual rate
of 0.40 percent of the first $400 million, 0.35 percent of the next $400
million, and 0.30 percent of the aggregate average daily net assets in excess of
$800 million of the Money Market Portfolio of the MONY Series Fund.
Enterprise Capital, as investment adviser to the Accumulation Trust, will
receive from the Accumulation Trust a daily investment advisory fee at an annual
rate of 0.80 percent of the first $400 million, 0.75 percent of the next $400
million, and 0.70 percent of the aggregate average daily net assets in excess of
$800 million of
22
<PAGE> 28
the Equity and Managed Portfolios of the Accumulation Trust. OpCap Advisors, a
subsidiary of Oppenheimer Capital, as sub-investment adviser to the Equity and
Managed Portfolios of the Accumulation Trust, will receive from Enterprise
Capital and not the Accumulation Trust .40 percent (0.30 percent of assets in
excess of $1 billion) of the aggregate average daily net assets of the Equity
Portfolio and .40 percent of the first $1 billion, .30 percent of the next $1
billion of assets, and .25 percent of assets in excess of $2 billion of the
average daily net assets of the Managed Portfolio. Enterprise Capital, as
investment adviser to the Accumulation Trust, will receive from the Accumulation
Trust a daily investment advisory fee at an annual rate of 0.75 percent of the
aggregate average daily net assets of the Small Company Value Portfolio of the
Accumulation Trust. Gabelli Asset Management, Inc., as sub-investment adviser to
the Small Company Value Portfolio of the Accumulation Trust, will receive from
Enterprise Capital and not the Accumulation Trust, 0.40 percent of the first $1
billion and 0.30 percent of the aggregate average daily net assets in excess of
$1 billion of the Small Company Value Portfolio. Enterprise Capital, as
investment adviser to the Accumulation Trust, will receive from the Accumulation
Trust a daily investment advisory fee at an annual rate of 0.60 percent of the
aggregate average daily net assets of the High Yield Bond Portfolio and Caywood
Scholl Capital Corporation, as sub-investment adviser to the High Yield Bond
Portfolio, will receive from Enterprise Capital and not the Accumulation Trust,
.30 percent of the first $100 million and 0.25 percent of the aggregate average
daily net assets in excess of $100 million of the High Yield Bond Portfolio.
Enterprise Capital, as investment adviser to the Accumulation Trust will receive
from the Accumulation Trust a daily investment advisory fee at an annual rate of
.85 percent of the aggregate average daily net assets of the International
Growth Portfolio, and Brinson Partners, as sub-investment adviser to the
International Growth Portfolio, will receive from Enterprise Capital and not the
Accumulation Trust, .45 percent (53% of the fee received by Enterprise Capital;
the fee paid to Brinson Partners declines as assets exceed $100 million) of the
aggregate average daily net assets of the International Growth Portfolio.
Enterprise Capital, as investment adviser to the Accumulation Trust, will
receive from the Accumulation Trust a daily investment advisory fee at an annual
rate of 1.00 percent of the aggregate average daily net assets of the Small
Company Growth Portfolio and Pilgrim Baxter & Associates, as sub-investment
adviser to the Small Company Growth Portfolio, will receive from Enterprise
Capital and not the Accumulation Trust, 0.65 percent of the first $50 million,
0.55 percent of the next $50 million, and 0.45 percent of the aggregate average
daily net assets in excess of $100 million of the Small Company Growth Portfolio
. Enterprise Capital, as investment adviser to the Accumulation Trust, will
receive from the Accumulation Trust a daily investment advisory fee at an annual
rate of 0.75 percent of the aggregate average daily net assets of the Equity
Income Portfolio and 1740 Advisers, Inc., as sub-investment adviser to the
Equity Income Portfolio, will receive from Enterprise Capital and not the
Accumulation Trust, 0.30 percent of the first $100 million, 0.25 percent of the
next $100 million, and 0.20 percent of the aggregate average daily net assets in
excess of $200 million of the Equity Income Portfolio. Enterprise Capital, as
investment adviser to the Accumulation Trust, will receive from the Accumulation
Trust a daily investment advisory fee at an annual rate of 0.75 percent of the
aggregate average daily net assets of the Growth and Income Portfolio and
Retirement System Investors, Inc., as sub-investment adviser to the Growth and
Income Portfolio, will receive from Enterprise Capital and not the Accumulation
Trust, .0.30 percent of the first $100 million, 0.25 percent of the next $100
million, and 0.20 percent of the aggregate average daily net assets in excess of
$200 million of the Growth and Income Portfolio. Enterprise Capital, as
investment adviser to the Accumulation Trust, will receive from the Accumulation
Trust a daily investment advisory fee at an annual rate of 0.75 percent of the
aggregate average daily net assets of the Capital Appreciation Portfolio and
Montag & Caldwell, Inc., as sub-investment adviser to the Capital Appreciation
Portfolio, will receive from Enterprise Capital and not the Accumulation Trust,
0.30 percent of the first $1 billion and 0.20 percent of aggregate average daily
net assets in excess of $1 billion of the Capital Appreciation Portfolio.
Enterprise Capital, as investment adviser to the Accumulation Trust, will
receive from the Accumulation Trust, .75 percent of the aggregate average daily
net assets of the Growth Portfolio, and Montag & Caldwell, Inc. will receive
from Enterprise Capital and not the Accumulation Trust 0.30 percent (0.20
percent of assets in excess of $1 billion) of the aggregate average daily net
assets of the Growth Portfolio.
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ANNUITY PROVISIONS
ANNUITY STARTING DATE
Annuity payments under a Contract will begin on the Annuity Starting Date
that is selected by the Owner at the time the Contract is applied for. The
Annuity Starting Date chosen may be no earlier than the Contract Anniversary
after the Annuitant's 10th birthday, and no later than the Contract Anniversary
after the Annuitant's 95th birthday. The minimum number of years from the
Contract Date to the Annuity Starting Date is 10. The Annuity Starting Date may
be advanced to a date not earlier than the 10th Contract Anniversary or deferred
from time to time by the Owner 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 Starting Date, and (2) the new Annuity Starting Date is a
date which is not later than the Contract Anniversary after the Annuitant's 95th
birthday. A particular retirement plan may contain other restrictions.
On the Annuity Starting Date, unless Settlement Option 3 or 3A is elected,
the Contract's Cash Value less any taxes which may be imposed by an applicable
state upon annuitization, will be applied to provide an annuity or any other
option previously chosen by the Owner and permitted by the Company. If
Settlement Option 3 or 3A is elected, the Contract's Fund Value (less any taxes
which may be imposed by an applicable state upon annuitization) will be applied
to provide an annuity. 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 Starting
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 Starting Date.
ELECTION AND CHANGE OF SETTLEMENT OPTION
During the lifetime of the Annuitant and prior to the Annuity Starting
Date, the Owner may elect one or more of the Settlement Options described below,
or such other settlement option as may be agreed to by the Company. The Owner
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 Starting Date. If no election is in effect on the Annuity Starting Date,
a lump sum payment will be deemed to have been elected.
Settlement Options may also be elected by the Owner 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.
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
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(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 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 Owners 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.
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.
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.
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OTHER PROVISIONS
OWNERSHIP
The Owner has all rights and may receive all benefits under the Contract.
During the lifetime of the Annuitant (and the Secondary Annuitant if one has
been named), the Owner shall be the person so designated in the application,
unless changed, or unless a Successor Owner becomes the Owner. On and after the
death of the Annuitant (and the Secondary Annuitant, if applicable), if the
Beneficiary (or Successor Beneficiary, if one be named) is not then living, the
Death Benefit shall be paid to the Annuitant's (or if the Annuitant is not then
living and a Secondary Annuitant has been named and is not then living, the
Secondary Annuitant's) executors or administrators, unless the Owner directed
otherwise.
The Owner may name a Successor Owner or a new Owner at any time. If the
Owner dies, the Successor Owner, if living, becomes the Owner. 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 Owner or Successor Owner will not apply to any payment made or action taken
by the Company prior to the time a request for change is received. Owners should
consult a competent tax advisor prior to changing Owners.
PROVISION REQUIRED BY SECTION 72(s) OF THE CODE
If the Owner of a Non-Qualified Plan dies before the Annuity Starting Date
and while the Annuitant is living, and if that Owner's surviving spouse is not
the Successor Owner as of the date of that Owner'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 Owner is the Beneficiary, the surrender
proceeds may, at the option of the Successor Owner, be paid over the life of the
Successor Owner. Such payments must begin no later than one year after such date
of death. If the Successor Owner is a surviving spouse, then the surviving
spouse will be treated as the new Owner of the Contract. Under such
circumstances, it shall not be necessary to surrender the Contract. If the
spouse is not the Successor Owner 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 Owner, 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 Owner dies on or after the Annuity Starting 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 Owner'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 Owner 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
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 Owner'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
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the Participant. If the Plan is an IRA under Section 408 of the Code, the
surviving spouse may elect to forego distribution and treat the IRA as his/her
own plan.
It is the Owner'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, 408, and 408A of the Code.
SECONDARY ANNUITANT
Except where the Contract is issued in connection with a Qualified Plan, a
Secondary Annuitant may be designated by the Owner. 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 Secondary Annuitant may be deleted by written notice to
the Company at its Operations Center. A designation or deletion of a Secondary
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 Secondary Annuitant will be deleted from the Contract automatically
by the Company as of the Contract Anniversary after the Secondary Annuitant's
95th birthday.
On the death of the Annuitant, the Secondary Annuitant will become the
Annuitant, under the following conditions:
(1) the death of the Annuitant must have occurred before the Annuity
Starting Date;
(2) the Secondary Annuitant is living on the date of the Annuitant's
death;
(3) if the Annuitant was the Owner on the date of death, the Successor
Owner must have been the Annuitant's spouse; and
(4) if the Annuity Starting Date is later than the Contract
Anniversary after the Secondary Annuitant's 95th birthday, the Annuity
Starting Date will be automatically advanced to that Contract Anniversary.
Effect of Secondary Annuitant's Becoming the Annuitant. If the Secondary
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 Secondary Annuitant.
However, if the Secondary Annuitant was also the beneficiary, then at the death
of the Annuitant, the Secondary Annuitant will be given the option of receiving
the death proceeds as beneficiary instead. If the Secondary Annuitant was the
Beneficiary on the Annuitant's death, and the contract is to be continued, 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 Secondary Annuitant's executors or administrators, unless the Owner directed
otherwise, will become the Beneficiary. All other rights and benefits under the
Contract will continue in effect during the lifetime of the Secondary Annuitant
as if the Secondary Annuitant were the Annuitant.
ASSIGNMENT
The Company will not be bound by any assignment until the assignment (or a
copy) is received by the Company at its Home Office. The Company is not
responsible for assessing the validity or effect of any assignment. The Company
shall not be liable as to any payment or other settlement made by the Company
before receipt of the assignment.
If the 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 Owner should consult a
competent tax advisor before assigning the Contract.
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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 Funds 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 Funds should become inappropriate in view of the purposes of
the Contract, the Company may substitute shares of another mutual fund for
shares of the Funds 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 Owner, 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 Funds 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.
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 Funds. The Company is
the legal holder of those shares and as such has the right to vote to elect the
Board of Directors of the MONY Series Fund or the Board of Trustees of the
Accumulation Trust, 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 each of the Funds
held in the Variable Account (whether or not attributable to Owners) at
shareholder meetings of each of the Funds in accordance with the instructions
received from Owners. The number of votes will be determined as of the record
date selected by the Board of Directors or the Board of Trustees of the
respective Fund. The Company will furnish Owners 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.
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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 either or both of the Funds, or to approve or
disapprove an investment adviser or principal underwriter for either or both of
the Funds. 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 either or
both of the Funds, if the Company reasonably disapproves those changes in
accordance with applicable federal regulations. If the Company does disregard
voting instructions, it will advise Owners of that action and its reasons for
the action in the next semiannual report to Owners.
Each Owner 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 Fund 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 each of the Funds. Shares of each of the Funds held
in each Subaccount for which no timely instructions from Owners 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
each of the Funds in its own right.
The number of shares of the corresponding Portfolio of one of the Funds in
a Subaccount for which instructions may be given by an Owner 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 respective Fund. In other words, if the value attributable to the Contract
held in the Subaccount were $540 and the net asset value of the respective
Fund's shares of the Portfolio held in that Subaccount were $20 per share on the
record date, then the Owner 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 respective Fund.
Matters on which Owners 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
Owner's selected Subaccount(s); (2) any change in the fundamental investment
policies of the Portfolio(s) corresponding to the Owner's selected
Subaccount(s); and (3) any other matter requiring a vote of the shareholders of
either of the Funds. With respect to approval of the Investment Advisory
Agreement or any change in a Portfolio's fundamental investment policies, Owners
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 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.
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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 Fund Value, on
annuity payments, and on the economic benefit to the Owner, 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 Owner 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 Owner (in the case of Non-
Qualified Plans) contributions, are generally taxable to the annuitant as
ordinary income. Owners, 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 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 Owner 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 includable 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 Owner 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
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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.
RETIREMENT PLANS
The Contracts described in this Prospectus currently 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 Section 408(b) of the
Code, including Simplified Employee Pensions established by employers
pursuant to Section 408(k);
(3) Deferred compensation plans provided by certain governmental
entities under Section 457; and
(4) 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 Owners, 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
31
<PAGE> 37
generated by an investment in that Subaccount over the 30 day period stated in
the advertisement and is the result of dividing that income by the value of the
Subaccount. The value of each Subaccount is the average daily number of Units
outstanding multiplied by the Unit Value on the last day of the period. The
"yield" reflects deductions for all charges, expenses, and fees of both the
Funds and the Variable Account other than the Surrender Charge. "Total return"
for each of these Subaccounts refers to the return an Owner 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 Funds 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. 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 Funds and the Variable
Account other than the Surrender Charge. Returns for periods exceeding one year
reflect the average annual total return for such period. 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 500 Indices and the Lehman
Brothers, Shearson, CDA/Wiesenberger, Russell, Merrill Lynch, and Wilshire
indices, and to various ranking services, including, without limitation, the
Lipper Annuity and Closed End Survey compiled by Lipper Analytical Services and
the VARDS report compiled by Variable Annuity Research and Data Service in order
to provide the reader a basis for comparison of 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), Owners 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.
32
<PAGE> 38
TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER 13, 1998
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C>
MONY Life Insurance Company of America...................... 1
Legal Opinion............................................... 1
Independent Accountants..................................... 1
Federal Tax Status.......................................... 2
Performance Data............................................ 5
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:
MONY Life Insurance Company of America
1740 Broadway
New York, New York 10019
Your name__________________________________
Address____________________________________
City _____________State ______ Zip _______
Please send me a copy of the MONY America Variable Account A Statement of
Additional Information.
Policy Bx-98
Form No. 1 SL (11/98) 333-59717
33
<PAGE> 39
THE MONY CUSTOM MASTER
STATEMENT OF ADDITIONAL INFORMATION
DATED NOVEMBER 13, 1998
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
November 13, 1998 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 1740 Broadway,
New York, New York 10019, Mail Drop 8-27 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.......................................... 2
Performance Data............................................ 5
Financial Statements........................................ F-1
</TABLE>
Form No. 1 SL (11/98) 333-59717
<PAGE> 40
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, the U.S. Virgin Island, 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 1997 of approximately $ 22.0 billion. As of December 31, 1997, MONY
had approximately $133.2 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.
In September 1997, MONY announced that it had begun the process of
demutualization. If completed, it is not expected that demutualization will have
any material effect on MONY America Variable Account A or the Contract.
At May 1, 1998, the rating assigned to the Company 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 1996. At the same date, the Company 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 1997, the Company paid MONY $57,527,856 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 Edward P. Bank, Esq., 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 PricewaterhouseCoopers
LLP, 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. PricewaterhouseCoopers LLP's office is located at 1301 Avenue of the
Americas, New York, New York 10019.
(1)
<PAGE> 41
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 Owner, Annuitant, or
Beneficiary depends on the type of retirement plan for which the Contract is
purchased and upon the tax and employment status of the individual concerned.
The discussion contained herein is general in nature and is not intended as tax
advice.
Each person concerned should consult a competent tax adviser. No attempt is
made to consider any applicable state or other tax laws. Moreover, the
discussion herein is based upon the Company's understanding of current federal
income tax laws as they are currently interpreted. No representation is made
regarding the likelihood of continuation of those current federal income tax
laws or of the current interpretations by the Internal Revenue Service.
TAXATION OF ANNUITIES IN GENERAL
Section 72 of the Code governs taxation of annuities in general. Except in
the case of certain corporate and other non-individual Owners, 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
An Owner 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 Owner'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 non-taxable distributions, and the balance
is treated as a non-taxable return of principal to the Owner. For partial
surrenders under a Qualified Contract, payments are generally prorated between
taxable income and non-taxable return of investment.
There are special rules for Qualified Plans or contracts involving 85
percent or more employee contributions. Since the cost basis of Qualified
Contracts is generally zero, however, partial surrender amounts will generally
be fully taxed as ordinary income.
An Owner 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. An Owner 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
(2)
<PAGE> 42
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.
PENALTY TAX
Payments received by Owners, 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 Owner (or, where the Owner 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 an
Owner's control of the investments of a segregated asset account may cause the
Owner, 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
(3)
<PAGE> 43
whether application of the regulations or Revenue Rulings will be prospective.
For these reasons, Owners 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 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 Owners, 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.
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 pre-approved
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.
(4)
<PAGE> 44
PERFORMANCE DATA
MONEY MARKET SUBACCOUNT
For the seven-day period ended December 31, 1997, the yield was 4.03% and
the effective yield was 4.11%.
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 pro-rated to
reflect the shortened 7-day period and allocated to the Money Market Subaccount
in the proportion that the total value of the Money Market Subaccount bore to
the total value of the Variable Account at the end of the period indicated. Net
investment income reflects earnings on investments less expenses of the Fund
including the Investment Advisory Fee (which for calculating the yield and
effective yield quoted above is assumed to be .40 percent, the fee which would
be charged based upon the amount of assets under management on the last day of
the period for which the quoted yield is stated). Not reflected in either the
yield or effective yield are surrender charges, which will not exceed 7% of
total Purchase Payments made in the Contract Year of surrender and the preceding
7 Contract Years.
(5)
<PAGE> 45
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, for the periods indicated is shown in the table below. This table
does not reflect the impact of the tax laws, if any, on total return as a result
of the surrender.
MONY AMERICA VARIABLE ACCOUNT A
PRO FORMA TOTAL RETURN
(ASSUMING $1,000 PAYMENT AT BEGINNING OF
PERIOD AND SURRENDER AT END OF PERIOD)
<TABLE>
<CAPTION>
FOR THE
FOR THE FOR THE PERIOD SINCE
1 YEAR ENDED 5 YEARS ENDED INCEPTION THROUGH
SUBACCOUNT DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1997
---------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Equity........................................ 18.10% 17.71% 16.34%
Managed....................................... 16.84% 18.82% 19.45%
Small Cap..................................... 36.61% 14.72% 15.36%
International Growth.......................... -2.30% N/A 7.30%
High Yield Bond............................... 5.78% N/A 11.16%
Intermediate Term Bond........................ 0.12% 4.34% 7.23%
Long Term Bond................................ 5.84% 7.57% 9.75%
Government Securities......................... -0.40% 3.43% 4.26%
</TABLE>
- ---------------
MONY America Variable Account A commenced operations on November 25, 1987. Total
return for the period since inception reflects the average annual total return
since the inception (commencement of operations) of each of the respective
Subaccounts, which is August 1988 for the Equity and Managed Subaccounts,
September 1988 for the Small Cap Subaccount, January 1988 for the Intermediate
Term Bond Subaccount, February 1988 for the Long Term Bond Subaccount, November
1994 for the Government Securities Subaccount, and November 1994 for the
International Growth and for the High Yield Bond Subaccounts, adjusted to
reflect the charges and expenses imposed by the Contract. 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 Funds were reinvested,
and that the Owner 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 average annual total return
percentages shown in the table reflect the historical rates of return,
deductions for all charges, expenses, and fees of both the Funds (including the
Investment Advisory Fees described in the Prospectus (see "Investment Advisory
Fee" at page 23) 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 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.
(6)
<PAGE> 46
The average annual total return for the Subaccounts other than the Money
Market Subaccount, assuming that the Contracts remain in force throughout the
periods indicated, is shown in the table below.
MONY AMERICA VARIABLE ACCOUNT A
PRO FORMA TOTAL RETURN
(ASSUMING $1,000 PAYMENT AT BEGINNING OF
PERIOD AND CONTRACT CONTINUES IN FORCE)
<TABLE>
<CAPTION>
FOR THE
FOR THE FOR THE PERIOD SINCE
1 YEAR ENDED 5 YEARS ENDED INCEPTION THROUGH
SUBACCOUNT DECEMBER 31, 1997 DECEMBER 31, 1997 DECEMBER 31, 1997
---------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Equity........................................ 24.23% 18.10% 16.34%
Managed....................................... 22.98% 19.19% 19.45%
Small Cap..................................... 42.61% 15.17% 15.36%
International Growth.......................... 3.97% N/A 8.72%
High Yield Bond............................... 11.99% N/A 12.45%
Intermediate Term Bond........................ 6.38% 5.06% 7.23%
Long Term Bond................................ 12.05% 8.19% 9.75%
Government Securities......................... 5.85% 4.19% 5.31%
</TABLE>
- ---------------
MONY America Variable Account A commenced operations on November 25, 1987. Total
return for the period since inception reflects the average annual total return
since the inception (commencement of operations) of each of the Subaccounts,
which is August 1988 for the Equity and Managed Subaccounts, September 1988 for
the Small Cap Subaccount, January 1988 for the Intermediate Term Bond
Subaccount, February 1988 for the Long Term Bond Subaccount, November 1994 for
the Government Securities Subaccount, and November 1994 for the International
Growth and for the High Yield Bond Subaccounts, adjusted to reflect the charges
and expenses imposed by the Contract. Total return is not indicative of future
performance.
The table above reflects the same assumptions and results as the table
appearing on page 6, except that no contingent deferred sales (surrender) charge
has been deducted. The data reflected in the table above reflects the average
annual total return an Owner would have received during that period if he did
not surrender his Contract.
30-DAY YIELD:
The yield for the Intermediate Term Bond, Long Term Bond, Government
Securities and High Yield Bond Subaccounts is shown in the table below.
MONY AMERICA VARIABLE ACCOUNT A
YIELD FOR 30-DAY PERIOD
<TABLE>
<CAPTION>
INTERMEDIATE LONG TERM GOVERNMENT HIGH YIELD
YIELD FOR 30 DAYS ENDED TERM BOND BOND SECURITIES BOND
----------------------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1997.................................. 4.78% 5.09% 4.43% 6.55%
</TABLE>
- ---------------
The 30-day yield is not indicative of future results.
For the Intermediate Term Bond, and Long Term Bond, Government Securities,
and High Yield Bond Portfolios, 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
(7)
<PAGE> 47
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 Funds 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.
YEAR TO DATE TOTAL RETURN:
The table below shows total returns for the year to date (January 1, 1998
to February 13, 1998) which have not been annualized and which assume a $1,000
payment made at the beginning of the period and reflecting the same assumptions
and results as the table appearing on page 5, except, in the case of the column
headed "Contract Continues In Force", no contingent deferred sales (surrender)
charge or annual contract charge has been deducted:
MONY AMERICA VARIABLE ACCOUNT A
PRO FORMA YEAR TO DATE TOTAL RETURN
JANUARY 1 TO FEBRUARY 13, 1998
(ASSUMING $1,000 PAYMENT AT BEGINNING OF PERIOD)
<TABLE>
<CAPTION>
SURRENDER AT CONTRACT CONTINUES
SUBACCOUNT END OF PERIOD IN FORCE
---------- ------------- ------------------
<S> <C> <C>
Equity................................................... -2.49% 3.78%
Managed.................................................. -2.25% 4.02%
Small Cap................................................ -2.26% 4.01%
International Growth..................................... -0.91% 5.35%
High Yield Bond.......................................... -3.38% 2.90%
Intermediate Term Bond................................... -5.09% 1.20%
Long Term Bond........................................... -4.98% 1.31%
Government Securities.................................... -5.44% 0.86%
</TABLE>
OTHER NON-STANDARDIZED PERFORMANCE DATA:
From time to time, average annual total return or other performance data
may also be advertised in non-standardized formats. Non-standard performance
data will be accompanied by standard performance data, and the period covered or
other non-standard features will be disclosed.
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.
(8)
<PAGE> 48
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,
1997................................................... F-3
Statements of operations for the year ended December 31,
1997................................................... F-6
Statements of changes in net assets for the years ended
December 31, 1997 and 1996............................. F-9
Notes to financial statements............................. F-13
With respect to MONY Life Insurance Company of America:
Report of Independent Accountants......................... F-17
Statements of admitted assets, liabilities, capital and
surplus as of December 31, 1997 and 1996............... F-18
Statements of operations for the years ended December 31,
1997 and 1996.......................................... F-19
Statements of capital and surplus for the years ended
December 31, 1997 and 1996............................. F-20
Statements of cash flows for the years ended December 31,
1997 and 1996.......................................... F-21
Notes to financial statements............................. F-22
</TABLE>
F-1
<PAGE> 49
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, Government Securities and Money Market Subaccounts; the Enterprise
Accumulation Trust's Equity, Small Cap, Managed, International Growth and High
Yield Bond Subaccounts; and the OCC Accumulation Trust's Money Market, Bond,
Equity, Small Cap, and Managed Subaccounts) as of December 31, 1997, the related
statements of operations for the year then ended and the statements of changes
in net assets for each of the two years in the period then ended. 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, 1997, 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,
1997, the results of their operations for the year then ended, and the changes
in their net assets for each of the two years in the period then ended, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
February 11, 1998
F-2
<PAGE> 50
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<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 4).... $ 984,605 $ 945,478 $34,084,201 $54,686,512 $1,184,974 $130,080,440 $20,107,823
========== ========== =========== =========== ========== ============ ===========
Investments in MONY Series Fund,
Inc., at net asset value (Note
2)............................ $1,500,365 $1,438,034 $35,861,201 $60,357,650 $1,673,300 $130,080,440 $20,983,471
Amount due from MONY America.... 0 0 1,349 3,473 0 1,852,198 29
Amount due from MONY Series
Fund, Inc. ................... 6 0 7,583 8,865 24 18,717 2,929
---------- ---------- ----------- ----------- ---------- ------------ -----------
Total assets............ 1,500,371 1,438,034 35,870,133 60,369,988 1,673,324 131,951,355 20,986,429
---------- ---------- ----------- ----------- ---------- ------------ -----------
LIABILITIES
Amount due to MONY America...... 6 0 7,583 8,865 24 18,717 2,929
Amount due to MONY Series Fund,
Inc........................... 0 0 1,349 3,473 0 1,852,198 29
---------- ---------- ----------- ----------- ---------- ------------ -----------
Total liabilities....... 6 0 8,932 12,338 24 1,870,915 2,958
---------- ---------- ----------- ----------- ---------- ------------ -----------
Net assets...................... $1,500,365 $1,438,034 $35,861,201 $60,357,650 $1,673,300 $130,080,440 $20,983,471
========== ========== =========== =========== ========== ============ ===========
Net assets consist of:
Contractholders' net
payments.................... $ 281,230 $ 53,157 $28,232,151 $42,643,700 $ (63,374) $114,069,375 $19,377,411
Undistributed net investment
income...................... 228,580 519,534 6,011,994 11,013,063 730,917 16,011,065 452,841
Accumulated net realized gain
(loss) on investments....... 474,795 372,787 (159,944) 1,029,749 517,431 0 277,571
Unrealized appreciation of
investments................. 515,760 492,556 1,777,000 5,671,138 488,326 0 875,648
---------- ---------- ----------- ----------- ---------- ------------ -----------
Net assets...................... $1,500,365 $1,438,034 $35,861,201 $60,357,650 $1,673,300 $130,080,440 $20,983,471
========== ========== =========== =========== ========== ============ ===========
Number of units outstanding*.... 37,580 37,519 1,941,792 2,645,732 55,440 8,585,010 1,761,542
---------- ---------- ----------- ----------- ---------- ------------ -----------
Net asset value per unit
outstanding*.................. $ 39.92 $ 38.33 $ 18.47 $ 22.81 $ 30.18 $ 15.15 $ 11.91
========== ========== =========== =========== ========== ============ ===========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-3
<PAGE> 51
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<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 4)...... $353,820,012 $255,536,588 $1,777,336,359 $64,662,367 $56,709,738
============ ============ ============== =========== ===========
Investments in Enterprise
Accumulation Trust at net asset
value (Note 2).................. $441,299,198 $317,339,769 $2,312,921,552 $65,176,534 $58,871,661
Amount due from MONY America...... 50,356 18,364 90,834 2,196 414
Amount due from Enterprise
Accumulation Trust.............. 80,584 11,615 267,380 3,122 1,479
------------ ------------ -------------- ----------- -----------
Total assets............ 441,430,138 317,369,748 2,313,279,766 65,181,852 58,873,554
------------ ------------ -------------- ----------- -----------
LIABILITIES
Amount due to MONY America........ 80,584 11,615 267,380 3,122 1,479
Amount due to Enterprise
Accumulation Trust.............. 50,356 18,364 90,834 2,196 414
------------ ------------ -------------- ----------- -----------
Total liabilities....... 130,940 29,979 358,214 5,318 1,893
------------ ------------ -------------- ----------- -----------
Net assets........................ $441,299,198 $317,339,769 $2,312,921,552 $65,176,534 $58,871,661
============ ============ ============== =========== ===========
Net assets consist of:
Contractholders' net payments... $279,663,113 $196,881,346 $1,262,187,746 $58,787,845 $50,416,401
Undistributed net investment
income....................... 19,341,725 39,243,879 163,883,632 1,628,241 5,579,860
Accumulated net realized gain on
investments.................. 54,815,174 19,411,363 351,264,981 4,246,281 713,477
Unrealized appreciation of
investments.................. 87,479,186 61,803,181 535,585,193 514,167 2,161,923
------------ ------------ -------------- ----------- -----------
Net assets........................ $441,299,198 $317,339,769 $2,312,921,552 $65,176,534 $58,871,661
============ ============ ============== =========== ===========
Number of units outstanding*...... 10,706,757 8,401,211 43,843,754 5,021,078 4,081,656
------------ ------------ -------------- ----------- -----------
Net asset value per unit
outstanding*.................... $ 41.22 $ 37.77 $ 52.75 $ 12.98 $ 14.42
============ ============ ============== =========== ===========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-4
<PAGE> 52
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
OCC 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 4)............... $1,701,986 $1,253,838 $1,719,684 $2,921,414 $29,637,161
========== ========== ========== ========== ===========
Investments in OCC Accumulation Trust, at
net asset value (Note 2)................. $1,701,986 $1,286,515 $3,049,924 $4,088,659 $47,608,557
Amount due from OCC Accumulation Trust..... 0 0 25,168 0 31,071
---------- ---------- ---------- ---------- -----------
Total assets..................... 1,701,986 1,286,515 3,075,092 4,088,659 47,639,628
---------- ---------- ---------- ---------- -----------
LIABILITIES
Amount due to MONY America................. 0 0 25,168 0 31,071
---------- ---------- ---------- ---------- -----------
Net assets................................. $1,701,986 $1,286,515 $3,049,924 $4,088,659 $47,608,557
========== ========== ========== ========== ===========
Net assets consist of:
Contractholders' net payments............ $1,375,548 $ 871,885 $1,017,492 $2,466,472 $16,884,479
Undistributed net investment income...... 326,438 353,701 96,597 171,376 1,401,493
Accumulated net realized gain on
investments........................... 0 28,252 605,595 283,566 11,351,189
Unrealized appreciation of investments... 0 32,677 1,330,240 1,167,245 17,971,396
---------- ---------- ---------- ---------- -----------
Net assets................................. $1,701,986 $1,286,515 $3,049,924 $4,088,659 $47,608,557
========== ========== ========== ========== ===========
Number of units outstanding*............... 122,178 75,192 74,411 117,879 932,054
---------- ---------- ---------- ---------- -----------
Net asset value per unit outstanding*...... $ 13.93 $ 17.11 $ 40.99 $ 34.69 $ 51.08
========== ========== ========== ========== ===========
</TABLE>
- ---------------
* Units outstanding have been rounded for presentation purposes.
See notes to financial statements.
F-5
<PAGE> 53
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<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.............. $106,179 $ 148,017 $ 1,895,013 $ 3,136,904 $ 146,889 $ 6,788,047 $ 607,853
Mortality and expense risk
charges (Note 3)........... (17,221) (16,999) (427,192) (666,186) (23,878) (1,645,030) (214,819)
-------- --------- ----------- ------------ --------- ------------- -----------
Net investment income........ 88,958 131,018 1,467,821 2,470,718 123,011 5,143,017 393,034
-------- --------- ----------- ------------ --------- ------------- -----------
Realized and unrealized gain
on investments (Note 2):
Proceeds from sales........ 55,200 244,471 8,372,489 12,468,873 703,679 788,436,603 4,138,353
Cost of shares sold........ (33,431) (137,574) (8,085,554) (11,001,832) (470,085) (788,436,603) (4,046,217)
-------- --------- ----------- ------------ --------- ------------- -----------
Net realized gain on
investments................ 21,769 106,897 286,935 1,467,041 233,594 0 92,136
Net increase in unrealized
appreciation of
investments................ 228,905 112,714 383,054 2,326,867 41,876 0 518,951
-------- --------- ----------- ------------ --------- ------------- -----------
Net realized and unrealized
gain on investments........ 250,674 219,611 669,989 3,793,908 275,470 0 611,087
-------- --------- ----------- ------------ --------- ------------- -----------
Net increase in net assets
resulting from
operations................. $339,632 $ 350,629 $ 2,137,810 $ 6,264,626 $ 398,481 $ 5,143,017 $ 1,004,121
======== ========= =========== ============ ========= ============= ===========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 54
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<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..................... $ 14,616,618 $ 26,987,250 $ 104,785,893 $ 1,926,290 $ 3,996,565
Mortality and expense risk charges
(Note 3).......................... (4,481,783) (2,887,071) (25,377,487) (754,671) (546,695)
------------ ------------ ------------- ------------ -----------
Net investment income............... 10,134,835 24,100,179 79,408,406 1,171,619 3,449,870
------------ ------------ ------------- ------------ -----------
Realized and unrealized gain on
investments (Note 2):
Proceeds from sales............... 72,220,351 39,894,047 457,425,449 18,298,568 8,419,722
Cost of shares sold............... (40,672,974) (27,693,191) (255,319,160) (15,131,932) (7,958,240)
------------ ------------ ------------- ------------ -----------
Net realized gain on investments.... 31,547,377 12,200,856 202,106,289 3,166,636 461,482
Net increase (decrease) in
unrealized appreciation of
investments....................... 34,785,044 43,551,752 125,071,710 (3,024,032) 1,157,688
------------ ------------ ------------- ------------ -----------
Net realized and unrealized gain on
investments....................... 66,332,421 55,752,608 327,177,999 142,604 1,619,170
------------ ------------ ------------- ------------ -----------
Net increase in net assets resulting
from operations................... $ 76,467,256 $ 79,852,787 $ 406,586,405 $ 1,314,223 $ 5,069,040
============ ============ ============= ============ ===========
</TABLE>
See notes to financial statements.
F-7
<PAGE> 55
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
OCC ACCUMULATION TRUST
-----------------------------------------------------------------
MONEY
MARKET BOND EQUITY SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Dividend income............................. $ 115,863 $ 103,714 $ 123,628 $ 161,545 $ 1,984,204
Mortality and expense risk charges (Note
3)........................................ (31,602) (20,786) (38,298) (48,000) (592,235)
----------- ----------- --------- --------- -----------
Net investment income....................... 84,261 82,928 85,330 113,545 1,391,969
----------- ----------- --------- --------- -----------
Realized and unrealized gain (loss) on
investments (Note 2):
Proceeds from sales....................... 5,594,899 2,568,735 646,222 385,164 12,706,470
Cost of shares sold....................... (5,594,899) (2,585,930) (354,973) (279,748) (6,945,376)
----------- ----------- --------- --------- -----------
Net realized gain (loss) on investments..... 0 (17,195) 291,249 105,416 5,761,094
Net increase in unrealized appreciation of
investments............................... 0 22,568 311,925 482,224 1,865,204
----------- ----------- --------- --------- -----------
Net realized and unrealized gain on
investments............................... 0 5,373 603,174 587,640 7,626,298
----------- ----------- --------- --------- -----------
Net increase in net assets resulting from
operations................................ $ 84,261 $ 88,301 $ 688,504 $ 701,185 $ 9,018,267
=========== =========== ========= ========= ===========
</TABLE>
See notes to financial statements.
F-8
<PAGE> 56
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONY SERIES FUND, INC.
-----------------------------------------------------------------------------
EQUITY GROWTH EQUITY INCOME INTERMEDIATE TERM BOND
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------- ----------------------- -------------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss).......... $ 88,958 $ (12,700) $ 131,018 $ (12,569) $ 1,467,821 $ (400,003)
Net realized gain (loss) on
investments......................... 21,769 92,019 106,897 81,521 286,935 (325,039)
Net increase (decrease) in unrealized
appreciation of investments......... 228,905 101,576 112,714 130,528 383,054 1,497,596
---------- ---------- ---------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............. 339,632 180,895 350,629 199,480 2,137,810 772,554
---------- ---------- ---------- ---------- ----------- -----------
From unit transactions:
Net proceeds from the issuance of
units............................... 64,958 173,420 10,553 84,957 7,883,206 7,367,531
Net asset value of units redeemed or
used to meet contract obligations... (18,731) (208,218) (196,802) (144,895) (7,423,806) (5,502,520)
---------- ---------- ---------- ---------- ----------- -----------
Net increase (decrease) from unit
transactions.......................... 46,227 (34,798) (186,249) (59,938) 459,400 1,865,011
---------- ---------- ---------- ---------- ----------- -----------
Net increase in net assets.............. 385,859 146,097 164,380 139,542 2,597,210 2,637,565
Net assets beginning of year............ 1,114,506 968,409 1,273,654 1,134,112 33,263,991 30,626,426
---------- ---------- ---------- ---------- ----------- -----------
Net assets end of year*................. $1,500,365 $1,114,506 $1,438,034 $1,273,654 $35,861,201 $33,263,991
========== ========== ========== ========== =========== ===========
Units outstanding beginning of year..... 36,033 37,368 43,089 45,391 1,916,050 1,806,518
Units issued during the year............ 1,961 6,064 353 3,083 444,683 435,583
Units redeemed during the year.......... (414) (7,399) (5,923) (5,385) (418,941) (326,051)
---------- ---------- ---------- ---------- ----------- -----------
Units outstanding end of year........... 37,580 36,033 37,519 43,089 1,941,792 1,916,050
========== ========== ========== ========== =========== ===========
- ---------------
* Includes undistributed net investment
income of: $ 228,580 $ 139,622 $ 519,534 $ 388,516 $ 6,011,994 $ 4,544,173
<CAPTION>
MONY SERIES FUND, INC.
---------------------------
LONG TERM BOND
SUBACCOUNT
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
From operations:
Net investment income (loss).......... $ 2,470,718 $ (617,564)
Net realized gain (loss) on
investments......................... 1,467,041 146,065
Net increase (decrease) in unrealized
appreciation of investments......... 2,326,867 (365,732)
------------ ------------
Net increase (decrease) in net assets
resulting from operations............. 6,264,626 (837,231)
------------ ------------
From unit transactions:
Net proceeds from the issuance of
units............................... 13,719,649 14,906,160
Net asset value of units redeemed or
used to meet contract obligations... (10,658,828) (14,275,641)
------------ ------------
Net increase (decrease) from unit
transactions.......................... 3,060,821 630,519
------------ ------------
Net increase in net assets.............. 9,325,447 (206,712)
Net assets beginning of year............ 51,032,203 51,238,915
------------ ------------
Net assets end of year*................. $ 60,357,650 $ 51,032,203
============ ============
Units outstanding beginning of year..... 2,506,531 2,477,673
Units issued during the year............ 653,780 761,674
Units redeemed during the year.......... (514,579) (732,816)
------------ ------------
Units outstanding end of year........... 2,645,732 2,506,531
============ ============
- ---------------
* Includes undistributed net investment
income of: $ 11,013,063 $ 8,542,345
</TABLE>
See notes to financial statements.
F-9
<PAGE> 57
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
MONY SERIES FUND, INC. (CONTINUED)
-----------------------------------------------------------------------------------
GOVERNMENT
DIVERSIFIED MONEY MARKET SECURITIES
SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------- ----------------------------- -------------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss).............. $ 123,011 $ (22,534) $ 5,143,017 $ 3,697,484 $ 393,034 $ (135,450)
Net realized gain on investments.......... 233,594 78,628 0 0 92,136 92,366
Net increase in unrealized appreciation of
investments............................. 41,876 166,348 0 0 518,951 360,512
---------- ---------- ------------- ------------- ----------- -----------
Net increase in net assets resulting from
operations................................ 398,481 222,442 5,143,017 3,697,484 1,004,121 317,428
---------- ---------- ------------- ------------- ----------- -----------
From unit transactions:
Net proceeds from the issuance of units... 42,121 108,458 771,270,721 579,470,083 9,322,729 9,252,639
Net asset value of units redeemed or used
to meet contract obligations............ (634,220) (270,309) (766,971,962) (553,816,098) (3,626,150) (2,761,464)
---------- ---------- ------------- ------------- ----------- -----------
Net increase (decrease) from unit
transactions.............................. (592,099) (161,851) 4,298,759 25,653,985 5,696,579 6,491,175
---------- ---------- ------------- ------------- ----------- -----------
Net increase (decrease) in net assets....... (193,618) 60,591 9,441,776 29,351,469 6,700,700 6,808,603
Net assets beginning of year................ 1,866,918 1,806,327 120,638,664 91,287,195 14,282,771 7,474,168
---------- ---------- ------------- ------------- ----------- -----------
Net assets end of year*..................... $1,673,300 $1,866,918 $ 130,080,440 $ 120,638,664 $20,983,471 $14,282,771
========== ========== ============= ============= =========== ===========
Units outstanding beginning of year......... 76,353 83,511 8,278,977 6,504,679 1,269,214 679,711
Units issued during the year................ 1,688 4,729 51,933,520 40,508,568 807,156 829,627
Units redeemed during the year.............. (22,601) (11,887) (51,627,487) (38,734,270) (314,828) (240,124)
---------- ---------- ------------- ------------- ----------- -----------
Units outstanding end of year............... 55,440 76,353 8,585,010 8,278,977 1,761,542 1,269,214
========== ========== ============= ============= =========== ===========
- ---------------
* Includes undistributed net investment
income of: $ 730,917 $ 607,906 $ 16,011,065 $ 10,868,048 $ 452,841 $ 59,807
</TABLE>
See notes to financial statements.
F-10
<PAGE> 58
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ENTERPRISE ACCUMULATION TRUST
-------------------------------------------------------------------------------------------
EQUITY SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT SUBACCOUNT
--------------------------- --------------------------- -------------------------------
1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss)..... $ 10,134,835 $ 990,518 $ 24,100,179 $ 763,292 $ 79,408,406 $ (1,088,954)
Net realized gain on
investments.................... 31,547,377 13,064,079 12,200,856 2,016,987 202,106,289 78,226,876
Net increase (decrease) in
unrealized appreciation of
investments.................... 34,785,044 28,297,136 43,551,752 11,474,221 125,071,710 198,383,114
------------ ------------ ------------ ------------ -------------- --------------
Net increase in net assets
resulting from operations........ 76,467,256 42,351,733 79,852,787 14,254,500 406,586,405 275,521,036
------------ ------------ ------------ ------------ -------------- --------------
From unit transactions:
Net proceeds from the issuance of
units.......................... 153,834,908 115,219,042 103,297,248 41,715,641 626,988,679 496,311,902
Net asset value of units redeemed
or used to meet contract
obligations.................... (61,472,849) (30,630,812) (33,906,004) (33,868,192) (409,563,542) (192,035,547)
------------ ------------ ------------ ------------ -------------- --------------
Net increase from unit
transactions..................... 92,362,059 84,588,230 69,391,244 7,847,449 217,425,137 304,276,355
------------ ------------ ------------ ------------ -------------- --------------
Net increase in net assets........ 168,829,315 126,939,963 149,244,031 22,101,949 624,011,542 579,797,391
Net assets beginning of year...... 272,469,883 145,529,920 168,095,738 145,993,789 1,688,910,010 1,109,112,619
------------ ------------ ------------ ------------ -------------- --------------
Net assets end of year*........... $441,299,198 $272,469,883 $317,339,769 $168,095,738 $2,312,921,552 $1,688,910,010
============ ============ ============ ============ ============== ==============
Units outstanding beginning of
year............................. 8,212,227 5,426,511 6,346,453 6,055,472 39,371,381 31,540,233
Units issued during the year...... 4,173,627 3,827,209 3,110,995 1,644,107 13,252,564 12,880,690
Units redeemed during the year.... (1,679,097) (1,041,493) (1,056,237) (1,353,126) (8,780,191) (5,049,542)
------------ ------------ ------------ ------------ -------------- --------------
Units outstanding end of year..... 10,706,757 8,212,227 8,401,211 6,346,453 43,843,754 39,371,381
============ ============ ============ ============ ============== ==============
- ---------------
* Includes undistributed net
investment income of: $ 19,341,725 $ 9,206,890 $ 39,243,879 $ 15,143,700 $ 163,883,632 $ 84,475,226
<CAPTION>
ENTERPRISE ACCUMULATION TRUST
------------------------------------------------------
INTERNATIONAL GROWTH HIGH YIELD BOND
SUBACCOUNT SUBACCOUNT
-------------------------- -------------------------
1997 1996 1997 1996
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
From operations:
Net investment income (loss)..... $ 1,171,619 $ (223,776) $ 3,449,870 $ 1,605,300
Net realized gain on
investments.................... 3,166,636 891,767 461,482 153,762
Net increase (decrease) in
unrealized appreciation of
investments.................... (3,024,032) 2,753,189 1,157,688 860,925
------------ ----------- ----------- -----------
Net increase in net assets
resulting from operations........ 1,314,223 3,421,180 5,069,040 2,619,987
------------ ----------- ----------- -----------
From unit transactions:
Net proceeds from the issuance of
units.......................... 35,179,809 28,954,972 30,370,695 17,522,375
Net asset value of units redeemed
or used to meet contract
obligations.................... (16,397,762) (3,642,450) (6,983,741) (3,512,778)
------------ ----------- ----------- -----------
Net increase from unit
transactions..................... 18,782,047 25,312,522 23,386,954 14,009,597
------------ ----------- ----------- -----------
Net increase in net assets........ 20,096,270 28,733,702 28,455,994 16,629,584
Net assets beginning of year...... 45,080,264 16,346,562 30,415,667 13,786,083
------------ ----------- ----------- -----------
Net assets end of year*........... $ 65,176,534 $45,080,264 $58,871,661 $30,415,667
============ =========== =========== ===========
Units outstanding beginning of
year............................. 3,610,923 1,456,982 2,361,710 1,194,315
Units issued during the year...... 2,649,674 2,462,266 2,234,031 1,460,685
Units redeemed during the year.... (1,239,519) (308,325) (514,085) (293,290)
------------ ----------- ----------- -----------
Units outstanding end of year..... 5,021,078 3,610,923 4,081,656 2,361,710
============ =========== =========== ===========
- ---------------
* Includes undistributed net
investment income of: $ 1,628,241 $ 456,622 $ 5,579,860 $ 2,129,990
</TABLE>
See notes to financial statements.
F-11
<PAGE> 59
MONY AMERICA
VARIABLE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
OCC ACCUMULATION TRUST
-----------------------------------------------------------------------------
MONEY MARKET BOND EQUITY
SUBACCOUNT SUBACCOUNT SUBACCOUNT
------------------------- ----------------------- -----------------------
1997 1996 1997 1996 1997 1996
----------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income............ $ 84,261 $ 93,564 $ 82,928 $ 118,511 $ 85,330 $ 43,218
Net realized gain (loss) on
investments.................... 0 0 (17,195) 7,592 291,249 201,716
Net increase (decrease) in
unrealized appreciation of
investments.................... 0 0 22,568 (105,165) 311,925 300,028
----------- ----------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations........ 84,261 93,564 88,301 20,938 688,504 544,962
----------- ----------- ---------- ---------- ---------- ----------
From unit transactions:
Net proceeds from the issuance of
units.......................... 3,559,696 4,333,584 206,205 85,477 94,191 90,651
Net asset value of units redeemed
or used to meet contract
obligations.................... (5,555,831) (4,350,827) (936,786) (250,849) (607,309) (615,503)
----------- ----------- ---------- ---------- ---------- ----------
Net decrease from unit
transactions..................... (1,996,135) (17,243) (730,581) (165,372) (513,118) (524,852)
----------- ----------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets........................... (1,911,874) 76,321 (642,280) (144,434) 175,386 20,110
Net assets beginning of year...... 3,613,860 3,537,539 1,928,795 2,073,229 2,874,538 2,854,428
----------- ----------- ---------- ---------- ---------- ----------
Net assets end of year*........... $ 1,701,986 $ 3,613,860 $1,286,515 $1,928,795 $3,049,924 $2,874,538
=========== =========== ========== ========== ========== ==========
Units outstanding beginning of
year............................. 268,258 271,019 118,986 129,078 87,730 106,172
Units issued during the year...... 258,478 326,685 12,934 5,293 2,620 2,767
Units redeemed during the year.... (404,558) (329,446) (56,728) (15,385) (15,939) (21,209)
----------- ----------- ---------- ---------- ---------- ----------
Units outstanding end of year..... 122,178 268,258 75,192 118,986 74,411 87,730
=========== =========== ========== ========== ========== ==========
- ---------------
* Includes undistributed net
investment income of: $ 326,438 $ 242,177 $ 353,701 $ 270,773 $ 96,597 $ 11,267
<CAPTION>
OCC ACCUMULATION TRUST
-----------------------------------------------------
SMALL CAP MANAGED
SUBACCOUNT SUBACCOUNT
----------------------- ---------------------------
1997 1996 1997 1996
---------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
From operations:
Net investment income............ $ 113,545 $ 94,164 $ 1,391,969 $ 427,532
Net realized gain (loss) on
investments.................... 105,416 124,066 5,761,094 4,226,402
Net increase (decrease) in
unrealized appreciation of
investments.................... 482,224 287,148 1,865,204 4,119,101
---------- ---------- ------------ ------------
Net increase in net assets
resulting from operations........ 701,185 505,378 9,018,267 8,773,035
---------- ---------- ------------ ------------
From unit transactions:
Net proceeds from the issuance of
units.......................... 273,519 454,923 4,748,474 4,110,996
Net asset value of units redeemed
or used to meet contract
obligations.................... (338,142) (857,279) (12,013,129) (11,872,383)
---------- ---------- ------------ ------------
Net decrease from unit
transactions..................... (64,623) (402,356) (7,264,655) (7,761,387)
---------- ---------- ------------ ------------
Net increase (decrease) in net
assets........................... 636,562 103,022 1,753,612 1,011,648
Net assets beginning of year...... 3,452,097 3,349,075 45,854,945 44,843,297
---------- ---------- ------------ ------------
Net assets end of year*........... $4,088,659 $3,452,097 $ 47,608,557 $ 45,854,945
========== ========== ============ ============
Units outstanding beginning of
year............................. 120,183 136,744 1,084,412 1,286,294
Units issued during the year...... 8,340 17,388 98,535 113,806
Units redeemed during the year.... (10,644) (33,949) (250,893) (315,688)
---------- ---------- ------------ ------------
Units outstanding end of year..... 117,879 120,183 932,054 1,084,412
========== ========== ============ ============
- ---------------
* Includes undistributed net
investment income of: $ 171,376 $ 57,831 $ 1,401,493 $ 9,524
</TABLE>
See notes to financial statement.
F-12
<PAGE> 60
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").
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 OCC
Accumulation Trust ("OCC") (formerly known as Quest for Value Accumulation
Trust) (collectively, the "Funds"). The Funds are registered under the 1940 Act
as open end, diversified, management investment companies.
On March 31, 1997, the Variable Account effected a substitution by
redeeming shares of the OCC Accumulation Trust Bond Portfolio and using the
redemption proceeds to purchase shares of the OCC Accumulation Trust U.S.
Government Income Portfolio. The substitution was effected through a redemption
of assets in-kind for the Variable Account and OCC.
A full presentation of the related financial statements and footnotes of
the Fund, Enterprise and OCC are contained on pages 68 to 102; 105 to 142; and
145 to 166; 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 Portfolios,
net asset values are based upon market quotations of the securities held in each
of the corresponding portfolios of the Funds. For the Money Market Portfolios,
the net asset values are based on the amortized cost of the securities held
which approximates value.
Taxes:
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.
3. RELATED PARTY TRANSACTIONS
MONY America is the legal owner 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.
F-13
<PAGE> 61
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RELATED PARTY TRANSACTIONS (CONTINUED)
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 for all subaccounts for 1997 was $2,158,177.
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. INVESTMENTS
Investment in MONY Series Fund, Inc. at cost, at December 31, 1997 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.................. 36,697 54,336 3,035,035 3,974,470 103,775 120,638,664 1,349,979
Amount.................. $827,651 $ 893,812 $31,870,045 $ 47,687,932 $1,420,468 $ 120,638,664 $13,926,074
-------- --------- ----------- ------------ ---------- ------------- -----------
Shares acquired:
Shares.................. 2,762 1,687 781,838 1,172,299 4,621 791,090,332 907,237
Amount.................. $ 84,206 $ 41,223 $ 8,404,697 $ 14,863,508 $ 88,702 $ 791,090,332 $ 9,620,113
Shares received for
reinvestment of
dividends:
Shares.................. 3,763 6,884 183,803 268,111 8,796 6,788,047 59,593
Amount.................. $106,179 $ 148,017 $ 1,895,013 $ 3,136,904 $ 145,889 $ 6,788,047 $ 607,853
Shares redeemed:
Shares.................. (1,638) (9,843) (775,748) (989,833) (36,003) (788,436,603) (389,952)
Amount.................. $(33,431) $(137,574) $(8,085,554) $(11,001,832) $ (470,085) $(788,436,603) $(4,046,217)
-------- --------- ----------- ------------ ---------- ------------- -----------
Net change:
Shares.................. 4,887 (1,272) 189,893 450,577 (22,586) 9,441,776 576,878
Amount.................. $156,954 $ 51,666 $ 2,214,156 $ 6,998,580 $ (235,494) $ 9,441,776 $ 6,181,749
-------- --------- ----------- ------------ ---------- ------------- -----------
Shares end of year:
Shares.................. 41,584 53,064 3,224,928 4,425,047 81,189 130,080,440 1,926,857
Amount.................. $984,605 $ 945,478 $34,084,201 $ 54,686,512 $1,184,974 $ 130,080,440 $20,107,823
======== ========= =========== ============ ========== ============= ===========
</TABLE>
F-14
<PAGE> 62
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENTS (CONTINUED)
Investment in Enterprise Accumulation Trust at cost, at December 31, 1997
consist 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.................................. 9,441,091 8,313,340 49,225,009 7,451,283 5,520,085
Amount.................................. $219,775,741 $149,844,309 $1,278,396,527 $ 41,542,065 $29,411,432
------------ ------------ -------------- ------------ -----------
Shares acquired:
Shares.................................. 4,962,924 4,170,268 17,040,724 5,617,792 5,579,958
Amount.................................. $160,100,627 $106,398,220 $ 649,473,099 $ 36,325,944 $31,259,981
Shares received for reinvestment of
dividends:
Shares.................................. 416,547 1,010,758 2,569,541 311,697 710,297
Amount.................................. $ 14,616,618 $ 26,987,250 $ 104,785,893 $ 1,926,290 $ 3,996,565
Shares redeemed:
Shares.................................. (2,244,353) (1,608,981) (12,118,216) (2,834,407) (1,500,067)
Amount.................................. $(40,672,974) $(27,693,191) $ (255,319,160) $(15,131,932) $(7,958,240)
------------ ------------ -------------- ------------ -----------
Net change:
Shares.................................. 3,135,118 3,572,045 7,492,049 3,095,082 4,790,188
Amount.................................. $134,044,271 $105,692,279 $ 498,939,832 $ 23,120,302 $27,298,306
------------ ------------ -------------- ------------ -----------
Shares end of year:
Shares.................................. 12,576,209 11,885,385 56,717,058 10,546,365 10,310,273
Amount.................................. $353,820,012 $255,536,588 $1,777,336,359 $ 64,662,367 $56,709,738
============ ============ ============== ============ ===========
</TABLE>
F-15
<PAGE> 63
MONY AMERICA
VARIABLE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENTS (CONTINUED)
Investment in OCC Accumulation Trust at cost, at December 31, 1997 consist
of the following:
<TABLE>
<CAPTION>
US GOVERNMENT
MONEY MARKET BOND INCOME EQUITY SMALL CAP MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares beginning of year:
Shares......................... 3,613,860 203,032 0 95,595 152,680 1,266,361
Amount......................... $ 3,613,860 $ 1,918,686 $ 0 $1,856,223 $2,767,076 $29,748,753
----------- ----------- ---------- ---------- ---------- -----------
Shares acquired:
Shares......................... 3,567,162 0 177,669 2,899 10,950 120,612
Amount......................... $ 3,567,162 $ 0 $1,817,368 $ 94,806 $ 272,541 $ 4,849,580
Shares received for reinvestment
of dividends:
Shares......................... 115,863 3,597 6,712 4,135 7,414 54,995
Amount......................... $ 115,863 $ 33,877 $ 69,837 $ 123,628 $ 161,545 $ 1,984,204
Shares redeemed:
Shares......................... (5,594,899) (206,629) (61,972) (19,115) (15,995) (318,595)
Amount......................... $(5,594,899) $(1,952,563) $ (633,367) $ (354,973) $ (279,748) $(6,945,376)
----------- ----------- ---------- ---------- ---------- -----------
Net change:
Shares......................... (1,911,874) (203,032) 122,409 (12,081) 2,369 (142,988)
Amount......................... $(1,911,874) $(1,918,686) $1,253,838 $ (136,539) $ 154,338 $ (111,592)
----------- ----------- ---------- ---------- ---------- -----------
Shares end of year:
Shares......................... 1,701,986 0 122,409 83,514 155,049 1,123,373
Amount......................... $ 1,701,986 $ 0 $1,253,838 $1,719,684 $2,921,414 $29,637,161
=========== =========== ========== ========== ========== ===========
</TABLE>
F-16
<PAGE> 64
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF
MONY LIFE INSURANCE COMPANY OF AMERICA:
We have audited the accompanying statutory statements of admitted assets,
liabilities, capital and surplus of MONY Life Insurance Company of America ("the
Company") as of December 31, 1997 and 1996, and the related statutory statements
of operations, capital and surplus, and cash flows for the years then ended.
These statutory 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.
The Company presents its financial statements in conformity with the
accounting practices prescribed or permitted by the Insurance Department of the
State of Arizona ("statutory"), which is a comprehensive basis of accounting
other than generally accepted accounting principles ("GAAP"). As explained in
Note 2 to the financial statements, the accounting practices used by the Company
vary from generally accepted accounting principles, and the effects of these
variances are material.
In our opinion, because of the effects of the matter discussed in the
preceding paragraph, the statutory financial statements referred to above do not
present fairly, in conformity with GAAP, the financial position of the Company
as of December 31, 1997 and 1996, or the results of its operations and its cash
flows, for the years then ended.
In our opinion, however, the statutory financial statements referred to
above present fairly, in all material respects, the admitted assets,
liabilities, capital and surplus of the Company as of December 31, 1997 and
1996, and the results of its operations and its cash flows for the years then
ended on the basis of accounting described in Note 2.
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 National Association of Insurance
Commissioners' 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.
COOPERS & LYBRAND L.L.P.
New York, New York
February 27, 1998
F-17
<PAGE> 65
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF ADMITTED ASSETS, LIABILITIES, CAPITAL
AND SURPLUS -- STATUTORY BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
ASSETS
Cash and invested assets:
Cash and short-term investments........................ $ 45,956 $ 90,207
Bonds.................................................. 1,074,724 1,047,957
Common stocks.......................................... 981 1,235
Mortgage loans......................................... 134,828 158,847
Real estate............................................ 22,627 40,725
Policy loans........................................... 45,892 41,464
Other invested assets.................................. 7,001 8,518
---------- ----------
Total cash and invested assets.................... 1,332,009 1,388,953
Investment income due and accrued........................... 22,402 20,401
Other assets................................................ 247 2,511
Separate account assets..................................... 3,606,711 2,529,992
---------- ----------
Total assets...................................... $4,961,369 $3,941,857
========== ==========
LIABILITIES, CAPITAL AND SURPLUS
Liabilities:
Life insurance and annuity reserves.................... $1,241,979 $1,284,529
Deposits left with the Company......................... 23,197 23,525
Policy claims in process of settlement................. 8,331 6,085
Federal income taxes due or accrued.................... 17,837 29,077
Transfers from separate accounts....................... (128,943) (97,477)
Other liabilities...................................... 32,869 18,842
Separate account liabilities........................... 3,606,711 2,529,992
Interest maintenance reserve........................... 3,965 3,583
Investment reserves.................................... 6,000 4,000
Asset valuation reserve................................ 16,272 17,887
---------- ----------
Total liabilities................................. 4,828,218 3,820,043
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............................. 133,500 133,500
Unassigned funds....................................... (2,849) (14,186)
---------- ----------
Total capital and surplus......................... 133,151 121,814
---------- ----------
Total liabilities, capital and surplus............ $4,961,369 $3,941,857
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE> 66
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF OPERATIONS -- STATUTORY BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Premiums, annuity considerations and fund deposits.......... $799,035 $741,870
Net investment income....................................... 99,006 102,092
Other income (net).......................................... 332 22
-------- --------
898,373 843,984
Policyholder and contractholder benefits.................... 407,381 336,731
Change in policy and contract reserves...................... (42,879) (35,010)
Commissions................................................. 40,860 36,793
Operating expenses.......................................... 64,866 53,212
Transfer to separate accounts............................... 397,492 428,101
-------- --------
867,720 819,827
Net gain from operations before federal income taxes........ 30,653 24,157
Federal income taxes........................................ 17,390 14,407
-------- --------
Net gain from operations.................................... 13,263 9,750
Net realized capital losses (See Note 7).................. (3,544) (1,720)
-------- --------
Net Income.................................................. $ 9,719 $ 8,030
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE> 67
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CAPITAL AND SURPLUS -- STATUTORY BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Capital and surplus, beginning of year...................... $121,814 $115,630
-------- --------
Net income.................................................. 9,719 8,030
Change in net unrealized capital gains...................... 2,774 1,618
Change in non-admitted assets............................... (771) 384
Change in asset valuation reserve........................... 1,615 (3,848)
Increase in investment reserve.............................. (2,000) 0
-------- --------
Net change in capital and surplus for the year.............. 11,337 6,184
-------- --------
Capital and surplus, end of year............................ $133,151 $121,814
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE> 68
MONY LIFE INSURANCE COMPANY OF AMERICA
STATEMENTS OF CASH FLOWS -- STATUTORY BASIS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------
1997 1996
---- ----
<S> <C> <C>
CASH FROM OPERATIONS:
Premiums, annuity considerations and fund deposits..... $ 799,751 $ 741,905
Investment income, net of investment expenses.......... 97,589 104,606
Other income........................................... 833 985
Policy benefits paid................................... (405,289) (336,206)
Transfers to separate accounts......................... (428,958) (460,502)
Commissions, other expenses and taxes paid............. (105,188) (91,150)
Federal income taxes (excluding tax on capital
gains)................................................ (27,516) 0
--------- ---------
Net cash from operations..................... (68,778) (40,362)
--------- ---------
CASH FROM INVESTMENTS:
Proceeds from investments sold, matured or repaid:
Bonds............................................. 130,649 134,846
Stocks............................................ 1,050 0
Mortgage loans.................................... 37,670 53,226
Real estate....................................... 18,453 19,790
Other invested assets............................. 1,512 18
Other............................................. 361 88
Taxes paid on net capital gains................... (1,564) 0
--------- ---------
Total investment proceeds.................... 188,131 207,968
--------- ---------
Cost of investments acquired:
Bonds............................................. 157,583 163,792
Stocks............................................ 68 40
Mortgage loans.................................... 13,641 38,651
Real estate....................................... 1,180 3,392
Other invested assets............................. 574 1,388
Change in policy loans............................ 4,428 3,339
--------- ---------
Total investments acquired................... 177,474 210,602
--------- ---------
Net cash from investments.................... 10,657 (2,634)
--------- ---------
CASH FROM FINANCING AND MISCELLANEOUS SOURCES:
Cash provided:
Other sources..................................... 13,870 8,041
--------- ---------
Net cash from financing and miscellaneous
sources.................................... 13,870 8,041
--------- ---------
Net change in cash and short-term investments.......... (44,251) (34,955)
Cash and short-term investments, beginning of year.......... 90,207 125,162
--------- ---------
Cash and short-term investments, end of year................ $ 45,956 $ 90,207
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE> 69
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
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.
On September 8, 1997, MONY announced that it is pursuing converting to a
stock life insurance company through demutualization. In connection with the
demutualization, MONY has prepared a Plan of Reorganization ("the Plan") which
is subject to approval by the Insurance Department of the State of New York as
well as adoption by MONY's Board of Trustees and approval by MONY's
policyholders.
In accordance with the Plan, subject to the approvals indicated above,
among other things, MONY will convert from a New York mutual life insurance
company to a New York stock life insurance company (the "Plan of
Demutualization") and become a wholly owned subsidiary of MONY Financial
Services Corporation (the "Holding Company"), a holding company organized in
Delaware for the purpose of becoming the parent holding company of MONY.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accompanying statutory financial statements have been prepared in
conformity with accounting practices prescribed or permitted by the Insurance
Department of the State of Arizona ("statutory"), which is a comprehensive basis
of accounting other than generally accepted accounting principles ("GAAP").
The preparation of statutory financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of results of operations and
changes in surplus during the reporting period. Actual results could differ
significantly from those estimates. The most significant estimates made in
conjunction with the preparation of the Company's financial statements include
those used in determining (i) valuation reserves for mortgage loans and real
estate investments, and (ii) the liability for future policy benefits.
In financial statements prepared in conformity with statutory accounting,
the accounting treatment of certain items is different than for financial
statements prepared in conformity with GAAP. Some of the general differences
include:
- Policy acquisition costs, such as commissions and other costs incurred
in connection with acquiring new and renewal business, are expensed when
incurred; under GAAP, such costs are deferred and amortized over the
present value of expected gross margins.
- Premiums for universal life and investment-type products are recognized
as revenue when due; under GAAP, they are reported as deposits to
policyholders' account balances. Revenues from these contracts under
GAAP consist of amounts assessed during the period against
policyholders' account balances for mortality, policy administration and
surrender charges.
- Policy reserves are based on statutory mortality and interest
requirements, without consideration of withdrawals, and are reported net
of reinsurance reserve credits; under GAAP, the reserves for interest
sensitive life and annuity products are equal to the fund value and are
reported gross of reinsurance reserve credits.
F-22
<PAGE> 70
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
- No provision is made for deferred income taxes; under GAAP, deferred
income taxes result from temporary differences between the tax bases of
assets and liabilities and their reported amounts in the financial
statements.
- An interest maintenance reserve ("IMR") is established as a liability to
capture realized investment gains and losses, net of tax, on the sale of
fixed maturities and mortgage loans resulting from changes in the
general level of interest rates, and is amortized into income over the
remaining years to expected maturity of the assets sold; under GAAP,
assets are carried on the balance sheet, net of appropriate valuation
allowances.
- An asset valuation reserve ("AVR"), based upon a formula prescribed by
the NAIC, is established as a liability to offset potential non-interest
related investment losses, and changes in the AVR are charged or
credited to surplus; under GAAP, no such reserve is required.
- Bonds in good standing are generally carried at amortized cost; under
GAAP, bonds which are classified as available for sale are carried at
fair value and the related change in unrealized gains and losses, net of
related deferred taxes and an adjustment for deferred policy acquisition
costs, is reported as a component of other comprehensive income in
equity.
- Certain assets designated as "non-admitted," are excluded from assets by
a direct charge to surplus; under GAAP, such assets are carried on the
balance sheet, net of appropriate valuation allowances.
- Methods used for calculating real estate and mortgage loan values and
real estate depreciation under statutory reporting are different from
those used for GAAP.
- Cash equivalents are defined as all highly liquid debt securities with
original maturities of twelve months or less; under GAAP, cash
equivalents are defined as short-term, highly liquid investments, which
generally have original maturities of three months or less.
The following is a description of the Company's principal statutory
accounting policies:
a. Premiums and Insurance Expenses
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.
The costs of acquiring new business, primarily commissions, underwriting,
agency and other costs related to issuance, maintenance and settlement of
policies are charged to operations in the year incurred.
b. Investments
Bonds are stated at amortized cost, except those bonds not in good
standing, which are carried at NAIC-designated values, which approximate fair
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 fair value. Policy loans are carried at their
unpaid principal balances. Short-term investments are carried at amortized cost
and consist of securities with original maturities of twelve months or less.
Mortgage loans other than those in process of foreclosure are carried at
their unpaid principal balances adjusted for unamortized premium or discount.
Real estate owned for investment is carried at depreciated cost, less
encumbrances, if any. There were no encumbrances in 1997 or 1996. Joint ventures
in real estate are
F-23
<PAGE> 71
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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,
less accumulated depreciation and encumbrances, if any, or estimated fair value
at the time of foreclosure. There were no encumbrances in 1997 or 1996. Mortgage
loans in process of foreclosure are carried at the lower of the current carrying
value or estimated fair value. Fair value is determined by using the estimated
discounted cash flows expected from the underlying real estate properties. These
projected cash flows are based on estimates regarding future operating expenses,
lease rates, occupancy levels and investors' targeted yields.
The Company provides, through a direct charge to surplus, an investment
valuation reserve for permanent impairment of real estate investments, joint
ventures in real estate, mortgage loans delinquent for more than 60 days and
restructured mortgage loans. This reserve reflects, in part, the excess of the
carrying value of such assets over the estimated undiscounted cash flows
expected from the underlying real estate properties. These projected cash flows
are based on estimates similar to those described in the preceding paragraph. As
of December 31, 1997 and 1996, the Company's investment valuation reserve was $6
million and $4 million, respectively.
Derivative instruments are valued consistently with the items being hedged.
Hedges of fixed income assets and/or liabilities are valued at amortized cost.
Derivatives that cease to be effective hedges are valued at market value.
Realized capital gains and losses on sales of investments are determined on
the basis of specific identification. Unrealized capital gains and losses are
recorded directly to surplus. Investment income is recognized as earned.
Investment income earned includes the amortization of premium and accretion of
discount relative to bonds acquired at other than their par value and excludes
certain overdue due and accrued interest income.
c. Interest Maintenance Reserve and Asset Valuation Reserve
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 IMR. These amounts are amortized into net income over the
remaining years to expected maturity of the assets sold.
The 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 changes in the AVR which are recorded directly to
surplus.
d. Policy Reserves
Policy reserves for deferred annuity contracts are computed by using 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 prescribed 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
prescribed statutory interest rates.
e. Non-admitted Assets
Certain assets designated as "non-admitted" assets (principally
miscellaneous receivables) are excluded from the statements of admitted assets,
liabilities, capital and surplus.
F-24
<PAGE> 72
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
f. Separate Account Assets and Liabilities
Separate account assets and liabilities represent primarily 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. Depreciation
The Company uses the constant-yield method of depreciation for
substantially all investments in real estate and real estate joint ventures and
limited partnerships acquired prior to January 1, 1991. Acquisitions subsequent
to January 1, 1991 and foreclosed real estate are depreciated on the
straight-line method. Real estate assets and improvements are generally
depreciated over ten to forty-year periods and leasehold improvements are
depreciated over the lives of the leases. Depreciation expense related to
investments in real estate was $1.1 million and $1.4 million in 1997 and 1996,
respectively; accumulated depreciation was $4.4 million at December 31, 1997 and
1996.
h. Cash Flows
Short-term investments are characterized as cash equivalents for purposes
of the statements of cash flows.
Certain amounts for 1996 have been reclassified to conform to the 1997
presentation.
3. 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, 1997 and 1996, this guarantee was
outstanding in the state of New Jersey.
4. RELATED PARTY TRANSACTIONS:
At both December 31, 1997 and 1996, approximately 26 percent of the
Company's investments in mortgages were held through joint participation with
MONY. In addition, approximately 100 percent and 87 percent of the Company's
real estate and joint venture investments were held through joint participation
with MONY at December 31, 1997 and 1996, respectively.
In 1997 the New York City Industrial Development Agency issued bonds in the
total amount of $16.0 million for the benefit of MONY related to MONY's
consolidation of site locations to New York City. Debt service under the bonds
is funded by lease payments by MONY to the bond trustee for the benefit of the
Company, which is the sole bondholder. The bonds are held by the Company and are
listed as affiliated bonds on Schedule D.
The Company and MONY are parties to an agreement 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 75 percent of the appraised value of the loan at
origination for each such mortgage loan. Pursuant to the agreement, the Company
received payments from MONY totaling $0.1 million in both 1997 and 1996.
The Company has a service agreements with MONY whereby MONY provides
personnel services, facilities, supplies and equipment to the Company to conduct
its business as well as for the Company to
F-25
<PAGE> 73
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. RELATED PARTY TRANSACTIONS (CONTINUED):
provide services to MONY Series Fund, Inc. ("the Fund"), an affiliate of the
Company, as an investment advisor. Services rendered by MONY under these
agreements are provided on a cost reimbursable basis.
The Company has an investment advisory agreement with the Fund with respect
to the investment and management of the Fund's invested assets. The Company is
compensated for such services with an investment management fee computed in
accordance with the terms of the agreement.
The Company has three underwriting agreements with the Fund and MONY
Securities Corporation ("MSC"). The agreements provide for MSC to act as the
principal underwriter for the sale of the Company's flexible premium variable
annuity contracts and as the broker for the sale of the Fund's shares. These
agreements may be terminated at any time by either MSC or the Company upon sixty
days prior notice.
In addition, the Company has an investment advisory agreement with MONY
whereby MONY provides investment advisory services with respect to the
investment and management of the Company's investment portfolio. The agreement
provides for scheduled fees for actual cost reimbursement and may be terminated
by either party upon 60 days written notice.
5. FIXED MATURITY SECURITIES AND COMMON STOCKS:
Fixed Maturity Securities by Investment Type and Common Stocks:
The cost and estimated fair value (see Note 8) of investments in fixed
maturity securities (including short-term investments and bonds) and common
stocks as of December 31, 1997 and December 31, 1996 are presented in the table
below. Cost is amortized cost for fixed maturity securities and original cost
for common stocks.
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------------- ------------- ----------- -------------------
1997 1996 1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ---- ---- ----
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities & obligations of
U.S. government agencies................ $ 5.9 $ 5.9 $ 0.0 $ 0.0 $0.0 $0.0 $ 5.9 $ 5.9
Collateralized mortgage obligations:
Government agency backed................ 123.7 126.4 2.2 1.3 0.1 1.0 125.8 126.7
Non-agency backed....................... 34.5 35.0 2.0 1.5 0.0 0.2 36.5 36.3
Other asset backed securities:
Government agency backed................ 0.2 0.2 0.0 0.0 0.0 0.0 0.2 0.2
Non-agency backed....................... 93.8 98.5 2.1 1.3 0.2 0.7 95.7 99.1
Public utilities.......................... 123.8 129.0 3.1 2.3 0.2 1.0 126.7 130.3
Corporate bonds........................... 676.8 653.0 18.0 13.2 2.2 4.8 692.6 661.4
Affiliates................................ 16.0 0.0 0.0 0.0 0.0 0.0 16.0 0.0
-------- -------- ----- ----- ---- ---- -------- --------
Total bonds............................. 1,074.7 1,048.0 27.4 19.6 2.7 7.7 1,099.4 1,059.9
Commercial paper.......................... 25.7 86.5 0.0 0.0 0.0 0.0 25.7 86.5
-------- -------- ----- ----- ---- ---- -------- --------
Total bonds and short-term
investments........................... $1,100.4 $1,134.5 $27.4 $19.6 $2.7 $7.7 $1,125.1 $1,146.4
======== ======== ===== ===== ==== ==== ======== ========
Common stocks............................. $ 0.8 $ 1.1 $ 0.2 $ 0.1 $0.0 $0.0 $ 1.0 $ 1.2
======== ======== ===== ===== ==== ==== ======== ========
</TABLE>
Amortized cost represents the principal amount of the fixed maturity
securities adjusted by unamortized premium or discount and reduced by writedowns
of $0.4 million and $3.4 million at December 31, 1997 and 1996, respectively, as
required by the NAIC for securities which are in or near default.
F-26
<PAGE> 74
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. FIXED MATURITY SECURITIES AND COMMON STOCKS (CONTINUED):
At December 31, 1997, 78.2% of the Company's Collateralized Mortgage
Obligation (CMO) portfolio was held in U.S. government and government
agency-backed securities. The remainder of the CMO portfolio consisted of NAIC
category 1 investment grade securities.
Maturities of Fixed Maturity Securities:
The amortized cost and estimated fair value of fixed maturity securities by
maturity date as of December 31, 1997 are as follows:
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
COST VALUE
--------- ---------
($ IN MILLIONS)
<S> <C> <C>
Due in one year or less................................. $ 48.9 $ 49.0
Due after one year through five years................... 411.4 418.1
Due after five years through ten years.................. 380.4 391.3
Due after ten years..................................... 259.7 266.7
-------- --------
$1,100.4 $1,125.1
======== ========
</TABLE>
Fixed maturity securities that are not due at a single maturity date have
been included in the preceding table in the year of final maturity. Actual
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 fixed maturity securities during 1997
and 1996 were $31.3 million and $13.3 million, respectively. Gross gains of $0.5
million in 1997 and $0.2 million in 1996, and gross losses of $4.3 million in
1997 and $0.3 million in 1996 were realized on these sales.
Proceeds from sales of investments in common stocks during 1997 and 1996
were $1.0 million and $0, respectively. Gross gains of $0.7 million in 1997 and
$0 in 1996, and gross losses of $0 in 1997 and $0 in 1996 were realized on these
sales.
There were no non-income producing bonds and redeemable preferred stocks
for the twelve months preceding December 31, 1997. The carrying values of fixed
maturity securities which were non-income producing for the twelve months
preceding December 31, 1996 were $1.0 million.
6. 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, including agricultural
properties. As of December 31, 1997, $55.3 million of mortgage loans have terms
that require amortization, and $79.5 million of mortgage loans require partial
amortization or are non-amortizing. Mortgage loans delinquent over 90 days or in
process of foreclosure were $0.6 million at December 31, 1997 and there were no
mortgage loans delinquent over 90 days or in process of foreclosure at December
31, 1996. There were no properties acquired through foreclosure during 1997 or
1996.
The Company has performing restructured mortgage loans of $14.1 million as
of December 31, 1997 and $15.0 million as of December 31, 1996. The new terms
typically reduce the contract rate of interest. Interest is recognized in income
based on the modified rate of the loan. Gross interest income on restructured
loans that would have been recorded in accordance with the loans' original terms
was approximately $1.4 million in 1997 and $1.5 million in 1996. Gross interest
income recognized in net income for the period from these loans was $1.0 million
in 1997 and $1.1 million in 1996. There are no commitments to lend additional
funds to any debtor involved in a restructuring.
F-27
<PAGE> 75
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
6. MORTGAGE LOANS AND REAL ESTATE (CONTINUED):
At both December 31, 1997 and 1996, there were no mortgage loans that were
non-income producing for the preceding twelve months.
At both December 31, 1997 and 1996, there were no real estate properties
that were non-income producing for the preceding twelve months.
7. INVESTMENT INCOME, REALIZED AND UNREALIZED CAPITAL GAINS (LOSSES):
Net investment income for the years ended December 31, 1997 and 1996 was
derived from the following sources:
<TABLE>
<CAPTION>
1997 1996
---- ----
($ IN MILLIONS)
<S> <C> <C>
NET INVESTMENT INCOME
- ------------------------------------------------------------
Bonds and common stock...................................... $ 79.0 $ 77.5
Mortgage loans.............................................. 12.0 14.4
Real estate (net of property expenses)...................... 1.2 3.0
Policy loans................................................ 3.5 2.7
Other investments (including cash & short-term
investments).............................................. 6.6 7.5
------ ------
Total investment income................................ 102.3 105.1
Investment expenses......................................... 3.3 3.0
------ ------
Net investment income.................................. $ 99.0 $102.1
====== ======
</TABLE>
Net realized capital gains (losses) on investments for the years ended
December 31, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
($ IN MILLIONS)
<S> <C> <C>
REALIZED CAPITAL GAINS (LOSSES)
- ------------------------------------------------------------
Bonds and common stock...................................... $(2.4) $ 0.9
Real estate and mortgage loans.............................. 0.4 (0.1)
Derivative instruments...................................... 0.0 (0.8)
Other....................................................... (0.2) 0.0
----- -----
(2.2) 0.0
Taxes....................................................... (0.5) (0.8)
Transferred to IMR, net of taxes............................ (0.8) (0.9)
----- -----
Net realized capital losses............................ $(3.5) $(1.7)
===== =====
</TABLE>
During 1997 and 1996, realized capital losses resulting from changes in
interest rates on bonds of $0.8 million (net of $0.5 million tax) and $0.9
million (net of $0.5 million tax), respectively, were transferred to the
Company's IMR for future amortization into net income.
Net unrealized capital gains were $2.8 million in 1997 and $1.6 million in
1996. The 1997 and 1996 net unrealized gains include writedowns of approximately
$0.2 million in 1997 and $0 in 1996 on real estate acquired through foreclosure
and mortgage loans in process of foreclosure. These gains and losses are
detailed by asset type in the table below.
F-28
<PAGE> 76
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
7. INVESTMENT INCOME, REALIZED AND UNREALIZED CAPITAL GAINS (LOSSES)
(CONTINUED):
<TABLE>
<CAPTION>
1997 1996
---- ----
($ IN MILLIONS)
<S> <C> <C>
UNREALIZED CAPITAL GAINS (LOSSES)
- ------------------------------------------------------------
Bonds and stocks............................................ $ 3.0 $1.6
Real estate and mortgage loans.............................. (0.2) 0.0
----- ----
Total net unrealized capital gains..................... $ 2.8 $1.6
===== ====
</TABLE>
8. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair values of mortgage loans, common stocks, cash,
short-term investments, separate account assets and liabilities, and
investment-type contracts approximate their carrying amounts. The carrying
values of bonds were $1,074.7 million and $1,048.0 million at December 31, 1997
and 1996, respectively. The estimated fair values of bonds were $1,099.4 million
and $1,059.9 million at December 31, 1997 and 1996, respectively.
The methods and assumptions utilized in estimating these fair values of
financial instruments are summarized as follows:
Fixed maturity securities (See Note 5)
The estimated fair values of fixed maturity securities are based upon
quoted market prices, where available. The fair values of fixed maturity
securities not actively traded and other non-publicly traded securities are
estimated using values obtained from independent pricing services or, in the
case of private placements, by discounting expected future cash flows using a
current market interest rate commensurate with the credit quality and term of
the investments.
Mortgage loans
The fair value of mortgage loans is estimated by discounting expected
future cash flows, using current interest rates for similar loans to borrowers
with similar credit risk. Loans with similar characteristics are aggregated for
purposes of the calculations. The fair value of mortgage loans in process of
foreclosure is the estimated fair value of the underlying collateral.
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 assets and liabilities
The estimated fair value of assets held in separate accounts is based
principally on quoted market prices. The fair value of liabilities related to
separate accounts is the amount payable on demand, net of surrender charges.
Investment-type Contract Liabilities
The fair values of annuities are based on estimates of the value of
payments available upon full surrender. The fair values of the Company's
liabilities under guaranteed investment 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.
F-29
<PAGE> 77
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. OFF BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK:
Financial Instruments with Off-Balance Sheet Risk:
In 1992, the Company entered into an agreement with a bank to lend
securities to approved borrowers. There were $65,000 of loaned securities as of
December 31, 1997. The minimum collateral on securities loaned is 102% of the
market value of loaned securities. Such securities are marked to market on a
daily basis, adjusting required collateral values accordingly.
Concentrations of Credit Risk:
As of December 31, 1997 and 1996, the Company had no single investment or
series of investments with a single issuer (excluding U.S. Government Agency
securities) exceeding 1.4 percent and 1.3 percent, respectively, of total cash
and invested assets.
The bond portfolio is diversified by industry type. The industries
comprising 10 percent or more of the carrying value of the bond portfolio at
December 31, 1997 are Financial Services of $133.5 million (12.4 percent),
Government and Agencies of $129.8 million (12.1 percent), Energy of $128.3
million (11.9 percent), Non-Government Asset/Mortgage-Backed of $128.3 million
(11.9 percent), Public Utilities of $123.8 million (11.5 percent), and Consumer
Goods and Services of $112.5 million (10.5 percent). At December 31, 1996, the
industries comprising 10 percent or more of the carrying value of the bond
portfolio were Government and Agencies of $132.5 million (12.7 percent),
Non-Government Asset/Mortgage-Backed of $133.5 million (12.7 percent), Public
Utilities of $129.0 million (12.3 percent), Energy of $119.7 million (11.4
percent), and Other Manufacturing of $116.9 million (11.2 percent).
The Company holds below investment grade bonds of $79.7 million at December
31, 1997. 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, $66.6 million are in category 3,
which is considered to be medium quality by the NAIC. At December 31, 1996, the
Company's investments in below investment grade bonds were $59.4 million.
The Company has investments in commercial and agricultural mortgage loans
and real estate (including joint ventures). The locations of property
collateralizing mortgage loans and real estate investment carrying values at
December 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
$ % $ %
- - - -
($ IN MILLIONS)
<S> <C> <C> <C> <C>
GEOGRAPHIC REGION
- ------------------------------------------
West...................................... 54.0 32.9 71.3 34.3
Mountain.................................. 41.2 25.1 48.3 23.3
Northeast................................. 25.3 15.4 25.6 12.3
Southwest................................. 16.8 10.2 20.9 10.1
Midwest................................... 14.7 8.9 25.5 12.3
Southeast................................. 12.4 7.5 16.1 7.7
----- ----- ----- -----
Total........................... 164.4 100.0 207.7 100.0
===== ===== ===== =====
</TABLE>
The states with the largest concentrations of mortgage loans and real
estate investments at December 31, 1997 are: California, $33.8 million (20.6%);
New York, $19.1 million (11.6%); Texas, $16.2 million (9.9%); Arizona, $13.6
million (8.3%); Washington, $11.6 million (7.1%) and Idaho, $10.7 million
(6.5%).
F-30
<PAGE> 78
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
9. OFF BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK (CONTINUED):
As of December 31, 1997 and 1996, the real estate and mortgage loan
portfolio was also diversified as follows:
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
$ % $ %
- - - -
($ IN MILLIONS)
<S> <C> <C> <C> <C>
PROPERTY TYPE
- --------------------------------------------
Agriculture................................. 99.5 60.5 117.8 56.7
Office Building............................. 24.5 14.9 34.9 16.8
Hotel....................................... 15.0 9.1 21.5 10.4
Retail...................................... 10.3 6.3 12.3 5.9
Industrial.................................. 7.3 4.5 9.4 4.5
Other....................................... 4.4 2.6 4.4 2.1
Apartments.................................. 3.4 2.1 7.4 3.6
----- ----- ----- -----
Total............................. 164.4 100.0 207.7 100.0
===== ===== ===== =====
</TABLE>
10. RESERVES:
The withdrawal characteristics of the Company's annuity actuarial reserves
and deposit liabilities as of December 31, 1997 were as follows:
<TABLE>
<CAPTION>
($ IN MILLIONS)
<S> <C>
Not subject to discretionary withdrawal provision........... $ 77.1
Subject to discretionary withdrawal -- with adjustment:
- at book value less surrender charges of 5% or
more.............................................. 180.9
- at market value..................................... 3,403.3
--------
Subtotal..................................... 3,584.2
Subject to discretionary withdrawal -- without adjustment:
- at book value (minimal or no charge or
adjustment)....................................... 475.1
--------
Total annuity actuarial reserves and deposit
liabilities -- gross and net of
reinsurance................................ $4,136.4
========
</TABLE>
The amounts above are included in the Company's statements of admitted
assets, liabilities, capital and surplus as life insurance and annuity reserves
($0.7) billion and separate account liabilities ($3.4) billion.
11. 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
general 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
$2.7 billion and $2.6 billion at December 31, 1997 and 1996, respectively.
Premiums ceded under these contracts were $16.1 million and $14.6 million;
benefit payments recovered were $11.6 million and $17.3 million; policy reserve
credits recorded were $11.1 million and $10.6 million; and recoverable amounts
on paid and unpaid losses were $2.4 million and $3.5 million in 1997 and 1996,
respectively.
The Company is contingently liable with respect to ceded insurance should
any reinsurer be unable to meet its obligations under these agreements. To limit
the possibility of such losses, the Company evaluates the financial condition of
its reinsurers and monitors concentration of credit risk.
F-31
<PAGE> 79
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
12. FEDERAL INCOME TAXES:
The Company is included in the consolidated federal income tax return with
its parent, MONY, and the parent's non-life subsidiaries. The allocation of
federal income taxes is based upon separate return calculations with current
credit for net losses and other federal income tax credits provided to the life
insurance members of the affiliated group. Intercompany tax balances are settled
annually in the fourth quarter.
The Company's federal income tax returns for years through 1991 have been
examined with no proposed material adjustments. In the opinion of management,
adequate provision has been made for any additional taxes that 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, depreciation expense and related recapture, capital gains deferred
to the IMR, and equity in joint ventures.
13. COMMITMENTS AND CONTINGENCIES:
In late 1995 and during 1996, a number of purported class actions were
commenced in various state and federal courts against the Company and MONY ("the
Companies") alleging that the Companies engaged in deceptive sales practices in
connection with the sale of whole and universal life insurance policies during
the period 1980 to the present. Although the claims asserted in each case are
not identical, they seek substantially the same relief under essentially the
same theories of recovery (i.e. breach of contract, fraud, negligent
misrepresentation, negligent supervision and training, breach of fiduciary duty,
unjust enrichment and violation of state insurance and/or deceptive business
practice laws). The Companies have answered the complaints in each action
(except for one being voluntarily held in abeyance), have denied any wrongdoing,
and have asserted numerous affirmative defenses.
On June 7, 1996, the New York State Supreme Court certified the Goshen
case, being the first of the aforementioned class actions filed, as a nationwide
class consisting of all persons or entities who have, or at the time of the
policy's termination, had an ownership interest in a whole or universal life
insurance policy issued by the Companies and sold on an alleged "vanishing
premium" basis during the period January 1, 1982 to December 31, 1995. On March
27, 1997, the Companies filed a motion to dismiss or, alternatively, motion for
summary judgment on all counts of the complaint.
The Massachusetts District Court in the Multidistrict Litigation has
entered an order recognizing the Goshen case as the lead case and essentially
holding all of the federal cases in abeyance pending the action of the Goshen
case. Consequently, all other putative class actions have been either
consolidated and transferred by the Judicial Panel on Multidistrict Litigation
to the United States District Court for the District of Massachusetts, or are
being voluntarily held in abeyance pending the outcome of the Goshen case.
On October 21, 1997, the New York State Supreme Court granted the
Companies' motion for summary judgment and dismissed all claims filed in the
Goshen case against the Companies. The order by the New York State Supreme Court
has been appealed to the Appellate Division by plaintiffs and all actions before
the United States District Court for the District of Massachusetts are still
pending.
In addition to the matters discussed above, the Company is involved in
various other legal actions and proceedings in connection with its businesses.
The claimants in certain of these actions and proceedings seek damages of
unspecified amounts. In addition, insurance companies are subject to
assessments, up to statutory limits, by state guaranty funds for losses of
policyholders of insolvent insurance companies.
F-32
<PAGE> 80
MONY LIFE INSURANCE COMPANY OF AMERICA
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
13. COMMITMENTS AND CONTINGENCIES (CONTINUED):
In the opinion of management of the Company, resolution of contingent
liabilities arising from litigation, income taxes and other matters will not
have a material adverse effect on the Company's statutory surplus or results of
operations.
At December 31, 1997, the Company had a commitment to issue a $1.9 million
fixed rate farm loan with an interest rate of 7.8% and a duration of 10 years.
There were no outstanding bond commitments as of December 31, 1997.
14. YEAR 2000:
The Year 2000 issue is the result of the widespread use of computer
programs written using two digits (rather than four) to define the applicable
year. Such programming was a common industry practice designed to avoid the
significant costs associated with additional mainframe capacity necessary to
accommodate a four-digit year field. As a result, any of the Company's computer
systems that have time-sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in a major systems
failure or miscalculations. The Company has conducted a comprehensive review of
its computer systems to identify the systems that could be affected by the Year
2000 issue and has developed and implemented a plan to resolve the issue. The
Company currently believes that, with modifications to existing software and
converting to new software, the Year 2000 issue will not pose significant
operational problems for the Company's computer systems. However, if such
modifications and conversions are not completed on a timely basis, the Year 2000
issue may have a material impact on the operations of the Company. Furthermore,
even if the Company completes such modifications and conversions on a timely
basis, there can be no assurance that the failure by vendors or other third
parties to solve the Year 2000 problem will not have a material impact on the
operations of the Company.
F-33
<PAGE> 81
MONY LIFE INSURANCE COMPANY OF AMERICA
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN $ THOUSANDS)
The following is a summary of certain financial data from the Company's
Annual Statement included in other exhibits and schedules subjected to audit
procedures by independent accountants and utilized by the Company's actuaries in
the determination of reserves:
<TABLE>
<S> <C>
INVESTMENT INCOME EARNED:
- ------------------------------------------------------------
U.S. Government bonds................................... 387
Other bonds (unaffiliated).............................. 77,378
Bonds of affiliates..................................... 602
Preferred stocks (unaffiliated)......................... 0
Preferred stocks of affiliates.......................... 0
Common stocks (unaffiliated)............................ 1
Common stocks of affiliates............................. 0
Mortgage loans.......................................... 12,097
Real estate............................................. 8,565
Premium notes, policy loans and liens................... 3,465
Collateral loans........................................ 0
Cash on hand and on deposit............................. 117
Short-term investments.................................. 4,652
Other invested assets................................... 571
Derivative instruments.................................. 0
Aggregate write-ins for investment income............... 1,355
----------
Gross investment income............................. 109,190
==========
REAL ESTATE OWNED -- BOOK VALUE LESS ENCUMBRANCES........... 22,627
MORTGAGE LOANS -- BOOK VALUE:
- ------------------------------------------------------------
Farm mortgages.......................................... 99,492
Residential mortgages................................... 0
Commercial mortgages.................................... 35,336
----------
Total mortgage loans................................ 134,828
==========
MORTGAGE LOANS BY STANDING -- BOOK VALUE:
- ------------------------------------------------------------
Good standing........................................... 120,120
Good standing with restructured terms................... 14,126
Interest overdue more than three months, not in
foreclosure............................................ 0
Foreclosure in process.................................. 582
----------
Total mortgage loans................................ 134,828
==========
OTHER LONG TERM ASSETS -- STATEMENT VALUE................... 52,824
COLLATERAL LOANS............................................ 0
BONDS AND STOCKS OF PARENTS, SUBSIDIARIES AND
AFFILIATES -- BOOK VALUE:
- ------------------------------------------------------------
Bonds................................................... 16,000
Preferred Stocks........................................ 0
Common Stocks........................................... 0
</TABLE>
F-34
<PAGE> 82
MONY LIFE INSURANCE COMPANY OF AMERICA
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN $ THOUSANDS)
<TABLE>
<S> <C>
BONDS AND SHORT-TERM INVESTMENTS BY CLASS AND MATURITY:
- ------------------------------------------------------------
BONDS AND SHORT-TERM INVESTMENTS BY MATURITY -- STATEMENT
VALUE:
- ------------------------------------------------------------
Due within one year or less............................. 84,300
Over 1 year through 5 years............................. 573,903
Over 5 years through 10 years........................... 344,927
Over 10 years through 20 years.......................... 68,716
Over 20 years........................................... 28,578
----------
Total by Maturity................................... 1,100,424
==========
BONDS AND SHORT-TERM INVESTMENTS BY MATURITY -- STATEMENT
VALUE:
- ------------------------------------------------------------
Class 1................................................. 579,042
Class 2................................................. 441,677
Class 3................................................. 66,571
Class 4................................................. 12,524
Class 5................................................. 0
Class 6................................................. 610
----------
Total by Class...................................... 1,100,424
==========
TOTAL BONDS AND SHORT-TERM INVESTMENTS -- PUBLICLY TRADED... 645,558
TOTAL BONDS AND SHORT-TERM INVESTMENTS -- PRIVATELY
PLACED.................................................... 454,866
PREFERRED STOCKS -- STATEMENT VALUE......................... 0
COMMON STOCKS -- MARKET VALUE............................... 981
SHORT-TERM INVESTMENTS -- BOOK VALUE........................ 25,700
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 AND ON DEPOSIT................................. 20,256
LIFE INSURANCE IN FORCE:
- ------------------------------------------------------------
Industrial.............................................. 0
Ordinary................................................ 11,744,853
Credit Life............................................. 0
Group Life.............................................. 1,875,204
AMOUNT OF ACCIDENTAL DEATH INSURANCE IN FORCE UNDER ORDINARY
POLICIES.................................................. 158,466
LIFE INSURANCE POLICIES WITH DISABILITY PROVISIONS IN FORCE:
- ------------------------------------------------------------
Industrial.............................................. 0
Ordinary................................................ 3,671,469
Credit Life............................................. 0
Group Life.............................................. 199,912
SUPPLEMENTARY CONTRACTS IN FORCE:
- ------------------------------------------------------------
Ordinary -- Not Involving Life Contingencies
Amount on Deposit................................... 19,131
Income Payable...................................... 969
Ordinary -- Involving Life Contingencies
Income Payable...................................... 2,996
Group -- Not Involving Life Contingencies
Amount on Deposit................................... 28
Income Payable...................................... 0
Group -- Involving Life Contingencies
Income Payable...................................... 15
</TABLE>
F-35
<PAGE> 83
MONY LIFE INSURANCE COMPANY OF AMERICA
SUPPLEMENTAL SCHEDULE OF SELECTED FINANCIAL DATA -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN $ THOUSANDS)
<TABLE>
<S> <C>
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....................... 61,031
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........................ 632,579
Dividend Accumulations -- Account Balance............... 0
CLAIM PAYMENTS 1997:
- ------------------------------------------------------------
Group Accident and Health -- Year Ended December 31,
1997................................................... 0
1997................................................ 0
1996................................................ 0
1995................................................ 0
1994................................................ 0
1993................................................ 0
Prior............................................... 0
CLAIM PAYMENTS 1997:
- ------------------------------------------------------------
Other Accident and Health -- Year Ended December 31,
1997
1997................................................ 0
1996................................................ 0
1995................................................ 0
1994................................................ 0
1993................................................ 0
Prior............................................... 0
Other coverages that use developmental methods to
calculate claims reserves -- Year Ended December 31,
1997
1997................................................ 0
1996................................................ 0
1995................................................ 0
1994................................................ 0
1993................................................ 0
Prior............................................... 0
</TABLE>
F-36
<PAGE> 84
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following Financial Statements are included in this Registration
Statement:
(1) With respect to MONY America Variable Account A:
(a) Report of Independent Accountants;
(b) Statements of assets and liabilities as of December 31, 1997;
(c) Statements of operations for the year ended December 31, 1997;
(d) Statements of changes in net assets for the years ended
December 31, 1997 and 1996.
(2) With respect to MONY Life Insurance Company of America:
(a) Report of Independent Accountants.
(b) Statements of admitted assets, liabilities, capital and surplus
as of December 31, 1997 and 1996.
(c) Statements of operations for the years ended December 31, 1997
and 1996.
(d) Statements of capital and surplus for the years ended December
31, 1997 and 1996.
(e) Statements of cash flows for the years ended December 31, 1997
and 1996.
(b) EXHIBITS
(1) Resolutions of Board of Directors of MONY Life Insurance Company
of America ("Company") authorizing the establishment of MONY America
Variable Account A ("Variable Account"), adopted March 27, 1987, filed as
Exhibit 1 of Registration Statement Nos. 33-14362 and 811-5166, dated May
18, 1987, is incorporated herein by reference.
(2) Not applicable.
(3)(a) Distribution Agreement among MONY Life Insurance Company of
America, MONY Securities Corp., and MONY Series Fund, Inc., filed as
Exhibit 3(a) of Post-Effective Amendment No. 3, dated February 28, 1991, to
Registration Statement No. 33-20453, is incorporated herein by reference.
(b) Specimen Agreement with Registered Representatives, filed as
Exhibit 3(b) of Pre-Effective Amendment No. 1, dated December 17, 1990, to
Registration Statement Nos. 33-37722 and 811-6216, is incorporated herein
by reference.
(c) Specimen Agreement (Career Contract) between the Company and
selling agents (with Commission Schedule), filed as Exhibit 3(c) of
Pre-Effective Amendment No. 1, dated October 26, 1987, to Registration
Statement Nos. 33-14362 and 811-5166, is incorporated herein by reference.
(4) Proposed form of Flexible Payment Variable Annuity Contracts,
filed as Exhibit (4) of Registration Statement dated July 23, 1998,
Registration Nos. 333-59717 and 811-5166, is incorporated herein by
reference.
(5) Proposed form of Application for Flexible Payment Variable Annuity
Contract, to be filed by amendment.
(6) Articles of Incorporation and By-Laws of the Company, filed as
Exhibits 6(a) and 6(b), respectively, of Registration Statement No.
33-13183, dated April 6, 1987, is incorporated herein by reference.
(7) Not applicable.
II-1
<PAGE> 85
(8) Not applicable.
(9) Opinion and Consent of Edward P. Bank, Vice President and Deputy
General Counsel, The Mutual Life Insurance Company of New York, as to the
legality of the securities being registered, filed as Exhibit (9) of
Registration Statement dated October 13, 1998, Registration Nos. 333-59717
and 811-5166, is incorporated herein by reference.
(10) Consent of PricewaterhouseCoopers LLP, Independent Accountants
for MONY America Variable Account A, filed as Exhibit (10) of Registration
Statement dated October 13, 1998, Registration Nos. 333-59717 and 811-5166,
is incorporated herein by reference.
Consent of PricewaterhouseCoopers LLP, Independent Accountants for
MONY Life Insurance Company of America, filed as Exhibit (10) of
Registration Statement dated October 13, 1998, Registration Nos. 333-59717
and 811-5166, is incorporated herein by reference.
(11) Not applicable.
(12) Not applicable.
(13) Calculation of Performance Data, filed as Exhibit 13 of Post
Effective Amendment No. 20, dated March 2, 1998 to Registration Statement
No. 33-20453, is incorporated herein by reference.
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
NAME POSITION AND OFFICES WITH DEPOSITOR
---- -----------------------------------
<S> <C>
Michael I. Roth.............................. Director, Chairman and Chief Executive
Officer
Samuel J. Foti............................... Director, President and Chief Operating
Officer
Kenneth M. Levine............................ Director and Executive Vice President
Richard E. Connors........................... Director
Richard Daddario............................. Director, Vice President, and Controller
Philip A. Eisenberg.......................... Director, Vice President, and Actuary
Margaret G. Gale............................. Director and Vice President
Stephen J. Hall.............................. Director
Charles P. Leone............................. Director, Vice President and Chief Compliance
Officer
Sam Chiodo................................... Vice President
William D. Goodwin........................... Vice President
Edward E. Hill............................... Vice President-Compliance Officer
Evelyn L. Peos............................... Vice President
Michael Slipowitz............................ Vice President
David S. Waldman............................. Secretary
David V. Weigel.............................. Treasurer
</TABLE>
The business address for all officers and directors of MONY America is 1740
Broadway, New York, New York 10019.
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
No person is directly or indirectly controlled by the Registrant. The
Registrant is a separate account of MONY Life Insurance Company of America, a
wholly-owned subsidiary of The Mutual Life Insurance Company of New York
("MONY").
The following is a diagram showing all corporations directly or indirectly
controlled by or under common control with MONY Life Insurance Company of
America, showing the state or other sovereign power under the laws of which each
is organized and the percentage ownership of voting securities giving rise to
the control relationship. (See diagram on following page.) Omitted from the
diagram are subsidiaries of MONY that, considered in the aggregate, would not
constitute a "significant subsidiary" (as that term is defined in Rule 8b-2
under Section 8 of the Investment Company Act of 1940) of MONY.
II-2
<PAGE> 86
organizational chart
II-3
<PAGE> 87
ITEM 27. NUMBER OF CONTRACT OWNERS:
As of December 31, 1997 MONY America Variable Account A had 95,307 owners
of Contracts.
ITEM 28. INDEMNIFICATION
The By-Laws of MONY Life Insurance Company of America provide, in Article
VI as follows:
SECTION 1. The Corporation shall indemnify any existing or former
director, officer, employee or agent of the Corporation against all expenses
incurred by them and each of them which may arise or be incurred, rendered or
levied in any legal action brought or threatened against any of them for or on
account of any action or omission alleged to have been committed while acting
within the scope of employment as director, officer, employee or agent of the
Corporation, whether or not any action is or has been filed against them and
whether or not any settlement or compromise is approved by a court, all subject
and pursuant to the provisions of the Articles of Incorporation of this
Corporation.
SECTION 2. The indemnification provided in this By-Law shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification for such
liabilities (other than the payment by the Registrant of expense incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant, will (unless in the opinion of its counsel the
matter has been settled by controlling precedent) submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) MONY Securities Corp. ("MSC") is the principal underwriter of the
Registrant and the Fund. The Mutual Life Insurance Company of New York ("MONY")
also acts as sub-investment adviser to the Fund through a services agreement.
(b) The names, titles, and principal business addresses of the officers of
MONY and MSC are listed on Schedules A and D of the respective Forms ADV for
MONY (Registration No. 801-13564), as filed with the Commission on December 20,
1977 and as amended, and on Schedule A of Form BD for MSC (Registration No.
8-15289) as filed with the Commission on November 23, 1969 and as amended and on
the individual officer's Form U-4, the texts of which are hereby incorporated by
reference.
(c) The following table sets forth commissions and other compensation
received by each principal underwriter, directly or indirectly, from MONY
America Variable Account A during fiscal year 1996 and 1995:
<TABLE>
<CAPTION>
NET
UNDERWRITING
DISCOUNTS AND COMPENSATION BROKERAGE OTHER
NAME OF COMMISSIONS ON REDEMPTION COMMISSIONS COMPENSATION
PRINCIPAL -------------- -------------- ------------ ------------
UNDERWRITER 1996 1997 1996 1997 1996 1997 1996 1997
----------- ----- ----- ----- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MONY Securities Corp................ 0 0 0 0 0 0 0 0
</TABLE>
II-4
<PAGE> 88
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books, and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder
are maintained by MONY Life Insurance Company of America, in whole or in part,
at its principal offices at 1740 Broadway, New York, New York 10019, at its
Operations Center at 1 MONY Plaza, Syracuse, New York 13202 or at its Marketing
Center at 1740 Broadway, New York, New York 10019.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Registrant hereby undertakes to file post-effective amendments to the
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old for so long as payments under the variable annuity contracts may be
accepted;
(b) Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information;
(c) Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
REPRESENTATIONS RELATING TO SECTION 26 OF
THE INVESTMENT COMPANY ACT OF 1940
Registrant and MONY Life Insurance Company of America represent that the
fees and charges deducted under the Contract, the the aggregate, are reasonable
in relation to the services rendered, the expenses expected to be incurred and
the risks assumed by MONY Life Insurance Company of America.
II-5
<PAGE> 89
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, MONY America Variable Account A,
has duly caused the Pre-Effective Amendment No. 2 to this Registration Statement
to be signed on its behalf by the undersigned thereunto duly authorized, in the
City of New York and the State of New York, on this 12th day of November, 1998.
MONY America Variable Account A
(Registrant)
MONY Life Insurance Company of America
(Depositor)
By: /s/ MICHAEL I. ROTH
------------------------------------
Michael I. Roth, Director
Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 2 to this Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE DATE
--------- ----
<C> <S> <C>
/s/ MICHAEL I. ROTH November 12, 1998
- --------------------------------------------------------
Michael I. Roth
Director, Chairman of the Board, and Chief
Executive Officer
/s/ SAMUEL J. FOTI November 12, 1998
- --------------------------------------------------------
Samuel J. Foti
Director, President, and Chief
Operating Officer
/s/ RICHARD DADDARIO November 12, 1998
- --------------------------------------------------------
Richard Daddario
Director, Vice President, and Controller
(Principal Financial, and Accounting Officer)
/s/ KENNETH M. LEVINE November 12, 1998
- --------------------------------------------------------
Kenneth M. Levine
Director and Executive Vice President
/s/ MARGARET G. GALE November 12, 1998
- --------------------------------------------------------
Margaret G. Gale
Director and Vice President
</TABLE>
II-6
<PAGE> 90
<TABLE>
<CAPTION>
SIGNATURE DATE
--------- ----
<C> <S> <C>
/s/ RICHARD E. CONNORS November 12, 1998
- --------------------------------------------------------
Richard E. Connors
Director
/s/ STEPHEN J. HALL November 12, 1998
- --------------------------------------------------------
Stephen J. Hall
Director
/s/ CHARLES P. LEONE November 12, 1998
- --------------------------------------------------------
Charles P. Leone
Director, Vice President and
Chief Compliance Officer
</TABLE>
II-7
